In the last week before Independence Day weekend, there are a few small IPOs to cap off a second quarter that was much improved from the lackluster first quarter. Syros Pharmaceuticals looks to continue the trend of insider buying on biotechs. Tactile Systems and Gemphire Therapeutics plan to make a second effort on completing their offerings, while Global Medical REIT hopes to become just the second REIT of 2016.
Syros Pharmaceuticals (NASDAQ:SYRS) plans to raise $60 million next week. The company is expanding on research of non-coding DNA to identify biomarkers that control the expression of disease-driving genes. Its lead candidate targets leukemia subsets and will enter a 40-patient Phase 2 trial in mid-2016. Insiders indicated an interest in purchasing up to $35 million (58% of the deal) in shares on the offering. At the midpoint, the company will command a post-IPO market cap of $363 million.
Two health care companies to IPO after delaying one week
Tactile Systems Technology (Pending:TCMD), which on Wednesday pushed its offering back to next week, is expected to raise $60 million at a market cap of $262 million. The company markets pneumatic compression devices for lymphedema and, unlike the year's other four medical device IPOs, Tactile boasts meaningful sales ($67 million LTM), growth (+35% in MRQ) and profitability (three consecutive years). Valued at a discount to peers (2.8x 2016 sales vs. 4.2x average), it must continue to grow sales of its core Flexitouch system while keeping marketing spend in check as it navigates expiring patents and a negative reimbursement ruling from Medicare.
After delaying its IPO on Thursday, Gemphire Therapeutics (Pending:GEMP) plans a $45 million IPO at a market cap of $125 million. Led by the former CEO of ProNAi Therapeutics (DNAI; -88%), Gemphire is developing a drug first discovered in 1998, which it believes can be an effective treatment with statins for high cholesterol. Insiders plan to invest $10 million on the IPO (22% of the deal).
Global Medical REIT (OTCQB:GMRE) hopes to raise $100 million at a market cap of $133 million to repay debt and complete the acquisition of two properties in Connecticut and Pennsylvania. The company currently owns 12 fully leased health care facilities in eight states, generating $6.7 million in annualized rent. Its facilities include acute-care hospitals, orthopedic surgery centers and other health care centers, with an average age of 10 years.
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 10% year-to-date, while the S&P 500 is flat. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Alibaba (NYSE:BABA), Synchrony Financial (NYSE:SYF) and Citizens Financial Group (NYSE:CFG). The Renaissance International IPO Index is down 3.2% year-to-date (as of Thursday's close), compared to +2.4% (also as of Thursday) for ACWX. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include NN Group and Aena S.A.
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