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U.S. IPO Weekly Recap And Week Ahead

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Via SeekingAlpha.com

There were no IPOs this past week, but initial filings from a biotech and a Chinese issuer are keeping the IPO market moving.

After another strong week, the IPO Index is now up about 35% from its March lows. As we pointed out in our 1Q20 IPO Review, the first IPOs to emerge from the shutdown will include companies unaffected by the virus such as biotechs, companies that benefit from the quarantine such as grocery giant Albertsons (ACI), and Chinese IPOs as the country is first to recover from the epidemic.

Lantern Pharma (LTRN), a Phase 2 oncology biotech using AI to redevelop abandoned drugs for targeted groups, filed to raise $29 million. Its most advanced candidate, LP-100, was originally developed by the University of California San Diego and is now in a Phase 2 trial for prostate cancer. Its second clinical candidate, LP-300, failed five Phase 3 trials between 2006 and 2013; Lantern is redeveloping the drug for a subset of lung cancer patients and plans to launch a Phase 2 trial.

Chinese cloud services provider Kingsoft Cloud (KC) filed to raise $100 million in a US IPO. Being spun out of China’s Kingsoft Group (OTCPK:KSFTF), it is the country’s third largest cloud services provider, booking over half a billion dollars in revenue in 2019. The company offers a comprehensive cloud platform and cloud infrastructure for enterprises, boasting a 155% net dollar retention rate for its largest clients.

2 Filings During the Week of April 13th, 2020

Issuer
Business

Deal
Size

Sector

Lead
Underwriter

Kingsoft Cloud

$100M

Technology

JP Morgan

Chinese cloud services and infrastructure provider being spun out of Kingsoft.

Lantern Pharma

$29M

Health Care

ThinkEquity

Phase 2 oncology biotech using AI to redevelop abandoned drugs for targeted groups.

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In the wake of Luckin Coffee’s (NASDAQ:LK) financial scandal, we wrote about the impact on future US listings from China and examined historical frauds and accounting restatements in the US IPO market.

We also note that the largest unicorns are shoring up their balance sheets, with Airbnb (AIRB) raising $2 billion in debt and equity, and Stripe (STRIP) adding $600 million to its war chest. Another large pre-IPO company, Rackspace, reportedly submitted a confidential IPO filing amid strong demand for cloud services.

No IPOs are scheduled for the week ahead, though pipeline activity indicates that some may be on the way.

Three out of the four IPOs since the second week of March have been biotechs, the sole exception being Chinese AR software company Wimi Hologram Cloud (NASDAQ:WIMI). Oncology biotech Lantern Pharma’s initial filing suggests that biotechs will continue to push through the challenging market conditions.

Grocery giant Albertsons Companies is in a unique position and a prime candidate for a potential spring IPO. Since its previous attempt to go public in 2015, the company has de-levered significantly, accelerated same-store sales growth over the last several quarters, and its peers have held their ground in the market selloff.

In the week ahead, lock-up periods will expire for several companies. On Tuesday, 4/21: BRP Group (NASDAQ:BRP). On Wednesday, 4/22: Aesthetic Medical International (NASDAQ:AIH), Cabaletta Bio (NASDAQ:CABA), Phathom Pharmaceuticals (NASDAQ:PHAT), Progyny (NASDAQ:PGNY), TFF Pharmaceuticals (NASDAQ:TFFP), and Youdao (NYSE:DAO). On Thursday, 4/23: Happiness Biotech (NASDAQ:HAPP).

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IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 4/16/20, the Renaissance IPO Index was down 8.0% year-to-date, while the S&P 500 was down 13.3%. Renaissance Capital’s IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Uber (NYSE:UBER) and Spotify (NYSE:SPOT). The Renaissance International IPO Index was down 8.0% year-to-date, while the ACWX was down 21.7%. Renaissance Capital’s International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include Meituan-Dianping and Adyen.

Original Posts: Weekly Recap, Week Ahead

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




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