A bad start to the year only got worse this week as the S&P 500 fell another 2%.
For the first time since October, the ninety-day returns swung negative to -0.6%. Just two weeks ago, that number stood at 17%. The VIX is up 48% year-to-date, closing Friday at 27.
After 12 companies submitted their initial filings with the SEC in the first week of the year, just three filed this week. Four companies, PLX Pharma (Pending:PLXP), Nordic Realty Trust (NASDAQ:NORT), Elevate Credit (NYSE:ELVT) and AmeriQuest (Pending:AMQ), set terms, and the only new IPO scheduled for this week delayed due to market conditions.
Deconstructed and delayed
Shimmick Construction Company (NASDAQ:SCCI), which provides heavy civil construction services to public agencies in California, delayed its proposed IPO on Thursday due to market conditions. It had filed to raise $75 million by offering 6.3 million shares (33% insider) at a price range of $11 to $13. The company is now determining whether it will price its IPO on a day-to-day basis.
The health of health care
The health care sector has dominated the initial filings, with 12 out of 15 so far this year, including all three filings this week. On Monday, drugmaker Shire (Nasdaq: SHPG) reached an agreement to purchase Baxalta (NYSE: BXLT) for $32 billion in cash and stock. This is a strong start to 2016 for health care, after the sector saw 78 companies raise $6.7 billion through IPOs in 2015. According to data from Thomson Reuters, global health care M&A transactions totaled $673 billion last year.
It is worth noting that the last filing of the week, AveXis, licenses technology from REGENXBIO, which went public in September 2015. Three other biotechs also license technology from REGENXBIO: Audentes Therapeutics, which filed on January 4; Dimension Therapeutics, which had its IPO in October 2015; and Voyager Therapeutics, which went public in November 2015.
|Biotech IPOs using REGENXBIO's gene therapy platform|
|Company (Ticker)||Gene therapy indication||Deal size ($mm)||IPO or Filing Date||Return from IPO|
|AveXis (NASDAQ:AVXS)||Rare neurological disorders||$115||Filed |
|Audentes Therapeutics (Pending:BOLD)||X-linked myotubular myopathy||$86||Filed |
|Dimension Therapeutics (NASDAQ:DMTX)||Rare genetic disorders||$72||Priced |
|Voyager Therapeutics (NASDAQ:VYGR)||CNS disorders||$70||Priced |
|REGENXBIO (NASDAQ:RGNX)||Rare diseases||$139||Priced |
What's in a name?
Red Rock Resorts (RRR), formerly Station Casinos, operator of 21 casino and entertainment properties in Las Vegas, changed its name and disclosed that it would list on the Nasdaq under the symbol RRR in an amendment filed with the SEC on Thursday. The company originally filed for an IPO that we estimate could raise $300 million in October 2015.
IPO Market Snapshot
In 2015, 170 companies raised $30 billion. The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 13.6% year-to-date, compared to -8% for the S&P 500. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Synchrony Financial (NYSE:SYF), Alibaba (NYSE:BABA) and Citizens Financial Group (NYSE:CFG). The Renaissance International IPO Index is down 8.3% year-to-date, compared to -10% for ACWX. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include NN Group and Recruit Holdings.