VC Funding in Life Sciences Companies Jumps 30%

Investor interest is growing in the life sciences sector as evidenced by an increase of nearly 30% in venture capital funding in life sciences companies during the first half of this year. This trend is driven by companies moving scientific innovations forward into clinical trials with promising data outcomes, according to Savills USA’s first half-life sciences sector report.

Continued increases in investment could stimulate leasing activity and help absorb oversupply in the saturated life sciences market, which is set to receive a substantial amount of square footage currently in its development pipeline through the end of this year.

Savills said cost-conscious occupiers have been focused on smaller leases this year, and those occupying larger spaces are delaying decisions or looking to densify their footprint amid the recent uncertain investment and economic environment.

The San Francisco Bay Area has reported $5.3 billion in capital investments so far this year on 213 deals in the life sciences sector, leading the 11 markets Savills included in its report. Notable leases during the second quarter in the market included 143,188 square feet to insitro, a data-driven drug discovery and development company, and 50,777 square feet to Corcept Therapeutics, a pharmaceutical company focused on cortisol modulation.

The Boston-Cambridge market has raised $3.7 billion in VC funding on 79 deals this year and welcomed the opening of Discovery Life Sciences’ new 53,000-square-foot office and laboratory facility in Malden, marking its third location in the Boston-Cambridge area. Notable leases in the market include 120,192 square feet to biotechnology firm Vericel and 111,119 square feet to Zoll Medical.

The San Diego life sciences market saw VC funding of $2.6 billion on 84 deals, and New York recorded VC funding of $2.3 billion on 176 deals through the first half. The New York City Economic Development Corporation is progressing with its plans for the 1.5 million square foot SPARC life sciences development and released an RFP as it enters the second phase of the Uniform Land Use Review Procedure (ULURP) process.

Other markets studied in the report include Denver-Boulder, which recorded $442.3 million in VC funding on 34 deals during the first half; Northern New Jersey with $470.1 million in VC funding on 10 deals; Philadelphia with $336.4 million in VC funding on 56 deals; Raleigh-Durham with $643.9 million in VC funding on 30 deals; Seattle with 345 million on 27 deals; Toronto with $84.4 million on 15 deals; and Washington, D.C., with $672.6 million on 73 deals.