France shining star in biotech IPO sky
27.03.2015 - Europe is once more proving that it can be a good bet for biotech companies going public. A newly established EU-wide lobbying initiative could help the IPO boom on its way.
With biopharma companies Cerenis and OSE Pharma, France is taking the lead with the most IPOs this year so far. It just goes to show that biotechs aiming to going public are now less likely to look across the Atlantic for public funding. But there is still a long road ahead: a new IPO task force aims to implement changes to make the costs of IPOs more attractive to biotechs.
Exceeding its own expectations, Labège-based Cerenis Therapeutics raised €53.4m this week with its IPO on Euronext Paris through the sale of 4.2 million shares at its top price of €12.70. The French company, which focuses on the development of high-density lipoprotein (HDL) therapies, had aimed to collect €35m. Since going public, the company is now valued at €225.9, pulling in Californian VC Sofinnova Partners as its main investor.
Next up this week with another triumphant IPO on Euronext Paris was immunotherapy developer OSE Pharma S.A. Like Cerenis, the French biotech pushed out all the stops and surpassed its original target of €16m, scooping up €21.1m through the sale of 2 million shares at €10.80 each.
But not all European exchanges are profiting from the same burst of activity as Euronext Paris. Aside from London’s AIM and Euronext Paris, the other exchanges in Europe have yet to experience the same influx of biotech IPOs.
According to experts, the low number of IPOs lies with the high regulatory and administrative costs of going public in Europe. With the aim of making it more financially feasible for SMEs to float, a new consortium has been established with experts from across the EU with direct knowledge and experience of IPOs – EuropeanIssuers, the European Private Equity and Venture Capital Association and the Federation of European Securities Exchanges (FESE). Created after the release of the European Commission’s Green Paper on the Capital Markets Union, Philippe de Backer, MEP and Chairman of the IPO Task Force, announced the publication of the EU IPO Report: “Rebuilding IPOs in Europe; Creating jobs and growth in European capital markets”. The Task Force has agreed on recommendations on how to improve this key component of Europe’s capital markets in the technology sector, such as biotechnology. The consortium has now begun lobbying the European Commission to introduce changes inspired by those that sparked the US biotech boom. They have suggested slashing the regulatory and administrative costs of an IPO by 50%. The FESE estimates that up to 10% of an IPO that raises less than €50m is swallowed up by fees. For a small IPO of €6m or less, the sting is even sharper: 15% of the amount raised goes towards costs.
“The European IPO markets need to work better for the real economy. Although Europe continues to build and grow businesses with the potential to be world class, the failure of the IPO market to facilitate their access to capital hampers their growth and ultimately their potential to create jobs,” said de Backer. “We need policymakers, regulators, and industry to work together to deliver reforms to regulation,” he continued.
French biotech Cellectis also made headlines this week with its second listing on Nasdaq New York when it collected US$229m (€211m) in an upsized IPO by offering 5.5 million American Depository Shares (ADS) at US€41.50 (€38). The Paris-based company develops cancer immunotherapies based on gene-edited CAR T cells and has been listed on Euronext Paris since 2007.