Analysis of European Companies on the Stock Markets by Knowbio GmbH

2016

Facts & Trends

Analysis of European Biotech Companies on the Stock Markets: US versus Europe

www.biocom.de

CONSULTANCY & RESE ARCH

Analysis of European Biotech Companies on the Stock Markets: US versus Europe Facts & Trends, 2016 www.biocom.de/en/analysis2016

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AnAlysis of EuropEAn biotEch compAniEs on thE stock mArkEts: us Vs EuropE contents

Contents 1.

Executive summary . . . . . . . . . . . . . . . . . . . . . . .

key facts for 2015: upward trend continued . . . . . . . . . .

focus on nAsDAQ: the us as a Viable option . . . . . . . . .

outlook 2016: times are changing . . . . . . . . . . . . . . .

the companies’ View: cross-border Experiences

. . . . . . .

5.1

Affimed . . . . . . . . . . . . . . . . . . . . . . . . . .

5.2

Ascendis pharma. . . . . . . . . . . . . . . . . . . . .

5.3

biotie therapies . . . . . . . . . . . . . . . . . . . . .

5.4

cellectis . . . . . . . . . . . . . . . . . . . . . . . . .

5.5

Evotec . . . . . . . . . . . . . . . . . . . . . . . . . .

5.6

motif bio . . . . . . . . . . . . . . . . . . . . . . . . .

5.7

poxel . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annex: methodology and overview . . . . . . . . . . . . . . .

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AnAlysis of EuropEAn biotEch compAniEs on thE stock mArkEts: us Vs EuropE Executive summary

Executive Summar y 2015 was a new record year for the European public biotech sector. the stock markets in Europe benefited from a global boom, but nAsDAQ attracts a growing number of Europeans. this report highlights the key facts.

Did the biotech boom hold through to the end of 2015? Did the ipo window remain open? Discussions about the near end of the biotech boom in the us have been on the table since the beginning of 2015. now, the answer is clear: despite a slowing down of the us development, the European biotech public sector continued its growth development which started in 2013. All key numbers for 2015 demonstrate a further upward trend. New record for the sector this biocom report analyses all European biotech firms – either listed on one of the 15 trading centres in Europe or on nAsDAQ. taking all indicators into account – number and volumes of ipos, follow-on

Key facts of the European public biotech sector › 193 public biotech companies with €109.6bn market cap* › 25 European biotech companies listed on nAsDAQ › 25 ipos with €1.21bn capital raised in 2015 (-3%) › 126 financings with €5.08bn capital raised in 2015 (+130%) › total financing proceedings of €6.29bn in 2015 (+82%) © biocom AG

financings and secondary listings, 2015 set a new record for the sector. All together, 193 European biotech companies raised €6.29bn of financial proceedings. that’s 82% more than in 2014 when €3.45bn was poured into the companies. NASDAQ in the spotlight A third of last year’s capital raised by European biotech companies – a total of €2.01bn – came in through the 25 companies listed on nAsDAQ. this is underlined by the fact that compared to its counterparts, which are only listed on European stock exchanges, the firms on nAsDAQ not only generated more capital in their follow-on financings, but also raised higher ipo volumes. on average, the ipo volumes and the follow-on financings of the European companies in the us are more than twice as much than in Europe. this demonstrates that in 2015 there was – against all odds – still a significant upswing trend with regard to the public markets when compared to 2014. investors interest in biotech was at an unbroken high level. this is also one of the main reasons for a European biotech company to opt for a nAsDAQ listing, but market conditions changed during the year. in 2015, the first biotech ipo announcements in the us were pulled off and during 3Q15 and 4Q15, the first European companies also decided against a listing on

*market cap by 6 Jan 2016

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AnAlysis of EuropEAn biotEch compAniEs on thE stock mArkEts: us Vs EuropE Executive summary

Capital raised of European biotech companies on the stock markets* Stock market segment

2014

2015

Capital raised via IPOs

Capital raised via follow-ons

Capital raised via IPOs

Capital raised via follow-ons

€182.1m

€565.9m

€386.2m

€1,709.8m

Euronext €748.0m €12.8m

€2,096.0m €91.3m

€18.2m

€78.9m

Alternext €104.1m Alternative Investment Market (AIM)

€187.1m

€97.1m €148.5m

€335.6m €255.0m

€48.2m

€455.5m

€503.7m €100.0m

–

€418.6m

LSE Main €355.0m –

€418.6m €265.9m

€79.0m

€211.5m

NASDAQ OMX Main €265.9m NASDAQ OMX First North

Frankfurt Stock Exchange (FSE)

–

€290.5m €16.4m

€16.4m –

€31.9m

€72.3m €147.3m

€147.3m €88.0m

€40.4m

–

€149.0m

€149.0m €79.1m

€167.8m

€352.0m

Swiss Exchange (SIX) €167.1m Oslo Børs

€8.0m

€519.8m €32.8m

€40.8m Warsaw Stock Exchange (WSE)

–

€24.6m

–

€2.1m

€2.1m €5.4m

€5.4m €506.9m

€16.7m

€83.2m

€24.6m –

Madrid

€66.5m

–

€2.2m

€2.2m €727.1m

€406.6m

€1,602.9m

NASDAQ €1234.0m © biocom AG

€1,996.1m * capital raised by companies which are traded in Europe and the us is assigned individually where the financing round took place.

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AnAlysis of EuropEAn biotEch compAniEs on thE stock mArkEts: us Vs EuropE Executive summary

“It was ver y obvious to us to move into a US stock market even though we were a Danish company. In the long-term, we want to develop towards becoming a US-based company.” Jan Møller Mikkelsen Ascendis Pharma

“Listing on NASDAQ fur ther on down the line is an option that we are keeping open.” Thomas Kuhn Poxel

“The European stock market is catching up with the US. There are more and more great investors – in France, Germany, Switzerland, Great Britain and Scandinavia.” André Choulika Cellectis

“Antibiotics are a really hot space right now and it was ver y difficult for investors to resist a phase III ready antibiotic. Now, it is impor tant for us to explore the US capital market, including a listing.” Graham Lumsden Motif Bio

“The NASDAQ IPO was the consequence of an early focus on fundraising in the US.”

Adi Hoess Affimed 6

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AnAlysis of EuropEAn biotEch compAniEs on thE stock mArkEts: us Vs EuropE Executive summary

Aim and on Euronext. so it remains to be seen how the public markets will develop during the upcoming year. Whereas some experts speak about the end of the ipo cycle, other are cautiously optimistic. Newcomers in the US the analysis showed that a us listing was, and is not the common way of going public for European biotechs. only 13% of the 193 listed companies trade their shares on nAsDAQ. According to the analysis, most of them are characterised by a higher market capitalisation, indicating a higher degree of maturity, and main activities in the health sector. in addition, the majority (76%) of the us-listed companies are newcomers: a total of 19 companies only started trading in 2014 or later. Among them are six of the seven European companies already listed in Europe that opted for a secondary listing in the us. five of them took place in 2015, accounting for a total of €643m in 2015.

the key message from the companies analysed is clear: nAsDAQ offers great opportunities, mostly because of the substantial number of its biotech-orientated investors. but nevertheless, the listing requirements are not to be underestimated. the cEos and cfos interviewed within this report share their experiences with regard to their ipo preparations and reasons for their companies’ listing. they provide invaluable advice on how to prepare for a us listing and on what to avoid. Europe more attractive in 2015 in 2015, five times as many companies decided on a listing in Europe (21) than in the us (4). Among the European trading centres, the Aim has become the most attractive stock market, but Euronext also remains interesting. london (39) and paris (38) are the top spots with the most listed biotech companies.

Seven case studies most of the case studies presented in this report are companies that went to nAsDAQ in 2014 or 2015. others floated in Europe and are now looking for a secondary listing in the us. in addition, we included a case study of a delisting in the analysis: › Affimed (see p. 28) › Ascendis pharma (see p. 32) › biotie therapies (see p. 36) › cellectis (see p. 40) › Evotec (see p. 44) › motif bio (see p. 48) › poxel (see p. 52) 7

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Key Facts for 2015

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AnAlysis of EuropEAn biotEch compAniEs on thE stock mArkEts: us Vs EuropE key facts for 2015

Upward Trend Continued the boom trend of 2014 held on through to the end of 2015: investors’ appetite in European biotech companies remained high. the sector observed a record number of biotech ipos and follow-on financings. Although discussions about the near end of the biotech boom were on the table from the beginning of 2015, the appetite for biotech companies hasn’t shown any signs of dampening. All key numbers for 2015 showed a further positive development for European companies. According to the analysis, which also includes all European biotech firms listed on nAsDAQ, 2015 set a new record for the sector. All together, 193 European biotech companies raised €6.29bn of total financial proceedings in 2015 – 82% more than in 2014 (€3.45bn). IPO window still open in 2015, a total of 25 European biotech ipos took place, raising a total amount of €1.21bn. this is comparable to 2014 when 25 companies raised €1.25bn in their ipos (see fig. 5). however, the us has lost some ground. the majority of the 25 firms opted for one of the 15 European trading centres, only four firms floated on nAsDAQ in 2015. compared to the previous years, an increasing number of European companies attracted large sums of money. the highest ipo volumes in 2015 were recorded with A d a pt i m m u n e (€170 m) o n n A s DAQ, cassiopea in Zurich (€168m) and biocartis (€115m) in brussels. the most attractive stock markets locations are currently london (39) and paris (38), but other Euronext locations such as stockholm

(20), brussels (8) and Amsterdam (6) also gained increasing interest in 2015 (see fig. 7). the shares of 25 European companies are traded on nAsDAQ, the most recent us ipo was conducted by Austrian nabriva (€81m). (for more information with regard to nAsDAQ listings, see chapter 3.)

€1.21bn Amount of money raised in IPOs by European biotech companies in 2015.

Follow-on financings the upswing for biotech companies which was seen in 2014, held on though 2015. since 2010, there has never been so much money invested into European public biotech companies – either in Europe or in the us. A total of €5.08bn was dropped into the companies via follow-on financings, which means a substantial increase of 130% compared to 2014 (see fig. 6). the average size of capital increase doubled from €20m to €40m. Within the European trading centres, Euronex t showed the highest activit y with 23 financings and total proceedings of €1.71bn. but us investors also had 9

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AnAlysis of EuropEAn biotEch compAniEs on thE stock mArkEts: us Vs EuropE key facts for 2015

Key facts of European and US public biotech sectors Europe

Number of public biotech companies

193

4031

Market capitalisation

€ 109.6bn

€ 781bn1

Turnover (2014)

€ 22.42bn

€ 85.15bn1

Capital raised via IPOs (2015)

€ 1.21bn

€ 4.53bn2

Number of IPOs (2015)

592

source: 1Ey Global biotech report 2015, 2renaissance capital 2015 us ipo review

a big slice of the pie. one third (32%) of the money – a total of €1.60bn – came in through nAsDAQ, mostly within the five secondary listings of cellectis (f), summit therapeutics (uk), Galapagos (bE), biotie therapies (fin) and celyad (f), which accounted for a total of €643m.

