Fundraising in Oncology Biotech: A Cynical Reflection for Optimistic Action

An article from January 2^nd on Endpoints News titled, “A look at biotech’s year of the megaround” reports that the biotech industry saw 96 nine-figure funding rounds in 2024. About one-third were preclinical and nearly the same amount for Phase 1. Most were Series A or B, with roughly one-third being oncology, in part or in entirety. (https://endpts.com/the-top-biotech-megarounds-of-2024/)

What does this mean for 2025? As Nobel laurate Niels Bohr may have said originally (before or independent of Yogi Berra), “It is difficult to make predictions, especially about the future.” However, I will hazard some guesses, possibly educated, some quite possibly based on anecdotal evidence.

First, a small caveat to those reading on: while these substantial raises might be necessary in our unpredictable macroenvironment and could expedite R&D and attract top talent (not just in Oncology), I worry that money often attracts more money, and the shiniest projects and names tend to be the most attractive. However, I am not convinced that this shininess leads to anything beyond a potential exit—but that is, for me, not the endpoint that matters. What matters is getting clinically meaningful drugs to patients, whether with incremental or exponential benefits. The exit can be a surrogate of this successful outcome, but is not the readout that is personally, and societally, meaningful.

I understand the challenges faced by BioPharma in bringing new oncology drugs to patients. With only a 5-10% chance of seeing the light of day, a new cancer therapeutic has many hurdles to surmount.  This doesn’t even consider whether the drug has a return on investment once launched (especially if the metric we use for success is that of being a Pharma blockbuster—another 90% haircut for drugs achieving at least $1B in sales).

So, did 2024 prove different for Oncology, will 2025?

In 2024, I saw plenty of innovation in hot areas like antibody-drug conjugates (ADCs), degraders, and bispecifics beyond T-cell engagers (PD-1xVEGF, obviously). We may also finally see progress in adoptive cell therapy in solid tumors and cancer vaccines (more on this in an upcoming Lumanity whitepaper). However, I also saw, and foresee, history potentially repeating itself. The industry’s herd mentality may lead to over-investment in certain modalities and targets, neglecting the challenges (inter-, not just intra-) of competition across different modalities (e.g., engagers vs cell therapies). Additionally, there seems to be an over-concentration on a limited set of targets, leading to overcrowding against a target, high clinical standards and insufficient consideration of commercial risk. This could result in a déjà vu, as seen with cell therapies targeting CD19, and may be happening again in autoimmune and inflammatory diseases.

While I’m pleased to see a resurgence of ADCs after 30+ years of ups and many downs, the investment frenzy feels reminiscent of the past IO tulip craze or frankly any prior technology bubbles. This suggests another few years of big money in ADCs!  However, this is not to say there are not innovations in the works, as there surely are, like bispecific ADCs and dual payload programs. I will note that, I might have raised similar concerns about HER2 in the past, only to be proven wrong by ENHERTU. Serendipity can sometimes override skepticism, as with the PD1xVEGF bispecifics, where the combinations of individual agents didn’t appear to suggest such clinical benefits.

However, I am wary of the self-congratulatory complacency coupled with a draconian retreat because the innovation has gotten tough in immuno-oncology (IO). Yes, despite the significant advances of checkpoint inhibitors, such as Keytruda for solid tumors, cell therapies for pediatric leukemias, and a growing role for T-cell engagers, many patients do not benefit from these therapies or cannot access them. Too many therapies with approved clinical benefits still leave patients progressing, with too few truly being cured.

The cycle of innovation, often overlapping with the Gartner hype cycle, can take 15-20 years from initial first-mover status to the first approval and next major leap forward. In IO, I hope the industry continues to fund innovation and doesn’t overly focus on clinical data, as learnings from prior failures have significantly advanced our understanding of cancer immunology and biology.

My concern is that the bevy of megarounds has drowned out smaller investments and perhaps diverted some capital away from early-stage, nascent ideas that in earlier times, let alone the heydays of 2020-2021, would’ve gotten more attention from investors. The pendulum may be swinging too far in cancer from the over-rewarding of hope (maybe hype) for novel platforms and preclinical data to the need for too much clinical data that outs such a burden on early pre-POC biotechs. While Pharma can, and should, demand quality studies and meaningful data, the automatic gainsaying of “this is outside our strategic wheelhouse” or “come back when you have randomized P3 data” does not promote innovation, as alluded in a recent RA Capital publication (https://rapport.bio/all-stories/semper-maior-pumping-up-the-candor).

However, let’s conclude on a positive note. As Uciane Scarlett wrote in BioCentury recently (https://www.biocentury.com/article/654643/navigating-biotech-investment-cycles-the-true-north-guest-commentary) for decades VCs have invested in both platforms (earlier) and assets (later) at about a 2:1 ratio (3:1 in the US) with some oscillations around this “steady state”. We are currently at a time when investment in early platforms is lower than usual, but the historical pattern at least offers hope that we’ll see a return to that steady state soon. Furthermore, as the American Association for Cancer Research (AACR) noted, 2024 saw more than 60 approvals of oncology drugs, including 11 first-in-class therapeutics (https://www.aacr.org/blog/2025/01/03/fda-approvals-in-oncology-october-december-2024/). While 2025 may bring more ADCs, bispecifics, immune cell engagers, and degraders, I am hopeful for breakthroughs in cancer vaccines, maybe Oncolytic viruses, beyond melanoma and bladder cancers, some engineered cell therapies for solid tumors beyond sarcoma, and even some data for in situ reprogramming (“in vivo CAR-T”). There are many novel, unexplored or unexploited areas in cancer biology and immunology that, as I hope I have argued, we need as an industry to continue to fund and support such innovative, early-stage work.