European stock market turns towards biotech – BIOCOM report documents upswing/Exchange ranking sees Paris und London in the lead
BIOCOM report documents upswing/Exchange ranking sees Paris und London in the lead
Berlin, 25th November 2014. The European capital market has once more become a serious financing alternative. The figures from the first nine months of this year had already significantly outperformed the previous year’s: in 2014, a total of EUR2bn was poured into biotech companies in Europe via the stock exchange (2013: EUR1,89bn). The number of IPOs doubled to ten, raising the total number of biotech companies that are listed on the 15 most important stock exchanges in Europe, to 144. The majority of companies are traded in Paris (32) and London (29).
These are the key findings of a recent report presented today by BIOCOM AG at the ‘German Equity Forum 2014’ which takes place from 25th to 26th November in Frankfurt, Germany. For the first time, a comprehensive analysis compares European stock exchanges in respect of their attractiveness for the biotech sector. ‘The dry spell is over. The capital market in Europe has turned towards biotech again,’ says Dr. Boris Mannhardt, CEO of BIOCOM. In the aftermath of the crisis years 2011 and 2012, all indicators are now showing signs of an upswing throughout all trading centres. Some stock market locations have profited in particular. ‘Tax benefits for innovative companies such as in France, or an internationally visible growth segment such as in London, are especially responsible for the actual positive development,’ emphasises Mannhardt. In addition, small trading centres such as Zurich or Amsterdam are once more attractive for biotech companies. This was shown by the most recent IPOs of Swiss Molecular Partners AG and German Probiodrug AG, which were not included in the report.
The cross-border exchange Euronext is at the top of the ranking, with the highest numbers of listed companies and IPOs as well as the highest average amount of follow-on financings. Eurofins Scientific SE (Paris: EUFI.PA) achieved the second highest capital increase of a European biotech firm this year. 17 of the 36 biotech firms that have floated in Europe since 2009, opted for an IPO at the Parisian trading centre. These listings brought in EUR319m capital. The stock exchange in Paris also has been particulary interesting for industrial biotech companies, as illustrated by the IPOs of Deinove (2010), Global Bioenergies (2012) and Fermentalg (2014). ‘Tax credits, social charges deductions for young and innovative companies, and the French public investment bank Bpifrance make a huge difference for companies like ours,’ says Emmanuel Petiot, CEO of Deinove.
A favourable financial environment also raises the attractiveness of the London stock exchange, according to John Burt, CEO of Abzena plc. In July, the Cambridge-based service company was listed on the AIM market. ‘Many of our pre-IPO shareholders had invested through various tax-efficient schemes in the UK, so it made sense to float here,’ Burt explains. Compared to other stock markets, the AIM can count the highest average IPO amounts. But it remains to be seen, whether or not this development will continue. Burt: ‘Maybe in the UK the IPO window is closing rather than opening.’
Compared to the US, the European public biotech sector in general is still in a catching-up process. On the one hand, this applies to the number of specialised investors and biotech analysts. ‘Interestingly, large investment companies and pension funds today determine the market, most of the banks have closed their biotech departments,’ says Mannhardt. On the other hand, the biotech sector in Europe lacks maturity. Compared to the US, turnover and market capitalisation of the European companies are significantly lower. Every second biotech company operates in the nano cap range having less than US$ 100m. Only 10% of the firms are above the market cap barrier of US$ 1bn. ‘Investors tend very quickly to move away from biotech when the overall economic climate becomes tougher. It is difficult to find substantial, sustainable long-term investors,’ says Deinove CEO Petiot. This is especially true for drug developers such as the Austrian-French vaccine specialist Valneva SE, listed at Euronext in Paris. ‘To guarantee growth, we need international investors,’ says Thomas Lingelbach, CEO of Valneva. ‘This is why we need a second listing in a market where we can acquire new investors.’
The stock exchange in Frankfurt, Germany, is still waiting for a biotech IPO, the last one dates back to 2007. Compared to other locations, it is nevertheless a fertile ground for follow-on financings, with the highest average number of capital increases per company between 2009 and 2014. Jens Holstein, CFO of antibody specialist MorphoSys AG, says: ‘We have observed that the number of institutions in Frankfurt that really have a high level of competence in biotech has decreased considerably. There is still capital available but it’s more likeley to be invested in established companies and less in a young biotech IPO.’
About the report
The European stock market landscape has been analysed for the first time with respect to its relevance for biotech companies by BIOCOM AG. In addition, the ‘Comparative Analysis of European Biotech Stock Markets 2014’ compiled all listing requirements as well as ongoing obligations of the 15 most important trading centres in Europe. With reference to the internationally comparable biotech definition of the Organisation for Economic Co-operation and Development (OECD) all listed dedicated biotech firms – from drug developers to enzyme producers – were recorded. The analysis encompassed all stock market segments with a minimum of eight listed biotech companies and investigated the availability of capital, the trading volume, the number and amounts of IPOs and follow-on financings from 2009 until the end of Q3 2014. The cross-border exchange Euronext is at the top of the ranking. It is followed by the Alternative Investment Market (AIM), the growth segment of the London Stock Exchange. The stock exchange in Warsaw brought up the rear of the ranking. In addition to the exchange ranking, the report includes an analysis of the major shareholders of European listed biotech companies as well as the following case studies: Abzena plc (AIM/London); Deinove SA (Alternext/Paris); Mabion SA (Main List/Warsaw); MorphoSys AG (Prime Standard/Frankfurt); Newron Pharmaceuticals SpA (Main Standard/Zurich); uniQure NV (Nasdaq/New York); Valneva SE (Euronext/Paris)
A download of the full report and its comprehensive annex with the detailed stock market profiles is available here:
About BIOCOM AG
As leading information specialist for biotechnology and life sciences in Europe, BIOCOM AG has extensive knowledge and experience in all biotech areas, from the pharmaceutical and agricultural sectors to industrial production. Experienced industry and scientific specialists at BIOCOM AG have been tracking the development of the biotech industry from research to market for more than 25 years. BIOCOM AG has its headquarters in Berlin and offices in Austria, Switzerland and Belgium. It is active throughout Europe in media, events and services.
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