IPOs this week : Sept 30 - Oct 4, 19 (wk 40)

IPOs expected to price
Five U.S. IPOs are expected to price on October 1, all on the smaller side ($40M to $245M). The companies set to debut are

• ADC Therapeutics (ADCT) -- Swiss biotech that plans to raise $200 million at a $1.8 billion valuation. The company is developing antibody drug conjugates, and its pipeline consists of seven candidates targeting hematological malignancies and solid tumors. Its two lead candidates are in pivotal Phase 2 trials, one of which is in collaboration with Genmab (NASDAQ:GMAB).
• Viela Bio (VIE), which is developing antibodies licensed from AstraZeneca, plans to raise $150 million at a $1.0 billion valuation. The company's lead candidate, inebilizumab, is a humanized monoclonal antibody designed to target CD19 for neuromyelitis optica spectrum disorder, a rare condition that attacks the nervous system. It could potentially be approved in the 1H20.
• Frequency Therapeutics (FREQ), a generative disease biotech that plans to raise $101 million to command a $526 million market cap. Its lead candidate, FX-322, is being developed to treat sensorineural hearing loss, the permanent loss of sensory hair cells in the cochlea within the ear.
• Aprea Therapeutics (APRE) and Monopar Therapeutics (MNPR) are both Phase 3 biotechs developing therapies for cancer;
• Metrocity Bankshares (OTCQX:MCBS) is a Georgia bank focused on serving Asian-American communities in the Eastern US and Texas.

Meanwhile, Budweiser Brewing Company APAC (BUDBC) is due to begin trading in Hong Kong on September 30 under stock code 1876.
Also in Hong Kong, Topsports International will begin trading on October 2 in an IPO aimed at raising up to $1.2B. Topsorts is the sportswear business of Chinese footwear retailer Belle International (OTCPK:BELLF).

IPO lockup expirations
IPO lockup expirations arrive for

• Ruhnn (NASDAQ:RUHN) and Powerbridge Technologies (NASDAQ:PBTS) on September 30, as well as for 
• Tradeweb (NASDAQ:TW), Silk Road Medical (NASDAQ:SILK) and NGM Biopharmaceuticals (NASDAQ:NGM) on October 1.

Endeavor Group (EDR) withdraws IPO

Global entertainment, sports and content company Endeavor Group (EDR) has pulled its initial public offering, The Wall Street Journal reports.

• It was expected to start trading on Friday, Sept 27.
• The company was already seeing weak investor demand that would have led to pricing below its expected range, and the roadshow wasn't well received, according to reports.
• It had scaled back to 15M shares on offer, from a planned 19.4M, and it cut its targeted range to $26-$27/share from a previous $30-$32/share.

The company, Hollywood’s biggest talent agency owner, was hoping to raise more than $600 million. It’s the latest black eye for the IPO market, as investors see companies as overpriced. Peloton Interactive had a disappointing debut earlier Thursday, following the disappointing debuts of Lyft and Uber earlier this year and the WeWork cataclysm of the past month.

The difficult market environment for such high profile IPOs was seen as a negative for the broader market.

Ari Emanuel, Co-CEO, William Morris Endeavor, (L) Patrick Whitesell, Co-CEO, William Morris Endeavor and David Droga, Founder and Creative Chairman, Droga5 pose for photos at the headquarters of William Morris Endeavor in Beverly Hills, CA.

An IPO has been rumored since Ari Emanuel and Patrick Whitesell merged their talent agency with sports and modelling agency IMG in 2013. Since then, Endeavor has acquired the Ultimate Fighting Championship, professional bull riders, the Frieze Art Fair and marketing agency 160over90.

Emanuel is a brother of former Chicago Mayor and Obama aide Rahm Emanuel.

Peloton Interactive (PTON) began trading on the Nasdaq on Thur 26 Sept 2019

• Full Time Employees: 1,954
• Founded in 2012 
• Headquartered in New York, New York.
• http://www.onepeloton.com

Peloton opened for trading at $27 after pricing IPO at $29

 

John Foley, co-founder and chief executive officer of Peloton Interactive Inc., stands for a photograph during the company’s initial public offering (IPO) in front of the Nasdaq MarketSite in New York, U.S., on Thursday, Sept. 26, 2019.

