Last month, we discussed how venture capital investments in the life sciences industry remained strong in 2016 despite a dip in some areas versus 2015. A new analysis by EP Vantage looks at which therapy areas are winning the most investments by VC companies. The analysis indicates that companies focusing on the sector’s “hottest therapy area tend to be sold in bigger deals and for higher returns than those in other fields” (EP Vantage).
Oncology stands as the highest funded therapy area and also unsurprisingly yields the greatest returns for investors. This may not come as a surprise, particularly after funding to private cancer therapeutics companies jumped to $2.8b in 2015 (CB Insights). However, the chart above shows just how significantly oncology trumps other therapy areas in terms of total number of deals over the past five years. Companies focusing on CNS treatments are the only other type to break a double-digit number of deals. CNS-focused companies generated the second-lowest average return, which could reflect some of the development problems within the field.
The EP Vantage report includes an analysis of the mean time from establishment to takeout by therapy area. Under this parameter, oncology fell in the middle of the pack with a mean start-to-deal time of six years. Despite the longer return time, oncology based companies seem poised to receive strong backing from VC firms in the coming years due to the strong return on investment.
Over the years, our team at Pearl Pathways has helped several VC funded companies and their clients successfully work towards commercialization and launch of products to the marketplace. We frequently interact with venture capital firms to provide education and insights about the life science industry and ever-changing regulatory landscape, so please contact us today to begin a conversation.