| |   | Hello, everyone. Damian here with a look at an expensive holding pattern, the virtue of making money from other people's fortune, and why SARS-CoV-2 is so wily. | | | Should Illumina cut bait on Grail? Genome sequencing giant Illumina has now spent 12 months in an expensive arm's-length relationship with Grail, the cancer testing firm it acquired for $8 billion in cash and stock. With last month’s news that European regulators are likely to veto a merger between the pair, is it time for Illumina to stop throwing good money after bad?
That question is likely to come up later today, when Illumina hosts its second-quarter earnings call. In an effort to appease regulators, Illumina has been operating Grail as a separate business, a doubly expensive arrangement under which every dollar the testing firm loses comes out of Illumina’s earnings but the two companies can’t go through the money-saving process of actually integrating their operations.
An EU veto would likely set in motion an appeals process that would further delay a potential resolution, leaving Illumina in a costly state of limbo with no clear end in sight. At some point the headache might outweigh the benefits of owning Grail. Analysts are sure to ask whether that time is now. | In biotech, a rising tide can be worth $500 million A well-established trend in the cash-intensive business of developing drugs is companies selling stock within hours of disclosing good news, as there’s no better time to raise money than when everyone is pleased with you. This year, amid a painful bear market for biotech stocks, companies are expanding that rule and raising money off of the good news of their peers.
Cerevel Therapeutics, a neuroscience company, said yesterday it would sell $250 million worth of stock and raise another $250 million in debt, cashing in on a roughly 45% increase in its share price over the past week.
The company didn’t disclose any news, good or otherwise, in that period. But competitor Karuna Therapeutics did, announcing Monday that its treatment for schizophrenia succeeded in a late-stage clinical trial. That was enough to boost Cerevel’s share price, and that boost was enough to convince the company and its bankers to cash in while investors were buying. If biotech’s recent recovery turns out to be short-lived, their decision may come to look especially wise. | Biomarkers: The Foundation of Personalized Oncology Register for a virtual event on August 17 to hear researchers, academics, and business leaders discuss what recent innovations in biomarkers mean for the future of cancer treatments. | The ‘don’t eat me’ model of cancer treatment is losing ground The history of cancer immunotherapy is a scientific search for ways to stop tumors from evading the body’s natural defenses. But one of the field’s latest bright ideas appears to be running out of steam.
Zai Lab, a Chinese-headquartered biotech company, said yesterday that it had stopped development of an antibody targeting the protein CD47, which tumors hijack to send a “don’t eat me” signal to certain types of immune cells. The decision came after “a review of the competitive landscape,” the company said, and it will now look to out-license the drug.
The news follows years of mounting concern that CD47, despite early promise, might be an imperfect target. While tumors can exploit it to escape immune detection, healthy red blood cells use CD47 to go about their business without meddling from the immune system. Blocking it risks exposing those cells to destruction, which could lead to dangerous bouts of anemia and make for an unsafe medicine. | How does Covid keep outfoxing our immune systems?  (HYACINTH EMPINADO/STAT) Two years and some 500 million infections into the Covid-19 pandemic, the SARS-CoV-2 virus is still figuring out new ways to evade the human body’s well-honed natural defenses. What gives?
As STAT’s Hyacinth Empinado and Andrew Joseph explain in a brief video, the reason is virological Darwinism. The longer SARS-CoV-2 stays around, the more it evolves, meaning different versions of the virus will emerge, become dominant, and then get outpaced by a different variant.
Watch it here. | More reads - The FDA’s ‘breakthrough’ medical devices are finally hitting the market in numbers, STAT
- One of 2021's star biotech players flags another big setback for the pipeline, Endpoints
- Amid Aduhelm woes, Biogen moves to pare back office space, Boston Globe
- After a Covid-fueled adrenaline rush, biotech is crashing, The Economist
| Thanks for reading! Until tomorrow,  | | | |
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