Healthcare IPOs lead 2Q19 to 5-year record.

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During the second quarter ending June 30, 62 IPOs raised $25.0 billion, the most active quarter by deal count in four years and the most capital raised in five years. Helped by Uber’s $8.1 billion IPO, quarterly proceeds made the 2Q 2019 the biggest second quarter since 2000.

While the year’s most highly-anticipated IPO stumbled on its public debut as Uber finished the quarter below its issue price, the quarter’s average return was 30%, driven by a strong tech sector, which also featured other high-profile names like Pinterest, Chewy, Zoom Video, as well as a direct listing for Slack. Plant-based foods maker Beyond Meat was the best performer, soaring 542% above its offer price as investors sought out innovative growth stocks.

Tech and healthcare made up two-thirds of all activity, continuing a multi-year trend. The year-to-date recovery in public markets and the flood of activity in the second quarter means that 2019 is shaping up to be an exceptional year for the IPO market and a pipeline full of large pre-IPO companies promises an lively second half.

Other key takeaways:

  • There have been 81 IPOs priced this year, a -22.1% change from last year;
  • Total proceeds raised were $37.1 billion this year, a +29.6% change from last year;
  • There have been 117 IPOs filed this year, a -2.5% change from last year; and
  • There have been 37 healthcare IPOs, the most in any sector.

Here are the health-sector pricings–totaling a mammoth $1.385B–and the filings–seeking another jaw-dropping $444M–during the final week, yes, just five days, of the second quarter:

1) BridgeBio Pharma Inc., a Phase 3 biotech developing therapies for genetic diseases and cancers, raised $349 million by offering 20.5 million shares at $17, above the range of $14 to $16. The company raised 55% more in proceeds than originally anticipated, becoming the year’s largest biotech IPO.

BridgeBio targets diseases that arise from defects in a single gene, and cancers with clear genetic drivers. Its pipeline of over 16 development programs includes product candidates ranging from early discovery to late-stage development, and last year spun off subsidiary Eidos Therapeutics (EIDX) in an IPO. The Palo Alto, CA-based company was founded in 2015 and lists on the Nasdaq under the symbol “BBIO.” J.P. Morgan, Goldman Sachs and Jefferies were among the lead managers on the deal. Shares closed Friday, July 5, up 71% from their IPO price to $28.99.

2) Elsewhere, Adaptive Biotechnologies Inc., which provides genetic immunosequencing tests used to diagnose and treat diseases, raised $300 million by offering 15 million shares at $20, above the upwardly revised range of $18 to $19. Its IPO is the second largest for a biotech firm in 2019, after BridgeBio Pharma (see above).

Adaptive’s IPO bolsters the Seattle-based company’s cash reserves, and that’s critical because despite the startup’s revenue-generating operations, creating “personalized” therapies that are tailored for the genetics of patients with complex diseases, from autoimmune disorders to cancer is immensely expensive. Adaptive Biotechnologies was founded in 2009 and booked $59 million in revenue for the 12 months ended March 31, 2019. It lists on the Nasdaq under the symbol “ADPT.” Goldman Sachs, J.P. Morgan and BofA Merrill Lynch were the joint bookrunners on the deal. Shares are now up 203% from their IPO price to $40.51.

3) Change Healthcare Inc., which provides healthcare revenue cycle management software and services, raised $557 million by offering 42.9 million shares at $13, below the range of $16 to $19. The Nashville, TN-based healthcare tech firm says it provides “data and analytics-driven solutions to improve clinical, financial and patient engagement outcomes in the US healthcare system.” It says its solutions are designed to improve decision making, simplify billing, collection and payment processes and enable a better patient experience.

Change Healthcare was founded in 2005 and booked $3.3 billion in sales for the 12 months ended March 31, 2019. It lists on the Nasdaq under the symbol “CHNG.” Barclays, Goldman Sachs and J.P. Morgan, were among the lead managers on the deal. Shares closed last week up 15% from their IPO price to $14.93.

4) Morphic Holding Inc., a preclinical biotech which is developing oral small-molecule integrin therapeutics for various chronic diseases, raised $90 million by offering 6 million shares at $15, within the range of $14 to $16. The company originally planned to sell 5 million shares. Waltham, MA-based Morphic develops therapeutics based on proteins called integrins that facilitate cell-extracellular matrix adhesion.

