Venture Funding of Therapeutic Innovation A Comprehensive Look at a Decade of Venture Funding of Drug R&D February 2015 by David Thomas, CFA and Chad Wessel BIO INDUSTRY ANALYSIS
Venture Funding of Therapeutic Innovation A Comprehensive Look at a
Decade of Venture Funding of Drug R&D
February 2015
BIO INDUSTRY ANALYSIS
Access to early-stage financing is the lifeblood of biotechnology
innovation. For therapeutic-focused biotechnology companies in
particular, the required capital and development timelines dwarf
most other industries, making it challenging to find sizable early
investments from committed investors. As the world’s largest trade
association representing biotechnology companies across the United
States and in more than 30 other nations, it is important for BIO
to better understand investor trends in order to determine where
scientific or policy issues may be impacting the ability to
maintain a robust pipeline of innovative medicines.
In this report, we set out to better understand where venture
financing over the last decade has been put to work in terms of
disease area and novelty of research. Some of the key findings of
this first-of-its-kind report are:
• Over the last decade, 78% of U.S. venture investment for
therapeutics went toward novel drug R&D, suggesting innovation
is a core priority for venture investors.
• Comparing five-year periods before and after the recent financial
crisis (2004-2008 vs. 2009-2013), total funding of drug R&D
dropped 21%, from $21.5 billion to $16.7 billion.
• Disease areas affecting large populations of Americans have seen
a decline in novel drug R&D funding over the five-year periods:
Diabetes (-81%), Psychiatry (-56%), Gastrointestinal (-49%),
Respiratory (-41%), Cardiovascular (-33%).
• Rare disease funding has seen a large increase over the past
decade in terms of both dollars raised and number of companies
funded.
• Threefold more venture dollars were raised by companies working
on drug improvements of previously approved pain drugs than for
novel drug R&D in Alzheimer’s Disease.
• Biologics developers now receive 50% of total venture funding for
therapeutics, up from only 27% in 2004, with most of the increase
seen after the signing of the Affordable Care Act in 2010, which
included 12 years of data exclusivity for biologics.
• There are fewer first-time Series A financings in recent years,
down 30% from a peak in 2006.
With a contracted life-science investor base and an investor
community continuously examining issues such as industry
productivity, the reimbursement landscape, scientific barriers, and
regulatory hurdles, some areas of therapeutic innovation are bound
to face greater challenges than others. This report will help
inform our future policy work and provide industry, policymakers,
and other stakeholders with a comprehensive view of the investment
environment.
Sincerely,
A Letter from The Honorable Jim Greenwood & Dr. Cartier
Esham
Jim Greenwood President & CEO, BIO
E. Cartier Esham, Ph.D. E.V.P., Emerging Companies Section,
BIO
BIO Industry Analysis | 1
Phase of Development
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2 | BIO Industry Analysis
Introduction To investigate investor trends, examine investment in
specific therapeutic areas and indications, and study whether there
are disease areas that might be struggling for early-stage venture
equity financing, we analyzed data from four venture capital
databases to create the broadest, most comprehensive study possible
– a categorization of $38 billion of venture capital into more than
1,200 U.S. drug companies, receiving more than 2,000 rounds of
funding over the last 10 years (2004-2013).
We categorized each company’s lead research focus at the time of
investment by: phase of development, disease and indication,
modality, and, most uniquely, level of novelty. More specifically,
individual tranches within each investment round were tagged by
lead program at the time funding was received. This allowed us to
capture changes in company therapeutic focus over time (see
Methodology for more details).
To assess level of novelty, we grouped companies into two
categories: 1) novel R&D of new chemical entities with no prior
regulatory approval, and 2) R&D that improves upon existing
therapeutics, such as new delivery methods, new formulations, or
development of approved drugs for new indications (repurposing).
Both have their place in the spectrum of drug development and, in
the end, serve to benefit patients. Products generated from the
second category will improve the quality of life for patients
through enhanced benefits of already approved drugs. Over time,
these benefits have proven valuable in expanding use, compliance,
and overall patient experience.
The first category of novel drug R&D examines truly innovative
and potentially disease-modifying agents for diseases with current
unmet medical need. Without adequate funding of novel drug R&D,
the next generation of innovative medicines cannot be
discovered.
This report also analyzes financing in specific therapeutic areas
in order to better determine where scientific or policy issues may
be impacting the ability to maintain a robust pipeline of
innovative medicines – a goal that is shared by patients,
healthcare providers, policymakers, investors, and the
biopharmaceutical industry alike.
BIO Industry Analysis | 3
Ten-Year Venture Funding Trend As shown in Chart 1, venture equity
funding of private drug development companies peaked in 2007 with
$5 billion in total funding. This was followed by a severe decline
through the financial crisis of 2008 and into 2010, a year in which
only $2.8 billion was raised, a drop of 44% from the industry’s
peak in 2007. Since that time, investment has begun to trend
upward, but only to $3.6 billion in 2013. The industry has not made
it all the way back to the heights of 2007, in part because of an
exodus of biotech venture investors. In fact, it is estimated that
there were 40% fewer biopharma venture investors in 2013 than in
2007.1
When comparing the relative amount of total financing for novel
drug R&D vs. drug improvement R&D, we found that the
majority of venture investment (78% on average over the last 10
years) is directed toward novel drug R&D. However, as will be
described below, there are major disparities within specific
therapeutic indications. For some areas the percentages are
reversed, with as much as 70% of investment going into improving
existing drugs rather than novel, potentially transformative
medicines.
Novel Drug R&D = R&D pursuing new chemical entities to
treat disease, with no prior regulatory approval.
Drug Improvement R&D = R&D that improves upon existing
therapeutics, such as new delivery methods, new formulations, or
using approved drugs for new indications (repurposing). Examples:
Drug delivery patch, topical cream, implanted delivery device,
needle-less injection, extended release, prolonged half-life
chemical modifications (conjugations, including pegylated
variants), reformulations of approved drugs, repurposing of an
approved drug, nutraceuticals.
Total Venture Funding of Drug R&D, 2004-2013
Chart 1. Total venture funding 2004-2013. Funding is represented as
investment toward R&D of novel molecular entities vs. R&D
for
improvements of approved drugs (including delivery, repurposing,
and reformulation).
Novel Drug R&D
Drug Improvement R&D
4 | BIO Industry Analysis
Total Venture Funding by Phase of Development – Core Focus on
Early-Stage We also examined total investment dollars broken down
into the five phases of drug development: Preclinical; Clinical
Phases I, II, and III; and market launch. More than half of venture
investment goes into companies at the early drug development
stages, with 34% of dollars going into companies not yet in human
testing and 20% to companies in Phase I, which is predominantly the
safety testing stage in humans. Preclinical funding in 2013 is near
where it was back in 2004 (near ~$1.5 billion), which was the
highest level of the last decade.
The clinical Phase II companies received 30% of venture dollars
over the last 10 years, a significant percentage that enables
companies to complete ongoing Phase II trials or to fund an
expensive Phase III trial. Companies in Phase III at the time of
financing, account for only 12% of the total funding. As Phase III
trials are the most expensive to conduct, many companies seek large
pharmaceutical or established biotech partners to help finance the
cost of these trials. Alternatively, companies can raise larger
sums of money for Phase III trials when they raise capital in an
initial public offering and follow-on offerings. This fact,
combined with the Phase III funds raised when a company is in Phase
II, may explain the low percentage of overall funding into Phase
III companies. Note that we categorize a company’s Phase at the
time of receipt of funding, which may not be the Phase that the
invested dollars will actually be used for. A tiny fraction of the
2004-2013 funds went into a few private specialty companies with
drugs already on the market, for a total of 3%.
Total Venture Funding by Phase of Drug Development
Chart 2. Total venture funding by Phase of Drug Development,
2004-2013.
0
50
100
150
200
250
300
350
400
$0
$1,000
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BIO Industry Analysis | 5
Large Molecules = Complex biologic entities that are either made
using living cells or require advanced biochemical synthesis.
Vaccines are included in this group, and on average make up 12% of
the “biologics” category over the study period.
Small Molecules = Traditional, chemically synthesized
pharmaceuticals commonly associated with oral pills.
Total Venture Funding by Drug Type – A Shift to Biologics While
biotechnology can be understood as utilizing genetic and cellular
engineering to achieve new biologic products, only one third of
companies in the industry actually work on biologics development.
Nearly two thirds of companies develop small molecules, the
traditional pharmaceutical modality that is commonly associated
with oral pills. However, if venture funding is an early indicator
of what is to come, this distribution may be shifting to more
biologics companies. The percentage of biologics R&D (large
molecule R&D, including vaccines) being funded back in 2004 was
27%; in 2013, it reached 50%. The majority of the increase in
biologics investment took place in the last few years, from 2011 to
2013.
“The 12 year data exclusivity for biologics, which BIO succeeded in
getting signed into law in 2010, has added to the growing interest
in this innovative modality”
Jim Greenwood, CEO, Biotechnology Industry
“The enthusiasm for biologics investment has a lot to do with the
expansion of platform technologies, like RNA and gene–based
therapies – many of which were not well appreciated a decade
ago”
Bruce Booth, Partner, Atlas Venture
Biologics vs. Small Molecules
Chart 3. Modality shift over 10 Years of Venture Financing.
27% 32% 39% 29% 39% 31% 32% 38% 49% 50% $0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
d ($
M )
Venture Funding by Disease Category We grouped annual investments
into 14 major therapeutic categories by a company’s lead program at
the time of investment. We then further subdivided these into
sub-indications to identify areas responsible for decreases or
increases in funding. Chart 4, below, shows the total investment
breakdown by main disease area.
