SVB's crys­tal ball points to big mon­ey biotech IPOs, down­shift in the tor­rid pace of ven­ture in­vest­ing

It was a bang-up year for bio­phar­mas in need of cash. In­vestors closed enor­mous funds in 2017, IPOs rolled out at a steady pace, and ven­ture cap­i­tal dol­lars flowed in­to com­pa­nies in record quan­ti­ties.

Sun­ny days are ahead for both the IPO and M&A mar­kets, ac­cord­ing to a Sil­i­con Val­ley Bank re­port, but ven­ture dol­lars may slow down in 2018.

The bank es­ti­mates in­vest­ments in biotech and phar­ma hit a record in 2017, with 548 com­pa­nies pick­ing up a pro­ject­ed $10.5 bil­lion in col­lec­tive in­vest­ment mon­ey dur­ing the year. Back in 2013, with near­ly the same num­ber of deals, com­pa­nies on­ly brought in $5.2 bil­lion to­tal. This in­di­cates the year saw much big­ger rounds, of course. Just in Q4, SVB count­ed sev­er­al mega-rounds, with Cul­li­nan On­col­o­gy, Ar­cus Bio­sciences, and Al­lakos each rais­ing over $100 mil­lion.

Big rounds are al­so re­flec­tive of the piles of cash held by health­care ven­ture firms. Ac­cord­ing to the re­port, health­care ven­ture fund­ing hit a new high in 2017 with $9.1 bil­lion raised by funds dur­ing the year. That’s up from $7.2 bil­lion last year, and sig­nif­i­cant­ly up from the years be­tween 2009 and 2013, when funds raised hov­ered be­tween $2 bil­lion and $4 bil­lion.

The bank pre­dicts that num­ber will de­cline next year, with health­care ven­ture funds rais­ing be­tween $6 bil­lion to $7 bil­lion. That’s be­cause many larg­er firms closed new funds in 2017, the re­port says. The bank al­so ex­pects bio­phar­ma in­vestors will slow their deal pace next year.

Where is this mon­ey go­ing? Pri­mar­i­ly on­col­o­gy com­pa­nies (no sur­prise there), and com­pa­nies de­vel­op­ing plat­form tech­nol­o­gy. Of the 125 Se­ries A in­vest­ments made in 2017, 38 were can­cer drug mak­ers and 19 com­pa­nies had plat­form tech.

“Plat­form com­pa­nies piqued in­vestor in­ter­est, as their tech­nolo­gies showed promise for mul­ti­ple ex­its across dif­fer­ent in­di­ca­tions,” the re­port states.

IPOs and M&As

A few more VC-backed bio­phar­mas went pub­lic in 2017 than the year pri­or, with 31 IPOs com­pared to 28 in 2016. It’s im­proved, but nowhere near the go-go days of 2014, when 66 bio­phar­mas went pub­lic.

It’s im­por­tant to note, how­ev­er, that these IPOs are rais­ing big mon­ey. In 2017, 39% of IPOs, or 12 com­pa­nies to­tal, raised over $100 mil­lion. That’s sig­nif­i­cant when you look at pri­or years. In 2016, on­ly one com­pa­ny raised over $100 mil­lion.

Sil­i­con Val­ley Bank ex­pects IPOs to re­main steady dur­ing 2018, with 28-32 IPOs pre­dict­ed next year.

Al­though IPOs in­creased dur­ing the year, M&As did not. Af­ter a lack­lus­ter 2016 (thanks to un­cer­tain­ty in an elec­tion year), many ex­perts in the in­dus­try pre­dict­ed — with Pres­i­dent Trump firm­ly seat­ed in the White House — that we would see an uptick in merg­ers and ac­qui­si­tions in 2017. They were wrong. Be­sides Gilead’s near­ly $12 bil­lion move on Kite, 2017 was rather qui­et on the M&A front. That has some won­der­ing if ac­quir­ers are on stand­by, wait­ing to see what will hap­pen with tax re­form be­fore mov­ing for­ward on big pur­chas­es.

The bank is ex­pect­ing M&A to pick up next year, with an es­ti­mat­ed 20-plus “big ex­its” based on avail­able cash held by ac­quir­ers — and the need for Big Phar­ma to re­plen­ish their pipelines.

The re­port — called Health­care In­vest­ments and Ex­its 2018 — was au­thored by SVB’s Jonathan Nor­ris, Thomas Joyce, and Caitlin Tol­man.

Norbert Bischofberger. Kronos

Backed by some of the biggest names in biotech, Nor­bert Bischof­berg­er gets his megaround for plat­form tech out of MIT

A little over a year ago when I reported on Norbert Bischofberger’s jump from the CSO job at giant Gilead to a tiny upstart called Kronos, I noted that with his connections in biotech finance, that $18 million launch round he was starting off with could just as easily have been $100 million or more.

With his first anniversary now behind him, Bischofberger has that mega-round in the bank.

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Francesco De Rubertis

Medicxi is rolling out its biggest fund ever to back Eu­rope's top 'sci­en­tists with strange ideas'

Francesco De Rubertis built Medicxi to be the kind of biotech venture player he would have liked to have known back when he was a full time scientist.

