Biotech's top 10 money raisers of 2018

Total annual biotech investments
Although the number of venture capital rounds fell to its lowest in a decade, larger deals made sure the total raised in 2018, $16.8 billion, surpassed 2017's record. (Eli Richman/FierceBiotech)

If 2017 was a banner year for biotech venture capital, 2018 blew it out of the water. Last year, private biotech companies reeled in a grand total of $16.8 billion, eclipsing 2017’s then-record $12.1 billion by 39%. And it wasn’t just the total spent that smashed records: The average per financing round increased too, and so did the proportion of enormous megarounds. 

The average raised per financing was $42.7 million, which—once upon a time—would have been impressive. This figure is three and a half times the average round in 2013, which stood at $12.6 million.

And the average has been climbing for years, with big leaps in 2015 and 2018. In 2015, it jumped 46% year over year to $22.5 million, and last year's figures came in 42% higher than 2017 to reach $42.7 million. 

That hefty average made up for a 10% dip in the number of financing rounds, from 442 to 393, the lowest in a decade, according to a Vantage analysis. The megarounds that lead our list helped drive the boost: 37, or 9%, of the year's funding rounds topped $100 million. One-third of the rounds exceeded $50 million. 

Indeed, among the top 10 VC rounds in 2018, the smallest—if it can be called small—was a whopping $250 million. Celularity and Viela Bio tied with twin series A rounds of $250 million. China-based companies Brii Biosciences and CStone Pharmaceuticals each outraised that by $10 million, tying for seventh with their seed capital and series B rounds, respectively. 

Early rounds made up the bulk of the top 10, with two seed rounds and four series A financings. Celularity and Viela are both Big Pharma spinoffs—from Celgene and AstraZeneca, respectively—and they join No. 4 Cerevel Therapeutics, a Pfizer spinoff, in the top 10. Cerevel started out with $350 million from Bain Capital and a clutch of CNS drugs that Pfizer had to shed. Viela came to be when AstraZeneca cut loose some autoimmune programs to concentrate on its oncology, cardiovascular and respiratory disease franchises. 

Celularity’s story is a little different. The Celgene spinoff is developing off-the-shelf cancer therapies based on placental cells, but unlike most early-stage biotechs, Celularity is bringing in revenue as it works on preclinical and clinical programs. The company started out owning a pair of wound-healing products acquired from Alliqua BioMedical, as well as LifeBankUSA, where parents can bank their children's placental stem cells and cord blood, in case they eventually need treatments derived from those cells. 

It's not surprising that the remaining series A, a $300 million round raised by Allogene Therapeutics, was the largest of that lot. The CAR-T player boasted former Kite leaders Arie Belldegrun, M.D., and David Chang, M.D., Ph.D., as co-founders and 17 allogeneic, or off-the-shelf, assets from Cellectis, once licensed by Pfizer and now handed off to Allogene. The team aims to write the second chapter of CAR-T, with treatments made from donor T cells rather than each individual patient's own cells. That's an easier and faster job—if, of course, these so-called off-the-shelf CAR-Ts prove out.

At the top of our overall list is, of course, Moderna Therapeutics and its mammoth $500 million series G, which hit the books just before the biotech picked up $125 million from an expanded partnership with Merck. And that influx of private investment arrived even as many expected Moderna's next financing to be its IPO.

Moderna did eventually list on the Nasdaq, in a $604 million IPO that became biotech’s biggest ever, outshining Allogene’s then-record-setting $288 million IPO just two months earlier. 

Moderna’s share price did fall in the two months following its Nasdaq debut, showing that “not all investors share some of the stratospheric private sector valuations that have been achieved recently,” Vantage wrote in January. But since then, its stock has been generally trending up, though in an admittedly choppy trajectory. 

Two other biotechs have gone public or prepared to do so since making it onto this list. Suzhou, China-based CStone Pharmaceuticals listed on the Hong Kong Stock Exchange in February, and Reuters reported in March that BioNTech had hired banks as it plotted to raise as much as $800 million in its Nasdaq IPO.

Most of 2018’s venture capital was spent in the first half, peaking at $4.8 billion in the second quarter. From there, investment trended downward, to $3.8 billion in the third quarter and $3.5 billion in the fourth. 

“Many assume that 2018 will not be repeated, … meaning the extent of any slowdown remains a big question for 2019,” Vantage wrote.  

As for 2019, it looks to be so far, so good. This isn’t an exhaustive list, but a spate of biotech companies have drawn VC funding in 2019, ranging from a $23 million series B for Attune Pharmaceuticals to BridgeBio’s $299 million financing. Most of this year's rounds so far fall around the $40 million to $60 million range, though a few peek over threshold. For example, $85 million for Black Diamond, $100 million for Apollomics and $125 million for SpringWorks Therapeutics—all series B rounds.

And though 2019 may not beat 2018 overall, the megaround may be here to stay, thanks to the rise of platform companies that can use their technologies to target many disease areas simultaneously. Take Maze Therapeutics and its $191 million series A round, which will bankroll some platform development, as well as support three drug programs.

“What was required to do that was not a normal raise,” said Charles Homcy, Maze Therapeutics’ founder, interim CEO and a partner at Third Rock. "If we had done a normal $55 million series A alone with Third Rock, we could pursue the drug discovery program, but not the platform in a way we think would make this a very competitive effort.”

All of that said, “a return to levels seen in 2015 and 2016, years that were still pretty respectable historically speaking, is not unimaginable,” Vantage wrote. “This is partly because the funding peak of late-2017/early 2018 was surely never sustainable.”

Top 10 VC rounds calculated in a Vantage analysis of EvaluatePharma data, January 2019, Evaluate Ltd.

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