Updated on 4/27/2020.
One biotech and two SPACs are on the calendar for the week ahead. The IPO market is showing some early signs of opening up. Recent biotech IPOs have had strong debuts, SPAC activity has picked up, and a few deals in the pipeline like Albertsons (ACI) and Kingsoft (KC) have signaled potential May IPOs. While volatility is still elevated, the Renaissance IPO Index is soundly outperforming the S&P 500. We also note that despite the empty calendar, all three of April’s biotech IPOs set terms and then priced less than a week later.
Phase 2 ENT biotech Lyra Therapeutics (LYRA) plans to raise $53 million at a $193 million market cap. The company is developing novel drug delivery systems for ear, nose, and throat diseases using its proprietary drug delivery platform XTreo. Its lead candidates LYR-210 and LYR-220 are bioresorbable polymeric matrices designed to deliver up to six months of continuous mometasone furoate (MF), a medium strength corticosteroid used in many FDA-approved drugs, for the treatment of chronic rhinosinusitis (CRS). LYR-210 is currently in a Phase 2 trial with top-line data expected in the 1Q21.
US tech-focused SPAC Social Capital Hedosophia Holdings II (IPOB.U) plans to raise $300 million at a $375 million market cap. The SPAC is another joint venture between Chamath Palihapitiya's Social Capital and Ian Osborne's Hedosophia and follows Social Capital Hedosophia Holdings III (IPOC.U), which raised $720 million in an upsized offering last week.
Cannabis SPAC Collective Growth Corp (CGROU) plans to raise $150 million at a $190 million market cap. The company was co-founded by former Canopy Growth (NYSE: CGC) CEO Bruce Linton and National Hemp Association Chairman Geoffrey Whaling.
| U.S. IPO Calendar | |||
|---|---|---|---|
| Issuer Business |
Deal Size Market Cap |
Price Range Shares Filed |
Top Bookrunners |
| Social Hedosophia II (IPOB.U) Palo Alto, CA |
$300M $375M |
$10 30,000,000 |
Credit Suisse |
| Second blank check company formed by Social Capital and Hedosophia targeting a US tech business. | |||
| Collective Growth Corp (CGROU) Austin, TX |
$150M $190M |
$10 15,000,000 |
Cantor Fitz. |
| Blank check company led by former Canopy Growth execs targeting the cannabis industry. | |||
| Lyra Therapeutics (LYRA) Watertown, MA |
$53M $193M |
$14 - $16 3,500,000 |
BofA Jefferies |
| Phase 2 biotech developing an implantable drug matrix for chronic rhinosinusitis. | |||
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This past week’s 61% pop from ORIC Pharmaceuticals (ORIC) provided further proof of the resilience of the biotech industry. Biotechs have been some of the strongest performing recent IPOs and are a key segment of IPOs addressing the changing needs caused by COVID-19.
After a period of inactivity, SPAC pricings, amendments, and new filings have all picked up. DraftKings’ successful SPAC merger added further interest in the space. SPAC executives have even shown a willingness to sweeten their original terms to get deals done, with four recent SPACs increasing the fractional warrants for IPO investors.
Albertsons Companies (ACI) will hold its quarterly earnings call in the week ahead; strong tailwinds from quarantined shoppers have set the stage for a potential May IPO, which would make it the first large offering in over two months. China-based Kingsoft Cloud (KC) also appears poised to launch an IPO as early as the first week of May.
Micro-cap education services provider China Liberal Education Holdings (CLEU) is set to begin trading in the week ahead after raising $8 million at a $38 million market cap on 3/31. The Beijing, China-based company provides primary and secondary-level educational services in China and booked $5 million in revenue for the 12 months ended June 30, 2019.
Street research is expected for two companies and lock-up periods will be expiring for four companies in the week ahead. For access to Street research release dates and lock-up period information, sign up for a free trial of IPO Pro.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 4/23/20, the Renaissance IPO Index was down 4.7% year-to-date, while the S&P 500 was down 13.4%. 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 5.3% year-to-date, while the ACWX was down 21.3%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Meituan-Dianping and Adyen.
