The IPO market is feeling the effects of the coronavirus outbreak with a surge in the VIX volatility index weighing on IPO activity. Since 2015, a week in which VIX volatility has surpassed 35 has been followed by a week averaging two US IPO pricings. Our observational trend continues through 2020, as one biotech entered the public market this past week. Six IPOs and three SPACs submitted initial filings with the SEC.
Passage Bio (PASG), a preclinical biotech developing gene therapies, priced at the high end of the range to raise $216 million at an $840 million market cap. The deal raised 72% more in proceeds than Passage Bio originally filed for. The company is furthering the research from UPenn’s Gene Therapy Program, which is headed by co-founder James Wilson. Bolstered by the recent performances of other large early stage biotech IPOs, Passage Bio finished up 23%, another sign that biotechs are pushing back against the effects of the coronavirus.
Chinese medical information platform Zhongchao (ZCMD) began trading on Monday after raising $12 million in an IPO on Friday 2/21. The company was flat after its first day on the Nasdaq and is currently down 2%.
| 1 IPO During the Week of February 24th, 2020 | |||||
|---|---|---|---|---|---|
| Issuer Business |
Deal Size |
Market Cap at IPO |
Price vs. Midpoint |
First Day Return |
Return at 02/28 |
| Passage Bio (PASG) | $216M | $840M | 6% | +23% | +23% |
| Preclinical biotech developing gene therapies for rare CNS disorders. | |||||
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Healthcare benefit management platform Accolade (ACCD) filed to raise $100 million, biotechs NLS Pharmaceutics (NLSP) and ORIC Pharmaceutics (ORIC) filed for $40 million and $86 million, respectively. Construction software Procore Technologies (PCOR) filed for an estimated $400 million. Medical device maker Pulmonx (LUNG) filed for $86 million, and marketing data platform ZoomInfo (ZI) filed for $500 million. SPACS, Social Hedosophia II (IPOB.U), Social Hedosophia III (IPOC.U), and GigCaptial3 (GIK.U) filed for $300 million, $600 million, and $200 million.
| 9 Filings During the Week of February 24th, 2020 | |||
|---|---|---|---|
| Issuer Business |
Deal Size |
Sector | Lead Underwriter |
| Accolade (ACCD) | $100M | Health Care | Goldman |
| Provides a platform that helps employees manage their healthcare benefits. | |||
| NLS Pharmaceutics (NLSP) | $40M | Health Care | Maxim |
| Biotech focusing on therapies for CNS and sleep disorders. | |||
| ORIC Pharmaceuticals (ORIC) | $86M | Health Care | JP Morgan |
| Phase 1 biotech developing small molecule therapies for cancer. | |||
| Procore Technologies (PCOR) | $400M | Technology | Goldman |
| Provides cloud-based construction management and collaboration software. | |||
| Pulmonx (LUNG) | $86M | Health Care | BofA |
| Makes minimally invasive medical devices for emphysema. | |||
| Social Hedosophia II (IPOB.U) | $300M | SPAC | Credit Suisse |
| Second blank check company formed by Social Capital and Hedosophia targeting US tech. | |||
| Social Hedosophia III (IPOC.U) | $600M | SPAC | Credit Suisse |
| Second blank check company formed by Social Capital and Hedosophia targeting ex-US tech. | |||
| ZoomInfo (ZI) | $500M | Technology | JP Morgan |
| Provides a data platform for sales, marketing, and recruiting professionals. | |||
| GigCapital3 (GIK.U) | $200M | SPAC | Nomura |
| Third blank check company led by semiconductor veteran Avi Katz. | |||
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IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 2/27/20, the Renaissance IPO Index was up 1.4% year-to-date, while the S&P 500 was down 7.8%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Uber (UBER) and Spotify (SPOT). The Renaissance International IPO Index was up 2.2% year-to-date, while the ACWX was down 9.3%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Adyen and Meituan-Dianping.
