| October 10, 2018

European Biotech Firms On Course To Hit $8 Billion Funding Mark

Nqaba Matshazi

Nqaba has been working as an investigative journalist for the last 10 years. He has written for various media outlets... Nqaba has been working as an investigative journalist for the last 10 years. He has written for various media outlets across the world.

Funding for European biotech firms is expected to reach $8 billion this year, a new record for financing, surpassing last year’s $6.85 billion.

The third quarter of 2018 has been particularly lucrative for biotech firms in Europe; the sector raised $2.489 billion. Between January and September 2018, European biotechnology firms raised $6.348 billion, with financing from the U.S. said to be the major driver of growth.

U.S. funding drives growth in Europe

According to the BioWorld website, the Nasdaq stock exchange has effectively become the home exchange for most top tier European biotechnology firms. The website said the “ongoing availability of U.S. capital has had a cumulatively transformative effect on the European sector during the past five years.”

In the third quarter, European firms that raised significant public funding are those that reported positive clinical trials such as Galapagos of Belgium, which received $346.1 million in a public share offering. Galapagos is a clinical-stage biotechnology company with programs in cystic fibrosis, inflammation, fibrosis and osteoarthritis.

Argenx from the Netherlands, a clinical-stage biotechnology company developing antibody-based therapies for the treatment of severe autoimmune diseases and cancer, raised $300.6 million in a U.S. public share offering.

Proqr Therapeutics of The Netherlands raised $104.1 million in a public share offering.

Other firms that raised significant funding are Idorsia Pharmaceuticals Ltd, which is $201 million in debt, raised $307 million in equity funding on the SIX Swiss Exchange to fund its late-stage development pipeline. Crispr Therapeutics, also of Switzerland, raised $200 million, as it moved towards the first ever clinical trial of a CRISPR-based genome editing technology.

In private equity funding, United Kingdom-based gene therapy firm Orchard Therapeutics led the way, raising $150 million to promote its late stage programs that are at commercialization stage. Artios Pharma, another UK firm, which is working on novel cancer therapies, raised $84 million.

Swiss-based biotech company, Therachon, focused on developing rare genetic disease treatments, raised $60 million, moving the company closer to a drug trial.

European firms’ strengths in courting investments have been those supporting cell and gene therapies, biomarker discovery, rare diseases and neurodegeneration.

Third quarter maintains growth momentum

The record third quarter funding follows a strong second quarter, with KPMG International describing European venture capital activity as “historically healthy.”

At the end of the second quarter, KPMG International said: “On a regional basis, the UK led the charge once again with over $2 billion invested, followed by France with over $800 million – its second highest quarterly total. In France, 15 deals at $20 million or more were raised, a testament to France’s increasing prominence as a stronghold for European innovation and VC investment.”

KPMG International predicted that venture capital funding was likely to grow through 2018, with investment in biotech – and healthtech and autonomous driving – expected to be strong.

Global financing for biotech sector on the rise

The growth of the European biotech sector is in keeping with the global trend, which has also been on the rise, generating $16 billion in the third quarter, adding to an estimated $38 billion raised in the first six months of 2018. In the overall sector, a total of $54 billion has been raised, 4 percent more than last year.

Predictably, most of the money was raised in the U.S. and Canada, where $41 billion was generated, while Europe contributed $7.9 billion.  Australia and Asia brought in a combined $5.1 billion, the BioWorld website said.

Although most of the funding was directed towards cancer therapies,there was also significant funding for cardiovascular, dermatologic and metabolic indications.

Pitchbook said the record funding biotech could be driven by “a history of small, early-stage bets paying off extremely handsomely.” The record funding is based on hopes by financiers in the biotech sector that the firms will either eventually be acquired or go public.

Earlier in the year, Forbes noted that what drove the rise in funding for biotech firms was not more deals, but rather “investors are putting up much larger sums of money. They are pouring hundreds of millions of dollars into companies long before they are due to sell stock on public markets. In 2013, the VC community spread $2.4 billion among 287 companies. The $2.8 billion spent over two months of 2018 went to just 60 start-up firms.”

 


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