Another Shutdown Casualty: Biotech IPOs

From WBUR.org:

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The partial government shutdown may be cooling the red-hot market for biotech IPOs — aka initial public offerings on the stock market.

The Securities and Exchange Commission said this week that its normal functions are suspended because the agency isn’t funded. Companies can’t go public without SEC approval.

This freeze in the IPO pipeline applies to all business sectors, but the timing is particularly bad for some Massachusetts biotechs.

January could have been a great month for a biotech firm to launch what’s known as a road show for IPO. A road show is just what it sounds like: Executives go on the road and show prospective investors why they should buy a lot of stock.

But the show can’t go on.

“I’m not aware of anybody who has started a road show during the shutdown,” said Patrick O’Brien, a partner at Ropes & Gray in Boston. In Massachusetts’s booming biotech industry, he’s part of the small circle of lawyers who routinely counsel companies through the IPO process.

O’Brien said he knows of more than one firm whose IPO is stalled by the shutdown, but he declined to identify the companies.

He said one problem is that investors don’t want to waste time meeting with companies whose IPO dates are up in the air.

“At the end of the road show, the SEC has to actually do something — that is declare the registration statement effective,” O’Brien said. “And, since they’re not open for business to do that, you can’t actually complete your IPO.”

Before the shutdown, January looked promising. Cambridge-based Moderna Therapeutics closed 2018 by smashing the IPO record for a biotech company by raising $604 million.

Then, the industry gathered for the annual J.P. Morgan Healthcare Conference, a major opportunity to impress investors.

“Where biotech ends up in the year almost always sets the mood for what happens a week and a half later at J.P. Morgan in San Francisco,” said venture capitalist Jorge Conde of Andreessen Horowitz.

The conference was just last week. This would normally be an ideal time for biotech executives to follow up with those fund managers they schmoozed over cocktails.

The shutdown complicates such dealmaking, though it’s unclear how many biotech IPOs are affected.

Framingham-based Alzheon withdrew its application on the same day that the SEC said operations are on hold. But the lawyer advising Alzheon, Peter Handrinos, said he can’t comment on whether the shutdown caused the company’s decision.

He did offer general comments: “The situation with the shutdown and its impact on the SEC probably has impacted some companies. Companies that have done the prep absolutely are eager to get out if they can. And now is the time that they would want to do it.”

Handrinos said volatility in the stock market is another factor for companies considering an IPO. And when the shutdown does end, one question will be: How long is the backlog at the SEC?

Read the full, original article on WBUR.org here.

Companies Working on IPOs Despite Shutdown, Says Nasdaq CEO

From Nasdaq.com:

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Global geopolitical uncertainty has weighed on the markets as of late, and the ongoing U.S. government shutdown has stalled the IPO pipeline, says Nasdaq President and Chief Executive Officer Adena Friedman.

The government shutdown, now in its 33 rd day, is not good for the U.S. and has challenged the public markets, Friedman said. Still, many companies are utilizing the downtime to prepare for an initial public offering (IPO) when the government has fully reopened.

“We continue to see that really every company is looking to tap the public markets as soon as [the government] reopens,” Friedman said during a CNBC interview at the World Economic Forum in Davos-Klosters, Switzerland.

“With the hope that the government does reopen in the coming days, weeks, then I think we will see that there is certainly less of a time window for these companies to go [public], but they are all ready to go,” said Friedman. “If the shutdown does extend for weeks, we’ll see more and more companies wanting to go public in a shorter window.”

Watch: Nasdaq CEO: The shutdown has already delayed IPOs

Business leaders, entrepreneurs and government officials are gathered in Davos to discuss how the private and public sectors can work together to make the world more equitable and stable as part of the forum’s central theme of “Globalization 4.0.”

The forum comes amid increased geopolitical risks concerning trade, Brexit and the U.S. government shutdown. During the fiscal quarter leading up to Davos, volatility was high, but several companies still pursued an IPO. Should volatility return with the same vigor, “if you’re a strong company, with a strong story and strong fundamentals, you’ll be able to get out even in a more volatile environment,” Friedman said. She noted that at the start of this year, there was a 35% increase in companies that wanted to IPO with Nasdaq.

Read: 2018 IPO Recap: A Note From Nasdaq Stock Exchange President

As exchanges ready for a potential wave of IPOs, there has been some pushback on IPOs with a dual-class share structure, which is when a company issues various types of shares that often have different voting rights. Although, Friedman acknowledged that the vast majority of companies do not go public with dual-class shares.

