Biopharmaceutical Sector - Market Update - February 21, 2022 - Torreya
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Biopharmaceutical Sector
Market Update – February 21, 2022
© 2021. All rights reserved. Securities offered in the United States are offered through Torreya Capital LLC, Member FINRA/SIPC. In Europe
such services are offered through Torreya Partners (Europe) LLP, which is authorized and regulated by the UK Financial Conduct Authority.
1
Pandemic Update
2
COVID-19 Case Continues to Drop
Down 42%. Seven-day smoothed global COVID caseload has dropped by 42% since
peak on January 27th, 2022.
1,962,968 Daily Confirmed COVID-19 Cases Worldwide (7-Day Smoothed)
4,000,000
New cases reported worldwide, Feb 17, 2022
3,500,000
3,000,000
5,863,136 2,500,000
2,000,000
Total deaths reported worldwide
1,500,000
1,000,000
10,483,059,250 500,000
0
Vaccinations delivered in 183 countries
10/22/20
11/22/20
12/22/20
10/22/21
11/22/21
12/22/21
9/22/20
1/22/20
2/22/20
3/22/20
4/22/20
5/22/20
6/22/20
7/22/20
8/22/20
1/22/21
2/22/21
3/22/21
4/22/21
5/22/21
6/22/21
7/22/21
8/22/21
9/22/21
1/22/22
Source: Johns Hopkins Database, Feb 18, 2022
3
Omicron Variant Raging in Parts of Asia
Countries with very good disease control are now dealing with Omicron as the virus has broken through.
Hong Kong working-class district reels as COVID runs
rampant
Coronavirus: South Korea’s daily cases eclipse 100,000
Feb 18, 2022. Once largely insulated from the coronavirus for first time; Japan’s death toll rises
pandemic, Hong Kong is facing a citywide outbreak, with
businesses buckling and some losing patience with the Feb 18, 2022. Deaths, however, have remained relatively low
government's "zero COVID" policies. In the cluster of working- in the highly vaccinated country which slightly eased a
curfew on businesses from 9pm to 10pm
class districts in nearby Sham Shui Po, some residential blocks
and public housing estates have been sealed off, crowds in South Korea’s new daily Covid-19 cases topped 100,000 for
malls and street markets have thinned, and once teeming the first time amid an Omicron outbreak, with authorities
saying social distancing measures would be only slightly
diners known as dai pai dongs and stalls selling knick-knacks eased ahead of the March 9 presidential election.
are quieter after dark.
Sources: https://www.reuters.com/world/asia-pacific/hong-kong-working-class-district-reels-covid-runs-rampant-2022-02-18/, https://www.scmp.com/news/asia/east-
asia/article/3167487/coronavirus-south-koreas-daily-cases-eclipse-100000-first-time
4
Is the End of Covid-19 in Sight?
Feb 16, 2022. Moderna CEO Stephane Bancel has signaled the end of the Covid-19 pandemic
is in sight.
When asked in an interview whether the virus was approaching the final stages of pandemic,
Bancel said: “I think that is a reasonable scenario.”
He repeated that the virus was going to stay with humans forever, like the flu, in the
interview with CNBC’s “Squawk Box Asia,” and added: “I think there is an 80% chance as
Omicron evolves or SarsCov-2 virus evolves, we are going to see less and less virulent
viruses.”
Bancel warned there was a 20% scenario in which a new mutation could be more virulent
than Omicron. A nurse holds a vial of Moderna Covid-19 vaccine.
Clement Mahoudeau/AFP via Getty Images
Bancel’s prediction appears to match a growing consensus among health experts. It echoes
comments that Dr. Anthony Fauci, President Joe Biden’s chief medical adviser, made to the
Financial Times last week, in which he said that the “full-blown pandemic phase” is ending.
Source: https://www.barrons.com/articles/moderna-stock-price-covid-omicron-pandemic-51645007795
5
Ukraine and the Stock Market
6Stocks Drop as Tensions Mount in
Ukraine
Feb 18 (Reuters) - U.S. stock indexes slumped on Friday as escalating
tensions in Ukraine amid fears of an imminent Russian invasion
prompted investors to dump risky assets in the run-up to a long
weekend.
All the major S&P 500 sectors were in the red, with energy shares
leading losses due to weaker oil prices.
