BLPA’s Rearview Mirror: One Tough Week

October 20, 2014

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A tough week in the markets, which shows on the number of deals closed this week.  Only three IPOs, one of them a play on demand for currently dead fiber, and then the biotech.  The ebola scares, earnings, and slower growth in China are all taking their toll.  China is forecast to slow to 3.9 percent growth as opposed to eight percent.  Unfortunately, as strong as they may be, the Party is unable to will it to happen.  Not that easy.

Earnings and the Market

It’s been a rough ride in the markets.  We’re five percent off the September high and down one percent for the year.  Give or take.

But wait, there may be good news on the horizon:  earnings season has arrived and overall we’re expecting increases of 6.9 percent.  The hopes are that a positive outlook in earnings will propel the market forward, as opposed to backwards, for the remainder of the year.

Google (GOOG:  Nasdaq) and Goldman Sachs (GS:  NYSE) are slowing down.  It seems competition is eroding some of Google’s ad sales.  Google announced earnings of $6.35 per share as opposed to the anticipated $6.54 per share.  On Goldman Sachs, it’s a quality of earnings issue, for some, as they claim that “the results were less impressive that they seem”

IPOs

(3 IPO’s)

Click on the Company Name for the S-1 filing, and the Company Symbol for the stock chart.  The Company description is taken from the S-1 filing.

Zayo Group Holdings (ZAYO:  NYSE) sold 21.1m shares at $19 per share, raising $401m at a valuation of $4.45b.  The stock closed the week at $22 per share.

  • We are a large and fast growing provider of bandwidth infrastructure in the United States and Europe. Our products and services enable mission-critical, high-bandwidth applications, such as cloud-based computing, video, mobile, social media, machine-to-machine connectivity, and other bandwidth-intensive applications. Key products include leased dark fiber, fiber to cellular towers and small cell sites, dedicated wavelength connections, Ethernet and IP connectivity and other high-bandwidth offerings.

Atara Biotherapeutics (ATRA:  Nasdaq) sold 5m shares at $11 per share, raising $55m at a valuation of $213m.  The stock closed the week at $12 per share.

  • We are a clinical-stage biopharmaceutical company focused on developing novel therapeutics for serious unmet medical needs, with an initial focus on muscle wasting conditions and oncology. Our product candidates are biologics targeting myostatin and activin, members of the Transforming Growth Factor-Beta, or TGF-ß, protein superfamily, which play roles in the growth and maintenance of muscle and many other body tissues. Our lead product candidate, PINTA 745, is in a Phase 2 clinical trial for protein-energy wasting, a condition affecting many end-stage renal disease patients. Our second product candidate is STM 434, and we expect to commence a Phase 1 clinical study of STM 434 for ovarian cancer and other solid tumors in the second half of 2014.

Denmark’s Forward Pharma (FWP:  Nasdaq) sold 10.5m shares at $21 per share, raising $221m at a valuation of $941m.  The stock closed the week at $19.99 per share.

  • Forward Pharma A/S is a Danish biopharmaceutical company preparing to initiate a Phase 3 clinical trial using FP187, a proprietary formulation of dimethyl fumarate, or DMF, for the treatment of multiple sclerosis, or MS, patients. Since our founding in 2005, we have worked to advance unique formulations of DMF, an immune modulator, as a therapeutic to improve the health and well-being of patients with immune disorders including MS. FP187, our clinical candidate, is a DMF formulation in a delayed and slow release oral dose, which we plan to advance for the treatment of relapsing remitting MS, or RRMS, and other immune disorders, such as psoriasis.

Mergers & Acquisitions

(4 transactions)

Click on the highlighted text for more deal information.

Spectrio, with services that include on-hold messaging, overhead music, digital signage and video displays, is being acquired by the Riverside Company.

Playlists.net is being acquired by Warner Music Group.  I have been a long-time subscriber to Playlists, ever since I signed on with Spotify.  And yes, they do have community. 

Alien Blue, an iOS app for Reddit by Jason Morrissey, is being acquired by Reddit.

Israeli on-line entertainment company that creates on-line games, Diwip, is being acquired by Imperus Technologies for $100m.

Private Placements

[4 transactions]

Financial

Quantopian, for algorithmic investing and algorithmic trading,raised a $15m Series B round.

Medical

Portal Instruments, which wants to transform drug delivery with a digitally controlled, needle-free platform, raised an $11m Series A round.

Osmo, an iPad game for kids, with “Real People and Real Objects,” raised a $12m Series A round.

Metail, a virtual fitting room, raised a $12m Series B round.  Unbelievably impressive.  Somewhat sobering:  if you need to lose weight—so does your model!  Seriously, this should be a tremendous win, if they have proprietary technology.  If Metail can cut down on the amount of returns, which total about 25 percent, from online orders, it will be huge.  

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Source: diagnosticimagingcenterskc.com Creative Commons

I often think of the time sink each of us have in dealing with technology.  That which is supposed to make us faster and more efficient also slows us down.  Because of all the peccadilloes associated with technology, I literally spend one to two hours a day wrestling with this and that.  Which is why I don’t think technology will ever run the world, or create massive unemployment.  As many jobs as it takes away it creates.  Albeit, the new jobs require a different skill set.

All the best,

Margaret Johns

Founder, BlueLake Partners, LLC

Affiliates:

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Jan Robertson

SiVal Advisors, LLC

 

Bic Stevens

Stevens Capital Advisors

 

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Susan Woods and Vlad Harris

Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area.  Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office.  She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs.  When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

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We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

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This newsletter is currently being proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate. He is retired from MIT, where he used to produce and proof their annual financial report. Exactly what we need.

[1] WSJ Morning Moneybeat July 21 – August 1, 2014

[2] Source: Renaissance Capital, SEC documents, Yahoo Finance. Nasdaq website

[3] Company S-1