Arcellx Sets IPO Terms: Should You Buy ACLX Stock?

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Feb. 3 2022, Published 11:46 a.m. ET

Biotechnology company Arcellx has filed for an IPO. What’s the expected date and price for Arcellx? Should you buy the stock in the IPO?

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The U.S. IPO markets have had a slow start in 2022. The U.S. IPO market had a record year in 2021 in terms of the number of listings and the total money raised. Apart from the traditional IPO boom, there was a flurry of SPACs as well. However, beneath the “record” lies the dismal performance of newly listed companies, which is also reflected in the price action of the Renaissance IPO ETF.

Most IPOs trade below the issue price.

Most of the IPOs in 2021 trade below the issue price. This includes high-flying names like DiDi, Robinhood, and Rivian. The SPACs' performance has been dismal and most pre-merger companies trade below the IPO price. As for de-SPACs, the less said the better.

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Even the most popular names like Arrival, Beachbody, Paysafe, Clover Health, and Lordstown Motors trade well below the SPAC IPO price and are penny stocks now. Given the dismal performance of new listings over the last year, markets have been wary of IPOs.

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What's Arcellx's IPO date and price?

Arcellx is expected to list on Feb. 4. The company has kept the IPO price range between $15 and $17. The final price will be set on the listing day. Companies price the IPO based on the market sentiments and the investor appetite.

Over the last year, several companies have had to lower the IPO price or price it at the lower end of the range. Even Robinhood, which kept a large portion of the IPO reserved for retail investors, priced the IPO at the lower end of the range.

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Arcellx will trade under the ticker symbol “ACLX.”

Arcellx will trade under the ticker symbol “ACLX” on the Nasdaq. Barclays, SVB Leerink, BofA Securities, and William Blair are the lead underwriters for the issue. Arcellx is offering 8.25 million shares in the IPO and 33.54 million shares will be outstanding after the IPO.

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What's the Arcellx IPO valuation?

Arcellx could raise almost $140 million as part of the IPO and it will command a valuation of just above $570 million. The company intends to use between $75 million and $85 million for the development of CART-ddBCMA, which is its first product candidate based on its ddCAR platform.

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Arcellx intends to use between $10 million and $20 million for developing product candidates under its ARC-SparX platform. It intends to use any additional money for R&D and general corporate purposes. In the fillings, Arcellx said that it has the cash to fund its operations for the next 12 months even without the expected proceeds from the IPO.

Arcellx's stock forecast shows some risk.

Arcellx is a clinical-stage company and it's in the pre-revenue stage. Like all other clinical-stage companies, it's posting massive losses and cash burn. In the first nine months of 2021, it posted a net loss of $44.3 million, which was wider than the $23 million that it posted in the same period the previous year.

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Loss-making companies have been out of favor with markets. Investors have pivoted towards mature and profitable companies.

Arcellx is working on immunotherapies for cancer and other autoimmune diseases and sees a total addressable market of $10 billion. However, considering the current macroeconomic environment, risk-averse investors would be better off in an established pharma company rather than a clinical-stage company.

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