Private Equity Investment
Biotechnology remains a favored sector for private investors. Over the past five years, biotechnology investments consistently have ranked among the top two investment categories for venture capital firms, except in 2008 when investors put slightly more funding into cleantech.
In the third quarter of 2009, biotechnology ranked first among the various venture capital investment sectors tracked by the PriceWaterhouseCoopers National Venture Capital Association Money Tree™ Report at 18.8% of total venture capital funding for the quarter. Over the past ten years, biotech companies have generally received between 17% and 20% of this allocation. The number of biotechnology investments and the aggregate investment amounts remained consistent at approximately 160 and $1.1 billion per quarter, respectively, since the third quarter of 2008.
The largest venture capital investment in biotechnology of 2009 was the $145 million startup funding of Clovis Oncology, which develops anticancer therapeutics.
Other significant private equity and venture capital investments in the second half of 2009 included:
- Pacific Biosciences raised $68 million to fund development of its platform for single-molecule DNA sequencing.
- Complete Genomics raised $45 million in August from investors to fund its DNA sequencing development and operations.
- Also in August, Kolltan Pharmaceuticals raised $40 million to fund development of monoclonal antibody oncology therapeutics.
- In September, Amyris Biotechnologies sold $42 million of preferred stock to finance development of microorganisms capable of producing compounds from renewable hydrocarbon biofuels to pharmaceuticals.
- Roka Bioscience raised $37 million in September to focus on molecular assays for biopharmaceutical production, water and food safety, veterinary and environmental applications, and bioterrorism testing.
- In November, GlycoMimetics sold $39 million of equity to support its glycobiology research and development of small molecule drugs that mimic the actions of carbohydrates. The company’s initial focus is on therapeutics that treat inflammatory and infectious diseases.
During 2009, more than half of the number of biotech investments were made, and 60% of the available funds were invested, in companies developing therapeutics; 30% of the investments and 20% of the funds were allocated to diagnostics, probes, and genetic engineering, and the remaining investments were focused on the development of equipment, industrial applications, research, animal biotech, and biosensors.
Business and financial activity in the biotechnology sector, particularly in the months leading up to 2010, show renewed vigor. Recent IPO shares are currently trading below their offering prices, but within range of recovering. The market is responding positively to the industry generally, and acquisition and financing deals are getting done.