Financing Private Biotechs in 2005: Following the Money

Analyzing VC investments in private companies last year suggests that conventional wisdom is holding: oncology and specialty pharma firms did especially well, pulling in the biggest shares of biopharma private equity in 2005.

According to Windhover's Strategic Intelligence Systems (SIS), private biotech companies in 2005 managed to pull in nearly $3.8 billion in equity financing. (Debt rounds, such as the $80 million raised by Jazz Pharmaceuticals Inc. in June 2005, have been excluded from this analysis.) [See Deal] A look at where VC money was going by round—how much cash was invested in Series A rounds versus how much went toward boosting existing portfolio companies, for example--suggests that while total financing was spread evenly throughout the private company life cycle, the average rounds for maturing private firms had increased significantly. (See "Biotechnology Fundraising Reflects Bigger Start-Ups, Fewer IPOs in 2005," START-UP, December 2005 Also see "Biotechnology Fundraising Reflects Bigger Start-Ups, Fewer IPOs in 2005" - Scrip, 1 December, 2005..)

But what kinds of companies did VCs support in 2005? Analyzing VC investments in private companies last year suggests that...

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