Biotalk Episode 13 2023 Year-In-Review Report: Global Trends in Biopharma Transactions

During this episode of Biotalk, Geoff Meyerson, CEO of Locust Walk, unpacks our 2023 Year-In-Review Report: Global Trends in Biopharma Transactions Report. Each quarter, Locust Walk’s deal team compiles key statistics and trends showcasing the current state of global private and public capital markets, strategic partnerships, and M&A in the biopharma sector.

In this episode, Geoff provides valuable insights into our report, focusing on critical areas such as:

  • Biotech capital markets: XBI performance and IPO volume
  • Private biotech markets: Financing deal value and volume remained flat
  • Strategic transaction activity: Q4 marked a surge in multi-billion-dollar acquisitions
  • Market outlook and advice for the year ahead

We invite you to listen to our podcast and download our report for the Insights page and welcome the opportunity to discuss its contents with you.  


Deal Context: 0:37

Our Advice for the Current Market: 6:11


Welcome to Biotalk. My name is Geoff Meyerson, CEO and Co-founder of Locust Walk, and you are listening to Biotalk, our podcast for biotech deal makers.

This episode of Biotalk is focused on Locust Walk’s 2023 Year-In-Review market conditions Report, in which we apply the latest data to analyze current activities in the biopharma deal landscape. Each quarter, Locust Walk’s deal team compiles key statistics and trends showcasing what is happening in the global private and public capital markets and strategic partnering and M&A activity.

Deal Context, Quarter Highlights and Key Takeaways, and Future Outlook

In the next few minutes, I will provide dealmaking context, highlight events that have had a critical impact on the biotech industry, and provide our outlook for the future along with our advice on how you can survive as a biotech dealmaker.

To provide some structure, I will first cover biotech capital markets, touching on both public and private market performance over the past year.  I will then transition into strategic transaction activity, covering both M&A and licensing. Please note, the full report published on the Locust Walk website is over 60 slides, so while I will do my best to summarize, as always I encourage you to check out the full report for additional detail. To download this report, please go to and go to our “Insights” page.

As the listener of a biotech podcast, you may well know that this has been a relatively challenging year for the XBI until the middle of the 4th quarter. The index traded below end-of-year 2022 levels for much of the year, but in spite of this, finished up 8% due to a remarkable 4Q rebound. Digging in a little deeper, concurrent with this upswing, Q4 saw a significant uptick in total follow-on offering volume and size (up to $3.5B from $1.4B in Q3), as well as PIPE volume and size (up to $1.7B from $600M). Although IPO volume in the 4th quarter dropped from Q3 levels, annual IPO volume increase 30% from 2022 levels. Performance for IPO, follow-on, and PIPE offerings in Q4 was also generally positive in line with market performance. While all these indicators suggest the beginnings of a gradual thaw for biotech public markets, biotech public investors will be hoping Punxsutawney Phil does not see his shadow come February, heralding another XBI downturn, as was the case in 2023.

Unfortunately, winter continued through 2023 for biotech private markets. Overall private financing deal value and volume in 2023 remained relatively flat with the depressed levels observed in 2022. Financing activity continues to be increasingly dominated by clinical stage opportunities, with deal value attributed to these deals increasing from 38% in 2021 to 58% in 2023. Interestingly, the distribution of Series rounds has remained relatively consistent over this period, suggesting that the bar for each financing round stage has risen somewhat uniformly across this period. The general malaise in biotech private financing markets also extended to European and Asian geographies, where 2023 levels remained about on par with 2022, and well below levels observed in the prior bull market cycle.

In terms of strategic transaction activity, the string of multi-billion-dollar acquisitions by big pharma in Q4 was the catalyst many of us have been hoping to see for some time. In December alone, there were 7 biotech M&A deals greater than $1B, with 10 such deals occurring over 4Q. These transactions drove the largest quarter for biotech M&A since Q4 of 2020, and propelled aggregate 2023 value to $162B, significantly surpassing the $94B observed in 2022. And while I could wax on about the M&A activity observed this quarter for hours, I will end with one final statistic of note: Despite the significantly increase total value in 2023, M&A deal volume was roughly equivalent in 2023 and 2022, with 81 and 76 deals respectively. This massive uptick in average deal value alludes to the size and profile of the acquirees, suggesting positive transaction momentum for the sector moving into 2024.

