It was another record-breaking year for the annual Bloom Burton & Co. Healthcare Investor Conference (BBHIC) in Toronto. The event brought together premier healthcare companies and investors from Canada and around the world.

At the conference, a high-caliber panel shared their insights on investing in R&D-stage healthcare companies—with thought-provoking views from Khosla Ventures, GordonMD Global Investments, Matrix Capital Management and J & J Innovation. This is a timely topic as R&D stage companies in Canada are working to discover new treatments while wrestling with critical corporate finance decisions to fund their work.

Here are the highlights from the panel discussion.

The Attractiveness of Public vs. Private Markets

When asked if they see more investment opportunities in public or private markets, panelists said they have no preference at this point in time. Some see private sector valuations as still being too high. But private companies have the benefit of greater flexibility and it is harder to quickly pivot on strategy in the public market.

There was agreement that finding the right opportunity comes down to the fundamentals. Investors need to do the research to find the right company with a sound offering and solid management team.

Is the IPO Window Open?

Panelists agreed that the IPO window is only slightly ajar in healthcare. Headwinds remain and the industry is about two-and-a-half years into a reset. There were lots of companies that previously launched IPOs too soon and many underperformed. Those lessons have not been forgotten. There is also a level of caution right now when deploying capital and it is taking longer to fund a company.

It was also pointed out that companies should only launch an IPO when they are ready—and for the right reasons. Ultimately, IPOs should not be seen as value-creation tools, but as a way to unlock a new pool of investors.

Venture Capital Market Dynamics

The reset in venture capital has been a slow one and there has been some bifurcation in the market. There have been some "monster" Series A funding rounds for proven companies in the U.S. But healthcare companies face stiff competition for funding from the AI sector. The importance of having discipline in the VC market was stressed.

AI and healthcare

There is no doubt that AI will have a major impact on the healthcare industry, particularly in clinical trials. The question is when. The biggest challenge currently facing the expanded use of AI is the quality of data. Poor data in means poor data out—and right now the inputs into AI models come from publicly available information. Opening up healthcare data to enhance the reliability of AI would, among other things, require a new regulatory framework.

Impact of Biosecure Act in U.S.

The Biosecure Act, now being considered in the U.S. Congress, would restrict doing business with certain Chinese biotech companies. Panelists said there could be serious consequences for American biotech companies and their supply chains. The Act is part of the larger debate about U.S.-China decoupling and the issue of biosecurity is an emerging one in corporate boardrooms.

2024 Predictions

The general sentiment is that the next two to four years will have the same feel as it does now—as a reset.

But audience members were reminded that companies should "build what you believe" no matter what the market says. A strong pitch to investors will stand out and companies do not have to only take what the market gives them.