Biotalk Episode 15: 2024 Q1 Report: Global Trends in Biopharma Transactions

During this episode of Biotalk, Geoff Meyerson, CEO of Locust Walk, unpacks our 2024 Q1 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: Highlighting XBI’s recovery, strong market indicators, and increased PIPE activity since Q2 2023. 
  • Private biotech markets: Saw the second-best deal quarter since 2021, yet activity remains flat compared to 2021’s robust fundraising 
  • Strategic transaction activity: Observing big pharma’s large acquisitions, with US M&A lower than Q4 while EU firms showed strong activity. 
  • Market outlook and advice for the months ahead. 

We invite you to listen to our podcast and read our report and welcome the opportunity to discuss its contents with you. Subscribe or follow Biotalk on Apple Podcasts | Spotify.   


0:36 Deal Context, Quarter Highlights and Key Takeaways, and Future Outlook

6:23 Our Advice for the Current Market


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 2024 First Quarter 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

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.

Q1 of this year continued last quarter’s recovery of the XBI and saw a sharp upswing at the end of February on the heels of multiple positive data readouts. The XBI has since normalized but ended Q1 above prior 2023 highs. In support of this positive momentum, we saw several strong indicators of a potential recovery for the public biotech markets. Q1 saw an increase in follow-on offering’s volume and deal size (up $8.1B from $3.5B in Q4’23), and a meaningful increase in PIPE volume and size (up $2.6B from $1.7B in Q4’23). We’re seeing a trend of increasing PIPE activity that started in Q2 2023, reflecting companies’ preference to reduce financing risk by securing capital prior to data announcements, despite the cost of providing less favorable terms. For example, Avidity raised a $400M PIPE, a week before they announced positive data from their Phase 1/2 trial for their lead asset. IPO volume also doubled from Q4, which is positive, although there has been limited activity after the first half of Q1 and the companies going public largely remain limited to later-stage companies. I believe the IPO window is still relatively shut and the public market for early-stage companies will remain challenging, with the two preclinical IPOs, Metagenomi and Fractyl Health, struggling to perform already.

To a lesser degree, the private US biotech markets saw some recovery in Q1 with 15 rounds >$100M, the second-best quarter in aggregate deal value since 2021, and nearing the 2023 peak seen in Q3. Overall, activity is still relatively flat when compared to the robust fundraising seen in 2021, but we are seeing signs of life. Private biotech investors remain somewhat risk-averse, as signaled by the relative share of value attributed to mid-to-late-stage clinical deals, increasing to 43% from 36% in Q4’23. We expect the private venture markets to be slower to recover, with meaningful upswings likely to be limited until rates are meaningfully cut, which appear less and less likely by the day for 2024. Interestingly, Series D & later rounds saw continued growth in the percentage of new investors vs. existing investors, which could point to crossover investors anticipating the IPO market re-opening in the near-term. A similar level of recovery has yet to be seen in ex-US geographies, with activity in Europe and Asia remaining stagnant this quarter.

In terms of strategic transaction activity, the year was kick-started with several multi-billion-dollar acquisitions by big pharma (i.e., Gilead/CymaBay, AstraZeneca/Fusion), but this trend was not sustained throughout the quarter, and Q1 closed with the second lowest aggregate deal value and volume in the past 3 years for the US, a sharp correction from the Q4 deal value spike of $60B. On a more positive note, M&A deal activity for EU-based companies was strong this quarter, with four $1B+ acquisitions, including AstraZeneca’s $1B+ acquisition of Amolyt Pharma, a Phase 3 rare disease company based in France. We expect buyers will start to show an opportunistic increase in risk tolerance for earlier stage acquisitions as post-Phase 2 proof of concept companies become scarcer outside of oncology, and competition for these companies and assets drives premiums further up. For now, however, it seems that larger pharmas who can afford to wait-and-see will largely continue to do so, prioritizing the need for clinical validation at the cost of a higher price tag, as demonstrated by public M&A equity premiums, which increased nearly 10% from last quarter.

In a similar vein, licensing activity fell compared to the volume seen in Q4, resulting in the second lowest quarter of aggregate deal value and volume in the past 3 years. Despite the markedly lower activity, one interesting indicator that may bode well for early-stage biotech is that Q1 licensing activity saw preclinical and discovery deals amass a much larger share of deal value than in 2023 (73% vs. 36%). This may suggest interest in early-stage opportunities among strategics is recovering as it relates to licensing opportunities.

Our Advice for the Current Market

So, what is our best advice for the current market?

We believe that the year will not be a linear low to high scenario, which we’ve already seen the ups and down after only one quarter. That said, 2024 will be a better year than 2023 on most metrics. Both public and private markets will continue their positive momentum as the year goes on with the caveat of course around further exogenous events, like wars, and a rapidly changing interest rate outlook. As we see European and Asian financing activity continue to falter, the US market will get increasingly competitive to raise capital. Signals pointing to the crossover and IPO market re-opening are starting to appear, but securing investor dollars will continue to be a challenge given the backlog of private companies. Remaining clear-eyed about the data required to secure private and public capital continues to win the day, and we believe that creative solutions to get to value inflecting data milestones, even where dilutive or less favorable regarding terms, will be required for survival for early-stage companies. Notably, the continued pruning of public biotech companies trading below cash indicates that the market rebound is well under way, with the number of such companies returning to levels not seen since March 2022. Continued consolidation through take-privates, as seen with Xoma acquiring Kinnate and The Column Group taking NGM Bio private, reverse mergers, and shutdowns will be painful, but ultimately signals that the sector is returning to health.

The increase in early-stage licensing deals offers a bright spot that suggests non-dilutive, strategic capital is becoming more accessible as large pharma works to balance their bets between large, expensive M&A deals for clinically validated opportunities and smaller, less risky licensing deals for discovery and preclinical technologies. Clinical-stage companies without proof-of-concept efficacy data will continue to face challenges funding trials, necessitating a forward-thinking approach in early development to be as capital-efficient as possible while deal and financing activity recovers.

We expect Asian markets to continue to lag the recovery of global markets, with Japan and China facing unique challenges. Japanese equities are soaring with the Nikkei 225 up 43% in the past 12 months, but the yen continues to depreciate, future rate hikes will likely limit the biotech sector’s ability to rebound. Conversely in China, equity markets continue to struggle, and as a result, we have seen an increase in companies seeking access to US capital markets, whether through re-domiciliation or other means.

Overall, we are starting to see positive momentum build across US public and private markets, and we expect 2024 to continue to out-perform recent years in both financing and transaction activity. We do not expect the recovery to be quick, but initial signs are positive that companies with strong data packages and, just as importantly, good timing with respect to the shift in market sentiment, will face an easier road than in 2022 and 2023.