It’s All About Biotech — 8 New Stocks to Watch This Week

Nine new stocks were supposed to hit the markets last week, but only seven managed to pull off their deals. With the tumult in the equities markets, there was lots of pressure on IPOs. Among last week’s deals, only four posted gains, with the largest one being Diplomat Pharmacy (DPLO), up about 23%.

For the upcoming week, the difficulties will likely continue. After all, many of the news stock are biotech companies, which generally are shunned when markets are on the risk-off mode.

Let’s take a look at the new stocks that plan to brave the markets this week:

New Stocks to Watch: EndoStim (STIM)

Expected Offering Date: Wednesday

EndoStim is a medical device company that focuses on the “development and commercialization of a novel neurostimulation system for the treatment of severe gastroesophageal reflux disease, or GERD.” Keep in mind that this disease is considered to be much worse than back pain when it comes to the loss of work productivity. Roughly 456,000 people have the disease across the world.

EndoStim’s neurostimulation system targets the source of severe GERD: the dysfunction of the lower esophageal sphincter, or LES (this is a muscle at the junction of the esophagus and stomach). Currently, the company’s device is in pivotal trials.

EndoStim plans to sell 3.2 million shares at a range of $10 to $12. The lead underwriter is Wedbush PacGrow.

New Stocks to Watch: Dominion Midstream Partners (DM)

Expected Offering Date: Wednesday

Dominion Midstream Partners is a master limited partnerships, formed by Dominion (D), which “owns liquefied natural gas (“LNG”) import, storage, regasification and transportation assets.” The main asset is the Cove Point LNG Facility, which is based in Chesapeake Bay in Lusby, Maryland. The firm also owns 136 miles of pipelines for the facility.

Growth has been meager, which is to be expected because of the fall-off in the energy markets. For the first half of this year, revenues bumped up 5% to $180 million and EBITDA dropped by 6% to $95 million. But with the IPO, Dominion Midstream Partners plans to build another facility, which is expected to be operational by sometime in 2017.

Dominion Midstream Partners intends to issue 17.5 million common units at a range of $19 to $21. The lead underwriters include Barclays (BCS), Citi (C), J.P. Morgan (JPM), Bank of America Merrill Lynch (BAC), Goldman Sachs (GS), UBS (UBS) and Morgan Stanley (MS).

New Stocks to Watch: Forward Pharma A/S (FWP)

Expected Offering Date: Wednesday

Forward Pharma is a biotech company developing a formulation of dimethyl fumarate, or DMF, for the treatment of multiple sclerosis (MS) patients. The drug is in the early stages of a Phase 3 clinical trial.

Forward Pharma is based on the core intellectual property of Aditech Pharma, which is a Swiss biotech operator. The company has had success with using DMF solutions.

Forward Pharma expects to sell 9.5 million shares at a range of $20 to $22. The lead underwriters include Leerink Partners, Jefferies and RBC Capital Markets.

New Stocks to Watch: Great Western Bancorp (GWB)

Expected Offering Date: Wednesday

Great Western Bancorp is a full-service bank that operates 162 branches in South Dakota, Iowa, Nebraska, Colorado, Arizona, Kansas and Missouri. All in all, a key part of the business comes from agribusiness customers.

And yes, growth has been solid. From fiscal year 2009 to 2013, net income grew at a compound annual rate of 21% to $96.2 million. Great Western has $9.29 billion in assets.

Great Western Bancorp plans to issue 16 million shares at a range of $21 to $24. The lead underwriters include Deutsche Bank (DB) and Bank of America Merrill Lynch.

New Stocks to Watch: Atara Biotherapeutics (ATRA)

Expected Offering Date: Thursday

Atara is clinical-stage biotech operator that is developing therapeutics to treat muscle-wasting conditions and oncology. The company’s approach is to target “myostatin and activin, members of the Transforming Growth Factor-Beta, or TGF-ß, protein superfamily.” They are critical in a body’s growth and maintenance of muscle and tissues.

The lead candidate is PINTA 745, which is in Phase 2 clinical trials and helps with muscle maintenance for those with end-stage renal disease.

Atara Biotherapeutics plans to issue 5 million shares at a range of $14 to $16. The lead underwriters include Goldman Sachs and Citi.

New Stocks to Watch: Virobay (VBAY)

Expected Offering Date: Thursday

Virobay is a clinical-stage biotech company that uses a cysteine cathepsin platform to treat diseases.

The lead candidate is VBY-036, which has completed Phase 1 trials. The drugs has shown to be effective with neuropathic pain. In fact, the U.S. market is estimated at about $2.4 billion.

Virobay intends to issue 3.8 million shares at a range of $12 to $14. The lead underwriters include Piper Jaffray and JMP Securities.

New Stocks to Watch: Xenon Pharmaceuticals (XENE)

Expected Offering Date: Friday

Xenon Pharmaceuticals is a biotech company that is building a proprietary discovery platform, called Extreme Genetics. The company is focused on individuals that have inherited severe traits or phenotypes.

So far, the system has gained approval in the European Union. What’s more, the company has top-notch partners like Teva (TEVA), Genentech and Merck (MRK). The collaborations have resulted in non-equity funding of more than $140 million.

Xenon Pharmaceuticals expects to sell 4 million shares at a range of $10 to $12. The lead underwriters include Jefferies and Wells Fargo Securities (WFC).

New Stocks to Watch: Zayo Group Holdings (ZAYO)

Expected Offering Date: Friday

Zayo is a provider of bandwidth infrastructure in the United States and Europe. The companies most important products include “leased dark fiber, cell towers and small cell sites,” as well as advanced applications for cloud services, mobile and social media.

For the fiscal year ended June 30th, 2014, revenues grew 12% to $1.1 billion and adjusted EBITDA jumped by 18% to $654 million. The company is also about $3.3 billion in debt. A key part of the strategy at Zayo has been acquisitions. In fact, the company has struck 30 deals since 2007.

Zayo Group Holdings plans to sell 28.9 million at a range of $21 to $24. The lead underwriters include Morgan Stanley, Barclays and Goldman Sachs.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


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