2021 Was Banner Year for VC Funding for Biopharma in the Bay State
The Bay State demonstrates its prowess as one of the top bio hubs in the United States. A new report from MassBio reveals the massive amount of venture capital that flowed into the state in 2021 to support life sciences and biopharma companies.
Following a record-breaking year in 2020 for venture capital, the year 2021 shattered records with $13.66 billion in venture capital funding. That represented a 70% increase year over year and dwarfed the combined venture capital funding from 2019 and 2020. In its 2021 Massachusetts Biopharma Funding Report released earlier this week, MassBio said the increased funding in 2021 mirrors national data that show accelerated financing in support of new technologies and therapies for multiple diseases, but primarily driven by COVID-19 concerns.
The report showed that 236 Massachusetts-based companies received 253 rounds of investment. The average amount raised per round was $53.9 million. ElevateBio and EQRx were the top companies to secure VC support, with more than $1 billion raised between the two. ElevateBio raised a whopping $525 million in a Series C financing round in March. That was only slightly higher than the $500 million Series B financing round for EQRx, which went public through a SPAC deal in the fall.
EQRx wasn't the only 2021 life sciences IPO in Massachusetts. In all, there were 25 IPOs from Massachusetts-based biopharma companies in 2021, which is a slight increase from the 21 IPOs in 2020. According to the report, 28% of all U.S.-based biopharma IPOs in 2021 were from Massachusetts companies. In those 2021 IPOs, the Massachusetts-based companies raised a total of $3.8 billion. The average amount raised in the IPOs by these companies was $154 million.
Venture capital, combined with support for the 25 Massachusetts-based IPOs in 2021, showcases the region's strengths known as Genetown. And the massive amounts of funding are not expected to slow down any time soon. Ben Bradford, vice president of Economic Development and Workforce at MassBio, noted that the level of financial support for Bay State-based companies shows that the state's strengths lie in early-stage biotech R&D and that investors want to participate in supporting that kind of innovation taking place at these companies.
"This funding will give these leading companies the resources they need to make big bets on the riskiest sciences that have huge potential effects on global human health. We have seen what cutting edge technology can do with the emergence of mRNA technologies in the development of a COVID-19 vaccine. Additional funding to Massachusetts companies will only further the development of therapies for a broad range of patient populations around the world," Bradford said in a Q&A on the MassBio website.
Already, Bradford is seeing signs of continued VC support in Massachusetts. He pointed to several IPOs as well as financial raises that have taken place in the first weeks of the year. Bradford suggested that 2022 is on track to top 2021 and that such investments will likely continue into the unforeseeable future. However, he noted that there is a potential for interest rate adjustment this year, which could impact future IPOs and financial raises.
M&A activity also played a key role in the Bay State. Last year, 34 Massachusetts biopharma companies were acquired. The combined total of the acquisitions was $63.86 billion. That's a significant increase from the 2020 M&A activity that saw a combined $15.63 billion for 28 companies. Noted acquisitions include AstraZeneca's $39 billion purchase of Alexion and Merck's $11 billion purchase of Acceleron.
Bradford noted that the state's hub is expanding beyond Cambridge and Boston, driven by a need for manufacturing lab space. Currently, there are no lab space vacancies in Cambridge and Boston. Bradford said companies will have to become comfortable with setting up shop in other communities within the state "if they want to remain in the number one life sciences ecosystem in the world."