‘Let the good times roll again’: VCs confident in biotech activity for ’24

Wall Street

‘Let the good times roll again’: VCs confident in biotech activity for ’24

Published: Jan 11, 2024

By Tyler Patchen


Several experts on a panel Wednesday at JPM’s Biotech Showcase expressed positive attitudes for the coming year on the investment side, with Andrew Lam, the principal of special investments at Ally Bridge Group, commenting that the panel’s title should be “Biotech in 2024: Let the good times roll.”

In all seriousness, Lam noted that there are “signs of life” in the industry. Gabe Cavazos, a senior managing director of investment banking at Leerink Partners, said that while the industry has been through a lot over the last two years, he is ready to see more of a rally in the market.

“What’s exciting is despite the hard times in 2023 . . . the last two months of the year have been quite productive, November and December,” noted panelist Maha Katabi, general partner at Sofinnova Investments. “We closed the year with 23 M&A deals in the industry. . . . And the last time we exceeded that number was . . . in 2002.”

On the IPO front, Lam noted that more companies could go public as soon as next week and expressed cautious optimism about the prices. This will give investors even more confidence as more capital is being “infused” into the sector. While Lam did say valuations are being compressed and raises are shrinking in deal size compared to previous years, the market is getting better, and sizes are bound to increase. In Cavazos’s view, the IPO front is only just returning to an “equilibrium” stage.

As for topics such as the IRA, which has also been a significant subject of discussion all week in San Francisco, Katabi said that while the IRA will be debated and refined, it will be a “non-issue” and should be regarded more as a patent expiration date and not necessarily the “dominant factor” in the conversation.

As for advice to companies on navigating the coming year, Lam said to condition your board early, as funding could be a 12-month process due to investors being “inundated with opportunities,” and there is a wide range of opportunities for investors to put their money into. Thus, he said it’s important to budget responsibly.

“Have a clear plan for what your current investors are doing versus new investors,” Katabi said. “Obviously, that doesn’t apply if you’re raising first-round financing, but having an anchor investor in your current syndicate that can lead this conversation—because these conversations are taking longer—is very helpful.”

Source: BioSpace