医疗保健行业投资和退出：2023年年中更新.pdf

Mid-Year 2023 UpdateBiopharma|Healthtech|Dx/Tools|DeviceHEALTHCARE INVESTMENTS AND EXITS|MID-YEAR 2023 UPDATE2We are pleased to bring you the Healthcare Investments and Exits Mid-Year 2023 Update,a comprehensive analysis of the trends,opportunities and challenges in todays healthcare innovation market.We began 2023 with a cautious outlook,and theres no disputing that the first half of the year has been difficult for stakeholders across the innovation economy.However,a lot has changed since the start of the year.Public markets show early signs of improvement,inflation is decelerating,interest rates may be near their apex and the general pullback in investment has stabilized.Still,the current investment environment presents ongoing challenges,marked by fewer deals,slower investment pace and pressured valuations.The time has likely come for companies previously avoiding down rounds through insider extensions to seriously consider valuation resets.Companies also face more investor scrutiny and are working against heightened demand for clinical milestones(page 9)and paths to profitability.Despite these challenges,there are reasons for optimism.We see signs of growth at the early stage where investment has been buoyed by strong interest from investors(page 11).There are promising bright spots in investment,such as womens health expanding into platform,menopause and mental healthcare(page 18),genomic diagnostics solutions(page 12),and devices with robust digital platforms that increase the efficiency of provider care teams(page 13).The new investment environment has reset valuations to match sustainable growth and profitability targets in 2023.This adjustment,while painful for many,will lead to a more sustainable future.Venture fundraising has rebounded since its dip in H222,and ample capital remains for right-sized investment into the healthcare innovation economy.While the near-term outlook appears uncharted,our belief in the resilience of the innovation economy remains unwavering.Kale FrankManaging Director,Biopharma,Dx/Tools,Silicon Valley BankJackie SpencerHead of Relationship Management for Life Science and Healthcare Banking,Silicon Valley BankRaysa BousleimanSenior Associate,Healthcare Insights,Silicon Valley BankDiamonds formed under pressureHEALTHCARE INVESTMENTS AND EXITS|MID-YEAR 2023 UPDATE3Healthcare market highlightsHealthcare fundraising and investmentsSector to watch:womens healthHealthcare M&A and IPO activityAuthorsGlossary4New private investment landscape marked by valuation corrections,slower investment pace and smaller check sizes;IPO window largely closed but acquirers active on selective basis in H123FundraisingFundraising rebounded after a relatively slow H222,hitting$6.8B in Q123 and$6.9B in Q223.This uptick is driven by expectations for lowering Federal Reserve interest rates,a resetting of valuations and very early signs of a rebounding stock market(mostly in the tech and healthtech sectors).The IPO window remains largely closed,tying up limited partner(LP)capital in late-stage companies and limiting return distributions.Consequently,more investors slowed late-stage fundraising.Seventy funds closed in H123,signaling that overall interest in healthcare investment remains strong.There is still an unprecedented amount of healthcare-dedicated venture capital(VC)to be deployed to top companies at rational,investor-driven valuations.BiopharmaEarly-stage investment jumped this year but at massively reset valuations.Focus is increasingly on companies led by veteran management teams with in-human proof-of-concept/proven modalities with compelling stories at“2023 market prices”and realistic exit prospects that do not rely upon the IPO window opening in the next 12-18 months.At the later stage,pre-IPO rounds hit single-digit pace per quarter as investors are more selective and public markets performance by biotechs remains mixed but largely negative.Promisingly,2023-vintage biopharma IPOs are performing well with six of eight trading in positive territory.The IPO window shows early signs of opening,with three biopharma IPOs priced in July 2023 raising$465M combined.HealthtechInvestment kicked off relatively strong in Q1,especially for seed/Series A companies.However,dollars slowed significantly from Q1 to Q223.Seed/Series A investment slowed 63%,and overall investment slowed 39%.We are on track to hit 2019 investment paces if this investment pace continues into H223.At the later stages,we are seeing fewer mega-deals,with median check sizes dropping substantially.The market downturn has put pressure on companies to add value in critical places where reimbursement is attainable in the near-term.It has also put pressure on D2C models to turn to enterprise to scale.Demand for proven value-based care models and chronic condition management remains high.The public markets remain closed,with zero IPOs in H123.Private M&A activity remains strong,but acquisition prices are down as acquirers