VC-backed healthcare companies in the US have seen a jump in financing, with more than $6B already invested in the first half of 2015 across more than 400 deals, putting this year on track to hit a 5-year funding high.
We used CB Insights’ database to highlight funding trends, exit activity, active investors, and the most well-funded companies to keep you up-to-date with what’s happening in the healthcare industry.
Private financing into healthcare companies has increased significantly for the past two years, with more than $11B invested in 2014, a 30% increase from the year prior. The first half of 2015 has already seen more than $6B invested, putting it on track to beat 2014’s total of $11.2B invested (albeit with slower dollar growth than in 2014). Deals, however, have slowed significantly for the first half of this year, with only 403 financings being completed. This would suggest that fewer, but larger healthcare deals have been happening.
In fact, there were 31 deals above $50M+ in the first half of 2015 (compared to 14 in the entirety of 2010).
Q2’15 was the first quarter since Q1’13 with less than 200 deals, but also was the third consecutive quarter of increasing investment, with 4 out of the last 5 quarters seeing more than $3B invested. Q2’14 saw the most activity, with a peak of $3.7B invested across 261 deals. Large deals in that quarter include a $200M investment into Intarcia Therapeutics and a $125M investment into Alignment Healthcare.
Seed/Angel rounds have taken 12% of total deals into healthcare, the lowest level since 2010. Series A and B rounds stayed within their historic range and took 45% of total deal share in the first half of 2015, including deals into Semma Therapeutics and Global Blood Therapeutics. Series C deals hit a high of 15% of deal share in the first half of 2015.
After two strong years, Series E+ financing dropped from 19% to only 14% of dollar share in the first half 2015, while Series B has climbed from 20% in 2013 to 28% in the same period, in part thanks to an $80M financing into Allergen Research Corporation. Series C saw a steady decrease in dollar share since 2010, and experienced a particularly large drop in 2014 when it took less than a fifth of all dollars for the first time. Seed deals have remained range-bound at 1%.
For VC-backed healthcare companies, IPOs are becoming more prevalent. In 2014, 47% of VC-backed healthcare exits were in the form of IPOs, compared to just 17% two years prior. There was a high of 140 healthcare exits in 2014, but 2015 is on track to have slightly less exits than 2014.
There have already been 2 VC-backed unicorn healthcare exits this year, with both Flexus Biosciences and Aduro BioTech exiting for above $1B in 2015. Of the top 10 healthcare exits this year, 7 were in the form of IPOs.
|1||Flexus Biosciences||Bristol-Myers Squibb||$1,250|
|3||Cord Blood Registry||AMAG Pharmaceuticals||$700|
|*Only included first exits|
Alta Partners has had the most exits in healthcare companies, with more than 30 portfolio companies exiting since 2010. Domain Associates and OrbiMed Advisors rounded out the top three, with both of them being investors in Glaukos and Otonomy. New Enterprise Associates followed, and is the only VC in the top five without a healthcare-specific focus.
|Investor in Exited Tech Companies|
|4||New Enterprise Associates|
|7||Kleiner Perkins Caufield & Byers|
|12||SV Life Sciences|
|15||Three Arch Partners|
|15||Johnson & Johnson Development Corporation|
|15||RiverVest Venture Partners|
|15||Bay City Capital|
Most Active Healthcare Investors
NEA, which has a new fund larger than $3B, is the most active VC investor in healthcare companies, with investments in ~80 companies since 2010. OrbiMed Advisors and Versant Ventures were the only other investors with more than 60 investments during this time. Some investors who have seen more activity in 2015 include Deerfield Management, Ally Bridge Group, and Foresite Capital Management.
|2||New Enterprise Associates|
|4||Ally Bridge Group|
|4||Foresite Capital Management|
|6||Mountain Group Capital|
|6||ARCH Venture Partners|
|6||Hatteras Venture Partners|
|12||Kleiner Perkins Caufield & Byers|
|15||New Leaf Venture Partners|
Novartis is the leader in healthcare investment among corporates, investing in more than 40 healthcare companies since 2010. Novartis has ramped up deal activity significantly in recent years. Johnson & Johnson and Fidelity Biosciences were not far behind, with more than 35 invested companies apiece.
|1||Novartis Venture Funds|
|2||Johnson & Johnson Development Corporation|
|4||Pfizer Venture Investments|
|8||Kaiser Permanente Ventures|
|9||Roche Venture Fund|
|12||Astellas Venture Management|
|12||Mitsui & Co. Global Investment|
|14||Fletcher Spaght Ventures|
|16||AbbVie Biotech Ventures|
|16||Biogen Idec New Ventures|
Most Well-Funded Healthcare Companies
Below are the most well-funded VC-backed healthcare companies in the United States, as well as a description and select investors. Three of the companies on this list are valued at $1B+ or more (Moderna, Intarcia Therapeutics, and Theranos).
|Moderna||Flagship Ventures, Boston Medical Investors, Invus Group, Merck & Co.||Moderna is pioneering messenger RNA therapeutics, an in vivo drug modality that produces human proteins or antibodies inside patient cells|
|Intarcia Therapeutics||New Enterprise Associates, Venrock, New Leaf Venture Partners, GGV Capital||Intarcia Therapeutics is developing therapies to ensure the best treatment outcome by optimizing patient convenience and adherence|
|Reata Pharmaceuticals||CPMG, Cardinal Investment Company, Novo Ventures||Reata Pharmaceuticals aims to build an integrated pharmaceutical company delivering medicines for deadly and difficult-to-treat diseases|
|Adaptive Biotechnologies||Celgene, Tiger Management Corp, Matrix Capital Management, Viking Global Investors||Adaptive Biotechnologies, formerly Adaptive TCR, is a pioneer in immunosequencing diagnostics, with a focus in oncology|
|Aurora Diagnostics||Cerberus Capital Management, BiologicTx, NeoGenomics Laboratories||Aurora Diagnostics is an independent specialized laboratory company focused on anatomic pathology at 23 locations in the United States|
|Theranos||Draper Fisher Jurvetson, ATA Ventures, Tako Ventures||Theranos aims to provide clinical decision-support systems|
|Melinta Therapeutics||Warburg Pincus, ABS Ventures, Vox Equity Partners, Vatera Healthcare Partners||Melinta Therapeutics focuses on groundbreaking antibiotics to overcome drug-resistant, life-threatening infections|
Want more information on healthcare companies? Check out our venture capital database below.