The records show pharmaceutical IPOs have underperformed in today’s new-issues market. The average opening-day loss since the beginning of April is 2.82 percent.

 

Consider this: From April 1 through June 13, 2014, eight pharmaceutical IPOs were priced, according to the U.S. Securities and Exchange Commission filings. Seven of the eight attracted so little interest that they had be to be cut in size to get out the door. Their opening-day scorecard is poor.

 

Only two of the eight finished their opening day as winners. Five were losers. One was unchanged. And yes, there is that average opening-day loss of 2.82 percent.

 

From April 1 through mid-June, 51 IPOs from other sectors were priced. Their scorecard: 40 winners, nine losers, two unchanged. The average opening-day gain for all 51 was 10.64 percent.

 

Three of this week’s eight pharmaceutical IPOs are companies with stories. So you might want to put Graham and Dodd back on the bookshelf. You don’t have to be a fan of Huey Lewis and the News – and their 1984 hit “I Want a New Drug” – to take note of these companies with products in development to treat chronic kidney and gastrointestinal diseases, breast cancer and obesity.   

 

Ardelyx (ARDX – proposed) is a Fremont, California-based clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of innovative non-systemic, small molecule therapeutics that work exclusively in the gastrointestinal tract to treat cardio-renal, GI and metabolic diseases. Chronic kidney disease and irritable bowel syndrome are among the illnesses targeted by the drugs in their pipeline. (For more information, please click here: Ardelyx)

 

Syndax Pharmaceuticals (SNDX – proposed) is a Waltham, Massachusetts-based late-stage biopharmaceutical company focused on the development and commercialization of its lead product candidate, entinostat, an epigenetic therapy for treatment-resistant cancers. Entinostat was recently granted Breakthrough Therapy designation by the U.S. Food and Drug Administration based on data from Syndax on a completed randomized Phase 2b clinical trial in estrogen receptor-positive locally recurrent or metastatic breast cancer.(For more information, please click here: Syndax Pharmaceuticals)

 

 

The favorite this week is Markit – and it’s all about the money. It’s approaching $1 billion in revenue and $128.5 million in net income for the last 12 months. This financial services company has only been around for about 11 years.

 

Markit Ltd. (MRKT – proposed) is a London-based global diversified provider of financial information services. Since Markit launched its business in 2003, the company has become deeply embedded in the systems and workflows of many of its customers. It continues to become increasingly important to its customers’ operations. Markit provides pricing and reference data, indices, valuation and trading services, trade processing, enterprise software and managed services. It counts more than 3,000 institutional customers, including banks and hedge funds. (For more information, please click here: Markit Ltd.)

 

 

OK, Elvis fans, we didn’t forget about you. (We caught your karaoke version of “Burning Love” when you thought no one noticed.) The records show energy IPOs have been hot in today’s new-issues market. There are three on this week’s calendar: One is a coal company, another is an oil and gas company in the Appalachian Basin in Pennsylvania and a third is an oil and gas company in the Permian Basin deep in the heart of Tex-Ass.

 

Consider this: From April 1 through June 13, 2014, five energy IPOs were priced. Their opening-day scorecard makes for great reading. All five finished their opening day as winners with an average opening-day gain of 18.6 percent.

 

Over the same time frame, from April through mid-June, 54 IPOs from other sectors were priced. Their scorecard showed 37 winners, 14 losers, three unchanged, and the average opening-day gain for all 54 was 8.13 percent.

 

Here are the highlights for this week’s energy offerings:

 

Eclipse Resources (ECR – proposed) is a State College, Pennsylvania-based independent exploration and production company engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin. The company has assembled a leasehold position in Eastern Ohio and the Utica Shale fairway. (For more information, please click here: Eclipse Resources)

 

Foresight Energy LP (FELP – proposed) is a St. Louis, Missouri-based limited partnership operating low-cost and high-margin bituminous thermal coal production operations in the Illinois Basin. The company plans to make cash minimum quarterly distribution of $0.3375 per unit for each whole quarter, or $1.3500 per unit on an annualized basis, to yield 6.7 percent at the mid-point of its price range. (For more information, please click here: Foresight Energy LP)

 

Viper Energy Partners LP (VNOM – proposed) is a Midland, Texas-based limited partnership formed by Diamondback to own, acquire and exploit oil and natural gas properties in North America. The company’s initial assets consist of mineral interests in oil and natural gas properties in the Permian Basin in West Texas. The Permian Basin is one of the oldest and most prolific producing basins in North America. (For more information, please click here: Viper Energy Partners LP)

 

Looking into the week of June 23, the calendar has nine IPOs so far. They are expected to raise over $900 million. But more names could pop onto the calendar by the time that Monday, June 23, rolls around.

 

Stay tuned.