Market cap the European public biotech sector still has a lower market capitalisation than its counterpart in the us (see table on the left). however, the maturity in Europe is growing. At the beginning of 2016, the 193 European biotech companies had a joint market capitalisation of €109.6bn. 45.6% of the European biotech companies operate in the “micro” range between us-$50m and us-$300m (see fig. 1). A further 29.5% can be included in the nano caps (below us-$50m). therefore, 75% of all companies have a market cap of less than us-$300m. only eleven companies achieved amounts of more than us-$2bn, among others these include the firms Actelion, novozymes, Qiagen, Genmab and Eurofins. compared to the 2014 analysis, the companies that are listed in Europe, in particular, were able to grow: within one year, their market cap increased by 16%. compared to the us firms however, the European sector is still in the early stages of development.

large cap

Fig. 1: Distribution of market capitalisation of European biotech companies

1.5% (3)

mid cap

4.2% (8)

small cap

19.2% (37)

micro cap

45.6% (88)

nano cap

29.5% (57)

100

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AnAlysis of EuropEAn biotEch compAniEs on thE stock mArkEts: us Vs EuropE key facts for 2015

€6.29bn

€3.45bn

∑2014

+82%

∑2015

Oncology in the spotlight the dominance of nano and micro cap companies in Europe is also the reason for a comparatively low turnover. in 2014, all European biotech firms together generated

a turnover of €22.42bn. the vast majority of companies (81.9%) are active in the health sector, developing diagnostics or new therapies for which major investments and long-term financial strategies are required. All 25 stock market newcomers in 2015 can be assigned to this category. the most attractive field within the area of health is oncology (see fig. 4). A total of 66 companies operate in this field, followed by neurology (32), inﬂammatory (26) and autoimmune diseases (25) as well as infections (24).

Fig. 3: Fields of activity health/medicine (158 companies) industrial biotechnology (20 companies) Agribiotechnology (1 company)

Fig. 2: Total financial proceedings of European biotech companies

non-specific services (14 companies)

0.5 % 7.2 %

service providers that offer biotech-based processes for others in the b2b environment have a completely different risk profile than biopharma-focused companies. Although mid-cap companies such as biomérieux and Eurofins fall into this category, only 14 companies overall operate in this field. Another activity area of the listed

10.4 %

81 .9%

Fig. 4: European biotech companies and the areas of indications* they address Autoimmune diseases

cardiovascular diseases

Dermatology

infections

inﬂammatory diseases

respiratory diseases

metabolic diseases

neurology

oncology

other

48 *several mentions possible

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AnAlysis of EuropEAn biotEch compAniEs on thE stock mArkEts: us Vs EuropE key facts for 2015

Fig. 5: Number of IPOs and the capital raised Initial public offerings: total proceedings 2015

Average volumes

total number €1,213m

€49m

-3% 2014

€1,247m

€50m

Fig. 6: Number of financing rounds and the capital raised Follow-on and other financings: total proceedings 2015

Average volumes

total number €5,079m

€40m

126

+130% 2014

€20m

€2,209m

109 © biocom

companies is industrial biotechnology. A total of 20 firms are involved in the development of new enzyme-based processes or biobased solutions for various industries. Danish novozymes represents one of the big global players in this field, having the second largest market capitalisation of all European public biotech companies. Exchange ranking With 15 different trading centres, the variety of stock exchanges is huge. last year’s analysis revealed that the cross-border stock market Euronext is especially attractive for European biotech companies as they obviously provide a critical mass of listed biotech companies, as well as a nurturing environment in terms of innovation and high-risk financing. this trend can also be confirmed for 2015. Eight out of 25 European listings (32%) in 2015 took place here. however, due to the overall positive environment other locations were also able to benefit. large ipos were recorded in

*Euronext, **nAsDAQ omX

helsinki **

2015

milan

2015

frankfurt

Amsterdam * 2015

new york

madrid

stockholm ** 2015

Warsaw

2015

paris *

2015

brussels *

2015

oslo

copenhagen **

Zurich

2015

193

london

Fig. 7: Overview of trading centres with total numbers of listed European biotech companies and IPOs in 2015

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AnAlysis of EuropEAn biotEch compAniEs on thE stock mArkEts: us Vs EuropE key facts for 2015

Zurich (cassiopea) and in oslo (nordic nanovector). the Alternative investment market (Aim) in london also gained momentum after irish life science investment company malin – managed by british fund manager neil Woodford – raised €330m on the lsE. the sector hopes that it will create a nurturing ground for upcoming biotech ipos. in 2015, london saw four newcomers on the scene – redx pharma (€20.7m), faron pharmaceuticals (14.2m), Evgen pharma (9.5m) and motif bio (€3.8m) – and is among the hot spots of biotech trading centres in Europe (see fig. 7). Will the increase continue? in general, a positive development has been recorded since 2013. Due to the stock market boom in the us, the number and volumes of ipos as well as follow-on financings increased significantly (see fig. 8 & 9). the 2015 figures demonstrated that the upswing continued. however, due to changing market conditions, it remains to be seen if the wave will hold on through 2016.

Fig. 8: Development of follow-on financings in €bn since 2010

507

total number

2010

1.30

2011

1.16

2012

1.23

2013

1.92

2014

2.21

2015

5.08

€12.90 billion

Fig. 9: Development of IPO activity and volumes in €m since 2010 2015

1,212.8 1,246.9

2014 2013

106.4

2012 2011 2010

25 25 6

204.1 17.6

6 7

115.6

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Focus on NASDAQ

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analysis of EuropEan biotEch companiEs on thE stock markEts: us vs EuropE focus on nasDaQ

The US as a Viable Option since 2014, a growing number of European biotech companies – mostly drug developers – have listed on nasDaQ. they were able to attract substantial amounts of capital overseas. nowadays, secondary listings are more common. the attractiveness of the us biotech market and its investors has been increasingly interesting for European biotech companies over the last two years – and the global public market upswing has significantly pushed forward this development. however, in 2015, the number of biotech ipos from Europeans in the us was lower than in 2014. nowadays, secondary listings are more common. Higher market capitalisation to date, us listings are still not the common way of going public in the European biotech sector. only 13% of the 193 listed companies trade their shares on nasDaQ. all together, the 25 companies have a market capitalisation of €28.16bn, which means an average of €1.13bn. compared to the firms only listed in Europe, this is on average more than twice as much (€490m). a large part of the us-listed companies (40%) operate in the small cap range (us-$300m up to us-$2bn), a further 44% of the firms have a micro market capitalisation (us-$50m up to us-$300m). similar to the European counterparts, there are only a few companies (8%) in the mid market cap range between us-$2bn and us-$10bn. a big difference is however, that in the us there are significantly fewer companies in the nano market cap below us-$50m. this suggests that the us-listed companies have a slightly higher degree of maturity.

Unbroken investors’ appetite this situation was underlined in 2015 by an unbroken high level of investors’ interest in biotech. in 2015, the European biotech companies raised total financial proceedings of €2.01bn via ipos, secondary listings and follow-on financings on nasDaQ. this is 63% more than they managed to attract in the whole of 2014 (€1.23bn), and represents almost one third of all capital raised by European biotech companies in 2015.

€2.01bn Capital raised via IPOs, secondary listings and follow-on financings on NASDAQ by European biotech companies in 2015

Majority of newcomers the majority (76%) of the us-listed companies are newcomers: a total of 19 companies started trading in 2014 or later. among them are also six of the seven European companies already listed in Europe that opted for a secondary listing in the us. in 2015, fewer companies (4) decided on a stock market debut overseas. in 2014, nine ipos took place over the year. however, last year’s average volumes were much higher than in 2014. in 2015, the companies raised €101m on average in the us, 62% more 15

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analysis of EuropEan biotEch companiEs on thE stock markEts: us vs EuropE focus on nasDaQ

Key facts of European biotech companies: US vs Europe NASDAQ listing

Listing in US/Europe

Listing in Europe

Number of European biotech companies

168

Market capitalisation

€17.01bn

€ 11.15bn

€ 81.40bn

Turnover (2014)

€ 662m

€1.17bn

€ 20.58bn

Capital raised via IPOs/listings in 2015

€ 406m

€643 m

€ 806m

Number of IPOs/listings in 2015

than in Europe (€38m). in 2014, it was a different picture as ipo volume averages were more similar to each other, at €56m (us) and €46m (Europe). the highest volumes of us ipos in 2015 we re ra ise d by b r itis h ada ptimmune (€170m) and Danish ascendis pharma

(€109m). in 2014, Danish forward pharma (€186m), norwegian camurus (€79m) and proQr (€79m) from the netherlands were at the top of the scale. however, six companies had ipos in 2014 and 2015, with volumes less than €50m, indicating that not every company goes to nasDaQ to pull off high volume ipos.

Fig. 10: Comparison of capital raised via IPOs in €m and number of IPOs 2010 2011 2012 2013

115.6

17.6

110.1 94.0 59.4 47.0

1 5 1

2014

506.9

2015

406.6 European exchanges

nasDaQ

739.9

16 9

806.2

21 4

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analysis of EuropEan biotEch companiEs on thE stock markEts: us vs EuropE focus on nasDaQ

Fig. 12: Comparison of follow-on financings in €m European exchanges

nasDaQ

461

total number

2010

1,297

2011

828

332

2012

624

604

2013

1,829

2014

1,482

727

2015

3,478

1,602

€9,538 €3,363 million

Follow-on financings an unbroken high in us investors’ appetite was recorded in 2015. all together, the 25 companies were able to attract €1.60bn in follow-on financings and secondary listings in 2015 (see fig. 12). compared to its counterparts which are only listed on European stock exchanges, the firms on nasDaQ generated on average about 60% more capital with volumes of €76m per financing (Europe: €33m). thus, although only representing 13% of all European biotech companies, the us-listed firms generated one third of the follow-on financings. the highest volumes were raised by the two irish firms prothena corporation (€121.4m) and trinity biotech (€102.5m). in addition, companies listed in the us and in Europe, were in particular attractive for investors. in 2015, a total amount of €903m was poured into these firms alone. a large part was generated by the two companies cellectis (f) and Galapagos (b), which both raised more than €200m each through secondary listings.

million

Fig. 11: Comparison of market capitalisation 1% (2) 4% (1)

large cap

4% (6)

mid cap

European exchanges

nasDaQ

8% (2) 16% (27)

small cap

40% (10) 46% (77) 44% (11)

micro cap nano cap

33% (56)

4% (1) 0%

10%

15%

20%

25%

30%

35%

40%

45%

50% 17

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analysis of EuropEan biotEch companiEs on thE stock markEts: us vs EuropE focus on nasDaQ

Drug developers go for NASDAQ With regard to the field of activities, drug developers, in particular, have opted for a us listing which is clearly connected with their comparatively high capital demand.

flammatory disease (20%) or in the cardiovascular area (20%). four companies each have an neurology (16%) or autoimmune disease focus (16%). further indications include infections (two companies) and respiratory diseases (one company).

the majority of the seven firms (28%) operate in the field of oncology, followed by five companies with activities either in the in-

What are American Depositary Receipts? European companies can choose different legal ways for a listing in the us. one of the most usual routes is to take american Depositary receipts (aDr). per definition, an aDr is a negotiable security that represents securities of a non-us company that trades in the us financial markets. Each aDr is issued by a domestic custodian bank when the underlying shares are deposited in a foreign depositary bank, usually by a broker who has purchased the shares in the open market local to the foreign company. When a company establishes an aDr programme, it must decide what exactly it wants out of the programme, and how much time, effort, and other resources they are willing to commit. for this reason, there are different types of programmes, or facilities, that a company can choose.

level 1 depositary receipts are the lowest level of sponsored aDrs that can be issued. When a company issues sponsored aDrs, it has one designated depositary who also acts as its transfer agent. if a foreign company wants to trade its shares directly on a us stock market, it must have a level 2 depositary receipt programme and meet the respective listing requirements of the exchange. among others, it must file a registration statement with the sEc and is under sEc regulation. a level 3 american depositary receipt programmes the highest level. the company is required to adhere rules that are similar to those followed by us companies. setting up this programme means that the foreign company is not only taking steps to permit shares from its home market to be deposited into an aDr programme and traded in the united states; it is actually issuing shares to raise capital.