Russian news agencies reported about a blast in the eastern Ukraine
city of Donetsk and separatists planned to evacuate residents from
the region to Russia due to heavy shelling. read more
Source: https://www.reuters.com/article/usa-stocks-idUSL4N2UT3G8
7Significant
Market Drop
on Friday
Related to
Increasing
Russian Troop
Presence
Around the
Ukraine
8Biden says he believes Putin has already decided to invade Ukraine Feb 18, 2022 MUNICH, Germany — President Biden said Friday that he is convinced Russian President Vladimir Putin has decided to invade Ukraine, capping a day full of ominous turns toward war between Russia and the former Soviet Republic. “We believe that they will target Ukraine’s capital Kyiv, a city of 2.8 million innocent people,” Biden said in a somber White House address. “We’re calling out Russia’s plans loudly and repeatedly, not because we want a conflict, but because we’re doing everything in our power to remove any reasons that Russia may give to justify invading Ukraine.” Until Russia attacks, Biden said, “diplomacy is always a possibility,” holding out slight hope that Western powers might avert a bloody, disruptive and economically damaging war. The comments followed similar admonitions from Secretary of State Antony J. Blinken that Russia’s plan to create a pretext for invading Ukraine “is already in play,” with Russian-backed separatists claiming they were the victims of artillery shelling and sabotage. Source: https://www.latimes.com/politics/story/2022-02-18/munich-security-conference-kamala-harris-reaffirms-support-nato-ukraine 9
Further Headlines
Feb 21, 2022
10Further Background Material on the Ukraine Situation
CSIS 4 BBC
1 https://www.csis.org/ https://www.bbc.com/
Economist Story Kyiv Post
2 https://www.economist.com/leade
rs/2022/02/19/whether-he-
5 https://www.kyivpost.com/
invades-ukraine-or-backs-down-
putin-has-harmed-russia
Pravda CNBC
3 https://english.pravda.ru/
6 https://www.cnbc.com/d
efense/
Running stories saying the
Ukrainians are attacking
Russia. 11XBI Biotech Index Down 4.2% Last Week
NASDAQ Biotech Index, Aug 1, 2021
Biotech Stocks Down VIX Continued its Rise
to Feb 18, 2022
5500
Return: Feb 11 to Feb 18, 2022 Jan 3: 16.6%
Jan 10: 19.4%
5300
Jan 18: 22.8%
Nasdaq Biotech Index: -3.2% Jan 28: 27.7%
Arca XBI Index: -4.2% Feb 4: 23.2%
5100
Torreya Global Biotech: +1.3% Feb 11: 27.4%
S&P 500: -1.4% Feb 18: 27.9% 4900
4700
Ten-Year Treasury Yield
Return: Jan 1 to Feb 18, 2022
Flat 4500
Nasdaq Biotech Index: -16.6% 4300
Jan 3: 1.63%
Arca XBI Index: -22.6%
Jan 10: 1.78%
Torreya Global Biotech: -16.5% Jan 18: 1.87%
4100
S&P 500: -9.3% Jan 28: 1.78%
3900
Feb 4: 1.93%
Feb 10: 1.92%
Feb 18: 1.92%
Source: S&P Capital IQ, Google and Torreya analysis
12Funds Flow into Biopharma Turned Negative this Month
We saw steady, albeit slow, inflows into biopharm funds Oct to Jan. In February we have seen net outflows.
Source: EPFR Informa.
13Even More Negative Enterprise Value Companies This Week Than Before Source: CapitalIQ 14
Life Sciences Equity Markets is at an All-Time Value
Value of Public Life Sciences Companies Worldwide by Subsector
Record ($8.5 Trillion)
The global life sciences sector dropped in value by 1.1% last week ($110 billion). Biotech was down 3.1%. Diagnostics,
tools, and devices were down.
Enterprise Value Change in Last Week Change in Last Change in Last Two
Sector Count
(Feb 18, 2022, $millions) (percent) Month (percent) Years (percent)
API 82 $101,475 2.0% -7.0% -4.2%
Biotech 896 $283,541 -3.1% -9.2% -13.0%
CDMO 42 $262,753 2.9% -9.7% 0.7%
Diagnostics 82 $281,692 -5.5% -9.1% -12.4%
OTC 33 $27,869 1.6% 2.3% 0.8%
Pharma 714 $5,576,567 -0.4% -2.8% -4.5%
Services 42 $258,110 1.4% -7.3% 5.3%
Tools 54 $779,127 -3.3% -7.1% -9.3%
Devices 187 $1,847,347 -2.6% -5.1% -8.1%
HCIT 12 $78,869 -1.9% 1.2% -2.6%
Total 2144 $9,497,481 -1.1% -4.3% -5.7%
Source: CapitalIQ 15Tough Week for Sage and Mirati
16
Source: https://www.bloomberg.com/news/articles/2022-02-16/biotech-stock-values-cut-in-half-while-new-drug-setbacks-pile-upTough Week for Masimo
Marketwatch, Feb. 16, 2022: “Medical technology company Masimo Corp.
shares MASI, +1.29% tumbled 35% Wednesday, to mark their biggest ever
percentage decline, a day after the company announced its biggest ever deal,
the acquisition of consumer tech company Sound United for about $1 billion.
