Our first Biotalk podcast is focused on Locust Walk’s 2022 year-in-review market conditions, which was released the first day of JPMorgan and rapidly accumulated over 500 downloads. Each quarter, Locust Walk’s deal team compiles key statistics and trends showcasing what is happening in the global private and public capital markets and strategic partnering and M&A.



We wanted to share some insights into the report and discuss key trends, opportunities and predictions for the industry in 2023.  To download this report, please go to locustwalk.com and go to our “Insights” page.  As always Locust Walk is happy to speak with you further if you have any questions about our views or if we can be helpful to guide your organization through the current market environment.



Timestamps:



Recap of How We Got Here: 1:03



Key Trends for Biotech Management Teams to Monitor: 4:36



Locust Walk Expectations for 2023 Biotech Market: 6:01



Signals of Market Recovery to Watch For: 9:45



How to be Successful in This Market: 11:19



Transcription:



Welcome to Biotalk. My name is Geoff Meyerson, CEO and Co-founder of Locust Walk, and you are listening to Biotalk, our new podcast for biotech deal makers.



Our first Biotalk podcast is focused on Locust Walk’s 2022 year-in-review market conditions, which was released the first day of JPMorgan and rapidly accumulated over 500 downloads. Each quarter, Locust Walk’s deal team compiles key statistics and trends showcasing what is happening in the global private and public capital markets and strategic partnering and M&A activity.



We wanted to share some insights into the report and discuss key trends, opportunities and predictions for the industry in 2023.  To download this report, please go to locustwalk.com and go to our “Insights” page.  As always Locust Walk is happy to speak with you further if you have any questions about our views or if we can be helpful to guide your organization through the current market environment.



It’s important to review recent history to provide context for the path ahead.  The industry became victim of its own success




Easy monetary policy with 0% and even negative interest rates in the US and major economies coupled with the success of COVID vaccine development and the intense focus on the biopharma industry to save the world led to a massive wave of biopharma fundraising and industry expansion



Starting February 2021, a mere 2 months after the first COVID vaccine approval, the balloon started to deflate with the gradual decline in the XBI and gradual reduction in financings although still occurring at a frenetic pace. In retrospect it is fascinating that the public market was declining yet the volume remaining amazingly high for crossovers, IPOs, and follow-ons.  During the 2020 and 2021 boom and from before COVID, way too many companies were created, too much private capital was invested and way too many companies went public leading to an explosion in number of publicly traded biotechs



2022 was a perfect storm of events occurring all at once leading to the first time in memory where macro political and macroeconomics took over control of the industry direction. Over these 12 months the continued aftershocks from COVID and the industry resetting because of too much company supply and too little capital availability created an accelerating negativity to the environment.  The Fed hiked rates 4.25% through the course of 2022 in response to the fastest inflation in 40 years, which led to a risk off environment from investors



2022 the XBI fell 25% on the year and 48% since its February 19, 2021 high. IPO issuances stood at only 9 companies compared to 92 in 2021



Companies both public and private have been forced to prioritize their portfolios, focusing on their most advanced viable assets and unfortunately downsize their teams. A consequence of this contraction in pipelines and employment is greater capital efficiency and return on inve...