EY-beyond-borders-2015

Section heading 

Biotechnology Industry Report 2015 

Beyond borders 

Reaching new heights 

Beyond borders Biotechnology Industry Report 2015 

1


To our clients 

and friends 

These are very good times for the biotechnology industry. For the 

second straight year, biotech companies have delivered strong, and 

sometimes unprecedented, results on almost every metric we track — 

revenues, profitability, financings, new drug approvals and more. 

Across the biotechnology industry, these achievements have been 

accompanied by optimism that the sector has entered a renewed age 

of innovation, buoyed by both high-profile product breakthroughs and 

scientific advancements. 

Investors have not simply recognized these efforts. They have rewarded them. Market 

valuations for biotechs reached new heights in both the US and Europe in 2014, and 

the window for initial public offerings remained open for eight consecutive quarters, a 

new record. As a result of the booming stock market, historic amounts of innovation 

capital are available to the smaller players in the industry, which remain the wellspring 

of future breakthroughs. 

In this, our 29th annual Beyond borders report, Reaching new heights, we celebrate the 

biotechnology industry’s recent achievements. In doing so, we take stock of not just 

where we have been, but the implications for the future. 

We firmly believe the biotechnology industry cannot afford to become complacent. 

In particular, the industry must continue to work with patients, payers, providers and 

governments around the globe to devise not just new products for unmet medical 

needs, but “beyond the pill” solutions that improve care delivery and health outcomes. 

Moreover, the industry has a vital role to play in helping devise new payment and 

financing schemes that enable access to the breakthrough innovations of the future. 

At EY, we aren’t becoming complacent either. Long-time 

readers will notice a change in the format of this year’s 

report. Recognizing that time is a precious commodity, 

we are moving away from issuing large, annual reports 

to the more frequent publication of insights via a new 

digital platform. Thus, we are “unbundling” in-depth 

perspective pieces from our industry trend data to 

enable readers to access our content when it is most 

needed: in real time. You can join the conversation and 

keep up to date with our latest perspectives at our new 

digital home, Vital Signs (ey.com/VitalSigns), and our 

Twitter feed (@EY_LifeSciences). 

As biotechnology companies strive to solve harder 

problems, EY’s global organization stands ready to 

help you reach even higher heights. 

2 Beyond borders Biotechnology Industry Report 2015 

Glen T. Giovannetti 

Global Life 

Sciences Leader


Contents 

4 The year in review 

10 Life of a start-up CEO: priorities and preparation 

Katrine Bosley, Editas Medicine 

12 The European biotech’s strategic decision: list in Europe or the US? 

Jörn Aldag, uniQure 

14 Financial performance 

15 The big picture 

20 United States 

28 Europe 

31 Australia 

32 Canada 

33 Financing 



47 Europe 

54 Deals 



65 Europe 

68 Appendix 

69 Acknowledgments 

70 Data exhibit index 

72 Contacts 


3

The year in review 

Beyond borders 2015 


4 Beyond borders Biotechnology Industry Report 2015


The view from the top 

This was a year for the record books. On almost every measure we track — revenues, profitability, capital 

raised and more — the industry reached new heights in 2014, spurred by a confluence of positive trends. 

Sustained sales of high-profile products continued to boost investor sentiment. Examples include Biogen’s 

Tecfidera and Gilead Science’s hepatitis C medicines, Sovaldi and Harvoni, which quickly became two of the 

most successful product launches in the industry’s history. 

It was also a landmark year for new 

product approvals, as a more supportive 

U.S. Food and Drug Administration 

(FDA) clarified the use of new expedited 

approval channels for breakthrough 

medicines. Against a backdrop of 

booming stock markets and expansionary 

monetary policies, these product 

successes helped propel the biotech 

industry’s market capitalization above 

the US$1 trillion threshold, a new high. 

Financial performance 

The news-making product successes 

of 2014 had an outsized impact on the 

industry’s financial results. In particular, 

the rapid ramp-up of Gilead Science’s 

hepatitis C products significantly boosted 

the revenues and net income of the sector. 

Financial performance was also affected 

by the large number of initial public 

offerings (IPOs), which increased revenues 

and R&D while lowering net income. 

Across the four established biotech 

clusters that we track — the US, Europe, 

Australia and Canada — revenues 

grew 24% in 2014. Adjusting for the 

“Gilead effect,” revenue growth would 

have been 12%, still ahead of the 10% 

delivered in 2013. 

Biotechnology at a glance across the four established clusters, 2014 

(US$m) 

Public company data 

Total US Europe Australia Canada 

Revenues $123,096 $93,050 $23,992 $5,794 $260 

R&D expense $35,387 $28,831 $5,576 $681 $299 

Net income (loss) $14,852 $10,618 $3,255 $1,066 ($87) 

Market capitalization $1,063,415 $853,862 $162,149 $42,177 $5,227 

Number of employees 183,610 110,090 58,770 13,370 1,380 

Number of public companies 714 403 196 52 63 

Numbers may appear inconsistent because of rounding. 

Source: EY. 

Against a backdrop of booming stock 

markets and expansionary monetary policies, 

product successes help propel the biotech 

industry’s market capitalization above the 

US$1 trillion threshold. 


5


R&D spending increased by 20% — very 

impressive and substantially above 

the adjusted revenue growth amount. 

R&D growth rates were strong in both 

the US (22%) and Europe (14%). In 

both markets, noncommercial leaders 

expanded their R&D spending faster 

than the commercial leader cohort. 

Net income skyrocketed 231% to 

US$14.9 billion, another historic high. 

Most of this increase (82%) came from 

Gilead. In the wake of the global financial 

crisis, the biotech sector had reached 

aggregate profitability for the first time 

as a result of sharp cuts in R&D spending 

across the industry. In 2014, on the other 

hand, the huge increase in profitability 

was for all the right reasons: strong sales 

of newly launched products resulted in 

even stronger increases in profits. 

The US sector had one of its best 

showings ever. Revenue grew 29%, or 12% 

normalized for Gilead’s results. Adjusted 

for Gilead’s performance, the unusually 

large number of IPOs and the acquisition 

of Life Technologies by Thermo Fisher 

Scientific, US revenue growth would have 

been an impressive 18%. R&D spend 

grew by 22%, with nearly 70% of biotech 

companies increasing their spending, 

slightly above the historical average 

FDA product approvals, 1996–2014 

New molecular entities Biologic license applications 

60 

50 

40 

Number of approvals 

30 

20 

10 

0 

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 

US product approvals are based only on approvals by FDA’s Center for Drug Evaluation and Research (CDER). 

Source: EY and FDA. 



of about two-thirds of companies. Net 

income almost tripled, reaching a new 

high of US$10.6 billion. 

While most of the growth came from US 

commercial leaders, led by Gilead, the 

rest of the industry more than held its 

own, particularly in revenue growth and 

R&D investments. 

The significant uptick in US biotech 

valuations drove a spike in the number 

of pre-commercial-stage companies 

with market capitalizations greater than 

US$1 billion. As of 31 December 2014, 

26 US companies reached this threshold, 

up from just three in 2007. 

The European biotech sector also put in a 

very strong showing, although not quite 

as robust as that of its US counterpart. 

Revenue growth rebounded strongly, 

reaching 15% in 2014 compared to the 

modest 3% uptick of 2013. Adjusted 

for the large number of IPOs, European 

revenue growth would have been 14% 

instead of 15%. R&D spending increased 

by 14%, a strong turnaround relative 

to 2013, when R&D spending actually 

declined by 4%. 

Net income increased by a very healthy 

199%, to US$3.3 billion. This percentage 

increase didn’t match the steep growth 

rate of 2013, when net income soared 

by 462%. Adjusted for the US$1.6 billion 

breakup fee Shire received when AbbVie 

called off the proposed merger between 

the two companies, net income growth 

still would have been an impressive 52%. 

Since 2007, there has been a dramatic increase in the number of US 

pre‐commercial companies with market cap >US$1b 

Number of companies 

30 

25 

20 

15 

10 

5 

0 

2007 2008 2009 2010 2011 2012 2013 2014 

Only therapeutics companies are included. 

Pre-commercial companies only have assets that are at the pre-approval stage. 

Based on market values as of 31 December of each year. 

Source: EY and Capital IQ. 

Global R&D spending increased by 20% — 

very impressive and substantially above the 

adjusted revenue growth amount. In the US 

and Europe, noncommercial leaders expanded 

their R&D spending faster than the commercial 

leader cohort. 


7


Financing 

The biotech bull market drove an 

extraordinary surge in IPOs and follow-on 

financings. Capital raised via US and 

European IPOs rose a remarkable 93% to 

US$6.8 billion in 2014. This annual total 

was the second-highest in the industry’s 

history, second only to the US$7.8 billion 

raised during the genomics bubble of 2000. 

While the IPO class of 2014 may have 

netted less capital, the companies that 

listed during the most recent window 

were more mature than those that 

debuted in 2000. Eighty-one percent of 

the members of the 2013-14 class had 

lead candidates in Phase II or later, and 

the majority retained the rights to their 

products. Meanwhile, capital raised in 

follow-on offerings increased by 49% to 

US$13.8 billion, setting a new record. 

Venture capital increased by 28% to 

US$7.6 billion — the second-highest total 

on record and considerably higher than 

the US$5.5 billion–US$5.9 billion raised 

annually between 2008 and 2013. In a 

positive sign for innovation, early rounds 

generated US$1.8 billion, a greater 

total than at any point in at least the last 

decade. At US$10 million, the median deal 

value recouped by early-stage firms was 

also the largest dollar amount since 2006. 

Debt financing also soared to a new 

record, reaching US$26.0 billion, or 

more than twice the 2003-13 average. 

This was driven, as in prior years, by the 

ability of large companies to raise funds 

at low interest rates to refinance existing 

debt, fund working capital and finance 

share repurchases. Five large companies 

closed six debt transactions of more than 

US$1 billion each. 

The year also brought good news for 

“innovation capital,” a metric we defined 

to track the funds raised by companies 

with revenues of less than US$500 million. 

As such, innovation capital is a key 

measure of the sustainability of a broad 

swath of biotech companies that depend 

on the capital markets to fund R&D. For the 

second year in a row, the biotechnology 

industry enjoyed robust gains in innovation 

capital, reaching US$18.6 billion in 2013 

and a new high of US$27.6 billion in 2014. 

This represents a 120% increase from 

the annual average of US$12.5 billion 

achieved from 2009 to 2012. 

The US biotech sector set new records 

in total capital raised (US$45.1 billion) 

as well as funds raised through 

IPOs (US$4.9 billion) and debt 

(US$23.9 billion). Biotechs raised 

US$5.6 billion in venture financing 

(slightly behind the US$6.1 billion raised 

in 2007), while follow-on financings 

reached US$10.7 billion (second only to 

the almost US$13 billion raised in 2000). 

For the second year in a row, the 

biotechnology industry enjoyed 

robust gains in “innovation capital,” 

which reached a new high of 

US$27.6 billion in 2014. 

Increases in financing totals were equally 

strong in Europe, where the biotech sector 

racked up its strongest performance in 

the history of the industry and posted the 

second-strongest performance in each 

individual financing category. European 

companies raised US$9.2 billion, a 

year-over-year increase of 53%, and 97% 

more than the previous 10-year average. 

European biotechs raised US$1.9 billion 

through IPOs, US$2 billion in venture 

capital, US$2.2 billion in debt financing 

and US$3.1 billion in follow-on offerings. 



Deals 

This was a standout year for M&A and 

alliances involving biotech companies, 

as several trends made this a seller’s 

market. Booming stock market valuations 

gave biotech companies more financing 

options and, therefore, more power at the 

negotiating table. This bargaining power 

was further boosted by the fact that big 

pharma companies have been eager 

to acquire commercial-stage biotech 

companies to address revenue shortfalls 

that have arisen due to pricing pressures, 

slower growth in emerging markets and 

R&D challenges. In addition, big pharma 

companies face more competition for the 

best assets from specialty pharma firms 

and big biotechs. 

M&A activity reached a 10-year high 

in both deal number and value (after 

normalizing the numbers to exclude 

megadeals, which we define as 

transactions valued at US$5 billion or 

more). There were 68 biotechnology M&A 

deals with a total value of US$49 billion, 

a 46% increase over 2013. Adjusting for 

megadeals, pharma companies spent 

more on biotech acquisitions than at any 

time in the previous seven years. 

In a sign of the increased bargaining 

power of biotech companies, acquirers 

paid significantly higher deal premiums. 

They also paid more up front. Only 33% 

of the M&A transactions signed in 2014 

featured future earn-outs, down from 

45% a year earlier. 

On the alliance front, biotech companies 

entered 152 licensing deals worth 

US$46.8 billion in 2014, making it the 

most lucrative year for those seeking 

alliances. As was the case for mergers and 

acquisitions, in 2014 biotechs captured 

more of the total potential alliance value 

at a deal’s signing than at any time 

since the financial crisis. Indeed, as a 

percentage of total deal value, up-front 

payments reached 11%, while the total 

dollars paid up front for alliances soared 

96% to US$5.1 billion. 

Reasons to celebrate 

The biotechnology industry’s strong 

performance in 2014 across so many 

different metrics is a reason to celebrate. 

Inevitably, there will be declines in some of 

the measures we track as we cycle out of 

the current boom period. Having reached 

new heights, however, it is worth taking a 

moment to reflect on just how much the 

industry has matured. Indeed, the view 

from the top is pretty good. 

In a sign of the 

increased bargaining 

power of biotech 

companies, acquirers 

paid significantly 

higher deal premiums. 


9


External perspective 

Life of a start-up CEO: 

priorities and preparation 

Katrine Bosley 

CEO, Editas Medicine 

Everyone has some idea of what biopharma CEOs do, based on what you can see as a team member within a 

company or as someone watching the industry from outside. In general, though, I find that these views usually 

see only part of the picture. 

I didn’t fully appreciate this until I first 

stepped into the CEO role. For every 

visible part of that role, there’s a lot that 

happens behind the scenes. It takes a 

while to figure out where to focus your 

time as a CEO, and there are areas that 

require much more time and energy 

than I had anticipated. Three of these 

areas are the board of directors, external 

engagement and capital strategy. 

I found that biotech CEOs can lean on 

three different groups for advice and 

perspective: their senior management 

team, their board of directors and their 

fellow CEOs. With my internal team, 

we discuss everything from the vision, 

strategy and values to organizational 

development, day-to-day management 

and operational issues that are central to 

building a biotech. 

I tap my CEO posse for advice and 

real-time, been-there-done-that 

perspectives. In many cases, these CEOs 

are shepherding companies that are two 

to three years ahead of mine in terms of 

their evolution. That means I get both 

critical outsider views from this group and 

also advice on what steps to take now to 

create the right foundation to build my 

company longer term. 

Board matters 

The board, in my mind, is first and 

foremost a resource. Like my peers, my 

board also provides an invaluable external 

perspective because the other directors 

have diverse experiences, and they have a 

bit of distance from the day-to-day details 

of the company. Intuitively, I expected 

my board would help me make important 

industry connections and supply me with 

hands-on knowledge on all the company’s 

strategic issues. What I didn’t fully grasp 

initially was what an important role they 

would play in pressure-testing my point of 

view and how vital that would be to finding 

the right balance between charging ahead 

toward a goal and changing course. 

I spend about 20% of my time preparing for 

or meeting with my board members, both 

formally and informally. That sounds like 

a lot of time. Still, given the complexity of 

building a biotech company, there’s never 

enough time to address each and every 

issue in detail. To get the most out of my 

board meetings, I have found it helpful to 

write down two questions to be the focus of 

a board meeting and to open the meeting 

with those questions. Limiting it to just two 

questions really forces you to prioritize and 

helps to make sure the face-to-face board 

time is spent on the right issues. 

External engagement 

I also spend a lot of time focused 

externally, whether it’s a media interview 

or at conferences or interacting with 

current or potential investors or recruiting. 

There are many different stakeholders 

you’re always communicating with 

and listening to: patients, scientists, 

physicians, regulators, employees, 

investors … They all pay attention, and all 

are crucial to building a company. 

While the actual time spent in external 

encounters may be short, the preparation 

time beforehand is considerable. CEOs 

need to plan out and practice how they 

want to communicate on a broad range 

of issues, from strategic to financial to 

scientific. To tell the story effectively, 



CEOs need to create a narrative that 

explains how the business will unfold over 

time and to adjust that narrative to be 

accessible to many different audiences. 

These worlds do often overlap. For 

example, specialist biotech investors attend 

most of the critical scientific conferences. 

Those research meetings are an important 

and different way to engage with the 

investor base as well as connect with the 

scientific community. They allow you to 

show investors how the story continues to 

advance, furthering relationships that can 

support future fundraising efforts before 

the company needs the money. 

Capital strategy 

Of course, I spend a lot of time on 

fundraising. As the CEO of a biotech 

start-up, I’m always planning two or three 

financing steps ahead, identifying how 

to tap diverse pools of capital for my 

company’s needs. 

because it’s easy. Still, the CEO must 

understand why she is raising the money. 

Will the capital allow the company to 

pursue productive activities at a faster 

pace, or is the additional money simply 

more runway? 

Both options are legitimate, but the CEO 

should be able to articulate why she is 

raising that specific amount of money 

and how it fits in with the company’s 

overall capital strategy, particularly 

alongside business development and 

grant activities. 

There is nothing about raising capital 

that happens with the snap of the fingers. 

There’s a long tail. At one of my previous 

companies, we raised a Series C financing 

in about four weeks, but that was only 

possible because we spent two years 

laying the groundwork to make it happen. 

I don’t fall into the camp that believes 

CEOs should automatically raise additional 

capital during boom times to secure 

a longer financial runway. It is more 

nuanced. Let’s recognize that there is 

no such thing as non-dilutive capital. 

Business development is differently 

dilutive from equity, but it’s still dilutive. 

Therefore, if you take the wrong amount 

of capital — whether that is too much or 

too little — you potentially buy yourself a 

problem down the line. A CEO needs to 

think hard about the price at which he or 

she will raise the equity relative to the 

progress the company plans to make. 

When it comes to fundraising, having 

not one backup plan but multiple backup 

plans is essential. You can create your 

ideal plan, but then you need to find 

out if it is possible in the real world. 

The marketplace will tell you whether 

the environment favors equity raises 

or business development. With multiple 

contingency plans in place, you are 

able to adjust and continue to build the 

company’s value within the context of 

what the real world is interested in doing. 

