Biotech's Strong Fourth Quarter Tops Off a Great Year
SAN FRANCISCO, Jan. 2 /PRNewswire/ --
"Biotech had another strong quarter and ended the year on very sound footing," said G. Steven Burrill, CEO of Burrill & Company, a San Francisco-based life sciences merchant bank.
"Indeed, 2003 was a huge year for the biotech industry which took Wall Street by storm, won some big battles on Capital Hill regarding Medicare and drug reimbursements, raised $16.3 billion in financings and $9 billion through partnering transactions, and received approval for a slew of important new drugs from the FDA,"
Burrill added.
"In addition, the industry generated more revenues in 2003 than ever and broke all records for government funding allocations. When you consider the tough political and economic environment that prevailed in the first quarter of the year, the industry's performance is all the more remarkable," he said.
The big news in Q4 03 was the return of the biotech IPO market:
seven companies went public raising a total of $453 million.
By the end of December, there were 14 additional deals on file with three having been pulled. "The companies that are knocking on the door have very impressive profiles," noted Burrill. "Many have products that are in late stage clinical trials and some are already generating significant revenues.
This is wildly different from the IPO boom in 2000 which was fuelled more by the excitement of genomics than revenues and pipelines," he said.
Of the six companies that filed in December, all were aimed at product development of one sort or another.
For example,
Immunicon Corporation is seeking FDA approval for its CellSearch Epithelial Cell Kit to detect and manage metastic breast cancer. Cell kits for colorectal and prostate cancer are also in the company's pipeline.
Santarus, one of the last companies to file an IPO in 2003, has a lead drug candidate called Rapinex, a modified version of the proton pump inhibitor found in Prilosec.
Idenix Pharmacetuicals has drugs in its pipeline to fight hepatitis B, hepatitis C, and HIV and
Peninsula Pharmaceuticals has a drug candidate, inhaled doripenem, that is being developed for use against respiratory infections in cystic fibrosis patients.
"Unfortunately, many of the companies that have already been launched are struggling," noted Burrill.
Neurochem (NRMX), which was listed on the Toronto Exchange prior to its debut on NASDAQ, has seen shares rise from $10.87 a share to $23.58 a share on December 31, more than doubling its value,
however only Pharmion which priced at $14.00 a share on November 6 showed any major improvement, ending the year at $15.25 per share.
"What investors want is to see these new issues go to premiums not take a nose dive," Burrill added.
"While we're expecting to see as many as 20 to 30 successful IPOs in 2004, we'll continue to have a fair amount of selectivity, and the market is likely to remain choppy into Q1 04," he said.
BIOTECH IPO ACTIVITY in 2003:
DEALS DONE Current Price % Change Company Ticker Issue Price (12/31/03) since IPO
Acusphere ACUS $14.00 $8.78 -37%
Advancis AVNC $10.00 $7.50 -25%
Genitope GTOP $9.00 $9.18 2%
CancerVax CNVX $12.00 $9.48 -21%
NitroMed NTMD $14.00 $7.19 -49%
Pharmion PHRM $14.00 $15.25 9%
Myogen MYOG $14.00 $14.30 2%
DEALS ON FILE
Proposed Company Ticker File Date Offering
Xcel Pharma XCEL 8/22/2003 $75M
Eyetech EYET 9/12/2003 $100M
Acorda Therapeutics ACRD 9/29/2003 $75M
Xcyte Therapies XCYT 10/10/2003 $75M
GTx GTXI 10/15/2003 $86M
Renovis RNVS 10/17/2003 $75M
DynaVax Tech DVAX 10/24/2003 $90M
Anadys Pharma ANDS 11/17/2003 $86M
Corgentech CGTK 12/5/2003 $86M
Immunicon IMMC 12/8/2003 $86M
Idenix Pharmaceuticals IDIX 12/15/2003 $100M
Peninsula Pharma PPRX 12/16/2003 $86M
Memory Pharma MEMY 12/23/2003 $86M
Santaurus SNTS 12/23/2003 $85M
DEALS PULLED
Proposed Company Ticker File Date Offering Date Withdrawn
Aderis ADPX 8/27/2003 $75M 10/29/2003
TolerX TLRX 8/26/2003 $75M 11/20/2003
Tercica TRCA 9/12/2003 $86M 11/25/2003
ViaCell - 1/30/2002 $115M 12/31/2003
*please note that there is a more detailed analysis of the biotech IPO market located on the burrillandco.com website.
Financings
The most popular fundraising vehicle for the third straight quarter was convertible debt.
