Alibaba Group Holding
Ticker: BABA
Expected to Trade: Friday, September 19
Price Range: $60.00-$66.00
Business Description
Alibaba Group is an online and mobile commerce company operating in China. The company owns and operates Taobao.com, China’s largest online shipping destination and the country’s most popular mobile e-commerce application. Taobao’s dominance in China can best be compared with Amazon’s in the U.S.
Gross merchandise volume for Alibaba is $248 billion — making it the largest retailer in the entire world. The company takes 11.3 billion annual orders from 231 million annual active buyers. The customer base is loyal, with 49 average orders per buyer each year.
Our Take
The trends all point to a strong future for Alibaba. China is obviously an incredibly large market. The company has a population base of 1.35 billion, and 302 million of these individuals shop online. For perspective, the population of the entire U.S. is 312 million, according the latest Census data.
Unlike in the U.S., brick-and-mortar retail infrastructure in China is underdeveloped, which bodes well for online retailers. Retail space per capita in China is less than 25% of what it is in the States, making offline shopping a major hassle.
Today, 7.9% of total Chinese consumption comes from online shopping, according to iResearch. This is a significant portion, but it also leaves plenty of room for growth.
The primary danger of this IPO lies in the massive amount of attention surrounding it. Because of Alibaba’s size and success, demand around the offering is going to be intense, to say the least. We expect shares to jump as soon as they start trading, but it will be tough to get an order fulfilled.
As for valuation over the long term, we feel fairly comfortable with the current price range. Alibaba posted $3.7 billion on the bottom line for the fiscal year ended March 31, which would give the company a P/E ratio of 44 if it trades at $66. For comparison, the market is currently willing to own Amazon at a P/E of 519.
Foamix Ltd.
Ticker: FOMX
Expected to Trade: Thursday, September 18
Price Range: $10.00-$12.00
Business Description
Foamix is clinical-stage pharmaceutical company developing topical foams for the treatment of acne, impetigo, and other skin conditions. The company’s lead product candidates include FMX101 for moderate-to-severe acne and FMX102 for impetigo.
Both products are based on the broad-spectrum antibiotic minocycline, which has routinely been used in oral form for treating these skin conditions.
Our Take
Phase II clinical trials showed that FMX101 provides a faster, more effective treatment than oral minocycline — the current standard of care for moderate-to-severe acne — with fewer side effects to boot. Specifically, patients experience a 71% reduction in inflammatory acne lesions within six weeks and a 73% reduction in non-inflammatory lesions by week 12, with no systemic side effects to be recorded.
We’ll admit this might be bit of a boring play, but the market is also hard to ignore. Moderate-to-severe acne affects approximately 10 million U.S. individuals each year. Additionally, in 2009, the FDA added oral minocycline to its Adverse Event Reporting System, meaning it is investigating severe side effects of the drug.
Phase III trials for FMX101 are expected to commence mid-2015. We don’t see too much action happening here until then, so you may want check back on this one in six to nine months.
ProQR Therapeutics
Ticker: PRQR
Expected to Trade: Thursday, September 18
Price Range: $11.00-$13.00
Business Description
ProQR Therapeutics was founded in May 2012 in the Netherlands as a development-stage biotechnology company focused on the treatment of cystic fibrosis (CF). The company’s lead product candidate is QR-010, which is intended to work by repairing an mRNA defect apparent in CF.
QR-010 is designed to be delivered through a nebulizer and has been granted orphan drug status by the FDA. This essentially means the product shows some promise of targeting a rare disease.
Our Take
Cystic fibrosis certainly isn’t a laughing matter, but ProQR just might be. The company is entering the public market with nothing more than a few pre-clinical trials, and it has yet to even file a New Drug Application (NDA) with the FDA. Even if QR-010 works, it could be over a decade before it hits a market that will only serve a potential 100,000 patients worldwide.
To be blunt, ProQR’s IPO is laughable at best, and its company website doesn’t really help the situation. The image below is a screenshot taken from the company’s “About” page:
Take note that no accreditations are listed for any of these “scientists,” which leads us to believe the credentials for some of them aren’t all that noteworthy.
I couldn’t come up with any information on André Schmidt, but Jim Swildens holds a PhD in Cellular and Molecular Biology and is endorsed for cell biology by a total of two people on LinkedIn. So I guess he’s got that going for him.
Of course, the true winner here is Tom Laterveer, the “Happiness Manager” for ProQR. Now, I’m not exactly sure what a Happiness Manager does, but I sure wouldn’t want the title on top of my resume. I also wouldn’t want any company I own equity in to be wasting salary on such a position.
It seems pretty clear that ProQR isn’t about making a profit, which would be perfectly alright if it wasn’t going to be trading on the public market. If you’re actually going to invest your money into ProQR, it’s better to think of it as a donation to CF research than an actual investment, because that’s essentially what this IPO is all about.
