Lifted by rising sentiment toward equities, investment manager Artisan Partners Asset Management (NYSE:APAM) had a strong reception for its $332 million IPO last week. Its 29% first-day gain was the best in at least 15 years for a pure-play, traditional asset manager. A $21 million microcap IPO from Professional Diversity Network (NASDAQ:IPDN), on the the other hand, struggled despite its connection to hot-performing LinkedIn (NYSE:LNKD), trading down out of the box and ending the week 10% below its offer price. Following a minor wave in February, there was only one new US IPO filing last week, from biotech Chimerix (NASDAQ:CMRX), but three relatively small companies, one enterprise software provider and two biotechs, set terms and are expected to price later this month.
Artisan Partners prices above the range, gains 29%
Artisan Partners, an equities-focused US-based investment manager with $74 billion under management, priced at $30, above the range of $27 to $29. The firm's long-only strategies have consistently outperformed since inception, and assets under management have increased at a 14% CAGR since 2002, which included a 30% increase in 2012. The successful debut was a reversal from Manning & Napier's (NYSE:MN) weak early trading in November 2011 and Silvercrest Asset Management's (proposed: SAMG) IPO withdrawal in November 2012. Citi and Goldman Sachs were the joint bookrunners on the deal.
Professional Diversity Network faces major business transition, sees weak trading
Professional Diversity Network, which operates social networking sites for two million minority members, raised $21 million after pricing at $8, below the range of $10 to $12. The company signed a new agreement in November 2012 with LinkedIn, which will sell postings on IPDN's sites as part of its career solutions. IPDN also began selling its services directly this year, after its exclusive agreement with Monster Worldwide (NYSE:MWW) expired at the end of 2012. The lack of a track record under the new arrangement, as well as a sharp drop in site visits from 2011 through September 2012 and low overall user engagement, was reflected in poor early trading. PDN broke issue on its first day of trading and ended the week at $7.19, down 10% from its offer price. Aegis Capital was the sole bookrunner on the deal.
Software company Model N sets terms for $87 million IPO
Model N (NYSE:MODN), a 14-year old company that provides both on-premise and cloud-based revenue management software, set terms for an $87 million IPO. The company, backed by Accel and Meritech, has 72 customers in the life science and technology industries, including Amgen (NASDAQ:AMGN), Johnson & Johnson (NYSE:JNJ), Merck (NYSE:MRK), Dell (NASDAQ:DELL) and VMware (NYSE:VMW). It offers its software under perpetual liceneses and as a SaaS solution on a subscription basis, and bookings grew 34% to $101 million in the fiscal year ended September 30, 2012. J.P. Morgan and Deutsche Bank are the joint bookrunners on the deal. If successful, Model N will the first enterprise software IPO to price in 2013.
AbbVie (Abbott) and Novartis partner Enanta Pharmaceuticals sets terms
Enanta Pharmaceuticals (NASDAQ:ENTA), which is partnering with AbbVie (ABBV; recent spinoff of Abbott) and Novartis (NYSE:NVS) to develop treatments for hepatitis C, set terms for a $60 million IPO. Unusually for a development-stage biotech, Enanta has been profitable for the past three years thanks to large upfront and milestone payments, which totaled over $40 million in both 2011 and 2012. The company's lead drug candidate is in Phase 3 trials and could receive FDA approval in early 2015. Primary backers include TVM Medical Ventures, Oxford Bioscience Partners, Shionogi & Co. and Abbott Laboratories. J.P. Morgan and Credit Suisse are the joint bookrunners on the deal.
Another biotech, Tetraphase Pharmaceuticals, looks to raise $75 million
Tetraphase Pharmaceuticals (NASDAQ:TTPH), a biotech creating antibiotics for life-threatening, multi-drug resistant infections, set terms for a $75 million IPO. The company is backed by Flagship Ventures, CMEA Ventures, Skyline Venture Partners, FMR (Fidelity) and Mediphase Venture Partners. Its lead drug candidates is in Phase 3 trials, and top-line data is expected in early 2015. Barclays and BMO Capital Markets are the joint bookrunners on the deal.
US Pipeline updates: only one new US IPO filing, but updates suggest more IPOs coming in March
Chimerix, a biotech developing oral antiviral therapeutics, was the only company added to the pipeline last week. It filed for an $85 million IPO, which is being managed by Morgan Stanley and Cowen and Company. The company’s lead drug candidate is expected to begin Phase 3 trials in 2013 for the prevention of CMV (cytomegalovirus), an infection found in certain stem cell transplant patients. It also has developed a preclinical compound for the treatment of HIV. Venture backers include Sanderling Venture Partners, Canaan Partners, New Leaf Ventures and Alta Biopharma Partners.
Blackston’s Pinnacle Foods raises proposed deal size to $633 million
Seven other companies released submitted updated filings last week. Blackstone-backed Pinnacle Foods (NYSE:PF) increased its proposed potential deal size to $633 million (from a $100 million placeholder), while fragrance and cosmetics company Coty (NYSE:COTY), homebuilder Taylor Morrison (NYSE:TMHC) and on-demand ad management firm Marin Software (NYSE:MRIN) all released financial results through the end of 2012. Many (if not all) of these deals could kick off roadshows by the end of March.
The US IPO pipeline now holds 111 companies looking to raise a total of $30.9 billion.
US IPO market performance update
Artisan's first-day pop was the fifth 25%+ first-day gain of 2013, and it ended the week as the year's sixth-best performing US IPO. The year's 22 US IPOs have produced an average total return of 17% (vs. 14% last week) and an average aftermarket return of 4% (vs. 1%). Of the 22 deals, 17 (77%) are trading above their offer prices.