I find it helpful to think in a multi-year 

time frame to plan and to set goals. A 

big piece of that planning relates to the 

financial strategy. Even if the CEO thinks 

two or three steps ahead, the reality 

he or she responds to will be different 

from the plan. By thinking through 

multiple scenarios over several years, 

the CEO has a better grasp of how much 

capital will be required to reach the next 

value-creating milestone. 

Often a CEO has to decide whether it’s 

better to raise more money now or later. 

In flush times, raising money is tempting 

I’m always planning two or three financing steps 

ahead, identifying how to tap diverse pools of 

capital for my company’s needs. 


11


External perspective 

The European biotech’s 

strategic decision: list 

in Europe or the US? 

Jörn Aldag 

CEO, uniQure 

Last year, approximately 12 European companies listed on the NASDAQ, while 19 biotechs listed on European 

exchanges. That near parity suggests European companies now have broader access to the capital markets and 

are not limited to listing on their in-country exchanges. 

This is welcome news. But it also means 

European biotechs have an important 

strategic decision to make: should they 

pursue a US listing or are there more 

advantages to listing on an exchange 

closer to home? 

As both a board member and a CEO, I 

have faced this choice. Regardless of 

which option a European biotech company 

chooses, it must thoroughly prepare for 

the event. In the past, some European 

biotechs have underestimated their IPO 

readiness and the scrutiny that comes 

with being a public company. 

I believe it is possible for a European 

biotech to list in Europe and assemble 

a strong and loyal investor base that 

provides the liquidity necessary for future 

growth. Let me give you an example. 

I am a board member of Molecular 

Partners, a Zurich-based biotech that 

listed on the Swiss SIX exchange in 

December 2014. We were fortunate to 

have good-quality, long-term investors 

who want to be associated with Molecular 

Partners and dig deep into its story. Our 

listing was facilitated by what I call a “local 

hero image.” Because investors looked 

at Molecular Partners and its DARPin 

technology as a home-grown product of 

Switzerland and its universities, there was 

traction and excitement about the listing. 

In the case of Molecular Partners, seeking 

a listing on the US markets wasn’t a 

strategic necessity. Depending on their 

specific scientific and clinical stories, 

other companies may find the US markets, 

and their more sophisticated investor 

base, a more suitable option. 

European biotechs that do choose to list 

in the US should not underestimate the 

effort required to build name recognition, 

however. Because they are not as wellknown 

as US private companies, the 

management teams of European biotechs 

must take pains to communicate their 

stories clearly. 

European platform biotech companies 

may also have a harder time telling 

their stories, since US investors tend to 

view product-centric business models 

as the path to value creation. Mastering 

the switch from platform to product, 

as Molecular Partners and my current 

company uniQure have done, is therefore 

essential if you are a European biotech 

seeking a US listing. 

UniQure, which was founded in 1998 

(originally operating as Amsterdam 

Molecular Therapeutics), is a gene therapy 

company. Our lead product is Glybera, 

approved in Europe for a rare genetic 

disorder in which fat builds up in the 

blood. We decided in the second half of 

2013 that we wanted to list on the US 

market, partly because of the access it 

gave us to mature capital markets and the 

robust, specialist investor community. We 

completed our IPO in February 2014. 

Forging ties 

To build awareness for uniQure, I spent 

seven weeks telling,― and refining, our 

story to US investors as part of the pre- 

IPO road show. In the process, we were 

able to take advantage of how interwoven 

the biotech and financial industries are in 

the US as compared to Europe. 

In the US, successful IPOs follow a 

well-established path. As ideas emerge 

from academia, companies are founded 



by highly regarded scientists on solid, 

innovative technologies. Venture 

capitalists bring in entrepreneurs who 

can lead the nascent firm through funding 

rounds, while building relationships with 

crossover investors. 

The collective goal is to bring the company 

to a particular value inflection point 

that enables a robust mezzanine round 

just prior to a public listing. By creating 

direct ties with crossover investors, 

the management team and its VCs lay 

the groundwork for a successful IPO, 

underpinned by a solid investor base. 

This emphasis on forging ties with 

crossover investors is less prevalent in 

Europe, where biotechs are generally more 

naïve about the work and timelines required 

for a successful IPO. When European 

companies seeking a US listing are focused 

on crossover investors, they may find that 

they are viewed as an unknown entity. 

Also, many European VCs believe that 

dilution is to be avoided at all costs. But in 

today’s environment, it is critical to have 

investment support from financiers that 

understand the business after the IPO. 

I don’t mean to suggest that my company 

has not benefited immeasurably from 

European VCs. In today’s world, however, 

companies may have to accept dilution 

in order to create a strong shareholder 

base. Those are the table stakes when 

preparing for an IPO. 

I have had the benefit of spending a 

lot of time in the US — I know people in 

the investor and pharma worlds, and I 

understand the process of going public. 

The US is the epicenter of the capital 

markets. In order to access the wealth and 

knowledge that are in such abundance in 

the US, European biotechs will need to 

educate themselves about the IPO process 

and its stakeholders, and about how 

they can best present their companies in 

order to succeed. 


13

Section Financial heading performance 


Financial 

performance 



Setting a new standard 

The big picture 

For the second year in a row, the biotechnology industry celebrated a standout performance, posting 

revenue, R&D and net income results that strongly outpaced 2013. Results varied markedly by geography 

across the four established biotechnology centers we track —― the US, Europe, Canada and Australia. In 

contrast to 2013, when a select few US biotech bellwethers propelled the bulk of the industry’s advances, a 

wider spectrum of companies in both the US and Europe contributed to the healthy gains. 

In particular, a group of newly minted US 

commercial leaders, defined as biotech 

companies with revenues of at least 

US$500 million, illustrated that years of 

hard work in the laboratory and the clinic 

are being rewarded in the marketplace. 

Revenues in 2014 grew 24% year over year, 

eclipsing the robust 2013 performance 

when top-line growth expanded by 10%. 

Admittedly, much of the expansion was 

driven by Gilead Sciences, which generated 

US$24.9 billion of the total revenue as a 

result of strong sales of its two hepatitis C 

therapies, Sovaldi and Harvoni. Even after 

adjusting for the “Gilead effect,” however, 

the industry would have grown its top line 

in 2014 by 12%. 

Solid revenue numbers in 2014, coupled 

with the year’s unprecedented M&A and 

financing environments, fueled a return 

to innovation as the surest path to longterm 

value creation. This linkage between 

R&D and long-term value creation fueled 

strong R&D spending for the second year 

in a row — and one of the greatest annual 

increases in this metric since 2001. 

Recall that in the aftermath of the financial 

crisis, biotech companies were hesitant to 

invest in R&D. In 2008, for the first time 

in the industry’s history, R&D spending 

Growth in established biotechnology centers, 2013–14 

(US$b) 

2014 2013 % change 


Revenues 123.1 99.0 24% 

R&D expense 35.4 29.4 20% 

Net income 14.9 4.5 231% 

Market capitalization 1,063.4 794.8 34% 

Number of employees 183,610 168,010 9% 


Public companies 714 619 15% 


Source: EY, Capital IQ and company financial statement data. 

actually declined as companies slashed 

costs and focused on surviving in a 

resource-constrained environment. While 

R&D growth inched upward from 2009 to 

2012, it continued to trail top-line growth 

during those years. In 2013, the cycle 

reversed and growth in R&D spending 

actually exceeded revenue growth by a 

healthy four percentage points. 

In 2014, biotech companies spent 

US$35.4 billion on R&D. Although growth 

in R&D spending didn’t quite equal topline 

growth, that would have been a hard 

bar to clear given the unprecedented 

annual increase in biotech revenues in 

2014. Importantly, the 20% uptick in 

R&D spending substantially outpaced 

the 12% revenue growth associated with 

the industry after adjusting for Gilead’s 

historic product launches. 

R&D spending in 2014 increased in both 

the US (22%) and Europe (14%) and 

was driven by both the noncommercial 

leaders and the industry’s biggest players. 

Indeed, on both sides of the Atlantic, 

noncommercial leaders actually expanded 

their R&D spending faster than the 

commercial leader segment. This renewed 


15


commitment to R&D was driven by 

the year’s unprecedented financing 

environment. (See accompanying 

“Financing, 2014” article.) 

Profitability for all 

the right reasons 

We first developed a profitability forecast 

for the biotechnology industry in 2003, 

when we predicted that the US industry 

would reach aggregate profitability by 

2008. That forecast was borne out when, 

in 2008, the US industry eked out a small 

profit of US$0.4 billion. 

Profitability arrived in a big way in 2009, 

but not for the reasons we anticipated. 

In the wake of the global financial crisis, 

biotech companies around the globe 

took extreme measures to reduce their 

cash burn by cutting headcount and 

R&D. That emphasis on fiscal discipline 

in an uncertain financing market moved 

the aggregate net income in established 

markets into the black for the first time 

ever — not just in the US, but globally. 

In 2014, net income reached a historic 

high, ballooning 231% to US$14.9 billion. 

Much of that net income increase (82%) 

came courtesy of Gilead. Adjusting for 

Gilead’s performance, global net income 

in 2014 doubled, with positive increases in 

three of the four biotechnology clusters: 

the US, Europe and Australia. In contrast 

to 2009-12, the uptick in aggregate 

net income in 2014 was for all the right 

reasons: strong sales of newly launched 

products resulted in even stronger 

increases in profits. 

Consistent with the healthier net income 

data are new figures from the EY Survival 

Index, which tracks the amount of 

cash biotech companies have on hand. 

In the US, the picture in 2014 largely 

remained the same as in the year prior. 

In Europe, however, the number of biotech 

companies in each of the categories 

expanded, except those with less than one 

year of cash on the books, where there 

was an 11 percentage point drop. Those 

data suggest the healthier climate that has 

existed in the US may finally be spreading 

to companies domiciled in Europe. 

The number of public companies surged 

15% in 2014, due to a record 94 IPOs, 

which offset the attrition resulting 

from acquisitions, delistings and other 

developments. The US and European 

totals grew by 58 and 32, respectively, 

while Canada added three companies and 

Australia added one. 

In 2014, the strengthening US dollar 

negatively affected global pharmaceutical 

companies. Interestingly, an analysis of 

the top 10 biotech companies by revenue 

in both the US and Europe suggests 

the impact of currency fluctuations 

was negligible, reducing US revenues 

by US$281 million (a loss of 0.3%) and 

EY Survival Index, 2013–14 

US Europe Canada 

2014 2013 2014 2013 2014 2013 

More than 5 years of cash 27% 26% 34% 32% 22% 24% 

3–5 years of cash 12% 15% 11% 8% 8% 7% 

2–3 years of cash 17% 12% 13% 10% 7% 5% 

1–2 years of cash 22% 24% 16% 15% 25% 5% 

Less than 1 year of cash 21% 23% 25% 36% 38% 59% 

Chart shows percentage of biotech companies with each level of cash. Numbers may appear inconsistent because of rounding. 




Revenues generated by US and European biotechnology commercial leaders fuel investor sentiment 

US commercial leaders EU commercial leaders Other US public companies Other EU public companies 

Number of commercial leaders 

140 

30 

120 

25 

Revenues (US$b) 

100 

80 

60 

40 

20 

15 

10 

Number of commercial leaders 

20 

5 

0 0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 

Commercial leaders are companies with revenues of at least US$500 million. 


increasing the European top line by 

US$26 million. This lack of effect was 

most likely due to the fact that sales of 

biotechnology products were more heavily 

concentrated in the US. 

These robust results helped sustain 

investor sentiment throughout the year 

and increased year-over-year market 

capitalizations, fueling prolonged interest 

in new company listings and the creation 

of a burgeoning class of pre-commercial 

biotech companies valued north of 

US$1 billion. Indeed, for the first time 

ever, the global biotech industry eclipsed 

another important threshold: the industry’s 

total market cap exceeded US$1 trillion. 

The uptick in aggregate net income 

in 2014 was for all the right reasons: 

strong sales of newly launched 

products resulted in even stronger 

increases in profits. 


17


Top 10 changes in US market capitalizations, 2009–14 

(US$m) 

Company 

Market cap at 

end of 2014 

Market cap at 

end of 2009 

US$ change 

CAGR 

(2009–14) 

Gilead Sciences $142,207 $38,940 $103,267 30% 

Biogen $80,163 $15,472 $64,691 39% 

Amgen $121,167 $57,257 $63,910 16% 

Celgene $89,343 $25,591 $63,752 28% 

Regeneron Pharmaceuticals $41,471 $1,946 $39,525 84% 

Alexion Pharmaceuticals $36,689 $4,324 $32,365 53% 

Illumina $26,210 $3,838 $22,373 47% 

Vertex Pharmaceuticals $28,574 $8,244 $20,330 28% 

BioMarin Pharmaceutical $13,331 $1,895 $11,436 48% 

Incyte Corporation $12,351 $1,080 $11,271 63% 

CAGR: compound annual growth rate. Numbers may appear inconsistent due to rounding. 


Top 10 changes in European market capitalizations, 2009–14 

(US$m) 

Company 

Market cap at 

end of 2014 

Market cap at 

end of 2009 

US$ change 

CAGR 

(2009–14) 

Shire $41,681 $10,581 $31,099 32% 

Jazz Pharmaceuticals $9,904 $244 $9,660 110% 

Alkermes $8,563 $892 $7,672 57% 

Novozymes $13,014 $6,448 $6,565 15% 

Actelion $12,915 $6,367 $6,549 15% 

BTG $4,720 $721 $3,999 46% 

Eurofins Scientific $3,876 $777 $3,099 38% 

Genmab $3,336 $709 $2,627 36% 

Meda $5,255 $2,726 $2,529 14% 

Swedish Orphan Biovitrum $2,704 $196 $2,508 69% 

CAGR: compound annual growth rate. Numbers may appear inconsistent due to rounding. 

A maturing industry 

Since much of the year’s strong 

performance came on the back of a 

booming stock market and a surge in 

IPOs, we decided to measure just how 

much the industry has matured since the 

last big IPO bonanza of 2000: 

• Total revenues for US and European 

biotechs increased an impressive 

610% over the past 14 years. 

• Adjusting for inflation, the revenues 

generated by the top 10 biotechs 

in 2014 were 4.6 times greater 

than the revenues generated 

by the top 10 in 2000. 

• Despite several notable acquisitions, 

the number of commercial leaders in 

the US expanded from seven in 2000 

to 19 in 2014, with average revenue 

per commercial leader increasing from 

US$1.6 billion to US$4.3 billion. 

• The cohort of European commercial 

leaders increased from two in 2000 

to nine in 2014, and the average 

revenue per commercial leader shot 

up US$1.2 billion to US$2.2 billion. 

A side-by-side comparison of the top 10 

US and European biotechs by revenues in 

2000 relative to 2014 is a good reminder 

of how much churn lies beneath the 

aggregate statistics in this industry: 

• Only three of the top 10 US-based 

biotechs of 2000 (Amgen, Bio-Rad 

and IDEXX) remain in 2014’s top 10. 




• Of the seven that exited the US 

top 10 list, six were acquired in 

megadeals worth at least US$10 

billion, while one shrank in revenue. 

• In Europe, four of the top 10 revenue 

generators from 2000 —― Shire, 

Eurofins, Qiagen and BTG —― still 

belong to the group in 2014. 

• Two of the remaining six European 

biotechs — Jazz Pharmaceuticals and 

Alkermes — are originally US-based 

companies that redomiciled to 

Ireland via acquisitions. 

A rising tide lifts 

all biotechs 

Both industry leaders and emerging 

companies earned phenomenal returns in 

recent years and the pool of companies 

with market valuations north of 

US$500 million swelled from 80 in 2009 

to 144 in 2014. During this same period, 

the 20 US biotech companies with the 

biggest market cap increases saw their 

valuations surge by US$488 billion. 

Our analysis shows that since 2009, three 

of the fastest-growing companies have 

been newly minted commercial leaders: 

Pharmacyclics, NPS Pharmaceuticals and 

Regeneron Pharmaceuticals. Indeed, an 

analysis of the market cap data shows that 

US biotech companies with valuations in 

the US$2 billion-US$10 billion range grew 

the fastest in 2014, outstripping the EY 

Biotech Index by 162 percentage points. 

Pharmacyclics’ market cap grew 126% 

to US$9.2 billion as a result of a full year 

of product sales for its leukemia product 

Imbruvica. In 2015, AbbVie acquired the 

biotech for US$21 billion. NPS has also 

been acquired: in January 2015, Shire 

acquired the rare disease drug developer 

for US$5.2 billion. 

The strengthening public markets, 

coupled with increasing competition 

for commercial-stage assets, has made 

for a seller’s market. With big pharma 

companies on the hunt for future revenue 

growth, in 2014 they were forced to 

pay hefty acquisition premiums relative 

to what they would have paid just two 

years ago. (For more, see accompanying 

“Deals, 2014” article.) 


19



United States 

US biotechnology at a glance, 2013–14 

(US$b) 

2014 2013 % change 


Revenues 93.1 72.1 29% 

R&D expense 28.8 23.6 22% 

Net income 10.6 2.7 293% 

Market capitalization 853.9 636.5 34% 


Financing 

Capital raised by public companies 37.8 20.0 89% 

Number of IPOs 63 41 54% 

Capital raised by private companies 7.3 5.7 28% 



Private companies 2,116 2,010 5% 

Public and private companies 2,519 2,355 7% 



In 2014, the US biotech industry’s revenue 

growth skyrocketed 29%, one of the 

best showings since we began tracking 

the metric and far exceeding the 13% 

revenue growth of 2013. While 67% of 

the companies we track had revenue, the 

annual data were heavily influenced by the 

performance of just one, Gilead Sciences. 

As a result of strong sales of Sovaldi and 

Harvoni, Gilead’s 2014 revenues more 

than doubled. In all, sales of these two 

products accounted for 60% of 2014’s 

US$21.0 billion revenue increase. 

Adjusting for Gilead’s results, the 

US industry’s revenues would have 

increased by 12% instead of 29%. In 

addition, the 2014 IPO class contributed 

about one percentage point to revenue 

growth, meaning that the industry’s 

revenue growth would have been 11% 

after adjusting for both Gilead and 

the unusually large number of IPOs. 

Conversely, Thermo Fisher Scientific’s 

acquisition of Life Technologies, which 

had revenues of US$3.8 billion in 2013, 

removed seven percentage points of 

revenue growth. The year-over-year 

revenue growth normalized for all three 

factors is therefore an impressive 18%. 

In addition to Gilead, three other 

biotech stalwarts delivered revenue 

increases greater than US$1 billion: 

Biogen (US$2.8 billion), Amgen (US$1.4 

billion) and Celgene (US$1.2 billion). 

Tecfidera, Biogen’s oral agent to treat 

multiple sclerosis, reached blockbuster 

status in less than 12 months, helping 

propel Biogen’s yearly revenues up 40%. 

