Biotech fund-raising spikes as M&A deals crater

Cash-hungry biotech companies have been headed back to the market as investors' appetite for biotech stocks was whetted by Big Pharma's high-profile pursuit of new therapies and the bright spotlight now focused on new vaccine therapies. Fund-raising has spiked 36 percent so far this year, says Thomson Reuters, with 39 debt offerings delivering $5.7 billion to an industry that has been starved of fresh capital.

"Last year a combination of depressed valuations, limited investor appetite for risk and illiquid trading profiles created a scenario where many biotech companies were within one year's worth of cash remaining," said Jim Cooney, managing director of Equity Capital Markets at Bank of America Merrill Lynch. A run-up in biotech stock prices has helped ease the crunch. "If market performance continues the way we expect it to, with the demand we've seen, the activity we'll see in the next 18-24 months will make this wave we've had seem de minimis in nature."

Reuters cites several analysts who are quick to note that a handful of new biotech IPOs may be encouraging after the drought we've seen, but they don't qualify as a full-fledged revival. And the analysts are also quick to highlight that M&A activity in biotech has plunged 84.6 percent. The biggest single biotech deal was Bristol-Myers Squibb's $2.4 billion deal for Medarex, followed by J&J's $970 million buyout of Cougar Biotechnology.  

- read the story from Reuters

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