Nordic Life Science 1
FINANCING // GLOBAL REPORT “Before we start the p
arade, let's recognize that life sciences cannot self-fund itself and the cost of capital is still relatively high. Many companies survived through this brutal couple of years by cutting down on human capital and it slowed down their R&D. Also, companies still trade at low levels. Looking at a two-year horizon, I foresee a strong growth curve.” T HE RECENT YEARS HAVE BEEN a bit of a roller-coaster for the life science industry´s confidence. Being at the epicenter of a global pandemic led us to collectively believe that the attention would last forever. Or at least longer than one year after nailing one of the biggest achievements in the history of mankind. In retrospect, it appears that many forecasts of life science companies were built upon that assumption, that money would continue to be cheap and business flowing. Then, the economic and political landscape changed our scenery completely. For those entering 2023 with budgets based off the pandemic years, the drop was significant. Some did not survive the fall. Some had to cut down drastically on staff to get on top of burn rates, desperately trying to make it to the next inflection point. Some came out stronger. So where are we now? For how long can investors sit on their fingers and where will the capital go, once released? And how are the Nordics doing relatively speaking? These were some of the topics covered during a 2-day conference in NYC right at the turn of the year, arranged by DNB// Back Bay, who recently joined together in a partnership. Two months into the New Year, we got back to the panelists of the December-event and had them look into the crystal ball of 2024 once again. The US-Nordic Banker Interview with James Cirenza, Managing Director, DNB. What do you expect from the 1-2 years to come? “Coming from the extreme year of 2021, with accessibility to capital being at a record high, the life science industry faced a brutal drop in 2022 that lasted until end of 2023. The start of 2024 equity issuance is far ahead of last year. Before we start the parade, let's recognize that life sciences cannot self-fund itself and the cost of capital is still relatively high. Many companies survived through this brutal couple of years by cutting down on human capital and it slowed down their R&D. Also, companies still trade at low levels. Looking at a two-year horizon, I foresee a strong growth curve.” Comparing US/Nordic countries during this roller coaster, what differences have you spotted? “The ups and downs were probably a bit more extreme in the US. There is a resilience in the Nordic financial landscape. On the other hand, for overseas SMEs that wanted to come into the US market, the last two years did not fit. These companies suffered. But when it comes to investing in the Nordics, it is important to assess the market from a long-term perspective. It has certainly paid off.” So why are we not seeing more US investors being all over this sweet spot? “If we exclude Novo Nordisk, the Nordics is a tiny little sector of mainly SMEs. For someone who was born yesterday, it would not appear as so much. But if you look over the course of 2-3 decades, what the Nordics has delivered in terms of high-quality R&D turned into companies traded at good levels is impressive. There is no other part of the world that can match this output." The Healthcare Investment Bankers and Strategic Advisors Interview with Vasilios Kofitsas, Managing Director, Investment Banking, Jonathan Gertler, CEO, and Jocelyn Miller, Chief Communications Officer, Back Bay Life Science Advisors. Coming out from a couple of tough years, how will that impact on investors’ willingness to come back to this sector? Jonathan: “The life science world is always about risk capital. I am of the optimistic nature that development stage assets that have true merit usually find a home – this means, unmet need solutions, compelling scientific and technology underpinning. After downturns, the initial investors may be less rewarded for their faith although structures that allow NORDICLIFESCIENCE.ORG | 57