U.S. IPO Weekly Recap: 2 Billion-Dollar Biotechs Cap A Mixed Week For Biotech IPOs

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Includes: ALEC, AREC, GOSS, HARP, HHHHU, MNCLU, RMG.U, SLACK, SWAV, VNOR
by: Renaissance Capital IPO Research
Summary

In the second week after the SEC opened, we saw a number of launches and two billion-dollar biotechs, Alector and Gossamer Bio, price their IPOs.

Another biotech, Harpoon Therapeutics, along with three SPACs, also priced their IPOs.

Also notable this week, workplace messaging platform Slack said that it plans to go public, but does not plan to do a traditional IPO, instead opting to go public via a direct listing.

In the second week after the SEC opened, we saw a number of launches and two billion-dollar biotechs, Alector (NASDAQ:ALEC) and Gossamer Bio (NASDAQ:GOSS), price their IPOs. Another biotech, Harpoon Therapeutics (NASDAQ:HARP), along with three SPACs, also priced their IPOs.

Alector, a Phase 1 biotech developing therapies for neurodegeneration, raised $176 million in its IPO on Wednesday, commanding a fully diluted market value of $1.4 billion, but ended its first day of trading down 5% and ended the week down 14%. Alector's poor performance rivaled that of another billion dollar biotech, Moderna (NASDAQ:MRNA), which IPO'd in late 2018 with a fully diluted market value of $8.1 billion, and ended its first day down 19%.

Harpoon Therapeutics, a Phase 1 biotech developing T cell immunotherapies for various cancers, raised $76 million in its IPO on Thursday. It also broke issue on its first day of trading, ending the day down 3.6%.

Gossamer Bio, which is developing in-licensed imunotherapies for asthma and other indications, took a different path than its billion-dollar biotech peers, ending its first trading day up 12.1%, after raising $276 million at a market value of $1.1 billion in an upsized IPO on Thursday.

Also notable this week, workplace messaging platform Slack (SLACK) said that it plans to go public, but does not plan to do a traditional IPO, instead opting to go public via a direct listing. Spotify (NYSE:SPOT), the world's largest music streaming subscription service, did a direct listing on the NYSE at a price of $132 in early 2018 and traded up 12.9% on its first day. It will be interesting to see if other big names also decide to take this route in the future.

6 IPOs During the Week of February 4th, 2019

Issuer
Business

Deal
Size

Market Cap
at IPO

Price vs.
Midpoint

First Day
Return

Return
at 02/08

Gossamer Bio

$276M

$1,056M

0%

+12%

+12%

Developing in-licensed immunotherapies for asthma and other indications.

Wealthbridge Acquisition (HHHHU)

$50M

$65M

0%

+0%

+0%

Blank check company targeting the air transportation industry in China.

Monocle Acquisition (NASDAQ:MNCLU)

$150M

$194M

0%

+0%

+0%

Blank check company formed to acquire an aerospace & defense or industrial business.

RMG Acquisition (RMG.U)

$200M

$250M

0%

+0%

+0%

Blank check company formed to acquire a materials or energy services business.

Harpoon Therapeutics

$76M

$377M

0%

-4%

-4%

Phase 1 biotech developing T cell immunotherapies for various cancers.

Alector

$176M

$1,391M

0%

-5%

-14%

Phase 1 biotech developing therapies for neurodegeneration.

4 Filings During the Week of February 4th, 2019

Issuer
Business

Deal
Size

Sector

Lead
Underwriter

Avantor (VNOR)

$1,500M

Materials

Goldman

LBO'd provider of laboratory supplies and services.

Shockwave Medical (SWAV)

$70M

Health Care

Morgan Stanley

Sells medical systems used in treating cardiovascular disease.

American Resources (NASDAQ:AREC)

$9M

Energy

Maxim

Kentucky-based producer of metallurgical coal.

Tortoise Acquisition (SHLL.U)

$225M

SPAC

Barclays

Blank check company targeting the energy industry.

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 (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.