In Q4 03, the industry garnered nearly $1.6 billion in debt and raised a total of almost $7.2 billion during 2003 compared to a total of $5.3 billion in 2002.
Genzyme Corporation (GENZ) raised $600 in convertible senior notes in December. The company said that it will use approximately $300 million of the proceeds to pay amounts outstanding under its credit facility. The company expects to use the rest to redeem outstanding 3% debentures and for other purposes.
Selected convertible debt offerings during the fourth quarter of 2003: Convertible Debt in Q4 2003 Company Ticker Symbol Value ($US M)
Genzyme General GENZ 600
Elan ELN 460
Serono SRA 441
Actelion ALIOF 75
Nearly $1.4 billion was raised through follow on offerings in Q4 03 bringing the total amount raised in 2003 to $3.5 billion.
Elan (ELN) managed to raise $173 million through the offering and sale of 35 million Ordinary Shares at a price of $4.95 per share.
Kos Pharmaceuticals raised $166 million in November and intends to use the net proceeds to acquire or in-license products.
Selected follow-ons during the fourth quarter of 2003:
Follow-Ons Q4 2003 Amount Company Ticker Raised Price at Price at % ($M US) Secondary 12/31/2003 Change Symbol
Elan ELN 173 $4.95 6.89 39
Kos Pharmaceuticals KOSP 166 $44.25 43.01 -3
Telik TELK 130 $20.00 23 15
Adolor ADLR 119 $17.25 19.99 16
Nabi Biopharmaceuticals NABI 85 $10.00 12.71 27
Tularik TLRK 82 $11.90 16.12 35
Cubist Pharmaceuticals CBST 78 $10.50 12.2 16
ZymoGenetics ZGEN 75 $12.50 15.5 24
Geron GERN 69 $12.00 9.97 -17
Flamel Technologies FLML 67 $33.25 26.79 -19
Progenics Pharmaceuticals PGNX 53 $16.25 18.86 16
OraSure Technologies OSUR 48 $9.00 7.96 -12
Encysive Pharmaceuticals ENCY 42 $6.50 8.95 38
Ista Pharmaceuticals ISTA 38 $9.50 9.28 -2
DepoMed DEPO 36 $5.50 7.09 29
Genelabs Technologies GNLB 32 $1.37 2.83 107
Pharmos PARS 29 $2.75 3.5 27
Nuvelo NUVO 28 $2.45 3.5 43
Inveresk Research IRGI 20 $20.00 24.73 24
VC investment in Q4 03 was $568 million bringing the total for 2003 to $2.8 billion, in line with the $2.7 billion invested by VCs in 2002.
"The resurgence of the IPO market will ultimately provide exit strategies for private investors and free up more funds for investment in young companies, but we won't see the benefits of that 'trickle down' for at least another quarter," said Burrill. "Early stage companies seeking cash may well be in for a challenging time as the bar has been raised much higher and the VC community has become increasingly discerning," he noted.
Private investment in public entities (PIPEs) accounted for $587 million in financing in 4Q 03 bringing the total for 2003 to $2 billion.
Garnering the most this quarter was ID Biomedical which announced in October that a syndicate of investment dealers agreed to purchase 5,800,000 units at a purchase price of $17.37 on a "bought deal" basis. The net proceeds of the offering are slated for the clinical and manufacturing development of the company's FluINsure(TM) and StreptAvax(TM) vaccines.
Selected PIPEs during the fourth quarter of 2003: Selected PIPEs in Q4 2003 Company Month Amt. Raised ($M US)
ID Biomedical Oct 100
Ariad Pharmaceuticals Oct 41
Xenova Group Dec 37
Arena Pharma Dec 35
Salix Pharmaceuticals Nov 31
VaxGen Dec 29
Novavax Nov 28
Antisoma plc Nov 26
EntreMed Nov 22
Cytogen Nov 21
CollaGenex Pharmaceuticals Oct 20
Spectrum Pharmaceuticals Oct 20
Introgen Therapeutics Nov 20
Keryx Biopharmaceuticals Nov 15
AVI BioPharma Dec 15
Aradigm Corp. Oct 14
The Immune Response Oct 12
Allos Therapeutics Nov 12
Manhattan Pharmaceuticals Nov 10
M&A and Alliances
M&A activity in Q4 03 was extremely robust with the announcement of several transactions totaling $16.3 billion.
On October 10, General Electric announced its intent to acquire Amersham plc, a leader in medical diagnostics and imaging agents. Under the agreement, GE will acquire all outstanding shares of Amersham in an all stock deal valued at $9.5 billion. GE will merge its Medical Systems division with Amersham to form a new entity, GE Healthcare. The move is expected to enable GE to accelerate the development of molecular imaging and personalized medicine.
