A Plasma-tastic IPO

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With shouts of joy from investors and the Foolish analysts who cover them, the IPO market seems wide open once again for companies with "pharmaceutical" or "biotherapeutics" in their names.

Unfortunately, it looks like the companies also need products, not to mention that mystical thing called "profits." Money-sucking development-stage drugmakers -- earlier-stage versions of companies like Vertex Pharmaceuticals (Nasdaq: VRTX) or Seattle Genetics (Nasdaq: SGEN) -- need not apply. Yet.

Joining Cumberland Pharmaceuticals (Nasdaq: CPIX), which IPOed in August, Talecris Biotherapeutics (Nasdaq: TLCR) debuted on the public markets yesterday, raising $950 million for the company. That's the largest IPO of the year, aside from Shanda Games' (Nasdaq: GAME) spinoff from Shanda Interactive (Nasdaq: SNDA). 

Talceris competes with Baxter (NYSE: BAX) and Australia's CSL Behring in providing immunotherapy products derived from human plasma. Essentially, the company collects the blood product from donors, then purifies out different proteins and antibodies that can be used as therapies for people who need them.

Its products brought in $1.4 billion in revenue last year, but lower gross margins than you'd normally have on drugs, combined with interest payments, ate up much of the revenue. The result: only $66 million in net income. Sales were up 20% year over year in the first half of this year, and margins are improving, so at least the company's headed in the right direction.

Net income -- excluding a one-time benefit -- has a full-year run rate of about $135 million, based on the first-half results. (That's assuming my math is correct.) But net income should improve in the second half, provided Talceris keeps increasing its revenue and uses the proceeds from the IPO to pay down some of its debt, lowering those pesky interest payments.

Talceris looks like it's worth keeping an eye on. If you'd like to do more research, check out Motley Fool CAPS, where you'll already find a bear pitch on the company, and a few outperform and underperform calls.