Sound United owns consumer audio brands including Bowers & Wilkins,
Denon, Polk Audio and Marantz. “Investors were not
excited to see a med tech
The deal is expected to close mid-year and to be financed with a mix of cash company go out and buy
on hand and borrowings under a new credit facility. Masimo said it would Polk Audio.”
immediately boost adjusted per-share earnings upon close. "The Sound United
transaction aligns with Masimo's priorities, objectives and vision by advancing
our strategy of enabling connected monitoring across both the hospital and
home," Chief Executive Joe Kiani said in a statement. Raymond James said the
deal was likely a surprise for investors, coming as it announced mostly in-line
earnings. "The deal has the potential to dilute the revenue growth and margin
profile in the near-term, but it significantly accelerates MASI's move into the
home," analyst Jayson Bedford wrote in a note." While this is not a shift in
strategy, most investors thought the transformation into the home would occur
in a more graduated manner." “
Source: https://www.marketwatch.com/story/medical-technology-company-masimo-stock-slides-35-after-unveiling-1-billion-acquisition-of-sound-united-2022-02-16
17Hooray for Hookipa
HOOKIPA (NASDAQ:HOOK) shares are 51% higher in after-hours trading after it amended an
agreement with Gilead Sciences (NASDAQ:GILD) for the development of an arenaviral
immunotherapy as part of a HIV regimen.
In 2018, Gilead (GILD) licensed exclusive right to HOOKIPA's arenaviral platform to develop
immunotherapies for HIV and hepatitis B virus. Under that pact, the companies would collaborate
through a joint research phase, after which Gilead had rights for further development.
Under the amended agreement, HOOKIPA (HOOK) is responsible for advancing the HIV program
through the end of a Phase 1b clinical trial, with funding from Gilead via an upfront payment. After
the phase 1b trial is completed, Gilead has the exclusive right to assume further development. The
hepatitis B virus part of the agreement is unchanged.
HOOKIPA will receive a $15 million upfront fee with the amended agreement. It will also receive a
$5M equity payment investment from Gilead and up to $30M in additional equity financing.
Source: https://seekingalpha.com/news/3800476-hookipa-pharma-gains-51-after-hours-on-amended-agreement-with-gilead
18This Too Shall Pass: How Biotech Bear Market Will End
Feb 13, 2022: “A year ago, companies were being valued as Experienced investors and analysts say they’ve lived
exciting ideas,” said Brad Loncar, chief executive officer of Loncar through plenty of painful periods before. Bardon and
Investments. “When the market corrects like it has, I think we’re MPM co-founder Ansbert Gadicke compare the
going back to valuing them as businesses.” experience to hibernating bears: The companies that
are well prepared will survive to see the spring and
That means the smart money isn’t abandoning the sector, said the older bears, the experienced investors, who have
Piper Sandler analyst Chris Raymond, who analyzes biotech experienced winters before know that this one will
money flows. But those who remain are taking a harder look at eventually end as well.
the companies they’re willing to back. Some are shying away
from companies that are years away from producing data that “If you’re a good company with good science with a
proves their ideas could translate into medicine. good business model, you’ll make it through,” said
Brad Loncar, the Loncar Investments chief executive.
People also tend to assume higher growth stocks, including “If you’re just based off a PowerPoint deck that’s
biotech, perform worse in inflationary environments. But that’s hopes and dreams, you might be in some trouble.”
not what the data show, said Raymond, the Piper Sandler analyst.
Those macro trends give biotech investors and analysts hope that
this downturn, like those before it, will pass.
Source: https://www.bloomberg.com/news/articles/2022-02-13/biotech-investors-unwind-speculative-bets-as-pandemic-fears-fade 19Fed Officials Push Back on Frontloaded Tightening
NEW YORK (AP) — The Federal Reserve should start raising
interest rates next month to help rein in too-high inflation,
Federal Reserve Bank of New York President John Williams
said Friday. But he added that the rate hikes may not have to
begin with as big a bang as some have suggested.
2/18/22
With inflation at its hottest level in two generations, the Fed
is widely expected to seek to cool the economy by raising its
benchmark short-term interest rate from its record low of
nearly zero, where it’s been throughout the pandemic. The
only question has been how big and how quickly it will move,
because an overly aggressive approach could choke the
economy while too much caution could let inflation spiral
further.
“Personally, I don’t see any compelling argument to take a
John Williams
big step at the beginning,” Williams said following an event at
President
New Jersey City University to discuss the economy and
interest rates. Federal Reserve Bank of San Francisco
Source: https://apnews.com/article/business-new-york-economy-inflation-john-williams-ac4435cccc8f26565fbd9c4be6c80646 20Fed Quite Constrained on its
Ability to Tighten
The Federal Reserve will begin reversing extraordinary
pandemic-era stimulus when it meets next month. What
comes next is anyone’s guess—including central bankers’.
The stakes are as high as they’ve ever been for the U.S.
central bank, which was in its infancy during the Spanish
Flu pandemic of 1918, and for the economy and financial
markets. For every professional prognosticator who is
sure a recession is inevitable, there’s another one
predicting that the Fed can combat inflation without
reversing economic growth. The disagreement over the
inevitability of a recession reflects varying views about
the frequency and quantity of coming interest-rate
2/18/22
increases; the Fed’s plans for and ramifications of
shrinking its monster balance sheet after $5 trillion in
emergency bond purchases; and the true state of an
economy turbocharged by fiscal and monetary policy
and not yet through the pandemic.
