February 2014 IPO Market Review

February 2014 IPO Market Review

Blog The Road to IPO: Legal and Regulatory Insights into Going Public

The February 2014 IPO market produced 21 IPOs, the third highest monthly tally since 2007. Life sciences companies dominated the month with 16 IPOs—76% of the total. Gross proceeds in February were $1.52 billion, well shy of the $5.15 billion in January and the lowest monthly figure since February 2013, reflecting the smaller average size of life sciences offerings.

The average IPO company in the first two months of 2014 has enjoyed a 16% first-day gain from its offering price—below the 21% average first-day gain for full-year 2013 but equal to the average first-day gain for full-year 2012. In the first two months of 2014, 41% of IPOs were “broken” (IPOs whose stock closes below the offering price on their opening day)—well above the 22% for all of 2013. At February month-end, however, only 22% of 2014 IPOs were trading below their offering price—a figure not much worse than the 19% of 2013 IPOs that ended the year below their offering price.

The average 2014 IPO ended February 31% above its offering price, compared to the year-to-date gains of 1% and 6%, respectively, for the Dow Jones Industrial Average and Nasdaq Composite Index.

With life sciences companies accounting for approximately 60% of all IPOs over the first two months of the year, the profile of the median 2014 IPO is far different than that seen in recent years. The median offering size of $84.0 million in 2014 is 21% below the median of $106.7 million for the five-year period of 2009 to 2013. The percentage of IPO companies that are profitable year-to-date, at 27%, is equal to half the comparable figure (54%) for IPO companies between 2009 and 2013. and only a single percentage point above the 26% figure that prevailed in 1999 and 2000. The median annual revenue figure of $15.3 million for 2014 IPO companies is 86% below the $106.6 million median for the five-year period of 2009 to 2013 and below even the $17.9 million and $17.6 million figures in 1999 and 2000, respectively.

IPO activity in February consisted of offerings by the following companies listed in the order they came to market:

  • Auspex Pharmaceuticals, a biopharmaceutical company focused on the development and commercialization of novel medicines for the treatment of orphan diseases, priced an IPO upsized by 17% at the high end of the range and produced a first-day gain of 31%.
  • Biocept, a cancer diagnostics company that develops and commercializes proprietary circulating tumor cell and circulating tumor DNA tests utilizing a standard blood sample, priced an IPO upsized by 5% at the low end of the range and declined 6% on its first trading day.
  • Continental Building Products, a leading, high margin manufacturer of gypsum wallboard and complementary finishing products, priced below the range and ended its first day with a gain of 9%.
  • Genocea Biosciences, a clinical stage biotechnology company that discovers and develops novel vaccines to address infectious diseases for which no vaccine or vaccines with limited effectiveness exist today, priced at the low end of the range and ended its first day of trading down 8% from its offering price.
  • uniQure, a leader in the field of gene therapy that has developed the first and currently the only gene therapy product to receive regulatory approval in the European Union, priced an IPO upsized by 17% above the range and declined 14% on its first trading day.
  • Egalet, a specialty pharmaceutical company developing and planning to commercialize proprietary, abuse-deterrent oral products for the treatment of pain and in other indications, priced an IPO upsized by 20% at the midpoint of the range and ended its first day flat.
  • Eleven Biotherapeutics, a clinical-stage biopharmaceutical company with a proprietary protein engineering platform, called AMP-Rx, that the company applies to the discovery and development of protein therapeutics to treat diseases of the eye, priced below the range and gained 9% on its first trading day.
  • Ladder Capital, a leading commercial real estate finance company with a proprietary loan origination platform and an established national footprint, priced at the midpoint of the range and ended its first day one cent shy of its offering price.
  • Revance Therapeutics, a clinical stage specialty biopharmaceutical company focused on the development, manufacturing and commercialization of novel botulinum toxin products for multiple aesthetic and therapeutic applications, priced an IPO upsized by 20% at the high end of the range and produced a first-day gain of 68%.
  • Argos Therapeutics, a biopharmaceutical company focused on the development and commercialization of fully personalized immunotherapies for the treatment of cancer and infectious diseases, priced an IPO upsized by 32% below the range and ended its first day flat.
  • GeoPark, an independent oil and natural gas exploration and production company with operations in South America, priced at the low end of its downwardly revised range and ended its first day of trading down 8%.
  • NephroGenex, a pharmaceutical company focused on the development of therapeutics to treat kidney disease, priced at the low end of the range and declined 4% on its first trading day.
  • Eagle Pharmaceuticals, a specialty pharmaceutical company focused on developing and commercializing injectable products utilizing the FDA’s 505(b)(2) regulatory pathway, priced at the midpoint of the range and ended its first day 14% below its offering price.
  • Flexion Therapeutics, a specialty pharmaceutical company focused on the development and commercialization of novel, long-acting, injectable pain therapies, priced at the midpoint of the range and produced a first-day gain of 13%.
  • Amedica Corporation, a commercial biomaterial company focused on using their silicon nitride technology platform to develop, manufacture and sell a broad range of medical devices, priced below a downwardly revised price range and ended its first day of trading 6% below its offering price.
  • Concert Pharmaceuticals, a clinical stage biopharmaceutical company applying its extensive knowledge of deuterium chemistry to discover and develop novel small molecule drugs, priced an IPO upsized by 20% at the top of the range and gained 1% on its first day.
  • Installed Building Products, the second largest new residential insulation installer in the United States, priced below the range and produced a first-day gain of 16%.
  • Inogen, a medical technology company that develops, manufactures and markets innovative portable oxygen concentrators used to deliver supplemental long-term oxygen therapy to patients suffering from chronic respiratory conditions, priced at the low end of the range and declined 5% on its first trading day.
  • Semler Scientific, an emerging medical risk-assessment company with a product allowing healthcare providers to measure arterial blood flow in the extremities, priced below the range and ended its first day one cent shy of its offering price.
  • Lumenis, a provider of innovative energy-based, minimally invasive clinical solutions, priced below the range and gained 1% on its first day.
  • Varonis Systems, a provider of a software platform that allows enterprises to map, analyze, manage and migrate their unstructured data, priced above the range and ended its first day of trading up 100%—the third “moonshot” of the year (an IPO that doubles in price on its opening day).

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