Billions in new venture cash targeted at early-stage biotech efforts
Early this year, the analysts at the National Venture Capital Association were hammering away at a perceived crisis in early-stage funding, lamenting signs that startups were having a terrible time rounding up the cash needed to hire teams and get programs in the clinic. But the VC activity in the first quarter of 2012 has dulled the edge of their argument. The analysts at Burrill & Co. took out their calculators and concluded that $2.6 billion in new venture funds for translation and early-stage work materialized in the U.S. and Europe in the last two months, with a $760 million partnership between Domain Associates and Rusnano leading the charge.
Some of this is charity money. Wellcome Trust has a new $317 million fund open for business. Some is Big Pharma money, like Merck Canada's decision to chip in to a $100 million fund for Quebec and a $200 million gamble by GlaxoSmithKline ($GSK), Johnson & Johnson ($JNJ) and Index. Governments are stepping in: A new venture group Sir Chris Evans put together in Wales is intended to swell to $350 million. Steven Burrill, who has gathered venture cash of his own, was particularly intrigued by a $250 million venture by Cleveland's University Hospital, earmarked for translational work and early- to mid-stage trials.
In addition to Burrill's numbers, some significant classic venture cash has been coming into play as well, like the $270 million Flagship fund announced in January. And BioWorld today reports that biotech venture rounds swelled to $391 million in the U.S. in the first quarter, up a whopping 34% over the same period in 2011.
"These efforts reflect broad attempts to forge creative new models for funding translational research and spur development of important new therapies," says Burrill. "It also demonstrates that governments across the globe, despite facing fiscal pressure, see the importance of investing in the life sciences to build innovation-based economies that can provide high quality jobs."
There's a back story to the sudden explosion of early-stage cash. The NVCA has been using the lack of funding to argue that Congress needs to pass new legislation that would expand the FDA's accelerated approval initiative, making it easier for biotechs to get an approval faster. Faster approvals, they add, would inspire investors to put more money into biotech companies.
With a sudden surge in these funds, will their argument to lawmakers continue to hold water?
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