Biotech 3

How Biotech Is Financing The Lockdown Dip

The COVID-19 pandemic has had huge knock-on effects on economies around the world. In this article, legal experts from Taylor Wessing explore how the novel coronavirus has hit the life sciences and biotech investment sector and how they see investors behaving as the lockdown and pandemic eases and develops over the next 24 months.

At the start of the COVID-19 crisis, the life sciences sector was better funded than at any other time in history, with US venture funding reaching a peak of $5.5 billion in the first three months of 2020, according to PitchBook. Biotech companies are of course capital-hungry, generally being pre-revenue. They fund their R&D and general and administrative (G&A) costs from capital, typically returning periodically to investors in private financings or to the capital markets to raise more capital that funds the next stage of the company’s development.