Biopharmaceutical Sector Update:
Evolving Financing and Deal Environment
October 5, 2021
In this report, we examine the financing and deal environment for the biopharma sector, with consideration of the ongoing COVID-19 pandemic. In preparing this report, we have analyzed data in the public and private financing markets and have also looked at the M&A market, with commentary on notable transactions.
- A good news week for COVID-19. New case volume continues to drop at the same time that Merck and Ridgeback reported remarkable data for an oral antiviral to treat the disease.
- Efforts to advance drug price reform in the U.S. Congress appear to have been stymied. The Democrats are struggling to get a larger social spending bill through and may need to restructure the bill.
- A panel being held on Wednesday, October 6 during BioFuture is well worth listening into on the drug price reform topic. (see www.biofuture.com)
- The Nasdaq Biotech Index fell 5.6% last week, the largest drop in many months.
- Conversations with market participants indicate that generalist investors are exiting the biopharma markets as the pandemic subsides.
- Macro news is not great. The 10-year Treasury bond yield has crept up 28 basis points in a month and historically tight credit spreads have reversed.
- The value of the life sciences sector has dropped a full half trillion dollars in several months, closing Friday with a total value under $8 trillion.
- The sector lost $240 billion last week alone, led by weakness in life science tools.
- The rout in life science tools stocks was broad with over 85% of players seeing a decline in value last week.
- The IPO market in September was the lightest we have seen since the pandemic began.
- The venture privates / crossover equity market also weakened significantly last week—for the first time in months.
- Q3 private debt volume was robust and stronger than volume in the first two quarters of 2021.
- M&A has picked up nicely in September, highlighted by Merck’s announced acquisition of Acceleron.
- September has seen three big pharma deals announce—the most since the pandemic began.
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Data sources: S&P Capital IQ, Crunchbase, press releases and Torreya Calculations