Three IPOs raised a combined $426 million this week, all pricing below the midpoint and finishing below issue. On average they returned a disappointing -13.5%.
Despite lopping $1 billion off of its proposed valuation, Germany-based BioNTech (BNTX) became the third-largest biotech IPO by market cap in at least 10 years. The mRNA developer raised $150 million at a market cap of $3.4 billion, 23% below its original target, and below its last round in August on a per-share basis. Investors likely valued it against close peer Moderna (MRNA), which declined 20% from the time BioNTech launched its roadshow until it priced. It finished the week down 8%. BioNTech had raised $1.3 billion privately, with the vast potential of mRNA generating excitement among scientists and VCs, but recent underperformance has made public equity markets skeptical about any $3+ billion company with no product revenue.
It was joined by Vir Biotechnology (VIR), which raised $143 million at a market cap of $2.3 billion, also one of the largest biotechs of the past decade. Vir priced at the $20 low end, still above its January round ($18), and traded down 30% in one of the worst first-day drops of 2019. Backed by ARCH Venture and SoftBank, had raised over $600 million privately, and is led by the former CEO of Biogen. Its RNA interference platform is being tested in a Phase 2 trial for hepatitis B.
HBT Financial (HBT) priced below the range to raise $133 million, the largest US bank IPO in more than two years. It priced at a market cap of $421 million, in-line with peers on price-to-book, and traded down 3% on its debut. All six of the year's regional US bank IPOs now trade roughly at or below the offer price, with an average return of -4%.
| 3 IPOs During the Week of October 7th, 2019 | |||||
|---|---|---|---|---|---|
| Issuer Business |
Deal Size |
Market Cap at IPO |
Price vs. Midpoint |
First Day Return |
Return at 10/11 |
| HBT Financial (HBT) | $133M | $421M | -11% | -3% | -3% |
| Family-owned bank with 64 branches in central and northeastern Illinois. | |||||
| BioNTech (BNTX) | $150M | $3,444M | -21% | -5% | -8% |
| German biotech developing individualized immunotherapies for cancer. | |||||
| Vir Biotechnology (VIR) | $143M | $2,299M | -5% | -30% | -30% |
| Phase 2 biotech developing immunologic therapies for infectious diseases. | |||||
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More Chinese issuers submitted initial filings this week, joined by a biotech, a genetic diagnostics company, and fours SPACs.
| 8 Filings During the Week of October 7th, 2019 | |||
|---|---|---|---|
| Issuer Business |
Deal Size |
Sector | Lead Underwriter |
| 89bio (ETNB) | $70M | Health Care | BofA ML |
| Phase 1 biotech developing therapies for NASH and other metabolic diseases. | |||
| Centogene (CNTG) | $69M | Health Care | Leerink |
| Provides genetic testing and rare disease diagnostic products. | |||
| FinServ Acquisition (FSRVU) | $200M | SPAC | Barclays |
| Blank check company targeting the fintech industry led by finance veterans. | |||
| Osprey Technology Acq. (SFTW.U) | $250M | SPAC | Credit Suisse |
| Second blank check company led by Edward and Jonathan Cohen targeting the tech industry. | |||
| Merida Merger I (MCMJU) | $100M | SPAC | EarlyBird |
| Blank check company formed by Merida Capital Partners targeting the cannabis industry. | |||
| Fangdd Network Group (DUO) | $150M | Real Estate | Morgan Stanley |
| Chinese online real estate trading platform. | |||
| LGL Systems Acquisition (DFNSU) | $125M | SPAC | Jefferies |
| Blank check company led by Marc Gabelli and the co-founder of L3 Technologies targeting the defense industry. | |||
| Q&K International Group (QK) | $100M | Real Estate | Morgan Stanley |
| Operates a long-term apartment rental platform in China. | |||
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 10/10/19, the Renaissance IPO Index was up 21.8% year-to-date, while the S&P 500 had a gain of 19.1%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Spotify (SPOT) and VICI Properties (VICI). The Renaissance International IPO Index was up 15.5% year-to-date, while the ACWX was up 10.8%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Meituan-Dianping and SoftBank.
