Issuing stock in the public markets has been the rage this year. Whether through traditional initial public offerings (IPOs), direct listings or special purpose acquisitions (SPAC deals), many companies made their stock market debuts in 2020.
IPOs in the United States raised approximately $58.10 billion in the July – September quarter, with more than 152 companies going public, according to data published by PwC. The average IPO gained 46% during the quarter.
While the driving force behind this IPO rush has been the booming tech industry, with investors often oversubscribing for these shares, many non-tech start-ups have been overlooked. Companies such as AirBnB and Doordash, which are acknowledged as the most profitable IPOs this year, are now facing a substantial reversal in the trend because the travel and restaurant industries are expected to bear the brunt of a second-round of COVID-induced lockdowns.
Conversely, companies such as Beam Therapeutics Inc. (BEAM), I-Mab (IMAB) and Schrodinger, Inc. (SDGR) have made successful stock market debuts with triple-digit gains so far this year. With the healthcare industry expected to continue to be watched closely by investors and others over the next few years, these companies, though operating in the biopharmaceutical industry, should benefit from the higher capital inflows and technological advancements.
Beam Therapeutics Inc. (BEAM)
BEAM develops precision gene medications using base editing technology. It currently has 12 base editing programs categorized into three distinct pipelines – electroporation, lipid nanoparticles, and adeno-associated viral vectors. BEAM began trading on the NASDAQ stock exchange from February 11, following its IPO.
The company had initially planned to offer 6.30 million shares priced between $15 – $17. However, following the COVID-19 crisis, the company increased its share offering by 48%, and priced the offering $17. The IPO raised $180 million.
BEAM gained 87.1% within two days of its market debut. However, in the wake of rising coronavirus cases and a country wide lockdown, the stock plummeted 59.1% to hit its 52-week low in March. BEAM has since gained more than 605%, hitting its all-time high of $91.94 yesterday.
The company is currently developing a pipeline of drugs for sickle cell disease and glycogen storage disease. In October, BEAM raised an additional $135 million through a follow-on offering of 12.50 million shares at $23.50 per share.
BEAM’s EPS is expected to rise 85.2% in the current quarter, 78.6% in the current year, and 12.6% next year.
How does BEAM stack up for POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
B for Industry Rank
A for Overall POWR Rating.
It is currently ranked #19of 403 stocks in the Biotech industry.
IMAB is a Chinese biopharmaceutical company focused on developing novel or highly differentiated biologics for autoimmune diseases and cancer treatments. IMAB began trading on NASDAQ on January 17. It raised $119.26 billion through its IPO of 7.41 million American Depository Shares.
Yesterday, IMAB was added to the NASDAQ Biotechnology Index, which tracks the largest biopharma companies listed on the stock exchange, yesterday.
In September, the company entered a global partnership with AbbVie to develop differentiated Immuno-oncology therapies. IMAB received a $200 million upfront payment a for licensing and milestone agreement and is eligible to receive up to $1.74 billion upon successful development of the drug Lemzoparlimab. And this month IMAB raised $148 million through a private placement with multiple U.S. and Asian biotech investment funds.
The company’s stock hit its record low of $9.30 in February, due to the worsening pandemic situation in China and the U.S. However, the stock has gained more than 410% since then to hit its all-time high of $47.46 on September 30. The stock has gained 224.6% to date.
Analysts expect IMAB’s revenues to increase in the current year to $204.92 million.
IMAB’s POWR Ratings reflect this promising outlook. It has a “Buy” rating with an “A” for Industry Rank, and a “B” for Trade Grade, Buy & Hold Grade and Peer Grade. It is currently ranked #39 of 240 stocks in the Medical – Pharmaceuticals industry.
Schrodinger, Inc. (SDGR)
SDGR designs computational software platforms for biopharmaceutical and industrial companies worldwide. It operates in two segments – software and drug discovery and has a portfolio of wholly owned programs. SDGR began trading on the NASDAQ Global Select exchange on February 6. The company raised approximately $202 million through initial public offering of $11.88 million shares, priced at $17 per share.
SDGR gained 84.7% on its first day of trading and gained more than 225% within 5 months to hit its all-time high of $99.50 in July, and 188.8% to date.
SDGR’s total revenue increased 29% year-over-year to $25.80 million in the third quarter ended September 30, 2020. This can be attributed to a 42% rise in software revenues. Gross profit rose 43% from the year-ago value to $15.30 million, while net income increased substantially from the negative values reported in the same period last year to $3.90 million. Moreover, SDGR has raised an additional $325.60 million through a follow-on offering over this period.
On November 23, SDGR entered a multi-year discovery collaboration with Bristol Meyers Squibb Company to develop and commercialize advanced molecule therapeutics. SDGR received $55 million in upfront payments through this partnership and is eligible to receive up to $2.70 billion for preclinical, development, and sales-based milestone payments.
The consensus EPS estimate of $0.04 for the next year indicates a 113.8% improvement year-over-year. The consensus revenue estimate of $173.50 million for 2021 indicates a 54.5% rise from the year-ago value.
It is no surprise that SDGR is rated “Buy” in our POWR Ratings system, with an “A” for Trade Grade, and a “B” for Industry Rank. It is currently ranked #28 out of 71 stocks in the Medical – Services industry.
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BEAM shares were trading at $86.97 per share on Tuesday morning, down $2.17 (-2.43%). Year-to-date, BEAM has gained 363.84%, versus a 15.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...
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