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A Glass-Half-Full Take on Q1 Biotech Venture-Funding Totals
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By Brian Gormley, WSJ Pro
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Good day. Biotech venture capitalists last quarter struck more deals than they did during the same period a year ago, but the amount invested in the first three months of this year plummeted, according to HSBC Innovation Banking.
It looks like biotech venture funding is retreating once again. But to HSBC Innovation Banking Managing Director Jonathan Norris, the data suggest investors are growing more aggressive, not less.
U.S. and European biotechs raised 143 financings last quarter, up from 134 in the first quarter of 2025, according to HSBC. But these startups raised only $5.2 billion in venture capital last quarter, down from $7 billion in the first three months of last year.
It was also the lowest quarterly total since the $4.8 billion invested in the fourth quarter of 2023, according to HSBC.
Venture financings of $100 million or more propped up investment totals in recent years. But megarounds, usually raised from large investor syndicates, are becoming less common.
Last quarter, there were 15, putting 2026 behind last year’s pace, when biotechs raised 76 megarounds for the full year, Norris said.
In the depths of the biotech winter, startups often raised megarounds to reduce their risk of running out of cash. These days, with biotech mergers and acquisitions heating up, fewer startups are raising giant rounds for that reason, Norris said.
Investors are now more willing to back smaller rounds with fewer co-investors, Norris said. The goal is to secure a larger stake in startups that seem poised to later score higher valuations or be acquired, he said.
The approach presents risks: If a startup can’t attract new backers to its next round, a smaller syndicate would be stuck supporting the company.
“I feel like venture investors are now in a risk-on mentality, driven by really strong M&A,” Norris said.
And now on to the news...
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Veradermics debuted on the New York Stock Exchange in February. PHOTO: @NYSE
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Hair-loss treatment. This year’s crop of biotechnology IPOs features an unusual star in an industry better known for targeting severe diseases: Veradermics, whose shares have rocketed on the potential of its hair-loss pill.
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Veradermics went public at $17 in February. Shares of the company, whose drug candidate promises to spur strong and rapid hair growth, have climbed more than 370% to about $80.
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Biotech initial public offerings are recovering from their postpandemic slump. But unlike the boom years, the momentum isn’t lifting everyone. Consequently, the performance of biotechs going public this year is mixed.
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Veradermics’s eventual success may not be assured, but its initial burst stems from its rare combination of attributes. Veradermics’s lead product is a proprietary oral extended-release version of minoxidil—the same medicine in topical Rogaine—that is in late-stage clinical trials. As a result, the risk the drug will fail or be rejected by the Food and Drug Administration is far less than most experimental medicines, investors said.
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Big Pharma Is Turning to China for the Newest Drug Ideas
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Not long ago, China was a backwater for drug research. Its companies made pharmaceutical ingredients or lower-cost generic drugs. Its patients offered an opportunity for big drugmakers to sell medicines developed in the West. Now it’s a major player in biotechnology. Researchers and startups in China are racing to develop hot new medicines for cancer, weight-loss and other diseases. Many are on the cutting edge of molecular biology. Looking to tap in to the innovation, big drugmakers and investors are spending billions to lock up rights to promising Chinese-originated drug candidates.
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Novo Nordisk Strikes Deal With OpenAI to Speed Up Drug Discovery
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Novo Nordisk said it would work with ChatGPT maker OpenAI on how to leverage artificial intelligence to discover new drugs, the latest AI partnership in the medical field as healthcare companies seek to harness the technology to get ahead of the competition. The Danish drugmaker said it would integrate OpenAI’s models across its operations to help its workforce analyze complex datasets and reduce the time it takes to move from research to delivering treatments to patients.
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People
IO Health, an AI intelligence layer for home health and hospice agencies, appointed Chet Robson as chief medical officer. He previously served as chief clinical officer at Walgreens.
Collective Health, a health benefits platform and third-party administrator, appointed Kaushik Bhaumik as chief revenue officer. He was previously at Ernst & Young.
Enodia Therapeutics, a startup developing small‑molecule therapies, appointed Yvonne McGrath as chief scientific officer. She was previously CSO of iTeos Therapeutics.
Mental health platform Grow Therapy named Seth Bressack as the company’s first chief financial officer. He was previously vice president of finance at Shopify.
Exits
Eli Lilly agreed to pay up to $300 million for CrossBridge Bio, a Houston-based startup developing dual-payload antibody-drug conjugates for the treatment of cancer.
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Beeline Medicines, a Boston-headquartered startup developing precision therapies for people living with autoimmune and inflammatory diseases, scored $300 million in Series A funding led by Bain Capital.
Terremoto Biosciences, a startup developing small-molecule medicines to treat patients with cancer and rare diseases such as hereditary hemorrhagic telangiectasia, completed a $108 million Series C round from investors including OrbiMed and Novo Holdings. The company is based in South San Francisco, Calif., and San Diego.
Neomorph, a startup developing molecular glue degraders to address previously undruggable proteins, closed a $100 million Series B round. Deerfield Management led the investment, which included participation from Longwood Fund and others.
Adcendo, a Copenhagen-based startup developing experimental cancer treatments, raised $75 million in Series C funding. Jeito Capital led the round, which included participation from Vida Ventures, TPG, Novo Holdings and others. Ksenija Pavletic, general partner and chief commercial officer of Jeito Capital, will join Adcendo’s board.
Sonire Therapeutics, a Palo Alto, Calif.-headquartered startup developing sonic technology to treat pancreatic cancer, landed $18 million in Series A funding led by Santé Ventures.
Helical, a London-based virtual AI lab for the pharmaceutical industry, was seeded with a $10 million investment. Redalpine led the funding, which included contributions from Gradient and BoxGroup.
Osteoboost Health, a Redwood City, Calif.-based developer of a non-drug wearable for low bone density in postmenopausal women, picked up an $8 million investment led by Ambit Health Ventures.
Wavelet Medical, a fetal brain monitoring provider, grabbed a $7 million seed investment from Aegis Ventures.
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Erica Schwartz spent more than two decades in uniform. DEPARTMENT OF HEALTH AND HUMAN SERVICES
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