2023 Q2 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 Second Quarter Report applies the latest data to analyze current activities in the life sciences deal landscape.

Public markets have shown some signs of stabilization but IPO, private financing and strategic dealmaking still remain below historical levels with no evidence of a near-term reversal.

The broader market and XBI both rebounded this quarter but remain largely at the same levels where they started at the beginning of the year.

  • The XBI benefited from positive clinical and M&A news flow with Merck’s $10.8B transaction for Prometheus Biosciences and Astellas’ $6.1B deal for Iveric Bio, both announced this quarter
  • However, the XBI has largely retraced levels to where it started at the beginning of the year and underperformed in 2023.  With a sustained high interest rate environment that has room to go higher, we are unlikely to see a more favorable macroenvironment until H2 2024
  • Generalist investors will also need to see sustained positive news flow before a broader-based recovery occurs

In the meantime, the IPO window remains shut and secondary offerings and alternative public offerings will not offer meaningful opportunities to raise capital for many public companies.

  • 75% of the secondary offerings this quarter raised less than $12M

Venture financing volume remained steady as deal value rose 17% since the last quarter, in part because attention has shifted to later-stage assets.

  • New investor interest in Series C saw the greatest growth
  • Financings for pre-clinical assets saw the greatest quarter-over-quarter decline with deals either going to discovery or clinical-stage companies

Partners showed a willingness to pay up for selected platform technologies, but M&A remained underwhelming.

  • Average licensing deal value was $705M this quarter which represented a 20% increase from the previous quarter
  • Average M&A deal size was $1.5B less than half of the $3.9B completed in the first quarter

Locust Walk believes that the recovery, while underway for companies with phase 2 clinical proof of concept data and beyond, will take at least another 12 to 18 months whereby there will need to be fewer companies trading below cash, fewer publicly traded biotechs, and declining interest rates.

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