Life Sciences M&A Activity Sets Annual Record with $8.3B Roche Agreement to buy Intermune, Burrill Media Reports
SAN FRANCISCO, CA-September 2, 2014-M&A activity propelled 2014 into the record books with the announcement of Roche's planned $8.3 billion acquisition of Intermune, the developer of a drug to treat a fatal and unexplained scarring of the lung. The agreement pushed life sciences M&A activity through the first eight months of 2014 to a record $195.7 billion, compared to the previous record of $189.7 billion for all of 2009 for therapeutics, tools, diagnostics, and digital health companies, according to Burrill Media.
The $74 a share purchase price for Intermune represents a 38 percent premium over its closing price on the last trading day before the deal was announced. It also caps a stunning turnaround for the California biotech, which fell to around $9 a share in 2010 after the U.S. Food and Drug Administration said it wouldn't approve Intermune's drug Esbriet, its treatment for idiopathic pulmonary fibrosis, without additional data.
Though Esbriet is now approved in Europe and Canada, there is no approved therapy in the United States for the condition, which causes a build-up of scar tissue in the lung without an understood cause. The disease is fatal and usual results in death in two to five years after onset. About 70,000 people in the United States have the condition. Approval for the drug in the United States is expected as early as November.
"While we've seen a lot of M&A activity driven by buyers in the United States relocating their headquarters to more favorable tax environments abroad, the Intermune deal is a reminder of the enormous value being created by the biotechnology industry," says G. Steven Burrill, CEO of Burrill, which produces publications and events focused on the global life sciences industry. "Large pharmaceutical companies continue to demonstrate a willingness to pay hefty sums for de-risked assets and will continue to buy, rather than build, as they look to the biotechnology industry to feed their demand for innovative therapies."
The biotechnology sector had a month of strong performance on the markets as the Burrill Select Index rose 8.75 percent posting a gain of 20.76 percent for the first eight months of 2014. That compared to a 3.23 percent increase for the Dow Jones Industrial Average, a 3.77 percent gain for the Standard & Poor's 500, and a 4.82 percent gain for the Nasdaq Composite Index. The Burrill Mid-Cap index was the strongest performer for the month among the family of Burrill indices gaining 18.18 percent gain for the month. For the year, the Burrill Small-Cap index has outpaced all of the other indices with a 57.25 percent gain.
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BURRILL INDICES
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12/31/2013
|
7/31/2014
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8/31/2014
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Month
Change
|
Year Change
|
|
|
Burrill Select
|
952.86
|
1058.04
|
1150.66
|
8.75%
|
20.76%
|
|
|
Burrill Large-Cap
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1165.34
|
1323.58
|
1411.07
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6.61%
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21.09%
|
|
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Burrill Mid-Cap
|
537.96
|
525.64
|
621.21
|
18.18%
|
15.48%
|
|
|
Burrill Small-Cap
|
143.25
|
194.23
|
225.26
|
15.98%
|
57.25%
|
|
|
Burrill Diagnostics
|
215.62
|
223.85
|
228.45
|
2.05%
|
5.95%
|
|
|
Burrill Personalized Medicine
|
150.29
|
171.9
|
183.63
|
6.82%
|
22.18%
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|
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NASDAQ
|
4176.59
|
4369.77
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4580.27
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4.82%
|
9.67%
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|
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DJIA
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16576.66
|
16563.30
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17098.45
|
3.23%
|
3.15%
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|
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S&P 500
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1848.36
|
1930.67
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2003.37
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3.77%
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8.39%
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|
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Amex Biotech
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2330.43
|
2737.17
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3131.89
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14.42%
|
34.39%
|
|
|
Amex Pharmaceutical
|
468.07
|
509.16
|
523.74
|
2.86%
|
11.89%
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|
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NASDAQ Biotechnology Index
|
2369.53
|
2623.54
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2892.71
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10.26%
|
22.08%
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Despite some choppiness in the market for initial public offerings, companies seeking to go public are still getting deals done, even if not always at the prices for which they may have hoped. Four life sciences companies raised a combined total of $281 million through initial public offerings on U.S. exchanges in August. Otonomy, a developer of therapeutics for ear diseases and disorders, completed the largest offering at $100 million as its IPO came at the top of its expected range. Auris Medical, another developer of therapeutics for the ear, and diagnostics maker T2 Biosystems, had to settle for much lower prices and sell more shares than they had planned in order to complete their offerings. Auris sold 9.6 million shares at $6 each to raise $56 million. The company had hoped to sell 6.9 million shares at $10 to $12. T2 sold 5.2 million shares at $11, well below its $15 to $17 expected range. Overall, life sciences companies raised $5.9 billion through a record 76 offering in the first eight months, up from $5.4 billion through 31 offering during the same period a year ago.
