Each quarter, Locust Walk’s deal team compiles key statistics and trends on strategic transactions and financings. Our 2022 Year In Review Report applies the latest data to analyze current activities in the life sciences deal landscape.

At the end of Q3 2022, we described the state of the Biopharma industry as being in a “narrow” depression. A reference to the relatively short duration of the severe downturn. While still unclear when we would consider the industry recovered, there were three guideposts we identified to help level-set expectations: 1. Fewer companies trading below cash 2. Consolidation through increased M&A and/or closures and 3. US Federal Reserve reversing its interest rate hikes. None of these metrics were cleared in Q4 2022, but we are moving in the right direction.

During Q4 2022, the Fed raised interest rates a total of 125 bps between Nov. and Dec., the number of biotech companies trading below cash remained significantly higher than pre-pandemic norms, and while ~44% of the total M&A deal value in 2022 occurred in Q4, ~70% of that was driven by the acquisition of Horizon by Amgen. However, the volume of M&A deals continued to move upward compared to the first half of 2022, a positive signal of recovery we look for to continue into 2023.

Despite the continued turbulence in the market, there was plenty to cheer for this past quarter. Notably, the clinical success of Eisai’s Lecanemab in Alzheimer’s and Madrigal’s Resmetirom in NASH marked major wins in historically challenging indications for biopharma drug development. CSL Behring’s HEMGENIX became the first gene therapy approved for hemophilia B. Major breakthroughs are occurring, and the FDA is willing to approve novel drugs, both material catalysts that can provide a tailwind to the rebound of the biopharma market once the macroeconomic headwinds begin to settle.

We invite you to read our report and welcome the opportunity to discuss its contents with you.