Pharma, Startups

Report: How are venture dollars distributed among disease and clinical trial phase?

How are venture capital dollars are actually disseminated? Into early stage companies? Late? What fields […]

How are venture capital dollars are actually disseminated? Into early stage companies? Late? What fields get the most investment – cancer?

Bruce Booth of Atlas Ventures blogged about this today on his Life Sci VC site about this topic, highlighted in a new whitepaper from BIO. Here are the highlights:

-Nearly 80 percent of U.S. venture investment went toward novel drug R&D, as opposed to repurposing or improving upon existing drugs. This is showcased in the below infograph:

– More than half the venture investment goes to early stage drug companies – with 34 percent of the funding funneled into preclinical companies, and 20 percent to those in Phase 1 companies.

“The clinical Phase 2 companies received 30 percent of venture dollars over the last 10 years, a significant percentage that enables companies to complete ongoing Phase 2 trials or to fund an expensive Phase 3 trial,” the report says. But only 12 percent of venture funding goes to companies engaging in the costlier Phase 3 trials. Here’s a telling infographic:

-There’s been a shift to biologics, if you slice venture funding by drug type.

-And here’s the breakdown by disease category, which unsurprisingly was dominated by cancer – it accounted for 24 percent of drug spending.

Booth warns that the stats are not super reliable in this situation, however:

I would note a point of statistical caution regarding detailed disease-specific conclusions in the report: as the data gets cut down into disease categories across individual years, the resolution in the data becomes more noisy and challenging (e.g., with the impact of lumpy and tranched financings common in venture). The authors chose to use the five-year convention of 2003-2008 and 2009-2013 as a way of broadening the sample sets. An alternative would be to use multi-year rolling averages, but having looked at that cut of the data it doesn’t dramatically alter any of the major conclusions.

Fair point.

The rest of the report focuses in on the different ways venture funding is distributed among disorders – a really fascinating and important breakdown to consider. It’s worth looking at the entire report.

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