Region’s biotech industry avoids financial hurt
A BizWest Special Report
There’s no argument that COVID-19 will go down in history as one of the world’s greatest health crises and one of the greatest financial challenges ever for the medical industry in the U.S.
However, the pandemic hasn’t wreaked havoc on biotechnology and pharmaceutical companies despite being so ingrained in the larger medical industry.
As of Nov. 14, the Nasdaq’s Biotechnology Index has grown 17% year-to-date, outpacing the S&P 500 Index by 7%. Biotech initial public offerings have also been hot this year, with 96 newly public companies producing average returns of 47% and, in the case of vaccine producers such as BioNTech SE (Nasdaq: BNTX), skyrocketing to more than 5.7 times its original valuation during the offering.
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The reasons behind the sector’s strength this year is twofold: The race to find treatments and vaccines for COVID-19 has been a near-singular effort from the world’s medical community, and speculators expect massive revenues from companies that in theory have the entire human population as a market.
Take Arca biopharma Inc. (Nasdaq: ABIO), a Westminster-based company that in mid-May announced it would try to repurpose its anti-blood clotting drug candidate for cardiac arrest patients into a treatment for a side effect seen in some severe COVID-19 patients.
Arca’s stock closed the day prior at $3.95 per share and closed the day after its announcement at $19.21 per share. The drug candidate is now recruiting patients for advanced trials.
Bolder Biotechnology Inc., a privately-held outfit of eight employees, is also looking to repurpose one of its drug candidates to treat mild cases of COVID-19. In its case, Bolder is looking to use its multiple-sclerosis drug to spur cell defenses against COVID and other types of infectious diseases.
Other local companies have pivoted as well, with Brickell Biotech Inc. (Nasdaq: BBI) adopting a co-development deal with a Japanese company for a COVID-19 vaccine alongside its Phase III trial for its anti-underarm sweating treatment.
The two Boulder-based disease testing developers MBio Diagnostics and Brava Diagnostics also merged in August, with the combined company focusing on rapid COVID-19 testing systems.
Research into new medical treatments also serves as an investment hedge in a time where other industries were in freefall during the first weeks of the global pandemic. Patients are still being diagnosed with chronic or deadly conditions alongside the larger health crisis, and that demand for treatments today and for new therapies tomorrow is relatively resilient.
As macabre as it sounds, someone can hold off on buying tickets for a cruise or patronizing a favorite restaurant, but putting off treatment of a recently-diagnosed cancer is less likely.
Boulder-based ArcherDX was one of those companies planning to go public this year while planning to raise $100 million from its genetic cancer-testing platform but later gave up the stock market debut to take a $1.4 billion acquisition offer from Invitae Corp. (NYSE: NVTA).
Biodesix Inc. (Nasdaq: BDSX), another Boulder-based cancer testing company, was less lucky in its debut last month, raising $72 million out of its $79 million cap and trading well below its original pricing of $18 per share.
However, the IPO suffered from poor timing as investors held their breath for the outcome of the presidential election and signals from the Supreme Court over a case that could invalidate the entire Affordable Care Act in November.
The Boulder area also saw investments come in on the manufacturing end of the biotechnology industry in 2020, with Novartis AG (NYSE: NVS) starting the regulatory process to manufacture the world’s most expensive drug in Longmont in January.
Meanwhile, Japanese contract manufacturer AGC Biologics Inc. purchased an idle drug plant in Boulder for $40 million in June, with plans to start full production of various medical treatments by April 2021.
