Maybe someone in your family, or in a family quite close to you, was born with a rare disease or develops one at a quite early age.

It’s undoubtedly heartbreaking as you, or those people you know, persist year after year, doing research and calling all the very best hospitals in the country to identify a solution that seems nowhere to be found.

Take Eli, born in March of 2009.

During his infancy, he was a very social little guy. He loved to play with his mom, dad, brother, and sister. He would sing at the top of his lungs and dance like crazy.

And while he still does all those things, he can no longer walk and has a host of other cognitive development issues that arose because of a rare disease called ‘gangliosidosis’ that developed by the age of 9.

No cure has yet to be found, but one company that I have my eyes on this week is a frontrunner in the search of genetic treatments for monogenic central nervous system conditions like gangliosidosis.

The company is called Passage Bio (PASG) and it hopes to raise $126 million in an IPO that goes live on February 28th.

So without further ado, let’s take a look at some of the company’s financials, followed by a brief discussion about the sector and underwriter. 

 

PASG’s Treatments are Nascent, But the Potential Is Enormous 

One of the great things about Passage Bio (PASG) is that it has such strong partnerships.

The company is currently in research collaboration with the University of Pennsylvania’s Gene Therapy Program.

So far, PASG has three lead product candidates, which are gangliosidosis treatment PBGM01, frontotemporal dementia treatment PBFT02, and Krabbe disease treatment PBKR03.

The company plans to invest the IPO proceeds of $39M, $42M, and $34M into each of those 3 products respectively as part of the overall $126M it’s seeking.

These products all seem quite promising and exciting, though the numbers are what I’m going to be paying the most attention to.

The anticipated pricing range for PASG leading into the IPO is $16-$18, which is a bit high considering the price that similar biotechs IPO at.

Not only that, the company has not yet entered phase 1 trials… that period the safety and potential toxicity of a drug gets tested and evaluated with a very small number of participants (usually 20 to 80 people).

Some might say that in terms of short term prospects, a gigantic liftoff in this company’s stock could be a little ways away until we get some more confirmation about the drug safety and efficacy.

Nevertheless, the market for the treatment of the kinds of disorders that PASG hopes to resolve is quite large and expected to grow to $129 billion by 2025.

There could be a whole lot of excitement around this IPO, so there’s a strong possibility I’ll at least keep it in my yellow light category as we move into the week.

For the most part, I’ll keep an eye on how the underwriters will price the IPO. Why?

Well, we know how many shares are being offered, as well as the pricing range. Passage Bio is expected to offer 7.4M shares between $16 and $18 a share, and this is one thing to keep in mind in an IPO. PASG expects to price its IPO on Feb. 27, and if it prices above $18… that’s a signal it could pop.

On the other hand, if it’s anywhere on the low-end of the range, it’s an indication traders and investors don’t want in on this IPO. It signals to me the stock could go in either direction.

PASG has a strong underwriter — JP Morgan Chase which has led 29 IPOs over the last 12 months, achieving an average 3-month return of 51%. Not only that, but healthcare IPOs have been hot… and over the last year, they’ve returned 62%, on average.

I think PASG could be the next hot IPO, but we’ll have to wait and see until the pricing comes out and the first trade date. So if I do decide to trade PASG, I’ll be sure to let my clients know about my plans and thoughts.

Author: Ben Sturgill

Ben leads two services at RagingBull. IPO Payday can help you pinpoint, position, and profit from IPOs. In Daily Profit Machine Ben guides day and swing traders to profit by trading the SPY Index. Ben hosts the RagingBull.com weekly podcast WealthWise where he shares thoughts on wealth and success with traders, businesspeople, entrepreneurs, and experts to uncover and share the wisdom needed to live a wealthy life.

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