00:00As we look into 2026, what does that environment look like on the deal side and on the IPO side?
00:06Well, thanks, Katie. The first half of the year and really the quarters preceding that were quite
00:11difficult for biotech. The second half of the year has been a whole different story. It's been
00:16quite dramatic when you look at the XBI, the major biotech public market index. It's up 30% for the
00:23year, which has outpaced the S&P and even the tech index. So pretty impressive recovery.
00:30A lot of what that is driven by, to some degree, has been a better outlook with regards to FDA.
00:38They're on pace to approve the same number of molecules or similar to what we've seen in
00:42previous years. That was kind of a black box heading into the opening of the year. Inflation
00:48has come down. Interest rates have come down in tandem as well. And that creates a better
00:53risk-on environment to make investments. What we're seeing on the M&A side is probably the most
00:57explosive part of the sector. Over $100 billion in M&A have happened this year. And what that means is
01:04investors that invested in those acquisitions now can recycle that money into new offerings. And we
01:11saw in November be the highest versus the peak at COVID with $6 billion in volume associated with
01:19follow-on offerings. So that means money is going into new opportunities and new innovation.
01:25Well, when it comes to M&A, the deals that you're seeing, where is there the most excitement? Because
01:30probably what the average listener is most acquainted with is what's going on with obesity,
01:34of course, GLP-1s and the weight loss wars. But where else is there excitement right now?
01:39Well, I think anything that has to do with longevity, you know, there's a recognition that,
01:44you know, we have an aging population worldwide. But particularly in the area that we're watching
01:50very closely of neuro, neurodegenerative diseases like Parkinson's or Alzheimer's, really key M&A
01:58activity that has happened this year. In fact, opening up the year, you had the J&J acquisition of
02:05Intercel. And with that, you know, $15 billion acquisition, that kind of opened up the floodgates
02:11toward other neuro companies that increasingly the science is working toward identifying new ways
02:18to treat these previously untreatable diseases. Still in the early days there, but I think a lot
02:23of value to be created in the next decade, especially when you think about the use of AI and computing
02:27and even quantum as it applies to diseases of the brain.
02:31I am curious, John, with some of the companies that Portal has been shepherding, I am curious about
02:37what the longer term path is for those companies potentially to become public and the idea of
02:42whether they need to go public in order to get the additional funding they would need to get
02:46whatever drugs or treatments that they're working on across the line.
02:50That's the typical path. You know, there are new alternative, you know, sources of funding to
02:54these companies that they can remain private longer. But the capital needs for a biotechnology
03:00company developing a drug are in the hundreds of millions of dollars. And so the continuum often
03:08starts with a series A, a B, a crossover, and then into an IPO that typically, you know, would be a
03:14cumulative amount of probably $500 million that goes into what will be required on the back end,
03:20which will be clinical studies, which are very expensive and lengthy in nature. On the other hand,
03:25in various very hot market sectors where there's unmet need, again, in the neuro space, for example,
03:34acquisitions can happen earlier. And sometimes that can happen even before an IPO occurs. And when you
03:40look at what's driving a lot of this, it's the pharmaceutical company, Patent Cliff, $300 billion
03:45coming off patent in the next five years. And most of it can't come from their internal R&D engines.
03:52So they have to go out and acquire companies. And they're looking for really transformative science
03:58that are going after important market areas that previously were not really being able to be
04:03addressed due to due to science. On the regulatory side, how comfortable are you so far with some of
04:09the initiatives that the current administration in the U.S. has taken and your outlook for any other
04:16potential changes coming down the pike over the next couple of years?
04:18Well, again, listen, there's no secret that there's been, you know, dysfunction, you know,
04:24within the ranks of FDA. However, that is not really affected what we're seeing from the standpoint
04:30of clear approvals. The movement by the FDA, Dr. McCary expressing several times a desire to accelerate
04:40drug approvals. The new voucher program to prioritize very important drugs in key unmet needs
04:47needs are important to shepherd these much needed drugs through the pipeline. So those are all
04:53positive. I think one of the things that we're really excited about on the early stage side of
04:57things is watching, you know, the acceleration of focus around approving rare disease drugs,
05:04especially using technologies like CRISPR. We have a company, Syntax Bio, that's applying it to,
05:10for example, making pancreatic beta cells. They just were awarded a collaboration with the
05:15juvenile delinquent research foundation.
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