(SLA-035) Research and Development Costs for Biologic Products Developed by U.S. Biotechnology Startups, 2017-2023

Background: Despite policy interest in pharmaceutical innovation, little is known about the investment needed for venture capital (VC)-backed startups to develop innovative biologics, a growing segment of the pharmaceutical marketplace.

Objectives: To estimate the investment needed for a biotechnology startup company to develop an innovative biologic.

Methods: In a cross-sectional analysis of FDA drug approval data, investment deal records, and clinical trials data, we estimate the investment needed for a biotechnology startup company to independently develop a biologic approved by the U.S. Food and Drug Administration (FDA) with priority review, an indicator of innovation.

Results: The median amount invested in a biotechnology startup per FDA-approved biologic was $304.1 million (interquartile range [IQR] $289.9 to $790.3 million) in uncapitalized costs, accounting for the cost of failures. The period from the first investment to FDA approval was a median of 13.5 years (IQR 5.7-15.2), while the total time from the start of phase 1 trials to FDA approval was a median of 7.9 (IQR 4.8-10.7) years. Companies received a median of 82.9% (IQR 76.1-94.0) of their total investment after the start of phase 1 and before FDA approval and 34.7% (IQR 5.1-61.8) of the total investment after the start of phase 3 and before FDA approval.

Conclusions: This estimate represents the direct drug R&D investment needed for independent development of innovative biologic products by biotechnology startup companies.