Content Detail

• Content META

  Title	Moderately Optimistic: Rounding Out Deal Making In 2024
  ID	3071959
  External ID	7197341602
  Author	Arda Can Tekin
  Published Date	Oct. 9, 2024, 6:43 a.m.
  Summary	2024 started with early optimism at a potential rebound in deal-making with many unpartnered life sciences assets in Phase III or later (and a lot more at earlier stages), more than $800bn available i
  Tags	None
  URL	https://invivo.citeline.com/iv154755/moderately-optimistic-rounding-out-deal-making-in-2024?utm_source=search&utm_medium=rss&utm_term=&utm_campaign=search_rss
  Sentiment	Negative: 0.06865    Neutral: 0.16761    Positive: 0.76374
  Relevance	0.02917

• Content Details

  Content ID	1517382
  Key	7046f1c7-1d63-4be1-8d06-ffdaeb797cd6
  Content	2024 started with early optimism at a potential rebound in deal-making with many unpartnered life sciences assets in Phase III or later (and a lot more at earlier stages), more than $800bn available in Big Pharma deal-making capacity and slow but steady venture capital fundraising. There were some factors pointing towards a healthier deal-making landscape for life sciences companies than in 2023. However, the first half of 2024 has proved challenging for many in the life sciences sector. Early optimism of a potential rebound by the end of 2024 and beyond should therefore be tempered. Below, we explore potential trends in venture capital, M&A, partnering and capital markets for life sciences companies as we head towards the end of 2024. Venture Capital In today’s tighter liquidity landscape, the general global trend for venture capital investors is to reserve their funds for their existing portfolio companies, many of which have been struggling to raise new funds and are needing bridge financing or support for down rounds. As such, VC investors are increasingly looking to de-risk their investments and are seeking to focus on clinical stage assets generating promising data. In early 2024, there were fewer funding rounds to report, but the amounts raised were higher on average and, while series B and more advanced rounds were less common and more difficult to raise, seed and series A rounds were relatively robust. Oncology remains the main field attracting VC investment, but immunology and neurology are increasing their market share, with all three areas together comprising more than two thirds of all life sciences VC investment into biotechs globally in Q1 2024.2 The year has also seen a significant focus on weight-loss drugs and women’s health. VC investment into European biotechs is well below the exceptional levels that were seen during the Covid-19 pandemic. Nevertheless, Q2 of 2024 was exceptionally robust, with the UK leading the way with £564mn in VC funding in Q2 2024, comprising about half of total VC investments into biotechs in Europe (which, in total, was still about a quarter of the investments in the US in the same period). Europe has been following the global trend with investors being more selective about which companies to invest in, focusing on those that have promising datasets. This holds true across early-stage investments as well as late-stage investments, with Europe lagging well behind the US in terms of average amounts raised by biotechs. Biopharma Dealmaking: All About The Science And Personal Chemistry Business development leaders from AstraZeneca and Novartis and a biotech CEO get frank about what they want from the other side, highlighting the need for transparency during competitive negotiations, plus a shared spark of enthusiasm about pursuing novel science. Read the full article here In addition, from a global perspective, after a marked Covid-19 spike in 2021, capital raised by VC investors for onward investment into the life sciences industry has sprung back to trail the 2020 levels every year since 2022. So far, it looks like this trend will continue through to the end of 2024.4 However, we do not expect the increased focus by VCs on de-risked assets to change significantly in the coming months. There are several VCs that have exhausted their current funds; they will be looking raise further funds in the near future, and this is proving increasingly difficult as many have yet to demonstrate a return on their existing funds. During the Covid-19 spike, we saw several non-specialist investors investing in life sciences companies, but this trend is now diminishing, and we do not expect it to return in the near future. We anticipate that valuations will continue to be weak with few exceptions where companies have assets which are seen as being of particular interest now such as anti-body drug conjugates (ADCs) or GLP-1 assets. M&A And Partnering Increased antitrust scrutiny in the US, the EU and the UK continue to be dampening factors for blockbuster life-sciences M&A, with memories of Illumina, Inc.’s attempted acquisition and subsequent divestiture of Grail Inc. being fresh in the mind. In addition, hopes of a strong 2024 on the M&A front appear to have fizzled after initial optimism following the announcement of various deals at or during the annual JP Morgan conference in January 2024. One continuing trend, however, is “dual-tracking” whereby potential IPO candidates also engage simultaneously in buyout discussions with Big Pharma. A few buyouts have been announced on the heels of an S-1 filing by a private biotech or by a biotech considered to be an IPO candidate. In an otherwise challenging market, this “dual-track” process can help private