Seeking Alpha

Timing is everything

  • Three late bull market biotech IPOs are shining examples of the truism of sector rotation and the value of diving through the funding window before it closes.
  • Ultragenyx Pharmaceutical (RARE -6.4%) debuted on January 31 on robust volume of 4.4M shares. Trading opened at almost 2x the IPO price of $21 ending the day at $42.25. Prices peaked at $69.77 on March 13. Shares trade hands today at $40. The firm still sports a market cap of $1.2B despite no revenues and two products in Phase 2 clinicals.
  • Dicerna Pharmaceuticals (DRNA -1.5%) debuted on January 30 on 4M shares. Trading opened at > 2x the IPO price of $15 ending the day at $46 never to return. Today shares exchange hands at $16, a tidy 65% drop from the peak. The company has no revenues and only one product in Phase 1 clinicals.
  • Uniqure N.V. (QURE -1%) debuted on February 5 on 4.7M shares. Prices struggled to stay above the IPO price of $17 and eventually succumbed to selling pressure ending the day at $14.61. Prices peaked at $18.75 on February 26. Shares trade hands today at $8.80 representing a 53% haircut from the peak. The company has no product revenues but plans to launch its gene therapy product, Glybera, in selected European countries in H1 2014.
  • Biotech ETFs: IBB, XBI, BIB, BBH, FBT, PBE, BIS
From other sites
Comments (1)
  • King Rat
    , contributor
    Comments (1010) | Send Message
     
    Timing is indeed vital and the evidence here exposes that very well.

     

    These pharmaceutical companies are priced as if their products will pass Phase 2 and Phase 3 with no issues, have no patent problems, have blockbuster sales, and avoid lawsuits.

     

    Sure, with all those conditions met, they may be $1billion companies. If so, however, where is the profit to make at current evaluations? Maybe at 1/2 or 1/4 of these prices would these stocks be worth it assuming blue skies.

     

    None of that is to take away from the researchers working day in and day out to safely bring these medicines to the hands of people who need them.
    21 Apr 2014, 02:21 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs