The Expert Opinion. Maxim Gorbachev: "2016 Was a Good Year for Our Venture Biotech Portfolio - 2 IPO and 2 Acquisitions"

"It’s right time to make the first results of 2016. Let’s have a quick look back on venture biotech market in 2016. Honestly speaking the market was tough. There was a slowdown in the capital markets with fewer IPOs/follow-on offerings. According to Deutsche Bank there were 24 biotech deals (includes IPOs and non-block FOs greater than $30m) on NASDAQ up to date 2016 with gross proceeds of $1,847M which is almost half of what was for the same period in 2015 (44 deals with as gross proceeds of $4,548M.

Negative US election noise with continued rhetoric around drug pricing throughout the year and fear of Clinton win pulled investor money out of biotech. According to J.P. Morgan US equity outlook healthcare sector saw on the largest outflows of funds in 2016. The NASDAQ Biotechnology Index (NBI) significantly lagged the broader market (2016 11 month performance: NBI -20% vs. the broader market index S&P 500 +7%). Valuations was under pressure
On M&A front in 2016 despite initial expectations there was also a lack of meaningful deals.

How 2016 was for RMI Partners? On the contrary, we have a good year. Two of our portfolio companies have made IPO despite unfavorable market conditions (Syndax Pharmaceuticals on March 02 raised $52,8M @ $12.00 per share and Clearside Biomedical did it twice on June 01 raised $50M @ $7 per share and  recently on December 9 added to the balance sheet another $36mm @ $9 per share).

Moreover, two of our portfolio companies have been acquired at pretty nice valuations. First, in February Novartis’ eye care business, Alcon, acquired Transcend Medical, a medtech company developing minimally invasive surgical devices to treat glaucoma, and secondly, in the fall, Allergan has purchased Tobira Therapeutics for six times its market value in cash and up to 19 times total, one of the biggest premiums ever.

What to expect from 2017? We are quite positive! Core sector fundamentals continue to be strong. First of all, Trump has called for speeding up drug approvals/cutting red tape at the FDA. M&A activity could be accelerated in Pharma/Biotech due to continues need to backfill pipelines and strong Big Pharma’s balance sheets. On RMI’s portfolio level we expect several of our portfolio companies hit important milestones next year. If you want to discuss in more details let’s meet in Moscow or at J.P.Morgan Healthcare conference in January in San Francisco.

Stay tuned to us and we will keep you up to date!
As Jake Moore said in Oliver Stone movie “Wall Street: Money Never Sleeps”: If it weren't for people who took risks, where would we be in this world?"

From our blog, follow us on Facebook