On Monday, December 16, the SEC-enforced 25-day quiet period on underwriter research following the November 21 IPO of Oxford Immunotec Global (NASDAQ:OXFD) will come to an end, allowing the IPO underwriters to release research reports on the medical diagnostic firm into the market on Tuesday, December 17th and likely leading to a temporary increase in the price of OXFD stock. See our prior article on OXFD here.
After a disappointing IPO at $12 per share-the expected range had been $13-$15 per share-the stock has performed quite well on the market, spiking as high as $19.50 per share in December; it closed at $17.70 per share on December 13.
The firm's underwriters, including J.P. Morgan, Piper Jaffray , Cowen and Company, and Robert W. Baird, will seek to reinforce the stock's success with the release of positive detailed research reports on the firm beginning with the conclusion of the quiet period on the sixteenth.
Both our research over the course of the past two years and recent academic findings have provided empirical evidence of the correlation between the quality and number of IPO underwriters and an increase in the price of stock at the close of the quiet period.
This rise in price typically begins a few days ahead of the end of the quiet period as some investors buy up shares in an effort to take advantage of the forthcoming flow of positive information from the underwriters, realizing that the underwriters will generally only release positive information about a firm that they recently underwrote. These stock purchases create the perception of rising demand and place upward pressure on the price of shares before the actual quiet period expiration occurs.
OXFD is a global manufacturer and marketer of medical diagnostic tests. It is primarily associated with its proprietary T-SPOT technology platform, which is designed to assist in diagnosing patients by examining the responses of the patients' T cells. The firm's T-SPOT TB test, designed to test for latent tuberculosis infection (LTBI), is approved to be sold in countries including the United States, the E.U., Japan, China, and many others-over 50 in total.
Critically, the T-SPOT TB test is now featured in TB screening clinical guidelines in 17 countries, including the U.S., several E.U. countries, and Japan. OXFD is seeking to use T-SPOT to replace the Tuberculin Skin Test, which currently is used in almost all LTBI tests; the T-SPOT TB test has much better sensitivity and is easier to administer than the Tuberculin Skin Test, which has been in use for over a century.
OXFD has a massive potential market for its T-SPOT tests, as the World Health Organization has estimated that some two billion people have LTBI (people with LTBI carry approximately a 10% lifetime risk of acquiring active TB). 2011 saw approximately nine million cases of active TB, which led to approximately 1.5 million deaths.
Peter Wrighton-Smith, Ph.D. has been CEO of OXFD since its founding. He formerly held various senior positions with PowderJect Pharmaceuticals PLC. Dr. Wrighton-Smith received a Masters in Engineering, Economics & Management and a Doctorate in Medical Engineering from Oxford University.
The conclusion of the quiet period provides aggressive investors with a buying opportunity.
OXFD has the potential to be a genuine home run of an investment. The T-SPOT technology is obviously superior to the current methods of testing for LTBI, and tuberculosis remains a high-profile global concern. If T-SPOT can continue to catch on in countries around the globe, and especially if it can continue to gain acceptance into medical guidelines, OXFD is in for some serious profits.
The risk to OXFD is that another firm will develop an even cheaper and/or more accurate test before the T-SPOT can proliferate fully, which could lead OXFD to become more or less an instant bust.
Disclosure: I am long OXFD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.