Watching the markets and recent economic trends, one might readily understand why the market for initial public offerings (IPO) has been less active. These first time offerings of stock, for up and coming companies, all but dried up as the world economic climate shifted and found access to capital difficult. Two years later, this particular situation may be beginning to shift as well.
Capital appears to be slowly finding its way back into the market. Venture capital (although slowly) seems to also be finding opportunity as companies on the verge of success are thinking now may be the time to act. This is an interesting area for an investor. Although speculative at best, the “should, would, could” adage comes into play.
Although there are many different perspectives to consider as one investigates a potential IPO, looking at the sector that the company is working within is likely the most important. What is this sector? What does it do? What is the market for the product? Does the company have a track record and do others (venture capital) have their money in place? These are all important questions to ask as one make decisions.
With these thoughts in mind, one may consider AVEO Pharmaceuticals and Ironwood Pharmaceuticals. Each is in IPO “process” with no given date for release. Generally, this is due to each following Securities and Exchange Commission (SEC) rules for a “quiet period” after registering for an IPO.
In the case of AVEO Pharmaceuticals, their cancer products have reach late stage development and received substantial financial backing. The company may not be showing profit but, typically, this is not unusual for a development stage drug company. The company is seeking $86 million in its IPO. Ironwood, working on an irritable bowel treatment product, is in much the same circumstance and is seeking $172 million.
The beginning of a trend is always just a bit more risky than entering after it has already started. If, however, an investor can find investments in solid marketable products, an IPO profit could be large.