Despite the stir caused by recent comments by Federal Reserve Chair Janet Yellenregarding the state of the biotechnology sector, Kalorama Information sees potential for growth based on the substantial investments in venture capital that came into the biotech market in 2012-2013. Kalorama's Biotech Funding Deals and Partnershipsnotes that biotech investment has increased significantly in the past few years and that 2013 saw a noticeable spike. In the last few years, this has resulted in a complex series of deals and transactions involving major players in the industry, as investors invest in proven companies on new science and technology initiatives that have potential in the clinic.
Fed Chair Janet Yellen commented regarding the biotechnology sector in testimony to Congress on July 15th(http://www.federalreserve.gov/monetarypolicy/files/20140715_mprfullreport.pdf), stating that "valuation metrics in some sectors do appear substantially stretched—particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year." This comment has been much discussed in the media, and some media outlets and business pundits have questioned whether the comments have affected biotechnology stocks.
The healthcare market research firm notes that the statement did not take into account information from venture capital markets, which have for the most part backed biotechnology.
"While Federal Reserve Chair Yellen's comments were directed at equity markets, venture capital spends are another way to judge a sector's merit," said Bruce Carlson, Publisher of Kalorama Information. "One out of every eight dollars invested in companies is invested in biotech. For key players in the biotechnology sector, the landscape for investing remains fertile."
Kalorama's Biotech Funding Deals and Partnershipsnotes significant transactions from 2011 to 2014 involving major companies such as Alkermes, Boston Biomedical, Dicerna Pharmaceuticals, immatics biotechnologies, Micromet, Reata Pharmaceuticals, UCB and Xoma. This report reviews the nature and direction of funding trends, and outlines the important role that investments play in moving technology into the marketplace.