Analyst: Biodesix’s stock debut suffers as market holds its breath on election, ACA repeal case

BOULDER and NEW YORK — To say investors were mum on Biodesix Inc. (Nasdaq: BDSX) conducting its initial public offering last week would be an understatement, as the Boulder biotechnology company’s stock sunk below $15 against the company’s previously-stated initial trading range of $17 to $19 per share.

The company did raise its maximum amount of proceeds from the sale, bringing in $72 million in new capital as of the end of the IPO on Friday.

But Biodesix, and its fellow smaller-cap biotech companies, may have less-than-stellar performance as of late because of two major events in Washington in the coming days.

Sahak Manuelian, the head of equity trading at Wedbush Securities, told BizWest that biotech debutants such as Biodesix that have priced their stocks at the middle of their expected ranges have underperformed in recent weeks as investors brace for larger volatility.

While the large stock market sell-offs last week fueled in part by rising COVID cases around the world played a role, Manuelian believes the election on Tuesday and the scheduled Supreme Court hearings over whether or not to strike down the Affordable Care Act in full are major political clouds over the health-care sector.

Although large-cap stocks are still producing good returns, Manuelian said the risk posed by a younger, less-established stock like Biodesix is harder to stomach.

“Going into the end of the year, I think guys are looking at their blotters and looking at year-to-date performance, especially dedicated health-care investors, and they’re not really looking for any unnecessary risk at this juncture,” he said.

He suggested that a lot of the early sell-offs in the stock’s life were potentially from institutional investors that were allocated a smaller portion of stock than they wanted, leading them to sell the position just to get it off their books.

The environment is starkly different compared to the biotech IPO scene earlier this year. While the broader economy was still weak, investors flocked to stocks focused on drug development. The thinking at the time was while consumer spending and elective-procedures such as dentistry would suffer in the middle of a stay-at-home order, demand for treatments against chronic or life-threatening illness would not.

That was why fellow Boulder-based diagnostics firm ArcherDX filed to go public in June and raised up to $100 million in the process, before abandoning the IPO for a $1.4 billion buyout offer from Invitae Inc. (NYSE: NVTA).

Although there are plenty of headwinds against Biodesix from the broader economic perspective, Manuelian said there’s not much reason to believe that investors are worried about the company’s fundamental operation other than just poor timing.

“I think that this is one that maybe investors will start to look at come the New Year and say, ‘Wait a minute, this thing got beat up, left for dead and maybe it’s worth taking another look at,’’ he said.

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