As IPOs have slowed significantly in 2022, so have the debuts of special purpose acquisition companies (SPACs) targeting the life sciences industry, primarily due to two looming threats. This time a year ago, BioWorld had tracked 60 IPOs of SPACs searching for biopharma or med-tech targets and nearly 30 SPACs that had secured acquisitions. For 2022, there are 21 SPACs currently searching, and only two of those went public this year. As for completed M&As involving SPACs, there have been 17 this year and another nine that are pending.
Digital health remains a primary driver of med-tech partnerships and mergers, accounting for 67.3% of all deal activity and 49.9% of the completed M&As in 2022.
An uptick in positive clinical data reported in recent months has helped nudge the BioWorld Biopharmaceutical Index (BBI) to its highest point this year. BBI is up by 15.58%, significantly higher than the 1.36% increase recorded at the end of August, just as statistically significant clinical results began to roll in from a number of biopharma companies.
The number of biopharma deals with nonprofit or government entities has dwindled in recent months, while industry grants are climbing. Combined, however, a total of 936 bio/nonprofit deals and grants worth $11.17 billion is down by 37% in comparison with last year’s $17.8 billion and by 58.7% in comparison with 2020’s $27 billion. The volume also is down significantly by 16.8% from 2021 and by 33.4% from 2020.
A large notes offering this month and a pick-up in public raises have boosted med-tech financings, which are now tracking similarly with 2019. So far this year, the med-tech industry has raised $35.7 billion through 457 transactions. The amount raised is down by 23% in comparison with the same time frame in 2021, although a few months ago that gap was 48%. The current volume is down by 25.4%.
A mega-deal and high-money buyouts may have given a boost to BioWorld’s Drug Developers Index in October, but safety issues, money troubles and failed trials continue to hold stocks down. Compared with the broader markets, drug development companies are showing the same ups and downs, influenced by rising inflation and a struggling economy, as well as uncertainties caused by war, the COVID-19 pandemic and politics.
Despite coming out strong earlier this year, biopharma deals have slowed significantly, with values now falling behind 2021 by 7.6%. In August, deals were ahead of all recent years, showing a 7% increase over last year. Through early November, the industry has completed 1,296 deals, including licensings, joint ventures and collaborations, valued at $154.6 billion.
Biopharma financings in 2022 are now tracking 12% higher than the pre-pandemic year of 2019, but they still pale in comparison with each of the last two years, both of which were standout years by every measure.
While weekly global and U.S. confirmed cases of COVID-19 are below each of the last two years, infectious disease experts remain on guard. There are still about 1,500 people dying around the world each day, including 350 in the U.S., and the SARS-CoV-2 virus may continue to find ways to outmaneuver current treatments and vaccines.