 

 

The calendar for the week of June 9 lists eight IPOs, which expect to raise about $1.8 billion. Don’t look now, but June 2014 is getting off to a fast start.

 

The June calendar has produced 192 IPOs since 2001, after the Internet bubble had burst, according to U.S. Securities and Exchange Commission filings. That makes 15 IPOs an “average” June, and that number is already in the crosshairs for 2014. Last week’s calendar produced three IPOs; eight more are set for this week, and another four IPOs are on tap for the following week. That adds up to 15 – an “average” June. And yes, the world is still waiting for Alibaba to announce its pricing terms.

 

Worth noting: There are stories out there that Alibaba is pointing to August 8 – the eighth day of the eighth month. Eight is considered a lucky number in China. A double 8 – an 88 – is considered very lucky. Actually this sounds more plausible than other stories we have been hearing.

 

Back to this week: The IPO professionals are reportedly focusing on three deals – Abengoa Yield plc (ABY – proposed); MobileIron (MOBL – proposed) and Zhaopin Ltd. (ZPIN – proposed).

 

Abengoa Yield plc is a Brentford, UK-based dividend play in the electric utility sector. It was formed in 2013 to serve as the primary vehicle through which Abengoa will own, manage and acquire renewable energy, conventional power and electric transmission lines and other contracted revenue-generating assets, initially focused on North America (the United States and Mexico) and South America (Peru, Chile, Uruguay and Brazil) as well as Europe (Spain). Note: Starting in the third quarter of 2014, the company plans to pay a quarterly dividend that will initially be set at $0.2592 per share, or $1.04 per share on an annualized basis, to yield 4 percent, based on the mid-point of its $25-to-$27 price range. (For more information, please click here: Abengoa Yield plc)

 

MobileIron is a Mountain View, California-based company that invented a purpose-built mobile IT platform for enterprises to secure and manage mobile applications, content and devices while giving their employees a choice of device, privacy and a native user experience. Translation: MobileIron software makes it easier to work on a mobile device, whether it’s on an iPhone, an iPad, an Android or a BlackBerry. (For more information, please click here: MobileIron)

 

Zhaopin is a Beijing-based provider of an online recruitment Website and human resources services in China. It’s been described as the largest online job service in China. With over 74 million registered users, the company is the second-largest provider measured by revenues in 2013, according to the iResearch Public Data. (For more information, please click here: Zhaopin Ltd)

 

Rounding out the list on this week’s calendar:

Aspen Aerogels (ASPN – proposed) is a Northborough, Massachusetts-based provider of high-performance aerogel insulation used mostly in large-scale energy infrastructure facilities. (For more information, please click here: Aspen Aerogels)

 

Memorial Resource Development (MRD – proposed) is a Houston-based independent natural gas and oil company focusing on the exploitation, development, and acquisition of natural gas, NGL and oil properties with most of its activity in the Terryville Complex of North Louisiana. Note this from its prospectus: “We do not anticipate declaring or providing any cash dividends to holders of our common stock in the foreseeable future.” (For more information, please click here: Memorial Resource Development)

 

Nordic American Offshore Ltd. (NAO – proposed) is a Hamilton, Bermuda-based company formed in October 2013 to acquire and operate platform supply vessels with an initial focus of operations in the North Sea. Its ships are to be used for transporting supplies and equipment to and from offshore installations such as drilling rigs. (Note: The offering is called an IPO, but some consider this a follow-on offering. Its common shares are traded on the Norwegian OTC List, an over-the-counter market that is administered by a subsidiary of the Norwegian Securities Dealers Association, under the symbol “NAO.” On May 30, 2014, the closing price of its common shares was 102 Norwegian Kroner (“NOK”) per share, which was equivalent to approximately $16.73 per share based on the Bloomberg Composite Rate of NOK5.9785 per $1.00 in effect on that date.)(For more information, please click here: Nordic American Offshore Ltd.)

 

Trinseo S.A. (TSE – proposed) is a Berwyn, Pennsylvania-based materials company engaged in the manufacture and marketing of emulsion polymers and plastics, including various specialty and technologically differentiated products. (For more information, please click here: Trinseo S.A.)

 

Looking into the week of June 16, the calendar has four IPOs so far. They are expected to raise about $1.4 billion. But more names could pop onto the calendar by the time that Monday, June 16, rolls around.

 

Stay tuned.

 

 

Of course, there are a couple of speed bumps on summer’s IPO Highway; maybe that’s where the confusion sets in. It slows down surrounding the July 4^th holiday and then closes down by mid-August ahead of the Labor Day weekend. But the floodgates are open for business the rest of the summer.

