Cancer, neurology, immune therapies drive continued robust pace of biopharma financings

2017 was recorded as the second highest financings year for the biopharmaceutical industry. High enthusiasm was demonstrated among investors who funneled about two-thirds of the money through public offerings.

BioPharma Financings Reports, 15 separate analyses compiled by BioWorld and Clarivate Analytics focused on key therapeutic markets, found that in addition to cancer companies, firms working on therapies for neurology and psychiatric indications, as well as immune therapies, tipped the scales when including financings, deals and grants, earning the most money of all therapeutic areas last year, and edging out the infectious disease space.

In fact, the top three areas combined represented 56 percent of all money that flowed into the industry in 2017.

Cancer came out on top in every area, collecting a total of $80.7 billion, mostly through deals and grants. Neurology/psychiatric was the second biggest money-making therapeutic area for 2017, pulling in $17.2 billion. Companies focused on immune therapies earned the third-place spot with $15 billion, followed by infection in fourth place with $14.3 billion.

Grants and deals collected by Clarivate’s Cortellis Deals Intelligence indicate the highest four projected values are cancer at $59.97 billion, neurology/psychiatric at $9.13 billion, immune at $8.7 billion and infection at $7.8 billion, mirroring the overall financings picture.

Strictly financings

Highlighting financings only, cancer and neurology/psychiatric companies retained their top spots ($20.7 billion and $8.1 billion, respectively), but infection took over third place with $6.5 billion, swapping places with immune, which posted $6.3 billion in financings.

The order of investor interest is not surprising, considering excitement over immunotherapy successes that have contributed to cancer’s stronghold, as well as industry chatter throughout 2017 concerning what appeared to be a growing appetite for neurodegenerative (ND) therapies. One biopharmaceutical executive from Abbvie Inc. said his team had booked triple the number of ND meetings than prior years during the Biotechnology Innovation Organization’s 2017 convention in San Diego. The influx in interest is attributed to more precise tools, budding research and the baby boomer population approaching ages when Parkinson’s disease, Alzheimer’s disease and dementia are more prevalent.

Financing deals, in general, presented greater options in 2017 for biopharmaceutical firms and their investors that may have at one time favored a merger-and-acquisition exit. BioWorld data indicate that while the value of completed M&As last year declined 51 percent over the prior year, public and private financings dollars rose 29 percent over the same period.

The early part of 2018 suggests continued fervor for the biopharmaceutical industry, with January setting a new all-time record for public financings – $4.78 billion – a 20 percent jump from the second highest January three years earlier.

Cancer and ND therapy companies represent approximately half of all public offerings for the month: 36 percent of IPOs and follow-on dollars went to cancer companies, and 15 percent went to companies with ND therapies in the pipeline.

Of the $20.7 billion raised by cancer companies in 2017, 65 percent of the amount came through IPOs and follow-ons. Aside from a $3 billion notes offering by Foster City, Calif.-based Gilead Sciences Inc., the top public offerings of cancer companies included Wilmington, Del.-based Incyte Corp.’s $664.98 million follow-on in September, and Cambridge, Mass.-based Bluebird Bio Inc.’s December follow-on for $600 million. Incyte has numerous cancer immunotherapy programs with epacadostat in melanoma, non-small-cell lung cancer, renal cancer and others, while Bluebird is focused on CAR T (bb2121) for multiple myeloma, as well as Lenti-D for cerebral adrenoleukodystrophy. The latter put Bluebird in the endocrine/metabolic category as its second highest public offering in 2017, behind Cambridge, Mass.-based Alnylam Pharmaceuticals Inc.’s $805 million offering in November. Alnylam is developing patisiran for amyloidosis.

A little more than half of the money invested in neurology/psychiatric companies flowed through public offerings – $4.2 billion, representing 52 percent. The largest offering was completed by Sage Therapeutics Inc., also of Cambridge, Mass., which raised $345 million in November. The company’s products brexanolone and SAGE-217 are targeting depressions, essential tremor and Parkinson’s disease. The neurology/psychiatric space and the cancer space both gained the benefit of a $1.1 billion investment led by Softbank Vision Fund for privately held Roivant Sciences Inc., of Basel, Switzerland, which works in dementia, prostate cancer and other diseases, through a family of companies. For neurology/psychiatric, the investment was followed by $270 million in venture capital money for Harmony Biosciences LLC, of Plymouth Meeting, Pa., and its narcolepsy drug.

Likewise, the immune space gained more than half of its financings dollars – $6.3 billion – through public offerings, with the $665 million follow-on of Incyte, which is developing ruxolitinib for graft-vs.-host disease, leading the way. Biomarin Pharmaceutical Inc.’s $495 million notes offering in August was followed by a $395.2 million offering of American Depositary Shares by Mechelen, Belgium-based Galapagos NV. Biomarin, of San Rafael, Calif., is focused on diseases such as mucopolysaccharidosis, Lambert Eaton myasthenic syndrome and phenylketonuria, whereas Galapagos is working on highly selective small molecule tyrosine kinase inhibitors for oncology and immunological diseases. The immune space also edged out infection by logging the Roivant $1.1 billion private investment, as the company has phase III drug RVT-802 for the rare disease, complete DiGeorge syndrome.

Financings for other therapeutic areas

IPO and follow-on financings dominated the dollars raised for every therapeutic area but genitourinary/sexual health, which instead received 50 percent of its financings through venture capital and only 39 percent through IPOs and follow-ons. One other area, toxicity/intoxication, received only 14 percent of its financing dollars from public offerings, with 81 percent arriving through private placements. The space earned the least amount of money in 2017 of the 15 therapeutic areas analyzed, with a mere $192 million through financings, and another $30.4 million through deals and grants combined.

Other weak areas for the year appeared to be cardiovascular, dermatologic and musculoskeletal, raising only $5.86 billion, $5.7 billion and $5.3 billion, respectively, through financings, deals and grants combined.

Companies working in the hematologic, respiratory and inflammatory therapeutic areas received 88 percent, 85 percent and 84 percent of financing dollars through IPO and follow-on offerings. Notably, dermatologic earned nearly as much through venture capital – $1.4 billion (42 percent) – as it did through public offerings – $1.5 billion (45 percent).

Data for this analysis was supplied through the BioPharma Financings, an add-on data package available for Clarivate Analytics Life Sciences clients. To learn more about BioPharma Financings, download this short presentation.