Biotech investment in UK ticks up in Q2

Despite the economic downturn, UK life sciences companies raised a healthy £382 million ($486 million) in new financing in the second quarter of the year, with venture capital driving the increase.

The figure from the BioIndustry Association (BIA) and Clarivate point to an improving fundraising environment in the sector in 2023, after a sharp downturn in 2022, with the amount raised up 29% on the first-quarter tally of £295 million.

Their report notes, however, that the public markets "remain challenging for UK biotechs, with no new market launches and lacklustre follow-ons." VC funding accounted for £338 million of the second-quarter total, with just £44 million coming from follow-on financing and no initial public offerings (IPOs) taking for the second quarter in a row.

The UK is faring no worse than the rest of Europe on IPOs, but the lack of activity comes as there have been signs of a recovery on the other side of the Atlantic, with a flurry of listings on the US Nasdaq.

The £106 million Series A for Ascend Gene & Cell Therapies – a specialist in process development, clinical manufacturing, and analytical and regulatory support for biotechs – was the biggest deal of the quarter, followed by digital health player Perspectum's £56.5 million third round and a £28 million financing for eXmoor Pharma, a contract cell and gene therapy manufacturer.

Gene therapy company Orchard Therapeutics' £28 million fundraising on the Nasdaq, meanwhile, accounted for the majority of public capital raised by UK biotech in the quarter.

The BIA said the increase in funding activity came amid other new sources of capital in the City of London, such as the recently-announced $400 million biotech fund from life sciences investor Medicxi.

Meanwhile, an initiative by pension providers to allocate a minimum 5% to unlisted equities by 2030, through defined contribution (DC) pension funds and other sources of long-term savings, will also provide a boost to the sector, predicted the industry group.

"Our sector is demonstrating resilience and growth amid challenging times," said the BIA's chief executive, Steve Bates. "It is fantastic to see venture investors continue to back the UK's life sciences companies and even raising new capital themselves […] showing that there is more money to deploy in the years to come."

He added that the availability of funding will "super-charge the growth of innovative UK businesses and deliver financial returns for savers and the economy."

The report points to a "healthy spread" of investment between early and late-stage private companies, with a welcome recovery in seed investment after a sluggish start to the year.

Clarivate's Mike Ward said that, globally, there was a 26% quarter-on-quarter increase in biotech investment in the period to £3.9 billion, driven by gains in the US and Europe, and with a "dramatic drop" in Asia Pacific.

"The market for initial public offerings remains lacklustre across the globe; while the appetite for follow-on financing grew for US and Asia-Pacific biotechs, European biotechs struggled to take on additional finance," he remarked.

Photo by Will H McMahan on Unsplash.