Regeneron, another biotech with notable 

2014 revenue growth (34%), grew as a 



result of both R&D collaborations and 

strong sales of Eylea, a next-generation 

anti-angiogenesis therapy for diseases 

that can cause blindness. 

Strong revenue and product stories 

helped power a 34% increase in market 

capitalization in 2014, and 58% of 

companies saw their valuations increase 

year over year. This healthy spike in 

market valuations didn’t quite equal the 

74% increase observed in 2013. However, 

given how rapidly valuations climbed 

in 2013, a similar growth rate in 2014 

was likely unrealistic. Normalizing for 

the year’s IPOs, market cap would have 

increased by 29% instead of 34%. 

Investing in the future 

The increase in market capitalization 

drove a spike in the number of precommercial-stage 

companies with market 

valuations greater than US$1 billion. 

As of 31 December 2014, 26 companies 

reached this threshold, led by Alnylam 

Pharmaceuticals (US$7.5 billion), Puma 

Biotechnology (US$5.7 billion) and Juno 

Therapeutics (US$4.7 billion). 

Compare those data to 2007, when 

there were just three pre-commercial 

billion-dollar companies and Vertex 

Pharmaceuticals, Regeneron 

Pharmaceuticals and Human Genome 

Sciences were at the top of the leader 

board. In a sign of how much the improved 

financing climate has changed the US 

biotechnology industry, 60% of this subset 

of companies completed an IPO in either 

2013 or 2014. 

US pre‐commercial companies with market cap >US$1b 

Company 

Market cap (US$m) 

Lead 

product status 

Therapeutic 

area 

Alnylam Pharmaceuticals $7,462 Phase III Multiple 

Puma Biotechnology $5,706 Phase III Cancer 

Juno Therapeutics* $4,722 Phase I/II Cancer 

Agios Pharmaceuticals* $4,104 Phase II Cancer 

Receptos* $3,793 Phase III Multiple 

Intercept Pharmaceuticals $3,332 Phase III Hepatic 

Acadia Pharmaceuticals $3,168 Phase III Multiple 

bluebird bio* $2,876 Phase III Genetic 

Kite Pharma* $2,413 Phase II Cancer 

Clovis Oncology $1,904 Phase III Cancer 

FibroGen* $1,582 Phase III Multiple 

Neurocine Biosciences $1,698 Registration Multiple 

Ophthotech* $1,510 Phase III Ophthalmic 

Chimerix* $1,468 Phase III Infection 

Auspex Pharmaceuticals* $1,448 Phase III Neurology 

Ultragenyx Pharmaceutical* $1,400 Phase III Multiple 

Radius Health* $1,281 Phase III Musculoskeletal 

Acceleron Pharma* $1,257 Phase II/III Cancer 

Achillion Pharmaceuticals $1,228 Phase II Infection 

Karyopharm Therapeutics* $1,224 Phase II Cancer 

TetraPhase Pharmaceuticals* $1,217 Phase III Infection 

Avalanche Biotechnologies* $1,213 Phase II Ophthalmic 

Merrimack Pharmaceuticals $1,196 Phase III Cancer 

NewLink Genetics $1,111 Phase III Cancer 

OvaScience $1,052 Development Women’s Health 

Sangamo BioSciences $1,040 Phase II Multiple 

*Company had an IPO in 2013 or 2014. 

Market capitalizations as of 31 December 2014. 



21


As a result of stronger market valuations 

and material gains in revenue growth, US 

biotech companies were clearly optimistic 

about investing in future products, and 

overall R&D expenditures grew by 22% 

relative to 2013. Nearly 70% of US biotech 

companies increased their R&D spending 

in 2014 — slightly above the historical 

average of about two-thirds of companies. 

Overall, US commercial leaders increased 

their R&D spending by 18%, including 

Alexion Pharmaceuticals (62%) and 

Regeneron Pharmaceuticals (48%). 

In contrast, Amgen, which in 2014 had 

the largest R&D budget in the global 

biotechnology industry, increased its 

R&D spending by just 3%. Amgen’s more 

modest increase isn’t too surprising given 

the company has come under pressure 

from activist shareholders seeking 

higher returns from R&D. 

Just as revenue growth was heavily 

influenced by Gilead, so too was net 

income, increasing nearly 300% from 

2013 to 2014. Absent Gilead, the 

aggregate net loss of US public biotechs 

increased US$700 million. The higher 

losses were due primarily to greater R&D 

expenditures, including by newly public 

companies, offset in part by increased 

earnings by other commercial leaders. 

Indeed, because of the aforementioned 

increase in R&D expenditures, only 13% 

of the US biotechs recorded a positive 

bottom line. Another 183 publicly 

disclosed a drop in net income (or an 

increase in net loss) for the year. 

Along with the uptick in R&D spending, 

a majority of US biotech companies 

were confident enough of their financial 

health to boost headcount in 2014. 

Employee numbers increased 10%, as 

80% of US commercial leaders and other 

firms maintained or increased their 

payrolls compared to 2013. One notable 

exception was Amgen, which reduced 

headcount by 10.5% as part of a larger 

restructuring effort. 

Normalizing for the large number of IPOs 

in 2014, R&D growth would have been 

15% instead of 22%. Note that this spend 

still outpaces the top-line growth after 

adjusting for Gilead’s revenues, albeit by 

a much smaller margin. Most significantly, 

net income would have grown at an even 

faster pace, by more than 360%. 

New commercial leaders 

Strong product sales helped push 

Pharmacyclics (Imbruvica), Medivation 

(Xtandi) and Incyte (Jakafi) into the realm 

of the US commercial leaders in 2014. 

The US commercial leaders remain a 

dynamic group of companies, primarily 

because several trends make acquisition 

targets of many of these high-performing 

biotechs. (See accompanying article, 

“Year in review.”) 

Indeed, 2014 saw the loss of one 

commercial leader as a result of an 

acquisition when Life Technologies 

was scooped up by Thermo Fisher 

Scientific. Three other companies are 

poised to leave the group in 2015: 

Cubist Pharmaceuticals, which Merck 

& Co. announced it was acquiring in 

December 2014 (the transaction closed 

in January 2015), and Pharmacyclics and 

Salix Pharmaceuticals, which were sold 

in March 2015 to AbbVie and Valeant 

Pharmaceuticals, respectively. 

Roughly 70% of the US biotech sector’s 

total revenues came from the top five 

commercial leaders: Gilead Sciences, 

Amgen, Biogen, Celgene and Regeneron. 

As mentioned, Gilead’s strong 

performance in 2014 had a material effect 

on the overall financial performance of the 

US biotech sector. Gilead also passed the 

US$20 billion revenue mark for the first 

time and displaced Amgen as the sector’s 

top revenue generator. 

In light of these findings, it isn’t surprising 

that the bulk of the industry’s growth 

went to the commercial leaders. The 

distribution was even more skewed this 

year, thanks to Gilead’s outsized results. 

However, noncommercial leaders fared 

well too, particularly after normalizing 

the results of the commercial leaders to 

control for the Gilead effect. Adjusting 

for Gilead’s results, the revenue growth 

of the noncommercial leaders would have 

outpaced the commercial leaders by two 

percentage points. 

Similarly, the noncommercial leaders 

increased their R&D spending by 29%, 

while the commercial leaders augmented 

their research budgets by only 18%. 

To some extent, the latter phenomenon 

was driven by a slowdown in the growth 



US commercial leaders, 2010–14 

2010 2011 2012 2013 2014 

Alexion Alexion Alexion Alexion Alexion 

Amgen Amgen Amgen Amgen Amgen 

Amylin Amylin Acquired by BMS 

Biogen Biogen Biogen Biogen Biogen 

Organic growth Biomarin Pharmaceutical Biomarin Pharmaceutical Biomarin Pharmaceutical 

Bio-Rad Laboratories Bio-Rad Laboratories Bio-Rad Laboratories Bio-Rad Laboratories Bio-Rad Laboratories 

Celgene Celgene Celgene Celgene Celgene 

Cephalon 

Acquired by Teva 

Cubist Cubist Cubist Cubist Cubist* 

Gen-Probe Gen-Probe Acquired by Hologic 

Genzyme 

Acquired by Sanofi 

Gilead Sciences Gilead Sciences Gilead Sciences Gilead Sciences Gilead Sciences 

IDEXX Laboratories IDEXX Laboratories IDEXX Laboratories IDEXX Laboratories IDEXX Laboratories 

Illumina Illumina Illumina Illumina Illumina 

Organic growth 

Life Technologies Life Technologies Life Technologies Life Technologies 


Incyte Corporation 

Acquired by Thermo Fisher 

Scientific 

Medivation 

Organic growth Myriad Genetics Myriad Genetics 


Pharmacyclics 

Organic growth Salix Pharmaceuticals Salix Pharmaceuticals Salix Pharmaceuticals Salix Pharmaceuticals 

Talecris Biotherapeutics 

Acquired by Grifols 

Organic growth The Medicines Company The Medicines Company The Medicines Company 

United Therapeutics United Therapeutics United Therapeutics United Therapeutics United Therapeutics 

Organic growth Vertex Pharmaceuticals Vertex Pharmaceuticals Vertex Pharmaceuticals Vertex Pharmaceuticals 

Organic growth ViroPharma Decline in sales 


*Merck & Co. announced the acquisition of Cubist in December 2014; the deal was finalized in January 2015. 



23


of Amgen’s R&D spending. In addition, 

the noncommercial leaders in 2014 

grew at a much faster pace; their 

increased confidence and flush coffers 

resulted in their renewed focus on R&D 

more generally. 

When it came to profitability, however, 

there was a stark divide between 

the commercial leaders and other 

companies. While the net income of 

commercial leaders rose 82%, the 

rest of the industry saw its net income 

decline 26% as the result of increased 

R&D spending and the cohort of new 

companies added via IPOs. 

Investors saw opportunities in US 

biotech companies regardless of their 

size, sending the market capitalizations 

of the commercial leaders up 36% and 

the noncommercial leaders 28%. These 

increases were much lower than the year 

prior, when the market capitalizations 

of the commercial leaders and the other 

companies increased 74% and 77%, 

respectively. Concerns related to drug 

pricing and already-high valuations were 

two reasons for the more modest uptick. 

Newly public companies contributed 

US$32.3 billion to the market 

valuation increase associated with the 

noncommercial leaders. Normalizing 

for the IPO class of 2014, the 

noncommercial leaders experienced 

an increase in market cap of just 9%. 

The IPO class also had an impact on 

other variables. Without the year’s IPOs, 

noncommercial leaders’ revenues would 

have increased by only 7%, while the 

annual growth in R&D expenditures would 

have been a much smaller 8%. The change 

in net loss for the noncommercial leaders 

would also have been much smaller — 

just US$200 million, an increase of 2% 

instead of 26%. 

US commercial leaders and other companies, 2013–14 

(US$b) 

2014 2013 US$ change % change 

Commercial leaders 

Revenues 81.3 61.8 19.4 31% 

R&D expense 17.2 14.6 2.6 18% 

Net income (loss) 23.4 12.9 10.6 82% 

Market capitalization 644.5 473.3 171.2 36% 

Number of employees 71,540 65,785 5,755 9% 

Other companies 

Revenues 11.8 10.3 1.5 14% 

R&D expense 11.6 9.0 2.6 29% 

Net income (loss) (12.8) (10.1) (2.7) -26% 

Market capitalization 209.4 163.3 46.1 28% 


Investors saw 

opportunities in US 

biotech companies 

regardless of their size. 

Numbers may appear inconsistent because of rounding. Commercial leaders 

are companies with revenues of at least US$500 million. 




Selected US public company financial highlights by geographic area, 2014 

(US$m, % change over 2013) 

Region 

San Francisco Bay Area 

New England 

San Diego 

New York State 

New Jersey 

Mid-Atlantic 

Southeast 

Los Angeles/Orange County 

Pacific Northwest 

Pennsylvania/Delaware Valley 

North Carolina 

Midwest 

Texas 

Colorado 

Utah 

Other 

Total 

Number 

of public 

companies 

80 

19% 

75 

29% 

44 

13% 

34 

17% 

25 

9% 

20 

5% 

19 

6% 

19 

19% 

16 

33% 

12 

20% 

13 

18% 

12 

0% 

9 

29% 

7 

17% 

4 

0% 

14 

0% 

403 

17% 

Market 

capitalization Revenue R&D 

210,781 

24% 

209,554 

42% 

60,027 

31% 

53,320 

56% 

100,907 

27% 

16,026 

19% 

6,909 

30% 

134,530 

45% 

12,683 

78% 

15,322 

13% 

11,775 

47% 

3,928 

49% 

3,352 

38% 

2,809 

-7% 

2,793 

39% 

9,145 

16% 

853,862 

34% 

32,610 

95% 

16,517 

27% 

2,870 

-53% 

3,706 

31% 

8,971 

20% 

2,277 

32% 

335 

26% 

20,335 

7% 

537 

-19% 

899 

-25% 

1,247 

31% 

67 

-40% 

254 

-2% 

62 

-11% 

778 

27% 

1,585 

38% 

93,050 

29% 

6,883 

34% 

6,487 

24% 

1,677 

11% 

1,863 

52% 

2,973 

10% 

808 

9% 

239 

15% 

4,965 

6% 

858 

62% 

575 

15% 

489 

47% 

193 

-2% 

237 

36% 

226 

51% 

85 

38% 

273 

34% 

28,831 

22% 

Net income 

(loss) 

9,477 

4,335% 

75 

-112% 

(918) 

107% 

(913) 

780% 

1,353 

25% 

(8) 

-91% 

(404) 

17% 

4,438 

-3% 

(852) 

23% 

(520) 

38% 

(804) 

397% 

(306) 

-28% 

(299) 

177% 

(311) 

69% 

151 

24% 

458 

64% 

10,618 

293% 

Total assets 

53,582 

41% 

36,129 

27% 

9,057 

-40% 

7,322 

45% 

21,534 

31% 

4,885 

12% 

2,064 

13% 

70,514 

5% 

2,061 

53% 

2,448 

-25% 

5,135 

45% 

773 

-3% 

1,257 

71% 

1,043 

24% 

867 

1% 

3,425 

42% 

222,095 

17% 

Cash and 

equivalents 

plus 

short-term 

investments 

20,238 

100% 

13,711 

34% 

6,040 

42% 

2,659 

42% 

9,745 

38% 

2,111 

14% 

644 

29% 

28,170 

41% 

1,287 

49% 

1,059 

-6% 

1,377 

-17% 

631 

26% 

833 

137% 

685 

45% 

228 

-46% 

1,438 

59% 

90,857 

46% 

Market capitalization as of 31 December 2014. Percent changes refer to change over December 2013. Numbers may appear inconsistent because of rounding. 

New England: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont; Mid-Atlantic: Maryland, Virginia, District of Columbia; Mid-West: Illinois, 

Michigan, Ohio, Wisconsin; Southeast: Alabama, Florida, Georgia, Kentucky, Louisiana, Tennessee, South Carolina; Pacific Northwest: Oregon, Washington 



25


In both the US and Europe, biotech stocks outperformed the broader indices, 

led by mid-sized biotechs in the US and large firms in Europe. 

US market capitalization relative to leading indices 

EY US biotech industry Dow Jones Industrial Average Pharma industry US Russell 3000 NASDAQ Composite EY US medtech industry 

+200% 

2013 

2014 

2015 

+150% 

+100% 

+50% 

0% 

-50% 

Jan 

Feb 

Mar 

Apr 

May 

Jun 

Jul 

Aug 

Sep 

Oct 

Nov 

Dec 

Jan 

Feb 

Mar 

Apr 

May 

Jun 

Jul 

Aug 

Sep 

Oct 

Nov 

Dec 

Jan 

Feb 

Mar 

Chart includes companies that were active on 31 March 2015. 


US market capitalization by company size 

EY US biotech industry 

Large-cap (>US$10b) 

Mid-cap (US$2b–US$10b) 

Small-cap (US$200m–US$2b) 

Micro-cap (


European market capitalization relative to leading indices 

EY European biotech industry CAC-40 DAX FTSE 100 Pharma industry EU EY EU medtech industry 

+150% 

2013 

2014 

2015 

+100% 

+50% 

0% 

-50% 

Jan 

Feb 

Mar 

Apr 

May 

Jun 

Jul 

Aug 

Sep 

Oct 

Nov 

Dec 

Jan 

Feb 

Mar 

Apr 

May 

Jun 

Jul 

Aug 

Sep 

Oct 

Nov 

Dec 

Jan 

Feb 

Mar 

Chart includes companies that were active on 31 March 2015. 


European market capitalization by company size 

EY European biotech industry 

Large-cap (>US$10b) 

Mid-cap (US$2b–US$10b) 

Small-cap (US$200m–US$2b) 

Micro-cap (



Europe 

European biotechnology at a glance, 2013–14 

(US$m) 

2014 2013 % change 


Revenues 23,992 20,915 15% 

R&D expense 5,576 4,910 14% 

Net income (loss) 3,255 1,087 199% 

Market capitalization 162,149 114,699 41% 


Financing 

Capital raised by public companies 7,182 4,384 64% 

Number of IPOs 31 8 288% 

Capital raised by private companies 2,068 1,569 32% 



Private companies 1,940 1,987 -2% 

Public and private companies 2,136 2,151 -1% 



In 2014, the European trend lines followed 

those in the US, albeit the trajectories for 

each of the key performance metrics did 

not reach the same heights. 

European biotech companies saw their 

revenue growth rebound strongly in 2014, 

as top-line sales expanded 15%, compared 

to the modest 3% uptick of 2013. In a 

sign of a healthier financial picture, 77% 

of European biotechs generated some 

revenue and 69% increased their top 

lines year over year. Those results are 

comparable to the revenue metrics posted 

by US biotech companies. 

Shire solidified its standing as the 

leading European biotech, posting the 

year’s largest revenue increase (roughly 

US$1.1 billion). Shire’s revenues were 

definitely bolstered by its acquisition 

of ViroPharma and that company’s 

hereditary angioedema product, Cinryze. 

In addition to Shire, Jazz Pharmaceuticals, 

which relocated to Ireland in 2012, saw 

strong revenue growth in 2014, thanks 

to solid sales for its excessive daytime 

sleepiness product Xyrem. 

