CAMBRIDGE, MA—The Massachusetts Biotechnology Council (MassBio®) released its 2022 Massachusetts Biopharma Funding Report that showed another strong year for Massachusetts’ world-leading early-stage R&D cluster.
The calendar year ending on December 31, 2022 saw the second highest total of venture capital (VC) funding to Massachusetts-based biopharma companies, $8.72 billion, surpassing 2020’s $8 billion and only falling short of 2021’s $13.66 billion. This influx of private funding into the Massachusetts ecosystem will ensure that lab and biomanufacturing space will continue to be in demand, and startup formation and company expansions will lead to additional jobs.
According to the report, about 25 percent of national VC biopharma investments flowed to Massachusetts biopharma companies in 2022. In a sign that biopharma investors are acting cautiously by seeking more data on a longer time horizon amid economic uncertainty, a market reset, and a closed IPO window, the average round size shrank ($35.3 million 2022 compared to $53 million in 2021), and investments flowed to more companies (246 companies over 273 rounds compared to 236 across 253 rounds). Furthering the industry’s growth regionally, 51 percent of companies that received VC funding in 2022 were located outside of Cambridge, up from 42 percent in 2021. Twelve municipalities outside of Cambridge received at least 1% of the total VC funding statewide in 2022, up from six the previous year. Among the communities newly featured are Bedford ($160M), Somerville ($145M), and Framingham ($91.5M).
“The VC funding that flowed into local biopharma companies in 2022 is proof that investors continue to want to be a part of the early-stage research and development happening here,” said Kendalle Burlin O’Connell, President and CEO of MassBio. “The Commonwealth’s innovation ecosystem is second to none, and with these investments comes new opportunities to spread the industry into new corners of the state and advance exciting science toward patients.”
Though the cool IPO market in Massachusetts matched national realities, a few Massachusetts-based initial public offerings (IPO) did occur, with 8 companies going public and an average deal size of $162 million. Notably, the Massachusetts IPOs represented 33% of all biopharma IPOs in the U.S. in 2022. While many predicted an active year for mergers and acquisitions, the total number of Massachusetts biopharma companies acquired was just 26, down from 34 in 2021 and 28 in 2020, again matching national trends. The combined value of the acquisitions was $5.9 billion, down from $63.86 billion in 2021 (a total that included two deals worth over $50 billion).
“Massachusetts remains in a position of strength to receive continued, meaningful investment, but the implementation of the Inflation Reduction Act, coupled with the fewest U.S. FDA approvals in years, will give investors new reasons for pause,” added Burlin O’Connell. “To counteract these chilling effects on innovation and address the enduring workforce challenges that endanger the industry’s future growth here, the Commonwealth must renew its commitment to an industry that has proven its value to the state economy and its residents and send a clear message to investors that Massachusetts remains the state of possible.”