Early-stage biopharma investors were on their series A game in the first half of 2021 with nearly $5 billion in cash infusions, while every private biotech and their siblings wanted to hit the public markets.
Biopharma funding almost doubled year-over-year to $4.69 billion across the U.S. and Europe for the critical series A round, according to a new report by Silicon Valley Bank. The number of deals grew by a third compared to the first two quarters of 2020.
"Investment pace intensified in 2021, buoyed by the accelerated adoption of healthtech solutions and new care delivery models and a strong interest in emerging biopharma technologies," the authors wrote.
Investors were most interested in platform technology deals with biotechs that could potentially spit out multiple pipeline products over time. These deals racked up nearly half of the total haul with $2.2 billion in investment. Oncology biotechs came in second with $1.1 billion. Small molecule drugs won gold for most investor backing, antibodies took silver and gene therapies topped out the medal podium.
Total biopharma funding reached $20.3 billion across the first half, which comes quite close to the $24.6 billion recorded for the entire previous year. To put biopharma investment dollars in context, the healthcare space benefited from a total $47 billion in cash infusions, which more than doubled the first half of 2020.
The most active investors in these early financings were Alexandria Venture Investments, which notched 12 deals, and Casdin Capital, which did nine. Big Pharmas Pfizer, Eli Lilly, Novartis, Sanofi, Takeda, AbbVie Johnson & Johnson, Bristol Myers and Roche were also big spenders. Pfizer had the most with 14 deals. Venture funds from Novartis and Novo Nordisk also got in the game.
IPO window open
A step above private funding comes the lauded public markets, and there was no shortage of activity there.
"Investors believe the IPO window will remain open," the report said. That prediction is based on mezzanine crossover activity in biopharma leading to 83 "likely IPO financings."
IPOs are a "driving force for exits" among biopharmas, with 25 listings in each quarter this year. 2021 has the potential to break last year's record 84 IPOs, but the investment bank predicts 80 for the year "as the market slows in 2H 2021."
But it hasn't all been roses for the newly public biopharmas. Companies in the sector have had lackluster performances since listing, compared to good performance for diagnostics/tools and medical device makers. Valuations and dollars dipped from 2020's records.
IPOs aren't the only way to reach the Nasdaq. Don't forget about your favorite acronym, the SPAC, or special purpose acquisition company. Nautilus Biotechnology raised $345 million in gross proceeds from its merger with blank check company Arya Sciences III, and Nuvation Bio picked up about $646 million from its merger with Panacea Acquisition during the half.
Since 2020, 16 biopharmas have announced de-SPAC transactions and six have completed the process, including Nautilus, Nuvation Bio and NRx Pharmaceuticals. The average de-SPAC performance of those six is far in the red at negative 30%.
And, despite lofty sales for Big Pharma, M&A activity proved dismal. Shockingly, just seven private mergers and acquisitions in biopharma occurred between January and July, despite many major companies sitting on a powder keg of cash from COVID-19 therapeutics and vaccines.
Four of the deals that did happen were pre-clinical companies, including Tidal Therapeutics and Arvelle Therapeutics, and the median upfront acquisition value was $305 million.
But we could see some blockbusters yet: Silicon Valley predicts biopharma will end 2021 with five or six $1 billion-plus private M&A deals.