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Interview European biotech companies have to consider several legal aspects when thinking of going public in the us. robert michels and Jeffrey baumel from legal firm Dentons explain the main challenges that should be taken into account. What are the main challenges on the legal side that should be considered in advance when thinking of going public in the US as a European company? Baumel: legal challenges include (i) production and disclosure of compliant audited financial statements (including for significant acquisitions, divestitures and joint ventures) which involve more complex financial analysis and lower materiality standards, (ii) ability to comply with complex corporate governance rules, including certifications for internal controls, enhanced disclosure controls and procedures, a compliant audit committee and satisfaction of board independence requirements, (iii) listing and post-listing disclosure requirements and (iv) methods for requesting confidential treatment for certain material agreements (or portions thereof) that contain sensitive information or information which is protected by obligations of confidentiality. in addition, following the completion of the ipo, the European company could become subject to us Gaap, which could change the manner in which the company prepares its financial statements. it should be borne in mind that the greater propensity for shareholder activism in the us creates a unique set of burdens and challenges for companies that may be underperforming in the markets relative to their actual value.

Which legal rules have to be taken into account? Baumel: a European issuer will need to comply with the rules and regulations of the sEc, including compliance with a lengthy and expensive registration and regulatory process, the eligibility and listing requirements of the applicable stock exchange on which shares will be listed (nysE or nasDaQ), and certain rules of finra. a European issuer will likely be able to avail itself of the benefits applicable to foreign private issuers, which provide for reduced disclosure on a simpler registration statement form, confidential submissions, more flexible testing the water rules and simplified compensation disclosure and analysis. many foreign issuers will also be able to file and report as an emerging growth company, which provides additional flexibility and relaxed disclosure benefits. finally, foreign issuers may be able to utilise home-country practice exceptions to certain exchange corporate governance requirements. foreign issuers may also choose to sell equity securities though aDr/ aDs issuances.

What are the current trends in the US? Baumel: Given the current ipo market in which ipos in general and in the biotech sector specifically have ground to a halt, one 19

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analysis of EuropEan biotEch companiEs on thE stock markEts focus on nasDaQ

trend that we can expect to continue to see is the use of multi-track processes in which an ipo, an m&a transaction and other potential liquidity events are considered holistically during a single unified process. private companies with strong technologies and venture capital backers can be expected to adapt to a weak market for new issues by increasing their private capital raising (as a bridge to a later more strategic transaction) and deferring exit for a later higher value proposition. there is likely to be downward pressure on valuations as public and private investors as well as buyers seek to wring out risk. When the market for us initial public offerings improves, we expect to see a significant number of European companies considering listing in the us as a result of the relaxed sEc standards available to foreign private issuers and emerging growth companies, including the ability to start the sEc registration process on a confidential basis. Given both market volatility and a difficult funding environment, we would also expect to see smaller public companies analysing whether to remain public or to consider going-private strategies.

What are the current trends in Europe? Michels: Despite the rather unfavorable market conditions since the beginning of 2016, the frankfurt stock Exchange witnessed its first biotech ipo in more than a decade when brain aG went public in January 2016. as such, it remains critically important for European biotech companies to have compelling options in Europe for go-

ing public as European stock exchanges increasingly are being seen as a viable alternative to nasDaQ. on the other end of the spectrum, we have continued to observe smaller financings take place for biotech companies via crowdfunding platforms over the past year. further, it remains to be seen whether the recent announcement of Euronext and the belgium Expert market to create the first secondary market platform for unlisted biotech companies is more of a marketing ploy or a truly innovative way towards building a viable crowdfunding secondary market.

What is Dentons’ offering for biotech clients? Baumel: our practice covers virtually all aspects of life sciences including medtech, pharma and biotech clients. this allows us to seamlessly handle transactional, tax, ip, litigation, employment, regulatory and compliance matters. our corporate practice also includes ipos, m&a, joint ventures, strategic alliances, and venture capital. Michels: our team of capital markets specialists in the us and Europe has strong experience in all industry segments. most importantly, we have a deep set of venture capital and strategic relationships spanning the globe. as an example, we advised Germany-based innocoll aG, a speciality pharmaceutical company, in connection with its nasDaQ ipo in 2014, a follow-on offering in 2015 and its re-domiciliation to ireland in 2016.

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Robert Michels is a partner in Dentons’ Frankfurt office and co-heads the European and Global Capital Markets groups at Dentons. Robert Michels specialises in capital markets, banking and securities law. He advises national and international clients in connection with listings/IPOs/SPOs on European and US Stock Exchanges as well as with corporate bonds. In addition, he advises issuers of structured products as well as listed companies with regard to compliance and post-listing obligations. He also represented several trading firms and traders in connection with trading compliance. Another focus is the legal advice of crowdinvesting and crowdlending platforms.

Jeffrey Baumel is a partner in Dentons’ New York office and co-heads the firm’s Life Sciences and Healthcare industry sector. He represents a broad range of companies in the life sciences, biotechnology and technology industries. His deep securities law experience comes from working with issuers, underwriters and venture capital investors on a wide range of transactions. These have included public offerings and private placements of equity and debt securities involving hundreds of millions of US dollars. In addition, Jeffrey Baumel has worked extensively with venture capital and investment banking firms specialising in growth-stage ventures.

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Outlook 2016

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analysis of EuropEan biotEch companiEs on thE stock markEts: us vs EuropE focus on nasDaQ

Times are Changing European listed biotech companies delivered solid results in 2015, but in the new year the situation seems to deteriorate. now it looks like the sector might have to start coming to terms with a closing ipo window. By Bernd Kaltwaßer, European Biotechnology Magazine

at first glance the outlook looks pretty grim. between 1 January and mid-february, the nasDaQ biotechnology index (nbi) lost about 25% of its value. the first month of 2016 was also the third-worst monthly performance in the measure’s history. comprising some 190 biotech stocks traded on the us-based technology stock exchange, the index lost every inch of ground it had gained in 2015. it’s starting to look as if the biotech sector’s three-year deluge of public market debuts, with dozens of companies raising billions of dollars in funding, is now rapidly grinding to a halt. and not just newcomers are seeing falls in value. “Even for the highest-quality companies, there is less demand than there was a few months ago for ipos,” Ziad bakri, a healthcare analyst at mutual fund firm t. rowe price, told the Wall street Journal. “it’s very tough.” Overall number of IPOs went down there have been several early warning signs that the path to going public is growing increasingly rocky. the overall number of ipos in the us has fallen, while more and more companies have pulled the plug on plans to take the leap. January of 2016 was the first month without a single ipo in the us in more than five years, according

to market intelligence firm ipreo. citing adverse market conditions, the first European biotech companies such as acacia pharma (lsE) have also decided against pursuing a listing in the second half of 2015. so it shouldn’t come as a surprise that sentiment among biotech investors has grown sour. Even the year’s biggest healthcare investment event in mid-January 2016, the Jp morgan healthcare conference – held this

223% This was the range of percentage points between the best and worst performing biotech IPO in the US in 2015, compared to 182% in Europe.

time in san francisco – couldn’t do much to remedy the situation. on the event’s first day, biotech stocks hit an unexpected low, with the nbi closing below 3,000 points for the first time since october 2014. several of this year’s conference attendees also commented on a very different mood than the “everything is awesome” theme that has prevailed at the last few Jp morgan conferences. however, the bull market drew offerings like honey draws flies. Just over 200 biotech 23

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analysis of EuropEan biotEch companiEs on thE stock markEts: us vs EuropE focus on nasDaQ

Best and worst performing IPOs in the US and Europe 2015 Company

Offer Date

Day IPO Deal size First Pop1 Return2

TOP 5 – US3

Company

Exchange

Offer Date

Deal Size

First Day IPO Pop1 Return2

TOP 5 – Europe

Aclaris Therapeutics

6/10

US-$55m

+144.9%

Motif Bio

AIM

02/04

€3.8m

+50.0%

+113.8%

Spark Therapeutics

29/01

US-$161m +117.4%

+97.0%

Poxel

Euronext

06/02

€25m

+7.96%

+98.8%

Seres Therapeutics

25/06

US-$134m +185.6%

+94.9%

Sensorion

Alternext

16/04

€8.2m

±0.0%

+92.1%

Inotek Pharmaceuticals

17/02

US-$40m

+0.0%

+88.8%

Biophytis

Alternext

13/07

€10m

+38.3%

+91.3%

KemPharm

15/04

US-$56m

+1.8%

+80.5%

Immunovia

First North

01/12

€3.1m

+60.54%

+83.8%

+0.5%

FLOP 5 – Europe

FLOP 5 – US3 Zosano Pharma

26/01

US-$50m

+0.1%

–78.0%

Nexvet Biopharma

NASDAQ

07/02

€33.1m

–11.2%

–65.9%

Bellerophon Therapeutics

13/02

US-$60m

–25.3%

–76.0%

Nordic Nanovector

Oslo Bors

20/03

€66.5m

+7.8%

–55.9%

HTG Molecular Diagnostics

6/05

US-$50m

–1.6%

–66.4%

FIT Biotech

First North

01/07

€3.5m

–33.3%

–48.7%

OpGen

5/05

US-$17m

–19.2%

–70.5%

Evgen Pharma

AIM

21/10

€9.5m

–8.8%

–41.2%

Jaguar Animal Health

13/05

US-$20m

–3.1%

–73.1%

Abivax

Euronext

05/06

€57.7m

–1.4%

–33.6%

first-day price spike, price differential between offering price and closing price on first day of trading; 2 price differential between offering price and closing price on 31/12; 3 all companies listed on nasDaQ stock exchange Data: renaissance capital (us), biocom aG (Europe)

and pharma companies have thrown their hats in the ipo ring since 2011, according to data provided by Dealogic. Within that group, more than 100 development-stage firms were still trading in mid-february. and while the average company is small, their aggregate size is considerable. Even after the 2016 selloff, they sport a combined market value of about us-$65bn. 2015 was a hallmark year for European companies as well. Despite a slowdown in the us, the biotech public sector here continued the growth development that started back in 2013 (see p. 8). a closer look at the best and worst performing ipos in Europe

and the us (see table above) implies however that the chance of grabbing a bigger chunk of cash quickly comes at a cost: more volatile development of stock price. the spread between the best and worst ipo returns in Europe was 182 percentage points, compared to 223 percentage points in the us. in addition, ipo returns on the five best and worst-performing ipos were grouped more closely in Europe. Late phase IPO cycle because European stock markets historically tend to follow developments on us exchanges within months, it now seems likely that the ipo environment is set to grow

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more challenging in Europe in the days to come. and there are some indicators that the industry has already entered into the late phase of an ipo cycle. for instance, Europe has seen a remarkable spike in acquisitions of more or less empty corporate shells. Using shells as a shortcut way private companies seeking a public listing often use a strategy involving shells to shortcut their way to one when the ipo window begins to close. to mention just a few: private kuros biosurgery aG (Zurich, ch) recently bought cytos biotechnology aG (schlieren, ch), relief therametrics sa (Geneva, ch) picked up therametrics holding aG (stans, ch), and Elanix technologies sa (nyon, ch) acquired porta systems aG (GEr). Despite stumbling ipo markets, some experts remain cautiously optimistic for 2016. “there will be pockets of strength and opportunities for outsized returns,” argue experts from renaissance capital, while marshall Gordon from clearbridge investments thinks ”that high-quality companies will be able to raise fresh capital, even in the current challenging environment.” or as Jeff leerink of leerink partners puts it: “the market is selectively open for business.” Despite the volatile markets in Europe and elsewhere, German bio economy pioneer brain aG successfully went public on Deutsche börse’s frankfurt stock Exchange in mid -february 2016, bagging €31.5m and being the first German biotech ipo in more than ten years. on nasDaQ, gene-editing company Editas medicine raised us-$94.4m. the post-ipo valuation

of us-$571.2m was the highest ever for a preclinical-stage company. many other firms have already begun to explore alternatives to an ipo, and there now appears to be an increased willingness among private biotech companies to explore sales opportunities. “on the demand side of the equation, strategic acquirers’ interest in biotech has remained fairly consistent in the past four years,” analyses investment company William blair in a research report. unlike speciality pharma, which has seen a spike in m&a activity driven by cheap debt and public investors who have rewarded acquisitions regardless of strategic alignment, biotech acquirers have stayed focused on strategic fit. Cash is still available so there are still many good reasons to be optimistic about the sector. cash is still available for biotechs, not least because a slew of venture capital firms have raised new funds over the last two years. Despite the market turmoil, a number of both private and public companies have also managed to secure neccessary cash, and now have pockets deep enough to continue operations. but perhaps most compelling is that promising new treatments are popping up across multiple therapeutic categories and not only in the always vibrant field of oncology. companies that can convincingly demonstrate how patients profit from their treatments will find it easier to attract cash. so there’s the hope that this time – even if biotech companies have to wait awhile to go public – they might be able to bridge the valley of Death.

