New BIA report shows UK biotech venture capital hit record high in 2015 with £489m raised
The UK biotechnology sector continues to build on the success of previous years, raising an unprecedented £900m on the London Stock Exchange in 2015 and recording the highest level of venture finance in recent years, according to the latest report Money, momentum and maturity: UK biotech financing and deals in 2015/16 compiled by the UK BioIndustry Association (BIA) in partnership with Evaluate and the London Stock Exchange (LSE).
The report details encouraging trends in follow-on funding, venture capital activity, the strength of the R&D pipeline and rate of regulatory approvals which are promising as we look to develop the UK as the third global biotech cluster.
2015 saw an impressive level of follow-on funding raised by biotech companies on the LSE. AIM-listed companies in particular raised almost £600m in further capital, representing over 60% of the total LSE money raised by biotech companies.
Investors’ appetite for venture finance was stronger than ever in 2015 with £489m raised, accounting for over a third of the European total. The trend towards fewer but larger financing rounds continues, as investors move away from the historical ‘drip-feed’ approach, enabling quality UK management teams to focus on delivering value with an increased level of maturity.
Despite these signs of continued momentum and maturity in the funding of the sector, there is no room for complacency. For example, the lack of reported seed capital for UK companies in 2015 underlines the importance of effective support for early-stage companies through fit for purpose innovation policy from the government.
BIA Chief Executive, Steve Bates, said: “The UK biotech sector is in great shape. The title of the BIA’s new report, Money, momentum and maturity, says it all. Firstly, more venture capital money went into UK biotech than ever before, cementing the UK’s lead in Europe. Secondly, impressive levels of follow-on funding demonstrate that not only can companies raise money, they can continue to build momentum through accessing further funds as they grow. Finally, 2015 showed continued maturity through both larger financing rounds and the fact that M&A in the sector is no longer dominated by the large players alone.”
“All of this shows the great shape the UK biotech sector is in and the huge potential there is to build upon. How we can sustain start-up momentum, alongside scaling-up UK life sciences companies that the country needs to feature as a top three global cluster, should be the shared focus across industry, government and investors in 2016.”
Lisa Urquhart, Editor of EP Vantage, the editorial arm of Evaluate, said: “The mood in UK biotech definitely shifted in 2015, creating one of the best environments for companies in decades. We saw this in the number and size of IPOs and very healthy follow on financing, which made the UK the stand out region in Europe. Looking to the future, the record amount of venture financing should give encouragement that the sector is funding itself beyond the old hand-to-mouth model and finally creating sustainable businesses. The only dark spot, beyond the uncertainty of the EU Referendum vote, is the lack of seed funding, which needs to be addressed if innovation is to continue.”
James Clark, Business Development Manager, Primary Markets, London Stock Exchange, said: “The figures from 2015 demonstrate a large display of confidence in the long term value of the UK public markets as a source of growth capital for returning issuers in the biotech industry. Reminding us that the real value of a public listing is not just the fundraising at IPO, but the ability to continue to tap public markets as a company’s strategic objectives expand.”
- UK companies accounted for over a quarter (£178m, 27%) of the amount raised by European biotechnology company IPOs in 2015.
- In 2015, AIM-listed biotechs raised a huge £574m in further capital – over 60% of the total money raised by biotechnology companies on the London Stock Exchange.
- UK venture capital activity also hit a high in 2015, with £489m raised versus £323m in 2014. The gap between
- UK venture funding and the rest of Europe continues to widen, with the UK contributing over a third of the European total in 2015.
- Average VC round sizes again increased in 2015, with a trend for fewer but larger rounds.
- In 2015, M&A was not just dominated by the industry’s big players, with relatively newly-listed companies such as Circassia and Clinigen recording £100m plus deals.
- The UK remains an R&D powerhouse, with the 585 pipeline projects in development, far outstripping other European countries. This includes the highest number of phase 3 projects in Europe.
- The rate of both US and European approvals for UK companies is well ahead of European peers. Despite its smaller number of biotech companies, the UK reported more regulatory wins than Massachusetts.