Total Venture Funding by Disease
Chart 4. Total venture funding by disease category,
2004-2013.
Oncology was the top funded disease area by a wide margin. Oncology
accounted for 24% of all investment dollars in the last 10 years,
with over $9 billion in total dollars invested, followed by
Neurology and Infectious Disease funding with 12.1% and 10.9%
respectively. Together these three disease areas account for almost
half of the total venture financings. On the other end of the
spectrum, combined financing for Psychiatry, Gastrointestinal, and
Respiratory makes up less than 10% of the total.
We also looked at disease-specific increases or decreases in
financing over time. For this, we compared year- over-year changes
as well as five-year windows – the most recent five-year window
versus the preceding five-year window. This splits the 10-year
period into pre-financial crisis (2004-2008) and post-financial
crisis (2009-2013).
Oncology
Neurology
ID
Platform
Other
CV
Endocrine
Metabolic
Ophthalmology
Immunology
Hematology
GI
Psychiatry
Respiratory
Venture Dollars Raised ($M)
Novel Drug R&D Drug Improvement R&D Total Funding
Disease Area 2004-08 2009-13 2004-08 2009-13 2004-08 2009-13
2004-13 Change %
Oncology $3,932 $3,869 $958 $370 $4,890 $4,239 $9,129 -13%
Neurology $1,627 $991 $1,262 $735 $2,889 $1,727 $4,615 -40%
ID $2,065 $1,462 $406 $204 $2,471 $1,666 $4,137 -33%
Other $937 $948 $416 $484 $1,352 $1,433 $2,785 6%
Platform $1,095 $1,150 $81 $116 $1,176 $1,266 $2,443 8%
CV $1,049 $700 $356 $324 $1,405 $1,024 $2,429 -27%
Endocrine $962 $384 $458 $590 $1,420 $974 $2,394 -31%
Metabolic $872 $1,192 $97 $23 $969 $1,214 $2,183 25%
Ophthalmology $633 $715 $175 $170 $807 $885 $1,693 10%
Immunology $777 $604 $106 $80 $882 $685 $1,567 -22%
Respiratory $596 $352 $270 $139 $866 $491 $1,358 -43%
Hematology $672 $466 $30 $59 $703 $525 $1,228 -25%
GI $581 $299 $247 $12 $828 $311 $1,140 -62%
Psychiatry $465 $203 $123 $99 $588 $302 $889 -49%
TOTAL $16,264 $13,337 $4,983 $3,407 $21,247 $16,743 $37,991
-21%
Table 1. Venture funding by disease ($M), 2004-2008 vs. 2009-2013,
broken down into Novel Drug R&D and Drug Improvement R&D.
Ranked by
total amount raised over 10 years.
Platform = These companies are engaged in molecular platforms that
can generate numerous new chemical entities. This category includes
companies with no clearly defined lead product whose research has a
potentially broad application, such as inventions within antibody
generation, antibody scaffold design, gene therapy, stem cell
therapy, regenerative medicine, or patented small molecule design
(combichem, cyclization chemistry, covalent linkage). Once
companies identify a lead product and utilize the majority of their
funds for that product, they are relabeled as a product company
within a specific disease indication.
Other = This area includes Dermatology, Allergy, Renal,
Osteoarthritis, Musculoskeletal Disorders, Genitourinary, and
others.
8 | BIO Industry Analysis
For the overall funding comparison for all disease areas for the
two five-year timeframes, a drop of 21% was realized, from $21.3
billion in 2004-2008 down to $16.7 billion in 2009-2013. Although
significant, when we look at specific disease areas, as in table 1,
we see drops in funding that are two to three times that
percentage. When breaking out novel drug R&D funding,
significant declines in 9 of the 14 other disease categories are
found. As illustrated in the chart below, there are declines in the
amount of novel R&D funding going into most of the disease
categories examined.
“The data found within this kind of analysis should help
stakeholders better assess scientific, regulatory, and public
policy issues that may have dramatic impact on venture capital
investments within specific disease areas.”
Robert Kiss, Managing Director, J.P. Morgan Asset Management
Change in Novel Drug R&D Venture Funding by Disease Area
Chart 5. Novel drug R&D venture funding by disease area,
2004-2008 vs. 2009-2013.
The chart above compares novel drug R&D funding by disease in
the two prior five-year windows, 2004-2008 vs. 2009-2013. The most
notable decreases are found in Endocrine (-60%), Psychiatry (-56%),
Gastrointestinal (-49%), Respiratory (-41%), and Neurology (-39%).
These are substantial declines that have impacted many
entrepreneurs across the industry seeking additional funding for
diseases effecting large populations. For many of these areas, the
breakout by sub-indication (below) provides additional insight into
these large decreases in investment.
Metabolic
Ophthalmology
Platform
Other
Oncology
Immunology
ID
Hematology
CV
Neurology
Respiratory
GI
Psychiatry
Endocrine
BIO Industry Analysis | 9
Oncology
Oncology is a very diverse set of literally hundreds of different
diseases. Biotechnology has been at the cutting edge of new
breakthroughs to meet unmet medical needs in this area. Many of the
investments over the last decade have led to notable advancements,
such as immuno-oncology, targeted antibodies, and selective kinase
inhibitors. The field is on the brink of making biomarker-defined,
patient-stratified medicine a reality. Innovation is evident
throughout the majority of oncology investments since 2004, as
nearly 85% has gone toward novel R&D as opposed to improvements
of older regimens. In this regard, oncology could perhaps serve as
a benchmark by which other disease areas should be funded:
significant amounts of funding, high levels of innovation, and a
broad diversity of companies. Unfortunately, as will be described
later, other disease areas have seen just the opposite over the
last few years.
Venture funding of companies with lead programs in cancer was just
over $9.1 billion over the last 10 years and accounted for 24% of
total venture capital raised - the largest of the 14 disease
categories. Looking at the data year by year in Chart 6, we see a
drop of almost 50% from the 2007 peak into 2010. This illustrates
that even a top- funded disease area like Oncology did not escape
the pullback in drug discovery investment in the years following
2008. The bulk of Oncology R&D funding (66%) occurred at the
Preclinical and Phase I stage, and the number of companies per year
receiving funding has increased since the lows in 2005-06.
More than 1.6 million Americans are expected to be diagnosed with
cancer, and more than 585,000 are expected to die in 2014
alone.2
Oncology 2004-2013
Chart 6. Total venture funding ($M) into companies with lead drug
R&D in Oncology, 2004-2013. Left: Novel R&D vs. Drug
Improvement
R&D. Right: Total Investment by Phase of R&D and number of
companies receiving financing per year for a specific venture
round.
2004-2008 2009-2013 % Change 2004-2013
Avg. # of Co.’s per Year 57 68 19% 62
% of all Venture Investment 23% 25% 10% 24%
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
Neurology
We have split the Central Nervous System (CNS) diseases into two
main groups: Neurology and Psychiatry. The area of Neurology
includes neurodegenerative diseases such as Alzheimer’s,
Parkinson’s, Amyotrophic lateral sclerosis (ALS), and Huntington’s
disease, as well as the relatively large area of Pain.
Additionally, the nerve cell autoimmune disease Multiple Sclerosis
is included in this group along with brain and spinal cord
disorders, sleep medicines, stroke, and many other neurological
diseases. Psychiatric medicine, analyzed later in this report,
includes mental health disorders.
Venture funding of companies with lead programs in Neurology was
just over $4.6 billion over the last 10 years and accounted for 12%
of total venture capital raised. However, we observed a significant
decline when we compared funding in the five-year windows - from
$2.8 billion in 2004-2008 to only $1.7 billion in 2009-2013, a
decline of 40%. Funding for novel R&D in Neurology dropped even
more, by 56%. The number of companies financed in Neurology reached
40 per year, while investment dropped over the latest five-year
period. This would imply companies are receiving smaller amounts of
funding.
2004-2008 2009-2013 % Change 2004-2013
Avg. # of Co.’s per Year 37 41 11% 39
% of all Venture Investment 14% 10% -24% 12%
Neurology 2004-2013
Chart 7. Total venture funding ($M) into companies with lead drug
R&D in Neurology, 2004-2013. Left: Novel R&D vs. Drug
Improvement
R&D. Right: Total Investment by Phase of R&D and number of
companies receiving financing per year for a specific venture
round. The
spike of 2004 is largely due to a $250 million B round into a
single company and six rounds over $40 million.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$200
$400
$600
$800
$1,000
$1,200
Chart 8. Relative venture funding of Pain vs Neurodegenerative
diseases Alzheimer’s, Parkinson’s, and Multiple Sclerosis. Novel
R&D vs
Drug Improvement R&D.
Novel Drug R&D
Drug Improvement R&D $0 $500 $1,000 $1,500 $2,000 $2,500
Pain
Other
MS
Alzheimer's
Parkinsons
From Chart 8, it is clear that pain accounts for the majority of
all Neurology funding. Funding of pain medicine R&D has been
threefold higher than the major neurodegenerative areas.
Pain 2004-2013
Chart 9. Total venture funding ($M) into companies with lead drug
R&D in Pain, 2004-2013. Left: Novel R&D vs. Drug
Improvement R&D.
Right: Total Investment by Phase of R&D and number of companies
receiving financing per year for a specific venture round.
