U.S. IPO Weekly Recap: One Biotech Prices Ahead Of The IPO Market’s Quarantine

As a rule, if March Madness gets canceled, then the IPO window is closed.

Remarkably, one biotech pulled off an IPO this week, along with a blank check company. Outside of a few more SPACs, the IPO market may essentially shut down for months, as coronavirus fears reshape the 2020 IPO timeline. Before issuance returns to normal, we’ll need to wait for:

• The VIX to fall below 30,
• the IPO ETF (NYSEARCA:IPO) to climb off its lows, and
• bankers and investors to feel comfortable at roadshows with dozens of people.

Mirroring broader markets, IPOs over the past five years averaged a 23% loss since the sell-off began, though a handful of names have outperformed. Companies in those industries are likely IPO candidates when the market re-opens.

Imara (NASDAQ:IMRA), a Phase 2 biotech targeting sickle cell disease, priced an upsized IPO at the low end of the range, raising $75 million at a market cap of $286 million. Backed by NEA and OrbiMed, Imara’s sole candidate is an oral, once-a-day therapy entering Phase 2b trials in the coming months. Imara fell 6.3% on its debut – not bad during the market’s worst day since 1987 – and closed back at its issuing price.

Deerfield Management’s second healthcare SPAC, DFP Healthcare Acquisitions (NASDAQ:DFPHU) raised $200 million, offering shares with quarter-warrants. It finished the week up 0.1%. The SPAC is led by the former CEO of Universal American, Richard Barasch, and Deerfield partner Steven Hochberg. Their previous SPAC acquired medical equipment provider AdaptHealth (AHCO; 47% return from IPO) in July 2019.

2 IPOs During the Week of March 9th, 2020
Issuer Business	Deal Size	Market Cap at IPO	Price vs. Midpoint	First Day Return	Return at 03/13
Imara	$75M	$286M	-6%	-6%	+0%
Phase 2 biotech developing small molecule therapies for rare genetic disorders.
DFP Healthcare Acq.	$200M	$250M	0%	+2%	+0%
Second healthcare-focused blank check company formed by Deerfield Management and Robert Barasch.

SPAC activity has been at record levels in 2020, and this trend doesn’t show signs of stopping despite some recently trading below their $10 issue price. Chardan Capital’s second eponymous healthcare SPAC, Chardan Healthcare Acquisition 2 (CHAQ.U), filed to raise $85 million and Brilliant Acquisition (BRLIU) filed to raise $40 million.

2 Filings During the Week of March 9th, 2020
Issuer Business	Deal Size	Sector	Lead Underwriter
Brilliant Acquisition	$40M	SPAC	EarlyBird
Blank check company targeting an Asia Pacific business.
Chardan Healthcare Acq 2	$85M	SPAC	Chardan
Second blank check company formed by Chardan Capital targeting the healthcare industry.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 3/12/20, the Renaissance IPO Index was down 22.3% year-to-date, while the S&P 500 was down 23.2%. Renaissance Capital’s IPO ETF tracks the index, and top ETF holdings include Uber (NYSE:UBER) and Spotify (NYSE:SPOT). The Renaissance International IPO Index was down 12.3% year-to-date, while the ACWX was down 27.6%. Renaissance Capital’s International IPO ETF (NYSEARCA:IPOS) tracks the index, and top ETF holdings include SoftBank and Adyen.

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