Nordic Life Science asked Dan Akschuti, Equity Partner/Biotech Analyst, Pareto Securities, about his predictions for 2024, including market trends, financing opportunities for SMEs and business strategy advice.

What do you predict will be the dominant market trend within life sciences this year?

“Expected increased focus on late-stage (post phase 2) and commercial-stage companies while seeing consolidation of the earlier-stage drug pipelines. We see/expect no specific disease area to receive extra strong focus, all remain interesting to investors, with a tilt towards bigger indications.”

When it comes to opportunities to find funding or financing, what’s your outlook?

“The answer is a bit similar to that for question 1, but as it is focused on Nordic life science companies, I would say the above is even more strongly the case here. Non-profitable companies with little cash in the bank will continue to have it tough to access capital, while commercial-stage and especially early profitable ones are in the investor’s appetite.”

Clear examples include recent (January 2024) Pareto Securities transactions for the companies Xbrane Biopharma, a non-profitable biopharma company that struggled with financing while Camurus, a profitable biotech had no such issues.”

“Clear examples include recent (January 2024) Pareto Securities transactions for the companies Xbrane Biopharma, a non-profitable biopharma company that struggled with financing while Camurus, a profitable biotech had no such issues.”

What are some of your basic criteria to invest capital in a company? What factors will you consider especially important this year?

“The “main effect” factor for stocks in the current market environment remains that the company has or can secure financing for the next stages. We see share prices remaining flat when the meeting of future financing needs are unclear, even when milestones are reached, such as good clinical results allowing progression of the projects in to the next clinical phase. So while investors in profitable companies do not need to face that issue, investors in earlier stage ones really have to look on how the current investor base of the company in question looks like. Do they have committed, specialist investors that will put up the money going forward or is there a gap?”

What strategies can Nordic life science SMEs use to keep the lights on until funding for the sector improves?

“Focus on the lead projects while putting the others/earlier stage projects on standby – but not compromising the development of those lead assets due to financial restraints. This has been and is a recipe for disaster, e.g., clinical trials that are not designed for success but based on the available financing.”

Focus on the lead projects while putting the earlier stage projects on standby.”

“To achieve that, companies must put their earlier stage projects on standby and unfortunately also lay off staff – which we have witnessed a lot over the past 12-16 months.”

What new life science technologies do you believe will gain ground during 2024?

“More and more lipid-based delivery systems vs. viral vectors, including active targeted drugs, i.e. drugs with attached moieties that bind to the target tissue.”

“Also generally increased specificity of drugs and with that also increased combination regimens that include novel antibody technologies that allow targeting of 2-4 targets with one molecule.”

What impact will the ongoing wars and conflicts and current recessions have on life science investments in the Nordic region this year?

“Besides general macro impacts, I do not expect any further impacts, such as supply chain issues and hopefully the world becomes calmer again soon.”

What do you predict when it comes to M&A activity in the Nordic life science industry this year?

“Absolutely, due to low valuations and nearly very large cash reserves of pharma companies and also specialist investors, we have seen record numbers of M&A transactions in the sector since Q2 2023, and there seems to be no halt in those activities. So, we are confident to see licensing deals, mergers and acquisitions this year. This is indeed a strong proof that the sector continues to perform strongly with roaring fundamentals.”

This is indeed a strong proof that the sector continues to perform strongly with roaring fundamentals.”

Anything you would like to add when it comes to predicting the Nordic life science financial landscape in 2024?

“I expect a slow normalization of valuations of good companies going forward, while mediocre ones will suffer from increased scrutiny and cautiousness.”

Photo: Anna W Thorbjörnsson