Charles Baltic Morning Keynote: The Current Financial State of the Life Sciences (July 10, 2013)
*View the Slide Deck Here
Charles Baltic, Managing Director and Co-Head of Healthcare at Needham & Company in New York, delivered the morning keynote address at the Life Science Innovation Northwest conference on July 10. Baltic kindly stepped up at the last minute to replace the scheduled speaker, John Crowley, who was forced to cancel due to a family medical emergency.
In thirty information-packed minutes, Baltic gave his audience an overview of the financial state of the life sciences industry. According to Baltic, the news is good: the life sciences market, after being hit hard by the recession, is in the middle of a significant upward trend. More money is being invested; valuations are returning to normal; volatility is declining to historically low levels; and investors in the life sciences are becoming ever more sophisticated about their investment options.
Baltic highlighted that the biopharmaceutical sector is outperforming the stock market as a whole. One indicator of a resurgent life sciences market is the increase in the number of biotech companies filing IPOs (initial public offerings). As of July this year, there were 14 such IPOs—still below historic highs, but a notable improvement over recent years’ numbers. Furthermore, the pricing of IPO shares has risen in the last few years, reflecting renewed interest from current investors. At the same time, higher prices encourage new investment as investors realize the life sciences industry is again a sector to watch. So-called “follow-on,” or post-IPO investing, is also making a strong recovery from the worst of the recession.
Another welcome sign is that venture capital firms are investing more heavily in life sciences startups. At the time of Baltic’s comments, venture capital had risen to 24% of total financing, versus 17% in 2012 and 11% in 2011. Meanwhile, the FDA approved more licenses and products in 2012 than at any time since 2004, spurring growth and creating exciting new opportunities for investment.
By the end of Baltic’s remarks it may have been difficult for the audience to recall specific data points, but the larger message was clear: the life sciences industry is healthier than it’s been in years, and the time to invest is now.