The dominant strategy has evolved alongside the broader capital markets:

Early on we saw more transformative M&A (Gilead / Kite in 2017, Celgene / Juno in 2018), while 2019-2021 saw an explosion of IPOs as public demand for innovative, earlier-stage companies reached its peak

Frothy valuations for largely early-stage assets & tech put most acquirers on the sidelines

More recently, with the IPO market largely locked up, companies have increasingly relied on private financings, with a select few able to issue follow-ons on the back of excellent clinical or commercial catalysts (i.e. LEGN)

Many mgmt. teams had anchored to their high valuations, despite shifting market dynamics, which created a value dislocation between buyers & sellers

Similar to the broader startup environment, financings today are much more contingent on progress towards meaningful catalysts & asset / platform differentiation - many companies will be unable to raise at favorable terms or at all in this new environment. The long list of cell therapy-focused company layoffs says a lot about the current situation

Even as valuations come down and liquidity tightens, pharma might be unwilling to spend aggressively on acquisitions in this space due to

(1) the pace of innovation: today's cutting-edge approach could be displaced in a few years and

(2) cell therapy's unique supply chain challenges

On the 1st point, the robust funding environment of the past few years has created a crowded landscape pursuing innovations such as:

• Allogeneic therapies
• Overcoming TME
• Controlling cell expansion & persistence
• Increased solid tumor efficacy
• In vivo CAR delivery
• Reduced toxicity & side effect profile
• Alternative cell types

Many would-be acquirers are instead placing multiple bets via BD, particularly around iPSCs, T-Regs, NK cells & other innovative approaches. These deals can actually "encumber" the biotech pipeline as economics are given away, thus limiting the universe of acquirers

The 2nd point speaks to the challenge of scaling up manufacturing while maintaining the viability & functionality of cells. Even years after launch, established players such as BMS and J&J are struggling to keep up with commercial demand - particularly with BCMA CAR-Ts in MM.

Winning requires tons of bespoke investment - cell therapy is not a bolt-on to existing commercial infrastructure and requires unique automation, analytics and supply chain practices

A shortage of experienced & multi-disciplinary talent has complicated moving towards in-house manufacturing. With tighter funding, it's likely companies rely on CDMOs more moving forward, to preserve capital & focus on core competencies.

And even if you reach commercialization, there are concerns as to how effectively cell therapies can penetrate the community setting vs. bsAbs and move towards upfront treatment

Given all that, we'll see how many companies decide to take the leap.