Taking the temperature of 2024 investment climate at Nordic American Healthcare Conference (NAHC), NYC.

The recent years have been a bit of a roller-coaster for the life science industry’s confidence. Being at the epicenter of a global pandemic led us to collectively believe that the attention would last forever. Or at least longer than one year after nailing one of the biggest achievements in the history of mankind. In retrospect, it appears that many forecasts of life science companies were built upon that assumption, that money would continue to be cheap and business flowing. Then, the economic and political landscape changed our scenery completely.

For those entering 2023 with budgets based off the pandemic years, the drop was significant. Some did not survive the fall. Some had to cut down drastically on staff to get on top of burn rates, desperately trying to make it to the next inflection point. Some came out stronger.

So where are we now? For how long can investors sit on their fingers and where will the capital go, once released? And how are the Nordics doing relatively speaking?

These were some of the topics covered during a 2-day conference in NYC right at the turn of the year, arranged by DNB//Back Bay, who recently joined together in a partnership. Two months into the new year, we got back to the panelists of the December-event and had them look into the crystal ball of 2024 once again.

The US-Nordic Banker

Interview with James Cirenza, Managing Director, DNB.

What do you expect from the 1-2 years to come?

“Coming from the extreme year of 2021, with accessibility to capital being at a record high, the life science industry faced a brutal drop in 2022 that lasted until end of 2023. The start of 2024 equity issuance is far ahead of last year.”

Many companies survived through this brutal couple of years by cutting down on human capital and it slowed down their R&D. Also, companies still trade at low levels. Looking at a two-year horizon, I foresee a strong growth curve.”

“Before we start the parade, let’s recognize that life sciences cannot self-fund itself and the cost of capital is still relatively high. Many companies survived through this brutal couple of years by cutting down on human capital and it slowed down their R&D. Also, companies still trade at low levels. Looking at a two-year horizon, I foresee a strong growth curve.”

Comparing US /Nordic countries during this roller coaster, what differences have you spotted?

“The ups and downs were probably a bit more extreme in the US. There is a resilience in the Nordic financial landscape. On the other hand, for overseas SMEs that wanted to come into the US market, the last two years did not fit. These companies suffered. But when it comes to investing in the Nordics, it is important to assess the market from a long-term perspective. It has certainly paid off.”

So why are we not seeing more US investors being all over this sweet spot?

“If we exclude Novo Nordisk, the Nordics is a tiny little sector of mainly SMEs. For someone who was born yesterday, it would not appear as so much. But if you look over the course of 2-3 decades, what the Nordics has delivered in terms of high-quality R&D turned into companies traded at good levels is impressive. There is no other part of the world that can match this output.”

The Healthcare Investment Bankers and Strategic Advisors

Interview with Vasilios Kofitsas, Managing Director, Investment Banking, Jonathan Gertler, CEO and Jocelyn Miller, Chief Communications Officer, Back Bay Life Science Advisors.

Coming out from a couple of tough years, how will that impact on investors’ willingness to come back to this sector?

Jonathan: “The life science world is always about risk capital. I am of the optimistic nature that development stage assets that have true merit usually find a home – this means, unmet need solutions, compelling scientific and technology underpinning. After downturns, the initial investors may be less rewarded for their faith although structures that allow further development ultimately serve all stakeholders. Creative solutions to ensure continued progress for truly worthwhile endeavors should be a top priority for all of us engaged in the life sciences.”

Now looking forward, what is to be expected from 2024?

Vasilios: “This year has certainly started strong both from a strategic (M&A, licensing/partnering) and financial (public and private investing) deal perspective.  It really started in late 2023 with significant M&A transactions announced even between Christmas and New Year’s and the time leading up to the JP Morgan Healthcare conference in San Francisco.  I expect an active deal market to continue for our industry this year.”

What makes you believe so?

“Several reasons; firstly the biopharma IPO window is open in the US and this has an effect on companies globally as companies seek capital to progress their pipelines.  While the companies listings have primarily been US-based, it will not be surprising to see strong ex-US companies looking to tap US investors, this includes Nordic companies as there are compelling companies in the region. Secondly, while the large ticket strategic deal making has been M&A for the most part, this will bleed into licensing/partnering activity as well.”

US funds in particular have raised a significant amount of capital. While the focus over the last couple of years has been to ensure portfolio companies were in good shape, VC are deploying capital into new investments.”

“And last but not least, venture funding should see an increase in activity; US funds in particular have raised a significant amount of capital. While the focus over the last couple of years has been to ensure portfolio companies were in good shape, VC are deploying capital into new investments.”

For those companies who now see the light in the tunnel, how has the competitive landscape changed?

