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Biotech Funding Starts Strong

Investing: $450 million investment in Moderna follows a breakthrough year for life sciences sector

by Rick Mullin
January 12, 2015 | A version of this story appeared in Volume 93, Issue 2

The biotech sector set records in 2014. SOURCE: Burrill Media
Bubble chart showing the number of biotech IPOs in 2014 and the capital biotechs raise.
The biotech sector set records in 2014. SOURCE: Burrill Media

If the biotech sector was looking for a sign of continued strength in funding after its record 2014, it got it last week when Moderna Therapeutics announced that it raised $450 million in the biggest single biotech private equity funding round ever. But the question remains whether the sector will repeat its 2014 performance this year.

Moderna, a specialist in messenger RNA drug discovery, received investments from Viking Global Investors, Invus, RA Capital Management, and Wellington Management. The firm will use the cash to accelerate discovery and development of modified mRNA that instructs native cellular machinery to make therapeutic proteins or antibodies.

The company has raised a total of $950 million, including previous investments from drug development partners AstraZeneca and Alexion and the U.S. government’s Defense Advanced Research Projects Agency.

Moderna’s big haul follows a record 2014 for venture capital investment and initial public offerings (IPOs) of stock in the sector, according to market intelligence firm Burrill Media. In addition, Burrill’s stock index for life sciences companies increased by 27% last year, compared with an 8% increase for the Dow Jones industrial average.

“We may never see another year of IPOs like the unprecedented number we saw in 2014,” Burrill CEO G. Steven Burrill says. “The incredible activity bodes well, not just for the companies that raised money, but for venture investors able to realize returns on their past investments, replenish their funds, and have ready capital to finance a new generation of companies.”

Large investments like the one in Moderna are becoming the norm in the sector, says Burrill, who anticipates larger but fewer investment rounds in 2015. He doubts the sector will perform as strongly as it did last year as investors taking large stakes in companies go into a holding pattern to see how investments perform. And he notes that the stock market as a whole is likely to do well this year given low energy prices and a strong U.S. economy.

“Biotech is going to be a follower, not a leader,” Burrill says.



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