Venture

Biotechs grabbed $1.83B in VC cash in Q3. Still fast but a little less furious

Biotech VCs in the US continued to steam along in the third quarter, racking up $1.8 billion in new investments. That marks a slight drop from the same period a year ago, but 2016 is still outstripping everything else on the record books aside from the sizzling stretch through 2015.

The total tots up as $5.5 billion for the first nine months of the year, as VCs continue to splurge on their portfolio of new and existing drug developers. By this point last year, the total for the year topped $6 billion.

To put that in some additional perspective, the total for the first three quarters in 2010 was $3.1 billion, as many shook their heads over the post-2008 slowdown.

The third quarter numbers did reflect a tick up from the second quarter, with the cash split among 87 biotechnology deals tracked by the MoneyTree Report from PricewaterhouseCoopers, based on data provided by Thomson Reuters.

Three of those deals registered in the top 10 nationwide for all of the venture cash distributed in the US. And they underscore an appetite for mega-rounds for select companies that are promising to disrupt the R&D field.

Moderna led the biotech bunch with its $474 million in new venture cash, which has brought its total to $1.5 billion as the company creates the infrastructure for a fully operational venture ahead of some convincing mid-stage data. That’s raised eyebrows in the industry, but CEO Stephane Bancel is grabbing for the brass ring. Victory would be huge; defeat would be too.

Intarcia’s $184 million quarter is designed to finish the work on its implant for longterm dosing of diabetics. The magic number in diabetes is 7 for A1C levels, and a cocky Intarcia believes its technology can more reliably get large numbers of patients to their goals, beating the giants at a game they’ve controlled for decades. Biotechs typically avoid diabetes drugs; too expensive in Phase III, with plenty of implosions along the way. Intarcia believes it can beat those odds.

— A smart, confident ex-Genentech crew is calling the shots at Denali, the third biotech found on the national top 10 list with $130 million in venture cash and a host of new collaborations to accelerate its work on neuroscience. This field is a graveyard of dead and dying programs, but Denali says the sector is ripe to make real progress. It’s another big, bold gamble to overthrow the status quo.

To be sure, while some VCs back the revolutionaries to the hilt, there are plenty of small biotechs operating with small staffs and a lean-and-mean approach to new drug development. They may not get as much attention, but the betting now will focus on who survives and who dives.

It’s the most interesting game in town, no matter how you bet your money.


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