Here we are a bit past mid-year, and figures from the first half of 2012 point to a rapidly worsening environment for early-stage biotech companies.
According to various sources, venture capital has dried up like a contact lens on a carpet. Bloomberg says there were just 59 deals totaling $550 million in the second quarter, down 43% from a year earlier, backing up similar figures from Dow Jones' VentureSource. The trend certainly hasn't improved as the year has progressed. For the first half, life sciences VC funding dropped 46% to $1.07 billion, according to VentureSource, with the total number of deals down 28% to 104.
Widen your view to the total capital raised by private and public biotech companies, and things don't look much better. According to data published in Bioworld, total fundraising was down 40% in the first half of the year, to $7.9 billion. The dearth of early-stage venture financing is going hand-in-hand with an apparent slowdown in partnership dollars. Private companies, with little hope of an IPO in the current environment, aren't exactly negotiating with partners from a position of strength. That leads to deal terms that offer up lower milestone payments and fewer overall dollars. Early stage public companies aren't faring much better.
Of course, the number one way to return the biotech ecosystem to full health is to build a healthy economy in which there is more appetite for risk. But let's hope the current adversity will lead to some creativity that will better serve the industry in good times as well as bad. . .View Full Article