R&D spending by European biotechs 

increased 14% in 2014, reaching 

US$5.6 billion. That increase is a sharp 

contrast to 2013, when R&D spending 

actually declined 4%. Fifty-seven percent 

of Europe’s biotechs increased their 

R&D expenditures in 2014, suggesting 

management teams were feeling more 

confident about their access to capital 

and therefore more willing to invest 

in future innovations. While that is a 



healthy sign, it is still substantially below 

the 70% of US biotechs that upped their 

R&D expenditures in 2014. Alkermes 

and Jazz contributed the most to the 

growth in R&D spending, allocating 

more than US$200 million combined to 

pipeline development. Other European 

stalwarts, however, pulled back from R&D 

investments in 2014, including Shire, 

which downsized its R&D expenditures by 

6% as the result of either termination or 

completion of late-stage clinical programs. 

As in the US, European biotech companies’ 

aggregate net income increased by a 

healthy percentage, spiking 199% to 

US$3.3 billion. This percentage increase 

didn’t match the steep growth rate of 

2013, when net income soared by 462%. 

It was also heavily influenced by the 

US$1.6 billion breakup fee Shire received 

from AbbVie when the proposed merger 

between the two companies was called off 

in October 2014. 

Adjusting for this one-time event, 

European biotech companies actually 

added US$533 million in aggregate net 

income in 2014, an annual increase of 

52%. This increase was driven largely by 

strong performances by Medivir, Actelion 

and Amarin, which each increased their 

net income by at least US$90 million. 

Indeed, only 45% of European biotechs 

boosted their net income in 2014, 

compared to 50% in 2013. Among those 

with sizeable drops in net income were 

Meda and Jazz Pharmaceuticals, while 

Alkermes reported a net loss. Meda’s 

net income fell as a result of one-time 

restructuring charges related to its 

Rottapharm acquisition, while the bottom 

lines of both Jazz and Alkermes were 

affected by the aforementioned increases 

in their R&D budgets. 

The market capitalizations of European 

biotech companies increased strongly 

for the second straight year amid 

positive investor sentiment. Indeed, 

market caps of European companies 

actually increased seven percentage 

points more than those in the US in 

2014. A catch-up phenomenon was 

at least partly responsible, given that 

European biotech market valuations 

didn’t increase as dramatically in 2013 

as those of US biotechs, there was more 

room for a run-up in 2014. In all, 59% of 

European biotechs saw their market caps 

increase in 2014. 

Another welcome change from past 

years was the uptick in IPOs. In 2014, 31 

European biotech companies debuted on 

public exchanges (including exchanges 

located in the US). As a result, the number 

of European public biotech companies 

swelled 20%. These new listings had a 

slight effect on Europe’s overall financial 

performance, contributing 1% to the 

continent’s revenue growth and 39% 

to the upsurge in R&D expenditures. 

Normalizing for the 2014 IPO class, 

aggregate net income for European 

biotechs would have increased by 232% 

instead of 199%, since many of these IPO 

companies were in net loss positions, as is 

normal for newly public companies. 

A brightening climate 

A subsector analysis of the European 

biotech sector provides additional data 

suggesting a brightening climate for 

biotechs in that part of the world. 

2014 was another solid year for European 

commercial leaders, which reported 

greater growth across all the key 

performance indicators we track. 

There were no changes to the list of 

European commercial leaders from 2013 

to 2014, as Shire remained independent 

after AbbVie called off its proposed 

acquisition of Europe’s largest biotech. 

This stability is welcome news. Anchored 

by a strong group of rapidly growing 

commercial-stage companies, it will be 

easier for the European biotech sector to 

sustain positive investor sentiment. 

In 2014, all nine European commercial 

leaders increased their revenues year 

over year, including five by double digits. 

Indeed, the European commercial leaders 

were responsible for 77% of the annual 

revenue growth in 2014. 

More importantly, the financial 

performance of Europe’s noncommercial 

leaders surged in 2014, keeping pace 

with ―— and in terms of revenue and R&D, 

surpassing ―— the commercial leaders. 


29


EU commercial leaders, 2010–14 

2010 2011 2012 2013 2014 

Actelion Actelion Actelion Actelion Actelion 

Elan Corporation Elan Corporation Elan Corporation Acquired by Perrigo 

Organic growth and relocation from US to Ireland Alkermes Alkermes 

Eurofins Scientific Eurofins Scientific Eurofins Scientific Eurofins Scientific Eurofins Scientific 

Ipsen Ipsen Ipsen Ipsen Ipsen 

Organic growth and relocation from US to Ireland Jazz Pharmaceuticals Jazz Pharmaceuticals Jazz Pharmaceuticals 

Meda Meda Meda Meda Meda 

Novozymes Novozymes Novozymes Novozymes Novozymes 

QIAGEN QIAGEN QIAGEN QIAGEN QIAGEN 

Shire Shire Shire Shire Shire 



Revenues at smaller European biotech 

companies increased by US$717 million, 

an 18% increase that was fueled by top-line 

sales growth in excess of US$100 million 

at both Medivir and BTG. 

Noncommercial leaders also increased 

their R&D expenditures by a total of 

US$401 million, far surpassing the 

US$256 million increase associated with 

the commercial leaders. It is not unusual 

to see small companies outperform larger 

players on a percentage basis since they 

are growing off a smaller base. 

However, on an absolute dollar basis, the 

growth in R&D expenditures in 2014 for 

small European biotechs was a striking 

turnaround from 2013, when R&D budgets 

fell 9%. Nearly 68% of the annual growth 

in R&D spend by Europe’s smaller biotech 

players came courtesy of the 31 newly 

public companies. 

European commercial leaders and other companies, 2013–14 

(US$m) 

2014 2013 US$ change % change 


Revenues 19,397 17,046 2,351 14% 

R&D expense 3,059 2,802 256 9% 

Net income (loss) 5,016 2,278 2,738 120% 

Market capitalization 111,265 77,918 33,348 43% 


Other companies 

Revenues 4,605 3,888 717 18% 

R&D expense 2,529 2,128 401 19% 

Net income (loss) (1,750) (1,171) (579) -49% 

Market capitalization 50,931 36,850 14,081 38% 


Numbers may appear inconsistent because of rounding. Commercial leaders 

are companies with revenues of at least US$500 million. 





Australia 

Australian biotechnology at a glance, 2013–14 

(US$m) 

2014 2013 % change 


Revenues 5,794 5,318 9% 

R&D expense 681 650 5% 

Net income 1,066 957 11% 

Market capitalization 42,177 38,068 11% 






With the exception of its revenues, 

the Australian biotech cluster grew at 

a slower pace in 2014 than the year 

before. R&D expenditures increased 

5% in 2014, compared to 8% growth in 

2013; aggregate net incomes were up 

11%, compared to 25% in 2013. Market 

valuations and employee headcounts 

expanded 11% and 8%, respectively. In 

2013, market valuations increased 15% as 

Australian biotech companies bolstered 

their employee base by 12%. 

That said, revenues did expand 9% from 

2013 to 2014 to US$5.8 billion. CSL, 

Australia’s largest biotech company, 

generated 92% of the year’s total 

revenues and was responsible for 68% of 

the sector’s R&D expenditures. 

Apart from acting as Australia’s 

biotech anchor, CSL aims to bolster 

its multinational presence. As such, 

2014 was a building year, both in 

terms of its geographic footprint and 

its product portfolio. As of January 

2015, both the FDA and the European 

Medicines Association had approved 

more flexible dosing regimens of the 

company’s Hizentra, to treat primary 

immunodeficiency disease.The company 

also announced its first major acquisition 

in a decade: the purchase of Novartis’ 

influenza vaccine business. This deal 

will likely have an impact on CSL’s 2016 

financial performance; its management 

team estimates integration costs 

associated with the acquisition could be as 

much as US$100 million. 

Outside of CSL, the other 51 public 

Australian biotech companies 

reported combined 2014 revenues of 

US$459 million, a year-over-year increase 

of 25%. That represents the second 

year in a row that Australia’s smaller 

biotech companies have seen revenue 

growth above 20%. 


31



Canada 

Canadian biotechnology at a glance, 2013–14 

(US$m) 

2014 2013 % change 


Revenues 260 623 -58% 

R&D expense 299 310 -4% 

Net income (loss) (87) (227) 62% 

Market capitalization 5,227 5,601 -7% 




Private companies 172 181 -5% 

Public and private companies 235 240 -2% 



While the Canadian biotechnology industry 

has continued to face challenges, one 

bright spot was the year’s financing 

data. In 2014, financing totals exceeded 

US$1 billion, a threshold that hasn’t been 

cleared since 2007. Two IPOs contributed 

US$85 million to this total. 

On the flip side, Canadian biotechs 

reported 2014 revenues of just 

US$260 million. This contraction was 

driven by numerous acquisitions and a 

dearth of new public listings. The average 

revenue per public company in Canada is 

now US$4 million. 

The reasons for this decline have been well 

documented in prior issues of EY’s biotech 

reports. With venture funding limited, 

Canadian companies have often gone 

public prematurely and then struggled 

to raise the subsequent rounds of capital 

needed for growth. In recent years, 

many of Canada’s leading companies 

were acquired by foreign companies, 

winnowing the local sector’s stable base. 

In 2014, the acquisition of two of the largest 

Canadian biotechs, Paladin Labs (by Endo 

International) and Cangene (by Emergent 

BioSolutions), had a pronounced impact 

on the sector’s financial performance. 

Revenues declined 58% in 2014, compared 

to a 3% increase the year prior, while R&D 

expenditures sank 4%. Adjusting for these 

two acquisitions, 2014 revenue would have 

increased by 15%, while aggregate R&D 

spending would have increased 10%. Cardiome 

Pharma, one of the country’s largest 

remaining public biotech, saw its revenues 

grow 567% to US$30 million in 2014. 

Meantime, the net loss of the Canadian sector 

declined by 62% in 2014. Adjusting for the 

Paladin Labs and Cangene acquisitions, the 

net loss would have improved another seven 

percentage points. 

Driven largely by the two large acquisitions, 

the sector’s market capitalization fell 7% in 

2014. This contrasts with 2013, when market 

capitalization increased 36%, well ahead 

of the 8% market cap growth in the overall 

Canadian market. 


Section Financing heading 


Financing 


33

Financing 

Financing the future 


What a year. In 2014, the financing climate seemed a world away from the doom and gloom of just a few 

years ago. Fundraising totals in 2014 broke all-time records in both the US and Europe, resulting in a total 

of US$54.3 billion raised, a 72% increase over 2013, which itself had been a remarkably strong year. 

Fundraising in 2014 handily beat capital raised in 2000 — a year in which investor enthusiasm about the 

sequencing of the human genome propelled fundraising to heights many thought we would never see again. 

The strong 2014 performance was driven 

by growth in all key funding categories: 

venture capital, IPOs, follow-on equity 

offerings and debt. IPOs garnered the 

biggest headlines in 2014, as US and 

European biotechs raised US$6.8 billion, 

an astonishing 93% increase over 2013’s 

strong performance. Remarkably, this 

was only the second-highest total in the 

industry’s history. IPO fundraising in 2000 

had been about US$1 billion higher. 

As in 2013, 2014’s solid IPO and follow-on 

financings were driven by the continuing 

bull market for biotech stocks, as investors 

expressed new confidence in the sector. 

Strong product launches by the industry’s 

bellwethers helped investors shake off 

apprehensions regarding regulatory risks 

and health care reforms. Gilead Sciences’ 

Sovaldi became the biggest product launch 

ever — all the more remarkable in that it 

came from a biotech company rather than 

a member of big pharma. Other important 

launches such as Biogen’s Tecfidera also 

exceeded market expectations. 

An FDA that is more willing to balance 

product access against risk, especially 

in areas of high unmet need, also helped 

in 2014. FDA programs designed to get 

differentiated products to market via 

accelerated pathways began to bear fruit, 

contributing to near-record numbers of 

approvals. Of the 41 approvals recorded 

in 2014, more than three-quarters were 

on first filings. Finally, the expansionary 

monetary policies of most central banks — 

particularly the U.S. Federal Reserve — 

played a big role as investors have shown 

a willingness to accept more risk in the 

pursuit of returns. 

Capital raised in the US and Europe, 2000–14 

(US$m) 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 

IPOs 7,838 548 593 484 2,068 1,692 2,091 2,262 119 840 1,325 863 880 3,526 6,802 

Follow-on 

and other 

13,415 2,233 1,763 4,904 6,857 6,604 9,286 8,889 4,098 9,226 5,955 5,869 7,616 9,310 13,838 

Debt 1,529 1,907 4,472 7,296 6,349 6,030 9,662 10,575 5,776 5,614 12,079 20,587 14,040 12,831 26,049 

Venture 4,121 3,694 3,504 4,073 5,277 5,495 6,044 7,930 5,987 5,809 5,805 5,678 5,518 5,948 7,630 

Total 26,903 8,382 10,332 16,757 20,551 19,821 27,083 29,657 15,980 21,491 25,163 32,998 28,055 31,614 54,319 

Numbers may appear inconsistent because of rounding. Convertible debt instruments included in “debt.” 

Source: EY, BioCentury, Canadian Biotech News, Capital IQ and VentureSource. 


Financing 

A venture financing rush 

IPO and follow-on financings have been 

driven by the support of generalist 

investors trying to capture some of the 

sector’s growth in market capitalization, 

and the companies that listed in 2013 and 

2014 were, on average, more mature than 

new listings in prior IPO windows. Unlike 

the firms that went public in the late 

1990s and early 2000s, most members 

of the IPO class of the last two years (81%) 

had lead candidates in Phase II or later, 

and the majority have retained the rights 

to their products rather than out-licensing 

them to a larger partner. 

If the IPO market continued to garner the 

headlines for biotech, an under-appreciated 

yet significant development was the 

growing rush of venture financing. Between 

2008 and 2013, despite many doomsday 

proclamations to the contrary, venture 

capital had been remarkably stable. 

Through the turmoil of the global financial 

crisis and the subsequent recovery, venture 

capital totals averaged US$5.8 billion, 

never falling below US$5.5 billion or 

rising above US$5.9 billion. In 2014, that 

pattern was broken, as US and European 

companies raised US$7.6 billion, a 28% 

increase and just shy of the all-time record 

of US$7.9 billion raised in 2007. 

The low interest rate environment of the 

last several years has led to a surge in debt 

financing. That pattern continued in 2014, 

as debt totals soared to US$26.0 billion, 

more than double the 2003-13 average. 

To control for the skewing effect of these 

large debt financings, we also analyzed 

equity financing totals (i.e., fundraising 

Innovation capital in the US and Europe, 2000–14 

Capital raised (US$b) 

Innovation capital 

60 

50 

40 

30 

20 

10 

0 


‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 

Innovation capital is the amount of equity capital raised by companies 


Source: EY, BioCentury, Canadian Biotech News, Capital IQ and VentureSource. 

excluding debt). In 2014, these totals 

reached an all-time high, as companies 

raised US$28.3 billion in non-debt 

capital, beating the previous high of 

US$25.4 billion achieved in 2000. 

Between them, five large companies 

closed six debt transactions of more 

than US$1 billion: Amgen, Celgene, 

Gilead, Ikaria and Illumina. Gilead’s two 

offerings — one in March and one in 

November 2014, each for US$4 billion — 

were to be used to repay existing 

debt and fund working capital and 

share repurchases. 

Starting in 2008, the challenging funding 

environment for small companies and 

the spike in debt financing by large firms 

inspired us to create a measure we call 

“innovation capital” — the funds raised 

by companies with revenues less than 

US$500 million. Biotech “commercial 

leaders” (entities with revenues in excess 

of US$500 million) are self-sustaining, 

cash-flow-positive entities that do not 

depend on fundraising to finance R&D. 

Indeed, the large debt financings of 

recent years have often been used for 

other purposes such as stock buybacks 

and acquisitions. We have therefore been 

measuring innovation capital to gauge the 

situation for smaller companies that need 

fundraising to sustain R&D and innovation. 

What we found was telling. In the 

four years before the financial crisis 

struck, innovation capital had averaged 


35

Financing 

US and European early‐stage venture investment, 2000–14 

Capital raised 

Number of deals 

2.0 200 

1.6 160 


1.2 120 

0.8 80 


0.4 

40 

0.0 0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 

Early-stage investments include seed, first and second venture rounds. 

Source: EY, BioCentury, Capital IQ and VentureSource. 

US$15.1 billion a year. Between 2008 and 

2012, the average fell to US$12.5 billion 

a year. Even as the overall fundraising 

climate recovered on the back of soaring 

debt financings by commercial leaders, the 

amount of innovation capital remained flat. 

That changed starting in 2013, 

when innovation capital shot up to 

US$18.6 billion, and 2014, when it reached 

a new high of US$27.6 billion. This bodes 

well for investment in research pipelines 

and the overall health of the sector. 

In another encouraging sign for biotech 

innovation, early rounds generated more 

funding than they had in at least a decade — 

US$1.8 billion — even though the number 

of deals dropped slightly from 182 to 177, 

year over year. The median deal value for 

early-stage firms — US$10 million — was 

also the highest since 2006. 

Some early rounds were truly remarkable 

in size. In fact, 2014 was the first year 

since we began tracking the biotech sector 

28 years ago in which there were four 

early-stage US biotech venture rounds of 

more than US$50 million. Philadelphiabased 

Spark Therapeutics, founded in 

2013, raised US$72.8 million to pursue 

gene therapies. Seattle-based Juno 

Therapeutics added US$190 million to 

the US$120 million it raised in December 

2013 (and then followed that up with 

one of the year’s largest IPOs) to help it 

achieve its goal of developing chimeric 

antigen receptor therapy (CAR-T) to help 

individual patients’ immune-system cells 

attack cancer cells. And Human Longevity, 

the latest company founded by genomics 

pioneer Craig Venter, raised US$70 million 

to create an enormous sequencing project 

aimed at finding cell-based treatments for 

extending healthy human life-spans. 

In addition, the year’s largest European 

first round — indeed, one of the largest 

in that sector’s history — went to UKbased 

Adaptimmune, which received 

US$104 million from a consortium 

led by venture capital firm New 

Enterprise Associates. Spun off from 

the University of Oxford in 2008, 


Financing 

Adaptimmune is developing T-cells to treat 

several types of cancer. The company also 

entered into a strategic partnership with 

GlaxoSmithKline in June 2014. 

European early-stage companies were 

more likely than their US counterparts to 

benefit from this trend — 36% of European 

venture capital came in the form of Series A 

or B funding, as opposed to 23% in the US. 

A rising tide 

The present IPO boom has given venture 

capitalists the opportunity to realize 

returns and restock their coffers, the 

better to support a new generation of 

companies. Recent research (based on 

data from Thomson Reuters) showing that 

one-third of biotech firms go public within 

five years of their initial investment — a 

higher proportion than for software or 

other sectors — also supports biotech 

investment prospects. This is a stark 

reversal from just a few years ago, when 

the average time to exit had extended to 

over eight years (or almost as long as the 

legal life of a venture capital fund). 

