Maxim Labkouski
The year 2023 ended with a bang with the announcement of several high-profile deals in the biotech M&A space. But can investors expect the party to last until 2024?
AbbVie (NYSE:ABBV) started the M&A tour in late November and announced plans to buy ImmunoGen (IMGN).) for $10 billion and then Cerevel Therapeutics (CERE) for $8.7 billion. Bristol Myers (NYSE:BMY) followed suit and said it had agreed to purchase Karuna Therapeutics (KRTX) for $14 billion and RayzeBio (RISB), which went public in September for $4.1 billion.
In a recent note, Piper Sandler noted that “despite the FTC's best efforts,” 2023 proved to be a “banner year” for M&A in the biotech sector, with the year's 24 deals surpassing the record 22 in 2020.
According to a recent note from Barclays, the size of M&A deals also increased in 2023, rising 71% year-on-year, helped by Pfizer's (PFE) $43 billion acquisition of Seagen. The investment bank said the increase in both transaction volume and deal size, coupled with an increase in year-end activity, “potentially bodes well for 2024.”
Morgan Stanley also expressed optimism about M&A activity in 2024.
“With equity markets recovering and most leading M&A indicators turning positive, we expect deal activity to improve year-over-year in 2024 before normalizing in 2025-2026,” Morgan analysts wrote Stanley in a recent statement.
Morgan Stanley added that as part of its reporting, it expects additional deals to continue to emerge “with several companies holding significant amounts of cash and carefully monitoring potential opportunities at appropriate prices.”
The IPO market is also expected to gain momentum in the new year.
Despite a comparatively cool IPO environment, several biotech companies managed to raise at least $100 million in 2023, including Structure Therapeutics (GPCR), Mineralys (MLYS), Apogee Therapeutics (APGE), RayzeBio (RYZB), Neumora ( NMRA) and Abivax (ABVX). ), Lexeo Therapeutics (LXEO) and CARGO Therapeutics (CRGX).
Barclays noted that while the IPO market remains significantly cooler than in the red-hot years of 2020 and 2021, biotech companies still raised 27% more cash in 2023 than in 2022. Barclays added that the number of While biotech deals in 2023 were comparatively small at just 11, those moving forward were larger, with the average IPO size rising to $253 million in 2022 from a previous high of $220 million.
Barclays said it sees the potential for a “more constructive” IPO market this year, partly due to an increasing backlog of companies seeking an IPO and the prospect of lower interest rates, “which generally bodes well for a more positive capital markets environment.” is.”
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