IPOs This Week: 7/16/18

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Includes: AFGL, ALLK, CCB, CNST, CRNX, ESTA, MYFW, REPL, RUBY, TLRY
by: B&B Market

Summary

The week of 7/16/18 is scheduled to IPO 10 companies.

After a couple quite weeks, this upcoming week is back into full swing with an unusual industry make up.

There are no conventional 'tech' companies this week, and this is very unusual if you have been following the series.  The makeup consists of financial, industrial, and healthcare.

Image result for ipos

Source: China Daily

Scheduled

  • AFG Holdings (NYSE:AFGL)

Overview

AFG Holdings is an original equipment manufacturer focusing on the oil and gas industry. Products include mission-critical equipment, aftermarket services, and complementary products. The company is based in Houston, Texas. In 2015, the company began a consolidation in response to tightening oil markets. As a result, operations went from 25 facilities to 15, without sacrificing core products, saving the company $90 million a year.

Use of Proceeds

Management expects to raise $82.3 million selling ~5 million shares at $16.50 per share. The funds will be used as follows:

  1. $72.9 million used to repay term loan
  2. Remaining used for general purposes

Overview

Allakos is a clinical stage biotechnology firm developing a monoclonal antibody (AK002) to treat eosinophil/mast cell related diseases. These are types of white blood cells that play a major role in inflammation. Below are examples of diseases that AK002 is targeted to attack.

Source: S-1

Use of Proceeds

Management expects to raise $86.3 million selling 6 million shares at $16 per share. The funds will be used as follows:

  1. $70 million for the development of AK002
  2. Remaining allocated towards general purposes
  • Coastal Financial (CCB)

Overview

Coastal Financial is a bank holding company, operating through the subsidiary "Coastal Community Bank". The company is small and operates primarily within Snohomish county, Washington. There are 13 locations (10 inside Snohomish county) within the Puget Sound region, and Coastal is the largest in this region. As of March 31, 2018 there was $831 million in total assets, $678.5 million in total loans, $727.3 million total deposits, and $66.9 million in equity.

Use of Proceeds

Management expects to raise $26.4 million by selling ~2.7 million shares at $14 per share. The funds will be used as follows:

  1. "Substantial portion" will be allocated to the bank to promote growth both organically and through mergers/acquisitions
  • Constellation Pharmaceuticals (CNST)

Overview

Constellation is a clinical stage biopharmaceutical company that focuses on cancer patients that have developed abnormal gene expressions or drug resistance. The lead candidates, CPI-1205 and CPI-0610, which inhibit zeste homolog 2 (EZH2) and bromodomain/extra terminal domain proteins respectively. These drugs allow cells to regain the ability to attack tumor cells.

Use of Proceeds

Management expects to raise $71 million selling 5.34 million shares at $15 per share. The funds will be used as follows:

  1. $32 million to fund trials for CPI-1205 (treatment of mCRPC)
  2. $20 million to fund trials for CPI-1205 (treatment of solid tumors)
  3. $7 million to fund development of CPI-0209
  4. $19 million to advance pipeline
  • Crinetics Pharmaceuticals (CRNX)

Overview

Crinetics is a clinical stage pharmaceutical company that focuses on rare endocrine diseases. The company's therapy targets peptide GPCRs (G protein coupled receptors). Lead product candidate, CRN 00808, is in clinical trials to treat Acromegaly. The additional trials are shown below.

Source: S-1

Use of Proceeds

Management expects to raise $71.6 million from selling ~4.5 million shares at $16 per share. The funds will be used as follows:

  1. $45 million to fund clinical development of CRN00808
  2. $15 million for preclinical development for other products
  • Establishment Labs Holdings (ESTA)

Overview

Establishment Labs is a medical technology copmany focused on aesthetic outcomes in the breast and reconstruction markets. The company is mainly known for its line of breast implants, Motiva Implants. The company is currently conducting traisl on a implant IDE (investigational device exemption) expected to complete in early 2019.