 

Since 1970, the “average” summer amounts to 82 IPOs and the “average” year amounts to 302 IPOs. The busiest summer on record, according to the U.S. Securities and Exchange Commission filings, came in 1986 when 248 of the year’s 728 IPOs were priced. That amounted to 34.1 percent of the year’s volume. The slowest summer came in 1974 when one – yes, just one – IPO was priced. The total IPO traffic in 1974 was nine. The slowest year came in 1975 when six IPOs were priced; three came to market during that summer.

 

This brings us to the present and the first week of June 2014.

 

Over the past several years, the IPO market has shut down during the Memorial Day week, and by mid-June, the bankers have hung up the “Open” sign. This year’s IPO market swings into gear sooner.

 

The action starts this week with a single offering.

 

True, there may be only one IPO on the calendar, but it is said to have the attention of the IPO players. The buzz started early. Here’s the deal:

 

Arista Networks (ANET – proposed) is a Santa Clara, California-based supplier of cloud networking solutions. The company’s solutions use software to address the needs of large-scale Internet companies, cloud service providers and next-generation data centers for enterprises.

 

Arista’s customers, according to the prospectus, “include six of the largest cloud services providers based on annual revenue, including eBay, Facebook, Microsoft and Yahoo!, financial services organizations such as Barclays, Citigroup and Morgan Stanley, and a number of media and service providers, including AOL, Comcast, Equinix, ESPN, Netflix, and Rackspace.”

 

The prospectus continued: “Our cloud networking solutions consist of our Extensible Operating System, or EOS, a set of network applications and our 10/40/100 Gigabit Ethernet switches. … Since we began shipping our products, we have grown rapidly, and according to Crehan Research, we have achieved the second-largest market share in data center 10/40/100 Gigabit Ethernet switch ports, excluding blade switching, sold in 2013.” Competitors: Cisco, Juniper, Brocade, Hewlett-Packard and Dell

 

Consider Arista’s first-quarter results:

The deal is expected to be priced on Thursday evening, June 5, to trade on Friday morning, June 6.

 

For more information, please click here: Arista Networks

 

Looking into the second week of June, the calendar has just one IPO so far. It is expected to raise about $100 million. But more names could pop onto the calendar by the time that Monday, June 9, rolls around.

 

Stay tuned.

 

 

For the past several years, the IPO calendar has dried up a few days before the last Monday in May – Memorial Day – and then it has come back to life by mid-June. This year, it looks like the calendar is following that cycle. But there are some strong signals that bode well for IPOs for the immediate future.

 

The factors that drive IPOs are the stock market and the IPO pipeline. A strong stock market provides the lifeblood of IPOs, and the lifeblood of the IPO calendar is the IPO pipeline. Both are showing favorable signs.

 

The first sign to watch is the stock market, as measured by the NASDAQ Composite Index, the barometer of the IPO market.

 

The NASDAQ has been on a roller-coaster ride this year. It closed at its 2014 high of 4,357.97 on March 5, UP 4.34 percent from 4,176.59 on Dec. 31, 2013. The NASDAQ took a sharp spill to close at this year’s low on April 11 at 3,999.73, DOWN 8.2 percent from its 2014 closing high on March 5.(Note: That was close to a correction. A 10 percent pullback from a recent high is considered a correction.) Since then, the NASDAQ worked its way back to close on Friday, May 23, at 4,185.81. (Note: This was the first time in the last six weeks that the NASDAQ closed with a gain for the year.)

 

The close tie between the NADSAQ and the IPO market has been highlighted in previous installments of “The IPO Buzz” column. The bottom line: IPOs need a strong stock market to flourish. 

 

Last week was a busy one at the U.S. Securities and Exchange Commission’s filing window. Fourteen companies filed plans to go public. They expect to raise almost $1.2 billion. This heavy traffic at the SEC filing window increased the visible IPO pipeline to more than 130 companies. These companies expect to raise about $19 billion. That is a dramatic increase from the beginning of the year.

 

On Dec. 31, 2013, there were 81 IPOs in the pipeline. They expected to raise $11.7 billion.

 

Through the Memorial Day holiday, 111 IPOs have been priced this year. These figures exclude unit offerings, closed-end investment companies and foreign companies offering American Depositary Shares in the U.S. capital markets, which represent ordinary shares already trading on their national stock exchanges. The 111 IPOs of 2014 have raised $22.8 billion.

 

 

And what’s an IPO pipeline without a headliner? Here’s one:

 

Alibaba Group Holdings, the giant Chinese online commerce company, filed on May 5 for an IPO to raise $1 billion. But the rumor mill is running full time, and people are saying it will be more. No pricing date had been set, at press time, but there are people out there who will tell you when that will happen. For the rest of us, we’ll have to wait until the company files with the SEC the number of shares it expects to offer and at what price range.

 

People have compared the coming Alibaba IPO with last week’s JD.com (JD) IPO.

