East of England region dominates UK biotech venture capital deals
Seven Cambridge companies and two from Stevenage made the top 15 UK venture rounds last year, according to a new report on biotechnology financing for the last year.
It means the nine biotechs from the East of England were responsible for 60 per cent of the nation’s VC investment, according to the study: ‘Global and growing: UK biotech financing in 2019’ by the BioIndustry Association (BIA).
Stevenage Biosience Catalyst companies were first and third. Achilles Therapeutics was top of the tree after raising a £100 million Series B round and Gyroscope Therapeutics third with a £50.4m Series B.
Cambridge rare diseases repurposing business Healx had the fourth highest raise with a £43.4m Series B. Cambridge-based Inivata was in fifth with another thumping Series B worth £39.8m.
Other Cambridge representatives in the top 15 were Azeria Therapeutics with £32m (B-round); Congenica (£23.3m B-round); Morphogen-IX (£18.4m Series B), Wren Therapeutics with an £18m Series B and STORM Therapeutics (£18m Series A). So East of England companies raised £343.3m (more than 60 per cent) of the UK total of £564m.
The BIA reports: “We continued to see large rounds in 2019 with three UK biotechs achieving a raise of above £50m which was almost unheard of prior to 2015. However there were eight such deals in 2018 and this reduction accounts for the overall disparity in VC investment between the two years.
“The largest deal, Syncona-backed Achilles Therapeutics, brought in a new cadre of US investors.”
Global VC deals totalled £14.5 billion in 2019 – down 12 per cent on 2018. Almost all regions experienced a drop. America continued to attract the lion’s share of global investment but 15 per cent less than 2018.
Even Boston and San Francisco, dominant globally, experienced falls. China raised £2bn – exactly the same as 2018, Europe stayed static at £2.6bn with the UK the leading cluster, accounting for 26 per cent of the continent’s total raise. This was down from 2018 when it attracted 40 per cent of the European total, the BIA reports.
All told, UK biotech companies raised £1.34 billion in 2019 - £679m in VC money, £64m via IPOs and $596m in all other public financings.
Although investment in 2019 didn’t exceed the record breaking total of 2018 it continued the upward trend of the past decade and maintained the £1bn+ annual financing the sector has enjoyed in each of the past five years, The figures cemented the UK as the No.3 global life sciences cluster.
The BIA adds that UK companies are becoming more successful in securing the scale of capital required to finance their growth as the sector matures and more companies move their products closer to market.
Europe and the US saw flat or reduced investment across public and private sectors. Private investment in UK biotech companies fell by 42 per cent between 2018 and 2019, driven largely by a dearth of large post-B financings. However investment was equal to 2016 and above 2017 levels.
Seed funding was steady at £27m; and at £142m, Series A financings were down on past years. However the £459m raised in Series B financings was a significant record by historical standards.
With five UK biotech IPOs in both 2017 and 2018 the two of 2019 signalled a significant cooling of public market appetite, the BIA reports.
The US technology market of NASDAQ remains the preferred destination for drug development companies with Cambridge’s Bicycle Therapeutics raising £47m in May – the highest IPO deal.
Comprehensive as the BIA report is, it does not include other types of financing which, for example, saw LifeArc invest $30m in Kymab in July and Abcam raising £200m in a new funding facility led by HSBC in June.
Nor does the biotech sobriquet include medical technology such as CMR Surgical’s robotics system for keyhole surgery.
CMR became Cambridge’s 18th unicorn (billion dollar valuation) by raising £195m Series C finance in September.