Less Risk, More Add-On Strategies Expected in Biotech Investment Going Forward

A flagging biotech investment market has droves of private investors seeking out low-risk, promising single-asset opportunities, and according to the Co-Founder of Vida Ventures, Dr. Arjun Goyal, the future is “gonna be a story of haves and have-nots.”

Silicon Valley Bank’s annual report on healthcare industry trends shows that early-stage venture funding in biopharma dropped about 24% in 2022 — a frightening statistic considering that kind of money was practically pouring in in 2021 to reach a record high. Despite this, the saving grace of the market is its demonstrated durability; the overall total investment logged in 2022 actually exceeded the 2020 total by just under $2 million.

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“The VC world in general has raised a lot of cash that will allow for sustaining those companies,” said Antoine Papiernik, Sofinnova Partners’ Managing Partner. “If you have enough resources, you're not going to die in the middle of the river.”

A great deal of companies have fallen by the wayside, though, with platform companies experiencing the sharpest drop off in early investment. Their seed and series A funding dropped by $1.2 billion last year. There is, however, always a silver lining, and in this case that pertains to the few platform companies that managed to outpace other kinds of biotechs. Tessera Therapeutics, Eikon Therapeutics, and Treeline Biosciences each scored financing rounds in 2022 that exceeded $200 million. Eikon’s Series B even came out above the half-billion dollar mark.