In the face of an economic downturn, the second quarter of the year saw a robust influx of new financing for UK life sciences companies, totaling £382 million ($486 million), primarily propelled by venture capital investments.
Data gathered by the BioIndustry Association (BIA) and Clarivate suggests a progressively improving fundraising landscape within the sector in 2023, following a substantial decline in 2022. This year’s figure represents a noteworthy 29% increase compared to the £295 million raised in the first quarter.
The report underlines that the public markets continue to pose challenges for UK biotech enterprises, evidenced by the absence of new market launches and lackluster follow-on offerings. Within the second quarter, venture capital funding constituted a significant portion at £338 million, while a modest £44 million originated from follow-on financing. Notably, there were no initial public offerings (IPOs) for the second consecutive quarter.
Although the UK’s performance in terms of IPOs is on par with the rest of Europe, this inactivity occurs concurrently with a resurgence across the Atlantic, characterized by a flurry of listings on the US Nasdaq.
The most substantial deal of the quarter was Ascend Gene & Cell Therapies securing £106 million in a Series A funding round. This specialist company focuses on process development, clinical manufacturing, and regulatory support for biotechs. Following closely, digital health player Perspectum secured £56.5 million in its third funding round, while eXmoor Pharma, a contract cell and gene therapy manufacturer, secured £28 million in financing.
In terms of public capital raised by UK biotech, Orchard Therapeutics’ £28 million fundraising on the Nasdaq represented the majority during the quarter.
The BIA noted that this heightened funding activity aligns with new capital sources emerging in London, including the recently announced $400 million biotech fund by life sciences investor Medicxi. Additionally, the initiative by pension providers to allocate a minimum of 5% to unlisted equities by 2030, particularly through defined contribution pension funds and other long-term savings avenues, is anticipated to further bolster the sector.
“Our sector is demonstrating resilience and growth amid challenging times. It is fantastic to see venture investors continue to back the UK’s life sciences companies and even raise new capital themselves showing that there is more money to deploy in the years to come. The availability of funding will “super-charge the growth of innovative UK businesses and deliver financial returns for savers and the economy.”
– BIA’s chief executive, Steve Bates
The report underscores a “healthy spread” of investment across early and late-stage private companies, highlighting a promising resurgence in seed investment after a sluggish start to the year.
Globally, biotech investment witnessed a substantial 26% quarter-on-quarter surge in the period, totaling £3.9 billion. This growth was driven by gains in both the US and Europe, with a notable decline in activity in the Asia Pacific region, according to Mike Ward from Clarivate.
“The market for initial public offerings remains lacklustre across the globe; while the appetite for follow-on financing grew for US and Asia-Pacific biotechs, European biotechs struggled to take on additional finance.”
– BIA’s chief executive, Steve Bates
