More firms weigh IPOs as biotech fever reaches Europe

Top candidates for a share sale include Swiss firms AC Immune and Molecular Partners

Thu, Mar 13, 2014, 19:00

Britain’s Lombard Medical was the latest to plan to go this week, following on the heels of others including Dutch gene therapy pioneer UniQure and UK diagnostics firm Oxford Immunotec.

The strong backing for Circassia’s London listing signals bullish sentiment is starting to take root on this side of the Atlantic. In a further sign that funding in the sector is taking off, Vectura also raised about £52 million in a share placing on today.

This will be pleasing for some European firms for whom a US listing could be a risky and costly endeavour, particularly if they lack a strong US presence.

“In Europe, an IPO is still one of the highlights in a company’s life whereas in the US it’s one of the easiest ways to get access to new money without debating valuation and board seats and so on. There doing an IPO is a financing act,” said Juerg Zuercher, a life-science specialist at Ernst & Young.

A trickle of smaller IPOs is already underway in France.

Crossject, the maker of a needle-free injection system, raised €17 million on Paris’ Alternext exchange last month, while Oncodesign, which helps companies assess the therapeutic potential of cancer drugs, aims to raise between €37.5 and €42.9 million on the Euronext.

Genomic Vision, a maker of molecular diagnostic tests to detect genetic disorders, and cancer vaccine maker Genticel have also signalled their intention to float on the Euronext.

Still, European investors, bruised by a series of booms and busts in this notoriously volatile sector, are likely to be pickier than their US peers when it comes to backing firms.

Hanspeter Gehrer, head of corporate finance at Swiss bank Vontobel, expects a limited number of biotech IPOs in Switzerland this year, saying firms would need to offer a free float of at least 100 to 150 million Swiss francs ($114 to $172 million) to get investors on board.

“In the current environment, investors are not prepared to take too big a bet. That means that firms must be close to generating cash flows and profits,” he said.

AC Immune’s decision on whether to opt for an IPO will likely hinge on Phase II data, expected in the second quarter, for its Alzheimer’s drug crenezumab, which it licensed to Roche subsidiary Genentech in 2006.

In a statement, AC Immune said an IPO was only one option.

Swiss media have also touted Polyphor, which is developing antibiotics, as a candidate after its chairman said in an interview last year his aim was to take the company public “some day”, and signalled it may even fulfil the criteria in 2014.

Polyphor did not immediately respond to a request for comment, while Molecular Partners was not immediately available to comment. (Reuters)