Highlights in small-caps: record IPO in biotech, Wizz Air success, SpaceX effect

Shares of space small-caps collapsed after the opening of trading in the U.S. on June 12, despite a rally on the eve of Elon Musk's SpaceX debut on the stock exchange. Carrier Wizz Air reported earnings but gave up its forecast for the next fiscal year due to geopolitical risks. Against this backdrop, Parabilis Medicines held a record IPO for biotechs - for $670 million. Investors are also preparing for a series of important FDA decisions and the publication of clinical data that could determine the dynamics of a number of biotech small-caps in June. The main news from June 8 to June 12 are in our review.

Quotes of small space companies fell sharply after the start of trading in the U.S. on June 12, despite the rally ahead of the largest in the history of the IPO SpaceX. After the opening of trading shares of Rocket Lab lost about 11%, although before the main session grew by more than 6% on the background of inclusion in the Nasdaq-100 index. AST SpaceMobile shares were down about 14%, Redwire was down 11% and Virgin Galactic Holdings was down nearly 35%. The Procure Space ETF industry fund was down about 7%.

Investors could reallocate capital from already-traded space companies into the securities of the new industry leader, Yahoo Finance wrote. Meanwhile, SpaceX began trading on Nasdaq and Nasdaq Texas after a $75 billion offering at a company valuation of $1.77 trillion. Shares opened at $150 a share - $15 above the IPO price - and closed at $160.95.

Danish biotech Zealand Pharma has published alarming results of clinical trials of its anti-obesity drug survodutide: 19% of patients dropped out of the study due to gastrointestinal side effects. Among those who took placebo, this number was 2.9%.

Despite the fact that the drug has shown effectiveness in the fight against excess weight, quotes of Zealand Pharma collapsed by almost 23% at the auction on June 8 on the stock exchange in Copenhagen. Analysts at Citi and Barclays questioned the commercial viability of the drug. Analysts' opinions on the company's shares diverge: eleven analysts recommend buying Zealand shares, seven recommend holding and one recommends selling.

Hungarian low-cost carrier Wizz Air ended fiscal year 2026 with an 8% increase in revenue to €5.7 billion. The number of passengers carried increased by 10% to a record 69.7 million, with flight utilization at 90.7%.

However, the increase in operating performance did not translate into higher net profit: it fell 99.4% to €1.3 million. Wizz Air estimates that the conflict over Iran could have reduced profits by around €50 million. However, the company managed to neutralize most of this negative effect through pre-negotiated fuel price hedging contracts.

Wizz Air did not provide a forecast for fiscal year 2027 due to ongoing seasonal uncertainties as well as risks related to the ongoing conflict over Iran and the situation in the Strait of Hormuz.

Biotechnology company Parabilis Medicines raised $670 million by offering 33.5 million shares at $20 per share - above its initial price range. After the offering, its valuation reached $2.3 billion. Parabilis' offering was the largest IPO in the history of the biotech sector, surpassing the record of Kailera Therapeutics, which raised $625 million in April, Fierce Biotech wrote.

Investors were attracted by the company's development of an experimental drug capable of destroying cancerous tumors from within. Parabilis will use the proceeds for clinical trials, development of new programs and general corporate purposes. Parabilis Medicines shares are traded on Nasdaq under the ticker PBLS.

In the second quarter, European small-caps outperformed shares of large companies. The segment is supported by the relocation of production facilities to Europe, increased infrastructure spending and the revival of the M&A market, according to BNP Paribas Asset Management.

Among the main risks for the small-caps sector in Europe, experts of BNP Paribas AM named inflation, growth of government bond yields and increase in transportation costs due to the conflict in the Middle East. They advise investors to follow a barbell strategy, which combines safe assets with a limited proportion of risky growth bets.

Since the beginning of 2025, the SPDR S&P Biotech ETF, which is considered one of the main benchmarks of the biotech industry, has grown by 35.9%. At the same time, the dynamics of biotech companies' shares largely depend not on financial results, but on regulatory decisions and data from clinical trials, which can dramatically change the valuation of the business.

According to the Bloomberg Intelligence calendar, in June the market will follow a number of important events in the segment of small and mid-cap companies. Among them are FDA decisions and publication of clinical data for Spero Therapeutics (June 18), Achieve Life Sciences (June 20), Viridian Therapeutics (June 30), as well as updates on MBX Biosciences (June 12-13) and Intellia Therapeutics (June 13). For investors, these are bets primarily on the likelihood of a successful event, hence the increased volatility.