Week Ahead: Biotechs Could Snap IPO Drought

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Includes: BGNE, EDIT, MAPI, NORT, OTG, PLXP, SCCI
by: Renaissance Capital IPO Research

February is kicking off with four potential biotech pricings, including heavy hitters Editas Medicine and BeiGene.

These two IPOs could breathe life back into the IPO market after a deal-less January and the Nasdaq Biotech Index, which is down 21% YTD.

CRISPR's public markets debut
Early-stage biotech Editas Medicine (NASDAQ:EDIT) represents the public market's first opportunity to invest in the massively hyped CRISPR/Cas9 technology, which could permanently fix up to 6,000 genetic diseases through gene editing. The biggest risk Editas faces is an ongoing legal battle over who owns the CRISPR/Cas9 IP. That said, the smart money is on Editas' side. After a $43 million seed round in 2013-2014, Editas raised a $120 million Series B last summer from 15+ highly reputable investors. Morgan Stanley and JP Morgan are joint bookrunners on this $100 million deal.

China's biotech beauty
BeiGene (NASDAQ:BGNE), the China-domiciled oncology biotech is targeting the 20-25% of the world's cancer patients who reside in China. If approved, its lead drug, which is similar to AbbVie's blockbuster ibrutinib (est. $1b 2015 sales), will enjoy a 5-7 year advantage over non-Chinese competitors due to the accommodative domestic regulatory pathway. Insiders Baker Brothers and Hillhouse Capital have indicated an interest for up to 50% of the estimated $127 million deal. Goldman, Morgan Stanley and Cowen are joint bookrunners.

Two additional biotechs; two day-to-day deals remain
Delayed-release aspirin developer PLx Pharma (Pending:PLXP) (est. $68 million) and enhanced generics developer Mapi-Pharma (NASDAQ:MAPI) ($50 million) are also on the calendar next week. Both companies are developing novel formulations of FDA approved drugs and plan to use the FDA's simplified 505(b)(2) pathway. The week could also see pricings from Shimmick Construction (SCCI) and Nordic Realty (NORT), who are still day-to-day.

Renaissance Capital's IPO Calendar - Week of 2/1/2016

Issuer
Business

Symbol
Exchange

Deal Size
$mil

Price Range
Shares Filed

Lead Manager(s)

BeiGene
Beijing, China

BGNE
Nasdaq

$127

$22.00 - $24.00
5,500,000

Goldman Sachs
Morgan Stanley

Chinese biotech developing cancer therapies for China and global markets.

Editas Medicine
Cambridge, MA

EDIT
Nasdaq

$100

$16.00 - $18.00
5,900,000

Morgan Stanley
J.P. Morgan

Developing gene editing therapies based on CRISPR/Cas9 technology.

Shimmick Construction Company
Oakland, CA

SCCI
Nasdaq

$75

$11.00 - $13.00
6,250,000

FBR Capital Markets

Provides heavy civil construction services to public agencies in California.

Nordic Realty Trust
New York, NY

NORT
Nasdaq

$75

$15.00
5,000,000

Wunderlich Securities

REIT newly formed to acquire office and industrial properties in Norway.

PLx Pharma
Houston, TX

PLXP
Nasdaq

$68

$17.00 - $19.00
3,800,000

Raymond James
Maxim Group LLC

Commercializing a delayed-release aspirin based on its proprietary lipid coating.

Mapi-Pharma
Ness Ziona, Israel

MAPI
Nasdaq

$50

$15.00 - $17.00
3,125,000

JMP Securities

Developing extended-release formulations of existing drugs and generics.

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Click to enlarge

IPO Pipeline Update:
Airport concession operator OTG EXP (NASDAQ:OTG) set terms to raise up to $553 million. Tactile Systems Technology (Pending:TCMD), at-home compression therapy device seller, filed to raise $86 million.

IPO Market Snapshot
By January 29 last year, 14 IPOs had priced, compared to none so far in 2016. The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 15% year-to-date, compared to -5% 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 9% year-to-date, compared to -6% for ACWX. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include NN Group and Recruit Holdings.