However, the increase in early-stage 

funding was not driven by a shift in 

investor focus. Instead, it was a case 

of the proverbial rising tide lifting all 

boats. The share of venture capital going 

toward early rounds has remained fairly 

static over time. 

A record-breaking 94 US and European 

biotech companies went public in 2014, 

raising US$6.8 billion, for an average of 

US$72 million per IPO. The year’s 94 IPOs 

thoroughly shattered the previous record 

of 79 in 2000. However, the class of 2000 

remained ahead in terms of the amount of 

capital raised (US$7.8 billion). 

However, the entire 2013-14 IPO 

window — in which 143 companies went 

public, raising US$10.3 billion, more than 

the previous eight years combined — is 

the largest window in the industry’s 

history. This is particularly remarkable 

because the window did not open in 

Europe until early 2014. 

US and European venture investment in early stage private companies holds steady 

Seed and first rounds 

All later rounds 

100% 

Percentage of venture dollars invested 

80% 

60% 

40% 

20% 

0% 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 



37

Financing 

Of course, investor sentiment in 2014 

was fundamentally different from 

2000. The window in 2000 was driven 

by undifferentiated enthusiasm over 

the sequencing of the human genome 

and the possibilities to come from that 

breakthrough. In 2014, however, the 

window was much more about real 

market performance than scientific 

promise. The window resulted from 

the strong performance of biotech’s 

commercial leaders and important 

clinical results from companies large 

and small — in some sense, the payoff 

from the human genome project over 

a decade later. 

US and European biotechnology IPO pricing, 2010–14 

Percentage of IPOs 

Above range Within range Below range 

100% 

80% 

60% 

40% 

20% 

The average IPO size was US$72 million, 

continuing the trend set in 2013, but 21 

companies raised over US$100 million. 

Although only four of the 21 were 

European companies, two were in the 

global top three: UK-based Circassia 

Pharmaceuticals and Forward Pharma 

of Denmark. The IPOs of Circassia and 

US-based Juno Therapeutics were also 

the third- and fourth-largest biotech 

IPOs of all time. 

0% 

2010 

2011 

2012 


2013 

2014 

The wide-open IPO window meant not 

only that record numbers of companies 

went public, but also that they did so 

at favorable terms. (As discussed later, 

this was in part because of strong post- 

IPO market valuations and growth.) 

As in 2013, roughly 60% of companies 

going public did so within or above their 

anticipated price ranges — well above the 

three-year average for 2010-12 of 36%. 

A record-breaking 94 US and European 

biotech companies went public in 2014, 

raising US$6.8 billion, for an average of 

US$72 million per IPO. 


Financing 

Financing 

United States 

US biotechnology financings, 2000–14 

Debt Follow-on and other IPOs Venture 

50 

40 

Capital rasied (US$b) 

30 

20 

10 

0 

‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 


US biotechnology recorded a 

colossal year in 2014, setting a new 

all-time record in total capital raised 

(US$45.1 billion) as well as funds raised 

through IPOs (US$4.9 billion) and debt 

(US$23.3 billion). The amounts raised 

in the two other financing categories 

represented the second-highest totals 

in the industry’s history: venture capital 

generated US$5.6 billion (second to 

the US$6.1 billion raised in 2007) and 

follow-on financing raised US$10.7 billion 

(behind the almost US$13 billion raised 

in 2000). 

The sector’s strong overall performance 

was underpinned by successful launches 

of well-differentiated products that could 

attract premium prices, supported by a 

more accommodating FDA, especially in 

areas of high unmet need. Meanwhile, big 

pharma’s increasing need to fill its growth 

gap also drew investors in anticipation of 

acquisitions of biotech assets at significant 

premiums, such as Roche’s US$8.3 billion 

purchase of InterMune and Merck & Co.’s 

two multibillion-dollar offers, for Cubist 

Pharmaceuticals (US$9.5 billion) and 

Idenix Pharmaceuticals (US$3.9 billion). 

(See accompanying “Deals, 2014” article.) 

As a result, generalist investors came 

back to biotech, the best-performing 

sector in the market for the last two years, 

driving up equity values and pumping 

much-needed capital into the sector. 


39

Financing 

Boom times for 

innovation capital 

Driven in part by the resurgent IPO 

and follow-on financing markets, 

2014 marked the highest amount of 

innovation capital ever raised in the 

sector — US$21.1 billion, a 40% increase 

over 2013. This is almost double the 

10-year average of US$10.9 billion and 

well ahead of the previous 10-year high 

of US$15.1 billion set in 2013. 

The two consecutive years of growth 

in innovation capital bodes well for 

the resilience of the biotech industry. 

It gives smaller companies — some of 

which will develop to become the future 

growth engines of the sector — more 

confidence to invest in R&D, more 

opportunity to expand their pipelines 

and more bargaining power with larger 

companies, in both alliances and M&A. 

Meanwhile, the amount of money raised 

by commercial leaders grew by an 

astonishing 127%, to US$23.9 billion. 

This included six debt offerings of at 

least US$1 billion. Gilead alone had two 

US$4 billion offerings, one in March and 

one in November of 2014. 

Quarterly breakdown of US biotechnology financings (US$m), 2014 

IPOs 

Follow-on and other 

Debt 

Venture 

Total 

Q1 Q2 Q3 Q4 Total 

$1,739 

(23) 

$4,651 

(83) 

$6,711 

(31) 

$1,333 

(95) 

$14,434 

(232) 

$1,055 

(17) 

$2,047 

(47) 

$9,734 

(44) 

$1,882 

(115) 

$14,719 

(223) 

$958 

(13) 

$1,081 

(27) 

$2,031 

(40) 

$1,059 

(103) 

$5,130 

(183) 

$1,193 

(10) 

$2,943 

(49) 

$5,325 

(26) 

$1,325 

(70) 

$10,786 

(155) 

$4,946 

(63) 

$10,722 

(206) 

$23,801 

(141) 

$5,600 

(383) 

$45,069 

(793) 

Figures in parentheses are number of financings. Numbers may appear inconsistent because of rounding. 


Innovation capital in the US, 2000–14 



50 

40 

30 

20 

Capital raised by commercial leaders 

10 

0 

‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 





Financing 

Innovation capital raised by leading US regions, 2014 

Los Angeles/Orange County 

6 

Midwest New England New Jersey New York State Pacific Northwest San Diego 

San Francisco Bay Area 

5 

Innovation capital raised (US$b) 

4 

3 

2 

1 

0 

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 

Size of bubbles shows relative number of financings per region. Innovation capital is the amount 

of equity capital raised by companies with revenues of less than US$500 million. 


Venture capital raised (US$m) 

Unsurprisingly, New England (which raised 

US$4.9 billion in innovation capital), the 

San Francisco Bay Area (US$4.4 billion) 

and San Diego (US$3.1 billion) continued 

to be the nation’s leading biotech venture 

and innovation capital hotspots in 2014. 

New England led in total number of 

innovation capital deals (131) and venture 

capital deals (80). The Bay Area attracted 

the most venture capital (US$1.4 billion), 

followed by New England (US$1.3 billion) 

and San Diego (US$654 million) — together, 

these three regions attracted 61% of all 

US venture investment in 2014. The Bay 

Area (US$1.3 billion), New England 

(US$1.1 billion) and the Pacific Northwest 

(US$621 million), with significant tailwinds 

from Juno Therapeutics, were the leaders 

in IPO dollars. 

From 2013 to 2014, San Diego continued 

to move up the innovation capital league 

table. The region attracted US$1.6 billion 

more in innovation capital in 2014 than 

it did the previous year. Follow-on public 

offerings were up almost US$1.2 billion, 

which included seven rounds of at least 

US$100 million. Receptos alone raised 

US$619 million. 

If commercial leaders were added to the 

figures, San Francisco Bay Area, New 

England and San Diego would account for 

56% of the total amount of capital raised 

in the US during 2014. 


41

Financing 

The resurgence of US venture capital 

While US venture capital held steady in 

the immediate aftermath of the financial 

crisis, we expected to see a drop in 

funding a few years down the road, 

because VCs were raising less money from 

limited partners, and there is lag between 

funds raised and funds disbursed by 

venture funds. 

But the proverbial other shoe never 

dropped. Instead, venture investment 

remained remarkably consistent from 

2008 through 2013. 

In 2014, however, the resurgent IPO 

market and the prospect of M&A exits 

at higher valuations led to an upsurge 

in funds raised by life sciences venture 

capital firms, as well as their investment 

in the sector. The US$5.6 billion invested 

in 2014 was 27% higher than the previous 

10-year average of US$4.4 billion. In 

2014, average and median deal sizes of 

venture financings also reached their 

highest totals since 2007. 

There was one record that didn’t fall in 

2014: the largest venture round. On 4 

January 2015, Moderna Therapeutics 

closed a US$450 million financing, 

the largest ever for a privately held 

biotechnology company. 

The average deal size was skewed by nine 

deals of more than US$70 million (against 

just three of that size in 2013), four of 

which tipped the US$100 million mark. 

US biopharmaceutical venture capital rebounds to its highest levels since the financial crisis 

Total amount raised Average deal size 

7 18 

6 

15 


5 

4 

3 

2 

1 

12 

9 

6 

3 

Average deal size (US$m) 

0 0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 



Financing 

Top US venture financings, 2014 

Company Region Lead product clinical stage Therapeutic focus 

Amount 

(US$m) 

Month 

Intarcia Therapeutics New England Phase III Metabolic/endocrinology 200 March 

Juno Therapeutics Pacific Northwest Phase I Oncology 134 August 

Invitae San Francisco Bay Area Services, technologies and tools Multiple 120 October 

Adaptive Biotechnologies Pacific Northwest Services, technologies and tools Multiple 105 April 

Paratek Pharmaceuticals New England Phase III Infection 93 June 

Naurex Midwest Phase II Neurology 80 May 

Spark Therapeutics Pennsylvania/Delaware Valley Phase III Multiple 73 May 

Human Longevity San Diego Services, technologies and tools Multiple 70 March 

Melinta Therapeutics New England Phase III Infection 70 February 

C3 Jian Los Angeles/Orange County Phase II Dental 61 March 

Viamet Pharmaceuticals North Carolina Phase II Infection 60 October 

Precision Therapeutics Midwest Services, technologies and tools Multiple 60 November 

Kolltan Pharmaceuticals New England Phase I Oncology 60 March 

ProNAi Therapeutics Midwest Phase II Oncology 60 April 

Juno Therapeutics* Pacific Northwest Phase I Oncology 56 April 

* In April 2014, Juno Therapeutics added US$56 million to its 2013 Series A round. 


The largest sum raised was by Intarcia 

Therapeutics, a Boston-headquartered 

developer of a tiny subdermal pump that 

can regulate the delivery of exenatide for 

diabetes and obesity patients. 

It is also noteworthy that Juno Therapeutics’ 

IPO — the largest of 2014 — was fueled 

by two big venture rounds for a total of 

US$190 million during 2014. The company 

also raised US$120 million in December 

2013, which meant that it raised a total of 

US$310 million in less than 12 months. 

Meanwhile, 23% of US biotech VC rounds 

in 2014 were early-stage (defined as 

seed or first round). That’s exactly the 

same proportion as the previous 10-year 

average, but down from 27% in 2013. 


43

Financing 

US biotechnology IPOs, 2000–14 

Capital raised Number of deals 

5 70 

Capital raised in IPOs (US$b) 

4 

3 

2 

1 

60 

50 

40 

30 

20 

10 


0 0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 


The IPO bounce 

For the second straight year, a surging 

IPO market breathed new life into the 

US biotech financing landscape. New 

benchmarks were set in terms of both the 

number of public listings (63) and proceeds 

raised (US$4.9 billion), outstripping 

previous records set in 2000-01 at the 

height of the genomics bubble, when 52 

IPOs raised US$4.5 billion. 

Of course, the 2014 boom came on the 

heels of a very strong 2013 (itself the 

third-biggest IPO year in the industry’s 

history), meaning that the sector has 

experienced an unprecedented two-year 

surge in which 101 companies went public 

and raised a combined US$8.2 billion. 

To put that in perspective, roughly the 

same number of IPOs occurred in the eightyear 

period between 2005 and 2012. 

The 2014 biotech IPO ledger is filled 

with new benchmarks. Although the 

average deal size remained consistent 

with 2013 and the overall 15-year 

average, more than three-quarters (48) 

of the biotechs that went public in 2014 

brought in more than US$50 million in 

their initial offerings, while 17 cleared 

the US$100 million mark. The previous 

record of 16 was set back in 2000, while 

the third-highest total was 13 IPOs in 

2013. 2014 closed with the secondlargest 

US biotech IPO on record, when 

Juno Therapeutics raised more than 

US$300 million. (The US record holder 

remains Talecris Biotherapeutics’ 

US$950 million IPO in 2009.) Nearly 60% 

of new companies listed within or above 

their IPO ranges. 


Financing 

As usual, therapeutics companies 

dominated the scene: 92% of companies 

that went public in 2014 were focused on 

new therapies (up from 80% of the class of 

2013), one-quarter of those in oncology. 

It would be unreasonable to assume that 

the most fruitful biotech IPO window in 

history would stay wide open for much 

longer, and indeed pricing power of new 

issuers diminished in the fourth quarter 

of 2014. That said, while only 10 

companies went public in Q4, three were 

among the largest of the year: Juno 

Therapeutics, FibroGen and Bellicum 

Pharmaceuticals. And as 2015 began, 

the IPO queue remained robust. 

The 2013-14 IPO window has been 

sustained by strong after-market 

performance. Of the 63 IPOs in the 

class of 2014, 40 (63%) had positive 

returns through 31 December 2014, 

16 were up more than 100%, and two 

earned returns of more than 335%: 

Radius Health (specializing in endocrine 

disorders) and Auspex Pharmaceuticals 

(focused on neurological disorders). 

The IPO class as a whole was up 27% 

through 31 December 2014 (and 

44% through 31 March 2015). Such 

returns have bolstered investor interest 

and confidence in the sector and 

expectations of a raft of companies 

aiming for IPO in the coming months. 

The anatomy of a US IPO window 



2.0 25 

1.6 20 

1.2 15 

0.8 10 

0.4 5 

0.0 0 

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 

2012 2013 2014 


US biotechnology IPO pricing by quarter, 2013–14 

2013 2014 

Below expected range Within or above expected range 

Q4 

40% 60% 

Q3 

54% 46% 

Q2 

38% 63% 

Q1 

73% 27% 

Q4 

50% 50% 

Q3 

85% 15% 

Q2 

58% 42% 


Q1 

33% 67% 

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 



45

Financing 

Top US IPOs, 2014 

Like Juno Therapeutics, nearly one-quarter of US biotech IPOs in 2014 were also focused on oncology, including three of the top five. 

New England is home to 17 of the IPO class of 2014. Thirteen newly public biotechs are based in the San Francisco Bay Area. 

Company 

Region 

Lead product 

clinical stage 

Therapeutic focus 

Gross 

raised 

(US$m) 

IPO pricing 

range 

Post-IPO 

performance (as of 

31 December 2014) 

Juno Therapeutics Pacific Northwest Phase II Oncology 305 Above 118% 

FibroGen San Francisco Bay Area Phase III Multiple 168 Within 52% 

Acucela Pacific Northwest Phase III Ophthalmic 163 Within -67% 

Bellicum Pharmaceuticals Texas Phase II Oncology 161 Above 21% 

Kite Pharma Los Angeles/Orange County Phase II Oncology 147 Above 239% 

Versartis San Francisco Bay Area Phase II Metabolic/endocrinology 145 Within 7% 

Ultragenyx Pharmaceutical San Francisco Bay Area Phase II Multiple 139 Above 109% 

Dermira San Francisco Bay Area Phase II Dermatology 125 Within 13% 

ZS Pharma Texas Phase III Multiple 123 Above 131% 

Avalanche Biotechnologies San Francisco Bay Area Phase II Ophthalmic 117 Within 218% 

Akebia Therapeutics Midwest Phase II Hematology/renal 115 Within -32% 

Otonomy San Diego Phase III Ear, nose and throat 115 Within 108% 

Revance Therapeutics San Francisco Bay Area Phase III Aesthetics 110 Within 6% 

Zafgen New England Phase II Metabolic/endocrinology 110 Within 93% 

Tokai Pharmaceuticals New England Phase II Oncology 105 Within -2% 

Dicerna Pharmaceuticals New England Phase I Oncology 103 Above 10% 

Sage Therapeutics New England Phase II Neurology 103 Within 103% 

Auspex Pharmaceuticals San Diego Phase III Neurology 97 Within 337% 

Concert Pharmaceuticals New England Phase II Multiple 93 Within -5% 

Coherus Biosciences San Francisco Bay Area Phase III Multiple 92 Within 21% 



Financing 

Financing 

Europe 

European biotechnology financings, 2000–14 

Debt Follow-on and other IPOs Venture 

10 

8 


6 

4 

2 

0 

‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 


The European biotech sector racked up 

its strongest financing performance in 

the history of the industry and posted the 

second-strongest performance in each 

individual financing category. Overall, 

the sector raised US$9.2 billion — 53% 

more than in 2013, and a whopping 97% 

more than the previous 10-year average. 

IPOs raised US$1.9 billion. That is more 

than in the prior seven years combined, 

but well below the US$3.3 billion raised 

in 2000. Follow-on financing brought in 

US$3.1 billion, just shy of the US$3.2 billion 

raised in 2007. Debt financing generated 

US$2.2 billion, almost double the 2003-13 

average of US$1.2 billion but below the 

US$2.5 billion raised in 2013. And venture 

capital raised US$2 billion, just $30 million 

below the 2006 peak. 

It’s also noteworthy that more than 

US$1.3 billion of the total raised 

in Europe in 2014 came via two 

formerly US companies now based in 

Ireland: Jazz Pharmaceuticals, which 

raised US$1.1 billion in two debt 

offerings, and Alkermes, which raised 

US$250 million via an equity deal. 

As in the US, European company 

financing slowed in the second half of 

2014, primarily due to a drop in follow-on 

offerings in the third quarter. IPO activity 

came to an abrupt halt in November, with 

no further activity through year-end. But 

as 2015 began, a small cohort of European 

companies entered the IPO queue. 


47

Financing 

The investment bonanza 

Large and small European companies 

all benefited from the banner 2014 

investment bonanza. Led by the UK, 

European innovation capital soared to 

its highest levels ever — US$6.5 billion — 

surpassing the US$5.6 billion invested in 

2000. This uptick in innovation capital 

was driven by resurgent IPO and follow-on 

markets and increased venture capital 

commitments. Indeed, venture investment 

was responsible for 31% of the total. 

