Investment Banking Update: Notable March Transactions and Cautious Optimism Ahead
By Jonathan Gertler, Kyle Mak, Greg Benning and the Back Bay investment banking team
The life science indices have been on a downtrend this past month, with SVB-precipitated events impacting the greater public and venture markets. Still, our investment banking team sees reason for cautious optimism.
In March, we saw one of the largest deals of 2023 with the announcement of Pfizer’s (NYSE:PFE) acquisition of Seagen (NASDAQ:SGEN) for $43B. This continues the deal activity within the ADC space as the field continues to post impressive clinical results and have unique advantages with respect to market exclusivity.
In the private sector, we continue to see strong participation from investors in large early rounds, with Cargo Therapeutics and Chroma Medicine raising $200M and $135M in their Series A and B rounds, respectively.
Proceeds raised by Cargo Therapeutics will advance their autologous CD22 CAR T-cell therapy candidate, CRG-022, through a pivotal multicenter Phase 2 trial in patients with Large B-cell lymphomas (LBCL)whose disease has relapsed or is refractory to CD19 CAR T-cell therapy.
Chroma Medicine plans to use funds to advance therapeutic programs for epigenetic editing.
A handful of biopharma and medtech companies have outperformed the industry index, given successful data readouts and corporate news, including:
89Bio (NASDAQ:ETNB) finished 1.4% higher on the month after noting on March 22 that its candidate for the treatment of NASH met the main goals of a small mid-stage study.
Enzo Biochem (NYSE:ENZ) shares rose significantly after they announced the sale of their clinical laboratory division to Labcorp (NYSE:LH).
The biotech markets have been impacted considerably, with the Nasdaq Biotechnology Index (NBI) falling close to 7% within 30 days. The result for companies: some may need to hold off on starting clinical trials, delay spending on overhead and hold off on other expenses until financial positions are fully clarified.
While biotech markets continue to show weakness, a major macroeconomic factor that can further impact equities is how the Fed plans to reinstate confidence in the banking sector while tackling inflation. The Fed’s decision to increase rates by 0.25% on March 23 was an expected move, bringing the federal funds rate to between 4.75% and 5%.
Markets reacted the day after the announcement favorably due to Fed Chair Jerome Powell’s hint at this potentially being the last rate hike. However, his nod at continued distress in the banking sector led to some uncertainty. With further potential macroeconomic factors impending, biotech companies may face external pressures which can impact their operating costs and issues regarding access to capital.
See Back Bay’s roundup of deal highlights from March 2023.
Sources: Available upon request
Sources: Yahoo Finance, Press Releases