With over 260 member companies and 20 employees in areas such as pharmaceutical development, biotechnology, medical technology and diagnostics, reports from the industry association are usually SwedenBIO be a valuable barometer of the climate in the life science sector.
In the report Bridging the gap 2018 is being pointed out as a record year for capital raising, or “refinancing,” of listed life science companies. This probably comes as no surprise to the informed reader.
"In an industrial sector where access to venture capital is a cornerstone for building success and growth, it is very pleasing to see the strong capital supply to companies," comments Jonas Ekstrand, CEO of SwedenBIO, in a press release.
The period 2007-2018 has been analyzed
SwedenBIO has collected data on 361 financing events in 46 companies during the period 2007-2018. The results show that Swedish private equity investors such as private equity and venture capital, continues to be the most frequently cited source of funding – while the survey also shows that this group continuously decreased in importance during the period analyzed. As for the category private equity investors It is defined in the report as all types of investors who participate in share issues outside the stock exchanges.
In terms of remaining capital calculated in millions of SEK, the stock market, not unexpectedly, dominated as a source of financing among respondents in the survey with SEK 1788 million of total remaining capital, which can be compared with SEK 568 million from private equity and venture capital.
Non-dilutive capital from support programs has increased in importance
The single most important reason why private equity has declined in importance was an increased number of initial public offerings (IPOs) with associated new issues. Another reason was an increase in soft financing sources from both government agencies such as Vinnova and almi as from European support programs such as Horizon 2020These two categories together accounted for 23 percent of all financing events in 2018.
»Capital from state and EU-funded authorities plays an important role in the financing of life science companies, both as a bridge to share issues and as a replacement for share capital when this is not as available,« says Jonas Ekstrand.
Strong inflow of new share capital in 2018
In 2018, the number of IPOs on the dominant Swedish stock exchanges – Nasdaq Stockholm, First North and Spotlight – decreased, but in return the number of refinancings or refundings (i.e. new issues) of previously listed companies increased significantly. In total, new share capital of SEK 6,9 billion was issued in connection with refinancings, clearly above the level of SEK 4,0 billion achieved in 2017. However, the 2017 figure excluded Wasps issue of SEK 4,3 billion to increase comparability.
Small share of international capital
Additional data from the survey shows that the proportion of foreign investors was low during the period, which can be seen as an opportunity for the industry to tap into another important source of financing, in addition to those described above. An increase in the proportion of foreign investors in the number of financings was seen in 2018.
"The importance of strong investment promotion that can attract competent capital to our Swedish life science sector is critical for us to be able to revitalize the industry, that is a conclusion we draw. Regional and national investment promotion has an important role here," says Ekstrand.
In addition to report authors Stone Westerberg has Business Region Gothenburg, Invest in Skåne and Invest Stockholm been involved in the production of the report. Industrifonden contributed data regarding IPO activities and issues.
Download the Bridging the Gap report here