November 15, 2023

The need-to-know this morning

Gilead Sciences and Arcellx announced an expansion of an existing partnership that gives Kite, Gilead's CAR-T division, ownership rights to additional CAR-T therapies being developed by Arcellx. Gilead is making a $200 million equity investment in Arcellx at a 30% premium to its Tuesday closing stock price, raising its ownership stake to 13%.
Alkermes completed the spin-out of its experimental cancer drugs into a separate, publicly traded company called Mural Oncology. With the split, Alkermes said it is now a "pure-play, profitable neuroscience company."
Graphite Bio, the financially troubled gene-editing company, announced a merger with Lenz Therapeutics. Once the transaction closes, the new company will take the Lenz name and focus on the development of its eye-drop treatments for presbyopia, the most common cause of near-vision loss in adults.

Chart of the Day

All biotech needed was a good CPI day

D3 vis exported to PNG (75)

The closely watched XBI biotech index rose 5% yesterday, its best single-day performance all year. The cause wasn't a billion-dollar buyout, promising data on a new drug, or news that Wegovy would somehow bring about world peace. It happened because inflation finally stalled out.

You probably do not come to STAT for news on the consumer price index, but yesterday the Bureau of Labor Statistics said inflation was pretty much flat between September and October, settling down after hitting a four-decade high last year. That suggests the Federal Reserve is almost certainly done raising interest rates and might even start cutting them, which is generally good news for market sectors perceived as risky, of which biotech is one.

The apparently strong correlation between the price of eggs and biotech stocks is a neat illustration of why 2023 has been so frustrating for investors in the life sciences, where market swings seem as reliant on macroeconomic trends as on whether new drugs turn out to work. As Cantor Fitzgerald analyst Eric Schmidt told STAT in September, "we as specialists are skating around this little pond and we don't know how thin or thick the ice will be at any given time because we're not in control of the overall climate."

Personnel

The allure of biotech is tripping up academia

The time-honored journey of a new medicine starts with a bright idea in an academic lab someplace, leading to a brave entrepreneur turning it into a startup, usually followed by some storied pharmaceutical company taking up the cause, and finally concluding with FDA approval. But thanks to long hours, low wages, and mounting competition, the first link in that chain is growing weaker.

As STAT's Jonathan Wosen reports, academic scientists are finding it harder and harder to recruit and retain the postdoctoral researchers they need to carry out the kind of basic research that sets drug discovery in motion.

More and more candidates are choosing a better-paid, more predictable career in industry, researchers said, which means promising hypotheses are going untested, grant dollars are sitting unused, and projects are languishing for months to years.

Read more.

Financials

Catalent didn't spend its money so well

Catalent, a multinational company that handles manufacturing for global drug companies, did very well at the height of Covid-19. The company did so well that it could afford a string of high-dollar acquisitions to expand its business, including a $1 billion deal for Bettera, "a leading gummies manufacturer."

It turns out, in hindsight, that those deals might have been unwise. Yesterday, Catalent delayed filing its quarterly results to account for a $700 million impairment charge related to recent acquisitions. It's the fourth time the company has had to push back an earnings release this year, and it's the second such charge since May, when Catalent reported a $200 million impairment tied to its newfound interest in gummies.

Catalent, among a group of pharma suppliers coping with an industry contraction, is in the midst of a bumpy recovery after missing financial goals, running into manufacturing issues, and reaching a settlement with activist investor Elliott Management.

Research

The NIH has ground to make up

At least according to Monica Bertagnolli, the agency's new director, who lamented that enrollment in federally funded clinical trials has lagged behind those paid for by the drug industry.

As STAT's Rachel Cohrs reports, Bertagnolli isn't suggesting the NIH, whose budget is dramatically overshadowed by the balance sheets of the world's biggest pharmaceutical firms, should strive to compete with industry. Rather, the agency plays the vital role of funding important research that exists outside the bounds of the profit motive, including drug-repurposing trials and long-term outcomes studies.

"If you just look at the number of patients who go on government-funded trials, it's been completely flat over the last decade," Bertagnolli said yesterday at a meeting of the advocacy group Friends of Cancer Research. "If you go and look at the number of people who go on pharma-sponsored trials, it's just this commitment and this increase."

Read more.

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