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Three new healthcare IPOs are scheduled to trade the week of June 24th. The full IPO calendar is at IPOpremium. Trial and paid & trial subscribers get early, complete financial analysis.

NanoString Technologies (NSTG), $76 million IPO

Based in Seattle, WA, NanoString Technologies scheduled a $76 million IPO with a market capitalization of $204 million, at a price range mid-point of $14 for Wednesday, June 26, 2013.

  • S-1 filed June 13, 2013
  • Manager; Joint Managers: J.P. Morgan; Morgan Stanley
  • Co-Managers: Leerink Swann; Baird

Summary

NSTG makes diagnostic machines and consumables users by researchers to learn about cancer to publish papers.

NSTG is in the process of introducing a proprietary diagnostic machine, which is based on research fed back to NSTG by its research customers. The first molecular diagnostic product, the Prosigna Breast Cancer Assay, was introduced in Europe in September 2012.

Q1 '13 revenue vs. Q1 '12 rose 24% to $5.6 million. Gross profit increased to 49% from 41%. Adjusted losses increased to $6.8 million from $3.5 million.

U.S. Supreme Court decision about human genes

The court ruled recently that human genes can't be patented, but that synthetic genes can be protected.

One of NSTG's main areas of intellectual property, namely patents NSTG licenses directed to the use of gene expression markers as part of genomic diagnostic tests, may be affected by these decisions.

Valuation

As of March 31, 2013 NSTG's accumulated deficit was $102.8 million.

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Q1 '13

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

NanoString Technologies

$204

9.1

-7.5

2.8

2.8

37%

Glossary

Conclusion

It's always difficult for companies to introduce new, medical diagnostic products. However, it seems NSTG's business model has found a sweet spot: a molecular diagnostic product for breast cancer, with a good change of more diagnostic products to follow.

At a price of 2.8 times book value, it appears that NSTG should be bought on the IPO.

Esperion Therapeutics (ESPR), $63 million

Based in Plymouth, MI, Esperion Therapeutics scheduled a $63 million IPO with a market capitalization of $197 million, at a price range mid-point of $14 for Wednesday, June 26, 2013.

  • S-1 filed June 12, 2013
  • Manager, Joint Managers: Credit Suisse; Citi
  • Co-Managers: JMP Securities; Stifel

Summary

ESPR is developing a drug to minimize the side effects and intolerance of cholesterol lowering statins. The executive chairman and chief scientific officer is a co-discoverer of Lipitor, the best selling statin.

Valuation

ESPR has an accumulated deficit of $46mm. It is priced at 2.6 times book value.

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Q1 '13

Cap

Sls

Erngs

BkVlue

TanBV

in IPO

Esperion Therapeutics

$197

n/a

-19.7

2.6

2.6

32%

Glossary

Conclusion

ESPR is in Phase II clinical trials and has no collaboration partner. Normally ESPR would be an avoid. However, in this case because the executive chairman and chief scientific officer is a co-discoverer of Lipitor, ESPR may be worth a shot.

Prosensa Holding B.V. (RNA), $60 million IPO

Based in Leiden, NL, Prosensa Holding B.V. scheduled a $60 million IPO with a market capitalization of $408 million, at a price range mid-point of $12 for Friday, June 28, 2013.

  • F-1A filed June 18, 2013
  • Manager, Joint Managers: J.P. Morgan; Citi
  • Co-Managers: Leerink Swann; Wedbush PacGrow; KBC Securities; Trout Capital

Summary

RNA is working on a medical solution to Duchenne muscular dystrophy (DMD), a genetic disease. DMD occurs mostly in boys. Symptoms typically appear between ages 1-4 years old.

The results of clinical trials may indicate that drisapersen may lead to stabilization of the disease. But stabilization is not a molecular cure, which is what some of the recent stem cell IPOs seem to offer as a possibility.

Also, it's not clear what the addressable market is for a DMD solution.

Another company, PTCT, focuses on a different subset of DMD and was up 10% on its IPO on Thursday, June 20, 2013.

RNA reports in Eurodollars, so to do any financial analysis in the U.S. dollars it's necessary to convert to dollars.

Collaboration

100% of revenue comes from licensing and collaboration agreements with GlaxoSmithKline (GSK), and RNA works closely with Leiden University Medical Center.

Valuation

Post-IPO RNA will have $107 million in cash. The ratio of cash to market capitalization will be 26%, at the price point mid-point of $12. RNA's accumulated deficit is $56 million.

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Q1 '13

Cap

Sls

Erngs

BkVlue

TanBV

in IPO

Prosensa Holding B.V.

$408

31.9

-22.2

5.4

5.9

15%

Glossary

Conclusion

RNA is priced at about double PTCT, which IPO'd June 20. Avoid RNA, especially given the current market uncertainties.

Disclaimer: These NSTG, ESPR, and RNA summary IPO reports are based on a reading and analysis of their respective SEC filings, referenced above, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: 3 New Healthcare IPOs For June 24th Week