Commercial leaders also enjoyed the 

healthy funding environment by raising 

US$2.8 billion, the greatest yearly total 

since 2007. Innovation capital accounted 

for 70% of total financing in 2014, up 

from 58% in 2013. 

The standout story in 2014 European 

financing was the UK. While the UK has 

been a perennial leader, in 2014 it hit a 

seven-year high, raising US$2 billion in 

innovation capital (31% of the European 

total) and US$593 million in venture 

capital (29% of the total). The UK also led 

Europe in the number of funding rounds. 

Industry observers attributed some of 

this renewed investor confidence to 

government tax breaks on investment 

in R&D. EY’s annual report on the UK 

biotechnology sector pointed out that in 

2013 there were more than 460 biotech 

drugs in development in the UK, far more 

than in any other European country. 

Innovation capital in Europe, 2000–14 


Quarterly breakdown of European biotechnology financings, 2014 

(US$m) 

IPOs 

Follow-on and other 

Debt 

Venture 

Total 


10 

8 

6 

4 

2 

0 


‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 




Q1 Q2 Q3 Q4 Total 

$719 

(9) 

$1,349 

(46) 

$1,331 

(6) 

$314 

(40) 

$3,713 

(101) 

$214 

(6) 

$728 

(23) 

$80 

(6) 

$633 

(56) 

$1,654 

(91) 

$519 

(10) 

$170 

(17) 

$755 

(14) 

$487 

(41) 

$1,931 

(82) 

$405 

(6) 

$869 

(27) 

$82 

(9) 

$596 

(46) 

$1,952 

(88) 

Figures in parentheses are number of financings. Numbers may appear inconsistent because of rounding. 

$1,856 

(31) 

$3,116 

(113) 

$2,248 

(35) 

$2,030 

(183) 

$9,250 

(362) 



Financing 

Innovation capital raised by leading European countries, 2014 

Belgium Denmark France Germany Israel Netherlands Switzerland UK 

2.5 

2.0 

Innovation capital raised (US$b) 

1.5 

1.0 

0.5 

0.0 

0 100 200 300 400 500 

600 

700 

Size of bubbles shows relative number of financings per country. 


Venture capital raised (US$m) 

The return of European venture capital 

Total amount raised Average deal size 

2.5 12 

2.0 

10 

Total amount raised (US$b) 

1.5 

1.0 

0.5 

8 

6 

2 

4 

Average deal size (US$m) 

0.0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 


0 


49

Financing 

Top European venture financings, 2014 

Company Country Lead product clinical stage Status 

Amount 

(US$m) 

Month 

Adaptimmune UK Oncology Phase I 104 September 

Adapt Pharma Ireland Substance abuse Phase not specified 95 May 

Biocartis Switzerland Non-disease-specific Molecular diagnostics 86 September 

Cell Medica UK Infection Phase III 82 November 

Glycotope Germany Women’s health Phase III 73 March 

NovImmune Switzerland Autoimmune Phase II 66 February 

Ascendis Pharma Denmark Metabolic/endocrinology Phase II 60 December 

Cardiorentis Switzerland Cardiovascular Phase III 60 September 

Nucana BioMed UK Oncology Preclinical 57 April 

ProQR Therapeutics Netherlands Respiratory Phase not specified 56 April 

Enigma Diagnostics UK Respiratory Molecular diagnostics 50 October 

Wilson Therapeutics Sweden Metabolic/endocrinology Phase II 40 April 

Kymab UK Autoimmune Preclinical 40 May 

Nordic Nanovector Norway Oncology Phase I 40 June 

Anokion Switzerland Autoimmune Preclinical 36 May 


Buoyed by renewed confidence 

in European and US IPO markets, 

European venture capital investment 

in biotech surged in 2014 to levels not 

seen since 2006, with US$2 billion 

raised. The average deal size was 

US$11.1 million, the highest since 

2002. There were only 183 rounds in 

2014, fewer than the previous 10-year 

average of 218. 

The improved figures for European 

financing is good news. Larger 

investments give European companies 

more options for R&D, better 

dealmaking opportunities and better 

opportunities for market readiness than 

they have had in many years. 

But European companies remain at a 

disadvantage to their US counterparts. 

The median deal size for US companies 

in 2014 was US$10 million, while for 

European companies it was less than 

half that figure. 

The consequences of this disparity are 

evident. Since drug development costs are 

no lower in Europe than in the US, smaller 

deal sizes mean that European companies 

face a longer road to market. They are 

often forced to partner earlier than US 

companies, have less power to negotiate 

favorable deal terms and are less able to 

retain the rights to their products. 

One important difference between 

European and US venture investment 

was the relative share of early rounds. 

In Europe, 70% of venture rounds were 

early-stage, as opposed to 23% in the 

US. Early-stage rounds accounted for 

US$661 million in Europe in 2014 — 

the highest total since at least 2002. 

Nine of the top 15 European venture 

financings of 2014 were invested in UK 

(5) or Swiss (4) companies, a reflection of 

the relative maturity of the venture capital 

sector in those countries. In addition, 

the importance of Paris-based Euronext 

as an IPO destination, combined with 

factors such as the French government’s 

revamped R&D tax credit policies, should 

help create a more favorable ecosystem 

for biotech venture capital in France. 


Financing 

The largest venture investment in 

Europe in 2014 was the US$104 million 

first-round funding raised by UK-based 

Adaptimmune, which is developing a 

new range of drugs based on immune 

system cells. The oversubscribed round, in 

September, was one of the largest earlystage 

funding rounds of the last decade. 

There were two other first-round 

venture financings in the 2014 top 

10: Switzerland’s Novimmune, which 

focuses on antibody-based drugs to 

treat inflammatory, autoimmune and 

other disorders, and Netherlands-based 

ProQR Therapeutics, which is developing 

RNA-based therapeutics for the treatment 

of severe genetic disorders, with an initial 

focus on cystic fibrosis. 

Eyeing the IPOs 

At the start of 2014, many industry 

observers were wondering why the US 

enthusiasm for biotech IPOs had not 

crossed the Atlantic. Indeed, European 

markets seemed stuck in a rut. Venture 

funding had dried up after the credit crisis. 

Investors in European markets had been 

burned by a number of biotech failures in 

the late 1990s and early 2000s, leading 

many generalist funds to stop investing 

in the sector. Perhaps European biotech 

investors would never regain the passion 

they had displayed in 2000, when 

companies such as Serono, Actelion and 

Crucell completed IPOs. 

But things changed rapidly. The US 

biotech IPO boom of 2013 soon gave 

European investors a boost in confidence 

and IPOs started to appear in February — 

when Egalet, uniQure and 4D Pharma 

raised a total of US$177 million. Circassia 

followed in March, and the floodgates 

opened. Just four weeks after Circassia’s 

launch, nine more European companies 

had gone public, and by November 

another 18 had followed suit, for a total 

of 31 for the year. 

To put this into perspective, the 

US$1.9 billion raised in 2014 was as much 

as the amount raised between 2007 and 

2013 combined. The 2014 total was not 

enough to rival 2000’s US$3.3 billion, 

nor did the 2014 average valuation of 

US$60 million come close to 2000’s 

US$123 million. What’s more, only four of 

the class of 2014 raised US$100 million, 

against 11 in 2000. 

European biotechnology IPOs, 2000–14 


3.5 35 

3.0 30 


2.5 25 

2.0 20 

1.5 15 

1.0 10 


0.5 5 

0.0 0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 



51

Financing 

Top European IPOs, 2014 

Company 

Country 

Lead product 

clinical stage 

Therapeutic focus 

Gross 

raised 

(US$m) 

IPO pricing 

range 

Post-IPO 

performance (as of 

31 December 2014) 

Circassia Pharmaceuticals UK Phase III Autoimmune 333 Within -15% 

Forward Pharma Denmark Phase II Autoimmune 235 Within -1% 

Molecular Partners Switzerland Phase II Multiple 116 Below 3% 

ProQR Therapeutics Netherlands Preclinical Respiratory 112 Within 67% 

uniQure Netherlands Marketed Multiple 92 Above -13% 

MediWound Israel Marketed Dermatology 80 Within -52% 

Horizon Discovery Group UK NA Research and other equipment 66 NA 6% 

Auris Medical Switzerland Phase III Ear, nose and throat 61 Below -35% 

Egalet Denmark Phase III Neurology 58 Within -53% 

Innocoll Ireland Marketed Multiple 58 Below -34% 

Affimed Therapeutics Germany Phase II Oncology 56 Below -11% 

arGEN-X Netherlands Phase I Multiple 55 Within -18% 

Fermentalg France NA Industrial 54 Within -36% 

Genticel France Phase I Infection 53 Within -35% 

MacroCure Israel Phase III Dermatology 53 Below -27% 

GalMed Pharmaceuticals Israel Phase II Metabolic/endocrinology 44 Within -57% 

VBL Therapeutics Israel Phase II Multiple 40 Below -1% 

Abzena UK NA Research and other equipment 37 NA -5% 

Bio Blast Pharma Israel Phase III Genetic 35 Within -42% 

Genomic Vision France NA Molecular diagnostics 34 Within -31% 


A look at the top 15 European companies 

that went public in 2014 reveals a depth 

and breadth not seen since the IPO 

class of 2000. The top 15 companies in 

2014 range from several with products 

already on the market to one — ProQR 

Therapeutics — still at a preclinical stage. 

Before 2014, no European IPO had raised 

more than US$100 millon since Denmark’s 

Symphogen went public in 2011. In 

2014, four IPOs exceeded this threshold: 

Circassia, Forward Pharma, ProQR and 

Molecular Partners. 

At US$333 million, Circassia’s IPO was 

the largest ever for the UK biotech sector. 

The historic volume of the IPO was partly 

driven by Circassia’s focus on developing 

allergy vaccines. Even even before its 

March listing, the company had raised 

several of the UK’s largest-ever rounds of 

biotech venture capital. 

Predicting the duration of an IPO window 

is an inherently tricky proposition. Europe 

had no IPOs after mid-November. And 

while 73% of the European class of 2014 

priced their IPOs within or above their 

anticipated ranges, that figure slumped 

to 50% in the second half of the year. 

Nonetheless, a degree of optimism has 

returned to the European biotech IPO 

market. This was evident in the first 

quarter of 2015 as seven IPOs raised a 

total of US$339 million. 

Of the 31 European companies that 

went public in 2014, 25 (81%) were 

focused on therapeutics; of those, 16% 

were in Phase III, 12% had licensed their 


Financing 

products and another 12% had products 

on the market. British, French and Israeli 

companies each notched five IPOs. 

When it comes to IPOs, European 

companies have faced some tough choices 

in recent years. Should they list their 

shares in their home markets, or try their 

luck with US investors in the white-hot 

US market? 

In 2014, the latter option looked like the 

best one. Except for Circassia, which 

was the first UK biotech to launch on 

the London Stock Exchange since 2006, 

eight of the top 10 European IPOs 

occurred on the NASDAQ. Of the top 

20 European biotech IPOs, those which 

listed on NASDAQ raised US$58 million, 

almost double the amount raised by the 

companies that listed on Euronext in Paris 

and the amount raised on AIM in London. 

Markets formerly open to biotech IPOs, 

such as Zürich and Frankfurt, now display 

almost no interest in the sector. Of the 

two German IPOs in 2014, one listed on 

NASDAQ and the other on Euronext. 

Still, seven companies did list on the 

Euronext exchange in 2014. Strong 

performance by Euronext-listed 

companies may add fuel to ongoing 

discussions at the European Commission 

aimed at creating a united European 

capital market. 

One of the key differences between 

companies that tested the IPO market in 

Europe in 2014 and their US counterparts 

is their relative post-IPO performances. 

While 63% of US companies finished 

the year trading up relative to their 

IPO price, only seven, or 23%, of the 

European 2014 IPO class could boast a 

similar result, a potential dent to future 

investor confidence in the sector. 

Post-IPO performance indicators are 

a sobering reminder of the challenges 

facing European companies, regardless 

of where they list. As our chart shows, 

European firms that listed on the NASDAQ 

performed much worse than their US 

counterparts. European firms’ 2014 

post-IPO performance was negative 

overall. The paradox for European firms 

is that while they are able to raise more 

funds up front by chasing a NASDAQ 

listing than they would if they listed 

Share price relative to offer price was calculated as of 31 December 2014. Median data are shown in yellow bars. 

Source: EY, Capital IQ and finance.yahoo.com. 

in Europe, they find themselves at a 

disadvantage, less able to attract the 

coverage and investor interest that 

homegrown US companies attract. 

The standout performer among European 

IPOs in 2014 was Manchester-based 

4D Pharma, whose price more than 

doubled after its February debut on the 

London AIM. Dutch company ProQR 

Therapeutics (focused on genetic 

disorders) and Sweden’s Gabather 

(developer of CNS drugs) both delivered 

returns of more than 60%, and 

Denmark-based Saniona also pleased 

investors after its debut on the Swedish 

AktieTorget exchange. 

Performance distribution of 2014 NASDAQ biotech IPOs (in %) 

Share price relative to offer price 

400 

360 

320 

280 

240 

200 

160 

120 

80 

40 

0 

-40 

-80 

US companies (62) European companies (12) 

Parameters 

Number of 

companies 

US 

biotech 

Europe 

biotech 

62 12 

Highest 386% 67% 

75 percentile 100% -9% 

Median 11% -31% 

25 percentile -10% -45% 

Lowest -75% -57% 


53

Deals Financing | Financing the future 


Deals 


Deals 

Changing dynamics 


2014 was a breakout year for both M&A and licensing, as biopharma companies used transactions to 

jump-start or shift business strategies in a sector where the dynamics are rapidly changing. Indeed, M&A 

activity in the biotechnology sector reached an eight-year high in both deal number and value (excluding 

megadeals, valued at US$5 billion or more). In all, the industry notched 68 biotechnology deals totaling 

US$49 billion, a 46% increase over 2013. 

Acquirers weren’t just paying more; 

they were also paying more up front. 

In contrast to 2013, when 45% of 

the deals were structured to include 

future earn-outs, only 33% of the M&A 

transactions signed in 2014 used this 

risk-hedging stratagem. 

On the alliance front, biotech companies 

brokered 152 licensing deals worth 

US$46.8 billion. A review of the past eight 

years of licensing activity shows 2014 was 

the most lucrative for biotechs looking to 

sign alliances, as the average up-front deal 

value increased by 78% to US$41 million 

from US$23 million in 2013. 

This transactional uptick is partly explained 

by the return of the public markets and 

rising valuations, which have given biotechs 

more financing options, and thus, more 

bargaining power in deal negotiations. 

There’s also more competition as big 

pharmas compete with specialty pharma 

companies and other biotechs for strategic 

assets to bolster pipelines. As a result of 

these forces, biotechs found themselves 

in the transactional driver’s seat, and 

interested acquirers had little choice but 

to pay at, or near, full value to win rights to 

products of interest. 

Pharma returns to 

M&A dealmaking 

A look at the numbers shows pharma 

buyers were primarily responsible for the 

year’s heightened deal activity. As we have 

written in the last several issues of Beyond 

borders, the pharma subsector continues 

to face a number of headwinds, including 

pricing pressures, R&D productivity 

challenges and a slowdown in high-growth 

emerging markets. These challenges have 

resulted in the group’s subpar revenue 

relative to the industry overall. In 2014, 

the need to accelerate growth helped 

explain pharma’s renewed emphasis on 

dealmaking, despite the fact that target 

valuations have reached record highs. 

Indeed, M&A activity between pharmas and 

either US or European biotechs reached a 

level in 2014 not seen since 2009, when 

Roche bought out the remaining shares 

of Genentech that it didn’t already own. 

Excluding megadeals, pharmas spent more 

in 2014 to acquire biotechs than they 

had annually in the previous nine years. 

Deal numbers also rebounded: pharmas 

acquired 27 biotechs in 2014, the highest 

deal volume since 2008. 

An analysis of the year’s deals shows 

that two different strategic priorities 

drove much of pharma’s M&A: first, 

access to products that could fill revenue 

gaps; second, acquisitions that enabled 

companies to achieve scale in businesses 

or therapeutic areas where they believe 

they are, or can be, market leaders. Indeed, 

in 2014, certain pharmas began to distance 

themselves from the diversification 

strategies they employed to smooth out 

earnings at the height of the patent cliff. 

This emphasis on focus fueled not just 

a wave of pharma-biotech M&A, but a 

number of intra-pharma transactions. 

Thus, certain companies divested 

“adjacent businesses” (e.g., animal health 

or consumer health) and/or therapeutic 

businesses that had been deprioritized, 

while others took the opportunity to 

acquire available assets. By focusing on 

fewer areas and achieving real depth, 

pharmas hope not only to rationalize their 

R&D and commercial efforts. They also 

aim to build franchises that offer an array 

of solutions across the care paradigm, 

potentially making their products more 

compelling to stringent health care buyers. 


55

Deals 

US and European M&As, 2007–14 

Potential value (US$b) 

Pharma-biotech 

70 70 

60 

50 

40 

30 

20 

10 

Chart excludes transactions where deal terms were not publicly disclosed. 


Biotech buyers? 

Biotech-biotech 

Biotech-biotech megadeals (>US$5b) 

Biotech buyers, meantime, signed 41 

transactions in 2014, making them a 

presence at the deal table. However, in 

terms of the number of deals, that is the 

second-lowest volume of biotech-biotech 

transactions since 2007. (The lowest was in 

2013, when there were 33 deals.) 

Biotech-biotech deal values also retreated, 

with the total dollars spent in 2014 

dipping 51% year over year to one of the 

lowest levels in the past decade. Smaller 

biotechs, as opposed to the commercial 

leaders, accounted for most of the year’s 

Pharma-biotech megadeals (>US$5b) 


0 0 

2007 2008 2009 2010 2011 2012 2013 2014 

60 

50 

40 

30 

20 

M&A activity. Like their pharma brethren, 

the data suggest the biotechs that were 

buying were most interested in acquiring 

products or platforms in their core 

therapeutic areas. 

That the biotech commercial leaders 

eschewed M&A in 2014 isn’t too 

surprising. As we noted in Firepower 

fireworks, EY’s 2015 Firepower Index 

and Growth Gap Report, strong product 

launches in recent years mean the bigger 

biotechs have not felt pressured to do 

deals to fill revenue growth gaps. 

