Although the financial market turbulence in the first quarter of 2015 scared some investors, it did not slow down public and private biotechnology companies from collectively raising a record-setting $14 billion—nearly 50% more than the total raised in the first quarter of 2014, which was considered the high watermark for the industry.
Global biotechs set a pace that included initial public offerings (IPOs) and follow-on financings of $9.7 billion—68% of the total raised in Q1 and $3 billion more than the amount raised from IPOs and follow-ons in the year-ago quarter.
Of the $9.7 billion, $8.4 billion was raised through 80 follow-on deals.
The biotech industry’s financial transactions were tracked by BioWorld Snapshots. According to BioWorld Today, investor demand for follow-on deals remains high, with no signs deal flow will slow down anytime soon.
The average amount raised per follow-on offering was about $100 million, and 10 deals exceeded the $200 million mark. One of those deals was Esperion Therapeutics of Ann Arbor, Mich., which closed its follow-on public offering of 2.01 million shares of common stock at $100 per share and included an option for the underwriters to purchase 262,590 additional shares. The company is developing oral alternatives to statins—the leading medications for lowering low-density lipoprotein cholesterol levels. An estimated 5% to 20% of adults, including many with elevated risk of heart disease, are statin intolerant, suffering from side effects that include muscle pain or weakness. Esperion plans to use the net proceeds from the offering to help complete the drug’s clinical development. It also has launched a cardiovascular outcomes trial for high-risk patients, and is working on an oral alternative to an injected cholesterol regulator that decreases LDL or “bad” cholesterol levels.
The most notable change in biotech investment in Q1 was the slowdown of biotech IPOs compared to 2014, particularly for U.S. companies. There were 15 international IPOs— just half of the 29 completed in Q1of 2014. European IPOs gained more attention, a switch from the U.S. domination of the IPO market last year.
Major IPOs included Malin of Dublin, Ireland, which set a new benchmark for a European IPO with gross proceeds of $352.8 million. Nanovector of Norway garnered $617 million. Both biotech firms also are listed on Nasdaq.
France-based Cellectis, which is developing cancer immuno-therapeutics, raised $229 million in its IPO, offering 5.5 million American depository shares (ADS) at $41.50 each. The company’s genome engineering calls for arming T cells with Chimeric Antigen Receptors to fight cancer. These modified T cells provide new properties in a drug that can resist existing cancer treatments. According to BioWorld Snapshots, Cellectis’ IPO was the largest American IPO for a biotech company headquartered outside the U.S.
Another European IPO in Q1 was Oxford, U.K.-based Summit, which also used American depositary shares, selling 3.45 million ADSs at a public offering price of $9.90 per share. It will use the proceeds to drive its clinical programs focused on Duchenne muscular dystrophy and Clostridium difficile infection, a bacterium that can cause serious intestinal conditions from diarrhea to colitis.
“There is strong momentum and optimism within the biotech sector so far this year,” said Charles Crain, senior manager, tax and financial services policy, for the Biotechnology Industry Organization (BIO), a Washington, D.C.-based biotech trade group. He attributed much of the investment boom to the federal Jumpstart Our Business Startups (JOBS) Act, which supports entrepreneurship and small business growth by easing federal regulations and allowing individuals to become investors.
“In the three years since the JOBS Act was signed into law,” said Crain, “there have been more than 140 IPOs in the biotech industry.”
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