What is perhaps more significant is that the majority of this
funding has gone to delivery of approved pain therapies, not novel
R&D. Only 33% of dollars invested in pain since 2004 went
toward novel R&D, as can be gleaned from the year-by-year chart
data in Chart 9.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$50
$100
$150
$200
$250
$300
12 | BIO Industry Analysis
Alzheimer’s Disease Relative to the large population in need of new
therapies and burden to the healthcare system, the dollar amount
heading into Alzheimer’s-focused companies is quite small. For
example, Ophthalmology received 5x this amount, while delivery and
reformulation of previously approved Pain drugs received 3x more
funding. From Chart 10, there does seem to be a silver lining in
the trend, as funding has been increasing. There has also been an
increase in the number of companies that received funding for
early-stage research. The spike in 2005 was primarily from just two
companies working on improvements to approved drugs.
Parkinson’s investment was even less than Alzheimer’s, and when
looking at the five-year windows novel drug R&D fell from $103
million to only $27 million, a 74% decrease. Some of this is
likely explained by the fact that companies are tagged by lead
product only, and many of the companies working in Alzheimer’s have
other neurodegenerative disease programs such as Parkinson’s. When
aggregate funding falls below $50 million per year and the number
of companies financed is less than five per year, the change can be
significantly influenced by just one or two sizable rounds. Similar
issues arise in the year-by-year chart for Multiple Sclerosis
focused companies as shown in Chart 11.
Alzheimer’s disease is ranked as the sixth leading cause of death
in the United States, and it is estimated it will affect 7.1
million people age 65 and older by 2025. In 2014, individuals with
Alzheimer’s are estimated to cost the healthcare system $215
billion in payments, which is projected to increase to $1.2
trillion by 2050.3
Alzheimer’s 2004-2013
Chart 10. Total venture funding ($M) into companies with lead drug
R&D in Alzheimer’s Disease, 2004-2013. Left: Novel R&D vs
Drug
Improvement R&D. Right: Total Investment by Phase of R&D
and number of companies receiving financing per year for a
specific
venture round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
Multiple Sclerosis
Chart 11. Total venture funding ($M) into companies with lead drug
R&D in MS, 2004-2013. Left: Novel R&D vs Drug Improvement
R&D.
Right: Total Investment by Phase of R&D and number of companies
receiving financing per year for a specific venture round.
Multiple Sclerosis The same issue of too few companies and tiny
funding amounts is evident with companies supporting a Multiple
Sclerosis lead program. The decrease in funding for novel therapies
(from $362 million to $78 million post- financial crisis) is
largely due to two companies raising large amounts in the earlier
dataset. In 2004, the majority of investment ($77 million) went
toward two companies in B and C rounds. In 2008, the majority of
investment ($75.8 million) went toward a single company’s B
round.
Other Indications Other indications in Neurology account for a much
larger portion of funding in this disease area, representing a
third of all Neurology and a fourth of all CNS funding. This group,
which includes Amyotrophic lateral sclerosis (ALS), Huntington’s
disease, sleep medicines, stroke, brain and spinal cord injury,
comas, and many other neurological diseases, experienced a 50%
decrease in total funding over the 10-year period. A large portion
of funding is from 2004, as seen in the large spike in Chart 7 at
the beginning of the Neurology section, when a single company
raised $250 million, the largest B round in biotech history.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$20
$40
$60
$80
$100
$120
$140
Amount Invested $588M $302M -49% $889M
Avg. # of Co.’s per Year 6 6 0% 6
% of all Venture Investment 3% 2% -36% 2%
$0 $100 $200 $300 $400 $500
Psychiatry (all)
Novel Drug R&D Venture Funding – Psychiatry
Chart 13. Funding of Novel Drug R&D only, 2004-2008 vs
2009-2013, for Psychiatric Diseases.
2004-08
2009-13
Psychiatry 2004-2013
Chart 12. Total venture funding ($M) into companies with lead drug
R&D in Psychiatric Disorders, 2004-2013. Left: Novel R&D
vs. Drug
Improvement R&D. Right: Total Investment by Phase of R&D
and number of companies receiving financing per year for a
specific
venture round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$50
$100
$150
$200
$250
$300
BIO Industry Analysis | 15
Psychiatric diseases include mental disorders such as
Schizophrenia, Bipolar Disorder, PTSD, ADHD/ADD, OCD, Depression,
Anxiety, and other mood related disorders. Venture funding of
companies with lead programs in Psychiatric diseases was just under
$0.9 billion over the last 10 years, and accounted for only 2% of
total venture capital raised. That is 5x less than Neurology.
Furthermore, funding for Psychiatry has dropped over the five-year
windows, from over $588 million to less than $302 million (-49%).
Novel R&D for this group dropped even more (-56%), from $465
million to $203 million.
There is a still an unmet medical need in many of these disorders,
and the funding levels do not point to a strong investment in
future breakthroughs. As seen in Chart 12, total dollars raised in
a single year can be lower than $50 million, smaller than what some
Oncology companies receive in a single financing round. The lack of
Preclinical investment suggests there might be relatively few new
targets or new approaches to attract early-stage financing.
Schizophrenia & Depression Investment for Schizophrenia-focused
companies peaked in 2005, but only involved two companies, and more
than half of the total investment was for reformulation
development. Almost no funding was found in the four years prior to
2012, explaining the 78% decrease in total funding for
Schizophrenia-focused companies, from $181 million to $39 million
for the five-year windows. On average only two companies per year
received funding with this focus.
Investment in Depression-focused companies was also sparse, with
only one to four companies funded per year. As with Schizophrenia,
2005 was a big year for Depression funding, but almost half went
into a single company’s C round. Additionally, in 2012, more than
half the money went into a company focused on improving an already
approved drug. Investment was close to zero from 2008-2011.
The remaining investments (listed as “Other” in Chart 13) similarly
accounted for less than four transactions per year, and often far
less than $50 million in a given year. This group consists of
ADHD/ADD, PTSD, OCD, Bipolar Disorder, Anxiety Disorders, and other
mood-related disorders. Again, peak years were often accounted for
by a single company investment, and often a post-Series A
round.
Mental health disorders are the leading cause of disability in the
US. One in four US adults, or 61.5 million people, have been
diagnosed with a mental health disorder.4
16 | BIO Industry Analysis
Avg. # of Co.’s per Year 36 33 -8% 35
% of all Venture Investment 12% 10% -14% 11%
Novel Drug R&D Venture Funding – Infectious Diseases
Chart 15. Novel drug R&D funding of Infectious Disease focused
companies, 2004-2008 vs. 2009-2013.
$0 $500 $1,000 $1,500 $2,000 $2,500
Infectious (all)
Infectious Disease 2004-2013
Chart 14. Total venture funding ($M) into companies with lead drug
R&D in Infectious Disease, 2004-2013. Left: Novel R&D vs.
Drug
Improvement R&D. Right: Total Investment by Phase of R&D
and number of companies receiving financing per year for a
specific
venture round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$100
$200
$300
$400
$500
$600
$700
BIO Industry Analysis | 17
Infectious diseases include viral, bacterial, fungal, and parasitic
infections. There is a high demand for novel drugs in these areas
to reverse disease progression within patients and to stop the
wider spread throughout the population. For antibiotics in
particular, there has been a rise in strains resistant to older
therapies, making the need for novel drugs highly important.
Venture funding for Infectious Disease totaled $4.6 Billion over
the last 10 years, and accounted for 11% of total venture capital
raised. However, it has dropped over the five-year windows, from
over $2 Billion to less than $1.5 billion (-33%).
The following chart shows novel drug R&D investment for the
main subcategories within Infectious Disease. As can be seen in the
chart, the majority of this decline is in antiviral (non-vaccine
small and large molecule) R&D. When we dig deeper into these
companies, we find that HIV and HCV funding has dropped
precipitously. Those two areas have experienced a drop of 74% over
the funding periods, from $785 million down to just $202
million.
Antimicrobials The antimicrobial space accounted for one third of
all Infectious Disease funding over the last five years, and has
decreased 19% over the two five-year windows. However, there are
some disparities that are important to point out based on data in
Chart 16 below. First, the level of Gram positive focused funding
has consistently outstripped that of Gram negative. In the most
recent period, there was a fivefold difference between funding for
Gram positive and Gram negative novel R&D. Both areas have a
consistent level of novel R&D investment when comparing the two
time frames (2003-2008 vs 2009-2013), with Gram positive funding
actually increasing. The lower levels of gram negative strain
funding are of particular concern due to the current threat of
antibiotic resistance in these strains and the lack of new drugs to
combat them. Broad spectrum antibiotic investment actually
accounted for much of the funding drop in this space. In fact,
there was only one company funded in the last two years with this
category as their lead program.
“The GAIN Act has helped incentivize funding into the much needed
area of novel antibiotic R&D, and catalyzed the financing of
venture backed companies that received FDA approval for new
antibiotics in 2014.”
Jim Healy, General Partner, Soffinova Ventures
Novel Drug R&D Venture Funding – Antimicrobials
Chart 16. Novel drug R&D funding of Antimicrobial focused
companies, 2004-2008 vs. 2009-2013.
$0 $100 $200 $300 $400 $500 $600 $700
Antimicrobials (all)
Antimicrobial g+
Antimicrobial g-
Broad Spectrum
Novel Drug R&D Venture Funding – Antivirals
Chart 17. Novel drug R&D funding of Antiviral focused
companies, 2004-2008 vs. 2009-2013.
$0 $200 $400 $600 $800 $1,000
Antivirals
HCV
HIV
2009-13
Antivirals Hepatitis C and HIV are some of the few areas where
close to 100% of funding went into novel R&D. However, we found
a sizable decrease in the five-year window. The large peak in
funding in 2004 is mostly split between two companies. Several
drugs have been approved since 2004 and the field is largely
dominated by larger biopharmaceutical companies.
