The life sciences lending market has evolved at a rapid pace in recent years, amid capital-raising challenges and scientific advances that continue to define the sector. This inaugural Growth and Venture Lending Study analyzes publicly filed debt financing agreements of $25 million or more entered into from 2021 to 2024 by U.S. and foreign biotechnology, medical device, diagnostics and related companies with stock listed in the United States. The focus of the study is primarily on companies that are not yet cash-flow positive, and the lenders who cater to those borrowers.
Venture and growth credit has become an indispensable financing tool for companies seeking to extend their cash runway without the dilution of a traditional follow-on equity offering. The pages that follow dissect some of the principal terms seen in this market and recent trends across a diverse set of lenders, including venture debt funds, credit arms of large asset managers and life science focused multi-strategy investment firms.
Deal terms have converged around a core set of protections for lenders, with most transactions now secured by substantially all company assets (including intellectual property rights), and financial covenants comprised of liquidity, and, when applicable, revenue covenants. Other terms, however, remain highly bespoke. Borrower profiles have likewise evolved. While venture-backed, pre-revenue biotech companies still account for some of the loans, a majority of the loans now involve companies with at least one approved product.
While some portions of the underlying documents were redacted, the publicly available disclosures still provided a robust foundation for analyzing current market trends. We hope this study serves as a practical tool for borrowers, lenders and their advisors as they navigate this specialized market.
If you would like to learn more about the findings in the study, please feel free to reach out to us.
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