* Britain's Circassia prices record-breaking European IPO
* UK, France, Switzerland seen in strong position as market
* Several firms weighing listing shares over trade sale
By Ben Hirschler and Caroline Copley
LONDON/ZURICH, March 13 Biotech fever is
spreading to Europe from the United States with a successful
stock market debut for a cat allergy company in Britain seen as
a bellwether that could help unlock listings in other countries
including Switzerland and France.
Top candidates for a share sale include Swiss firms AC
Immune and Molecular Partners, which are both weighing up a
possible initial public offering (IPO), according to people
familiar with the companies.
Geneva-based Novimmune named Andrew Oakley, the
former chief financial officer of Europe's biggest biotech
Actelion, as its new finance chief on Wednesday - also
raising expectations that the firm is beefing up its management
team in preparation to go public.
Sentiment was given a major boost on Thursday when British
allergy drug development firm Circassia raised around
581 million pounds ($965 million) in its London listing, a
record-breaking sum for a European biotech.
"The market is receptive to good companies that have got a
well thought out story," Circassia Chief Executive Steve Harris
told Reuters. "I don't know that there will be a lot, but I'm
sure there are a number of other good quality companies that
will come to market in Europe."
With the IPO window nudging open, companies that in the past
might have opted for a trade sale to larger pharmaceutical
companies are now considering a share listing instead.
One venture capital backer of several European biotechs said
banks were now "super active" in seeking IPO business.
"There is growing noise suggesting the IPO market is opening
up in Europe and, in fact, it would be surprising if it didn't.
There is normally a lag of about a year from the U.S. taking off
and Europe following," said Francesco De Rubertis, a leading
biotech investor at Index Ventures in London.
HOT ON WALL STREET
Biotech shares have surged in the United States since 2011
as advances in the understanding of the genetic basis of
disease, enthusiasm for a clutch of new drugs in cancer and
hepatitis C and new U.S. rules to speed up the development of
innovative medicines whet investors' appetite.
That, in turn, has fuelled a surge in U.S. biotech IPOs,
which really started to take off at the end of 2012, and dozens
of firms have since raised money by listing.
The United States is home to the world's leading biotech
companies, resulting in an experienced pool of specialised U.S.
funds with a deep understanding of the sector's complexities and
long development timelines.
By contrast, firms raising money in Europe rely more heavily
on generalist and small-cap investment funds, many of which have
traditionally had little appetite for early-stage biotech
businesses, making Europe a tougher place to raise funds.
Many European investors have unhappy memories of past
biotech failures, most notably the high-profile rise and fall of
British Biotech, an experimental cancer drug business, back in
The lack of enthusiasm up till now has prompted several
European companies to jump ship and seek a listing on the Nasdaq
market in New York, where they can tap a deeper pool of
experienced biotech investment capital.
Britain's Lombard Medical was the latest to plan to
go this week, following on the heels of others including Dutch
gene therapy pioneer UniQure and UK diagnostics firm
The strong backing for Circassia's London listing signals
bullish sentiment is starting to take root on this side of the
Atlantic. In a further sign that funding in the sector is taking
off, Vectura also raised about 52 million pounds ($86
million) in a share placing on Thursday.
This will be pleasing for some European firms for whom a
U.S. listing could be a risky and costly endeavour, particularly
if they lack a strong U.S. presence.
"In Europe, an IPO is still one of the highlights in a
company's life whereas in the U.S. it's one of the easiest ways
to get access to new money without debating valuation and board
seats and so on. There doing an IPO is a financing act," said
Juerg Zuercher, a life-science specialist at Ernst & Young.
A trickle of smaller IPOs is already underway in France.
Crossject, the maker of a needle-free injection
system, raised 17 million euros ($24 million) on Paris'
Alternext exchange last month, while Oncodesign,
which helps companies assess the therapeutic potential of cancer
drugs, aims to raise between 37.5 and 42.9 million euros on the
Genomic Vision, a maker of molecular diagnostic tests to
detect genetic disorders, and cancer vaccine maker Genticel have
also signalled their intention to float on the Euronext.
Still, European investors, bruised by a series of booms and
busts in this notoriously volatile sector, are likely to be
pickier than their U.S. peers when it comes to backing firms.
Hanspeter Gehrer, head of corporate finance at Swiss bank
Vontobel, expects a limited number of biotech IPOs in
Switzerland this year, saying firms would need to offer a free
float of at least 100 to 150 million Swiss francs ($114 to $172
million) to get investors on board.
"In the current environment, investors are not prepared to
take too big a bet. That means that firms must be close to
generating cash flows and profits," he said.
AC Immune's decision on whether to opt for an IPO will
likely hinge on Phase II data, expected in the second quarter,
for its Alzheimer's drug crenezumab, which it licensed to Roche
subsidiary Genentech in 2006.
In a statement, AC Immune said an IPO was only one option.
Swiss media have also touted Polyphor, which is developing
antibiotics, as a candidate after its chairman said in an
interview last year his aim was to take the company public "some
day", and signalled it may even fulfil the criteria in 2014.
Polyphor did not immediately respond to a request for
comment, while Molecular Partners was not immediately available
($1 = 0.7192 euros); ($1=0.8746 Swiss francs); ($1 = 0.6022