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1、Published Jan.17,2024Jackie SpencerHead of Relationship Management for Life Science and Healthcare BIts been six months since we brought you our Mid-Year Healthcare Investments and Exits 2023report,and I wish I could say that much has changed since then that investments have roared back,valuations a
2、re soaring and the IPO window has lifted wide open.Unfortunately,were not there yet.What has emerged is a clearer picture of where were headed.Strategies that took shape months ago are now showing up in the data,as investors who once favored later stage deals have decisively pivoted toward earlier d
3、eals.The result has meant smaller checks spread to a growing number of companies at right-sized valuations.While VC investment in healthcare has settled near half its 2021 peak,deal counts have rebounded in recent months and are approaching their prior pace.If investors were ever sitting on their ha
4、nds waiting for clarity,that time is over.VCs are back to work.Their investments are creating green shoots of optimism across the spectrum of healthcare innovation.Promising companies are being funded at rates that approach or even exceed historic norms,and the advent of generative AI technology off
5、ers immense possibility for innovative healthcare founders.But the challenges of the current market remain significant.A generation of late-stage companies that took high valuations at the peak of the VC boom now face an uncertain future.Dozens or even hundreds of IPO-readycompanies have limited fun
6、ding options outside of a public exit.For these companies,a public market turnaround couldnt come soon enough.Life science companies are less affected by the slower market if they have strong clinical results.Biopharma companies with favorable clinical trials are finding plenty of interest among inv
7、estors and achieving strong step-up valuations.The stickiness weve seen in biopharma reflects the longer term perspective many life science investors take.Fewer tourist investors enter this arena,and the LPs that invest in healthcare tend to be more immune to market whims.That reality is helping to
8、bolster fundraising.While tech-focused VC investors are struggling to raise new funds,healthcare investors have fared well.US investors raised$19B in new health-specific funds in 2023,the third highest year on record.Growth in promising areas such as womens health,AI-enabled diagnostics,drug discove
9、ry and personalized medicine are reasons for immense optimism in healthcare innovation.As we look to the year ahead,we understand that many companies will continue to face challenges.The reset now washing through the industry will take its toll.But if this process creates a reality more grounded in
10、fundamentals,where positive and sustainable outcomes are possible for more companies in the long-run,then maybe it was worth it.After all,theres nothing more irrepressible than the power of a good idea.HEALTHCARE INVESTMENTS AND EXITS ANNUAL REPORT 2023204Healthcare Market Highlights07Fundraising an
11、d Investment13Investment by Sector18Spotlight:AI in Healthcare21Healthcare Exits:M&A and IPO TrendsHEALTHCARE INVESTMENTS AND EXITS ANNUAL REPORT 202334HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023Note:Quotes gathered from remarks at the JPM Healthcare Conference Jan 8-11,2024.They were lightly ed
12、ited for clarity.Source:JPM Healthcare Conference and SVB research.Good clinical data are always important for creating momentum.”Alessandro MaselliPresident&CEO,CatalentYou have to navigate a 3D space if you want to be successful in predictive simulation and modeling.That requires data,it requires
13、algorithms,and it requires compute.”Frank O.Nestle,M.D.Global Head of Research&Chief Scientific Officer,SanofiAI gives the opportunity to move away from the artisanal craft of drug discovery to an engineered process.”Ray PressburgerGlobal Life Science Lead,Accenture Biopharma companies focused on la
14、rge population categories such as obesity,cardiovascular,and autoimmune diseases,are likely to attract acquisition interest in 2024.Over the last year we have moved to a view where we say AI is actually a necessity for understanding disease.”5Dr.Matthias EversChief Business Officer,Evotec For late-s
15、tage rare disease assets,interest is growing from buyers in Europe and Asia.Exit opportunities more plentiful for companies with strong clinical data.$680M acquisition$250M acquisition$650M fundraisingWest Street Life Sciences Fund I$2B acquisitionFundraisingUS investors raised$19B for new health-fo
16、cused VC and growth funds in 2023,the third highest amount for any year.This may signal optimism that deployment will pick up as inflation eases and the Fed pauses rate hikes.We expect fundraising to be strong again in 2024.BiopharmaCompanies with strong clinical assets are still finding funding tra
17、ction,despite headwinds.Promising developments on the horizon include:RNA-based therapies,the GLP-1 class and ADCs.While exits are depressed from historic norms,we saw 19 IPOs this year,a sign that the IPO market could be biting again,though IPOs are largely reserved for companies with more robust c
18、linical validation(phase II and beyond).HealthtechCompanies are still recovering from the overabundance of interest received during the pandemic,with investment down 33%from 2022.Later stage companies face challenges growing into lofty valuations,many of which were decoupled from fundamentals.Acquis
19、itions remain steady,though there are fewer disclosed deals,reflecting the strained environment that many of these once highly valued companies now find themselves in.InvestmentsInvestment volumes have leveled off over the past four quarters,settling 55%below totals seen in 2021.However,the pace of
20、deployment is picking up.Deal counts are down just 11%from the 2021 peak and gaining speed as dwindling runways force founders to accept less favorable terms.Dx/ToolsAfter a gangbuster 2021 and modest 2022,diagnostics IPOs came to a grinding halt in 2023.This marks the sectors first year since 2016
21、with no IPOs.A bright spot in private diagnostics investments is the total capital invested in seed/Series A companies which,while short of the peak in 2022,far exceeds pre-pandemic levels.The continued development of personalized medicine will likely benefit this sector.DeviceGiven the reliance on
22、outpatient procedures,the medical device sector is still working through knock-on effects of the pandemic,including halted procedures and disrupted supply chains.This manifested as a tough year for device exits when total exit values are at their lowest point since 2017.Investments have fared relati
23、vely well.Theyre down 25%from 2022,while dx/tools and healthtech are down 42%and 33%,respectively.ExitsThe exit market remains tight as late-stage companies grapple with valuation overhang.IPOs were flat vs 2022 with M&A activity favoring acquirers as evidenced by a surge the share of undisclosed de
24、als.We may see more IPOs in 2024 as public markets adjust to higher interest rates.6 6HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 20237HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023$4B$4B$6B$8B$7B$9B$10B$11B$17B$28B$22B$19B$5B050000000250003000020000212022
25、2023US VC firms raised$19B for health-focused funds in 2023,making it the third best year for healthcare fundraising.Defying a trend in the overall innovation economy,fundraising was a bright spot for healthcare in 2023.US investors raised$19B for health-focused venture and growth funds,the third-hi
26、ghest total for any year and just a 14%decrease from last year.While tech-focused VCs are struggling to raise new funding amid the VC downturn,healthcare investors are refilling their reserves,hoping to maximize their upside potential as valuations drop.Promisingly,the Feds recent mention of potenti
27、al interest rate drops in 2024 may speed up additional fundraising.Fourteen firms raised$1B+funds last year,but that fresh capital could sit on the sidelines for a while.The frenzied sense of urgency we saw in 2021 is largely gone,giving investors more time to focus on diligence.With valuations stil
28、l settling,investors are cutting smaller checks and stretching their funds further.Firms that focused on later stage deals when the market was hot are now turning their attention to early-stage deals,which are more sheltered from public market volatility and may have cleaner cap tables unencumbered
29、by down rounds or out-of-reach valuations.In one notable example,Lux Capital announced they pivoted toward earlier stage deals.In 2021,Lux invested 44%of their deployments into later stage companies.Now,the trend has flipped with 81%of deals going to early stage in 2023.This shift may be a bellwethe
30、r for other firms.Notes:1)US Healthcare Venture Capital Fundraising defined as an approximation of healthcare investment dollars to be invested by firms that historically invest in+50%US companies.Estimates based on anecdotal conversations with investors and expert analysis of last fund deal pace.2)
31、Notable funds based on largest estimated allocation to venture healthcare.Source:PitchBook and SVB proprietary data.Closed fundsFunds still raising8HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023This time last year,investors were mostly treading water.Deal counts dropped nearly 30%from H1 2022 to H2
