U.S. IPO Week Ahead: 3 IPOs Feature Industrial Pipes And High-Growth Health Care

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Includes: CRSP, FMAX, FRTA, IRTC
by: Renaissance Capital IPO Research

Three IPOs are set to raise $518 million in the week ahead. LBO'd industrial pipe maker Forterra is by far the week's largest deal, while CRISPR Therapeutics will attempt to prove that gene editing is more than a pipe dream. High-growth heart monitoring company iRhythm Technologies plans to raise $75 million. A fourth deal, Full Spectrum, is still exploring its $15 million IPO on a day-to-day basis.

Renaissance Capital's IPO Calendar - Week of 10/17/2016
Issuer
Business
Symbol
Exchange
Deal Size
$mil
Price Range
Shares Filed
Lead Manager(s)
Forterra
Irving, TX
FRTA
Nasdaq
$368 $19 - $21
18,420,000
Goldman Sachs
Citi
Leading drainage and potable water pipe company in the US and Eastern Canada.
CRISPR Therapeutics
Basel, Switzerland
CRSP
Nasdaq
$75 $15 - $17
4,700,000
Citi
Piper Jaffray
Preclinical biotech developing therapies based on CRISPR/Cas9 gene editing tools
iRhythm Technologies
San Francisco, CA
IRTC
Nasdaq
$75 $13 - $15
5,350,000
J.P. Morgan
Morgan Stanley
Provides a device and analysis for detecting cardiac arrhythmias.
Full Spectrum
Sunnyvale, CA
FMAX
Nasdaq
$15 $7 - $9
1,875,000
Joseph Gunnar & Co.
Develops and sells products used to create private cellular networks.
Click to enlarge

Ceci n'est une pipe IPO

Forterra (Pending:FRTA) plans to raise $368 million at a market cap of $1.3 billion ($2.3 billion enterprise value). Acquired by Lone Star in March 2015, Forterra has rapidly made six acquisitions worth $1.2 billion, making it the nation's leading provider of industrial drainage and potable water pipes. Its experienced management team has overseen strong EBITDA margin expansion and expects construction and infrastructure spending to drive growth. However, its end markets are highly cyclical, and it will carry substantial debt after the IPO (4.7x PF LTM EBITDA).

High-growth device company iRhythm puts its heart on the line

iRyhthm Technologies (Pending:IRTC) is set to raise $75 million in the week ahead, including $15 million from insiders (20%). Backed by Synergy Partners, Norwest and Novo, iRhythm sells peel-and-stick heart-monitoring patches used to detect cardiac irregularities, and potentially prevent stroke. It operates in a large market ripe for next-generation devices, but competitors have also released new biotelemetry products. In the first half, iRhythm grew revenue by 79% to $29 million (66% gross margin), but the unprofitable company has also taken on $31 million in debt.

The final cut for gene editing

CRISPR Therapeutics (Pending:CRSP) plans to raise $75 million as the year's third IPO focused on gene editing. The trio of highly-funded preclinical biotechs focused on CRISPR-Cas9 technology also includes February IPO Editas Medicine (EDIT; -16%) and May IPO Intellia Therapeutics (NTLA; -29%). While gene editing is extremely early stage, it holds the potential to transform modern medicine. Boasting partnerships with Bayer and Vertex, CRISPR will have the most cash of the three, but it is also being pitched at the highest market value after a recent sell-off among biotech peers.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 2% year-to-date, while the S&P 500 is up 4%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Alibaba (NYSE:BABA) and Citizens Financial Group (NYSE:CFG). The Renaissance International IPO Index is down 3% year-to-date, while ACWX is up 2%. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include NN Group and Cheil Industries.