At BIO 2024, the spotlight was on transformative trends in biotechnology. From the therapeutic promise of psychedelics and cautious dealmaking to the pivotal role of AI in drug discovery, the conference highlighted a vibrant yet challenging ecosystem. Amidst financial uncertainties, the industry is poised for innovation and resilience, ready to shape the future of healthcare.
Hallucinogens are HOT: Despite the FDA’s opposition to the use of MDMA for PTSD, there is still a lot of interest in the therapeutic potential of psychedelic and dissociative drugs. Biotechs are exploring whether a mild “trip” can address a host of neuropsychiatric conditions, including generalized anxiety disorder, depression, bipolar disorder, and eating disorders.
Dealmaking is warming up: The dealmaking climate is turning toward more favorable weather. Industry insiders feel that we’re in late winter/early spring, so expect to move slowly and proceed with caution. With over 60,000 partnering meetings at the BIO convention, some green shoots are budding. Big Pharma is sitting on a lot of cash that they must put to work. When we’ve fully thawed, the shopping spree will likely focus on later-stage deals to backfill pipelines as multiple blockbuster products fall off the patent cliff.
Venture Financing is Feast or Famine: In light of tepid M&A activity, venture capital funding of biotech has been flat year over year, and that money is getting funneled into fewer companies. While that’s great for the rare gems closing the mega-rounds, they are going to a smaller group of proven management teams, and that doesn’t bode well for many other private biotechs.
Choppy Public Markets: Meanwhile, access to capital in the public markets isn’t exactly free-flowing either. It’s been a year of big winners (predominantly large-cap companies) and big losers, with half of public biopharma stocks up by 50% and 30% of biopharma stocks down 20% (source: JPMorgan research). The IPO window is open a crack, but only 9 companies, primarily biotechs with clinical-stage assets, squeezed through so far this year. Most are performing below their IPO price. We know several companies are anxiously preparing to confidentially file their S-1s. But the clock is ticking on 2024, and if they don’t make their public debut by the end of September, they will likely wait until after the Presidential election or even after JPM in January 2025.
The Power of the Fed: Some theorize that biotech M&A and investing will pick up in Q4, potentially powered by a reduction, or even the signal of a reduction, in interest rates by the Fed.
Biotech Miracles: BIO’s new CEO, John Crowley, has real world experience with the impact that biotech has on society, having founded a biotech that created therapies to save the lives of his own children. He stresses the importance of authentic storytelling focused on the impact of our industry, where biotech creates medical miracles that improve health and save lives.
Who’s Gonna Pay? The big question remains: who will pay for healthcare innovation as both political parties are ready to use their muscle to control drug prices? As we move toward increasingly high-cost precision medicines, plus cell and gene therapies that cost north of a million dollars, outcomes-based models seem the obvious choice. However, will insurers foot the bill for a lifetime of benefit for someone who could be off their plans next year?
Biotech and Biothreats: BIO’s role will be a storyline to watch as biotech increasingly becomes a national security focus. The Biosecure Act, if passed, signals a major shift favoring domestic over international manufacturing capabilities. BIO’s imperative? To ensure that the U.S. has the capacity to meet both domestic and global demand for innovative medicines and is prepared for biological threats.
And the Buzzword of the Year is... AI. AI is transforming our world broadly, and biopharma companies are eager to see that transformation happen in drug discovery and development. They hope to generate better drugs faster and with a higher success rate in the clinic.