Cavazos began by telling ScienceBoard editor in chief, Samantha Black, PhD that 2021 was one of the worst years in biotech regarding investments since 2006.
“Some of the macro factors have been having an impact on the weakness… of the sector,” he said. “And then some company-specific events, particularly in Q4, really put a lot of pressure on the XDI biotech index. More broadly, we had a number of high-profile failures within year, which really have had an impact on investor sentiment.”
In spite of the tumultuous environment in 2021, it was still a record year for biopharma IPOs. Cavazos listed the following as indicators of success and enthusiasm from the investment community:
- In the first half of the year alone there were over 75 initial public offerings (IPOs) in biopharma, realizing $14.7 billion
- 80 crossovers deals (venture financings in which there is significant participation from investors that typically buy into publicly traded companies or IPOs)
- Oncology, rare diseases and central nervous system diseases led in terms of dollars following into the market
- Companies achieved over 80% of redemptions and 75 in the pipeline (the return of an investor’s principal on a fixed income security such as a bond, mutual fund or preferred stock)
- Currently 80 special-purpose acquisition company (SPACs; 43 life sciences, $2 billion expiring in 2022)
- Several large pharmaceutical companies have patent expirations coming up ($125 billion in lost revenue expected in 2022)
- $200 billion in revenue coming from COVID-related sales
In 2022 investors expect a shift away from preclinical companies to companies with catalyst data that drives stock market prices, Cavazos commented. His team estimates 500 billion in cash available for acquisitions, share buybacks, and internal investments. They expect 2022 to be very active and hope to see an uptick deal-making, volume, and dollar value.
“And I think that’s where those markets are going, establishing proof of concept in smaller, more niche patient populations,” he explained. “And then leveraging that success and broadening it to much larger indications, more chronic indications with a larger percentage of the population.”
SVB Leerink is a healthcare-dedicated investment bank that has over 145 investment bankers focused on healthcare. They advise and work with biotech companies to help them raise equity investments for growth and innovation.
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