Register for IPO Updates
US IPO Stats
IPO Industry Breakdown
Largest Global IPOs
Largest US IPOs
IPO News Archive
New Ways to Invest in IPOs - IPO ETFs
Biotech boomlet set to smash IPO record for two-week period
Analyst IPO Market Commentary
Last year saw the most biotech IPO activity in over a decade, both in number of deals (37) and proceeds ($2.7B). Yet when the Q4 experienced a 50% decline in the number of these IPOs over the Q3, and especially when 6 deals postponed in November, it seemed the market for biotechs had lost steam. 2014 is proving otherwise, as the industry is once again dominating the IPO calendar.
Two biotechs, Dicerna (
) and Celladon (
), have priced upsized offerings this week, three are scheduled to price tonight, and eight more are on next week's calendar. With two more in mid-February, that's a total of fourteen biotechs in two weeks. Even in the busiest period last year, the maximum number of biotech offerings in a two-week period was merely six in September. Before that, there had not been six during a two-week period since August 2000. Altogether, biotechs represent 52% of all currently scheduled deals, compared with a historical average close to 9% of pricings. Just through mid-February, the estimated proceeds for all planned and priced IPOs this year are $943 million, more than the total seen in any year from 2008 to 2012.
Biotech stocks have generally performed extremely well recently, with Dicerna a standout example. Dicerna was up 207%, which is the highest first-day pop for a biotech in over ten years. Since 2001, only two IPOs, both Chinese Internet companies (Baidu
), have ended the first day up more than 140%. While the other two biotechs to go public this year have performed more modestly (up 11% on average), the average 2013 biotech was up 72%. Also impressively, the average biotech to go public in 2011 to 2012 has gained over 250%.
Biotech Performance Since 2011
Time of Pricing
Cap at IPO
2011 - 2012
*Equal weighted average as of 1/30/14
The biotech bonanza is due to the emergence of several favorable conditions. First, the actual bioscience has made rapid advancements, evidenced by two gene therapy IPOs. Next, the FDA has put greater emphasis on accelerating the approval of life-saving drugs, so they do not stand by in interminable review. Investors have also been very receptive in their appetite for biotechs, further driving these IPOs just as the companies need critical financing. Finally, financial statements must be re-audited if an IPO occurs after February 14th. The biotechs are then eager to make it through this window of opportunity as science, regulation, and capital converge.
Particularly unusual is the number of pain-relief companies that have launched – appropriate for investors after last week's market dive. In fact, just one of the fifty-four biotechs over the past three years were focused on novel pain treatments, but the next two weeks will see four. Trevena is developing a potentially more powerful replacement for morphine, while Cara (
) and Egalet (
) are designing less addictive treatments.
Pain Relief IPOs on the Calendar
Novel opioid pain medication
Pain & acute heart failure
Phase 2a complete
Abuse-deterrent oral pain meds
Injectable pain therapies for osteoarthritis
Phase 2b complete
The IPO calendar also calls for a breakout of IPOs that target rare diseases. Rare disease biotech IPOs were very successful in 2013: Acceleron (
), Agios (
), Epizyme (
), and PTC (
) are all up more than 50%. Investor interest in the space seems to remain very high, as Dicerna's record trading today and Ultragenyx's increased price range ($19-$20 from $14-$17) illustrate.
Rare Disease IPOs on the Calendar
RNAi treatments of liver disease & cancer
Metabolic genetic diseases
Treatments for orphan diseases
Gene therapies for orphan diseases
Phase 3 complete
*Priced upsized deal at $15 and closed up 206% on its first day of trading.
Consistent with the first two groups, the remaining deals on the calendar are generally in a late stage of development and are looking to raise less than $75 million. Genocea (
) has developed vaccines that, by activating T cell responses, could be used to treat herpes and protect against pneumonia. Argos is relaunching its IPO after postponing a February 2012 offering. It is developing immunotherapies for cancer and HIV.
Other Biotech IPOs on the Calendar
Gene therapy for systolic heart failure
Phase 2a complete
Vaccines for infectious diseases
Protein therapeutics for eye diseases
Phase 2b complete
Enhanced Botox formulations
Immunotherapy for cancer & HIV
Treatments for kidney disease
Priced upsized deal at $8 and closed up 2% on its first day of trading.
