The private biotech sector witnessed a 46% increase in total venture financing deal value in the first quarter (Q1) of 2024 compared to the fourth quarter (Q4) of 2023. This uptick signals progress towards recovery in venture financing as investor confidence improves, according to GlobalData, a leading data and analytics company.
Private biotech venture financing saw a downturn during 2022 and 2023, influenced by macroeconomic challenges such as high interest rates and inflation, which led to increased investor caution. Nonetheless, investor optimism has increased in anticipation of lower interest rates and reduced inflation this year, which would lower the cost of capital.
Ophelia Chan, Senior Business Fundamentals Analyst at GlobalData, comments: “The increase in venture capital investments in private biotech companies is anticipated to continue over the next year.”
Private biotech venture financing deals in Q1 2024 saw an increase in larger funding rounds than in Q4 2023. This highlights the improved venture capital sentiment from being more selective in favoring smaller funding rounds to investing more in larger funding rounds.
GlobalData’s Pharma Intelligence Center Deals Database reported a notable 109% surge in venture financing for Phase II and Phase III deals in Q1 2024 compared to Q4 2023.
Chan adds: “Investor preference is shifting towards late-stage clinical developments, in efforts to mitigate risk, contrasting to previous investments seen in early-stage biotechs in 2021.”
During Q1 2024, investor interest surged in antibody drug conjugates (ADCs) and radiopharmaceuticals. ADCs saw over a fivefold increase in venture financing, from $98 million in Q4 2023 to $568 million in Q1 2024. Tubulis, a German biotech, secured the largest venture financing deal in Q1 2024, receiving $139 million in Series B2 funding for its next-generation ADC lead candidates. Additionally, venture capital investment in innovative radiopharmaceuticals surged over 330% in Q1 2024 compared to the same quarter the previous year, indicating sustained growth prospects.
Chan concludes: “Over the last two years, market volatility and the downturn in public markets led to a decline in biotech initial public offerings (IPOs). However, as the economy and stock markets stabilize, with the reopening of the IPO market, investor confidence is improving, paving the way for increased venture funding in the biotech sector. This influx of funding is poised to bolster private biotechs in advancing drug R&D efforts.”
Note: Includes all announced and completed venture financing deals for private biotech companies headquartered globally from 2020–Q1 2024. Includes deals where at least one drug is involved and across Pipeline and Marketed Stages of Development with deal values disclosed in the public domain.
