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12:00 AM
 | 
May 30, 2011
 |  BioCentury  |  Finance

Europe's Iceberg 2011: A rising tide; demand to match

BioCentury annual survey: Maturing European biotech demands more money than ever

Europe's biotech industry is maturing, as a handful of public companies are transitioning from sizable cash burners to commercial enterprises, while the number of private clinical-stage companies has reached record levels.

Indeed, BioCentury's 9th Annual European Iceberg Survey - which projects the money required to provide three years of runway for companies in the clinic, or have a product on the market - counts 217 private companies in the clinic and beyond. That is up 21% from 180 in last year's survey and nearly four times the number in the initial survey taken in 2003 (see "The Ascent").

But the surge in clinical-stage stories also means more voracious appetites for money: the private group's capital need is projected to be about $4.2 billion to cover the next three years, up 38% from $3 billion in last year's survey.

Meanwhile, the projected funding need from the public side is less than in 2010, as late-stage biotechs are starting to offset spending with revenue from newly approved drugs.

Companies like Basilea Pharmaceutica AG and Genmab A/S are seeing top-line growth from drugs approved over the past three years. Basilea's Toctino alitretinoin was approved in Europe in 2008 to treat chronic hand eczema and is in Phase III testing in the U.S., while Genmab's Arzerra ofatumumab was approved to treat chronic lymphocytic leukemia (CLL) in 2009 and 2010 in Europe and the U.S., respectively.

The $1.2 billion that unprofitable public biotechs in the clinic look to need over the next three years thus looks achievable. Last year, the group raised $2.6 billion, excluding the $5.6 billion in debt raised by Grifols S.A. and Teva Pharmaceutical Industries Ltd. (see "Clinical Rationing," A11).

On the private side, venture funding for clinical-stage biotechs looks more challenging. In 2010, private European biotechs in the clinic or with a drug on the market raised $878.8 million of the $1.4 billion raised in venture rounds. The rest went to companies in preclinical development and those selling tools, services and/or diagnostics.

Carrying out the clinical-stage funding over three years yields $2.6 billion, which is $1.6 billion short of the $4.2 billion suggested by BioCentury's 2011 survey of the group.

Including the estimated burn from unprofitable public biotechs,...

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