U.S. IPO Week Ahead: Permian Pipelines Go Public Alongside 3 Cancer Biotechs

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Includes: BCYC, GXGXU, IDYA, PLTX, RTLR
by: Renaissance Capital IPO Research
Summary

Upcoming IPOs include four deals raising $868 million.

The majority of the week's proceeds will go to Rattler Midstream LP, a yield vehicle being carved out of Diamondback Energy with oil and gas pipelines in the attractive Permian Basin.

The biotech flood continues, with three more oncology-focused drug developers.

After this week, the IPO market will get a short break, as companies hit pause until after Memorial Day.

Upcoming IPOs include four deals raising $868 million. In addition, a SPAC plans to raise $250 million. Don't expect many new additions to the calendar. After this week, the IPO market will get a short break, as companies hit pause until after Memorial Day. That said, new initial filings should continue to pour in ahead of an active summer.

The majority of the week's proceeds will go to Rattler Midstream LP (NASDAQ:RTLR), a yield vehicle being carved out of Diamondback Energy (NASDAQ:FANG) with oil and gas pipelines in the attractive Permian Basin. The company offers a 5.7% dividend yield at the midpoint.

The biotech flood continues, with three more oncology-focused drug developers. This year, 19 biotechs have completed US IPOs, averaging a return of about 5% from the offer, with negative aftermarket trading. That compares to 58 biotechs in the full-year 2018, which now average a mere 1% return from IPO (-11% in post-IPO trading).

This week's largest biotech is Peloton Therapeutics (PLTX), raising $150 million at a market cap of nearly $750 million. The company is developing a small molecule therapy with a novel mechanism of action to go after kidney cancer. It is backed by The Column Group, a lead backer of recent IPOs NGM Biopharma (NASDAQ:NGM) and Gritstone Oncology (NASDAQ:GRTS).

Backed by 5AM Ventures and Canaan, IDEAYA Biosciences (NASDAQ:IDYA) is developing therapies for genetically-defined cancers, focusing on biomarkers that could lead to a higher chance of efficacy. It claims that its direct targeting of oncogenic pathways and synthetic lethality represent an emerging class of precision medicine.

UK-based Bicycle Therapeutics (NASDAQ:BCYC) is developing a novel peptide platform which it has dubbed "bicycle" due to its distinct shape. While early stage, the company has secured some strong collaboration agreements with AstraZeneca (NYSE:AZN) and others.

U.S. IPO Calendar

Issuer
Business

Deal Size
Market Cap

Price Range
Shares Filed

Top
Bookrunners

GX Acquisition (GXGXU)
New York, NY

$250M
$313M

$10
25,000,000

Cantor Fitz.

Blank check company led by the managing partners of Trimaran Capital Partners.

Bicycle Therapeutics
Cambridge, United Kingdom

$65M
$278M

$14 - $16
4,333,333

Goldman
Jefferies

Phase 1 biotech developing novel oncology medicines based on bicyclic peptides.

IDEAYA Biosciences
South San Francisco, CA

$70M
$290M

$13 - $15
5,000,000

JP Morgan
Citi

Phase 1 biotech developing targeted therapies for genetically-defined cancers.

Peloton Therapeutics
Dallas, TX

$150M
$742M

$15 - $17
9,375,000

JP Morgan
Citi

Phase 2 biotech developing small-molecule HIF-2a inhibitors for kidney cancer.

Rattler Midstream LP
Midland, TX

$583M
$2,652M

$16 - $19
33,333,332

Credit Suisse
BofA ML

Oil and gas midstream services unit being spun out of Diamondback.

Bicycle Therapeutics, a Phase 1 biotech developing novel oncology medicines based on bicyclic peptides, plans to raise $65 million by offering 4.3 million shares at a price range of $14.00 to $16.00. At the midpoint of the proposed range, it would command a market value of $278 million. Bicycle Therapeutics, which was founded in 2009, booked $11 million in collaboration revenue over the last 12 months. The Cambridge, United Kingdom-based company plans to list on the Nasdaq under the symbol BCYC. Goldman Sachs, Jefferies and Piper Jaffray are the joint bookrunners on the deal. Insiders intend to purchase up to $25 million of the IPO (38% of the deal).

GX Acquisition, a blank check company led by the managing partners of Trimaran Capital Partners, plans to raise $250 million by offering 25.0 million units at a price of $10.00. At that price, GX Acquisition would command a market value of $313 million. Formed in 2018, the New York, NY-based company plans to list on the Nasdaq under the symbol GXGXU. Cantor is the lead bookrunner on the deal.

IDEAYA Biosciences, a Phase 1 biotech developing targeted therapies for genetically-defined cancers, plans to raise $70 million by offering 5.0 million shares at a price range of $13.00 to $15.00. At the midpoint of the proposed range, it would command a market value of $290 million. Founded in 2015, the South San Francisco, CA-based company plans to list on the Nasdaq under the symbol IDYA. J.P. Morgan, Citi and Jefferies are the joint bookrunners on the deal. Insiders intend to purchase up to $35 million of the IPO (50% of deal).

Peloton Therapeutics, a Phase 2 biotech developing small-molecule HIF-2a inhibitors for kidney cancer, plans to raise $150 million by offering 9.4 million shares at a price range of $15.00 to $17.00. At the midpoint of the proposed range, Peloton Therapeutics would command a market value of $742 million. Founded in 2010, the Dallas, TX-based company plans to list on the Nasdaq under the symbol PLTX. J.P. Morgan, Citi and Jefferies are the joint bookrunners on the deal.

Rattler Midstream LP, an oil and gas midstream services unit being spun out of Diamondback, plans to raise $583 million by offering 33.3 million shares at a price range of $16.00 to $19.00. At the midpoint of the proposed range, Rattler Midstream LP would command a market value of $2.7 billion. Formed in 2018, Rattler booked $247 million in sales over the last 12 months. The Midland, TX-based company plans to list on the Nasdaq under the symbol RTLR. Credit Suisse, BofA Merrill Lynch, J.P. Morgan, Barclays, Citi, Goldman Sachs and Wells Fargo are the joint bookrunners on the deal.

Last week, there were 5 IPO pricings. Fastly (NYSE:FSLY), an edge cloud computing platform, was the week's winner, ending up about 50% from its IPO price.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 5/16/19, the Renaissance IPO Index was up 34.7% year-to-date, while the S&P 500 had a gain of 15.6%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Elanco (NYSE:ELAN) and Okta (NASDAQ:OKTA). The Renaissance International IPO Index was up 10.2% year-to-date, while the ACWX was up 9.8%. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include SoftBank and Xiaomi.

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