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UK's Abingworth says biotech deal flow is highest quality in history

One of the leading European biotech venture capital firms has described deal flow in the sector as the ‘highest quality' in its near twenty-year history. UK-based Abingworth said its most recent fund, the $225m Bioventures III, is already more than 50 per cent invested only eight months after its final closing.

Stephen Bunting, managing director of Abingworth, said the group had been undeterred by the volatility in public markets and was continuing to expand its operations to accommodate the wealth of attractive investment opportunities.

‘We are continuing to invest regardless of the events in the public markets. Abingworth is seeing the highest quality deal flow in its history and is in a strong position to lead these deals. We are now gearing up by taking on new hires, including strengthening the internal pharmaceutical expertise, and adding to the team in the US,' he said in a statement.

The group has so far committed to 13 private companies since closing its fund in December last year. All the investments have been in early-stage biotechnology and medical companies in the US and Europe.

The biotech venture sector has grown dramatically over the past 18 months and is expected to further increase its share of total venture investment over the medium term. Part of the momentum behind the recent growth has come from excitement about the science. But much of it is has also come from investors switching out of other tech sectors since the bursting of the TMT bubble.

The result has been a massive influx of new players into the biotech venture sector. Some of them come from within the industry itself and bring extensive scientific and commercial experience. Many others, however, are existing venture firms exploiting strong institutional appetite for biotech to move into the sector for the first time.

Abingworth said competition to fund good companies had become ‘fierce,' referring not just to the number of venture groups now active in the sector but the volume of capital at their disposal. Some experienced venture players in the sector have complained recently that they have been rashly outbid by novices with little proven experience of adding value to biotech businesses.

Abingworth has been active in the life sciences sector since 1973 and has offices in both London and Palo Alto. It has close to $400m under management and a focus on early-stage investments.

A recent piece of AltAssets research on the sector - ‘Delivering on Discovery: Private Equity Investing in Biotechnology' - said the strength of the industry's fundamentals would continue to attract capital but the present weakness of public markets presented a major short-term challenge to exiting investments.

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