this article is a shortened version of the spring edition’s European biotechnology magazine cover story. www.eurobiotechnews.eu

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The Companies’ View

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEts: us vs EuropE the companies’ view

Cross-border Experiences European biotech companies have always individual reasons on choosing their listing location. the case studies show the broad spectrum of stories that come along with an ipo or secondary listing – whether it took place in Europe or in the us.

the decision for a listing location is one of the key questions during the ipo process. the case studies in this report highlight that there is always an individual story behind each company and that sometimes the ipo was not even planned at the start. in the report, we present the background stories of listings from france such as of cAr-t play cellectis and diabetes specialist poxel. Danish Ascendis pharma, finnish Biotie therapies and German Affimed represent a range of European companies which, for different reasons, all suceeded

with their ipo on nAsDAQ. As a special case, German Evotec was included in the report to shed some light on the reasons for de-listing on nAsDAQ. motif Bio is an example for a biotech company that needed a quick listing for transaction reasons and opted for the Aim in london. the cEos and cfos interviewed in the framework of this report share their experiences with regard to their ipo preparations and reasons for their listing. they provide invaluable insight on how to prepare for a an ipo and on what to avoid.

Case studies at a glance Company

Country of origin

Exchange

Year of listing

Page

Affimed

Germany

nAsDAQ

2014

Ascendis Pharma

Denmark

nAsDAQ

2015

Biotie Therapies

finland

nAsDAQ

2015

Cellectis

france

Euronext/nAsDAQ

2007/2015

Evotec

Germany

fsE

1999

Motif Bio

Aim

2015

Poxel

france

Euronext

2015

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04.04.2016 9:20:23 Uhr

AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: Affimed

Affimed

engaging NK Cells to fight Cancer German Affimed was one of the first European biotech companies that profited from the open ipo window in the us. since its listing on nAsDAQ in 2014, the immuno-oncology specialist has managed to raise more than us-$120m – enough capital to continue to develop its clinical pipeline of bispecific antibodies, and to present an exit strategy for its venture capital investors. “in Europe, we didn’t think it was possible for us to raise our desired amount of money, that’s why we

“The NASdAQ iPO was the consequence of an early focus on fundraising in the US.” focused on us investors early on,” explains Adi hoess, cEo of Affimed. “in the end, the ipo was a consequence of this process, but not intended in the beginning.” hoess joined the company in 2010, but Affimed’s roots had already been put down ten years earlier when melvyn little at the German cancer research center in heidelberg first developed a technology to establish special antibodies with two or more binding fragments – which resulted in the foundation of Affimed. in 2007, first clinical studies in other bispecific molecules showed promising data for this approach. this led to the first venture capital investments in Affimed and helped the German startup establish its properietary tandAb technology platform and first clinical projects. “today it’s understood that the development from a

healthy cell into a tumour cell is closely related to the immune system and that therapies should activate the body’s own immune cells to destroy the tumour,” hoess explains. Affimed combines several strategies: the company is one of the few that aims to trigger natural killer (nk) cells as one important part of the immune system. “compared to the more common t cell-based approaches or to checkpoint modulators, this way seems to broaden the therapeutic window without causing too many side effects,” hoess says. in addition, Affimed focuses on antibodies with four binding elements allowing highly specific binding and therefore effective attacks on the cancer cells. this technology is also used to develop trispecific antibodies with two distinct tumour binding fragments which could make them even more efficient in fighting cancer. the nAsDAQ proceeds have helped to advance the two clinical projects Afm13 and Afm11. Afm13 is the most advanced candidate and has been developed to treat patients with hodgkin lymphoma. the bispecific tandAb antibody is in a phase ii trial and activates nk cells by targeting cD16A and cD30 receptors. in early 2016, Affimed started a cooperation with us-pharma company merck to test Afm13 in combination with the anti-pD-1 antibody keytruda. “in patientderived xenograft models, this combination demonstrated impressive synergy,” hoess underlines. Afm11 on the other hand is a t cell engager targeting cD3/cD19. it’s currently in phase i testing to treat non-hodgkin lymphoma. A further trial with leukaemia patients is planned to start in 2016.

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: Affimed

Affimed N.V., Heidelberg, Germany

Established

2000

Headquarters

heidelberg

Field of activity

immunotherapies with a focus on bispecific antibodies that trigger nk and t cells; several candidates to treat hodgkin lymphoma, non-hodgkin lymphoma, leukaemia

Employees (2015)

Turnover (2015)

€7.6m

Market capitalisation | 6 Jan 2016

€178m

Year of IPO | NASDAQ

2014

Raised capital via IPO | NASDAQ

€43.2m (us-$56m)

Raised capital via follow-on financings | 2015

€56.6m (us-$64m)

Major shareholders | 30 March 2016

Aeris capital (27%), orbimed (14%), novo nordisk (8%), Brookside capital management (6%)

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: Affimed

interview You decided to go public in 2014. Why was it the right time? A lot came together in 2014: at the time, our vcs had already been on board for several years and we wanted to present them with an exit strategy. in addition, we were looking for larger financing volumes to further develop our early clinical programmes in immuno-oncology. simultaneously, there was an open ipo window, a high interest in this topic and other listed peers at the same development stage. With our story, we were perfectly suited to fit in this sweet spot.

Adi Hoess joined Affimed in 2010 as Chief Commercial Officer and since 2011, has led the company as CEO. He has more than 20 years of professional experience. Prior to joining Affimed, Dr Hoess was CCO at Jerini AG and CEO of Jenowis AG. At Jerini AG he played a major role in the M&A process of Jerini AG with Shire. Dr Hoess began his professional career in 1993 at MorphoSys as a scientist, in 1997, he became Director of BD and in 1999, VP of Licensing and BD. Adi Hoess received his PhD in chemistry and biochemistry from the University of Munich in 1991, and an M.D. from the Technical University of Munich in 1997. From 1991 to 1993, he worked as a post doc at the Dana-Farber Cancer Institute at the Harvard Medical School in Boston, US.

Why did you choose NASDAQ? the decision for the us was a consequence of an early process which, in the beginning, was not intended to end in an ipo on nAsDAQ. in 2012, we looked for a new private financing round – and due to a better infrastructure of special crossover funds in the us, we started contacting investors and speaking with biotech analysts overseas. Eventuallly, we hired financial and ir support, did a few roadshows and got good feedback from the 70-100 investors we’d met. this was a crucial and important step. When the ipo window opened in 2013, we had already accomplished a main part of the ipo preparation. in parallel, the immunooncology field had further evolved. in the end, the ipo on nAsDAQ was a logical consequence of our early fundraising process in the us.

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➜

dO S

Solid story: you need to have a convincing story to tell the investors. ideally, you are active in an attractive market and you already have clinical programmes with good data.

You have raised more than US-$ 120m on NASDAQ. What makes Affimed attractive to US investors?

How do you differentiate from your competitors? our technology has several advantages. firstly, we are the most advanced company in the field working with bispecific antibodies that have four antigen binding fragments. By doing so, we are following a dual targeting approach to fight cancer cells: we attack each receptor twofold which makes the antibody highly specific and more effective than others. the four elements also allows us to build trispecific antibodies with two different tumour target binding sites which could be promising in the future to treat solid

Is it a problem for you being a European company? not at all, because we’ve addressed the main challenges non-us companies face when entering the us market: you need a team with a proven track record in biotech to convince investors. if you have this reputation – and we had it – investors will take you seriously and there is no problem in having European roots.

Has the downturn on the stock markets had an influence on you? We are not surprised to see a downturn in the stock market. it’s the normal down sizing when generalists go out. for us, it doesn’t have an impact because we are still financed for another two years. But even if we needed fresh capital now, we wouldn’t anticipate any issues. that’s the advantage of nAsDAQ: refinancing options are there at any given time because of the critical mass of biotech specialists.

Early start: An ipo process needs good preparation. the earlier you start talking with investors, analysts and banks, the clearer you will see whether your story is good enough for the stock market.

dON’TS

➜

today, we are playing at the top of the league in a highly competitive environment, with our approach that focuses on bispecific antibodies that target immune cells. With our competence in nk cell engagers in addition to the more common t cell approach and our highly specific tandAb antibodies, we’re not doing the same as ten other companies. What makes us additionally attractive to investors, is the fact that the field we’re in is not just hype, it has already proven clinical efficacy and there are products on the market. thus, compared to other new technologies such as gene therapy, immuno-oncology therapies are less risky to invest in.

tumours. secondly, some of our antibodies target nk cell activation. this strategy is still in an early phase, but it seems to be less toxic than t cell based approaches and promising for combination strategies. thirdly, we’ve solved some of the technological challenges connected with bispecific antibodies. We are able to produce high volumes of stable molecules and can keep the cost of goods at a low level.

Long experience: us investors look for serial entrepreneurs. you need to have a track record in the biotech industry and a broad management team with enough professional experience. With a good reputation, you will be able to convince investors.

Be careful: not every bank and not every advisor in the us will be the right one to prepare your company for an ipo. take your time to carefully consider which partner fits your needs best. Be present: Don’t underestimate the time you need to establish your company within the financial community in the us. it’s time consuming and you have to follow a consequent approach. in the long-term perspective, European companies should plan to build up at least a core us team with continuous presence overseas.

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: Ascendis pharma

Ascendis PhArmA

Us iPO initiates Growth spurt Ascendis pharma A/s is among the European biotech companies that chose the triedand-tested us waters for an ipo in January 2015. “our main reason to list in the us was that we wanted to have better access to our investors,” says Jan møller mikkelsen, founder and cEo of the Danish biopharma. “it’s much easier to address us investors if you are listed on nAsDAQ.” With the bulk of its future market in the us and more capital potential, Ascendis felt they would fare better with a us than with a European listing. “We had a good solid story, and for us the timing was absolutely perfect. We were one of the first ipos on nAsDAQ in 2015,” remarks Jan møller mikkelsen.

“The timing was perfect. We were one of the first iPOs on nAsdAQ in 2015.” founded by Jan møller mikkelsen in 2007, Ascendis pharma is headquartered in copenhagen but maintains offices in palo Alto, california, with research and development facilities in heidelberg, Germany and copenhagen. Ascendis’ transcon technology platform produces predictable long-acting prodrugs, which can be applied to protein, peptides and small molecules. Among others, the Danish company produces products for the treatments of growth hormone deficiency (GhD). currently, GhD patients have to re-

place the growth hormone with daily injections. Ascendis’ transcon Growth hormone is a replacement therapy for GhD sufferers with once-weekly administration. “What is unique in our transcon Growth hormone is that we can liberate an unmodified growth hormone with exactly the same concentration and exposure as the less convenient daily growth hormone products. in clinical studies, our treatment has demonstrated an efficacious and safe profile,” explains Jan møller mikkelsen. since its ipo on nAsDAQ at the beginning of 2015 where it raised us-$124.2m in capital, the company’s profile has grown considerably. its most advanced product for the treatment of GhD in children and adults will move into phase iii trials in summer 2016. “Because we will have these trials, awareness of the company is increasing. We have finalised two phase ii trials and all the data we saw and achieved indicated that we really have the best-in-class product opportunity in the market,” confirms Jan møller mikkelsen. Another influencing factor for choosing a us listing was the company’s collaborations with two large us-based market leaders, in medical fields outside its core area. its partnership with Genentech, a us subsidiary of swiss pharma concern roche, focuses on ophthalmology, and together with sanofi, Ascendis works in the field of diabetes.

