SOURCE: Burrill & Company

Burrill & Company

July 01, 2013 08:45 ET

Life Sciences Companies Finish First Half of 2013 With Torrid Pace of Financings

Despite Down Month in June, Biotech Stocks Continue to Outperform Major Indices This Year, Burrill & Company Says

SAN FRANCISCO, CA--(Marketwired - Jul 1, 2013) - Life Sciences companies raised $56.2 billion in cash during the first half of 2013 -- 60.4 percent more than the $35 billion raised during the same period a year ago -- as companies capitalized on rising share prices, encouraging clinical results, and improving economic prospects, Burrill & Company reported.

Biotech stocks have well outpaced the general market during the first six months of the year, despite a sell-off in June. Though the Burrill Select Index fell 3.7 percent in June, it is up 33.8 percent through the first six months of the year. That compares to 13.8 percent for the Dow Jones Industrial Average, 12.6 percent for the S&P 500, and 26.7 percent for the Nasdaq Composite Index.

BURRILL INDICES                        
Index   12/31/2012   5/31/2013   6/28/2013   Month Change     Year Change  
Burrill Select   589.98   819.80   789.39   -3.7 %   33.8 %
Burrill Large Cap   736.90   1010.91   939.48   -7.1 %   27.5 %
Burrill Mid-Cap   309.52   402.22   386.75   -3.8 %   25.0 %
Burrill Small Cap   105.48   127.05   132.07   3.9 %   25.2 %
Burrill Diagnostics   191.32   211.26   207.09   -2.0 %   8.2 %
Burrill Personalized Medicine   119.22   149.91   147.30   -1.7 %   23.5 %
Burrill Biogreentech   162.27   183.67   175.61   -4.4 %   8.2 %
NASDAQ   3019.51   3455.91   3403.25   -1.5 %   12.7 %
DJIA   13104.14   15115.57   14909.60   -1.4 %   13.8 %
S&P 500   1426.19   1630.74   1606.28   -1.5 %   12.6 %
Amex Biotech   1547.03   1983.77   1956.26   -1.4 %   26.5 %
Amex Pharmaceutical   369.57   421.25   413.90   -1.7 %   12.0 %
NASDAQ Biotechnology Index   1430.81   1872.09   1813.15   -3.1 %   26.7 %

The rise in financings during the period reflects a big increase in global debt offerings to $26.6 billion (up 174.9 percent). Follow-ons rose to $10.2 billion (up 171.7 percent) and IPOs grew to $4.7 billion (up 262 percent). The increase in fundraising for life sciences companies during the first half of the year comes despite a 1.3 percent drop in global venture capital financings to $6.2 billion and a 41.2 percent drop in global PIPE offerings to $2 billion. 

"Low interest rates, greater economic stability, and a surging stock market have helped fuel investor appetite for life sciences companies in 2013," says G. Steven Burrill, CEO of Burrill & Company, a global financial services firm. "Companies have seized on the improving environment for financing and the best IPO market for biotech in 13 years."

Life Sciences Biggest Advancers and Decliners in H1 2013     
Company   Price 12/31/12   Price 6/28/13   Price Change   Percent Change  
Clovis Oncology   16.0   67.16   51.16   320 %
Acadia Pharmaceuticals   4.65   18.10   13.45   289 %
pSivida   1.21   3.86   2.65   219 %
Alimera Sciences   1.57   4.86   3.29   210 %
RaQualia Pharma   348   1071   723.0   208 %
Cytokinetics   3.96   11.53   7.57   191 %
Keryx Biopharmaceuticals   2.62   7.50   4.88   186 %
MannKind   2.31   6.52   4.21   182 %
TearLab   4.10   10.60   6.50   158 %
Isis Pharmaceuticals   10.44   26.96   16.52   158 %
Myrexis   2.83   0.08   -2.76   -97 %
Affymax   18.99   1.03   -17.96   -95 %
Pharmaxis   19.58   2.00   -17.58   -90 %
Celsion   8.19   1.05   -7.14   -87 %
Bio Lab Naturals   1.15   0.15   -1.00   -87 %
Resverlogix   1.60   0.23   -1.38   -86 %
Oxygen Biotherapeutics   12.88   3.06   -9.83   -76 %
Echo Therapeutics   10.40   2.54   -7.86   -76 %
GenVec   1.34   0.38   -0.96   -71 %
Aveo Pharmaceuticals   8.05   2.51   -5.54   -69 %
Includes life sciences stocks with closing price of $1 or more on December 31, 2012  

