Sublime Stericeuticals

Early Stage

Continuous Process Lyophilization

Analytics

Raised to Date: Raised: $5,000

Aggregate Commitments $

Platform

Silicon Prairie Online

Start Date

06/30/2021

Close Date

12/31/2021

Min. Goal

$200,000

Max. Goal

$1,500,000

Min. Investment

$1,000

Security Type

SAFE

Funding Type

RegCF

Series

Pre-Seed

Valuation Cap

Uncapped

Discount Rate

0%

Rolling Commitments $

Status

Active

Reporting Date

09/19/2021

Days Remaining

103

% of Min. Goal

3%

% of Max. Goal

0%

Likelihood of Max
unlikely
Avg. Daily Raise

$62

Momentum
cold
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Location

Fort Dodge, Iowa

Industry

Healthcare & Pharmaceuticals

Tech Sector

Biotech

Distribution Model

B2B

Margin

Medium

Capital Intensity

Low

Business Type

Growth

Sublime Stericeuticals, a biotechnology company, is testing the waters on Silicon Prairie Online. The company has designed, developed, and tested its Cryophilizer that delivers a superior drug product. The product will be used in pharmaceutical manufacturing to upgrade the sterile freeze-dried drug manufacturing operations. Joel Lennon-Meyer founded Sublime Stericeuticals in October 2018. The current crowdfunding round has a minimum goal of $1,000 and a maximum goal of $200,000, and the funds will be used towards the development of prototype, design, staffing, and marketing and sales. Sublime Stericeuticals’ process allows manufacturers to freeze-dry their products at one-fourth costs and ten times higher throughput.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$503,247

$182,467

COGS

$216,130

$20,405

Tax

$22,443

$7,023

 

 

Net Income

$75,169

$18,744

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$183,940

$45,410

Accounts Receivable

$60,699

$21,612

Total Assets

$292,006

$67,022

Short-Term Debt

$138,933

$11,176

Long-Term Debt

$76,700

$0

Total Liabilities

$215,633

$11,176

Financials as of: 06/30/2021
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Ratings

Analyst Report

Synopsis

Pharmaceutical lyophilization is a complex scientific process by which drugs, vaccines, and other biological materials are freeze-dried. This process stabilizes the products and allows them to be transported and distributed without sacrificing quality or effectiveness. For example, Pfizer and BioNTech are developing a “lyophilized formulation” of the COVID-19 vaccine, which would remove the requirement for ultra-cold vaccine transport. The current vaccines’ inability to be transported without extreme refrigeration has caused many doses to be wasted and poses issues for distributing vaccines in low-resourced, rural areas. 

Lyophilization is increasing in popularity, but drug makers are wrangling with the process’ limitations. It’s regarded as time-consuming and expensive. Sublime Stericeuticals looks to change that. The company is in the very early stages of developing a new type of continuous lyophilization machine. This product will supposedly cut lyophilization costs to just 25% of what they are currently, while increasing throughput by 10x. 

Sublime Stericeuticals’ current raise on Silicon Prairie Holdings has been rated an Underweight Deal by the KingsCrowd investment team. 

Price

Sublime Stericeuticals’ price is difficult to analyze. In fact, it doesn’t exist. The company doesn’t seem to list a valuation cap anywhere, nor other investment terms, so it’s impossible to say whether investors are getting a good deal or not. As a result, the company’s price rating is very low. 

Market

The lyophilization equipment market is expected to grow to $8.5 billion worldwide by 2025. The pharmaceutical segment of this market is actually rather small at just $1.3 billion in 2018. More commonly, lyophilization equipment is used for freeze-dried foods.

Sublime Stericeuticals is addressing a rather narrow market that is likely dominated by old-school players. The company appears to have slightly more market opportunity in the freeze-dried foods segment. This direction is barely addressed in the company’s raise materials, and Sublime’s founders don’t have experience in that industry. All in all, this is a small market (particularly small for Sublime’s intended niche), so Sublime Stericeuticals’ market rating is very low.

Team

Sublime Stericeuticals was co-founded by a pair of pharmaceutical consultants who have worked together on various contracts over the last 15 years. Co-founder and Vice President Shawn Stimson holds a BS in chemical engineering from Southern Illinois University, Edwardsville. He has more than 15 years of experience as a consultant for various pharmaceutical companies. His primary expertise appears to be in quality assurance and compliance for pharmaceutical equipment. 

Co-founder and President Joel Lennon-Meyer holds a BA in chemistry from Iowa State University. His professional background is similar to Stimson’s. Lennon-Meyer has spent the last 25 years as a validation engineer and technical lead for various chemical and pharmaceutical companies. 

