After a disappointing start to the year, the last few months have seen a boost to fundraising for UK biotech companies. DDW’s Diana Spencer unpacks the Q3 figures and annual predictions from the BioIndustry Association1.
While 2021 was the highest year on record for investments into UK biotech and life sciences companies, it looks unlikely that the sector will be able to build on this success in 2022.
Although still a major global player in the biotech industry, investment in the UK this year seems to be affected by current global events and economic uncertainty in the country.
The ‘Biotech financing update’ for June-August 2022 by the UK BioIndustry Association (BIA) and Clarivate shows venture capital investment fell by 11% between Q2 and Q3.
UK-based life sciences and biotech companies raised £1.5 billion ($1.7 billion) in equity finance in the first three quarters of the year. However, accelerating investment activity in Q3 is a cause for optimism, as the sector looks to the government to create the right conditions for growth.
The global picture for biotech
In total, £14.9 billion ($17.1 billion) has been raised through private investment so far this year, leaving 2022 on track to be the third best year ever.
Massachusetts retained the top spot as the world’s most successful fundraising biocluster during Q3, securing £1.4 billion ($1.6 billion), followed by the San Francisco Bay area (£687m/$789m), China (£489m/$561m) and San Diego (£401m/$460m). The UK has slipped to fifth place at £247 million ($283m) but still accounts for a quarter of all European venture capital raised. No other European country raised over £100 million.
Only four biotechs were able to complete initial public offerings (IPOs) in the three months to 31 August. The largest fundraising was completed by Shanghai-based Inventisbio which raised ¥2.084 billion ($285 million) in an IPO on Shanghai’s STAR Market. The other three IPOs were all American: Maia Biotechnology, Paxmedica Inc and Shuttle Pharmaceuticals.
The UK’s top deals in Q3
The third quarter of 2022 has been by far the most successful for the UK biotech industry so far this year.
Seed funding remained steady compared to the previous three months and later-stage companies continued to be able to secure large rounds, with Mirobio achieving the largest private raise this year with its £78.6 ($90) million Series B.
The financing was led by Medicxi with participation from new investors, OrbiMed and Monograph Capital and existing Series A investors, Oxford Science Enterprises, Samsara BioCapital, SR One and Advent Life Sciences.
The company said that the funds will primarily be used to advance MiroBio’s two lead antibody candidates into clinical trials and obtain safety and efficacy data in patients with autoimmune diseases.
Steve Bates, CEO of BIA, comments: “The UK remains the strongest country in Europe for biotech venture capital and a rival to American clusters. We continue to welcome global investors who see the quality of our science and capital efficiency of our ecosystem. As evidenced by the agreed acquisition of MiroBio by Gilead, this leads to strong returns for investors.”
| Company name | Deal date | Round | Value (£m) |
| Mirobio | 29/06/2022 | B | 78.6 |
| F2G | 04/08/2022 | ND | 58.3 |
| Charm Therapeutics | 09/06/2022 | A | 43.1 |
| Revolo Biotherapeutics | 08/06/2022 | ND | 20.6 |
| Vicebio | 21/07/2022 | ND | 14.9 |
| Constructive Bio | 15/08/2022 | Seed | 12.9 |
Top UK biotech VC deals, June to August 2022
In terms of follow-on financing, companies listed on NASDAQ achieved one of the best ever quarters. Verona Pharma raised £129.3 ($148.5) million from NASDAQ investors, and Immunocore raised £120.7 ($138.7) million in a private placement with General Atlantic, Rock Springs Capital, RTW Investments and other undisclosed investors.
In London, Redx Pharma raised £34 ($39) million to help it progress its pipeline of therapeutics targeting cancer and fibrotic disease, while ANGLE raised £20 ($22.9) million.
Impact of the financial downturn
Like many other industries, global economic headwinds are having an impact on the sector this year, with 2022 expected to see the first annual decline since 2019 and be only the fourth best year overall for fundraising.
UK businesses will be looking to the government to offer financial reassurance and encourage investment in the industry as we go into 2023.
Bates continues: “It’s great to see so many companies continuing to be able to raise the capital they need to progress their R&D programmes. However, it is clear that the outlook for all sectors, including ours, is difficult.
“The fundamental strengths of UK science, our companies and our people is cause for optimism, but it’s crucial the government maintains support for the sector through R&D tax reliefs, venture capital incentives and the vital pension reforms needed to unlock new sources of capital to drive our innovative industry forward.”
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