Source: https://www.barrons.com/articles/the-fed-is-scrambling-to-tame-inflation-while-avoiding-a-recession-51645229935 21The Main Issues for the Fed are the Cost of Rolling the
Public Debt and its own Balance Sheet
The Fed’s Quantitative
“The labyrinth of scenarios for how monetary tightening is Easing Policy of Buying
conducted and plays out is a web of trade-offs that have U.S. bonds is likely the
only gotten more unattractive as inflation surges and
main culprit behind
economic growth slows from lofty levels. The Fed is late in
inflation and the main
removing stimulus that, with the benefit of hindsight, was
tool to be used to reverse
far too excessive, especially in conjunction with massive
fiscal aid. The central bank’s largess might have staved off a inflation.
worse recession and market correction in 2020, when the
Covid pandemic first reached the U.S. in force and the Historical tightening via
economy effectively closed. But it has contributed to an increasing interest rates
inflationary mess that is getting more painful to address. is going to be more
The risks of a policy failure are big and growing, threatening difficult this time around.
job losses and market bloodshed to fight inflation,
persistently higher prices to avoid recession, and, in a
worst-case scenario, all of that at once.
The constraint on the Fed this time isn’t so much
households and business, but the amount of debt amassed
by the government in recent decades and supercharged by
the pandemic, says Georgetown’s Angel. A record $30
trillion in public debt—up about 30% since early 2020—
means that even rates topping out at 2% translate to an
extra $600 billion a year in interest owed and affect
future spending, he says.
Source: https://www.barrons.com/articles/the-fed-is-scrambling-to-tame-inflation-while-avoiding-a-recession-51645229935 22Industry News
23New Book: Forty Percent of New Medicines from Biotech Companies with 50 or Fewer Employeers Small pharma is outperforming big pharma, new book suggests (Feb 17, 2022) Small biotech firms have ‘created more life-changing medicines’ than all major pharmaceutical companies combined, say Cambridge researchers Source: https://www.varsity.co.uk/science/23139. Also see: https://www.thebusinessofbiotechnology.com/ 24
Biotech and Beauty
The beauty industry’s landscape is constantly evolving, shaped by
the rise of innovative products, crafty tools, and new techniques.
As we all know, developments emerge to fulfill the needs of
consumers and align with the social conditions, and within the
framework of the beauty world, this notion certainly applies. So,
what sort of changes are we adapting to these days? Well many
to be exact, but one of the most dire obstacles facing the beauty
industry helping to mitigate the effects of climate change.
As Aganovic sees it, not only is biotech a relatively new concept in
the beauty space, but the broadened use of biology in beauty is a
rather novel practice: “The foundational practice of today’s beauty
industry is not biology, but in fact chemistry— the study of matter
and reactions between substances.” Jasmina Aganovic [CEO of
Arcaea] also explains that for as long as we can remember, the
beauty industry has been utilizing chemistry to create formulas,
but scientists and industry professionals have begun to realize
biology can also play an essential role. Aganovic shares that
biotech-based companies like her own are beginning to build
Source: https://www.townandcountrymag.com/style/beauty- around biology to expand the beauty industry’s potential, using
products/a38915833/what-is-biotech-beauty
technology to produce new ingredients and novel functionality to
address unsolved problems. 25Nature Article This Week:
How to Start a Biotech Company
Well worth a read: https://www.nature.com/articles/s41587-022-01239-9
“Commercializing research is fraught with
pitfalls, but a thoughtful checklist can ensure
you set off on the right path and give your
fledgling business the best chance of success.
These days, it feels as though more and more
academics are venturing into the dynamic and fast-
paced world of life-science startups. Many US
academic institutions now provide access to training
programs for academic founders. But taking the
plunge into the realm of business, finance and law
can nevertheless be a daunting process. A new
startup founder faces numerous (often unforeseen)
obstacles when seeking to commercialize their
research. This article lays out those critical issues
and provides some helpful tips for faculty members
seeking to commercialize their research.”
26General Atlantic Sees Opportunities in Healthcare
System Inefficiencies
Feb 2022
▪ Enormous number of players in virtual care now
▪ Took off during the pandemic
▪ Big consolidation
Source: https://www.youtube.com/watch?v=N1AbAQYVFNc
Source: https://www.pehub.com/general-atlantic-sees-opportunities-in-healthcare-systems-inefficiencies/
27Science Article on Metabolism over Life Span “You can’t exercise your way out of a bad diet” Source: https://www.science.org/content/article/scientist-busts-myths-about-how-humans-burn-calories-and-why 28
If you Exercise a Lot, Your Metabolism Adapts
(continuation of previous story)
PONTZER GOT A LESSON in the value of food sharing in 2010, when he traveled to Tanzania to study the energy budgets of the Hadza hunter-gatherers. One
of the first things he noticed was how often the Hadza used the word “za,” which means “to give.” It’s the magic word all Hadza learn as children to get
someone to share berries, honey, or other foods with them. Such sharing helps all the Hadza be active: As they hunt and forage, Hadza women walk about 8
kilometers daily; men, 14 kilometers—more than a typical American walks in 1 week.
