Europe HealthTech Calls for Funding

Biotech companies in Europe are struggling to raise more than 50 million € rounds, and Euronext is running out of cash. Most are forced to cross the Atlantic (notably for funding)

What is missing from the European biotech sector to do as well as American biotech?

If the Old Continent has made progress in recent years, funding is nowadays Achilles heel, judging industry players gathered past month in Paris for the "HealthTech Days" forum organized by France Biotech association. "The situation is quite stalled at the moment," said Gilles Nobecourt, associate director at Andera Partners, on the sidelines of the discussions. After the acquisition by Gilead (for $ 11 billion) of Pharmasset in 2011, which brought its hepatitis C drugs that have been successful, general investors thought they could make money with biotech, even with high valuations. "There was a lot of money available on both sides of the Atlantic," says the investor.

But between mid-2015 and the end of 2016, the sector has slowed down. General investors then left biotech or, for those who remained, repositioned themselves on the Nasdaq. "Hence a lack of liquidity and depth on Euronext," observes Nobecourt. Between 2008 and 2018, 132 operations (all sectors combined) were carried out on Euronext, which raised a little over 3 billion euros while Nasdaq, 355 operations raised 24 billion euros.

Long development times

In France, if indeed the financial ecosystem is very active for the initiation and start-up of biotech, beyond this stage, companies are hampered by the lack of funding. In Europe, venture capital invests in the first two rounds, but few go beyond, such as Andera Partners, Sofinnova or Kurma biotech. However, in this industry, product development times are long (a dozen years) and expensive: a phase III trial, the last step before registration, costs 50 to 150 million euros. An encouraging note, however: whereas in 2017, there had been only one fundraising of more than 100 million euros, there were 3 in 2018 and already 4 in 2019.

If European companies do not find private financing, they have no choice but the Stock Exchange. And it is often premature. Typically, they are at a stage of development where they have a molecule with Phase II results and an industrial partnership about to be signed. "As soon as they sign, thus giving up the rights on their molecule, they find themselves at the starting point, to take again all the risks to develop with a second molecule", explains Olivier Garnier from Bryan-Garnier firm. "They only raise 20 million instead of the 80 they would need to develop several molecules at once, as do their counterparts on the other side of the Atlantic, which weakens them. "

Prices too high

Those who can afford it sometimes opt for the Nasdaq. But if Europeans are welcomed, feeding investors' interest over time is often difficult. To achieve this, the French bosses then tend to move their headquarters to the other side of the Atlantic and develop their business in the United States to become more and more American.

"We therefore absolutely need to create a European Nasdaq," concludes Garnier. But to bring investors, we need success. "So we must stop listing companies at a price too high", insists Olivier. Therefore, in Europe, of the 27 companies listed on the stock market since June 2010, 85% saw their price drop below their introductory price. "

Thanks & Appreciation to C.D.@LesEchos