With shouts of joy from investors and the Foolish analysts
who cover them, the IPO market seems wide open once again for
companies with "pharmaceutical" or "biotherapeutics" in their
names.
Unfortunately, it looks like the companies also need
products, not to mention that mystical thing called
"profits." Money-sucking development-stage drugmakers --
earlier-stage versions of companies like
Vertex Pharmaceuticals (Nasdaq: VRTX) or
Seattle Genetics (Nasdaq: SGEN) -- need not
apply. Yet.
Joining
Cumberland Pharmaceuticals (Nasdaq: CPIX),
which
IPOedin August,
Talecris Biotherapeutics
(Nasdaq: TLCR)
debutedon the public markets yesterday, raising $950
million for the company. That's the largest IPO of the year,
aside from
Shanda Games ' (Nasdaq: GAME)
spinofffrom
Shanda Interactive (Nasdaq: SNDA).
Talceris competes with
Baxter (NYSE: BAX) and Australia's
CSL Behringin providing immunotherapy products derived
from human plasma. Essentially, the company collects the
blood product from donors, then purifies out different
proteins and antibodies that can be used as therapies for
people who need them.
Its products brought in $1.4Â billion in revenue
last year, but lower gross margins than you'd normally have
on drugs, combined with interest payments, ate up much of the
revenue. The result: only $66Â million in net
income. Sales were up 20% year over year in the first half of
this year, and margins are improving, so at least the
company's headed in the right direction.
Net income -- excluding a one-time benefit -- has a
full-year run rate of about $135 million, based on the
first-half results. (That's assuming my math is correct.) But
net income should improve in the second half, provided
Talceris keeps increasing its revenue and uses the proceeds
from the IPO to pay down some of its debt, lowering those
pesky interest payments.
Talceris looks like it's worth keeping an eye on. If you'd
like to do more research, check out
Motley Fool CAPS, where you'll already find a bear pitch
on the company, and a few outperform and underperform
calls.
This article was originally published as
A Plasma-tastic IPOon
Fool.com
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