Sun, Feb 27, 2011 - Page 11 News List

European biotech power shifts to new wave of firms

Although the market is still fragile, analysts say there is scope for more biotechnology IPOs this year

By Aaron Gray-Block AND Katie Reid  /  Reuters, AMSTERDAM, AND ZURICH, SWITZERLAND

Researchers at biotechnology firm Prosensa work on developing possibly the world’s first treatment for Duchenne muscular -dystrophy on Feb. 17 at their new laboratory in Leiden, the Netherlands.


Roman seems a typical six-year-old boy, smiling shyly next to his younger sister and mother, Silvia, as they open the door to their Amsterdam home.

However, Roman has Duchenne muscular dystrophy (DMD), a genetic disorder that already makes it hard to walk long distances and will probably put him in a wheelchair by his teens. Lung and heart problems mean most DMD patients die aged 25 to 30 years.

“He knows that his muscles are not that strong, but he does not know it is progressive,” Dutch events manager Silvia says. “He will ask about it himself, when he can handle it. That’s the hard thing, his pain — that’s the hardest thing.”

Yet there is a glimmer of hope. Roman’s mother believes a small Dutch biotech company called Prosensa, located 40km away in the university town of Leiden, may finally have found a way to help Roman and others like him.

She’s not the only excited one. GlaxoSmithKline is throwing its weight behind the new drug and the two companies last month started a final-stage Phase III clinical study of a product that might help up to 13 percent of boys with DMD.

Silvia hopes Roman will be enrolled in subsequent trials.

Prosensa is one of a new wave of successful European biotechs, many of them in the Benelux countries and Scandinavia. They are stepping over a past generation of biotech failures and starting to win interest from investors.

Significantly, it focuses on rare diseases — a red-hot area in the wake of Sanofi-Aventis’s US$20 billion-plus deal to buy Genzyme.

Europe’s biotech sector has stumbled in the past, but there is now renewed talk of stock market listings and trade sales.

Prosensa is preparing the ground for an initial public offering (IPO) and will choose its moment carefully.

“It is one of the options,” chief executive Hans Schikan said.

Prosensa last year hired a chief financial officer with IPO experience, although chief business officer Luc Dochez stresses a flotation “will be a choice, not a forced option” as Prosensa still has two years of funding.

Other young biotech companies are also eyeing the public markets, including Dutch rival Kiadis, a specialist in cell-based therapy, which bankers believe is again looking to list after pulling a planned IPO in 2007.

There are signs the market is recovering from recent trough years and this year could see more IPOs, with investor interest in places like Amsterdam and Brussels encouraging, although the overall picture is fragile.

“The market is improving. In Europe, a few biotech IPOs are being planned,” one banker said.

The Netherlands and Belgium are a hotspot, helped by the sentiment-boosting US$2.4 billion buyout of Dutch vaccine maker Crucell by Johnson & Johnson and high hopes for Belgian biotech star performer ThromboGenics. Some German and Austrian IPOs are also on the cards, bankers say.


Nomura analyst Samir Devani detects a “power shift” in European biotech, particularly away from the UK, where a series of blow-ups with key pipeline products at companies like Antisoma have taken a heavy toll on confidence.

Last year saw the emergence of a new group of well-financed European biotechs worth US$500 million or more, including ThromboGenics, Sweden’s Medivir, Denmark’s Bavarian Nordic, Sweden’s Diamyd Medical and Norway’s Algeta, he said.

The biotech casino remains high-risk, given the binary nature of the clinical trials that drive values. However, the growing appetite of “Big Pharma” for biotech assets is underpinning the sector and analysts at Jefferies expect out-licensing deals and consolidation to remain key share price drivers this year.

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