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Raising capital for the life science sector: trends and challenges Medicon Valley Alliance Annual Meeting 2019 Salvatore Santoro Head of Investment Banking Sweden, DNB Markets 2019-11-04
Raising capital for the life science sector:
trends and challenges
Medicon Valley Alliance Annual Meeting 2019
Salvatore Santoro
Head of Investment Banking Sweden, DNB Markets
2019-11-04
International industry
leadership and expertise
Circa 11,000 employees
globally
Close to 200 years of history
with heritage from 1822
One of the largest banks in the
Nordics
290 280
200 190 150
110
DNB is a global bank with a leading position in the Nordics
1 In SEKbn as per 3 November 2019
Source: FactSet 2
Market capitalisation1
Introduction
Recent transactions No 1 ECM advisor across Norway and Sweden in 2018
DNB Markets has a leading ECM franchise in Sweden and Norway
Introduction
SEK 314m
Private Placement
2018
Joint Bookrunner
SEK 508m
Private Placement
2018 Joint Bookrunner
SEK 7.1bn
Advisor to Alexion
on acquisition of
Wilson
2018
Financial Advisor
Private Placement
2019
SEK 160m
Private Placement
2019
Joint Bookrunner
SEK 546m
Private Placement
2019
Financial Advisor
NOK 74m
Private Placement
2019
Joint Bookrunner
NOK 65m
Private Placement
2019
Financial Adviser
NOK 370m
Joint Global
Coordinator
IPO
2019
SEK 727m
Joint Bookrunner
Private Placement
2019
NOK 243m
Private Placement
2019
Joint Bookrunner
1 Norway and Sweden
Source: Dealogic
Total ECM volume (EURm)1 Issues
36
Carnegie 39
Pareto 31
SEB 19
ABG 32
Citi 5
Arctic 26
Nordea 14
Morgan Stanley 4
Danske Bank 14 1 177
1 435
1 644
1 823
1 912
2 031
2 165
2 212
2 541
2 662
3
NOK 222m
Joint Bookrunner
Private Placement
2019
SEK 805m
IPO
2017
Joint Bookrunner
Nordic equity market value concentrated to Denmark with pre-revenue life science equity value mainly in Sweden
Source: Factset 4
20
151
6 11
0
20
40
60
80
100
120
140
160
0
2,400
800
1,600
Norway
5 59 2
734
3
1,227
5
Denmark
68
225
Sweden Finland
No. companies Mcap pre-revenue companies Mcap post-revenue companies
Market backdrop
Market capitalisation per country (SEKbn), number of listed companies
Source: Factset
…
5
Degree of equity market value concentration varies significantly across the Nordics with the greatest diversity in Sweden
Denmark Norway Sweden Finland
11 100%
293 1,964 61
Market backdrop
Market value per country split on constituent companies (SEKbn)
50
100
150
nov-14 nov-15 nov-16 nov-17 nov-18 nov-19
50
100
150
nov-14 nov-15 nov-16 nov-17 nov-18 nov-19
50
100
150
nov-14 nov-15 nov-16 nov-17 nov-18 nov-19
50
100
150
nov-14 nov-15 nov-16 nov-17 nov-18 nov-19
Source: Factset 6
The Healthcare sector L5Y has generally outperformed the broader Nordic market
Market backdrop
+77% +64%
+41%
-31%
Top performers L5Y
2,686%
780%
746%
470%
451%
Allshare health care index per geography
Allshare index per geography
Allshare mcap: 7,300bn Health care share: 5.9%
Allshare mcap: 2,700bn Health care share: 3.4%
Allshare mcap: 4,000bn Health care share: 48.0%
Allshare mcap: 2,800bn Health care share: 0.3%
Healthcare sector return compared to allshare return across Nordics (%)
Source: Bloomberg 7
The Life Science IPO market window has been open since 2013 across the Nordics
2019 YTD 2014 2013 2015
212
2016 2017 2018
91
326
111
399
176
89
Market backdrop
IPO capital raised (USDm)
FIN
NO
DNK
SWE
Source: Bloomberg 8
Top-10 equity issuers in the Nordic life science market since 2013
717
533
272 268 241 235 199
108
4
1
4
6
3
1
6
1 1
0
1
2
3
4
5
6
0
100
200
300
400
500
600
700
800
Swedish Orphan
Biovitrum AB
Nordic Nanovector
ASA
Forward Pharma A/S
Genmab A/S
1
Oncopeptides Ambu A/S Getinge AB Hansa Biopharma
AB
Bavarian Nordic A/S
BioArctic AB
107 100
Capital raised (USDm), number of issues
Market backdrop
Source: Holdings 9
Institutional investors’ share of portfolio allocted to Healthcare equities has on average increased with 3x since 2013
Market backdrop
8.1%
AP2
11.5%
7.6%
13.5%
Nordea
10.9%
22.4%
D&G Swedbank
Robur
AP3
8.9%
10.7%
3.9%
9.7%
Alecta AP4 Handelsbanken Lannebo
6.9%
3.9%
1.0%
8.3%
9.8%
5.7% 4.6%
0.0%
+41%
+717%
+28%
+24%
+295%
+178%
+77%
+29%
2013
Q3 2019
Share of portfolio allocated to Healthcare sector (%)
Source: Factset 10
Designing the optimal life science IPO – what do investors want?
Conclusion
Does the Company have a clear understanding of its regulatory pathway?
Is the capital need aligned with value inflection points and sizeable enough to attract both domestic and international investors?
Is it a promising product with significant commercial potential?
Does the Company have enough data?
Is Management able to execute on the proposed strategy?
Does the Company have specialist and/or supportive owners?
First-in-class product in a potential USDbn market
Orphan indications generally a plus
- Strong safety data - Phase II data recommended
Clear development plan
Multiple upcoming data points in short to medium term
Highly competent team with strong backing
Specialist investors / VCs
News flow post listing – need to avoid “radio silence” first 6-12 months in the listed environment Value driving data triggers post IPO
Make sure that you secure strong equity research which can help investors to make informed investment decisions and support the company in the listed environment
Only work with top ranked advisors
1
2
3
4
5
6
7
8
Source: Factset, DNB Markets, Dagens Industri 11
Equity research analysts are a critical tool for institutional investors to price life science assets
Conclusion
• IPO on Nasdaq Stockholm • 2017 EASL conference2, detailed data
presented. Sell-side research takes note of strong data
• The WTX share jumps +30% upon
the publication of Patrik’s updated report (having not reacted before the research note publication)
• Patrik is ranked “Top Stock Picker” in
the Nordics by Starmine. In an interview with Dagens Industri, he points to Wilson Therapeutics as a favourite stock
• The WTX share price appreciates +15% and closes at a new all-time high of SEK 83 upon publication of the news article
• Alexion acquires Wilson
Therapeutics by the way of´public offer
• 70% premium to last close • 373% premium to IPO price
68
76
72
24 apr 17 apr
70
80
3 apr
84
82
78
10 Apr 1 maj 8 maj
62
0
52
54
64
56
58
74
60
66
SEK
+30%
+15%
1
2
2016 June
2017 April
2017 May
Wilson Therapeutics’ Share Price Development
2018 Apr
1
2
Thank you for your attention!
Salvatore Santoro
Head of Investment Banking Sweden
DNB Markets
Mobile: +46 731 46 70 10
E-mail: [email protected]