To learn about their energy expenditure, Pontzer asked the Hadza whether they’d drink his tasteless water cocktail and give urine samples. They agreed. He
almost couldn’t get funding for the study, because other researchers assumed the answer was obvious. “Everyone knew the Hadza had exceptionally high
energy expenditures because they were so physically active,” he recalls. “Except they didn’t.”
Individual Hadza had days of more and less activity, and some burned 10% more or less calories than average. But when adjusted for nonfat body mass, Hadza
men and women burned the same amount of energy per day on average as men and women in the United States, as well as those in Europe, Russia, and Japan,
he reported in PLOS ONE in 2012. “It’s surprising when you consider the differences in physical activity,” Schoeller says.
One person who wasn’t surprised was epidemiologist Amy Luke at Loyola University Chicago. She’d already gotten a similar result with doubly labeled water
studies, showing female farmers in western Africa used the same amount of energy daily when adjusted for fat-free body mass as women in Chicago —about
2400 kilocalories for a 75-kilogram woman. Luke says her work was not well known—until Pontzer’s paper made a splash. The two have collaborated ever since.
Source: https://www.science.org/content/article/scientist-busts-myths-about-how-humans-burn-calories-and-why 29Are French Fries OK? (key research out this week) French-fried potatoes consumption and energy balance: a randomized controlled trial Background: Epidemiologic observations suggest increased potato consumption correlates with weight gain, adiposity, and diabetes risk, while nut consumption is associated with weight control and metabolic health. Randomized controlled trial (RCT) data indicate humans respond to changes in energy intake in single dietary components and compensate for extra energy consumed. Objective: We completed an RCT testing whether increased daily potato consumption influences energy balance (specifically, fat mass (FM)) compared with calorie-matched almond consumption. Design: A 30-day RCT of 180 adults prescribed calorie-matched (300 kcal/day, n=60 participants/group) consumption of 1) almonds, 2) French fries (Potato) or 3) French fries with herb/spices mix (Potato+herb/spices). Baseline and 30-day FM were measured by dual-energy x-ray absorptiometry (primary outcome), with secondary outcomes including body weight and carbohydrate metabolism (glycated hemoglobin (HbA1c), fasting blood glucose and insulin, homeostatic model assessment of insulin resistance (HOMA-IR)) markers. Results: A total of 180 participants were randomized (gender [67.8%-female], age [mean±SD, 30.4±8.7 years], body mass index (BMI) [26.1±4.2 kg/m2] and weight [75.6±15.4 kg]), with 12 dropouts and 3 terminations. Total FM change was not significantly different between Almond and Potato (combined±herb/spices; (mean±SE)] Almond:230.87±114.01g; Potato:123.73±86.09g; p=0.443), nor was change in fasting glucose (p=0.985), insulin (p=0.082), HOMA-IR (p=0.080) or HbA1c (p=0.269). Body weight change was not significantly different with potato groups combined versus almonds (p=0.116), but was significantly different among the three groups (p=0.014; Almond: 0.49±0.20kg; Potato: -0.24±0.20kg; Potato+herb/spices: 0.47±0.21kg). Conclusion: There were no significant differences in FM or in glucoregulatory biomarkers after 30 days of potato consumption versus almonds. Results do not support a causal relationship between increased French fried potato consumption and the negative health outcomes studied. Source: https://pubmed.ncbi.nlm.nih.gov/35179193/ 30
Public Equity Offerings
31Weekly Global
Biopharma Biopharma
Sector IPO by
IPO Activity Volume
Month, 2020 to 2021
Last week saw a five IPOs price. Three were in China. One in Europe and one (Blue Water Vaccines) in the United States. There was
an IPO market last week!
Biopharma IPO Volume ($ million), Weekly, May 24, 2020 to Feb 18, 2022
4000
3500
3000
Volume ($ millions)
2500
2000
1500
1000
500
0
30-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan 28-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan
Week Ended
Source: Data from CapitalIQ
32Background on IPO Market and Blue Water Deal
One microcap biotech is charging headfirst into treacherous IPO waters, jumping to Nasdaq with
modest raise
Feb 18, 2022: “It’s a tough market right now for biotech IPOs, but one small company is taking the public leap Friday
with a modest initial offering.Blue Water Vaccines raised $20 million in its IPO, pricing shares at $9 apiece late Thursday
afternoon. The Cincinnati-based company will use the money primarily to advance a slate of preclinical programs
toward IND studies and boost manufacturing capabilities, it reported in its S-1 filing.
Long gone are the days of 2020 when the biotech IPO market was booming, a period that stretched well into the first
half of 2021 and saw roughly 200 companies go public. The bull market helped bring in about $30 billion in new cash,
as investors set their sights on the life sciences hoping to find the next pandemic success like Moderna.During that
period, it was not uncommon to see three or four biotechs price their IPOs every week. Some were so busy that 10
biotechs debuted in a single week last February, and raises topping the $200 million mark were aplenty.”
