New report: UK biotech financing
The latest UK Biotech Financing Report, published by the BioIndustry Association (BIA) and Clarivate, shows 2021 was the highest year on record for investments into UK biotech and life sciences companies.
£4.5 billion was raised in public and private financings, £1.7 billion (60%) more than in 2020.
- Venture capital financings totalled £2,518 million, an increase of 81% from 2020
- Initial Public Offerings (IPOs) totalled £1,304 million, an increase of 434% from 2020
- Other public financings raised £684 million
Although venture capital made up a greater proportion of the total raised, it is the number and scale of IPOs that mark out the year as distinctly different to what the UK has seen before, with a remarkable increase from the £244 million raised in 2020. Listings of UK companies on markets on both sides of the Atlantic suggest an ecosystem reaching maturity, and the record-breaking levels of venture investment shows a strong pipeline of companies coming through.
Notable company investments include:
- Oxford Nanopore topped UK Venture deals for the second year running with a £195 million fundraise prior to their £350 million London IPO, which was the largest amount raised in a listing on the London Stock Exchange by a biotech company.
- Vaccitech, the Oxford University spin-out commercialising the technology platform behind the Oxford/AstraZeneca COVID-19 vaccine, also raised a large series B round of £118m prior to their IPO on NASDAQ.
- Exscientia capitalised on the well-placed hopes of AI-driven drug discovery to secure the fourth largest private fundraise ever recorded by the BIA, with a £158m Series D round.
“The UK life science sector has led the world during the pandemic; from sequencing the virus genome to developing the first diagnostics, vaccine, and antivirals; setting up the world’s biggest and fastest ever clinical trial, and now this record-breaking level of investment.
"We value the significant investment that comes from overseas, but we must complement it with the full financial firepower of the City of London so that more companies stay in the UK.
“This is why our ambitious 2021 Life Sciences Vision sets out our firm commitment to helping UK life sciences and biotech firms access long-term scale-up capital from investors here at home, who are committed to building successful companies. Scaling up UK companies will help both grow our economy and improve access to innovative diagnostics and treatments.” - George Freeman MP, Minister for Science, Research and Innovation
Steve Bates OBE, CEO, BIA
I have been blown away by the determination and vitality of the UK’s life sciences and biotech community showcased during the pandemic.
Many companies turned their scientific firepower to the international fight against COVID-19, with impressive results, while others stoically continued their vital work addressing other great health and societal challenges. It has been heartening to see their efforts backed so resolutely by investors in the UK and abroad.
The first quarter of 2021 matched Q1 2020. Then, between March and May, an astonishing £1.6 billion was raised. Things slowed a little after that but by the end of August the sector had broken through the £3 billion mark for the first time, surpassing the 2020 annual total. The final three months covered by this report saw Oxford Nanopore’s watershed listing on the London Stock Exchange and further large private capital raises by other UK leaders. It is an absolute pleasure to say that as a result, a record-breaking £4.5 billion has been invested in UK-headquartered Life sciences and biotech companies in 2021.
Private financings and Initial Public Offerings (IPOs) have increased in number and size. UK companies are no longer being drip-fed capital, meaning their leadership teams have more time to focus on what matters – their value-creating R&D programmes. The welcome influx of foreign capital, largely from the US, is driving this, allowing the UK to really begin to challenge the life sciences clusters of Boston Massachusetts and the San Francisco Bay Area. This report also showcases M&A and licensing deals that demonstrate the real value, for both investors and patients, that is being generated from the UK innovation ecosystem.
The UK has everything it needs and is uniquely placed to be the global hub for life sciences. This was recognised by the UK Government in the Life Sciences Vision, which is delivering crucial policy and fiscal support to ensure we capitalise on our competitive advantage. The Life Sciences Scale-Up Taskforce, on which I sat alongside life science specialists and leading figures from the City , was also convened in 2021 to analyse the remaining barriers to growing the sector and make recommendations to the Government, which I look forward to seeing implemented in 2022.
As I look to the future for the UK’s financing environment, there is an obvious gap that we must plug. History has handed the UK two world-leading sectors: life sciences and finance. A symbiosis should exist between these two but it doesn’t, yet. The large fundraises showcased in this report are largely the result of overseas investment, meaning the value creation will also be offshored. There is great opportunity to turbo-charge the UK’s life sciences and biotech sector and capture more of its economic value for the UK by building better connections between our financial institutions and innovative scaling businesses. I invite anyone interested in seizing this opportunity to get in touch.
