EvaluatePharma recently reported VC investments in companies developing human therapeutics (excluding diagnostics, devices, medical instruments, etc.). A total of $1.9 million was invested in 98 deals the first half of 2011. If this trend continues for the remainder of the year, 2011 will be the worst year for VC financing during the past five years. For comparison, $4.5 million was invested in 270 deals in 2010.
Companies developing oncology drugs continue to attract the most of money (34% vs. 31% for 2010). CNS companies attracted 15% of VC investments, and anti-infectives got 12%.
Unfortunately, the downward trend is not surprising considering that the VC industry itself continues to contract. LPs want liquidity in times of uncertainty, and venture capital as an asset class is not very liquid. Other headwinds that may be contributing to the declines VC drug investments include a conservative FDA regulatory environment, as well as Medicare reimbursement uncertainty, expanding development timelines, and increasing costs.
That being said, there’s still a ton of unmet need in the drug therapy space and a ton of very exciting technology being developed. Hopefully, enough money will be available to commercialize these new technologies.