Trends to watch in 2023 for the next major plot twists in biotech

Predicting the future is famously a mug’s game. Between COVID-19, drug pricing legislation, and a dramatic turn of events in neuroscience, the last few years of biotech history have been volatile to the point of capriciousness.

So instead of guessing at what the year ahead may bring, here are a few of the trends that will likely be staging grounds for the next major plot twists, including an escalating scramble for all-important cash and an invocation of a time-honored pharmaceutical cliché.

Getting creative to raise money

Despite the breathless promises of countless AI startups, the process of inventing drugs is probably not going to get significantly faster or cheaper any time soon. That means the cash-burning companies doing the expensive work of making medicines are going to need to raise money, which in 2023 will likely require a little creativity.

The year-long downturn for biotech stocks has forced publicly traded companies to sell their stock at discounted prices to raise cash, and made it all but impossible for private companies to execute initial public offerings. That creates a vicious cycle. To stay afloat, private companies have to go back to venture capital firms, but VCs, with no IPOs to speak of, aren’t making returns on their last round of investments. Everyone is living under the weight of a biotech cash crunch, and that’s not going to change until the market turns around.

In the meantime, 2022 taught us that deals can still get done with some ingenuity. A handful of public companies signed agreements that allowed hedge funds to look at confidential, blinded clinical trial data as an inducement to buy stock. Others have looked to companies like Royalty Pharma, a company that trades immediate cash for a cut of the profits from approved or in-development medicines. Nimbus Therapeutics, a company founded during biotech’s last major downturn, formed LLCs around its individual drugs so they could be easily sold off, and earlier this month, Takeda paid $4 billion for one of them.

A new era in Alzheimer’s

For years, the dream among forward-looking neuroscientists was a fu

ture in which treating Alzheimer’s disease would be like fighting cancer, with an armamentarium of specifically targeted medicines allowing for therapy to be tailored to a specific patient. All we needed, the thinking went, was a first-mover drug to get the ball rolling.

Lecanemab, the Eisai-invented Alzheimer’s treatment expected to win approval in January, could fill that role. There’s an emerging consensus that the drug’s benefits, while modest, are real enough to justify its use for many patients. And once it’s approved, researchers can begin studying lecanemab in combination with investigational treatments aimed at a different biological aspect of Alzheimer’s, beginning an iterative process that, in cancer, has led to a steady stream of newer and more effective medicines.

There’s no guarantee any of those combinations will work. Even in oncology, which is much better understood than the underlying science of Alzheimer’s, success has come in fits and starts. But lecanemab promises to serve as both a starting point and a measuring stick for the next generation of treatments, bringing the field that much closer to the dream of a full medicine chest for Alzheimer’s.

High expectations for a new obesity drugs

The annals of biopharmaceutical history are filled with optimistic slide decks and exuberant analyst notes claiming this or that medicine had the potential to become the next Lipitor, the superlatively successful cholesterol drug that made about $200 billion for Pfizer before going generic. But in 2023, thanks to a new generation of metabolic treatments, that dusty drug industry cliché might finally come true.

They’re called incretin mimetics, and they work by boosting the function of a bodily hormone called GLP-1, which increases insulin production. The earliest GLP-1 agonists have been around for about a decade, used largely to treat Type 2 diabetes, but data demonstrating their dramatic effects on body weight have led to more recent FDA approvals for obesity. The latest and most powerful GLP-1 drug, an Eli Lilly treatment marketed for diabetes as Mounjaro, is expected to win an obesity approval next year and bring in annual sales of more than $20 billion by the end of the decade. Novo Nordisk, Amgen, and Pfizer are each developing rival GLP-1 drugs that promise less frequent dosing, more substantial weight loss, or fewer side effects.

There are more than 100 million people in the United States who meet the diagnostic criteria for obesity, making GLP-1 drugs “the electric vehicles of biopharma for this decade,” SVB Securities analyst David Risinger wrote in a note to clients earlier this year, “because the market opportunity is so significant and current penetration is extremely low.”

Whether GLP-1 treatments can reach the industry’s lofty projections — Pfizer expects the market to hit about $100 billion in 2030 — will depend on insurance companies, federal regulators, and cultural mores as to whether high body weight is in itself a disease. It’s also unclear just which GLP-1 drug will emerge as the category leader. It’s worth remembering that Lipitor, a drug synonymous with pharma’s millennial heyday, was not the first or even most powerful cholesterol drug on the market.

In 2023, thanks to a new generation of metabolic treatments, the dusty drug industry cliché of ‘the next Lipitor’ might finally come true.