Evidence continues to mount that VC purse strings have tightened drastically this year. Set against the backdrop of a flat-lined IPO market is the discovery that VC-related investments into biotechnology have dropped off sharply so far this year. Despite the fact the sector was the break-out story of 2000, it appears even its success has succumbed to the current market atmosphere.
According to our VentureXpert database, biotech investments, to date, are down 43% from the same time last year. From Jan. 1 through Feb. 20, $146.56 million was raised. This compares poorly to the $261.58 million in funding from the same time last year, which was raised before the human genome mapping announcement made heads spin in the industry.
At this point in time last year, venture capital money had been used to conduct placement rounds with 33 companies. 84 VC firms had participated, and money was utilized from 91 different funds. This year, just 12 companies have received funding during the same time period from 36 different investment houses.
The 1999 numbers help to frame the enormity of the ride biotechnology took last year, and the severity of this year’s cuts. 30 companies saw an infusion of capital, but just $128.04 million was raised during the same time period in 1999. However, 64 VC firms participated, an expression of continued interest.
The one constant that remains relatively unchanged over the last three years has been the meager number of VC-backed biotech IPOs launched up through the President’s Day holiday. This year, Third Wave Technologies Inc., [NNM:TWTI] priced a $82.5 million offer at $11. It now trades between $9-$10.75. Last year, Diversa Corp. [NNM:DVSA] priced at $24 in a $174 million offering and Sequenom [NNM:SQNM] priced a $136.5 million deal at $26. At market close yesterday, the two were trading at $16.43 and $12.68, respectively.
No VC-backed biotech IPOs were executed in 1999.
Colleen O’Connor can be contacted at Story Feedback.