 

2nd day

PowerBar maker Bellring Brands (BRBR) files for IPO

• BellRing primarily sells ready-to-drink protein shakes (71% of FY18 sales), powders (14%), and nutrition bars (11%). The company's core brands are Premier Protein (77%), Dymatize (13%), and PowerBar (7%).
• Parent Post Holdings plans to sell 20% of its stake on the IPO.
• Ticker: BRBR

Bellring Brands Inc. (BRBR), a spinoff of Post Holdings (POST), has filed for an initial public offering, according to a Friday filing. The maker of PowerBar seeks to sell $100 million worth of shares, although that's often a placeholder used to calculate filing fees.

Cereal maker Post will own a majority of the combined voting power of the new company and "will have the ability to control the direction of our business," Bellring said in its prospectus. Bellring listed net earnings of $40.3 million in the fiscal third quarter, compared with net earnings of $29 million in the year-ago period. Sales grew to $828 million in fiscal 2018 from $575 million in fiscal 2016, Bellring said. In the fiscal third quarter of 2019, sales rose to $238 million, from $216 million in the fiscal third quarter of 2018. Underwriters include Morgan Stanley, Citigroup, and J.P. Morgan. Bellring filed to trade on the New York Stock Exchange under the symbol BRBR. Last month, Hershey (HSY) said it had agreed to buy nutrition-bar maker One Brands LLC for $400 million, and Simply Good Food (SMPL) announced its intention to buy Quest Nutrition LLC, another maker of protein bars, among other items, for $1 billion.

CWK : 1-year performance

Datadog (DDOG) began trading on the Nasdaq on Thur 19 Sept 2019

Datadog, Inc. provides monitoring and analytics platform for developers, information technology operations teams, and business users in the cloud.

• Sector(s): Technology
• Industry: Software—Application
• Full Time Employees: 1,403
• Founded in 2010 
• Headquartered in New York, New York.
• http://www.datadoghq.com

Puxin (NEW) : 1-year performance

IPOs this week : Sept 23 - 27, 19 (wk 39)

IPOs expected to price
Peloton Interactive (PTON) is the headliner in the IPO market with a pricing expected next week. The company reported $915M in revenue for its last fiscal year and a loss of $196M on high R&D and marketing costs. Peloton plans to sell 40M shares to the public in a range of $26 and $29 a share. There are some early indications that the pricing could be below the targeted range.

Other IPOs expected to price in the week ahead include Oportun Financial (OPRT) on September 25 and Endeavor Group (EDR) on September 26. In Asia, the Budweiser Brewing Co. (BUDBC) IPO is set to price in Anheuser-Busch InBev's (NYSE:BUD) second crack at raising some funds to pay off debt.

IPO lockup expirations
IPO lockup expirations arrive on 

• Linx (NYSE:LINX), 
• Precision BioSciences (NASDAQ:DTIL) and 
• Puyi (NASDAQ:PUYI) on September 24.

IPOs this week : Sept 16 - 20, 19 (wk 38)

IPOs expected to price

• Envista (NVST) and IGM Biosciences (IGMS) are expected to price their IPOs on September 17 to be followed by pricings for 
• Datadog (DDOG), Ping Identity Holding (PING) and Exagen (XGN) on September 18. 

IPO lockup expirations

• IPO share lockups arrive on Up Fintech Holding (NASDAQ:TIGR) on September 16, 
• as well as Levi Strauss (NYSE:LEVI) and Canada-traded Cansortium on September 17. 

In other IPO developments to watch, WeWork (WE) will officially begin marketing shares to investors next week ahead with the IPO on track and Anheuser-Busch InBev (NYSE:BUD) will be watched closely for indications of where demand stands for the Budweiser Brewing Co. (BUDBC) IPO.

Also, keep an eye on Peloton (PTON) and its quest for a $1B valuation. D.A. Davidson jumped the gun by rating the exercise equipment company at Neutral even before the IPO has fired off. "While valuation is actually more agreeable than anticipated on forward estimates, it is still fairly robust, and we will wait for a better entry point," stated the firm.

Cloudflare (NET) began trading on the NYSE on Fri 13 Sept 2019

CloudFlare specializes in a cloud-based network platform that promises security, enhanced performance of business-critical applications, and “eliminating the cost and complexity of managing individual network hardware”.