In a similar vein, 2023 saw the greatest licensing deal activity observed over the past three years, both in terms of overall deal value and volume. While aggregate value was certainly boosted by a selection of large, high-profile licensing transactions such as Daiichi Sankyo and Merck’s ADC collaboration, the consistent relationship between value and volume may speak to these transactions serving as an alternative means to capitalization given the frosty state of capital markets (especially private). However, throughout 2023, licensing deals continue to be heavily backloaded, with total upfront consideration accounting for only ~18% of total deal value in Q4. One final interesting indicator for the current state of biopharma deal making is that aggregate licensing deal value for Ph 1 assets jumped ~3x from 2022 levels in 2023, potentially signifying a reversal in the bimodal preclinical / post-PoC deal distribution that characterized the 2022 landscape. That would make a good sign for early-stage biotech.

Our Advice for the Current Market

So, what is our best advice for the current market? While public biotech markets may be beginning to thaw, the limited IPO volume and restriction to late-stage approaches suggest that the improvement in circumstances and capital access is limited to a subset of late-stage, large biotechs (at least for now). There are earlier stage biotechs in the IPO queue, which could change this trend. Our bet is that these will be one offs and early-stage companies will continue to struggle with an IPO financing. Access to capital for earlier stage, private biotech may continue to be restricted although we believe that there will be an uptick in 2024. We’ve heard rumblings of a crossover market emerging given the backlog of private companies with maturing data and investors who have fund timelines where they will need to start deploying capital. Unfortunately, investors who can choose to invest publicly or privately have largely shifted public. That reversal will need to occur concurrent with an uptick in IPOs.

Fortunately, the increase in licensing volume and value especially at phase 1 suggests that now more than ever, monetizing undercapitalized programs represents a key tool to secure non-dilutive funding to advance core programs and platform development. Such partnerships have the added benefit of providing external validation that may become instrumental to securing fundraising, whether public or private, as market conditions improve.

For private companies with investors who are tired or public companies who have traded below cash for an extended period, it is important for both their investors and management to be objective about whether the company can and should exist as an independent entity or whether pursuing alternatives business combinations represents the best strategy, especially as larger biopharmas continue to transition into ‘buy mode’. One of the best indicators from JPMorgan was the increase in transactions for companies that did not have randomized controlled phase 2b or later data. The companies that get bought before this data point encourages capital formation and overall industry positivity. To capitalize on this emerging trend and based on our experience, exit value is maximized by making informed strategic decisions with sufficient runway to accomplish the desirable outcome, though I fully recognize the difficulty of making such a call. However, while the tides may seem to be turning based on the XBI and large-cap M&A deals, I reiterate my belief that it may be a little while until the top-down improvements in macro conditions lift the boats of the smaller public and private biotechs, and thus companies must plan accordingly. 2024 will absolutely be a better year than 2023 and I share the enthusiasm from many at JPM because of the shifting macro winds and increase in M&A, especially pre-POC. That said, this year will be non-linear, could be very bumpy and will not be easy. When we’re writing our market conditions for 2024 at the end of the year, I predict more IPOs, more crossovers, similar M&A and a general uptrend that might be hard to see without zooming out on the year. The good times are far from back but we’ve passed the bottom of the market. This from someone who has been bearish on the record for 3 years.

As evidenced by the significant approvals seen in the past year, the pace of innovation continues to be driven by strong companies advancing differentiated technologies, emphasizing the importance of pursuing robust science that addresses patient unmet needs. The beginnings of a thaw observed over the past quarter is a good reminder that eventually, the macroeconomy and capital markets will eventually heal, ushering in a new growth era for the sector. In the interim, continued focus on controllable factors that will improve innovation, differentiation, and position will enable companies to evolve into strong entities maximally positioned to take advantage of the coming spring.

In conclusion, I want to thank everyone for listening to this episode of Biotalk. Please share your thoughts and feel free to suggest potential topics and guests for future episodes. We look forward to a productive dialogue and hope you tune in to our next podcast. Please share with all your friends and colleagues to help us grow the audience. This is Geoff Meyerson for Biotalk signing off.