This could be the busiest 5-day stretch in the IPO market since the week of July 28, 2014, as 14 companies look to raise nearly $2 billion.
However, last week's mediocre returns suggest that upcoming IPOs could face valuation pushback while some struggle to get done. 10 of the 14 IPOs are health care as the sector appears to have reached a watershed moment. The other four include a high-growth restaurant, a large MLP, an unusual REIT and a specialty lender.
It's Bo-Time for Bojangles' IPO
Bojangles' (BOJA) is the second restaurant IPO of 2015. The first, Shake Shack (SHAK), has gained 237% since its offering and trades at about 20x 2014 sales. Not all restaurants are a gravy train, however, as Bojangles' closest peers have not fared well in the past month. Selling deep-fried chicken and biscuits, Bojangles' does not make health claims, but instead emphasizes its no-microwave kitchens, made-to-order meals and "cult-like following." Its 20 consecutive quarters of positive comp growth and strong breakfast sales could have investors asking for seconds.
Will raising $900 million be a tall order for Tallgrass Energy?
Tallgrass Energy GP LP (TEGP) is set to be the year's second-largest IPO behind another energy transportation and storage MLP, Columbia Pipeline Partners LP (CPPL), itself one of just four LPs in the past five years that has raised over $800 million. Last week's oil and gas MLP, Black Stone (BSM), priced at the low end and broke issue. However, the discerning investor would note Tallgrass's lack of direct commodity exposure as well the strong performance and rising distributions of its underlying LP, Tallgrass Energy Partners LP (NYSE: TEP).
Two specialty finance IPOs: Betting on a Vegas REIT and an equipment financier
International Market Centers (IMC) is a turnaround REIT owned by Oaktree Capital and Bain Capital with two trade show centers offering a proposed 6% annual yield. Hosted in fabulous Las Vegas, NV, and equally-fabulous High Point, NC, these conventions result in about 75% of manufacturers' annual orders for the furniture, home décor and gift industries. Commercial Credit (CCR) is a fast-growing (+28% revenue in 2014) independent lender in the fleet transportation, construction and waste industries. CCR has been profitable since its 2004 inception and enjoys repeat customers, but a rise in interest rates could pressure margins.
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Health care IPOs in critical condition? We'll find out
Since 2013, 124 biotech IPOs have raised over $9 billion, creating a total equity value of $38 billion at the time of IPO. Even after last week's selloff in the biotech industry, those companies now command a market value of about $84 billion. As 2015 biotechs average -2% after the first-day pop, the sector's hyperactivity will be tested with these 8 biotech IPOs.
Two gene therapies, one with a $1 billion valuation
Adaptimmune Therapeutics (ADAP) is the type of biotech that IPO investors would almost expect to see a soaring first-day pop - if it went public two weeks ago. While it has not yet completed Phase 1/2 clinical trials, Adaptimmune's novel immunotherapy has shown promising results so far. The company secured a major partnership with GlaxoSmithKline and is backed by NEA, OrbiMed, Wellington, Fidelity BioScience and others. Controlled by Pope Asset Management, MultiVir (MVIR) is an early-stage biotech developing gene therapies for cancer featuring the same IP and management as Introgen, a biotech that went bankrupt in 2008.
Public LIFE: aTyr Pharma's IPO to gauge interest for preclinical biotechs
aTyr Pharma (LIFE), like Adaptimmune, boasts a novel therapy and impressive backers (Fidelity, Polaris, Domain), but investors may be turned off by its early stage. While not a reliable indicator of performance, aTyr's lead underwriter J.P. Morgan has a notable track record with biotechs. J.P. Morgan has led 12 biotech IPOs since 2013 (most recently Spark Therapeutics (ONCE; +154%)) and the group has an average return of +217%. 
A better Botox, a safer OxyContin
Led by founder and primary shareholder Jon Edelson, Anterios (ANTE) is developing a topical formulation of botulinum toxin. 2014 IPO Revance Therapeutics (RVNC), which also fits that description, is up 20% year-to-date, but still well below its first-day close. Collegium Pharmaceutical (COLL) is also owned and run by its founder, and the biotech is developing an abuse-deterrent version of pain medication OxyContin. Abuse-deterrent Vicodin developer KemPharm (KMPH) went public two weeks ago, and trades just above its offer price.
End migraines! Stop acne! Lose weight!
CoLucid Pharmaceuticals (CLCD) is developing the first new treatment for acute migraines in 20 years. Backed by Domain Partners, Novo A/S and Pappas Ventures, the late-stage biotech targets a massive market but must rely on just one drug candidate. Klox Technologies (KLOX) produces a topical gel that reacts to light from its proprietary lamp. The company claims that this combination therapy can be used for cosmetic skin care or to treat acne, chronic wounds and ulcers. Gelesis (GLSS) is developing a novel weight loss pill that expands in the stomach, giving patients a sense of fullness. The US markets for obesity and diabetes are enormous, but commercialization remains years out.
