Financial Scorecard: Biotech and big pharma keep on rolling

If we thought that biotech's record financing year would be a tough act to follow we might have to revise that notion if the transactions that have been completed so far this month are anything to go by.

The industry has had a red hot start to 2015, both on the capital markets and in raising capital.

Public companies have generated an incredible $5 billion for themselves, $3 billion of that total being captured in the past few days alone, with San Rafael-based Biomarin Pharmaceutical Inc. topping the deal value list by grossing approximately $911.5 million from a public offering of 8.5 million shares of common stock priced at $93.25 each. The final total also included the underwriters exercising in full their option to purchase an additional 1.275 million shares.

The company intends to use the net proceeds for general corporate purposes and to fund its acquisition of Prosensa Holding NV, announced in November and estimated to be worth about $680 million, with another $160 million to come for two near-term regulatory milestones. (See BioWorld Today, Nov. 25, 2014.)

Cambridge, Mass.-based Alnylam Pharmaceuticals Inc. padded its bank balance to the tune of $450 million, pricing of an underwritten registered public offering of about 4.7 million shares of its common stock at a public offering price of $95 per share.

In addition, Puma Biotechnology Inc. banked $211 million from its public offering of 1 million shares of its common stock at $190 per share and another 150,000 shares sold by the underwriters exercising in full their option to purchase shares.

What is driving that incredible deal flow?

"The alignment of all the factors we saw end of last year and into this month have come together at a torrid pace," John Chambers, head of health care investment banking at Roth Capital Partners, told BioWorld Insight. "Investors are looking at the new issuance market as a vehicle to quickly amass a position in companies that would otherwise take several days or longer to assemble.

"Another factor in follow-ons is the incumbent demand from existing investors in these companies looking to maintain or increase their relative ownership positions," he added. "The companies getting out quickly this year in most cases have performed extremely well and have a series of upcoming milestones. Since demand for transactions is high, investors need to move very quickly and aggressively to ensure their minimum allocation is achieved."

Private companies haven't been left on the sidelines either in that frentic cash grab and deal flow has been brisk generating around $1.4 billion.

Despite the uncertain markets, investors have kept their faith in the biotech sector, particular the large cap companies. The BioWorld Blue Chip Biotech Index closed last Thursday up 6 percent so far in January compared with the Dow Jones industrial average and Nasdaq composite index closing unchanged month-to-date.

However, it is not only biotech companies that are currently impressing investors; big pharma companies are receiving an equal share of attention thanks to a steady news flow on their dealmaking activities. The BioWorld Pharma Index has jumped 4.4 percent month-to-date.