Argenx starts double trading with $100 million US IPO
Who would have thought that dealing with llamas could be so profitable? Most people would not have, but Argenx Inc. may be setting the trend.
On Wednesday Netherlands-based Biopharma took center stage with an IPO that frankly shocked many. Many people had been skeptical when the Dutch company upsized its first issuance on the NASDAQ US stock market to $83 million so hitting the $100 million mark was a feat on its own. Argenx raised the amount by selling 5.9 million American Depository Shares at $17 apiece. So what made the Biopharma company stand out from the rest in the IPO?
Losses are normal when you are dealing with clinical stage pharmaceutical companies. In fact, they are even expected. It usually comes down to the high cost of producing anything in a lab coupled with the fact that such a company has no earnings. In the case of Argenx, these losses were substantial. Added to that they also hit an all-time high last year because the company was spending cash to ‘research and develop’ its product candidates. But on Wednesday investors were not looking at that. Instead, they saw a company which for one has little to no competition in the market. Argenx is the only Biopharma company using genetic engineering and llama DNA to come up with drugs that could potentially cure cancer and other rare autoimmune system diseases. Its market is set to grow over the years, and it has proprietary rights over its technique and drugs.
Added to the competitiveness of the firm is the fact that Argenx’s product candidates are almost ready to hit the market. Most of them are already moving into their Phase 2 trials. Argenx’s primary product, the ARGX-113, has moved into phase three and the company promises that is it should be hitting the market about one or two years from now. The company is also working with firms like Shire to help market its products once they are approved and readied for commercialization. That means investors could be looking at getting their returns even before 2020. And since the dividends will probably be high given the company’s success rate so far, what was not to like about that deal.
Another reason that made the Argenx share price spike during the Wednesday IPO was that contrary to what increasing losses hints at for the firm, Argenx is in a good financial position. In the last two years, Argenx has doubled its incoming revenue. Most of the funds came from its trading on the Euronext Brussels (ERB) market and investment packages from venture capitalists like Seventure Partners and OrbiMed. Having such a strong backing boosted investors’ confidence in the company thus the high returns.
Finally, never underestimate the power of good performance. In the months leading to the US IPO, Argenx has been trading steadily on the ERB and at good prices. The company had even upsized its IPO using the trading ERB price for its stock as a guideline. Doing well in the home market boosted Argenx’s chances with a US IPO.