Q3 Results Biotech Industry – A Bumpy Roller Coaster Ride
Quarter 3 of the Biotech industry, A Bumpy Roller Coaster Ride
“Every setback is a setup for a comeback. ” -Willie Jolley, an American motivational speaker, author, and singer.
The biotech industry stock market has faced setbacks for the past few years. Its recovery has been synonymous to rising from the ashes.
The biotech industry seems to be bouncing back after uncertainty for a few years.
The third quarter of 2024 has been in a “so far, so good” situation for drug developers.
Besides facing some lag, like the Yen carry trade issues and the typical August slowdown, the interest rate cut sparked a mini-revival in biotech’s Initial Public Offering(IPO). By the end of this year and in 2025, two more rate cuts are expected to keep the pace going.
According to the William Blair Bankers, biotech is on the right path to outperform the 2023 total for private financing, with at least ten crossover rounds happening each quarter, something that hasn’t happened since the boom of 2021.
In the third quarter, including Septerna Phase 1 biotech that was filed on Wednesday, five biotech companies went public, along with three more companies.
After a slow summer start, private investments and public equity offerings began to rebound after Labor Day. The first nine months of 2024 have blown past last year by a significant margin upto 34%. Biopharma companies completed 189 secondary offerings this year, raising $33.9 billion. Last year, the numbers were 186 offerings and $25.3 billion raised.
According to an Endpoints News tally, the ‘Private megarounds- the big fundraisers’ have also been stable, and there were 23 in the first quarter, 27 in the second quarter, and 23 in the third quarter.
New funds for biotech startups are also pouring big money into new drug development. Mega funds were announced by several venture capital firms last week, where ‘Bain Capital Life Sciences and ARCH Venture Partners’ raised $3 billion;
‘Flagship Pioneering’ pooled $3.6 billion in the third quarter, and companies like
TPG raised $580 million, venBio raised $528 million, DCVC Bio raised $400 million, and Asabys raised $200 million.
Jefferies analyst Michael Yee wrote on October 1st that,
“Q3 was a good quarter for biotech – lower rates, better financing windows, and strong follow-on investments”.
Weak points of the quarter
European pharma stocks weren’t high, as Roche (downfall of 6.5%), Novo Nordisk (downfall of 1.5%), and AstraZeneca (downfall of 1.5%) stocks lost their way.
By citing updates from Roche’s GLP-1 pill and GLP-1/GIP injectable and Novo’s Phase 2a CB1 program, the Jefferies analysts wrote on Tuesday evening that, ‘Obesity remains an important matter for the sector considering the outsized moves in large caps and these stocks should get increasingly data-driven since the competition is about to heat up.
Mergers and acquisitions were a bit weak in Q3. The only major buyout was Eli Lilly’s $3.2 billion acquisition of Morphic Therapeutic in July. Some other deals might cross the $1 billion mark, but those depend upon companies hitting specific milestones first.
The XBI, or an index for biotech, ended the day at $98.80 on Sept. 30, just short of breaking the $100 mark. Analysts are hopeful that it will break that key level of $100 soon, especially with lower rates and more investment flowing into the sector.
The biotech industry had a roller-coaster ride in its third quarter, but overall, the scene is bright. IPOs are back, and venture capital flows continue. Even though European stocks sank and mergers were slow, the enthusiasm for new drug development keeps things lively. If lower interest rates continue to improve financing options, then the biotech industry might remain bright in 2025 and beyond.
Q3 Results Biotech Industry – A Bumpy Roller Coaster Ride
