Strategic Insights for Biopharma Innovation

Comprehensive Market Analysis on Biopharma Funding, Mergers and Emerging Therapeutics. Beacon is the essential decision-support tool for developers of complex therapeutics. Our market-defining, proprietary ontologies combined with the most accurate and comprehensive life sciences data, provide our customers with unparalleled visibility of the drug, trial and commercial landscape. With Beacon, you can make drug development decisions with confidence. This is why 23 out of the world’s top 25 drug developers trust us. Beacon Q1 – Q3 2024: Strategic Insights for Biopharma Innovation beacon-intelligence.com 2 beacon-intelligence.com Beacon Q1 – Q3 2024: Strategic Insights for Biopharma Innovation From the start of 2024 through the end of Q3, our research teams added over 850 new deals across all Beacon modules. The Immune Tolerance module saw the highest level of activity, leading in both new company launches and announced deals. Additionally, bi- and multispecific drug development remains a dynamic area, with a deal number that has reached 70% of 2023’s full-year total, considerably higher than most other fields. Q1-Q3 2024: Beacon Overview New Deals Added Number of Deals 0 600 400 500 300 150 50 550 350 200 100 450 250 Immune Tolerance Bispecific RNA Gene Therapy ADC TPD Cytokine Cell OV Therapy Cancer Vaccine Microbiome DDR Checkpoint FY2023 Q1-Q3 2024 Percentage indicates deal number compared to FY2023 56% 32% 43% 45% 65% 42% 45% 53% 70% 61% 58% 48% 58% 3 Beacon Q1 – Q3 2024: Strategic Insights for Biopharma Innovation beacon-intelligence.com In line with a cautious financial environment and increasingly strict regulations, most modules have seen deal numbers for the first three quarters of 2024 fall to less than half of the total recorded in 2023. However, certain areas, such as autoimmune-targeting drugs, bispecifics, cytokine therapies, RNA-based treatments, and TPD drug development, appear to be less impacted by these pressures. This report will reflect on some of the financing, M&A, and licensing activity added to Beacon so far this year. Keeping a close eye on these trends is crucial for identifying opportunities and remaining competitive as we approach the year’s end. Throughout 2024, the number of financing rounds added to Beacon has consistently trailed behind the same periods in 2023, highlighting the ongoing challenges in securing funding. Despite this, 25% of the announced rounds this year have exceeded $100 million in value, up from 16% in 2023. The average round size in 2024 so far has also increased to $63.1 million across 133 rounds, compared to $56.4 million across 270 rounds last year. The highest total funding, both in 2023 and the first three quarters of 2024, was achieved by companies developing autoimmune therapies, followed by those with ADC, cell therapy, and RNA pipelines. Funding: Fewer Rounds, Higher Average Value Funding Rounds by Value Q1 2023 – Q3 2024 Number of Funding Rounds Added to Beacon Funding Total (million USD) 0 $- 90 $6,000 50 70 30 $3,000 $1,000 80 40 10 $4,000 $2,000 60 20 $5,000 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Undisclosed ≤$50m $50m-$99m $100m+ Funding Total Q3 2024: Highest Value Round: Arsenal Bio $325m Series C Highest Series A: Third Arc Bio $165m 4 beacon-intelligence.com Beacon Q1 – Q3 2024: Strategic Insights for Biopharma Innovation Q1-Q3 2024 Funding Type Biggest IPOs 2024: Company HQ Total Number of Funding Rounds Added to Beacon Number of Seed/Series A Rounds Added to Beacon North America 82 48 Asia 34 23 Europe 16 9 Series A funding represents 35% (46 rounds) of the financing announced since the start of 2024. The highest proportion of this capital has been directed toward companies developing therapies for immunemediated diseases, with the largest Series A round of the year raised by Third Arc Bio, following its launch with an autoimmune antibody. Companies focused on ADCs, bispecifics, checkpoint inhibitors, and cytokine therapies have seen the highest average funding per round, signaling a renewed interest from early-stage investors in innovative biologics, and possibly away from new advanced therapy ventures. 2024 IPOs: Level with Last Year Angel .................................1% Pre-seed............................2% Seed ................................27% Series A ...........................34% Series B ...........................22% Series C ........................... 