Capital raising hits new high

As we enter a new year and reflect on the past 12 months, the metrics show a positive and resilient outcome for the industry with the highest capital raising for life science companies on record.

Annual data collected and reported by Bioshares shows that the capital raised by ASX-listed biotech companies in calendar year 2020 was $1.7 billion, building on the $1.08 billion raised the year prior.

While the impact of COVID-19 is yet to be realised, the result is looking better than first anticipated for Australian life science companies seeking to commercialise health and medical research.

David Blake, Editor/Analyst & Co-founder of Bioshares, said, “Rising share prices are one of the key drivers of capital raisings. Compared to the first quarter of 2019, the Bioshares Index was up 62 per cent at the end of 2020.

“Shares prices move when companies hit milestones, such as Opthea successfully marching through a Phase IIb study in 2019, and even begin to pay dividends, as seen with Clinuvel Pharmaceuticals for example.

“But 2020 was different. While the June quarter saw raisings of buffer capital (about $600 million), investors, probably many of whom were newly minted day traders stuck at home, got on the biotech-is-actually-good-for-something bandwagon… an opportunity presented itself for some companies to position themselves in front of new investors.”

Scott Power, Analyst for Morgans and committee member of the AusBiotech Investor Advisory Group, said, “At the start of the pandemic, Australia saw a short period where companies and investors were cautious of where and when to put their money to get the best return on income. Through low interest rates and government incentives we’ve seen a flood of money being pumped into the sector since April – particularly in health and life sciences, including diagnostics.

“It’s been an absolute bumper year, not just in terms of the dollar figure, but also the number of transactions. Around 25 per cent of the listed companies in life sciences don’t need to raise money, they’re profitable. Many outside of the top 100 ASX-listed companies have a large appetite for capital. Around 60 per cent of those came to market and successfully raised money, resulting in the extraordinary numbers that have come through.”

Less than 12 months ago, Australia was facing the potential risk of losing a generation of mid-to-late stage biotech companies, and the talent behind them. Typically taking more than a decade for a product to get to market, this would have been detrimental to Australia’s future.

Instead, Australia has been amongst the globe’s lesser COVID-19-impacted countries, providing the opportunity to start and continue medical research and clinical trials through the pandemic. Overall, clinical trials in Australia have progressed as they were pre-lockdown; and in some therapeutic areas the number of trials being conducted has increased. COVID-19 has reiterated the vibrant industry’s health and economic benefits, and its opportunity to be a major contributor to the country’s economic recovery.

Scott Power predicted that 2021 will continue this momentum; while not at the same rate. “Many companies have raised more than what they need, which will see them through for a considerable period. While there may not be the same opportunity as in 2020, there will still be plenty of capital available in 2021.”

AusBiotech is committed to fostering relationships between life science companies and investors, in connecting with innovative, Australian companies that offer high-value return-on-investment.

It has developed a range of resources for investors and companies that is specific to the life sciences sector, including the Guide to Life Science Investing – that aims to build an improved understanding of the unique life sciences sector to increase the quantity and quality of investment in life sciences companies. See AusBiotech’s investment resources here.

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