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After experiencing a robust level of investment during the COVID-19 pandemic, financial support for the biotech sector dropped off in 2023 — but is again seeing considerable interest in 2024.
From 2019 to 2020, biotech-related venture financing increased 60%, reaching a new high point of $23 billion, according to the Nature Biotechnology journal. Biotech stocks rose 20%, and the number of biotech company initial public offerings increased by more than 39%.
U.S.-based companies that were working to produce innovative drugs in 2021 received an 104% increase in funding — however, after a number of early-stage biotech companies went public with a high valuation, and some failed to deliver notable results, according to analytics provider GlobalData, investor confidence in the sector decreased.
The S&P Biotechnology Select Industry Index, which peaked in February 2021, had shed more than 50% by the fourth quarter of 2023, according to a McKinsey & Company report. Life science news source BioSpace reported a record amount of biotech companies — 41 — went bankrupt in 2023.
In the first two months of 2024 alone, though, seven bio companies went public — more than half of the total number of biopharma IPOs that were offered in 2023, according to Ropes & Gray’s “Life Sciences 2024 Dealmaking Trends & Outlook” report.
Research from the National Venture Capital Association and Pitchbook indicates biotech and pharmaceutical organizations raised $5.9 billion in more than 200 rounds of financing in the first quarter of this year — a higher amount than 2023’s quarterly average.
This year, Precedence Research predicts the biotech sector will reach $1.55 trillion, then rise to $1.75 trillion in 2025 — and continue to grow through 2033, eventually reaching a market size of $4.25 trillion.
Biotech research organizations have received funds from a number of institutional investors thus far in 2024.
In March, the clinical-stage company CervoMed said it had entered into a definitive securities purchase agreement for a private placement to sell an aggregate of 2,532,285 common stock shares and warrants to purchase shares of its common stock to a group of institutional and accredited healthcare specialist investors — which included global value-oriented and event-driven hedge fund Armistice Capital, investment company RA Capital Management, and healthcare investment firm Soleus Capital.
The company said in a press release that it anticipated the private placement would produce approximately $50 million in gross proceeds. It planned to use the net proceeds from the financing to fund operating expenses and research relating to its clinical-stage neflamapimod medication, which treats central nervous system disorders such as strokes, dementia with Lewy bodies, and Alzheimer’s disease.
Multi-asset immunology company Zura Bio Limited, which formulates novel dual-pathway antibodies for autoimmune and inflammatory diseases, also entered into subscription agreements for a private placement in April that was expected to produce gross proceeds of approximately $112.5 million.
Investors such as private and public biopharma-based global investment firm Access Biotechnology, Armistice Capital, RA Capital Management and health care-oriented private investment firm Great Point Partners, LLC participated in the deal.
In May, clinical-stage biopharmaceutical company Corvus Pharmaceuticals, Inc. announced it had entered into a securities purchase agreement with new and existing investors such as Armistice Capital and asset management firm Point72.
Corvus, which develops immunotherapy options for a range of cancer and immune diseases, said it expected the agreement to raise roughly $30.6 million in aggregate gross proceeds.
GenSight Biologics, another biotech company, said in May that it had offered shares through a private placement. The company’s shareholders include healthcare investment firm Sofinnova, investment firm Invus and Armistice Capital.
GenSight, which develops gene therapies for retinal neurodegenerative diseases and central nervous system disorders, said it planned to utilize the net proceeds to finance general corporate expenses and manufacturing operations and regulatory procedures that relate to its gene therapy product for Leber hereditary optic neuropathy (LHON) — a rare genetic disease that can affect the optic nerves and lead to vision loss, according to the North American Neuro-Ophthalmology Society.
“This fundraising marks an inflection point in our journey and demonstrates the confidence of investors in our vision and ability to achieve our strategic objectives," GenSight CEO Laurence Rodriguez said in a press release. "We are grateful to our historic investors for their continued support."
