14 companies were scheduled to go public this week, including 10 health care deals. Only 8 IPOs got through, as 3 biotechs have been pushed back to next week, two companies postponed and one withdrew. however; IPO investors had plenty of options while the NASDAQ composite hit a 1-month low. This week's deals did include the year's largest IPO so far and the first restaurant chain since Shake Shack to begin trading.
Six companies submitted initial filings, including fitness wearables company Fitbit (FIT) and the less fitness-oriented chicken wing chain Wingstop (WING). Four companies with billion-dollar valuations joined the IPO calendar, including small business e-commerce platform Shopify (SHOP), EQT GP (EQGP) and biotech Galapagos (GLPG).
Investors eat up Bojangles' IPO
Bojangles' (BOJA) priced above its range and popped nearly 50% in early trading Friday (investors hoping for a Shake Shack (SHAK; +224%) spike), but closed with a 25% gain. Restaurant IPOs have done notoriously well, but the chicken and biscuit chain still must prove itself outside of the Southeast and against increasing competition at breakfast time. Bojangles' first-day pop was in line with the average of the last three restaurant IPOs with 7-10% unit growth and a similar PE-backing (LOCO, PLAY, FRSH). Owner Advent International sold 100% of the deal.
A (general) partner of my (limited) partner is a partner of mine: 2015's largest IPO Tallgrass GP up 9%
Tallgrass Energy GP LP (TEGP) raised $1.2 billion to become the year's largest IPO, surpassing pipeline MLP Columbia (CPPL), after it priced 14% above the midpoint and offered additional shares. The newly-public company owns GP and LP interests in gas pipeline company Tallgrass Energy LP (NYSE: TEP), which steadily raised its distributions and gained over 125% since its May 2013 IPO.
Four biotechs have mixed performance
Adaptimmune Therapeutics (ADAP) appeared that it would buck the downward biotech trend when it priced at the high end and raised $1.2 billion in the year's second-largest biotech IPO after Cellectis (CLLS; also a BofA-led IPO), which already traded in Europe. However, the cancer immunotherapy biotech fell 6% on its debut. Instead, aTyr Pharma (LIFE) was the week's best performer, gaining a modest 7% on its first day and then finishing Friday up 38%. Insiders reduced the float on the IPO and a Series E round in March saw investments from Federated Investors, T. Rowe Price and Sofinnova. As mentioned in the Week Ahead blog post, the prior 12 J.P. Morgan-led biotechs average over 200% gains.
Collegium Pharmaceutical (COLL) is developing an abuse-deterrent version of OxyContin, a multi-billion drug. Collegium priced at the low end and traded up 8% to its original midpoint, also likely helped by major insider buying and a March funding round from TPG Biotech, RA Capital and Adage Capital. CoLucid Pharmaceuticals (CLCD) gave IPO investors a headache as the migraine biotech priced 29% below its midpoint and fell 20% on day one, the year's second-worst first-day performance.
Diagnosis negative: 2 diagnostics IPOs get done but disappoint
Despite diagnostics peers postponing IPOs this year, both of the week's scheduled diagnostics companies went public. HTG Molecular Diagnostics (HTGM) priced at the midpoint and broke issue but finished the week just above its IPO price. The week's smallest IPO, OpGen (OPGN) also had the lowest return as it finished the week down 27% after dropping 19% on the IPO (the year's third-worst debut).
3 biotechs delay until next week - topical Botox, weight loss pill and gene therapy
A lagging biotech sector means less interest in early-stage drug development without big-name backers. Weight loss pill maker Gelesis (GLSS) will attempt to price its $52 million offering next week if it can find a large enough investor base. Gene therapy biotech MultiVir (MVIR) and topical botulinum toxin maker Anterios (ANTE) will also attempt to raise $60 million and $51 million, respectively, next week. Of note, this week's two worst performers had originally been on the calendar for the prior week.
No dice for Vegas REIT IMC, no credit for Commercial Credit, no time for Klox
Two IPO candidates postponed their offerings indefinitely and one withdrew its plans entirely. Oaktree and Bain-backed International Market Centers (IMC) offered a 6% yield but the turnaround REIT postponed as investors didn't show enough interest in its trade centers in Las Vegas, NV, and High Point, NC. Commercial Credit (CCR) postponed and withdrew its $116 million; the equipment financing provider had achieved robust organic growth (27% 5-year CAGR) but faces increased competition and did not offer a dividend. Canada-based Klox Technologies (KLOX) which is developing light-activated gels for acne and skin care, was the only health care company to officially postpone.
| IPO pricings (week of May 4, 2015) | |||||
| Company (Ticker) | Business | Deal size ($mm) | IPO price vs. midpoint | 1st-day pop | Return at 5/8 |
| aTyr (LIFE) | Biotech: Rare muscular dystrophies |
$24 | 0% | 7% | 38% |
| Bojangles' (BOJA) |
Chicken and biscuits chain | $147 | +19% | 25% | 25% |
| Tallgrass Energy GP LP (TEGP) | GP/LP interest in gas pipelines | $1,204 | +14% | 9% | 9% |
| Collegium Pharmaceuticals (COLL) | Biotech: Abuse-deterrent oxycodone | $428 | -8% | -4% | 8% |
| HTG Molecular Diagnostics (HTGM) | Diagnostics: Molecular profiling | $50 | 0% | -2% | 2% |
| Adaptimmune Theapeutics (ADAP) | Biotech: Cancer immunotherapy | $191 | +6% | -6% | 1% |
| CoLucid Pharmaceuticals (CLCD) | Biotech: Acute migraines | $55 | -29% | -20% | -20% |
| OpGen (OPGN) | Diagnostics: Genetic tests | $17 | -33% | -19% | -27% |
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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 3% for the S&P 500. 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.
