Life Sciences Funding in View: 2025 Outlook

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LIFE SCIENCES FUNDING IN VIEW: 2025 OUTLOOK JANUARY 2025

1 / CUSHMAN & WAKEFIELD

LIFE SCIENCES JANUARY 2025

Life Sciences Funding In View

Key Findings

• Globally, life sciences venture capital (VC) and initial public offering (IPO) volume ticked up in 2024, with the U.S. leading activity, followed by China and the UK. • Mergers and acquisitions (M&A) volume declined in 2024 as pharmaceutical (pharma) companies made smaller bets. However, increased activity is expected in 2025. • While U.S. VC investment volume grew year-over-year (YOY), IPO activity fell short of expectations. With some uncertainty — such as interest rate cuts and the presidential election — behind us, some clarity bodes well for the sector.

• Although funding flows are projected to rise in 2025, lessons learned in the past couple of years will remain. Companies must continue demonstrating financial discipline and clinical trial success. Investors are likely to explore higher-risk opportunities in search of innovative companies.

• The funding slowdown in the life sciences sector has affected

commercial real estate (CRE), with further softening in U.S. life sciences fundamentals in 2024. Increased activity in 2025 could signal the start of a CRE recovery.

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LIFE SCIENCES JANUARY 2025

Global Funding

Slight Recovery in 2024

The IPO sector remained subdued but saw slight growth in 2024, with offerings totaling $11.6 billion (+22% YOY). IPO deal activity in APAC declined for the second consecutive year, totaling $2.4 billion (-4% YOY). Europe experienced a surge of activity, with IPOs totaling $2.8 billion (+3,000%) after a weak 2023. Offerings in North America remained subdued, totaling $4.4 billion (-10% YOY), despite initial market optimism. U.S. companies continued to dominate the list of top 10 global deals, with the only billion-dollar deal awarded to AI drug discovery startup Xaira Therapeutics, based in the San Francisco Bay Area. CRE VIEW: Improving deal activity in life sciences bodes well for the CRE sector. Well-capitalized companies are better positioned to make longer-term capital expenditure decisions, including increasing headcount and expanding their footprint.

• Public and private life sciences investment deal volume ticked up in 2024. Global VC volume totaled $45.3 billion, up 4% YOY. While still below the recent cyclical peak, it was 6% higher than the previous 10-year

average, signaling positive momentum for life sciences investment. Regionally, APAC continued to experience a VC

pullback, with deal activity totaling $5.2 billion (-45% YOY). Both Europe and North America posted deal volume increases in 2024: European VC deals totaled $8.6 billion (+19% YOY) and North America reached $31.5 billion (+17% YOY) nations saw declines, including China, where deal volume fell to $3.8 billion (-52% YOY). Most European countries saw deal activity increase, including the UK, where deal volume totaled $3.1 billion (+34% YOY). In the Americas, U.S. activity rose to $30.5 billion (+16% YOY).

• At the country level, most APAC

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LIFE SCIENCES JANUARY 2025

2024 Global VC Funding Funding by Region

APAC Europe North America

$100

$90

$80

$70

$50.7

$60

$50 $Billions

$37.6

$36.2

$40

$11.4

$30

$27.0 $31.5

$27.8

$25.0

$26.8

$8.5

$20

$7.4

$20.7

$15.2

$15.1

$17.4

$7.2

$15.7

$6.2

$5.9

$12.1

$10

$8.6

$5.0 $3.6

$9.4

$3.1

$8.2

$3.8

$7.4

$5.2

$1.0 $3.2 2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Source: PitchBook Data, Inc.; *Data has not been reviewed by PitchBook analysts

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LIFE SCIENCES JANUARY 2025

2024 VC Funding by Country

Off Chart $30,517 $26,354

Spain Japan South Korea Belgium Netherlands France Germany Canada Switzerland UK China US

