Top mega-rounds fuel record VC pace, with a distinctly ex-U.S. biotech accent

Print 22 January 2016
John Carroll / FierceBiotech

Last year private venture investors registered a blistering pace in the global biotech industry, with the average round swelling in size as the top 10 financings grabbed the biggest slice of the pie analysts at EP Vantage have seen in the 9 years they've been gathering stats.

But while the money flowed like never before, the number of companies enjoying the surge actually dwindled, barely beating the all-time low, the analysts add, based on numbers from Evaluate Pharma. And the big question that will be considered now is whether the worldwide boom of the past two years has already begun to fade.

Altogether, close to $8.7 billion flowed into 366 companies in the U.S., Europe and Asia, says the new report. The bottom line easily tops the $7.06 billion that EP Vantage counted in 2014. The average round swelled to $24.1 million, with the top 10 raking in 19% of the total--another record, though not much more than has been reported over much of the past 9 years.

If you've been laboring under the impression that all biotech R&D happens in either Cambridge, MA, or the Bay Area, it's time to take off the blinders. New money has been flowing to companies that span the world, with 6 of the top 10 notably going to biotechs outside of the U.S. (See the list below.)

Some of these megarounds were clearly funded primarily by crossovers interested in benefiting from the wave of biotech IPOs that helped fund the industry for three years. A painful market correction, though, may blunt IPOs this year, driving the crossovers out and slowing the pace of investments. A full roster of traditional venture groups remain, with new funds to help keep up the rate of new biotech creation.

(Editor's Note: One important add to EP's list of top venture rounds: Acerta quietly noted last fall, as it struck a $7 billion deal with AstraZeneca on a BTK inhibitor, that it had raised $375 million in a private placement back in May. That bit of news from the Dutch biotech was inserted into a press release on the deal, which was largely overlooked, and flagged to me by a careful reader this morning. Jefferies was the exclusive placement agent on that round. Here's the release. A more visible miss at EP Vantage: Denali Therapeutics' band of ex-Genentech execs raised a $217 million A round in May to apply fresh scientific insights into the pursuit of new drugs for neurodegenerative diseases. Lisa Jarvis, a senior editor at Chemical & Engineering News, gets credit for flagging that on Twitter.)

Here are the top 10 global rounds from last year, as reported by EP Vantage:

• Moderna Therapeutics, $450 million. Moderna helped define what a monster round is last year when it raised $450 million from investors. The biotech has remained immune to the siren call of the public markets, so far, as it stayed focused on building its preclinical foundation. More recently, though, Moderna has begun to step toward the clinic, where the giant-sized expectations that it has helped foster will be tested in humans.

Neil Woodford

• Immunocore, $320 million. The Oxford, U.K.-based biotech has its own take on using T cell receptors to drive an immune system attack on cancer, perhaps the hottest field in R&D right now. And like its sister U.K. company Adaptimmune, Immunocore has been attracting some major league backers, including new investments from Neil Woodford and Kelly Martin's Malin. This mammoth round, a record for the U.K., helped inspire the country's biotech industry, which has enjoyed its own surge of venture funding as VC activity spreads beyond U.S. shores.

• TauRx Pharmaceuticals, $135 million. Alzheimer's has defied the blockbuster ambitions of giants like Eli Lilly, J&J and Pfizer, each of which has spent a fortune mounting late-stage studies for a disease that has been erasing the brains of millions of people. But Singapore-based TauRx has managed to convince an unorthodox group of investors to back its Phase III on tau, the second of two big targets in the field (with amyloid beta). We'll know later in the year if all the money was well spent, or not, as data from three Phase III studies are expected to be revealed. 

• Nabriva Therapeutics, $120 million. There's been a surge in transatlantic financings over the past couple of years, and Vienna-based Nabriva benefited from that trend. The crossover round helped set the stage for an IPO to help fund work on new antibiotics. This particular round was designed to help fund a Phase III study. 

• Editas Medicine, $120 million. The Cambridge, MA-based company is still at a preclinical stage of development, but gene-editing is such a hot topic right now that Editas believes it can buck the cool-down on Wall Street and leverage this huge round into a successful IPO. Editas faces a challenge on its patients from rivals in the field, but VCs have been enamored by its potential for radically changing the way that diseases can be treated.

Bill Gates

• CureVac, $110 million. Tubingen, Germany-based CureVac has enjoyed the support of two billionaires--Bill Gates and Dietmar Hopp--as it pursues late-stage work on a new cancer vaccine based on its mRNA tech. This big round was designed to help the biotech as it grew staff on both sides of the Atlantic. And the biotech already employs more than 240 staffers.

• Gritstone Oncology, $102 million. Neoantigens in the new, new thing in immuno-oncology, and Gritstone plans to be a pioneer in the field with this monster startup round. The big idea here is that by finding unique antigens created by cancer mutations, a biotech like Gritstone can develop a personalized cancer vaccine. In this new era of combination approaches in oncology, Gritstone and its rivals are off to the races. The company is helmed by Clovis co-founder Andrew Allen. 

• Innovent Biologics, $100 million. Back at the beginning of 2015 Innovent Biologics helped signal the rising stature of China's biotech industry, luring in Eli Lilly, Fidelity and others to join the local Legend Capital in a big round to back its work on 10 antibodies, including 4 biosimilars. The biotech says it has world-class tech operating with U.S. and European standards. Lilly bought in to that notion, adding a $1 billion development deal in October. 

• Nantworks, $100 million. The billionaires provide biotech cash, and they get it. In this case, Patrick Soon-Shiong raised a hefty round as he constructed a new oncology empire last year. 

• BeiGene, $97 million. BeiGene CEO John Oyler went a long way to proving that a biotech based in China can not only employ cutting-edge science, it can also attract the kind of big money needed to launch an ambitious new player. And now it's pushing ahead on four key oncology fronts. 

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