The Burrill Report


Public biotech companies in the United States took advantage of the sector’s strong performance in the public markets during the first three weeks of the year to raise almost $1 billion in equity and debt during the third week of January. In addition, five biotech companies set terms for their upcoming IPOs, bringing to 11 the number of companies to have set IPO terms so far this year.

While emerging market fears led to a selloff of risky stocks at the end of the week, the biotech sector held its own much better than general market indices. The Burrill Biotech Select Index was up 6 percent year to date, compared to the Dow Jones Industrial Average (down 4.2 percent), the S&P 500 (down 3.1 percent), and the Nasdaq Composite Index (down 1.2 percent).

Eleven companies raised almost $700 million in follow-on offerings during the week, many of them taking advantage of a strong share price. Acceleron Pharmaceuticals raised $120 million in a bumped up follow-on offering of 2.4 million shares priced at $50 a share. The biotech, which went public in September 2013 at $15 a share, is co-developing a treatment for the rare disease beta-thalassemia and myelodysplastic syndromes with Celgene that is in mid-stage clinical studies. Shares of the company fell 10 percent on the news but are up 23.8 percent since the beginning of the year, and up 227 percent since the IPO.

Nektar Therapeutics raised $108.4 million in a follow-on offering of 8.5 million shares at $12.75 a share. The company’s naloxegol, exclusively licensed to AstraZeneca, is under review as a treatment for opioid-induced constipation in the United States, European Union, and Canada with a U.S. PDUFA date of September 16. Nektar is up 13.8 percent year to date and up 74.4 percent since the beginning of 2013.

Keryx Biopharmaceuticals also took advantage of its strong share price to raise $100 million by selling 6.9 million shares at $14.50 a share in a follow-on offering. Keryx had originally proposed to sell $90 million in the offering. The biotech’s shares are up 21.2 percent since the beginning of the year and up almost 500 percent since the beginning of 2013. Keryx’s ferric citrate drug Riona was just approved in Japan to treat hyperphosphatemia in patients with chronic kidney disease. The drug is being reviewed by the U.S. Food and Drug Administration with a PDUFA date of June 7.

Exelixis, shares of which are trading up 24.6 percent since the beginning of the year, completed an $80 million follow-on offering, selling 10 million shares at $8 a share. The cancer drug developer’s Cometriq is approved in the United States to treat progressive, metastatic medullary thyroid cancer. It was given a positive review in December by regulatory authorities in the European Union.

Emergent BioSolutions opted to raise money through a $215 million debt offering of senior convertible notes sold in a private placement to institutional investors. The notes convert at a 23 percent premium to Emergent’s closing price prior to the deal’s announcement. The biotech will use a majority of the capital to fund its $222 million acquisition of Canadian biotech Cangene, which is expected to close this quarter. Emergent BioSolutions provides anthrax vaccine to the U.S. government stockpile under a contract worth up to $1.3 billion.

January 24, 2014
http://www.burrillreport.com/article-u_s_public_biotechs_raise_almost_one_billion_in_equity_and_debt.html