In the third quarter, global biopharmaceutical companies collectively raised more than $12 billion from public and private transactions. Year to date (YTD), the sector has generated $41.5 billion, according to BioWorld data, putting it on track for a $55 billion haul for the year. Although the amount raised from public offerings in the quarter didn't match the comparable period one year ago, the number of new biopharma IPOs that were completed demonstrates there is still a healthy demand for those new issues, despite the negative sentiment that persists for the sector in general.

Public offerings, including IPOs, generated just over $6.2 billion of the third quarter total and reached almost $21 billion YTD. (See Biopharma financing money raised, below.)

Deal volume slipped to 50 follow-on transactions in the third quarter, compared to 64 in the second quarter and 61 in the first quarter. (See Biopharma financing volume, below.)

Acadia Pharmaceuticals Inc. led the way in September, taking advantage of its 30% jump in share price. It was able to go to the market and close an underwritten public offering of 7.187 million shares, a total that included 937,500 shares sold to the underwriters who exercised in full their option to purchase additional shares at $40 each. The gross proceeds were approximately $287.5 million.

In the third quarter, the leading deal belonged to Bothell, Wash.-based Seattle Genetics Inc., which completed an underwritten public offering of 8.21 million shares of its common stock priced at $70 each for gross proceeds of approximately $575 million. The company said it anticipates using the net proceeds to fund ongoing commercialization of Adcetris (brentuximab vedotin), its antibody-drug conjugate targeting CD30 for lymphoma, in the U.S. and Canada, and to fund its activities in preparation for the potential commercial launch of antibody-drug conjugate enfortumab vedotin.

Other notable offerings in the period included Amarin Corp.'s $460 million raise in July and Deciphera Pharmaceuticals Inc., whose shares (NASDAQ:DCPH) spiked in August as result of a pivotal phase III study showing lead candidate ripretinib enabled people with fourth-line and beyond gastrointestinal stromal tumors to live a median of 6.3 months before disease progression vs. one month with a placebo. Ripretinib also reduced the risk of disease progression or death by 85%. (See BioWorld, Aug. 14, 2019.)

As a result, the company closed a registered underwritten public offering in which 10.81 million shares of common stock were sold at $37 per share, generating gross proceeds, inclusive of the exercise of the underwriters' option to purchase additional shares, of approximately $460 million.

Deciphera said it intends to use the net proceeds of the offering to fund: clinical trials for ripretinib, including the expansion stage of its phase I trial, its ongoing pivotal phase III trials, and additional clinical trials, as well as clinical research outsourcing and manufacturing of clinical trial material, and pre-commercialization manufacturing process development and validation.

Steady diet of IPOs

Even though investors are shying away from the sector, biopharma IPOs continue to be completed at a steady pace. "There is demand for companies with good management and promising products, though strong insider support seems increasingly vital. Like investors, issuers are becoming increasingly fearful of what 2020 will have in store for biotech. Many seem to be rushing to jump through the financing window while it remains open," Cowen analysts noted.

BioWorld recorded seven companies that completed their offerings in the third quarter, bringing the total number of U.S. biopharma IPOs completed this year to 38, with more than $4.9 billion raised. Their collective share price performance at the end of the third quarter was underwater by 3%.

According to Renaissance Capital's 3Q 2019 Quarterly Review of the U.S. IPO Market, health care and tech companies "again dominated IPO issuance, making up 62% of all IPOs due to biotechs and large U.S. tech unicorns."

Of the new issues in the quarter, Copenhagen-based antibody developer Genmab A/S's IPO on Nasdaq grossed $581.8 million. The transaction represents the largest biotech IPO on Nasdaq so far this year, surpassing Bridge Biopharma Inc., with a $348.5 million raise, followed by Adaptive Biotechnologies Corp., which grossed $345 million, and Gossamer Bio Inc., which raised $317 million. (See BioWorld, July 22, 2019.)

Also graduating to the public ranks in the period was IGM Biosciences Inc., of Mountain View, Calif., which closed its IPO of approximately 12.6 million common shares, priced at $16 apiece, including the full exercise by underwriters of the overallotment option to purchase approximately 1.6 million additional shares grossing approximately $201.3 million.

