Our Year In Review: Annual Talk On Macro, Biotech, and Atlas

Posted February 12th, 2019 in Atlas Venture, Biotech investment themes, General Venture Capital, Pharma industry

At the end of every year, we host both our Atlas Venture Annual Meeting for our fund investors (Limited Partners) and our Atlas Retreat for senior industry executives.  As a kickoff for these two meetings, we typically open with a “Year In Review” to frame up some of the important themes facing biopharma.

Our most recent Year In Review (“YinR”) tackles three areas: macro themes facing the pharmaceutical industry, some of the dynamics in the biotech ecosystem, and a brief update on Atlas Venture itself. Despite being a couple months old, these topics all remain very timely and relevant.

This year’s macro themes include a deeper exploration of the global revenue growth challenge by examining the component parts of revenue, namely aggregate volume and price, and the forces shaping them. Positive volume drivers include demographics, geography, and new product launches, which are constrained by forces like the orphanization of new drugs and generic competition. Drug pricing is a challenging picture around the globe and in the US, as is well appreciated, and highlights the continued and rising importance of value-based discussions (and of Pharma getting out in front of those discussions).

On the biotech ecosystem, the YinR focuses on two things: the “exciting” equity capital market environment and the state of the M&A landscape.  On the capital markets, the talk explores the balance between “bubble” forces and “rational cycles” – reviewing datapoints in support of both perspectives. This talk was largely prepared in August-November, which was a wonderfully volatile time in the markets (and was recorded in late November). For M&A, the relative quiet in private biotech M&A in 2017-2018, and relative strength in public R&D-stage biotech M&A, is discussed briefly.  This section closes with a review of biotech venture capital returns driven by the recent equity capital markets and M&A trends, with a quick comparison to tech/software venture capital.

Lastly, it provides a brief update on Atlas Venture – our team, strategy, and portfolio composition. As you might expect, the more confidential aspects shared with our LPs have been removed from the talk.

This year, for the first (and maybe only) time, we’ve decided to share a video recording of the Year In Review 2018 here at LifeSciVC, with voiceover accompanying the slides.  Here it is:

Here’s the cheat sheet for where each section starts, in case you’d like to jump to (or focus on) certain sections.

  • Macro (0:26)
    • Global growth challenge (0:29)
    • Volume drivers (1:12)
    • Price drivers (10:55)
    • Earnings picture (18:00)
  • Biotech ecosystem (20:45)
    • Equity Capital Markets (21:00)
    • M&A landscape (34:45)
    • Biotech venture returns (37:42)
  • Atlas Venture (39:40)
    • Strategy (40:02)
    • Portfolio update (41:14)

As this is the first time we’ve ever shared this talk via this medium, feel free to share feedback both on content and on format.

Special thanks to Edward Goin, who provided the graphic design for this presentation (edward.goin@gmail.com)

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