“We would like more companies to tap the public markets,” said Friedman. “We do believe it’s good for the country, good for the economy to have more companies in the public markets, so if we look at the practicality of allowing these founder-led companies to come with a dual-class [share structure], it’s better than them staying private and investors not being able to invest with them at all.”

Friedman elaborated on that point when speaking with Yahoo! Finance Editor in Chief Andy Serwer, saying that a private company is typically only available to a select number of investors, whereas when a private company goes public, it then becomes available to millions of people.

“Our view is that, frankly, going public is the first step to giving some level of inclusive growth because you are allowing those average savers access to these great companies that they otherwise wouldn’t be able to invest in,” Friedman said. “And, that will help with the wealth disparity and the divide that has developed in the country recently.”

Read full, original Nasdaq.com article here.

Workiva Named One of the 2019 Best Workplaces in Technology by Great Place to Work and Fortune Magazine

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AMES, Iowa – January 17, 2019Workiva (NYSE:WK), the leading cloud provider of connected data, reporting and compliance solutions, was named one of the 2019 Best Workplaces in Technology by Great Place to Work® and Fortune Magazine.

To determine the Best Workplaces in Technology, Great Place to Work® analyzed responses from more than 220,000 employees in the technology industry at Great Place to Work-CertifiedTM organizations. Employees anonymously rated their employers on more than 60 surveyed criteria.

Workiva ranked 19 on the list of 25 large technology companies. This is the third time Workiva has been named to the Best Workplaces in Technology list.

“Workiva is proud to be in this prestigious group, which includes some of the most successful technology companies in the world,” said Marty Vanderploeg, Chief Executive Officer of Workiva. “We give our employees the freedom and resources they need, and together we are transforming an industry and improving the lives of our global customers, employees and investors.”

“Iowa’s technology community is proud to be represented on the world’s stage by Workiva,” said Brian Waller, President of the Technology Association of Iowa. “We see every day how much Workiva employees love the work they do, the challenging problems they get to solve and the opportunities they have to improve their communities.”

“For years, Workiva has been one of the biggest employers in Montana’s tech community, setting the standard for high-paying jobs with excellent benefits, a workplace culture employees love and exciting career opportunities with global impact,” said Christina Henderson, Executive Director of the Montana High Tech Business Alliance. “Workiva is also leading the effort in growing the number of women and people of color in our high-tech workforce. It comes as no surprise to see Workiva nationally recognized.”

“The companies featured on the 2019 Best Workplaces in Technology list offer dynamic, flexible and transparent workplaces,” said Michael C. Bush, CEO of Great Place to Work. “These companies create cultures that invite all employees to innovate, creating a competitive edge for their businesses and helping to realize the unique potential of each individual.”

The Best Workplaces in Technology list is one of a series of rankings by Great Place to Work and FORTUNE based on employee feedback from Great Place to Work-Certified™ organizations.

Read full press release here.

Workiva Releases Independent Study That Shows Wdesk ROI of 113 Percent

Real Estate Investment Trust Uses Wdesk to Reduce Financial Review and Reconciliation Process Time by 90 Percent

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AMES, Iowa–(BUSINESS WIRE)–Workiva (NYSE:WK), the leading cloud provider of connected data, reporting and compliance solutions, today released an independent study that documents how a publicly-traded, real estate investment trust (REIT) achieved a return on investment of 113 percent over three years by using its Wdesk cloud-based platform. Workiva commissioned Forrester Consulting to conduct “The Total Economic Impact™ of Workiva Wdesk” study in January 2019.

The REIT, which manages $15 billion in commercial real estate, uses Wdesk to streamline its financial reporting processes, thereby reducing costs and giving its financial reporting, accounting and marketing teams more time to focus on higher-value work.

Prior to Wdesk, the company compiled quarterly regulatory filings and investor relations documents from disparate sources using legacy, on-premise software. The manual process of setting up documents at the start of each review cycle was tedious and labor intensive, and the review and reconciliation processes were time consuming and prone to errors.

“Without a single source of truth, the financial reporting team had to check and recheck the numbers in every document, all while working against looming deadlines. This meant extended hours and late nights,” wrote Forrester.

Wdesk has modernized how the REIT manages and reports financial data.“In that final week of preparing our document we’re not figuring out what the right answer is – we’ve already determined that prior to the crunch time,” said the REIT’s Vice President of Financial Reporting. “We’re now focused on finalizing our tie-outs and addressing comments and not determining what data should be in our queue.”

