The IPO Buzz: Heating Up for February

Hey, January, don’t let the door hit you in the rear on the way out. It’s been widely reported that January 2016 went into the history books producing no IPOs. The last time a January failed to price an IPO was in 2009, but that wasn’t the first time. Going back to 1974, it has happened five times. The first was January 1974, the second January 1975, then January 2002, January 2009 and once again in the long cold January of 2016.

The slowest start for the IPO market came in 1975 when two deals were priced in June – that’s right, in June. That year turned out a grand total of six IPOs, according to the U.S. Securities and Exchange Commission filings.

But there is good news for 2016. The IPO logjam is about to be broken this week.

Cancer Drugs and DNA Repair

The first week of February lists six deals on the IPO calendar: Four are carryovers from January and two are new faces at the IPO window. The word out there is that those two new offerings are “in play.” They are BeiGene, Ltd.( BGNE – proposed) and Editas Medicine (EDIT – proposed).

BeiGene is a Beijing-based clinical-stage biopharma company focused on developing molecularly targeted immuno-oncology drugs to treat lymphoma, melanoma, ovarian and other types of cancer. The hot word is immune-oncology. But there’s more to the story.

The Buzz: (1) Two existing shareholders, Hillhouse BGN Holdings Limited and entities affiliated with Baker Bros. Advisors LP, have indicated an interest in purchasing 50 percent of the IPO; (2) A business collaboration with Merck KGaA that has already produced $33 million in revenue through 2016, and (3) Since BeiGene’s inception in 2010, it has raised $170 million in equity financing from investors, including leading healthcare-focused funds, major mutual funds, China-based funds and from its founders.

Bankers expect to price 5.5 million American Depositary Shares at US$22 to US$24 each on Wednesday evening to trade on the NASDAQ Global Market Thursday morning.

(For more information, please click here: BeiGene)

Conversation starter: BeiGene is set to begin trading on Feb. 4, the first day of the Red Fire Monkey Year, as 2016 is known, and just ahead of the Chinese New Year Day on Monday, Feb. 8.

Editas Medicine is a Cambridge, Massachusetts-based biotech company working to develop a proprietary genome editing platform based on CRISPR/Cas9 technology. CRISPR/Cas9 uses a protein-RNA complex composed of the Cas9 enzyme bound to a guide RNA molecule designed to recognize a particular DNA sequence. The RNA molecule guides the Cas9 complex to the place in the genome that requires repair. Once there, the complex makes a specific cut in the DNA, ultimately triggering the cell’s DNA repair machinery to address the genetic defect.

The Buzz: (1) Among Editas’ backers are reportedly Bill Gates, Google Ventures, T. Rowe Price, Fidelity and venture capital firms such as Flagship Ventures, Polaris Partners, Third Rock Ventures and others; (2) Editas has entered into license agreements with the President and Fellows of Harvard College, the Massachusetts Institute of Technology and the General Hospital Corporation (Massachusetts General Hospital); and (3) Editas has entered into a collaboration with Juno Therapeutics. Under the terms of the agreement, Juno has agreed to pay Editas $25 million upfront and up to $22 million in research support over the next five years, according to the prospectus. In addition, Editas will be entitled to receive a number of payments depending on the achievement of certain future milestones related to research, regulatory matters and commercial sales. According to Zacks Investment Research, these payments can amount to more than $230 million – for each of three programs covered by Editas’ agreement with Juno – plus tiered royalties on drugs that gain approval under the collaboration.

Bankers expect to price 5.9 million American Depositary Shares at $16 to $18 each on Tuesday evening to trade on the NASDAQ Global Market Wednesday morning.

(For more information, please click here: Editas Medicine)

Bon Appetit

Then on Thursday, Jan. 28, 2016, OTG EXP (OTG – proposed), the award-winning travel restaurateur with more than 200 restaurant and retail locations in 10 airports across North America, posted its IPO pricing terms. OTG expects to offer its deal next week. That set off another round of buzz in the world of IPOs.

Looking into the week of Feb. 8, 2016, the IPO calendar has just one company – OTG – looking to raise $552 million, but more on this later.

Stay tuned.

Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinions.