DUBLIN – European biotechnology firms engaged in the discovery and development of drugs and other therapeutic modalities raised $2.366 billion in equity financing during the third quarter, taking the running total for the year so far to $5.570 billion.
Just two transactions – both completed by Danish firms – account for more than 20% of the total. Genmab A/S and Ascendis A/S took in $582 million and $575 million in an IPO and a follow-on offering on Nasdaq, respectively. Those two deals have put the wider sector on course for a very good, if not a great, year. (See European biotechnology equity funding Jan.-Sep. 2017–2019 and European biotechnology equity funding Jan.-Sep. 2019, right.)
Although the 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, four upcoming IPOs could help to bridge the gap by the year-end. Biontech SE, ADC Therapeutics SA, Innate Pharma SA and Aprea Therapeutics AB are seeking $739 million in aggregate in offerings on Nasdaq during the coming weeks. It would still take a blow-out fourth quarter for the sector to surpass the record-breaking total of $7.715 billion it raised in 2018.
A major difference between this year and last year has been the scale – and, to a lesser extent, the number – of follow-on offerings. By the end of Q3 2018, European biotechs had raised $3.458 billion across 72 transactions, as compared with $2.092 billion across 62 transactions for the same period this year. At the same time, money is still flowing into the most attractive listed European firms in unprecedented amounts. The Q3 tally for follow-on offerings does not include the mammoth $1.1 billion in an equity investment Galapagos NV received from Gilead Sciences Inc., as part of their expanded alliance, which involved another $3.95 billion cash up front (See BioWorld, July 16, 2019.).
Big-ticket follow-on offerings have been few and far between in 2019, with the sole exception of the massive $575 million raised by Ascendis in the first quarter to complete the development and start the commercialization of its once-weekly human growth hormone product. It surpassed any follow-on offering last year, but it was an outlier. The second largest follow-on offering so far in 2019 was the $225 million raised by the Dutch gene therapy developer Uniqure NV. The U.K.'s Orchard Therapeutics plc completed the third largest follow-on transaction, which raised $128 million. In contrast, there were five transactions of $200 million or more in the first three quarters of 2018, three of which exceeded $300 million.
The same dynamic holds true to an even larger extent in the IPO category. With one notable exception, the sector's IPO performance has been distinctly lackluster so far. Subtract the $582 million that Genmab raised on Nasdaq in July, and the year's running total would be miniscule.
U.S. listing 'long overdue'
The Copenhagen-based antibody developer Genmab is, as CEO Jan van de Winkel told BioWorld, "20 years young" this year. It celebrated the 20th anniversary of its founding in February.
It was among the last of the European holdouts that eschewed a listing on Wall Street until now. "You could say the listing in the U.S. was long overdue," van de Winkel said. "One of the key reasons was to get on the radar screen in the United States." Although the antibody developer had long had a strong U.S. presence on its shareholder register in Copenhagen – even before the Nasdaq transaction, more than 40% of its investors were from the U.S. – it wanted to diversify from biotech specialists and tap into the general U.S. investor community. That necessitates getting more analyst coverage from Wall Street. "Up to the IPO, they were disincentivized to cover a company like Genmab, because there was no trading," he said.
The move to Wall Street has boosted its market cap, from about $11 billion to $13 billion. "Our ambition is to make it several-fold larger," van de Winkel said. It coincides with the company's plan to take at least a 50% ownership position in its future products. It has already started to build a commercialization arm, which will have a strong U.S. orientation. Antibodies will remain the company's focus, but the modality is changing rapidly to encompass bispecific and multispecific molecules, as well as antibody-drug conjugates and fragment antibodies. Genmab is participating on all of those fronts, but it is also looking at other ways of delivering antibodies to patients. "You will see us move into other modalities pretty soon," he said. "There are a number of parallel approaches one can choose. We are already orienting ourselves in the area."
Private equity is where European biotechs have raised the most cash this year, particularly in the third quarter. Although the U.K. remains a strong performer, with three of the top 10 transactions during the quarter, it has ceded some ground to other territories. In the equivalent period last year, six of the 10 largest transactions – including three of the top five – involved U.K. firms. (See story this issue.)
This time round, its performance has been more muted, and there is greater geographical spread among the top fundraisers during Q3. Not for the first time, Biontech has topped the table – its $325 million series B round was the largest private equity transaction in the quarter, while the $91 million it took in from a strategic investment by Sanofi SA was the largest in the first quarter. Its upcoming IPO, in which it is currently seeking $303 million, is likely to be the largest such transaction in Q4. (See Top 10 private equity investments in Q3 2019, right.)
(Methodological note: BioWorld's quarterly surveys of European equity funding attempt to capture investments in biotech firms arising from the European innovation ecosystem. Companies that are nominally headquartered in Europe but whose main operations are located elsewhere are not included in the analysis.)