frankfurt After record numbers in the first two years of the corona pandemic, German biotech companies raised significantly less capital in 2022. A total of 921 million euros in fresh money entered the industry, around 60 percent less than the previous year, as the industry association Bio Deutschland announced on Wednesday.

that’s on one side due to a special effect of the corona pandemic. The two German vaccine developers biontech Y curavac received a large part of the capital in 2020 and 2021 with a total of more than two billion euros. On the other hand, the successes of vaccines gave a strong impetus to investments in biotech companies in 2021.

But the consequences of the Russian war of aggression in the Ukraine, the energy crisis, inflation and economic uncertainties have also put a strong brake on the industry: the valuations of the largest German biotech companies have fallen significantly on the stock market: the stock market value of biontech has fallen about 37 percent since the end of 2021, the curavac just under 71 years old and since evotech nearly 58 percent.

The outlook for the biotech industry by 2023 is bleak

“The mood in the industry is significantly more pessimistic than in previous years,” says Viola Bronsema, Managing Director of Bio-Germany. In the annual trends survey, only 40 percent of surveyed managers at biotech companies described their current business situation as good; in 2021 it was still 64 percent. More than half said that the energy crisis was having a negative impact on their business situation.

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The outlook for the current year is also bleak, even worse than during the 2008 financial crisis. Only 26 percent of companies expect an improvement.

While company leaders still assessed the industry’s political climate as extremely positive over the past two years, the value of this index has now returned to its pre-pandemic level. “It seems that politicians are too quick to forget the role of innovative biotech companies,” says Bronsema. “That is remiss, too and especially with regard to future challenges.”

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In 2021, the industry generated sales of around 26 billion euros in Germany. The more than 770 companies employ almost 45,000 people. To strengthen the industry, the federal government has launched some promising measures, such as a start-up strategy, a future strategy or a future fund, says Oliver Schacht, CEO of the association. “It’s all about speed and actual implementation here.”

Germany is not alone in falling capital inflows. 2022 has also left its mark on corporate America. However, investments are still being made here to a much greater degree. Venture capital for biotech companies developing drugs has more than halved to $11.4 billion by 2022, according to figures from the US industry association.

IPOs in this category fell from 80 to 14. At a total of $1.2 billion, the companies raised only about a tenth of the 2021 value.

German companies did not dare to go public in 2022

No German biotech company dared to go public last year. In 2021 there were still three companies left. The US technology exchange Nasdaq has long been the preferred place for initial listings. Experts in the biotech scene are based in the US, and companies can generally score higher there.

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Approximately half of the funds raised in Germany come from private companies and the other half from listed companies. Despite declining capital inflows, Olivier Litzka, a partner at life sciences fund company Andera Partners, remains confident in the industry. This is no longer in the limelight as it was during the pandemic. “But there are still a lot of promising companies and product developments in Germany,” Litzka told Handelsblatt.

Funding is back to pre-pandemic levels. “But that was not a bad level. And the general trend is upwards over the years,” explains the industry expert.

Andersa Partners had in the last year involved in one of the three largest biotech financing rounds in Germany: The oncologist Tubulis raised 60 million euros in May. The company develops so-called antibody-drug conjugates (ADCs) with which tumors can be targeted. The antibodies ensure that the chemotherapeutic agent, that is, the cellular toxin, reaches the tumor directly.

Tubulis, Catalym, Resolve: the biggest biotech financings of 2022

Ideally, this is accompanied by fewer side effects than whole-body chemotherapy. Tubulis started in 2019 as a spin-off of the Leibniz Research Institute in Berlin and the LMU in Munich.

fresh capital

72

millions of euros

was collected by the company Resolve Biosciences from Monheim, near Düsseldorf.

The biotech company Catalym from Martinsried, near Munich, has also dedicated itself to fighting cancer.n.Received a total of 50 million euros in a funding round in November. The money will flow toward further clinical trials of the drug candidate Visugromab. This is intended to neutralize a specific protein that tumors use to protect themselves from the body’s own immune system. For this reason, currently available cancer therapies often do not work as desired.

The company Resolve Biosciences from Monheim near Düsseldorf raised the most money. The specialist in the research field of space biology received a total of 72 million euros from investors.

Resolve advances what is known as molecular mapping. This technology provides insights into the biology of individual molecules and cell structures, allowing scientists around the world to gain new insights into the causes and processes involved in infectious diseases such as COVID-19, neurobiology, oncology, and cancer. developmental biology. Since its introduction, the system has been successfully placed in several leading laboratories in Europe and North America.

capital is available

The fall in the US stock markets is likely to continue to have an impact on the biotech sector. Litzka expects privately financed companies to find it more difficult to raise fresh money in the future. “Many large funds, especially in the US, have had to accept heavy losses in the value of their listed investments in recent months. Now they are going back to low-value public companies. That’s why less money is currently flowing to private companies in the United States,” he says.

In his opinion, this does not apply to Europe. Because some European venture capital funds have raised a lot of money in the last two years, which has so far only been partially invested. That goes for Andera Partners, too, says Litzka. “Following the big funding round we led at Tubulis last year, we will invest in Germany again this year.”

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