Two large biotechs traded up as the first IPOs of 2016.
As we noted in our mid-week blog post, both biotechs went public in a challenging market: The Nasdaq biotech Index is down 25% this year and the average return for 2015's biotech IPO class is -26%, with 80% trading below issue.
BeiGene (NASDAQ:BGNE) offered IPO investors a unique opportunity to buy into a Chinese immunotherapy biotech with a potentially enormous market. With insiders buying nearly 50% of the upsized $158 million offering, it finished Friday up 44% - enough to earn it a place among the top 10 IPOs of 2015. Editas Medicine (NASDAQ:EDIT) gave public investors the first pure play on the massively-hyped CRISPR gene editing technology, which has the potential to cure 6,000 genetic diseases. Backed by Flagship Ventures, Third Rock, Fidelity, Google and others, Editas priced its $94 million offering at the low end and came close to breaking issue, but finished the week up 10%. BeiGene and Editas came public at market caps above $500 million - larger than 89% of biotechs at IPO in the past 10 years.
Their strong performance offers an encouraging sign for biotechs, a battered sector that helped power the IPO market in 2014 (26% of deals) and 2015 (35%). Of the 17 initial filings this year, 65% are biotech.
Two more biotechs are on the IPO calendar for next week, as well as two operating companies hoping to raise $450-$550 million.
|The first two IPOs of 2016 traded up during the week of February 1, 2016|
|Company (Ticker)||Business||Deal size ($mm)||IPO price vs. midpoint||1st-day pop||Return at 2/5|
|BeiGene||Biotech: Cancer therapies out of China||$158||+4%||18%||41%|
|Editas Medicine||Biotech: CRISPR gene-editing||$94||-6%||14%||10%|
IPO Market Snapshot
The Renaissance IPO Indices are market cap weighted baskets of newly public companies. The Renaissance IPO Index is down 20% year-to-date, compared to -8% for the S&P 500. Renaissance Capital's IPO ETF (NYSEARCA: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 9% year-to-date, while the ACWX is down 8%. Renaissance Capital's International IPO ETF (NYSEARCA:IPOS) tracks the index, and top ETF Holdings include Japanese staffing firm Recruit Holdings and European insurance provider NN Group.
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