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: Ascendis pharma

Ascendis Pharma A/S, Copenhagen, Denmark

Established

2007

Headquarters

copenhagen

US subsidaries

Ascendis pharma inc., palo Alto, california

Field of activity

endocrine/metabolic and cardiovascular diseases

Employees (2014)

Turnover (2014)

€13.9m

Market capitalisation | 6 Jan 2016

€419m

Year of IPO | NASDAQ

2015

Raised capital via IPO | NASDAQ

€109m (us-$124.2m)

Major shareholders | 14 March 2016

fidelity management & research co. (9.64%), rA capital management (7.01%), visium Asset management (5.75%), rs investment management (4.11%), vhcp management (3.40%), Janus capital management (2.94%), Acuta capital partners (2.18%), Bakers Bros. Advisors (2.12%), sio capital management (1.19%), rock springs capital management (1.13%)

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: Ascendis

interview Why did Ascendis decide to go public in the US? it was quite clear that we could get better access to us investors. this was the main reason to go to nAsDAQ. it’s much, much easier and a more direct way to address the us investors if you are listed on nAsDAQ compared to being listed on one of the European stock exchanges.

Jan Møller Mikkelsen has served as Ascendis Pharma’s CEO and President since he founded the Danish biopharma in 2007. He is now based at the company’s US office in Palo Alto, California. Prior to setting up Ascendis, Jan Møller Mikkelsen was President and CEO of Veloxis Pharmaceuticals A/S. In 1999, he co-founded ProFound Pharma A/S, which was acquired by Maxygen Inc. in 2000. It was here that Jan Møller Mikkelsen was responsible for 15 drug discovery and development projects. He has also held several positions at Novo Nordisk. He holds a degree in biochemistry from the University of Odense in Denmark and pursued postdoctoral research at the Children’s Hospital in Oakland, California.

Why did you not choose a European stock market exchange for your IPO? i actually think it’s the opposite of the us. in Europe, there is low interest in biotech with shareholders. nAsDAQ however, was, and still is, a very positive environment for biotechs. secondly, in the states there is much more focus on technology platforms than in Europe, so for us it was the right place to be.

How do you rate the development of Ascendis since going public, in particular with regards to coverage and interest by investors? it’s going exactly as we had expected and hoped for — i have no complaints. i also think the story has developed exactly as we wanted it to. As the company matures towards phase iii trials, we’re seeing a higher level of interest among investors.

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dO s

Solid story: but you need to have matured your story to a state where it is attractive to us investors. if there is a focus for a good story in the biotech industry, it will get out. US presence: have a local presence in the us. this will help with the communication with the investors.

How do you view your stock market performance since your IPO?

What is your view of the European stock exchange market? first of all, you can see that the European market is much more fragmented because it is located in different places with different players. And nAsDAQ is so much bigger and more established than the European markets. it has created a lot of huge successes, such as Gilead.

Was the time of your IPO well chosen? yes, it was perfect. it was one of the first ipos on nAsDAQ in 2015. We started planning at the beginning of 2014 and the execution took six months.

How much effort did you put into the preparations before your NASDAQ listing?

Was Ascendis’ deployment in the US an influencing factor when choosing NASDAQ?

dOn’Ts

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We are moving around our stock price – plus/minus 10%. We’re doing pretty well considering there has been a big downturn in the market. our company has been less influenced by the fluctuation on the market. i think this is because the potential of our company is less speculative, and we are starting to be a late-stage company. perhaps there has been much more fluctuation on the more speculative companies that are preclinical or early stage because they do not yet have proof-of-concept.

the different regulations to be a public traded company in the us. the financial department and the compliance officer had a major impact on Ascendis becoming a publicly traded company.

Target group: if you have a product that is targeted to the us market, then nAsDAQ is the right place for you.

Maturity: if you are a preclinical or early stage company, really consider if a flotation on nAsDAQ is a viable option because there is more fluctuation on there for early stage companies. Strong investors’ base: you cannot be successful there without a strong crossover syndicate of European and us-based investors.

We went to the us because our largest market is there. it was very obvious to us to move into a us stock market even though we were a Danish company. in the longterm, we want to develop towards becoming a us-based company.

We hired an American cfo in the us before the listing. We have to live up to

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: Biotie therapies

Biotie therapies

the Goal always in sight headquartered at the edge of Europe, in turku, finland, Biotie therapies prides itself on having grown into a global biopharmaceutical company. After all, the market is global, too, says Biotie’s cfo David cook. predecessor Biotie therapies corp. was founded in 1992, and in 2000, it was the first finnish biotech company to go public. the

“it was a lot of work by a lot of people. But we were well prepared, and the flotation went as smoothly as we had hoped.” company floated close to home on helsinki stock Exchange’s new market. But Biotie only took on its current form after merging with finnish biotechs oy contral pharma ltd and carbion inc in 2002. the merger laid the foundation for Biotie’s transition into an international company. the takeover of synosia in 2011 was the next milestone, netting the company subsidiaries in switzerland and the us. “having operations in both Europe and the us is a huge asset for us,” stresses cook. over the years, Biotie has specialised in neurodegenerative and psychiatric disorders. its first lead product was nalmefene, which reduces alcohol consumption in alcoholdependent patients. today, Biotie commercialises the drug through its Danish partner lundbeck under the trade name selincro in 26 markets. tozadenant, an adenosine

A2A receptor antagonist for the treatment of parkinson’s disease, has taken nalmefene’s place as lead product in Biotie’s pipeline. When partner ucB handed back the global rights to the drug to Biotie in 2014, the company took an unusual step and decided to continue the development in-house. A first for the company, but well justified in light of the robust phase iib data, Biotie believes. in order to finance the upcoming phase iii study, Biotie decided to list in the us. the us operations have grown to be one of the most important pillars of Biotie’s business, cook says, so it was a natural step for the company. the flotation itself went smoothly, he adds. After all, the possibility had long been on the table, and Biotie had already been in talks with investors for years. it still took six months to compile the documentation required. “Bringing your finances up to speed is an exercise that is easy to underestimate,” cook points out. “you might think, well, we’re already a listed company and we were audited according to ifrs. But then, you will find out that you’ll have to get re-audited, still under ifrs, but under the us standards.” in June 2014, Biotie confidently raised the €50m it had anticipated. the company has wasted no time and started recruitment for the tozadenant study in July 2015. “We expect the top line results of the main study at the end of 2017,” cook says. phase ii studies for its two other products, syn120 for the treatment of Alzheimer’s disease and dementia, and Btt1023, an antibody for the treatment of liver disease, are expected to yield results by the end of 2016.

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: Biotie therapies

Biotie Therapies Corp., Turku, Finland

Established

2002

Headquarters

turku

US subsidary

Biotie therapies inc, san francisco

Field of activity

cns and psychiatric disorders

Employees (2014)

Turnover (2014)

€14.9m

Market capitalisation | 6 Jan 2016

€178m

Year of IPO | NASDAQ OMX

2002 (predecessor: 2000)

Raised capital via IPO | NASDAQ OMX

n/a (predecessor: € 20m)

Year of listing | NASDAQ

2014

Raised capital via IPO | NASDAQ

€50.2m (us-$56m)

Stock exchange

nAsDAQ omX helsinki (Bth1v), nAsDAQ stock market (Biti)

Major shareholders | 14 March 2016

Biotie therapies oyj (9.7%), ilmarinen mutual pension insurance company (2.5%), the finnish national fund for research and Development sitra (1.1%)

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: Biotie therapies

interview Why did Biotie decide to carry out a secondary listing in the US?

David Cook is Chief Financial Officer of Biotie Therapies Oyj, and is also in charge of the company’s business development activities. Since 2014, the British native, who holds a M.A. in chemistry from the University of Oxford, has also served as Non Executive Director and Chair of the Audit Commitee of Alliance Pharmaceuticals Ltd. Previously, he held senior financial positions at Jazz Pharmaceuticals, EUSA Pharma and Zeneus Pharma.

We needed equity funding for the clinical phase iii study for our lead product tozadenant for parkinson’s disease. thanks to the money raised, we could start recruitment for the study in July. But it was quite natural for us to go to the us. We actually have more people working for us in the us, in south san francisco, than in turku. our products are focused more on the us market, too. We have the global rights, but initially we are looking for fDA approval. We are not a company that just has an office suite in new york – we have real operations and half our management team in the us. so the nAsDAQ listing was very much a natural step for Biotie.

You raised a relatively small amount for NASDAQ. for us, the us ipo was part of a twostage financing process. We raised a total of €83.3m gross. We did a private offering first with some new us specialist healthcare investors in the form of convertible notes. these automatically converted into shares upon the us offering. the money raised was the money we needed. it would not have been in our current shareholders’ best interests to raise more at this price.

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Do s

Farsighted: Early preparation is key. meet us investors even before you decide on a nAsDAQ listing.

Storyteller: you need to have a good story and a good reason for people to invest.

Were you satisfied with the listing and the subsequent development of your share price?

How much work did the US flotation mean for Biotie? there is a lot of pre-preparation required before you decide to list in the us and start the formal process. We have been working with ir group trout for the last four years. they arranged a series of road shows and conferences where we met investors, which turned out to be very helpful in the actual ipo process. After the board decision to float on nAsDAQ, it took us about six or seven months before the actual listing happened. Which is a relatively short time – if you hadn’t ever been in the us market, it would be very difficult

What is your view of the US stock exchanges in comparison with the Helsinki market? i cannot really compare the actual floating process as Biotie’s helsinki listing happened long before i joined the company. that said, my gut feeling is that it is generally a quicker process in finland, or across Europe generally. there are much more stringent rules and documentation required in the us. As an example, the form f-1, the registration statement, is a much longer document than a finnish prospectus would be. probably three times as long. And the review process that one needs to go through is, again, a much longer process than in finland.

Don’ts

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the listing itself was a success, and we were very pleased with the share price, especially given the price in finland. since it was a secondary listing, the nAsDAQ share price was inevitably pegged to the finnish price, and there was no new valuation of the company. As far as share price development goes, it’s too early for an analysis. so far, i think we are doing rather well. there has been some market volatility, but our share price development has been mostly positive, which is certainly something not all companies can say.

to do it in that period of time. We managed because we had been meeting us investors and going to us healthcare conferences for many years. so in a roundabout way, preparation had been going on for some time, albeit indirectly. After the decision to float, it was mostly a matter of bringing the financials up to speed, which was quite a challenge. from there, we moved on to the road shows and pulling together the registration.

Buddy up: make sure you have a great team working with you, both internally and externally.

Piece of cake: Going public on nAsDAQ is not a walk in the park. Do not underestimate the time and effort that will be needed for the entire process of a listing!

Shooting star: Don’t expect the share price to completely change just because you are now listed. this is especially true for a company already listed, which will essentially have a fixed price going into the market.

