The US IPO market slowed this week with four small companies raising less than $100 million in their deals and seeing lukewarm receptions from IPO investors. Biotechs Zogenix (ZGNX) and Anacor Pharmaceuticals (ANAC) both slashed the offer prices by roughly 70%, while China-based companies SYSWIN (SYSW) and China Xiniya Fashion (XNY) both posted negative double-digit returns on their first day of trading.
Zogenix (ZGNX), which recently launched a needle-free migraine treatment called Sumavel DosePro, raised $56 million in its IPO by offering 14 million shares at $4, over 69% below the midpoint of its originally proposed range of $12-$14. Though the biotech claims Sumavel DosePro offers faster relief and easier administration than competing treatments, the company is years away from profitability and operates in a highly competitive market, which likely contributed to investors' concerns.
Anacor Pharmaceuticals (ANAC) also drastically reduced its IPO price, raising $60 million by offering 12 million shares at $5, 71% below the midpoint of its initial $16-$18 range. The Palo Alto-based biotech is developing novel treatments for nail fungus and psoriasis using its boron-based chemistry platform. Though it has yet to generate product revenue, its licensing agreement with GlaxoSmithKline could potentially provide for over $200 million in licensing and milestone payments. However, like Zogenix, Anacor is unprofitable, and has accumulated a deficit of $104 million. Both biotechs traded flat this week.
SYSWIN (SYSW), an aggressive real estate sales agency based in Beijing, raised $67 million by pricing its downwardly revised IPO at $7, well below its original range of $9.25-$11.25. Though the company is rapidly growing and boasts strong brand recognition, the Chinese government has recently taken steps to cool the property sector, which has resulted in depressed trading in the space. SYSWIN fell 11% in its debut.
Though China Xiniya Fashion (XNY) was the only IPO this week to price at the top of the range, raising $67 million, it also traded poorly, falling 10% after listing on the NYSE on Tuesday. China Xiniya, which sells men's business casual apparel in China's lower-tier cities, has since gained back some ground and was changing hands at close to $10.70/share on Friday morning.
This week also saw two IPO withdrawals from wind company First Wind Holdings (WIND) and steel components provider Hirschfeld Industries (HSFD), which had expected to raise $228 million and $150 million, respectively, in their IPOs. Despite this week's pullback, the US IPO market is set to pick up again with six deals scheduled on the IPO calendar to price within the next two weeks.
