After three weeks without any deals, the US IPO market is back in session.
Three health care companies are each set to raise about $100 million in the week ahead. Backed by Fidelity, medical device company Penumbra (PEN) boasts strong sales growth (+41% in the 1H15) and near-profitability as it looks to ramp up its sales force. Its proposed $847 million market cap would make it the year's largest medical products company to go public, and its valuation is being pitched below its peer group.
REGENXBIO (RGNX) has the profile of a biotech with strong first-day pop potential. The company owns the rights to a gene therapy delivery technology used by eight partners developing 18 drug candidates, including Baxalta, Dimension (DMTX) and Voyager. It is also well-funded, snagging $71 million in May from notable investors including Janus, Venrock, Deerfield, GSK, Fidelity and Vivo Capital. However, its drug pipeline is entirely preclinical and its patents begin expiring in 2022. Lead underwriter Morgan Stanley has led two biotech IPOs this year, most recently Global Blood Therapeutics (GBT; +164%) in August.
Nabriva Therapeutics (NBRV) is looking to raise $96 million at a much lower valuation. The company is set to begin Phase 3 trials for a new class of antibiotics aimed at treating pneumonia, with a lead candidate designated by the FDA for Fast Track review. Approval would still be a few years out, and the therapy would face significant competition from generics. Nabriva raised $50 million in April from Vivo Capital, OrbiMed, Novartis and others, and insiders plan to purchase an additional $50 million worth of shares on the offering, or 52% of the proposed deal size.
We note that the 2015 IPO market has been marked by a scarcity of technology companies and an abundance of health care, primarily biotechs. The VIX Volatility Index finished Friday below 25 and hit its lowest level since the market sell-off in mid-August, a welcome sign for the numerous IPOs waiting in the wings. However, zero IPOs filed terms on Monday morning; companies are likely waiting for valuation multiples to expand (the average 2015 non-biotech IPO is up just 2%) and for markets to react to the Fed's rate hike decision (Digicel, for example) before moving forward.
| Renaissance Capital's IPO Calendar - Week of 9/14/2015 | ||||
| Issuer Business |
Symbol Exchange |
Deal Size $mil |
Price Range Shares Filed |
Lead Manager(s) |
| Penumbra Alameda, CA |
PEN NYSE |
$101 | $25 - $28 3,800,000 |
J.P. Morgan BofA Merrill Lynch |
| Markets devices for neuro and peripheral vascular conditions and diseases. | ||||
| REGENXBIO Rockville, MD |
RGNX Nasdaq |
$100 | $17 - $19 5,555,555 |
Morgan Stanley BofA Merrill Lynch |
| Developing gene therapies for rare diseases with a proprietary delivery platform. | ||||
| Nabriva Therapeutics Vienna, Austria |
NBRV Nasdaq |
$96 | $15 - $17 6,000,000 |
Leerink Partners RBC Capital Markets |
| Developing a novel antibiotic for bacterial pneumonia. | ||||
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IPO pipeline update: Just 3 initial filings, but others in the pipeline get ready
As we highlighted in our 2015 Fall IPO Preview, the active pipeline contains a high number of LBOs and health care companies. Two preclinical biotechs and one LBO submitted initial filings in the past week. Acquired by Goldman and Olympus Partners in 2014, PSAV (PSAV) is the largest provider of audiovisual and technology set-up services for events with $1.4 billion in sales. Backed by Frazier and Novo Ventures, AnaptysBio (ANAB) is looking to raise $86 million as it develops therapies for severe asthma and peanut allergies. Gene therapy biotech Dimension Therapeutics (DMTX) filed on Monday for an IPO that could raise $115 million. Other companies have been gearing up for fourth quarter IPOs with updated filings. Highly-anticipated tech IPO Pure Storage (PSTG) updated its financial results, Performance Food Group (PFGC) amended its filing and First Data (FDC), which could be the year's largest IPO, selected a ticker and exchange. In addition, five biotechs submitted amended filings, each one seeking to raise over $80 million.
IPO Market Snapshot
Strong IPO volume in the fourth quarter will in part hinge on improved returns for recent IPOs. The Renaissance IPO Index has traded down 7.3% year-to-date, compared to -5.1% for the S&P 500. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Alibaba (BABA), Hilton Worldwide (HLT) and Twitter (TWTR). In the past month, Alibaba and Twitter fell below their IPO prices for the first time. The Renaissance International IPO Index has traded down 1.6% year-to-date, compared to -6.3% for the ACWX. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include Recruit Holdings and Cheil Industries. In May 2015, the US IPO Index was up 9% year-to-date and the International IPO Index was up 15%. To find out if this is the best ETF for you, visit our IPO Investing page.