Funds raised from the offering will be used to support a phase I trial of IGM-2323, a bispecific T-cell engaging IgM antibody targeting CD20 and CD3 proteins; IND-enabling studies and a phase I trial of the company's second candidate, an IgM antibody targeting death receptor 5 proteins. (See BioWorld, Aug 21, 2019.)

Momentum

It appears the momentum of new biopharma new issues isn't slowing down, with several companies already completing their IPOs early into the fourth quarter.

Aprea Therapeutics Inc., of Boston, priced its IPO of approximately 5.7 common shares at $15 apiece, the midpoint of its proposed range, for expected gross proceeds of approximately $85 million. The company granted underwriters a 30-day option to purchase up to 850,000 additional shares, potentially adding about $12.8 million to the raise. The funds will support phase Ib/II studies of APR-246, a p53 tumor suppressor protein stimulator, in solid tumor and hematological malignancies and potential follow-up studies and preparation of a new drug application in myelodysplastic syndromes.

Woburn, Mass.-based Frequency Therapeutics Inc. raised $84 million, with a further $12.6 million to add if the underwriters exercise in full their option to purchase up to 900,000 additional shares. The net proceeds will be used to advance FX-322, a lead from its small-molecule activators of Lgr5-positive epithelial stem cell proliferation and differentiation into hair cells, to treat chronic noise-induced hearing loss, including completion of a planned phase IIa trial. The drug is partnered with Tokyo-based Astellas Pharma Inc.

Viela Bio Inc., of Gaithersburg, Md., said it priced its IPO of 7.9 million common shares at $19 each, the low end of its proposed range, expecting to raise approximately $150 million. The company granted underwriters a 30-day option to purchase up to approximately 1.2 million additional shares, potentially generating another $22.5 million from the offering. The proceeds will be used mainly to support the BLA approval process and pre- and initial commercialization activities for the B-lymphocyte antigen CD19 inhibitor inebilizumab, initially as first-line monotherapy in neuromyelitis optica spectrum disorder, and to conduct trials in additional indications.

In addition, four companies have joined the IPO runway: 4D Molecular Therapeutics Inc., of Emeryville, Calif., has filed to raise up to $100 million in an IPO to support the development of targeted therapies based on next-generation AAV vectors; Cabaletta Bio Inc., of Philadelphia, has filed to raise up to $100 million to support its work on chimeric autoantibody receptor T cells to bind and destroy disease-linked B cells; Phathom Pharmaceuticals Inc., of Buffalo Grove, Ill., has filed to raise up to $100 million in an IPO to support the development of treatments for gastrointestinal diseases; and Vir Biotechnology Inc., of San Francisco, has established terms for its proposed IPO, planning to offer 7.14 million shares in the price range of $20 to $22.

The company said its development pipeline consists of product candidates targeting hepatitis B virus, influenza A, HIV and tuberculosis.

Private financings

Global private companies started out the year in record fashion, attracting more than $4.6 billion in the first quarter. Although the pace of transactions slowed slightly in the second quarter with about $3.8 billion raised, it picked up again in the third quarter with more than $4 billion being generated. The $12.4 billion that companies have attracted YTD is down 8% from the $13.5 billion total raised in the same period last year. It is interesting to note that private biotech companies based in Asia are beginning to attract the attention of venture capital companies. The latest transaction involved Chengdu-based Hinova Pharmaceuticals Inc., of China's Sichuan province, which closed a $40 million series B financing.

The proceeds will go to support the global phase III study for lead asset HC-1119 for prostate cancer.

Cash flowing overseas

Although U.S. and Canadian companies have attracted the lion's share of public and private capital so far this year, 29% of the cash has been generated by companies based in Europe and Australasia. (See Biopharma financing by region, below.)

European biotechnology firms engaged in the discovery and development of drugs and other therapeutic modalities raised $2.36 billion in equity financing during the third quarter, bringing the total for the year to $5.57 billion. That total raised in the first three quarters of 2019 lags by a considerable amount the $6.349 billion raised during the equivalent period last year. (See BioWorld, Oct. 3, 2019.)

The majority of the funding of Australasia-based companies so far has headed to the coffers of private companies.

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