That could change in 2015 and 2016 as big 

biotechs face their own headwinds. As more 

10 


companies enter faster-growing therapeutic 

battlegrounds such as oncology or 

hepatitis C, the increasing competition 

and pushback from payers threaten to 

decelerate big biotechs’ growth rates. 

This is particularly true for biologics 

developers, which, for the first time, face 

the prospect of biosimilar competition in 

the US marketplace. 

In some ways, big biotechs are also 

victims of their own success. Thanks 

to robust pipelines, they have posted 

revenue growth numbers that are difficult, 

if not impossible, to sustain without 

resorting to inorganic means. 

The good news for the biotechnology 

commercial leaders is that they have an 

arsenal of “firepower” at their disposal 

when they are ready to consider strategic 

M&A. EY defines firepower as an 

acquirer’s capacity for deals based on its 

market valuation, its debt capacity and the 

strength of its balance sheet. According to 

the EY Firepower Index, which measures, 

in aggregate, the firepower of various 

biopharma buyers, big biotechs’ firepower 

grew 30% from 2013 to 2014. Compare 

that increase to the more modest uptick 

associated with big pharmas, which as 

a class, posted only a 13% increase in 

available firepower in the same year. 

In an era when big biotechs, big pharmas 

and specialty pharmas are often 

competing for the same assets, what 

matters most is relative firepower. As a 

class, big pharmas still command more 

firepower than their rivals; however, EY’s 

analysis shows big biotechs and specialty 

pharmas continue to make gains that, in 


Deals 

Big pharma continues to command the most firepower, even as its 

relative share of “total firepower” declines to an eight‐year low 

Big pharma 

100% 

Specialty pharma 

Big biotech 

from a high of 12 to just three. After a 

three-year slump, 2014 marked another 

bonanza year for the billion dollar club, 

matching 2010 in terms of the number of 

deals that met this threshold. 

Share of total firepower 

80% 

60% 

40% 

20% 

In 2014, pharmas weren’t just the most 

active acquirers; they were also the 

most active in-licensers. The potential 

deal values for pharma-biotech alliances 

grew 59% from 2013 to 2014. This is in 

contrast to 2013, when a slate of strong 

biotech buyers drove the year-over-year 

growth in alliance values. Indeed, while 

biotech in-licensers committed to spend 

US$10.5 billion on alliances in 2014, 

virtually the same amount as for 2013, 

average total deal values for dropped 13%. 

0% 

2007 2008 2009 2010 2011 2012 2013 2014 

Data analyzed through 14 December 2014. “Total firepower” refers to the combined firepower of big pharma, 

specialty pharma and big biotech. 


the future, could make it more challenging 

for big pharmas that are relying on M&A 

for new product growth. These shifts 

in firepower are likely to influence deal 

trends in 2015 and beyond, including 

pushing certain acquirers into licensing 

situations as they look for more affordable 

strategies to access products. 

A strong year for 

biotech alliances 

The 2014 alliance data also show it was 

clearly a biotechnology seller’s market. 

The number of strategic alliances 

rebounded sharply from 2013 to 2014, 

reaching a level not seen since 2010. 

Although alliance volumes remained 

roughly 20% below the 2007 peak, 

average potential deal values in 2014 

reached their highest level since the 

financial crisis. Indeed, biotechs that 

licensed products in 2014 garnered 

potential deals worth an average of 

US$279 million; that is a 17% increase 

over the previous highest average 

deal size of US$238 million, which was 

achieved in 2008. 

Another metric that demonstrated 2014’s 

warmer licensing climate was the number 

of alliances with potential deal values 

greater than US$1 billion. From 2010 

to 2011, the number of alliances worth 

US$1 billion or more dropped sharply 

Meanwhile, pharma in-licensers nearly 

doubled the amount they committed to 

alliances to US$36.3 billion. The average 

total value for a pharma-biotech alliance 

increased 21% from 2013 to 2014 to 

US$367 million, while the median total 

deal value for pharma-biotech alliances 

increased from US$143 million to 


These soaring amounts shouldn’t be 

surprising given the macro forces at work 

in the life sciences. The robust IPO and 

follow-on markets of 2014 meant biotechs 

were less dependent on transactions to 

finance themselves and could therefore 

focus on deals that furthered their strategic 

objectives. Moreover, as competition 

increased, biotechs found themselves 

in the welcome position of garnering 

top dollar for their assets, especially for 

late-stage, de-risked products. 


57

Deals 

Capturing more 

value up front 

As noted, in 2014 biotech licensers 

captured more value at a deal’s signing. 

From 2005 to 2007, biotech licensers 

realized, on average, 11% of an alliance’s 

value in the up-front payment. For the 

next six years, that value slowly declined, 

averaging 10% from 2008 to 2010 and 

just 8% for the 2011-13 time span. 

In 2014, biotech licensers saw 

year-on-year total up-front payments for 

alliances soar 96% (from US$2.6 billion 

to US$5.1 billion). As a percentage of total 

deal value, up-front payments reached 

11%, a level not seen since before the 

financial crisis. 

Both pharma and biotech in-licensers 

contributed to the gains. Biotech 

in-licensers spent twice as much on 

up-front payments in 2014 as they did 

in 2013; pharma in-licensers, meantime, 

spent 88% more on up-front payments 

(US$3.4 billion) in the same time period. 

US and European strategic alliances based on biobucks, 2007–14 



50 200 

40 

30 

20 


10 40 

0 0 

2007 2008 2009 2010 2011 2012 2013 2014 

Chart shows potential value, including up-front and milestone payments, for 

alliances where deal terms are publicly disclosed. 

Source: EY, Medtrack and company news. 


US and European strategic alliances based on up‐front payments, 2007–14 



Up-fronts/biobucks 

6 14% 

160 

120 

80 


Indeed, in 2014, both biotech and pharma 

buyers paid more up front to access 

key technologies and products than at 

any other time since the financial crisis. 

Year over year, big pharma up-front 

fees increased, on average, 49% to 

US$53 million, while biotech up-front 

payments increased 44% to US$39 million. 

The uptick is even more striking when the 

year’s figures are compared to the averages 

associated with the prior three-year period. 

Pharma up-front payments spiked 85% in 

2014 compared to 2011-13, while biotech 

up-front payments climbed 103%. 

Up-front value (US$b) 

12% 

5 

10% 

4 

8% 

3 

6% 

2 

4% 

1 

2% 

0 0% 

2007 2008 2009 2010 2011 2012 2013 2014 


Up-fronts as a share of biobucks 


Deals 

Notable biotech 

transactions 

A historic analysis of deal premiums paid 

for each of the top 10 acquisitions for the 

past six years shows the difference a year 

can make. In 2009, acquirers of the top 10 

biotechs paid bid premiums that averaged 

63%. Those average bid premiums 

declined over the next four years, reaching 

a nadir of 36% in 2013. In 2014, as 

biotechs’ options improved, bid premiums 

increased nine percentage points to 45%. 

Consistent with biotech’s stronger position 

at the bargaining table, only six of the 

largest deals of 2014 included contingent 

value rights (CVR). When pharma or 

biotechs felt compelled to acquire, the 

strategic priority was great enough that 

companies were willing to pay large sums 

up front without hedging their bets via 

contingency payments. 

In contrast to 2013, big pharmas in 

2014 were much more visible at the 

acquisition table, signing six of the top 15 

deals, including the year’s three biggest 

money-getters. Biotechs, meanwhile, were 

buyers in just two of the year’s top deals. 

Merck & Co. and Roche were the year’s 

top acquirers, spending, respectively, 

US$13.4 billion and US$10 billion on 

biotechs. Both pharmas signed megadeals 

during the year: Merck purchased Cubist 

Pharmaceuticals in a transaction worth 

US$8.4 billion in cash and another 

US$1.1 billion in assumed debt; Roche, 

meantime, spent US$8.3 billion to acquire 

InterMune and its lead drug pirfenidone, 

a potential blockbuster for idiopathic 

pulmonary fibrosis. 

Bid premiums for top 10 M&As, 2009–14 

Percentage 

Bid premium average (%) Bid premium median (%) 

70% 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

2009 2010 2011 2012 2013 2014 

Chart excludes transactions where bid premium was not publicly disclosed. 

Chart includes biotech deals only. 


Merck also purchased hepatitis C drug 

developer Idenix in 2014. The deal doublet 

exemplifies big pharma’s belief in the 

strategic importance of building marketleading 

commercial franchises. Having 

divested its consumer health business 

to Bayer HealthCare in October 2014, 

Merck used the proceeds to strengthen 

its pipeline of anti-infectives. Via Cubist, 

it has gained a suite of acute care hospital 

products that complement its existing 

portfolio of antibiotics. The Idenix 

transaction, meantime, has given the New 

Jersey-based pharma access to promising 

early-stage drug candidates in a lucrative 

therapeutic area. 

Roche’s acquisition of Seragon was also 

noteworthy. For starters, it wasn’t Roche, 

but its subsidiary Genentech, which 

brokered the deal. Historically, Genentech 

has not been an aggressive acquirer, 

preferring to tap its highly productive 

internal R&D group for future products. 

The up-front cash associated with the deal 

also made it difficult to ignore. Genentech 

shelled out US$725 million up front for a 

Phase I asset and a back-up compound, and 

agreed to another US$1 billion in earn-outs. 

That Genentech was willing to pay so 

much for such early-stage compounds 

highlights both the scarcity of high-quality 

oncology assets and the belief that 

commercial success requires a “solution 

mentality” whereby companies develop 

therapeutic combinations to treat the full 

spectrum of a disease. In this instance, 

the Seragon acquisition gives Genentech 

access to two next-generation selective 

estrogen receptor degraders (SERDs) that 

could be combined with other molecules 

in the Roche/Genentech pipeline to treat 

estrogen-driven cancers. 


59

Deals 

Selected M&As, 2014 

Acquiring company Country Acquired company Country 

Total potential 

value (US$m) 

CVRs/milestones 

(US$m) 

Merck & Co. US Cubist Pharmaceuticals US 9,500 — 

Roche Switzerland InterMune US 8,300 — 

Merck & Co. US Idenix Pharmaceuticals US 3,850 — 

Otsuka Pharmaceutical Japan Avanir Pharmaceuticals US 3,500 — 

Meda Sweden Rottapharm Italy 3,093 — 

Forest Laboratories US Aptalis Pharma Canada 2,900 — 

Endo International Ireland Auxilium Pharmaceuticals US 2,600 — 

Johnson & Johnson US Alios BioPharma US 1,750 — 

Roche/Genentech US Seragon Pharmaceuticals US 1,725 1,000 

Baxter International US Chatham Therapeutics US 1,410 1,340 

Mallinckrodt US Cadence Pharmaceuticals US 1,400 — 

AMAG Pharmaceuticals US Lumara Health US 1,025 350 

Baxter International US AesRx US 843 828 

BioMarin Pharmaceutical US Prosensa Netherlands 840 160 

Teva Pharmaceuticals Israel Labrys Biologics US 825 625 

Bristol-Myers Squibb US iPierian US 725 550 

“Total potential value” includes up-front, milestone and other payments from publicly available sources. 

Source: EY, Capital IQ, Medtrack and company news. 

Of the biotech-biotech deals, the 

most notable were Meda’s acquisition 

of Rottapharm and BioMarin 

Pharmaceutical’s acquisition of Prosensa. 

Not only was Meda’s acquisition of 

Rottapharm the largest European 

biotech acquisition, it was also indicative 

of 2014’s “eat or be eaten” dynamic, 

and one means Meda used to stave off 

its interested acquirers. In many ways, 

BioMarin’s Prosensa purchase represents 

a calculated risk for the California-based 

biotech. BioMarin announced the deal 

following news that Prosensa’s latestage 

treatment for Duchenne muscular 

dystrophy had failed to show a meaningful 

benefit in clinical trials. 

In 2014, biotechs with differentiated, 

late-stage assets or novel platforms had 

the luxury of negotiation from a position 

of strength. 


Deals 

Notable biotech alliances 

In 2014, 13 alliance transactions cleared 

the US$100 million up-front threshold, 

a marked uptick from 2013 when only 

seven deals met this bar. In terms of total 

biobucks, 12 alliances garnered potential 

deal values of at least US$1 billion versus 

five the prior year. 

Access to promising new technologies 

and the potential for multi-target 

collaborations drove some of the biggest 

up-front payments. As was true in 2013, 

ModeRNA Therapeutics (messenger RNA 

therapeutics) and FORMA Therapeutics 

(drug discovery) were among the top 15 

alliance getters of 2014. 

Alnylam Pharmaceuticals also signed a 

noteworthy deal with Sanofi’s Genzyme 

subsidiary for access to the biotech’s 

rare disease treatments. As part of the 

deal, Sanofi took a 12% equity stake in 

Alnylam and retains an option to buy 

as much as 30% of the biotech at some 

point in the future. The US$700 million 

down payment provides Alnylam with 

considerable financial optionality as it 

continues to develop its experimental 

treatment for transthyretin-familial 

amyloid polyneuropathy. 

With pharma buyers looking for 

near-term revenues, it’s hardly surprising 

that in 2014 late-stage products also 

garnered rich up-fronts. Celgene, 

which continued its aggressive alliance 

strategy, sought to deepen its pipeline 

of inflammation assets, acquiring rights 

to the first-in-class Phase III Crohn’s 

disease therapy from Nogra Pharma 

Alliances with big up‐front payments, 2014 

Company Country Partner Country 

Up-front 

payments 

(US$m) 

Celgene US Nogra Pharma Ireland 710 

Sanofi/Genzyme US Alnylam Pharmaceuticals US 700 

Pfizer US OPKO Health US 295 

AbbVie US Infinity Pharmaceuticals US 275 

Celgene US Forma Therapeutics US 225 

Novartis Switzerland Ophthotech US 200 

Servier France Intarcia Therapeutics US 171 

Sanofi France MannKind US 150 

Roche/Genentech US NewLink Genetics US 150 

Alexion Pharmaceuticals US ModeRNA Therapeutics US 125 

Johnson & Johnson US MacroGenics US 125 

Daiichi Sankyo Japan Charleston Laboratories US 100 

Baxter International US Merrimack Pharmaceuticals US 100 

Celgene US Sutro Biopharma US 95 

Pfizer US Cellectis France 80 


with the year’s largest up-front payment. 

OPKO Health, Infinity Pharmaceuticals, 

Ophthotech and Intarcia Therapeutics 

also signed rich deals for late-stage 

assets in the orphan disease, oncology, 

ophthalmology and diabetes arenas. 

Which companies were the most 

prominent in-licensers of 2014? As 

a group, Japanese pharmas were 

noticeable, participating in three of the 

year’s largest alliances based on biobucks. 

Of the individual pharmas, Johnson & 

Johnson, Takeda Pharmaceuticals and 

Roche were the most active individual 

players, brokering alliances with publicly 

disclosed potential deal values totaling 

US$4.5 billion, US$2.2 billion and 

US$2.0 billion, respectively. For the 

second year in a row, Celgene was 2014’s 

top biotech in-licenser with five publicly 

disclosed deals worth US$4.5 billion. 


61

Deals 

Big biobucks alliances, 2014 

Company Country Partner Country 

Total potential 

value (US$m) 

Up-front 

payments (US$m) 

Dainippon Sumitomo Pharma Japan Edison Pharmaceuticals US 4,295 60 

Pfizer US Cellectis France 2,855 80 

Celgene US Nogra Pharma Ireland 2,575 710 

Merck & Co. US Ablynx Belgium 2,297 27 

Takeda Pharmaceutical Japan MacroGenics US 1,600 ND 

Viking Therapeutics US Ligand Pharmaceuticals US 1,538 ND 

Bristol-Myers Squibb US CytomX Therapeutics US 1,242 50 

Astellas Pharma Japan Proteostasis Therapeutics US 1,200 ND 

Celgene US Sutro Biopharma US 1,185 95 

Roche US NewLink Genetics US 1,150 150 

Servier France Intarcia Therapeutics US 1,051 171 

Novartis Switzerland Ophthotech US 1,030 200 

Baxter International US Merrimack Pharmaceuticals US 970 100 

Johnson & Johnson US Geron US 935 35 

Sanofi France MannKind US 925 150 

“Total potential value” includes up-front, milestone and other payments from publicly available sources. 

“ND” refers to deals where up-front amounts were not publicly disclosed. 


Realizing value 

In 2013, the story was one of promise. 

A warming financing climate and 

greater competition for deals created 

a more positive dealmaking climate; 

for smaller biotechs and their backers, 

there was renewed hope that as a class, 

biotechs would recognize more value 

for their efforts. 

In 2014, that promise became reality. 

The same market forces at work in 

2013 strengthened in 2014, creating an 

unprecedented year for transactions. 

Biotechs with differentiated, late-stage 

assets or novel platforms had the luxury of 

negotiating from a position of strength, a 

welcome change from just a few years ago. 

While the shift is worth celebrating, 

some pressing issues could darken the 

optimistic skies of the life sciences sector. 

Ongoing questions about pricing and 

access to truly breakthrough innovations 

continue to dog the industry. Payers 

around the globe are offering tough words 

about the value of late-stage or newly 

launched pharmaceuticals. 

In this new value-oriented world, biotech 

management teams must remain vigilant, 

making sure capital allocation strategies 

are aligned with their operational 

performance goals. 


Deals 

Deals 

United States 

US M&As, 2007–14 

Pharma-biotech Biotech-biotech 

Biotech-biotech megadeals (>US$5b) 

75 

Pharma-biotech megadeals (>US$5b) 


60 

60 

50 


45 

30 

40 

30 

20 


15 

10 

0 

2007 2008 2009 2010 2011 2012 2013 2014 



0 

Excluding megadeals, 2014 was the 

strongest year since 2007 for biotech 

M&A in the United States. Including 

megadeals, potential deal values increased 

sharply over 2013 to US$42.9 billion. That 

is the third-highest annual deal total since 

2007. All in, there were 51 transactions 

involving US biotechs, a new eight-year 

high in terms of deal volumes. 

Both pharma and biotechs were active 

in-licensers of US biotech products in 

2014. In terms of total potential deal 

values, pharma-biotech alliances in 2014 

generated US$25.5 billion, the largest 

money total since 2007; US-focused 

biotech-biotech alliances, meanwhile, 

generated US$10.4 billion, equaling 

the dollar record set the year before. 

The total alliance value increased 73% 

year-over-year in 2014, as a result of 

pharma’s renewed interest in dealmaking. 

Although the number of alliances still 

lags the peak observed in 2006 (when 

the US biotech industry witnessed 

nearly 150 licensing deals), the 112 

transactions signed in 2014 represent 

a 16% year-over-year increase and the 

volume is consistent with deal volumes 


63

Deals 

seen over the last five years. More 

important, biotech partners are clearly 

in a stronger negotiating position than 

they were in years past. On average, 

US biotechs that licensed products 

in 2014 got commitments of nearly 

US$330 million, the highest dollar total 

since at least 2007. 