Jonathan: “I believe in the fundamentals of our space and pay less attention to the trends of what’s hot and what’s not. Fundamental solutions – therapeutics that address unmet need in a meaningful and not just incremental way, technology solutions that address patient outcome quality, workflow improvements, diminish invasiveness, and achieve improved economic efficiency for delivery systems remain key.”

Several events have seen a record high number of companies attending, the trickiness being to match that with investors. What will attract US investors back to Nordic life sciences?

Jocelyn: “The NAHC is an annual milestone in the US-Nordic healthcare community, in part because people understand that the Nordics bring such a unique excellence in development approach and that we will curate and present only the most compelling technologies. We are in it for the long run, and it pays off. By committing over time to fostering US-Nordic collaboration, we ensure that Nordic excellence in technology and management and US market opportunities have a clear path, even in times of turbulence. As markets now open up again and IPOs gain traction, we are not surprised to see US companies looking to the Nordics for partnering, collaboration and inspiration.”

 

Left: Helena Strigård (author) together with Jocelyn Miller, Chief Communications Officer, Back Bay Life Science Advisors. Right: Nordic Healthcare Conference 2024

 

The Biotech Builder

Interview with Krishna Allamneni, EVP and Chief Development Officer, Concarlo Therapeutics, and Strategic Advisor, California Life Sciences FAST Advisor, San Diego Ecosystem.

Can you share when the investment landscape started to shift for California biotech and its consequences?

“General investors who had shown interest in biotech during COVID shutdown began to pull back around the 1st quarter of 2021, about a year into the successful vaccination of the general public. This was reflected in the downward slide of the US Biotechnology market and a tightening of capital availability as early as Summer 2022 that continued on through late 2023.”

The long California Biotech drought of 2021-2023 was a tremendous blow to early-stage preclinical and platform companies that took advantage of the mirth.”

“However, US biotech started experiencing a slight uptick in the investment landscape around the last half of 2023. The long California Biotech drought of 2021-2023 was a tremendous blow to early-stage preclinical and platform companies that took advantage of the mirth. As IPO opportunities became scarce, even for clinical stage companies, venture capital firms were left to support existing pre-IPO portfolio companies as opposed to starting newcos or syndicating early rounds of funding.”

What coping strategies did you see among companies?

“To navigate this challenging environment, biotech’s employed various softer strategies in the early phase of the downturn such as pipeline prioritization, reverse mergers or alternative funding approaches. But as the markets continued to be tough through 2023, and M&As weren’t coming through as fast as they needed to, many had to let people go or file for bankruptcy.”

However, amidst the adversity, opportunities emerged for those who were able to adapt and seize them. Both for biotech employers and subject matter experts, new opportunities arose of being intentional and strategic about their next hire or leadership opportunity, respectively.”

“However, amidst the adversity, opportunities emerged for those who were able to adapt and seize them. Both for biotech employers and subject matter experts, new opportunities arose of being intentional and strategic about their next hire or leadership opportunity, respectively. Many have been proactive in picking up promising projects and talent from companies that did not survive the downturn.”

 

Left: Discussions at Nordic American Healthcare Conference 2024. Right: Krishna Allamneni, EVP and Chief Development Officer, Concarlo Therapeutics

 

“We at Concarlo were also able to exploit the unexpected opportunity the layoffs have offered to strengthen our bench. The market conditions allowed us to more deliberately focus on our foundational science and value generating data points.  By prioritizing project pipeline, hiring highly adaptable talent with diverse expertise, and leveraging strategic business partnerships, successful companies are able to navigate through the tunnel and position themselves for success in the coming quarters. California biotech, especially the San Diego ecosystem, has been able to capitalize on these approaches and position themselves to succeed in 2024, as evident from a steadily expanding listing of biotech jobs.”

We are starting to see some signs of recovery in the Nordics now, companies are rehiring. What is the status in California?

“While the Nordic region may be experiencing a resurgence in hiring and economic activity, the situation in California’s biotech sector has been more nuanced. We’ve observed a gradual improvement in recent months, particularly driven by the revival of ADCs, weight loss drugs, a renewed interest in the CNS drugs, emergence of psychedelics, continued confidence in immuno-oncology drugs and emerging cell and gene therapy technologies as well as a technological and supply chain successes of radiopharmaceuticals. Companies with assets in these areas had an easier time in raising funds and attracting top talent.”

Nonetheless, there are signs of optimism as the industry continues to adapt and innovate.”

“However, the recovery has been slow and uneven, and not all companies with proven leadership and stellar scientific pipeline have seen the same level of success. Nonetheless, there are signs of optimism as the industry continues to adapt and innovate.”

This article was originally written by Helena Strigård (in the featured photo) for NLS magazine No 01 2024, out February 2024