U.S. IPO Weekly Recap: 2 Big Biotechs And A Bank Squeeze Through The IPO Window

Three IPOs raised a combined $426 million this week, all pricing below the midpoint and finishing below issue. On average, they returned a disappointing -13.5%.

Despite lopping $1 billion off of its proposed valuation, Germany-based BioNTech (NASDAQ:BNTX) became the third-largest biotech IPO by market cap in at least 10 years. The mRNA developer raised $150 million at a market cap of $3.4 billion, 23% below its original target, and below its last round in August on a per-share basis. Investors likely valued it against close peer Moderna (NASDAQ:MRNA), which declined 20% from the time BioNTech launched its roadshow until it priced. It finished the week down 8%. BioNTech had raised $1.3 billion privately, with the vast potential of mRNA generating excitement among scientists and VCs, but recent underperformance has made public equity markets skeptical about any $3+ billion company with no product revenue.

It was joined by Vir Biotechnology (NASDAQ:VIR), which raised $143 million at a market cap of $2.3 billion, also one of the largest biotechs of the past decade. Vir priced at the $20 low end, still above its January round ($18), and traded down 30% in one of the worst first-day drops of 2019. Backed by ARCH Venture and SoftBank, it had raised over $600 million privately, and is led by the former CEO of Biogen. Its RNA interference platform is being tested in a Phase 2 trial for hepatitis B.

HBT Financial (NASDAQ:HBT) priced below the range to raise $133 million, the largest US bank IPO in more than two years. It priced at a market cap of $421 million, in line with peers on price-to-book, and traded down 3% on its debut. All six of the year’s regional US bank IPOs now trade roughly at or below the offer price, with an average return of -4%.

3 IPOs During the Week of October 7th, 2019

Issuer
Business

Deal
Size

Market Cap
at IPO

Price vs.
Midpoint

First Day
Return

Return
at 10/11

HBT Financial

$133M

$421M

-11%

-3%

-3%

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

BioNTech

$150M

$3,444M

-21%

-5%

-8%

German biotech developing individualized immunotherapies for cancer.

Vir Biotechnology

$143M

$2,299M

-5%

-30%

-30%

Phase 2 biotech developing immunologic therapies for infectious diseases.


More Chinese issuers submitted initial filings this week, joined by a biotech, a genetic diagnostics company, and fours SPACs.

8 Filings During the Week of October 7th, 2019

Issuer
Business

Deal
Size

Sector

Lead
Underwriter

89bio (ETNB)

$70M

Health Care

BofA ML

Phase 1 biotech developing therapies for NASH and other metabolic diseases.

Centogene (CNTG)

$69M

Health Care

Leerink

Provides genetic testing and rare disease diagnostic products.

FinServ Acquisition (FSRVU)

$200M

SPAC

Barclays

Blank check company targeting the fintech industry led by finance veterans.

Osprey Technology Acq. (SFTW.U)

$250M

SPAC

Credit Suisse

Second blank check company led by Edward and Jonathan Cohen targeting the tech industry.

Merida Merger I (MCMJU)

$100M

SPAC

EarlyBird

Blank check company formed by Merida Capital Partners targeting the cannabis industry.

Fangdd Network Group (DUO)

$150M

Real Estate

Morgan Stanley

Chinese online real estate trading platform.

LGL Systems Acquisition (DFNSU)

$125M

SPAC

Jefferies

Blank check company led by Marc Gabelli and the co-founder of L3 Technologies targeting the defense industry.

Q&K International Group (QK)

$100M

Real Estate

Morgan Stanley

Operates a long-term apartment rental platform in China.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 10/10/19, the Renaissance IPO Index was up 21.8% year-to-date, while the S&P 500 had a gain of 19.1%. Renaissance Capital’s IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Spotify (NYSE:SPOT) and VICI Properties (OTC:VICI). The Renaissance International IPO Index was up 15.5% year-to-date, while the ACWX was up 10.8%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Meituan-Dianping and SoftBank.

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