“We’re seeing a lot of the venture capital funding going into the ADCs, and from our perspective, while we have been saying this for quite a number of years, the new modalities are a way of getting access to new revenue streams for big biopharma companies facing the patent cliff and with revenues potentially at risk.”

Investments in ADCs, as well as gene therapies, antibodies and peptides made up about 52% of private equity and venture capital in biopharma in the first quarter of 2023, EY said in a report. The Seagen acquisition was a confirmation of the importance of the space.

Baral likens the ADC revolution now to what cell therapies like CAR-T were a few years ago. Gilead, for instance, made a major move in 2017 to buy Kite Pharma for just under $12 billion, and J&J inked a major collaboration with Legend, another CAR-T player.

“There aren’t that many quality assets that are available in the market, and biopharma companies don’t have enough R&D in their internal pipeline to be able to replace some of the revenue at risk,” Baral said. “So the question now is, what else do I start looking at?”