Canadian Health Sector Puts up First IPO this year
Three months into the year, Canada has proved to already have a more successful investment environment for companies seeking to go public as compared to last year. Markets have seen the emergence of a Canadian firm in the line of food and nutrition – Freshii Inc., a forerunner in the luxury clothing business – Canada Goose Holdings, an investment firm in Fairfax Africa and the mineral exploration sector with Superior Incorporated. Notably, there have been no issuances on pharmaceutical companies in Canada’s first quartile. This, compared to the New York Securities Exchange where pharmaceutical companies make up a majority of publications, makes the statistic all the conspicuous. However, the beginning of the second quarter of this year has had a successful turn towards the health care sector with the planned entry of Zymeworks Inc.
Zymeworks is a biopharmaceutical company that specializes in the production of cancer treatments. Its personnel further research in the oncology field to produce various solutions towards the elimination of cancer cells in humans. The firm identifies itself as “a clinical-stage biopharmaceutical company dedicated to the discovery, development, and commercialization of next-generation multifunctional biotherapeutics initially focused on the treatment of cancer.”
The company, which started in 2003, will be the first Canadian firm under the biopharmaceutical sector to go public since 2007. As such, its issuance is likely to cause a stir amongst investors. Underwriters for this deal are set to be a combination of Canadian and American investment firms. The joint book-running managers include Citigroup, Barclays, and Wells Fargo Securities. Canaccord Genuity is the deal’s lead manager while Cormak Securities Limited will be the co-manager for the company’s issuance.
Zymeworks filed its S-1 form for release under the Toronto Stock Exchange and New York Securities Exchange on April 3rd. It intends to trade under the ticker “ZYME.” The business plans to raise a revenue totaling to $75 million upon the release. Apart from paying its underwriters, the company plans to use proceeds from the initial public offering to pay for clinical expenses incurred during research for cancer cures.
Currently, Zymeworks has two potential drugs in line with cancer treatment. The company, referring to these compounds as “product candidates,” plans to continue with trials one the issuance is over. The products include ZW25 and ZW33. ZW25 is undergoing tests on adaptations and applications under the first phase of its trial. ZW33 is yet to begin its official clinical trials under Phase one.
For the past three years, the firm has generated significantly increasing amounts of revenue. The 2014 fiscal year had the company raise a revenue of $1.67 million dollars. In 2015, however, Zymeworks increased this figure to $9.67 million. For the financial year that ended December 31, 2016, the firm put up a revenue of $11 million.
Despite the bright prospects in revenue terms, the Zymeworks has been making higher losses as well. As such, the future of this venture hangs in the balance. On one hand, the company could get a breakthrough in its trials and produce a potential cure to cancer, causing its stock to soar and give exponential returns to investors. On the other hand, however, the firm could hit a dead-end in its efforts causing a significant decrease in its stock.
Financial details concerning the offering are yet to be announced. However, majority shareholders Eli Lily & Co. and CTI Life Sciences Fund do not plan to sell their holdings in the company.