The IPO market ended its annual end-of-summer lull as three health care IPOs priced this week and each traded up about 30% or more. Two priced above the proposed range and one priced below.
Penumbra strikes back against strokes
Penumbra became the year's largest medical products company to go public when it priced its upsized $120 million IPO above the range at a valuation of nearly $1 billion. It gained 38% on its debut, demonstrating a demand for high-growth device companies (+41% in the 1H15) that have achieved meaningful sales ($149 million in the LTM) and profitability. This could be a good sign for cancer-treating device company NovoCure (NVCR), which is eligible to launch its IPO next week.
Preclinical is powerful: REGENXBIO up 40%
REGENXBIO priced 22% above its midpoint and gained 40% by week's close. Its $619 million market cap at IPO makes it the 11th-largest of 2015. Excluding foreign-listed companies going public in the US, the nine biotechs with IPO market caps over $500 million this year have averaged a first-day pop of 87%. REGENXBIO was backed by notable VCs such as Venrock, Vivo and Deerfield, plus large funds Fidelity, Janus and Jennison, but had no insider buying - unusual for a biotech. Its partner Dimension Therapeutics (DMTX) filed earlier this week and Voyager Therapeutics could soon follow suit.
Nabriva gets by with a little help from its friends
Investors appeared to be anti-antibiotic biotechs when Nabriva Therapeutics came in below its already-slashed price, raising $92 million at a valuation of $209 million. However, its current owners, including HBM Healthcare, Vivo Capital, OrbiMed, and Novartis, lent a hand by purchasing $42 million worth of shares (46% of gross proceeds). Nabriva was up over 50% in intraday trading, but settled at +29%, giving it a market value just under what it originally proposed. The later-stage biotech is developing a novel therapy for pneumonia that addresses drug-resistant bacteria.
| 3 IPOs during the week of September 14, 2015 | |||||
| Company (Ticker) | Business | Deal size ($mm) | IPO price vs. midpoint | 1st-day pop | Return at 9/18 |
| REGENXBIO (NASDAQ:RGNX) | Biotech: Gene therapies | $139 | 22% | 38% | 40% |
| Penumbra (NYSE:PEN) | Medical device for strokes | $120 | 13% | % | 38% |
| Nabriva Therapeutics (NASDAQ:NBRV) | Biotech: Pneumonia antibiotics | $92 | -36% | % | 29% |
IPO Market Snapshot
The Renaissance IPO Index has traded down about 5% year-to-date, in line with the S&P 500. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Alibaba (NYSE:BABA), Hilton Worldwide (NYSE:HLT) and Twitter (NYSE:TWTR). The Renaissance International IPO Index has traded down 0.6% year to date, compared to -6.6% for the ACWX. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include Recruit Holdings and Cheil Industries.
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