$3,835

$3,069

$1,396

$1,009

$754 $816

$503 $532

$276 $311

$153 $167 $195 $214

Singapore India Italy Ireland

2024

2023

$87

$2,000

$4,000

$6,000

$8,000 $10,000 $12,000 $14,000 $16,000

$ Millions

Source: PitchBook Data, Inc.; *Data has not been reviewed by PitchBook analysts

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LIFE SCIENCES JANUARY 2025

2024 Global IPO Activity IPO Activity by Region

APAC Europe North America

$40

$35

$30

$14.5

$25

$20

$16.8

$5.8

$Billions

$15

$14.3

$0.6 $1.7

$6.2

$10

$9.2 $0.1 $1.4

$1.9

$8.7

$4.4

$8.7

$6.4

$6.0

$3.7

$5.0

$4.1 $0.4

$1.7 $1.0 $2.6

$2.8

$2.5 $0.1

$2.0

$1.1 $1.9

$2.7

$2.4

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Source: PitchBook Data, Inc.; *Data has not been reviewed by PitchBook analysts

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LIFE SCIENCES JANUARY 2025

Top 10 Global VC Deals 2024

Deal Size (USD millions)

Current Business Status

Companies

Deal Date

VC Round Series Primary Industry

Deal Type HQ Location

Xaira Therapeutics 23-Apr-2024

$1,000

1st Round Series A Drug Discovery

Startup

Early Stage VC San Francisco, CA

Areteia Therapeutics

12-Feb-2024

$425.0

1st Round Series A1

Drug Discovery

Clinical Trials - Phase 3 Early Stage VC Chapel Hill, NC

Treeline Biosciences 19-Aug-2024

$421.8

3rd Round Series A Drug Discovery

Startup

Early Stage VC Watertown, MA

Kailera Therapeutics 01-Oct-2024

$400.0

1st Round Series A Drug Discovery

Clinical Trials - Phase 3 Early Stage VC Waltham, MA

Mirador Therapeutics Avenzo Therapeutics

Other Healthcare Technology Systems

21-Mar-2024

$400.0

1st Round Series A

Generating Revenue

Early Stage VC San Diego, CA

26-Mar-2024

$385.9

1st Round Series A Drug Discovery

Clinical Trials - Phase 2 Early Stage VC San Diego, CA

Formation Bio

26-Jun-2024

$372.0

5th Round Series D Drug Discovery

Generating Revenue

Later Stage VC New York, NY

Candid Therapeutics

20-Aug-2024

$370.0

1st Round Series B Drug Discovery

Clinical Trials - Phase 1

Early Stage VC San Diego, CA

35Pharma

26-Nov-2024

$350.0

2nd Round Series C Biotechnology

Clinical Trials - General

Later Stage VC Montreal, Canada

Metsera

26-Aug-2024

$350.0

1st Round Series A Drug Discovery

Clinical Trials - Phase 2 Early Stage VC New York, NY

Source: PitchBook Data, Inc.; *Data has not been reviewed by PitchBook analysts

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LIFE SCIENCES JANUARY 2025

Venture Capital

Improved Capital Investment

2024 Total U.S. Life Sciences VC Funding

› Deal activity in the U.S. ticked up in 2024, with VC funding reaching $30.5 billion, up 16% YOY. Investor enthusiasm for continued innovation in the sector, optimism about expected interest rate cuts, and the strength of the economy drove deal volume higher. However, the number of deals declined, leading to a significant rise in average deal size, which reached $18 million (+54% YOY) and exceeded 2021 levels by 23%. › Investment was primarily focused on early- and later-stage companies, with angel investment jumping to $31 million (+76% YOY). Late-stage companies experienced a 20% YOY increase in volume at $16.3 billion, as the attractiveness of more established companies continues to interest investors. Early-stage companies saw a resurgence in capital, with deal volume increasing 20% YOY to $12.1 billion. › Deal size also increased across most company types, with early-stage companies experiencing the largest increase, growing to nearly $36 million (+31% YOY). Seed-stage companies also saw growth, with average deal sizes nearing nearly $6 million (+38% YOY).

$60

3,500

$49.6

3,000

$50

2,500

$40

$36.6

$35.7

2,000

$30.5

$30

$27.3

$26.4

$24.5

1,500

$20.0

$20 $Billions

1,000

$14.5 $14.9

$11.9

$10

500

CRE VIEW: Larger deal sizes provide seed- and early-stage companies with more capital for investments, increasing the likelihood of additional rounds. This bodes well for potential life sciences leasing activity in 2025.

