It was winner-takes-all in biotech investing in 2024. Larger funds attracted an outsize share of the available investment cash. While many companies struggled, dozens raised at least $100mn. Much of the excitement was generated by red-hot sectors. In late April San Francisco-based artificial intelligence drug discovery start-up Xaira announced it had raised $1bn in one of biotech’s biggest-ever launches. New York-based weight loss start-up Metsera brought in more than $500mn in funding in seven months. The market is increasingly driven by fewer, deep-pocketed investors, often working with a relatively small number of like-minded investors and fund managers. Among the high-flying funds are Flagship Pioneering, the investor behind vaccine company Moderna, which raised $3.6bn in July. In October, Netherlands-based Forbion raised $2.2bn across its two newest funds. But many in the sector are struggling. The post-pandemic rise in interest rates, which damped the appeal of risky, long-term bets, prompted a severe shake-out. Even after a rise of about 40 per cent since late October 2023, the S&P Biotechnology Select Industry index is more than 50 per cent below its 2021 high. More than one in four US healthcare companies raising at least $15mn of new funds reported a flat or down round in the first half of 2024, according to Silicon Valley Bank.

Full opinion : Why smaller biotechnology startups are finding more investors than big ones