U.S. IPO Recap: Biotech Success Continues, But 3 Deals Delayed Or Postponed

by: Renaissance Capital IPO Research

Three companies priced U.S. IPOs last week, while one was delayed and two, including Votorantim Cimentos (VEBM), the largest expected deal of 2013 year-to-date, were postponed. Two biotechs, bluebird bio (NASDAQ:BLUE) and PTC Therapeutics (NASDAQ:PTCT), priced upsized IPOs, while a third biotech, Regado Biosciences (RGDO), failed to price. Bluebird Bio was the week’s top performer, gaining over 58% in its first day of trading. Gogo (NASDAQ:GOGO) priced at the high end of its range, but traded down in its market debut. Two companies launched deals, and four companies, including RetailMeNot (NASDAQ:SALE), a long-time member of our Private Company Watchlist, made initial filings. With 82 IPO pricings year-to-date and 11 more pricings scheduled before the end of the month, 2013 is on pace to have the most IPOs since 2007.

IPO pricings (week of June 17, 2013)
Company (Ticker) Business Deal Size ($mm) Price vs. Midpoint Return
bluebird bio (BLUE) Genetic & orphan diseases $101 13% 50%
Gogo (GOGO) In-flight WiFi provider $187 6% -6%
PTC Therapeutics (PTCT) Clinical stage biotech $126 3% 17%

PTC & bluebird continue wave of biotech success, but Regado fails to price

In total, bluebird bio, a clinical-stage biotech developing gene therapies for severe genetic and orphan diseases, raised $101 million in an upsized IPO, offering 5.9 million shares at $17. The company rose over 58% on its opening day, giving it the best biotech first-day return since Pain Therapeutics (NASDAQ:PTIE) rose 82% on its first day of trading in July 2000 and the third highest first-day gain of 2013, behind only Marketo (MKTO, 78% first day return) and Tableau Software (DATA, 64%). PTC Therapeutics, a biotech developing treatments for rare forms of muscular dystrophy and cystic fibrosis, also upsized its IPO, offering 21% more shares than originally planned. PTC priced at $15, within its $13 to $16 range, and raised $126 million. The company gained 10% on its first day of trading, despite the market’s sell-off at the end of the week, indicating continued investor enthusiasm in the biotech sector.

However, not all biotechs are benefiting from the recent wave of successful biotech IPOs. Regado Biosciences, which is developing a breakthrough anticoagulant system for cardiovascular surgeries, failed to price on Tuesday as scheduled. The deal has not officially been postponed and will potentially price this week. Regado’s delayed deal follows the postponement of pet medication biotech Aratana Therapeutics’ (NASDAQ:PETX) $51 million IPO on Tuesday.

Gogo prices at high end of range, trades off in market debut

Gogo, the leading provider of in-flight WiFi on commercial and business jets, priced at $17, the high end of its range, but traded off 10% in its market debut amid concerns over the company's high capex requirements and capacity constraints. The FAA also announced on Friday that it expects to relax current regulations that require electronic devices to be turned off during taxiing, take-off and landing, which could adversely affect Gogo's sales.

Votorantim Cimentos postpones $3.4 billion IPO

Votorantim Cimentos, Brazil's largest cement producer, postponed its IPO on Tuesday, citing poor market conditions. The São Paulo, Brazil-based company had filed to raise $3.4 billion, which would have made it the largest U.S. IPO since Facebook (NASDAQ:FB) raised $16 billion in its highly publicized May 2012 IPO. Votorantim Cimentos’ production is closely tied to Brazil's GDP, and its postponement coincided with weak economic conditions in Brazil. Brazilian stocks have traded poorly in recent months, the real has been weakening and Standard & Poor’s recently cut its outlook of Brazil’s government debt from stable to negative.

IPOs setting terms (week of June 17, 2013)
Company Business Deal Size ($mm) LTM Sales ($mm)
Noodles & Company (NASDAQ:NDLS) Fast-casual restaurant chain $75 $312
Prosensa Holding (NASDAQ:RNA) Genetic disorders treatment $60 $11

Noodles & Company launches first restaurant IPO of 2013

Fast-casual restaurant Noodles & Company (NDLS), which operates over 300 restaurants serving pasta bowls inspired by regional and worldwide cuisine, launched the first restaurant IPO since Bloomin’ Brands (NASDAQ:BLMN), the leading casual dining restaurant company and owner of Outback Steakhouse, completed its $176 million offering in August 2012. Noodles is led by Chairman and CEO Kevin Reddy, who formerly served as COO of Chipotle Mexican Grill. Prosensa Holding (RNA), a biotech engaged in the discovery and development of RNA-modulating therapeutics for the treatment of genetic disorders, was also added to our IPO calendar when it set terms for a $60 million IPO last week.

New IPO filers (week of June 17, 2013)
Company Business Deal Size ($mm) LTM Sales ($mm)
City Ventures (CTYV) California homebuilder $150 $97
Iroko Pharmaceuticals (IRKO) NSAID therapeutics $145 $10
RetailMeNot (SALE) Online coupon marketplace $230 $156
World Point Terminals, LP (NYSE:WPT) Oil storage terminal operator $212 $74

Four companies added to the US IPO pipeline

Last week’s notable filers included digital coupon marketplace RetailMeNot, formerly known as WhaleShark Media. The Austin, TX-based company had been on our Private Company Watchlist since November 2011. Also among last week’s new filers was California homebuilder City Ventures (CTYV), which is the sixth homebuilder to file this year and the fourth homebuilder focused solely on development in California. Of the three homebuilders that have completed their offerings this year (TPH, TMHC and WLH), only Taylor Morrison Homes, the leading homebuilder in the U.S. and Canada, has seen positive gains (+16%) since its offering.

Year-to-date results
The 82 IPOs in 2013 have raised $18.7 billion and produced an average return of 20%. There have been 52 IPOs in the past 90 days, with total proceeds of $11.7 billion and an average return of 20%. The active IPO pipeline includes 118 companies looking to raise $34.4 billion.

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