Venture backers still find Massachusetts fertile ground

The top 12 venture capital rounds by Massachusetts biotechs in 2012 raised more than half a billion dollars, and provided the springboard for two public floats, in a year of otherwise disappointing returns on the biotech scene, finds a report published by the Massachusetts Biotech Council.

The New England state attracted the second highest amount of VC funds behind California last year, accounting for a fifth of private money raised in the US, according to EvaluatePharma data. Cambridge-based Warp Drive Bio raised $125m in an initial funding round, equal second in the league table of American VC rounds in 2012.

Falling back

Along with the industry worldwide, Massachusetts VC funding rounds fell back from record levels in 2011, amounting to $838m last year, the industry group said in its annual industry snapshot. Warp Drive was the only private Massachusetts group to break the $100m barrier; two, the now-public Bluebird Bio and Rhythm Pharmaceuticals, broke the $50m barrier, according to the report.

Two firms, Genocea Biosciences and Collegium Pharmaceutical, managed to pull off multiple rounds in a year that frustrated many companies as well as financiers trying to assemble consortia to back promising companies. The bulk of the action is Cambridge; 61%, roughly equalling the gross domestic product of the Caribbean island nation Dominica, went to companies based in the home of Harvard University.

Massachusetts biotechs are also echoing the greatest amount of activity in the sector – oncology. While oncology candidates represent the biggest share of candidates in development throughout pharma, accounting for 30% of all R&D projects, they are over-represented in Massachusetts laboratories and clinics at 37%, according to EvaluatePharma data.

Therapeutic focus

Anti-infectives are also over-represented in Massachusetts laboratories and clinics, accounting for 16% of drugs in development compared to the 14% for the industry as a whole, according to EvaluatePharma. CNS and endocrine projects are slightly under-represented, perhaps reflecting the difficulty of getting these through the clinic without a big pharma partner as well as the obstacles to achieving regulatory approval.

Early-stage discovery continues to be the strength of Massachusetts biotech. Some 819 projects are in preclinical development at Massachusetts-based companies, nearly equalling the entire R&D pipeline of the European biotech hub Switzerland at 888, EvaluatePharma data reveal.

This could go some way towards explaining a healthy M&A scene, with 48 takeouts of companies in the state worth $33.3bn – including the $20.1bn Sanofi paid for Genzyme – and 57 acquisitions by Massachusetts companies worth $9.3bn between 2008 and 2012. With so much early discovery, it is not surprising that so many companies end with an exit.

To contact the writer of this story email Jonathan Gardner in London at [email protected] or follow @JonEPVantage on Twitter

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