Biopharmaceutical Sector Update:
Evolving Financing and Deal Environment
May 29, 2020
Summary of key points:
- The NASDAQ Biotech Index hit an all time high on May 20, 2020.
- The strong market has not benefitted all biopharma companies. More than a third of NASDAQ Biotech Index constituents are down for 2020.
- Companies in the specialty pharma sectors have under performed relative to companies carrying out research on more innovative molecules, reflecting a sector shift into biopharma innovation. This effect is particularly pronounced in the small cap specialty pharma group.
- Private venture financing activity has been robust, at close to record levels all year.
- Public company follow-on equity activity has been at close to an all time record in May 2020.
- The IPO market has not been as strong thus far in 2020.
- The private debt market is open with five issuances in the week of May 18th. However, this market remains soft, reflecting abnormally high credit spreads in the broader high yield bond market.
- On the biopharma M&A front, deal activity has been quiet, reflecting an industry that has been largely focused on the COVID-19 pandemic. Both deal count and dollar volume of M&A have been at the lowest point in recent memory since 2020 began.
- Pharma licensing activity has been at a normal level in recent months.
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