Caution returns to European biotech stocks

Following the record-breaking year 2015, the European biotech sector witnessed a significant decrease of IPOs and follow-on financings in 2016. Taking all indicators into account – number and volumes of IPOs, follow-on financings and secondary listings, the 213 European biotech companies raised €3.3bn in 2016, 48% less than in 2015 (€6.29bn). However, the dampended investor appetite is more visible on Nasdaq US than on the European exchanges. Only three companies opted for an IPO on Nasdaq, raising the number of US-listed European biotech companies to 29. These are the key findings of the Analysis of European Biotech Companies on the Stock Markets: US vs Europe released by German market analyst BIOCOM AG, published on the occasion of the investors conferences Biotech Showcase and JP Morgan in San Francisco, US. “Total figures of 2016  are comparable to the year 2014 and show that the decrease to date has not been as severe as in 2012 and 2013. For us, it is a sign that after record years and IPO booms, Europe is beginning to experience a healthy reset,” says Sandra Wirsching, responsible for the report at BIOCOM.

According to the analysis, a total of 17 European biotech IPOs took place in 2016, raising a total amount of €556m. This marks a decrease of 54% compared to 2015 (€1.2bn). The majority of 14 firms opted for one of the 15 European trading centres, only three firms floated on Nasdaq. Among the European trading centres, London (43) as well as Paris (42) are the top locations with the most listed biotech companies. As stated in the report, cross-border stock market Euronext seems to be most attractive for European biotech companies. Four of this year’s 14 European listings (29%) took place here. But other locations, such as Stockholm, were also able to increase their number of listed biotech companies.

A total of €2.75bn was dropped into the companies via follow-on-financings, a substantial decrease of 46% compared to 2015. “Investors’ enthusiasm for biotech companies in 2015 could not be repeated in 2016, but the figures are nevertheless 24% higher than in 2014,” says Wirsching. Nasdaq numbers paint a different picture: The US stock market cooled off significantly in 2016. The 29 companies listed in the US attracted a combined total of €565m in follow-on-financings only, among them two secondary listings (Motif Bio, TiGenix). However, average volumes were nevertheless higher compared to their counterparts which are listed on European stock exchanges only. “What makes the US exchange interesting is the strong investor base, but the listing requirements are not to be underestimated,” says Wirsching. 

The report is a publication of the Consultancy & Research unit of BIOCOM AG. It provides current trends with regard to the European public biotech sector. It sheds light on the 15 most important trading centres in Europe and – for the first time – also on the European biotech companies listed on Nasdaq. With reference to the internationally comparable biotech definition of the Organisation for Economic Co-operation and Development (OECD) all dedicated biotech firms – from drug developers to enzyme producers – were recorded. The analysis investigated the availability of capital in terms of IPOs and follow-on financings from 2010 until the end of 2016 for all European biotech companies regardless of their listing location as well as in comparison between Nasdaq and the European exchanges.