Big pharma also continued to feed its appetite for biotech.
In November, Eli Lilly announced its plan to acquire Applied Molecular Evolution for approximately $400 million-a deal consisting of 80% stock and 20% cash.
The acquisition is viewed as a key milestone in Lilly's drive to add antibody capabilities and products. Lilly gains a strong pre-clinical pipeline of next generation products that include second generation Remicade and second generation Rituxan.
In December, Pfizer announced that it planned to acquire Esperion Therapeutics, a biopharmaceutical company focused on the development of HDL targeted therapies for the treatment of cardiovascular disease in a cash tender offer that represented a 54% premium over Esperion's previous closing price.
The deal, valued at $1.3 billion, reaffirms Pfizer's commitment to long-term cardiovascular research and brings Pfizer a novel approach to the emerging area of reverse lipid transport for the treatment of acute cardiovascular disease. While Pfizer's Lipitor is the leading drug for use as a chronic therapy, Esperion has three clinical compounds that are being developed for acute, hospital-based treatments to regress arterial plaque.
Also in December, Abbott Laboratories and i-STAT Corporation, a maker of point-of-care diagnostic systems for blood analysis announced their intent ot merge. Under the agreement, Abbott will acquire all the stock of i-STAT in a cash tender offer valued at $392 million.
In smaller transactions, Cephalon purchased Cima Labs in November for its fast-dissolving pill technology in an all cash deal.
In late December, Invitrogen announced that it would acquire BioReliance, a contract service organization. "Pharma's reliance on biotech intensified in 2003 and we can expect this trend to continue in 2004," said Burrill.
M&A transactions announced during 4Q 03: Selected M&A Transactions in Q4 2003 Acquirer Acquired Value ($US M)
General Electric Amersham 9500
Sicor Teva Pharmaceutical Industries 3400
Pfizer Esperion Therapeutics 1300
Cephalon Inc. Cima Labs 515
Invitrogen Corp. BioReliance 500
Eli Lilly and Co. Applied Molecular Evolution 400
Abbott i-Stat 392 Allergan Inc.
Oculex Pharmaceuticals 230 Actelion Axovan 188
There were more partnering deals made in 4Q 03 than in the previous quarter, but they were generally smaller in value, generating $2.1 billion vs. nearly $2.6 billion in 3Q 03. Most of the deals were done by big Pharma and centered on development and marketing rights for various lead compounds.
For example, Merck continued its aggressive partnering strategy with three deals worth $532 million:
an alliance with Actelion for cardio-renal diseases,
an alliance with Neurogen to develop new treatments for pain, and
an alliance with GenPath Pharmaceuticals that focuses on the treatment of cancer.
Pfizer's deal with Akzo Nobel's pharmaceutical division, Organon, is for Organon's asenapine for schizophrenia and bipolar disorder, which is in Phase III clinical trials.
The transaction is structured with an initial payment of $100 million up front and up to $270 million in milestone payments.
Bristol- Myers Squibb will make an upfront payment of $45 million to Corgentech and $205 in additional milestones for its E2F Decoy solution that is infused in harvested veins used in grafts to strengthen the graft.
In a $160 million partnering deal,
AstraZeneca and Abgenix will both contribute up to 36 cancer targets to be exclusively commercialized worldwide by AstraZeneca. Abgenix will conduct early trials, clinical manufacturing, and the first five years of commercial manufacturing for which the company will receive milestone payments, royalties, and other compensation. AstraZeneca will be responsible for late stage clinical development and commercialization.
The companies will also pick and develop an additional pool of antibodies to co-develop on an equal cost/profit sharing basis.
An extra advantage for AstraZeneca in this deal is that Abgenix will be able to do the commercial manufacturing.
Selected partnering transactions during 4Q 03: Collaborations Value Biotech Pharma Description ($US M)
Akzo Nobel NV Pfizer Inc.
Partnered to develop 370 and market Akzo's Organon unit's asenapine serotonin (5HT2) and dopamine (D2) receptor antagonist
Actelion Merck & Co. Inc. Companies will 272 co-develop and promote worldwide Actelion's classes of oral renin inhibitors to treat heart failure, renal failure and hypertension
Corgentech Bristol-Myers Jointly develop and 250 Squibb commercialize Corgentech's E2F Decoy edifoligide, an oligonucleotide that inhibits E2F and is in Phase III development to prevent vein graft failure
Lexicon Genetics Bristol-Myers Partnered to develop 192 Squibb small molecules against targets supplied by Lexicon. The companies will focus on depression, anxiety, schizophrenia, pain and Alzheimer's disease.
