Biotalk Episode 4: 2023 Q2 Report: Global Trends in Biopharma Transactions

During this episode of Biotalk, Geoff Meyerson, CEO of Locust Walk, unpacks our 2023 Q2 Report: Global Trends in Biopharma Transactions Report. Each quarter, Locust Walk’s deal team compiles key statistics and trends showcasing what is happening in the global private and public capital markets, strategic partnering, and M&A.







To download this report, please go to locustwalk.com and go to our “Insights” page. We are happy to speak with your team if you have questions about our views or if we can provide any perspective or guidance to your organization.







Timestamps:







Deal Context: 1:12







Future Outlook: 6:00







Our Best Advice for the Current Market: 7:13







Transcription:







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 Second 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.







Our report covers key takeaways for the sector across US, Europe and Asia geographies for a comprehensive view of biotech deal making. We invite you to review our report and hope you will find it useful in your business. To download this report, please go to locustwalk.com and go to our “Insights” page. As always Locust Walk is happy to speak with you further if you have any questions about our views or if we can be helpful to guide your organization through the current market environment.







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







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







To provide deal context (Jumping right in)









Jumping right in, public markets have shown some signs of stabilization this quarter, with the XBI exhibiting a slight rebound, up by ~8% since the end of the first quarter



Nevertheless, this correction brings the XBI back to its position at the start of 2023, and it remains up only 9 percent over the last twelve months, underperforming the S&P  which has been up 16 percent over the same period







The number of companies trading below cash has come down from March (212 companies in March, compared to 165 companies in June), but the figure remains significantly elevated and we’ve largely retraced levels seen at the beginning of the year, which were high relative to historical trends











Additionally, the gradual revival of the XBI is driven by a chain of positive licensing deal flow this quarter, with average aggregate licensing deal value up 20% from Q1, to $705M







Notably this rise in deal value is accompanied by a 40% decline in deal volume, reflecting the shift towards fewer deals and larger bets



In contrast, the venture market which has favored later-stage assets, licensing deals indicate that partners are taking a longer-term view with significant investments in discovery/pre-clinical assets across modalities and indications. This might sound counterintuitive based upon things that we are hearing, but the data doesn’t lie and we are still finding early deals being done.