Last year the prevailing global economic woes did not prove to be much of an impediment for biopharmaceutical companies in their quest to generate capital with a total of $24.8 billion raised. However, the ongoing financial uncertainties in Europe coupled with a weak domestic economy, a U.S. presidential election and a long contentious debate over the "fiscal cliff" all contributed toward making it a challenging environment for companies looking for funding. As a result, fundraising in 2012 finished well off the pace of 2011, with $18.14 billion collectively raised, down 22.4 percent.

Public biopharmaceutical companies, which had a great year, by and large were not able to fully leverage their increased stock valuations, successful clinical results and product approvals into follow-on and other financings. According to BioWorld Insight analysis approximately $14.3 billion was raised by these public companies compared with $18.9 billion last year.

Public offerings accounted for $8.5 billion of this total, down from $10.2 billion in 2011. Deal size averaged about $85 million among the 100 deals that were completed during the year. Only 13 of these offerings managed to top $100 million. Interestingly enough, two of the companies involved in the largest debt financings – Celgene Corp. ($1.5 billion) and Medicis Pharmaceutical Corp. ($450 million) – were also involved in M&A transactions.

Summit, N.J.-based Celgene acquired privately held Avila Therapeutics Inc., of Bedford, Mass., in a deal potentially valued at $935 million. The company paid $350 million in cash, with the remainder made up of milestones: $195 million related to the development and regulatory approval of Bruton's tyrosine kinase (Btk) inhibitor AVL-292, and up to $380 million in potential payments contingent upon the development and approval of candidates generated from Avila's Avilomics platform. (See BioWorld Today, Jan. 27, 2012.)

On the other side of the coin Medicis was acquired by Canada's largest specialty pharma Valeant Pharmaceuticals International Inc., of Montreal for a total deal value of $2.6 billion. (See BioWorld Today, Sept. 5, 2012.)

Rare disease developer BioMarin Pharmaceutical Inc. turned to the markets to net $235 million from an underwritten public offering of 6.5 million shares of common stock. BioMarin's share value (NASDAQ:BMRN) have been on a tear, increasing 44 percent this year. Key growth driver for the company is GALNS (N-acetylgalactosamine-6 sulfatase), which came through with solid Phase III data in rare lysosomal storage disorder mucopolysaccharidosis Type IVA (MPS IVA). (See BioWorld Today, Nov. 6, 2012.)

Other deals of note during 2012 included Medivation Inc., which closed a $225 million public offering of convertible notes followed by public stock offerings from Amylin Pharmaceuticals Inc. totaling $208 million and Vivus Inc. totaling $202.5 million.

Several biotech companies completed large private placements of debt in 2012: Salix Pharmaceuticals Ltd., $690 million, Isis Pharmaceuticals Inc., $201 million and Amarin Corp. plc, $150 million. But beyond these deals, the vast majority of the alternative fundraisings by public companies were, according to BioWorld Snapshots data, small, averaging around $5 million.

Excellent Market Performance

The BioWorld Stock Report recorded an average 22 percent share price increase in 2012 for the 233 public biotechnology companies, which the report tracks. That compares to a 7.2 percent increase in the Dow Jones Industrial Average, a 16 percent increase in the NASDAQ Composite index and a 13.4 percent increase in the S&P500 during the same period.

The stellar stock performances of blue chip biotech companies helped drive the sector. Collectively, these 39 billion-dollar market cap companies have seen their share prices jump by an average of 53 percent in the year.

Arena Pharmaceuticals Inc.'s shares, for example, increased by a whopping 382 percent thanks to receiving FDA approval of lorcaserin, to be marketed in the U.S. as Belviq, the first new weight-loss drug to be approved in 13 years for chronic weight management in addition to a reduced-calorie diet and exercise. It is not yet marketed in the U.S, pending a Drug Enforcement Administration (DEA) review. (See BioWorld Today, June 28, 2012.)

