Brexit fears, Woodford woes overshadowed UK biotech and cut 2019 financing by almost half
The venture tide might have subsided, the IPO window may be closing and certain listed biotechs may be having a tough time amid Neil Woodford’s well-publicized demised, but there’s still plenty to celebrate in the UK BioIndustry Association’s eyes.
Overall investment in UK biotech last year fell from the record-breaking £2.2 billion levels of 2018 to £1.3 billion — including £679 million in venture capital, a meager £64 million in IPOs plus £596 million when you add up all public financings, according to a new report from the BIA.
The bottom line for private investment, which remains crucial for any kind of drug development projects to get off the ground:
Private investment in UK biotech companies fell by 42% between 2018 and 2019, driven largely by a dearth of large post-B financings. However, investment was equal to 2016 and above 2017 levels.
For the companies that did manage to secure sizable VC rounds, many relied on overseas investors. Achilles’ £100 million round featured a cadre of US investors, led by RA Capital, betting on its neoantigen work; anti-aging player Juvenescence brought in investors from Florida and Oman for its £82 million Series B.
“The impending loss of the European Investment Fund to the UK however is undoubtably suppressing investment, impacting the formation of new UK-focused life science funds in 2019,” BIA CEO Steve Bates wrote. “Policymakers have recognised this, with the British Business Bank establishing the £2.5bn British Patient Capital fund in 2018 to address the UK’s venture capital shortfall. Investments have started to be made but its impact is yet to be felt by the sector and more funding is required.”
Nevertheless, the BIA report — an annual pulse check on the country’s life sciences sector co-written by data partner Informa Pharma Intelligence — also noted that the decline in VC funding was in line with a global retreat.
Around the world, 2019 saw £14.5 billion worth of biotech venture funding, down 12% on average. Even the US, which continued to draw the lion’s share of investments, dipped 15%, while both Europe and China held onto similar numbers as 2018 at £2.6 billion and £2 billion, respectively.
“The drop-off in earlier stage rounds might be a result of investors preferring to allocate more funds to existing portfolio companies,” Mike Ward, Informa’s head of content, wrote.
In terms of IPOs, the BIA acknowledged the Hong Kong Stock Exchange as a destination for public debuts more than a year after the city revised its rules to allow pre-revenue biotech listings.
While their European counterparts such as BioNTech and Genmab have found an appetite for public floats, only two UK companies managed to get a spot on the public markets: Bicycle Therapeutics (Nasdaq) and Diaceutics (AIM).
“The BIA has noted in previous editions of this report that UK companies are remaining private for longer in response to more abundant VC money and less public market appetite,” the report read. “This looks to be a trend that will continue.”
A look at the data on follow-on financings suggest that a public biotech looking to raise more cash would be better off at the Nasdaq than the London Stock Exchange.
“The investment landscape has been perceived as challenging due to both national and global uncertainty but the amount raised by biotech companies has continued its upward trend in 2019,” Kate Rowley, investment director of Bioscience Managers, commented.