The IPO market hit the reset button on Monday night (May 15, 2023). Strong Global Entertainment (SGE) priced its micro-cap IPO at $4.00 – $1.00 below its $5.00 assumed IPO price – to raise $4.0 million. The micro-cap IPO was the first deal to get priced in more than a week as concerns over the U.S. debt ceiling roiled the overall U.S. stock market. No IPOs were priced last week – an unexpected speed bump after Johnson & Johnson’s spinoff of Kenvue (KVUE) raised $3.8 billion on May 3, 2023, in the biggest IPO since November 2021. Kenvue’s IPO led the pricing of $4.8 billion of deals – two IPOs and two SPAC IPOs – in the first week of May. (Editor’s Note: This column, published early Tuesday, May 16, 2023, has been updated several times to include details of Strong Global Entertainment’s trading debut on the NYSE – American Exchange, the launch of Atmus Filtration Technologies Inc.’s big IPO, the pricing of CaliberCos Inc.’s IPO, and some details on next week’s IPO Calendar.)
Strong Global Entertainment, the Charlotte, N.C.-based maker of large format projection screens for major movie theater chains, priced 1.0 million shares in its IPO – the same number of shares in the prospectus. The deal’s size had been cut three times. Its original terms called for 3.0 million shares at $5.00.
The stock started trading Tuesday (May 16, 2023) on the NYSE-American Exchange. Strong Global Entertainment’s stock opened at $3.70 – 30 cents below its $4.00 IPO price – and then rose to touch $4.00 in its session high – before slipping again. The stock was trading at around $3.58 – down 42 cents or off 10.5 percent from its IPO price – at about 11:50 a.m. EDT today on volume of more than 500,000 shares.
Strong Global Entertainment’s stock closed on Tuesday at $3.71 – down 29 cents from its $4.00 IPO price – for a drop of 7.25 percent on its first day of NYSE – American Exchange trading.
ThinkEquity was the sole book-runner of Strong Global Entertainment’s IPO.
Strong Global Entertainment manufactures and distributes large projection screen systems to major cinema exhibitors, including IMAX Corp., AMC Entertainment Holdings, and Cinemark Holdings. The profitable company provides maintenance, repair, installation, network support services and other services to cinema operators, mostly in the United States. Strong Global Entertainment also manufactures and distributes its Eclipse curvilinear screens, which are specially designed for theme parks, immersive exhibitions and simulation applications. The profitable company recently launched Strong Studios to expand its entertainment business to include content creation and the production of feature films and series, according to the prospectus.
A Light Week
At sunrise on Monday (May 15, 2023), this week’s IPO Calendar included just a few more micro-cap deals – CaliberCos. Inc. (CWD proposed) from sole book-runner Spartan Capital Securities, Azitra (AZTR proposed) from sole book-runner ThinkEquity, and possibly ALE Group Holding Limited (ALEH proposed) from sole book-runner Prime Number Capital.
Bankers had expected to raise about $26.25 million this week from four micro-cap IPOs, including Strong Global Entertainment and ALE Group Holding. Some saw ALE Group’s deal as a candidate to move to next week’s pricing roster.
As of Thursday morning (May 18, 2023), the week’s IPO traffic totaled just two micro-cap IPOs – Strong Global Entertainment (SGE) and CaliberCos Inc. (CWD – with combined volume of $8.8 million. The other micro-cap IPOs were moved to next week’s pricing roster, lining up behind the big traditional IPO of Atmus Filtration Technologies Inc. (ATMU proposed), which was launched Tuesday (May 16, 2023) to go public during the week of May 22, 2023.
CaliberCos IPO Upsized & Priced at $4.00 – Below Target
CaliberCos Inc. (CWD) upsized its tiny IPO – to 1.2 million shares from 800,000 shares in the prospectus – and priced the deal at $4.00 – $1.00 below its assumed IPO price of $5.00 – to raise $4.8 million on Tuesday night (May 16, 2023). The micro-cap IPO’s size was cut last week from 1.2 million shares. The IPO’s pricing date was pushed back a night to Tuesday night.
Spartan Capital Securities was the sole book-runner.
Shares of CaliberCos Inc. opened Wednesday (May 17, 2023) at 12:25 p.m. EDT at $3.80 – down 20 cents from their $4.00 IPO price – on NASDAQ on volume of 42,899 shares. The stock scored a moonshot when it hit an intraday high of $8.80 – more than double its $4.00 IPO price – and then gave up some of that gain. CaliberCos’ stock closed at $6.00 – up $2.00 for a 50 percent gain from its $4.00 IPO price – in its first day of trading on NASDAQ. Volume: 2,012,620 shares.