Source: https://endpts.com/one-microcap-biotech-is-charging-headfirst-into-treacherous-ipo-waters-jumping-to-nasdaq-with-modest-raise/
33Biopharma Sector IPO Activity by Month, 2020 to 2021
Weekly Global Biopharma Follow-On Equity Volume
The week of Feb 4 was the first week in awhile with a follow-on market (14 deals for $627mm). Last week (week of Feb 11) saw the
market build up. There were 17 transactions in the market for $767mm in volume.
Biopharma Equity Follow-On Volume ($ million), Weekly, May 2020 to Feb 18, 2022
12000
10000
8000
Volume ($ millions)
6000
4000
2000
0
30-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan 28-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan
Week Ended
Source: Data from CapitalIQ
34Private Capital Markets Environment
35Weekly Global
Biopharma Biopharma
Sector DebtbyIssuance.
IPO Activity Month, 2020 to 2021
Last week saw Amgen and BMS both issue significant amounts of debt in the market. This was a $10bn issuance week, the largest
since last November. Bristol’s deal was part of a debt exchange transaction.
Biopharma Public Debt Issuance Trend ($ million), Weekly, May 2020 to Feb 2022
16000
14000
12000
Volume ($ millions)
10000
8000
6000
4000
2000
0
30-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan 28-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan
Week Ended
Source: Data from CapitalIQ, Crunchbase.
36Bristol Issues $6 Billion as Part of an Exchange
Bristol Myers Squibb Prices $6 Billion of Senior Unsecured Notes. Replacing Debt Due in Next Five Years
With Very Long-Dated Debt Ahead of Fed Tightening
02/15/2022 NEW YORK--(BUSINESS WIRE)-- Bristol-Myers Squibb Company (NYSE:BMY) today announced that it
has priced a public offering (the “Offering”) of senior unsecured notes in a combined aggregate principal amount
of $6 billion (collectively, the “Notes”). The Notes will be issued in four tranches: (i) $1,750,000,000 in aggregate
principal amount of 2.950% notes due 2032, (ii) $1,250,000,000 in aggregate principal amount of 3.550% notes due
2042, (iii) $2,000,000,000 in aggregate principal amount of 3.700% notes due 2052, and (iv) $1,000,000,000 in
aggregate principal amount of 3.900% notes due 2062. Bristol Myers Squibb expects that the closing of the
Offering will occur on March 2, 2022, subject to the satisfaction of customary closing conditions.
Concurrently with this offering, we commenced a tender offer (the “Tender Offer”) to purchase, for cash, various
series of our outstanding notes (the “Tender Offer Notes”). We intend to use the net proceeds of this offering (i) to
fund the Tender Offer, (ii) to pay fees and expenses in connection therewith and this Offering, (iii) to fund the
repayment of outstanding debt upon maturity or earlier redemption and (iv) to the extent of any remaining
proceeds, for general corporate purposes. This offering is not contingent on the consummation of the Tender Offer
or the purchase of any of the Tender Offer Notes in connection therewith.
BofA Securities, Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, and Wells Fargo Securities, LLC are
acting as joint book-running managers for the Offering.
37Weekly Global
Biopharma Biopharma
Sector Venture
IPO Activity Equity Placements
by Month, 2020 to 2021
We saw $696 million in private venture equity placements complete last week. The market is softening from levels seen a month
ago.
Biopharma Venture Equity Privates Trend ($ million), Weekly, May 2020 to Feb 2022
5000
4500
4000
3500
Volume ($ millions)
3000
2500
2000
1500
1000
500
0
30-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan 28-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan
Week Ended
Source: Data from CapitalIQ, Crunchbase.
38Report from Bio CEO Investor Meeting
Investment rounds are taking longer to complete "There is money for everything from seed through to late-
stage," said Asish Xavier, the vice president of venture
investments at Johnson & Johnson Development Corp., the
When the market for biotech companies peaked in early 2021, drug
healthcare conglomerate’s startup financing arm. JJDC
startups were able to go from creation to the public markets faster
approved its first couple deals this week and they should
than ever. Nearly two-thirds of the roughly 150 biotechs that raised at
close in May, he added, speaking at the BIO conference.
least $50 million in an IPO during 2020 and 2021 were in either
preclinical or Phase 1 testing when they went public, according to data
But the poor stock market performance of biotechs that went
compiled by BioPharma Dive. That share was notably higher than
public last year, combined with the sector’s overall downturn,
previous years, too.
has forced investors to reset expectations. Companies
seeking 2021-esque valuations now need "a lot longer" to
"Up until recently, the reflex for management teams, and perhaps the
raise funding, said Sara Nayeem, a partner at Avoro Capital,
other existing investors was 'let's do this financing and then we'll go
on Monday.
public in six months,'" Otello Stampacchia, founder of the investment
firm Omega Funds, said in a recent interview.