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: cellectis

cellectis

cresting on the cAR-t Wave cellectis is one of the pioneers in the field of gene editing and has developed the first approaches to meganuclease-based human gene therapy. its lead product candidate is ucArt19, an engineered t-cell product candidate for the treatment of cD19 expressing haematological malignancies that have developed in acute lymphoblastic leukaemia and chronic lymphocytic leukaemia. the company’s products also include ucArt123 for acute myeloid leukaemia in-

“the Us deployment of the company was at the centre of the decision to go to NAsDAQ.” dications, ucArt22 for acute lymphoblastic leukaemia, and ucArt38 and ucArtcs1 for multiple myeloma indications. All candidates are in the preclinical phase. Based in paris and new york, cellectis is currently the only gene-editing company to develop off-the-shelf cAr t-cell therapies. in contrast to competitors, cellectis’ allogeneic t-cell therapy doesn’t involve the individual cells of the patient. instead they follow a Gmp-based approach. “the objective is to just send vials to hospitals, patients come in, injection is immediately given, and there is no wait and it’s price-competitive,” explains André choulika, cEo and co-founder of cellectis. the roots of the company date back to 1999 after choulikas’ project “cellectis” won a competition organised by the french ministry of research to help high-tech busi-

ness start-ups. in 2005, the research team provided proof of in vivo efficacy of meganucleases as molecular scissors to reprogramme the genome of living organisms and cells. With this scientific breakthrough under its belt, cellectis made a successful ipo on Euronext Alternext in 2007. “our investors were not convinced we could do it at first, but they trusted us and we finally made it. since then we have built up a lot of credibility,” says choulika on his company’s initial listing. comparing the general mood for biotech ipos in 2007 to 2015, choulika notes, “the mood was very similar – on a bullish side – a very positive mood.” in recent years, cellectis successfully increased the number of us shareholders and advanced its us presence. in 2014, cellectis closed a strategic partnership with pfizer, which set the basis for stronger r&D ties with us academic centres such as the mD Anderson cancer center, tX, and Weill cornell medical college, ny. in 2015, the french company also opened a subsidiary in new york. “the us deployment of the company was at the centre of the decision to go for a secondary listing on nAsDAQ. in addition, a lot of us shareholders were very demanding,” recalls choulika. Another push came from cellectis’ us competitors Juno and kite, which both went public in 2014. “We’re all in the same group which means we can healthily compete together on the same market,” choulika explains. “if you’re only listed in Europe, you don’t have the access to the same financial analysts and you’re not compared in the same way. it’s more on par, and it definitely makes things easier.”

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: cellectis

Cellectis SA, Paris, France

Established

1999

Headquarters

paris

US subsidaries

cellectis inc, new york plant science subsidiary, calyxt inc. new Brighton, minnesota

Field of activity

immuno-oncology therapies based on gene-edited t cells

Employees (2015)

100

Turnover (2015)

€ 56.4m

Market capitalisation | 6 Jan 2016

€ 966m

Year of IPO | Euronext

2007

Raised capital via IPO | Euronext

€ 24m

Year of listing | NASDAQ

2015

Raised capital via listing | NASDAQ

€ 208m (us-$228m)

Major shareholders | 14 March 2016

fmr (10%), cormorant Asset management (1.3%), orbimed Advisors (1.0%), Jp morgan (0.9%), lazard Asset management (0.8%)

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: cellectis

interview Why did Cellectis decide to carry out a secondary listing in the US?

André Choulika is the Chairman and co-founder of Cellectis and has served as its CEO since its inception in 1999. He received a PhD in molecular virology from the Pierre et Marie Curie University (Paris VI) and completed a research fellowship at the Harvard Medical School Department of Genetics. Whilst working in the Division of Molecular Medicine at Boston Children’s Hospital, he developed the first approaches to meganucleasebased human gene therapy. He has been the President of France Biotech since June 2010.

the decision came out of an analysis of our shareholder structure. We realised that since the end of 2013, our shareholders have shifted from being very strong paris-based institutional investors to us-weighted holdings. We had more us shareholders who were buying stocks on the french stock market. Also, we have had a strong presence in the us since signing the agreement with pfizer and are now developing products together with us academic centres.

Was the time of the secondary listing well chosen? yes, it was just at the top of the biotech wave and we capitalised on that. Just after the listing, the market crashed and since then it has been going down. But there is always a window for good companies to list in the us, so we don’t know if it would have worked earlier, but i am still convinced that any time is a good time for a good company. We had great momentum in Q1 2015 and there was a small pop. it’s also a question of luck.

Your share price is currently lower than at the time of the US listing. What were the determining factors for this? 42

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DO s

Stand out from the crowd: if you have a compelling story that can differentiate itself on nAsDAQ and will shine to investors, then you should do it.

How do you evaluate the work you have to put in for a NASDAQ listing? the us market is super demanding. you need to have offices in the us and put on road shows. if you don’t have a strong presence, investors will forget about you. once your company is listed on nAsDAQ, you have to abide by us rules. the biotech industry is resultorientated and the boom is essentially pushed by results.

What is your view of the US stock exchanges in comparison with the European market? there are a number of sophisticated investors in Europe, but there are more in the us. this is what makes the us mar-

ket more intense: more liquidity, more influence and competition. in addition, there is also the upside that you can raise more capital on the stock markets in the us than you can on Euronext. listing on nAsDAQ is more appealing to the financial community there. But if you cannot make a follow-on financing on Euronext, you won’t make it on nAsDAQ either. however, if you want to raise a hundred million euros on Euronext, it’s quite a challenge. But the European stock market is catching up with the us. there are more and more great investors — in france, Germany, switzerland, Great Britain and scandinavia. in Europe, it’s harder to gather enthusiasm on super ambitious projects, that’s also why we’ve opted for a deployment in the us.

Do you think European companies have to work more to attract investors in the US? i am not saying you absolutely have to go to the us if you want to be successful, this is not true. it’s great being on nAsDAQ if you are planning a us deployment, but i think there is a lot of potential to develop in Europe. A company that is only listed in Europe can have tremendous success. there is a great potential for any company to grow really big here, without any catches. if everyone starts turning to the us market and leaving Europe, it will be quite sad for Europe.

DON’ts

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there are two types of parameters that influence the stock price. one is the global market, which has not been in great shape over the past six months. the market in the summer was really tough for all stocks, including biotech. the second point is: all investors are waiting on clinical data. they want to know if our product works as well as autologous therapies or doesn’t work at all. there are three options: if the product doesn’t work, it will be hard. if it works, but not as well as autologous, it’s not bad — we have a market. option three: it works the same, then cards will be reshuffled.

Springboard: choose nAsDAQ if you have plans to deploy your company to the us. use nAsDAQ as a platform to expand your business in the us. if you want to launch a product over there, this will make a good story for us investors.

No interest: Don’t go on nAsDAQ if you can’t raise capital in Europe — you’re not going to find more excited investors in the us if you can’t create excitement in Europe. if you cannot make a follow-on financing on Euronext, you won’t make it on nAsDAQ either. it’s not a place to just go and grab some cash. Caution: if you get stuck with your ipo preparations, don’t trade after because you won’t have enough attraction for investors. Keep a low profile: if you’re not a hundred percent sure about listing, avoid media coverage on the ipo proceedings to avoid arousing us investors’ interest too early. otherwise the backlash could be severe. there is always a risk going on nAsDAQ. Life saver: Don’t go on nAsDAQ to salvage the company, but as a platform to jump.

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: Evotec

EvotEc

there and Back Again “We are one of the few companies that went to nAsDAQ and then left it,” summarises Evotec cEo Werner lanthaler. today, the German company is comfortable with its listing on the frankfurt stock Exchange, being one of 15 biotechs from Germany listed there. the company’s history began in 1993, when German nobel prize winner manfred Eigen founded Evotec Biosystems Gmbh together with a team of scientists. Back then the company developed its first high-throughput-drug screening system for pharma companies.

“the flotation was a precondition for the acquisition of Renovis, there was no way around it.” today, based on its screening librar y expertise, Evotec has established itself as a provider of drug discovery solutions for busine s s a nd ac ad e mic pa r tne r s worldwide. the company of fers drug discover y ser vices, among them antiinfectives, target identification and validation, compound management, proteomics, and cell and protein production. the list of its partners reads like the who’s who of biopharmaceutical research: Genentech, novartis, AstraZeneca, Bayer, medimmune, Boehringer ingelheim. Evotec has also launche d collaborations with roche, Janssen and pfizer to further develop its own clinical assets. A total of six candidates

are currently undergoing clinical studies. recently, Evotec announced a multi-target partnership with sanofi, strengthening its presence in the immuno-oncology field as well as in stem cell research. With regard to the public capital market, Evotec entered the scene in 1999 with its ipo at the “neuer markt” segment in frankfurt. since then, due to the difficult financial environment in Europe, the company has experienced ups and downs, followed by several strategic restructurings with either backing the service division or the clinical pipeline. in 2007, Evotec set its sights on us-American company renovis to gain a preclinical pipeline in pain diseases. A nAsDAQ listing was the only feasible step to make the merger possible. “you need a currency that will work on a global level,” lanthaler explains. it took one year to finally float and to complete the us$150m transaction. one year after the flotation, Evotec again restructured the company due to cost pressure and made the decision to delist in the process, choosing to bundle its liquidity on its home market instead. in retrospect, it was the right decision each time, lanthaler is sure. “the flotation was a precondition for the acquisition, there was no way around it,” he emphasises. “And the delisting not only meant major savings, but also a clear step towards adjusting the structure of the company.”

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: Evotec

Evotec AG, Hamburg, Germany

Established

1993

Headquarters

hamburg

US subsidary

Evotec (us), inc. with offices in san francisco, Branford and princeton

Field of activity

drug discovery/screening & drug development, activities in several indications such as neurodegenerative diseases, cancer, diabetes, pain diseases, antiinfectives and inflammation

Employees (2015)

1,000

Turnover (2014)

€89.5m

Market capitalisation | 6 Jan 2016

€525m

Year of IPO | FSE

1999

Raised capital via IPO | FSE

€64m

Year of listing | NASDAQ

2008

Year of delisting | NASDAQ

2009

Stock exchange

frankfurt stock Exchange

Major shareholders | 14 March 2016

roi verwaltungsgesellschaft mbh/roland oetker (10%), AGi (3%), tvm (3%)

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: Evotec

Interview Why did Evotec initially decide to carry out a listing in the US?

Werner Lanthaler has been CEO of Evotec since 2009. Prior to that, he held the position of Chief Financial Officer at Vienna-based biotech Intercell for nine years, during which time he was also instrumental in the company’s IPO. Previously, Lanthaler served as Director of the Federation of Austrian Industry, and as Senior Management Consultant at the consulting firm McKinsey & Company. He holds a doctorate in economics from Vienna University.

it was all part of an acquisition process of listed us company renovis. We did not have the liquidity for a cash transaction, and if we had paid off renovis’ shareholders with Evotec shares from the frankfurt stock Exchange, they might have dropped them right away. many us shareholders cannot or do not want to accept shares not listed on their home exchange nAsDAQ. the consequences could have been disastrous for our share price. to keep the investor base, it was a technical necessity to go public on nAsDAQ.

Evotec delisted in 2009, only a year after floating. Why? the costs associated with a listing on nAsDAQ are prohibitive. Also, we were cutting back our activities in the us at that time, for example closing down the site in san francisco. last but not least, don’t forget we were a small biotech company – still are, in fact. to split up liquidity on two different exchanges is problematic. At that time, it made more sense for us to pool our liquidity in frankfurt rather than in new york.

Would you make a different decision today? Who knows? there is a huge trend of European biotechs going public on 46

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Do’s

Well-prepared: consider your flotation as an operative undertaking that requires a lot of preparation and thinking ahead. the market is very selective.

Storyteller: you should have growth mapped out and an organic story to tell. if you are still in research and will be for years, a flotation might not be the right way for you.

