Oct 12, 2023 - Economy

Biotech venture capitalist says bad industry outlook will continue

Photo: Steven Duarte/Axios

Unproductive investments a few years back led to the biotechnology sector's current bleak capital market, Stephen Berenson, managing partner at Flagship Pioneering, told Dan Primack at Axios BFD Thursday.

The big picture: A string of late-stage trial failures around 2021 contributed to the public market's current skepticism of biotech, he said. And that poor market outlook is likely to continue for a while.

Context: The IPO market for biotech fell 93% in 2022 from the year prior, according to EY.

What he said: "Companies are going to run out of money unless they're able to prove their value propositions to some constituency, whether it's investors, pharma, merger partners, you name it," said Berenson, a board member for Moderna.

Yes, but: Biotech companies can't let failures stop them from innovating, he said.

  • When a company fails a trial "you have to grieve for a couple of minutes. But if you're grieving for much longer, you're not doing your job," Berenson said.
  • "The way you construct your companies — it can be done in a way where you are exposed to binary outcomes, 0r you have a platform which creates many opportunities actually to win," he added.

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