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San Diego Life Science Funding Rebounds BIG in Q1 2024, But Will It Last?

Welcome back to biotech beach! Capital raised in Q1 2024 for San Diego-based life science companies jumped 324% from same period last year. Local M&A activity magnifies gains in the XBI biotechnology index, lifting all ships. Looking ahead in 2024, do diminished rate cut hopes mean an atmospheric river will soon bring rain and stormy seas to our waters?

Palm trees on a vintage post card
Greetings from Biotech Beach. Credit: Hertig

Fundraising has reached 2021 levels

Are cloudy skies finally clearing for San Diego’s life science investment community? 2024 started off with huge financings for life science companies according to recent data from Connect San Diego. Nearly $1.4 billion was raised in Q1 2024. This was the largest quarterly amount since Q3 2021, during the tail end of the pandemic when biotech’s peak euphoria faded with an end to ZIRP (“zero interest rate policy”). Now here we are, two and a half years later and the winds have shifted. Five of the fourteen largest financings in 2023 and 2024 occurred within the last 30 days, led by Mirador Therapeutics with a haul of $400 million on March 21st (see Exhibit 1 at the end for a list of financings >$100). Let's dig into the quarterly numbers for the last three years to see what changed (Figure 1).

The golden bars above represent financings during the free money period, with the exception of Q4 2021 when valuations of pre-revenue biotech companies were in free fall. We usually don't see a lot of financings occur in Q4, but the -69% collapse in funding from Q1 to Q4 2021 was otherworldly. For years 2022 and 2023 we enter what I call the “Blue Period”, represented by blue bars, when total funding for life science companies in San Diego did not reach over a billion dollars per quarter for nine straight quarters, until the losing streak ended in Q1 this year (green bar). The backdrop of all of this is the 5-Year Treasury yield falling from near 5% in Q4 2023 to below 4% to kick off 2024 and the XBI biotechnology index surging 40% during the same period. I previously wrote about the inverse relationship between interest rates and biotech valuations, although this does not explain the whole story.

M&A activity is driving new investment

Another major factor happening in San Diego is the IPO market opening up amidst an uptick in M&A activity that started in Q4 last year (see Exhibit B for M&A activity). Acquisitions are picking up because valuations tend to increase once rates go down and big pharma--flush with cash--wants a piece of the action before it gets too expensive. Investors are riding this wave of hope for lower inflation and lower rates. All that money is getting recycled back into growth stage companies via late-stage financings and public offerings (Figure 2). Thus, the funding mix between early and late-stage companies changes with the availability of capital. In Q1 and Q2 2021 about a third of all life science financings were Series A, compared to the “Blue Period” of 2022 and 2023 when Series A financings made up less than a quarter. The trend has once again snapped in 2024, where over half of all life science financings were Series A.

At least four of the large financings in 2023/2024 were for companies led by executives who moved on from previously acquired companies. For instance, Prometheus veterans went on to form Mirador Therapeutics, and Turning Point Therapeutics (2022 BMS acquisition) veterans went on to lead Avenzo Therapeutics and BlossomHill Therapeutics. Likewise, Cerevel Therapeutics, a Cambridge-based company acquired by AbbVie, had leadership join Rapport Therapeutics here in San Diego. It seems to take between 9-12 months for leadership from a M&A company to lead new company and raise a boatload of cash. As a result, recent M&A activity should feed the capital pipeline for the next few quarters.

2024 forecast looks like a mix of sun and clouds

After a stellar Q1 this year there are high expectations that the run will continue. The S-1 registration pipeline continues to be backlogged with a number of life science companies looking to go public later this year. The success of the capital markets hinge around investor appetite for high-risk assets with long development development timelines. As a result, companies with later stage (Phase 2 or later) assets in their pipelines may outperform those with earlier stage platforms. This investment mix can change if unemployment goes up or if inflation goes down (or a combination of the two), leading the fed to lower rates. With both the 5-year and 10-year treasuries moving well into the 4% range again, we will likely see a short-term correction in the biotechnology index. Time will tell if diminished investor expectations on rate cuts will bring enough rain to close the beaches again.

Exhibit 1. Life Science San Diego Financings >$100m: 2023/2024 To-Date

Company Name


Amount ($m)



1. Mirador Therapeutics



Immunology and Inflammation

2. ADARx Pharmaceuticals



RNA Therapeutics

3. Avenzo Therapeutics




4. Capstan Therapeutics




5. Engrail Therapeutics




6. Avenzo Therapeutics




6. Rapport Therapeutics




8. Alterome Therapeutics




9. Rakuten Medical




10. Iambic Therapeutics



AI Drug Discovery

11. Boundless Bio




11. Rapport Therapeutics




11. BlossomHill Therapeutics



Small Molecule

Exhibit 2. Biotech San Diego M&A >$1b: 2023/2024 To-Date




Amount ($b)







Bristol Myers Squibb




Bristol Myers Squibb







Ambrx Biopharma

Johnson & Johnson



DTx Pharma




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