Four companies went public in the past week and brought the final IPO count of 2014 up to 275 deals that raised $85 billion, making it the most active year for the IPO market since 2000. The year's record biotech boom was capped by Juno Therapeutics (+46%), the largest biotech IPO in at least 15 years. Online lender On Deck Capital (+21%) also raised investor interest in a week that saw each IPO end above the offer price, which hasn't occurred since March of this year.
Earlier this week, Renaissance Capital published the 2014 Annual Review of the US IPO Market, which offers our experts' insights on notable trends of 2014 IPOs as well as a look at what to expect in 2015.
Two more biotech IPOs in the race to cure cancer
Juno Therapeutics (JUNO) priced 45% above its original midpoint - the year's second highest premium behind Castlight Health - and raised $265 million at a valuation of over $2 billion, making it the largest biotech IPO in at least 15 years both by deal size and market cap. Juno likely benefited investor enthusiasm around immunotherapy treatments, such as 2014 biotech IPOs Kite Pharma (KITE; +215% from offer price) and Immune Design (IMDZ; +176%). Aside from the more than $300 million it has raised in private funding, Juno's main selling point may be the 90% remission rate it achieved in an ongoing Phase 1 trial for certain lymphomas/leukemias and a pipeline that could cover 42% of annual cancer deaths.
Bellicum Pharmaceuticals (BLCM) is also an early stage biotech focusing on cancer immunotherapies. The company priced above its range and raised $140 million to become the fourth largest biotech IPO of the year. It rose 26% on its first day, but traded down to just a 4% gain by the end of Friday. Bellicum's technology is aimed at preventing some of the life-threatening side effects associated with other immunotherapies.
(On)Deck the halls: Online small business lender up 21%
On Deck Capital (ONDK) priced above the range and popped 40% on its debut, following up the prior week's IPO of LendingClub (LC, +68%). While On Deck gave back some of its gains on Friday, its successful offering suggests that alternative lending IPOs could continue to see interest in 2015 as consumers and small businesses abandon banks and traditional lenders in favor of easy-to-use online platforms.
Rice goes against the grain: Energy MLP up 8%
Five weeks had gone by without a midstream oil and gas MLP going public amid a drop in oil prices, but Rice Midstream LP (RMP) raised $413 million and traded up 8% by Friday. It priced at the year's largest discount for an energy MLP and then broke issue on the first day. A spinoff of E&P Rice Energy (RICE), the midstream MLP owns natural gas gathering pipelines in the Marcellus Shale. Its parent has gained 23% since its January IPO, trading above the seven other E&P IPOs of 2014. Close peers (AM, CNNX) have traded down significantly in the past month, but Rice Midstream is an encouraging sign for the more than ten energy MLPs in the IPO pipeline, if they accept potential valuation pushback.
Two IPOs postpone
Louisiana bank First Guaranty Bancshares (FGBI) currently trades on the OTC markets and postponed plans to raise $91 million and list on the NASDAQ. S1 Biopharma (SXB), which is developing a combination of existing drugs for female hypoactive sexual desire disorder, had delayed its $23 million IPO until this past week, but further pushed back the offering to January.
| IPO pricings (week of December 15, 2014) | |||||
| Company (Ticker) | Business | Deal Size ($mm) | IPO Price vs. Midpoint | First-Day Pop | Return as of 12/19 |
| Juno (JUNO) | Cancer immunotherapy | $265 | 45% | 46% | 46% |
| On Deck Capital (ONDK) |
Online small business loans |
$200 | 18% | 40% | 21% |
| Bellicum Pharmaceuticals (BLCM) |
Cancer immunotherapy |
$140 | 19% | 26% | 4% |
| Rice Midstream Partners LP (RMP) | Rice Energy pipeline MLP | $413 | -18% | -1% | 4% |
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IPO market snapshot
275 IPOs have raised $85 billion in 2014, averaging a first-day pop of 13% and over 4% thereon. The Renaissance IPO Index, a market cap weighted basket of newly public companies that is designed to represent the US IPO market, has gained 8% year-to-date. Renaissance Capital's IPO ETF tracks the index, and its top holdings include Alibaba (BABA), Zoetis (ZTS), Twitter (TWTR), Hilton (HLT) and Voya Financial (VOYA).
