2004 is likely to be the last window of opportunity for biotech companies in Europe to go public for the next three years, according to Martijn Kleijwegt, managing partner of Amsterdam and Munich-based venture capital fund, Life Sciences Partners (LSP). Speaking at BioCapital Europe, the annual venture conference, with a strong focus on Benelux countries that took place on 6 April and was co-hosted by LSP and Fortis Bank, he said, ‘A pattern has become established since 1991, with the window for initial public offerings in the industry globally opening for about a year at a time, every three years’.The last three IPO windows were in 1991/2, 1995/6 and from Q4 1999 to Q4 2000. The current window opened in the last quarter of 2003 during which time 37 companies filed for an IPO and 17 have so far been successful, raising a joint $1.2 bn. The two successful European IPOs, which took place this year, were by the UK's Ark Therapeutics and Switzerland's Basilea, which between them raised $259 m. The total raised since 1995 in IPOs has been $1.9 bn with a more sizeable $5.3bn in follow-ons.Biotechnology stocks are in fact leading the stock market recovery in the US with the Nasdaq Biotech Index up 40% in 2003 up to mid-November, ahead of the S&P 500 Pharmaceuticals and the Nasdaq Composite indices. ‘This resurgence,’ said Pieter Lucas of Ernst & Young, also speaking at BioCapital Europe, ‘has a solid foundation in successful product launches and a healthy product pipeline. There were 17 new product approvals in the US in 2003 and there are currently 300 biotech products in Phase III clinical trials, 17 of which are European.’ Apart from the capital markets, the biotechnology industry in Europe remains reliant on funding from the venture capital industry, which in the first half of 2003 invested $1.4bn, representing 27% of its total investment in the period. But, said Lucas, ‘Europe locally cannot produce all the investment that is needed for biotech. In Germany for instance, there are currently 60 companies looking for $600m in funding. What is happening is that the gap between the cash ‘Have's’ and the ‘Have-not's’ in the industry is widening. At the top end there are now seven companies with market caps in excess of $1bn against four in 2003. But although performance in European biotech is improving, revenues are up 10 per cent, the sector in Europe is actually contracting, with, on average, three per cent fewer employees.’If Europe is to build a sustainable biotech industry, it must invest more and regulate less or risk the industry re-locating to the US, according to David Chiswell, the original founder of Cambridge Antibody Technology and now chair of the UK's trade body, the BIA. He pointed out that the US government invests $100 per head of population in scientific research against $ 20 in the UK. US Companies invest as much as 50% more on their own research and manage to raise 20 times more in funding. Unsurprisingly, company valuations have been on the up in the US since the 1990s while Europe's have gone down. Dr Chiswell believes Europe needs a single, strong technology stock exchange, a quicker processing of drug approvals and take-up in each home market, and the removal of impediments to venture funding, such as shareholder pre-emption rights. 30 companies from Belgium, the Netherlands, France, Germany, Italy, UK, Switzerland, Denmark, Sweden, and Norway reported on their progress at the one day conference on 6 April in Amsterdam. Several companies announced the conclusion of successful funding rounds, largest of which was Ablynx of Belgium, developing drugs from antibodies, which announced it had raised E25m ($30m).
