Weekly Secondary Performance Recap (7.13.18)

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This past week 16 secondary offerings came to market and IPO Boutique placed BUY ratings on 9 of them. In all, $2.93bn was raised by companies in the secondary market this week. This was the first full week back from the July 4th holiday and many secondaries performed well at first trade.

The average gain of IPO Boutique BUY rated offerings this week at first trade was 4.2%

The average gain of IPO Boutique Neutral rated offerings this week at first trade was -1.8%.

The last 20 IPO Boutique ‘BUY’ rated secondary offerings have produced an average gain of 5.1% at first trade and an average gain of 11.5% at the high of their first-day of trading. These numbers are extraordinarily high but does show that an active syndicate trader can find a nice return if following the correct trends.

Secondary offerings produced strong results but with varying levels of aftermarket performance. Some of the best priced debuted on Thursday — Natera Inc (NTRA), Assembly Biosciences (ASMB) and AcelRx Inc (ACRX) opened 9.3%, 7.5% and 5.5% above their offering prices, respectively. Each of those three offerings traded higher but none better than the ASMB offering which squeezed 17.1% above its issue price during its offering day session. IPO Boutique had BUY ratings on all three.

The biotech offerings that debuted on Friday had a much different outcome. Spero Therapeutics (SPRO), CytomX Inc (CTMX) and Myovant Sciences (MYOV) opened 7.8%, 1.9% and 0.8% above their offering prices respectively. Within the first hour, two of the three deals were under issue price and, in fact, all three closed well below issue. SPRO finished -2.1%, MYOV -6.1% and CTMX -6.7%. When the trend turns, especially in biotech offerings, the end result can get ‘ugly’ and that was the case on Friday.

The Neutral ratings were skewed with the poor performance of SELLAS Life Sciences (SLS) which opened -14.3% and closed -23.8%. The SLS offering changed underwriting lineups late in the process and was very small in size. One Neutral rated deal that performed better than expected was ArQule Inc (ARQL) which opened 4.9% above issue price.

There are currently zero secondary offerings on the schedule for next week.