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Capital Invested

Number of Deals (RHS)

Source: PitchBook Data, Inc.; *Data has not been reviewed by PitchBook analysts

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LIFE SCIENCES JANUARY 2025 LIFE SCIENCES JANUARY 2025

U.S. Funding by Deal Type

Funding by Deal Type

Average Deal Size by Type

$60

$40

$34

$36

$50

$35

$32

$33

$30

$40

$28

$27 $24

$25

$24

$30

$20

$16

$18

$16

$15 $Millions

$20 $Billions

$14

$10

$21

$10

$16

$14

$12

$10

2020 2021

2022

2023

2024

2020 2021

2022

2023

2024

Accelerator/ Incubator

Angel

Accelerator/ Incubator

Angel

Seed

Early Stage VC

Seed

Early Stage VC

Later Stage VC

Grants

Later Stage VC

Grants

Source: PitchBook Data, Inc.; *Data has not been reviewed by PitchBook analysts

1. Healthcare Laboratory Services; 2. Other Healthcare Technology Systems

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LIFE SCIENCES JANUARY 2025

Initial Public Offering Activity

U.S. Quarterly IPO Activity

› U.S. IPO activity in 2024 fell short of expectations, as deal activity fell to $4.4 billion (-11% YOY). Thirty companies went public at an average offering size of $180 million (-34% YOY). › One of the largest offerings of the year came from CG Oncology (NAS: CGON), which launched at $380 million — significantly exceeding initial expectations. Notably, one-third of 2024 IPOs were by oncology-focused companies, showing significant momentum in this space. › Life sciences IPOs often face external challenges that affect market capitalization, including negative investor sentiment, economic fluctuations and general investment market volatility. In 2024, heightened volatility led to pricing declines for most newly public companies, underscoring the importance of resilience for long-term success. CRE VIEW : Subdued IPO activity affects market activity, as companies carefully manage their available capital. While potential improvements in stock market pricing could drive some new leasing activity in 2025, tight budgets are expected to keep this growth significantly tempered.

$6.0

$5.0

$4.7

$4.2

$3.9

$3.8

$2.4

$Billions

$1.6

$1.5

$1.3

$1.2

$1.1

$0.9

$0.8

$0.6

$0.4

$0.3

$0.0

2021 Q1

2021 Q2

2022 Q1

2021 Q3

2023 Q1

2021 Q4

2024 Q1

2020 Q1

2022 Q2

2022 Q3

2023 Q2

2023 Q3

2022 Q4

2024 Q2

2023 Q4

2024 Q3

2020 Q2

2020 Q3

2024 Q4

2020 Q4

Source: PitchBook Data, Inc.; *Data has not been reviewed by PitchBook analysts

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LIFE SCIENCES JANUARY 2025 LIFE SCIENCES JANUARY 2025

Venture Capital

U.S. Markets VC investment volume rose across most hub markets, continuing to capture the lion’s share of funding, with 69% of total VC flows in 2024 directed toward these areas. The San Francisco Bay Area led with $8.5 billion in deal volume (+25% YOY), including the year’s largest deal only billion-dollar transaction, Xaira Therapeutics. Average deal size in the Bay Area climbed to $28 million (+33% YOY). Deal activity was softer in Boston at $7.1 billion (-12% YOY) and an average deal size of $26 million (-1% YOY). San Diego experienced robust growth, reaching $3.7 billion in deal volume (+115% YOY), with deal size increasing to $35 million (+125% YOY). Philadelphia recorded $632 million in deal activity (+21% YOY) with an average deal size of $13 million (+60% YOY). Raleigh- Durham posted $762 million in volume (+32% YOY), including the second-largest deal of the year — $480 million funding of Areteia Therapeutics. Deal size in Raleigh-Durham averaged $22 million (+115%). The Suburban Maryland market saw declines in both deal volume, down to $280 million (-22% YOY), and deal size, averaging $10 million per deal (-3% YOY).

