Venture deals continue to flow for UK biotech under dark clouds
Monday 24 April 2023, London - The first quarter of 2023 has seen deal flow continue for the UK’s innovative life science and biotech companies at all stages of development, new data from the UK BioIndustry Association (BIA) and Clarivate shows.
As global macro-economic headwinds, suppressed public markets and political uncertainty weighed on investor confidence, venture investment remained steady, with private UK biotechs securing £258 million across 20 deals, with an average deal size of £13 million.
Investors were more likely to back companies with an existing track record, with five Series B deals recorded, but they were also more reluctant to part with their cash, resulting in an average Series B deal size of £18 million, compared to £58 million in 2022.
Notable deals in the three months leading to the end of February 2023 include:
- Pulmocide, a Manchester-based biotech developing medicines for respiratory diseases, raised £43 million in a Series C round
- Grey Wolf Therapeutics, an immuno-oncology company, raised £40 million in a Series B deal
- Akamis Bio, formally known as PsiOxus Therapeutics, raised £25 million to advance its gene therapy platform to treat cancer
- Prokarium secured £24.9 million to advance its novel bacteria-based cancer treatment
- Storm Therapeutics raised a £24.2 million Series B to continue its development of RNA-modifying enzymes as a treatment for solid tumours and leukaemias
The public stock markets continue to be subdued, with no initial public offerings (IPOs) for the sector and only £37 million raised by existing public companies. A similar picture was seen across the world, with investment down in all regions globally.
In the US, a total of £1.9 billion was raised in private deals, down from £3.3 billion a year earlier. In Europe, £624 million was raised, down from £1.4 billion. The UK remained the largest contributor to Europe’s total, making up 40% of the venture capital raised and over half of the deals seen across the continent.
With public and private financings combined, the UK sector raised a total of £295 million during the three months to the end of February.
Steve Bates OBE, CEO of BIA said:
“We’re delighted to see deal flow continue at a comparable level to the past three quarters but recognise that it’s a tough environment out there for companies fundraising.
“UK biotechs and their investors were facing considerable uncertainty during the period covered by our latest data, including the fall-out from the previous UK administration’s “mini-budget” and a threatened cut to R&D tax relief before we secured a reprieve at Spring Budget.
“These temporary domestic challenges compounded an already difficult macro-economic picture and a dormant Nasdaq.
“The quality of our science and management teams will carry us through this period and the UK Government’s more positive approach to R&D tax relief and continuing efforts to unlock pension funds holds real promise to super-charge the sector. In fact, as Nasdaq sleeps, there is an opportunity for UK investors to seize the reins and benefit from the value creation opportunity of our world-leading science base.”
Mike Ward, Global Head of Thought Leadership, Life Sciences, Clarivate, said:
“The drop off of investor interest in the global biotech sector that we saw in 2022 maintained its momentum in the first quarter. Globally, there was a 37% year-on-year decline in venture capital support for the biotech sector. This apparent loss of appetite is a reflection of the headwinds impacting the global economy as biotech innovation remains robust. It is not yet clear how long the financing drought may last, and even though life science-focused VCs are well capitalised it is anticipated that biotech management teams are going to have to make some tough decisions as they adapt to a cash-constrained environment.”
Notes to editors:
- Steve Bates and company CEOs are available for interviews. Please contact Alina O’Keeffe [email protected] / 077 4124 6088
- The report can be found at biotechfinance.org/q1
- The period covered by the report is 1 December 2022 to 28 February 2023
- Only equity investment in UK-headquartered life science and biotech companies is counted
- Background on R&D tax relief and the Spring Budget