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Nasdaq’s $1.2trn biotech index draws Europe’s coronavirus vaccine hunters

As the race towards developing a vaccine for COVID-19 intensifies, Spanish Pharma Mar (PHMR.MC) has become the latest biotech company looking at listing on New York’s Nasdaq market. If this happens it will join a growing number of biotech companies aiming to capitalize on investors’ interest in the booming sector as it tests one of its therapies to treat the new coronavirus.

The news follows mid-stage human trials of the company’s cancer drug Aplidin in patients suffering from coronavirus. Encouraging results from the preliminary tests helped Pharma Mar’s Madrid-listed shares almost triple to €7.51 ($8.41) since mid-March, taking its market valuation to €1.67bn ($1.87bn).

Pharma Mar stock chart

The pharma industry’s search for a treatment for COVID-19 has fuelled interest among investors for the companies most likely to succeed. As a result, Nasdaq’s biotech index, NBI soared about 25% in the second quarter, its best quarterly performance in nearly 20 years, reaching a total value of $1.2trn.

US-based rival Gilead Sciences has shown how lucrative this research can be after it unveiled a deal with the US government to sell it 90% of the world’s supply of its remdesivir drug, the only proven treatment for COVID-19 for the next three months. The Nasdaq-listed firm agreed to sell more than 500,000 treatment courses to the US until September. The overall price is unclear, but treatment is priced at $2,340 per course.

A number of initial public offerings (IPOs) followed, in marked contrast to the broader financial market where the pandemic has dwindled interest in new issues.

“There’s a number of midsized biotech firms in the UK and elsewhere in Europe that are in preliminary talks with investors in New York about a potential listing there,” one banker involved in the discussions told Reuters.

“There is a sophisticated pharma investor base on Nasdaq that goes beyond anything we have here in Europe at the moment, and the sector is red hot.”

Shares in other US firms listed on Nasdaq’s market include Moderna (MRNA.O), Novavax (NVAX.O) and Inovio Pharmaceuticals (INO.O), which are testing potential vaccines against coronavirus, have soared this year.

Other European drugmakers including Sanofi (SASY.PA) also have Nasdaq listings, and German drugmaker CureVac is planning a US IPO next month as it starts trials of its experimental COVID-19 vaccine. These are just a few of the biotech and healthcare companies whose billion-dollar-plus listings are leading a US IPO bounce back.

Stepping onto the US market is a prudent move for Pharma Mar. It will give the company better access to investors who understand biotech cycles and value research and development more than in Europe, where investors put greater focus on profits.

Rather than listing directly, Pharma Mar is considering buying a rival in the United States, which could then provide a way to join Nasdaq’s market, according to Chairman Jose Maria Fernandez Sousa-Faro.

The company could use revenues of as much as $1bn it stands to make by 2026 from a deal with Jazz Pharmaceuticals (JAZZ.O) for lung cancer treatment Lurbinectedin in the United States, he said.

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Galina Mikova

Galina is a Hubspot-certified Technical Writer with over 10 years of experience in working with Fortune 500, private investment, banking, FOREX and niche tech companies as well as crypto and blockchain startups. She has a solid background in FinTech and blockchain technology.