Funding for other antivirals such as Hepatitis B (HBV), Influenza,
cytomegloviris (CMV), and herpes simplex virus (HSV) actually
picked up over the last 10 years.
Anti-fungal Within the Anti-fungal space, 60% of all investment was
for delivery or reformulation of approved drugs. Only a couple of
companies per year were funded in this area and yearly totals for
novel drug R&D ranged from $0 to $30 million in most years,
save for 2009 when the total reached $70 million.
BIO Industry Analysis | 19
Vaccines 2004-2013
Chart 18. Total venture funding ($M) into companies with lead drug
R&D in Vaccines, 2004-2013. Left: Novel R&D vs. Drug
Improvement
R&D. Right: Total Investment by Phase of R&D and number of
companies receiving financing per year for a specific venture
round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
d ($
M )
Vaccines The vaccine space within Infectious Disease covers both
viral and bacterial targets. Examples from the viral vaccine
R&D front include new vaccines against influenza, SARS, RSV,
HIV, and Ebola viruses.
Novel vaccine financing was about half that of antivirals or
antibacterials in the recent five-year period. Most of the recent
financing has been for clinical-stage companies, not preclinical as
in prior years.
20 | BIO Industry Analysis
Cardiovascular
Cardiovascular indications, such as heart failure, Acute Coronary
Syndrome, Atherosclerosis, Hypercholesterolemia, and Hypertension
received total venture funding of $2.4 Billion over the last 10
years, and accounted for 6% of total venture capital raised.
However, funding has dropped 27% over the five-year windows, from
over 1.4 billion to less than $1.0 billion.
2004-2008 2009-2013 % Change 2004-2013
Avg. # of Co.’s per Year 21 17 -19% 19
% of all Venture Investment 7% 6% -8% 6%
Cardiovascular 2004-2013
Chart 19. Total venture funding ($M) into companies with lead drug
R&D in Cardiovascular, 2004-2013. Left: Novel R&D vs.
Drug
Improvement R&D. Right: Total Investment by Phase of R&D
and number of companies receiving financing per year for a
specific
venture round.
Delivery and reformulations accounted for as much as 60% of the
funding in Cardiovascular in some years and as little as 15% in
others. The bulk of CV funding went toward Heart Failure and Acute
Coronary Syndrome. Very few companies and total dollars went into
Hypercholesterolemia and Hypertension (only 15% of the total in
cardiovascular funding).
An estimated 83.6 million American adults have a cardiovascular
disease. By 2030, 44% of the US population is projected to have
some form of cardiovascular disease.5
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$50
$100
$150
$200
$250
$300
$350
$400
Endocrine Diseases
Venture funding for Endocrine Diseases, such as Diabetes, reached
$2.4 Billion over the last 10 years, and accounted for 6% of total
venture capital raised. However, funding has dropped 31% over the
five-year windows, from over $1.4 billion to less than $1
billion.
While there has been a large amount of financing for drug
improvements in this disease category, novel drug R&D venture
funding for Endocrine dropped more than 50%, as seen by the
declining blue bars in Chart 20.
2004-2008 2009-2013 % Change 2004-2013
Avg. # of Co.’s per Year 18 17 -6% 18
% of all Venture Investment 7% 6% -13% 6%
Endocrine 2004-2013
Chart 20. Total venture funding ($M) into companies with lead drug
R&D in Endocrine, 2004-2013. Left: Novel R&D vs. Drug
Improvement R&D. Right: Total Investment by Phase of R&D
and number of companies receiving financing per year for a
specific
venture round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
Novel Drug R&D Venture Funding – Endocrine
Chart 21. Novel drug R&D funding of Endocrine focused
companies, 2004-2008 vs. 2009-2013.
$0 $200 $400 $600 $800 $1,000
Endocrine (all)
22 | BIO Industry Analysis
Type II Diabetes 2004-2013
Chart 22. Total venture funding ($M) into companies with lead drug
R&D in Type II Diabetes, 2004-2013. Left: Novel R&D vs.
Drug
Improvement R&D. Right: Total Investment by Phase of R&D
and number of companies receiving financing per year for a
specific
venture round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$50
$100
$150
$200
$250
d ($
M )
Endocrine – Other This category includes contraceptives, growth
hormones, osteoporosis-related disorders, Acromegaly, hypogonadism,
Menopause, and other hormone-related diseases. Fifty-five percent
of investment went to novel R&D over the dataset period.
Pre-fiscal crash, $316 million was spent on novel R&D whereas
post-crash only $261 million was raised. Peaks in 2006 and 2007 saw
about 50% or more of the investments go to improvements for
approved drugs.
Type II Diabetes About 30-40% of Endocrine investment is in Type 2
Diabetes. The total amount of novel drug Endocrine investment is
almost 10x that for Type I Diabetes-focused companies in both five-
year windows. Example of non-novel: Peaks in 2011 and 2012 are
financings for delivery technologies of approved drugs with a $150
million C round and a $163 million Series D. These account for 75%
and 85% of those two years of Type II Diabetes financing.
Diabetes remains the 7th leading cause of death in the United
States6, with more than 29 million people affected by the
disease.7
BIO Industry Analysis | 23
Metabolic Diseases
Metabolic covers a wide range of diseases, from the rare genetic
diseases to broader population diseases such as obesity. Total
venture funding for the last decade reached $2.2 Billion, or 6% of
the total raised during that timeframe. Metabolic funding seems to
have experienced the opposite trend as Endocrine over the two
five-year windows – Endocrine funding fell 31%, but Metabolic
funding rose 25%. This extraordinary divergence can be explained by
the sub-indications under each area. For Endocrine, a drop in Type
II Diabetes funding of novel drug R&D was the culprit. For
Metabolic, the rising interest in genetic diseases explains the
increase.
2004-2008 2009-2013 % Change 2004-2013
Avg. # of Co.’s per Year 12 13 8% 12
% of all Venture Investment 5% 7% 59% 6%
Metabolic Diseases 2004-2013
Chart 23. Total venture funding ($M) into companies with lead drug
R&D in Metabolic, 2004-2013. Left: Novel R&D vs. Drug
Improvement
R&D. Right: Total Investment by Phase of R&D and number of
companies receiving financing per year for a specific venture
round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$50
$100
$150
$200
$250
$300
$350
$400
Novel Drug R&D Venture Funding – Metabolic
Chart 24. Novel drug R&D funding of Metabolic focused
companies, 2004-2008 vs. 2009-2013.
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400
Metabolic (all)
Other Indications 2004-08 2009-13
24 | BIO Industry Analysis
Obesity The 2004-2008 investment in novel R&D for obesity
therapies was $105 million vs $172 million during 2009-2013. The
majority of investments (85% in dollar terms) have gone toward
novel R&D.
Genetic Disorders This is one of the few areas where 100% of
funding went into novel R&D, and also an area well represented
in the rare disease section of the report (below). We found a
sizable increase in the five-year window – investment jumped from
$288 million to $500 million after 2008. There was a large peak in
2012, but 64% of this is explained by two rare disease companies
raising B and D rounds prior to going public.
Metabolic – Other This group includes Musculoskeletal diseases,
Cachexia, Familial Amyloid Polyneuropathy, Hyperkalemia, and other
metabolic disorders. Eighty-five percent of this investment went
toward novel R&D funding, which increased from $236 million
(2004-2008) to $425 million (2009-2013).
More than one-third, or 78.6 million, of U.S. adults are obese8 and
12.7 million childern ages 2 to 19 are obese.9
Individual orphan diseases affect fewer than 200,000 people in the
U.S. each, but taken together are estimated to affect some 30
million people,10 with approximately 50% of them being children
with an orphan disease.11
BIO Industry Analysis | 25
Immunology (non-GI, non-Respiratory)
Immunology covers a set of disease that are primarily of autoimmune
origin, such as Rheumatoid Arthritis and Psoriasis. For this
section, we excluded immune-based diseases that are covered under
the Gastrointestinal (e.g., Crohn’s) and Respiratory (e.g., Asthma)
sections below. Total venture capital raised for Immunology was
$1.6 billion for the 10-year period, or 4% of the total venture
capital raised. For the five-year windows, Immunology funding
dropped 22% in funds raised, from $882 million to $685
million.
Investment for Immunology has been jagged, with spikes in 2006 and
2008 followed by massive drops in 2007 and 2011. Most of the
funding has been toward novel drug R&D with 10-20 companies per
year receiving that funding.
2004-2008 2009-2013 % Change 2004-2013
Avg. # of Co.’s per Year 15 11 -27% 13
% of all Venture Investment 4% 4% -2% 4%
Immunology 2004-2013
Chart 25. Total venture funding ($M) into companies with lead drug
R&D in Immunology (non GI, non-Respiratory), 2004-2013.
Left:
Novel R&D vs. Drug Improvement R&D. Right: Total Investment
by Phase of R&D and number of companies receiving financing per
year
for a specific venture round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$50
$100
$150
$200
$250
$300
$350
Novel Drug R&D Venture Funding – Immunology
Chart 26. Novel drug R&D funding of Immunology (non-GI,
non-Respiratory) focused companies, 2004-2008 vs. 2009-2013.
$0 $200 $400 $600 $800 $1,000
Immunology (all)
Multiple Indications 2004-08 2009-13
Rheumatoid Arthritis and Psoriasis Companies receiving financing
with a Rheumatoid Arthritis (RA) indication as lead product saw
novel R&D funding drop from over $200 million to below $100
million for the most recent five five-year window. The peak
investment in 2008 went mostly (47%) to a C round for a single
company. Additionally, some of the decrease might be explained by
successful products being introduced during the last decade.
