DUBLIN – In what continues to be a year like no other, European biotechnology firms engaged in drug development raised $4.783 billion in equity financing during the third quarter. It is an unprecedented level of funding for the sector. If it failed to raise a penny more in the fourth quarter, it would still post a new annual record – European biotechs have already raised $9.977 billion this year. Last year’s total of $7.739 billion, then a new high for the sector, is already in the rear-view mirror.
Regardless of their stage of development, companies were able to raise money during Q3. (See European biotech equity funding Q3 2018–2020, below.)
The private equity and the public markets were both receptive. The IPO window is, for now at least, wide open. After a lackluster start to the year – no European firm completed an IPO during Q1 – 10 firms have completed IPOs in the last two quarters, six of them in Q3. (In addition, the usual cluster of small-scale Swedish firms listed their shares on the junior First North exchange in Stockholm without raising cash.)
Seven of those transactions took place on Nasdaq, while Lausanne, Switzerland-based antibody-drug conjugate developer ADC Therapeutics SA took the unusual step of going public on the NYSE. Its $267.7 million raise, completed in Q2, remains the biggest by a European firm so far this year. Two other IPOs passed the $200 million threshold during Q3. Curevac AG, which has gained global prominence through its development of an mRNA-based vaccine against SARS-CoV-2, took in $245.3 million in August and Gosselies, Belgium-based immuno-oncology specialist Iteos Therapeutics Inc. raised $229.7 million, including the underwriters’ option.
Those firms that were already listed – particularly those on Nasdaq – took advantage of the market’s present appetite for health care stocks. The total raised, $2.704 billion, was comfortably ahead of the sizeable Q2 tally of $2.275 billion. The feeding frenzy is not purely a function of the extraordinary effort to develop drugs and vaccines to combat COVID-19. Health care has traditionally been a safe harbor for investors during a downturn. It’s a strange place to be for biotechnology, which, in more normal times, is a far riskier proposition than most.
At the same time, a small handful of transactions scooped up most of the cash. Just three transactions raised more than $500 million. Only six, in total, crossed the $100 million threshold. (See Top 10 follow-on European offerings and PIPEs Q3 2020, below.)
Only one of the top three fundraisers, Mainz, Germany-based Biontech SE, is engaged in COVID-19 development. The company, which has been one of Europe’s leaders for some time, is now valued at about $17.5 billion. Zug, Switzerland-based Crispr Therapeutics AG needs little introduction, but its stock market performance has been spectacular compared with those of its two closest peers. Crispr (whose main development center is in Cambridge, Mass.) is now valued at about $5.7 billion, whereas Editas Medicine Inc. and Intellia Therapeutics Inc., both of Cambridge also, are valued at $1.7 billion and $1.1 billion, respectively. Another top 10 fundraiser, London-based Verona Pharma plc, which raised $200 million in a private placement and share offering, is in the process of saying sayonara to its long-time home market. It plans to delist its shares from AIM by Oct. 30, and will in the future retain a single listing on Nasdaq.
The biggest share offering in Q3 was from Ascendis Pharma A/S, of Copenhagen, Denmark. It has been among Europe’s most aggressive fundraisers in recent years, as it gears up for a potential approval next year of its growth hormone deficiency drug, Transcon HGH, a sustained-release form of human growth hormone. The file has a June 25, 2021, PDUFA date.
In the private equity sphere, “everyday” biotech companies dominated the largest transactions, with one notable exception. Curevac, which has raised $640 million in private equity in total this summer, is also in line to receive €252 million (US$295 million) in grant funding from the German government to further accelerate its vaccine development efforts. Unlike its compatriot and rival Biontech, which has entered a partnership with New York-based Pfizer Inc., Curevac has, so far at least, opted to pursue a solo strategy in COVID-19. Its large-scale deal with London-based Glaxosmithkline plc – which covers several mRNA-based vaccine and antibody development programs – did not include its COVID-19 vaccine. (See Top 10 European venture rounds in H1 2020, above.)
The other big earners in terms of venture capital deals are not focused on COVID-19. Two of them are Dutch firms working on new immunomodulatory technologies for cancer. Amsterdam-based Neogene Therapeutics BV is developing individualized T-cell receptor therapies for cancer. Utrecht-based Lava Therapeutics NV is developing a bispecific gamma-delta T-cell engager technology for solid and liquid tumors. Berlin-based T-Knife GmbH is also taking forward an advanced immunology approach for cancer. The company is employing a proprietary humanized T-cell receptor (TCR) mouse platform to identify high-affinity and high-specificity TCRs that are restricted to human leukocyte antigens.
Other established but still private firms topped up their funding to maintain their momentum. Stevenage, U.K.-based antiviral drug developer Reviral Ltd., which is focused on respiratory syncytial virus, Copenhagen-based fibrosis specialist Galecto Inc. and Manchester, U.K.-based antifungals developer F2G Ltd. all fall into that category. Business as usual continues during these most unusual times.