Lead candidate is MORF-720, an oral avb6 specific integrin inhibitor for the potential treatment of idiopathic pulmonary fibrosis, in development with partner AbbVie. An IND will be filed by year-end. Morphic Holding was founded in 2014 and lists on the Nasdaq under the symbol “MORF.” Jefferies, Cowen, BMO Capital Markets and Wells Fargo Securities acted as lead managers on the deal. Shares are now trading up 59% from their IPO price to $23.86.

5) And Karuna Therapeutics Inc., a Phase 2 biotech developing therapies for schizophrenia and other CNS disorders, raised $89 million by offering 5.6 million shares at $16, the midpoint of the $15 to $17 range. The Boston, MA-based biopharmaceutical firm develops therapies for neuropsychiatric disorders.

Lead candidate is antipsychotic KarXT, an oral modulator of muscarinic receptors, in Phase 2 development for acute psychosis in schizophrenia patients. KarXT is a combination of a muscarinic agonist called xanomeline and a muscarinic antagonist called trospium. The company says a key advantage of KarXT is its selective effect on muscarinic receptors in the brain, thereby avoiding the unwanted side effects associated with activating peripheral muscarinic receptors. Karuna Therapeutics was founded in 2009 and lists on the Nasdaq under the symbol “KRTX.” Goldman Sachs, Citi and Wells Fargo Securities acted as lead managers on the deal. Shares are up 71% as of July 5, to $27.35.

6) Included among SEC filings for initial public offerings the final week of 2Q19, Livongo Health Inc., which provides a unified healthcare platform for chronic illness management, registered up to $100 million worth of common. The Mountain View, CA-based develops solutions for patients with chronic diseases that leverage technology and data science.

It began with a focus on diabetes, but now has offerings for hypertension, prediabetes and weight management and behavioral health. Its diabetes solution includes a cellular-connected interactive blood glucose meter, an unlimited supply of test strips, personalized Health Nudges to support behavioral change, various digital tools and coaching/monitoring services. Livongo was founded in 2008 and booked $88 million in sales for the 12 months ended March 31, 2019. It plans to list on the Nasdaq under the symbol “LVGO.” Morgan Stanley, Goldman Sachs and J.P. Morgan are the joint bookrunners on the deal. No pricing terms were disclosed.

7) Mirum Pharmaceuticals Inc., a clinical-stage biotech developing therapies for rare liver diseases, registered up to $86 million worth of common in an IPO. The company’s drugs improve the flow of bile acids from the liver in a systematic manner in order to provide relief in Alagille syndrome (ALGS) and progressive familial intrahepatic cholestasis (PFIC), enabling medical practitioners to treat children with rare cholestatic liver diseases effectively. Meanwhile, adults will be the core demographic for the volixibat program, which tests the hypothesis that blocking recycling of bile acids can reduce its harm systematically. Expect Phase 2 trials in primary sclerosing cholangitis and intrahepatic cholestasis of pregnancy in 2020, the company says.

Foster City, CA-based Mirum was founded in 2018 and it plans to list on the Nasdaq under the symbol “MIRM.” Citi, Evercore ISI and Guggenheim Securities are the joint bookrunners on the deal. No pricing terms were disclosed.

8) Health Catalyst Inc., which provides a data analytics platform and services to healthcare organizations, registered up to an estimated $200 million in an IPO. The Salt Lake City, UT-based tech firm provides healthcare data analytics via its cloud-based platform. It says it accomplishes its corporate mission via a process called the Health Catalyst Flywheel that features three components of its solution: data platform, analytics applications and services expertise. Health Catalyst was founded in 2008 and booked $127 million in sales for the 12 months ended March 31, 2019. It plans to list on the Nasdaq under the symbol “HCAT.” Health Catalyst filed confidentially on April 10, 2019. Goldman Sachs, J.P. Morgan and William Blair are the joint bookrunners on the deal. No pricing terms were disclosed.

9) And Castle Biosciences Inc., which sells genetic tests used to diagnose skin cancers, registered up to $58 million in an IPO. The Friendswood, TX-based skin cancer-focused company provides doctors and patients with personalized clinically actionable genomic information to support more precise treatment decisions.

Its non-invasive products use proprietary algorithms to assess a patient’s specific risk of metastasis or recurrence of their cancer, enabling physicians to identify those who may benefit from more aggressive care and those who do not need certain medical and surgical interventions. Castle Biosciences was founded in 2007 and booked $28 million in sales for the 12 months ended March 31, 2019. It plans to list on the Nasdaq under the symbol “CSTL.” SVB Leerink and Baird are the joint bookrunners on the deal. No pricing terms were disclosed.

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