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US venture capital investors continue to back biotech

By Gareth MacDonald+

02-Jul-2014
Last updated on 05-Jul-2014 at 09:48 GMT

Biopharma firms continued to attract US venture capital investment in Q1 according to new analysis by PricewaterhouseCoopers (PwC), which says the number of firms that received backing is encouraging.

The analysis – part of the “MoneyTree” report published by PwC and the National Venture Capital Association in April – showed that the biotechnology sector garnered $1.1bn from venture capitalists in Q1, up from $871m in the equivalent period in 2013.

Within the biotechnology sector, pharmas received $26m according to Greg Vlahos, PwC US Life Sciences Partner, who told BioPharma-Reporter.com that although this is down from Q4 2013 in dollar terms, the number of firms receiving investment remained stable.

In Q1 2014, $26m was invested into companies in the Pharmaceutical subsector, which represents a 64% decline in dollars from the prior quarter when $71 million was invested. The number of deals however, did not experience a large drop.”

Vlahos added that: “Companies in the Pharmaceutical subsector received funding compared to 15 in the fourth quarter of 2014. Over the past few years, the number of Pharmaceutical companies receiving venture capital investments has ranged from a high of 20 to a low of 12, so the 14 companies receiving funding in Q1 was well within the historical norm.

So, despite the drop in dollars invested, we are not seeing a significant drop in the number of companies receiving funding in this area, which is good news.”

Europe

Vlahos’ comments follow less than a week after industry groups, investors and officials met in Belgium to discuss ways of making it easier to access funding in Europe to stem the flow of local biopharmas seeking venture capital backing in the US.

The problem– according to officials from European Commission, European Investment Bank, industry groups and investors who met in Brussels– is the complex regulations that make it hard for biopharmas to access finance in Europe even though it is available.

Panel chair William Brooks said: “Access to finance for emerging companies is an on-going problem. By revising policy tools and adjusting its current financing measures, the European Union can translate R&D innovation to its full potential, impacting both its economic future and its citizens’ health.”

He explained that, to effect this change, Logos Public Affairs and the European Biopharmaceutical Enterprises (EBE) have arranged a series of debates for industry, funders and EU officials to discuss shaping the EU’s financing mechanisms.

Finance solutions

According to the EBE the aim is to identify financing solutions in cooperation with the main EU financing bodies; the European Investment Bank (EIB) and the European Investment Fund (EIF) as well as European Commission.

The debate project consists of a series of policy dialogues that seeks to improve current financing mechanisms for biotech start-ups in Europe to overcome the so-called “death valley” often occurring beyond the early stage and seed financing level.”

EBE president Roberto Gradnik said: “It is critical that all finance community players participate in seeking solutions for sustainable European biopharmaceutical ecosystem.”

He described projects like Horizon 2020  and Innovative Medicines Initiative  as a “promising shift in EU funding policy not only supporting research and applied research only but also towards funding research linked to innovation and delivery of innovative medicines, diagnostics and therapies

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