• Sector: Technology
• Industry: Software - Application
• Full Time Employees: 1,069
• Founded in 2009 
• HQ in San Francisco, California
• http://www.cloudflare.com

Shares hit high of $19.53 after pricing above range at $15. Closed up 20% at $18.

Cloudflare Inc. Co-founder and CEO, Matthew Prince, along with Co-Founder and COO, Michelle Zatlyn, joined by NYSE President Stacey Cunningham

Cloudflare Inc. Co-founder and CEO, Matthew Prince, along with Co-Founder and COO, Michelle Zatlyn

In August, Cloudflare dropped 8chan as a customer, condemning the unmoderated message board as “a receptive audience for domestic terrorists” following recent mass shootings, and this appears in the company’s “risk factors” section. Cloudflare noted that it was not the first time a customer elicited scrutiny after a violent attack.

The company also disclosed that it may have done business with individuals and entities tied with narcotics and terrorism according to the U.S. Department of the Treasury’s Office of Foreign Assets Control blacklists, and that it was introducing additional controls and screening to prevent similar activity occurring in the future.

Cloudflare’s IPO comes just a few months after cybersecurity company CrowdStrike (CRWD) went public in June. While CrowdStrike shares are trading 91% above their IPO price, the ETFMG Prime Cyber Security (HACK) is up 14% for the year and the Renaissance IPO ETF (IPO) is up 31%. The First Trust Cloud Computing ETF (SKYY) is up 19% for the year, compared with a 23% gain in the tech-heavy Nasdaq Composite Index COMP, -0.22%.

Cybersecurity has become a hot space recently as a buy or be bought mentality has crept into the year as VMware (VMW)  announced an acquisition of cybersecurity company Carbon Black (CBLK) Broadcom (AVGO)  made a bid for Symantec Corp.’s (SYMC)  enterprise business, and BlackBerry Ltd.’s (BB)  acquisition of Cylance in February.

Prince said an IPO has always been an implicit assumption at the company. As soon as you start taking venture capital money or start issuing options to employees, there’s an implicit signal that you’re going to have to turn that into something you can buy a house with or send a kid to college with, and that there was no pressure from early investors or employees, he said.

Satsuma Pharma (STSA) began trading on the Nasdaq on Fri 13 Sept 2019

Headquarters: South San Francisco, CA

Founded: 2016

Founded in June 2016, Satsuma is a clinical-stage biopharma company developing a novel therapeutic product for the acute treatment of migraines.

Its product candidate STS101 is a drug-device combination of a proprietary dry powder formulation of dihydroergotamine mesylate, or DHE, for quick and easy administration using a pre-filled, single-use, nasal delivery device.

Although DHE products have already been used for the acute treatment of migraines, widespread usage is constrained by invasive and burdensome administration and/or suboptimal clinical performance of available injectable and liquid nasal spray products.

A Phase 1 study of STS101 has been completed, with data from the trial showing rapid and sustained DHE plasma concentrations, low pharmacokinetic variability and a favorable safety and tolerability profile.

Recently, the company initiated a Phase 3 study dubbed EMERGE. Top-line data from the trial is expected in the second half of 2020.

"It has been estimated that migraine results in up to $36 billion in healthcare and lost productivity costs and up to 157 million lost workdays annually in the United States," Satsuma said in the filing, highlighting the market opportunity for its pipeline asset.

The Finances

Satsuma has yet to post revenue. The company reported a loss of $7.35 million for 2018 compared to a loss of $5.17 million in 2017. For the six moths ended June 30, the company's loss ballooned from $3.42 million to $9.11 million.

Vince Holding Corp. (VNCE) reported earnings on Thur 12 Sept 19 (a/h)

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NEW YORK--(BUSINESS WIRE)--

Vince Holding Corp. (VNCE), a leading global luxury apparel and accessories brand (“Vince” or the “Company”), today reported unaudited results for the second quarter of fiscal year 2019 ended August 3, 2019.

Highlights for the second quarter ended August 3, 2019:

• Net sales increased 13.0% to $71.4 million as compared to $63.1 million in the same period last year.
• Direct-to-Consumer comparable sales grew 7.1%.
• Gross margin rate increased 480 basis points to 48.7%.
• Operating performance improved $4.4 million to $2.0 million compared to an operating loss of $2.4 million in the same period last year.
• Net earnings improved $4.8 million to net income of $1.0 million or $0.08 per diluted share compared to a net loss of $3.8 million or $0.33 per share in the same period last year.

