February 2015 IPO Market Review

Momentum in the IPO market ebbed in February with the month producing only six IPOs—the lowest monthly figure since the four IPOs in February 2013. The 19 IPOs over the first two months of 2015 are just over half the total of 37 IPOs produced in the first two months of 2014.

Gross proceeds in February were $869 million, bringing total gross proceeds for the first two months of 2015 to $2.11 billion, 68% below the gross proceeds of $6.67 billion in the first two months of 2014.

All of the year’s IPOs have come from emerging growth companies, 13 of which have been VC-backed—68% of the total, up from 55% for full-year 2014. Life sciences companies have accounted for 12 IPOs over the first two months of 2015.

The median offering size for IPOs in the first two months of 2015 was $78.3 million, a decline of 18% from the full-year 2014 figure of $96.0 million and the lowest annual figure since the $61.6 million median IPO offering size in 2000.

With the concentration of IPOs by life sciences companies, the median annual revenue for IPO companies has fallen by 81% from $68.2 million in 2014 to $13.0 million in the first two months of 2015—a figure even lower than the $17.7 million median figure that prevailed over 1999 and 2000.

The percentage of profitable IPO companies declined from 36% in full-year 2014 to 21% over the first two months of 2015. None of the life sciences company IPOs this year has been profitable.

The average IPO in the first two months of 2015 produced a first day gain of 15%—comparable to the 14% first-day gain for the average IPO in 2014. Without the two “moonshots” at the end of January (IPOs that double in price on their opening day), however, the average 2015 first-day gain would be only 3%.

The first two months of 2015 have seen seven IPOs that were “broken” (IPOs whose stock closes below the offering price on their first day), representing 37% of the year’s total, compared to 27% of IPOs that were broken for full-year 2014.

The average 2015 IPO ended the month 20% above its offering price, outperforming both the Dow Jones Industrial Average and Nasdaq Composite Index. At February month-end, only 26% of all 2015 IPOs were trading below their offering price compared to 38% for all IPOs in 2014.

IPO activity in February consisted of offerings by the following companies listed in the order they came to market:

  • Nexvet Biopharma, a clinical-stage biopharmaceutical company focused on transforming the therapeutic market for companion animals by developing and commercializing novel, species-specific biologics based on human biologics, priced below the range and ended its first trading day down 11% from its offering price.
  • Avenue Financial Holdings, a bank holding company headquartered in Nashville, Tennessee, priced at the low end of the range and gained 8% in first-day trading.
  • Inovalon Holdings, a leading technology company that combines advanced cloud-based data analytics and data-driven intervention platforms to achieve meaningful insight and improvement in clinical and quality outcomes, utilization and financial performance across the healthcare landscape, priced above an upwardly revised price range and ended its first day of trading flat.
  • Invitae, whose mission is to bring comprehensive genetic information into mainstream medical practice to improve the quality of healthcare for billions of people, priced an IPO upsized by 19% above the range and produced a first-day gain of 7%.
  • Bellerophon Therapeutics, a clinical-stage therapeutics company focused on developing innovative products at the intersection of drugs and devices that address significant unmet medical needs in the treatment of cardiopulmonary and cardiac diseases, priced an IPO upsized by 25% below the range and declined 25% from its offering price in first-day trading.
  • Inotek Pharmaceuticals, a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of therapies for glaucoma, priced at the expected price and ended its first day of trading flat.