Will Alder Biopharmaceuticals IPO Cure Investor Headaches?


Alder Bio, a clinical-stage biopharmaceutical firm, engaged in developing therapeutic antibodies, plans to raise $100.1 million in its upcoming IPO.

ALDR will offer 7.2 million shares at an expected price range of $13-$15 per share, aiming for a market value of $432 million.

We recommend caution before buying into this IPO as ALDR might not be able to commercialize any of its products for many years, despite a significant market for migraine treatment.

Alder Biopharmaceuticals, Inc. (NASDAQ:ALDR), a clinical-stage biopharmaceutical firm engaged in the discovery, development and commercialization of therapeutic antibodies, plans to raise $100.1 million in its upcoming IPO.

The Bothell, Washington-based firm will offer 7.2 million shares at an expected price range of $13-$15 per share. If the IPO can find the midpoint of that range at $14 per share, ALDR will command a market value of $432 million.

ALDR filed on March 19, 2014.
Lead Underwriters: Credit Suisse Securities LLC, Leerink Partners LLC
Underwriters: Sanford C. Bernstein and Co Inc, Wells Fargo Securities LLC

Alder's Products: Therapeutic Antibodies, Treatment of Migraines
ALDR seeks to discover, develop and commercialize therapeutic antibodies through its proprietary antibody platform, which is designed to select antibodies for maximum efficacy, speed of onset, and durability of therapeutic response.

The firm's yeast-based manufacturing technology, MabXpress, also gives the firm the ability to target diseases that otherwise would not be treatable through antibodies.

The firm's ALD403 clinical asset is being developed to treat migraine headaches, and ALDR is also in the process of developing a treatment for rheumatoid arthritis, Clazakizumab, in collaboration with Bristol-Myers Squibb Co (NYSE:BMY). Both products are set to enter Phase 2b dose-raging trials in 2014.

Click to enlarge
Source: Alder Biopharmaceuticals

ALDR offers the following figures in its S-1 balance sheet for the year ended December 31, 2013:

Revenue: $18,796,000.00
Net Loss: ($20,613,000.00)
Total Assets: $26,739,000.00
Total Liabilities: $58,727,000.00
Stockholders' Equity: ($143,362,000.00)

Strong, Well-Financed Competitors
ALDR's products, should they gain approval, would compete with products designed by other pharmaceutical firms for similar indications. Many of these competitors are established pharmaceutical firms with access to far greater financial resources than ALDR. Major competitors could include Johnson & Johnson (NYSE:JNJ), Amgen (NASDAQ:AMGN), AbbVie (NYSE:ABBV), Genentech, Wyeth, and Allergan (NYSE:AGN), among others.

Management With Strong Academic Background
Co-founder Randall C. Schatzman, Ph.D has served as ALDR's President and CEO since the company commenced operations in January 2004. Dr. Schatzman previously served as Senior Vice President of Discovery Research at Celltech R&D, Inc and as Director of Gene Discovery at Mercator Genetics, Inc. He also served as Section Leader at Roche Bioscience.

Dr. Schatzman received a Ph.D in Molecular Pharmacology from Emory University and a B.S. in Biochemistry from Purdue University.

We are neutral on this IPO and suggest investors take caution before buying into it.

Even if ALDR does manage to commercialize its products, it will not be able to do so for years, and there's no guarantee that ALDR's candidates will ever gain FDA approval.

That said, there certainly is a significant market for migraine treatment, and we're encouraged by the firm's partnership with Bristol-Myers Squibb.

The firm also benefits from a solid leadership team.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.