Investors pulled back from biopharma tech companies in the first three months of 2021, though capital is still flowing in greater amounts than it was before the Covid-19 pandemic, according to a report this week by research firm CB Insights.

The pullback reflects, in some respects, broader trends in equity markets, which got off to a rocky start in 2022. But it also stems from a slowdown in funding for pandemic-related biotech as Covid-19 appears to wane, according to Kedar Karkare, a senior intelligence analyst for New York-based CB Insights.

“2021 was just a really frothy year,” Karkare said in an interview.

Future performance, he added, depends in part on public markets. “If we see there is a broader public markets rebound in 2022, that could drive a rebound in biopharma funding.”

Global funding for biopharma tech hit a peak of $4.7 billion in the second quarter of 2021 and has dropped in every quarter since, according to the CB Insights State of Biopharma Tech report, released this week. The total was $2.8 billion in the first quarter of 2022, according to CB Insights. The lion’s share – nearly $2.3 billion – went to U.S. companies, followed by $264 million for European firms and $246 million for companies in Asia.

There also were fewer deals: 66 in the first quarter of 2022, compared to 78 in the final three months of 2021. The average deal value also shrank, dropping from $54 million in 2021 to $46 million so far in 2022. Nonetheless, the average remains higher than the $36 million figure from 2020.

After a record-setting spike in 2021, exits were down, too. In the first quarter of 2022, there were six M&A deals, compared to 12 in the first quarter of 2022, according to CB Insights. There were two IPOs in this year’s first quarter, down from nine a year ago.

One factor that could be weighing on the market is the weaker-than-expected performance of biopharma tech companies that went public last year, whether through IPOs or special purpose acquisition companies, Karkara said. “That’s potentially caused a little bit less interest in the later-stage private biotech companies.”

In one sign of the trend, early-stage companies are taking a greater share of funding: 44% so far in 2022, compared to 39% in all of 2021. Their share had been declining at least since 2018, when it was 57%, according to the CB Insights report.

Still, some companies managed to land substantial amounts of capital in the first quarter.

The top fundraiser was Freenome, a South San Francisco-based company developing blood tests for early detection of cancer. Freenome raised $290 million from investors that included pharma and diagnostics giant Roche.

Other big deals include a $150 million fundraising for digital health firm Verana Health and a $236 million fundraising for New York-based Kallyope, one of two unicorns minted in the first quarter. It was valued at $1.2 billion, according to CB Insights. The other, ConcertAI, was valued at $1.9 billion.

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