The wind under the wings of the equity capital markets (ECM) calendar is a rising stock market. It has always been that way, and if history repeats itself, the return of the IPO market could be sooner rather than later.
Consider: All the major U.S. stock market indexes have reversed the recent correction. At Friday’s close, March 18, 2016, each was UP about 12.4 percent from its Feb. 11 closing lows. Next, the ECM’s secondary calendar started coming alive. Last week, five registered secondary offerings and eight spot secondary offerings were priced, according to sources. Only one registered secondary offering was priced during the first week of March, along with several spot secondaries. With the underlying stock market in the throes of a recovery and the secondary calendar coming back to life, the question is: “Where are the IPOs?”
A long-time investment professional, with decades of experience, told IPOScoop.com he calls it “the drag effect” for IPOs. Once the stock market recovers from a selloff and secondary offerings start to dot the landscape, THEN you can expect to see IPOs “dragged” onto the calendar. Like everybody else, he has no time table. But the IPO stage is being set for the curtain raiser.
A Trio to Watch
This leads us to the next question: Who will be the candidates to lead the way? A sampling of IPO professionals this past week has produced some interesting names. Let’s take a look at what the pros think. We’ll keep it to three picks.
Acacia Communications (ACIA – proposed), based in Maynard, Massachusetts, is developing high-speed coherent optical interconnect products that transform communications networks, relied upon by cloud infrastructure operators and content and communication service providers, through improvements in performance and capacity and a reduction in associated costs.
Note: On Feb. 24, 2016, Acacia filed an S-1/A amendment updating its financials. For the year ended Dec. 31, 2015, Acacia reported net income attributable to common shareholders of $7.6 million on revenues of $239.1 million versus net income attributable to common shareholders of $1.7 million on revenues of $146.2 million a year ago.
BATS Global Markets (BATS – proposed), based in Lenexa, Kansas, is a global operator of securities exchanges and other electronic markets enabled by world-class technology. The company provides trade execution, market data, trade reporting, connectivity and risk-management solutions to brokers, market makers, asset managers and other market participants, ultimately benefiting retail and institutional investors across multiple asset classes.
Note: On March 10, BATS Global filed an S-1/A amendment updating its financials. For the year ended Dec. 31, 2015, BATS Global reported net income of $82.2 million on revenues of $1.78 billion versus net income of $49.2 million on revenues of $1.45 billion a year ago.
Red Rock Resorts (RRR- Proposed), based in Las Vegas, is a gaming, development and management company operating 21 casino and entertainment properties. Red Rock believes it is an established leader in Native American gaming, managing facilities in Northern California and Western Michigan
Note: On March 15, Red Rock filed an S-1/A amendment updating its financials. For the year ended Dec. 31, 2015, Red Rock reported net income of $137.7 million on revenues of $1.35 billion versus net income of $100.5 million on revenues of $1.29 billion a year ago.
Going Solo in a Short Week
Turning to this week, the calendar lists just one IPO in a four-day trading week. The U.S. stock markets will be closed for Good Friday. The lone deal is another pharmaceutical (SIC Number: 2834) that everybody calls a biotech (SIC Number: 2836).
Corvus Pharmaceuticals (CRVS – proposed) is a Burlingame, California-based 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. Since its inception, Corvus has built a pipeline of four immuno-oncology programs, three of which focus on the adenosine-cancer axis to modulate an immune response. Its lead product candidate, CPI-444, is an oral small molecule antagonist of the A2A receptor for adenosine, an immune checkpoint.
The Buzz: (1) Certain insiders have indicated an interest in buying up to $25 million of stock in this offering at the IPO price; (2)Corvus has collaborations with leading biotechnology companies, including Genentech;(3)It has collaborative relationships with research institutions, including The Sidney Kimmel Comprehensive Cancer Center at Johns Hopkins University, and (4) as of Dec. 31, 2015, Corvus had cash, cash equivalents and marketable securities of $94.4 million and an accumulated deficit of $31.5 million.
Bankers expect to price 4.7 million shares at $15 to $17 each on Tuesday evening to trade Wednesday morning on the NASDAQ Global Market.
(For more information, please click here: Corvus Pharmaceuticals)
Looking into the week of March 28, 2016, the IPO calendar has one small-cap offering expecting to raise $20 million.
Disclosure: Neither the author nor anyone else on the IPOScoop.com staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and IPOScoop.com staff do not issue advice, recommendations or opinions.