SOURCE: Burrill & Company

Burrill & Company

March 01, 2012 08:45 ET

Improving Market Drives Life Sciences Financings in February

Burrill & Company Notes Four IPOs Completed This Month, but All Below Targeted Range

SAN FRANCISCO, CA--(Marketwire - Mar 1, 2012) - The strong boost to biotech stocks in the first two months of the year has sparked new life in the sector and allowed companies to move to raise new funding in public markets.

Of the 340 life sciences companies trading at or above $1 at the end of 2011, 253 or 74.4 percent of them are trading higher year-to-date while 25 percent of those companies are up more than 25 percent so far this year. On the other end of the spectrum, 26 percent of these companies are down year-to-date, with only 2.6 percent of those companies falling more than 25 percent. In February, all of the Burrill Indices ended the month higher with the Burrill Biotech Select Index up 15.5 percent for the year. The Dow Jones Industrial Average, up 6 percent for the year, closed above the 13,000 mark in February, the first time since 2008.

"There's been a sharp improvement in the price of life sciences stocks as economic news in the United States has been generally positive this year, actions in Europe to address the debt crisis advance, and news within the sector is encouraging," says G. Steven Burrill, CEO of Burrill & Company, a diversified global financial services firm focused on the life sciences industry. "We are still in an environment where markets can turn quickly and sharply in response to negative news. Smart companies will take advantage of opportunities to secure financing and get deals done."

Life sciences companies through secondary offerings raised $924 million in February in a total of 18 deals, including 15 therapeutics companies, two medical device companies, and one maker of natural product ingredients. Through the end of February, there's been a 21 percent increase in the amount raised through follow-on offerings in the United States year-to-date compared to 2010. Globally, however, follow-on financings are down nearly 25 percent year-to-date.

During February, four companies completed IPOs on U.S. exchanges, but found investors still lack enthusiasm for new issues in the sector. Each of these companies sold their shares below their target range and collectively raised only $227.4 million, 33 percent less than the $337.5 they sought to raise. This includes the therapeutics companies Cempra Pharmaceuticals and ChemoCentryx, the digital health company Greenway Medical Technologies, and the agbiotech Ceres. All four issues, though, are up from their IPO price and have posted a collective 19 percent gain. Year-to-date, though, IPO financings are lagging the same period a year ago, when six companies debuted on U.S. exchanges and raised a total of $380 million.

Threshold Pharmaceuticals, the month's biggest mover, soared nearly 300 percent in February on positive results from a mid-stage clinical trial of its experimental drug candidate to treat advanced pancreatic cancer. Vivus, another big mover, advanced nearly 80 percent after an FDA advisory panel recommended that the agency approve its experimental obesity drug, Qnexa.

The bio-renewables developer Amyris was among the largest decliners in February, falling more than 36 percent after the company announced it would pull back production plans in a major shift in strategy after running into problems scaling its technology.

Life Sciences Capital Scorecard in USD M
YTD, Feb 29, 2012 YTD, Feb 28, 2011 Change
Global Venture Capital 1,830 1,497 22.2%
U.S. VC 1,319 1,005 31.2%
IPOs (8 in 2012 v. 18 in 2011) 464 1,345 -65.5%
U.S. IPOs (6 in 2012 v. 8 in 2011) 380 521 -27.1%
Global PIPEs 865 712 21.5%
U.S. PIPES 365 284 28.5%
Global Follow-ons 1,401 1,866 -24.9%
U.S. Follow-ons 1,293 1,067 21.2%
Global Other Equity 636 N/A
U.S. Other Equity 341 N/A
Global Debt Offerings 2,624 5,617 -53.3%
U.S. Debt 2,232 4,967 -55.1%
Global Other Debt 1,391 1,826 -23.8%
U.S. Other Debt 1,364 200 582.0%
Total Global Public Financings 7,381 11,366 -35.1%
Total U.S. Public financings 5,975 7,039 -15.1%
Global Partnering 8,895 9,269 -4.0%
U.S. Partner/Licenser 4,148 6,773 -38.8%
Global M&A 10,686 42,447 -74.8%
M&A, U.S. Target 9,578 33,591 -71.5%

"Amyris' experience will serve as a cautionary tale to the growing line-up of companies at the crucial stage of testing their technology at commercial scale," says Burrill. "The challenges are many and include raising the capital to build the first commercial facility, retaining a consistent supply of feedstock, bringing the cost and quality of products to be at par with conventional chemicals and fuels, and having a market in which to sell."