11% Series D .............................2% Series E..............................1% $380m CG Oncology $366m Kyverna Therapeutics $362m Bicara Therapeutics Additional 6 public listings via reverse merger Number of IPOs Added to Beacon 0 24 12 16 18 8 2 20 22 10 4 14 6 2023 2024 Q4 5 IPOs 5 beacon-intelligence.com Beacon Q1 – Q3 2024: Strategic Insights for Biopharma Innovation Q1-Q3 2024 US IPOs Added to Beacon Number of Funding Rounds Added to Beacon 0 $450 $400 $200 $300 $100 $350 $150 $250 $50 Jan Feb Mar Apr May Jun Jul Aug Sep CGON $380m KYTX $367m MGX $94m AVBP $201m GUTS $100m BOLD $100m CTNM $108m ALMS $193m ARTV $167m ZBIO $259m UPB $255m OSTX (NYSEAMERICAN) $6m KAPA (NYSEAMERICAN) $6m BCAX $362m Tightening private capital led to a resurgence of biopharma IPOs at the beginning of 2024 compared to the low numbers seen in 2023 and 2022. This has also led to an increase in the number of companies accessing the public markets without a traditional IPO, including a direct listing by FibroX and several reverse mergers. Although this activity slowed over the summer, interest rate cuts led to a second wave of public listings seen in the third quarter, including upsized offerings from Bicara Therapautics, Zenas Biopharma, and Upstream Bio. While preclinical IPOs remain few in number compared to previous years, leading to companies relying on private funding for longer to progress to later development stages, if this improvement in IPO activity is sustained, it will provide more exit opportunities for VC and PE investors and could bode well for an increased availability of private investment. 6 beacon-intelligence.com Beacon Q1 – Q3 2024: Strategic Insights for Biopharma Innovation M&As: Bispecifics Lead in Deal Numbers & Upfront Payments 80% of the companies on Beacon acquired in 2024 are in clinical drug development stages, up on previous years, indicating that acquirers are prioritizing de-risking their investments by targeting developers with validated assets and a clearer path toward regulatory approval. Looking at modality, bispecifics have been the target of the highest number of company acquisitions so far this year, with upfront payments totalling $19.5bn dollars, far higher than any other modality tracked on Beacon. This is potentially driven by expanding therapeutic applications for these assets; while oncology remains the focus in the drug conjugate space, bispecifics are being increasingly investigated for autoimmune conditions. J&J have obtained two bispecifics targeting atopic dermatitis through the acquisitions of Proteologix and Numab’s Yellow Jersey Therapeutics. Similarly, Vertex acquired Alpine Immune Sciences to add the lead asset targeting IgA nephropathy to their pipeline. M&A activity in the cell, gene, and RNA therapy sectors has been slower, likely due to the significant investment needed to overcome complex drug delivery and manufacturing challenges. Companies in these fields may take longer to attract M&A interest as they work to de-risk their pipelines and scale up production capabilities, especially given that acquiring companies are increasingly favouring clinical-stage developers. 7 Beacon Q1 – Q3 2024: Strategic Insights for Biopharma Innovation beacon-intelligence.com M&As: Mid-Size Clinical Developers in Oncology and Immunology Draw M&A Attention Acquired Companies Q1-Q3 2024 by Headcount 2024 Top Acquirers Among Companies on Beacon Number of Acquisitions Acquired Company Headcount 0 22 14 18 10 20 12 6 2 16 8 4 1-10 11-50 51-200 201-500 501-1,000 1,001-5,000 10,000+ Undisclosed Headcounts of acquired companies indicate mid-size, clinical acquisitions remain most popular across all modalities. Clinical Preclinical Acquirer Number of Beacon-relevant Companies Acquired Companies Acquired Novartis Pharmaceuticals 4 Mariana Oncology MorphoSys Calypso Biotech SanReno Therapeutics Johnson & Johnson 3 Yellow Jersey Therapeutics Proteologix Ambrx Merck & Co 2 Eyebiotech Harpoon Therapeutics Abbvie 2 Celsius Therapeutics Landos Biopharma Amongst big pharma, there are four companies approaching patent cliffs that have acquired more than one company tracked on Beacon this year, Novartis is leading with four companies, acquiring candidates for both oncology and autoimmune disease. 8 beacon-intelligence.com Beacon Q1 – Q3 2024: Strategic Insights for Biopharma Innovation Licensing: RNA Therapies Lead 2024 Licensing Deals with Non-Oncology Focus Q1-Q3 2024 Licensing Deal Number & Upfront Payments by Modality Bi/Multispecific Naked Antibody Fusion Protein Antibody Cell Therapy Small Molecule RNA Therapy ADC/Drug Conjugate Gene Therapy Protein Degrader Cytokine Therapy Sum of Upfront Payments (million USD) Number of Licensing Deals $- 0 $1,000 35 25 15 $700 $300 $500 $100 20 5 $800 $400 $600 $200 30 10 $900 Sum of Upfront Payments (USD) Number of Deals $941m $131m $130m $115m $185m $328m $318m $441m $426m $425m Note: the following analyses exclude data from the Immune Tolerance module Note: small molecule refers to other classes of small molecules tracked on Beacon, excluding degraders The highest number of licensing deals signed so far in 2024 were for RNA and gene therapies in non-oncology indications. Upfront payments for RNA therapies have outpaced those for other modalities, driven in part by GSK’s restructured collaboration with CureVac to develop RNA vaccines for infectious diseases, which included a substantial €400 million upfront payment. Momentum in RNA therapies for cardiovascular conditions also continues, highlighted by Novartis’ $185 million upfront payment for siRNA candidates from Argo Biopharma. 