Swiss Biotech Report 2006

24>>biotech IPO continue to be relatively low. But the Swissstock market stands out as a positive force since thebiggest European biotech IPOs in both 2004 and 2005were on the Swiss Exchange.How does the Swiss biotech market look comparedwith other markets?Yvonne Wegmann: The SWX Swiss Exchange has thehighest market capitalisation in the life sciences, biotechnologyand medtech sector, accounting for morethan a third of its total capitalisation. Companiesseeking capital in Switzerland have access to knowledgeableand highly experienced sector-specific investors.They also benefit from the formidable placingpower of the Swiss banks and comparably easyaccess to analyst coverage. With more than 35 percent of its listed companies being foreign, the SWX isEurope’s most international marketplace, yet it providesexceptionally high visibility for each individualIPO.Harry Welten: The Swiss Exchange knows our industryand markets and supports them very effectively.The cooperation with the stock exchange is not ashighly regulated as in the US. Certainly there arespecific criteria that have to be met here as well, buteven smaller companies can satisfy them easily.Thomas Bieri: Switzerland offers numerous locationaladvantages for biotech IPOs. There is very good accessto risk capital and private equity. The large numberof professional investors in the areas of pre-IPOfinancing makes it easy for young biotech firms togrow their companies. When a new stock is floatedon the Swiss Exchange, it is possible to attract notonly professional institutional investors but also alarge number of powerful high-net-worth individualswho are always looking for attractive opportunities inthe growth segment. This group of investors does notexist in other markets to the same degree. Importantadditional advantages are the reasonable regulatoryenvironment, the company-friendly legal situation andthe relative tax advantages.Has the attitude of Swiss investors changedover the past few months?Maurice Pedergnana (General Secretary SECA), Harry Welten (CFO Arpida),Yvonne Wegmann (Vice President SWX Swiss Exchange)Thomas Bieri: Biotech IPOs differ from IPOs in othersectors. In most cases, these companies have highpotential but there are uncertainties and it may takeyears until a sustainable cash flow is established. Assessingthe future opportunities of biotech companiestherefore requires extensive expertise. This iswhy there are only very few entities in Europe whocan act as lead investors in a biotech IPO. Most ofthem are in the UK and in Switzerland. In order tocomplete a successful IPO, other investor segmentsmust be convinced by a company’s investment case,particularly from the country in which the IPO is tobe staged (anchor market concept). The fact thatSwitzerland has seen some successful biotech IPOsin the last two years shows that there is an aboveaveragenumber of investors in Switzerland who showan interest in biotech and that their attitude haschanged in favour of greater risk tolerance.Irene Püttner: The shares of the companies listed onthe SWX have advanced considerably in the last fewmonths. The success of the publicly traded companiesgenerally also offers a solid basis for new IPOs.The companies profit from an above-average sectorexposure among investors and thus from a better understandingof the industry. This is based on a longtradition and on a high concentration of global pharma,medtech and biotech companies and internationallyrecognised universities.Yvonne Wegmann: The demand for life science andbiotech securities traded on the SWX Swiss Exchangehas been on a steady increase. The SXI Bio+Medtech® sector index performed outstandingly in 2005,increasing by 37.93 per cent and outperforming thetotal market (SPI ® ). The index also achieved an outstandingperformance when compared to Europeanand US benchmarks. In contrast to biotech IPOs inmany other of European markets, biotech IPOs carriedout on the SWX in 2004 and 2005 achieved theirprice targets in spite of the difficult environment andraised enough capital to finalise clinical development.Harry Welten: Biotech is a trend sector. At the presenttime, the mood of investors is positive, which has acorresponding impact on the publicly traded biotechcompanies. But we should not forget that external