Locust Walk,a global investment bank that integrates corporate development strategy and execution with capital raising for innovative life science companies
Boston, MA – July 13, 2023 – Locust Walk, a global investment bank that integrates corporate development strategy and execution with capital raising for innovative life science companies, compiles key statistics and trends on strategic transactions and financings to produce quarterly market conditions reports. Our 2023 Second Quarter Report applies the latest data to analyze current activities in the life sciences deal landscape in the US, Europe, and Asia.
2023 Q2 Report Executive Summary
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.
Click here to download the 2023 Q2 Report: Global Trends in Biopharma Transactions or visit the link below.
https://www.locustwalk.com/2023-q2-report-global-trends-in-biopharma-transactions/
About Locust Walk
Locust Walk is a global investment bank that integrates corporate development strategy and execution with capital raising for innovative life science companies. We support management and board members through all aspects of a deal – from clearly defining and assessing all options to developing company positioning and navigating through the full transaction cycle from outreach to term sheet structuring to negotiating to close. Our suite of capabilities and data driven approach provides our clients with greater confidence in decision making, a rapidly deployable full team, and seamless integration working with us as one global team.
For more information on Locust Walk or to contact a deal team member, please visit www.locustwalk.com