Soon-Shiong tries again with NantHealth IPO for up to $92M--even with ongoing whistleblower suit

IPOs 2016
Patrick Soon-Shiong

Patrick Soon-Shiong has been aiming to create a whole lineup of cancer companies with billion-dollar valuations. His first effort to go public was last July with immune-oncology company NantKwest; it reportedly had the largest valuation ever for a biotech IPO at $2.6 billion.

While that NantKwest ($NK) IPO raised $207 million and attracted a slew of prominent biotech investors, its valuation has since dwindled by almost $2 billion to less than $700 million. The IPO priced at $25 per share, with shares spiking to about $38 shortly thereafter--they're now trading at just above $8.

But Soon-Shiong is undaunted. Another of his companies, big data cancer analytics player NantHealth, is making a run again at an IPO. He had told the Los Angeles Times that he planned an IPO for NantHealth last year, but then around yearend announced a delay.

That news was followed with a whistleblower lawsuit made public in January 2015 from a pair of employees hired to prepare NantHealth for an IPO.  According to the lawsuit, they "soon discovered that (NantHealth execs) were engaged in a multitude of fraudulent activities, which would, if known to investment bankers, customers and the public, ... substantially devalue the company's stock and likely cause the end of the IPO."

The current IPO filing makes short work of that whistleblower suit regarding the last effort toward an IPO by NantHealth that was filed by former company executives, Stephanie Davidson and William Lynch. The SEC filing notes only that "two of our former employees filed a complaint against us alleging they were terminated in violation of Florida's Whistleblower Act and are seeking unspecified damages, including back pay, compensatory damages, punitive damages and attorneys' fees."

The case moved from Federal court to Florida in June 2015. Given the nature of the allegations, NantHealth will need to address them publicly in order to court investors now that an IPO filing has officially been made.

The company--like all of Soon-Shiong's efforts--has grand ambitions. NantHealth aims to integrate genomic and proteomic sequencing data into individual healthcare to create actionable information for physicians, providers and payers that also incorporates electronic medical records and connected devices.

The expectation is that a vast integration of genomic, biometric and phenotypic data would enable the actualization of precision medicine. Its primary platform is known as Comprehensive Learning Integrated NantHealth Intelligent Clinical System (CLINICS).

According to the SEC filing, NantHealth had raised $412 million as of the end of 2015. At that time, it had only $7.2 million in cash--down from a whopping $225.6 million at the end of 2014. Last year, NantHealth had net revenue of $58.3 million with a net loss of $72 million.

The NantHealth IPO didn't attract the bulge bracket banks that NantKwest had to underwrite its IPO; BofA Merrill Lynch and Citigroup headlined that one. This time, the NantHealth IPO is being headed by healthcare sector specialists Jefferies and Cowen & Co.

Major NantHealth investors include electronic records company Allscripts Healthcare Solutions ($MDRX), which plowed $200 million into it last June and Soon-Shiong's umbrella company, NantWorks. The Allscripts investment reportedly gave NantHealth a $2 billion valuation at the time.

- here is the IPO filing

Editor's note: An early version of this article misstated the status of the whistleblower lawsuit.