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GoingPublic Life Sciences Biotechnologie 3/15 - 4 Going public in Europe versus the US

European investors are increasingly joining the biotech investment boom

114 03-2015 „Biotechnologie“ls In 2014, the median time to go public for biopharma companies was less than six years, according to analysis by Silicon Val- ley Bank (SVB). Two of the hottest IPOs, both with breakthrough science, Juno Therapeutics’ 265 m. USD IPO in Decem- ber 2014 and Spark Therapeutics’ 185 m. USD IPO one month later, were completed less than two years after the companies had been founded. Innovation pays Transformative science – cancer immuno- therapies, gene therapies, rare diseases – have garnered the greatest investor interest – both public and private. Venture investors, having been able to realize returns on their past investments, are replenishing their funds, and have ready capital to finance a new generation of com- R ecord amounts of capital have flown into the biotech industry over the last few years. The surge of initial public offerings (IPO) peaked in 2014 when a total of 106 life sciences companies completed IPOs on US exchanges and 18 companies did so on European exchanges, raising a record 10.3 bn. USD combined. Though the frenzy has abated somewhat in the United States in the first half of 2015, Eu- rope is on track to equal its 2014 numbers. What the absolute numbers conceal, is that many European biotech companies have opted for the higher valuations on Wall Street, where stocks are more actively traded and the potential for raising capital through secondary offerings is greater. With the exception of Circassia (LSE/333.5 m. USD) and Acucela (Tokyo/162.4 m. USD), the top 15 IPOs of 2014 and 2015 were completed on US ex- changes. Indeed, the ability to return to the markets for secondary funding is extremely important to cash intensive bio- tech companies and many newly public companies have raised significant sums in secondary offerings within oneyear of their IPOs. Already public European com- panies, such as Affimed, UniQure, Summit Therapeutics, Galapagos, Celectis, Biotie Therapies, Horizon Pharma, DBV Techno- logies and others have collectively raised 2 bn. USD etween January and August of 2015 through secondary listings on Wall Street to support their development pro- grams. The increased investor risk tolerance has allowed companies to go public at earlier stages of development. Whereas 73% of the biopharma companies that completed IPOs on US exchanges in 2012 had a lead compound in phase 3, one year later, 60% of biopharma companies that completed IPOs had a lead candidate in phase II. By 2014, 36.8% of the companies that completed IPOs on US exchanges had lead products in phase II, and 23.7% had lead products in phase I or earlier. Given the generally earlier stage of European biotech companies, this trend has opened the door to the public markets in the United States. Industry confidence in Europe and the United States is at an all-time high, as investors seek to capitalize on the upside of biotech returns. Sustained gains suggest a continuation of the current boom at least for the remainder of 2015. By Anton Gueth International Going public in Europe versus the US European investors are increasingly joining the biotech investment boom ABOUT THE AUTHOR Anton Gueth is Managing Director of Evolution Life Science Partners, a San Francisco and New York based banking advisory firm focused on the Life Science companies. He gained 20 years of industry experience at Eli Lilly and Company, before joining the investment banking industry. Tab. 1: Life Sciences IPOs – Listing in Europe vs. United States Year No of IPOs Europe Raised USD M Average No of IPOs United States Raised USD M Average 2015* 16 948.1 59.3 52 6,199 119.2 2014 18 943.3 52.4 106 9,356 88.3 2013 2 56.3 28.5 51 4,444 87.1 2012 8 193.2 24.2 16 1,093 68.3 2011 5 224.5 44.9 19 1,746 91.9 2010 8 208.7 26.1 20 1,431 71.6 2009 1 146.0 146.0 3 1,217 405.7 *) 2015: Jan-Aug 15 (includes pharma/biotech/medical devices/digital health tech companies) Source: Burrill Media; Marie Daghlian 11403-2015 „Biotechnologie“ls 2015* 16948.159.3526,199119.2 201418943.352.41069,35688.3 2013256.328.5514,44487.1 20128193.224.2161,09368.3 20115224.544.9191,74691.9 20108208.726.1201,43171.6 20091146.0146.031,217405.7