Btobioinnovation.com 

Author: Jean-Claude Muller, 穆卓Executive Editor at BtoBioInnovation  jcm9144@gmail.com

SPECIAL REPORT 24.02

2024 Perspectives for Biotechnology Companies

For many, if not for most biotechnology companies, 2023 has been a dreadful and frustrating year. Annus horribilis said the CEO of one of them, who had to restructure his organisation with drastic job cuts and who barely survived. Reasons were multiple and complex and could become fear mongering when not thoroughly addressed. At this stage we would like to mention four of them: high interest rates, low company market valuation, overall economic climate, and geopolitical events. As an undisputed indicator, in 2023, we saw only 19 US Initial Public Offerings (just one European), a historical low, versus 104 in 2021.

Will there be a change in 2024? Possible, but probably not in the very first part of the year.

What can one reasonably expect now? Feedback gathered from the JPMorgan Health conference earlier this month in San Francisco, as well as from other relevant events and from discussions with investors and analysts leads us to believe that the following trends will constitute the overall gist of the landscape in the year to come.

According to bankers’ assessment, interest rates will remain high and eventually start dropping significantly during the second part of the year.

Company market capitalisation will remain low, and upbeat in valuation will take time. Board members of innovative companies need to become more realistic on the real value of their assets, redefine their strategy and thoroughly evaluate the options available in 2024. “Emotion is not an option in the Board Room.” More than ever before, Boards will need to be very accurate and transparent on the risks, benefits, and timing of their offer.

Financing will again be very selective. Since 2021, Venture Capitalist’s portfolios are almost all heavily loaded on the risk side, and they need to be better balanced on the value and exit side. Money is available on the marketplace, but it is facing an explosion of offers. One investor said: “Our capital investment will only be based on solid data not on expectations.”

Large Pharma companies are eagerly looking for assets to replenish their portfolio. In reading the transcripts of the presentation of several CEO’s at the JPMorgan Healthcare conference we did identify some subtle paradigm shifts from previous messages. They all hammered their motto that they were looking for assets which would provide substantial topline revenue prior to 2030. Innovative platforms are no longer their preferred child. For years large companies have acquired numbers of new platforms which are all underexploited and did not deliver the expected opportunities. Leaders are now becoming more cautious on expansive platform deals. In sharp contrast to this statement, late 2023 and early 2024 has seen Big Pharma embrace antibody-drug conjugates (ADCs), a new popular cancer modality with Pfizer’s acquisition of Seagen, Abbvie’s purchase of Immunogen, Johnson & Johnson takeover of AmBrx and Merck ‘s partnership with Daïchi. “Enhertu from AstraZeneca and Daïchi broke the rule that we thought about ADCs” said James Sabry, Roche’s gloal head of partnering.

GLP-1 agonists were undoubtedly the star of the JPMorgan Healthcare conference, with unprecedented excitement around these new drugs. The extraordinary scientific and medical successes of Ozempic, Victoza, Wegovy and Saxenda have opened the door for many other strong investments and deals in the area. In September 2023, JPMorgan raised its projections for weight loss and cardiometabolic drugs to bring in over $100 billion by 2030 in a duopoly controlled by Novo Nordisk and Eli Lilly. As an immediate and direct consequence one can notice that Precision Medicine is no longer the one and only panacea of R&D strategy. Drugs covering chronic diseases (diabetes, obesity, asthma, inflammation) of large markets are again becoming very fashionable and highly profitable.

Artificial Intelligence to help innovation and speed up development has not yet proven to be the leapfrog forward promised by some gurus. We believe as for other previous breakthrough technologies (combinatorial chemistry, high throughput screening, genomics, theragnostic, etc…) that AI will become a useful tool in the toolbox. Analyses by already existing AI of huge sets of preclinical and clinical data as well as imaging reports, to drive better and faster decisions, have been performed since several decades and are not new to the biopharmaceutical industry. AI improvements will still be required but many of us need to see exactly where and how this tool will have his biggest impact.

Last, but not least, geopolitical events (Ukraine, Middle East, European Union elections, US elections) could strongly affect how the political and economic sector may consider investments in healthcare innovation. The biopharmaceutical sector will need to be united and work hard to maintain momentum in successfully tackling important healthcare issue including the sensitive one on pricing. Recent situations have shown that this industry knows how to come together and solve difficult problems in dramatic situations.

Paris, January 19, 2024.

This document has been prepared by btobioinnovation and is provided to you for information purposes only.  The information contained in this document has been obtained from sources that btobioinnovation believes are reliable but btobioinnovation does not warrant that it is accurate or complete. The views presented in this document are those of btobioinnovation’s editor at the time of writing and are subject to change.  btobioinnovation has no obligation to update its opinions or the information in this document.