Biotech IPOs show their resilience, yet again.
Twelve IPOs filed this week, including nine biotechs -
more biotech IPO filings than any week last year
. The sub-sector that powered the 2015 IPO market (35% of the 170
deals) ended last year battered down to a +3% gain, compared to
+41% for biotechs at the end of 2014. Of the last 20 IPO filings,
health care accounts for 65% and technology is 25% - the depressed
tech sector saw notable filers Nutanix (NTNX) and SecureWorks
(SCWX) in December. However, filing for an IPO is one thing -
getting the deal done will be another.
The VIX Volatility Index, which has a
close inverse relationship to IPO activity
closed above 25 for the first time since September
. With a crash in commodities and big trouble in China's markets,
the S&P 500 ended the week down 6% - the worst opening week in
its history. The average IPO from 2015 now trades -11% below its
offer price. Even recent IPOs from the 4Q15, which faced intense
valuation pressure, saw total average returns drop to +6% from +17%
last week, while their post first-day trading swung negative.
Expect more pricing pressure in the beginning of 2016.
Biotech investors go for seconds
14 biotechs priced secondary offerings
this past week. The biotechs fell -2% on average from the offer
price, after pricing -18% below where they were trading at the
announcement of the offering. Their return was unimpressive, but
far better than that of the Nasdaq Biotech Index, which plummeted
-11% this past week. While the pre-revenue biotech sector does not
experience traditional multiple contraction, IPO investors may
instead seek greater discounts, with an eye on venture investors'
last private round.
Down but not out: Nine biotechs file for IPOs
The flurry of biotech filings contains several IPOs that should not
get lost in the crowd.
(EDIT) will test IPO investors' appetite for a hot biotech at an
extremely early stage - human trials expected to begin in 2017.
Leveraging CRISPR gene editing technology, Editas has raised over
$200 million from a group of top-tier investors including
Deerfield, Fidelity, Google, Polaris and Third Rock.
(CRVS), also in preclinical studies, was the largest biotech IPO
filer this past week with a $115 million deal size. Backed by
OrbiMed, Adams Street and Fidelity, Corvus is developing checkpoint
immunotherapies for tumors, another promising space. After
postponing an IPO in 2014,
) is back with a new use for its drug candidate - checkpoint
immunotherapy - along with a new $80 million funding round from top
investors in August and the former CMO of AstraZeneca leading the
company. After netting $65 million in a Series C in October
(OrbiMed, Sofinnova, Redmile),
(BOLD) plans to raise $86 million as it develops one-shot gene
therapies for rare but fatal diseases. Backed by Polaris and Merck,
(VIST) has an ambitious plan to create a universal flu vaccine that
both treats and prevents all strains of the disease; its $69
million IPO could take it the rest of the way through Phase 2
trials. Pulmonary arterial hypertension biotech
(RETA) is seeking $80 million as it plans a Phase 3 trial. T-cell
(BAVN) filed to raise $86 million.
Three non-biotechs: Argentina bank,
and avoiding adverse drug events with IT
Controlled by CEO Julio Supervielle, Argentina-based bank
(SUPV.RC) filed to raise $100 million in the US less than one month
after the country's currency began free-floating, weakening about
30% compared to the dollar. Founder and CEO-owned
(OTG) plans to raise $100 million to pay down debt ($428mm; 8.5x
LTM adj. EBITDA), which the company took on to rapidly expand its
concession stores into new airport terminals (+42% yoy growth;
$359mm LTM sales). Venture-backed
Tabula Rasa HealthCare
(TRHC), which offers risk management IT solutions to health care
providers, filed to raise $115 million. It grew sales by 45% to $50
million during the first nine months of 2015, at a 30% gross
M&A update: Medical device IPO acquisitions
High-growth medical device maker
), on file for a $75 million IPO, announced that it would be
acquired for $380 million. Another medical device maker,
(SRGQ.RC), officially withdrew its IPO after announcing its
acquisition in November. If markets remain turbulent, more IPO
filers may explore their M&A options.
Failure to launch: No IPOs added to the calendar
Even as biotechs piled into the IPO pipeline, poor market
conditions likely deterred companies from joining the
. Only Shimmick Construction (
) is scheduled for next week in a $75 million IPO.
12 filings during the week of January 4,
Deal size ($mm)
|Bavarian Nordic (BAVN)
|Biotech: Vaccines that stimulate T-cells
|Audentes Therapeutics (BOLD)
||Biotech: Gene therapy for muscular diseases
|Editas Medicine (EDIT)
||Biotech: Gene editing based on CRISPR
|Tabula Rasa HealthCare (TRHC)
||IT solutions for health care management
|Reata Pharmaceuticals (RETA)
||Biotech: Protein-based anti-inflammation
|Syndax Pharmaceuticals (
||Biotech: Enhanced immuno-oncology
|Corvus Pharmaceuticals (CRVS)
||Biotech: Immunotherapy for solid tumors
|Spring Bank Pharmaceuticals (SBPH)
||Biotech: Viral disease platform
||Biotech: Universal flu vaccine
|Grupo Supervielle (SUPV.RC)
||Argentina bank with $2B in assets
|OTG EXP (OTG)
||Operates 220 restaurants in 10 airports
|Clearside Biomedical (CLSD)
||Biotech: Diseases that cause blindness
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IPO Market Snapshot
In 2015, 170 companies raised $30 billion. The Renaissance IPO
Indices are market cap weighted baskets of newly public companies.
The Renaissance IPO Index is down 7% year-to-date, compared to -6%
for the S&P 500. Renaissance Capital's IPO ETF (
) tracks the index, and
top ETF holdings
include Synchrony Financial (SYF), Alibaba (BABA) and Citizens
Financial Group (CFG). The Renaissance International IPO Index is
down 2% year-to-date, compared to -7% for ACWX. Renaissance
Capital's International IPO ETF (
) tracks the index, and
top ETF Holdings
include Recruit Holdings and NN Group.
US IPO Weekly Recap: 2016 IPO market kicks off with
a flurry of biotech filings
originally appeared on IPO investment manager Renaissance Capital's
web site renaissancecapital.com.
The information and opinions expressed herein were prepared by
Renaissance Capital's research analysts and do not constitute an
offer to buy or sell any security. Renaissance Capital, the
Renaissance IPO ETF (symbol: IPO)
Global IPO Fund (symbol: IPOSX)
, may have investments in securities of companies mentioned.