8/7/15 Analyst IPO Market Commentary
Biotech companies lead a weak week in IPOs.
So far this year, 127 companies have come public, and the average first-day pop has been about 16%. In the past two weeks, 8 of 12 IPOs ended their first day down or flat. The downward trend accelerated this week with an average first-day return of just 6%. Three biotech companies had successful IPOs and averaged 22% returns on the first day, but two consumer companies and one energy company launched with an average first-day return of -11%. The average growth for the week was 16% in a week that saw the Nasdaq fall 2%.
•Planet Fitness ended its first day flat, but gained 14% for the week.
•Amplify Snack Brands priced above its range and broke issue in its debut
•Six out of ten IPOs scheduled for this week launched; four largest IPOs either broke issue or postponed
•46% of IPOs year-to-date currently trade below their offer price
Amplify Snack Brands (BETR) priced above its range and broke issue in its debut, the second IPO this year after Flex Pharma (FLKS) and only the ninth IPO in the last ten years to do so. The company behind SkinnyPop brand popcorn priced above its range at $18 and closed the day down 10%. Planet Fitness (PLNT), the franchised low-cost gym chain, priced at the high end of its range and quickly dropped when the market opened. It found support and closed the week up 14%. Neither company could emulate the success of recent health-focused IPOs Blue Buffalo Pet Products (BUFF) and FitBit (FIT), which saw first-day pops of 36% and 48%, respectively.
Zynerba rolling in the green; investors go nuts for Aimmune
Zynerba Pharmaceuticals (ZYNE) had the best IPO, closing up 75% for the week. The company is similar to GW Pharmaceuticals (GWPH), another biotech developing cannabinoid-based treatments. GW's total return of 1084% since its IPO indicates investor interest in preclinical biotech companies, a bullish sign for Zynerba. Aimmune Therapeutics (AIMT) had the best first-day pop of the week, gaining 51%. The company is developing an oral immunotherapy to desensitize peanut allergies. DBV Technologies (DBVT), a French biotech developing immunotherapy patches for food allergies, has returned 83% since its US IPO in late 2014. Parkinson’s disease biotech Intec (NTEC) was not as strong, but in a tough week for IPOs, its 0.5% gain on the first day was third best.
Four IPOs fail to price
Breast implant maker GC Aesthetics (GCAA) did not price as scheduled, but will assess its IPO on a day-to-day basis. Citing pressure on energy investors and implying valuation pushback, Carlyle-backed Philadelphia Energy Solutions (PESC), the third-largest IPO of the week, postponed as well. Benitec Biopharma (BNTC) postponed its US IPO, likely reflecting its early stage and a lack of in-human efficacy data. RiverBanc Multifamily Investors (RMI), originally on the IPO calendar for last week, has officially postponed its IPO, possibly reflecting valuation sensitivity.
Nowhere to run: Sunrun has third worst debut of 2015
Sunrun (RUN) priced at the midpoint of its range and then fell 23% on the first day. It was the third worst debut of 2015 after last week saw the worst, vTv Therapeutics (VTVT). Sunrun is the #2 player in the residential solar business behind SolarCity (SCTY). SunEdison (SUNE) announced that it would acquire the #3 player, Vivint Solar (VSLR). SunEdison has fallen 35% in the last week and 50% in the past month. The prior two solar IPOs, TerraForm Global (owned by SunEdison (GLBL)) and 8point3 Energy Partners (owned by SunPower/First Solar (CAFD)) also broke issue on the first day and now trade over 20% below their respective offer prices.