February is kicking off with four potential biotech pricings, including heavy hitters Editas Medicine and BeiGene.
These two IPOs could breathe life back into the IPO market after a deal-less January and a sharp decline in the Nasdaq Biotech Index (down 21% YTD).
CRISPR’s public markets debut
Early-stage biotech Editas Medicine (EDIT) represents the public market’s first opportunity to invest in the massively hyped CRISPR/Cas9 technology, which could permanently fix up to 6,000 genetic diseases through gene editing. The biggest risk Editas faces is an ongoing legal battle over who owns the CRISPR/Cas9 IP. That said, the smart money is on Editas’ side. After a $43 million seed round in 2013-2014, Editas raised a $120 million Series B last summer from 15+ highly reputable investors. Morgan Stanley and JP Morgan are joint bookrunners on this $100 million deal.
China’s big biotech
BeiGene (BGNE), a China-domiciled oncology biotech, is targeting the 20-25% of the world’s cancer patients who reside in China. If approved, its lead drug, which is similar to Abbvie’s blockbuster ibrutinib (est. $1b 2015 sales), will enjoy a 5-7 year advantage over non-Chinese competitors due to the accommodative domestic regulatory pathway. Insiders Baker Brothers and Hillhouse Capital have indicated an interest for up to 50% of the estimated $127 million deal. Goldman, Morgan Stanley and Cowen are joint bookrunners.
Two additional biotechs; two day-to-day deals remain
Delayed-release aspirin developer PLx Pharma (PLXP) (est. $68 million deal size) and enhanced generics developer Mapi-Pharma (MAPI) ($50 million) are also on the calendar next week. Both companies are developing novel formulations of FDA approved drugs and plan to use the FDA’s simplified 505(b)(2) pathway. The week could also see pricings from Shimmick Construction (SCCI) and Nordic Realty (NORT), which are still day-to-day.
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IPO Pipeline Update:
Airport concession operator OTG EXP (OTG) set terms to raise up to $553 million. Tactile Systems Technology (TCMD), at-home compression therapy device seller, filed to raise $86 million.
IPO Market Snapshot
By January 29 last year, 14 IPOs had priced, compared to none so far in 2016. The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 15% year-to-date, compared to -5% for the S&P 500. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Synchrony Financial (SYF), Alibaba (BABA) and Citizens Financial Group (CFG). The Renaissance International IPO Index is down 9% year-to-date, compared to -6% for ACWX. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include NN Group and Recruit Holdings. To find out if this is the best ETF for you, visit our IPO Investing page.
