(Editor’s Note: This column was updated Thursday afternoon with the postponement of FinWise Bancorp and the closing price of Southern States Bancshares on its first day of trading.)
Eliem Therapeutics (ELYM) jumped on Tuesday in its NASDAQ debut, opening at $16.25 – up 30 percent from its $12.50 IPO price. The biotech trimmed its IPO’s price to $12.50 on Monday morning for pricing that night, after some IPO investors balked last week at its initial price range of $17 to $19. As the week began, Eliem Therapeutics’ IPO and two small bank deals made up the IPO Calendar. One of those bank deals – Southern States Bancshares (SSBK) – was priced Wednesday night at the low end of its range. The other bank IPO – FinWise Bancorp (FINW proposed) – was postponed Thursday afternoon. It’s a sign that the IPO market is winding down for the traditional August break after July’s red-hot pace. IPO professionals say it’s time to step back after the postponement of several deals in the past two weeks.
Four IPOs were postponed last week, while three IPOs were postponed during the week of July 26.
“There’s a message there,” a seasoned IPO pro says. “The valuations are off, for one thing. When you see this happening, the IPO window normally closes for a week or two.”
Disappointment roiled the IPO market last week when most retail investors did not get stock in Weber, Inc.’s (WEBR) IPO, after the number of shares was cut drastically and the IPO was priced well below range. Shares of Weber popped on the iconic grill brand’s first day of trading as a public company.
The traditional summer slowdown in the IPO market usually runs from mid-August until Labor Day – or perhaps the week after that holiday. A year ago, bankers did not stop. Instead, the pace seemed to pick up in August and accelerated again in mid-September. That set the stage for 2020 going down in IPO history as a record year – until this year, that is.
“I’m ready for a break,” a veteran IPO trader says.
All told, bankers expect to raise $172.8 million from the three IPOs on tap so far to price during the week of Aug. 9. Let’s take a look.
Biotech IPO Priced Monday Night
Eliem Therapeutics (ELYM) priced its revised IPO on Monday night by increasing the number of shares to 6.4 million, up from 6 million in its revised prospectus, and pricing the stock at $12.50 to raise $80 million. The stock started trading at 12:58 p.m. EDT Tuesday on the NASDAQ at $16.25 – up $3.75 – on volume of 133,509 shares.
“They’re starting to price these deals right,” a veteran IPO pro said, referring to Eliem’s pop at the opening.
Shares of Eliem Therapeutics closed on Tuesday at $15.90, up 27.2 percent from their IPO price on their first day of trading.
The clinical biotech’s small-cap IPO was revised early Monday morning with an increase in the number of shares – to 6 million, up from 4.5 million initially – while the price was cut to $12.50, down from its initial range of $17 to $19. (The IPO was originally scheduled for pricing on Thursday night, Aug. 5, 2021. If the IPO had been priced at the $18 mid-point of its initial range, the deal would have raised $81 million.)
SVB Leerink, Evercore ISI, Stifel and Guggenheim Securities are the joint book-runners.
Eliem Therapeutics, based in Redmond, Washington, has two lead clinical-stage drug candidates:
- ETX-810 to treat the chronic pain of two conditions – diabetic peripheral neuropathy and sciatica – in two Phase 2a clinical trials expected to report topline data in the first half of 2022.
- ETX-155 to treat major depression, peri-menopausal depression and photosensitive epilepsy (by targeting focal onset seizures, the most common type of seizures experienced by people with epilepsy) – The company plans to start two Phase 2a clinical trials for this drug as an anti-depressive treatment, with topline data expected in the first half of 2023. Eliem also plans to start a Phase 1b clinical trial in patients with photosensitive epilepsy with topline data expected in the first half of 2022.
Southern States Bancshares Priced Wednesday Night
A traditional Alabama-based community bank holding company and a Utah-based digital bank were scheduled to price their IPOs on Wednesday night. Both companies expected their stock to start trading Thursday on the NASDAQ.
