STEM CELL THERAPY RUSSIAN IPO – CERTAIN CONSIDERATIONS

THIS POST WAS ORIGINALLY PUBLISHED FEBRUARY 01, 2007

GLOBAL IPOs
Stem cell companies have their own love for stock markets. When these companies evaluate and develop their long-term plans they clearly understand the necessity of investment attraction. Thus, the most viable way is to look into capital markets – public or private. In many cases they address these markets even though they do not require immediate financing. The reason is very simple – continuation of development and R&D efforts is the subject of survival. If it happens that at a certain stage there would be no money – the business is instantly dead.
It is essential that for IPO or private placement the company should fit into market requirements. The number of such companies is limited – that is why the IPO list is rather short. We have tried to collect some data for recent IPOs of the sector and here what it looks like:

When evaluating the data we may notice one common thing there – all the companies suffer losses at the time of IPO. Small profit from preparations sales cannot cover the R&D expenses. Thus,
- GERON CORPORATION – the largest as to it capitalization company. Since it started operations in 1990 till 2006 - the losses amounted to $ 369.6 mln.
-VIA CELL. As for December 31, 2005 – losses of $ 101.6 mln.
-AASTROM. Since 1989 till 2006 – $ 141 mln.
-OSIRIS. Since April 2002 till December 31, 2005 – losses of $ 142.5 mln.
At the same time all the companies are planning their losses for the upcoming years.
Thus, from the investor point of view, all companies of the stem cell sector, despite of their losses and no profit – are still very attractive. Just look at the IPOs results.
When analyzing the trading pattern, one can easily notice the great deal of volatility of stem cell companies’ stock. These facts may change drastically volumes and prices:
-public announcements on the R&D results, business development, technological innovations or new products;
-changes in the governmental regulations of the sector and the industry;
-public announcements of M&A;
-public discussions on ethics, morality and safety of the applied technologies;
-news on the competitors’ success;
-news on the process of the clinical research work;
-publications of financials, that show the company’s profits and losses.
Thus, summarizing all the above, there are two accepted ways to invest – short-termed (speculative) and strategic. Strategic investment oriented at 3-5 years will definitely lead to greater results. Both ways are extremely attractive.