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US IPO Weekly Recap: 2016 IPO market kicks off with a flurry of biotech filings
Analyst IPO Market Commentary
Biotech IPOs show their resilience, yet again.
Twelve IPOs filed this week, including nine biotechs -
more biotech IPO filings than any week last year
. The sub-sector that powered the 2015 IPO market (35% of the 170 deals) ended last year battered down to a +3% gain, compared to +41% for biotechs at the end of 2014. Of the last 20 IPO filings, health care accounts for 65% and technology is 25% - the depressed tech sector saw notable filers Nutanix (
) and SecureWorks (
) in December. However, filing for an IPO is one thing - getting the deal done will be another.
The VIX Volatility Index, which has a
close inverse relationship to IPO activity
closed above 25 for the first time since September
. With a crash in commodities and big trouble in China's markets, the S&P 500 ended the week down 6% - the worst opening week in its history. The average IPO from 2015 now trades -11% below its offer price. Even recent IPOs from the 4Q15, which faced intense valuation pressure, saw total average returns drop to +6% from +17% last week, while their post first-day trading swung negative. Expect more pricing pressure in the beginning of 2016.
Biotech investors go for seconds
14 biotechs priced secondary offerings
this past week. The biotechs fell -2% on average from the offer price, after pricing -18% below where they were trading at the announcement of the offering. Their return was unimpressive, but far better than that of the Nasdaq Biotech Index, which plummeted -11% this past week. While the pre-revenue biotech sector does not experience traditional multiple contraction, IPO investors may instead seek greater discounts, with an eye on venture investors' last private round.
Down but not out: Nine biotechs file for IPOs
The flurry of biotech filings contains several IPOs that should not get lost in the crowd.
) will test IPO investors' appetite for a hot biotech at an extremely early stage - human trials expected to begin in 2017. Leveraging CRISPR gene editing technology, Editas has raised over $200 million from a group of top-tier investors including Deerfield, Fidelity, Google, Polaris and Third Rock.
), also in preclinical studies, was the largest biotech IPO filer this past week with a $115 million deal size. Backed by OrbiMed, Adams Street and Fidelity, Corvus is developing checkpoint immunotherapies for tumors, another promising space. After postponing an IPO in 2014,
) is back with a new use for its drug candidate - checkpoint immunotherapy - along with a new $80 million funding round from top investors in August and the former CMO of AstraZeneca leading the company. After netting $65 million in a Series C in October (OrbiMed, Sofinnova, Redmile),
) plans to raise $86 million as it develops one-shot gene therapies for rare but fatal diseases. Backed by Polaris and Merck,
) has an ambitious plan to create a universal flu vaccine that both treats and prevents all strains of the disease; its $69 million IPO could take it the rest of the way through Phase 2 trials. Pulmonary arterial hypertension biotech
) is seeking $80 million as it plans a Phase 3 trial. T-cell biotech
) filed to raise $86 million.
Three non-biotechs: Argentina bank,
and avoiding adverse drug events with IT
Controlled by CEO Julio Supervielle, Argentina-based bank
) filed to raise $100 million in the US less than one month after the country's currency began free-floating, weakening about 30% compared to the dollar. Founder and CEO-owned
) plans to raise $100 million to pay down debt ($428mm; 8.5x LTM adj. EBITDA), which the company took on to rapidly expand its concession stores into new airport terminals (+42% yoy growth; $359mm LTM sales). Venture-backed
Tabula Rasa HealthCare
), which offers risk management IT solutions to health care providers, filed to raise $115 million. It grew sales by 45% to $50 million during the first nine months of 2015, at a 30% gross margin.
M&A update: Medical device IPO acquisitions
High-growth medical device maker
), on file for a $75 million IPO, announced that it would be acquired for $380 million. Another medical device maker,
), officially withdrew its IPO after announcing its acquisition in November. If markets remain turbulent, more IPO filers may explore their M&A options.
Failure to launch: No IPOs added to the calendar
Even as biotechs piled into the IPO pipeline, poor market conditions likely deterred companies from joining the
. Only Shimmick Construction (
) is scheduled for next week in a $75 million IPO.
12 filings during the week of January 4, 2016
Deal size ($mm)
Bavarian Nordic (
Biotech: Vaccines that stimulate T-cells
Audentes Therapeutics (
Biotech: Gene therapy for muscular diseases
Editas Medicine (
Biotech: Gene editing based on CRISPR
Tabula Rasa HealthCare (
IT solutions for health care management
Reata Pharmaceuticals (
Biotech: Protein-based anti-inflammation
Syndax Pharmaceuticals (
Biotech: Enhanced immuno-oncology
Corvus Pharmaceuticals (
Biotech: Immunotherapy for solid tumors
Spring Bank Pharmaceuticals (
Biotech: Viral disease platform
Biotech: Universal flu vaccine
Grupo Supervielle (
Argentina bank with $2B in assets
OTG EXP (
Operates 220 restaurants in 10 airports
Clearside Biomedical (
Biotech: Diseases that cause blindness
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In 2015, 170 companies raised $30 billion. The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 7% year-to-date, compared to -6% for the S&P 500. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and
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