Notwithstanding market nervousness toward the end of the first quarter of 2014, the period was characterized by a tsunami of cash flooding into biotech coffers. Both global public and private companies benefited. As a result, the sector collectively raised $9.5 billion almost double the amount raised in the same period last year according to data from BioWorld Snapshots.
The heavy lifting for the period was once again carried out by public companies, which took advantage of their elevated share prices and enthusiastic investors to raise $6.5 billion in follow-on public financings in the first quarter, which was 99 percent higher than the $3.255 billion raised by public biotech companies in the same period in 2013. The amount included $2.2 billion from 28 initial public offerings (IPOs) a pace, if sustained for the rest of the year, which will establish a new record for the number of biotech IPOs completed in a year.
Healthy deal flow
There was a healthy deal flow for follow-on financings. For the quarter, 53 transactions were completed compared to 32 in the first quarter of 2013. However the average amount that was raised per deal remained the same at approximately $85 million.
Intermune Inc., of Brisbane, Calif., was involved in the largest public offering selling 7.5 million shares to the public at $32.75. The company said that the estimated net proceeds of $233 million will be used for the potential commercial launch of Esbriet (pirfenidone) in the U.S. and ongoing commercialization efforts in Europe, to fund research and development programs with Esbriet and other compounds intended to address idiopathic pulmonary fibrosis and other fibrotic diseases. (See BioWorld Today, March 17, 2014.)
Synageva Biopharma Corp. raised $211.5 million from an underwritten public offering of 2 million shares of common stock at $105.75 each. The company granted the underwriters a 30-day option to purchase 300,000 additional shares of stock, potentially adding $31.725 million to its haul.
In its prospectus, Synageva said proceeds will be used to support the infrastructure for lead program sebelipase alfa (SBC-102) and the remainder of its pipeline, including commercial and manufacturing ramp-up. Sebelipase alfa is a recombinant form of the human lysosomal acid lipase (LAL) enzyme in global development in infants, children and adults as an enzyme replacement therapy (ERT) for LAL deficiency.
Also just topping $200 million was the financing completed by Ironwood Pharmaceuticals Inc., which issued a total of 15.8 million shares in its public offering at $12.75 each this included the underwriters exercising in full their option to purchase an additional 2,058,825 shares at the public offering price.
The company's $201 million gross offering was upsized from $150 million, oversubscribed and priced at a premium to the prior offering day's closing share price. The net proceeds of about $191 million will be deployed to boost commercial efforts and explore new indications with its approved Linzess (linaclotide). The FDA cleared Linzess for constipation-predominant irritable bowel syndrome and chronic idiopathic constipation in the summer of 2012. (See BioWorld Today, Aug. 31, 2012.)
By close of the first quarter only Intermune's share value had increased following its public offering up 11.4 percent. Synageva and Ironwood saw their shares drop 28 percent and 15 percent respectively.
AN IPO STAMPEDE
Although the pace of biotech IPOs was predicted to slow down after the 42 new issues that were completed last year, the window has remained wide open so far this year. With 28 companies completing their IPO in the first quarter one is left wondering whether this pace is sustainable. According to BioWorld Snapshots there are currently 19 companies on the biotech runway with more predicted to join. It certainly looks as though the situation is set up to beat last year's incredible year for biotech IPOs.
Not surprisingly biotech companies were the main drivers of IPO activity in general during the first quarter. According to data compiled by Renaissance Capital, the U.S. IPO market showed more activity than any other first quarter since 2000 as 64 companies raised $10.6 billion more than double the number of IPOs in the first quarter of 2013, a year that also had the most public offerings in over a decade.
The hot IPO market isn't exclusively confined to the U.S. either. Circassia Pharmaceuticals plc created a new high-water mark for UK biotech by pricing its IPO on the London Stock Exchange at £3.10 per share in a transaction that grossed £200 million (US$333.6 million). The Oxford-based company will net about £190.8 million from the offering providing funds to take four allergy treatments through phase III and to commercialize a lead cat allergy product. (See BioWorld Today, March 14, 2014.)
Circassia's success was quickly followed by UK's Horizon Discovery Group, which raised £68.6 million (US$113 million) in an oversubscribed IPO that priced at the top end of the valuation range. The company will have net proceeds of £37.8 million to expand sales and marketing of its genomics and personalized medicine research tools, for mergers and acquisitions and to apply its tools to in-house drug discovery and research collaborations. (See BioWorld Today, March 25, 2014.)
The postmarket meltdown in biotech stocks didn't faze the appetite of U.S. investors for new issues. Versartis Inc. was the top U.S. priced IPO near the end of the quarter pricing its IPO at $21 the high end of a range to raise $126 million.
The Redwood City, Calif.-based company holds global rights to its lead compound, long-acting recombinant human growth hormone (rHGH) VRS-317, in development to treat adult and pediatric growth hormone deficiency (GHD).
Editor's note: This story first appeared in BioWorld Insight. Subscribers of BioWorld Today can add BioWorld Insight for a special discounted rate! Call (404) 262-5476 or (800) 688-2421 and mention editor Peter Winter for a free trial. Additional commentary from Winter can be found on the BioWorld Perspectives blog at bioworld.com.