Smallest IPOs: Two diagnostics providers face an uphill battle on IPO path
More health care diagnostics IPOs have been postponed than any other sector this year, including genetic test provider AltheaDx (IDGX) and gene profiling company AutoGenomics (AGMX). Invitae (NVTA; -29%) has the year's second-lowest return. A holdover from last week, genetic test provider OpGen (OPGN) could raise $15 million while molecular profiling company HTG Molecular Diagnostics (HTGM) looks to raise $50 million.
| Renaissance Capital's IPO Calendar - Week of 5/4/2015 | ||||
| Issuer Business |
Symbol Exchange |
Deal Size $mil |
Price Range Shares Filed |
Lead Manager(s) |
| Tallgrass Energy GP LP Leawood, KS |
TEGP NYSE |
$900 | $24 - $27 35,311,000 |
Citi Goldman Sachs |
| Holds GP and LP interests in midstream natural gas LP Tallgrass Energy. | ||||
| Adaptimmune Therapeutics Abingdon, United Kingdom |
ADAP NASDAQ |
$150 | $15 - $17 9,375,000 |
BofA Merrill Lynch Cowen & Company |
| Developing cancer immunotherapies using genetically enhanced T-cell receptors. | ||||
| International Market Centers Las Vegas, NV |
IMC NYSE |
$150 | $12 - $14 11,500,000 |
Barclays Credit Suisse |
| Owns furniture trade show centers in Las Vegas, NV and High Point, NC. | ||||
| Commercial Credit Charlotte, NC |
CCR NYSE |
$116 | $15 - $17 7,250,000 |
J.P. Morgan Keefe Bruyette Woods |
| Provides commercial equipment loans to middle-market companies. | ||||
| Bojangles' Charlotte, NC |
BOJA NASDAQ |
$100 | $15 - $17 6,250,000 |
BofA Merrill Lynch Wells Fargo Securities |
| Restaurant chain known for its chicken and biscuits with over 600 locations. | ||||
| Collegium Pharmaceutical Canton, MA |
COLL NASDAQ |
$75 | $12 - $14 5,800,000 |
Jefferies Piper Jaffray |
| Developing an abuse-deterrent oral formulation of oxycodone for pain. | ||||
| aTyr Pharma San Diego, CA |
LIFE NASDAQ |
$75 | $13 - $15 5,360,000 |
J.P. Morgan Citi |
| Developing restorative protein therapeutics for rare muscular dystrophies. | ||||
| CoLucid Pharmaceuticals Burlington, MA |
CLCD NASDAQ |
$75 | $13 - $15 5,360,000 |
Piper Jaffray Stifel |
| Late-stage biotech developing therapies for acute migraines. | ||||
| Klox Technologies Quebec, Canada |
KLOX NASDAQ |
$67 | $13 - $15 4,800,000 |
UBS Investment Bank |
| Developing a light-reactive topical gel for acne and skin care. | ||||
| MultiVir Houston, TX |
MVIR NASDAQ |
$60 | $12 - $14 4,600,000 |
RBC Capital Markets |
| Biotech developing gene therapies for cancer. | ||||
| Gelesis Boston, MA |
GLSS NASDAQ |
$52 | $12 - $14 4,000,000 |
Piper Jaffray Stifel |
| Developing a weight loss capsule for patients with obesity and type 2 diabetes. | ||||
| Anterios New York, NY |
ANTE NASDAQ |
$51 | $12 - $14 3,900,000 |
Stifel RBC Capital Markets |
| Developing a topical formulation of botulinum toxin. | ||||
| HTG Molecular Diagnostics Tucson, AZ |
HTGM NASDAQ |
$50 | $13 - $15 3,570,000 |
Leerink Partners |
| Markets a diagnostic platform for complex molecular profiling. | ||||
| OpGen Gaithersburg, MD |
OPGN NASDAQ |
$15 | $5.50 - $6.50 2,500,000 |
Maxim Group |
| Provides genetic tests that identify multi-drug resistant bacterial infections. | ||||
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IPO pipeline update: 2 turnarounds submit filings
Including the launch of Fortress Transportation & Infrastructure Investors LLC (FTAI), 13 companies set terms to leave the IPO pipeline, but only two joined it, both turnaround stories. Wayzata-backed power boat manufacturer MasterCraft (MAST.RC) and American Securities-backed naval defense contractor Alion Science and Technology (ALIO.RC) each filed to raise $100 million. Both had been saddled with debt until their PE owners stepped in and restructured the companies.
IPO market snapshot
The Renaissance IPO Index, a market cap weighted basket of newly public companies that is designed to represent the US IPO market, has traded up 6% year-to-date, compared to 2% for the S&P 500. The index had reached its highest point ever last Friday, but it fell due to Twitter's decline. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Alibaba (BABA), Twitter (TWTR), Hilton (HLT), Ally Financial (ALLY) and JD.com (JD). To find out if this is the best ETF for you, visit our IPO investing page.