As a result, companies may need to be more frugal with their
money and stretch their funding until they achieve
The parade of early stage biotechs going public occurred because the
"demonstrable milestones," like data from a trial,
market rewarded them with large valuations, earning their backers
Stampacchia said Monday. Biotechs may also "top up"
sizable returns. And that made it easier for biotechs to quickly amass
existing rounds by bringing new investors in on the same
syndicates of venture firms and crossover investors who invest in
terms, which he described as an insurance policy against a
public and private startups.
bleak IPO market.
39
Source: https://www.biopharmadive.com/news/biotech-startup-stock-market-downturn-venture-capital/618823/Biotech firm Synthego raises $200 mln in funding from Softbank, others Feb 18, 2022: Biotechnology firm Synthego said on Thursday it had raised $200 million in a late-stage funding round led by hedge fund Perceptive Advisors, with participation from SoftBank Vision Fund 2. The California-based company, which uses machine learning, automation and gene editing to accelerate drug development, did not disclose the valuation at which the latest funds were raised. Other investors in the Series E round included venture capital firms Moore Strategic Ventures, Declaration Partners, Laurion Capital Management, Logos Capital, GigaFund and Chimera Investments. The company said it would use the funds for the creation of a cell and gene therapy discovery and development ecosystem to help researchers fast track the translation of new discoveries into therapeutics for serious diseases. It will also invest in the development of CRISPR technology, a gene-editing tool that allows Paul Dabrowski scientists to rewrite the genetic code in almost any organism, Synthego said. The technique's Synthego, CEO real-world applications include the curing of genetic diseases and creating drought-resistant crops. Source: https://www.reuters.com/markets/us/biotech-firm-synthego-raises-200-mln-funding-softbank-others-2022-02-17/ 40
Mergers and Acquisitions Environment
41Global Biopharma M&A Activity Continues to Be Soft
Biopharma Weekly M&A Volume, June 2020 to Feb 2022
Through 2021. Quite a Few Smaller Deals Happening.
We continue to find ourselves in an M&A desert. We do not believe that this is a permanent state of affairs.
Biopharma M&A Volume Trend ($ million), Weekly, May 2020 to Feb 2022
50000
45000
40000
35000
Volume ($ millions)
30000
25000
20000
15000
10000
5000
0
30-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan 28-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan
Week Ended
Source: S&P, CapitalIQ
42Collegium Acquires Biodelivery Sciences For $604 Million Collegium pays 54% premium in all cash deal funded by $650 million in credit from Pharmakon STOUGHTON, Mass. and RALEIGH, N.C., Feb. 14, 2022 (GLOBE NEWSWIRE) -- Collegium Pharmaceutical, Inc. (Nasdaq: COLL) and BioDelivery Sciences International, Inc. (NASDAQ: BDSI) today announced a definitive agreement pursuant to which Collegium will acquire BDSI for $5.60 per share in cash. BDSI has a portfolio of pain and neurology products that address serious and debilitating conditions. BDSI’s commercial growth driver, BELBUCA, is a meaningfully differentiated schedule III opioid product and is highly complementary to Collegium’s portfolio of pain products. Additional products in the BDSI portfolio include Symproic®, a contributor, and ELYXYB, a neurology product in its early launch phase. “We are excited to announce this acquisition, which represents a major step forward in our mission to build a leading, diversified specialty pharmaceutical company committed to improving the lives of people suffering from serious medical conditions,” said Joe Ciaffoni, President and Chief Executive Officer of Collegium. “The BDSI portfolio expands and enhances Collegium’s differentiated pain offerings and establishes a foothold in neurology, a strategic market adjacency. Importantly, we expect this acquisition will be immediately and highly accretive by expanding our revenue scale and generating significant synergies.” “We are pleased to announce the transaction with Collegium, which we view as a testament to the attractiveness of our portfolio and long-term value of our brands,” said Jeff Bailey, Chief Executive Officer of BDSI. “Our team has worked diligently to grow our differentiated products. We believe that this transaction will deliver benefits to patients and prescribers and create significant value for our shareholders.” Source: https://www.globenewswire.com/news-release/2022/02/14/2384236/34897/en/Collegium-to-Acquire-BioDelivery-Sciences-Broadening-Pain- Portfolio.html 43
Market Rewarding Commercial Acquisitions in Specialty Pharma
Commercial Pharma Post-Acquisition Performance vs. XBI
Pacira Post-Acquisition of Flexion (Oct 11, 2021) Supernus Post-Acquisition of Adamas (Oct 11, 2021) Collegium Post-Acquisition of BDSI (Feb 14, 2022)
1.6
34% 1.4 Equity Generated: +$190 million
1.4 17% 1.4 Deal EV: $538 million 27%
1.2 1.2
1.0 1.2
1.0
0.8
0.6 0.8 -23%
-23% 1.0 1%
0.4 Equity Generated: +$837 million
Deal EV: $582 million 0.6 Equity Generated: +$264 million
0.2 0.8
Deal EV: $462 million
0.0 0.4 2/11 2/14 2/15 2/16
Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22
XBI Collegium
XBI Pacira XBI Supernus
▪ Following recent M&A, commercial pharma buyers have consistently returned double digits and significantly outperformed
the S&P XBI index
▪ In an environment where the share value of biopharma companies is declining, investors appear to view these acquisitions
as accretive to buyer valuations—a sentiment reflected in their share price performance
Source: Capital IQ
44With $1.7T in the coffers, biopharma M&A expected to
be 'a different animal' in 2022
Feb 15, 2022:
“2022, of course, will be a different animal,” said Arda Ural, Ph.D., Americas industry markets leader for health sciences at EY, in an interview.
