Busted IPOs Underscore Lack of Appetite for Risk

Last week began with up to eight initial public offerings (IPOs) on the calendar, and ended with two new publicly traded companies, both of which were busted IPOs. Of the other six, two have officially withdrawn from the IPO wars and the others are delayed.

The coming week has no IPOs on the calendar, partly due to the Presidents’ Day holiday on Monday and partly due to the absolute weakness of the IPO market.

Through the week ending February 12, IPO ETF manager Renaissance Capital reported that four IPOs have priced in the United States so far this year, down nearly 82% from a year ago. Total proceeds raised through last week equaled $400 million, down nearly 90% compared with the same period in 2015. Of the four IPOs that have gone off this year, all have come from the health care sector. Last year’s IPO total came in at $30 billion on 170 offerings. Renaissance Capital does not include “best efforts” or blank-check companies in its totals.

AveXis Inc. (NASDAQ: AVXS) and Proteostatis Therapeutics Inc. (NASDAQ: PTI) both priced their IPOs on Wednesday and shares began trading Thursday morning.
[recirclink id=314823]
Proteostasis priced its IPO at $8.00 per share, well below the expected price range of $12 to $14. The company also raised the number of shares on offer from a planned 3.85 million to 6.25 million. The bad news is that shares plummeted after trading began, falling 33% to a low of $5.36, finally closing the day down 10% and ending the week down 11%.

AveXis priced its shares at $20, the midpoint of an expected range of $19 to $21 and offered 4.75 million shares for sale, up from a prior quantity of 4.25 million. Shares opened in the late morning at $17.26, down nearly 14% and closed their first day of trading down 17% and ended the week down 23%.

Shimmick Construction and Nordic Realty Trust have officially postponed their IPOs, while airport concession operator OTG EXP and Advanced Disposal Services are delayed. Two Israel-based health care firms, Mapi-Pharma and Advanced Inhalation Therapies, also failed to launch last week.