 

JD.com, based in Beijing, is the largest online direct sales company in China. JD.com priced its IPO of 93.7 million shares at $19 each on Wednesday evening. It raised $1.78 billion. The IPO opened at $21.70 Thursday morning and closed Friday at $20.10, UP 5.79 percent from its initial offering price.

 

There are differences between the two.

 

Alibaba reported net income of $3.53 billion on revenues of $7.88 billion for the 12 months ended March 31, 2014.

 

JD.com reported a net loss of $8 million on revenues of $11.5 billion for the year ended Dec. 31, 2013, its most recently reported financial figures.

 

One trader told IPOScoop.com: “To compare Alibaba to JD.com is like comparing the New York Yankees to the Staten Island Yankees.”

 

Looking into the following week, the calendar has nothing. But recent IPO history shows we can expect thing to start picking up.

 

Stay tuned.

 

 

 

So the new normal is a two-week IPO calendar.

 

In past years, the IPO calendar was a three-week affair: This week, next week and the week after. But that no longer exists.

 

The JOBS Act of 2012 forever changed the way companies go public. The short explanation: A company files a confidential filing and then the behind-the-scenes work starts that leads up to the official filing known as an S/1. Shortly after that comes an amendment – the S-1/A – with pricing terms and the deal goes on the calendar with a trading date.

 

Let’s take a look at this week’s IPO traffic and see how it came together.

 

Topping this week’s calendar are two deals that are reportedly on everybody’s “most wanted” list: JD.com and Parsley Energy.

 

 

 

 

Rounding out the rest of this week’s calendar:

21st Century Oncology Holdings (ICC – proposed) filed for an IPO on Feb. 11. On May 8, it filed its pricing terms to offer 13.3 million shares at $14 to $16 each to raise $200 million. It was announced that the deal would be priced Tuesday evening, May 20, and trade Wednesday, May 21.

 

21st Century Oncology Holdings, based in Fort Myers, Florida, operates the largest integrated network of cancer treatment centers and affiliated physicians in the world. The company has about 674 community-based physicians in the fields of radiation oncology, medical oncology, breast, gynecological and general surgery, urology and primary care, providing medical services at approximately 298 locations. (For more information, please click here: 21st Century Oncology Holdings.)

 

 

Agile Therapeutics (AGRX – proposed) filed for an IPO on March 3. On Friday, May 9, it filed its pricing terms to offer 4.6 million shares at $12 to $14 each to raise $60 million. It was announced that the deal would be priced Wednesday evening, May 21, and trade Thursday, May 22.

Agile Therapeutics, based in Princeton, New Jersey, is a women’s health specialty pharmaceutical company focusing on the development and commercialization of new prescription contraceptive products. (For more information, please click here: Agile Therapeutics)

 

First Foundation (FFWM – proposed) filed for an IPO on April 18. On Friday, May 9, it filed its pricing terms to offer 2.2 million shares at $21 to $24 each to raise $50 million. It was announced that the deal would be priced Wednesday evening, May 21, and trade Thursday, May 22.

First Foundation, based in Irvine, California, is a financial services company that provides personalized financial services to high net-worth individuals and their families, family businesses and other affiliated organizations.(For more information, please click here: First Foundation)

 

 

Heritage Insurance Holdings (HRTG– proposed) filed for an IPO on April 21. On Tuesday, May 13, it filed its pricing terms to offer 6 million shares at $14 to $16 each to raise $90 million. It was announced that the deal would be priced Thursday evening, May 22, and trade Friday, May 23.

Heritage Insurance Holdings, based in Clearwater, Florida, is a property and casualty insurance company providing personal residential insurance for single-family homeowners and condominium owners in Florida. (For more information, please click here: Heritage Insurance Holdings)

 

 

SunEdison Semiconductor (SEMI– proposed) filed for an IPO on Sept. 9, 2013. On Monday, May 12, it filed its pricing terms to offer 7.2 million shares at $13 to $15 each to raise $100.8 million. It was announced that the deal would be priced Wednesday evening, May 21, and trade Thursday, May 22.

Based in Singapore, SunEdison Semiconductor is a provider of silicon wafers to the semiconductor industry. (For more information, please click here: SunEdison Semiconductor)

 

 

Superior Drilling Products (SDPI- proposed), based in Vernal, Utah, is a provider of new diamond drill bits and drill string components for the oil, natural gas and mining drilling industries. The IPO is a carryover from past weeks and its pricing date is listed as “the week of.” (For more information, please click here: Superior Drilling Products)

Looking into the following week, the calendar has nothing. But as we have seen in the past, names could pop onto the IPO launching pad by the day after Memorial Day, which will be observed on Monday, May 26.

 

Stay tuned.