If the year-end regulatory buzz took some investors by surprise it was nothing compared with the flurry of business development news, which included no fewer than six healthcare companies filing to float on Nasdaq.
You can hardly blame their management teams; with the Nasdaq biotech index standing at record highs it is anyone’s guess how long the raging bull market will continue, and a similar window of opportunity might not come around for years. Despite the uncertainty, and a few market wobbles, companies are banking on appetite for pharma and biotech lasting a little while longer.
The last two IPO filings came as the New Year’s Eve champagne was on ice, with Revance Therapeutics, a business focusing on aesthetic medicine, seeking to raise $86m and the RNAi company Dicerna Pharmaceuticals filing for a $69m float.
In early 2013 Revance raised funds to run phase III trials of its botulinum toxin products, expanding a $33m series E into a $104m round through the conversion of $71m of debt. It says it has a topical project, RT001, that is due to generate data from two US pivotal trials in crow’s feet lines this year.
Dicerna is much earlier in development, its goal being to identify a specific molecule from its lead series, DCR-PH1, for primary hyperoxaluria, in mid-2014. No human studies are expected to begin until the following year.
A day earlier Argos Therapeutics and Eleven Biotherapeutics filed documents with the US SEC to raise $60m and $69m respectively on Nasdaq.
Eleven is an opthalmics-focused business with projects in phase II and phase I, while Argos is a dendritic cell immunotherapy company – a particularly out of favour area after the much-publicised setbacks faced by Dendreon. Both Dicerna and Argos completed large private rounds in the third quarter (Slow quarter for venture funding could dim hopes of a pick-up, October 17, 2013).
Still, it is probably not surprising, given Argos’s therapy focus, that this is not the group’s first attempt at flotation; it had tried to raise $86m in a Nasdaq IPO two years ago, but pulled this, citing market conditions.
Meanwhile, a private company, ANI Pharmaceuticals, struck a deal to buy 31 marketed generic drugs from Teva for $12.5m on Boxing Day, which also saw another year-end healthcare IPO filing on Nasdaq as Aptalis Holdings proposed to raise up to $500m.
Aptalis, a speciality pharma company, is expected to generate over $700m in group sales this year, and is being sold by the private equity group TPG Capital. TPG had formed Aptalis through a 2011 merger between Eurand Pharmaceuticals and Axcan Pharma, which it had taken private for $1.3bn back in 2008.
Private equity was also in the news on Christmas Eve, with the private critical care business Ikaria falling to Madison Dearborn Partners in a $1.6bn buyout. Ikaria sells an inhaled nitric oxide product to treat hypoxic respiratory failure in newborn infants, and some of its development assets are to remain with the selling shareholders.
The last IPO hopeful, Nephrogenex, filed documents on December 23 to raise $47m, largely to fund phase III development of its only significant asset, Pyridorin.
This is an inhibitor of advanced glycation end-product formation, and has completed three phase II trials in diabetic nephropathy. The same day Pfizer licensed Kissei’s phase I gout project KUX-1151m, though no financial details of the deal were disclosed.
As companies rush for the IPO window and business development activity continues apace, it is clear that sentiment remains bullish, despite almost daily reminders of the inherent risks of investing in healthcare (Pharma regulatory and development news over Christmas, January 2, 2014).
For an example of untempered expectations look no further than Puma Biotechnology, which ended 2013 valued at just under $3bn, up 108% in December, 451% over 2013, and an incredible 728% since its June 2012 IPO. Companies including Inovio Pharmaceuticals and Coronado Biosciences enjoyed significant December rises for no particular reason.
All of the IPO candidates will hope for a little more of the investor enthusiasm that has propelled biotech to what looks like its best year ever.