“When I was a scientist 20 years ago I would have loved Medicxi,’ the co-founder tells me. It’s the kind of place run by and for investigators, what the Medicxi partner calls “scientists with strange ideas — a platform for the drug hunter and scientific entrepreneur. That’s what I wanted when I was a scientist.”

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Af­ter a decade, Vi­iV CSO John Pot­tage says it's time to step down — and he's hand­ing the job to long­time col­league Kim Smith

ViiV Healthcare has always been something unique in the global drug industry.

Owned by GlaxoSmithKline and Pfizer — with GSK in the lead as majority owner — it was created 10 years ago in a time of deep turmoil for the field as something independent of the pharma giants, but with access to lots of infrastructural support on demand. While R&D at the mother ship inside GSK was souring, a razor-focused ViiV provided a rare bright spot, challenging Gilead on a lucrative front in delivering new combinations that require fewer therapies with a more easily tolerated regimen.

They kept a massive number of people alive who would otherwise have been facing a death sentence. And they made money.

And throughout, John Pottage has been the chief scientific and chief medical officer.

Until now.

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Chas­ing Roche's ag­ing block­buster fran­chise, Am­gen/Al­ler­gan roll out Avastin, Her­ceptin knock­offs at dis­count

Let the long battle for biosimilars in the cancer space begin.

Amgen has launched its Avastin and Herceptin copycats — licensed from the predecessors of Allergan — almost two years after the FDA had stamped its approval on Mvasi (bevacizumab-awwb) and three months after the Kanjinti OK (trastuzumab-anns). While the biotech had been fielding biosimilars in Europe, this marks their first foray in the US — and the first oncology biosimilars in the country.

Seer adds ex-FDA chief Mark Mc­Clel­lan to the board; Her­cules Cap­i­tal makes it of­fi­cial for new CEO Scott Bluestein

→ On the same day it announced a $17.5 million Series C, life sciences and health data company Seer unveiled that it had lured former FDA commissioner and ex-CMS administrator Mark McClellan on to its board. “Mark’s deep understanding of the health care ecosystem and visionary insights on policy reform will be crucial in informing our thinking as we work to bring our liquid biopsy and life sciences products to market,” said Seer chief and founder Omid Farokhzad in a statement.

Daniel O'Day

No­var­tis hands off 3 pre­clin­i­cal pro­grams to the an­tivi­ral R&D mas­ters at Gilead

Gilead CEO Daniel O’Day’s new task hunting up a CSO for the company isn’t stopping the industry’s dominant antiviral player from doing pipeline deals.

The big biotech today snapped up 3 preclinical antiviral programs from pharma giant Novartis, with drugs promising to treat human rhinovirus, influenza and herpes viruses. We don’t know what the upfront is, but the back end has $291 million in milestones baked in.

Vas Narasimhan, AP Images

On a hot streak, No­var­tis ex­ecs run the odds on their two most im­por­tant PhI­II read­outs. Which is 0.01% more like­ly to suc­ceed?

Novartis CEO Vas Narasimhan is living in the sweet spot right now.

The numbers are running a bit better than expected, the pipeline — which he assembled as development chief — is performing and the stock popped more than 4% on Thursday as the executive team ran through their assessment of Q2 performance.

Year-to-date the stock is up 28%, so the investors will be beaming. Anyone looking for chinks in their armor — and there are plenty giving it a shot — right now focus on payer acceptance of their $2.1 million gene therapy Zolgensma, where it’s early days. And CAR-T continues to underperform, but Novartis doesn’t appear to be suffering from it.

So what could go wrong?

Actually, not much. But Tim Anderson at Wolfe pressed Narasimhan and his development chief John Tsai to pick which of two looming Phase III readouts with blockbuster implication had the better odds of success.

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On a glob­al romp, Boehringer BD team picks up its third R&D al­liance for Ju­ly — this time fo­cused on IPF with $50M up­front

Boehringer Ingelheim’s BD team is on a global deal spree. The German pharma company just wrapped its third deal in 3 weeks, going back to Korea for its latest pipeline pact — this time focused on idiopathic pulmonary fibrosis.

They’re handing over $50 million to get their hands on BBT-877, an ATX inhibitor from Korea’s Bridge Biotherapeutics that was on display at a science conference in Dallas recently. There’s not a whole lot of data to evaluate the prospects here.

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Servi­er scoots out of an­oth­er col­lab­o­ra­tion with Macro­Gen­ics, writ­ing off their $40M

Servier is walking out on a partnership with MacroGenics $MGNX — for the second time.

After the market closed on Wednesday MacroGenics put out word that Servier is severing a deal — inked close to 7 years ago — to collaborate on the development of flotetuzumab and other Dual-Affinity Re-Targeting (DART) drugs in its pipeline.

MacroGenics CEO Scott Koenig shrugged off the departure of Servier, which paid $20 million to kick off the alliance and $20 million to option flotetuzumab — putting a heavily back-ended $1 billion-plus in additional biobuck money on the table for the anti-CD123/CD3 bispecific and its companion therapies.