Biopharma investment drops by nearly 50% in 2022

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Cell therapy, RNA technology, antibody drug conjugates and AI/machine learning are among the key areas of investment for pharma, according to a new report.

Clarivate’s ‘Biopharma Dealmaking in 2023’ report examines how pharma companies are replenishing their pipelines as many face a steep patent cliff. The report combines data and insights from BioWorld, Cortellis Deals Intelligence and industry sources.

It reveals many companies are paying particular attention to critical emerging modalities and technologies such as antibody drug conjugates, artificial intelligence (AI) and machine learning, cell therapy, bispecific antibodies and RNA therapeutics.

2022 was a difficult year for biotech globally, as the industry saw a drop off in its ability to raise finance, combined with continued high interest rates and other economic challenges.

A total of $60.8 billion was raised by biopharma companies in 2022, down by 48.6% from 2021 and 54.8% from 2020. Only 35 initial public offerings were completed, generating $4.85 billion.

Biotech companies raised $16.9 billion through 158 follow-on offerings, while there were 381 public and other financings that raised $16.86 billion and 493 private venture capital (VC) rounds that raised $22.2 billion.

While the reported bio partnering deal values for 2022 were the second highest recorded, the number of transactions was the lowest since 2018.

A geographic analysis shows that biotech innovation is greatly influenced by US companies, but that trend is declining. The influence of Asia-Pacific-based industry, particularly Mainland China, is rising. In 2022, 43% of bio partnering transactions involved at least one US-based company, while 29% of deals involved at least one European partner.

Pharma/biotech collabs fuel innovation

Big Pharma was the biggest driver of biopartnering activity, having a role in almost half the deals for which financial terms were shared. The most active large pharma company was Merck (also known as Merck Sharp & Dohme or MSD), participating in 15 such partnering deals in 2022.

One of the most active pharma companies in 2022 partnering with artificial intelligence (AI)/machine learning (ML) companies was Sanofi, which has established marquee relationships with AI/ML companies – inking three of the four most valued deals in 2022.

Cell therapy platforms maintain their allure for pharma, with companies such as Roche securing a research collaboration with Poseida Therapeutics to develop off-the-shelf, or allogeneic, CAR-T cell therapies to address medical needs for patients with certain blood cancers.

Pharma is also keen to access next generation RNA platforms, such as self-amplifying RNAs derived from the genomes of positive-strand RNA viruses. In 2022, the most valuable RNA platform partnership saw CSL-Sequirus pay Arcturus $200 million up front and offer more than $4 billion in potential development and commercial milestones for influenza, pandemic preparedness and three additional respiratory infectious disease vaccines.

Mike Ward, Global Head of Life Sciences and Healthcare Thought Leadership, Clarivate, commented: “The rapid devaluation of biotechs has brought about a role reversal in which biotechs, recently flush with capital, are looking at some lean years while pharmas hold all the leverage in the relationship. However, the fundamental dynamic underpinning these companies remains: they need each other in order to keep pipelines producing innovative medicines.”

Read the full report: Biopharma Dealmaking in 2023.

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