Feature Biotech Bubbles During the Global Recession Private Biotech Frms Are Awash with Funding, Raising Record-Breaking Sums in 2020
Total Page：16
File Type：pdf, Size：1020Kb
feature Biotech bubbles during the global recession Private biotech frms are awash with funding, raising record-breaking sums in 2020. Melanie Senior reports. iggest. Best. Worst. Deepest. Almost any superlative you like will probably Bfit 2020. It was a year that smashed many records. The most important was producing approved vaccines less than 12 months after an entirely new pathogen was sequenced. Fundraising across the biotech sector rocketed off the charts. Biotech’s savior role in the pandemic attracted a stampede of private and public investors alike—including some deep-pocketed newcomers. Venture financing hit an all-time high of over $23 billion—up over 60% on an already strong 2019 (Fig. 1). More than $11 billion worth of new biotech funds were raised. Some companies had secured their investments in 2019, but plenty more were able to capitalize on the surge in interest during the year (Table 1). Initial public offerings (IPOs) pulled in nearly three times as much as in the previous year, and over half were preclinical or phase 1 companies. Biotech stock indices all rose strongly. In short, the global recession apparently passed biotech by. The cash wasn’t only backing companies developing COVID-19 23.0 vaccines or therapies—though many in this 25 700 group benefited. Instead, the pandemic Amount raised 581 Number of financings 600 527 apparently “reinforced the requirement for 20 520 524 Number of financings 472 long-term, value-based investors of any kind 432 448 500 14.3 to have exposure to life sciences, including 15 354 366 13.4 400 biotech,” says Shahzad Malik, general 328 9.8 10 300 partner at Advent Life Sciences. 7.4 6.2 5.3 200 5 3.4 3.5 3.0 Mega-rounds Amount raised ($ billions) 100 For the few private companies working on 0 0 infectious disease products, 2020 brought 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 an inevitable COVID-19-linked bonanza. Year Tübingen, Germany-based CureVac, whose unmodified mRNA-based vaccine candidate Fig. 1 | Global VC investment in biotech over ten years. Source: BCIQ. for COVID-19 is in phase 2b/3, raised over $600 million in July, including a loan from the German government, and a further $245 million when it listed on Nasdaq a $23 billion total included 58 rounds of over these [cell or gene] technologies not for their month later. Overall, the pandemic triggered $100 million—more than double 2019’s potential in narrowly defined, monogenic an almost doubling of precommercial tally—and eight private rounds worth over diseases alone, but for their potential well deals involving private infectious diseases $250 million (Table 2). beyond that” in much more widespread companies, but this was from a low baseline Those eight mega-raises reinforce conditions, says Jeffrey Tong, partner at of only 10 deals or fewer each year since existing themes that became prominent Third Rock Ventures. Third Rock is an 2010. Financing also spiked in 2020, in 2020: the advance of cell and gene investor in another of 2020’s top-ten private reaching over $670 million—still not therapy, gathering momentum in precision fundraisers, liquid biopsy group Thrive close to the $3.5 billion raised by cancer oncology and the rise of innovative R&D Earlier Detection (Box 1). companies (Fig. 2). in China. The emergence of cell and gene Sana Biotechnology’s $700 million Outside infectious disease, the pre-crisis therapy modalities is likened to the arrival was aggregated funding raised since trend toward ever-larger private financing of replacement proteins and monoclonal the company came onto the radar in rounds accelerated sharply in 2020. The antibodies (mAbs). “People are buying into 2019. Never mind that the Seattle-based 408 NATURE BIOTECHNOLOGY | VOL 39 | APRIL 2021 | 408–418 | www.nature.com/naturebiotechnology feature who caution about overhyping of immature Table 1 | New money flowing into biotech technologies and the potential impact on Fundraiser Amount raised, $ millions (date announced) confidence (if things don’t work) and the prices of any eventual products (if they Frazier Healthcare Partners 617 (January 16) do). “If you have a big name [with a track Andreessen Horowitz 750 BioFund III (February 4) record], you can raise large amounts of New Enterprise Associates 3,600a (March 11) capital with just a sketch on the back of a Flagship Pioneering 1,100 (April 2) napkin,” quips one investor, preferring to remain anonymous. b Arch Venture Partners 1,460 (April 2) Yet the deepening of biotech capital VenBio 394 (April 3) markets—now a multiyear trend—“has Gilde 450 Gilde Healthcare V (April 3) structural implications for the sector’s ability to raise capital and scale enterprises,” Deerfield Management 840 (April 6) argues Bruce Booth, partner at Atlas Qiming Venture Partners 1,100 (April 9) Venture. In other words, all this money is Kurma Partners 173 (April) fast-forwarding biotech’s innovation cycle, TVM Capital Life Science 478 (October) allowing parallel shots on goal. “Better funded companies have more scope to make Peregrine Ventures 300c (October) mistakes, dust themselves off and try again,” Forbion 560 (December) comments Malik. Table shows selected new funds announced in 2020. aTechnology and healthcare. bTotal across two funds targeting early-stage biotechs. That argument held, apparently, for cPlanned size; $101 million closed as of October 2020. 