2018 has enjoyed a roaring surge of IPOs across industries, and investors across the market today are now turning their attention to Evelo Biosciences (NASDAQ:EVLO), which could enjoy one of the biggest market debuts of the year. With new pricing details of the company’s IPO having just been released, the market is abuzz with chatter about Evelo Biosciences’ opportunity-filled future.
Here’s everything you need to know about the biotech company’s forthcoming debut, and the intimate details that investors will need to familiarize themselves with if they’re hoping to turn a profit of its IPO.
More than 5 million shares will be offered
Investors who are concerned Evelo Biosciences (NASDAQ: EVLO) isn’t aiming high enough with its market debut are likely to be sated by news that the company intends to offer some 5.3 million shares in its IPO, and is hoping to hit an expected price range of $15 to $17 per share. A successful IPO could see Evelo reap in more than $100 million from investors, which could prove crucial towards future expansion efforts, not to mention the marketing efforts it will need to put forward in order to start churning out serious profits.
According to filings made with the SEC, Evelo has some financial heft behind it that will make it a force to be reckoned with on the market; after all, the company has an annual gross revenue that exceeds $1.07 billion, according to its prospectus, though it does have a history of posting net losses. While biotech investors will likely be intimately familiar with throwing their weight behind companies that are operating at a loss and powered by promises of future profits, Evelo will want to take extra steps to reaffirm to potential shareholders its commitment to getting out of the red.
A midpoint range valuation could peg Evelo at a market valuation of more than $500 million, though it remains to be seen how investors will greet the company once it makes its debut. Evelo also finds it in a peculiar spot when it comes to financing; despite the influx of cash it’s expecting from its IPO, Evelo’s prospectus makes it clear that the company is in need of additional sources of revenue, and investors will want to be aware that Evelo needs access to some serious capital before it can hope to become profitable.
Evelo’s focus on microbial gut therapies that combat intense inflammatory diseases could attract the eyes of biotech-savvy investors looking to make a difference in the medical field, however, and the successful marketing of effective treatment solutions could be a lucrative cash cow for years to come. 2018 has been a thriving year for biotech IPOs, and it stands to reason that Evelo could become the latest firm to ride the market’s rising wave all the way to the bank.
Progress is yet to come
Investors interested in Evelo Biosciences should confront reality upfront; the company is incredibly young, meaning most of the progress it intends to make combatting inflammatory diseases and other illnesses is yet to come. This doesn’t mean that Evelo is peddling nothing more than promises, of course, but should serve to remind investors that biotech investments, like insurance groups, are often long-term schemes that can take years, if not decades, to pay off.
While a glance at the company’s portfolio shows some impressive aspirations, not to mention potentially lucrative therapy solutions that could be brought to the market in a few years’ time, it’s unlikely Evelo will be turning a net profit anytime soon. Investors looking to make a quick buck off a hot market debut will thus be relatively unimpressed with Evelo’s potential, though those in it for the long haul may see some serious opportunity in investing in the fledgling biotech firm.
The company’s focus on the gut-body network will doubtlessly pay off in the long term, especially since so many ill American patients are willing to shell out top dollar prices for treatment solutions, but biotech companies face a slew of regulatory hurdles they must overcome before delivering marketable products. The anti-inflammatory therapeutics market is set to grow in the near future, too, meaning Evelo will likely face heavy demands for its solutions despite whatever funding concerns currently beset it.
Nonetheless, if Evelo doesn’t secure more capital to fund its operations, the company won’t have a long-term future on the marketplace. Its inability to turn a profit thus far may be worrying to sum, but Evelo is facing a serious cash crunch that needs to be addressed before the company’s stocks can thrive. Biotech investors may like what they see in Evelo Biosciences’ portfolio, but the company’s dismal financial prospects are likely to bear down on its shoulders as it makes its market debut.