As we noted in a mid-week blog post, AAAP had the best first-day pop (+53%) for an IPO in three months, and on the same day Voyager had the best pop in almost two months (+27%). While there were no biotech filings this past week, it is a safe bet that the sector will continue find available capital in the US IPO market.
Four biotechs make up the best and worst IPOs this week
Advanced Accelerator Applications (AAAP) finished the week with a 58% gain. The company's nearly $1 billion market cap is 85% higher than its proposed value in February during the first IPO attempt. Given the terrible performance of diagnostics peer Lantheus Holdings (LNTH; -43%), which went public in June, AAAP's investors were likely very enthusiastic about the positive results its drug candidate received in a Phase 3 trial for neuroendocrine tumors.
Backed by Third Rock, Voyager Therapeutics (VYGR) had shown at least one successful application of its gene therapy for advanced Parkinson's disease in a Phase 1 trial, and boasted a substantial collaboration from Genzyme. While its capital needs are intensive, the biotech went public at a $367 million market cap with $232 million in post-IPO cash.
The earliest-stage of all, WAVE Life Biosciences (WVE) raised $102 million by pricing at the midpoint and offering additional shares, making it the week's largest IPO. However, insiders and Teva put in for 61% of the deal. The preclinical biotech was the week's only IPO to break issue, down 1% by Friday.
Mesoblast (MESO) raised $60 million and began trading on the Nasdaq at $8 per ADS, well below the $12.10 its converted ADSs were listed at in Australia (and where Celgene invested in April). The regenerative stem cell biotech has several late-stage candidates and a collaboration with Teva. However, in the past 11 years it has needed to raise more capital than its current market cap, and will require more in the future.
Education software provider Instructure passes its IPO test
Two companies in the technology sector went public this week, bringing the 4Q15 up to five.
Instructure (INST), which provides learning management software for schools and corporations, raised $70 million this week. It added enough insider buying on Monday to cover 24% of the deal in total, but by the time of pricing it had found enough investors to purchase the entire deal at $16, the low end of the proposed range. Those investors were rewarded with a 13% gain, putting it above most tech IPOs this year.
Cutting fiber optics leads to flat debut for Xtera
Much like recent IPO Adesto Technologies (IOTS), Xtera Communications (XCOM) was backed by ARCH Ventures and other notable VCs, positioned its technology as being at an inflection point and ended up delaying and pricing the IPO at $5 - half the proposed midpoint. Xtera ended the week where it priced.
Nonbank lender loanDepot (LDI) postponed its $510 million IPO at a proposed market cap of $2.5 billion. Despite its high growth and online angle, investors appeared unwilling to give the mortgage company a valuation in line with public online lenders like LendingClub (LC). Sole Elite Group (SOLE) will again attempt to price its IPO next week.
| 7 IPOs during the week of November 9, 2015 | |||||
| Company (Ticker) | Business | Deal size ($mm) | IPO price vs. midpoint | 1st-day pop | Return at 11/13 |
| Advanced Accelerator Applications (AAAP) | Biotech and diagnostics | $75 | 0% | 53% | 58% |
| Voyager Therapeutics (VYGR) | Biotech: Gene therapy for Parkinson's | $70 | -13% | 27% | 29% |
| Instructure (INST) | Education software | $70 | -6% | 13% | 13% |
| Equity Bancshares (EQBK) | Midwest commercial bank | $44 | -2% | 6% | 7% |
| Mesoblast (MESO) | Biotech: Stem cells | $60 | 0% | 1% | 1% |
| Xtera Communications (XCOM) | Fiber optic networking | $25 | -50% | 0% | 0% |
| WAVE Life Sciences (WVE) | Biotech: RNA therapies | $102 | 0% | 0% | -1% |
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IPO Market Snapshot
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 -1% for the S&P 500. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Alibaba (BABA), Citizens Financial Group (CFG) and Hilton Worldwide (HLT). The Renaissance International IPO Index is down 3% year-to-date, compared to -5% for ACWX. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include Recruit Holdings and Samsung C+T. To find out if this is the best ETF for you, visit our IPO Investing page.
