This episode of Biotalk is focused on Locust Walk’s 2023 First Quarter Market Conditions Report, in which we apply the latest data to analyze current activities in the life sciences deal landscape. 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.







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:







Deal Context: 1:14







Future Outlook: 5:23







Our Best Advice for the Current Market: 8:53







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.







This episode of Biotalk is focused on Locust Walk’s 2023 First Quarter market conditions Report, in which we apply the latest data to analyze current activities in the life sciences deal landscape. 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.







Our report covers key takeaways for the sector across US, Europe and Asia geographies for a comprehensive view of biotech deal making. We invite you to review our report and hope you will find it useful in your business. 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. Locust Walk is happy to speak with you to review our quarterly findings in more depth or otherwise provide guidance for your organization through the current challenging environment to achieve its business objectives.







Deal Context, Quarter Highlights and Key Takeaways, and Future Outlook







In the next few minutes, I will provide deal making context, highlight events that have made a critical impact on the biotech industry, and provide our outlook for the future and our best advice on how you can survive as a biotech deal maker.







To provide deal context (Jumping right in)









Prevailing market trends from 2022 continued into the first quarter of 2023 as the context for deal making, which maintains unfortunately the correction for the frothy and capital-saturated biotech market of the COVID era.







My view is that valuation data that is publicly available does not accurately reflect the reality of the current financing landscape.







Insider led rounds are anecdotally being done at down round valuations and that isn’t reflected in the overall data and some insider led rounds have artificial valuations to avoid righting down their portfolios.







In contrast, outsider led rounds have been able to command step ups that are flat to 20% vs the 2x they would have received in a more favorable market. These deals are taking much longer to close with many more investors required to be called per dollar committed.







The list of 200+ companies trading below cash speaks to the need for strategic alternatives. Many of these companies have not decided that doing a strategic deal is their best outcome but more of them have been choosing that path than before. Some have had negative data forcing this path but others...