At $108 billion, biopharma M&A activity in 2021 represented a mere 40% of 2019 levels, the consulting firm noted.
But the potential was there. Last year, companies had M&A firepower that reached levels not seen since 2014, with $1.2 trillion (PDF) at the
ready. And, just as it does now, biotech sported an ever-expanding field of targets, thanks to record amounts of private financing that have
spawned a flurry of nascent biotechs.
High premiums, rising valuations and discord over pricing—especially for biotechs that have no clinical proof—dampened the market for
buying and merging. But now, biotech valuations are coming down. And the “innovation deficit” among pharmaceutical companies expected
over the next few years—plus pending patent exclusivity losses—could be a “propeller for deals,” Ural said.
“That fundamental, foundational problem will be a concern,” Ural said. De-risked assets that have cleared pivotal trials and are on the path to
market will appeal to Big Pharma because the behemoths can handle the commercial, regulatory and supply chain risks better than budding
biotechs can, he said.
Source: https://www.fiercebiotech.com/biotech/biopharma-ma-2022-different-animal-drugmakers-coffers-lined-17t
45Appendix:
Weekly Transaction Listing
46Biopharma Sector Transaction List. Week ended Feb 18,
2022 (deal size > $15mm)
Date Target/Issuer Transaction Types Value ($mm)
02/14/2022 Collegium Pharmaceutical, Inc. (NasdaqGS:COLL) Private Debt Placement 650.0
02/14/2022 BioDelivery Sciences International, Inc. (NasdaqGS:BDSI) Merger/Acquisition 645.64
02/14/2022 Hualan Biological Bacterin Inc. (SZSE:301207) IPO 357.96
02/17/2022 Blueprint Medicines Corporation (NasdaqGS:BPMC) Public Equity Offering 300.0
02/14/2022 Roivant Sciences Ltd. (NasdaqGM:ROIV) Public Equity Offering 250.0
02/15/2022 Kallyope Inc. Private Equity Placement 236.0
02/17/2022 Synthego Public Equity Placement 200.0
02/11/2022 OBI Pharma, Inc. (TPEX:4174) Public Equity Offering 113.09
02/16/2022 Third Harmonic Bio, Inc. Private Equity Placement 105.0
02/11/2022 Wild Type Public Equity Placement 99.69
02/16/2022 Electra Therapeutics Public Equity Placement 84.0
02/15/2022 Jilin Province Xidian Pharmaceutical Sci-Tech Development Co.,Ltd IPO 71.86
02/15/2022 ArriVent Biopharma Public Equity Placement 69.0
02/15/2022 Terray Therapeutics, Inc. Private Equity Placement 60.0
02/16/2022 Splice Bio Private Equity Placement 56.84
02/11/2022 Vascular Biogenics Ltd. (NasdaqGM:VBLT) Public Equity Offering 50.0
02/16/2022 Chongqing TCRCure Biotechnology Co., Ltd. Private Equity Placement 47.3
02/15/2022 Parse Biosciences Public Equity Placement 41.5
02/14/2022 Variantyx Public Equity Placement 41.5
02/15/2022 NMD Pharma ApS Private Equity Placement 39.77
02/15/2022 HOOKIPA Pharma Inc. (NasdaqGS:HOOK) Public Equity Placement 35.0
02/16/2022 Centauri Therapeutics Limited Private Equity Placement 32.59
02/14/2022 Suzhou Genhouse Bio Co., Ltd. Private Equity Placement 31.4
02/14/2022 BIO-FD&C Co.,Ltd. (KOSDAQ:A251120) IPO 30.39
02/14/2022 Solasia Pharma K.K. (TSE:4597) Public Equity Placement 29.78
02/16/2022 ITM Medical Isotopes GmbH Private Equity Placement 28.42
02/15/2022 Aelis Farma S.A. (ENXTPA:AELIS) IPO 28.41
02/16/2022 Bioniz Therapeutics, Inc. Merger/Acquisition 25.0
02/16/2022 Memo Therapeutics Public Equity Placement 24.86
02/16/2022 Walking Fish Therapeutics Public Equity Placement 23.0
02/18/2022 Blue Water Vaccines, Inc. (NasdaqCM:BWV) IPO 20.0
02/14/2022 Marizyme, Inc. (OTCPK:MRZM) Public Equity Offering 18.29
02/17/2022 Signalchem Lifesciences Corporation Private Equity Placement 15.75
Source: CapIQ, Crunchbase, Biospace 47Disclaimer
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