As biotechs pull resources out of thinner budgets, investors are still being cautious with their investments compared to funding highs seen a few years ago.
Experts deliberated the regulatory and financial factors influencing the current state of oncology clinical trials at the 13th Annual Clinical Trials in Oncology East Coast 2024 conference, being held 9 – 10 July in Burlington, Massachusetts.
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By GlobalDataIn the last few years, to combat increasing inflation, the government increased interest rates, which have held steady in the last few months. This environment in turn has made it difficult for venture capitalists to ensure above market returns, said Sally Wang Liang, Venture Partner at HighLight Capital.
While the venture funding deals were at a high in 2021, such deals have dipped since. Venture capitalists have become more cautious, and the caution of one reverberates within the whole group and “dampens the appetite for investment” as a whole, Liang said. Consequently, companies have taken longer to close financing rounds, with many returning to their syndicate of investors to solicit funds, thereby reducing the capital available for new investments. While agreeing that the funding environment was challenging, Dr. Filip Janku, CMO of Monte Rosa said that ultimately, the strongest candidates—managed properly—will survive irrespective of financial landscapes.
“From the beginning of the last decade, we have gotten addicted to unusually low interest rates; this is not a high interest rate economy compared to before. Though it’s the way it is received,” said Janku.
However Liang finds that the industry is “reawakening” with select IPO windows opening, biotechs entering mergers and acquisition deals, and a small number of companies raising larger financing rounds to secure capital. But in this environment, investors are putting their “eggs into the less risky basket”, which as of now, is not oncology, she added.
Oncology is an area that “waxes and wanes” in popularity; but the hurdle is the sheer volume of oncology companies with sound preclinical data, making it difficult to determine which candidates have the highest chance of success, said Liang.
Janku added that investor action is also highly influenced by industry trends. For example, while current trends point to oncology being on the wane and metabolic disorders on the rise, the inverse was seen in previous years. Investors are ultimately looking for novel candidates, and this leads them away from herd behavior PD-1 inhibitors and GLP-1 agonists, which are no longer groundbreaking, said Liang.
