Despite a dicey market we are staring down a full calendar this week and next. There are 13 deals in active marketing now which is pretty good (the system peaks out at around 20 or so because things are still manual, managements doing meetings, etc.)
Of the six scheduled for this week five are in the healthcare area, mostly in biotechnology. (Edge Therapeutics, NovoCure, Oasmia, Strongbridge in biotech and Surgery Partners which is a service provider.)
Performance Food Group (PFGC) is a big one with lots of underwriters. As a $13B foodservice distribution company it's pretty boring but a nice stable option for some investors. Word is the deal is in great shape. Worthy of a trade if you can get IPO shares and enjoy that kind of thing... 😉
We're taking a deeper look at CytomX which is scheduled for next week. But in the meantime what's coming up right now? Here's our list for this week in the order of attractiveness based on science and market opportunity:
- NovoCure (NVCR) - Deutsche, Evercore, JPM, Wells, JMP, Wedbush - Cancer has been treated for a long time with surgery, radiation and drugs - NovoCure is bringing a new modality to this treatment array with their "Tumor Treating Fields" (TTFields). This is a low-toxicity anti-mitotic treatment that uses low-intensity, intermediate frequency, alternating electric fields to exert physical forces on key molecules inside cancer cells, disrupting the basic machinery necessary for normal cell division, leading to cancer cell death. They have received FDA approval for Optune, our first TTFields delivery system, in 2011 for use as a monotherapy treatment for adult patients with glioblastoma brain cancer, or GBM, following confirmed recurrence after chemotherapy. After more successful trials NovoCure has filed to bring TTFields into the market as a method for treating newly-diagnosed and recurrent GBM patients. The company plans trials of TTFields for brain metastases, advanced non-small cell lung cancer, or NSCLC, pancreatic cancer, ovarian cancer and mesothelioma.
- Mirna (MIRN) - Citi, Leerink, Oppy, Cantor - This is a promising company because microRNA plays a role in many biological processes. Mirna is pushing a synthetic microRNA molecule (miR-34 or MRX34 depending on the context) and it's being developed primarily as a cancer therapy although it appears to have broad applicability as a monotherapy and in combination with other drugs.
- Surgery Partners (SGRY) - BofA, Goldman, Jefferies, Citi, Morgan Stanley, Credit Suisse, RayJay, RBC, Stifel - This company owns surgical hospitals focused on non-elective, outpatient procedures. They have 4,000 doctors (employed, partnered and affiliated) across 100 facilities. Basically this is a "growth hospital" that grows through acquisition and providing a platform for doctors who want to be part of a larger organization/practice. They strive to provide a wide range of surgical practices in each location so they can be an effective "one stop shop" for surgical clients. By providing ancillary services they make it attractive for physicians who want to have easy access to labs, xrays, radiologists, anesthesia services, therapists, etc. Given the size the IPO it fairly low risk, it also will provide a window into what is happening in healthcare services so worth following. (There's a big story here on services provided and the costs around "ancillary services" but that deserves a dedicated effort.)
- Edge (EDGE) - Leerink, Credit Suisse, Guggenheim, JMP - This one is a little less interesting but it does target acute care, namely severe hemorrhaging. There's less competition here so while the market is smaller the company may have very solid prospects.
- Strongbridge (SBBP) - BofA, Stifel, JMP, Roth - Another rare disease company which focuses endocrine diseases like Cushing’s syndrome and acromegaly. The opportunity is based on niche markets where they can charge unlimited prices. Government regulations could make this very explicit strategy problematic in 2016. We'd rather look for major new potential therapies that don't rely on orphan drug or rare disease pricing models.
- Oasmia (OASM) - Ladenburg - As a sole-managed deal with a non-public roadshow we'd stay away from this one. For the record they are basically a reformulation company and not delivering any ground shaking innovations but rather are making drugs like Taxol and Abraxane able to be given with less toxicity and to animals.
So far it looks like deals will get done but potentially at smaller sizes and/or lower prices. A little closer to a buyer's market these days but probably closer to neutral than wildly favorable.