Life sciences companies outside the United States accounted for 30 percent of total life sciences financings in the first half of 2013 compared to 16.6 percent for the same period a year ago. The growth in activity outside the United States was due in part to large financings from Canada-based Valeant Pharmaceuticals, which raised $2.3 billion in a follow-on offering and $3.2 billion in debt. Nevertheless, when large pharmaceuticals are excluded, life sciences companies outside the United States accounted for 28.8 percent of total financings in the first half of 2013, up from 24.1 percent for the same period a year ago.

In June, the gene therapy company Bluebird Bio completed its upsized IPO above its target range to raise $101 million. Its share price promptly rose more than 50 percent in the first day of trading. Five other companies completed IPOs on U.S. exchanges in June with PTC Therapeutics, Esperion Therapeutics, and Prosensa pricing within their target ranges, and NanoString Technologies and Aratana Therapeutics each pricing significantly below their target ranges.

Life sciences companies overall have raised a total of $4.5 billion through IPOs in 2013. The $2.6 billion IPO of Pfizer's animal health unit Zoetis and the $525 million IPO for the global contract research organization Quintiles Transnational provided a big boost to the numbers. Nevertheless, the activity is up as 23 life sciences companies completed IPOs in the first half of 2013 compared to just 9 during the same period a year ago. The sector has also outperformed the general market as these issues are up an average of 26.5 percent with 13 newly public life sciences companies' shares now above their initial offering price, six below it, and four essentially unchanged. Stemline Therapeutics, which completed its IPO at the end of January, ended the first half of 2013 up 138.4 percent, making it the best performing new life sciences issue this year. A breakdown of this year's IPO performance can be found on The Burrill Report at

"During the last week of June, four life sciences companies completed IPOs and the aftermarket performance of these deals has steadily improved during the year," says Burrill. "We continue building momentum as a large number of companies have entered the IPO queue."

Public life sciences companies have taken advantage of the strong public equities markets to strengthen their cash positions. The two largest follow-ons of the first half of the year came in June and both were done to fund the year's two largest acquisitions. Thermo Fisher Scientific raised $2.5 billion to help fund its $13.6 billion purchase of Life Technologies and Valeant completed a $2.3 billion offering to help pay for its $8.7 billion acquisition of eye care products maker Bausch & Lomb.

Overall, M&A activity in the first half of 2013 is down 10.4 percent to $60.1 billion compared to the same period a year ago. Life sciences companies are focusing more on partnering to address their pipeline needs and Big Pharma continues to sharpen its therapeutic focus and pare products and divisions that it views as ancillary.

In June, innovative therapeutics drove two of the month's largest deals. Johnson & Johnson acquired Aragon Pharmaceuticals for up to $1 billion with $650 million of that paid upfront. Aragon's lead experimental drug is in mid-stage development for prostate cancer. AstraZeneca continued its efforts to expand its pipeline with the acquisition of Pearl Therapeutics for up to nearly $1.2 billion with $560 million of that upfront. Pearl develops inhaled bronchodilator products for diseases such as chronic obstructive pulmonary disease.

Global partnering activity rose 21.3 percent to $18.6 billion in the first half of 2013 as large drugmakers focused on discovery and early-stage deals to access innovative experimental drugs. Of the 99 deals with disclosed values during the first half of the year, 45 involved large pharmaceutical or biotech companies gaining access to innovative experimental drugs. Those transactions carried larger potential value, representing nearly 70 percent of the total potential deal value at $12.8 billion.

