The IPO market went 2-for-2 this week.
Spin-Off Successful as US Infrastructure Play Finds a Bid in IPO Aftermarket
The week’s largest deal, Titan America (TTAM US), priced a full-size deal of 24.0mm shares at $16.00 (lower-half of the range) and opened at $16.20 for a gain of 1.25% at first trade. After opening with just a 20-cent premium versus issue, the stock broke below the $16.00 issue price within the first 90 minutes of trading. From there, buyers stepped in and rebounded the stock past its opening price and as high as $17.27 for a gain of 8% at its top-tick.
From an allocation standpoint, the underwriters stated that the top 10 accounts in the book took 60% of the shares and the top 25 obtained 80%. The carve-out of the deal was disproportionately skewed toward long-only accounts.
The price action on day one was bullish for this stock. Unlike technology or biotech IPOs, this company is a spin-off from a European cement company — as vanilla of an IPO as there is in the market. With that being said, value investors found favor in the secular tailwinds of US infrastructure and the positives this company will be able to extract as a newly-formed company. We do not anticipate this IPO to be a “runner” in the coming days but the stage is set for a steady climb as the “right investors” are potentially in this stock and will be looking to possibly add to a “full position” in the near future.
RA Capital Backed Biotech IPO Booms in Debut
Sionna Therapeutics (SION US) priced 10.6mm shares (upsized from 8.8mm) at $18.00 (high-end of the range) and opened at $25.00 for a 38.9% gain at first trade. As for Sionna Therapeutics (SION US) debut, the stock lagged in early trading and even hit a low of $21.10 before rebounding at the end of the day. The stock reclaimed its opening print of $25.00 and closed Friday’s session at that spot. The first day volume on this IPO was just under two million shares which is notably light. We anticipate the volume on this stock to be “minimal” in the coming days and weeks ahead. From a catalyst perspective, this company has product candidates in both Phase I and Phase II in the cystic-fibrosis arena and do expect “data” in the 1H 2025 at some point.
Broadly speaking, IPOs in the biotech sector are a “sell-the-news” event and we believe traders who “chase” this particular biotech at elevated price levels should be “nimble”. The IPOs that are more apt to see “follow-through” in the aftermarket are those with product candidates in later stage. This IPO does not meet that criteria.
Performance & Looking Ahead
IPO Boutique has now rated five of the first ten IPOs of the year with a ‘3’ rating and four of the five achieved the rating threshold. The five have averaged a +13.8% return at first trade. On deck for the IPO market is the year’s first technology IPO, SailPoint (SAIL), which debuts on Thursday.
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