Biotechs raise record venture capital haul in 2015
If 2014 was the year of the biotech IPO then 2015 could be remembered as the year of the venture round. Private drug developers raised a staggering $9.64bn*, up 37% over the previous year and the biggest annual haul since at least 2007,EvaluatePharma data show.
The surge was driven by an increasing number of very large financings, which pushed the average amount raised to $26.5m, another record (see data below). The receptive state of the public markets for all things biotech undoubtedly bestowed a benefit; although this still largely remains the case investors have been sending more cautious signals so far in 2016, suggesting that something of a peak was reached last year.
|Annual VC investments|
|Year||Investment ($bn)||Financing count||Avg per financing ($m)||No. of rounds ≥ $50m||Top 20 rounds as % of total||Top 10 rounds as % of total|
What is notable about last year’s topline figures is not just the amount raised, but that the number of financings struck went in the opposite direction. At 370 the level is back down to the post-crash nadir. The trend of a polarisation of capital into ever fewer hands appears to have continued last year, the implications of which should concern those involved in company formations.
Further underlining this trend is the analysis that reveals the share of the pie being taken by the most fortunate. The top 10 financings of last year took nearly a quarter of all the money raised, a significantly bigger share than back in 2007 and a portion that has been growing.
Last year this statistic was skewed by three huge rounds raised by Moderna, Acerta and Immunocore, which rank as the biggest private rounds since 2007. Having these two in the figures for last year will skew the picture somewhat in terms of boosting the average sum raised per round. However, there was also a marked jump in the number of rounds that raised more than $50m.
This data only consider companies developing human therapeutics, excluding medtech and diagnostic plays, for example.
The more detailed look at venture financing above shows just how lucrative the last five quarters have been for the private sphere, even discounting the Moderna, Acerta and Immunocore rounds, which boosted the first, second and third quarters of 2015 respectively.
The drop in the number of financings in the last two quarters is also very noticeable, and it will be interesting to see whether this lower level is sustained as we move through 2016.
The continued financial health of the private sector will of course be hugely influenced by the state of the public markets – once again last year many of the big rounds were raised by companies with the stated aim to float as soon as possible. Of the drug developers that raised the top 10 rounds last year, below, at least half have either already conducted an IPO or are on the way to doing so.
The top three, however, have not admitted publicly to any interest in floating. Immunocore is probably the most likely to go; it is essentially the sister company of Adaptimmune, which went public last year and is working in the red hot oncology field of engineered T cells.
Signs of a slowdown in the IPO market could well give them and any other hopefuls pause (Biotech IPOs slow, but appetite for size remains unsatisfied, January 13, 2016). But any narrowing of the IPO window this year could also hit those content to remain in the private sphere, if it makes their financial backers more cautious.
Given the sums raised last year, however, few private companies are likely to be heard complaining that loudly right now.
|Top 10 rounds of 2015|
|Moderna Therapeutics||450.0||Series D|
|Acerta Pharma||375.0||Series B|
|Denali Therapeutics||217.0||Series A|
|Nabriva Therapeutics||120.0||Series B|
|Editas Medicine||120.0||Series B|
|Mereo BioPharma||118.0||Series A|