Time to find out if biotechs can go public in 2023

After a year that saw the fewest biotech IPOs since 2012, the industry is in for its first major test of whether 2023 will be different.

Structure Therapeutics, a company with operations in the U.S. and China, filed to raise $125 million in an IPO that would set its valuation at more than $500 million. Structure's most advanced medicine is an oral treatment aimed at the hormone GLP-1, a target shared by blockbuster injectable drugs for diabetes and obesity including Wegovy and Mounjaro. The company is also developing early-stage treatments for heart and lung diseases.

Structure's success or failure on the public markets could be instructive for the industry. Last year, just 19 biotech companies went public as a prolonged downturn sapped demand for new listings and forced private companies to rethink their plans.

Regulatory

Pharma wins latest round of its spat with hospitals

In a victory for the pharmaceutical industry, a federal appeals court ruled that drugmakers have the right to limit discounts to certain safety-net hospitals, part of a complex, ongoing dispute.

As STAT's Ed Silverman reports, the ruling stems from a lawsuit, filed by Sanofi, Novo Nordisk, and AstraZeneca, claiming the federal government overstepped its authority when it demanded the companies sell their products at a discount to safety-net hospitals that used outside pharmacies to distribute medicines. That practice, according to the drug companies, has led to abuses, including duplicate billings, product diversions, and ineligible rebates.

The ruling is a win for the drug industry, but it's hardly the end of the fight. Two other appeals courts are currently considering similar suits, and the issue has a complex and contradictory legal history.

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Layoffs

Another SPAC is struggling

Quantum-Si, a sequencing firm that has lost nearly 80% of its value since merging with a SPAC in 2021, is laying off employees to streamline costs.

The company is cutting 12% of its staff this quarter, according to a filing with the SEC, as part of a broader restructuring. Quantum-Si had 153 employees as of Dec. 31, 2021, the most recent numbers available.

Quantum-Si, founded by genomics entrepreneur Jonathan Rothberg, is on its second CEO since going public, after John Stark left the company in 2022. Quantum-Si's sole product, launched in December, is a protein-sequencing tool called Platinum. As of the third quarter, the company had $372.1 million in cash.

Pfizer

No one knows whether U.S. Covid drugs have a future in China

The future revenues of Pfizer's Covid-19 treatment Paxlovid could swing wildly on demand from China, but there's no guarantee the country will keep buying foreign medicines as case counts rise.

Pfizer has already sold a few million doses of Paxlovid to China through a deal with a local distributor, but negotiations over future shipments have stalled over pricing, Reuters reported yesterday. Meanwhile, over the weekend, China granted conditional approval to two domestic oral antivirals for Covid-19, manufactured by Simcere Pharmaceutical Group and Shanghai Junshi Biosciences.

That leaves Wall Street, which has struggled to project 2023 sales for Pfizer's Covid-19 products, with more questions than answers. China's abrupt departure from its Zero Covid policy suggested a potential revenue boon for Pfizer and Merck, whose Lagevrio is also cleared for use in the country. But the country's track record of using domestic Covid-19 vaccines over foreign ones suggests China might take a similar tack with antivirals.

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