Biotech venture investing continues to sizzle in a big, $1.7B Q1

With crossover investors still crowding into the biotech field to help launch a wave of new IPOs, the industry recorded $1.7 billion in new venture funds in the first quarter, according to The MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters.

While that dollar number represents a bit of a dip compared to a blockbuster $2 billion fourth quarter, that figure still leaves a high-water mark for this early in the year as biotech investing in these boom times continues to run at a hectic pace. Venture investing in biotech since the 2008 crisis has typically fallen short of $1 billion in Q1. And 2015's first quarter even beat out the $1.6 billion raised in early 2007.

That leaves venture investing on pace to match or possibly exceed last year's chart-topping $6 billion. And there are no signs of it slowing in the immediate future.

"Biotech had its third strongest quarter in MoneyTree history," says Greg Vlahos, the life sciences partner at PricewaterhouseCoopers. And it managed that without relying on a string of megadeals to swell the figure. The total number of deals for the quarter hit 124, a 14% bump over Q4 in 2014, with a surge of cash for early-stage deals.

"It's a really positive quarter for biotech overall," says Vlahos.

As is common for the first quarter, there was a decline in venture-backed IPOs, with only 6 biotechs to report. But the recent round of IPO announcements indicates to Vlahos that the party on Wall Street isn't over yet. "I suspect we'll see that the 6 are surpassed in April alone," he adds.

That close connection between the IPO market and biotech venture investing has also been clear to Bruce Booth, a partner at Atlas Venture. Crossover rounds backed by a group of public company investors are responsible for a large part of the big surge in biotech, he notes, leaving the traditional players maintaining a strong but steady pace.

The IPO connection was apparent in the quarter's list of the biggest rounds. One of the biggest, for $76 million, went to aTyr, which filed for its IPO immediately after reporting the round. Cidara Therapeutics, a 2014 Fierce 15 company, raised $42 million in venture cash and went public earlier this week. And fellow 2014 Fierce 15 honoree Voyager Therapeutics' recent round immediately started speculation that an IPO could be in its near future.

Special Reports: FierceBiotech's 2014 Fierce 15 - Cidara Therapeutics - Voyager Therapeutics