ABGSC on the Norwegian oncology space: “There are multiple important milestones coming up for many companies, with significant potential to lift the local sector sentiment”

ABGSC analyst Adam Karlsson and Healthcare Investment Banking Partner Eirin Mårvik share their thoughts on companies in the Norwegian oncology space, ahead of our upcoming Norwegian Oncology Lunch Seminar.
 
What trends are currently driving the Norwegian oncology space?
“While I wouldn’t necessarily say that there are any trends specific to the Norwegian oncology space, overall, oncology remains the therapeutic area that receives the most funding and where the global pipeline is the most crowded”, says Karlsson.
“The biggest hurdle for development stage biotech companies, regardless of their therapeutic area, is clinical development; it is only once this is substantially de-risked that it becomes relevant to consider the finer points of what potential acquirers or partners in large cap pharma and biotech companies are currently looking for”, explains Karlsson. He continues: “While such companies have been and continue to invest in building out their capabilities in various novel modalities such as cell and gene therapies, ADCs, and next-gen bi-specifics, when it comes down to it, most companies are modality-agnostic and consider the merits of the individual drug in question, while ideally looking for commercial synergies within their existing portfolio.
“Taking an even broader perspective, the fundamental driver of the biotech industry remains the rapid pace of innovation and favourable demographic trends with an ageing global population and a growing middle-class in developing nations, where healthcare spending as a percentage of GDP is expected to continue to rise”.
Can you tell us more about the challenges currently facing Norwegian oncology companies?
“The main challenge, both now and always, is clinical development”, says Karlsson.
He goes on to explain that, “Beyond this, the biotech bear market that has been ongoing since the last peak in February 2021, coupled with the macroeconomic trends of rising inflation and interest rates weighing on tech companies overall, has created a significantly tougher funding environment for global biotech. M&A has also been poor so far this year, with several large deals by Pfizer (flush with cash from its Covid-19 business) flattering the numbers. This has also contributed to tougher times for biotech companies looking to raise money at attractive valuations”.
What macro events/trends will you be keeping an eye on over the next few months?
“The most important macro trends will be the inflation trajectory, as this feeds into the relative balance between growth and value stocks, a major extrinsic driver of biotech valuations, and secondly, the pace of recovery in biotech M&A”, explains Karlsson. He also notes that “Many industry watchers believe that until we start to see a material pickup in the number and value of large cap pharma and biotech M&A, it is too early to call the biotech bear market over”.
What can we expect from the upcoming seminar?
“The seminar invites both listed and unlisted companies in the oncology space to briefly present their latest developments, followed by a Q&A session”, explains Karlsson. “In the Q&A we will aim to dig deeper into what we, from an equity research point of view, believe are the key determinants of clinical and commercial success for the respective companies, and hence the core value drivers for investors”.
“We look forward to seeing you there!” says Karlsson.
Mårvik adds that, “There is a lot going on within oncology in Norway, and although the sector sentiment over the last couple of years has been, and still is, challenging, both locally and internationally, we think it is time that we provide investors with the opportunity to be updated on some of the most exiting companies in this field”.
She explains that, “There are multiple important milestones coming up for many of these companies, with significant potential to lift the local sector sentiment. I look forward to the presentations and expect insightful questions from both our research team and the audience”.
 
ABGSC’s Norwegian Oncology Lunch Seminar will be held on Wednesday 23 November; you can access a full agenda here. Please note, this event is for clients only.
RSVP: invitations@abgsc.no
Clients can read more insights from Adam Karlsson here.