Healthcare
Biotech鈥檚 Path Forward
Insights from venture capital investors at the 蜜豆视频 Global Healthcare Conference
The ever-evolving biotech landscape has become a magnet for venture capital investment. However, the sector faces unique challenges: it has consistently underperformed against broader markets like the S&P 500 and NASDAQ, is facing uncertainty as regulations shift, and is still recovering from a pandemic-driven surge that inflated valuations and disrupted growth cycles.聽
Andrew Lam, Managing Director and Head of Biotech Private Equity at Ally Bridge Group, and Priscilla Sugianto, Principal at Vivo Capital, shared their insights at the 蜜豆视频 Global Healthcare Conference on the state of the biotech market, the trends shaping private investment, and the technologies that are driving the next wave of innovation.
The ups-and-downs in Biotech
The ups-and-downs in Biotech
The biotech industry has seen some dramatic ups-and-downs over the last few years, fueled by a surge of interest during the COVID-19 pandemic and tempered by the cooldown that followed. While the S&P 500 saw steady growth during that time, biotech significantly underperformed. 鈥�2020 and 2021 were anomalies in the equity capital markets,鈥� Andrew Lam notes. An influx of non-specialist investors and overheated valuations left the market overextended, creating what Lam describes as a 鈥渉angover period鈥� from 2022 to 2024.聽
The sector's recent correction has refocused attention on building solid foundations.
The market has been steadily correcting since COVID. While the growth trajectory may now be slower, it鈥檚 grounded in stronger fundamentals, with a focus on more mature companies going public.
笔谤辞蝉辫别肠迟蝉听for future growth
笔谤辞蝉辫别肠迟蝉听for future growth
Looking ahead, biotech鈥檚 growth will likely hinge on several macroeconomic and regulatory factors. Following the U.S. election and potential changes in regulation, M&A activity may see an increase. 鈥淲e might see the return of mega-mergers with the new administration,鈥� Lam says. 鈥淏ut consolidation could mean fewer buyers for smaller biotech firms.鈥� Sugianto agrees, pointing out that these mergers may also reduce competition at the high end, impacting smaller companies in the SMID-cap universe.
Despite some regulatory uncertainty 鈥� such as FDA user fees 鈥� both Lam and Sugianto see positive signals from stabilizing interest rates, which should improve access to capital. 鈥淚f rates stabilize鈥�, Sugianto says, 鈥渋t will ease costs for biotech firms looking to finance late-stage developments.鈥� However, she cautions about potential shifts in FDA funding. 鈥淚f FDA user fees are reduced, it could delay drug approvals, affecting new treatments.鈥�
Venture capital trends
Venture capital trends
We鈥檙e seeing more dual track approaches with our companies pursuing both M&A and IPO routes to provide optionality.
Head of Biotech Private Equity at Ally Bridge Group
Biotech companies are increasingly choosing to stay private longer.聽 In the current market, M&A has been a more favored exit option than IPO, as private capital continues to flow steadily toward mature assets. Sugianto pointed out that companies are at times taking 鈥渄own rounds鈥� 鈥� lower valuations than in previous funding stages 鈥� as they correct from the high valuations of 2021. 鈥淚t鈥檚 the tale of two cities,鈥� she explains, 鈥渨hich separates the well-funded 鈥榟aves鈥� from the 鈥榟ave nots鈥� who are still struggling to secure capital.鈥澛�
What鈥檚 driving biotech innovation?
What鈥檚 driving biotech innovation?
Despite all this financial turbulence, innovation in biotech remains vibrant. Lam highlights targeted therapies as a leading area, specifically antibody-drug conjugates (ADCs) and radioligand therapy (RLTs). 鈥淲e鈥檝e overcome the engineering challenges that limited ADCs years ago,鈥� he said, 鈥渕aking them a viable option today.鈥� ADCs and RLTs, once considered niche, are gaining traction as precision treatments become more widely accepted.
Sugianto noted the growing focus on bispecific and multispecific therapies, which she believes could potentially replace CAR-T therapies as standard cancer treatments. 鈥淭here鈥檚 a significant opportunity to leapfrog CAR-T,鈥� she says, adding that CAR-T鈥檚 complexities make it challenging to scale. Lam agrees, noting that targeted radioligand therapy is also seeing broader adoption as cancer centers retrofit their facilities to support this new treatment method.
The shift toward more advanced therapies, along with adoption at major cancer centers, provides biotech with strong tailwinds for growth. 鈥淎s centers make investments in retrofitting,鈥� Sugianto says, 鈥渢hey鈥檙e driving demand for these cutting-edge therapies.鈥澛燣am believes, too, that this momentum bodes well for biotech, as 鈥渢hese investments are irreversible; once a facility is outfitted, the technology will be used.鈥�
What does the future hold?
What does the future hold?
As biotech continues to recover from recent market corrections, its future is looking optimistic. Equity capital markets is fueling growth opportunities, and new technologies are driving innovation. However, as both Andrew Lam and Priscilla Sugianto emphasize, the industry will need to find a way to navigate market shifts and economic uncertainties to fully capitalize on these trends.聽
