To gain admittance to the “IPO Hall of Fame,” an IPO must score an opening-day gain of 100 percent or more. That’s called a “moonshot.” Not many IPOs have done that. From Jan. 1, 1970, through Sept. 20, 2013, the new-issues calendar produced 13,197 IPOs, according to the U.S. Securities and Exchange Commission filings. Of that number, just 251 were moonshots – opening-day winners with gains of 100 percent or more.
Note: During the insanity-dot-com era from Nov. 10, 1998, through Nov. 7, 2000, 206 IPOs scored opening-day gains of 100 percent or more.
Now let’s look at last week for those that flirted with history.
The Bull’s Eye
Benefitfocus (BNFT), a Charleston, South Carolina-based provider of cloud-based benefits software solutions for consumers, employers, insurance carriers and brokers, priced its IPO of 4.935 million shares at $26.50 each to raise $130.8 million. That was 26.4 percent more than originally planned, which was 4.5 million shares at $21.50 to $24.50 each to raise $103.5 million.
The IPO opened at $42.50, sold as high as $55.87, and closed its opening day at $53.55 – UP 102.1 percent from its initial offering price.
Rocket Fuel (FUEL) a Redwood City, California-based advertisement technology company that helps customers place their ads on websites and mobile networks, priced its IPO of 4 million shares at $29 each to raise $116 million. That was 13.7 percent more than originally planned, which was 4 million shares at $24 to $27 each to raise $102 million.
The IPO opened at $59.95 (UP 106.7 percent from its initial offering price), sold as high as $62.50, and closed its opening day at $56.10 – UP 93.5 percent from its initial offering price.
FireEye (FEYE), a Milpitas, California-based provider of a virtual machine-based security platform that offers real-time protection to enterprises and governments worldwide against the next generation of cyber-attacks, priced its IPO of 14 million shares at $20 each to raise $280 million. That was 25 percent more than originally planned, which was 14 million shares at $15 to $17 each to raise $22.4 million.
The IPO opened at $40.30 (UP 101.5 percent from its initial offering price), sold as high as $44.89, and closed its opening day at $36 – UP 80 percent from its initial offering price.
This brings us to this week and another IPO calendar with 12 deals expecting to raise over $1.8 billion. The IPO handicappers, who make up Wall Street’s Consensus of Opening-day Premium, or SCOOP for short, are eyeballing three deals. They are: Foundation Medicine (FMI – proposed), Ophthotech (OPHT – proposed) and RingCentral (RING – proposed).
Foundation Medicine is a Cambridge, Massachusetts-based commercial-stage company focused on changing the way patients with cancer are treated. The company believes its proprietary molecular information platform generates actionable genomic information about a patient’s individual cancer. This enables physicians to optimize treatments in clinical practice and enables biopharmaceutical companies to develop targeted oncology therapies more effectively. Foundation’s first clinical product, FoundationOne, is the only commercially available comprehensive molecular information product designed for use in the routine care of patients with cancer. For the six-month period ended June 30, 2013, Foundation reported a net loss of $17.4 million on revenues of $11.1 million, compared with a net loss of $11.3 million on revenues of $2.4 million for the same period a year ago. Founded in 2009, the company has about 142 employees.
Underwriters plan to offer 5 million shares of Foundation Medicine at $14 to $16 each to raise $75.0 million. The IPO is expected to be priced Tuesday evening and trade Wednesday morning on the NASDAQ Global Market. The joint-lead managers are: Goldman, Sachs and J.P. Morgan. The co-managers are: Leerink Swann and Sanford C. Bernstein.
(Note from its prospectus: “We are developing FoundationOne for hematologic malignancies in collaboration with Memorial Sloan-Kettering Cancer Center.”)
Ophthotech is a New York City-based biopharmaceutical company specializing in the development of novel therapeutics to treat diseases of the eye. Its most advanced product candidate is Fovista, which is being developed for use in combination with anti-VEGF drugs that represent the current standard of care for the treatment of wet age-related macular degeneration, or wet AMD. Ophthotech has completed a large Phase 2b clinical trial in which 1.5 milligrams (mg) of Fovista was used in combination with one of the standard-of-care drugs, Lucentis. For the six-month period ended June 30, 2013, Ophthotech reported a net loss of $18.2 million on no revenues, compared with a net loss of $10.1 million on no revenues for the same period a year ago. Founded in 2007, the company has about 22 employees.
Underwriters plan to offer 5.7 million shares of Ophthotech at $16 to $19 each to raise about $100 million. The IPO is expected to be priced Wednesday evening and trade Thursday morning on the NASDAQ Global Market. The joint-lead managers are: Morgan Stanley and J.P. Morgan. The co-managers are: Leerink Swann and Stifel.
(Note from its prospectus: “Our existing principal stockholders and their affiliated entities have indicated an interest in purchasing an aggregate of approximately $25 million in shares of our common stock in this offering at the initial public offering price.”)
RingCentral is a San Mateo, California-based provider of cloud computing-based solutions for business communications. The company’s products are designed to help its users manage mobile, fax and email communications. Its products include RingCentral Office, RingCentral Mobile and RingCentral Fax. For the six-month period ended June 30, 2013, RingCentral reported a net loss of $23.9 million on revenues of $73.2 million, compared with a net loss of $18.7 million on revenues of $51.8 million for the same period a year ago. Founded in 1999, the company has about 399 employees.
Underwriters plan to offer 7.5 million shares of RingCentral at $11 to $13 each to raise about $90 million. The IPO is expected to be priced Thursday evening and trade Friday morning on the New York Stock Exchange. The joint-lead managers are: Goldman Sachs, J.P. Morgan and BofA Merrill Lynch. The co-managers are: Allen & Company and Raymond James.
These are three stories from this week’s IPO calendar. The real story has yet to be told and will unfold as the week progresses.
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.