Use of Proceeds

Management expects to raise $45.3 million selling ~3.2 million shares at $16 per share. The funds will be used as follows:

  1. $5-8 million to fund IDE study
  2. $5 million to payoff indebtedness to Class Z preferred shareholders
  3. Remainder allocated towards working capital
  • First Western Financial (MYFW)

Overview

First Western Financial is a financial holding company in Denver, Colorado. The company offers a full array of Wealth Management services across the western part of the US. As of March 31, 2018 there was $5.4 billion AUM, total assets of $991.6 million, $817.3 million in loans, $8181.2 million in deposits, and $104.2 million of equity.

Use of Proceeds

Management is expecting to raise $26.2 million selling ~1.3 million shares at $20 per share. The funds will be used as follows:

  1. $25 million to redeem all outstanding preferred shares
  2. Remaining cash plus cash on hand to payoff outstanding 2020 notes

The preferred shares consists of 8,559 Series A shares, 428 Series B shares, 11,881 Series C shares, and 41,000 Series D shares.

  • Replimune Group (REPL)

Overview

Replimune Group is a biotechnology firm that focuses on oncolytic immunotherapies. These therapies are intended to, "maximally activate the immune system against solid tumors." The lead product candidate, RP1, is in Phase1/2 clinical trials and the company has been collaborating with Bristol-Myers Squibb (BMY) within the trials. The company is also collaborating with Regeneron Pharmaceuticals (REGN), who will fund a portion of the trials.

Use of Proceeds

Management is expecting to raise $90.8 million selling 6.7 million shares at $15 per share. The funds will be used as follows:

  1. $20 million to fund the completion of Phase 1/2 clinical trials for RP1
  2. $15 million to fund additional Phase 2 costs
  3. $20 million for preclinical steps of RP2
  4. $10 million to fund preclinical and Phase 1 trails for RP3
  5. $20 million for costs associated with Massachusettes facility
  • Rubius Therapeutics (RUBY)

Overview

Rubius is a biopharma firm that is pioneering Red Cell Therapeutics, or RCTs. This therapy targets red blood cells and the company believes this can be the foundation for many diseases. Hundreds of RCTs have been created using the company's proprietary platform, Rubius Erythrocyte Design (RED). These therapies are created from Type O donor blood so they can be used by anyone. The company is focusing on rare, autoimmune, and cancer diseases.

Use of Proceeds

Management is expecting to raise $182.6 million through the sale of ~8.7 million shares at $21 per share. The funds will be used as follows:

  1. $95.0 million to purchase, renovate, customize and operate the manufacturing facility
  2. $42.0 million to advance RTX-134 through a Phase 1/2a proof-of-concept trials
  3. $176.0 million to advance and expand our RED Platform and research and development pipeline

Overview

Tilray is a medical cannabis firm who researches, cultivates, processes, and distributes in 10 countries across 5 continents. The company operates inside Argentina, Australia, Canada, Chile, Croatia, Cyprus, the Czech Republic, Germany, New Zealand and South Africa. Operations also include the management of clinical trails for other manufacturers.

Use of Proceeds

The IPO expects to raise ~$121.6 million, selling 9 million Class 2 shares at $15 per share. The funds will be used as follows:

  1. $52.9 million to fund cultivation and processing expansion
  2. $37 million to repay outstanding debt

Conclusion

After a couple weeks of silence, the week of July 16 launches us back into full swing. With 7 out of 10 companies falling into the healthcare sector, this week is lacking diversity. The financial companies may seem appealing to some investors due to the increasing interest rate environment, but remember that First Western is primarily a Wealth Management company. As for Coastal, the company is very small and condensed. This requires an analysis of the Puget Sound area as that is where 90%+ of revenue activity is conducted. This leaves only AFG Holdings, which will be the focus of this weeks "IPO Potential". This article can be expected later on this week.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.