Secondary markets also saw notable gains, New York and Los Angeles-Orange County rounded out the top five markets. Deal activity in New York totaled $1.8 billion (+102% YOY), with an average deal size of $26 million (+217% YOY). The Los Angeles-Orange County market posted $1.5 billion (+34% YOY) in deal volume, with average deal size of $27 million (+217%). Seattle experienced a drop in volume, totaling $482 million (-14% YOY), though deal size increased to $17 million (+42% YOY). Emerging markets reported significant deal activity in 2024. Deal volume in Houston totaled $285 million (+70% YOY), with an average deal size of $9 million (+118% YOY). Minneapolis saw deal activity rise to $394 million (+88% YOY) with an average deal size of $17 million (+186% YOY). Austin also experienced robust deal growth, with $349 million in deal volume (+34% YOY) with an average deal size of $17 million (+124% YOY). CRE VIEW: VC funding remains critical for the CRE recovery in hub markets. Increased deal activity in these markets is expected to influence vacancy rates and asking prices over time.

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LIFE SCIENCES JANUARY 2025

2024 U.S. Funding by Market

40%

35%

30%

25%

20%

15%

$Billions

10%

Source: PitchBook Data, Inc.; *Data has not been reviewed by PitchBook analysts

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LIFE SCIENCES JANUARY 2025

U.S. Funding by Top 10 Markets U.S. Top 10 Markets 2024 by Deal Type

$4.7

$3.7

$Billions

$1.4

$3.4

$2.9

$0.9

$2.1

$1.4

$0.7

$0.6

$0.4

Accelerator/Incubator

Angel

Seed

Early Stage VC

Later Stage VC

Grants

Source: PitchBook Data, Inc.; *Data has not been reviewed by PitchBook analysts

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LIFE SCIENCES JANUARY 2025

Top 3 Hub Markets Capital investment accelerated in 2024

San Diego

SF Bay Area

Boston

$12

600

$16

500

300

450

$14

$10

500

250

400

$12

350

400

200

$10

300

250

150

200

100

150

Capital Invested ($Billions)

100

Capital Invested ($Billions)

$8.9 $10.4 $11.0 $6.8 $8.4

$9.8 $15.2 $9.6 $8.1 $7.1

$4.4 $5.6 $2.5 $1.7 $3.7

2020 2021 2022 2023 2024

Deal Volume Number of Deals (RHS)

Deal Volume

Number of Deals (RHS)

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LIFE SCIENCES JANUARY 2025

Top 3 Emerging Markets Uptick in activity despite the drop in number of deals

Austin

Houston

Minneapolis

$800

$450

$400

$700

$350

$600

$300

$500

$250

$400

$200

$300

$150

$200

$100

Capital Invested ($Millions)

$100

$50

$155.3

$217.3

$373.8

$230.5

$285.4

$237.7

$349.1

$167.7

$209.8

$186.4

$264.9

$157.6

$309.0

$394.4

$707.0

2020 2021 2022 2023 2024

Deal Volume Number of Deals (RHS)

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LIFE SCIENCES JANUARY 2025

U.S. NIH Funding

Non-Profit For Profit

› For the first time in nearly 10 years, annual National Institutes of Health (NIH) award totals decreased. A flat YOY budget constrained resources, leading to $35.1 billion in grant awards, an 8% drop from 2023. For-profit funding experienced the steepest decline, falling to $2.8 billion (-12% YOY), while non-profit funding totaled $32.3 billion (-7% YOY). › The NIH’s proposed 2025 budget of $50.1 billion represents a marginal increase over 2024’s budget of $49.9 billion, suggesting that total awards for 2025 will mirror 2024 levels. CRE VIEW : The NIH is an important source of funding for universities and institutes, which occasionally spin off accelerators or incubators into the private sector. Subdued award levels in 2025 indicate that CRE activity from these entities is likely to resemble 2024. However, private-public partnerships, which have historically driven significant space absorption in some markets, may increase in 2025 if private companies seek more opportunities in this space.