Since 2004, there have been few companies with a Psoriasis
indication as their lead product receiving financing. One possible
explanation for this could be that most companies target Rheumatoid
Arthritis as the primary indication and Psoriasis as a secondary
one; thus, their Psoriasis work is not picked up in the analysis.
Furthermore, many new drugs for Psoriasis have come to the market
over the past decade.
Immunology – Other This category includes Graves’ Disease, Lupus,
Primary Biliary Cirrhosis, Celiac Disease, Gout, and many other
diseases. The majority of investment in this space (88%) went
towards novel R&D, and the amount has increased over the last
five years vs the prior five years.
Psoriasis is the most common autoimmune disease in the country,
affecting 7.5 million Americans.12 Rheumatoid Arthritis affects
about 1.5 million Americans.13
BIO Industry Analysis | 27
Gastrointestinal Diseases 2004-2013
Chart 27. Total venture funding ($M) into companies with lead drug
R&D in GI, 2004-2013. Left: Novel R&D vs. Drug Improvement
R&D.
Right: Total Investment by Phase of R&D and number of companies
receiving financing per year for a specific venture round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$50
$100
$150
$200
$250
Gastrointestinal Diseases
The majority of the Gastrointestinal Diseases category venture
funding is split into two main sub-disease areas: Irritable Bowel
Syndrome (IBS) and Inflammatory Bowel Disease (IBD), but there are
many other diseases that fit into this area. Total venture capital
raised for Gastrointestinal Diseases was $1.1 billion over the
ten-year period, or 3% of the total venture capital raised for
therapeutics. One of the biggest drops of the major disease groups
analyzed is found here – a 62% drop in funding from $828 million to
$311 million for the two five-year windows.
2004-2008 2009-2013 % Change 2004-2013
Avg. # of Co.’s per Year 9 5 -44% 7
% of all Venture Investment 4% 2% -51% 3%
28 | BIO Industry Analysis
Novel Drug R&D Venture Funding – Gastroinestinal
Chart 28. Novel drug R&D funding of Gastrointestinal focused
companies, 2004-2008 vs. 2009-2013
$0 $100 $200 $300 $400 $500 $600 $700
GI (all)
Other Indication 2004-08 2009-13
IBD and IBS The main types of Inflammatory Bowel Disease (IBD) are
Crohn’s disease and Ulcerative Colitis (UC). Irritable Bowel
Syndrome (IBS) is a non-inflammatory chronic condition affecting
the large intestine. Both of these areas, IBD and IBS, show a drop
in novel drug R&D funding, as shown in the chart above.
GI – Other This category includes Gastroenterologic disorders,
Chronic Idiopathic Constipation, Ulcers, Dyspepsia, Gastroparesis,
Exocrine Pancreatic Insufficiency, Liver failure/Cirrhosis, Colon
Cleansing/Laxatives, and other GI disorders. This diverse group of
companies raised over $100 million for each of the two five-year
windows and funding only slightly fell in the second five-year
window.
In the United States, there are 60 to 70 million people affected by
digestive diseases.14
BIO Industry Analysis | 29
Respiratory Diseases
Respiratory diseases examined include a number of common diseases
such as Asthma, COPD, and Idiopathic Pulmonary Fibrosis (IPF), as
well as other diseases such as Cystic Fibrosis, Emphysema, Acute
Respiratory Failure, Acute Lung Injury (ALI), Acute Respiratory
Distress Syndrome (ARDS), and other respiratory diseases. Total
venture capital raised for Respiratory Diseases was $1.4 billion
for the ten-year period, or 4% of the total venture capital raised
for therapeutics. Funding dropped significantly, from $866 million
to $491 million (a change of -43%), between the two five-year
windows.
2004-2008 2009-2013 % Change 2004-2013
Avg. # of Co.’s per Year 11 9 -18% 10
% of all Venture Investment 4% 3% -29% 4%
Respiratory 2004-2013
Chart 29. Total venture funding ($M) into companies with lead drug
R&D in Respiratory, 2004-2013. Left: Novel R&D vs.
Drug
Improvement R&D. Right: Total Investment by Phase of R&D
and number of companies receiving financing per year for a
specific
venture round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$50
$100
$150
$200
$250
$300
d ($
M )
Respiratory diseases cause 138,000 deaths annually and are the
third leading cause of death in the U.S. In children under 1 year
of age, approximately one in six deaths are due to lung
disease.15
30 | BIO Industry Analysis
Novel Drug R&D Venture Funding – Respiratory
Chart 30. Novel drug R&D funding of Respiratory focused
companies, 2004-2008 vs. 2009-2013. Select sub-indications are
shown for
comparison to the total amount raised in the category.
$0 $100 $200 $300 $400 $500 $600 $700
Respiratory (all)
COPD 2004-08 2009-13
Asthma Looking at novel R&D, $266M was invested in the
2004-2008 period compared to only $60M in the five years post 2008.
In 2007, $77 million (57%) was from a single company’s C
round.
Asthma 2004-2013
Chart 31. Total venture funding ($M) into companies with lead drug
R&D in Asthma, 2004-2013. Left: Novel R&D vs. Drug
Improvement
R&D. Right: Total Investment by Phase of R&D and number of
companies receiving financing per year for a specific venture
round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$20
$40
$60
$80
$100
$120
$140
$160
BIO Industry Analysis | 31
COPD COPD was one of the few respiratory areas that increased, from
below $50 million during 2004-2008 to over $100 million in the five
years after 2008.
Respiratory - Other Acute Respiratory Failure, Acute Lung Injury
(ALI), Acute Respiratory Distress Syndrome (ARDS), Cystic Fibrosis,
Emphysema, Idiopathic Pulmonary Fibrosis (IPF), fall under “other”
respiratory diseases. Funding in the 2004-2008 timeframe shows a
large amount invested into the “other” category. This was
predominantly directed to later-stage companies, and 44% of the
money invested in 2004 and more than 60% in 2006 went toward
improvements to already approved drugs. Most companies pursuing
multiple lead therapies in multiple respiratory areas were found to
be delivery companies.
32 | BIO Industry Analysis
The Hematology category includes Blood Stimulators, Coagulation
agents, Anemia, Antithrombotic, Chronic Venous Ulcers, Peripheral
Arterial Disease (PAD), Sickle Cell Disease, Iron Overload,
Hemophilia, and Neutropenia/ Leukopenia. Some of these diseases are
rare, and therefore were also analyzed rare disease section of this
report.
2004-2008 2009-2013 % Change 2004-2013
Avg. # of Co.’s per Year 8 8 0 8
% of all Venture Investment 3% 3% -6% 3%
Hematology 2004-2013
Chart 32. Total venture funding ($M) into companies with lead drug
R&D in Hematology, 2004-2013. Left: Novel R&D vs.
Drug
Improvement R&D. Right: Total Investment by Phase of R&D
and number of companies receiving financing per year for a
specific
venture round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$50
$100
$150
$200
$250
d ($
M )
Funding for Hematology has declined since peak the years of 2005
and 2007, when more than $150 million per year went into this area.
Almost half of the investment before 2009 were for Blood
Stimulators, which dropped thereafter, as did the category as a
whole. Novel drug R&D funding dropped from $332 million in
2004-2008 to $139 million in the last five years. In 2005, $117
million out of $148 million went to a single company’s F round.
Additionally, in 2007, $125 million out of $129.4 million went to
just two companies for late rounds. Other sub- indications actually
saw an increase in funding as a group, but the levels were less
than $100 million per year when combined.
BIO Industry Analysis | 33
Ophthalmology
Many of the companies with lead programs in the Ophthalmology space
work on macular degeneration but with new biologics platform
technologies, such as gene therapy or novel target binding proteins
(non-antibody scaffolds). Ophthalmology venture funding totaled
$1.7 billion over the last decade, representing 5% of the total
venture capital raised. Year-to-year totals are choppy, but
investment interest has maintained the $800 million- plus level of
funding when comparing the five-year windows before and after the
2008 fiscal crash.
The high degree of novelty over the last decade can be seen in the
blue bars in Chart 33. The average number of companies receiving
funds per year has increased more than the actual dollar amounts,
with 2013 being the highest.
2004-2008 2009-2013 % Change 2004-2013
Avg. # of Co.’s per Year 12 16 33% 14
% of all Venture Investment 4% 5% 39% 5%
Ophthalmology 2004-2013
Chart 33. Total venture funding ($M) into companies with lead drug
R&D in Ophthalmology, 2004-2013. Left: Novel R&D vs.
Drug
Improvement R&D. Right: Total Investment by Phase of R&D
and number of companies receiving financing per year for a
specific
venture round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$50
$100
$150
$200
$250
$300
Platform
The Platform category contains primarily preclinical-stage
companies that have a core technology in creating a diverse set of
new molecules. A great example is an antibody-generating platform
that can generate antibody drugs for targets across all diseases.
Other examples include gene therapy, stem cell therapy,
regenerative medicine, nanoparticles, and small molecule
diversification methods that generate combinatorial libraries,
cyclization of fragments, or covalent linkage inhibitors. Once
companies identify a lead product and utilize the majority of their
funds for that product, they are relabeled as a product company
within a specific disease indication. This explains why nearly all
funding for this category is for Preclinical stage companies.
2004-2008 2009-2013 % Change 2004-2013
Avg. # of Co.’s per Year 24 27 13% 26
% of all Venture Investment 6% 8% 38% 6%
Platform 2004-2013
Chart 34. Total venture funding ($M) into companies with molecular
Platform technologies, 2004-2013. Left: Novel R&D vs.
