ARMO biosciences (NASDAQ: ARMO), a cutting-edge company focused on cancer immunotherapy treatments, filed for a multi-million IPO last Friday that could see the company cut directly to the forefront of the medical market. The aspirant, California-based company raised more than $86 million after it went public, and showed positive signs of future growth that’s left many investors keeping a close eye on the stock.
Beating cancer
ARMO’s high aspirations for success in the marketplace will largely depend on its long-term success in its fight against various forms of late-stage degenerative cancer, and the company has already shown it doesn’t intend to disappoint its patients nor its early financial backers. Filings made by ARMO with the SEC have revealed a little less than many investors are used to, but those familiar with the medical scene understand that ARMO will have to leverage the capital it raises from its IPO to fund further treatment trials before turning large profits.
In ARMO’s market, success can’t be rushed, and the company will have to balance investor’s hungry demands for profits with the slow, careful process of its pioneering medical teams. Cancer rates have continuously risen over the past few years, and while companies like ARMO have helped stymy fatal cases of the disease, there remains a large consumer base to market its highly-needed products to, ensuring that the company will have the necessary audience for its trials for years to come.
The proceeds from its IPO will soon be put to work funding currently-planned phase IIB trials for a drug capable of helping patients with small-cell lung cancer, and other projects are doubtlessly lined up for the future. After a few hundred patients are enrolled in the trial, and ARMO has sufficient time to perfect its drug to the point where its marketable, investors can expect to seek share prices rise when the company delivers results.
Investors will need patience
Before ARMO can break out onto the medical scene and see its share prices climb by healthy amounts, however, it will need to fight the same demons that have haunted countless other medical and tech companies before it. Investors will be clamoring for near-instant results, and ARMO’s extensive cancer trial operations can take years to complete. While the company expects results that might placate shareholders and would-be investors by the end of 2018, missing a deadline could prove fatal to its long-term prospects.
Investors familiar with drug companies in general and immunotherapy treatment companies in particular understand the risk associated with year-long trials, however, and few are expecting instant cures to diseases that have long haunted countless patients. A workable trial that shows true potential for its new immunotherapy drugs should be sufficient to show investors that ARMO means business, and will doubtlessly help its share prices climb in the meantime.
ARMO’s fate doesn’t rely on a singular drug, either. The company has much in the works for the coming decade, including a series of enabling-studies for a new antibody and other cutting-edge trials planned. For those projects to ever come to fruition, however, ARMO will need to do more to hedge its current losses so that investors don’t jump ship before its dreams can become a reality.
The company has posted consistent losses since 2015, for instance, with the painful $27.9 million in losses it posted in September of 2017 up more than $22 million from September of the year before. ARMO won’t have much luck currying future favor if it doesn’t apply at least some of the profits from its IPO towards reducing its slowly growing losses.
ARMO has shown it’s not afraid to venture into the realm of private financing, however, and the idea that the company could be left stranded in the water without any capital anytime soon is ludicrous. ARMO’s success will entirely depend on how quickly it can deliver immunotherapy results, with its pet projects on the side merely icing on the cake for potential investors.
ARMO’s wise decision to pivot from early to late stage cancer treatments won’t just align itself with other successful medical treatment companies that have gone public, but will help show investors that the company is dedicated towards creating a drug that’s helpful while remaining profitable, too. The results the company post from its existing studies and forthcoming trials between now and 2020 will be the deciding factor in its future, but all signs point towards ARMO chugging slowly but steadily towards success.