A key moment for participants at BIO-Europe® is the state-of-the-industry report from the Biotechnology Industry Organization (BIO) that provides the big picture numbers on the biotech industry and sets the stage for the discussions in conference sessions and feeds conversations throughout the event.
“This has been an incredibly successful year for all the metrics that we track,” began David Thomas, Director for Industry Research and Analysis at Washington-based BIO.
David Thomas, BIO
For initial public offerings (IPOs), 2014 has already broken records, with the largest number of IPOs in the 35-year history of public biotech, surpassing the previous peak in the year 2000.
“The 73 IPOs on US exchanges so far this year are approaching double what we had last year,” he said, adding that “2013 was an incredible year with the majority of investors predicting we would certainly see fewer IPOs in 2014. Yet here we are in 2014 towering over last year in total count and with USD 5.5 billion raised.”
Notably, in a continuing trend of foreign companies listing in the US, 14 European and Israeli companies who decided to trade on US exchanges helped push the total number of IPOs over the peak.
Driving the interest in the US are three things: a strong equity market overall, a more positive sentiment toward biotech, and the success of policy changes supported by BIO. These policy changes have helped companies access investors in a less burdensome, more efficient way and reduced costly filing requirements. This policy work continues in Washington, with a current focus on Jobs Act 2.0 legislation to further help emerging biotechs find access to capital.
Biotech stock performance in 2014 has trumped every other sector of the economy, he noted, with the NASDAQ Biotech Index up 31% year-to-date.
“And keep in mind, this is after biotechs were up 66% last year and this could be the sixth year that large biotechs post double-digit gains,” he told the BIO-Europe participants. “This at a time when global economic growth is slowing and more and more investors are seeing the value in our high growth industry and its lower correlation to the overall economy.”
Turning to new drug approvals in the US through the CDER division of the FDA, Thomas highlighted that this was a strong year for products treating diseases with unmet medical needs.
“We already have an increase over last year, with 32 new drugs approved through CDER, approaching the 2012 number of 39, which was the highest number in 15 years,” he said.
It was a particularly good year for biologics, on track to post the highest number of new Biologics License Applications (BLAs) in biotech history.
More significant than the total number of approvals this year is that there was a faster and more efficient review process with almost 90% of small molecule New Drug Application (NDA) approved on first review, and 100% of the BLAs approved on first review. Six compounds had received the FDA’s breakthrough therapy designation, a relatively new program that places a drug at the top of the priority list at the FDA.
On the merger and acquisition front, 2014 has been a strong year for small biotech acquisitions. Excluding the outlying deal of the decade, the USD 11 billion acquisition of Phase II company Pharmasset, Thomas reported, “We have the highest total dollar amount in a decade, clearly above the last two years. However, if you look at the number of companies, this is actually still down from peak levels seven years ago and is suggestive that buyers are paying more per company.
“That is in fact what we see,” he continued. “This year saw the largest average value paid for pre-approval stage biotechs since at least 2006 and we are seeing many Phase III and post-POC deals that typically price at premiums to earlier stage companies.”
Therapeutic licensing deal volume is currently projected to come in about where we have been since 2011 with 100 transactions (with a disclosed USD 10 million or more in value), he reported, noting 2014 has been another robust year for early stage preclinical platform deals.
Looking more closely at preclinical deals, he said, “we find that nearly 80% were for biologics.”
Looking at the total dollars going into biotech from licensing and ignoring the BioBucks for milestones, we see a break in the downward trend that has been in effect since the drop in 2010. In 2014 we have seen a number of deals with upfront payments over USD 100 million, with two biologics deals over USD 700 million upfront.
As 2015 approaches, BIO is already making progress on policies to continue to expand access to capital for biotechs and enhance the regulatory efficiency in the US.
“The industry and regulators are doing a great job,” said Thomas. “But there is always room for improvement on the regulatory front. The user fee negotiations that brought us new and improved programs such as Breakthrough Therapy Designation are set to begin again next year and continue into 2017. BIO would once again like to make positive changes and inform policy makers what those changes might look like. To do this, BIO has set up a three-year, real-time online survey for companies to provide feedback about their experiences with FDA at each stage of development. Please encourage your CMO and clinical team to take part in this important study.”
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