2017, the company generated adjusted
Ebitda of US$40.9m on revenue of
US$389.4m.
AGIOS SIZES UP FUNDING NEEDSAGIOS PHARMACEUTICALS pivoted from
industry conferences to the capital
markets, securing US$425m in a follow-on
stock sale that meets its funding needs for
the year.
JP Morgan, Goldman Sachs and Cowen
marketed for one day Thursday before
pricing 7.1m shares at US$67, 4.7% below
pre-launch levels but marking a slight
INCREASEûFROMûTHEû53M ûlXEDûSIZEû
targeted at launch.
Agios shares traded at US$71.56 on
Friday.
Agios, which presented at the JP Morgan
healthcare conference a week earlier, is
using proceeds to support a recently
launched cancer drug and another that is
pending regulatory approval.
AVEXIS READIES FOR DRUG LAUNCHGene editing specialist AVEXIS secured
US$400m on a follow-on stock sale
Tuesday, after delivering positive clinical
trial results and laying out a path with US
regulators for commercial approval of its
lead drug.
AveXis shares fell 10.6% to US$105.01 on
the one-day marketing Tuesday, only to
rebound post-pricing, highlighting the
HEAVYûCHURNûOFûPROlT
TAKERSûAGAINSTû
investors seeking to establish new
positions.
Goldman Sachs, Jefferies and Bank of America
Merrill Lynch placed 3.92m shares post-close
Tuesday at US$102, a further 2.9%
discount.
AveXis shares closed the following day
US$104.87 and ended the week at
US$107.41.
AveXis had been rumoured as a
potential takeover target, so its move to
fundraising suggests a preference to go it
alone.
AveXis now has roughly US$725m of
cash to fund commercialisation and
ongoing trials. It also owes US$80m to
collaborative partner Regenxbio under a
new global licensing agreement.
The company plans to spend US$225m–
$270m on research, manufacturing and
clinical activities mainly on spinal
muscular atrophy (SMA) and another
US$140m–$175m for pre-commercial
activities to launch a drug to treat SMA
Type 1.
!VE8ISûSTILLûNEEDSûlNALûSIGN
OFFûFROMûTHEû
US Food and Drug Administration to begin
selling AVXS-101, its SMA Type 1 drug.
SMA is a genetic disorder that leads to
infant mortality.BIOTECHS RUSH ECMA clutch of smaller biotechnology
companies took advantage of the sector’s
early-year strength, helped in part by an
M&A bid, to raise equity capital in the past
week.
Biotech ECM is often strong in the early
part of the year and several M&A deals
have further buttressed stock prices across
the sector. Through early Friday, the
Nasdaq Biotechnology Index is up 4.76% so
far in 2018.
ARROWHEAD PHARMACEUTICALS, a
developer of medicines that treat diseases
by silencing genes, raised US$52.5m in
equity overnight Wednesday from the
sale of 10m shares at US$5.25 each,
the top end of the US$5.00-$5.25
range and a 8% discount to the last
sale price.The deal was upsized from an initial
target of US$40m and followed a 55% rise
in its stock price in the past 12 months.
Jefferies and Bank of America Merrill Lynch
were active bookrunners, while Cantor
Fitzgerald was passive.
INTREXON, a bioengineering company, found
investors to contribute US$75m in equity from
the overnight sale of 6m shares at US$12.50
each, a 9.2% discount to the last sale price.
JMP Securities was sole bookrunner and
Stifel was lead manager. The funds are for
general corporate purchases and strategic
acquisitions or investments.
PARATEK PHARMACEUTICALS, a biotech
developing drugs based on tetracycline
chemistry, raised US$51.5m from the
overnight sale of 3.2m shares at US$16.10,
an 8.9% discount to last sale. BTIG was sole
bookrunner.
GENOCEA BIOSCIENCES took a more
complicated route to raise US$53.4m of
equity, selling both common stock and
warrants.EQUITIES AMERICASApollo-backed gaming machine
maker brings US$184.5m IPO
US Market share gains versus ‘big four’ spur growth outlookElectronic gaming machine maker PLAYAGS (or
AGS as it prefers to call itself) believes its high
levels of recurring revenue, high margins and
global expansion opportunities will appeal to
investors when it looks to price its US$184.5m
NYSE IPO on Thursday, January 25.
AGS, which Apollo bought in late 2013, plans
to sell 10.25m primary shares at US$16-$18.
As with recent sponsor-backed IPOs, there are
early signs that investors may push the company
to accept a lower price.
Credit Suisse, Deutsche Bank, Jefferies and
Macquarie Capital are active books.
In the online roadshow post, AGS chief
executive David Lopez highlighted the
company’s strong market share growth, margins
and recurring revenue versus competitors
including the so-called “big four” - Scientific
Games (Bally), Aristocrat Leisure, International
Game Technology and Konami.
Since 2013, emerging/non-big-four players
such as AGS, Everi, Ainsworth Game Technology,
Incredible and Inspired Entertainment have won
significant market share from these big four,
increasing their combined “ship share” from 7%
to 24%.
The key reason for AGS’s market share gains
is the performance of its machines, which have
produced double the house win per day average
and a much higher return than most of its peers’
products, according to AGS’s pitch to investors.AGS claims 2% market share and aims to
increase this to 5% over time.
The downside is that it is operating in a
business that is highly competitive and the
company has relied heavily on acquisitions for
that growth.MARGINS
Adjusted Ebitda margins were an impressive
52% in the latest period, while the company
generates 83% of revenue from recurring
sources, mainly its large installed base of gaming
machines leased to casinos and other gaming
establishments.
The company has low working and
maintenance capital needs and doesn’t expect to
pay cash taxes for at least the next five years.
AGS is eyeing “white space” opportunities
in the US but is also looking to expand abroad,
particularly Canada, the Philippines and Brazil.
AGS will use the IPO proceeds to pay off
holdco PIK notes, allowing it to de-lever from
5.6 times to 4.3 times net debt/Ebitda, chief
financial officer Kimo Akiona said.
The IPO is being marketed at a valuation of
around nine times EV-to-forward Ebitda.
One hedge fund investor described this
valuation as “egregious” and said seven to
eight times Ebitda would be a fairer mark for a
company.
Anthony Hughes