Mike Ward, Global Head of Life Sciences & Healthcare, Thought Leadership, Clarivate
With the whole world continuing to focus on how to tackle the COVID-19 pandemic which started in 2020, the global biopharma industry not only gained in public prominence but had one of its best years ever.
Venture and private backing for biotechs hit a new record as did the total sums raised by the sector through initial public offerings, although lacklustre support for follow-on financing meant the global total for the year was some 12% lower than the 2020 record.
Venture and private backing for biotechs hit a new record as did the total sums raised by the sector through initial public offerings, although lacklustre support for follow-on financing meant the global total for the year was some 12% lower than the 2020 record. Biopharma licensing and joint venture deal value, where the financial details were provided, were up about 8% on 2020, the previous record, but the total value of merger and acquisitions that completed in 2021 were down 32% on the previous year, as any appetite for mega-mergers was replaced by one for bolt-on acquisitions.
In 2021, the U.S. Food and Drug Administration approved 50 new molecular entities and while this was not a record for a single year, it was in line with the growth trajectory we have seen in biopharma R&D productivity since the start of the century.
More significant, however, was both the increasing diversity in the types of molecules associated with these new medicines and in the diseases addressed. In the class of 2021 FDA approvals, which was still dominated by small molecule drugs (46%), there were 12 different classes including monoclonal antibodies, antibody-drug combinations and bispecific antibodies among others.
The UK life sciences and biotech sector reached new heights in 2021, securing £4.5 billion in public and private financings, £1.7 billon more than in 2020.
Venture capital financings totalled £2,518 million, Initial Public Offerings (IPOs) netted £1,304 million, and all other public financings raised £684 million. By percentage, the split was 56% VC, 29% from IPOs, and 15% from all other public financings.
Although venture capital made up a greater proportion of the total raised, it is the number and scale of IPOs that mark out the year as distinctly different to what the UK has seen before. Listings of UK companies on markets on both sides of the Atlantic suggest an ecosystem reaching maturity, and the record-breaking levels of venture investment shows a strong pipeline of companies coming through.
"The UK life sciences sector is genuinely one of the jewels of the UK economy and continues to demonstrate its capacity for growth based on the extraordinary innovation created here."
- Sir Jon Symonds, Chairman, GSK
A record £2,518 million was invested into private UK biotechs in 2021 as both domestic and a growing cohort of international investors raced to access growth opportunities in the UK’s booming sector.
Despite the ongoing disruption caused by the pandemic, investors proved more willing than ever to make seed commitments to fledgling companies, with £128 million invested, over four-times more than we have seen in previous years.
Later-stage financings were also more numerous and netting more than in previous years, reflecting the maturing sector but also the participation of more international investors willing to make larger commitments.
"There has never been a better time to start a new life sciences company in the UK. 2021 challenged all of us in different ways, but through these challenges rose a new wave of entrepreneurs, scientific founders and data driven health technologies. We have learned that we can disrupt the old ways of working, the healthcare status quo, and be ambitious in the way we capitalise British companies as they grow. It is very exciting to see talented first time entrepreneurs start new companies, and venture funds raising fresh capital; further enhancing the dynamic nature of this sector." - Clare Terlouw, Head of LifeArc Ventures
Top UK venture deals
Super-sized funding rounds are becoming much more common for UK biotech companies. Eight companies achieved funding rounds of over £100 million in 2021, compared to just three in 2020, and a further 27 raised more than £20 million each, compared to 12 in the previous year.
Oxford Nanopore topped our leaders board for the second year running with a £195 million fundraise prior to their London IPO. Vaccitech, the Oxford University spin-out commercialising the technology platform behind the Oxford/AstraZeneca COVID-19 vaccine, also raised a large round prior to IPO, notably bringing in UK‑based institutional investor M&G alongside new international investors. M&G is taking a welcome greater interest in the sector, having also backed Nanopore.
"What we do at Oxford Nanopore is best defined by the simple, bold mission that has always driven us forward: to enable the analysis of anything, by anyone, anywhere."
Dr Gordon Sanghera, CEO, Oxford Nanopore
Elsewhere, Exscientia capitalised on the well-placed hopes of AI-driven drug discovery to secure the fourth largest private fundraise ever recorded by the BIA, but more-traditional drug discovery and development biotechs still dominate the fundraising league table from seed to later-stage.
