It has been a year like no other we have experienced, and it still has another quarter to run. Despite the serious disruptions to normal business operations due to the ongoing COVID-19 pandemic, biopharmaceutical companies have found a way to conduct transactions efficiently. We are in a time of “Zoom-onomics,” where virtual meetings have taken the place of traditional face-to-face interactions. Most executives say they like the new normal and that has translated into a record amounts of financing generated. According to BioWorld, almost $85 billion was raised by public and private biopharma companies globally in the second and third quarters alone, bringing the dollars generated to date to more than $100 billion – a total that smashes the existing record of about $69 billion that was raised in 2015. It is not inconceivable that by the time the curtain closes on 2020, the industry will have raised more money than it did in 2018 and 2019 combined.
Public offerings red hot
Just over half of the total raised to date has been from public offerings, including follow-ons and IPOs ($55.1 billion) with other public financing transactions chipping in $27.4 billion and private companies raising $18.4 billion. (See Biopharma financings value by type, below.)
The summer months saw a slight slowing of the volume follow-ons that were completed in the third quarter, with 80 deals generating a total of $12.8 billion compared to the 99 that were completed in the second quarter, raising $20.6 billion. (See Biopharma financings volume by type, below.).
Among the transactions, 19 biopharmas raised $200 million or more, including an outlier deal where Astrazeneca plc priced a three-tranche global bond offering totaling $3 billion. Other top deals by amounts raised included Horizon Therapeutics plc, which closed its underwritten public offering generating $963 million in gross proceeds; and in July, Biontech SE, of Mainz, Germany, closed an underwritten offering of 5.5 million American depositary shares (ADSs), each representing one ordinary share, at $93 per ADS, for gross proceeds of approximately $512 million.
The appetite for IPOs this year has been voracious, with $14.63 billion generated from these new issues, a total that is already well ahead of the $10.7 billion in 2018 that stood as the record for IPOs. Thirty companies graduated to the public ranks in the third quarter compared to 24 in the second quarter.
A tsunami of capital has also washed over global private companies this year, and BioWorld reports that venture capital rounds are now at their highest levels, reaching $18.5 billion by the end of September. They are 12% above the full year of 2019 ($16.5 billion) and 6% above the 2018 record ($17.4 billion).
Biopharma companies attracted more than $6.9 billion in the third quarter. Of the 155 transactions in the period, 62% of them were completed by companies based in the U.S. and Canada and 43 companies (28%) were based in Europe.
Early stage investments (seed and series A) represented more than 41% of the volume of deals, with series B rounds accounting for 21%.
While public companies appeared to have very little difficulty in raising capital for their operations, the same cannot be said for them moving their share values during the quarter. The BioWorld Biopharmaceutical index dipped 3.4% during this period and 1.6% in September. (See BioWorld Biopharmaceutical index, below.)
The main culprit for the fall is the uncertainty that investors are wrestling with about the performance of companies for the rest of the year. There appear to be valid arguments for both positive and negative viewpoints, argue Cowen & Co. analysts in their monthly performance review of the sector. “Progress in COVID antibodies and vaccines is positive for the industry, but there are worries that the impact of COVID on product franchises has been more persistent than guidance assumed, risking lackluster Q3 earnings,” they wrote. “The return of M&A and dealmaking is good for valuations but increasing political rhetoric against drug pricing into the [U.S. presidential] election may be bad for sentiment.”
On a company level, most of the members of the group closed the month with their share prices losing ground. The exceptions included Seattle Genetics Inc., whose shares (NASDAQ:SGEN) soared almost 24%. The increase was supported by strong data presented at the ESMO Virtual Congress. Along with its partner, Copenhagen, Denmark-based Genmab A/S, the company showed that the innovaTV 204 pivotal phase II, single-arm trial evaluating tisotumab vedotin as a monotherapy in patients with previously treated recurrent and/or metastatic cervical cancer showed a 24% confirmed objective response rate, including seven participants (7%) with complete response and 17 (17%) with partial response. After median follow-up of 10 months, median duration of response was 8.3 months; median progression-free survival (PFS) was 4.2 months and six-month PFS was 30%; median overall survival (OS) was 12.1 months and the six-month OS was 79%.
Earlier in the month, the company reported more strong clinical data, this time with partner Astellas Pharma Inc. The phase III trial of Padcev (enfortumab vedotin-ejfv) met its primary endpoint of overall survival compared to chemotherapy. The global EV-301 clinical trial compared Padcev to chemotherapy in adult patients with locally advanced or metastatic urothelial cancer who were previously treated with platinum-based chemotherapy and a PD-1/L1 inhibitor. In the trial, Padcev significantly improved OS, with a 30% reduction in risk of death; it also significantly improved PFS, a secondary endpoint, with a 39% reduction in risk of disease progression or death.
The only other company to enjoy a significant move to the upside in September was Alnylam Pharmaceuticals Inc., with its shares (NASDAQ:ALNY) jumping 10%. The company reported positive top-line results from the Illuminate-B pediatric phase IIIU study of lumasiran, an investigational RNAi therapeutic targeting HAO1 – the gene encoding glycolate oxidase – in development for the treatment of primary hyperoxaluria type 1. The company has filed an NDA for lumasiran, with the FDA granting priority review and setting a PDUFA action date of Dec. 3, 2020.