Up-front payments in 2014 skyrocketed 

to US$3.8 billion, increasing 111% 

year-over-year to the highest level since 

before 2007. Perhaps more important, 

biotechs in 2014 realized more up-front 

value from their licensing efforts (11.8%) 

than in recent memory. That is about a 

five percentage point improvement from 

2007, when buyers were willing to pay, 

on average, just 7% of a deal’s potential 

price tag at its signing. 

Pharma-biotech up-fronts reached 

US$3.0 billion in 2014, the highest level 

since 2006. Biotech-biotech up-fronts 

were a healthy US$774 million, 

the second highest since 2008’s 


US strategic alliances based on biobucks, 2007–14 



40 160 

35 

30 

25 

20 

15 

10 

5 



0 0 

2007 2008 2009 2010 2011 2012 2013 2014 

Chart shows potential value, including up-front and milestone payments, 

for alliances where deal terms are publicly disclosed. 


US strategic alliances based on up‐front payments, 2007–14 




140 

120 

100 

80 

60 

40 

20 


4.0 

12% 

In 2014, biotech 

companies realized 

more value from 

their licensing 

efforts than in 

recent memory. 


3.0 

2.0 

1.0 

0.0 0% 

2007 2008 2009 2010 2011 2012 2013 2014 


9% 

6% 

3% 



Deals 

Deals 

Europe 

European M&As, 2007–14 

Pharma-biotech Biotech-biotech Pharma-biotech megadeals (>US$5b) Number of deals 

25 30 

20 

24 


15 

10 

5 

18 

12 

6 


0 0 

2007 2008 2009 2010 2011 2012 2013 2014 



For European biotechs, 2014 was the 

second robust M&A year in a row as 

median deal sizes reached a healthy 

US$51 million. Deal volume remained 

strong in 2014; the number of transactions 

involving a European biotech (27) 

increased 22% from 2013. Europe hasn’t 

seen that many biotech M&As since 

2007, when 30 deals closed. Excluding 

megadeals, total deal proceeds for the 

year were the second highest observed 

since 2007. 

Similar to the US situation, pharmas were 

responsible for most of the acquisition 

activity, accounting for US$4.9 billion of 

the US$6.9 billion in acquisition dollars. 

As was also the case in 2013, when Shire 

purchased ViroPharma for US$4.2 billion, 

the 2014 annual deal total was heavily 

influenced by a single deal: Meda’s 

acquisition of Rottapharm. Other notable 

transactions were Roche’s takeout of 

Santaris Pharma, worth US$250 million 

up front and another US$200 million 

in earn-outs, and ProStrakan Group’s 

purchase of Archimedes Pharma for 


In concert with the rebound in 

European M&A, it was an equally strong 

year for European alliances, as the 

average potential deal value reached 

US$227 million. Indeed, the potential 

value associated with European biotech 

alliances in 2014 was the greatest since 

2007. Much of the year-over-year growth 

in deal values was driven by biotech 

licensing, which increased more than 

300% to a new high of US$4.6 billion. 


65

Deals 

Deal values for pharma-biotech alliances 

grew a more modest 26% from 2013 

to 2014; still, that represented the 

second-highest dollar total of the past 

eight years for such deal types. In addition, 

it was the pharmas that brokered some of 

the largest deals, including Pfizer’s alliance 

with Cellectis (potentially worth US$2.9 

billion) and Merck & Co.’s partnership 

with next-generation antibody developer 

Ablynx (potentially worth US$2.4 billion). 

European up-front payments totaled more 

than US$1.2 billion in 2014, representing 

just 8% of the total European alliance 

value. The up-front to biobucks ratio is 

a sign that European biotechs still don’t 

have as much bargaining power as their 

US counterparts. That is not surprising 

given that the capital markets in Europe 

have lagged behind those in the US. 

Indeed, such data are consistent with the 

continuing trend of EU companies choosing 

to tap the US public markets instead of 

exchanges closer to their home countries. 

As we note in the accompanying article, 

“The European biotech’s strategic decision: 

list in Europe or the US?” a certain cadre 

of European biotechs are trying to tap 

the more sophisticated investor base 

associated with the US market. 

The 2014 annual alliance numbers were 

heavily influenced by the Celgene/Nogra 

transaction. If this deal, which included a 

US$710 million up-front, is excluded from 

the annual total, then up-front payments 

to European biotechs actually declined 

below the level achieved in each of the last 

two years. Moreover, up-front payments 

as a percentage of the total alliance values 

declined to just 5%. 

European strategic alliances based on biobucks, 2007–14 



18 

15 

12 

9 

6 

3 



0 0 

2007 2008 2009 2010 2011 2012 2013 2014 

Chart shows potential value, including up-front and milestone payments, 

for alliances where deal terms are publicly disclosed. 


European strategic alliances based on up‐front payments, 2007–14 



1.5 15% 

1.2 

0.9 

0.6 

0.3 




0.0 0% 

2007 2008 2009 2010 2011 2012 2013 2014 

75 

60 

45 

30 

15 

12% 

9% 

6% 

3% 




Deals 

The biotechnology 

industry’s strong 

performance in 

2014 across so 

many different 

metrics is a reason 

to celebrate. 

Indeed, the view 

from the top is 

pretty good. 


67

Appendix 


Appendix 


Appendix 

Acknowledgments 

Project leadership 

Glen Giovannetti, EY Global Life Sciences 

Leader, provided the strategic vision 

for this report and brought his years of 

experience to the analysis of industry 

trends. He also brought a hands-on 

approach, editing articles and helping to 

compile and analyze data. 

Siegfried Bialojan, German Biotechnology 

Leader, and Jürg Zürcher, EMEIA 

Biotechnology Leader, provided guidance 

on the development of the European 

content. Siegfried also conducted the 

interview with Jörn Aldag. 

Ellen Licking and Gautam Jaggi, EY’s 

Life Sciences Lead Analysts, were 

the report’s lead authors and editors. 

Iain Scott contributed insights and helped 

draft the “Financing, 2014” article. 

As the project manager for Beyond 

borders, Jason Hillenbach had 

responsibility for the entire content 

and quality of this publication. He 

was also directly accountable for the 

primary data analysis and research 

throughout the report. 

Data analysis 

Lisa-Marie Schulte, Tanushree Jain, 

Eva-Maria Hilgarth, Richa Arun and 

Ashish Kumar conducted all of the 

research, collection and analysis of 

the report’s data. 

Additional analysis of the Canadian 

financing data were provided 

by Yann Lavallée, Lara Iob and 

Mario Piccinin. 

Kim Medland, Jason Hillenbach, 

Amit Nayak and Ellen Licking conducted 

fact-checking and quality review of the 

numbers presented in the publication. 

Editing assistance 

Russell Colton brought his incomparable 

skills as a copy editor and proofreader to 

this publication. His patience, hard work 

and attention to detail were unparalleled. 

Russ was assisted by Sue Brown. 

Design 

This publication would not look the way it 

does without the creativity of Mike Fine, 

who was the lead designer for this project. 

This is the first Beyond borders report in 

which he has been involved. 

PR and marketing 

Public relations and marketing efforts 

related to the report and its launch were 

led by Katie Costello, Peter Kelley 

and Sue Lavin Jones, with the help of 

Greg Kelley from our external PR firm, 

Feinstein Kean Healthcare. 


69

Appendix 

Data exhibit index 

Biotechnology at a glance across the four established clusters, 2014 ...............................5 

FDA product approvals, 1996–2014 .............................................................................. 6 

Since 2007, there has been a dramatic increase in the number 

of US pre-commercial companies with market cap >US$1b ........................................... 7 

Growth in established biotechnology centers, 2013–14 .................................................15 

EY Survival Index, 2013–14 .........................................................................................16 

Revenues generated by US and European biotechnology 

commercial leaders fuel investor sentiment ..............................................................17 

Top 10 changes in US market capitalizations, 2009–14 .................................................18 

Top 10 changes in European market capitalizations, 2009–14 .......................................18 

US biotechnology at a glance, 2013–14 ........................................................................20 

US pre-commercial companies with market cap >US$1b ................................................21 

US commercial leaders, 2010–14 .................................................................................23 

US commercial leaders and other companies, 2013–14 .................................................24 

Selected US public company financial highlights by geographic area, 2014 .....................25 

US market capitalization relative to leading indices ........................................................26 

US market capitalization by company size .....................................................................26 

European market capitalization relative to leading indices ..............................................27 

European market capitalization by company size ...........................................................27 

European biotechnology at a glance, 2013–14 ..............................................................28 

EU commercial leaders, 2010–14 .................................................................................30 

European commercial leaders and other companies, 2013–14 .......................................30 

Australian biotechnology at a glance, 2013–14 .............................................................31 

Canadian biotechnology at a glance, 2013–14 ..............................................................32 

Capital raised in the US and Europe, 2000–14 ...............................................................34 

Innovation capital in the US and Europe, 2000–14 .........................................................35 

US and European early-stage venture investment, 2000–14 ..........................................36 

US and European venture investment in early stage private companies holds steady .......37 

US and European biotechnology IPO pricing, 2010–14 ..................................................38 

US biotechnology financings, 2000–14 .........................................................................39 

Quarterly breakdown of US biotechnology financings, 2014 ..........................................40 

Innovation capital in the US, 2000–14 ..........................................................................40 


Appendix 

Innovation capital raised by leading US regions, 2014 ....................................................41 

US biopharmaceutical venture capital rebounds to its 

highest levels since the financial crisis .......................................................................42 

Top US venture financings, 2014 ..................................................................................43 

US biotechnology IPOs, 2000–14 .................................................................................44 

The anatomy of a US IPO window .................................................................................45 

US biotechnology IPO pricing by quarter, 2013–14 ........................................................45 

Top US IPOs, 2014 ......................................................................................................46 

European biotechnology financings, 2000–14 ...............................................................47 

Innovation capital in Europe, 2000–14 ..........................................................................48 

Quarterly breakdown of European biotechnology financings, 2014 ................................48 

Innovation capital raised by leading European countries, 2014 .......................................49 

The return of European venture capital .........................................................................49 

Top European venture financings, 2014 ........................................................................50 

European biotechnology IPOs, 2000–14 .......................................................................51 

Top European IPOs, 2014 ............................................................................................52 

Performance distribution of 2014 NASDAQ biotech IPOs (in %) ......................................53 

US and European M&As, 2007–14 ................................................................................56 

Big pharma continues to command the most firepower, even as its 

relative share of “total firepower” declines to an eight-year low ..................................57 

US and European strategic alliances based on biobucks, 2007–14 ..................................58 

US and European strategic alliances based on up-front payments, 2007–14 ...................58 

Bid premiums for top 10 M&As, 2009–14 .....................................................................59 

Selected M&As, 2014 ..................................................................................................60 

Alliances with big up-front payments, 2014 ..................................................................61 

Big biobucks alliances, 2014 ........................................................................................62 

US M&As, 2007–14 .....................................................................................................63 

US strategic alliances based on biobucks, 2007–14 .......................................................64 

US strategic alliances based on up-front payments, 2007–14 .........................................64 

European M&As, 2007–14 ...........................................................................................65 

European strategic alliances based on biobucks, 2007–14 .............................................66 

European strategic alliances based on up-front payments, 2007–14 ...............................66 


71

Appendix 

Global biotechnology contacts 

Global Life Sciences Leader Glen Giovannetti glen.giovannetti@ey.com +1 617 374 6218 

Global Life Sciences Assurance Leader Scott Bruns scott.bruns@ey.com +1 317 681 7229 

Global Life Sciences Advisory Leader Kim Ramko kim.ramko@ey.com +1 615 252 8249 

Global Life Sciences Tax Leader Mitch Cohen mitchell.cohen@ey.com +1 203 674 3244 

Global Life Sciences Transaction Advisory Services Leader Jeff Greene jeffrey.greene@ey.com +1 212 773 6500 

Australia Brisbane Winna Brown winna.brown@au.ey.com +61 7 3011 3343 

Melbourne Denise Brotherton denise.brotherton@au.ey.com +61 3 9288 8758 

Sydney Gamini Martinus gamini.martinus@au.ey.com +61 2 9248 4702 

Austria Vienna Erich Lehner erich.lehner@at.ey.com +43 1 21170 1152 

Belgium Brussels Lucien De Busscher lucien.de.busscher@be.ey.com +32 2 774 6441 

Brazil São Paulo Frank de Meijer frank-de.meijer@br.ey.com +55 11 2573 3383 

Canada Montréal Sylvain Boucher sylvain.boucher@ca.ey.com +1 514 874 4393 

Lara Iob lara.iob@ca.ey.com +1 514 879 6514 

Toronto Mario Piccinin mario.piccinin@ca.ey.com +1 416 932 6231 

Vancouver Nicole Poirier nicole.poirier@ca.ey.com +1 604 891 8342 

Czech Republic Prague Petr Knap petr.knap@cz.ey.com +420 225 335 582 

Denmark Copenhagen Christian Johansen christian-s.johansen@dk.ey.com +45 5158 2548 

Finland Helsinki Sakari Helminen sakari.helminen@fi.ey.com +358 405 454 683 

France Lyon Philippe Grand philippe.grand@fr.ey.com +33 4 78 17 57 32 

Paris Virginie Lefebvre-Dutilleul virginie.lefebvre-dutilleul@ey-avocats.com +33 1 55 61 10 62 

Franck Sebag franck.sebag@fr.ey.com +33 1 46 93 73 74 

Germany Düsseldorf Gerd Stürz gerd.w.stuerz@de.ey.com +49 211 9352 18622 

Mannheim Siegfried Bialojan siegfried.bialojan@de.ey.com +49 621 4208 11405 

Greater China Shanghai Titus Bongart titus.bongart@cn.ey.com +86 21 22282884 

Felix Fei felix.fei@cn.ey.com +86 21 22282586 

India Mumbai Hitesh Sharma hitesh.sharma@in.ey.com +91 22 6192 0950 

V. Krishnakumar krishnakumar.v@in.ey.com +91 22 6192 0950 

Ireland Dublin Aidan Meagher aidan.meagher@ie.ey.com +353 1221 1139 

Israel Tel Aviv Eyal Ben-Yaakov eyal.benyaakov@il.ey.com +972 3 623 2512 

Italy Milan Gabriele Vanoli gabriele.vanoli@it.ey.com +39 02 8066 9840 

Rome Alessandro Buccella alessandro.buccella@it.ey.com +39 06 67535630 

Antonio Irione antonio.irione@it.ey.com +39 06 6755715 

Japan Tokyo Hironao Yazaki yazaki-hrn@shinnihon.or.jp +81 3 3503 2165 

Yuji Anzai anzai-yj@shinnihon.or.jp +81 3 3503 1100 

Patrick Flochel flochel-ptrck@shinnihon.or.jp +41 58 286 4148 

Korea Seoul Jeungwook Lee jeung-wook.lee@kr.ey.com +82 2 3787 4301 

Netherlands Amsterdam Dick Hoogenberg dick.hoogenberg@nl.ey.com +31 88 40 71419 


Appendix 

New Zealand Auckland Jon Hooper jon.hooper@nz.ey.com +64 9 300 8124 

Norway Trondheim/Oslo Willy Eidissen willy.eidissen@no.ey.com +47 918 63 845 

Poland Warsaw Mariusz Witalis mariusz.witalis@pl.ey.com +48 225 577950 

Russia/CIS Moscow Dmitry Khalilov dmitry.khalilov@ru.ey.com +7 495 755 9757 

Singapore Singapore Sabine Dettwiler sabine.dettwiler@sg.ey.com +65 9028 5228 

Rick Fonte richard.fonte@sg.ey.com +65 6309 8105 

South Africa Johannesburg Warren Kinnear warren.kinnear@za.ey.com +27 11 772 3576 

Spain Barcelona Dr. Silvia Ondategui-Parra silvia.ondateguiparra@es.ey.com +34 93 366 3740 

Sweden Uppsala Staffan Folin staffan.folin@se.ey.com +46 8 5205 9359 

Switzerland Basel Jürg Zürcher juerg.zuercher@ch.ey.com +41 58 286 84 03 

United Kingdom Bristol Matt Ward mward@uk.ey.com +44 11 7981 2100 

Cambridge Cathy Taylor ctaylor@uk.ey.com +44 12 2355 7090 

Rachel Wilden rwilden@uk.ey.com +44 12 2355 7096 

Edinburgh Mark Harvey mharvey2@uk.ey.com +44 13 1777 2294 

Jonathan Lloyd-Hirst jlloydhirst@uk.ey.com +44 13 1777 2475 

London/Reading David MacMurchy dmacmurchy@uk.ey.com +44 20 7951 8947 

Ian Oliver ioliver@uk.ey.com +44 11 8928 1197 

United States Boston Michael Donovan michael.donovan1@ey.com +1 617 585 1957 

Chicago Jerry DeVault jerry.devault@ey.com +1 312 879 6518 

Houston Carole Faig carole.faig@ey.com +1 713 750 1535 

Indianapolis Andy Vrigian andy.vrigian@ey.com +1 317 681 7000 

Los Angeles Don Ferrera don.ferrera@ey.com +1 213 977 7684 

New York/New Jersey Tony Torrington anthony.torrington@ey.com +1 732 516 4681 

David De Marco dave.demarco@ey.com +1 732 516 4602 

Orange County Kim Letch kim.letch@ey.com +1 949 437 0244 

Mark Montoya mark.montoya@ey.com +1 949 437 0388 

Philadelphia Steve Simpson stephen.simpson@ey.com +1 215 448 5309 

Howard Brooks howard.brooks@ey.com +1 215 448 5115 

Raleigh Mark Baxter mark.baxter@ey.com +1 919 981 2966 

Redwood Shores Scott Morrison scott.morrison@ey.com +1 650 496 4688 

Chris Nolet chris.nolet@ey.com +1 650 802 4504 

San Diego Dan Kleeburg daniel.kleeburg@ey.com +1 858 535 7209 

Seattle Kathleen Smith kathy.smith@ey.com +1 206 654 6305 

Washington, D.C. Rene Salas rene.salas@ey.com +1 703 747 0732 


73

EY | Assurance | Tax | Transactions | Advisory 

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For more timely insights on the key business issues affecting life 

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more information on our services. To connect with us on Twitter, 

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© 2015 EYGM Limited. 

All Rights Reserved. 

EYG No. FN0206 

CSG no. 1411-1355695 

ED None 

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