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Homology Breaks Into The Market With Highly Successful IPO

By Alex NewmanStock MarketsMar 30, 2018 07:08AM ET
www.investing.com/analysis/homology-breaks-into-the-market-with-highly-successful-ipo-200302058
Homology Breaks Into The Market With Highly Successful IPO
By Alex Newman   |  Mar 30, 2018 07:08AM ET
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Investors everywhere may be unfamiliar with the complex science behind modern gene editing techniques, but they’ll likely want to brush up on this tech now that NASDAQ:FIXX, one of the leading biotech companies aiming to revolutionize gene editing, has enjoyed such a massively successful IPO. The company reaped in more than $144 million during its successful market debut, which will doubtlessly prove crucial towards its future investments towards better gene editing technologies and techniques, and tech investors around the globe are now watching the company with serious interest as it moves forward.

An extraordinarily successful IPO

2018 has been a fascinating year for the tech scene, with companies like Dropbox breaking out onto the market for the first time while established market behemoths like Amazon (NASDAQ:AMZN) and Facebook (NASDAQ:FB) have been suffering from volatile prices thanks to political controversies. Of all the developments to hit the tech market this year, however, Homology’s (NASDAQ: FIXX) breakout may be one of the most impressive; the company’s IPO saw some 9 million shares sold to investors for $16 apiece, which was at the high-end of its expected valuation. Now that it’s flush with some additional capital, investors are wondering what steps Homology may take next to keep its momentum going.


Homology Medicines’ hefty IPO wasn’t the end of its stock successes, either; the company’s shares are currently trading up, having recently hit $18 apiece, demonstrating that the market is clearly fixated on the biotech company. Perhaps that’s because of the bold mission driving Homology forward; the biotech company aims to develop a gene therapy delivery platform that will help patients afflicted with rare diseases that could be aided or exterminated all-together with cutting-edge genetic treatments.


According to filings made by Homology with the SEC, the company intends to use the bulk of the funds it collected from its IPO – which brought in about $44 million more than was originally anticipated – to fund an early stage test of its latest gene therapy candidate, which it hopes to bring to the market one day to compete against established gene editing techniques like CRISPR. Tech investors familiar with biotech stocks likely understand that backing Homology will be a long-term investment; after all, the clinical trials these companies need to complete before delivering their products to the market often take years to complete. Still, especially thanks to the extra cash netted from its IPO, it stands to reason Homology can make some seriously impressive gains in the next few years.


Like the vast majority of all other biotech companies, Homology has been consistently incurring losses since its inception, and will likely only become profitable after its gene editing platform takes off and becomes popular in the mainstream medical world after clinical testing trials are completed. Homology posted net losses of some $30 million in fiscal year 2017, illustrating that while the biotech company’s debt isn’t outrageous, a close eye needs to be kept on it to ensure a runaway into the red doesn’t occur.

The future of evolution

Companies like Homology, which are literally tampering with the way human cells evolve and repair themselves over time, could stand to revolutionize human evolution as we know it. Existing gene editing technologies like CRISPR continue to vacuum up huge amounts of positive press throughout the world, meaning companies like Homology, which aim to challenge those established techniques with fast checks, could stand to enjoy sizable interest in their platforms in the future, should they produce a viable product during clinical trials.


With regenerative medicine and gene editing techniques as a whole enjoying serious industry growth, with the field of cellular therapies already being valued at some $25 billion, companies like Homology clearly have a solid future for themselves, if they can make it through intense clinical testing procedures that could potentially stymie their aspiring products. Homology has successfully tested some of its new techniques in mice before, illustrating that it has the potential to deliver human-viable products, too, and the success of its near-future clinical trials could help generate even higher share prices for it.


For Homology to become viable in the long-term, it needs to keep its relatively minor losses down to a minimum, and continue to expand its partnerships, which thus far it’s been doing quite capably. Homology’s recent announcement that it’s struck up a partnership with Novartis, for instance, is helping to convince worried investors that the company has a serious future in the biotech industry, and few are writing off its future prospects after its impressive IPO. Expect big things from Homology in the future; the company is slowly but surely churning ahead with some seriously next-generation innovations that are changing the human genome as we know it. If it’s clinical trials prove to be successful, it’s likely Homology could become as big a name as CRISPR is one day.

Homology Breaks Into The Market With Highly Successful IPO
 

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Homology Breaks Into The Market With Highly Successful IPO

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