Record investment in UK biotech

31.01.2019

The UK’s BioIndustry Association (BIA), together with Informa Pharma Intelligence, have recently published figures which reveal that the UK biotech sector raised a record £2.2bn in 2018, up from £1.2bn the year before.

Venture and private equity funding in the UK biotech sector saw a huge increase of 116%, totalling £1.1bn, making it the fifth most attractive region in the world for investors, behind the San Francisco bay area, Massachusetts, China and the San Diego cluster. Although seed funding remained relatively consistent with the 2017 figures, and series A funding bounced back from the drop in 2017, investments in series B and post-series B funding rounds significantly increased, suggesting that UK companies are choosing to stay private for longer.

The report highlights the limited appetite in UK capital markets for drug discovery risk, with only two UK market listings in 2018. Contrast this with the US markets, on which more money was raised through biotech IPOs in 2018 than in any year since 2014. Two notable UK biotechs, Autolus Therapeutics and Orchard Therapeutics (both spin-outs from UCL), took advantage of the increased buoyancy in the US markets in 2018, following the now well-established trend of UK biotechs choosing to list on NASDAQ.

Follow-on financing also saw an increase of 45% to £658m. The majority of investment (57%) came from the US, which is reflected in the lower levels of follow-on financing raised by London-listed companies (£277m in 2018 vs £361m in 2017). It is clear that UK science is increasingly being viewed as an attractive investment proposition by US investors, no doubt helped to some extent by the favourable USD/GBP exchange rate.

The BIA’s report does however acknowledge that the outlook for UK biotech is likely to be more challenging in 2019, with 2018 having closed amid a number of mid and late stage clinical trial disappointments, the impact of which will be felt into 2019. The uncertainty caused by Brexit, which looms ever closer, is also likely to have a negative effect on investment – at least until a resolution to the current impasse can be found.

Samuel Munday

Author