The torrent of biotech deals on the calendar will test investor appetite for these high-risk companies. In addition to the biotech IPOs that launched, six more have filed this month, meaning that more than one in five companies in the IPO pipeline (22 out of 107) is a biotech. It is impossible to say whether the rest of 2014 will sustain these levels, but one thing is certain: like a shot in the arm, biotechs are back!
Keywords / Tickers: USIPOMarket, IPO
Recently Priced IPOs
ETF Express Award:
ETFExpress awards are based on a 'peer review system' whereby readers - including institutional and high net worth investors as well as managers and other industry professionals at fund administrators, brokers, custodians and advisers - are invited to elect a 'best in class' in a series of categories via an online survey. In each category, the firms with the most votes at the end of the voting period are subject to a final review by ETFExpress's Senior Editorial team.
Past performance does not guarantee future results. The performance data quoted represents past performance and current returns may be lower or higher. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. Investors should consider the investment objectives, risks, charges and expenses carefully before investing.
As stated in the Prospectus, the total annual operating expenses for the Fund was 3.48%. The Adviser has contractually agreed to keep net expenses from exceeding 2.50% of the Fund's average daily net assets for at least a year from the date of the Prospectus and for an indefinite period thereafter subject to annual re-approval of the agreement by the Board of Trustees.
An investor cannot invest directly in an index. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.
Definitions: Net Asset Value (NAV) of the fund is calculated by dividing the total value of all the securities in its portfolio, less any liabilities, by the number of fund shares outstanding. Market Price is current value at which an asset or service can be bought or sold. Premium/Discount is provided to show the comparison of the daily net asset value (NAV) and the midpoint of the closing bid/ask for each of the funds. The
Renaissance IPO Index® (IPOUSA)
is a stock market index based upon a portfolio of U.S.-listed newly public companies that includes securities prior to their inclusion in core U.S. equity portfolios. The Renaissance International IPO Index®
(IPOXUS) is a stock market index based upon a portfolio of newly public companies listed on non-U.S. exchanges. The S&P 500® Index (SPX) is a stock market index which includes 500 U.S. listed companies and seeks to capture approximately 80% coverage of available U.S. market capitalization.
Risk Disclosure: Investments in the
Renaissance IPO ETF, symbol "IPO"
Renaissance International IPO ETF, symbol "IPOS"
(the "ETFs"), and the
Global IPO Fund, symbol "IPOSX"
(the "Mutual Fund") are subject to investment risk, including possible loss of the principal amounts invested. The ETFs and the Mutual Fund (the "Funds") invest in companies that have recently completed initial public offerings. These stocks are unseasoned equities lacking trading history, a track record of reporting to investors and widely available research coverage which many result in extreme price volatility. Due to a greater number of IPOs in certain segments, the Funds may also be subject to information technology and financial sector risk, small and mid-capitalization company risk, and, for the Renaissance International IPO ETF, emerging markets risk. The Funds may hold securities in the form of Depository Receipts, REITs, and Partnership Units which have greater risks than common shares. The strategies have high portfolio turnover and securities lending risks. The returns of the ETFs may not match the return of the respective indices. The ETFs are classified as non-diversified investment companies subject to concentration risk.
Prospectus: Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus and/or summary prospectus with this and other information, please visit
. Read the prospectus carefully before investing. Renaissance Capital Investments, Inc., distributor for the Mutual Fund. Foreside Fund Services, LLC, distributor for the ETFs, 1-866-486-6645.
Definitions: The Renaissance IPO Index® is a stock market index based upon a portfolio of U.S.-listed newly public companies that includes securities prior to their inclusion in core U.S. equity portfolios. The S&P 500® Index is a stock market index based on the market capitalizations of 500 large companies whose common stock is publicly traded on the NYSE.
The information contained herein is proprietary and copyrighted. The media is welcome to use our information and ideas, provided that the following sourcing is included: Renaissance Capital - manager of IPO-focused ETFs.
The information and opinions expressed herein were prepared by Renaissance Capital's research analysts and do not constitute an offer to buy or sell any security. Renaissance Capital, the Renaissance IPO ETF (symbol: IPO), the Renaissance International IPO ETF (symbol: IPOS), or the Global IPO Fund (symbol: IPOSX), may have investments in securities of companies mentioned.
Register for Updates
Renaissance Capital LLC is an SEC-registered investment adviser.
Renaissance Capital Investments, Inc. is a
-registered broker-dealer, and member of
© 2016 Renaissance Capital LLC. All rights reserved.