Brendan Hoffman, Chief Executive Officer, commented, “We were very pleased with the exceptional top and bottom line performance in the second quarter reflecting double digit sales growth in both our direct-to-consumer and wholesale channels. Our results are evidence that the multiple initiatives that we have been undertaking are coming together to deliver strong performance in all areas of the business.

We are excited about the momentum in our business as we continue to make progress across our strategic initiatives which include driving global expansion across our retail, e-commerce and wholesale channels as well as increasing brand awareness globally. We believe that we are well positioned within the luxury market to deliver consistent long term profitable growth and enhance shareholder value.”

For the second quarter ended August 3, 2019:

• Net sales increased 13.0% to $71.4 million compared to $63.1 million in the second quarter of fiscal 2018. Wholesale segment sales increased 14.7% to $43.4 million as compared to $37.8 million in the same period last year due primarily to the acceleration of seasonal wholesale shipments. Direct-to-consumer segment sales increased 10.6% to $28.0 million compared to the second quarter of fiscal 2018. Comparable sales increased 7.1%, including e-commerce sales, primarily due to an increase in transactions and average dollar sale.
• Gross profit was $34.7 million, or 48.7% of net sales, compared to gross profit of $27.7 million, or 43.9% of net sales, in the second quarter of fiscal 2018. The 480 basis point increase in gross margin rate was primarily due to product mix, efficiencies in the product development cycle and sourcing initiatives.
• Selling, general, and administrative expenses were $32.8 million, or 45.9% of sales, compared to $30.1 million, or 47.7% of sales, in the second quarter of fiscal 2018. The growth in SG&A dollars was primarily the result of increased compensation and benefits partially related to growth in stores, increased marketing investments, costs associated with enhancements to our ecommerce and Vince Unfold platforms, as well as higher occupancy costs related to new stores.
• Operating income was $2.0 million, or 2.8% of net sales. Operating loss was $2.4 million for the second quarter of fiscal 2018.

10x Genomics (TXG) began trading on the Nasdaq on Thur 12 Sept 19

• Sector: Healthcare
• Industry: Health Information Services
• Full Time Employees: 557
• Incorporated in 2012 
• HQ Pleasanton, California
• http://www.10xgenomics.com

Priced upsized 10 mln share (from 9 mln shares) IPO at $39.00, above the increased $36.00-38.00 range
Opened for trading at $54

Tocagen (TOCA) : late-stage trial of cancer treatment misses primary endpoint

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Shares of Tocagen Inc. plummeted 82% on heavy volume toward a record low Thursday, after the gene company said a late-stage trial of its brain cancer treatment failed to meet its primary endpoint of survival compared with standard of care treatment. Trading volume of 975,000 shares ahead of the open was already more than triple the full-day average of about 253,000 shares. The company said all secondary endpoints of the phase 3 trial evaluating Toca 511 and Toca FC in patients with recurrent high grade glioma undergoing resection showed no meaningful difference between the arms of the trial. The company said further analysis of the trial data is underway. The stock is on track to open below the $1 mark, below the previous record low close of $3.00. It had already tumbled 49.1% year to date through Wednesday.

ZScaler (ZS) reported earnings on Tue 10 Sept 19 (a/h)

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ZScaler beats by $0.05, beats on revs; guides Q1 EPS below consensus, revs above consensus; guides FY20 EPS below consensus, revs in-line; appoints Dali Rajic as President Go-To-Market and Chief Revenue Officer

Reports Q4 (Jul) earnings of $0.07 per share, excluding non-recurring items, $0.05 better than the S&P Capital IQ Consensus of $0.02; revenues rose 53.2% year/year to $86.1 mln vs the $82.83 mln S&P Capital IQ Consensus. Billings +32% to $126 mln vs. +55% in Q3.

Co issues mixed guidance for Q1, sees EPS of $0.00-0.01, excluding non-recurring items, vs. $0.03 S&P Capital IQ Consensus; sees Q1 revs of $89-90 mln vs. $87.60 mln S&P Capital IQ Consensus.

Co issues guidance for FY20, sees EPS of $0.12-0.15, excluding non-recurring items, vs. $0.20 S&P Capital IQ Consensus; sees FY20 revs of $395-405 mln vs. $402.82 mln S&P Capital IQ Consensus.

