Biotech migrants: Born in Europe, (funds) raised in America
Among the 193 European biotechs that raised EUR 6.3 billion in 2015, a third of that capital came through the 25 EU startups that listed on the American stock exchange NASDAQ, according to Berlin-based BioCom AG in its report European Biotech Companies on the Stock Markets.
A fast-and-loose calculation shows about EUR 25 million for each of the European companies that stayed home, while those who migrated to America were rewarded with USD 92 million each.
So what's the smart move? If you follow the EU companies that followed the money in 2015, the hot ticket is over the Atlantic to New York.
"We like Europe a lot, but the United States plays the first violin in the biotech industry," said Bernd Seizinger with Aprea AB, who was featured on the Opening Plenary panel session at BIO-Europe Spring® 2016 in Stockholm.
Bernd Seizinger, Aprea ABCurrently the Executive Chairman for the Swedish company from the Karolinska Development AB portfolio, Seizinger is a serial entrepreneur who in March of this year raised USD 51 million in a Series B financing round that included both European and American venture capital.
And a top-line strategy that investors bought into is Seizinger plan to build up a presence in the United States and prepare for an exit even as the company is ramping up its first Phase II trial for its lead program, a first-in-class anticancer compound reactivating key tumor suppressor protein p53.
A no-nonsense Bavarian, here is how Chairman Seizinger explained it to the audience of business development executives at BIO-Europe Spring.
"I strongly believe that those companies who have more than a foothold but a strong presence in the US will always hold a competitive advantage, particularly when it comes to an exit for the company later in development. Most likely the company will be sold to a company that also has an American base. And as an alternative, if the trade sale is not going smoothly, then with a strong presence in the US you can build a credible story for an IPO on the NASDAQ. The NASDAQ is not our primary strategy, it is our back-up plan.
“If we remain a parochial European company and nothing else, then the story is less credible. You are not suddenly one day going to have a NASDAQ epiphany and find yourself 100% in the US. The idea is to progressively build a strong and credible presence.
It is not an either-or-condition. We continue to be proud of our Swedish origins and our location here. The Stockholm team will be expanded, in fact.
To attract top-notch talent to the company, it is going to be easier if it is in the United States."
During the panel session, a counterpoint to this strategic approach was offered by the CEO of Swiss-based Molecular Partners AG, Christian Zahnd:
"I agree with some of what he said. There will always be European companies going to the US, and to the NASDAQ, and for very good reasons. Because the deepest capital pools are clearly there and not in Europe, as everyone is aware.
"On the other hand, capital is fluid, and it also flows to Europe if you make yourself known to investors. We thought it would serve Molecular Partners well to build something of story in being a domestic champion, rather going to NASDAQ where we would be only one among hundreds, one among thousands of other companies. And this strategy has served us well. Being on the Swiss stock market exchange, we have been somewhat sheltered from the capital market crisis on the NASDAQ, not completely but somewhat sheltered."
Zahnd also said, "Where I do agree is that the depth of the talent pool is deeper in the US, always finding the best people there. So there are pros and cons. Yet still, I spend a significant amount of time in the US."