Barbara Ryan

Barbara Ryan is the founder of Fabulous Pharma Females, a non-profit dedicated to the advancement of women in the biopharmaceutical industry. As a 35-plus-year veteran of the bio pharmaceutical industry, healthcare company Board Member and finance expert and C-suite advisor, she recognizes the power of investing in trusted relationships when it comes to achieving common

Finding the right talent to fill leadership positions is never easy. But when the market is flooded with opportunities and the coveted qualifications are specialized, the task becomes a real issue. This is a current concern for many biotech companies looking to fill chief financial officer (CFO) positions. The recent biotech explosion combined with a desired candidate skill set that includes life sciences and capital markets experience has created a

"When you know it is coming—but it takes forever to get there."
Year to date, the S&P 500 is up an impressive 16% and near an all-time high (as of this writing). Growth continues to underperform. At the furthest end of the risk curve is biotech, with the XBI down about 8.5% on the year, only modestly off this year’s low and down 46% from the all-time highs set in October 2020 and early 2021.

Retail sales, industrial production, and housing starts all came in above consensus expectations for the month of July. According to Michael Darda, chief economist and market strategist at Roth Capital Markets, “[S]trong data is at variance with the FOMC’s intention to impose a restrictive monetary stance and ‘hold there,’ such that growth moves below trend and inflation moves back to target. Any signs that growth is at, or above, trend will be met with tighter monetary policy than would otherwise prevail. We can see this most clearly in the 36-month Fed fund future, where the implied policy rate has risen more than 100 bps since the spring of this year. Market rates have risen in sympathy.”

Biotech continues to significantly underperform the S&P500, which year to date is up 18.2% versus the XBI (up just 2.4%). The broader market recently resumed its upward trend as CPI data was a bit cooler than expected despite continued strong job growth. The debate on the overall market continues to be on the bullish side—a slowdown in rate hikes or plateau combined with the prospects for a soft landing and no recession. The bear case is that the Fed continues to

For the first time since January 2022, the Fed did not raise interest rates at its latest meeting, halting a streak of 10 straight previous hikes and putting at least a pause on the most rapid Fed-induced rise in interest rates in history. That is great news for rate-sensitive biotech stocks

After peaking in early 2021 at more than $140, the biotech XBI index hit a low of about $74 in April 2022 and has bounced around ever since with little overall progress—one step forward followed by one step back. As of May 31, the XBI stands at about $84. This has been the steepest and longest bear market for the index since its inception.

2023 started out with a fair amount of investor optimism that biotech would come out of its steepest and longest bear market since the inception of the XBI index in 2006 and see an acceleration in M&A. The M&A would certainly be fueled by the combination of a high level of innovation; record firepower of $1.4 billion across the largest acquirers, according to EY’s Annual Firepower Report; and looming LOEs on products representing a total of more than $300 billion in revenues, leaving a vacuous growth gap to fill in order to achieve growth targets

The new year started with a fair amount of investor optimism that biotech would come out of its steepest and longest bear market since the inception of the XBI index in 2006. From its peak in early 2021, the XBI fell roughly 57% to a recent low of $63 in June 2022. By early February of this year, the biotech index had climbed its way back to $92, and investors found reasons to be optimistic. Some of those reasons include:

Last month I wrote about some emerging green shoots in the biotech sector, suggesting a potential recovery in 2023 performance following the steepest and longest decline in the sector in its history. These green shoots included data suggesting an easing in inflation—thus, potentially a more dovish Fed and an easing in rate hikes. These were coupled with rising expectations for a recession and ultimately declining rates. If these come to pass, investors would likely have rotated out of value and back into growth stocks, specifically biotech.

Following epic capital inflows and stock market outperformance for the biotech sector in 2020, the XBI index subsequently had its steepest and longest decline from early 2021 through 2022. The XBI underperformed the S&P 500 in each of the past two years; something that has not happened since the inception of the index more than 15 years ago.

It’s Dec. 19, 2022, as I write this, and I can’t help but reflect on the past year. However, this column won’t get published until we are likely in the late innings of the J.P. Morgan Healthcare (JPM) Conference—many of us in person for the first time since January 2020, which is hard to believe.

In January 2020, healthcare industry movers and shakers descended on San Francisco for the 38th Annual J.P. Morgan Healthcare Conference, the definitive Woodstock of healthcare. Who could have imagined that we would not return until January 2023. What will we be talking about?

A near-record number of emerging biotech companies are trading at negative enterprise values and by year end, if nothing changes, nearly 40% will have less than 12 months of cash.This is despite the fact that in 2021, emerging biotechs raised more than $80 billion in follow-on financing, venture funding, and initial public offerings (IPOs), second only to the record amount of $90 billion raised in 2020.

Rising interest rates are the enemy of long-dated assets as they put heavy downward pressure on valuations. As biotech is likely the longest dated of all asset classes, its valuations will run in an inverse direction to interest rates, which can explain part of the longest and steepest decline in the XBI since its inception.