On the M&A front, Dainippon Sumitomo said it would acquire privately held Boston Biomedical, a developer of oral therapies that target cancer stem cells with its lead candidate in late-stage clinical testing, for $200 million in upfront cash and milestones that could push the total deal value to $2.6 billion. Biogen Idec, in February, also said it would acquire privately held Stromedix, a developer of therapies for fibrosis and organ failure with its lead candidate in mid-stage clinical testing, for $75 million in upfront payments and milestones that could push the total deal value to $562.5 million.

"Privately held companies that are being acquired today often find they will have to wait to reap the rewards of a transaction. In the absence of a vibrant IPO market, buyers have the upper hand and often insist on sharing risk," says Burrill. "Increasingly, the structure of these agreements may borrow from those of partnerships and may mean investors seeking exits will have to be patient to realize their full return."

On the regulatory front, the Obama Administration's proposed budget for the U.S. Food and Drug Administration in fiscal 2013 calls for a $4.5 billion or 17 percent increase in funding, but the increase is expected to come almost entirely from industry user fees. User fees overall are expected to fund about 45 percent of the agency's budget. The government's contribution to funding FDA will essentially remain flat under the proposal. Separately, the medical device industry in February reached a tentative agreement with the FDA on reauthorization of the Medical Device User Fee Act, which is set to expire at the end of September.

Two separate bills seeking to provide accelerated approval for certain drugs have begun their trek through the legislative process in Congress. The first, known as TREAT, would accelerate approval of drugs for unmet medical needs that significantly advance the standard of care, or are highly targeted for distinct sub-populations. The other, known as ULTRA, seeks to accelerate approval for therapies for ultra rare diseases. Sponsors of the bills hope to get them folded into the reauthorization for the Prescription Drug User Fee Act, which is set to expire at the end of September.

"These are difficult times for the federal budget, but if the FDA is to meet its broad mandate, the government needs to appropriately fund its activities," says Burrill. "The FDA's mission has continued to grow, but its budget has not kept pace and user fees do not solve the problem."


INDEX 12/30/2011 1/31/2012 2/29/2012 Month Change Year Change
Burrill Select 432.49 490.70 499.33 1.8% 15.5%
Burrill Large Cap 529.22 595.24 607.94 2.1% 14.9%
Burrill Mid-Cap 295.33 325.49 338.56 4.0% 14.6%
Burrill Small Cap 88.25 95.02 96.08 1.1% 8.9%
Burrill BioGreenTech 151 151.05 155.25 2.8% 2.8%
Burrill Diagnostics 175.42 190.40 190.60 0.1% 8.7%
Burrill Personalized Medicine 100.62 110.29 110.36 0.1% 9.7%
Canadian Biotech 59.17 60.23 64.27 6.7% 8.6%
NASDAQ 2605.15 2813.84 2966.89 5.4% 13.9%
DJIA 12217.56 12632.91 12952.07 2.5% 6.0%
S&P 500 1257.6 1312.41 1365.68 4.1% 8.6%
Amex Biotech 1090.18 1322.04 1322.98 0.1% 21.4%
Amex Pharmaceutical 332.94 330.51 335.63 1.6% 0.8%

About Burrill & Company
Founded in 1994, Burrill & Company is a diversified global financial services firm focused on the life sciences industry. With $1.5 billion in assets under management, the firm's businesses include venture capital/private equity, merchant banking, and media. By leveraging the scientific and business networks of its team, Burrill & Company has established unrivaled access and visibility in the life sciences industry. This unique combination of resources and capabilities enables the company to provide life sciences companies with capital, transactional support, management expertise, insight, market intelligence, and analysis through its investments, conferences, and publications. Headquartered in San Francisco, the company oversees a global network of offices throughout the United States, Latin America, Europe, and Asia. For more information visit:

Contact Information

  • Contact:
    Daniel Levine
    Managing Director
    Burrill & Company
    Email Contact