In 2021 it paid to stay private when the chips were down
While biotech indices fell, 2021 saw private companies raise the largest amount of venture capital ever.
For biotech in 2021 it paid to be private. While waning public investor sentiment made the year a minor disaster for listed companies, closely held groups enjoyed their most successful 12 months ever, with secured venture capital eclipsing 2020’s then record-breaking total by 26%.
True, the data are not wholly positive: 2021 was driven by a massive first quarter, after which VC financing fell, and the absolute number of deals continued the broad downward trend of the past few years. As such it was a handful of gigantic rounds, including a $700m series C by a Chinese group, that secured 2021’s place in the record books.
But it says something that this round, raised by Abogen Biosciences largely to finance development of a thermostable mRNA Covid-19 vaccine, came in an otherwise lacklustre third quarter. This period overall was on a par with 2020’s third quarter, and its $6.0bn of VC financing was barely half that seen in the first three months of 2021.
The totals, generated from Evaluate Pharma data, have been amended slightly versus those reported quarterly before, to backfill deals that had not been reported earlier and to eliminate companies that were not obviously in drug R&D, such as technology or platform-only plays.
However, this has had a relatively minor effect, and the overall trend is unchanged. Fourth-quarter VC biotech financing came in at $5.0bn, down 5% year on year, rounding off a year in which private companies hauled in $28.5bn of cash.
| Annual biopharma venture investments | |||||
|---|---|---|---|---|---|
| Year | Investment ($bn) | Financing count | Avg per financing ($m) | No of rounds ≥$50m | No of rounds ≥$100m |
| 2021 | 28.45 | 514 | 55.56 | 216 | 93 |
| 2020 | 22.56 | 543 | 42.41 | 173 | 63 |
| 2019 | 15.65 | 483 | 33.58 | 125 | 37 |
| 2018 | 18.18 | 548 | 34.83 | 127 | 36 |
| 2017 | 12.89 | 573 | 24.5 | 73 | 16 |
| Source: Evaluate Pharma. | |||||
In fact, Abogen made up $1bn of this annual total. Its $700m series C, led by seven investors including Singapore's state investment firm Temasek Holdings, was the biggest single VC raise of the year; it was followed in the fourth quarter by a series “C+”, which amounted to another $300m.
Other notable fourth-quarter VC rounds included a $500m series A by Neumora, a US biotech focusing on neuroscience, whose raise was the joint third-biggest of 2021. And Sotio, a Czech biotech with a pipeline that includes an IL-15 superagonist, MAb-drug conjugates and cell therapies, raised €280m ($316m), largely from its majority owner, PPF Group.
That said, 2021’s VC total will most likely be remembered for a record-breaking first quarter, which included raises by the cell therapy group Elevatebio and by EQRX, a company seeking to shake up oncology drug pricing.
However much the public markets struggled in 2021, the hope emerging from the year’s VC data is that many financiers see a turnaround sooner rather than later, as the possibility of public listing remains key to underpinning a company’s valuation when it is seeking private funds.
EQRX is a case in point. Though it is by no means clear whether competing on price in oncology is a realistic strategy, the group is now going public, albeit by means of a Spac, in a $1.8bn deal.
| 2021's biggest biotech venture rounds | |||
|---|---|---|---|
| Company | Country | Investment ($m) | Financing round |
| The top five of Q4 2021... | |||
| Neumora | US | 500.0 | Series A |
| Sotio | Czech Republic | 315.9 | Series undisclosed |
| Abogen Biosciences | China | 300.0 | Series C+ |
| Acelyrin | US | 250.0 | Series B |
| Cardurion Pharma | US | 219.7 | Series undisclosed |
| ...and the best of 2021 overall | |||
| Abogen Biosciences | China | 700.0 | Series C |
| Elevatebio | US | 525.0 | Series C |
| EQRX | US | 500.0 | Series B |
| Neumora | US | 500.0 | Series A |
| Adagio Therapeutics | US | 336.0 | Series C |
| Source: Evaluate Pharma. | |||
Note 04/04/2022: Story amended to correct 5th best round of 2021 overall.
