Investment Thesis

Kaleido Biosciences’ (KLDO) stock was one of the top gainers in the biotech industry last week, as its share price rose by 54% to $8.9, and the upward momentum has continued into this week.

The company’s announcement that it had dosed its first patient in an unregistered study of its Microbiome Metabolic Therapy (“MMT”) candidate KB295 in Ulcerative Colitis (“UC”) lifted the stock price by a further 13% yesterday, to $11.75 at the time of writing.

This represents a 47% discount to the company’s February 2019 $15 per share IPO, however, which raised $75m, with 5m shares sold, and a 77% discount to Kaleido stock’s peak trading price of $18, achieved shortly after IPO, in May 2019. As such, I believe this is an interesting time to be considering purchasing some Kaleido stock.

Kaleido Biosciences share price performance since IPO. Source: TradingView.

The company has a unique and differentiated approach focused on the human microbiome, the health of which a growing body of scientific evidence suggests could have a profound effect on overall human health – addressing diseases from immuno-oncology, metabolic, liver and kidney conditions, and multiple sclerosis, to diabetes, irritable bowel syndrome, UC, and Parkinson’s disease.

Kaleido is using advances in chemistry to create novel synthetic targeted glycans – collections of complex carbohydrates that modulate the microbial metabolism to drive a specific biological response.

Kaleido BioSciences: Current Pipeline. Source: company website.

The company’s current pipeline is focused on 4 main assets (as we can see above) with KB195 – targeting Urea Cycle Disorders (“UCD”) – and KB174 – targeting hepatic encephalopathy (“HE”) – both conditions caused by high levels of ammonia in the blood, with both treatments demonstrating efficacy in early stage trials.

More recently, however, it is KB109 – the company’s COVID-19 pathogen-targeting candidate, and KB295