Biotech Wrap: Slow and Steady, but Gaining –

When it comes to venture capital investing, the biotech sector suffers from a bad case of middle child syndrome. It’s certainly not the most popular sector to invest in, nor is it among the laggards.

As 2000 draws to close, venture capitalists have invested nearly $3.1 billion in biotech companies, representing about 4% of all VC disbursements, according to our VentureXpert database. These figures mark considerable gains from last year, when VCs invested $1.67 billion, which represented 3% of all VC disbursements.

Investments in the biotech sector in 2000 received a few boosts along the way. The first came in late June with the announcement of the mapping of the human genome. Then, earlier this month, the California Public Employees Retirement System approved an increase of more than 50% in its investment in biotechnology, a move that could spur a renewal of VC interest.

This year, VCs have invested in 228 biotech companies, with ZymoGenetics Inc. and Structural GeNomiX Inc. garnering some of the biggest investments. 1999 saw 184 biotech enterprises receive venture funding, led by Orchid Biosciences, which received $72 million, and Sequenom Inc., which received $49 million.

Concurrent with ZymoGenetics’ spin-off from its parent company, Novo Nordisk A/S, in October, an investor group led by E.M. Warburg Pincus acquired a 35% stake in the company for $150 million. The other investors included Patricof & Co. Ventures, Apax Partners, Frazier & Co. as well as Novo A/S, the VC arm of the Novo Group, and several individual investors.

Elsewhere, Structural GeNomiX this year received a total of $77 million in financing over two rounds. The company completed a $45 million funding round in September and a $32 million round in April. VCs included BA Venture Partners, Amerindo, MDS Health Ventures, Orbimed Advisors, Vector Fund Management, Atlas Ventures, Apple Tree Partners, Prospect Venture Partners, The Sprout Group, Index Ventures and Vulcan Northwest.

Jennifer Strauss can be contacted at