Galapagos’s monster cash call earlier this week serves to remind drug developers that, if money is your game, the US is the place to be. The Belgian company will raise at least $338m in an offering of ADSs, a fund-raising that ranks as one of the largest ever conducted by a European biotech.
Still, while the company is based in Europe its investors increasingly are not. A look at other large fund-raisings by public continental drug developers shows that the biggest hauls of the past five years all relied on investors located on the other side of the Atlantic (see tables below).
|Notable European fund-raisings of the last five years|
|Galapagos (Belgium)||338||2017||ADS follow-on|
|GW Pharma (UK)||290||2016||ADS follow-on|
|DBV Technologies (France)||282||2015||ADS follow-on|
|Galapagos (Belgium)||317||2015||Majority raised via initial Nasdaq ADS offering|
|Cellectis (France)||228||2015||Initial ADS offering|
|GW Pharmaceuticals (UK)||179||2015||ADS follow-on|
|Advanced Accelerator Applications (France)||150||2016||Initial ADS offering|
|GW Pharma (UK)||170||2014||ADS follow-on|
|Ascendis (Denmark)||112||2016||Initial ADS offering|
|DBV Technologies (France)||105||2014||Majority raised via initial Nasdaq ADS offering|
It has long been accepted that access to capital is more limited the European side of the pond. The lack of a pan-European exchange to unite companies and investors in a much larger pool, and the often-cited “cultural differences”, mean that huge fund-raisings are simply not part of the scenery.
This has changed to a certain extent in the past few years as a growing number of companies have chosen to operate an ADS (American Depositary Share) scheme, or simply skip a local listing and head straight to Nasdaq. The biotech boom acted as a major pull factor here and, even though US investor appetite has cooled somewhat in the past 12 months, European biotechs continue to tap these markets successfully.
Recent moves include Switzerland’s AC Immune, which last year bypassed a European flotation and went straight to Nasdaq, raising $58m. London-listed Verona Pharma launched its Nasdaq listing today.
Verona has undertaken a very successful recapitalisation over the past couple of years, a feat no doubt only possible on the promise of an ADS listing on Nasdaq at some point in the future. The respiratory specialist carried out a substantial £45m ($63m) UK placing last year, which was backed by US investors including Orbimed and Vivo Capital, which have again supported the company’s $75m Nasdaq offering.
The poster child here is clearly GW Pharmaceuticals, whose ADS programme was so successful that it cancelled its UK listing last year. The developer of cannabis-based medicines has banked around $740m across five US-based raises since launching an ADS programme in 2013.
Galapagos, which has a primary listing on Euronext, did not exactly need the cash – it ended last year with almost €1bn in the bank, and projected a spend of around €150m for 2017. The company is funding a promising cystic fibrosis programme and is picking up 20% of the R&D bill for global development of filgotinib, a Gilead-partnered RA asset.
Raising money when in a strong position is always wise, though the Belgian company’s bank balance is looking decidedly like a war chest.
The table above shows some of the biggest follow-ons conducted by European biotechs in the past five years, and it is evident that none of these was carried out solely in their home markets.
That US investors have become more important to European drug makers in the past few years in incontrovertible – a similar situation can be seen in private financings as well. Whether these can still be called European raises is a question of semantics.