In terms of IPO aftermarket performance the market continues to love technology and healthcare. Last week we saw Duck Creek Technology (DCT) in InsurTech price way above the range at $27 and trade up to $40, KE Holdings (BEKE) which is a RealEstateTech company price above the range at $20 and close the week at $33, finally there was another mRNA BioTech name, CureVac (CVAC) that rocketed to $55.90 after pricing their deal at $16 which was the top of the range. They sure left gobs of money on the table.
We’ve got eight deals on the calendar for this week which is pretty busy for mid-August. Normally things would be quiet now but with the market hovering at new highs and an upcoming election there is a sense of urgency to get deals done as soon as possible. The other factor is that since travel is no longer a feature of the roadshow and everyone is working from home anyway – there’s no reason not to do a deal in late August.
This may be first year in our 10 year history where we don’t get a break in August. As they say, make hay while the sun shines!
Of the “regular way” IPO names this week all of them are biotech names and all but one are already oversubscribed. We also have a number of new SPAC deals this week which we will cover here *after* the announce a transaction and do a “de-SPAC” as they say. This is a potent new path to get an IPO done so we’ll be covering them here as they turn into real companies.
Here’s a run down of the IPO deals pricing this week:
Harmony Biosciences (HRMY) – This company has developed a new treatment for narcolepsy. There have been treatments around for some time like Provigil (circa 1998) but these are controlled substances and not ideal a treatment for a chronic disorder due to many side effects. Unlike these drugs the Harmony treatment (WAKIX) is not a stimulant. It is easy to take as a once-a-day pill. The drug is now commercially available and growing rapidly. In the quarter ended March 2020 revenues were $19.8M with a loss of $8.5M and in the June quarter revenues were up to $38M and the company generated a profit of $7.3M. The current range is $20-23 with Goldman leading. Expected to price tonight to trade tomorrow. Market value at the mid-point is $1.5B.
Inhibrx (INBX) – This one has a platform build around a single antibody with four ongoing clinical programs. What’s interesting about this is that it appears to dramatically improve the ability to induce tumor cell death with what I would describe as “better bonding” although that’s a lay term for it. The trials are early stage but the science seems impressive and differentiated to me. This is a small deal at $100M with Jefferies as the lead. The market value in the $16-18 range is ~$600M.
Kymera Therapeutics (KYMR) – Partnerships are strong with this one – Vertex (VRTX) and Sanofi (SNY). Vertex is a giant ($5B+ sales, $70B+ market value) and they are also investing in the IPO. Sanofi has $41B+ in revenue and a $130B+ market value. Need I say more? The company has what is differentiated technology that is focused on “protein degradation” which is another path to develop useful therapies. It’s early stage but has attracted the attention of some large players. This one also has a “fortress balance sheet” with $300M in cash for a runway that extends beyond 2025. This $125M offering is led by Morgan Stanley and would have a market value just shy of $800M if it prices in the $16-18 range.
Nano-X Imaging (NNOX) – This one has yet to get lots of attention from institutions. That’s surprising because the medical device segment has been hot. They are launching a digital X-Ray platform into the robust medical imaging market. Their technology promises smaller and cheaper sources of X-Ray beams using nano-technology and silicon rather than the “hot metal analog” solution used today. One aspect of the story that might be giving investors pause is that they company plans to deploy and monetize these systems using a SaaS kind of model. They do have collaborations with some larger players including Fuji. Their message is that a lower cost product like this would substantially expand the market for medical imaging where there are quite a few big players. There’s still lots to do including developing and improving the cloud-based software that runs these systems. I’d put this on my list as a “sleeper” deal that could be worth digging into. The current range is $16-18 and it’s a smaller deal at $100M. The market cap in the proposed range is ~$800M.
All that and yet another $1.2B in SPAC money in four deals – Northern Genesis (NGA), One (AONE), Star Peak Energy (STPK) and Forum Merger III (FIII).