Overview

This new report released by the BioIndustry Association (BIA) and Informa Pharma Intelligence reveals that the UK has the strongest clinical and preclinical pipeline in Europe. It also shows that more UK biotech companies are maturing and moving through the financing life cycle, with UK biotech company IPOs raising more than twice as much money in 2017 than in 2016.

BIA CEO, Steve Bates, said: 

“The UK’s impressive preclinical and clinical pipeline shows the strength and capability of the UK biotech ecosystem to produce fantastic science that attracts talent and funding from across the globe. There is money to be made as this pipeline develops. The Patient Capital Review means 2018 is the year UK pension funds will be nudged into backing this key sector of the future UK economy.

“It is also very encouraging to see that UK biotech companies are scaling and maturing at pace, and the variety of funding options open to them means we can build the third global cluster in bioscience in the UK.”

Informa Executive Editor, John Hodgson, said:

"Despite Brexit, UK biopharma investment is internationalising. London's markets provide cash for biotech globally, UK biotechs access international money, and venture capital has migrated upstream."

 

Overall Trends for 2017

The UK is in a good place in Europe with strong levels of funding. 2017 marked a return to a more usual financing pattern that relies on the public markets – 2015, 2014 and 2013 all had greater numbers for public rather than private fundraising.

It’s very positive to see that both IPO and follow-on financing were stronger than last year and this shows that the uncertainty around Brexit has not had a detrimental impact on the public markets for biotech. This year’s strong public market figures may also have been bolstered by 2016’s venture capital fundraisings. The progression to the public markets could show that the sector in the UK continues to mature as companies move through the funding cycle. 

 

Venture capital funding

The UK venture capital picture

Although it is positive to see seed funding up this year, the bulk of venture capital money is aimed at later stage and more established biotech companies, which shows the continuing maturing of the sector.

The total venture capital investment in the UK sector to November was £515m. This is down on the totals for 2016 and 2015 (£681m and £795m, respectively) although much higher than the annual totals between 2012 and 2014.
Furthermore, December brought a £85m B round from gene therapy specialist Orchard Therapeutics and an £8m A round from Biosceptre International, boosting the 2017 total to a respectable £608m. Unfortunately, these were after the data cut-off point for this report so aren’t reflected in the charts.

In our previous report, we had noted the apparent dependence of late-stage UK venture capital investment on the involvement of funds associated with Neil Woodford. In 2017, the value of venture rounds in which Woodford invested declined to about a third of their 2016 value (£115m in 2017 versus £309m in 2016).
However, this did not impact late-stage venture investments unduly as other investors stepped into the breach, most notably corporate venture groups such as the Novartis Venture Fund, Johnson & Johnson Development, Amgen Ventures and Vertex Ventures.

For more analysis and case studies, download the full report here.

Public markets

UK IPOs for 2017

2017 was a return to form for the public markets, with excellent results for biotech companies from across the UK. Two UK companies launched on AIM, raising £19.5m between them, whilst three opted to IPO on Nasdaq raising £214.9m. The two case studies below highlight how floating on the public markets can help to transform an organisation’s plans for the future. 

For more analysis and case studies, download the full report here

Partnering and deal making

Mergers and Acquisitions

The theme of maturing UK companies continues when we look at the figures for M&A activity for 2017 as we saw Horizon acquiring Dharmacon from GE. We also saw some promising biotechs being acquired by the big players. Puridify span out of University College London in 2013 and their revolutionary bioprocessing platform purification technology, FibroSelect caught the eye of major player GE who acquired the company in November.

Although not a biotech acquisition – a merger that will change the funding landscape in the UK in 2018 was that of IP Group and Touchstone Innovations. The merger first kicked off in July 2017, after IP Group raised £184m on the London Stock Exchange. The deal was given the go-head by Competition and Markets Authority in October and brought together two of the UK leading university spin-out bodies. The deal was worth £490m based on the relative value of the two companies’ shares. 

For more analysis and case studies, download the full report here

Pipeline and the future

Pipeline

UK innovation remains strong. British companies have the greatest number of products in both preclinical and clinical pipelines in Europe. Some of the strength of this pipeline can be attributed to the significant amount of funding that the UK invests in early stage and translational science and reflects the quality of our universities.

The data for 2017 shows a greatly increased level of preclinical activity across all the European nations. This reflects the extension of the Pharma Projects database to include those companies which only have preclinical projects; previously the database recorded preclinical projects associated with companies that also had clinical-stage programmes.

For more analysis and case studies, download the full report here.

Pipeline Progressing_webfinal.pdf
3.07MB