TLDR
Key Points:
- VC investment in biopharma dropped to $29.9 billion in 2023 from $36.7 billion in the previous year.
- Despite the decline, biopharma exits totaled $18.3 billion in 2023, showing a strategic patience in investment.
A new analysis from PitchBook revealed that venture capital investment in biopharma experienced a significant correction in 2023, dropping to $29.9 billion across 920 transactions from $36.7 billion in the previous year. The final quarter of 2023 saw a further slip in venture funding to $6.3 billion, attributed to a modest decline in deal activity. Despite the decline in investment, biopharma exits through 55 IPOs and 39 company acquisitions still totaled $18.3 billion, showcasing a strategic patience and selective investment ethos throughout the year. The report highlighted a cautious yet discerning investment approach, with a preference for companies showcasing mature clinical data. Top VC biopharma investors for 2023 included RA Capital Management, Alexandria Investment Ventures, and Arch Venture Partners, with a focus on early-stage biotechs incorporating AI.
Looking ahead, the market analysts identified molecular glue degraders, epigenetic editing, and macrocyclic peptides as pockets of opportunity in 2024 and beyond. Molecular glue degraders, characterized as a “buoyant” market, are led by companies like Monte Rosa Therapeutics and Triana Biomedicines. Epigenetic editing has an optimistic outlook, with a focus on diseases with well-understood mechanisms like certain cancers. Gene therapy tech has gained confidence with FDA approval of CRISPR Therapeutics and Vertex’s Casgevy. Lastly, the macrocyclic peptide sector, though preclinical, shows potential for growth with the success of drugs like Merck & Co.’s MK-0616.
