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May 15, 2013

VC Investment: Not Quite Dead?

  • Venture investment in some biotechnology specialties has more than doubled year-to-year during the first quarter, even as overall investment in the field continued to decline, according to a report released today.

    The report, authored by PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ and based on data from Thomson Reuters, said that investment in early-stage biosensor companies zoomed 152% to $43 million during Q1 2013. Also more-than-doubling was investment in animal biotech businesses, which ballooned 110% to $40 million. Biotech research concerns showed a 37% year-to-year jump, to $7 million.

    While the eight-page report offered no examples, T2 Biosystems announced March 28 that it had closed on a $40 million Series E financing round. T2 said the capital would be used to support clinical programs as well as commercialization of T2Candida™, the company’s flagship molecular diagnostic test panel designed for sensitive and rapid identification of species-specific Candida fungal infections directly from whole blood.

    T2’s Series E round was led by new investor Goldman Sachs and joined by existing investors Flagship Ventures, Polaris Partners, Aisling Capital, Flybridge Capital Partners, Physic Ventures, Arcus Ventures, Partners Healthcare, Camros Capital, and WS Investments.

    Another recent winner of Q1 financing was BiOptix Diagnostics, a Boulder, CO, company developing its E-SPR (enhanced surface plasmon resonance) technology platform for the detection of molecular interactions. BiOptix recorded as receiving $6.23 million in a Series B round from Boulder Ventures and Rossiyskaya Korporatsiya Nanotekhnologiy, though the company later told the Boulder County Business Report it actually won $5 million during the quarter.

    In the animal biotech category, one example of a Q1 financing was the March 7 disclosure of $10 million in financing from Square 1 Bank won by Aratana Therapeutics, a Kansas City developer or medicines for cats and dogs that in-licenses drugs found to be working in humans [See GEN, January 15]. Just 13 days later, Aratana filed for an initial public offering, but made no decision on how many shares it will sell, or the price of those shares.

    The largest subsegment, human biotech, inched up just 1% year-to-year, but still accounted for the biggest share of funding at $731 million (83.5%) of the $875 million raised in 96 deals during the first quarter. Also flat during Q1 was venture investment in early-stage biotech equipment companies, which dipped 1% to $19 million. Pharmaceutical biotech startups saw a 43% drop in financing, to $24 million, while industrial biotech concerns received 83% less in financing than the year-ago quarter, to $19 million.


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