Companies around the world are steering clear of the public markets so far this year, with first-time stock offerings down for the second quarter in a row. But San Diego appears to be bucking the trend, with local companies posting another strong quarter when it comes to initial public offerings.
Three San Diego companies went public in the second quarter, including health care players Turning Point Therapeutics and Guardion Health Sciences, as well as insurance company Palomar Holdings.
Turning Point, a cancer drug maker, led the pack, raising $191 million. Palomar raised $97 million, while Gaurdion brought in the smallest chunk at $5 million. The former two companies carried the quarter, as Guardion's stock sank 63% since listing in April.
The numbers are still strong for San Diego, which typically sees only a couple of IPOs per quarter. And the size of the deals are notable. It's the second quarter in a row that San Diego has had a local biotech post a mega-sized IPO. In the first quarter, Gossamer Bio (also working on anti-cancer drugs) raised $317 million.
This quarter's star _ Turning Point _ saw its stock skyrocket after listing on the Nasdaq in April. In a matter of months, the company's stock jumped nearly 60 percent, giving it a market cap of $1.3 billion. Founded in 2013, Turning Point has been pegged as a promising startup that could follow in the footsteps of cancer companies like Ignyta (sold to Roche for $1.7 billion in 2017) and Loxo Oncology (bought by Eli Lilly for $8 billion earlier this year).
While San Diego's IPO listings are off to a good start in 2019, global trends are rough, according to EY (which used to be known as Ernst & Young) in the company's latest IPO report. Both global and national IPO activity has been sluggish in the second quarter, following a slow start to the year.
In its report, EY attributed the "unusually quiet" year to "ongoing geopolitical tensions, trade issues among the U.S., China and the European Union." They also cited Brexit and the outcome of European elections as dampening IPO sentiment.
There were 66 U.S. IPOs in the second quarter raising a total of $27 billion. Tech companies brought in the lion's share, bringing in 64% of the total proceeds for the quarter. High performers include Uber's $8.1 billion listing and Pinterest's $1.6 billion IPO.
Globally, IPO activity has been slow all year. The number of deals and the total proceeds are both down 28% over last year _ a significant year-over-year dip, with totals also trailing the historical average.
Martin Steinbach, EY's global leader, said companies considering listing on the public markets need to take note of the climate. "The main way for issuers to navigate the shift from old to new realities in unpredictable markets is to remain flexible," Steinbach said. "So well-prepared companies, with the right equity story, will find their windows of opportunity."
He expects higher IPO activity in the second half of 2019.
The longest government shutdown in the country's history has tanked the number of companies that went public so far this year, cutting U.S. public listing activity dramatically in the first quarter.
