VC investments hit status quo in Q1, but no complaints here

Last year wasn't the best for venture capital investments in U.S. private companies, with the total for the year headed in the wrong direction, failing to match 2015 levels. (See BioWorld Today, Jan. 4, 2017.)

So it was nice to see the $1.45 billion worth of investments in the first quarter within rounding distance of the $1.56 billion seen in the first quarter of last year. Both quarters saw 52 companies tracked by BioWorld Snapshots receiving investments.

And if you're focused on the long-term health of the industry, it looks better when you dig through the results.

Looking at series A and seed investments, there were 28 investments in those startups, an increase from the 24 seen in the year-ago quarter, according to Snapshots, from BioWorld, the Clarivate Analytics biopharma news service. And the total raised by those companies jumped from $602 million last year to $704 million in the recently completed quarter.

Of course, startup Vir Biotechnology Inc., of San Francisco, helped pad the first-quarter series A total with its $150 million commitment from Arch Venture Partners. But the $704 million doesn't include additional undisclosed investments from the Bill & Melinda Gates Foundation and others, including sovereign wealth funds, public mutual funds and prominent individuals and family offices, so the actual total is larger.

Arch's managing director, Robert Nelsen, said the company is prepared to "write individual checks of up to $100 million to in-license innovative technology platforms and novel clinical assets from biotech and pharmaceutical companies," suggesting Vir's total committed investments could be substantially larger. (See BioWorld Today, Jan. 9, 2017.)

In addition to building its pipeline through licensing deals, Vir plans to develop its own drugs for infectious diseases, something this former lab-rat was happy to hear. In fact, that's a trend that appears to be headed in the right direction, with the fraction of companies doing specialty pharma dropping overall; just seven of the 52 companies were classified as specialty pharma, defined as a company in-licensing drugs or using a platform to reformulate drugs

Looking to the public markets, the number of companies hitting the U.S. exchanges declined from seven companies in the year-ago quarter to just five companies in the first quarter of 2017. The total amount raised looked even bleaker, with gross proceeds from IPOs in the first quarter of 2017 ($290 million) less than half what was raised in the year-ago quarter ($660 million).

Some of the decline appears to be because companies are able to raise money on foreign exchanges. Looking at the combined total for U.S. and foreign exchanges, the $461 million raised through IPOs in the recently completed quarter doesn't look quite as bad compared to the $673 million raised in the year-ago quarter.

And there's still three quarters for 2017 to catch up. A few high-profile companies have filed for IPOs, including Ionis Pharmaceuticals Inc.'s spin-off, Akcea Therapeutics Inc., of Cambridge, Mass., which is looking to raise $100 million, and San Diego-based Tocagen Inc., which filed a prospectus with the SEC last month and has set a proposed range for 7.3 million shares at $10 to $12, which would raise $80.3 million at the midpoint price. (See BioWorld Today, March 13, 2017.)

US Private Company Financing

For discussion on drug pricing in the current biopharma environment, download a free copy of the recent BioWorld special report here: The PAPs Series: More Drug Pricing Red Tape or Potential Solutions?