NovoCure IPO: Our Pick Of The Week

NovoCure (NASDAQ: NVCR) is a commercial stage cancer treatment company set for an IPO offering 12.5 million shares of common stock with a price target of $26-$29 per share. The company scheduled a $344 million from the IPO with an estimated market cap of $2.4 billion.

The underwriters for the IPO include Deutsche Bank, JPMorgan Chase, Wells Fargo, JMP Securities, Evercore ISI and Wedbush PacGrow.

The company develops treatments for solid tumor cancers using a proprietary therapy called tumor treating fields. The company plans to use the proceedsfor research and large-scale clinical trials.

Business Overview and Oncology Focus

The company’s first TT Fields delivery system that received FDA approval was Optune. This was awarded in 2011. Optune is a monotherapy treatment for patients with glioblastoma brain cancer.

Following Optune’s success, Novocure built its commercial organization around Optune and launched the treatment in the United States, Japan, Switzerland and Germany. These are still its active markets.

See Novocure’s full pipeline here.

Novocure hopes to generate approximately $188.9 million from the IPO after commissions and discounts. The primary purpose of the funds is for advanced and large-scale clinical trials using tumor treating fields. The company will use an additional $60 million for its continued commercialization of Optune in the United States, Germany, Japan, and Switzerland.

Investment Risk Factors At An Early Stage

At this point, Optune is still the only product that Novocure possesses for commercial-stage development; therefore, the company is dependent heavily on its success. In addition, the FDA only approved Optune for the treatment of glioblastoma brain cancer. According to NovoCure, material harm to the business model will occur if it cannot increase global sales.

The company incurred a net loss of $52,630,000 in the six months ending June 30, 2015. The company has not generated a profit in any of the last four quarters and states it does not anticipate generating a net profit anytime in the future.