CaliberCos Inc., based in Scottsdale, Arizona, describes itself as “a leading vertically integrated asset management firm, whose primary goal is to enhance the wealth of investors seeking to make investments in middle-market assets.” The profitable company defines the middle market as projects ranging in size from $5 million to $50 million. Caliber’s investment properties include apartments and townhomes, commercial office buildings and office parks, hotels, self-storage unit properties, retail buildings, small psychiatric hospitals and medical office buildings.
Atmus Filtration Technologies Inc. (ATMU proposed) – a spinoff by diesel engine maker Cummins – shook up the IPO market’s sleepy status quo on Tuesday by launching its $275.43 million IPO. This deal is the only big traditional IPO set for pricing during the last full week of May. The terms call for 14.12 million shares $18.00 to $21.00.
Goldman Sachs and J.P. Morgan are the lead joint book-runners of Atmus Filtration’s IPO. The company filed its S-1 in late February.
Atmus Filtration makes lube filters, coolants, chemicals and other products for commercial trucks and off-highway heavy equipment, including agricultural equipment.
Last Full Week of May
The IPO Calendar is growing for the last full week of May, thanks to the launch of Atmus Filtration (see above) and the carry-over of two micro-cap IPOs from this week’s roster – Azitra Inc. (AZTR proposed) and ALE Group Holding Limited (ALEH proposed). These deals join Fitell (FTEL proposed).
Azitra Inc. (AZTR proposed), a dermatology-focused biotech, is scheduled to price its micro-cap IPO – 2.4 million shares at $4.50 to $5.50 to raise $12.0 million – has been moved to next week’s IPO Calendar from its initial spot on Wednesday night (May 17, 2023). This is an NYSE-American Exchange listing.
ThinkEquity is the sole book-runner.
Azitra Inc., based in Branford, Connecticut, has a collaboration partnership with Bayer AG, the big German pharmaceutical company, to use Azitra’s patented skin microbiome technology and genetic engineering to develop therapeutic treatments for skin rashes caused by cancer therapy, an orphan skin diseases called Netherton syndrome, and other difficult skin conditions. The company was founded in 2014 by scientists from Yale University. Azitra attracted early funding from billionaire investor Peter Thiel’s Breakout Labs, Fierce Biotech reported in 2016.
Azitra’s leading therapeutic product candidates include:
-*ATR-12, a genetically modified strain of Staphylococcus epidermis (S. epidermis) to treat Netherton syndrome, an orphan skin disease that can sometimes be fatal, with a proposed Phase 1b clinical trial expected to begin in the first half of 2023 and initial results expected in the first half of 2024;
– *ATR-04, a genetically modified strain S. epidermidis for treating the papulopustular rash experienced by cancer patients undergoing epidermal growth factor receptor inhibitor, or EGFRi, targeted therapy. Azitra says it intends to submit an IND for a Phase 1b clinical trial in certain cancer patients undergoing EGFRi targeted therapy by the end of 2023. Subject to FDA approval of its IND, Azitra says it expects to begin its Phase 1b clinical trial in the first half of 2024 with initial results expected in late 2024.
– *ATR-01, an engineered recombinant human filaggrin protein for treating ichthyosis vulgaris, a chronic xerotic (abnormally dry), scaly skin disease with an estimated incidence and prevalence of 1 in 250, which suggests a total patient population of 1.3 million in the United States. Azitra says it is planning to complete lead optimization and IND-enabling studies in 2023 to support an IND filing in late 2024.
Azitra, like most biotechs, has minimal revenue and a history of net losses.
ALE Group Holding Limited (ALEH proposed) is another micro-cap IPO set for pricing during the week of May 22, 2023. This is a micro-cap IPO of 1.25 million shares at $4.00 to $6.00 to raise $6.25 million. This is a NASDAQ listing.
Prime Number Capital is the sole book-runner.
ALE Group Holding Limited, incorporated in the British Virgin Islands, is the issuer of the shares in the IPO. The profitable holding company conducts its business through its wholly owned subsidiary, ALE Corporate Services Ltd. (ALECS), a Hong Kong company incorporated on June 30, 2014. The subsidiary, ALECS, provides accounting and corporate consulting services to small and medium-sized businesses. Its services include financial reporting, corporate secretarial services, tax filing services and internal control reporting.
“Our goal is to become a one-stop solution for all the accounting, corporate consulting, taxation and secretarial needs of small and medium enterprises operating in Asia and the U.S.,” the prospectus says.
Another micro-cap IPO – Australian online fitness equipment retailer Fitell Corp. (FTEL proposed) – is also on the IPO Calendar for the week of May 22, 2023. Fitell Corp. aims to raise $15.0 million by pricing 3.0 million shares at $4.00 to $6.00. Revere Securities and R.F. Lafferty & Co. are the sole book-runners.
More names may land on next week’s IPO Calendar before Friday’s closing bell.
(For more information about these companies, please check the IPO Calendar and the individual IPO Profiles found on IPOScoop.com’s website.)
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