High approval rates, absolute number of approvals in the main territories, on par with the 2020 record
The high approval rate is one of the rare satisfaction for the European bios, when looking back to 2021. 33 out of 37 submissions with known outcome led to an approval/authorization in the US, Europe, Japan, or China, or a 89% approval rate, which is a very good achievement. This includes 15 approvals in Europe (centralized only, CHMP positive recommendations not yet confirmed by the EC at the end of the year considered as confirmed), 12 approvals in the US, 4 in Japan and 2 in China. 3 CRLs were received from the US FDA, for Camurus’ Brixadi via Braeburn, Mirtha’s Myring via Mayne Pharma, and Orphazyme’s arimoclomol. DBV also withdrew their application in Europe for Viaskin Peanut. The approval of PEPAXTO is counted as a success, since the withdrawal was voluntary.
There were also 33 approvals in these territories in 2020 (we indicated 30 in last year’s review but the number was revised after late disclosures), 13 in the US, 13 in Europe, 5 in Japan and 2 in China, but the approval rate was only 81%. So, the 2020 absolute record was reached once again in 2021.
The current calendar shows another small decline in review in the main territories, but it may ultimately end roughly similar, accounting for some potential accelerated approval submission in the next few weeks.
An improved trend on IPO & new listings
There were 23 new listings in our nano-to-smidcap biotech universe in 2021, the highest since 2015 (28, the absolute record)? This comes after 2 weak years in a raw in Europe (3 new listings on the main European markets in 2019 & 8 in 2020). Among these new listings in 2020, only 2 were IPOs (lowest in almost a decade). The picture is dramatically different, since 20 out of the 23 new listings are IPOs (or with placement close to the listing so that it can be considered as an IPO on the main market considered). As a reminder, we don’t count a prior listing on a secondary market, which mainly applies for Sweden. The 3 other non-IPOs were listing transfers without any surrounding placement of equity, from Spotlight to Nasdaq OMX.
As it has been the case historically, the 3 main hotspots, i.e. the Nordics (13), France/Benelux (5, all FR), and the UK/Ireland (4), were the main providers of new listings. One singularity is the new IPO of an Italo-Swiss company, Philogen, on Borsa Italiana. Usually, Swiss or Italian companies prefer to list on SIX in Zurich, but Philogen picked the Italian place, where they will feel alone, like Molmed before them.
In contrast, there were also few delisting in 2021: Genkyotex (acquired by Calliditas), Kiadis (acquired by Sanofi), Vectura (acquired by Philip Morris Intl), Tiziana Life Sciences and Silence Therapeutics (AIM exodus), and finally Allarity Therapeutics (wishing to list only on Nasdaq in New York).
Another good year for the financing of the public bios on the Old Continent, after a record in 2020
After the 7.4 bEUR raised/secured in 2020, it was hard to hope for a similar performance in 2021. Nevertheless, the European public bios raised or secured another 6.7 bEUR in 2021, well above the 3.6 bEUR of 2018 or the 5.5 bEUR of 2019 (4.2 bEUR excluding the amounts from the Galapagos/Gilead deal).
The number of financing operations of max 5 mEUR was 86 in 2018, 113 in 2019, 182 in 2020, and 127 in 2021 (46.7%, 49.8%, 53.5%, 46.7% of all the financing operations, respectively) for total amounts of 142, 188, 328, 203 mEUR, respectively, over the past 4 years. These numbers show that there was a 1-year window opening for the smallest bios to get financed, when it would have been difficult for them to raise any amount prior to the pandemic. This window seemingly closed in 2021.
The estimated total cash and cash equivalents (our estimates) of 170 public biotech companies listed on the main European markets (our coverage universe) was an aggregate of approximately 18.0 bEUR (median of 16.5 mEUR, IQR [5.6;40.4 mEUR]), conferring them a median cash runway (including extra lines of financing) of approximately 14 months (IQR [9;21 months].
In terms of financing categories, the raises by equity offering (IPOs, and secondary/follow-on) – the real pulse of a “healthy” financing situation- increased from 2.8 bEUR in 2018, to 3.9 bEUR in 2019, to record 5.4 bEUR in 2020 before slipping back to 2019 levels in 2021, at 4.0bEUR (1.15 bUSD/955 mEUR for argenx, 154 & 230 mEUR for Bavarian Nordic, 109 mEUR for Oncopeptides, 101 mEUR For Zealand, 500 mUSD/431 mEUR US IPO for Evotec). The amount raised or secured from other dilutive schemes (various equity lines [usually adopted by the most desperate companies], warrants/options, convertible bonds/notes [usually contracted by the companies with revenues expected in the near future for the largest amounts]), progressed from 585 mEUR in 2018, to 700 mEUR in 2019, and to 1.5 bEUR in 2020 and 2021 (600 mUSD/557 mEUR of convertibles for Idorsia, 135 mUSD/117 mEUR convertibles for ObsEva, 125 mUSD/106 mEUR ATM for Cellectis). The amounts from non-dilutive schemes were 240 mEUR in 2018, 920 mEUR in 2019, 460 mEUR in 2020 and reached a new high of 1.19 bEUR in 2021. One can mention 3 significant debt placements form last year: 350 mUSD/296 mEUR for Indivior, 250 mUSD/211 mEUR for Morphosys, and 200 mUSD/177 mEUR for Zealand Pharma. All these companies generate revenues.
The state of the financial markets at the end of 2021 and early in 2022 may indicate that raising or securing funds this year will be more difficult than during the past couple of years. With raising interest rates, the cost of capital is also to follow, with a negative impact expected on valuations. Just to provide an order of magnitude of an impact, using an example of a non-risk adjusted NPV of about 650 mUSD we have on hand, with a reference discount of 13%, we obtain a 6.7% decline in NPV with a discount of 14%, and a 12.9% decline with a discount of 15%. According to the various Street consensus out after Fed Chair Powell’s public meeting of January (2022), it seems the less “hawkish” view is to have 4 rate hikes (1pp if 0.25% each), while the most pessimistic estimates go up to 7 hikes, if not more!