UK biotech companies raised a massive £1.3 billion through IPOs in 2021. The figure accounts for 42.8% of all the money raised by UK biotechs at IPO in the past decade and is a remarkable leap from the £244 million raised in 2020.
Topping the IPO charts was Oxford Nanopore, which also represented the largest amount raised in a listing on the London Stock Exchange by a biotech company. The listing generated a great deal of interest, including from retail investors. Three UK therapeutic companies also launched on London’s Alternative Investment Market (AIM), as did a handful of foreign biotechs, hinting at improving conditions for the UK sector on its home market.
However, overall, more money was collected by companies choosing to list on NASDAQ, which accounted for two thirds of the total raised. The deals achieved were also considerably larger than those seen in 2020, where £119 million was the largest raise.
"Arecor Therapeutics is a globally focused biopharmaceutical company transforming patient care by bringing innovative medicines to market through the enhancement of existing therapeutic products. By applying our innovative proprietary formulation technology platform, Arestat™, we are developing an internal portfolio of proprietary products in diabetes and other indications, as well as working with leading pharmaceutical and biotechnology companies to deliver enhanced formulations of their therapies." - Dr Sarah Howell, CEO, Arecor
Follow-on financing returned to normal levels in 2021. The vast majority of public UK biotechs raised follow-on financing in 2020 taking advantage of buoyant market conditions, with £1.18 billion raised. In 2021, the figure almost halved to £684 million but this is still good by historical standards.
The NASDAQ total was largely composed of Autolus’ £183 million investment from Blackstone, which will be used to advance the company’s CAR-T cell therapy, currently in Phase III clinical trials. Financings on AIM were dispersed across a number of companies.
On the Main Market, Oxford Biomedica received a £50 million strategic investment from the Serum Institute of India, via a subsidiary. Both companies are involved in the production of the Oxford/AstraZeneca COVID-19 vaccine and the investment will be used to expand advanced therapy manufacturing facilities near Oxford.
"Founded and headquartered in the UK, Autolus is delivering life-changing treatments for cancer patients. Amongst the world leaders in cell re‑programing technologies, we are developing best in class autologous T cell therapies. Our lead product, obe-cel, has the potential to become standard of care and transform outcomes, including offering the prospect of a cure for some patients suffering from adult Acute Lymphoblastic Leukemia." - Lucinda Crabtree, Senior Vice President, Finance, Autolus
M&A, licensing, debt and grants
Mergers and Acquisitions
Two high value exits of established UK biotech companies happened in 2021, returning capital to investors and securing commitments to continued development and manufacturing in the UK.
NASDAQ-listed GW Pharma, a leader in the science, development and commercialisation of cannabinoid-based epilepsy treatments, was acquired by Jazz Pharmaceuticals. The deal agreed in February delivered GW shareholders $220 per American depositary share – $200 in cash and $20 in Jazz shares, representing a 50% premium.
As an important source of operating capital, licensing deals have been included in this report for the first time to provide a fuller picture of the financing of UK biotech companies.
Potentially the most valuable was struck between AstraZeneca and VaxEquity, to use the University College London spin-out's saRNA platform. VaxEquity could receive development, approval and sales-based milestones totalling up to $195 million and royalties in the mid-single digits per programme. AstraZeneca has the option to collaborate with VaxEquity on up to 26 drug targets. An upfront payment was not reported.
More-established life science companies raised significant capital in the form of debt throughout 2021, but not at higher levels than in previous years.
US companies and revenue-generating life science companies in Ireland accounted for the vast majority of debt raised, including Jazz Pharmaceuticals, which partly financed its acquisition of GW Pharmaceuticals using debt financing from BofA Securities and J.P. Morgan Securities LLC.
UK biotech companies won over £50 million in non‑dilutive grant funding in 2021. This is a crucial support for early-stage businesses and allows highly innovative but risky research projects to go ahead. It also complements and leverages downstream private investment.
The figures represent a drop compared to previous years, but this is likely due to a lag in reporting by grant funders and/or recipients. This is the second time
we have published this data and the figures have changed slightly compared to those released last year.
We previously reported that in 2020 UK companies received £40 million in grants but this year we have revised this figure up to £73 million.
Earlier years remain approximately the same and overall the trends have not changed. We are also not able to capture all funding sources (the US Government and its agencies being a major one we are unable to report) but the data here gives a strong indication of the financial support UK biotech companies are receiving alongside their equity finance investors.
We expect the £50 million figure for 2021 will be revised up in our subsequent report and we will continue to refine how we analyse and report this dataset.