After what has been deemed a “funding winter” for life science SMEs, building a strong data package to attract larger capital in the current climate is as important as ever, says Jordy Breuker, associate capital advisory at the financial services provider F.Institute.
Breuker was speaking on a panel discussing the macro-environmental factors impacting life sciences R&D companies at the BioTrinity conference, which took place 23-24 April, in London, UK.
In 2023, biotech funding dropped by 43.2% compared to 2022 and by 52.3% from 2021, due to macroeconomic pressures like high inflation, high interest rates, and geopolitical instability. This made investors more cautious and pushed them to prioritise existing portfolios.
“It's well known that it's been a tough year. Looks like we're heading out, but there's definitely still a problem. What we see is there's a backlog of a couple of years, companies waiting to be financed both the very early stage and the later stage,” said Breuker.
Breuker emphasised that life science SMEs should focus on ensuring R&D is as strong as it can be to attract investors: “Really strengthen the knowledge base from MOA [mechanism of action] to assays [so] you can really understand the molecule.
“This also means that you can be a bit more bold in your financing strategy. So instead of trying to shave off some money here and there, try and think big, really build out your R&D and funding roadmap to build the strongest data package that you can. I think that's a clear trend to move out of this funding winter,” says Breuker.
Oxford University Innovation’s CEO Steve Silvey explained that while there is enough capital available, it’s not being invested quickly because the opportunities to invest in good deals are limited, and the values are lower for the capital.
“Innovative companies are thinking bigger, and [asking] how can we offer a very compelling proposition to the right investor that allows us to attract capital… to effectively see us through this time and build a more compelling and bigger vision for our business as well,” Silvey concludes.
A report on GlobalData’s Pharma Intelligence Center highlighted that Q1 2024 investment activity witnessed a significant rise in value compared to both the previous quarter and the same period last year, increasing from $5.3bn in Q1 2023 to $7.7 in Q1 2024.
GlobalData is the parent company of Pharmaceutical Technology.
