A strong third quarter has pushed biopharma financings ahead of several pre-pandemic years, as follow-on offerings and private placements picked up the pace. IPOs and venture capital rounds dipped below prior quarters, but the overall amount raised so far this year has placed 2022 as the fifth best financing year among the last 10, ahead of both 2019 and 2017.
Although U.S. President Joe Biden suggested in September that the pandemic is over, health officials insist there is still much to do in preparation for an endemic stage of the SARS-CoV-2 virus. The number of weekly COVID-19 confirmed cases both globally and in the U.S. is similar with each of the last two years, but deaths from the virus are at some of the lowest levels since the pandemic began. Still, the virus will continue to evolve and circulate, and the biopharma industry will need to develop new booster vaccines, antivirals and monoclonal antibodies, among other candidates, to prepare for upcoming battles.
Despite a sharp increase in mid-August, BioWorld’s Biopharmaceutical Index ended that month up a mere 1.4% and rose only slightly in September to 1.5% as of the 26th. It has done significantly better than the Nasdaq Biotechnology Index and the Dow Jones Industrial Average, which are down 23.2% and 19.5%, respectively.
The amount of clinical news in 2022 continues to lag last year, partly due to a decline in COVID-19-related data. Through the last week of September, there have been a total of 2,495 phase I, II and III clinical entries, compared with 3,027 during the first three quarters of 2021. This represents a drop in activity of 17.6%.
While U.S. FDA approvals are down by 27% in 2022, the agency was busy throughout the month of September, clearing seven new molecular entities (NMEs), the most for any month this year.
While 2022 represents the lowest financing year for med-tech companies over the past four years, amounts raised through IPOs, venture capital rounds and private placements are still topping other years, while stagnant follow-on activity weighs heavily on the overall total.
While COVID-19 remains a top research priority globally for government and nonprofit entities in partnership with biopharma companies, deal activity also is heavily focused on other infectious diseases, such as smallpox and influenza.
Everything from regulatory approvals, clinical readouts and big money buyout offers can boost the stocks of biopharma companies. But restructurings, diminishing cash and safety issues can also push the prices down. Either way, since the end of July, BioWorld’s Drug Developers Index has shown minimal movement. It is still down by 21.95% for the year, but that is its highest point since the end of March. In comparison with the broader markets, it is following closely the path of both the Nasdaq Biotechnology Index, down 17.16% for the year, and the Dow Jones Industrial Average, down 13.09%.
With a diminishing number of deals in the last month, the gap between deal values this year compared with each of the last two years has shrunk. In August, 2022 deal values were ahead of 2021 by 7% and of 2020 by 2%. Now, in early September, they are ahead of last year by 0.6% and behind 2020 by 3.5%. Volumes, which were down by 23% last month, are now down by 26%.
