NEW YORK – If the current trend in venture investment is a harbinger of what's to come, then it's good news for firms developing biologics, according to a report released today by the Biotechnology Industry Organization (BIO) that highlighted positive – and some negative – funding trends that have emerged in the last decade.

Despite its name, the biotech industry comprises mostly firms developing small molecules, defined as the traditional pharmaceuticals created via chemical synthesis. According to BIO, only one-third of companies actually develop biologics, or large molecules, made using living cells or advanced biochemical synthesis – BIO's report lumps vaccines into that group – but venture funding, particularly in the last few years, has been shifting toward biologics.

In 2004, only 27 percent of biologics R&D was backed by venture funding, according to BIO's report, titled "Venture Funding of Therapeutic Innovation: A Comprehensive Look at a Decade of Venture Funding of Drug R&D." By 2013, however, it reached 50 percent.

Most of that increase happened in 2011 to 2013, which BIO President and CEO Jim Greenwood attributed the 12-year exclusivity included in the Affordable Care Act of 2012.

But scientific advancements have contributed, too.

"The enthusiasm for biologics investment has a lot to do with the expansion of platform technologies, like RNA and gene-based therapies – many of which were not well appreciated a decade ago," said Atlas Ventures partner Bruce Booth.

While the report does not list any specific achievements, the last few years have seen several critical wins for new modalities such as the FDA approval of the first systemic antisense drug – Isis Pharmaceuticals Inc.'s Kynamro (mipomersen) – for homozygous familial hypercholesterolemia and the EMA approval of the first gene therapy product, Glybera (alipogene tiparvovec), from Uniqure NV. (See BioWorld Today, July 23, 2012, and Jan. 31, 2013.)

Meanwhile, the promise of RNA technologies, after a brief hiatus, is back on the investment radar, thanks for encouraging early clinical data and a roster of emerging platforms tackling the irksome problem of delivery. (See BioWorld Insight, Nov. 18, 2013.)

In fact, platform technologies in general appear to be going well in terms of investment, according to BIO's report, which showed that platform start-up firms received $2.5 billion in funding over the last decade – about 6 percent of the total $38 billion in venture financing from 2004 to 2013. An average of 25 firms received funding each year. "In terms of both dollars invested and the number of companies funded, the trend is up over the last decade," the report stated.

Another encouraging trend is that venture investors clearly prefer putting their money into novel drug development – at least for some indications. Over the 10-year period, BIO found that about 78 percent (on average) of investments went toward novel R&D, while the remaining went toward what BIO termed "drug improvement," a category capturing repurposing, reformulating or new delivery methods.

The caveat is that with the exception of a few indications, primarily metabolic and ophthalmology, which have seen huge jumps in novel R&D funding, most other disease areas have seen fewer venture dollars in the last half of the decade compared to the first half, with endocrinology and psychiatry seeing the biggest drops.

The bulk of BIO's venture report breaks out venture funding trends over the past decade by disease space, and is expected to be the focus of discussion for Tuesday's plenary session at the BIO CEO & Investor meeting.

Overall, during 2004 to 2013, venture equity funding of private biotechs peaked in 2007 with $5 billion before hitting the financial crisis of 2008. In 2010, venture investments totaled only $2.8 billion, a 44 percent decline from 2007. Since then, that figure has been climbing, reaching $3.6 billion in 2013, but BIO noted a disturbing trend in the latter half of the decade.

"The industry has not made it all the way back to the heights of 2007, in part because of an exodus of biotech venture investors," the report stated. "In fact, it is estimated that there were 40 percent fewer biopharma venture investors in 2013 than in 2007."

The BIO study runs through 2013 and does not include 2014 numbers. But 2014 was a banner year for the industry, with venture funding totaling about $5.6 billion.