Co announced the appointment of Dali Rajic as President Go-to-Market and Chief Revenue Officer. Rajic has nearly 25 years of experience in sales leadership and go-to-market operational roles, most recently at AppDynamics 

Dave & Busters (PLAY) reported earnings on Tue 10 Sept 19 (a/h)

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Dave & Busters beats by $0.05, reports revs in-line; lowers FY20 revs, comparable store sales, and net income guidance

Reports Q2 (Jul) earnings of $0.90 per share, $0.05 better than the S&P Capital IQ Consensus of $0.85; revenues rose 8.0% year/year to $344.6 mln vs the $344.29 mln S&P Capital IQ Consensus.

Comparable store sales decreased 1.8%.The decrease in comparable store sales was driven by a 2.0% decline in walk-in sales, which was partially offset by a 0.1% increase in special events sales.

In light of the competitive environment and because its value-creation initiatives will take time to execute, PLAY lowers guidance for FY20.

• Sees FY20 revs of $1.338-$1.359 bln vs. prior outlook of $1.365-$1.390 bln and vs. the $1.37 bln S&P Capital IQ Consensus.
• Lowers net income guidance to $91-$100 mln from $103-$113 mln.
• Lowers comparable store sales guidance to -3.5 to -2.0% from -1.5% to +0.5%.
• Continues to expect 15-16 new stores in FY20.

Play is focused on five priorities to drive long-term value creation, including revitalizing existing stores, building deeper guest engagement, disciplined cost management, investing in highest-return new store locations, and continuing capital return to shareholders.

IPOs this week : Sept 9 - 13, 19 (wk 37)

IPOs expected to price
The IPO market returns from a crushingly slow period of inactivity with pricings set for

• SmileDirectClub (SDC), 10X Genomics (TXG) and Alerus Financial (OTCQX:ALRS) on September 11 and 
• CloudFlare (NET), SpringWorks Therapeutics (SWTX) and Satsuma Pharmaceuticals (STSA) on September 12. 

IPO quiet period & lockup expirations
There is a quiet period expiration on CrossFirst Bankshares (NASDAQ:CFB) on September 9 and IPO lockup expiration on Canadian firm Project One Resources on the same day.

WeWork's (WE) IPO roadshow is anticipated to roll into New York and San Francisco to gauge investor interest. So far, WeWork's IPO is having trouble attracting interest from large institutional investors as some reports suggest the shared workspace company is only being valued at ~$25B versus the $47B for the last private funding round. SoftBank (OTCPK:SFTBF) has a 29% stake in WeWork parent We Co.

CrowdStrike (CRWD) reported earnings on Thur 5 Sept 19 (a/h)

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CrowdStrike beats by $0.05, beats on revs; guides Q3 EPS above consensus, revs above consensus; raises FY20 EPS and rev above consensus

Reports Q2 (Jul) loss of $0.18 per share, excluding non-recurring items, $0.05 better than the S&P Capital IQ Consensus of ($0.23); revenues rose 94.1% year/year to $108.1 mln vs the $103.79 mln S&P Capital IQ Consensus.  ARR of $423.8 million, grew 104% year-over-year

Co issues upside guidance for Q3, sees EPS of ($0.12-0.11), excluding non-recurring items, vs. ($0.14) S&P Capital IQ Consensus; sees Q3 revs of $117-119.5 mln vs. $110.98 mln S&P Capital IQ Consensus.

Co issues upside guidance for FY20, sees EPS of ($0.65-0.62), excluding non-recurring items, from ($0.72-0.70) vs. ($0.71) S&P Capital IQ Consensus; raises FY20 revs to $445.4-451.8 mln frin $430-436 mln vs. $435.04 mln S&P Capital IQ Consensus.

"We delivered a strong second quarter with rapid subscription revenue growth and record net new ARR generated in the quarter," said George Kurtz, CrowdStrike's co-founder and chief executive officer. "Customer growth accelerated as an increasing number of organizations recognize the power of CrowdStrike's cloud-native Falcon platform to effectively stop breaches and simplify their security stack with our single-agent architecture. We secured a record number of net new subscription customers in the quarter. In addition, as of July 31, 2019, 50% of our subscription customers had adopted four or more cloud modules, underscoring the continued success of our platform strategy."