Rivulet Media Inc (fka RIVU)

[benjimane]

Hey peeps check this out.. Dont know if you all have seen this article but I will post it anyways... I think our Regen IPO will be much higher considering our pipeline..


http://www.brw.com.au/p/investing/the_ipos_market_watch_run_biotechs_cUtH07cxzdS2XvrpLnAynO

The IPOs to watch as biotechs get set for a bull market run
Published 25 November 2013 07:16, Updated 25 November 2013 07:58

In a risk-averse market, biotech floats have looked like investment chickenpox. There has been a dearth of such floats since 2008 and a handful that listed are mostly trading below their issue price. But that could quickly change as the global life-science industry booms.

The US Nasdaq Biotechnology Index has hit record highs, up 63 per cent from its low this year, and its bull run has unleashed 41 biotech floats in 2013, collectively raising just under $US3 billion ($3.2 billion). The average share-price gain of US biotech floats since listing is 42 per cent.

These figures have been an adrenalin shot for even the biggest life-science bull, and have prompted talk that Australia is primed for a wave of biotech floats in the next 12 months.

With the broader IPO market on track for its best year in a decade by capital raised, biotech expectations are rapidly building.

“The US biotech sector is going through the biggest bull market in 13 years,” says Mark Pachacz, chief investment officer at Biotech Select Fund and research principal at investment newsletter Bioshares.

Pachacz says drug discoveries are underpinning the US biotech boom. “The industry is having success in bringing new drugs to market. In 2012, 36 new drugs were approved in the US, which is high, and at least 10 new oncology drugs have been approved in the last 18 months or so. This is real progress and real success.”

Biotech investment cycles are also driving stocks higher, says Pachacz: “If you believe the US biotech sector goes in five-year cycles, then the last upswing was missed in 2007-08 because of the GFC.

“The last biotech bull market was actually in 2003, so the sector is playing catch-up in a big way.”

Pachacz says the boom in US biotech sentiment is helping Australian stocks. “We saw this interest start to infect the local market about six months ago, predominantly at the more speculative end. Companies in the cancer-development space such as Alchemia, Bionomics and Patrys, have been running hot, as have many other early-stage biotechs.”

Improving sentiment means better capital-raising conditions. “The impact for the Australian biotech sector is that cash has been much easier to raise, which means companies are much better placed to commercialise their products. The IPO window [for biotechs] is now well and truly open,” Pachacz says.

Inteq managing director Kim Jacobs says greater enthusiasm for IPOs is spreading to the biotech market. Inteq was lead manager on the Reva Medical and GI Dynamics IPOs, two of the largest life-science floats in recent years after raising a combined $165 million, and lead manager on the 2005 IPO of HeartWare Inc, which is capitalised on the US Nasdaq exchange at $US1.48 billion.

“It’s still tough for small technology companies to raise capital through floats, but conditions are better than they were a year ago,” Jacobs says. “In the US and Israel, there has been more interest this year in investing in pre-revenue life-science and information technology IPOs.”

A long way from 2012

To put recent IPO gains into perspective, only one life-science company, Osprey Medical, managed to close a float and list in 2012. It raised $20 million to develop technology that captures X-ray-visible dye used during heart procedures before it circulates to the kidneys. Osprey’s 40¢ issued shares have now rallied to 72¢ and it is emerging on the radar of brokers and investment newsletters.

Other life-science IPOs in 2012 were withdrawn. In a dreadful market, US-based Ventus Medical, which develops technology to treat sleep disorders, could not close its $40 million float. Medical device company Vibrant cancelled its $120 million offer in July last year, and Hawaii-based sleep therapy company Kai Medical abandoned a possible $100 million float in April 2012. In contrast, at least six life-science companies should float this year, possibly more if the sharemarket rallies and enthusiasm for biotech shares goes up a gear.

Medical device maker dorsaVi is raising $18 million through an IPO to develop motion analysis device technologies, and expects to list on ASX on December 11. The Biotech Select Fund has invested in dorsaVi, and Pachacz likes its innovative technology in the medical, sporting and occupational health and safety markets.

Stem-cell researcher Regeneus listed in September after seeking $10 million through an IPO. Founded in 2007, the company is involved in the promising field of regenerative medicine, which enhances the body’s natural ability to replace tissue damaged or destroyed by disease or injury.

Regeneus’s 25¢ issued shares have rallied to 39¢ since listing, after gaining approval in November for a novel canine cancer vaccine to move to commercialisation in the US. The vaccine uses dogs’ tumour proteins to inhibit further growth in the cancer.

Early-stage medical device company Simavita has launched a $20 million IPO to develop technology to manage urinary incontinence. Its technology, targeted at the elderly, will help residential aged-care facilities develop incontinence management care plans for sufferers.

New Zealand-based Innate Immunotherapeutics and animal therapeutics researcher Nexvet are reportedly also considering IPOs. Several other biotechs could join them; the fourth quarter of each calendar year is typically the busiest for IPOs as companies rush to close offers before Christmas.

Life-science reverse takeovers, or “backdoor listings”, where companies transfer assets into ASX-listed shell companies, could also feature. Shares in OncoSil Medical, which is developing a radiation therapy device for pancreatic cancer, have increased almost four-fold this year off a low base after its backdoor listing.

Mines to medicine

The timing for biotech IPOs is good. After the worst year in a decade by capital raised, the Australian market is staging a remarkable turnaround. More than $10 billion could be raised through IPOs this year as the rising sharemarket encourages sellers to launch them, and as buyers show greater interest.

Other tailwinds are helping biotech floats. The combined market capitalisation of ASX-listed life-science companies rose 29 per cent over one year to September 2013, the PwC quarterly BioForum report shows. Smaller life-science stocks were especially strong in the first quarter of this financial year.

Moreover, mining floats have dried up after dominating listings volumes in the last few years. With junior exploration and clean-tech companies out of favour, life-science and information technology IPOs could fill a gap for speculators.

The strong performance of Virtus Health shows investors are eager for well-priced investment-grade healthcare and biotech offerings. After raising $338 million and listing in early June at $5.68 a share, the in vitro fertilisation services provider has soared to $8.70 – and is a contender for Float of the Year.

But investors need to exercise caution with biotech and healthcare floats. Parallels between US and Australian biotech indices are somewhat misleading, as the US Nasdaq Biotechnology index includes much larger, more established life-science companies than similar Australian indices.

Also, most life-science floats have disappointed since 2008. Reva Medical, developer of a bioabsorbable coronary stent to restore arterial blood flow to the heart, has slumped from a $1.10 issue price in late 2010 to 59¢. GI Dynamics has fallen from a $1.10 issue price to 74¢. It is developing a device to treat obesity and type 2 diabetes by controlling glucose levels.

Both companies have great promise, but their poor early share-price performance shows the challenges of investing in early-stage life-science companies, and why a long investment time frame is needed.

Smaller life-science floats have fared even worse. Canadian-based Bioniche raised $12.5 million in a 2011 IPO. Its shares, issued at $1.45, are down to 38¢. Bluechiip raised $3 million through a 2011 float to develop wireless tracking technology used for frozen biospecimens, and now trades at 12.5¢ from a 25¢ issue price.

A 2008 IPO, Genera Biosystems, trades at 9.1¢, and life-science floats such as Austofix and Fluorotechnics have delisted or become shells for other companies.

To be fair, life-science IPOs from the last five years listed in an awful market for floats and speculative technology companies. But their poor performance shows why it pays to take great care with all IPOs, especially those yet to make revenue or profit, as is often the case with life-science companies.