Each quarter, Locust Walk’s deal team compiles key statistics and trends on strategic transactions and financings. Our 2024 Q1 Report applies the latest data to analyze current activities in the life sciences deal landscape.

Biopharma public market conditions improved further in Q1, driven by strong follow-on & PIPE activity, whereas strategic deal making declined notably from 2023, & private financing remained flat.

The XBI outperformed the S&P 500 at several points in Q1, signaling increased confidence in the industry, despite finishing Q1 up only 4% vs. Q4 2023.​

• The XBI sharply rose to $101 on the heels of several positive data readouts but has normalized since and ended Q1 at $95, representing 23% growth over the past 12 months​
• Continued positive trends in the S&P 500 signal improved macroeconomic conditions and support the potential for a gradual biotech recovery, assuming the Fed maintains their target for three rate cuts this year​
• The number of companies trading below cash declined to the lowest it has been since Q1 2022, providing a strong positive signal for the sector ​

IPO and follow-on deal volume more than doubled compared to Q4 2023, indicating improvements in public biotech market conditions.​

• Despite this increased activity, the IPO window still appears relatively shut, with companies that have recently gone public somewhat limited to well-funded, later-stage companies with a strong insider base of public market investors​
• Q1 saw the greatest number of follow-on offerings since Q1 2021 (38 follow-ons >$75M) and PIPE activity continued to increase, signaling returning public investor interest amidst a limited IPO environment and gradually decreasing negative EV companies in the market​

Venture financing increased from Q4, signaling progress towards a recovery, with overall activity slightly above ranges seen across 2022 and 2023, though we expect private markets to continue to lag other biotech market indicators until interest rates are meaningfully cut.​

• The proportion of mid to late-stage (Ph 2 / Ph 3) deals slightly increased to 43% in Q1 from 36% in 2023 overall, suggesting private VCs remain relatively risk-averse and public market sentiment has not fully trickled down to the private markets​
• Despite this, average round size increased this quarter (i.e., 33% increase over average deal value from Q4 to Q1), as the total volume of rounds >$20M increased from 32 in Q4’23 to 41 in Q1’24, indicating greater activity​

Aggregate Q1 M&A and licensing deal value decreased by ~75% from Q4’23 and was lower than any quarter in 2023.​

• Discovery and preclinical deals made up a larger share of licensing deal value than in 2023, whereas M&A continues to be focused on validated clinical stage opportunities, which suggests pharma players are still willing to wait and spend more later, while placing smaller, lower risk bets earlier

While the improvement in biopharma public markets signals a positive recovery for 2024, the slowdown in strategic deal making, ongoing stagnation ​in the private fundraising market, and delays in rate cuts suggest the biotech recovery will continue to be a gradual process.

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