IPO Update: SaverOne 2014 Pursues $10 Million IPO

A Quick Take On SaverOne 2014 Ltd.

SaverOne 2014 Ltd. (SAVR) (SVRE) has filed to raise $10 million from the sale of its American Depositary Shares representing underlying common stock in an IPO, according to an amended registration statement.

The company is developing automobile safety software technologies.

SaverOne has produced only a small amount of revenue to-date, so management hasn’t proven its ability to generate strong revenue growth for its offerings; I’m on Hold for the IPO.

Company & Technology

Petah Tikvah, Israel-based SaverOne was founded to develop its SaverOne mobile application that prevents distracted driving resulting from the use of mobile phones.

Management is headed by Chief Executive Officer Ori Gilboa, who has been with the firm since September 2019 and was previously CEO of Negev Group, a home design company.

The company’s primary offerings include:

• SaverOne Generation 1.0 – for private vehicles

• Generation 2.0 – Gen 1.0 replacement and for automotive aftermarket

• Generation 3.0 – for the OEM market (2025 expected launch)

SaverOne has booked a fair market value investment of $26.6 million as of December 31, 2021 from investors including Ronen Weisberg, Ituran Location and Control, Universal Motors Israel and Y.D. More Investments.

SaverOne – Customer Acquisition

Management expects to launch its Generation 2.0 product in Q2 2022 in the aftermarket segment in the U.S. and Europe.

For its Generation 3.0 product, the company is working with a ‘leading global OEM… in order to make the installation of the SaverOne System into a vehicle’s system an essential part of the vehicle manufacturing process.’

Selling & Marketing expenses as a percentage of total revenue have dropped as revenues have increased from a small base, as the figures below indicate:

Selling & Marketing	Expenses vs. Revenue
Period	Percentage
2021	539.3%
2020	759.2%

(Source)

The Selling & Marketing efficiency multiple, defined as how many dollars of additional new revenue are generated by each dollar of Selling & Marketing spend, was 0.1x in the most recent reporting period. (Source)

SaverOne’s Market & Competition

According to a 2020 market research report by Market Research Future, the global market for driver safety products is forecast to reach nearly $25 billion by 2027.

This represents a forecast CAGR of 8.72% from 2021 to 2027.

The main drivers for this expected growth are a rise in technology options to satisfy greater safety needs for consumers and increased demand from fleet operators for safer driver operations.

Also, machine learning and Internet of Things applications will also play a role in the industry’s growth trajectory as well as the continued rollout of high capacity, low latency 5G wireless networking capabilities.

Major competitive or other industry participants include:

• Cellcontrol

• Katasi

• Cipia Vision

• Lytx

SaverOne 2014 Ltd.’s Financial Performance

The company’s recent financial results can be summarized as follows:

• Tiny amount of topline revenue

• Gross profit

• High and increasing operating losses and cash used in operations

Below are relevant financial results derived from the firm’s registration statement:

Total Revenue
Period	Total Revenue	% Variance vs. Prior
2021	$ 145,000	53.0%
2020	$ 94,800
Gross Profit (Loss)
Period	Gross Profit (Loss)	% Variance vs. Prior
2021	$ 52,000	198.9%
2020	$ 17,400
Gross Margin
Period	Gross Margin
2021	35.86%
2020	18.35%
Operating Profit (Loss)
Period	Operating Profit (Loss)
2021	$ (8,446,000)
2020	$ (5,206,800)
Net Income (Loss)
Period	Net Income (Loss)
2021	$ (8,518,000)
2020	$ (4,069,800)
Cash Flow From Operations
Period	Cash Flow From Operations
2021	$ (6,939,900)
2020	$ (3,708,600)
(Glossary Of Terms)

(Source)

As of December 31, 2021, SaverOne had $4.4 million in cash and $2.2 million in total liabilities.

Free cash flow during the twelve months ended December 31, 2021, was negative ($7 million).

SaverOne’s IPO Details

SaverOne intends to sell 1.39 million ADS’s representing common shares at a proposed price of $7.22 per ADS for gross proceeds of approximately $10.0 million, not including the sale of customary underwriter options.

No existing or potentially new shareholders have indicated an interest to purchase shares at the IPO price.

The company’s stock is listed on the Tel Aviv Stock Exchange under the symbol “SAVR”.

Assuming a successful IPO at the midpoint of the proposed price range, the company’s enterprise value at IPO (excluding underwriter options) would approximate $15.8 million.

The float to outstanding shares ratio (excluding underwriter options) will be approximately 34.23%. A figure under 10% is generally considered a ‘low float’ stock which can be subject to significant price volatility.

Per the firm’s most recent regulatory filing, it plans to use the net proceeds as follows:

approximately $2.0 million for global sales and marketing expansion – sales force expansion in key markets via direct sales and indirect partnerships;

approximately $4.0 million for Generation 2.0 and 3.0 technology development as part of the accelerating development of our technology;

approximately $1.0 million for accelerated R&D in machine learning/artificial intelligence;

the remainder for working capital and general corporate purposes and possible future acquisitions.

(Source)

Management’s presentation of the company roadshow is not available.

Regarding outstanding legal proceedings, management says that in Israel, ‘two of our patent applications have been allowed and subsequently opposed by a third-party. We have reached an agreement with the opponent according to which, the opposition proceedings shall be deferred until January 1, 2023, or until a divisional application of one of these two Israeli patent applications is allowed (whichever is earlier). As soon as the opposition proceedings resume, we intend to respond to the grounds of opposition. Our attorneys have advised us that it is difficult to assess the likelihood of the opposition to succeed, at this early stage.’

The sole listed bookrunner of the IPO is ThinkEquity.

Valuation Metrics For SaverOne

Below is a table of the firm’s relevant capitalization and valuation metrics at IPO, excluding the effects of underwriter options:

Measure (TTM)	Amount
Market Capitalization at IPO	$29,216,529
Enterprise Value	$15,841,529
Price/Sales	201.49
EV/Revenue	109.25
EV/EBITDA	-1.88
Earnings Per Share	-$2.00
Operating Margin	-5824.83%
Net Margin	-5874.48%
Float To Outstanding Shares Ratio	34.23%
Proposed IPO Midpoint Price per Share	$7.22
Net Free Cash Flow	-$6,983,100
Free Cash Flow Yield Per Share	-23.90%
Revenue Growth Rate	52.95%
(Glossary Of Terms)

(Source)

Commentary About SaverOne

SAVR is seeking U.S. public capital market investment to invest in its development and product commercialization plans.

The company’s financials have produced only a tiny amount of topline revenue, a small gross profit and high and growing operating losses and cash used in operations.

Free cash flow for the twelve months ended December 31, 2021, was negative ($7 million).

The firm currently plans to pay no dividends on its shares and anticipates that it will use any future earnings to reinvest back into the company’s growth plans.

The market opportunity for driver safety technologies is large and expected to grow at nearly a 9% CAGR through 2027, so the firm has strong industry growth dynamics in its favor.

ThinkEquity is the sole underwriter and IPOs led by the firm over the last 12-month period have generated an average return of negative (42.0%) since their IPO. This is a bottom-tier performance for all major underwriters during the period.

The primary risk to the company’s outlook is the long development cycle ahead for its OEM product, resulting in the need for further equity or debt investment to achieve.

SaverOne has produced only a small amount of revenue to-date, so management hasn’t proven its ability to generate strong revenue growth for its offerings.

I’m on Hold for the IPO.

Expected IPO Pricing Date: To be announced.