As the general economy was grinding to a halt, Vertex Pharmaceuticals—which develops treatments for cancer, autoimmune diseases and neurologic disorders—reported a 124 percent increase in net income for the first quarter this year. Trillium Therapeutics, a Canadian biotech firm with preclinical programs and therapies for cancer treatment, posted a 1,830 percent return over the past 12 months. These and other biotech companies have been immune to the COVID-19 pandemic. Case in point, Vertex stated in its quarterly report that COVID-19 did not have an impact on its supply chain for its approved medicines.
An incredible amount of money has been invested in the biotech sector during the past six months. Venture capitalists have poured $15B into biotech since 2019. And the US Department of Health and Human Services, among other things, committed $1B for Johnson & Johnson to co-fund vaccine research, development and clinical testing—and to scale up its vaccine production facilities.
Investing in novel therapeutic diagnostic has tremendous potential. If a company develops a cure for a disease like Alzheimer’s or cancer, which affect a large population, the return on investment can be astronomical.
One of the things fueling this surge in biotech funding is tech companies investing in healthcare. For example, Verily Life Sciences (formerly known as Google Life Sciences) combines engineering innovation, data analytics and clinical expertise. The pairing of biology and software has led to scientific and medical breakthroughs that were not previously possible. With informational systems, genetic sequencing can now be done very accurately and inexpensively. This and many other technologies have made it possible for biotech to generate a tremendous number of promising candidates, attracting billions of dollars in investments.
During the past few months, I’ve seen a fourfold increase in the number of investment opportunities. For example, Amivas—a company that I have recently been in the market with—has gotten a drug approved for an orphan malaria indication. Affinity Bio—a monoclonal drug discovery company in Australia—is working on a promising treatment for COVID-19, which has worldwide implications. And Ocular Sciences, another company I was involved with, has developed therapeutics eye drops. And of course, there is a lot of interest in investing in novel therapeutic diagnostics.
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Biotech’s Future Shines Bright, here.
Seth Yakatan
Known for solutions that yield results, Seth Yakatan has completed or advised on acquisitions and corporate finance transactions totaling over $3 billion. He is the CEO of Katan Associates International—a financial strategy and merchant banking firm that specializes in helping companies achieve commercialization and asset monetization objectives—especially those within life-science and e-commerce sectors. Often acting as an interim CFO, Seth is an author, lecturer, and guest speaker on valuation theory and real-world practices.