Money Flows Back Into Biotech & Pharma
Money flows into life sciences appears to be on the rise.
This past February’s Biotech crash had a ripple effect for many companies. For example, following the crash, clinical trial starts dipped. This is according to CRO Activity Report 2Q 2016 report issued by BioPharm Insight. As an Executive Search firm with an eye out for opportunities where our candidates can make a big difference in pushing science (and investor returns) forward, this downturn has been disconcerting.
But lately news has appeared that the tide is turning. Allergan has been on a buying spree having purchased Tobira for $1.7M, Vitae Pharmaceuticals for $640M and RetroSense for $60m. Horizon also purchased Raptor Pharmaceuticals for $800M and J&J is buying Abbott’s Medical Optics business for $4.3BN. This is part of the new normal, where large companies purchase smaller ones just after they’ve proven their technology’s potential. These deals are great news, especially given that the original investors will likely be looking for new homes for their newly-earned returns.
The flow of money hasn’t limited to buyouts. Despite the IPO market being soft (though it’s returning according to Renaissance Capital IPO Calendar), Venture Capital is pouring its money back into companies. For example, KKR invested $66M in AcuFocus; Seattle’s Sound Pharmaceuticals is raising $30M to advance trials of hearing-loss drug; Caladrius Biosciences entered into agreements to raise $25 Million and Delinia raised $35M from Sofinnova and Atlas. These are just to name a few. It seems that VC strategy has been to find undervalued companies and to help the companies in their current portfolios with cash injections until markets are willing to put more cash forward.
The stage is set to see more money flowing into preclinical and early stage companies as well. Two funds recently raised significant money; Avalon Ventures collects over $116 mln for its 11th fund and Sofinnova Ventures closes in on $650M biotech fund. If you’re curious where that money will be flowing try looking at the hottest biotech R&D field in venture investing.
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