The IPO Buzz: Drugs, Energy and Money

The records show pharmaceutical IPOs have underperformed in today’s new-issues market. The average opening-day loss since the beginning of April is 2.82 percent.
Consider this: From April 1 through June 13, 2014, eight pharmaceutical IPOs were priced, according to the U.S. Securities and Exchange Commission filings. Seven of the eight attracted so little interest that they had be to be cut in size to get out the door. Their opening-day scorecard is poor.
Only two of the eight finished their opening day as winners. Five were losers. One was unchanged. And yes, there is that average opening-day loss of 2.82 percent.
From April 1 through mid-June, 51 IPOs from other sectors were priced. Their scorecard: 40 winners, nine losers, two unchanged. The average opening-day gain for all 51 was 10.64 percent.
“I Wanna New Drug”
Three of this week’s eight pharmaceutical IPOs are companies with stories. So you might want to put Graham and Dodd back on the bookshelf. You don’t have to be a fan of Huey Lewis and the News – and their 1984 hit “I Want a New Drug” – to take note of these companies with products in development to treat chronic kidney and gastrointestinal diseases, breast cancer and obesity.   
Ardelyx (ARDX – proposed) is a Fremont, California-based clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of innovative non-systemic, small molecule therapeutics that work exclusively in the gastrointestinal tract to treat cardio-renal, GI and metabolic diseases. Chronic kidney disease and irritable bowel syndrome are among the illnesses targeted by the drugs in their pipeline. (For more information, please click here: Ardelyx)
Syndax Pharmaceuticals (SNDX – proposed) is a Waltham, Massachusetts-based late-stage biopharmaceutical company focused on the development and commercialization of its lead product candidate, entinostat, an epigenetic therapy for treatment-resistant cancers. Entinostat was recently granted Breakthrough Therapy designation by the U.S. Food and Drug Administration based on data from Syndax on a completed randomized Phase 2b clinical trial in estrogen receptor-positive locally recurrent or metastatic breast cancer.(For more information, please click here: Syndax Pharmaceuticals)
ZAFGEN (ZFGN – proposed) is a Cambridge, Massachusetts-based biopharmaceutical company dedicated to improving the health and well-being of patients affected by obesity. Its lead candidate, Beloranib, is a novel first-in-class, twice-weekly subcutaneous injection being developed for the treatment of multiple indications, including obesity and hyperphagia, or insatiable life-threatening hunger and hunger-related behaviors and severe obesity in the general population. (For more information, please click here: ZAFGEN)
London Calling
The favorite this week is Markit – and it’s all about the money. It’s approaching $1 billion in revenue and $128.5 million in net income for the last 12 months. This financial services company has only been around for about 11 years.
Markit Ltd. (MRKT – proposed) is a London-based global diversified provider of financial information services. Since Markit launched its business in 2003, the company has become deeply embedded in the systems and workflows of many of its customers. It continues to become increasingly important to its customers’ operations. Markit provides pricing and reference data, indices, valuation and trading services, trade processing, enterprise software and managed services. It counts more than 3,000 institutional customers, including banks and hedge funds. (For more information, please click here: Markit Ltd.)
Hunka Hunka Burning Coal
OK, Elvis fans, we didn’t forget about you. (We caught your karaoke version of “Burning Love” when you thought no one noticed.) The records show energy IPOs have been hot in today’s new-issues market. There are three on this week’s calendar: One is a coal company, another is an oil and gas company in the Appalachian Basin in Pennsylvania and a third is an oil and gas company in the Permian Basin deep in the heart of Tex-Ass.
Consider this: From April 1 through June 13, 2014, five energy IPOs were priced. Their opening-day scorecard makes for great reading. All five finished their opening day as winners with an average opening-day gain of 18.6 percent.
Over the same time frame, from April through mid-June, 54 IPOs from other sectors were priced. Their scorecard showed 37 winners, 14 losers, three unchanged, and the average opening-day gain for all 54 was 8.13 percent.
Here are the highlights for this week’s energy offerings:
Eclipse Resources (ECR – proposed) is a State College, Pennsylvania-based independent exploration and production company engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin. The company has assembled a leasehold position in Eastern Ohio and the Utica Shale fairway. (For more information, please click here: Eclipse Resources)
Foresight Energy LP (FELP – proposed) is a St. Louis, Missouri-based limited partnership operating low-cost and high-margin bituminous thermal coal production operations in the Illinois Basin. The company plans to make cash minimum quarterly distribution of $0.3375 per unit for each whole quarter, or $1.3500 per unit on an annualized basis, to yield 6.7 percent at the mid-point of its price range. (For more information, please click here: Foresight Energy LP)
Viper Energy Partners LP (VNOM – proposed) is a Midland, Texas-based limited partnership formed by Diamondback to own, acquire and exploit oil and natural gas properties in North America. The company’s initial assets consist of mineral interests in oil and natural gas properties in the Permian Basin in West Texas. The Permian Basin is one of the oldest and most prolific producing basins in North America. (For more information, please click here: Viper Energy Partners LP)
Looking into the week of June 23, the calendar has nine IPOs so far. They are expected to raise over $900 million. But more names could pop onto the calendar by the time that Monday, June 23, rolls around.
Stay tuned.
Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinions.