Boom-bust cycles in biotechnology are not necessarily destructive to the sector in the long run, reflecting waxing and waning of investor enthusiasm and often periods of irrational exuberance; such boom periods reflect a robust initial public offering (IPO) window, relatively easier access to capital, lofty valuations, and validation by Big Pharma interest; as was evident with the immuno-oncology sector

The last several years reflect a time of immense advancement in drug development, in particular immuno-oncology; arguably, there has not been a time in the history of biotechnology when such a confluence of riches in drug development innovation have made a dramatic difference in medicine, truly improving patient care and exciting investors

The boom in the biotechnology sector over the last four years may be attributed to several factors, including an increasing number of FDA drug approvals through 2015; however, most agree that the progress in immuno-oncology drug development takes the lion’s share of the credit Most of the biotech IPO class of 2013 to 2015 have given back the bulk of their gains and investors are in a bearish mood; the bust cycle allows for a reality check on valuations and purging of assets of less than robust science that should never have been funded at lucrative valuations

Authored by: Rahul Jasuja, PhD, Managing Director, Biotechnology Research and Kumaraguru Raja, PhD, Vice President, Biotechnology Research

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