Only one company completed an IPO outside the United States in August. GeneReach Biotechnologies, a Taiwan-based maker of veterinary diagnostics, raised $5.5 million through an IPO on the Taiwan GreTai market. Overall, a total of 95 life sciences companies have completed IPOs globally in 2014 to raise a total of $7.4 billion. That compares to 39 companies that raised a total of $5.5 billion in the first eight months of 2013.
Private financings also continued their robust pace in August with more than $1 billion in venture capital investments made into life sciences companies in August, a 30 percent increase from a year ago. Juno Therapeutics' $134 million Series B round was the largest private financing for the month. The investment, which included funding from ten public mutual funds and healthcare-focused funds, included the participation of all of the company's previous major investors, follows a $176 million series A round in April for the developing of cancer immunotherapies. Juno co-founder ARCH Venture Partners separately announced the close of a $400 million fund to invest in healthcare, energy, and materials companies. The venture firm in the past two years has seen nine portfolio companies complete IPOs and six other acquired in the past two years, according to Forbes. The firm had originally sought to raise $250 million for the fund, it's eighth.
"The continued strength of the IPO market and the appetite for acquisitions is creating renewed confidence for private investment in the life sciences sector," says Burrill. "Venture capital firms will seize on the opportunity to leverage past successes to raise new funds.
| Capital Raised by Life Sciences Companies in USD Millions | |||
| YTD 8/31/14 | YTD 8/31/13 | Change | |
| Global Venture Capital | 10915 | 8108 | 34.60% |
| U.S. VC | 8614 | 6413 | 34.30% |
| IPOs (95 IPOs in 2014 vs. 39 in 2013) | 7352 | 5519 | 33.20% |
| U.S. IPOs (76 IPOs in 2014 vs. 31 in 2013) | 5867 | 5358 | 9.50% |
| Global PIPEs | 4038 | 2710 | 49.00% |
| U.S. PIPEs | 1512 | 1182 | 27.90% |
| Global Follow-ons | 8275 | 11249 | -26.40% |
| U.S. Follow-ons | 7213 | 7895 | -8.60% |
| Global Other Equity | 563 | 802 | -29.80% |
| U.S. Other Equity | 488 | 699 | -30.20% |
| Global Debt Offerings | 30721 | 31751 | -3.20% |
| U.S. Debt | 25174 | 21464 | 17.30% |
| Global Other Debt | 563 | 8143 | -93.10% |
| U.S. Other Debt | 488 | 5442 | -91.00% |
| Total Global Public Financings | 51,512 | 60,174 | -14.40% |
| Total U.S. Public Financings | 40,742 | 42,040 | -3.10% |
| Global Partnering | 28192 | 18313 | 53.90% |
| U.S. Partner/Licenser | 15904 | 13055 | 21.80% |
| Global M&A | 266077 | 218379 | 21.80% |
| M&A, U.S. Target | 109752 | 56926 | 92.80% |
"The FDA approved a total of five new molecular entities and biologics in August through its Center for Drug Evaluation and Research. That brings the total for the first eight months of the year to 26, compared to just 15 during the same period a year ago. New approvals in August included Genzyme's Cerdelga for the treatment of Type 1 Gaucher disease, Biogen Idec's Plegridy for the treatment of relapsing forms of multiple sclerosis, Merck's Belsomra for insomnia, The Medicines Company's Orbactiv to treat skin infections, and Boehringer Ingelheim's Jardiance to improve control of blood sugar in patients with type 2 diabetes. Though financings and markets remain strong, payers continue to take steps to rein in spending on drugs. In August, Express Scripts and CVS Caremark, two leading pharmacy benefits managers, announced exclusions to their formularies for 2015. The exclusions include several recently approved and high-profile drugs that the PBMs say are expected to save their customers a combined $4.5 billion a year.
"Controversies over pricing and growing efforts on the part of payers to curb spending will continue to pose a threat for drugmakers," says Burrill. "As new hepatitis C drugs ready to enter the market and compete against Gilead's Sovaldi, it will show us whether competition will provide payers with any part of the solution they seek."
About Burrill
Burrill LLC is a life sciences/healthcare focused firm focused exclusively on company building, using its almost 50 years of experience capital, network capital, and expertise to help build the next generation of life science leaders. Burrill's global relationships with healthcare/life science leaders worldwide is without peer, providing Burrill portfolio companies and clients with sustainable competitive advantage.
Burrill Media is Burrill's information, intelligence and insight business, publishing weekly, monthly, quarterly and annually developments in the life sciences/healthcare ecosystem. Burrill Media also hosts meetings and events for the life sciences/healthcare industry.
September 02, 2014
http://www.burrillreport.com/article-life_sciences_ma_activity_sets_annual_record_with_8_3b_roche_agreement_to_buy_intermune_burrill_media_reports.html