U.S. IPO Weekly Recap: 2 Big Biotechs Break The Ice As The First IPOs Of 2016 Trade Up

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Includes: BGNE, EDIT
by: Renaissance Capital IPO Research

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.

Investment Disclosure: The information and opinions expressed herein were prepared by Renaissance Capital's research analysts and do not constitute an offer to buy or sell any security. Renaissance Capital, the Renaissance IPO ETF (IPO), the Renaissance International IPO ETF (IPOS), or the Global IPO Fund (MUTF:IPOSX), may have investments in securities of companies mentioned.

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