Two Life Sciences IPOs and Strengthening Markets Offer Encouragement to Sector

Two Life Sciences IPOs and Strengthening Markets Offer Encouragement to Sector 
One Year After Passage of JOBS Act, Biotechs Take Advantage of the
New Law, Says Burrill & Company 
SAN FRANCISCO, CA -- (Marketwire) -- 04/01/13 --  Two companies
focused on infectious disease successfully completed IPOs in March,
ending a drought in life sciences initial public offerings since the
$2.6 billion debut of Pfizer's animal health business Zoetis at the
end of January. 
Watertown, Massachusetts-based Enanta Pharmaceuticals, developing a
pipeline of novel small molecule drugs targeting hepatitis C,
completed a $56 million offering selling 4 million shares at $14. The
offering came at the bottom of its expected $14 to $16 range.
Existing investors, along with other insiders, committed to purchase
about one third of the offering. Shares in the company ended March up
30 percent. 
Tetraphase Pharmaceuticals, also based in Watertown, Massachusetts
and using synthetic chemistry to develop new antibiotics, completed a
$75 million offering. The company sold a little more than 10.7
million shares at $7 each. The company originally planned to sell 6.8
million shares at between $10 and $12 each but to complete the IPO it
had to cut the price and upsize the number of shares. Existing
investors and insiders committed to purchasing up to a third of the
offering at the IPO price. Tetraphase shares ended March up 1
Both companies qualified as emerging growth companies under the JOBS
Act, the legislation that passed a year ago with the intention of
making it easier and more attractive for emerging growth companies to
raise capital through IPOs. Specifically, newly public companies with
limited or no revenue have reduced reporting requirements for the
first five years or until they reach $1 billion in revenue. Though
rulemaking under the JOBS Act is incomplete, biotech companies have
embraced the new law. In fact, 11 of the 13 life sciences companies
that completed IPOs since the passage of the law, did so under the
JOBS Act.  
"We know anecdotally that biotech companies like the ability to test
the waters with investors and avoid having to make disclosures of
competitive confidential information until they are ready to go
through with an IPO," said G. Steven Burrill, CEO of Bu
rrill &
Company, a global financial services firm focused exclusively on the
life sciences. "Investor interest, while improving, continues to
remain the critical barrier to emerging growth biotechs going
Overall, the six life sciences IPOs completed during 2013 ended the
first quarter of 2013 up 10.9 percent collectively. Enanta, up 30
percent, is the best performer with Kalobios, down 25, the weakest
and only one of the six deals to be in negative territory. Four of
the six deals came in below their target range, selling 22 percent
more shares than they had planned to sell to raise the money they
The total capital raised through global life sciences IPOs took a big
jump to $2.9 billion, more than twice the amount raised during the
same period a year ago, but that's largely due to the $2.6 billion
Zoetis IPO. Though overall IPO market conditions appear to be
improving, there has not been a significant follow-through to the
enthusiastic reception investors gave Zoetis. 
The markets delivered a solid performance during the first quarter
with all of the major indices up. The Burrill Select Index ended the
quarter up 14.3 percent, outperforming the Dow Jones Industrial
Average (up 11.3 percent), the Nasdaq Composite Index (up 8.2
percent), and the S&P 500, which ended the quarter at a record
1569.19 (up 10 percent). But the best performer by far was the
Burrill Small Cap Index, which rose 25.1 percent during the quarter.
Notably, four leading biotech companies -- Amgen, Biogen Idec,
Gilead, and Celgene -- all ended the first quarter trading at
all-time highs. 
"With the approval of Biogen's new oral multiple sclerosis drug and
growing expectations for Gilead's experimental hepatitis C drug,
investors are recognizing the true value these companies are
creating," says Burrill, author of the newly released book Biotech
2013-Life Science: Capturing Value. "This should help generate
investor enthusiasm for the sector more broadly."  