Drug
Improvement R&D. Right: Total Investment by Phase of R&D
and number of companies receiving financing per year for a
specific
venture round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
$0
$50
$100
$150
$200
$250
$300
$350
$400
d ($
M )
Overall, Platform start-ups received $2.5 billion in funding over
the past decade, representing 6% of the $38 billion of venture
financing during the 2004-2013 period. On average, 25 companies per
year received financing in this group, placing it near one of the
highest in both dollars and companies receiving investment. In
terms of both dollars invested and the number of companies funded,
the trend is up over the last decade.
BIO Industry Analysis | 35
Other Diseases
Many other diseases were funded that did not fit within our top 14
categories discussed above. These include Dermatology, Allergy,
Musculoskeletal diseases, Osteoarthritis, Otology (ear diseases),
Periodontitis, Urology, non-viral liver diseases, fertility drugs,
and treatments for side-effects of chemotherapy or radiation. In
aggregate, the funding for these diseases accounted for less than
10% of the total for any given year, and 7% for the ten- year
period covered by this study. More than 40% of funding in the
“Other” group of diseases was split between Dermatology and Renal,
with Dermatology accounting for the majority of the delivery
development in the form of topical cream formulations of existing
drugs.
2004-2008 2009-2013 % Change 2004-2013
Avg. # of Co.’s per Year 23 25 9% 24
% of all Venture Investment 6% 9% 34% 7%
Other Disease Areas 2004-2013
Chart 35. Total Investment ($M) into companies that did not fit
into the major 14 areas above, 2004-2013 Left: Novel R&D vs.
Drug
Improvement R&D. Right: Total Investment by Phase of R&D
and number of companies receiving financing per year for a
specific
venture round.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
T ot
al R
ai se
d ($
M )
In contrast to the diverse Platform group, the “Other” category
includes many Phase II through Market phase companies, and contains
mostly companies focused on improving existing drugs.
36 | BIO Industry Analysis
Rare Disease According to a recent report, there are 7,000 rare
diseases that cumulatively affect 30 million Americans.14 Only 350
therapeutics are approved for these diseases, indicating there are
thousands of rare diseases without a treatment or cure. Over the
last 10 years, there has been an increase in investment into rare
diseases, with the highest amounts (over $500 million/ year) seen
recently in 2012 and 2013. As shown below, most funding is directed
to clinical trial stage companies, with the exception of 2013 when
nearly half of the funding went into Preclinical stage
companies.
“We see significant interest in rare diseases as gene therapy
technologies mature and generate meaningful clinical data and
returns for investors. We are hopeful that advanced gene therapy
approaches will deliver products that will dramatically improve
patients’ lives.”
Jim Healy, General Partner, Soffinova Ventures
Rare Diseases 2004-2013
Chart 36. Total venture funding ($M) into companies with a lead
drug in a rare disease, 2004-2013. Total Investment by Phase of
R&D
and Number of companies receiving financing per year for a specific
venture round.
0
5
10
15
20
25
30
35
$0
$100
$200
$300
$400
$500
$600
Market
This category includes medicines focused on treating Epidermolysis
Bullosa (EB), Hereditary Inclusion Body Myopathy (HIBM),
Friedreich’s Ataxia, Primary Hyperoxaluria (PH), Familial Amyloid
Polyneuropathy, Spinal Muscular Atrophy, Transthyretin amyloidosis,
Hypohidrotic Ectodermal Dysplasia, Pompe disease, Fabry’s disease,
von Gierke’s disease, Leber’s Congenital Amaurosis, Muscular
Dystrophy (MD), Narcolepsy, Hunter Syndrome, Hurler Syndrome, and
Lymphangioleiomyomatosis (LAM). Although many Oncology companies do
seek Orphan Drug status for rare cancer indications, we only found
a few unique cases where a company’s lead program was for a
specific rare cancer. Most Oncology companies analyzed had multiple
lead cancer areas and indications often switched from lead to
non-lead status from year to year.
BIO Industry Analysis | 37
Series A Funding Series A funding is the first significant
financing round after the smaller “Seed” round, and often involves
a syndicate of venture firms that back a new approach to drug
development. Tracking the Series A rounds can tell us what areas
the most sophisticated venture investors have decided to come
together and support amongst a plethora of potential ideas that
come across their desks.
In total, $10.7 billion went into Series A over the last 10 years,
which is 28% of the $38 billion invested in all rounds. A healthy
82% of Series A money has gone into novel drug discovery over the
last 10 years, with the highest amount seen last year.
Series A
Chart 37. Series A venture funding ($M) by Phase and by Innovation
Level. As expected more early phase with early financing
stage.
Pre Clinical Phase I Phase II Phase III MarketNovel Drug R&D
Drug Improvement R&D
T ot
al R
ai se
d ($
M )
Preclinical-stage companies took in the majority (56%) of Series A
venture dollars between 2004-2013, and “early” R&D, as defined
as Preclinical to Phase I, made up 74%. Molecular platform
companies accounted for 17% of the Series A Preclinical funding and
10% of total Series A rounds. Investment into the Platform group,
as shown in the table below (Table 2) rose 66% when comparing the
two five-year timeframes.
The volume of first-time Series A investments gives us insight into
how widespread the funding is in a given year. Based on this
analysis, the peak in initial Series A financings was in 2006, when
89 companies received their first Series A financing. This compares
to only 63 in 2013, a near 30% drop from the peak. Interestingly,
2012 was the low point, not 2010 as was the case for total
investment dollars overall (Chart 1), with only 55 therapeutics
companies receiving their first Series A tranche.
38 | BIO Industry Analysis
Number of Companies Receiving First Series A Round, 2004-2013
Chart 38. Declining # of New Series A Financing for Drug
Development R&D
0
10
20
30
40
50
60
70
80
90
100
Series A by Disease
Chart 39. Series A venture funding ($M) broken down by disease
area.
Oncology
Neurology
ID
PLATFORM
Other
CV
Endocrine
Metabolic
Ophthalmology
Immunology
Hematology
GI
Psychiatry
Respiratory
BIO Industry Analysis | 39
Although the number of new companies receiving Series A financing
is down, the total dollar amount that is flowing into Series A
financing rounds is approaching prior highs. In fact, investment
into novel drug R&D reached its highest point in 2013. This
also suggests more money per company, as dollars have increased
while the number of companies has decreased. Part of this might be
explained by the trend in biotech venture to make the Series A
financing last longer, so company management is not out searching
for the next round of financing shortly after the first large
raise. Following the fiscal crisis of 2008, company executives and
venture capitalists began to stretch small initial funds to
mitigate dependence on later rounds early in development.
As with the overall data for all rounds described earlier in the
report, Oncology brings in the bulk of Series A funding, with 24%
of the total funding over the last 10 years of A rounds. Neurology
had the second highest level of investment (13% of Series A), which
was largely due to the boost to novel drug R&D investment. Most
of this went into the “Neurology – Other Indication,” a category
that includes a diverse group focused on ALS, Huntington’s, and
rare CNS disorders.
“With fewer early-stage investors starting companies, Series A
financing has evolved over the last decade into a much more
selective process.”
Jean-Francois Formela, Senior Partner, Atlas Venture
Venture Dollars Raised ($M)
Novel Drug R&D Drug Improvement R&D Total Funding
Disease Area 2004-08 2009-13 2004-08 2009-13 2004-08 2009-13 Change
%
Oncology $909 $1,158 $125 $22 $1,034 $1,180 14%
Neurology $174 $458 $525 $256 $699 $713 2%
ID $666 $351 $70 $36 $736 $387 -47%
PLATFORM $354 $612 $40 $40 $394 $652 66%
Other $132 $320 $203 $178 $335 $499 49%
Ophthalmology $298 $316 $96 $43 $394 $359 -9%
CV $263 $222 $158 $56 $421 $278 -34%
Immunology $308 $242 $34 $0 $342 $242 -29%
Respiratory $162 $72 $149 $64 $311 $136 -56%
Metabolic $165 $228 $17 $0 $181 $228 25%
Endocrine $186 $53 $102 $53 $288 $106 -63%
Hematology $150 $130 $10 $31 $160 $161 0.2%
GI $136 $98 $36 $6 $172 $104 -39%
Psychiatry $72 $99 $10 $12 $82 $110 35%
TOTAL $3,976 $4,359 $1,574 $797 $5,550 $5,156 -7%
Table 2. Series A venture funding ($M) broken down by disease area
in five year windows.
40 | BIO Industry Analysis
In contrast to the overall funding, Series A funding shows 7 of 14
disease areas with increases over the five-year windows examined.
The major decreases in funding were found in Endocrine (-63%),
Respiratory (-56%), Infectious Disease (-47%), GI (-39%), and
Cardiovascular (-34%). Similar values were found when looking at
changes only in novel drug R&D, except in Neurology and the
“Other” categories. Neurology novel drug R&D funding increased
163% (vs. 2% for total Series A), and the “Other” group increased
142% (vs. 49% for total Series A). The 49% jump in the overall
“Other” category was influenced in part by investments into women’s
health products.
In terms of relative size of venture rounds, the average Series A
capital raised was found to be roughly 10x the size of a Seed
round, with the average Series A financing totaling $16 million
over the last decade compared to $1.5 million for Seed rounds.
Subsequent B rounds garnered about $10 million more than Series A,
at an average of $25.2 million. Series C rounds, as might be
expected, were even larger, at $28.5 million. All money raised
after Series C was found to be, on average, $49 million per round.
