U.S. IPO Week Ahead: Tech And Big Biotech Fill Up A 9-IPO Week

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Includes: ADPT, BBIO, CHNG, CMBM, KRTX, LINX, MORF, PRMI, REAL
by: Renaissance Capital IPO Research
Summary

Nine IPOs are scheduled to raise $2.1 billion in the week ahead.

Tech and healthcare continue to dominate the IPO market, with four of each this coming week.

New filings should also pick up, as companies target post-July 4th launches.

Nine IPOs are scheduled to raise $2.1 billion in the week ahead. Tech and healthcare continue to dominate the IPO market, with four of each this coming week. New filings should also pick up, as companies target post-July 4th launches.

McKesson/Blackstone's Change Healthcare (NASDAQ:CHNG) is the week's largest IPO, aiming to raise $750 million from common stock, plus $250 million in convertible units. Providing billing and collections software and services used by various healthcare providers, Change's sticky solution booked $3.3 billion in sales with strong EBITDA margins (28% in FY19), though the company is highly levered, and recently had weak results in some of its largest business units.

The RealReal (NASDAQ:REAL) is raising $270 million at a proposed $1.7 billion valuation. The online luxury consignment store is a second act for the founder of Pets.com, who leads the company as co-founder and CEO. Several fast-growing e-commerce IPOs have outperformed this year (Chewy (NYSE:CHWY), Revolve (NYSE:RVLV)), though RealReal has the highest losses by far (-29% EBITDA margin).

Brazil-based Linx (NYSE:LINX) is raising about $250 million in its US IPO. Like last year's US IPOs PagSeguro (NYSE:PAGS) and StoneCo (NASDAQ:STNE), Linx provides payment solutions in Brazil, though its core software helps retailers turn POS transaction data into insights that can be analyzed on an ERP system. Listed in Brazil, the company grew sales by 20% in 2018 to $179 million, with a 10% net margin.

As we recently described in a special IPO commentary, June's flood of biotechs continues this week, including two that are coming public valued at more than $1.5 billion. Viking-backed Adaptive Biotechnologies (NASDAQ:ADPT) is a hybrid diagnostics/biotech company, with a fast-growing immuno-sequencing business and a pipeline of preclinical candidates. KKR-backed BridgeBio Pharma (NASDAQ:BBIO) has a massive pipeline of 16 clinical programs, mainly focused on genetic diseases.

U.S. IPO Calendar

Issuer
Business

Deal Size
Market Cap

Price Range
Shares Filed

Top
Bookrunners

Cambium Networks (NASDAQ:CMBM)
Rolling Meadows, IL

$81M
$363M

$13 - $15
5,800,000

JP Morgan
Goldman

Provides wireless broadband networking products.

Linx
São Paulo, Brazil

$254M
$1,636M

$8.68
29,274,601

Goldman
Morgan Stanley

Brazilian provider of POS/ERP connectivity software and payment services.

Adaptive Biotechnologies
Seattle, WA

$200M
$2,098M

$15 - $17
12,500,000

Goldman
JP Morgan

Provides genetic immunosequencing tests used to diagnose and treat diseases.

BridgeBio Pharma
Palo Alto, CA

$225M
$1,725M

$14 - $16
15,000,000

JP Morgan
Goldman

Late-stage biotech developing therapies for genetic diseases and cancers.

Change Healthcare
Nashville, TN

$750M
$5,401M

$16 - $19
42,857,144

Barclays
Goldman

Provides healthcare revenue cycle management software and services.

Morphic Holding (NASDAQ:MORF)
Waltham, MA

$75M
$450M

$14 - $16
5,000,000

Jefferies
Cowen

Preclinical biotech developing oral small-molecule integrin inhibitors for chronic diseases.

Priam Properties (PRMI)
Nashville, TN

$171M
$222M

$18 - $20
9,000,000

BofA ML
Baird

Newly-formed REIT focused on office properties in the Midwest and Southeast.

Karuna Therapeutics (NASDAQ:KRTX)
Boston, MA

$70M
$377M

$15 - $17
4,375,000

Goldman
Citi

Phase 2 biotech developing therapies for schizophrenia and other CNS disorders.

The RealReal
San Francisco, CA

$270M
$1,633M

$17 - $19
15,000,000

Credit Suisse
BofA ML

Authenticated online luxury consignment store.