Forrester reported that the REIT experienced the following benefits:

Financial reporting staff

  • Reduced time dedicated to reviewing and reconciling financial metrics by 90 percent
  • Improved accuracy in tie-outs by creating a single source of truth for financial data across department

Financial reporting contributors

  • Simplified contributor review process by removing inconsistencies in data across departments
  • Reduced hours spent reconciling discrepancies

Accounting team

  • Reduced time spent on developing impairments presentations by over 50 percent
  • Alleviated stress associated with each reporting cycle close
  • Reduced overtime hours previously needed to meet reporting deadlines

Marketing team

  • Reduced time required to create board books and five-year plans by 50 percent
  • Improved collaboration and accuracy by linking spreadsheets and source documents directly to Wdesk presentations so changes were reflected in real time

Forrester also reported that the REIT experienced the following immeasurable benefits:

  • Avoidance of reputational damage caused by errors in regulatory filings
  • Better work-life balance for finance and accounting teams
  • Lower printing costs associated with producing more accurate documents
  • More flexibility as teams now spend less time on administrative tasks related to review and reconciliation and more time on value-added tasks and processes that create efficiencies and improve insights

Workiva commissioned Forrester Consulting to evaluate the benefits of Wdesk to enterprises. In addition to interviewing several experienced Wdesk customers, Forrester’s research approach included gathering usage data and constructing a risk-adjusted financial model to measure benefits, costs, flexibility and risks. This is the fourth in a series of studies that Workiva has commissioned with Forrester.

The full study can be found here.

Read full press release here.

Wall Street Journal: Wall Street Firms Plan New Exchange to Challenge NYSE, Nasdaq

From WSJ.com:

Morgan Stanley, Fidelity and Citadel Securities among backers of new ‘Members Exchange’

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A launch would inject new competition into the heavily concentrated stock-exchange business. PHOTO: BRENDAN MCDERMID/REUTERS

A group of financial heavyweights including Morgan Stanley , Fidelity Investments and Citadel Securities LLC plans to launch a new low-cost stock exchange to challenge the New York Stock Exchange and Nasdaq Inc., the companies said.

The creation of the new venue, called Members Exchange or MEMX, comes after years of frustration among Wall Street brokers and traders with the fees charged by U.S. stock exchanges.

MEMX will be controlled by the nine banks, brokerages and high-frequency trading firms funding it, according to a news release.

Such an arrangement harks back to the era when exchanges were owned by their members, typically stockbrokers.

MEMX investors also include investment banks Bank of America Merrill Lynch and UBS Group AG, high-speed trader Virtu Financial Inc. and retail brokers Charles Schwab Corp. , E*Trade Financial Corp. and TD Ameritrade Holding Corp., according to the news release.

New York-based MEMX made its plans public on Monday. Representatives of the investor group said they would seek to apply for exchange status with the Securities and Exchange Commission early this year.

SEC approval for a new exchange is a drawn-out process that can take 12 months or longer, meaning it may be 2020 or later before MEMX is up and running.

A launch would inject new competition into the heavily concentrated stock-exchange business.

Today, all but one of the 13 active U.S. stock exchanges is owned by three corporations: NYSE parent Intercontinental Exchange Inc., known as ICE for short, Nasdaq and Cboe Global Markets Inc. Between them they handle more than three-fifths of U.S. equities trading volume.

Shares of ICE sank 3% on Monday, while the broader S&P 500 index rose 0.7%. Nasdaq and Cboe fell 2.6% and 1.8%, respectively.

Nasdaq spokesman Joe Christinat said his company welcomes competition. “However, with dozens of trading venues already in operation in the U.S., we’re keen to learn more about the value proposition,” he added.

Bryan Harkins, co-head of the markets division at Cboe, said in an emailed statement that “healthy competition ups the game for all of us and we welcome new entrants into the space.”

The NYSE welcomes “additional voices” in advocating for positive changes to U.S. equity market structure, a company spokeswoman said.

Despite its prominent backers, there is no guarantee that MEMX will succeed. New exchanges often struggle to attract trading activity away from established markets. IEX Group Inc., a startup that was founded in 2012 and now runs the only independent exchange not owned by the big three, handles 2.5% of U.S. equities trading volume.

The MEMX initiative shows that “market participants can no longer tolerate the abuses of power” of the exchange business, IEX Chief Executive Brad Katsuyama said in an emailed statement.

But brokers looking to save costs could be drawn to MEMX’s low fees. ICE, Nasdaq and Cboe have faced criticism for raising fees for services such as the data feeds that brokers use to monitor moves in stock prices. The three big exchange groups say their prices are fair.

Read the full, original WSJ.com article here.