Beyond The Printed Page | December 9, 2022

2023 Finance And Funding Outlook: Additional Insights Part 2

Source: Life Science Leader
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By Ben Comer, Chief Editor, Life Science Leader

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In an effort to provide a diversity of viewpoints on pressing questions related to biopharma financing and funding in 2023, Life Science Leader reached far and wide in soliciting executive responses to questions featured in our December Industry Outlook 2023 special issue. We greatly appreciate the volume and quality of responses received from leaders across the industry, many of which appeared in the print magazine: those finance and funding questions and responses can be found here. The following collection of responses did not appear in the December magazine, due to space constraints, and are presented here as part two of a three-part online supplement providing additional insights submitted in response to our outlook questions. Part one of the online supplement is available here.

The largest pharmaceutical companies are expected to face constrained growth and earnings over the next few years, due to increased competition and the loss of key patents. What steps can companies take to maximize overall company value?

Dan Passeri, M.Sc., J.D.
Cue Biopharma

With pipeline and patent expiration pressures, large pharmaceutical companies will need to strategically acquire or align with biotechnology companies providing potential solutions to core asset life cycle management, as well as accessing proprietary assets to address pipeline gaps. Focused strategies from biotechnology companies addressing these needs will provide validation, value accretion and capital access. It is likely that a significant focus of large pharmaceutical companies will be upon early-stage clinical assets that have been de-risked through successful Phase 1 dose escalation studies, and are beginning to demonstrate evidence of clinical activity and patient benefit. The valuation profile at this stage of development will likely provide an optimal cost/benefit profile for further broadening clinical development pipelines in core strategic indications. In order to optimize the prospects of aligning with the strategic needs of large pharmaceutical companies, smaller biotech companies should evaluate the sector (for example, pharmaceutical companies with an oncology franchise), and define those companies with a strategic alignment for targeted business development initiatives.

From an opportunistic perspective, which countries or markets outside of the U.S. will be most important for biopharma companies in 2023, and why?

Mai-Britt Zocca, Ph.D.
IO Biotech

The biotech environment in Europe, particularly Denmark, is growing. I have been a part of this environment for more than 20 years now and what I’ve seen is a significant increase in new companies being created attracting quality talent from top institutions. The bustling biotech community and network is something I am proud to see and be a part of. There are also now multiple attractive financial opportunities with new investors coming into the space.

The biotech environment overseas is ripe for innovation, and I expect more U.S. companies to look to other countries to collaborate and, most importantly, utilize new technologies that offer hope for treating diseases that impact patients worldwide. Additionally, clinical trial recruitment has been a challenge since the beginning of the pandemic. Tapping into global populations for clinical trials not only can advance its progression, but large global population data is extremely helpful in obtaining appropriate objective data to evaluate therapies in development.

What financing challenges or opportunities exist in the context of strong private investment and VC funding, combined with weak biopharma support in the public markets?

Pete O’Heeron

Financing really is the heart and soul of clinical-stage companies.  The resources available to a high-growth company can control how quickly breakthroughs might occur in the laboratory and move into the trial phase. As we saw, 2022 was a difficult year for the biotech market, and both public and private biotech firms have had to respond to the downturn. For smaller companies, it is important to maintain forward progress in development and testing, but when resources decrease, you begin to see stagnation in innovation. To avoid this, identifying multiple capital partners who see the potential in your technology is absolutely critical, and this requires assets proven by research, as investors are becoming more selective.

What financial tools or strategies will help biopharma organizations improve key operational areas, such as R&D or commercialization, next year?

James Graham
Recce Pharmaceuticals

Over the last 18 months, the biopharma world has experienced an abrupt and steep decline in values, resulting in a tough financing environment. Yet the need for innovative treatments remains high, and it is imperative that the short-term financial market volatility does not derail long-term clinical development. To achieve this, biopharma management must plan their financing beyond the standard 12-24 months, as was done in the past, and find alternative routes of financing. Many investors have already adjusted their financing strategies, investing in fewer opportunities in order to extend their financing over the longer term. Nurturing relationships with investors who take the long-term view is, therefore, critical. Beyond public and private market financing, finding win-win partnerships with government and payers is an often overlooked way in which the biopharma world can achieve substantial savings and help build relationships with payers ahead of commercialization. In Australia, for instance, the government has put in place an R&D tax rebate of up to 43.5%, which Recce is benefiting from.