The New Normal
The transition into the 3rd and 4th quarters of 2022 saw a shift from money chasing the latest discovery with promise to a more cautious approach to investment and expansion. As one of my Colliers colleagues described it, we’ve move from FOMO (fear of missing out) to FOAM (fear of a mistake). We are characterizing this shift as the “preservation of capital” phase of what Walter Isaacson called the “third and even more momentous scientific era, a life-science revolution driven by biotech”. It’s not that the fundamentals for growing drug development companies have changed meaningfully during this period. Companies are still discovering and advancing breakthrough therapies for the future. But the climate is different, with more careful attention to the investment and deployment of precious capital.
How SVB Factors In
This White Paper was written 30 days prior to the collapse of Silicon Valley Bank on March 10. The market dynamics addressed in this paper contributed in part to the failure of SVB. However, this all might have been avoided had the leadership at SVB and bank regulators addressed the fundamental misalignment of SVB’s strategy for investment of excess deposits in 2021 and the Fed’s interest rate strategy to curb inflation by raising the Federal Funds rate 4.25% over the course of 2022.
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