biotechs leverage the alternative option of going public during buyout discussions, which can help to bolster negotiations with Big Bharma who are continuing to look to plug gaps in their portfolios or address impending patent cliffs. The IPO market continues to be difficult meaning that companies looking to list are less certain that they will succeed when they start the process and therefore want to make sure that they have another option if market conditions mean their listing cannot go ahead. Given the investor base in Europe is generally not as deep-pocketed as in the US, partnerships or licensing deals can be an even more compelling proposition for European biotechs. Large pharma companies, as well as biotechs with cash reserves, continue to seriously consider partnering transactions with other biotechs. One such example is Autolus Therapeutics plc’ strategic collaboration with BioNTech SE to advance both companies’ autologous CAR-T programs towards commercialization. Successful partnering events can also be a boost for companies that have access to equity markets and promising programs, as demonstrated by Autolus’s subsequent $350m underwritten offering following the announcement of its BioNTech collaboration. Capital Markets IPOs are still challenging, although there have been signs of the market easing globally, with the value of IPOs in Q1 of 2024 being about six times that in Q1 of 2023. While some significant IPOs have occurred in the US (such as CG Oncology, Inc. and Kyverna Therapeutics which both raised more than $300m), this has been driven by later-stage companies with (often) commercial products. The absence of IPOs by earlier stage companies can be correlated with the prevailing investor bias towards investing in de-risked assets and an unwillingness to be the first to test out new waters in this challenging deal environment. More positively, pre-clinical, clinical, or commercial-stage companies that are already listed still seem able to raise capital in the public markets through follow-on offerings regardless of the stage of their assets. There is a significant pent-up interest from early stage biotechs looking to list on the public markets. If public markets rally in response to the US election or other macro events occur such as a tapering in interest rates, we could see some of these companies being able to realize their ambitions. The expectation is that initially it will be companies with later stage assets in the US that will be successful in listing and that biotechs in Europe who have increasingly viewed a listing on Nasdaq as their route to an exit, are likely to have to wait longer before they can list successfully in the US. M&A And Partnering In 2024: No Rally In Site With big pharma companies continuing to seek out assets to add to their portfolios and a difficult climate for new entrants wishing to access the capital markets, we expect M&A and partnering transactions to rebound faster than the capital markets. This is likely to be the case particularly as Big Pharma companies look to address their strategic needs and fill market gaps and biotechs look for partners that can help finance access to larger patient populations for their later stage clinical trials, explore multiple indications for their assets or support further development of their products. In Europe specifically, including the UK, there is increased recognition of our scientific strength in life sciences and the broad talent base. As a result, the life sciences industry is increasingly a focus of public funding and support, ranging from indications that governments and the EU will provide direct funding of infrastructure in Europe to incentivizing pensions schemes to invest in the life sciences sector in the UK. Advice From Investors On Early-Stage Financing Startup financing may be hard to come by, but now is not the time to ask for less cash. Read the full article here These moves should hopefully improve the chances of life sciences companies flourishing in their home market rather than becoming early buyout targets. These sorts of initiatives may help to close the gap with the US when it comes to returns per dollar invested. As with most government interventions however, there will be a time lag before results are seen from such initiatives. We are moderately optimistic for the life sciences industry in the short-to-medium term, but we do not anticipate a significant rally in VC investment, M&A or partnering transactions or capital markets transactions in the final quarter of 2024. While the life sciences industry is somewhat removed from immediate political effects, and there are already signs that either potential administration in the US might continue the hawkish anti-trust enforcement that has initiated the slow-down in M&A transactions in particular, we believe that the result of the US election might provide further clarity for life sciences companies and their investors as to what deal-making options are more viable in the immediate future (for example whether an M&A transaction will be more viable as opposed to a partnering deal). Until 6 November 2024 at least, it remains very much “wait and see.”
  Content Reference URL	None

• Publisher

  None

• Data Source

  Data Source Name	Quantexa News
  Data Source Type	news
  Data Source URL	https://app.aylien.com/dashboard
  Description	Welcome to Quantexa News API — the most powerful way to aggregate, filter, and integrate global news data into your apps and models.
  Weight	10