The biotech industry refuses to wait. This past week saw the first IPOs since the coronavirus outbreak seized the US economy, with oncology biotech Zentalis Pharmaceuticals (ZNTL) up 29% on its first day.
The IPO Index slid 8% this week, while the VIX Volatility Index is still at about triple its 2019 average. And yet, Zentalis soared and Keros Therapeutics (KROS) launched an IPO for next week. In addition to the excitement over Zentalis’ approach, it and other biotech IPOs likely benefit from insider support, as well as recent outperformance in the healthcare sector (highlighted in our 1Q20 Review). The industry shows no sign of slowing, with biotech VCs raising massive new funds this week.
Zentalis Pharmaceuticals priced its upsized IPO at the high end to raise $165 million at a $642 million fully diluted market cap. The biotech is developing novel small molecule therapies targeting late-stage metastatic ER+/HER- breast cancer, and its lead candidate is an oral selective estrogen receptor degrader (SERD) in Phase 1/2 trials. Zentalis finished up 29%.
Beijing-based WiMi Hologram Cloud (WIMI) priced at the low end to raise $26 million at a $325 million market cap. A leader in holographic augmented reality services in China, the company was highly profitable in the first half of 2019 (48% net margin) but did not provide audited full-year 2019 financials, and it is unclear how the pandemic will impact the business. On its debut, WiMi quickly broke issue before underwriter support brought it back to the offer price. It finished the week down 5%.
| 2 IPOs During the Week of March 30th, 2020 | |||||
|---|---|---|---|---|---|
| Issuer Business |
Deal Size |
Market Cap at IPO |
Price vs. Midpoint |
First Day Return |
Return at 04/03 |
| Zentalis Pharmaceuticals (ZNTL) | $165M | $642M | 6% | +29% | +29% |
| Phase 1/2 biotech developing novel small molecule therapies for various cancers. | |||||
| WiMi Hologram (WIMI) | $26M | $325M | -35% | +0% | -5% |
| Chinese provider of holographic augmented reality software for advertising. | |||||
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In the week’s only filing, Harbor Custom Development (HCD) filed to raised $15 million. The Washington homebuilder owns and controls five residential communities containing over 350 lots in the Puget Sound region.
| 1 Filing During the Week of March 30th, 2020 | |||
|---|---|---|---|
| Issuer Business |
Deal Size |
Sector | Lead Underwriter |
| Harbor Custom Development (HCD) | $15M | Real Estate | ThinkEquity |
| Real estate developer in the Puget Sound region of Washington. | |||
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Renaissance Capital released its Quarterly Reviews for the US and Global IPO markets, as well as other quarter-end content. See below for links to our reviews:
• 1Q20 US IPO Review
• The 1Q20 IPO Market’s most active venture capital firms
• How did Private Equity perform in the 1Q20 IPO Market?
• The 1Q20 IPO Market’s Law Firm Leaderboard
• 1Q20 IPO rankings for the Big Four accounting firms
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 4/2/20, the Renaissance IPO Index was down 21.0% year-to-date, while the S&P 500 was down 21.8%. 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 down 13.5% year-to-date, while the ACWX was down 25.3%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Meituan-Dianping and Adyen.