Some companies have actually raised to Series G and beyond, but
this is rare in the dataset. Typically, venture backers will seek
exit options by at least the C round, depending on the M&A and
IPO environment.
Average Series Size
Chart 40. Average amount raised by round (since 2004). “D or Later”
includes all subsequent financings beyond the C round.
$1.5
$16.3
$0
$10
$20
$30
$40
$50
$60
A ve
ra ge
A m
ou nt
R ai
se d
BIO Industry Analysis | 41
Discussion Venture investors vary by fund in terms of what stage of
development and what sequence of financing they participate in.
Their commitment to the life science sector is influenced by
multiple factors that include: 1) the financing environment as
experienced by the LPs (Limited Partners), 2) the venture capital
perception of unmet medical need based on availability of currently
marketed therapies in a given therapeutic area, 3) the exit
opportunities via acquisition (i.e., interest from larger
pharmaceutical or biotech companies), 4) the exit opportunities
available through public markets (Form-10 or traditional IPOs that
will be dependent on market conditions), and 5) the regulatory and
reimbursement environment overall and within a specific
indication.
The first factor (the financing environment) was quite evident in
the slowdown following the 2008 financial crisis. Many LPs, such as
pension funds, decided to decrease their allocation to venture,
with a particular exodus from life science venture funds due to the
extensive capital and timeline requirements of groundbreaking
R&D (which can total much more than $1 billion and 10 years
before a therapy reaches the market). In the data described above,
we see the fallout deepening into 2010, when innovative therapeutic
venture dollars slipped to the lowest level in over 7 years.
For the second factor (VC perception of unmet medical need), when
there are currently available therapies and high hurdles for
innovation, more of the R&D funding may find its way into
improving already approved drugs. For example, many investments in
the area of Pain were found to be in drug improvement rather than
in companies developing inhibitors of novel targets. At the other
end of the spectrum, in Oncology most of the investment in recent
years has been largely in companies developing innovative new
drugs, as there is a strong desire to improve upon the current
standard of care for cancer patients.
A strong environment for VC exits (whether M&A or IPO) is
critical to the maintenance of the funding ecosystem. In the past
decade there has consistently been a large company suitor for small
biotechs, although the type, stage, and focus of companies acquired
has varied. For the public exits, the last decade has been anything
but consistent. Only recently, has the IPO window for small private
biotechs opened. From 2008-2011, not a single Preclinical or Phase
I biotech was able to exit into the public markets. However, since
the JOBS Act became law in 2012, we have seen more than 20
Preclinical/Phase I IPOs and more than 130 total biotech IPOs. The
current environment of both of these exit options influences the
investment decisions at the venture stage.
With respect to the last factor, the regulatory and reimbursement
environment, VCs will pull back from areas that are seen as having
unfavorable or unpredictable regulatory and reimbursement hurdles.
For example, requiring drug developers in certain chronic disease
indications to run larger cardiovascular outcome trials after
completing pivotal efficacy studies has contributed to a funding
exodus of chronic illnesses that affect large populations. This has
had some impact on tilting investment over the last few years
toward drug R&D for small populations and rare diseases.
All of these factors have been at play over the last decade, as
seen in the overall drop in funding into 2010 and the dramatic drop
within particular disease areas. Policies that have helped reverse
or buffer some of the negative impact from these factors have been
critical to maintaining stable funding of the innovation ecosystem.
However, for some segments of the biotech sector further policy
initiatives are needed.
“The JOBS Act, signed in 2012, has been a key factor in opening
capital markets to small innovative biotech companies. The
increased access to public markets has already started a favorable
feedback effect of capital flowing back into private start-up
companies.”
Jonathan Leff, Partner, Deerfield Management
42 | BIO Industry Analysis
Methodology Data Source Four databases were combined to create the
broadest study possible: BioCentury’s BCIQ, Elsevier’s Strategic
Transactions Database, EvaluatePharma, and Thomson Reuters’
ThomsonONE. Further, investigation of company R&D and
financings was complemented with Factset and SEC filings as well as
Fierce Biotech, Xconomy, BiotechGate, and company press releases.
Equity investments from 2004-2013 were aggregated, and duplicates
and non-drug company financing events were removed. Generics,
distribution, and pharmacy companies were also excluded. Cases
where private money was raised for the sole purpose of acquiring an
existing company were also excluded.
Equity investments in this study are predominantly venture in
nature, with some differences at the Seed stage where angel
investors, family offices, and other non-venture capital investors
have an impact. Additionally, debt financing, bridge loans,
government grants, and disease/patient foundation grants were also
excluded.
The numbers reported in this report are not inflation adjusted to
2013. However, we did look at inflation adjusted numbers over the
10 year period studied. The overall drop in funding is even more
severe when expressed in 2013 dollars: from -21% in this report to
-28% adjusting for inflation when comparing the 2004-2008 period
with 2009- 2013. For changes in the major disease areas, there is a
similar shift: the decreases are slightly larger and the increases
are smaller.
Innovation Score For the innovation score, we grouped companies
into two categories, novel R&D pursuing a new chemical entity,
and R&D that expands the properties, availability, patient
experience, etc. of an already-approved chemical entity. In the
first bucket, we include in-licensed assets with prior data, such
as spin-outs from big pharmaceutical companies. The lead drug for
the novel category cannot have had a prior approval for any
indication.
The second category includes delivery technologies such as
nanotechnology, lipids (micelles), new adjuvants for approved
vaccines, extended release and prolonged half-life chemical
modifications (conjugates and linkers, including pegylated
variants) patches, topical creams, implanted delivery devices,
needle-less injections, as well as reformulation of an approved
drug, repurposing of an approved drug, nutraceuticals, and medical
foods.
Round of Investment Series financings often occur over multiple
years as tranche payments. For example, a Series A round can have
the sequence of A1, A2, A3 rounds within the same year or in
different years. These were accounted for by year such that the
accounting is for companies financed per year, not
payments/tranches per year. For example, a company with A1, A2, and
A3 payments in 2012 would be treated as a single company financing
in 2012, not three separate A round financings. If the A1, A2, A3
rounds occurred in 2011, 2012, and 2013, then these would be
counted as one A round investment per year. This enables an
accurate accounting of breadth of funding on a yearly basis.
BIO Industry Analysis | 43
Therapeutic Areas and Phase Each financing event was tagged by the
company’s lead program disease area and phase of development as of
the date of payment. As mentioned above, this is based on the date
of actual funding, not commitment to future tranches. For example,
large A rounds can be spread out into payments stretching beyond a
single year when press releases and major media outlets report a
financing event. Each year of funding, for each round, investment
was labeled by one of 14 major diseases and by sub-indication -
these indications are listed in Appendix Chart A3.
Vaccines include both bacterial and viral vaccines. Thus, all other
Infectious Disease categories are for small molecule or large
molecule approaches ex-vaccine. Oncology vaccines are tagged as
vaccines if a true antigen (peptide often) is being utilized and
will have the modality tagged with vaccine instead of large. Thus,
Oncology vaccines do not show up under Vaccines within Infectious
Disease. This allows us to sort vaccines across all disease areas.
“Other” in Infectious Disease refers mainly to anti-parasitic
medicines and Head Lice treatments.
Wound healing was placed under Dermatology if directly related to
skin injury, but if directly affecting the immune system it is
labeled under Immunology. Platform refers to molecular platforms
only, not target- or hypothesis- driven platforms. For example, a
company focused on the mTOR pathway would not be a platform
company, but a company designing bispecific Fab fragments would
count as Platform. Strokes involving the brain are classified under
Neurology, but if designed for heart stroke in patients, it is
labeled as Cardiovascular. Osteoporosis falls under Endocrine, and
Osteoarthritis was placed under “Other.” Also under “Other” are
Dermatology, Allergy, Musculoskeletal diseases, Osteoarthritis,
Otology (ear diseases), Periodontitis, Urology/Genitourinary,
non-viral liver diseases, fertility drugs, and treatments for side
effects of chemotherapy or radiation.
44 | BIO Industry Analysis
References 1. Based on analysis of the Dow Jones Venture Source
database by Bruce Booth of Atlas Ventures: http://lifescivc.
com/2014/09/early-stage-biotech-venture-scarcity-fitness-fear-and-greed/
3. Alzheimer’s Association, “2014 Alzheimer’s Disease Facts and
Figures,” Alzheimer’s & Dementia, Volume 10, Issue 2.
http://www.alz.org/downloads/Facts_Figures_2014.pdf
4. “PhRMA: 119 drugs for mental health disorders in R&D,”
PharmaTimes. 6 May 2014. http://www.pharmatimes.com/
Article/14-05-06/PhRMA_119_drugs_for_mental_health_disorders_in_R_D.aspx
5. American Heart Association. Heart Disease and Stroke
Statistics—2014 Update. AHA Statistical Update Web
site.http://circ.ahajournals.org/content/early/2013/12/18/01.cir.0000441139.02102.80.full.pdf
6.
http://www.cdc.gov/media/releases/2014/p0610-diabetes-report.html;
http://www.cdc.gov/diabetes/pubs/
statsreport14/national-diabetes-report-web.pdf
9.
http://www.heart.org/idc/groups/heart-public/@wcm/@sop/@smd/documents/downloadable/ucm_319588.pdf
10. Report to the President on Propelling Innovation in Drug
Discovery, Development, and Evaluation. President’s Council of
Advisors on Science and Technology. September 2012.
11. http://globalgenes.org/rare-diseases-facts-statistics/
Appendix
Table A1. 10 years of venture investing by disease - $M invested.
