Of the three scheduled healthcare offerings this past week, only two priced. This marks a total of seven IPOs year to date, all from healthcare companies, which have been predominantly development stage biotechs supported by existing backers. While the broader market is stabilizing and returns on recent IPOs are improving, investors are still awaiting the launch of IPOs by significant operating companies to signal the reopening of the IPO window.
Two healthcare IPOs price, one postpones
Hutchison China MediTech (NASDAQ:HCM), a Chinese pharmaceutical with a pipeline of oncology drugs and a complex business structure, raised $101 million by offering 7.5 million ADSs at $13.50; this IPO was a cross-listing from the AIM market in London. Senseonics Holdings (NYSEMKT:SENS), a pre-revenue glucose device maker, raised $45 million in an OTC uplisting, with up to $17 million (38%) from insiders, by offering 15.8 million shares at $2.85. Spring Bank Pharmaceuticals (NASDAQ:SBPH), which is developing therapies for hepatitis B and other viral diseases, postponed its $40 million offering due to market conditions.
|Two healthcare IPOs during the week of March 18, 2016|
|Company (Ticker)||Business||Deal size ($mm)||IPO price vs. midpoint||1st-day pop||Return at 3/18|
|Hutchison China MediTech||Pharmaceutical with oncology drug pipeline||$101||0%||-0.7%||0%|
|Senseonics Holdings||Continuous glucose monitor device maker||$45||-14%||0%||0%|
Market conditions stabilize and IPO returns improve
After another week in positive territory for both the IPO Index and the S&P, the IPO index is now 20% above its February 11 lows compared to the S&P's 12% bounce. Over the same time period, the VIX has declined 50% to 14. On top of that, trailing 90 days IPO returns have steadily improved from -13% four weeks ago to +26% this week. Despite all of these factors, the IPO market is yet to see a true icebreaker from one of the 122 pipeline companies or a pick-up in initial filings. The only filing in the past two weeks is from Moxian (OTCQB:MOXC), a Chinese software company looking to raise $58 million, which has a dual CEO/CFO role, no substantial revenue and no underwriter.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 9% year-to-date, compared to +0.3% 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 4% year-to-date, compared to 0% for ACWX. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF Holdings include NN Group and Recruit Holdings.
Investment Disclosure: The information and opinions expressed herein were prepared by Renaissance Capital's research analysts and do not constitute an offer to buy or sell any security. Renaissance Capital, the Renaissance IPO ETF, the Renaissance International IPO ETF, or the Global IPO Fund (MUTF:IPOSX), may have investments in securities of companies mentioned.
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