Is HilleVax Inc. IPO a Good Buy?

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Contributor, Benzinga
May 2, 2022

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  • Although COVID-19 cases are thankfully on the decline, the U.S. is now combating a surge in norovirus-related infections, driving interest in vaccine development.
  • While norovirus infections usually clear up within a few days for most people, such outbreaks impose burdens on the healthcare system and on the economy.
  • Given the successful rollout of the COVID-19 vaccine, biotechnology firms have opportunities with addressing the norovirus, though strong elements of pushback could present risk.

Ever since the abrupt intrusion and paradigm shift that the COVID-19 pandemic imposed, American society at large has been yearning for normalization. According to information from UC Davis Health, fatigue stemming from lockdowns and mitigation protocols weighed on households — and that was in July of 2020. Another widescale health setback could spark friction, which is where vaccine developer HilleVax Inc. arrives on the scene.

As of the final week of April 2022, COVID-19 cases have dropped to low levels across most of the country — that’s the good news. The not-so-pleasant development is an increase in cases of the norovirus, which the Centers for Disease Control and Prevention (CDC) defines as a “very contagious virus that causes vomiting and diarrhea.”

To be clear, the Mayo Clinic states that for most people, “norovirus infection usually clears up within a few days and isn't life-threatening.” However, “in some people — especially young children; older adults; and people with weakened immune systems or other medical conditions or who are pregnant — norovirus infection can be severe. Norovirus infection can cause severe dehydration and even death.”

Because of the unprecedented worldwide devastation of COVID-19, both government agencies and individual households have an incentive to protect themselves from norovirus infections. Obviously, the personal health risk is the most pressing concern. However, the norovirus could hurt economic productivity — a factor that non-traditional professionals such as gig workers must take seriously.

Therefore, the upcoming new listing of HilleVax has drawn significant intrigue among institutional and retail investors alike.

What Does HilleVax do?

A biotechnology firm currently in Phase 2 of its clinical trial progression, HilleVax specializes in the development of vaccines. Its initial product is HIL-214, a vaccine candidate designed for the “for the prevention of moderate-to-severe acute gastroenteritis caused by norovirus infection,” per the company’s website.

Specifically, HilleVax uses an advanced approach called virus-like particle (VLP). According to Frontiers in Microbiology, VLPs are “nanostructures that possess diverse applications in therapeutics, immunization and diagnostics. With the recent advancements in biomedical engineering technologies, commercially available VLP-based vaccines are being extensively used to combat infectious diseases, whereas many more are in different stages of development in clinical studies.”

While advanced, the VLP approach enjoys approval in prior indications, such as the HPV and hepatitis B vaccine. As well, research indicates some success with VLP-based malaria vaccines. Moreover, HilleVax provides these advantages:

  • Provenance: Unlike the COVID-19 vaccine, which represented the first time a messenger-RNA-based vaccine hit the market, VLP-based solutions enjoy an established track record, potentially making products more socially palatable.
  • Acumen: HilleVax originated from a collaboration between life sciences stalwarts Frazier Healthcare Partners and Takeda Pharmaceutical (NYSE: TAK), implying that the upcoming new listing is much more than a fly-by-night operation.
  • Support: The upcoming public market debut of HilleVax is one of the biggest of this volatile year, enjoying sizable institutional backing.

Based in Boston, Massachusetts, HilleVax might also benefit from fortuitous timing. Founded in 2019, the company is making its way into the public sphere as society gains greater appreciation for advanced pharmaceutical technologies.

When is the HilleVax IPO Date?

Following a record-breaking tally for new listings in 2020 and 2021, the segment suddenly saw an erosion of volume, first from broader market volatility and then from the geopolitical flashpoint in eastern Europe. However, as the global community gradually absorbs this new reality, a few companies have dared to launch an initial public offering (IPO), or the first time a private enterprise distributes its equity shares to retail investors.

So far, the majority of listings in the IPO calendar have been small or even micro-capitalization firms. That won’t be the case with HilleVax, which is scheduled to make its debut on April 29, 2022. Shares will trade on the Nasdaq exchange under the ticker symbol HLVX.

