U.S. IPO Weekly Recap: Tech And Life Sciences Fare Well While SmileDirectClub Falls Flat In 6-IPO Week

In the first busy week since the August break, six companies and two SPACs entered the public market. VC-backed health and tech fared well, led by 10x Genomics (NASDAQ:TXG) and Cloudflare (NYSE:NET), while SmileDirectClub (NASDAQ:SDC) saw its initial hype evaporate.

The largest deal of the week, SmileDirectClub priced its $1.3 billion IPO above the range and promptly fell below issue; it’s the first company in three years to price above the range and trade down on its first day. SmileDirectClub came public at a premium to close peer Align Technology (NASDAQ:ALGN), reflecting its large potential market opportunity and high growth (190% y/y), but its large losses and insider payouts left investors frowning. SmileDirectClub finished the week down 19%.

Cloudflare and 10x Genomics both priced upsized IPOs above the upwardly revised range with billion-dollar valuations. Cloudflare raised $525 million to command a $4.8 billion market cap. The company came to market in line with closest peer Fastly (NYSE:FSLY), which has traded up 82% since its May IPO. Cloudflare finished the week up 20%. 10x Genomics raised $390 million to command a $4.2 billion market cap. The company is growing fast (106% y/y) and has high recurring consumables revenue. 10x Genomics finished the week up 34%.

Migraine biotech Satsuma Pharmaceuticals (STSA) priced its $83 million deal at the $15 midpoint and finished the week up 13%. Rare disease biotech SpringWorks Therapeutics (SWTX) priced its IPO at the $18 high end to raise $162 million and finished the week up 26%. Regional bank Alerus Financial (NASDAQ:ALRS) priced below the range to raise $60 million with its Nasdaq uplisting, finishing the week up 5%.

8 IPOs During the Week of September 9th, 2019

Issuer
Business

Deal
Size

Market Cap
at IPO

Price vs.
Midpoint

First Day
Return

Return
at 09/13

10x Genomics

$390M

$4,231M

18%

+35%

+34%

Provides a single-cell sequencing platform for biomedical research.

SpringWorks Therapeutics

$162M

$798M

6%

+26%

+26%

Phase 3 biotech developing small molecule therapies for rare cancers.

Cloudflare

$525M

$4,796M

36%

+20%

+20%

Provides a cloud platform for website security and web content optimization.

Satsuma Pharmaceuticals

$83M

$270M

0%

+13%

+13%

Developing a fast-acting dry powder nasal spray for migraines.

Alerus Financial

$60M

$358M

-9%

+5%

+5%

Regional bank with a focus on retirement and benefit services.

New Providence Acq. (NPAUU)

$200M

$250M

0%

+0%

+0%

Blank check company led by former soda executives targeting the consumer sector.

Experience Investment (EXPCU)

$250M

$313M

0%

+0%

+0%

Blank check company led by a team from KSL Capital Partners and focused on the travel and leisure industry.

SmileDirectClub

$1,346M

$8,878M

12%

-28%

-19%

Develops and sells at-home teeth straightening systems.

Four companies filed for IPOs this week. Large German biotech BioNTech (BNTX) filed for an estimated $500 million US IPO. Illinois bank HBT Financial (HBT) and denim-focused apparel retailer Madewell (MDWL.RC) both filed to raise $100 million. Global Internet of People (GIP), an online peer-to-peer knowledge sharing platform in China, filed and set terms for a $20 million US IPO.

4 Filings During the Week of September 9th, 2019

Issuer
Business

Deal
Size

Sector

Lead
Underwriter

Global Internet of People

$20M

Technology

ViewTrade

Online peer-to-peer knowledge sharing and enterprise service platform in China.

HBT Financial

$100M

Financials

KBW

Family-owned bank with 64 branches in central and northeastern Illinois.

Madewell

$100M

Consumer Discretionary

Denim-focused apparel brand backed by TPG and Leonard Green.

BioNTech

$500M

Healthcare

JPMorgan

German biotech developing individualized immunotherapies for cancer.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 9/12/19, the Renaissance IPO Index was up 32.0% year-to-date, while the S&P 500 had a gain of 20.1%. Renaissance Capital’s IPO ETF (NYSEARCA:IPO) tracks the index, and top ETF holdings include Spotify (NYSE:SPOT) and Roku (NASDAQ:ROKU). The Renaissance International IPO Index was up 11.9% year-to-date, while the ACWX was up 13.0%. Renaissance Capital’s International IPO ETF (NYSEARCA:IPOS) tracks the index, and top ETF holdings include Meituan-Dianping (MEIT) and SoftBank (OTCPK:SFTBY).

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