In the rare case where two different rounds (for example, B and C
rounds) were
raised in the same year, this is counted as two seprate company
financing events in the same year.
Table A2. Number of companies per year receiving funding for a
specific round. In the rare case where two different rounds (for
example, B and C
rounds) were raised in the same year, this is counted as two
seprate company financing events in the same year.
Average # of Companies/Year
Novel Drug R&D Drug Improvement R&D Total Funding 10 Year
Average
Disease Area 2004-08 2009-13 2004-08 2009-13 2004-08 2009-13
2004-2013
Oncology 49 60 8 8 57 68 62
Neurology 22 27 15 14 37 41 39
ID 31 28 5 6 36 33 35
Other 15 16 0 0 23 25 24
Platform 21 23 3 4 24 27 26
CV 15 10 6 7 21 17 19
Endocrine 12 9 6 8 18 17 18
Metabolic 11 12 1 1 12 13 12
Ophthalmology 9 11 3 5 12 16 14
Immunology 14 10 1 1 15 11 13
Respiratory 8 7 3 2 11 9 10
Hematology 7 7 0 1 8 8 8
GI 5 4 4 1 9 5 7
Psychiatry 5 5 1 1 6 6 5
Disease Area 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 10
yr SUM
Oncology $1,032 $689 $680 $1,353 $1,136 $919 $616 $923 $740 $1,042
$9,129
Neurology $989 $473 $481 $493 $453 $532 $314 $184 $322 $375
$4,615
Infectious $460 $458 $522 $596 $435 $452 $323 $375 $171 $345
$4,137
Other $177 $256 $283 $370 $266 $225 $320 $256 $367 $265
$2,785
Platform $201 $227 $360 $208 $180 $221 $250 $141 $286 $369
$2,443
CV $230 $281 $299 $374 $221 $167 $141 $256 $283 $177 $2,429
Endocrine $200 $183 $430 $398 $209 $176 $77 $279 $284 $157
$2,394
Metabolic $176 $173 $288 $239 $93 $162 $176 $241 $371 $265
$2,183
Ophthalmology $106 $105 $174 $285 $138 $196 $92 $216 $107 $275
$1,693
Immunology $163 $67 $265 $77 $310 $157 $152 $57 $148 $171
$1,567
Respiratory $240 $64 $157 $237 $169 $106 $154 $106 $65 $60
$1,358
Hematology $88 $210 $126 $170 $109 $90 $104 $91 $150 $90
$1,228
Gastroinstestinal $131 $146 $216 $128 $207 $39 $67 $66 $87 $52
$1,140
Psychiatry $93 $274 $129 $56 $36 $50 $39 $58 $111 $44 $889
TOTAL $4,286 $3,606 $4,411 $4,984 $3,960 $3,491 $2,826 $3,249
$3,492 $3,686 $37,991
46 | BIO Industry Analysis
Novel Drug R&D Drug Improvement R&D Total Funding
Indication 2004-08 2009-13 2004-08 2009-13 2004-08 2009-13 2004-13
Change %
Oncology - Oncology $3,932 $3,869 $958 $370 $4,890 $4,239 $9,129
-13%
CV - Hypercholesterolemia $50 $78 $19 $58 $70 $136 $206 96%
CV - Hypertension $52 $16 $19 $46 $71 $62 $133 -13%
CV - Other Indication $897 $606 $310 $171 $1,207 $777 $1,984
-36%
CV - Multiple Indications $50 $0 $7 $49 $57 $49 $106 -14%
ID - Antimicrobial g+ $301 $369 $85 $25 $386 $394 $780 2%
ID - Antimicrobial g- $79 $78 $10 $56 $89 $134 $223 51%
ID - Antimicrobial broad $461 $222 $117 $3 $578 $225 $803
-61%
ID - Anti-fungal $66 $114 $85 $34 $151 $148 $298 -2%
ID - Antiviral - other $135 $208 $70 $32 $205 $240 $445 17%
ID - HCV $500 $101 $0 $0 $500 $101 $602 -80%
ID - HIV $285 $101 $0 $2 $285 $102 $387 -64%
ID - Vaccine $238 $267 $11 $48 $249 $315 $564 26%
ID - Other Indication $0 $1 $29 $6 $29 $7 $35 -76%
ID - Multiple Indications $0 $0 $0 $0 $0 $0 $0
Immunology - Arthritis $224 $80 $36 $18 $260 $98 $357 -62%
Immunology - Psoriasis $60 $24 $0 $0 $60 $24 $84 -59%
Immunology - Other Indication $238 $362 $40 $62 $277 $425 $702
53%
Immunology - Multiple Indications $256 $138 $30 $0 $286 $138 $424
-52%
Endocrine - T2D $589 $111 $86 $377 $675 $488 $1,163 -28%
Endocrine - T1D $56 $11 $103 $30 $160 $40 $200 -75%
Endocrine - Other Indication $317 $262 $269 $184 $586 $446 $1,032
-24%
Endocrine - Multiple Indications $0 $0 $0 $0 $0 $0 $0
Metabolic - Obesity $95 $172 $76 $0 $171 $172 $343 0%
Metabolic - Genetic Disorder $288 $595 $0 $0 $288 $595 $883
107%
Metabolic - Other Indication $236 $425 $21 $23 $257 $448 $704
74%
Metabolic - Multiple Indications $253 $0 $0 $0 $253 $0 $253
-100%
Psychiatry - Schizophrenia $129 $39 $52 $0 $181 $39 $220 -78%
Psychiatry - Depression $132 $108 $21 $43 $152 $151 $304 -1%
Psychiatry - Other Indication $205 $55 $50 $56 $255 $111 $366
-56%
Psychiatry - Multiple Indications $0 $0 $0 $0 $0 $0 $0
Chart A3. Average amount raised by round (since 2003). “D or Later”
includes all subsequent financings beyond the C round.
BIO Industry Analysis | 47
Novel Drug R&D Drug Improvement R&D Total Funding
Indication 2004-08 2009-13 2004-08 2009-13 2004-08 2009-13 2004-13
Change %
Neurology - Pain $323 $237 $719 $495 $1,042 $732 $1,774 -30%
Neurology - Parkinson's $103 $27 $0 $62 $103 $89 $192 -14%
Neurology - Alzheimer's $149 $211 $35 $4 $184 $215 $399 17%
Neurology - MS $362 $78 $21 $11 $384 $88 $472 -77%
Neurology - Other Indication $602 $388 $347 $91 $950 $478 $1,428
-50%
Neurology - Multiple Indications $87 $51 $139 $73 $226 $124 $350
-45%
Respiratory - Asthma $266 $71 $32 $29 $298 $101 $399 -66%
Respiratory - COPD $66 $142 $6 $60 $72 $202 $275 180%
Respiratory - Other Indication $264 $139 $220 $1 $484 $140 $624
-71%
Respiratory - Multiple Indications $0 $0 $12 $49 $12 $49 $61
306%
Hematology - Blood Stimulator $332 $139 $0 $4 $332 $143 $475
-57%
Hematology - Coagulation $79 $40 $30 $25 $110 $65 $175 -41%
Hematology - Other Indication $253 $281 $0 $30 $253 $311 $564
23%
Hematology - Multiple Indications $9 $6 $0 $0 $9 $6 $15 -30%
GI - IBS $325 $142 $56 $0 $380 $142 $523 -63%
GI - GERD $0 $0 $90 $0 $90 $0 $90 -100%
GI - Crohn's $107 $16 $85 $0 $191 $16 $207 -92%
GI - Ulcerative Colitis $10 $14 $4 $6 $14 $20 $34 40%
GI - Other Indication $140 $127 $12 $6 $152 $133 $285 -13%
GI - Multiple Indications $0 $0 $0 $1 $0 $1 $1
Ophthalmology $633 $715 $175 $170 $807 $885 $1,693 10%
PLATFORM $1,095 $1,150 $81 $116 $1,176 $1,266 $2,443 8%
Other - Allergy $31 $12 $0 $0 $31 $12 $43 -60%
Other - Dermatology $132 $266 $97 $139 $229 $405 $634 77%
Other - Renal $310 $195 $0 $105 $310 $300 $610 -3%
Other - Chemo/Rad side effects $87 $133 $0 $0 $87 $133 $220
53%
Other - Other Indication $222 $260 $124 $91 $346 $351 $697 2%
Other - Multiple Indications $155 $81 $195 $150 $350 $232 $581
-34%
Chart A3 – Continued. Average amount raised by round (since 2003).
“D or Later” includes all subsequent financings beyond the C
round.
Authors David Thomas, CFA Director, Industry Research &
Analysis Biotechnology Industry Organization (BIO)
Chad Wessel Manager, Industry Research & Policy Analysis
Biotechnology Industry Organization (BIO)
Acknowledgements We would like to acknowledge BIO’s Emerging
Companies Section staff for their review and contributions to this
report: Charles Crain, Shelly Mui-Lipnik, Matt Stross, Aqila
Zafar.
About BIO The Biotechnology Industry Organization (BIO) is the
world’s largest trade association representing biotechnology
companies, academic institutions, state biotechnology centers and
related organizations across the United States and in more than 30
other nations. BIO members are involved in the research and
development of innovative healthcare, agricultural, industrial and
environmental biotechnology products. BIO also produces the BIO
International Convention, the world’s largest gathering of the
biotechnology industry, along with industry-leading investor and
partnering meetings held around the world. BIOtechNOW is BIO’s blog
chronicling “innovations transforming our world” and the BIO
Newsletter is the organization’s bi-weekly email newsletter. More
information on BIO and the biotechnology industry can be found at
www.bio.org.