Oncology industry trends & insights for 2024
The oncology sector is a dynamic field that continues to push the boundaries of cancer research and treatment. Despite recent market corrections, the pursuit of innovative therapies to address the significant disease burden remains important. To gain deeper insights into the forces shaping this field, we interviewed several of our clients, who are industry experts, including CEOs and investors from both early- and late-stage companies. Drawing on their diverse perspectives, this article explores the historical evolution of oncology, the current investment climate, and some key drivers shaping the future of the field.
From systemic treatments to precision medicine
Over the past century, oncology research and development has undergone a remarkable evolution. Early on, work focused on understanding cancer development and progression. As our knowledge deepened, researchers turned their attention to specific organs and the diverse cancers that originate within them. Eventually narrowing to the cellular and molecular levels, addressing the intricate genetic makeup and mutations driving individual cancers.
This journey to understand cancer biology is mirrored in the transformation of treatment approaches, shifting away from systemic chemotherapy towards more targeted and precise interventions. However, the rapid evolution of the standard of care (SOC) can be a double-edged sword for companies. While continuous innovation is essential to remain competitive, the lengthy drug development process means that SOCs often shift before a company brings their product to market, making their therapy appear less innovative and even outdated, ultimately leading to those companies being less competitive or failing.
A mutli-billion-dollar market
Since the approval of PD-1 inhibitor Keytruda in 2014, there has been an emphasis on targeted therapies, immunotherapies, antibody-drug conjugates (ADCs), and radiopharmaceuticals in the industry. In 2023, most of the 13 cancer-targeting NMEs approved by the Food and Drug Administration (FDA) fell into one of these modalities. While success in oncology often leads to a flurry of “me to” drugs, which can drive competition and incremental improvements, this can also lead to market saturation. To maintain progress and fully capitalize on the market’s potential, there needs to be a balance between refining existing modalities and prioritizing the development of truly novel therapies that offer significant advancements in patient care.
The oncology market’s size and growth trajectory are undeniable. BioSpace reported the value of the global oncology market in 2023 was $222.36B and is projected to grow over the next decade at a compound annual growth rate (CAGR) of 8.9% to reach $521.60B. In their Venture Healthcare 2023 report, HSBC tallied VC investment in oncology at $5.5B for 162 deals. This substantial investment along with the persistent demand for new cancer therapies to improve patient outcomes supports the notion there is always space for new modalities.
The driving force behind innovation and shifting trends
While academic research and biotech startups play a vital role in oncology innovations, big pharma stands out as a major driving force. Their mergers and acquisitions (M&As) validate promising research areas, attracting attention and funding. Last year saw significant activity, as big pharma acquired companies that have demonstrated clinical success, with radiopharmaceuticals and antibody-drug conjugates (ADCs) leading the way. RayzeBio was acquired by BMS for $4.1B, while Pfizer spent $43B on an industry leader in ADC leader, Seagen.
Recent changes to the FDA’s accelerated approval process have also influenced oncology trends and investor sentiment. While this path allows for faster patient access to promising therapies, it can rely on less extensive clinical data. Unfortunately, this has led to cases where drugs, initially approved on early data, are later withdrawn due to insufficient long-term benefits or safety concerns. As a result, the FDA has adjusted its guidance, requiring more randomized clinical trial data, to encourage a more robust product. However, this has also cooled investor interest in some pre-clinical companies that may be too far from data and thus too risky to be fundable in the current environment.
Navigating the current investment climate
The oncology investment landscape is experiencing a natural correction, shifting from early-stage potential to later-stage pipelines with concrete data. While funding for early-stage oncology companies is still available, with $1.4B invested in Seed and Series A in 2023, (HSBC), investors are seeking applications beyond niche indications. Early-stage companies should focus on larger, more broadly applicable mechanisms and targets. Meanwhile, later-stage companies are expected to provide clear pathways to regulatory approval through randomized clinical trials, emphasizing the importance of data-driven de-risking for investors.
A natural correction and a path forward
Despite the recent slowdown, the oncology space remains vibrant and competitive. The current phase is best viewed as a natural correction after years of inflated growth. This cyclical adjustment helps to self-regulate the field over the long term.
For companies in the space, adapting to the shifting environment is key. Early-stage companies must focus on showcasing their broader potential to investors, while later-stage companies need to prioritize data that demonstrates clear efficacy. A combination of careful planning with space to remain agile will help weather the evolving industry dynamics.
Special thanks to the following individuals for their valuable insights and contributions to the research behind this article:
- Jason Lettmann, CEO ALX Oncology
- Alex Zisson, Managing Director H.I.G. Capital
- Hong Wan, President, CEO, and Co-Founder Tallac Therapeutics
- Yvonne Yamanaka, Principal venBio Partners
About Theoria Creative
Theoria Creative is a fundraising marketing firm for life sciences companies – translating complex science into clear messages, simple graphics, and persuasive stories. We bridge the communication gap for our biotech and life sciences clients, enabling them to clearly and succinctly articulate their unique message and value when raising funds, soliciting partnerships, pitching at roadshows, or presenting to prospective buyers.
View examples of our client work here.