DUBLIN – Last year was yet another banner year for European biotechnology firms engaged in drug development. The sector took in $7.739 billion in equity funding in 2019, just edging past the previous high of $7.715 billion it reached in 2018. (See European equity funding in 2019, below.)

The second half of the year was a marked improvement on the first half, but that was linked to the timing of a couple of large-scale transactions  – Genmab A/S’s $582 million IPO on Nasdaq in July and Argenx BV’s $557 million follow-on offering in November – rather than to any great shift in sentiment. The growing roster of European firms with a Nasdaq listing continues to anchor the sector. Those firms raised $3.555 billion in follow-on offerings in total. (See Investment in European biotechnology 2017–2019, below.) They were joined by another seven firms, including Genmab, who between them raised another $1.175 billion in IPOs.

European equity funding in 2019 ($M)

Transaction type

Q1

Q2

Q3

Q4

Full year

Venture

692

659

1,237

 396

2,984

IPO

145  

169

 584

 302

1,200

Follow-on offering

923

626

 556

1,450

3,555

Total

1,760

1,454

2,377

2,148

7,739

Source: BioWorld

 

Investment in European biotechnology 2017–2019

Transaction type

2019 ($M)

2018 ($M)

2017 ($M)

Private equity

2,984

2,580

1,611

IPO

1,200

1,105

1,590

Follow-on offering

3,555

4,030

2,549

Total

7,739

7,715

5,750

Source: BioWorld

 

But those headline figures do not tell the whole story, as BioWorld’s annual European funding snapshot includes only equity finance raised from the public markets and private equity investors. It therefore does not include Galapagos NV’s massive $1.1 billion equity investment from Gilead Sciences Inc., as part of the $5 billion strategic alliance they entered in July. So there is little doubt that European biotechnology has never had it so good, notwithstanding the myriad uncertainties surrounding the U.K.’s imminent departure from the European Union, the ongoing U.S. drug pricing debate and the ongoing U.S./China trade war. All of those external issues have failed to dampen the ongoing investment surge in European biotechnology, which is fueled by the virtuous cycle of success in the clinic and, for a select number of mature firms, successful product development.

The private equity sphere put in another record-breaking performance in 2019, with 124 transactions logged. The amounts were not disclosed for a small number of transactions, so the actual tally is higher than the $2.984 billion total disclosed for 115 transactions. The cash was more widely distributed than usual – the U.K. is normally Europe’s top performer in raising venture capital. This year was no different in that respect, but the top 10 transactions, which it normally dominates, featured firms from across the region. Biontech SE, now Germany’s largest biotech by market cap (engaged in drug development at least), had the distinction of having two transactions in the top 10. (See Top 10 European venture rounds in 2019, below.) But the U.K. raised the largest aggregate amount ($768 million), followed by a Biontech-powered Germany ($559 million) and Switzerland ($503 million). The Netherlands ($274 million) and France ($260 million) rounded out the top five.

Top 10 European venture rounds in 2019

Company

Country

Stage

Amount ($M)

Biontech SE

DE

B

325

Arvelle Therapeutics GmbH

CH

A

180

AM-Pharma BV

NL

C

130

Achilles Therapeutics Ltd.

UK

B

121

Juvanescence Ltd.

UK

B

100

Biontech SE

DE

ND

91

ADC Therapeutics SA

CH

E ext.

76

Alizé Pharma 3 SAS

FR

A

76

Philogen SpA

IT

ND

70

Pharvaris BV

NL

B

66

Source: BioWorld

 

The IPO performance was, at a headline level, solid, with $1.2 billion raised. But the headline number masked the more or less complete collapse of the European IPO market. European firms completed only eight sizeable IPOs in 2019, and all but one of them were on Nasdaq. (See Top eight European IPOs in 2019, below.) The public markets in Sweden remain open to biotech firms, but the amounts raised and the resulting valuations are minuscule – and are generally well below the levels a company with global ambitions would expect to raise in a series A or B round in other countries. Nasdaq is no longer the de facto public market for European biotech – it is now the only functioning public market for private European firms that aim to conduct an IPO.

Top eight European IPOs in 2019

Company

Country

Market

Amount ($M)

Genmab A/S

DK

Nasdaq

582

Biontech SE

DE

Nasdaq

150

Genfit SA

FR

Nasdaq

145

Aprea Therapeutics Inc.

SE

Nasdaq

98

Hookipa Pharma Inc.

AT

Nasdaq

84

Bicycle Therapeutics plc

UK

Nasdaq

61

Innate Pharma SA

FR

Nasdaq

55

Ascelia Pharma AB

SE

Stockholm

24

Source: BioWorld

 

European biotechnology has come a long way in the last decade – perhaps none more so than Copenhagen, Denmark-based Genmab. Back in 2010, it had reached a nadir, as founding CEO Lisa Drakeman left under a cloud, and the antibody developer’s pipeline was looking decidedly lackluster after several phase III trial failures. But her successor Jan van de Winkel led a remarkable turnaround, culminating in the firm’s Nasdaq listing but largely powered by the prior progress of its multiblockbuster anti-CD38 antibody, Darzalex (daratumumab), which is marketed by Johnson & Johnson. The IPO proceeds and the royalty income from J&J will fund the next stage of Genmab’s growth, during which it plans to play an active role in product commercialization. In 2011, Genmab was at one point valued at little more than its cash balance of $227 million. Its current market cap is north of $14 billion.

It is one of a small handful of European companies with the financial and innovation muscle that allows it to control its own destiny. Others that are currently valued at more than $5 billion include Galapagos ($13.6 billion), Biontech ($8.9 billion), Argenx ($6.8 billion) and Ascendis Pharma A/S ($6.6 billion). But positive progress from several other highly valued contenders, such as antibody developer Morphosys AG (now worth $4.5 billion), gene editing pioneer Crispr Therapeutics AG ($3.3 billion), cannabinoid medicine specialist GW Pharma plc ($3.1 billion) and gene therapy pioneer Uniqure NV ($3.1 billion) could rapidly alter that picture. Idorsia Ltd., the spin-out from Actelion Ltd. (now part of Johnson & Johnson), is the sole European biotech unicorn not quoted on Nasdaq – it has, from the outset, opted to remain on its home exchange in Switzerland. With a valuation of CHF3.8 billion (US$3.9 billion) and CHF875 million in cash and equivalents, it is under no immediate pressure to migrate to Wall Street. But as Genmab has shown, if there is a solid strategic rationale for doing so, obtaining a Nasdaq listing can offer a significant valuation boost.

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