                                                               Month  Year  
BURRILL INDICES                 12/31/2012 2/28/2013 3/29/2013 Change Change
Burrill Select                      607.66    638.61    694.44   8.7%  14.3%
Burrill Large Cap                   736.90    779.13    855.73   9.8%  16.1%
Burrill Mid-Cap                     309.52    347.58    350.34   0.8%  13.2%
Burrill Small Cap                   105.48    116.90    132.00  12.9%  25.1%
Burrill Diagnostics                 191.32    203.60    207.78   2.1%   8.6%
Burrill Personalized Medicine       119.22    128.02    131.90   3.0%  10.6%
Burrill Biogreentech                162.27    181.56    182.13   0.3%  12.2%
NASDAQ                             3019.51   3160.19   3267.52   3.4%   8.2%
DJIA                              13104.14  14054.49  14578.54   3.7%  11.3%
S&P 500                            1426.19   1514.68   1569.19   3.6%  10.0%
Amex Biotech                       1547.03   1702.36   1826.75   7.3%  18.1%
Amex Pharmaceutical                 369.57   392.434   412.613   5.1%  11.6%

First quarter 2013 global M&A deal values stayed in line with 2012
numbers, buoyed by strong activity in January and February. Global
M&A deal values fell 65 percent in March, however, compared to the
same period in 2012, with just $2.1 billion in 14 announced deals,
none of which were for more than $400 million. Valeant
Pharmaceuticals' acquisition of Obagi Medical Products for $344
million was the second largest deal in March. The price represents a
28 percent premium to Obagi's closing share price before the
announcement was made public. Obagi markets several topical aesthetic
and therapeutic skin care systems.  
Global partnering deal values in the first quarter of 2013 fell by 30
percent compared to the first quarter of 2012. Several factors may be
contributing to the drop, such as fewer deals with disclosed
financial terms, more collaborative dealmaking with non-profits and
academic institutions, and fewer deals announced altogether. In
contrast, March partnering deal values were 75 percent above the same
period in 2012. 
Two big deals at the end of the month accounted for the most of the
total. H. Lundbeck and Otsuka Pharmaceuticals entered into a
potential $825 million deal for the development of Lundbeck's
mid-stage investigational therapeutic to treat Alzheimer's disease.
Separately, privately-held Edison Pharmaceuticals' entered into a
licensing agreement with Dainippon Sumitomo Pharma for the
development and commercialization rights in Japan to two mid-stage
compounds for the treatment of orphan pediatric mitochondrial disease
and adult central nervous system diseases. That deal is worth $50
million in upfront and research payments to Edison, up to an
additional $495 million in milestones, and royalties on
commercialized products of the collaboration. 

Scorecard First Quarter 2013                                     
                                        First     First    Change
                                      Quarter   Quarter     
                                         2013      2012          
Global Venture Capital                  2,578     3,042    -15.2%
U.S. VC                                 1,959     2,004     -2.3%
IPOs (7 in 2013 vs 13 in 2012)          2,887       907    218.3%
U.S. IPOs (6 in 2013 vs 7 in 2012)      2,863       499    473.6%
Global PIPEs                              775     1,370    -43.4%
U.S. PIPEs                                246       512    -52.0%
Global Follow-ons                       2,649     2,104     25.9%
U.S. Follow-ons                         2,579     1,996     29.2%
Global Other Equity                       330       511    -35.4%
U.S. Other Equity                         271       495    -45.2%
Global Debt Offerings                   8,177     5,519     48.2%
U.S. Debt                               7,005     4,512     55.3%
Global Other Debt                       3,785     1,492    153.6%
U.S. Other Debt                         1,108     1,443    -23.2%
Total Global Public Financings         18,603    11,903     56.3%
Total U.S. Public Financings           14,073     9,457     48.8%
Global Partnering                       7,095    10,173    -30.3%
U.S. Partner/Licenser                   5,138     4,886      5.1%
Global M&A                             16,523    16,675     -0.9%
M&A, U.S. Target                        7,370    14,397    -48.8%

