Evening Brief – 03.06.23

While demand for new medicines doesn’t wane amid a weak economic backdrop, the rise in interest rates and the generally depressed dealmaking environment, whether through private equity, venture capital or M&A, has led to a slowdown in investments in many life sciences startups.

But the slow start to 2023 should be balanced with two facts: the amount of undeployed capital at PE and VC firms remains as high as ever and the managers of these funds are incented to put it to use by making investments.

What has not slowed and is expected to continue is investment in cell and gene therapies; a long-term trend that is expected to continue based on both the volume of trials and on the continuing shift of investments away from small drug developers toward therapeutic-focused companies.

Within this larger trend towards cell and gene therapies there is still a strong level of interest from venture capitalists. Based on global sales forecasts from Evaluate Pharma, cell and gene therapy sales are forecast to grow at a faster rate than other biotech related businesses.

Cargo Therapeutics just closed a $200 million oversubscribed and upsized Series A financing round to develop a new kind of cancer cell therapy; cancer therapeutics have accounted for most of the recent funding news. Last month, Garuda Therapeutics received $62 million for blood stem cell therapy.