Booming biotechs bank $2.7B in follow-on cash

Print 26 January 2015
Damian Garde / Feirce Biotech

Much of the focus in biotech's recent boom has been on the ease with which companies are making their way onto Wall Street. And, over the past week, a host of drug developers illustrated the benefits of being a publicly traded company, raising roughly $2.7 billion in follow-on offerings to bankroll R&D and potential acquisitions.

With Nasdaq's combined biotech fund ($IBB) trading at an all-time high, 16 drugmakers chose this week to sell off their shares, by investor and blogger Brad Loncar's count, pricing offerings ranging from $2 million to nearly $1 billion.

The biggest beneficiary was BioMarin ($BMRN), which grossed $911.5 million in total thanks to some willing underwriters, raising the cash it needs to close a $680 million acquisition of Duchenne muscular dystrophy biotech Prosensa ($RNA). Next was Alnylam ($ALNY), which raised $450 million to hit the gas on its pipeline and pad its M&A fund. Zafgen ($ZFGN), a recent IPO success, banked $138 million to support the late-stage development of its pioneering obesity drug. And Auspex ($ASPX), another 2014 debutante, grossed roughly $170 million to support its pipeline of central nervous system treatments.

The list goes on. Puma Biotech ($PBYI), Arena Pharmaceuticals ($ARNA), Intrexon ($XON) and Radius Health ($RDUS) each raised more than $100 million on the week, capitalizing on widespread bullishness to fill their coffers. And, perhaps most encouraging to biotechs hoping to follow suit, most of the companies priced their offerings at low-percentage discounts to their most recent closes.

The big week is yet another marker of biotech's extended honeymoon with investors, beginning with 2013's initial IPO deluge, sparking a flood of new venture funds in 2014 and leading a slew of once-staid execs at this month's JP Morgan Healthcare conference to speak openly about ditching the old hand-to-mouth model and growing into vertically integrated drugmakers.

How long such heady days will last is anyone's guess, but most agree that a few costly clinical failures--inevitable in biotech--will eventually lead generalist investors to see their shadows and go back to treating the industry with cautious curiosity. In the meantime, though, biotechs would be foolish not to capitalize on all the rampant optimism.

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