While global public financings were up 56 percent in the first quarter
of 2013 compared to the first quarter of 2012, global venture
financings were down by 15 percent compared to the same period last
year mostly due to a drop-off in financings outside the United
States. Financings for privately-held companies in March remained
flat in the United States compared to March 2012, but were down 8
percent globally.  
Early-stage financings were notably lacking in March, with most deals
greater than $20 million in later-stage rounds. A breakdown of
categories in global venture financings showed that medical device
companies took in one-third of the capital raised, therapeutics
developers garnered 28.4 percent of the total, industrial biotechs
accounted for 14.8 percent, Tools/technology companies for 9.2
percent, diagnostics developers for 6.8 percent, and digital health
and healthcare technology companies for 7.4 percent. 
Non-traditional sources of capital continue to be important for
startups. U.K.-based Infirst Healthcare, a spin-out of the U.K. drug
discovery group Seek, raised $38 million from Invesco Asset
Management managed funds. Infirst bills itself as a consumer
healthcare company that is commercializing fast-to-market medicines.
The new funding will be used for the launch of its drugs into the
cough and cold and pain consumer healthcare markets where it says
there has been little innovation in many years. 
Reviewers at the U.S. Food and Drug Administration in March approved
two new drugs and a new imaging agent for use in treating certain
cancers, raising to eight the total number of new molecular entities
approved by the agency's Center for Drug Evaluation and Research
during the first quarter of 2013. That matches the total approved in
the first quarter of 2012.  
In March, Biogen Idec won approval for Tecfidera, a new pill for
adults with relapsing forms of multiple sclerosis that was also
recommended for European approval. The FDA also approved a new
first-in-class Janssen Pharmaceuticals pill for type 2 diabetes, the
most common form of the disease. In addition, Navidea
Biopharmaceuticals got a green light to market Lymphoseek, its
radioactive diagnostic imaging agent that helps doctors locate lymph
nodes in patients with breast cancer or melanoma who are undergoing
surgery to remove tumor-draining lymph nodes. 
The FDA also made further progress on defining its approach to the
emerging world of healthcare information technology in March as
Congressional hearings were held to discuss whether regulation will
hamper innovation in the sector. During the hearings, the agency said
that only a fraction of mobile apps would require its review, citing
as examples cases in which an app transforms a mobile device into a
medical device already regulated by FDA or acts an accessory to a
medical device already regulated by agency. The agency also said that
it plans to issue final guidance that will help companies determine
whether their product will require FDA clearance or approval within
Senator Ron Wyden, D-Oregon, sent a letter to National Institutes of
Health Director Francis Collins expressing concerns that patients are
paying too much and taxpayers are not sharing in the financial
returns the pharmaceutical industry enjoys when new drugs result from
NIH-funded research. Wyden's letter focused on Pfizer's rheumatoid
arthritis drug Xeljanz, which is expected to cost $25,000 and reach
peak sales of $2.5 billion.  
Wyden called on the NIH to convene a panel that examines the pricing
of drugs developed with public funds and said in this economic
climate of increasing scarcity, "It is time to revisit the idea of
striking a better balance between encouraging profit, innovation,
accessibility and affordability." 
"Senator Wyden's efforts ignore the tremendous funding, time, and
risk that drugmakers face when they seek to take discoveries made in
the lab and develop them into marketed products that benefit
patients," says Burrill. "Senator Wyden could help to lower the cost
of drugs and increase accessibility to innovative new products by
working to address the problems with translational research today and
finding ways to address the high cost and complexity of human
clinical trials." 
Biotech 2013-Life Sciences: Capturing Value, Burrill & Company's 27th
annual report on the life sciences industry, is now available. A
complimentary chapter, along with the table of contents and a list of
the nearly 200 charts and graphs can be downloaded for free at  
About Burrill & Company 
 Founded in 1994, Burrill & Company is a
diversified global financial services firm focused on the life
sciences industry. With $1.5 billion in assets under management, the
firm's businesses include venture capital/private equity, merchant
banking, and media. By leveraging the scientific and business
networks of its team, Burrill & Company has established unrivaled
access and visibility in the life sciences industry. This unique
combination of resources and capabilities enables the company to
provide life sciences companies with capital, transactional support,
management expertise, insight, market intelligence, and analysis
through its investments, conferences, and publica
tions. Headquartered
in San Francisco, the company oversees a global network of offices
throughout the United States, Latin America, Europe, and Asia. For
more information visit:  
Daniel Levine 
Managing Director 
Burrill & Company 
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