SomaLogic Stock: Biopharmaceutical Company With Excellent Upside (NASDAQ:SLGC)

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SomaLogic, Inc. (NASDAQ:SLGC) is a biopharmaceutical company that studies protein biomarkers. This makes it possible to monitor health and disease based on changes in specific protein samples. The company’s state-of-the-art SomaScan platform offers the ability to identify and monitor specific protein markers. These insights will enable drug manufacturers to target specific proteins with their treatments, allowing faster and more effective treatment methods for a plethora of distinct diseases and afflictions. Because of the SomaScan system’s versatility, its platform is one of the most efficient and most accessible research data platforms in the biopharmaceutical markets.

SLGC Stock Price Chart

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This article will show that despite SomaLogic Inc’s newness on the market, it has all the hallmarks of being a viable and valuable company. With solid financials showcasing growth in its first two full years of operation, the company is clearly well managed. The most intriguing part of the company is that its SomaScan technology makes it a valuable centerpiece in a number of different drug markets. That kind of broad demand is sure to continue to rise as more information becomes available, which could skyrocket company value. These factors demonstrate that SomaLogic represents a rare buy-now, low-risk stock in the biopharmaceutical industry that investors should consider adding to their portfolio.

Versatility is a Key Factor

One of the critical factors in the value of this company is the versatility and range of its trademarked platform. SomaScan technologies represent a multitude of possibilities across a wide variety of markets. When you look at the diseases associated with the build-up of specific proteins, you find a variety of highly fatal, common diseases that lack effective treatment options. Cancer, Alzheimer’s, and cardiovascular disease are some of the most prevalently researched diseases. Because many of these diseases can be traced back to the build-up of specific proteins, the ability to scan the body and isolate these proteins becomes essential in developing effective treatments.

The SomaScan technology platform is highly sought after by drug companies seeking treatment development for a myriad of specific diseases. Cancer treatments are by far one of the most lucrative, along with Alzheimer’s medications and treatments, primarily due to the high failure rate associated with development. If SomaScan technology could be a critical building block attached to the development of these treatments, then it could revolutionize medicine. This could skyrocket the company to unheralded levels of profit.

Market Outlook

While the company has ties to several segments of the biopharmaceutical industry, it is essential to examine the most relevant markets to gain insight into the potential future viability. In the case of SomaLogic Inc., those markets are represented by diseases for which SomaScan technologies are best suited to contribute to treatments options.

The global cancer drug market was valued at $136 billion in 2020 and is expected to grow at a hefty 7.2% CAGR up through 2030. At that rate, the market cap would balloon to an astounding $272 billion. The primary market drivers for this industry are predictable. First and foremost, it is a high-demand industry with a low supply. Cancer rates are increasing across the globe, and there are not enough effective treatments available on the market to treat a large number of variations, stages, and types of cancer. If SomaLogic were to help crack the cancer code and find itself attached to effective treatment options for cancers, it would be highly lucrative.

The Alzheimer’s drug market was valued at $6.5 billion in 2021. It is expected to reach an impressive $25 billion in 2027, growing at 17.5 %. This is one of the most lucrative markets in the biopharmaceutical industry simply due to drug failure rates of 99.6%. Although the discovery of protein buildups as the root cause of Alzheimer’s has renewed faith that more treatments are imminent, none has come to fruition as of late. Like the cancer market, the main drivers of this market are high supply to low demand, with an increase in diagnosis. These factors again make any treatment development extremely lucrative.

The cardiovascular disease market is the least lucrative of the three markets but is not without its upside. While the market is projected to hit a robust $146.4 billion in 2022, it has a slow projected CAGR of just 1.8%. What helps the market is that it covers a vast array of cardiac diseases; however, the downside is that only a small handful of these diseases are linked explicitly to protein buildups. So, while the market is broad, which drives its large-cap, SomaLogic would only be involved with a very small segment of this slow-moving market. In other words, it provides nice stability for the company floor but offers limited upside.

Financial Overview

SomaLogic Revenue and Assets Projection

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Company revenues saw an increase from 2020 to 2021. In 2020, the company posted a respectable $55.8 million in revenue. In 2021 that number jumped to an impressive $81.6 million. While it’s a small sample size, the fact that the company has shown a high degree of growth in such a short time leads me to believe that it will only continue to grow. Another encouraging aspect is that profits exceed 50% of revenue, which is an extremely favorable rate. In 2020 the company brought in $33 million in gross profits. That number increased in 2021, with the company closing out the year with $48 million in gross profits.

SomaLogic Net Income and price

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However, net income does throw a bit of a damper on the company income statement. While the company has done well-increasing profits and revenues, it has yet to figure out its operational expenses. Despite its solid revenue and gross profit numbers, the company’s net income has remained negative for the last two years. In 2020 the company posted a net income loss of $53 million. In 2021 it followed up with a second back-to-back net income loss of $87.5 million. While this is troubling, with all the potential SomaLogic offers, investors should have faith that the company will figure out how to get net incomes in line.

The company has done extremely well in terms of paying off its debt. In 2020 the company held $34 million in debt. In 2021 that debt has been fully repaid. This shows a sense of fiscal responsibility within the company, leaving its options open moving forward. In addition to repaying its debts, the company has also done a great job stockpiling cash. In 2020 the company held just under $165 million in cash in hand. At the end of 2021, that number ballooned to $439.5 million. This provides the company with stability and flexibility, both signs of good management, which is a positive sign for the future.

SomaLogic Cash and Assets Chart

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SomaLogic has also done a tremendous job in growing company assets. Keeping and growing a rich portfolio is an essential aspect of the longevity of a business. In 2020 the company had $242 million in assets. In 2021 that number had risen to a staggering $706 million. When looked at this way, it’s easy to explain the net income struggles when a bulk of operating expenses were spent expanding. All in all, the financials tell the story of a company that is on solid ground and pursuing massive growth. This is a highly positive trend for the future potential of the company.

Conclusion

SomaLogic, Inc. is a newly listed biopharmaceutical company headed for a meteoric market rise. Their technology stands them apart from anyone else in their industry. It allows them to have their hands in almost every aspect of the drug market, making its potential truly tantalizing. The SomaScan technology they lease to companies provides key insights into treatment development for some of the world’s most plaguing diseases. If a breakthrough is imminent, it will come because of SomaLife technologies. This only serves to highlight the significance of this company in the market. The financials show a steadily growing company, and I expect this to continue to be the case. Over the next ten years, this could prove to be an incredibly valuable company making it a prime target for biopharma investors looking to add to their portfolio.

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