Although public offerings slowed considerably in March as a result of the steepest stock market declines in history during that period, global biopharmaceutical companies managed to collectively generate just over $16 billion in the first quarter from a record number public and private transactions. Only the first quarter of 2018 saw more cash raised in the past decade, according to BioWorld data. The first quarter haul was 1.9% greater than the $15.7 billion raised in the comparable period last year but significantly lower than the $23.1 billion raised in Q1 2018. Deal volume, at 347, established a 10-year record for the number of transactions in the first three months of the year. Public offerings, including IPOs, represented approximately 52% of the first-quarter financings.

Public offerings

March had the fewest number of biopharma follow-on public offerings for each of the last 10 years. At only eight for the month, it was about a third of what was seen during March 2019 (24), 2018 (25) and 2017 (22), noted BioWorld analyst Karen Carey.

The eight follow-on offerings in March totaled $483.7 million, a drop of 82% compared with the same period last year, which logged about $2.7 billion. It also is down by 81% and 76% from 2018 and 2017, respectively.

Not surprisingly, three of the companies completing follow-on offerings in March, Cel-Sci Corp., Hoth Therapeutics Inc. and Tiziana Life Sciences plc, are working on therapies or vaccines to combat COVID-19. Vienna, Va.-based Cel-Sci, which raised $7.7 million, is developing an immunotherapy using its LEAPS peptide technologies. London-based Tiziana, which raised $10 million, is working on TZLS-501, its anti-interleukin-6 receptor monoclonal antibody, and New York-based Hoth, which raised $5 million, partnered with Halovax LLC to advance an application of Vaxcelerate, a self-assembling vaccine platform.

In the quarter, 10 companies were able to raise more than $200 million from their offerings, before the financial markets cratered. The top deal involved Moderna Inc., of Cambridge, Mass., which priced an underwritten public offering for gross proceeds of about $575 million. Since that February transaction, its shares (NASDAQ:MRNA) have increased 83% in value, fueled by the company’s involvement in developing a messenger RNA (mRNA) vaccine against COVID-19.

Last month, it reported the first participant had been dosed in a phase I study of a mRNA vaccine (mRNA-1273) against the SARS-CoV-2. That trial is being conducted by the NIH. Moderna intends to work with the FDA and other government and non-government organizations in order to be ready for a phase II trial. The company said manufacture of the mRNA-1273 material for the potential phase II trial, which could begin in a few months, is underway.

Apellis Pharmaceuticals Inc., of Waltham, Mass., also closed a significant public offering in the period that generated gross proceeds of about $404.2 million.

IPO window

Prior to the global financial crisis, the appetite for biopharma IPOs in the U.S. was robust, with eight companies graduating to the public stage, collectively raising $1.336 billion along the way. Four companies garnered more than $200 million from their offerings, including Redwood City, Calif.-based Revolution Medicines Inc., which raised $273 million. The company is focused on the RAS and mTOR signaling pathways and its lead candidate, RMC-4630, is described as a potent and selective inhibitor of SHP2, a central node in the RAS pathway. In collaboration with Paris-based Sanofi SA, RMC-4630 is being evaluated in a phase I monotherapy trial for a range of tumor types featuring specific, molecularly defined oncogenic mutations, as well as a phase Ib/II study in combination with cobimetinib in patients with relapsed/refractory solid tumors displaying specific genomic mutations.

According to Renaissance Capital's Q1 2020 U.S. IPO market review, as many as 20 companies were “forced to shelve offerings when the IPO window slammed shut in early March, as the focus of investors and policy-makers shifted to a post-coronavirus paradigm.”

However, the unfriendly financial markets did not deter cancer drug developer Zentalis Pharmaceuticals Inc., which priced April 2 an upsized IPO for 165.2 million. The company has also granted the underwriters a 30-day option to purchase up to an additional 1.37 million shares of its common stock. Its lead candidate, ZN-c5, is an oral selective estrogen receptor degrader for estrogen receptor-positive, HER2-negative breast cancer. The company expects to report top-line data from the phase I, monotherapy dose-escalation portion of an ongoing phase I/II trial in the second half of the year.

Keros Therapeutics Inc., a company developing treatments for hematological and musculoskeletal disorders, could be next out of the IPO gate. The company, which expects to raise up to $77.6 million if underwriters of the offering exercise their full option to buy additional shares, is expected to price at $15 per share, listing on Nasdaq under the symbol KROS.

Private financings

Deal flow among global private biopharma companies was in high gear during the first quarter, with BioWorld recording 120 transactions, generating in excess of $4.7 billion, just 1.4% shy of the $4.78 billion raised last year at this time. Sixteen companies received $100 million or more in venture funding, including Eqrx Inc., a new venture that launched with $200 million in series A financing, and Cambridge, Mass.-based Elevatebio LLC, whose $170 million series B round will support manufacturing cell and gene therapies. The latter’s business model is focused on Basecamp, which puts together single- and multiproduct enterprises in cell and gene therapies by providing founders with centralized, bench-to-bedside capabilities. Elevatebio’s areas of interest include immunotherapy, regenerative medicine and viral-based in vivo gene therapy.

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