The Biotechnology Industry Organization released a report in March 2016 titled: Emerging Therapeutic Company Investment and Deal Trends. BIO Industry Analysis says more than 90 percent of the biopharma industry is composed of small, emerging companies. According to BIO President Jim Greenwood and E. Cartier Esham, Ph.D., executive VP of BIO’s Emerging Companies Section, it is important for the trade association to better understand early-stage investor and deal-making trends in order to determine where scientific or policy issues may be affecting the ability to maintain a robust pipeline of innovative medicines. They say the ability to access capital and build strategic alliances is vital for small therapeutic-focused companies to succeed in translating novel drug candidates into approved medical products for patients.
Greenwood and Dr. Esham say the report will help inform future policy work and provide industry, policymakers, and other stakeholders with a comprehensive view of the investment and partnering environment for novel therapeutics. It set out to highlight five investment and deal-making activities involving emerging therapeutic companies: venture capital, IPOs, follow-on public offerings (FOPOs), licensing, and acquisitions. Key findings from the report included:
• Venture Capital: 2015 was the best year on record for U.S. venture capital, with just less than $7 billion raised. Funding of immuno-oncology and neurodegenerative disease companies helped propel this all-time high result. Investment in treatments for neurological diseases continued to increase. However, a few disease fields affecting large populations (endocrine, respiratory and gastrointestinal) continued to decrease in recent years.
• Series A Financing: Series A financing nearly doubled from 2014 to 2015, and the amount of first-time Series A investments reached 80 for the first time in nine years.
• IPOs: The IPO market continued to be strong since the passage of the JOBS Act during 2012. For 2015, 39 U.S. emerging therapeutic companies listed on public exchanges.
• Follow-On Public Offerings: FOPOs by U.S. emerging companies established a record high in 2015, with $16.1 billion raised.
• Licensing: A record of $7.1 billion for upfront payments in R&D-stage licensing deals occurred in 2015.
• Acquisitions: Acquisitions of R&D-stage companies during 2015 raised $26.3 billion in upfront payments, an all-time high.