The first quarter of 2016 produced a meager eight IPOs with gross proceeds of $667 million. Only once over the prior 12 years has the first quarter produced a lower tally—there were only two new offerings in the glum post-financial-crisis first quarter of 2009.
All of the IPOs in the first quarter of 2016 came from emerging growth companies (EGCs). In comparison, EGCs accounted for 93% of the total in 2015, 85% of all IPOs in 2014 and 82% of all IPOs in 2013.
The median IPO offering size in the first quarter of 2016 was $82.5 million, down 10% from $91.7 million for all IPOs in 2015, and the lowest annual figure since 1999.
The median annual revenue of IPO companies in the first quarter of 2016—all by life sciences companies—was a mere $0.3 million, compared to $37.8 million for 2015, $68.2 million for 2014 and $108.8 million for the five-year period preceding 2014.
The percentage of profitable IPO companies declined from 36% for all 2014 IPO companies to 30% in 2015, with only 6% of life sciences IPO companies in 2015 being profitable. None of the IPO companies in the first quarter of 2016 were profitable. Over the five-year period preceding 2015, 13% of life sciences IPO companies were profitable.
Only three of the eight IPOs in the first quarter of 2016 produced a first-day gain. The average first quarter 2016 IPO company declined 0.1% on its first day of trading, compared to an average first-day gain of 16% for all 2015 IPO companies.
By the end of the first quarter, however, the average 2016 IPO company was trading up 25% from its offering price. Even if one were to exclude Editas Medicine (up 116% from its offering price at March 31), the average 2016 IPO company has produced an aftermarket gain of 12%, outperforming the major US market indices.
IPO activity in the first quarter of 2016 consisted of offerings by the following companies listed in the order they came to market:
- Editas Medicine, a leading genome editing company dedicated to treating patients with genetically defined diseases by correcting their disease-causing genes, priced at the low end of the range and produced a first-day gain of 14%.
- BeiGene, a globally focused biopharmaceutical company dedicated to becoming a leader in the discovery and development of innovative, molecularly targeted and immuno-oncology drugs for the treatment of cancer, priced at the high end of the range and ended its first day of trading up 18% from its offering price.
- AveXis, a clinical-stage gene therapy company dedicated to developing and commercializing novel treatments for patients suffering from rare and life-threatening neurological genetic diseases, priced an IPO upsized by 12% at the midpoint of the range and declined 10% on its first day of trading.
- Proteostasis Therapeutics, an innovative biopharmaceutical company committed to the discovery and development of novel therapeutics that treat diseases caused by an imbalance in the proteostasis network, a set of pathways that control protein biosynthesis, folding, trafficking and clearance, priced below the range and ended its first day of trading down 17% from its offering price.
- Syndax Pharmaceuticals, a clinical stage biopharmaceutical company developing entinostat as a combination therapy in multiple cancer indications with its initial focus on tumors that have shown sensitivity to immunotherapy, including lung cancer, melanoma, ovarian cancer and triple negative breast cancer, priced below the range and produced a first-day gain of one cent.
- Hutchison China MediTech, an innovative biopharmaceutical company based in China aiming to become a global leader in the discovery, development and commercialization of targeted therapies for oncology and immunological diseases, priced below the anticipated price and ended its first trading day down less than 1% from its offering price.
- Senseonics Holdings, a medical technology company focused on the design, development and commercialization of glucose monitoring systems to improve the lives of people with diabetes by enhancing their ability to manage their disease with relative ease and accuracy, priced at the expected price and was flat in first-day trading.
- Corvus Pharmaceuticals, a clinical stage biopharmaceutical company focused on the development and commercialization of novel immuno-oncology therapies that are designed to harness the immune system to attack cancer cells, priced at the low end of the range and declined 5% on its first day of trading.