The situation is not completely
dire, however. For example, few
are predicting that 2019 will see a
substantial retrenchment in venture
funding, though firms are expected
to start investing more prudently.
And, while the public markets are
showing a diminishing appetite for
new issues, the IPO window is far
from shut. Substantial sums are still
being raised by some.
This report attempts to identify
swing factors that could improve
or damage sentiment, and shift that
perception over the year.
Excitement about new technologies that are delivering real breakthroughs remains palpable, but
several are in launch phase or
Hopes for the immuno-oncology
space were significantly reined
in after the spectacular failure of
Incyte’s epacadostat last March,
and while expectations are low for
substantial progress, a surprise win
from another IO combo would lift
Huge optimism prevails around
cell therapy and related techniques,
however, and it is in this realm
that valuations remain testing. The
extent to which companies with unproven technologies can maintain
their billion-dollar-plus valuations
next year will signal the depths of
any downturn; these include Allogene, which is working on allo-geneic CAR-T therapies, or those
pursuing gene editing like Crispr
On the plus side, the US FDA
looks like it will remain one of
biopharma’s best friends. The
influential regulator’s willingness
to speed novel therapies to market
on controversially slim evidence
has emboldened companies and
investors to take ever-greater risks.
Perhaps this is another red flag.
Should the agency alter its stance,
the sector would have a real reason
for an existential crisis.
“If you are a high-quality company looking to raise capital you
can probably still squeak by. But a
market downturn like this creates
an extra layer of hesitancy, and for
poorer-quality companies it will
be harder,” says Salim Syed, head
of biotechnology equity research at
Broader market trends will play a
big role in shaping the biotech IPO
market in 2019, but so will the performance of more recent entrants.
And, encouragingly, the graph
above (Fig. 1) shows that 2018’s
flotations are performing largely in
line with other years.
But the IPO window was so wide
open in early 2018 that very early-stage companies, even some that