Based on the latest information, HilleVax plans to raise $175 million through the distribution of 10.3 million shares at a price range between $16 and $18. At the middle of this spectrum, HLVX stock will command a fully diluted market value of $625 million. By far, it’s the biggest planned raise in the IPO sector of the week.

JPMorgan Chase & Co. (NYSE: JPM), SVB Leerink under SVB Financial Group (NASDAQ: SIVB), Stifel Financial Corp. (NYSE: SF) and Guggenheim Securities represent the joint bookrunners for the deal.

Interestingly, even if you were not interested in buying HLVX stock, you should still monitor its debut and track its overall performance. While other IPOs have hit the market since Russia’s unsettling decision to invade Ukraine, HilleVax commands significant institutional support.

In contrast, the new listings surrounding HLVX stock are only planning to raise a relatively miniscule amount. For instance, Belite Bio Inc. aims to raise only $36 million on the same day as HilleVax’s debut. Therefore, if HLVX attracts significant attention, it could mean that sentiment for IPOs is starting to return to pre-conflict norms.

What Analysts are Saying About HilleVax IPO

As a major capital raise following the paradigm-shattering impact of the Russian invasion of Ukraine, analysts will almost surely have eyes on HLVX stock, both during its launch date as well as subsequent trading sessions. Indeed, the vaccine developer will represent a de-facto benchmark for IPO sentiment in a conflict- and inflation-rattled environment.

But prior to the disruption of the modern global order, interest increased significantly for its progression in the capital funding process. Specifically, HilleVax CEO Rob Hershberg stated that the company aims to distribute the first approved vaccine for norovirus infections. An ambitious target, several motivating factors exist to encourage the effort:

  • Societal impact: Though most people infected with norovirus recover relatively quickly, norovirus incidents lead to roughly 200,000 deaths out of 700 million worldwide cases annually.
  • Economic disruption: According to research published by the National Institutes of Health, norovirus cases impose a global annual expense of $4.2 billion in direct health costs. Disease among children younger than 5 years “costs society $39.8 billion, compared to $20.4 billion for all other age groups combined.”
  • Workforce displacement: From the same research paper, societal costs from norovirus cases amount to $60.3 billion per year. Such a figure is especially problematic during the new normal when many workers — having been displaced from their salaried jobs from the COVID-19 pandemic — now function in non-traditional (and comparatively unprotected) roles under the gig economy.

Though compelling, the main risk factor for HLVX stock is willingness within the general public to take yet another vaccine. It’s a matter that can go either way. On one hand, the development and distribution of the COVID-19 vaccine represented a bright spot in an otherwise dark moment in history. But on the flipside, vaccine hesitancy — along with a spike in disinformation content — could lever severe headwinds toward HilleVax’s only product, HIL-214.

HilleVax Financial History

As exciting as the field of biotech is, the financials often separate the contenders from the pretenders. Though HilleVax is compelling, both for its clinical progress and robust support from institutional investors, IPO participants should view the company’s fiscal profile with an objective lens.

Primarily, since HilleVax is a pre-revenue business, the nature of HLVX stock is almost purely aspirational. In fairness, should the firm succeed in commercializing HIL-214, the rewards could be astonishing. However, the framework of such biotech plays is often binary: it’s either hit or miss with nothing in the middle.

Still, HilleVax isn’t completely speculative. In the year ended Dec. 31, 2021, the company’s cash balance hit $124.6 million, reflecting investor support. But given the company’s liabilities, HilleVax ran a total shareholder’s deficit of almost $101 million. Basically, this statistic means that the firm lost more money than its owners put into it — rarely an encouraging sign.

HilleVax Potential

Largely, the success of HLVX stock may come down to consumer sentiment. Because of the time spent cooped up at home, revenge travel has become a legitimate phenomenon. However, no one wants to get sick on vacation, which may inspire interest in norovirus vaccination.

On the other end of the spectrum, Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk’s acquisition of social media platform Twitter Inc. (NYSE: TWTR) reflects broader interest in personal freedoms and less governmental influence on individual matters. Therefore, the idea of vaccination may encounter significant friction.

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If you want to participate in HilleVax’s IPO, you’ll need to know how to buy stocks. But before you take that step, you must sign up for a brokerage account. Below is a list of best brokers to consider.

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