U.S. IPO Week Ahead: On Track For 7 IPOs, Led By Virgin Trains USA

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Includes: ANCN, AVDR, BFL, CBUS, MITO, TCRR, VTUS
by: Renaissance Capital IPO Research
Summary

Railroad IPOs were hot in the 1850s, but two billionaires are bringing the industry back this week with an offering of Virgin Trains USA.

In total, the week could see up to seven deals, but Virgin Trains USA's $510 million IPO is larger than the other six combined.

The IPO calendar has three biotechs, a medical device maker, a gene-edited crop company, and a Florida bank.

Railroad IPOs were hot in the 1850s, but two billionaires are bringing the industry back this week with an offering of Virgin Trains USA. In total, the week could see up to seven deals, but Virgin Trains USA's $510 million IPO is larger than the other six combined. These others are mostly small healthcare IPOs: The IPO calendar has three biotechs, a medical device maker, a gene-edited crop company, and a Florida bank.

Even if the US government fails to avoid another shutdown by Friday, these seven should be the last to price for a few weeks, based on normal seasonality. Last year, the IPO market had a blackout period between 2/15 and 3/7. In a normal market, we would expect an uptick in initial filings starting on Monday, which would enable companies to go public in the first week of March.

U.S. IPO Calendar

Issuer
Business

Deal Size
Market Cap

Price Range
Shares Filed

Top
Bookrunners

Anchiano Therapeutics (NASDAQ:ANCN)
Jerusalem, Israel

$35M
$96M

$14.55
2,400,000

Oppenheimer

Phase 3 biotech developing therapies for early-stage bladder cancer.

BankFlorida (NASDAQ:BFL)
Palm Beach Gardens, FL

$42M
$51M

$9.50 - $10.50
4,200,000

B. Riley FBR

Community bank with one branch in Southern Florida.

Virgin Trains USA (NASDAQ:VTUS)
Miami, FL

$510M
$2,985M

$17 - $19
28,334,000

Barclays
JP Morgan

Owns and operates an express passenger rail system in Florida.

Avedro (NASDAQ:AVDR)
Waltham, MA

$75M
$290M

$14 - $16
5,000,000

BofA ML
JP Morgan

Sells ophthalmic medical systems used in treating corneal disorders.

Cibus (NASDAQ:CBUS)
San Diego, CA

$100M
$350M

$14 - $16
6,666,667

Morgan Stanley
BofA ML

Developing gene-edited crop traits for the global seed industry.

TCR2 Therapeutics (NASDAQ:TCRR)
Cambridge, MA

$75M
$374M

$14 - $16
5,000,000

Jefferies
Leerink

Early stage biotech developing immunotherapies for various cancers.

Stealth BioTherapeutics (NASDAQ:MITO)
Newton, MA

$81M
$430M

$12 - $14
6,200,000

Jefferies
Evercore ISI

Phase 3 biotech focused on mitochondrial dysfunction.

Virgin Trains USA is targeting $510 million at a market cap of $3.0 billion. Founded by Fortress's Wes Edens and licensing Richard Branson's famous brand, the high-speed passenger rail company began service in Florida during January 2018, and booked roughly $10 million in revenue during the year. Like Fortress's recent energy IPO, New Fortress (NASDAQ:NFE), Virgin Trains USA is an ambitious undertaking that will require billions of capex.

Stealth BioTherapeutics is raising $81 million at a market cap of $430 million. Controlled by China's Morningside Venture, insiders have indicated on 74% of the deal. The company is in a Phase 3 trial for primary mitochondrial myopathy, a rare disease with no approved therapies.

TCR2 Therapeutics is targeting a $75 million IPO, including 40% insider interest. Primary backer MPM Capital was also behind this past week's T cell cancer biotech, Harpoon, which received a lukewarm reception on its debut (-3%). TCR2's IND was cleared by the FDA in January, and it is now ready to begin testing in humans.

Backed by OrbiMed, Avedro is raising $75 million to fund commercialization of its ophthalmic medical system used to treat eye disorders and improve vision. Fast growing medical device IPOs delivered strong first-day returns last year, and while Avedro's 24% growth (+55% in the US) is a key selling point, that was a result of higher drug pricing but lower device sales, and the company remains highly unprofitable.

Cibus is raising $100 million at a market cap of $350 million as it advances what it believes is a faster, more efficient method of developing desirable crop seed traits. Its gene-edited seeds are non-GMO, and last year it began marketing a herbicide-tolerant canola seed ($2.4 million in recorded sales), with plans to develop additional traits and seed types.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 2/7/19, the Renaissance IPO Index was up 19.3% year-to-date, while the S&P 500 had a gain of 8.1%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include VICI Properties (OTC:VICI) and Spotify (NYSE:SPOT). The Renaissance International IPO Index was up 4.2% year-to-date, while the ACWX was up 7.0%. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include SoftBank and China Tower.

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.