32、 2022,as valuations reset.Today,valuations remain muted,but deployments are picking up as more investors have committed to a new strategy of backing earlier stage companies.Across the US and Europe,average deal size has fallen from$35M in H1 2021 to$24M in H2 2023.These shifts may signal stabilizati
33、on.After a rapid decline that began in January 2022,VC investment has leveled off,averaging around$11B per quarter over the last year,a roughly 55%decline from 2021.From the great heights of two years ago,that drop may feel extreme,but in the context of VC history,were back to 2019 levels.The questi
34、on on everyones mind seems to be:is this a return to normal or the start of a new,more cyclical normal?Whichever the case,the days of unchecked up-and-to-the-right growth expectations are likely behind us(for now).Investment trends vary by sector.Healthtech,a pandemic darling with an influx of touri
35、st VC investment,saw a spike of capital during 2021 but has failed to keep pace as virtual care and other pandemic trends recede.Biopharma,however,has been less impacted by market volatility.Companies with strong clinical assets are generally finding enough investment to pursue the next milestone.20
36、2120222023Sectors($M)USEU&UKTotalUSEU&UKTotalUSEU&UKTotalYoYChange1Biopharma31,2156,92438,13824,9974,83029,82717,0034,16121,164-25%Healthtech33,1292,88136,01014,0633,95718,02010,4711,37211,843-33%Dx/Tools11,9552,71314,6688,6501,65910,3094,2811,4155,696-42%Device6,6912,3839,0747,0911,5728,6634,7231,2
37、395,962-25%Total82,99014,90197,89054,80112,01966,81936,4778,18744,665-30%6586688336$0B$10B$20B$30B$40B$50B$60B2018 H12018 H22019 H12019 H22020 H12020 H22021 H12021 H22022 H12022 H22023 H12023 H2Note:1)YoY change calculated from January through November of 2023 and th
38、e same period in 2022.Source:PitchBook and SVB proprietary data.9HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023Overall5554474442403734Dx/Tools109777666Biopharma3633222117171614Note:1)Most active new investors calculated as new(first-time)investments in US,EU and UK companies from 1/1/2022-12/1/2023
39、.Dates of financing rounds subject to change based on add-on investments.Additional investors not listed due to space limitations.Source:PitchBook,conversations with investors and SVB proprietary data.Healthtech3634262518181412Device0HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023The days
40、 of the vanity valuation are long gone.Now its all about the spoon-fed deals.Just like an IV in the hospital,these investments often in the form of inside rounds keep companies alive until they can thrive again.Investors are increasingly using inside and extension rounds to kick the can down the roa
41、d for companies that would otherwise fail or be forced to take a down round.To get a sense of this trend,we defined spoon-fed deals as later stage companies valued at or above$20M raising a round of$15M or below.Deals in this range are up across all healthcare.Nearly half of all later stage diagnost
42、ics deals are spoon-fed deals,up from 27%in 2021.The spike in the proportion of spoon-fed deals is similar for healthtech and biopharma,but are lower for devices,which already had a higher rate of spoon-fed deals.In general,deal sizes are trending lower as companies are forced to do more with less,a
43、nd investors are more interested in earlier deals with cleaner cap tables.In 2023,VC deals less than$10M accounted for 65%of all deals,up from 50%in 2021.Greater scrutiny on pricing is also affecting step-ups,which have fallen below the pre-pandemic norm for all stages.Series C companies,which were
44、getting a median 2x increase in valuation in 2021 are now seeing only a 30%bump.But even these numbers are likely inflated as they only include disclosed deals,which are a shrinking minority of all deals.Notes:1)A spoon-fed deal is defined as a deal that is$15M or less for later stage company with a
45、 pre-money valuation at or above$20M.2)Step-ups are the latest pre-money valuation divided by the previous post-money valuation for disclosed deals only.Sources:PitchBook and SVB analysis.1.8x1.9x2.5x2.3x1.5x1.0 x1.5x2.0 x2.5x3.0 x3.5x4.0 x4.5x200222023Series A1.6x1.6x2.0 x1.6x1.3x1.0 x1.
46、5x2.0 x2.5x3.0 x3.5x4.0 x4.5x200222023Series C1.8x1.8x2.0 x2.0 x1.5x1.0 x1.5x2.0 x2.5x3.0 x3.5x4.0 x4.5x200222023Series BMedianMiddle 50%of deals50%15%8%5%23%65%13%6%3%12%$0-$10M$10M-$20M$20M-$30M$30M-$40M$40M+DeviceDx/ToolsHealthtechBiopharmaAll Sectors2021202320%31%41%46%27%4
47、9%29%44%42%18%23%28%33%38%43%48%53%2021202311HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023Nearly two-thirds of deals were under$10M in 2023,up from half of all healthcare deals in 2021.Notes:1)Up rounds defined as deals where the pre-money valuation is higher than the prior deals post-money valuat
48、ion.2)Step-up multiple calculated by dividing the pre-money valuation on the current venture round by the post-money valuation on the preceding venture round.Source:PitchBook and SVB proprietary data.43%45%48%57%67%9%8%6%6%7%48%47%45%37%26%200222023Step-Up2StageDeal SizeSector1.32xSeries
49、C$430MBiopharma1.52xSeries D$323MDevice1.49xSeries A$300MBiopharma1.19xSeries C$273MBiopharma1.88xSeries A$270MBiopharma1.05xSeries F$260MHealthtech3.03xSeries B$260MBiopharma1.81xSeries C$255MDx/Tools1.13xSeries C$225MBiopharmaUndisclosed dealsDown/flat roundsUp rounds12HEALTHCARE INVESTMENTS&EXITS
50、|ANNUAL REPORT 202313HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023$430M$401M$300M$273M$270M$260M A growing backlog of IPO-hopefuls pressed against a barely-ajar IPO window adds pressure to private valuations.Competition for financing is fierce as investors navigate unclear paths to exits.Pressure
51、is especially acute at the later stages(Series B and beyond),which are down 30%vs.2022.Early-stage investment,more shielded from macro headwinds,jumped in Q2 and Q323.Early-stage investment was strong for companies with AI-enabled drug development AIs purported ability to cut costs and speed develop
52、ment is lowering the capital barriers for early-stage biopharma companies.The dramatic slowing of deal pace is giving investors time for diligence.Investors are increasingly focused on sufficient runway to drive companies through meaningful clinical milestones.But the bar has been raised.FDA denials
53、 have risen to peak levels in 2023,and R&D expenditure has not slowed.While early-stage platform companies had an easier time raising funds during the markets peak,the pendulum has swung toward less risky investments amid the ensuing pullback.At times,this means that very early,pre-clinical assets a
54、re less attractive because of how long they can take to land in the clinic.Bright spots in investment were driven by strong clinical developments:the GLP-1 class,ADCs and the landmark approval of CRISPR developed drug for sickle cell disease,Casgevy.Note:1)Seed/Series A includes first-time investmen
55、ts from institutional or corporate venture investment in the US,EU and UK and any first-round investments equal to or greater than$2M,regardless of investor.Dates of financing rounds are subject to change based on add-on investments.Source:PitchBook and SVB proprietary data.$1.2B$1.9B$2.3B$946M$1.4B
56、$2.2B$1.9B$1.7B$1.3B$1.9B$1.6B$1.2B$2.2B$3.0B$848M$854M2020 H12020 H22021 H12021 H22022 H12022 H22023 H12023 H22021$8.9B(353)2022$6.6B(297)2023$4.7B(218)2020$6.1B(281)$13M$15M$17M$15M$10M$10M$10M$9M2020202120222023Q1Q2Q3Q4Pre-money valuationDeal size$6.7B$12.6B$11.3B$4.7B$5.8B$9.1B$6.5B$6.0B$8.1B$8.
57、6B$5.6B$6.9B$6.7B$7.9B$6.4B$3.6B2020 H12020 H22021 H12021 H22022 H12022 H22023 H12023 H22021$38.1B(908)2022$29.8B(812)2023$21.2B(626)2020$27.0B(699)Q1Q2Q3Q4$300M$245M$215M$145M$137M$100M Seed/Series ALater stage14HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023$1.3B$375M$315M$260M$166M$125M$203M$139M
58、$60M$57M$50M$31M If it looks like a bubble,it may pop like one,too.The pandemic ushered in a massive wave of investment,as all eyes turned to digital healthcare,including the eyes of traditional tech investors.At the peak of the VC boom in H2 2021,healthtech companies raised$20B.Two years later,that
59、 has dropped roughly 75%to$5B.One gauge of the decline is the drop in seed and Series A valuations.While many sectors have seen stability in early-stage valuations,bolstered by an influx in investor interest,healthtechs earliest-stage deals have seen the opposite trend with valuations dropping 33%in
60、 the last year.It may take time for this sector to reset as many healthtechcompanies that raised at large valuations in 2021 are grappling with limited options to avoid a down round.Companies face more scrutinous investors and are working against heightened demand for strong-unit economics and paths
61、 to profitability.One bright spot within healthtech is value-based care(VBC).Companies in this space provide VBC directly,or enable providers to adopt VBC models.Healthtechcompanies are facing such challenges that the measure of success is changing.For late-stage companies,even strong metrics may re
62、sult in a flat round.One example is Aledade,which secured a Series F deal of$260M at a 1.05x step-up.$28M$35M$35M$25M$9M$9M$8M$5M2020202120222023Note:1)Seed/Series A includes first-time investments from institutional or corporate venture investment in the US,EU and UK and any first-round investments
63、 equal to or greater than$2M,regardless of investor.Dates of financing rounds are subject to change based on add-on investments.Source:PitchBook and SVB proprietary data.$415M$637M$993M$649M$423M$683M$696M$570M$355M$708M$455M$405M$501M$524M$472M$267M2020 H12020 H22021 H12021 H22022 H12022 H22023 H12
64、023 H22021$2.6B(399)2022$2.6B(432)2023$1.9B(386)2020$1.7B(220)$2.8B$7.8B$7.3B$3.5B$3.2B$8.5B$5.0B$3.0B$3.7B$7.3B$3.2B$2.3B$3.7B$12.5B$2.6B$3.0B2020 H12020 H22021 H12021 H22022 H12022 H22023 H12023 H22021$36.0B(999)2022$18.0B(1062)2023$11.8B(844)2020$13.4B(614)Q1Q2Q3Q4Q1Q2Q3Q4Seed/Series APre-money v
65、aluationDeal sizeLater stage15HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023$255M$215M$175M$150M$140M$131M$103M$90M$57M$51M$50M$40M$38M$36M The VC headwinds that emerged in 2022 only intensified in 2023.However,fundamental market drivers for dx/tools companies remained strong,with encouraging clini
66、cal data reigniting the promise of personalized medicine and advanced therapeutic modalities.Seed/Series A activity remained resilient,dropping from the markets peak but remaining well-above pre-pandemic levels.This data reinforces market anecdotes that Series A deal activity revolves around top-tie
67、r profiles with a mixture of veteran management teams and compelling stories at a“2023 market price.”While dx tests and R&D tools saw nearly 50%losses in YoY investment dollars,dx analytics saw the smallest drop of 34%.Dx analytics companies with AI-driven drug discovery platforms were a bright spot
68、,as they meaningfully accelerate time to clinic and cut costs across the drug development pipeline a concern thats top of mind now as capital efficiency is imperative.They also partner with oftentimes deep-pocketed pharma players.We expect for AI-driven drug discovery companies to maintain high valu
69、ations and robust growth.Another bright spot is personalized medicine(including personalized clinical decision support),namely Artera for cancer treatment,Viome for metabolic health,Heartflow for coronary artery disease and RapidAI for strokes.$9M$10M$10M$8M$5M$4M$4M$3M2020202120222023Notes:1)Seed/S
70、eries A includes first-time investments from institutional or corporate venture investment in the US,EU and UK and any first-round investments equal to or greater than$2M,regardless of investor.Dates of financing rounds are subject to change based on add-on investments.2)Company does not have logo o
71、r website.Source:PitchBook and SVB proprietary data.$150M$274M$535M$343M$97M$413M$312M$217M$261M$181M$286M$273M$311M$365M$359M$256M2020 H12020 H22021 H12021 H22022 H12022 H22023 H12023 H2Q1Q2Q3Q42021$1.2B(187)2022$1.5B(200)2023$1.1B(185)2020$819M(111)Seed/Series A$1.4B$3.5B$3.7B$2.0B$3.3B$4.5B$3.5B$
72、858M$3.4B$3.1B$1.5B$1.8B$2.8B$3.6B$1.6B$1.0B2020 H12020 H22021 H12021 H22022 H12022 H22023 H12023 H22021$14.7B(510)2022$10.3B(494)2023$5.7B(431)2020$10.9B(341)Pre-Money valuationDeal sizeQ1Q2Q3Q4Later stageEvolutionaryScale216HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023$323M$165M$150M$145M$129M$1
73、00M$60M$35M$32M$29M$27M$22M While other sectors benefited from the spotlight on health innovation during the pandemic,device companies experienced a setback.When COVID-19 hit,elective procedures were largely paused,and supply chain congestion/backlogs impacted multiple manufacturers and devices.That
74、 has created a knock-on effect impacting revenue for device companies,which rely heavily on outpatient procedures.The space is still recovering.Investors appear to be shifting attention from new early-stage deals toward portfolio preservation to help existing companies ensure they have enough cash t
75、o hit meaningful clinical milestones.Investor appetite for early-stage technology with long roads to commercialization/payer reimbursement may be lowered,as we are in arguably the most difficult fundraising time and R&D costs arent lowering.In our mid-year update,we noted device companies are facing
76、 increased challenges selling devices to hospitals.This remains true as providers face mounting cost pressures,driving device companies to pivot from“value”to“willingness to pay,”as their technology must have clearer paths to monetization.Brain-computer interface devices made waves this year,with El
77、on Musks Neuralink raising a$323M Series D funding round lead by Founders Fund,Peter Thiels venture capital firm.Neuralink will use the cash to bring its device into the clinic.Note:1)Seed/Series A includes first-time investments from institutional or corporate venture investment in the US,EU and UK
78、 and any first-round investments equal to or greater than$2M,regardless of investor.Dates of financing rounds are subject to change based on add-on investments.Source:PitchBook and SVB proprietary data.$334M$219M$304M$224M$229M$348M$321M$283M$255M$413M$173M$95M$133M$319M$174M$82M2020 H12020 H22021 H
79、12021 H22022 H12022 H22023 H12023 H22021$1.3B(189)2022$971M(137)2023$684M(142)2020$950M(103)$27M$25M$30M$22M$10M$7M$8M$5M2020202120222023$1.5B$1.4B$2.5B$1.5B$1.5B$3.1B$2.2B$1.6B$2.0B$2.6B$2.3B$1.5B$1.6B$2.0B$1.6B$1.4B2020 H12020 H22021 H12021 H22022 H12022 H22023 H12023 H22021$9.1B(542)2022$8.7B(521
80、)2023$6.0B(449)2020$6.6B(364)Q1Q2Q3Q4Pre-Money saluationDeal sizeQ1Q2Q3Q4Seed/Series ALater stage17HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 202318HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023$0M$250M$500M$750MJan-19Jan-20Jan-21Jan-22Jan-23Jan-24The generative AI revolution is touching every corn
81、er of the innovation economy,setting off debates as much about the ethics and controls applied to this powerful technology as the capabilities itself.Perhaps no arena represents the promises and risks of AI so acutely as healthcare.Researchers hope that large language models(LLMs)such as OpenAis Cha
82、tGPT and Googles Bard will greatly accelerate the search for cures to our most devastating diseases.And the stakes couldnt be higher.Doctors are already using AI to monitor patients vital signs at home,capture notes during appointments and to predict patient outcomes.Enabling these capabilities is a
83、 growing contingent of healthcare and life sciences companies delivering AI solutions to optimize the medical field.VC deals for healthcare AI have jumped 2.1x since 2019,a rate nearly double the increase for AI in tech overall.About 15%of healthcare companies receiving VC funding in the last year h
84、ave incorporated AI and machine-learning technology into their products.Seed-stage valuations now favor healthcare companies using AI over those that dont.But this technology is far from bulletproof.Studies have shown racial bias in predictions and called into question the accuracy and efficacy of d
85、iagnostic models.In response,new federal standards are being considered.One proposal calls for“nutrition labels”to measure the validity and fairness of AI models.Note:1)AI includes companies tagged with tech vertical of“AI/ML”in pitchbook.ML is machine learning.Sources:PitchBook and SVB analysis.1.4
86、x1.2x2.6x2.1x0.5x1.0 x1.5x2.0 x2.5x3.0 xQ1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4200222023$6M$7M$8M$9M$10M$11M$12M200222023Healthcare overallHealthcare with AIHealthcare AI/ML deals TTM BiopharmaDeviceDx/ToolsHealthtechTech AI/ML deals TTM GoogleSearches for“A
87、I”TTM Healthcare AI investment(US,UK and Europe)Latest valuations:19HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023$1B$7B$4B$10BThe list of AI-enabled healthcare companies is getting longer each month as new use cases emerge and prove viability.Companies are deploying neural networks and large langu
88、age models across every sector of the healthcare value chain.The biggest area seeing investment is within a space we define as alternative care.Companies such as Livongo,Forward and Lark are using AI to monitor health metrics and optimize patient outcomes.Other companies are using AI to optimize cli
89、nical trials,develop better imaging technology or create provider tools such as notetaking chatbots.But the technology is still early and it carries risks.Missing from the list is Olive.AI,which was valued at$4B in 2021 and was seen as one of the most promising AI companies until its abrupt collapse
90、 and bankruptcy in November.Note:1)AI includes companies tagged with tech vertical of“AI/ML”in pitchbook.ML is machine learning.Source:PitchBook and SVB proprietary data.Alternative Care,$24.9B Provider Operations,$16.8B Clinical Trial Enablement,$8.9B Patient analytics and testing,$7.5BDrug Discove
91、ry/R&D,$4.7BNeurology,$3.6BPlatform,$4.9BHealthcare Navigation,$1.5B Wellness and Education,$1.2B Non-invasive Monitoring,$0.8BOncology,$0.7BRare Disease,$0.7B20HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 202321HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023By some measures,late-stage biopharma compa
92、nies are fairing better than other healthcare sectors.While exits remain muted compared to historic norms,companies with strong clinical results are finding a path to public markets.There were 19 IPOs in 2023,more than all other healthcare sectors combined.IPOs continue to be reserved for the highes
93、t-caliber companies with more robust clinical milestones.The vast majority(84%)of IPOs this year were Phase II and beyond,up from 68%in 2021.Notably,there were no pre-clinical IPOs this year,while there were 25 in 2021(26%of total IPO activity).Including M&A activity,the$30B in disclosed value for e
94、xits in 2023 is on par with 2022 as of this writing and could exceed it if any closed deals are delayed in their reporting.The M&A market for publics has been red-hot this year,as pharmas(with war chests of cash)continue to focus on top publics with promising data.This year has seen 29 deals with a
95、median deal size of$1.4B(65%+were over$1B).2022 saw just 25 deals and only 40%over$1B.Some investors see increased regulatory scrutiny as a risk factor for exits.Several high profile tech deals have been scuttled by regulators in the last few months over anti-trust concerns and issues of competition
96、.In December,the FTCsued to block Sanofis$755M licensing deal with Maze Therapeutics.The prospect of a more arduous approval prospect could deter certain M&A deals and further limit the options for exit-ready companies.Notes:1)On 12/26/2023 Bristol Myers Squibb announced a definitive merger agreemen
97、t to acquire RayzeBiofor$62.50 per share in cash,for a total equity value of approximately$4.1 billion.2)The likely to IPO(LIPO)list tracks the top 15 crossover-funded private mezzanine deals($40M+)as a proxy for IPO sentiment and pipeline.Sources:PitchBook and SVB analysis.SVB IndicationNeurologyPl
98、atformOncologyStage at IPOPhase IIIPhase IIIPhase IIIIPO Price($)(Date)17(9/15/23)18(5/5/23)18(9/15/23)Market Cap at IPO($)2.6B1.7B1.2BPrice($)12/31/2317.057.4662.17Price+/-0%-59%245%Market Cap($)12/31/232.6B726M3.8BPrivate M&AIPOMarket cap at IPOPrivate M&A total deal value$29.8B$30.6B$90.6B$87.3B$
99、47.5B$51.4B$21.0B2023202220252083968200222023Number of new likely to IPO(LIPO)companies2Percent of LIPO companies that remain private100%90%80%70%60%50%40%30%20%10%0%3843684015181113H120H220H121H221H122H222H123H223180%of companies that did LIPO
100、deals in H2 21 have yet to IPO.22HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023TargetAcquired byDeal SizeTotal RaisedIndication$220M$3MProvider Operations$150M$27MHealthcare Navigation$130M$74MProvider Operations$95M$250KProvider Operations$94M-Alternative Care$52M$6MProvider OperationsAcquisitions
101、 are accelerating for healthtech companies with few disclosed deals reflecting the strained environment that many of these once highly valued companies now find themselves in.At least 117 VC-backed healthtech companies were acquired in 2023,but only about 19%of the deals disclosed the price,which ma
102、y suggest many of the deals favored buyers.These undisclosed deals had a knock-on effect on the tally of total exit value,which fell to its lowest reported total in at least six years.Healthtech companies have faced tough challenges during the VC downturn.The space received immense interest from inv
103、estors during the pandemic when telehealth,virtual care and other digital health products surged in popularity.Crossover and so-called“tourist”investors entered the sectors in droves,driving sky-high valuations that have been tough for companies to grow into as interest in this sector waned after th
104、e pandemic.Despite those challenges,there are bright spots to be found.VBA Software,a payments platform for providers,was acquired for$260M by the PE firm Spectrum Equity.The company has raised just$3M of VC.In another profitable return for investors,the healthcare e-commerce site MDsave was acquire
105、d for$150M,five times more than the$27M it raised from VCs.IndicationM&A DealsTotal Deal Value$B+ExitsMedian Years to ExitProvider Operations318$30.2B55.4Alternative Care138$16.9B64.7Wellness&Education85$3.0B14.1Clinical Trial Enablement 53$3.1B15.3Medication Management37$3.9B15.8Healthcare Navigati
106、on33$1.9B14.0M&A disclosedM&A undisclosedIPO6222247484696220020202120222023Market cap at IPOPrivate M&A total deal value$2.1B$4.2B$60.2B$29.8B$23.2B$18.6B$3.0B2023202220218201723HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023Sources:PitchBook and SVB analy
107、sis.Similar to healthtech,the diagnostic tools sector is also facing a tougher environment post-COVID.Demand spiked for disease testing and diagnostics capabilities during the pandemic.In 2021,a staggering 32 dx/tools companies went public through IPOs,an amount more than all other years since 2017
108、combined.That number slowed to a modest seven in 2022,and zero in 2023,marking the first year with no global venture-backed IPOs since 2016.While M&A activity picked up slightly this year,there were few successful outcomes for founders.Only$1.1B in acquisitions was disclosed,the lowest amount since
109、2017 and a fraction of the$42B in exit value that was realized in 2021.Leading diagnostics corporates in the lab equipment space have seen sales slow as their customers reel in expenses following an increase in spending during the pandemic.Agilent Technologies and Thermo Fisher laid off workers and
110、closed facilities this year.Still,corporate buyers are using the tougher conditions to scoop up bargains in the M&A market.Among the noteworthy deals,Quest Diagnostics bought the tumor detection company Haystack Oncology for$392M,and GE HealthCare bought the AI-enabled disease detection platform Cap
111、tion Health for$150M,twice what it raised in VC,while Philips bought the image analysis firm DiA for$100M,over four times its capital raise.TargetAcquired byDeal SizeTotal RaisedIndication$392M$62MDx Analytics$186M$82MDx Analytics$150M$70MD&D Tools$100M$22MDx AnalyticsPrivate M&AIPO101032
112、720020202120222023Market Cap at IPOPrivate M&A Total Deal Value$1.1B$8.2B$42.3B$26.7B$9.5B$4.0B$318M20232022202182017IndicationM&A DealsTotal Deal Value$B+ExitsMedian Years to ExitDx Tests20$16.0B26.2R&D Tools31$8.2B15.6Dx Analytics13$1.9B06.424HEALTHCARE INVESTMENTS&EXITS|ANNU
113、AL REPORT 2023Sources:PitchBook and SVB analysis.$6.8B$18.7B$35.7B$14.0B$13.2B$7.6B$5.1B20232022202182017As investors take more time for due diligence,one of the sectors feeling that drawdown the most is devices.Medical devices tend to be tied most to elective procedures,which slowed duri
114、ng the pandemic.This delayed the development of many device companies and has had a knock-on effect in exit markets,which have slowed to levels not seen since 2017.In 2023,the disclosed value of M&A deals and IPOs for device companies was$6.8B,a 63%drop from 2022.Amid the slowdown,there were bright
115、spots.Dermatology company Kerecis,which uses fish skin to treat burns,was acquired by Coloplast for$1.3B,one of the largest M&A exits for a device company in the last seven years.Neurology startup Relievant was acquired by Boston Scientific for$850M.The company had raised$272M for its Intracept Proc
116、edure to alleviate back pain.A notable absence on the top deals table is surgical devices.This category has accounted for the most M&A deals of the last seven years,but these companies also take the longest to develop.As deals have slowed,its likely that investors are being especially cautious evalu
117、ating surgical device startups,which may be better capitalized for a long wait and less willing to take an unfavorable exit.Private M&AIPO09388002120222023Market cap at IPOPrivate M&A total deal valueIndication#M&ATotal Deal Value($B)#$B+ExitsMedian Years to ExitSurg
118、ical117.818.5Cardiovascular165.804.4Vascular175.416.3Orthopedic173.308.2Uro/Gyn83.108.6Non-Invasive Monitoring72.617.6Dermatology11.319.8TargetAcquired byDeal SizeTotal RaisedIndication$1.3B$146MDermatology$850M$272MNeurology$600M$220MPlatform$600M$61MUro/Gyn$415M$132MVascular$225M$67MCardiovascular
119、Sources:PitchBook and SVB analysis.25HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023Jackie SpencerHead of Relationship Management for Life Science and Healthcare BJackie Spencer leads the US Relationship Management team for Life Science and Healthcare Accelerator and Growth.Jackie and her team are f
120、ocused on providing banking and financing solutions to innovative companies in the sector.Since joining SVB in 2007,Jackie has worked across both the technology and healthcare practices from emerging market to late-stage corporate finance.Jackie graduated from St.Marys College of California with hon
121、ors,receiving a bachelors in finance.Josh PherigoSenior Researcher,Market IRaysa Bousleiman manages relationships with traditional venture capital firms focused on healthcare and life science investments.She is also responsible for conducting data-driven analyses on the global healthcare innovation
122、economy that SVB serves.Prior to SVB,Raysa worked as a healthcare consultant focusing on health systems revenue cycle management and operations.Raysa graduated from the University of Southern California with honors,receiving a bachelors in human biology.Raysa BousleimanVice President,Healthcare VCRe
123、lationship MSarah WalkerResearcher,Market I Timot LamarreResearcher,Market I2626HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 2023SVBs Healthcare Investments and Exits Mid-Year 2023 Update looks at the trends,opportunities and challenges in todays healthcare innovation market.Healthcare Investments and
124、 ExitsMid-Year 2023The Future of Healthtech 2023 report looks at the trends and opportunities in the innovation economy and why the new investment environment is,ultimately,a good thing.Future of HealthtechOctober 2023Our first-ever report on the Womens Health sector examines the blue ocean opportun
125、ities and market factors creating momentum in womens health.Innovation in Womens HealthDecember 202327HEALTHCARE INVESTMENTS&EXITS|ANNUAL REPORT 202327Silicon Valley Bank(SVB),a division of First-Citizens Bank,is the bank of some of the worlds most innovative companies and investors.SVB provides com
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