struggle with valuation disconnect at the later stage.We anticipate that healthtech companies will continue to delay IPO plans until at least late 2023.InvestmentsAfter a major drop in 2022,investment dollars and pace have remained relatively flat for the last three quarters,signaling the dawn of a new market cycle marked by corrected valuations(focused on fundamentals like clinical assets and paths to cash flow operations),smaller check sizes and more concentrated cohorts of investors.There is a major increase in insider-led bridge rounds as companies continue to face difficulty attracting new investors and avoid“valuation haircuts”that come with bringing in new capital.Anecdotal evidence indicates that a wave of down rounds and“structured”term sheets have come to market alongside continued cost-saving measures.While this shift has been a painful reset,the market right-sizing can lead to a more sustainable future.Ample capital remains for right-sized investment into the healthcare innovation economyalbeit on a more diligent basis.Dx/ToolsInvestment in H123 matched that of H222 for Series A and late-stage investments,driven mostly by Q123 activity.There were zero IPOs in H123,marking the first year since 2018 with no IPOs in the first half.Public markets remain closed for new entrants,and all indictors point toward a higher bar for IPO hopefuls,both in terms of revenue run rate and ability to generate cash flow.Investors are driving a rotation in strategy:trading high-cost revenue growth for line of sight to cash-flow positive operations.We expect IPOs to continue to be muted in 2023 as the market watches for a rebound in performance for 2020 and 2021 IPO cohorts(33 of 38 are trading negatively).Private companies with unicorn valuations will likely need to wait until 2024 for big M&A exits.DeviceInvestment in H123 is down 8%from H222,but early-stage investment is up 44%and remains a bright spot for investment activity.There are fewer$100M+deals in 2023 as many top companies raised rounds in 2022,and it is uncertain how many later-stage opportunistic device investors will continue to be active.Device companies are hit hard by supply-chain issues and the decline in elective procedures.Companies are working to enable profitable long-term growth while achieving necessary near-term cost savings.Weve seen more investment dollars poured into remote monitoring,at-home care and early detection as demand to reduce medical costs and keep patients out of high-cost,acute-care settings grows.The IPO window remains largely closed,with two China-based IPOs in H123 but zero US-based IPOs.M&A remains muted,but we continue to see spinouts from big device players like Medtronic,which creates more acquirers down the road.HEALTHCARE INVESTMENTS AND EXITS|MID-YEAR 2023 UPDATESource:PitchBook,S&P Capital IQ and SVB proprietary data.US,EU and UK5HEALTHCARE INVESTMENTS AND EXITS|MID-YEAR 2023 UPDATEUS Healthcare Venture Capital Fundraising12012-H1 2023Notable Funds with Allocations to Healthcare3Notes:1)US Healthcare Venture Capital Fundraising defined as an approximation of healthcare investment dollars to be invested by firms that historically invest in+50%US companies.2)Estimates based on anecdotal conversations with investors and expert analysis of last fund deal pace and focus on healthtech.3)Notable funds based on largest estimated allocation to venture healthcare.Source:PitchBook and SVB proprietary data.All non-SVB named companies are independent third parties and are not affiliated with Silicon Valley Bank,a division of First-Citizens Bank&Trust Company.62After a relatively slow H222,investor fundraising accelerated to$6.8B in Q123 and held steady at$6.9B in Q223If this pace were maintained,2023s life-science-focused fundraising would near 2021s record pace.This uptick comes amid expectations for a more dovish Fed(with a pause at the June meeting),a near wholesale resetting of valuation expectations in the private market,and early signs of a rebounding stock market.Savvy investors know these conditions bring opportunity.However,2021 saw debuts by opportunity funds and new managers,whereas 2023 activity is largely focused on veteran managers.As this cadre finishes building capital,the pace of fundraising could slow if emerging fund managers cant win LPs confidence.The IPO window is still largely closed,public valuations are under pressure and late-stage investors are focused on shoring up existing investments and bargain shopping public names.Consequently,capital remains tied up in mid-and late-stage private companies with uncertain exit opportunities.The biggest change weve seen is increased willingness by both founders and investors to“find a deal”to move assets forward.This unsticking should drive increased activity and opportunities for all parties.VCs remain well-positioned to fund new healthcare companies with more than$35B raised in the last 18 months.