Here are this week’s upcoming technology IPOs, so you can stay up to date on what’s coming to the market.
On Deck Capital
Ticker: (NYSE: ONDK)
Expected to Trade: Wednesday, December 17
Price Range: $16.00-$18.00
Business Description
On Deck Capital provides an online platform called OnDeck Score for small business lending up to $250,000.
The company uses proprietary analytics software that aggregates data from a variety of sources to assess the “creditworthiness” of small businesses. Small businesses can apply for a term loan or line of credit on the company’s website (https://www.ondeck.com). OnDeck Score allows for an immediate funding decision and allows small businesses to transfer funds as soon as the same day.
Our Take
On Deck has so far originated more than $1.7 billion in loans to small businesses, particularly in California, Florida, and New Jersey. The company’s loans have increased at a compound annual growth rate of 127% from 2011 to 2013 and had a year-over-year growth rate of 171% for the nine months ended September 30, 2014.
According to the Federal Deposit Insurance Corporation (FDIC), there were $178 billion in business loan balances under $250,000 in the United States in the second quarter of 2014 across 21.7 million loans. Further, management consulting firm Oliver Wyman estimates that there is a potential $80 to $120 billion in unmet demand for small business lines of credit.
By replacing manual underwriting with an automated data-driven approach, On Deck is providing a convenient funding solution to up to 28 million small businesses across the U.S.
We like the fundamental business model and expect substantial growth on the top line next year. It’s simply a matter of bringing the company out of the red.
Interest revenue hit $99.9 million in the nine months ended September 30, 2014, more than double the $41.1 million seen in the same period last year. Growth is undoubtedly strong, but On Deck is still reporting a net loss from operations.
In the nine months ended September 30, 2014, the company posted a loss of $25.2 million. This was less than the loss of $29.4 million seen in the same period last year, but not by much.
With $22 million in cash and an expected $170 million to be raised in the company’s IPO, On Deck has a fair amount of runway left at current burn rates. Regardless, we’d ultimately like to see the company turn a profit before considering it a buy.
Bellicum Pharmaceuticals
Ticker: (NASDAQ: BLCM)
Expected to Trade: Thursday, December 18
Price Range: $15.00-$17.00
Business Description
Bellicum is a clinical-stage biotech company developing novel cellular immunotherapies for various forms of cancer, including hematological cancers and solid tumors. The company is also focused on orphan inherited blood disorders.
The company uses its Chemical Induction of Dimerization (CID) platform to engineer and then control components of the immune system in real time. By incorporating its CID platform, Bellicum believes its product candidates could offer better safety and efficacy outcomes than those seen with current cellular immunotherapies.
Our Take
Bellicum is yet another dev-stage biotech that’s probably hitting the public market way too early in the game. The company’s lead candidate (BPX-501) initiated phase II trials in the first half of 2014, putting it on track for the commercial market some time around 2018.
The company does have a strong cash position, with $61 million reported as of September 30 and $100 million in proceeds expected from its IPO on Thursday.
At a current burn rate of about $12 million each year, Bellicum definitely isn’t going to be the worst dev-stage biotech on the market, but operational expenses have nearly doubled year-over-year and will be worth keeping an eye on.
Most importantly, though, Bellicum’s clinical candidates are essentially lotto tickets at this stage. There’s simply not enough data for us to make a well-informed investment decision. It’ll be worth a look further down the line.
Juno Therapeutics
Ticker: (NASDAQ: JUNO)
Expected to Trade: Friday, December 12
Price Range: $15.00-$18.00
Business Description
Juno Therapeutics is a development-stage biotech company creating novel cellular immunotherapies based on two distinct and complementary platforms: chimeric antigen receptors (CARs) and T-cell receptors (TCRs) technologies. In simple terms, the platforms work to genetically engineer a patient’s own T cells to recognize and kill cancer cells.
Our Take
Juno Therapeutics aims to end 2014 with a bang. The company has set terms for a $191 million offering, which would make it the biggest biotech IPO of the year.
In addition to its public funding, Juno has previously received venture capital of $314 million from Arch Venture Partners, Amazon’s Jeff Bezos, and Alaska Permanent Fund.
Despite the aforementioned superlatives, however, Juno doesn’t give us many good reasons to want to own a piece of the company right now. Juno lost $170.8 million over the last four quarters and has absolutely zero revenue generation. Of course, this is typical with dev-stage biotechs, but Juno doesn’t even have a single candidate past phase I in the clinical pipeline yet:
Phase II trials for Juno’s lead candidate (which targets relapsed/refractory B cell acute lymphoblastic leukemia) are not expected to initiate until late 2015. It will be years before Juno brings a product to market, so burn rate and cash position are the top considerations here.
Juno reported $237 million in cash as of September 30. Assuming it receives $191 million in the IPO, Juno will have about $430 million, or two and a half years of runway. Typical time to market from the start of phase II is about four years, meaning the threat of dilution here is incredibly high.
Juno isn’t a safe bet in the currently bloated biotech market.
