While only three IPOs are heading out the door, this isn’t a week to take your eye off the market.
One of the deals is generating a great deal of buzz: Intersections, a Chantilly, Virginia-based provider of identity theft protection.
The talk is, there is strong demand for the IPO.
The other two deals are biopharmaceutical companies: Barrier Therapeutics, of Princeton, New Jersey, which is developing dermatology products, and Cytokinetics, of South San Francisco, California, which is developing small-molecule drugs targeting malignant tumors. Demand, say the rumors, is mild for both deals.
All three of this week’s IPOs are to be priced on Wednesday evening. They will begin trading on Thursday morning. That will be it for the week – and the month – of April.
Assuming all of these deals get off the IPO launch pad, here is what April 2004’s IPO scorecard will look like: Bankers will have priced 12 IPOs during the month, raising about $1.8 billion, according to available records. That is below March’s roster of 16 IPOs, which raised $2.9 billion.
But don’t be fooled by the apparent slowdown in IPO traffic in April 2004. The April scorecard in 2004 – regardless of how the week of April 26 plays out – will be well above 2003’s figures.
In April 2003, no IPOs made it to market. That’s right. The IPO scorecard for last April read zero. By May 1, only five IPOs had been priced for the entire year. Those underwritings raised $992 million. What a difference a year makes.
The April 2004 IPO calendar has shaped up like this:
· The week of April 5. Three IPOs were ready to strut their stuff down Wall Street: Arbor Realty Trust, a Uniondale, New York-based real estate investment trust, or REIT; JED Oil, a Canadian startup oil and gas developer; and Memory Pharmaceuticals, a Montvale, New Jersey-based biopharmaceutical company developing drugs to treat memory impairment diseases, such as Alzheimer’s. All three got priced and traded.
· The week of April 12. None.
· The week of April 19. Two IPOs were on the launch pad: Gander Mountain, a Minneapolis-based specialty retailer, and ProCentury, a Westerville, Ohio-based specialty property and casualty insurance holding company. Both got priced and traded.
Now let’s back up a bit. As of April 1, there were no IPOs scheduled to make their debut after the week of April 19. But that’s how the IPO market usually goes. The IPO calendar is focused on a three-week window of opportunity.
Today’s forward IPO calendar paints a different picture:
· The week of April 26. Three IPOs are on the launch pad: Barrier Therapeutics, Cytokinetics, and Intersections (for details, see below).
· The week of May 3. Three IPOs are ready to take a bow in the markets: Greenhill, a New York City-based investment banking firm; InfraSource Services, an Aston, Pennsylvania-based contractor servicing the utility transmission industry, and Origen Financial, a recently formed REIT based in Southfield, Michigan.
· The week of May 10. One IPO is on the new-issues calendar: Atlas America, an independent natural gas developer based in Moon Township, Pennsylvania.
That’s the normal three-week IPO window that investment bankers follow in pricing IPOs.
Now let’s take a look at the coming week of April 26.
The pharmaceutical sector
Barrier Therapeutics, of Princeton, New Jersey, is an early-stage biopharmaceutical company that develops products in the field of dermatology, including drugs to treat psoriasis, severe acne, and vaginal yeast and nail fungus infections. Barrier Therapeutics expects to price its IPO of 5 million shares at $14 to $16 each to raise $75 million.
Morgan Stanley is the lead manager. Acting as co-managers are Banc of America and J.P. Morgan.
is the lead manager. Acting as co-managers are Banc of America and J.P. Morgan.
For the year ending December 31, 2003, the company reported grant revenues of $376,000 and a net loss attributable to shareholders of $28.6 million.
For the year ending December 31, 2002, the company reported no revenues and a net loss attributable to shareholders of $33.2 million.
As of December 31, 2003, the company had an accumulated deficit of $61.9 million.
Bankers plan to price the deal Wednesday evening, April 28, to trade the following day.
Cytokinetics is a South San Francisco, California-based biopharmaceutical company that develops small-molecule drugs to target malignant tumors, such as those found in breast, lung, and colorectal cancer. Cytokinetics plans to price its IPO of 5.8 million shares at $11 to $13 each to raise $69.6 million.
Goldman Sachs is the lead manager. Acting as co-managers are Credit Suisse First Boston, Pacific Growth Equities, and Lazard.
First Boston, Pacific Growth Equities, and Lazard.
For the year ending December 31, 2003, the company reported total revenues of $10.6 million and a net loss of $32.7 million.
For the year ending December 31, 2002, the company reported total revenues of $11.4 million and a net loss of $23.1 million.
As of December 31, 2003, the company had an accumulated deficit of $94.1 million.
Bankers plan to price the deal on the evening of April 28 to trade the following day.
The buzz
These are two more biopharmaceutical companies with the potential to rack up millions of dollars in losses. But these deals have been getting done. And they have been selling in the aftermarket above their initial offering prices.
52-week percentage changes
Dow Jones Pharmaceuticals Index: up 9.1 percent
Nasdaq Composite Index: up 41.7 percent
The technology sector
Intersections, a Chantilly, Virginia-based provider of identity theft protection and credit management services, plans to price its IPO of 6.25 million shares at $15 to $17 each to raise $100 million. The company will offer 3 million shares and selling shareholders will offer 3.25 million shares.
Deutsche Bank Securities and Lazard are the co-lead managers. Acting as co-managers are Stephens & Co. and SunTrust Robinson Humphrey.
Securities and Lazard are the co-lead managers. Acting as co-managers are Stephens & Co. and SunTrust Robinson Humphrey.
For the year ending December 31, 2003, the company reported revenues of $147.3 million and a net income of $19.4 million, or $1.36 per share (diluted).
For the year ending December 31, 2002, the company reported revenues of $91.8 million and a net income of $5.3 million, or 43 cents per share (diluted).
The buzz
The numbers tell the story: A fast-growing, profitable company in a hot industrial sector – identity theft protection – is offering its stock at a price-to-earnings ratio of about 12 times last year’s earnings.
52-weeks percentage changes
Dow Jones Software Index: up 14.1 percent
Nasdaq Composite Index: up 41.7 percent
The “Pick of the Week” is a no brainer. It is the Intersections IPO.
The trend of the recent biopharmaceutical IPOs is for the bankers to cut the proposed offering prices, offer the IPOs, and watch the deals trade at a slight premium in the aftermarket. This is what happened to the six biopharmaceutical IPOs that bankers have priced since March 16.