In the last full week of the first quarter, the IPO market could see a billion-dollar cancer biotech and a producer of optimized solar power technology.
Three health care IPOs: a mega biotech and two small medical devices
Pre-clinical immunotherapy biotech Cellectis (CLLS) is the week's largest deal, hoping to raise as much as $129 million at a valuation of over $1.2 billion. The company has been publicly listed in Paris since 2007, and after declining to an all-time low of €2.32 in December 2013, it has since rallied above €35. Cancer immunotherapy has been a white-hot space, demonstrated by recent IPOs Kite Pharma (KITE; +323%) and Juno Therapeutics (JUNO; +156%). Having secured major collaboration agreements with Pfizer and Servier, Cellectis's success now hinges on its planned Phase 1 trial, expected later this year.
Until gene therapies are approved, companies like ViewRay (VRAY) are making advancements in traditional cancer therapies. Backed by OrbiMed, Aisling Capital and Fidelity it markets the only approved MRI-guided radiation therapy system, but is still early-stage, with negative gross margins and less than $10 million in 2014 sales. Valeritas (VLRX) was scheduled to price its IPO last week, but the insulin device maker delayed its $75 million offering to the week ahead.
Shining a light on solar tech
SolarEdge (SEDG), which plans to raise $119 million, pits its solar panel inverter technology against close peer and competitor Enphase Energy (ENPH). Both companies enjoy a growing market for replacing traditional inverters, and SolarEdge boasts large contracts with key players SolarCity (SCTY), Vivint Solar (VSLR) and SunRun. However, its fast growth and expanding margins are partially fueled by fugacious government incentives.
Two finance IPOs
Jernigan Capital (JCAP) is expected to raise $100 million at a market cap of $105 million as the newly-formed mortgage REIT pursues a strategy of financing self-storage businesses. IPO investors are essentially placing a bet on Dean Jernigan, the former CEO of CubeSmart (NYSE: CUBE). Tennessee-based Franklin Financial Network (FSB) also plans to list on the NYSE this week. Another bank in the Nashville area, Avenue Financial (AVNU), has traded up 17% since its February IPO.
The first Chinese IPOs of 2015: Up to 2 this week (revised from 3)
2014 saw a spike in Chinese IPOs and while the 14 generally outperformed right off the bat, they now average -1%. Both of the upcoming deals are marketed as "best efforts" offerings, have not disclosed year-end 2014 financials and have a founder, Chairman and CEO with a greater than 40% post-IPO stake. Once the "Groupon of China," Wowo (WOWO) now runs an online mall where small businesses operate digital storefronts. Tantech Holdings (TANH) is a profitable producer of bamboo charcoal, which it uses to make barbecue briquettes, battery components and air purifiers. A third Chinese IPO, Yulong Eco-Materials (YECO), was originally eyeing this week but the Pingdingshan brick and concrete supplier is more likely to come during the week of April 6.
| Renaissance Capital's IPO Calendar - Week of 3/23/2015 | ||||
| Issuer Business |
Symbol Exchange |
Deal Size $mil |
Price Range Shares Filed |
Top 2 Bookrunners |
| Cellectis Paris, France |
CLLS NASDAQ |
$129 | $36.83 3,500,000 |
BofA Merrill Lynch Jefferies |
| Developing cancer immunotherapies based on gene-edited CAR T-cells. | ||||
| SolarEdge Technologies Herzilya, Israel |
SEDG NASDAQ |
$119 | $16 - $18 7,000,000 |
Goldman Sachs Deutsche Bank |
| Provides DC-optimized inverter systems for the solar industry. | ||||
| Jernigan Capital Miami, FL |
JCAP NYSE |
$100 | $19 - $21 5,000,000 |
Raymond James |
| Newly formed REIT focused on lending to self-storage facilities. | ||||
| Valeritas Bridgewater, NJ |
VLRX NASDAQ |
$75 | $14 - $16 5,000,000 |
Piper Jaffray Leerink Partners |
| Markets a disposable device that delivers basal-bolus insulin therapy for Type 2 diabetes. |
||||
| Franklin Financial Network Franklin, TN |
FSB NYSE |
$61 | $24 - $27 2,400,000 |
BofA Merrill Lynch |
| Tennessee commercial bank with 11 branches and $1.4 billion in assets. | ||||
| Wowo Beijing, China |
WOWO NASDAQ |
$60 | $9 - $11 6,000,000 |
Axiom Capital |
| Operates an online mall connecting Chinese merchants and consumers. | ||||
| ViewRay Oakwood Village, OH |
VRAY NASDAQ |
$52 | $12 - $14 4,000,000 |
Cowen & Company Stifel |
| Markets the first and only FDA-approved MRI-guided radiation therapy system. | ||||
| Tantech Holdings Lishui City, China |
TANH NASDAQ |
$16 | $4 - $6 3,200,000 |
ViewTrade |
| Chinese manufacturer of household bamboo charcoal products. | ||||
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IPO pipeline update: GoDaddy to go public
Filing activity was average last week, but IPO launches may slow down this week to avoid a road show during Holy Week (markets close on Friday, April 3). After being on file for over 9 months, GoDaddy finally set an IPO date. The domain registrar was acquired by KKR, Silver Lake and TCV for $2.3 billion in 2011 and plans to raise nearly $400 million at a $4 billion enterprise value during the week of March 30.
Four companies submitted initial filings last week, none of which were in the health care sector. Wayne Farms (WNFM) is one of the largest producers of broiler chickens in the US, with over $2 billion in annual sales. Black Stone Minerals (BSM), which owns working interests in oil and gas production assets in the US, could raise over $700 million. Apigee (APIC), a high-growth software provider, is an encouraging sign for the tech sector, which has seen fewer IPOs this year.
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 8% year-to-date, compared to +2% for the S&P 500. The IPO market remains open to new issuance. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Zoetis (ZTS), Twitter (TWTR), Alibaba (BABA), Hilton (HLT) and Ally Financial (ALLY). To find out if this is the best ETF for you, check it out from your online broker.
