During the first quarter of 2020, a total of 153 financings brought $13.2 billion into the med-tech industry, representing a 20% drop from the first quarter of 2019, but still significantly above all of the other quarters since 2017.
The number of private financings appears to be climbing in comparison with recent years, and some large notes offerings have placed private raises of public companies on top. In contrast, IPOs and follow-on offerings are way down from previous quarters.
Private money climbs
During the first quarter of 2020, there were 88 venture capital (VC) financings and 46 private financings of public companies, such as private placements and notes offerings. This compares to 72 and 32, respectively, during the first quarter of 2019, and 67 and 21, respectively, during the first quarter of 2018.
Due to large notes offerings during the first quarter, including one worth $1.9 billion for Washington-based Danaher Corp., which completed its purchase in March of GE Healthcare, the first-quarter private placements tower over other quarters in the past four years. In fact, the first quarter of 2020 raised more through these types of financings than 2017, 2018 and 2019 did throughout the whole year. The $8.5 billion raised through these types of financings also include high-money notes offerings by Thermo Fisher Scientific Inc., of Waltham, Mass., and Amsterdam-based Royal Philips NV, as well as Somerset, N.J.-based Catalent Pharma Solutions Inc.
The largest private placement for the quarter was completed by Princeton, N.J.-based Integra Lifesciences Holdings Corp., which raised $348.1 million in February. It was followed in March by $343.8 million raised by San Diego-based Nuvasive Inc.
There were five VC rounds in the first quarter in which the company nabbed more than $100 million, with Redwood City, Calif.-based Karius Inc. raising the most in February at $165 million. It was followed by $145.6 million for San Francisco-based Element Science Inc., $125 million each for San Jose, Calif.-based Outset Medical Inc. and Tirat Carmel, Israel-based Insightec Ltd., and $100 million for San Francisco-based Verana Health Inc.
Public financings dip
It was an extremely slow quarter in terms of med-tech IPOs within BioWorld’s coverage area. The sole IPO to complete was done by San Francisco-based digital health company 1Life Healthcare Inc., which raised $245 million in January. That amount compares to $401.4 million from six IPOs in the first quarter of 2019, and $5.4 billion from three IPOs in the first quarter of 2018, which included the $5.2 billion whopper completed by Erlangen, Germany-based Siemens Healthineers AG. Like this year, there was only one IPO in the first quarter of 2017 when Jounce Therapeutics Inc., of Cambridge, Mass., raised $101.84 million.
For follow-ons, there were 18 completed in the first quarter, raising $2.15 billion, a drop of 84% from the $13.19 billion raised through 20 follow-on offerings in the first quarter of 2019. The 2019 amount includes two large notes offerings from Marlborough, Mass.-based Boston Scientific Corp. and Luxembourg-based Medtronic Global Holdings S.C.A. Together, they are more than $12 billion of the total.
This year’s first-quarter follow-on offerings are more in line with 2018 and 2017 in which 17 offerings raised $1.18 billion and 15 offerings raised $2.1 billion, respectively.
The two largest follow-ons of the first quarter of 2020 involving shares were Seattle-based Adaptive Biotechnologies Corp.’s $212 million raise in January, and Somerset, N.J.-based Catalent Inc.’s $494.41 million financing in February.