JPM 2023: Ropes & Gray From the Boardroom: Building Next Generation Companies Panel (Jan 8, 2023)
Melissa Rones of Ropes & Gray masterfully moderated the panel on Investment Themes that Will Shape Life Sciences Dealmaking Strategies in 2023 and Beyond on Sunday afternoon. These in-person From the Boardroom events have become one of the highlights of my JPM week events.
The diverse, esteemed, and brilliant panel included Abbie Celniker of Third Rock Ventures, Kiran Reddy of Blackstone Life Sciences, Jason Russell of Morgan Stanley, Anna Marie Wagner of Ginkgo Bioworks, and Rachel Zimet Strick of Abbvie.
I captured some of the keypoints which are summarized below.
— While there is a lot of private fresh powder, a lot of this capital is moving into the public market thereby reducing availability in the private markets. Companies that struggled to raise capital in 2022 will get more desparate in 2023 as they see their runways shorten.
— With the collapse of the IPO market, private companies will need to be creative about financing options. Investors are going to be hyperfocused on valuation and will be looking for disciplined management teams. They will also want clarity, and specifics, on how funding proceeds are going to be used. This will prove challenging for some management teams used to ready access to capital with little scrutiny by investors.
— Larger biotech/pharma companies with cash are well positioned in 2023 and 2024 to acquire companies / assets and are gleefully searching for opportunities. This will lead to opportunities for struggling private companies albeit with less leverage than in the previous decade.
— The disconnect in 2021 between buyers and sellers on value persisted in 2022 but that gap has narrowed. With the current recession and economic situation, sellers that hadn’t been open to discussing deals on lead candidates recently opened up for these discussions. For those private companies that are too big for private money and can’t access public markets, M&A may be their only option, including licensing deals.
— The panel echoed what I heard from two panels at the neuroscience conference earlier in the day: life sciences companies need to build what patients need and keep the patients at the center of all development activities.
— It’s still too early to tell how the Inflation Reduction Act (IRA) will impact the life sciences sector but there is agreement that there will be some strong discourse on what is expected to get to market. The IRA will certainly shift the focus to the business case for therapies and target markets and it may be easier for biologics than small molecules. This was echoed on an earlier panel at the neuroscience conference.
— Geopolitical factors, economic instability, and Covid have lead to life sciences companies thinking about where their work is being done and are considering local options although domestic contract research organizations (CROs) haven’t been able to keep up with this new demand. There are regulatory and cost factors that have to be taken into consideration as well.
— Cell therapy will continue to be interesting with the focus on technologies for development and scalable production. With few companies having the end-to-end solutions, partnering is a must, leading to complicated royalty stacks. The question is: how do we create a reasonable business model to make this partnering model work?
Were you at the event? Did I miss any key points? Let me know if the comments or send me an email at terrihansonmead@gmail.com.
About the Author
Terri Hanson Mead provides IT compliance and IT strategy services for biotech, medical device, diagnostic, and digital health companies. Through her companiy, Solutions2Projects, she helps life sciences companies align technology roadmaps with corporate objectives and meet IT compliance requirements in a complex and regulated industry. She is an active angel investor focused on investing in startups that expand the power and influence of women.
