2021 Year End Report

Each quarter, Locust Walk deal team members compile key statistics and trends on strategic transactions and financings. Our 2021 Year End Market Conditions Report applies the latest data to analyze current activities in the life sciences deal landscape. ​
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In this report you can find an overview and analysis of the following across the biopharma market in the US, Europe, and Asia (Japan and China):​

  • Key performance indicators for the life science market​​
  • IPO and private financing activity and performance​​
  • Deal activity for strategic partnership and M&A​
  • A look ahead and our predictions of the future

 

United States

  • Biotech indices continued to decline in Q4 2021 (-5.4% NBI, -2.7% BTK), compared to the 9.4% gains of the benchmark S&P 500 this quarter
  • The US biopharma IPO momentum cooled off significantly in Q4 2021, with both deal volumes and aggregate value falling to levels not seen since the start of the COVID-19 pandemic. Similarly, the US biopharma Follow-On market fell to its lowest deal volume and aggregate value levels in over 3 years
  • Public biopharma market valuations continue to fall across major therapeutic areas, continuing the trend that began in Q2 2021
  • Biopharma companies from the IPO Classes of 2019, 2020, and 2021, on average, all underperformed the major biotech indices this quarter, though the class of 2021 underperformed by the least
  • The healthcare SPAC IPO market bounced back strongly across both the biotech and general healthcare sectors with deal volume and average deal value of biotech SPAC IPOs increasing substantially compared to the previous quarter
  • As public markets continue to cool off, private financing activity has once again begun to heat up, particularly for early-stage rounds
  • Strong deal flow among licensing deals suggests sustained interest in strategic transactions with average deal size near that of 2020, a record year
  • The dramatic decrease in M&A activity in 2021, spending down 37% compared to 2020, may suggest large pharma is gearing up for a 2022 shopping spree, particularly for the likes of Pfizer and J&J, who should be flush with cash coming off the success of the COVID-19 vaccine

Europe

  • Although the private investment rampage into EU biopharma seemed to fall off in Q3, the Q4 has, yet again, recovered the impressive numbers of Q1 and Q2 2021: Q3 could have been just a mirage, a small break on the otherwise sustained growth that began in Q1 2020 and that we expect to continue in 2022 due to the new massive VC funds that have been announced in 2021
  • Public financings ramped up significantly in both volume and value during this quarter, thereby recovering from the last drop observed in Q3. There were seven IPOs and four secondary offerings, of which three and two respectively exceeding the $100 mark
  • European M&A activity stays consistent in terms of deal volume, but total deal value is small compared to the first quarters of the year. Multiple big announced acquisitions could close in the first half of 2022, which would boost the numbers of these quarters
  • Q4 EU biopharma licensing agreements experienced a slowdown accounting for $5.3B in aggregate value, a 35% decrease compared to Q3. The deal activity in this quarter was again driven by a strong focus on oncology through five significant deals

Japan

  • With licensing deal volume in 2021 in line with previous years and a +43% YoY increase in aggregate deal size, deal activity appears strong, but this was mainly driven by Takeda who had 11 deals (with value announced), most of which are research-stage. Unless Takeda has a repeat performance, other companies need to accelerate their efforts to raise deal activity in Japan in 2022
  • Venture financing in Japan had an amazing year as volume and total financing value (29 and $303M, respectively) was vastly up from the previous high in 2020 (24 deals and $159M)
  • In 2022, we expect the venture financing momentum to continue, as we expect more investment in the sector as biotech continues to attract attention as the threat of COVID continues
  • Japanese companies have been laggards in contributing to finding COVID treatments, although there are several programs in developing vaccines and therapeutics underway. 2022 will be an important year for the industry to show that Japanese companies can bring innovative products to the table, and if they can do so, may be a catalyst for the capital markets

China

  • In-licensing deals continue to be strong in China, with volume on par with previous years while deal sizes are becoming larger
  • 71% of deals in 2021 had upfront value over $5M compared to 37% in 2020
  • 9 deals with upfront payment of $30M or more; up by 3 from 2020
  • Like previous years, oncology deals continue to be the main focus
  • Venture financing for biotech companies continue to exceed previous levels: while the number of financing deals was slightly higher (163 in 2021 vs 161 in 2020) the aggregate deal value was $10.3B (+19% YoY)
  • As we predicted early last year, the number of IPOs declined in 2021, dropping from 28 in 2020 to 14 in 2021
  • We think do not think this is a sign of a decline, but rather, a reaction to the aberrantly active 2020. For 2022, we expect number of IPOs to be slightly above 2021 levels as we do not see interest in the Chinese market to slow down

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