The pattern continued in June with Big Pharma and Big Biotech driving the month's largest deals. Morphosys, a developer of antibody therapies, was the biggest benefactor of this trend, entering into two agreements during the month. It entered into a global license agreement for $29.3 million upfront and worth up to a total of $579.2 million with GlaxoSmithKline for its phase 1/2 antibody to treat rheumatoid arthritis. Morphosys also entered into an agreement with Celgene to co-develop and co-commercialize its experimental therapy for relapsed or refractory multiple myeloma for $92 million upfront that is worth up to a total of $758 million. Celgene will also make a $60 million equity investment in Morphosys.

Life Sciences Financing Scorecard H1 2013          
    YTD 6-28-13   YTD 6-28-12   Change  
Global Venture Capital   6,241   6,323   -1.3 %
U.S. VC   4,833   4,644   4.1 %
IPOs (28 in 2013 vs 19 in 2012)   4,695   1,297   262.0 %
U.S. IPOs (23 in 2013 vs 9 in 2012)   4,574   636   619.2 %
Global PIPEs   2,037   3,464   -41.2 %
U.S. PIPEs   827   749   10.4 %
Global Follow-ons   10,200   3,754   171.7 %
U.S. Follow-ons   6,976   3,561   95.9 %
Global Other Equity   609   969   -37.2 %
U.S. Other Equity   526   855   -38.5 %
Global Debt Offerings   26,581   9,669   174.9 %
U.S. Debt   18,539   5,367   245.4 %
Global Other Debt   5,833   9,564   -39.0 %
U.S. Other Debt   3,139   8,149   -61.5 %
Total Global Public Financings   49,955   28,717   74.0 %
Total U.S. Public Financings   34,581   19,317   79.0 %
Global Partnering   18,551   15,290   21.3 %
U.S. Partner/Licenser   12,352   8,373   47.5 %
Global M&A   60,123   67,121   -10.4 %
M&A, U.S. Target   38,591   47,085   -18.0 %

The FDA's Center for Drug Evaluation and Research did not approve any new molecular entities in June, leaving the agency's total NME approval count at 13, as compared to 14 NME approvals completed by July 1, 2012. Not included in the count is Baxter's Rixubis, a recombinant Factor IX for hemophilia, the first new treatment for the disease in 15 years. The approval was granted by the FDA's Center for Biologics Evaluation and Research and, as such, not counted in Burrill & Company's tally of new drug approvals.

In June, the U.S. Food and Drug Administration designated the Novartis drug serelaxin and GlaxoSmithKline's drisapersen as Breakthrough Therapies in June, raising to 16 the total number of therapies to receive the Breakthrough Therapy designation in 2013. The designation requires that preliminary clinical evidence indicate that the drug may deliver a substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

The U.S. Supreme Court in a unanimous decision in June ruled that genes cannot be patented. In the case of Applied Molecular Pathology v. Myriad Genetics the court reversed more than 20 years of patent policy. The ruling in the closely watched challenge to Myriad's patents relating to the company's test for genetic mutations tied to certain forms of breast and ovarian cancer let stand Myriad's patents on synthetic or complementary DNA relating to the tests. Myriad says it has a large set of other unchallenged patents protecting its tests. Myriad's stock rose more than 10 percent following the news of the ruling, but ended the day of the decision down $1.91 to close at $32.01.

"Though the Myriad decision could lead to thousands of patents being invalidated, it is unclear to what extent single gene patents by themselves are providing protection on critical intellectual property for companies," says Burrill. "Moving forward, life sciences companies will need to be more thoughtful about their patent strategies as they craft their claims."

The justices in June also ruled in a case that challenged the pay-for-delay settlements between branded pharmaceutical makers and generic drug companies. In a 5-3 decision in Federal Trade Commission v. Actavis, the court reversed the U.S. Court of Appeals for the Eleventh Circuit, which dismissed a complaint from the Federal Trade Commission that charged that Solvay Pharmaceuticals' settlements with several generic drugmakers to keep them from entering the market with generic versions of the company's testosterone replacement, AndroGel, violated the Federal Trade Commission Act. The court said that while such settlements might fall within the exclusionary potential of patents, it does not immunize such agreements from antitrust challenges as it ordered the Eleventh Circuit to hear the case.

The July 2013 issue of The Burrill Report examines these decisions, as well as several other recent rulings that have impact on the life sciences industry. The issue can be downloaded for free at

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:

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