UK life sciences industry sees resurgent financing year

BioTrinity and Peel Hunt reveal today that UK life sciences financings by innovative companies in 2014 amounted to $2.86 billion. The UK has in place strong foundations to build on its world class science base and a strong level of funding allows Britain’s best companies to keep their IP in the UK, leverage the generous tax-climate and build world class companies employing many thousands of skilled scientists, engineers and graduates.

A comprehensive data set analysis revealed 114 disclosed financing rounds in 2014 by UK life sciences companies across a range of companies including biotech, diagnostics, medtech and research tools. $883m was raised in venture financing rounds and $1,975m was raised on the London Stock Exchange, marking 2014 as a year of resurgence for the UK life sciences sector.

During the year AstraZeneca fought off a hostile bid from Pfizer, and Shire completed two acquisitions following the withdrawn bid by AbbVie. In the mid cap market, BTG has tapped into public markets to build a world beating interventional medicine franchise; Vectura Group, SkyePharma plc, Retroscreen Virology, EKF Diagnostics and Oxford BioMedica have shown that follow-on financing is buoyant.

In 2014, the data revealed that UK innovative life sciences companies secured $883m in venture financing in 71 financing rounds of which nearly $500m was raised by biotech companies.  Medical devices companies raised $107m in venture funds, while diagnostics companies raised $192m, and research tools companies raised $91m, led by Oxford Nanopore.  However, only 12.2% was directed for “enterprise-size financing rounds” below $5m. Companies in the Golden Triangle secured over 50% of venture financing, with the Oxford cluster in the lead ($221m), London slightly behind ($147m) and the Cambridge cluster ($131m), collectively the most active UK life sciences R&D clusters.

Forty three public markets fundraisings, including 13 IPOs, raised $1,975m including $1,580m in biotech, pharma and speciality pharma financings, $203m by medical devices firms, $53m by diagnostics companies, $18m by contract research companies and $121m by research tools companies. There were seven fundraises on the public markets of $100m or more, indicating investor risk appetite amongst institutional investors is improving.  Circassia Pharmaceuticals plc raised over £200m in March 2014, valuing the company at £581m, making it the largest ever London listed biotech IPO.

In addition, a further $689m was raised by London-listed funds investing in IP commercialisation comprised of Imperial Innovations plc ($247m), Allied Minds ($181m), IP Group ($154m) and Mercia Technologies ($108m). This figure was excluded from the totals because these funds invest in a number of sectors including life sciences.

The Golden Triangle secured 60% of public market financings, with the London cluster in the lead ($551m), followed by Oxford ($485m) and Cambridge ($141m).

UK companies have also tapped into the buoyant US markets, further validating the attractiveness of UK science. Summit Therapeutics’ recent NASDAQ Global Market listing raising $34.1m highlights the quality and strength of the UK life sciences sector globally and points to a continuation of 2014’s successful trend.

Encouragingly, 2015 has got off to a good start in London, with specialty pharmaceutical company Allergy Therapeutics proposing to raise $32m and IP Group proposing to raise $192m.  In addition, there is evidence of funds flowing from US-based investors into a number of London listed mid and small cap healthcare companies, signifying that London listed companies are able to attract capital on a global stage.

Jon Rees, CEO at OBN said “Taken together the public markets and venture financing data combined demonstrate the resurgence of financing in UK life sciences. However, the relatively small proportion raised for enterprise financing rounds strongly supports the case for continued financing mechanisms to support innovative R&D firms through the equity gap, such as the Biomedical Catalyst. Nevertheless, OBN welcomes this banner year for UK life sciences – which we hope will be followed by financing events announced at BioTrinity 2015.”

Jim Mellon, entrepreneur and fund manager said “This latest research confirms the record year that we are having in the life sciences sector. Building on the very high levels of mergers and acquisitions we’ve seen in our existing fund, these new funding rounds will give us many more companies to look at as potential investments for our new fund.”

Clare Terlouw, Corporate Director at Peel Hunt said “It has been a breakthrough year for the UK Healthcare and Life Sciences industry with strong public markets that will help Britain’s best companies keep their IP in the UK and build a thriving industry. We look forward to continuing to work with innovative and growing companies across the life sciences sector, helping them retain value for longer and become global leaders in their respective fields.”

Further analysis of UK life sciences financings will be presented at BioTrinity 2015 by Clare Terlouw who will represent Peel Hunt in an expert panel on May 12, 2015. Clare will speak alongside representatives from other industry majors such as LSP, Forbion, EdRIP, Sofinnova Partners and fundraising advisors Akesios, examining the new IPO reality, and dynamics involved in considering whether UK based companies should list in the UK or the US.  In addition, a detailed analysis benchmarking the European life sciences financing landscape in 2014 will be presented by EY at BioTrinity 2015.

Notes: BioTrinity and Peel Hunt focused exclusively on life sciences companies, excluding hospitals, care homes, IP commercialisation companies, introductions, and reverse takeovers where no new funds were raised.  A complete data set is available upon request by accredited press.