Market Optimism and Our Latest Innovation Wave Podcasts

David H. Crean serving as the Managing Partner at Cardiff Advisory LLC , highlights several trends that we are seeing in the public and private markets for life sciences companies hoping for a return to a better capital financing and exit environment. Dr. Crean also shares the latest recordings with guests from the Innovation Wave Podcast.

Sector Confidence is Growing

In the last two years, various factors, such as high capital costs, uncertain economic indicators, regulatory examinations, and global tensions, have postponed transactions. However, there's a silver lining with inflation showing signs of improvement, although it's expected to remain above the target to address ongoing concerns. The Federal Reserve has maintained its interest rates, projecting a 2.1% economic growth for the year, surpassing previous expectations and indicating a potential end to rate hikes. This outlook suggests that the economy could expand without igniting recession worries, with the Fed anticipating rate reductions. This is a key fundamental that will catalyze change in biotech valuations.

Recently, there's been a noticeable uptick in activity across deals, mergers and acquisitions, public offerings, and venture capital investments in the healthcare and life sciences sectors. This surge hints at a shifting momentum, reminiscent of the adage about adjusting sails to navigate the wind's direction.

"We cannot direct the wind but we can adjust the sails."

The PIPE (Private Investment in Public Equity) and follow-on markets have seen robust investment, drawing $4 billion in the early months through 30 transactions. This interest highlights the sector's appeal, especially in biotech, for investors seeking promising opportunities.

The IPO landscape is also reviving after a slowdown, with more companies poised for public offerings, especially those in advanced clinical phases, signaling a more favorable environment for quality entities. The growing queue of companies aiming for IPOs underlines the importance of readiness and seizing opportunities.

The $XBI index has rebounded, reflecting a renewed investor interest in biotech stocks, with financing rounds reaching levels close to the market's peak three years ago. This resurgence indicates a returning confidence in the investment sector, benefitting startups and venture capitalists who faced challenges during the IPO slowdown.

Venture investments have shown remarkable examples of the changing landscape with significant funding rounds announced in late March. The biotech sector is witnessing a cautious return of crossover investment, buoyed by a healthier stock market and optimistic IPO prospects, though reverse mergers are becoming less common. Shell companies are being used for reverse merger + PIPE deals this year with speed as capital to fund the deals is more abundant.

Strategic mergers and acquisitions faced hurdles in 2023 due to valuation discrepancies, but the trend is reversing in 2024 with increased deal activity. This uptick is fueled by assets that didn't enter the market in the previous downturn and strategies from corporates and private equity to divest non-core assets. The competition for deals is heating up, necessitating swift and decisive actions to secure and successfully execute acquisitions. Large pharmaceutical firms are keen on investing in specific therapeutic areas, driving biotech companies to focus on generating compelling data to stand out amidst stringent due diligence and to forge earlier, more strategic partnerships to optimize resources and achieve development milestones.

Market Guidance

In the current market, characterized by a careful optimism, companies in the life sciences sector continue to draw investments and grow their funds. Yet, achieving more than just breakthrough innovation is crucial. They must also craft compelling narratives, chart a definite route to market, and likely showcase outcomes from clinical studies. Preparation is key—exploring diverse options for securing funding is advisable. The timing of these endeavors is critical. It's essential for these companies to find the right balance between their scientific aspirations and financial caution as they push their innovations forward. My consistent advice to Boards and CEOs remains: "Endure to '25."

Latest Podcasts: Dive in and ride the Innovation Wave

Episode 14: Dr. Stanley Lewis, Founder and CEO of A28 Therapeutics

In episode 14 of our podcast earlier in March, Bob and I spent time with Stanley T. Lewis, MD, MPH , the Founder and CEO of A28 Therapeutics , who has an extensive background in healthcare, biopharmaceuticals, and clinical research. His journey into the world of entrepreneurship and medicine is deeply personal and driven by both family influence and his experiences as a clinician and researcher

Dr. Lewis's father was described as a serial entrepreneur, instilling in him the belief that to truly succeed and control one's destiny, one must venture into building something of their own. This notion resonated with Lewis, even though it wasn't the primary driving force behind his career. His transition from clinical medicine to focusing on drug development was marked by a significant decision to move to California in 2018, ceasing his clinical practice to avoid potential conflicts of interest as he embarked on developing new drugs.

Dr. Lewis's decision to found A28 Therapeutics in 2021 was motivated by his experiences with patients suffering from diseases with inadequate treatments, starting with HIV/AIDS during its early crisis years. Witnessing the limitations of available treatments and the severe side effects they entailed, Lewis was driven to contribute to the development of more effective and less harmful medications. His personal connection to cancer, through the experiences of his father and his wife's grandfather with gastric cancer, further fueled his dedication to improving oncology therapeutics. Dr. Lewis aims to develop drugs that offer hope and tangible benefits to patients with advanced disease stages, particularly focusing on liver metastases.

Dr. Lewis's work is characterized by his commitment to pushing the envelope in drug development, motivated by both a deep scientific interest and a personal mission to offer better treatment options to patients. His leadership at A28 Therapeutics reflects a culmination of his vast experience in clinical research, patient care, and teaching, alongside his entrepreneurial spirit inspired by his family's legacy.

Listen here to our journey with Dr. Lewis.

Episode 15: Dr. Tari Suprapto of Novo Nordisk

In episode 15 of our most recent podcast, Bob and I spent time with Tari Suprapto recognized for her extensive experience in the field of technology commercialization within the life sciences sector. She currently serves as the Director for Search & Evaluation for Western US and Canada at 诺和诺德 , a role that follows her previous position in the External Innovation team at Elanco. Suprapto has a notable career spanning over 15 years, where she has been instrumental in commercializing innovations from prestigious research institutions like the Salk Institute, The Rockefeller University, and Memorial Sloan-Kettering Cancer Center. She also has a strong scientific background evidenced by her Ph.D. in cell biology from The Rockefeller University and an Honors B.A. from Swarthmore College .

In addition to her professional achievements, Suprapto is also the former Board Chair at the San Diego Innovation Council (SDIC), where she contributed significantly to the organization's growth and the diversity of its members. Her work in this capacity reflects her commitment not only to advancing scientific innovation but also to fostering a supportive community for these endeavors. Her work in licensing, building, and managing strategic alliances, along with a robust technical background, highlights her as a leader in bridging the gap between academic research and commercial application.

Suprapto's journey from academia to the forefront of biotechnology and pharmaceutical innovation exemplifies a blend of scientific expertise and strategic business development, showcasing her as a significant figure in the life sciences community. Her leadership roles and contributions to technology commercialization underscore the impact of dedicated professionals in transforming scientific discoveries into tangible healthcare solutions

Listen here to our journey with Tari.

As always, if there are topics you wish to have us address in future Episodes, or feel that you know of a key influencer who has value to add to our ecosystem and would be a great guest, please contact Bob or me and share your input. For more information, go to the Innovation Wave Podcast website. Dive in and ride the innovation wave. Be informed, be inspired, be innovative!

#Biotechnology #Lifesciences #venturecapital #Innovation #Mergersandacquisitions #Healthcare

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Disclosures

Innovation Wave is a life sciences dedicated podcast produced by co-hosts Bob McGriff and David H. Crean. Relevant topics within the ecosystem related to the growth and exit of businesses are discussed in candor with entrepreneurs, key executives, influencers, and thought leaders in 15-20 minute episodes.

David H. Crean, Ph.D., is Managing Partner for?Cardiff?Advisory LLC, an M&A investment banking strategic advisory firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of?Cardiff?Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428.?Cardiff?Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC,?Member FINRA SIPC.