A review of financing trends in the global and US life-sciences sectors for the first nine months shows mixed results. On the plus side, initial public offerings (IPOs) are up significantly this year on a global basis and in the United States, rebounding from anemic levels in 2012. Venture-capital funding, however, was flat through the first nine months of 2013, and global and US partnering deals declined slightly. Also, on a global basis, mergers and acquisitions (M&A) increased more than 10%, but M&A activity for US-based targets declined slightly.
IPOs on the rise
Year-to-date global public financings for life-sciences companies were up 15.9% above the same period in 2012, and up 10% for US public companies, according to a recent analysis by Burrill & Company. Globally, capital raised through IPOs is up 232% and follow-on offerings are up 129% in 2013 compared to the same period in 2012. Through the first nine months of 2013, there were 46 life-sciences IPOs compared with 28 IPOs in the same period in 2012, notes the analysis. The 46 IPOs thus far in 2013 raised $6.1 billion compared to $1.8 billion raised from the 28 IPOs in 2012 on a global basis. In the United States, 39 IPOs raised $5.9 billion through the first nine months of 2013 compared with only 12 IPOs that raised only $871 million in 2012, representing a nearly 583% increase.
On the venture capital front, privately held life sciences companies raised $9.2 billion globally through the first nine months of 2013, about on par with the amount raised in the same period in 2012, according to the Burrill & Company analysis. US financings, at $7.3 billion, were slightly above the $7 billion raised year to date in 2012. Theracos, a pharmaceutical research and development company that develops therapeutics to treat inflammatory disease, metabolic disorders, and depression, completed a $93 million financing, the largest financing of September 2013.
M&A and partnering
Globally, life-sciences companies completed $98.1 billion in M&A through the first three quarters of 2013, an increase of nearly 12% compared to the same period a year ago, according to the Burrill & Company analysis. M&A involving US targets is down 4.3% through September 2013 year to date. Most of the activity in September focused on deals outside of innovative therapeutics, noted the Burrill & Company analysis. Private-equity firm Kohlberg Kravis Roberts said it will pay nearly $1.7 billion to acquire Panasonic’s healthcare unit. After the deal, it will own 80% Panasonic Healthcare, which makes and sells blood glucose monitoring devices for diabetics and information technology equipment. Medical-device company Stryker said it will pay nearly $1.7 billion for privately held Mako Surgical, which makes robotic-assisted tools for orthopedic surgery. The biggest therapeutics deal during September was Japanese pharmaceutical company Otsuka’s $886-million acquisition of Astex Pharmaceuticals to bolster its therapeutics pipeline, notes Burrill & Company. The deal gives Otsuka Astex’s fragment-based drug-discovery platform, a pipeline that includes several mid-stage cancer drug candidates, and several partnered programs. Astex’s Dacogen, a drug for myelodysplastic syndromes and elderly acute myeloid leukemia, is sold by Eisai and Janssen.
Although the global life-sciences partnering activity was down 5% for the first nine months of 2013 compared to the same period in 2012, it was up 5.5% in September 2013 compared to the same period a year ago. The report notes that AbbVie, which has been actively seeking to boost its pipeline as it prepares to lose US patent protection on its blockbuster rheumatoid arthritis drug Humira in 2016, entered into two licensing agreements during the month. It licensed from Ablynx next-generation treatments for rheumatoid arthritis and lupus in a deal worth up to $840 million. Ablynx will get $175 million upfront for rights to its mid- stage candidate ALX-0061. AbbVie also expanded its partnership with Galapagos, which is focused on a next-generation candidate to succeed Humira, to cover new drugs for cystic fibrosis, noted the analysis. Galapagos will get $45 million upfront and up to an additional $360 million in milestones if the partnership succeeds in producing a small-molecule treatment for the debilitating respiratory disease.