How do European stock exchanges compare to NASDAQ? for each life science investor in Europe, there are a hundred in the us. the only two markets that work for the life sciences at the moment are paris and Aim in london. for smaller biotechs, frankfurt has not been of any relevance for the last few years. it is sad, but true. there is only one other biotech company listed with us in the tecDAX index of frankfurt stock Exchange, and there has not been a new listing in this segment for years. the same is true for other markets here. consider

Austrian biotech company nabriva. When i was at Austrian intercell, the company went public in vienna. today, 11 years later, nabriva, a very similar company to intercell, goes to nAsDAQ for its ipo. this shows that the vienna stock Exchange has not managed to be attractive to life sciences companies, even though there are many good biotechs in Austria. i am sure that almost all European companies are planning to list on nAsDAQ sooner or later.

What are the reasons for that? first of all, nAsDAQ ipos have more or less taken the place of venture capital in our segment. for a growing company looking for money, there are just no alternatives, as there is no liquid, functioning vc market in Europe. then, there is investor potential that is not really available here. there are almost only generalist investors in Germany, for example. When a company floats on nAsDAQ, it will benchmark the value.

Dont’s

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nAsDAQ. there is a larger pool of capital in the us, there are more knowledgeable investors, and a larger peer group. considering Evotec’s size and structure today, we would seriously consider a nAsDAQ listing. on the other hand, i am not unhappy with the listing in frankfurt. i believe that there is no company in the world that will succeed on nAsDAQ if they weren’t successful on their home market first. if a company cannot convince a home exchange of their capital market story, it will be even harder to convince an exchange far away. it is foolish to believe that investments will fall into your lap, or that the investors are any more naive in the us. however, there is more competition, but that goes for investors and companies seeking investors. A us ipo is definitely not a walk in the park!

Size matters: Don’t go on nAsDAQ if your company is too small. the worst that can happen to you if you go to nAsDAQ is to have no news flow and no visibility. if you have a market cap of under us$300m, you will easily go under in the huge pool of similar companies. floating will mean a lot of work and money spent, with possibly no pay-off.

Tight-lipped: Don’t be too quiet. you have to make yourself heard. there may be many investors on nAsDAQ, but you are also competing with many other companies.

Will we see Evotec on NASDAQ again in the near future? We are not ruling out that we will at one point float again on nAsDAQ. But on the other hand, by not doing so we have saved at least €8m over the last six years.

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: motif Bio

MOtif BiO

fighting Bacterial Resistance the development of new antibiotics is a field that has fluctuated over the last few years. But today, due to the increasing threat of multidrug-resistant bacteria, biotech companies developing novel antibiotics, are attracting a growing interest from public markets. this was also a contributing factor that pushed British antibiotic play motif Bio towards a list-

“it is important that we explore the US capital market, including a NASDAQ listing. ing on Aim in 2015. “Antibiotics are a really hot space right now and it was very difficult for investors to resist a phase iii ready antibiotic – there are just not many of those around right now, particularly outside of the us,” says Graham lumsden, cEo of motif Bio. lumsden joined the london-based company in 2013 af ter working with us-pharma company merck for 26 years. As motif’s new cEo, he re-focused the company on one core area: antibacterials. in addition, he looked for projects to enlarge the preclinical pipeline. “our programmes were so earlystage that it was proving very difficult to find investors. it became abundantly clear to me that it would be much more straightforward for us to raise capital if we had one or more later-stage assets,” lumsden points out. in 2014, motif was able to acquire the worldwide exclusive rights of iclaprim. the drug is a dihydrofolate reductase (Dhfr) inhibitor originally discovered by f. hoffman-la roche

ltd, which was licensed to and developed by swiss company Arpida AG. in 2008, following a phase iii trial, Arpida requested fDA and EmA approval, which was not granted. motif is now putting the drug back on the road. “iclaprim is 16-fold more potent than the currently used trimethoprim, which is of the same class of antibiotics. We reviewed all preclinical and clinical data and we believe that with some improvements, we will be successful,” lumsden says. the listing on Aim was a precondition for the acquisition of us-based nuprim, which held the commercial rights of iclaprim. With regard to the investors in london, motif followed a two-step approach. “the ipo was predominantly a retail investor raise. Based on that, we had a successful meeting with the fDA in which they agreed to take iclaprim to phase iii, and then we were able to get the designation of Qualified infectious Disease product (QiDp),” lumsden explains. the QiDp designation grants iclaprim ten years of market exclusivity in the us, starting from the date of approval. this allowed motif to go back to the institutional investors in london for a follow-on which was completed in July 2015. in total, motif raised more than €35m which will predominantly go towards the phase iii trial. in early 2016, the first patient was dosed. the fDA and EmA filings are planned for early 2018. until then lumsden is also trying to close the valuation gap between motif and its nAsDAQ-listed peers. in 2016, he appointed the investment bank mts health partners. lumsden: “it is important that we explore the us capital markets, including the potential for a nAsDAQ listing.”

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: motif Bio

Motif Bio, London, UK

Established

2013

Headquarters

london

US Subsidary

motif Biosciences inc, new york

Field of activity

novel anti-gram-positive antibiotics, focus on Dhfr inhibitors

Employees (2015)

Market capitalisation | 6 Jan 2016

€66.27m

Year of IPO | AIM

2015

Raised capital via IPO | AIM

€ 3.8m (£2.8 m)

Raised capital via follow-on financing | July 2015

€ 30.7m (£22m)

Major shareholders | 14 March 2016

Amphion Group (26.08%), invesco perpetual (25.4%), Aviva investors Global services ltd (8.47%), michael floyd (4.43%), khalid islam (4.43%), spreadex limited (3.68%)

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: motif Bio

interview Why did Motif Bio decide to carry out an IPO in 2015? the listing on Aim was a closing condition of the transaction for motif to acquire us-based company nuprim as the previous owner of iclaprim – to complete this, we had to become a public company. But before this, we had already started to explore the possibility of listing on Aim in order to finance our antibiotic development programme. We were getting a very positive response, so we started talking to banks, brokers, lawyers and accountants towards the end of 2014.

Graham Lumsden joined Motif Bio as Chief Executive Officer in 2013. Prior to that, Lumsden was a senior executive at Merck & Co., Inc. where he held commercial leadership positions in worldwide businesses including contraceptives and osteoporosis. Graham Lumsden has a proven record of success in subsidiary and global leadership positions, including new product launches, pre-clinical/clinical development, regulatory strategy, cross-functional team leadership, IP strategy/ litigation, and domestic/international sales and marketing. Mr Lumsden is a member of the Royal College of Veterinary Surgeons (MRCVS), holds a postgraduate diploma from the Chartered Institute of Marketing (MCIM), and is a dual citizen of the US and the UK.

Why you were interested in Iclaprim? What makes this antibiotic so special compared to others? there are two main things that sets iclaprim apart from the others. firstly, iclaprim is the only antibiotic with a dihydrofolate reductase (Dhfr) inhibitor currently in clinical development. Whilst bacteria are developing resistance to the other mechanisms, iclaprim mechanism is unique, which means it will still be effective. iclaprim is 16-fold more potent than the currently used trimethoprim, enabling it to be used as a single agent rather than as part of a combination. secondly, a lot of available antibiotics are toxic to kidneys which is intolerable for patients with renal insufficiency or kidney disease. iclaprim does not build up this toxicity and you don’t have to adjust the dose, so it’s a good fit for

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➜

DO S

Exciting story: the most important thing is to have a compelling investment proposition. Quality advisors: you really need good quality advisors and brokers who have access to the investors. they take you out on the roadshow and get you in front of the people who are going to actually step in and fund the ipo. these patients which represent 25-26% of all patients in hospitals suffering from infections. Because we already knew about these advantages, our preclinical work at motif focused on this class of antibiotics.

motif has reviewed all preclinical and clinical data, including the us and EmA correspondence. We believe that iclaprim can be a success with some improvements to the original development programme. that’s why we agreed to acquire iclaprim rights in 2014 from nuprim in order to enlarge our preclinical pipeline with a later-stage asset. We were already talking to banks and advisors to prepare our Aim listing, and the nuprim officials showed interest in partnering with us instead of receiving funding from a venture capitalist. upon our listing of April 2nd 2015, we finally gained the exclusive rights to develop and commercialise iclaprim.

Was the AIM the only option or did you consider listing on NASDAQ? We didn’t believe we were ready for a nAsDAQ listing. At the end of the day, the Aim was the quickest and shortest path to becoming a public company.

What are the next milestones for your company? Almost all of the proceeds of the ipo and the follow-ons will go towards our phase iii pivotal trials. in early 2016, we dosed the first patient. We’re on track to finish the studies in the second half of 2017, which is the first big milestone for us. then we will be able to put together the regulatory filings in the us and in Europe at the end of 2017, or the beginning of 2018.

Strong legal team: Do make sure you have a strong legal firm behind you.

DON’tS

➜

Iclaprim was originally developed by Swiss company Arpida AG, but did not gain FDA or EMA approval in 2008. Why do you think it’s worth a second chance?

however, it is important that we explore the capital markets in the us. that’s why a listing on nAsDAQ remains an option for us in order to be aligned with several of our peer companies such as paratek or cempra.

Pitch accordingly: pitch the valuation and the price at the right level. recognise that once you’re on Aim, you can move onto bigger and better things. Rush things: Don’t try and get everything done at once. Becoming a public company on Aim puts you up to access a larger pull of capital.

Which market do you target? With iclaprim we’re specifically going after hospital-based infections, which seems to us the more attractive market. hospital doctors are more accessible, there are fewer of them and they are generally more innovative. current revenue in the us for hospital gram-positive in-patient infections is us-$1.8bn. it is true that we also need antibiotics to treat gramnegative infections, for which the market currently is about us-$671m. in the long run, through licensing deals, we intend to bring in some novel antibiotics that target gram-negative infections. 51

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: poxel

poxel

entering the Diabetes Challenge competition is high in the field of diabetes, but french poxel sA is driving full speed ahead with its pipeline. the company develops drugs with a new mechanism of action targeting cellular energy such as mitochondrial dysfunction and Amp kinase activation. the aim is to improve treatment durability and the management of cardiovascular risk factors associated to type 2 diabetes (t2D).

“listing on NASDAQ further on down the line is an option that we are keeping open.” Based in lyon, the foundation of poxel was laid during a period of strategic new orientation of the German pharma company merck serono. in 2009, a team led by thomas kuhn set up poxel, taking on the t2D programme. “As a spin-out from merck serono, we have benefited from experienced executives who have been able to rapidly advance the clinical and preclinical programmes that we inherited,” says cEo kuhn. the lead product of poxel is imeglimin, the first in a new class of oral anti-diabetic agents, that proved efficacy and safety in 16 clinical studies. “We are a strong believer that cellular energy is at the root of the disease. this is why targeting the mitochondria, which transforms the nutrients from food into energy, is very relevant for the treatment of t2D,” explains kuhn. imeglimin is also expected to delay disease progression by preserving beta

cell function over time. kuhn: “the majority of people suffering from t2D still die from cardiovascular complications – imeglimin targets those pathways.” in 2015, poxel was one of the first biotechs in the year to go public on Euronext. Although ipo conditions had already slowed down in france at the time, the company succeeded to raise €27m. in July 2015, poxel executed a private placement which brought in €20m – with us investors representing 91%. “listing on nAsDAQ further on down the line is a key option that we are keeping open,” kuhn says. With the capital, the company is now pushing its imeglimin clinical development forward. Whilst poxel plans to form a partnership in the us and Europe, the company aims to get marketing approval in Japan on its own. poxel wants to profit from a streamlined development plan to access an attractive market for innovative t2D products. the company also believes that its drug candidate specifically addresses the needs of Asian patients. “our product has a great mechanism which will really fit with the Japanese and Asian population pathophysiology,” kuhn points out. Based on the ipo proceeds, the company initiated a phase iib trial late 2015. phase iii trials could get started as early as 2017. in addition, poxel has another first-in-class diabetes drug in its pipeline. pXl770 directly activates the enzyme Amp kinase. in doing so, it improves lipid profiles, which are the main risk factors for diabetes patients developing cardiovascular diseases. A phase i trial is currently ongoing in Europe, phase ii is due to start next year.

