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US Fund flows data currently available for November and December 2015 mirrored the tapering biotech sentiment, with a combined $ 1.3bn leaving the US healthcare sector, while total net assets hovered around $ 137bn. For 2015, $ 9.6bn still flowed into US healthcare overall, driven by the very positive first half of the year. For European healthcare, these numbers are not available but will have followed the same trend.
For FY15, the US biotech indices still ended the year up, with the Nasdaq Biotech (NBI) up 12%. European Biotech performed with 22% and the Belgian Euronext Pharma&Bio index spurred 37% (driven by a strong 4Q15 rally of heavy weight UCB). However, sentiment quickly plummeted right around the turn of the year, with the NBI down 28.0% at the 2016 low in early February and -20% for the European and Belgian biotech indices. General indices such as EURSTOXX or the Bel20 ended the year positive (4%, respectively 13%), also had a rough start to 2016 and were down 15-20% at the low in February. Since this low, markets have rebounded by ~5%, but are still ~10% lower versus year start, and the NBI is today still -24%.
Zooming into the Brussel Biotech market, it is striking that stocks of those companies which have a strong shareholder base in the US (Ablynx, Celyad, Galapagos) are distinctively more down YTD (~-30%) than the stocks of the companies with no or limited US-based investor exposure (YTD ~-9%).
In the month December and January there was a period of 60 days with no IPOs on the US NASDAQ technology market nor was there any meaningful public event on European markets. This closed period follows an extreme bull period in 2015. As an example in Europe -taking all indicators into account regarding IPOs, follow-on financings and secondary listings – the 191 European listed biotech companies raised € 6.3bn, +82% versus 2014 (€ 3.4bn). It is no surprise that there is a long queue of anticipated biotech’s waiting to IPO, but this has largely failed to turn into deals thus far, outside of two successful IPOs Editas and BeiGene, both in early February. Belgian TiGenix announced its US NASDAQ IPO plans end of last year, but also their transaction is still awaiting better times.
The 2015 US IPO class was down by an average of 26.4% during January 2016 and more than 22% down on average from initial offering prices. Both BeiGene and Editas moved up on their first day of trading, and are holding strong, which will hopefully be a precursor of things to come for those lined up in the IPO queue. For the 2015 Euronext Brussels biotech IPO’s, Bone Therapeutics and Biocartis are holding strong and are hovering around their IPO price while the average decline of Mithra, Kiadis (Nl) and Curetis (G) is -20% versus IPO.
Recent IPOs in particular have seemed to bear the brunt of the onslaught, and it appears that most prospective IPOs and follow-ons will sit tight for the time being until broader sentiment improves for the sector as a whole. In the meantime, though, crossover rounds continue to pop up across the biosphere, pointing toward a broader belief that the window will re-emerge and allow quality names and stories to still access the public markets.