Stimson and Lennon-Meyer do have concrete experience in the pharmaceutical industry, which is a plus. However, it’s difficult for the average person to judge whether their expertise aligns perfectly with the invention and manufacturing of a lyophilization machine. It’s also concerning that neither founder has a strong business background. As a result, Sublime’s team score is very low.

Differentiators

At this point, it’s very difficult to assess whether the Sublime Stericeuticals lyophilization machine actually represents a concrete improvement for the pharmaceutical lyophilization process. The Sublime prototype doesn’t even exist yet, and the company offers very few concrete details on its raise page. Supposedly, Sublime’s technology will cut costs down to a quarter of what they currently are and increase throughput by 10x, but it’s just not possible to verify those claims yet. 

Moreover, Sublime Stericeuticals is competing against a number of established lyophilization machine manufacturers who already have a strong foothold in the pharmaceutical industry. IMA S.p.A., based out of Italy, is apparently the leader in the global lyophilization equipment market. The company offers a wide range of freeze dryers and accessories. At this point, it’s just too difficult to say whether Sublime Stericeuticals is sufficiently differentiated from well-established competitors. As a result, the company’s differentiation score is quite low. 

Performance

Sublime Stericeuticals’ financial performance is a bit of a mystery. The company does not provide extensive raise materials, but all evidence points to a pre-revenue company that is still in prototype development phase. In fact, Sublime doesn’t anticipate launching a sellable product until at least Q2 2022, per its business model. It’s entirely unclear as to why Sublime lists more than $500,000 in revenue on its SEC filing. The source of this income is unknown.

Sublime Stericeuticals’ performance rating is artificially high based on what’s listed on the company’s SEC form. In actuality, Sublime does not seem to have generated revenue from its core product. In fact, it’s supposedly been three years since the company was founded, but Sublime has little to show for it. 

Risks

Sublime Stericeuticals is a very risky investment. There’s absolutely no evidence yet that the Sublime lyophilization machine will work, or if the company will succeed at creating its device. Plus, extensive research, development, and manufacturing is very capital-intensive and takes a long time to generate returns. Financials and funding are key uncertainties, and investment terms are particularly risky given that they don’t seem to exist. There’s also significant risk in the size of this niche market and in that Sublime’s founders have little business experience.

Bearish Outlook

There are numerous reasons why investors should have serious doubts about investing in Sublime Stericeuticals. Perhaps most importantly, the company simply doesn’t offer very much information about what it’s building and why. Claims about reducing costs to one quarter current standards and increasing throughput by 10x are impressive, but they’re not backed up by any meaningful explanation or evidence. 

Moreover, Sublime Stericeuticals’ fundraise simply seems a bit sloppy, which isn’t a strong signal of operational excellence. The company posted a deck that is incomplete (one slide lists templated bullet points obviously meant to be filled in before finalizing the deck). It also seems to have put very little effort into its main raise page. Plus, investment terms, including valuation and discount, are entirely unclear.

On top of all of this, Sublime seems to be catering to a very niche market dominated by large-scale manufacturers with a global reach. It’s likely that these competitors’ contracts with pharmaceutical companies extend for years, and there’s no reason to believe that the pharmaceutical industry (not known to be particularly nimble or innovative) is in a rush to replace very expensive equipment with a brand-new invention. All in all, Sublime Stericeuticals seems like a highly risky investment. 

Bullish Outlook

There are very few reasons to be bullish about an investment in Sublime Stericeuticals. Admittedly, Sublime’s founders do have deep experience in the pharmaceutical industry, and there’s some proof that the existing pharmaceutical lyophilization process is expensive and inefficient. Sublime has also partnered with a Fortune 500 liquid nitrogen company, Air Products, which will supposedly assist in the distribution of Sublime’s machine. However, these signals alone are likely not enough to justify an investment in Sublime at this time. 

Executive Summary

Sublime Stericeuticals intends to produce a continuous lyophilization (freeze drying) machine to make the pharmaceutical lyophilization process much less expensive and much more productive. However, the company does not have a concrete prototype or clear reasoning as to why its product is differentiated from the legacy market. Investors receive very little information from Sublime’s raise materials and don’t even know the valuation cap of this fundraising round. Sublime’s revenue is a mystery. The business seems to be pre-product, but more than $500,000 in revenue is listed on Sublime’s SEC form. Therefore, Sublime Stericeuticals has been rated an Underweight Deal. 

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com

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