As the coronavirus started to spread in 2020, industry watchers hoped the biopharma sector would pull through and shore up both the IPO market and venture capital investment.
Private investment in the biopharma industry had been trending generally upward, with dips in 2016 and 2019. The second trough followed a record-setting 2018, in which biopharma companies—those developing therapeutics for human disease—raked in a total of $17.9 billion.
With the COVID-19 pandemic and its attendant distancing rules and restrictions in play, Evaluate figured a repeat of 2018, or even 2019, would be out of the picture. In the first quarter, “the hope was that biotech would prove sufficiently resilient to allow VC financing to fall only to 2017 levels,” or $13.2 billion, Evaluate wrote. That’s nothing to scoff at considering the totals put up in years prior, but it would have rendered 2018 “an outlier.”
It wasn’t an outlier.
In 2020, the biotech sector raised just under $20 billion, outstripping 2018 on every measure, except the total number of financing rounds. 2020 saw 448 venture financing rounds for biopharma companies, while 2018 had it beat with 481 rounds, according to Evaluate’s 2020 Review. Otherwise, 2020 came out on top, logging bigger rounds, and more of them.
There were 59 rounds exceeding $100 million in 2020, compared to 38 in both 2018 and 2019. The average raised per financing was $44.63 million, 14% higher than the $39.06 million average in 2018 and twice the average round in 2016, which stood at $21.6 million.
Among the top 10 VC rounds in 2020, the smallest—if it can be called small—was $200 million, compared to $250 million in 2018. But 2020 also had a handful of very large, “truly monstrous” rounds in Sana Biotechnology’s $700 million series A, Lyell Immunopharma’s $493 million raise and LianBio and Everest Medicines’ twin $310 million rounds.
Sana’s astonishing financing is a new high-water mark—the largest round in 2018 was Moderna’s $500 million series G and the biggest in 2019 was BioNTech’s $325 million series B.
Biopharma's role in fighting the pandemic likely stoked investor interest: “While Covid-19 ravaged other sectors, the fact that biopharma is seen as the solution to the global crisis probably accounts for the huge funding inflow,” Evaluate wrote in a January 2021 analysis.
The megaround has become a staple of biotech venture financing, thanks to the rise of platform companies that can use their technologies to target many disease areas simultaneously. Sana, with its $700 million Series A and $587.5 million IPO, isn’t just tackling multiple types of disease—it's doing it with not one, but two platforms. That kind of approach requires deep pockets, rather than the iterative approach biotech startups would traditionally take, raising a bit of money at a time to see them through the next big milestone.
Most of 2020’s venture capital was spent in the first half, peaking at $5.73 billion in the second quarter. From there, investment trended downward, to $4.88 billion in the third quarter and $4.78 billion in the fourth. But, Evaluate points out, “it was only because of Sana that the third and fourth quarters looked like a retrenchment; in reality, of course, each period brought in nearly $5 billion of private cash.”
EQRx launched in the first quarter with a $200 million series A and a mission to force some price elasticity into the pharma market. It started building its pipeline by licensing assets, but it will eventually develop its own biologic and small-molecule drugs that it will offer at “radically lower” prices. Dubbed “fast followers,” these drugs will be designed after—but still be differentiated from—drugs that are already on the market or coming to market soon. In January of this year, the company topped up its coffers with a $500 million Series B financing—a good sign for biopharma VC spending in 2021.
We assembled this list using data EvaluatePharma provided in February 2021, plus commentary from the firm's Pharma, Biotech & Medtech 2020 in Review report
As the last numbers trickle in for 2020, Evaluate expects total biopharma investments to exceed $20 billion.
Can 2021 beat that? We’ll find out soon enough.