*US IPO - Linx S.A. is currently listed in Brazil

Adaptive Biotechnologies, which provides genetic immunosequencing tests used to diagnose and treat diseases, plans to raise $200 million by offering 12.5 million shares at a price range of $15.00 to $17.00. At the midpoint of the proposed range, it would command a market value of $2.1 billion. Adaptive, which was founded in 2009, booked $59 million in sales over the last 12 months. The Seattle, WA-based company plans to list on the Nasdaq under the symbol ADPT. Goldman Sachs, J.P. Morgan, BofA Merrill Lynch, Cowen and Guggenheim are the joint bookrunners on the deal.

BridgeBio Pharma, a late-stage biotech developing therapies for genetic diseases and cancers, plans to raise $225 million by offering 15.0 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 $1.7 billion. The Palo Alto, CA-based company was founded in 2015 and plans to list on the Nasdaq under the symbol BBIO. J.P. Morgan, Goldman Sachs, Jefferies, SVB Leerink and five others are the joint bookrunners on the deal.

Cambium Networks, which provides wireless broadband networking products, plans to raise $81 million by offering 5.8 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 $363 million. Cambium Networks, which was founded in 2011, booked $251 million in sales over the last 12 months. The Rolling Meadows, IL-based company plans to list on the Nasdaq under the symbol CMBM. J.P. Morgan and Goldman Sachs are the joint bookrunners on the deal.

Change Healthcare, which provides healthcare revenue cycle management software and services, plans to raise $750 million by offering 42.9 million shares at a price range of $16.00 to $19.00. At the midpoint of the proposed range, it would command a market value of $5.2 billion. Change Healthcare, which was founded in 2005, booked $3.3 billion in sales over the last 12 months. The Nashville, TN-based company plans to list on the Nasdaq under the symbol CHNG. Barclays, Goldman Sachs, J.P. Morgan, BofA Merrill Lynch and five others are the joint bookrunners on the deal. The company also plans to raise $250 million in a concurrent offering of convertible tangible equity units at $50 per unit.

Karuna Therapeutics, a Phase 2 biotech developing therapies for schizophrenia and other CNS disorders, plans to raise $70 million by offering 4.4 million shares at a price range of $15.00 to $17.00. At the midpoint of the proposed range, it would command a market value of $377 million. The Boston, MA-based company was founded in 2009 and plans to list on the Nasdaq under the symbol KRTX. Goldman Sachs, Citi and Wells Fargo Securities are the joint bookrunners on the deal. Insiders intend to purchase up to $30 million of the IPO (43% of the deal).

Linx, a Brazilian provider of POS/ERP connectivity software and payment services, plans to raise $254 million by offering 29.3 million shares at a price of $8.68, its as-converted price on the Brasil Bolsa Balcão (ticker: LINX3). At that price, Linx would command a market value of $1.6 billion. Linx, which was founded in 2004, booked $183 million in sales over the last 12 months. The São Paulo, Brazil-based company plans to list on the NYSE under the symbol LINX. Goldman Sachs, Morgan Stanley, Jefferies, BofA Merrill Lynch and Itau BBA are the joint bookrunners on the deal.

Morphic Holding, a preclinical biotech developing oral small-molecule integrin inhibitors for chronic diseases, plans to raise $75 million by offering 5.0 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 $450 million. The Waltham, MA-based company was founded in 2014 and plans to list on the Nasdaq under the symbol MORF. Jefferies, Cowen, BMO Capital Markets and Wells Fargo Securities are the joint bookrunners on the deal. Insiders intend to purchase up to $30 million of the IPO (40% of the deal).

Priam Properties, a newly-formed REIT focused on office properties in the Midwest and Southeast, plans to raise $171 million by offering 9.0 million shares at a price range of $18.00 to $20.00. At the midpoint of the proposed range, Priam Properties would command a market value of $222 million. The Nashville, TN-based company was founded in 2018 and plans to list on the NYSE under the symbol PRMI. BofA Merrill Lynch, Baird and RBC Capital Markets are the joint bookrunners on the deal.

The RealReal, an authenticated online luxury consignment store, plans to raise $270 million by offering 15.0 million shares at a price range of $17.00 to $19.00. At the midpoint of the proposed range, The RealReal would command a market value of $1.6 billion. The RealReal, which was founded in 2011, booked $230 million in sales over the last 12 months. The San Francisco, CA-based company plans to list on the Nasdaq under the symbol REAL. Credit Suisse, BofA Merrill Lynch, UBS Investment Bank, KeyBanc Capital Markets and Stifel are the joint bookrunners on the deal.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 6/20/19, the Renaissance IPO Index was up 39.8% year-to-date, while the S&P 500 had a gain of 19.0%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Okta (NASDAQ:OKTA) and Elanco (NYSE:ELAN). The Renaissance International IPO Index was up 13.2% year-to-date, while the ACWX was up 13.7%. 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.