The decline in biotech was in large part driven by the reopening of the economy, as investors fled growth stocks in favor of the now very cheap cyclicals left for dead during the shutdown. This began the correction in the biotech sector.

In our June column, we speculated about whether the XBI biotech index could be close to a bottom following the longest and steepest decline since its inception. On May 11, the XBI traded as low as $62.81, a level it essentially retested one month later on June 14. From its peak in February 2021 to this recent trough, the index has been in decline for 16 months and fallen nearly 62%.

My colleagues at Ernst & Young LLP (EY US) recently published “Beyond Borders: EY biotechnology report 2022,” providing a snapshot of the current state of the industry and its strong fundamentals. I am pleased to share their key findings here.

As we live through the steepest and longest bear market in biotech history, historical precedents offer little value in assessing how much lower we could fall or for how long. According to a recent biotech market update from Tim Opler and team at Torreya, over one-third of biotechs have lost 75% of their value since the market peaked in early 2021, over 200 companies are trading below enterprise value, and two-thirds of biotechs have an enterprise value below $100 million (vs. 36% in November 2021).

The pace of biotech company restructurings has become so brisk that Fierce Biotech is now publishing a Layoff Tracker to keep up. While the XBI (biotech) index is down 45% from its highs in early 2021, that does not begin to tell the story for many earlystage biotechs who went public during the heady capital markets of 2021 and 2020. For many in this class, stock prices are down 80% to 90%, and there are currently over 150 companies in the sector now trading below cash.

Nothing in life is a sure thing. But investing in biotech, and biotech IPOs in 2020 specifically, seemed as close as you could get. In fact, the returns were so consistently outsized, investment managers competing for returns could not afford to not aggressively participate.

Inflation reports continue to worsen. We reached 7.5% year over year in the US in January, the highest level in 40 years. This suggests the Fed will be busy raising rates to a greater extent and for a longer period of time than previously thought.

Fundamentals in the biopharma industry generally are healthy, with the leading companies continuing to report sales and earnings ahead of expectations and raising forward guidance. That said, the sector’s performance continues to lag the market. The large cap pharma DRG index was up a historically very strong 18.7%, largely owing to a 60.4% gain in Pfizer, which of course was fueled by expected sales of $36-plus billion for 2021 and likely another $30 billion in 2022—an unprecedented windfall.

A decade ago, my colleagues at EY (where I am a senior advisor) created the Firepower Index to understand a company’s total capacity to fund deals to achieve their growth goals. EY defines Firepower by the strength of a company’s balance sheet and market capitalization.

Large pharma—and just about everything else, literally—has outperformed biotech in 2021. Yet, investors still poured record sums of money into the sector in the form of new VC, and subsequent dollars backing IPOs, SPACs, and follow-on offerings. 2020 saw a record number of IPOs in biotech, 69 in total, and the class saw an average stock price appreciation of 38%, substantially outperforming the market.

Normally this month, 12,000 participants in the healthcare industry (senior management, bankers, investors, analysts, etc.) converge in San Francisco for the annual J.P. Morgan Healthcare Conference.As was the case with Woodstock, all the “players” are there and they go at it day and night, but not this year

In the month of November, the biotech sector had its biggest run up since the Spring. Perhaps optimism for a COVID-19 vaccine, a shining example of our industry’s innovative prowess and critical importance of its contributions. In the last 25 years, there have been seven novel vaccines developed; four of these came from Merck

Who would have predicted back in early March as we went into a COVID-induced lockdown, that the biopharma sector would see a fierce record streak of financings?

The special purpose acquisition company (SPAC), or “blank-check company,” originally introduced decades ago as a cleaner form of a reverse merger shell, has made an impressive comeback. A SPAC has one purpose: to merge with a company and take it public (“de-SPAC”). Typically, when a biotech company does an IPO, it raises cash to fund the development of its assets.

Impressively, about 90% of them were upsize, with an average increase in the number of shares issued of around 30%, and 85% of these deals priced at the high end or above the range. The average return for biotech IPOs year to date exceeds 80%. Since money truly does chase returns, it is not surprising that the sector has generated the largest levels of oversubscription.

It’s hard to imagine legislation enacting any of the measures by Nov. 7; the executive orders are likely only symbolic as they are notoriously limited, can be challenged in court, and include no details on implementation or timing. Nevertheless, the effort and rhetoric are worthy of inspection.

As COVID-19 takes the global healthcare ecosystem hostage, biopharma companies, healthcare providers (HCPs), and patients have been forced into new models of accessing care. Brick and mortar visits are being supplemented by digital tactics and a reluctance to adopt telemedicine has been replaced by the necessity to do so

Over the past month, and year to date, biotech stocks have massively outperformed the markets, financings are on a tear, money continues to pour into the space, and M&A is alive and well. The Nasdaq Biotech ETF is currently trading above its late 2019 and early

When I discussed writing a monthly finance column for Pharmaceutical Executive with Editorial Director Lisa Henderson a few months ago, I never imagined that my first installment would focus on a once-in-a-100-year storm. COVID-19 dominates all things around the globe, including normally recession-resilient biotech.