$40

$3.2

$3.0

$35

$3.3

$2.8

$30

$2.3

$1.8

$25

$1.8

$1.4

$2.1 $1.7 $0.9 $1.5

$1.3

$1.9 $1.9 $1.8 $1.9

$1.9

$1.5 $0.9

$20

$34 $35

$Billions

$32

$32 $33

$15

$29

$26

$23 $24

$22 $22 $23 $22

$21 $21 $22

$21 $21 $21 $21 $21

$10

Source: National Institutes of Health

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LIFE SCIENCES JANUARY 2025 LIFE SCIENCES JANUARY 2025

Merger & Acquisition Activity

BioPharma M&A Deal Volume by Year

› Pharma companies continued to make significant biotech acquisitions in 2024, closing 39 BioPharma M&A deals, slightly above the 38 deals of 2023. However, deal size in 2024 was notably subdued, with no megadeals ($10 billion-plus) in 2024. The largest deal of the year was Boston-based Vertex Pharmaceuticals’ $4.9 billion purchase of Alpine Immune Sciences. Immune therapy-focused M&As dominated the year, followed by cancer therapies. › In one of the first deals of 2025, New Jersey-based Johnson & Johnson(J&J) purchased Intra-Cellular Therapies for $14.6 billion. This deal added Intra Cellular’s Caplyta, a treatment for schizophrenia and depression tied to bipolar disorder 1 , to J&J’s portfolio. Pharma companies are expected to remain active this year as they continue to add companies to offset revenue shortfalls from the patent cliff and loss of exclusivity. CRE VIEW: Pharma mergers are generally net positive for the CRE sector. In some cases, they result in decreasing footprints as the acquired combines are folded into existing space. However, often these acquisitions result in additional space being leased to better accommodate the newly acquired companies.

$160

$142.4

$140

$120

$100

$80

$71.8

$66.8

$Millions

$60

$46.5

$40

$15.6

$20

2021

2022

2023

2024

2025YTD

1. https://apnews.com/article/johnson-jnj-intracellular schizophrenia-19160ba4559aaab40836078d12a89800

Source: BioPharma Dive

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LIFE SCIENCES JANUARY 2025 LIFE SCIENCES JANUARY 2025

2025 Outlook United States

• While more capital flowed to the life sciences sector in 2024, CRE fundamentals softened further. A more robust uptick in flows, both in the public and private space, is needed to begin firming up some of the vacancy challenges in many markets. Entering 2025, investor sentiment is more positive with expectations of lower interest rates and regulatory changes that could improve the business climate. While 2025 is expected to be a year of growth, the CRE recovery will likely lag as markets work their way through large blocks of vacant space. • VC funding: In 2024, megadeals dominated the landscape as the number of deals over $100 million surged. Investors showed their confidence by writing larger checks; however, strong clinical trials and healthy financials are expected. Early 2025 shows a continuation of this trend, with at least seven $100 million-plus deals announced in the first two weeks of January, indicating that investors will continue to make significant bets on companies that show strong fundamentals. As these companies secure subsequent funding rounds and bolster their capitalization, leasing activity in key markets should tick up. • IPO Market: After a lackluster year for IPO activity following an exuberant start, 2025 has begun on a subdued note. Many companies are still preparing offerings, and IPO activity for the year will depend on stock market sentiment. A more favorable business environment could drive an uptick in IPOs later in the year. Some things to consider in 2025 include:

• Further interest rate cuts: Interest rates will be more favorable in 2025, with the Fed signaling that cuts in the second half of the year will be stronger than the first. Life sciences companies should expect debt to be slightly more cost effective in 2025, with additional relief expected in 2026. acquisitions of biotech companies in 2025. Adding innovative companies with in-demand therapies to their pipeline will be paramount, as the clock continues to tick on the patent cliff. The recently announced blockbuster J&J-Inter-Cellular deal has injected enthusiasm into the sector, but it may not be indicative of activity throughout the year. Nevertheless, 2025 is expected to be an up year for M&A. • CRE fundamentals will remain challenged: The life sciences new development pipeline has significantly pulled back, giving the sector some breathing room. As leasing activity picks up, new vacant space in the market will be absorbed. Occupiers will face a favorable market in 2025, with ample high-quality, highly amenitized space available. • M&A: Pharma companies are expected to continue their strategic

Global insights: Stay informed about the state of life sciences real estate worldwide with Cushman & Wakefield’s upcoming Life Sciences Update report – subscribe here to receive exclusive access .

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LIFE SCIENCES JANUARY 2025

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in approximately 400 offices and 60 countries. In 2022, the firm reported revenue of $10.1 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award winning culture and commitment to Diversity, Equity and Inclusion (DEI), Environmental, Social and Governance (ESG) and more. For additional information, visit www.cushmanwakefield.com.

Author

Sandy Romero Head of Life Sciences & Healthcare Insights

Global Research +1 212 713 6970 sandy.romero@cushwake.com

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LIFE SCIENCES JANUARY 2025

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