This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Pharma IPOs Are Good Medicine

NEW YORK ( TheStreet -- Health care stocks may be making a full recovery thanks to the Supreme Court's recent ruling to upholding the Obamacare mandate.

For one, the court's decision could lead an increase in M&A deals in the second half of 2012. Uprooted legacy business models have opened up new opportunities for both health care and pharmaceutical sector, according to a recent survey by PricewaterhouseCooper.

In the pharma sector, PwC believes the big names will right size their portfolios with divestitures by selling off assets that are no longer core revenue generators or in key markets. The good news for some companies is that capital is likely to used for tuck-in acquisitions or to beef up their emerging markets agendas. Customers are asking firms to lay out all strategic options for them, whether it is finding a buyer, divesting a business or going public, says PwC's Tim Hartnett.

The IPO market could benefit as well. So far, new offerings from health care companies have been few and far between in 2012. According to Renaissance Capital, only 6 deals have been done year-to-date in the sector with total proceeds of $400 million. The average first day of return has been 2.8%, but the average total return is a healthy 37.1%. Not too shabby.

The deals tend to be small pharmaceutical companies looking for public money in order to complete their clinical trials. Cancer drugs just don't seem to wow the market like they once did. As a result, many of these offerings tend to drop their prices right before they hit the market, making them even better deals.

Supernus Pharmaceuticals (SUPN - Get Report) originally planned to price shares in the range of $12-$14, but ended up pricing in April at $5. Shares of the company, which makes epilepsy and ADHD drugs, closed Friday at $13.26, or a return of 165%. Supernus recently announced it's received a tentative letter of approval from the Food and Drug Administration for Trokendi XR, a proposed extended-release treatment for epilepsy, and expects to launch its first drug in 2013.

NewLinks Genetics (NLNK - Get Report) makes cancer drugs and had originally planned to price at $11, but ended up debuting at $7. The stock finished Friday at $12.70, up 81.4%.

Another example is Clovis Oncology (CLVS), which priced at the bottom of its planned range of $13-$15.00. The stock finished Friday at $19.64, up 51%. So, it does seem that with the drug company IPOs flying under the radar, investors are getting well-priced stocks.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CLVS $12.89 -2.30%
NLNK $15.62 -3.20%
SUPN $15.69 -1.30%
AAPL $92.90 -0.76%
GOOG $696.50 0.11%


Chart of I:DJI
DOW 17,721.53 +70.27 0.40%
S&P 500 2,058.63 +7.51 0.37%
NASDAQ 4,738.0360 +12.3970 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs