Life Sciences Review and Outlook – 2024

March 8, 2024

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This update provides a summary of 2023 highlights for capital markets, M&A activity, royalty financing transactions and clinical financing deals, along with expectations for 2024.

The last five years have been particularly tumultuous in the biopharmaceutical sector. The strength of capital markets and M&A activity in early 2020 was shaken during the pandemic, with stock valuations rising significantly through early 2021 before falling sharply through the fourth quarter of 2023. While Dedicated healthcare funds remained in the market during this time, generalist funds withdrew. significantly in 2022 and 2023, leaving the sector with insufficient capital overall to support the number of public (and aspiring to be public) biopharmaceutical companies. This was reflected in the fact that more than 200 Nasdaq-listed biopharmaceutical companies were trading below their cash balances in the third quarter of 2023. As a result, many biopharmaceutical companies sought less dilutive sources of capital, including equity-based financing. royalties and third-party funding of clinical trials, while others explored sales, reverse mergers and liquidations. At the same time, a select group of companies with particularly attractive assets (either risk-free or in a therapeutic space with high investor interest) were still able to raise capital on favorable terms.

Beginning in Q4 2023, we saw the XBI rally in the broader market, which seemed to indicate a bottom in the market and a broader ability to access capital. Also during this time, Big Pharma has accumulated significant cash balances from the pandemic and the sale of the blockbuster GLP-1 drugs. This led to a strong year in 2023 for larger M&A transactions (over $1 billion), albeit with a sense that it was a buyers' market taking advantage of lower stock valuations of target companies. Looking ahead, we expect a more stable capital environment in 2024, which will support capital formation and continued M&A activity, although uncertainty remains due to rising geopolitical tensions, a pending presidential election in the United States United States and continued global economic uncertainty.

As we enter this new year, we are cautiously optimistic that the coming year will provide a favorable business environment for the biopharmaceutical sector and will represent a return to a more balanced environment. Read more below.

Read more

We invite you to join our team of experienced attorneys and industry leaders for a webcast, where we will provide a summary of 2023 highlights for capital markets, M&A activity, royalty financing transactions and clinical funding deals, along with expectations for the life sciences deals market. in 2024.

Register for our Webcast: Join us on March 12, 2024: “Life Sciences Review and Outlook to 2024.”


The following Gibson Dunn attorneys prepared this update: Ryan Murr, Branden Berns, Todd Trattner, Karen Spindler and Melanie Neary.

The attorneys at Gibson Dunn are available to help you resolve any questions you may have regarding these issues. Please contact the Gibson Dunn attorney with whom you regularly work, any leader or member of the firm. life sciences practice group, or the authors in San Francisco:

Ryan Murr (+1 415.393.837, [email protected])
Branden Berns (+1 415.393.4631, [email protected])
Todd Trattner (+1 415.393.8206, [email protected])
Karen Spindler (+1 415.393.8298, [email protected])
Melanie Neary (+1 415.393.8243, [email protected])

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