Weekly Recap: Filing Updates Could Foreshadow A Busy March For The U.S. IPO Market

by: Renaissance Capital IPO Research

Several companies updated filings last week in what was otherwise a quiet period in the U.S. IPO market. One micro-cap IPO was added to the IPO calendar as Professional Diversity Network (NASDAQ:IPDN), a group of online job posting sites for minorities, launched a $20 million offering. The sole new filing came from Ambit Biosciences (NASDAQ:AMBI), a development stage biotech that revived its IPO plans after a 2011 IPO attempt.

Professional Diversity Network Launches Roadshow for $20 Million IPO

After setting terms in December 2012 and then doubling its deal size to $20 million on Feb. 13, Professional Diversity Network launched its roadshow last week. The company's online job posting sites have 2 million, mostly Hispanic-American and African-American members. It recently changed its source for job postings, which accounted for most of its $6 million in revenue for the 12 months ended Sept. 30, 2012, from Monster Worldwide (NYSE:MWW) to LinkedIn (LNKD). Aegis Capital is the sole bookrunner on the deal.

Ambit Biosciences Files for $58 Million IPO

Having withdrawn a previous IPO attempt in 2011, Ambit Biosciences filed for a smaller, $58 million IPO last week. In partnership with Astellas Pharma (4503.JP), the company is completing a Phase IIb trial on its lead drug candidate, a treatment for acute myeloid leukemia. Revenue from collaboration agreements was $18 million in 2012. Backers include OrbiMed, Perseus-Soros Biopharmaceutical Fund, Roche, and MedImmune Ventures. Citi and Leerink Swann are the joint bookrunners on the deal.

Filing Updates Pick Up

Five other companies updated their IPO filings, raising the total to 17 updates over the past two weeks. This activity, combined with a large group of confidential filers, suggests that many deals could be ready to launch in the next few weeks. Larger candidates include theme park operator SeaWorld Entertainment (NYSE:SEAS), homebuilder Taylor Morrison Home Corporation (NYSE:TMHC), equities-focused investment firm Artisan Partners Asset Management (NYSE:APAM), packaged foods company Pinnacle Foods (NYSE:PF), smart grid provider Silver Spring Networks (NYSE:SSNI), and -- pending a shareholder vote in early March -- Empire State Realty Trust (ESB). The complete U.S. IPO pipeline currently includes 110 companies looking to raise $31.2 billion. Just under 50% of these companies have filed an update within the last 180 days.

Recent IPO Performance Falls

The top two first-day performers of the year have struggled in the aftermarket and dragged down the performance of recent IPOs. 3D printing company ExOne (NASDAQ:XONE) gained 67% in its first two days of trading (Feb. 7-8), but it has fallen 11% since. Money transfer service Xoom (NASDAQ:XOOM) jumped 59% on Feb. 15, but it has dropped every day since, resulting in a -20% return from its first-day close. Compared with three weeks ago, the average aftermarket return for IPOs from the past 90 days has nearly halved, from 12% to 7%. In 2013, 20 IPOs have raised $5.5 billion, with a 14% average total return and a 2% average aftermarket return.