This current wave of biotech investment aligns with a broader investor thesis that views the sector as a ripe area for growth.
The biotech industry is witnessing a revival in the early months of 2024 with a series of IPOs worth around $100 million or more and startup financings. This uptick, along with the recovery of biotech’s flagship stock funds and a surge in dealmaking, has sparked optimism about the industry's health.
The recent success stories include companies like CG Oncology, Kyverna Therapeutics, and ArriVent Biopharma, which not only raised more funds than anticipated but also saw their stock prices increase post-IPO. Biotech venture capital has pulled in approximately $15 billion annually in the last two years.
Invivo Partners, a Barcelona-based venture capital firm, is close to securing a new fund of €100 million ($109 million), with a potential to extend up to €120 million, marking its third fund since inception. The firm has conducted notable acquisitions like Sanifit Therapeutics by Vifor Pharma for €205 million and Versantis by Genfit for about €43 million.
However, the sustainability of this IPO resurgence remains uncertain. Following a brisk period of activity in late January and early February, no new IPO plans have been announced.
Observers are cautiously watching whether this initial burst will translate into sustained growth for the sector or if it represents a temporary spike in a typically volatile market landscape.
The IPO slowdown since late 2021 has had a cascading effect on venture funding for biotech startups, making it more challenging to raise funds at desirable valuations.
The focus on late-stage, de-risked investments raises questions about the financing landscape for early-stage biotech innovators and whether a shift in investor sentiment could broaden the pool of IPO candidates.
This current wave of investment aligns with a broader investor thesis that views biotech as a ripe area for growth, driven by technological advancements and an increasing demand for healthcare innovation.
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