9 beacon-intelligence.com Beacon Q1 – Q3 2024: Strategic Insights for Biopharma Innovation Licensing: U.S. Leads in Programs, Europe Tops Upfront Payments Advanced Therapeutics Biologicals $1.5bn Upfront $1.0bn Upfront $105m Upfront Number of Programs In-Licensed Number of Programs In-Licensed Number of Programs Out-Licensed Number of Programs Out-Licensed 0 0 35 35 30 30 10 10 20 20 25 25 5 5 15 15 0 10 20 30 40 50 60 0 5 10 15 20 25 30 Note: the following analyses exclude data from the Immune Tolerance module Europe North America Asia Europe North America Asia The comparisons here highlight differences in the licensing landscape for biologicals and advanced therapies. North America, particularly the United States, leads in both in-licensing and out-licensing programs across all modalities tracked by Beacon. However, Europe has made the largest upfront financial commitments for deals signed in 2024. When examining the origin of out-licensed programs, the U.S. dominance is especially pronounced in advanced therapies, while Europe and Asia are more evenly matched. In contrast, the biologicals sector shows a more diverse distribution of licensed assets, with Chinese biotech companies owning a significant portion of out-licensed assets. Note: advanced therapeutics and biologicals refers only to modalities of these types tracked on Beacon Beacon Q1 – Q3 2024: Strategic Insights for Biopharma Innovation Summary and 2025 Outlook Licensing deals have been more frequent in cell, gene, and RNA therapies, where high production and delivery costs make cost-sharing through licensing a preferred strategy. This approach could continue as a way of spreading risk in such capital-intensive fields until scalability and delivery challenges are solved. Companies across all landscapes that rely solely on private investment sources will likely continue to seek innovative funding solutions for their drug development efforts. While investors remain cautious, anticipated interest rate cuts by the Federal Reserve may lead to an increase in companies opting for debt financing. Additionally, recent successful IPOs and other pathways to the public markets could provide private investors with a reassuring exit strategy, ultimately enhancing the landscape for private equity financing. M&A activity has continued at a steady pace, despite economic and regulatory headwinds, with most deals inked and most upfront cash relating to the acquisition of next-generation biologicals. We can expect this upward trend of clinical acquisitions to continue into 2025 given the number of large pharma with upcoming patent cliffs and a need for pipeline replenishment. This document as been prepared by our Senior Researcher Aysha Saeed. Copyright: Hanson Wade 2024 This report has been created through considerable effort by Hanson Wade’s Beacon Deals and Companies research team. Unauthorized copying and/or distribution of this document constitutes copyright infringement. All rights reserved. With these trends showing a move towards requiring stronger validation and diligence for investments than ever before & funding less diluted in 2024, it has become more imperative than ever to have a comprehensive overview of both the commercial & scientific landscapes you operate in. Higher levels of diligence and landscape complexity have led to more and more decision makers involved with biopharma drug development turning to Beacon data to ensure no stone is left unturned when ensuring pipeline is differentiated and well benchmarked against the field and any deals have been scrutinised in the context of the evolving landscape. Beacon gives you complete visibility every piece of data released in key landscapes, from preclinical development to regulatory approval, to commercial deals and company profiles from around the world with market leading search ontologies & data curation to cut through the noise & bring confidence to your commercial strategy. Contact us to book a bespoke demonstration, or visit the Beacon website to learn how we can support your drug development and market intelligence needs.