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: poxel

Poxel SA, Lyon, France

Established

2009

Headquarters

lyon

Field of activity

type 2 diabetes, first-in-class oral anti-diabetic treatments

Employees (2015)

Market capitalisation | 6 Jan 2016

€ 236m

Year of IPO | Euronext

2015

Raised capital via IPO | Euronext

€ 26.8m

Raised capital via private placement | July 2015

€ 20m

Major shareholders | 14 March 2016

Edmond de rothschild (22.54%), floating (21.68%), Bpifrance (21.40%), management (15.36%), omnes capital (8.33%), merck serono (5.57%), Jp morgan Asset management (5.12%)

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AnAlysis of EuropEAn BiotEch compAniEs on thE stock mArkEt: us vs EuropE case study: poxel

Interview Six years after the spin-out from Merck, why did Poxel decide to carry out an IPO in 2015?

Thomas Kuhn is the CEO and co-founder of Poxel SA, which was founded in 2009 as a spin-out from Merck Serono’s diabetes unit. After receiving a degree in pharmacy from the University of Lyon I, France and an MBA from Ashridge University, UK, the French native joined German pharma company Merck KGaA in 2000, where he held several positions in clinical development, in particular in the area of diabetes. After Merck merged with Serono in 2007, Kuhn was part responsible for refining Merck Serono’s strategy, by driving the project to relocate the diabetes pipeline. This lead to the establishment of Poxel.

capital for developing these assets is very high as type 2 diabetes is an attractive market. in those six years, the maturity of the company and our diabetes focused product pipeline was advanced. We had completed phase 2b with our lead asset and were nearing phase 3. in addition, our second asset was close to phase 1 – definitely a pretty good portfolio for a company of our size. other factors which supported an ipo at that time were the solid structure of our company with a management team, coming from Big pharma as well as a strong investor base.

Why did you decide for a listing on Euronext? the Euronext market is clearly a very attractive one. After nAsDAQ, it is number two with a lot of biotech, medtech and life science companies.

Did you consider NASDAQ? many well-established companies list on Euronext and then take a secondary listing on nAsDAQ. We think it is a streamlined process with a good benchmark to follow. six months after our ipo, we had a private placement that attracted a good bench of life science investors from the us. more than 90% of the capital increase was

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➜

Do S

Have a strong team on board: this is important while you’re working on your ipo, because you still have to operate your business as usual.

completed with us investors. Based on that, listing on nAsDAQ further on down the line is an option that we are keeping open.

Did you profit from the recent biotech wave on the stock markets?

What does it take to successfully float on Euronext? firstly, the preparation is most important – it’s a very time consuming process. you have to run the process very thoroughly in a disciplined manner with good advisors that will support and take good care of your story. We worked with two well-known banks and we had a good legal firm. But what’s most important: you need a good story with a major asset that is attractive to investors and a strong news flow – you need to get on the road. lastly, you need to have the money in the bank to run the ipo process.

We raised around €27m at the ipo and another €20m at the private placement six months after the ipo. these proceeds will finance our two main assets: we will develop our lead product candidate imeglimin in Asia and prepare for phase iii in the us and Europe. the rest of the proceeds will finance the currently ongoing phase 1 of our second lead product pXl770 in Europe and a phase 2, which is due to start in 2017.

Why is the Japanese market so interesting for Poxel? there are several reasons: first of all, Japan is the number two diabetes market after the us. A lot of people adopted the Western lifestyle which leads to a modification in metabolism resulting in obesity and type 2 diabetes. our product targets the mitochondrial dysfunction and fits very well with the pathology of the Asian population. in addition, costs for clinical trials are much lower than in Europe or the us. Another reason to prioritise Asia concerns regulartory issues. the market access in Japan is favourable: you can anticipate what will happen to your drug pricing because it is negotiated.

Think big: We started our roadshow in the us 18 months before the ipo with the intention of getting us investors on board. We ran what is called a 144A process, which allows us investors to contribute to our ipo. it triggered a significant amount of work to meet the regulatory requirements. But it paid off in the end.

DoN’TS

➜

there was a bullish market in 2013 and the first half of 2014 with a lot of ipos from life science companies. however, the ipo market in france closed in the second half of 2014. Afterwards the banks and investors were pretty cautious about the mood in 2015. that year we were one of the first ipos that took place, but against all odds the market was very good and we benefited from this. postmarket was then very positive.

How does Poxel plan to use the proceeds from the IPO?

Investors’ appetite: this is a key element. it is very important to regularly go out on the road. poxel went on a roadshow in the us and in Europe 18 months before the ipo and we regularly met and talked with investors, so we had a good understanding of who could be interested in our story.

Disorganisation: it is very important that you have an alignment concentrated on the objective within the company or it could be disruptive. Unprepared: if there are uncertainties within your board, advisors or your management team, it won’t be sorted out during the process. you need to go back to the bench and then launch your process afterwards.

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annex

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AnAlysis of EuropEAn biotEch compAniEs on thE stock mArkEts: us Vs EuropE overview and methodology

Overview and Methodology European biotech companies are listed on various trading centres in Europe and the us. the overview shows the most important European stock exchanges and the nAsDAQ with respect to their biotech ipo and financing activity. the period under review for this report was

was defined as “the application of science

Q1/2010 until Q4/2015. in the framework of

and technology to living organisms, as well as

the study, the most important 15 European

parts, products and models thereof, to alter

trading centres were analysed according to

living or non-living materials for the production

the following parameters:

of knowledge, goods and services.” this definition follows the internationally comparable

› number of biotech companies › number of ipos › number of follow-on and other financings › capital raised via ipos › capital raised via follow-on and other financings.

biotechnology framework of the organisation for Economic co-operation and Development (oEcD). for an easy-to-use analysis, data relating to cross-border stock exchanges such as Euronext and nAsDAQ omX were cumu-

these data were recorded for Euronext and

lated according to their main market and

nAsDAQ omX as well as the exchanges in

growth market segments – Euronext/Alter-

london, Zurich, frankfurt, oslo and Warsaw.

next and nAsDAQ omX main/nAsDAQ omX

for the first time, an analysis of nAsDAQ, new

first north respectively. market capitalisa-

york, and its listed European biotech compa-

tion of all companies was updated 6 January,

nies (israeli companies not included) was also

2016. the stock market profiles (see next page)

included. At the end of Q4/2015, a total of 193

show most of the data compiled.

dedicated biotech companies was counted. Whereas the majority of the firms could be as-

for the time period 2010 to 2014, foreign cur-

signed to either a European stock market or to

rencies other than Eur have been converted

nAsDAQ, there is a total of seven companies

to Eur according to the conversion ratio used

that are listed on both sides of the Atlantic. for

in the “comparative Analysis of European bio-

these companies, the respective capital raised

tech stock markets” published by biocom in

was assigned to the exchange where the fi-

January 2015. for all 2015 data, the conver-

nancing took place, if not otherwise indicated

sion ratio of the respective date was used. for

(e.g. the secondary listing on nAsDAQ). All in-

the 2014 turnover of the companies, a mean

formation stems from publicly available data

ratio for the year was used.

sources and annual reports, unless otherwise indicated. Within the report, biotechnology

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AnAlysis of EuropEAn biotEch compAniEs on thE stock mArkEts: us Vs EuropE Data page: stock market profiles

Data Page

Stock Market Profiles Key facts of European biotech stock market exchanges EURONEXT Euronext Listed companies

Capital raised via IPOs in €m (number of IPOs)

Total

AIM

NASDAQ OMX Main

Main

First North

2010

31.6 (1)

–

28.8 (3)

–

46.2 (1)

–

2011

–

6.6 (1)

–

2012

82.6 (3)

–

8.2 (1)

–

19.3 (1)

–

2013

44.2 (2)

–

13.4 (1)

–

1.3 (1)

2014

182.1 (6)

–

12.8 (1)

–

166.9 (4)

–

255.0 (1)

–

2015

341.9 (7)

–

8.2 (1)

–

24.5 (2)

–

4.8 (1)

682.4 (19)

–

78.0 (8)

–

210.7 (7)

–

255.0 (1)

46.2 (1)

–

6.1 (2)

2010

505.5 (10)

–

7.0 (1)

–

95.9 (11)

–

437.0 (12)

–

5.5 (2)

2011

293.1 (10)

–

80.3 (7)

–

82.2 (11)

–

29.3 (2)

256.5 (9)

–

8.7 (5)

Total

Capital raised via follow-on and other financings in €m (number of followon financings)

LONDON Alternext

2012

39.8( 6)

–

15.1 (5)

–

157.5 (12)

–

14.4 (1)

212.0 (8)

–

9.1 (6)

2013

1,080.9 (23)

–

37.3 (5)

–

249.5 (15)

–

27.2 (2)

89.1 (6)

–

11.3 (6)

91.3 (11)

–

136.1 (15)

–

100.0 (3)

265.9 (12)

–

16.4 (6)

2015 2,268.9 (22) 610.0 (2)

2014

670.4 (18) 104.5 (1)

258.5 (9) 208.0 (1)

334.6 (16) 35.0 (1)

418.6 (2)

229.9 (10) 50.0 (1)

31.9 (5)

4,858.6 (89) 714.5 (3)

489.5 (38) 208.0 (1)

1,055.8 (80) 35.0 (1)

589.5 (10)

1,490.4 (57) 50.0 (1)

82.9 (30)

*number of companies with a secondary listing on nAsDAQ and their financing **number of companies exclusively listed on nAsDAQ and their financing

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AnAlysis of EuropEAn biotEch compAniEs on thE stock mArkEts: us Vs EuropE Data page: stock market profiles

FRANKFURT

Listed companies

Capital raised via IPOs in €m (number of IPOs)

Total

OSLO

WARSAW

NASDAQ

18**

2010

–

5.5 (1)

–

2011

–

3.5 (1)

7.5 (5)

–

2012

–

94.0 (1)

2013

–

0.5 (1)

–

47.0 (1)

2014

–

88.0 (1)

8.0 (1)

–

506.9 (9)

2015

–

167.8 (1)

66.4 (1)

–

394.0 (4)

–

255.8 (2)

78.4 (4)

13.0 (6)

1,041.9 (15)

2010

129.3 (12)

–

27.1 (3)

27.4 (4)

–

9.8 (3)

2011

42.4 (7)

–

33.5 (2)

2.5 (3)

–

332.0 (4)

2012

410.0 (9)

310.0 (1)

62.2 (3)

7.5 (2)

0.5 (1)

603.8 (5)

293.8 (4)

2013

209.4 (13)

–

81.8 (6)

26.1 (6)

9.9 (4)

88.2 (4)

2014

378.1 (14)

230.8 (1)

79.1 (4)

32.8 (7)

24.6 (8)

727.2 (9)

391.9 (7)

2015

128.4 (8)

–

108.7 (5)

14.0 (1)

2.1 (1)

1,582.9 (20)

679.9 (14)

1,297.6 ( 63)

540.8 (2)

392.4 (23)

110.3 (23)

37.1 (15)

Total

Capital raised via follow-on and other financings in €m (number of followon financings)

ZURICH

3,343.9 (45) 1,795.6 (36)

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CONSULTANCY & RESE ARCH

Analysis of European Biotech Companies on the Stock Markets: US versus Europe Facts & Trends, 2016 www.biocom.de/en/analysis2016

Sandra Wirsching Division Manager BIOCOM AG Lützowstr. 33–36 10785 Berlin +49(0) 30 26 49 21-63 s.wirsching@biocom.de

2016

Facts & Trends

Analysis of European Biotech Companies on the Stock Markets: US versus Europe