The first two IPOs of the second quarter are targeting a combined $170 million in the week ahead. Subscription billing unicorn Zuora (ZUO) and Alzheimer’s disease biotech Alzheon (ALZH) represent the leading sectors from the first quarter. Tech deals are up 20% on average year-to-date; while health care deals are up 8%, the sector accounts for both the two best and two worst deals of the year.
| U.S. IPO Calendar | |||
|---|---|---|---|
| Issuer Business |
Deal Size Market Cap |
Price Range Shares Filed |
Top Bookrunners |
| Alzheon (ALZH) Framingham, MA |
$70M $228M |
$13 - $15 5,000,000 |
Citi Piper Jaffray |
| Late-stage biotech developing small molecule therapies for Alzheimer's disease. | |||
| Zuora (ZUO) San Mateo, CA |
$100M $1,140M |
$9 - $11 10,000,000 |
Goldman Morgan Stanley |
| Provides a cloud-based subscription billing and management platform. | |||
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Zuora (ZUO), which offers a billing management platform, aims to raise $100 million at a $1.1 billion market value. Founded by an early Salesforce.com (NYSE: CRM) executive, the company benefits from an experienced management team, and insiders intend to purchase 12% of the IPO. Zuora has grown subscription revenue at 30%+, and boasts a 110% dollar-based retention rate. However, the company spends heavily on sales and marketing, which holds back profitability, and its services segment dragged gross margin down to 52% in 2017.
Alzheon (ALZH), which is developing small molecule therapies for Alzheimer’s disease (AD), is targeting $70 million at a $228 million market value. The FDA granted Fast Track designation for the company’s sole candidate, ALZ-801, in late 2017, and management expects to begin Phase 3 trial for patients with mild AD later in 2018. While Alzheon is addressing a multi-billion dollar market with significant unmet need, ALZ-801 is based on a drug that originally failed in large AD trials and was only revived after retrospective analysis; other drugs addressing beta amyloids, which Alzheon targets, have failed in Phase 3 trials.
Upcoming IPOs: 11 deals could launch
Eleven companies are eligible to launch IPO roadshows in the upcoming week, headlined by electronic signature platform DocuSign (DOCU), DellEMC spinoff Pivotal Software (PIVI.RC) and spreadsheet-based collaboration platform Smartsheet (SMAR). Others deals that could launch include CIBC spinoff FirstCaribbean International Bank (FCI), HR software provider Ceridian (CDAY), a Michigan commercial bank, a small Chinese fintech and four biotechs.
| 11 Deals Could Launch in the Week Ahead | |||
|---|---|---|---|
| Issuer Business |
Est. Deal Size |
Sector | Lead Underwriter |
| DocuSign (DOCU) | $400M | Technology | Morgan Stanley |
| Provides a cloud-based electronic signature platform. | |||
| ASLAN Pharmaceuticals (ASLN) | $86M | Health Care | Leerink Partners |
| Singapore biotech developing cancer therapies using the HER pathway. | |||
| CLPS (CLPS) | $14M | Technology | The Benchmark Company |
| Chinese provider of turn-key financial technology solutions. | |||
| Ceridian HCM Holding (CDAY) | $200M | Technology | Goldman Sachs |
| Provides enterprises with human capital management software. | |||
| Smartsheet (SMAR) | $100M | Technology | Morgan Stanley |
| Provides a spreadsheet-based work collaboration platform. | |||
| FirstCaribbean International Bank (FCI) | $350M | Financials | Barclays |
| Leading bank in Barbados, the Bahamas and Cayman Islands spun out of CIBC. | |||
| Level One Bancorp (LEVL) | $25M | Financials | Raymond James |
| Michigan-based commercial bank with $1.3 billion in assets. | |||
| Mereo BioPharma Group (MREO) | $81M | Health Care | Cowen & Company |
| Developing rare disease drug candidates acquired from large pharmas. | |||
| Pivotal Software (PIVI.RC) | $500M | Technology | Morgan Stanley |
| DellEMC spin-off providing a platform for enterprises to manage cloud-based apps. | |||
| Surface Oncology (SURF) | $75M | Health Care | Goldman Sachs |
| Clinical-stage biotech developing next-generation antibody cancer therapies. | |||
| MorphoSys (MOR) | $150M | Health Care | Goldman Sachs |
| Licensing antibodies to pharmas and developing its own therapy for lymphoma. | |||
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index has returned -0.6% year-to-date and the S&P 500 is down -2.6%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Snap (SNAP) and US Foods (USFD). The Renaissance International IPO Index is up 4.9% year-to-date, while the ACWX is down -1.3%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Orsted (DONG Energy) and ASR Nederland.