$3.6B$3.9B$6.1B$7.5B$7.2B$9.1B$9.6B$10.7B$16.8B$28.3B$21.8B$13.7B201220132014201520162017201820192020202120221H 2023Mid-Year 2023HEALTHCARE INVESTMENTS AND EXITS|MID-YEAR 2023 UPDATEH1 20232453483552534715779740747854747596558764668$0$5B$10B$15B$20B$25BQ120Q220Q320Q420Q121Q221Q321Q421Q122Q222Q322Q422Q123Q223VC Dollars and Deals by Healthcare SectorsUS,EU&UK202020212022H1 2023Sectors($M)USEU&UKTotalUSEU&UKTotalUSEU&UKTotalUSEU&UKTotalBiopharma22,5324,79527,32731,6306,94638,57624,9604,78729,7478,3381,96010,298Healthtech111,7701,60513,37433,1332,88136,01413,2933,86117,1545,0215885,609Dx/Tools9,1281,75510,88311,9882,71314,7017,9681,5829,5501,9248782,801Device5,7648506,6156,7942,3839,1766,7981,5498,3472,3809123,293Total49,1979,04058,23783,58114,92798,50853,04311,78364,82617,6915,08822,779In 2022,the public markets dramatic pullback and federal interest rate hikes caused sharp drops in investment dollars from 2021s historic highs.Hinting at a bottom,quarter-over-quarter(QoQ)investment has been relatively flat the last three quarters.Perhaps investors have found an“idling speed”as they evaluate portfolios and market conditions.One nuance to this period:down rounds are more prevalent than ever,but many go unreported.Its possible this translates into additional investment activity not captured here,albeit“painful”activity for stakeholders.The S&P Biotech Index ended H123 flat but is up 15%since late March.Public market momentum is driven by better alignment between market expectations and Fed interest rate projections,a bloom in M&A activity(e.g.,Seagen,DICE,Chinook),and a number of noteworthy data readouts.This has bred optimism and a trickle of IPOs,but more needs to happen before markets are deemed healthy.Mainly,investors and Boards aligning on terms to drive research forward,later-stage investors working through a backlog of companies theyd expected to be public by now or are public but trading at bargain prices,and reckoning with a large supply of companies needing additional private rounds.We believe were firmly in a new phase defined by focus on valuation and“fundamentals”like clinical assets and paths to cash flow operations.While a painful reset,the spring is loaded with ample capital and a golden age of science.7Note:1)Healthtech deals that overlap with other sectors are not included in healthtech totals on this slide but are included in healthtech-specific analyses on page 11.Financing data include private financings by venture-backed companies in the US,EU and UK.Dates of financing rounds are subject to change based on add-on investments.Source:PitchBook and SVB proprietary data.HEALTHCARE INVESTMENTS AND EXITS|MID-YEAR 2023 UPDATEMid-Year 2023Overall4644353430292929Dx/Tools66666655Deal count(2022-H1 2023)Biopharma21181512111099Note:1)Most active new investors calculated as new(first-time)investments in US,EU and UK companies from 2022-2023.Dates of financing rounds subject to change based on add-on investments.Additional investors not listed due to space limitations.Source:PitchBook,conversations with investors and SVB proprietary data.All non-SVB named companies are independent third parties and are not affiliated with Silicon Valley Bank,a division of First-Citizens Bank&Trust Company.8Healthtech3226212016161111Device97665544HEALTHCARE INVESTMENTS AND EXITS|MID-YEAR 2023 UPDATEMid-Year 2023$1.2B$1.3B$1.9B$1.9B$2.2B$1.5B$901M$1.4B$2.2B$2.2B$3.0B$1.9B$874M$1.6BH1 2020H2 2020H1 2021H2 2021H1 2022H2 2022H1 2023Seed/Series A1Dollars and(Deals)Note:1)Seed/Series A includes first-time investments from institutional or corporate venture investment in the US,EU and UK and any first-round investments equal to or greater than$2M,regardless of investor.Dates of financing rounds are subject to change based on add-on investments.Source:PitchBook and SVB proprietary data.All non-SVB named companies are independent third parties and are not affiliated with Silicon Valley Bank,a division of First-Citizens Bank&Trust Company.Seed/Series A Dollars and Deals by Top IndicationsMedian Seed/Series A Valuations20212022H1 2023Indications Dollars($)DealsDollars($)DealsDollars($)DealsPlatform3.4B972.2B81964M32Oncology1.6B771.8B76507M48Ophthalmology194M9202M9289M3Neurology1.7B56294M24270M10Cardiovascular62M666M9148M3Auto-Immune355M11479M14148M4Orphan/Rare379M16141M659M2Largest H1 2023 Seed/Series A DealsHEALTHCARE INVESTMENTS AND EXITS|MID-YEAR 2023 UPDATE9$12M$17M$17M$12M$12M$12M$12M$8M202020212022H1 2023Early-stage investment jumped in Q223 but at massively reset valuations.The pace of investment was nearly equal to the prior two quarters combined,but valuations during Q2 brought median Series A pre-money valuation down from$16M during Q1 to$11M for Q223.One quarter is not a trend,but these data reinforce market anecdotes that Series A deal activity revolves around:(i)top-tier profiles with a mixture of veteran management teams,in-human data,proven modalities,de-risked targets,or(ii)compelling stories at a“2023 market price.”The large Series A deals are rarer but drive total investment dollars(e.g.Orbita