Slack's (WORK) widely-covered direct listing was hailed as a success.
Slack opened on Thursday at $38.50, well above the NYSE's "reference price" of $26, and more than triple its last round less than a year ago. And yet, new public investors ended the week with losses. The stock closed Friday at $37.22, down 3.3% from the opening trade. With millions of users and fast growth, Slack is a very strong story, but with a diluted market value of about $23 billion (~48x LTM sales), it is not a cheap story.
In addition to Slack, six companies went public via traditional IPO, including four biotechs, one gene sequencer, and a discount grocer.
| 6 IPOs, a SPAC, and a Direct Listing During the Week of June 17th, 2019 | |||||
|---|---|---|---|---|---|
| Issuer Business |
Deal Size |
Market Cap at IPO |
Price vs. Midpoint |
First Day Return |
Return at 06/21 |
| Personalis (PSNL) | $135M | $567M | 13% | +68% | +78% |
| Provides a genome sequencing platform for cancer drug development. | |||||
| Stoke Therapeutics (STOK) | $142M | $634M | 20% | +42% | +52% |
| Preclinical biotech developing RNA-targeted therapies for rare genetic diseases. | |||||
| Slack (WORK) | $7,367M | $15,580M | 0% | +49% | +43% |
| Provides a workplace messaging application. | |||||
| Grocery Outlet Holdings (GO) | $378M | $2,077M | 38% | +30% | +30% |
| Operates a network of more than 300 independently run discount grocery stores. | |||||
| Akero Therapeutics (AKRO) | $92M | $471M | 7% | +15% | +23% |
| Early stage biotech developing therapies for NASH and other metabolic diseases. | |||||
| Atreca (BCEL) | $125M | $484M | 0% | +6% | +0% |
| Preclinical biotech developing immunotherapies for solid tumors. | |||||
| South Mountain Merger (SMMCU) | $225M | $275M | 0% | +0% | +0% |
| Blank check company led by former CardConnect executives and focused on the fintech industry. | |||||
| Prevail Therapeutics (PRVL) | $125M | $648M | 0% | -20% | -15% |
| Early stage biotech developing gene therapies for neurodegenerative diseases. | |||||
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Personalis (PSNL) was the week's top performer, pricing an upsized IPO above the range and finishing with a gain of 78%. The gene sequencing company targets a $5 billion market opportunity, and saw its sales jump 300% in 2018 to $38 million.
Two biotechs traded up, two traded down/flat, and one postponed
Stoke Therapeutics (STOK) was the week's top biotech with a 52% gain. The preclinical biotech priced above the range to raise $142 million at a diluted valuation of $634 million. While early stage, Apple Tree-backed Stoke boasts an experienced management team and a platform with multiple applications.
Led by the former CMO of Gilead and also backed by Apple Tree, Akero Therapeutics (AKRO) priced at the high end and finished the week up 23%. The company is relatively early stage, and going after the liver disease NASH, which has a large opportunity with no FDA-approve therapy.
Developing gene therapies for Parkinson's and other diseases, Prevail Therapeutics (PRVL) priced at the midpoint to raise $125 million at a diluted market cap of nearly $650 million, but plummeted 20% on its first day. Preclinical immuno-oncology biotech Atreca (BCEL) priced at the midpoint and finished the week just 0.4% above issue.
LBO'd by Hellman & Friedman, Grocery Outlet Holdings (GO) offered investors one of the few public grocers with a history of strong growth (10% in 2018; +3.9% comp growth). The company priced a whopping 38% above its midpoint and finished the week with a 30% gain.
Dermavant Sciences (DRMT), postponed its $100 million offering. While the company has a late-stage candidate, investors may have been turned off by milestone obligations, poor trading from other Roivant IPOs, and an unusual loan on its balance sheet.
| 7 Filings During the Week of June 17th, 2019 | |||
|---|---|---|---|
| Issuer Business |
Deal Size |
Sector | Lead Underwriter |
| Fulcrum Therapeutics (FULC) | $86M | Health Care | Morgan Stanley |
| Clinical-stage biotech developing therapies based on gene regulation for rare diseases. | |||
| Medallia (MDLA.RC) | n/aM | Technology | BofA ML |
| Enterprise customer experience and feedback management platform. | |||
| Mirum Pharmaceuticals (MIRM) | $86M | Health Care | Citi |
| Clinical-stage biotech developing therapies for rare liver diseases. | |||
| Phreesia (PHR) | $125M | Technology | JP Morgan |
| Provides a patient-intake software platform for healthcare providers. | |||
| SC Health Corp (SCH.U) | $150M | SPAC | Credit Suisse |
| Blank check company targeting the Asian Pacific healthcare industry. | |||
| AMTD International (AMTDI.RC) | $200M | Financials | AMTD Global |
| Hong Kong-based financial services firm and investment bank. | |||
| Tuscan Holdings Corp II (THCAU) | $125M | SPAC | EarlyBird |
| Second blank check company led by Stephen Vogel targeting the cannabis industry. | |||
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IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 6/20/19, the Renaissance IPO Index was up 39.8% year-to-date, while the S&P 500 had a gain of 19.0%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Okta (OKTA) and Elanco (ELAN). The Renaissance International IPO Index was up 13.2% year-to-date, while the ACWX was up 13.7%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include SoftBank and Xiaomi.
