2023 Q1 Report: Global Trends in Biopharma Transactions

Each quarter, Locust Walk’s deal team compiles key statistics and trends on strategic transactions and financings. Our 2023 First Quarter Report applies the latest data to analyze current activities in the life sciences deal landscape.

The First Quarter was a continuation of 2022 plus a systemwide shock with SVB’s rapid failure. SVB’s rapid failure underscored many of the fundamental challenges still facing BioPharma.

  • The industry is working through the impact of past low interest rate policy and the subsequent pivot to control inflation
  • SVB, which served the innovator economy, had too few deposits because its customers have been facing increased financing hurdles and have drawn down on cash rather than raising additional funds
  • This points to the structural changes that will need to occur before we see a sustained recovery – such as a slowing in interest rate hikes, further industry consolidation, a reset in public and private valuations and investment returns driven by the re-opening of the IPO market and sustained M&A

We see evidence in the data and client conversations that some of these changes are occurring.

  • An increased bar for public and private financings forces companies to focus efforts on their most promising programs which should position surviving companies for success.  For example, Lecembi was approved for Alzheimer’s demonstrating the industry’s power to deliver therapies to market for difficult to solve diseases
  • An increase in M&A deal value this quarter, albeit with Seagen skewing results.  We need to see broader participation in strategic transactions before this can be declared a catalyst for driving a recovery
  • Continued layoffs, public companies trading below cash and down rounds in later stage financings.  While these are painful and negative over the short term, they should lead to a leaner set of survivor companies that are attractive to the market
  • Interest policy will remain the hardest factor to handicap

We invite you to read our report and would welcome the opportunity to discuss its contents with you.