News about obesity drugs was one of the compelling stories that unfolded during the year. On the heels of that approval, Vivus Inc.'s Qsymia (phentermine/topiramate) won approval for a very similar patient group, those with a BMI of 30 or more, or those with a BMI of 27 plus one or more obesity-related comorbidity. Not long after, Orexigen Therapeutics Inc. received some long-awaited signals from the FDA that it could explore a faster path to resubmission of its new drug application for Contrave (naltrexone/bupropion). That's encouraging movement in a field that was effectively stalled for many months while the FDA deliberated over how to handle potential cardiovascular risks for obesity drugs. Signs are pointing to plenty of room in the market for the "big three," as well as many other obesity candidates making progress through pipelines.

Investors would have pocketed significant gains had they invested in these companies with Orexigen's shares closing the year up 226 percent and Vivus' shares closed up 38 percent.

Other Winners

Other big blue chip company winners during the year were Infinity Pharmaceuticals Inc., Pharmacyclics Inc., Regeneron Pharmaceuticals Inc. and Medivation Inc.

Infinity's shares have surged closing the year up 295 percent. Just before closing out the year the company reported that it was ending a two-year old collaborative research program with Millennium: The Takeda Oncology Company and Takeda Pharmaceutical Co. Ltd., of Osaka, Japan, to retain full worldwide rights to IPI-145 and worldwide rights to any future product candidates for the same targets, PI3K-delta and PI3K gamma. (See BioWorld Today, Dec. 27, 2012.)

Also in December the company took advantage of its lofty share price by generating $172 million in an underwritten public offering. (See BioWorld Today, Dec. 14, 2012.)

Infinity has an ongoing Phase I trial of IPI-145 in advanced hematologic malignancies. The oral compound is thought to be the first in clinical development to inhibit both phosphoinositide-3-kinase (PI3K)-delta and PI3K-gamma.

Pharmacyclics Inc., of Sunnyvale, Calif., saw its shares hit a 52-week high of $68.98 early in September before easing back to close the year $57.78, up 290 percent. Investors have warmed to the company's prospects for its Bruton's tyrosine kinase inhibitor, ibrutinib, for the treatment for chronic lymphocytic leukemia. In June, the company reported updated Phase Ib/II data showing progression-free survival (PFS) with a median follow-up of 17.5 months is 87.7 percent in the relapsed/refractory 420-mg cohort, and high-risk relapsed/refractory patients with 17 p deletion and IgVH unmutated status have an estimated 18-month PFS of greater than 70 percent and 80 percent, respectively. (See BioWorld Today, June 19, 2012.)

Another rising star is Regeneron Pharmaceuticals Inc., thanks to the higher-than-expected sales of age-related macular degeneration drug Eylea (aflibercept ophthalmic solution), which has driven the company to profitability after 24 years. Eylea received FDA approval in November 2011. Shares of the Tarrytown, N.Y.-based firm rose to $171.07, a gain of 208 percent by year end, boosting the company's market cap to a lofty $16.5 billion.

Rounding out the three digit increases in its share value was Medivation, up 122 percent. Investors rewarded the San Francisco-based company for the approval Xtandi (enzalutamide) capsules for the treatment of patients with metastatic castration-resistant prostate cancer (mCRPC) who have previously received docetaxel. The FDA's green light came three months ahead of the product's scheduled PDUFA date. (See BioWorld Today, Sept. 4, 2012.)

While investors took to biotech big time, it was more of a struggle for pharmaceutical companies. The Amex Pharmaceutical Index closed up 11 percent for 2012 compared to the 32 percent increase in Nasdaq Biotechnology Index during the same period.

The performance is a reflection of the fact that most of the big pharma companies are still struggling with multiple looming drug patent expirations and thinning product pipelines.

Overall, it has been an excellent year for biotech's public companies.

In next week's issue we will review whether the momentum can be maintained as we talk with company CEOs and leading investors who will be gathered at the J.P. Morgan Healthcare conference in San Francisco. We will also look at partnering and mergers and acquisitions during 2012, which has traditionally been driven by pharma companies to increase their product offerings. However, biotech companies have been competing big time in these transactions.