Southern States Bancshares, Inc. (SSBK), a bank holding company based in Anniston, Alabama, priced its IPO on Wednesday night (Aug. 11, 2021) at $19 – the low end of its $19 to $21 range – on 2 million shares, the number of shares in the prospectus, to raise $38 million. Southern States Bancshares’ stock closed Thursday at $19.77, up 4.05 percent from its IPO price.
The company’s flagship subsidiary, Southern States Bank, provides community banking services from 15 offices in Alabama and Georgia.
Keefe, Bruyette & Woods and Truist Securities were the joint book-runners.
Worth noting: Of the 2 million shares in the IPO, Southern States Bancshares offered 996,429 shares and the selling stockholders offered another 1,003,571 shares.
FinWise Bancorp Postponed
The pricing of FinWise Bancorp (FINW proposed) was postponed Thursday afternoon “due to market conditions,” according to Wall Street sources. As of Thursday morning, the deal had been pushed back for possible pricing on Thursday night. (The deal was initially set for pricing Wednesday night.) On Wednesday morning, Aug. 11, 2021, the bank holding company amended its Free Writing Prospectus in an SEC filing to disclose that a lawsuit had been filed on Aug. 10, 2021, against its flagship bank, FinWise Bank, and its Strategic Program partner, Opportunity Financial.
FinWise Bancorp (FINW proposed) is headquartered in Murray, Utah, south of Salt Lake City. The bank holding company’s subsidiary, FinWise Bank, markets itself as a digital community bank. FinWise Bank is one of the most active Small Business Administration lenders, according to the SBA’s website. The bank, however, has been the subject of consumer groups’ protests over its consumer loans – in partnership with Opportunity Financial, a non-bank lender – to individuals at interest rates ranging from 8 percent to 160 percent.
This was a small-cap IPO of 4.13 million shares at $13 to $15 with estimated proceeds of $57.8 million, if the deal had been priced at the mid-point.
Piper Sandler is the sole book-runner. Stephens, Inc. is the co-manager.
Three SPACs Priced Monday Night
The steady stream of SPAC pricings continued Monday night: Conyers Park III Acquisition Corp. (CPAAU) raised $350 million, while Avista Public Acquisition Corp. II (AHPAU) raised $200 million, and Abri SPAC I (ASPAU) raised $50 million. All three SPAC deals were priced in line with the terms in their prospectuses.
Six SPACs Priced Tuesday Night
Bankers priced six SPAC IPOs on Tuesday night, raising a total of $1.06 billion: 10X Capital Venture Acquisition Corp. II (VCXAU) – $200 million; Chardan NexTech Acquisition 2 Corp. (CNTQU) – $110 million; Decarbonization Plus Acquisition Corp. IV (DCRDU) – $275 million; Pono Capital Corp. – $100 million; TPB Acquisition Corp. I – $175 million, and World Quantum Growth Acquisition Corp. (WQGA.U) – $200 million.
Three SPACs Priced Wednesday Night
Another three SPAC IPOs made it out of the pricing gate on Wednesday night, raising a total of $400 million: AfterNext HealthTech Acquisition Corp. (AFTR.U) – $250 million; Oxbridge Acquisition (OXACU) – $100 million, and PHP Ventures Acquisition Corp. (PPHPU) – $50 million.
Five SPACs Priced Thursday Night
On Thursday, five more SPACs were priced with a total of about $840 million: Armada Acquisition Corp. I – $150 million; AxonPrime Infrastructure Acquisition Corp. – $150 million; CENAQ Energy Corp. – $150 million; Jupiter Acquisition Corp. – $150 million, and Kensington Capital Acquisition Corp. V – $240 million.
Week of Aug. 16
The IPO Calendar is blank for the third week of August. The IPO pros believe that the market is ready for its August break this year.
(For more information, please check the IPO Calendar and click on a company’s name, which will take you to the IPO Profile and a link to the prospectus.)
(Never trade on proposed symbols. You might wind up owning something on the OTC Bulletin Board.)
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