IPO slowdown could signal bubble trouble

The €57.7m flotation of the anti-viral specialist Abivax on the Euronext Paris exchange has raised hopes of an improving climate for European pharma and biotech companies in the public markets.

But the number of IPOs this year looks set to fall short of 2014 levels in both Europe and the US, EvaluatePharma data suggest. And European players are still lagging well behind their US counterparts – both in terms of the number of transactions and the amount of money raised; if this is a leading indicator of the overall market then biotech bulls should take note (see tables below).

So far this year, there have been nine IPOs involving European companies, bringing in a total of $537m, and 20 floats of US companies, which raised a combined $1.4bn. Even if new entries continue at this rate 2015 is unlikely to beat last year, which saw 32 European and 67 US companies go public – adding to speculation that biotech has been in a bubble that is now deflating (Floats stumble in Q1 as bubble debate escalates, April 13, 2015).

That said, in comparison with figures before 2014, this year’s IPO activity looks reasonably healthy, though a closer look at the figures shows some less promising signs. One conclusion could be that last year was the high-water mark, at least for biotech flotations.

EU vs US company IPOs 2009-15
EU US
Year Number of IPOs Total raised Number of IPOs Total raised
2015* 9 $537m 20 $1,400m
2014 32 $1,700m 67 $6,000m
2013 9 $199m 37 $2,900m
2012 8 $122m 20 $813m
2011 7 $120m 16 $577m
2010 17 $544m 22 $909m
2009 9 N/A 17 N/A
2009-2015 91 $3,200m 199 $12,600m
*as of 24 June 2015.


Floating on Mr Bubble

The number of European companies floating in 2015 has already equalled or exceeded that seen in each of the three years before 2014, and US numbers tell a similar story.

The top of Europe’s class of 2015 so far is the UK-based T-cell specialist Adaptimmune, which admittedly had to cross the pond to raise $191m. Also looking to the US was Denmark’s Ascendis Pharma, which pulled in the second-largest sum.

These compare pretty favourably with the offerings from US residents, led by the gene therapy firm Spark Therapeutics, which raised $185m.

But Europeans looking closer to home saw lower rewards – the most successful, the HDL cholesterol-targeting Cerenis Therapeutics, brought in a relatively small $58m. Cerenis was one of five French companies to go public so far this year, making it the best-represented EU country by far.

European companies carrying out IPOs in 2015*
Company Country Stock exchange Amount raised Date
Abivax France Euronext Paris $65m Jun 2015
Sensorion Pharmaceuticals France Euronext $9m Apr 2015
Adaptimmune UK Nasdaq $191m Apr 2015
OSE Pharma France Euronext Paris $24m Mar 2015
Cerenis Therapeutics France Euronext Paris $58m Mar 2015
Redx Pharma UK LSE AIM $17m Mar 2015
Bone Therapeutics Belgium Euronext $37m Feb 2015
Poxel France Euronext $28m Feb 2015
Ascendis Pharma Denmark Nasdaq $108m Jan 2015
*as of 24 June 2015.

If, as seems clear, investors in the US have deeper pockets, it is surprising that so few European players have looked further afield; only a small proportion have headed to the US markets over the past five years.

Even more surprising is that some US outfits should decide to travel in the opposite direction, a recent example being the Californian computational drug discovery specialist Verseon, which raised $100m on London’s AIM.

European company IPOs on European versus US markets
Year European US
2015* 7 2
2014 25 7
2013 7 2
2012 7 1
2011 7 0
2010 17 0
2009 9 0
*as of 24 June 2015.

Wherever companies look to raise their cash, it appears that the amount up for grabs has fallen from last year’s giddy heights. Only time will tell whether this particular bubble has burst or not.

To contact the writer of this story email Madeleine Armstrong in London at madeleine@epvantage.com or follow @medtech_ma on Twitter

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