Good news and bad news about biotech VC dollars

According to the latest numbers from Bay Bridge Bio, biotech companies are on pace to bank more than $13 billion in venture investments in 2019. In a glass-half-full terms, that would be the second most lucrative year in recorded history. On the half-empty side, however, it would be about 25% below what the industry raised in 2018.

One possible explanation for the decline comes in IPO proceeds, which are also on the decline since last year. According to Bay Bridge’s numbers, 2019’s IPO class is about 15% off of 2018s, a slump in part driven by swooning valuations of the latest generations of unicorns to go public.

If those returns don’t recover, VCs might be less willing to pay so handsomely for private shares, bringing pre-IPO valuations down. That makes the next crop of IPOs — from high-dollar companies including Vir Biotechnology and Frequency Therapeutics — particularly interesting to watch as 2019 rounds out.