What Trends Are Biopharma Finance Execs Following?

By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL

When pandemic-prompted lockdowns first hit, one of the first places to be impacted was the world of finance. But the world soon realized that were a solution to be proffered, it would come from the likes of biopharma. Finance has always played an important part in mapping out the future, as money, as they say, makes the world go round. In preparing for our annual outlook issue (published in December), Life Science Leader asked a group of biopharma execs for their thoughts on everything from travel plans to trends. Here’s what they had to say. Don’t miss out on all the other knowledge and wisdom provided by the more than 40 biopharmaceutical executives taking part in this year’s annual outlook by becoming a Life Science Leader subscriber today.

What Current U.S. Finance Trends Do You Think Could Have Long-Term Ramifications For Biopharma?

Samir Gharib, CFO, Spruce Biosciences: The rapid rise in SPACs may create significant issues by flooding the market with too many public companies, and in many cases, providing public market access to companies that otherwise would not have been able to pursue a traditional initial public offering (IPO). The traditional route, while undoubtedly fraught with time and cost disadvantages, does provide for a vetting mechanism that enables the best companies with the highest quality investors to pursue public market entry. SPACs also often carry longer lockup periods and tend to be more illiquid compared to traditional IPOs, which may result in increased volatility and loss of shareholder value. Additionally, the underpinnings of any company’s investment thesis must be suitable to create and maintain a market for the stock, through delivery of inflection points and catalysts. Ultimately, the ability of SPACs to perform well in the aftermarket and long term is questionable. And if investor losses balloon as a result, this has the potential to contribute to underperformance across the life sciences sector.

What Technology Will Have The Most Disruptive Impact On Biopharma Over The Next 10 Years?

Troy Ignelzi, CFO, Karuna Therapeutics: We are seeing a significant increase in the utilization of artificial intelligence (AI) in the life sciences industry. While AI was once used in a more limited fashion, we’re now seeing it used in various research and development functions and several other aspects of biotech. In the neuropsychiatric space specifically, we see the use of AI through computer vision, behavioral phenotyping, and machine learning to discover new and novel therapies. We also see AI being used in clinical trials, particularly those conducted in the outpatient setting, to confirm medication ingestion and compliance. As the industry continues to explore and expand the possibilities of AI, I believe it will be a catalyst of major disruption over the next 10 years.

Parag Shah, founding managing director and CEO, K2 Health Ventures: AI is an often-over-used term, sometimes with no clear definition of what we really mean by it in the context of biopharma. I would argue that what we mostly mean is the use of a variety of technologies that allow us “augmented intelligence” to supplement our own human intelligence. The continued enhancement of these AI and ML (machine learning) technologies to help us find difficult to see molecular biology patterns in massive amounts of data will be one of the more disruptive forces for how we create whole new classes of medicines. There are multiple areas across the drug innovation continuum where these technologies can have significant impact – from discovery of novel targets or systems of targets and design of novel therapeutic constructs or modalities to better informed candidate selection and new preclinical models that are highly predictive and can be used for more efficient, effective clinical trial design. In this way, AI/ML has the potential to de-risk parts of the drug development process and increase the velocity of novel therapeutics to market over the next decade.

To What Global Capital Trends Are You Paying Closest Attention?

Olivia Tyrrell, J.D., partner, Baker McKenzie: Venture financing was strong in 2020 and continues to be strong in 2021. The amount of capital available will be a key driver in deal growth in the near-term future, specifically over the remainder of 2021 and into 2022, with large-cap companies being the most likely deal-makers in the biopharma space.

The biopharma and life sciences space grew tremendously during the COVID-19 pandemic and is poised for continued fast-paced growth over the next three to five years. Innovation and the need for companies to enhance their processes and optimize efficiency through digital transformation already has and will continue to attract greater investment and new players into this space, particularly from the tech sector. The hottest assets are likely to be oncology and gene and cell therapy. There is also interest in research on Alzheimer's disease, obesity, diabetes, and sickle-cell anemia. In the longer term, companies in the biopharmaceutical industry are expected to continue harnessing new technologies to revolutionize research, development, manufacturing, and commercialization.

What’s Your Perspective On Travel Getting Back To Normal In 2022?

Ivor Macleod, CFO, Athersys: Although earlier this year there was the tantalizing sense that we might soon return to our former traveling lives, I believe that business travel is unlikely to ever get back to pre-COVID-19 “normal” levels. Aside from the potential permanent reduction in travel expenditures, reasonably effective alternatives to travel have been developed and broadly embraced with far better success than predicted. The need for personal interaction in certain circumstances as well as the lack of informal networking opportunities provided by the virtual format will drive some form of “recovery,” but I do believe that travel will be avoided wherever possible. Beyond employee safety and company liability, I believe the increasing importance of ESG (environmental, social, and governance) measures to investors will ultimately lead to employees being discouraged from traveling. While biopharma and pharma companies have been working hard on ESG, most of the efforts have been on the S and G so far. Air travel, in particular, weighs heavily on the carbon footprint and as companies strive for “net-zero,” I do believe that companies will be much more judicious about authorizing travel in the future until renewable energy alternatives are developed to replace fossil fuels.

Lis Leiderman, M.D., CFO and head of corporate development, Decibel Therapeutics: Currently, I plan to kick off 2022 by attending the J.P. Morgan conference in person, and we’ll consider in-person attendance at other conferences on a case-by-case basis. We’ll monitor the public health situation closely but also take into consideration our team members’ comfort level and what form of attendance we think will have the most value. I think the investor community did a terrific job adjusting to virtual events. It wasn’t always perfect, but we saw a great deal of flexibility on the investor and company sides to make events meaningful and productive. We certainly miss the energy of in-person events and appreciate the value of being able to network with peers, have impromptu “water cooler” conversations that yield ideas, and make lifelong connections. That said, we’ve also been very successful navigating the virtual environment imposed by COVID-19, completing a crossover round and going public within 11 months of the outset of the pandemic. I’m sure everyone in the company will remember the virtual celebration of our IPO during a truly challenging year.

Andrew Oh, senior partner, Flagship Pioneering: Until the COVID situation stabilizes, I plan on deciding a couple weeks before any conference whether or not I’ll attend in person. My strong preference is to attend in person because I view these events as a chance to catch up with industry friends and contacts on both a business and personal level. However, given the COVID situation, I will want to have answers to several questions prior to making any in-person conference decision. Specifically, I will want to know: (1) what are the current and projected COVID case/positivity trends, (2) what is the profile of the predominant variant (infectivity and virulence), (3) how effective are the vaccines against this variant, (4) will the event be hosted outdoors or in a well ventilated facility, (5) is social distancing possible, and (6) what is the event’s mask, vaccination, and testing policy for staff and attendees (and what are the regulations for the host city)? Given that we operate in a data-driven, science-focused industry, it only makes sense to make a data-driven decision.