2020’s series A financing rounds, seven of which were worth over $100 million. The average series A round size—$34 million— was almost 30% larger than in 2019. Five of 4,000 those top A-rounders focus on gene or cell Infectious disease therapy or precision oncology. 3,528 3,500 Cancer China boosts outsized A rounds 3,000 Chinese companies, investors and markets also became more prominent during 2020. 2,500 Nearly a third of the $100-million-plus 2,264 private rounds of 2020 were raised by 2,000 Chinese companies—up from just a seventh in 2019. Shanghai-based Mabwell 1,500 Bioscience and D3 Bio raised the two largest A rounds anywhere (Table 3). Amount raised ($ millions) 1,017 1,000 1,152 This reflects the country’s burgeoning 751 736 673 investment in more innovative biotechs, 467 as well as the economy’s more rapid return 500 328 370 213 111 140 286 to normality following the SARS-CoV-2 89 136 77 130 95 8 15 117 outbreak. Mabwell has assembled more than 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 30 assets—mostly mAbs and long-acting Year recombinant proteins—for oncology, autoimmune disease, infectious disease and Fig. 2 | Infectious diseases activity rises, but still in cancer’s shadow. Source: BCIQ. ophthalmology; three are in phase 3 trials. D3Bio is developing an as-yet unspecified pipeline of small- and large-molecule therapies in precision medicine approaches company’s suite of (mostly) cancer-focused Three-year-old cell therapy specialist for poorly served patient populations in cellular therapies is still preclinical. Seasoned Lyell Immunopharma’s bumper C round oncology and immunology. management (the company being run by also reflects its team’s track record: founder Juno Therapeutics alumnus Steve Harr) Rick Klausner is another Juno veteran New investors on the block and the apparently boundless promise of and former US National Cancer Institute Boston-based Scorpion Therapeutics’ $108 engineered cells was enough to draw in a head. Lyell hasn’t gone public, yet, but the million series A illustrates once again how range of investors—and propel the company South San Francisco-based company has new investors—hedge funds, private equity to a $587.5 million IPO in January 2021. used some of its funds to invest alongside firms, family offices and later-stage asset For the listing, familiar biotech names like traditional VCs in a suite of T-cell-focused management groups, many with little or founding venture capital (VC) firm Flagship technology partners, including Eureka no sector experience—are willing to bet on Pioneering and Arch Ventures were joined Therapeutics and CERo Therapeutics. seasoned biotech entrepreneurs running by a trail of lesser-known backers such Financings of this scale, and speed, for high-risk companies that may not even be as the Canada Pension Plan Investment early-stage ventures would not have been in the clinic. Scorpion—whose CEO and board and UK investment management possible just a few years ago. They have cofounder Gary Glick started First Wave firm Baillie Gifford. raised eyebrows among some investors, Bio and IFM Therapeutics, which made NATURE BIOTECHNOLOGY | VOL 39 | APRIL 2021 | 408–418 | www.nature.com/naturebiotechnology 409 feature $461 million private biotech fund in Table 2 | Largest private biotech funding rounds in 2020 October 2020 (Fig. 3). Company $ millions raised (round) Focus area Country Are the newcomers here to stay? a “Undoubtedly, there will be some tourists,” Sana Biotechnology 700 (unspecified) Gene and cell therapy US says Tong. Some may be spooked by CureVaca 634 (series B)b mRNA therapies and vaccines Germany inevitable clinical failures and lack the Lyell Immunopharma 493 (series C) Cell therapy US courage to stay in the sector. Others may Grail 390 (series D) Cancer diagnostics US switch back to more familiar terrain, like airlines or hospitality, once those LianBio 310 (unspecified) China sectors recover. “The moment there are Mabwell Bioscience 279 (series A) Antibodies China better returns available elsewhere, the Freenome 270 (series C) Cancer diagnostics US [non-traditional] investors will leave,” says one biotech specialist. Thrive Earlier Detection 257 (series B) Cancer diagnostics US For now, though, biotech remains Table excludes China’s Everest Medicines, considered specialty pharma. Source: BCIQ (includes devices, diagnostics). aSince gone public. very rosy relative to most other sectors.