Another biotech IPO has beaten the market blues. Keros Therapeutics (KROS) finished the week up 35%, affirming that the biotech industry won’t be deterred by current market volatility.
Oncology biotech Keros Therapeutics priced its upsized IPO at the high end to raise $96 million at a $325 million fully diluted market cap (+12% vs. original midpoint). The company priced its IPO at a 19% premium to its last capital raise in March 2020, and it believes its cash balance of $149 million will last into the 2H22. Keros’ lead candidate, KER-050, is beginning a Phase 2 trial for anemia and thrombocytopenia associated with myelodysplastic syndromes (MDS). The company believes KER-050 will treat all stages of MDS, making it superior to current therapies. Keros finished the week up 35%.
The IPO Index jumped 11.3% this past week, compared to a 10.4% increase for the S&P 500. The Index's top performers were Levi Strauss (LEVI; +45% this week), Farfetch (FTCH; +42%), StoneCo (STNE; +41%), Allakos (ALLK; +40%), PPD (PPD; +38%), and Lyft (LYFT; +38%). The Vix Volatility Index settled to its lowest level in a month; if this trend continues, we could see IPO volume begin to normalize by summer.
| 1 IPO During the Week of April 6th, 2020 | |||||
|---|---|---|---|---|---|
| Issuer Business |
Deal Size |
Market Cap at IPO |
Price vs. Midpoint |
First Day Return |
Return at 04/10 |
| Keros Therapeutics (KROS) | $96M | $325M | 7% | +26% | +35% |
| Phase 1 biotech developing therapies for blood and musculoskeletal disorders. | |||||
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This past week, Airbnb agreed to pay more than 10% interest on the $1 billion it raised from private equity lenders. The investors also received warrants that they can convert at an $18 billion valuation, a large drop from the $50 billion valuation it once sought.
Trading in Luckin Coffee (LK) was halted this past week as regulators continue to investigate claims of fraud related to overstated revenue. Two more US-listed Chinese issuers, TAL Education Group and iQIYI (IQ), are now facing accusations of financial misconduct as well.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 4/8/20, the Renaissance IPO Index was down 14.2% year-to-date, while the S&P 500 was down 14.9%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Uber (UBER) and Spotify (SPOT). The Renaissance International IPO Index was down 9.9% year-to-date, while the ACWX was down 21.7%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Meituan-Dianping and Adyen.
