According to figures released this morning by Dow Jones VentureSource, 21 NYC-area biotech startups have been funded so far this year, down from 28 by the end of the third quarter of 2010. The dollar amounts have dropped, too: VCs have invested just $200 million in New York biotechs so far this year, compared to $294 million invested through Q3 last year.
If we’re to have any hope of matching last year’s haul—37 New York biotechs raised a total of $384.4 million in 2010—we’ll need to see some big deals, and fast.
It’s not that the VC world has soured on the life sciences. To the contrary: According to figures released earlier this week by PriceWaterhouseCoopers and the National Venture Capital Association (NVCA), the biggest deal of the third quarter—in any industry—was pulled off by Reata Pharmaceuticals, an Irving, TX-based biotech that raised $300 million. Reata is in late-stage trials of a drug to treat chronic kidney disease.
We can’t very well gripe that VCs are ignoring New York, either. The Big Apple, after all, is home to two of the top 10 money raisers of the third quarter: blog hosting platform Tumblr, which raised $85 million, and ZocDoc, the online doctor-appointment booking site that pulled in $75 million from Goldman Sachs and Russian billionaire Yuri Milner’s DST Global. Venture capital investing overall jumped 31 percent over the third quarter a year ago, according to PriceWaterhouse/NVCA.
Part of the reason biotech funding may be down in New York stems from the sheer challenge of being a biotech in the Big Apple. That’s one of the topics that came up at New York Life Sciences 2031, Xconomy’s October 13 forum on the future of biotech in the city. “Most startups that are scrappy and saving their pennies can’t afford to be here,” said panelist Barbara Dalton, a longtime VC who is now the vice president of venture capital for Pfizer (NYSE: PFE). “My funds have invested in great companies in New York. They all reach a time where they have to grow beyond five people in a lab and they have to leave Manhattan.”
But it’s not all doom and gloom for biotech fundraising in New York. In fact, the city kicked off Q4 with a pretty good one: On October 19, NYC-based Imagen Biotech announced that it sewed up a $40 million Series A financing from SV Life Sciences, Novo Ventures, and Fidelity Biosciences. Imagen is working on treatments for degenerative eye diseases such as age-related macular degeneration. Its management team is a who’s-who of ophthalmology that includes Matthew Feinsod and David Guyer, formerly of Eyetech Pharmaceuticals—the New York startup that was bought by OSI Pharmaceuticals (now Astellas) for $935 million in 2005.
Now if we could just get a few more deals like Imagen’s Series A, perhaps biotech funding in New York this year will indeed measure up to 2010.