| | | |   | Good morning! Damian here with a look at some less-than-enviable biotech IPOs and an invitation to tell Moderna what to do with all its money. | | | Biotech’s class of 2020 is not doing great One out of every four biotechs that went public in 2020 is trading at a valuation below its cash reserves, according to a new STAT analysis of data from the financial database provider Sentieo.
As STAT’s Kate Sheridan reports, that equates to an insult for those management teams, as trading below cash means investors have decided a dollar is worth less in your hands than it would be if put to any other use. And the statistic reads like glaring evidence that too many biotechs raced to market in 2020, when the IPO window was wide open and valuations soared across the sector.
Things are particularly bleak for four members of biotech’s class of 2020, which have fallen by 85% on average and haven’t raised more money since going public.
Read more. | After all that, Califf is the next FDA commissioner It took 10 months to find a nominee and three months to wrangle the votes required to confirm him, but President Biden at last has a permanent FDA commissioner.
Robert Califf cleared the Senate by a vote of 50-46 yesterday, ending one of the most protracted and controversial confirmation processes in the FDA’s 115-year history. Califf’s margin was the narrowest on record. The only candidate who came close was his predecessor, Scott Gottlieb, who was confirmed 57-42.
Califf takes the reins at the FDA just as the agency considers a slew of controversial applications that will make headlines in the months and years to come. STAT's Nicholas Florko dissected some of the thorniest questions facing a Califf-led FDA, including pediatric Covid-19 vaccines, new treatments for ALS, and the seemingly endless debate over novel therapies for Alzheimer's disease.
Read more. | How a machine, with humans-in-the-loop, is transforming clinical intelligence What happens if you apply the scale of artificial intelligence and the editorial analysis of human beings to clinical trials research? A novel approach to monitoring, discovering, and analyzing clinical data. With their new algorithm, accessed through platform STAT Trials Pulse, machine-learning company Applied XL is transforming the clinical intelligence space, speeding up decision-making on partnerships, investments, commercialization, and more. See how they’re doing it. | Mirati’s cancer drug isn’t an FDA priority The FDA accepted Mirati Therapeutics’ application for a novel cancer drug, the company said, but the review time will be longer than it had hoped.
As STAT’s Adam Feuerstein reports, the FDA granted a so-called standard review to Mirati’s drug, adagrasib, which sets the approval decision date on Dec. 14. That’s four months later than the company wanted when it requested a shorter priority review. The FDA declined that request because Amgen’s Lumakras, which uses the same mechanism, is already approved, according to Mirati.
This could set in motion a snowball for Mirati. Amgen is finishing a clinical trial that, if successful, will likely lead the FDA to change Lumakras’ accelerated approval to a full approval. If that happens before adagrasib’s review is complete, the FDA could reject the Mirati drug on the grounds that the Amgen drug satisfies the medical need for similar patients.
Read more. | SPAC splits are spiking The SPAC process doesn’t end with the signing of a merger agreement, after which both parties have a grace period to cancel the deal. And, as sentiment sours for the humble SPAC, more and more blank-check companies are backing out at the last minute.
According to Bloomberg, six SPAC transactions have already been canceled in 2022, putting this quarter on pace to set a record. The pace of cancellations started ramping up in the second half of last year, when 16 SPACs came unglued.
The issue is likely related to redemptions, the term for when buyers of a SPAC IPO pull their money out before a merger goes through. A year ago, the average redemption rate hovered around 10%, according to the data firm SPAC Research. This month, it reached 90%.
Not everyone is feeling chastened. Just yesterday, a biotech SPAC called Genesis Unicorn Capital raised $75 million in an IPO. And Akili Interactive, maker of an FDA-cleared therapeutic video game, is pressing forward with a SPAC merger that would value the company at around $1 billion. | Spending Moderna’s money Moderna, a company experiencing the biotech life cycle in fast-forward, has in just two years graduated from the speculative stage and breezed through the exultant transition to profitability. The reward for its staggering success: an army of armchair CFOs with opinions on how it should spend its money.
And it is quite a bit of money. Moderna had an estimated $19 billion in cash at the end of last year, and it’s projected to amass another $25 billion or so over the next two years.
But because all of that revenue is contingent on an unpredictable pandemic, Moderna has a problem: “The expectations of the current investor base are unrealistic regarding new drug development timelines,” according to biotech investor Brad Loncar, who leads Loncar Investments. That’s why he recommends the company pay a dividend to shareholders, which “would attract more investors with patience to see it out.”
The risk to that plan is related to that same unpredictable pandemic: If revenues from Moderna’s Covid-19 vaccine fall off a cliff sooner than expected, it might live to regret returning cash to shareholders. But the other popular options — buying back shares or spending big on acquisitions — bring risks of their own.
We’ll find out what if anything Moderna intends to do on Feb. 24, when the company will present its latest results. | More reads - Welcome back to the FDA, Robert Califf. Let’s get to work on your big idea. STAT
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| Thanks for reading! Until tomorrow,  | | | |
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