Abgenix AstraZeneca plc The companies partnered 160 to identify and develop tibodies for cancer.
NeuroSearch A/S GlaxoSmithKline Under a five-year deal, 120 NeuroSearch and GlaxoSmithKline partnered to develop CNS therapeutics.
Diagnocure Inc. Gen-Probe Inc. Partnered to develop 111 a urine test to detect PCA3DD3 gene, which Gen-Probe claims is over-expressed in malignant prostate tissue.
GenPath Merck & Co. GenPath will use its 100 Pharmaceuticals cancer models to identify tumor maintenance genes that are targets for small molecules.
Shire Bayer AG Shire granted Bayer 70 Pharmaceuticals exclusive rights to develop and market in Japan its Fosrenol lanthanum carbonate to treat high blood phosphate levels in patients with end-stage renal disease.
Cardiome Pharma Fujisawa Pharma The companies partnered 68 Corp. to co-develop COM's RSD1235 intravenous antiarrhythmic, which is in Phase III testing to treat atrial fibrillation.
Neose Novo Nordisk A/S Building upon a 2002 56 Technologies deal, the companies will use Neose's GlycoPEGylation technology to make next-generation versions of three undisclosed therapeutic proteins.
Our outlook for 2004 is positive.
Medicare has now been resolved in the industry's favour,
there are close to 400 drugs advancing through clinical trials,
investor interest has been rekindled and a sizeable sum of money is in the war chest.
We believe that the equity markets will be robust during the first half of the year and that the industry will raise as much as $20 billion through
PIPEs,
secondaries,
convertibles and
IPOs.
Even though the IPO market will be choppy in 2004, with the second half of the year more tentative than the first two quarters, we expect to see between 20 and 30 IPOs get done.
For a more detailed analysis of the year ahead, please refer to our press release dated December 18: "2003 is Biotech's Second Best Year Ever and 2004 Looks Even Better" which is located on prnewswire.com and burrillandco.com. U.S. Biotech Industry Fundraising ($US millions) Public IPO Secondary PIPEs Debt Public 2003 $453 $3,536 $2,051 $7,170 4Q03 453 1,369 587 1,589 3Q03 0 1340 676 2,764 2Q03 0 130 522 2,487 1Q03 0 517 204 152 4Q02 0 180 77 517 2002 445 979 907 5,251 Private Financing Partnering Total Venture Other Total Capital 2003 $2,841 $294 $16,345 $8,933 $25,278 4Q03 568 0 4,566 2,918 7,484 3Q03 670 15 5,465 2,556 8,021 2Q03 628 12 3,779 2,256 6,035 1Q03 549 217 1,639 1,203 2,842 4Q02 528 50 1,352 2,354 3,706 2002 2,688 178 10,448 7,496 17,944 Burrill & Company
Burrill & Company is a life sciences merchant bank, focused exclusively on companies involved in biotechnology, pharmaceuticals, diagnostics, human healthcare and related medical technologies, wellness and nutraceuticals, agricultural technologies, and industrial biotechnology (biomaterials/bioprocesses).
Venture Capital
The Burrill family of venture capital funds, with over $500 million under management, includes the Burrill Life Sciences Capital Fund, the Burrill Biotechnology Capital Fund, the Burrill Agbio Capital Fund and its successor- the Burrill Agbio Capital Fund II, and the Burrill Nutraceuticals Capital Fund.
Strategic Partnering
Burrill & Company assists life science companies in identifying, negotiating and closing strategic partnerships between large and small companies providing access to resources, technologies or collaborations essential for executing their business plans.
Burrill & Company also works with major life science companies to spinout internal assets and capitalize on their value, ranging from the outright sale of products or businesses to creation of new companies to exploit these assets. Burrill uses its extensive network to help companies identify, assess and capture ("spin-in") products and companies strategic to building their businesses.
Burrill & Company's BioStreet(TM) is an internet-based life sciences transaction service which enhances dealmaking capabilities by offering a broad range of services designed to streamline and facilitate deals. BioStreet combines the efficient distribution power of the worldwide web with the scientific skills and strategic relationships necessary for concluding successful transactions.
We have completed more than 25 strategic partnerships with a value in excess of $1.5 billion.
For more information, please visit Burrill & Company's website at burrillandco.com. Burrill & Company
CONTACT: Mandy Jones of Burrill & Company, +1-415-591-5405, or fax,+1-415-591-5401, or mandy@b-c.com
Web site: burrillandco.com
nachrichten.boerse.de |
