Did Mod­er­na break the biotech IPO mar­ket?

2018 end­ed re­plete with a record-break­ing round of FDA ap­provals and IPO cash rich­es for the year. But that ra­pa­cious en­thu­si­asm soured as De­cem­ber rav­aged stocks across the board, in­clud­ing some ag­gres­sive­ly val­ued new­ly-pub­lic com­pa­nies that al­so end­ed up as col­lat­er­al dam­age, as the cor­rec­tion at the end of the year blurred lines in­to a bear mar­ket.

While the sell-side came out gun­ning with am­bi­tious stock price pro­jec­tions ear­ly Wednes­day, one promi­nent set of an­a­lysts sees mar­ket sen­ti­ment tip­ping to­ward an an­gry back­lash that could have a pro­found im­pact on an in­dus­try that’s en­joyed bil­lions in new pub­lic in­vest­ments.

“If there was any­thing good about De­cem­ber it was on­ly that it end­ed,” Cowen an­a­lysts wrote in a note eval­u­at­ing bio­phar­ma sen­ti­ment on Wednes­day. “Stock per­for­mance wasn’t just poor, but hor­ri­ble by his­tor­i­cal pro­por­tions. The eq­ui­ty in­dices had one of the the worst De­cem­bers of the past cen­tu­ry with both the S&P 500 and DJIA eras­ing not just 2018’s gains, but a por­tion of those from 2017. Biotech fared no bet­ter. The NBI was down 11.2% in De­cem­ber, clos­ing 2018 down 9.3%. Sim­i­lar­ly the XBI (-12.1% in De­cem­ber, -15.5% in 2018) has not just end­ed 2018 down, but has giv­en back a large pro­por­tion of the per­for­mance since the Q1:16 lows. Fol­low­ing the worst per­for­mance for stocks on a Christ­mas Eve ever, the on­ly mer­cy came via a ~5% re­bound on the day af­ter Christ­mas. Oth­er­wise the per­for­mance would have been that much worse.”

IPOs raked in record sums in 2018 helped along by uni­corn list­ings such as Mod­er­na, Al­lo­gene and Ru­bius. Per­haps the most elec­tri­fy­ing of all pub­lic list­ings last year was that of Mod­er­na $MR­NA, a uni­corn biotech that pulled off the biggest IPO in ear­ly De­cem­ber with a $604 mil­lion boun­ty that as­signed it a mar­ket cap of about $7.5 bil­lion af­ter sell­ing an up­sized 26.2 mil­lion shares at $23 each — the mid-point on its range. The stock, though, soon showed signs of a strug­gle on its first day of trad­ing, end­ing the day down 20% and evap­o­rat­ing some $1.5 bil­lion from its mar­ket val­ue. With a steep drop in Mod­er­na’s trad­ing price in its first day out, Wall Street was show­ing signs of cau­tion.

That re­luc­tance was well timed, as the end of the year proved to be a blood­bath.

“In­vestors are shell shocked by the de­pre­ci­a­tion that was so quick, so dra­mat­ic, and so close to the end of the year. A hand­ful of funds have been closed, and oth­ers have re­struc­tured, mak­ing all less se­cure in their jobs with a fair num­ber head­ing to their hol­i­day va­ca­tions con­tem­plat­ing changes in ca­reers. Sen­ti­ment is worse than we can re­mem­ber over the last five years, and in fact many in­vestors have de­vel­oped a bear mar­ket mind­set,” Cowen an­a­lysts wrote.

In the bio­phar­ma world, per­haps Mod­er­na is the straw that broke the camel’s back. The stock closed at $15.27 on Dec. 31 and a mar­ket cap of about $5 bil­lion. On Wednes­day, a slew of ini­ti­a­tions on the mR­NA com­pa­ny sur­faced from the com­pa­ny’s own un­der­writ­ers:

  • Buy at Gold­man Sachs, PT $25
  • Over­weight at JP Mor­gan, PT $22
  • Over­weight at Piper, PT $24
  • Over­weight at Mor­gan Stan­ley, PT $29
  • Out­per­form at Op­pen­heimer, PT $27
  • Buy at Need­ham, PT $28

For Cowen, a no­table ex­cep­tion from Mod­er­na’s list of un­der­writ­ers, IPO sen­ti­ment in 2019 will be un­der­scored by re­straint and vig­i­lance.

“Fol­low­ing some no­table IPOs that were per­ceived to be ag­gres­sive­ly val­ued, and that quick­ly broke the deal price, the mood to­ward IPOs has sunk be­low dis­in­ter­est to­ward anger. The win­dow may not have closed com­plete­ly, but in­vestors will be very choosy over the next sev­er­al months, se­lec­tive­ly sup­port­ing com­pa­nies with strong fun­da­men­tals, pedi­greed man­age­ment, and at­trac­tive val­u­a­tions. Nonethe­less, there re­mains no short­age of pri­vate com­pa­nies hop­ing to IPO dur­ing 2019,” not­ed the an­a­lyst team.


Im­age: SHUT­TER­STOCK

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Stéphane Bancel, the CEO of Moderna, one of the leading mRNA players whose quick vault into the markets with a highly effective vaccine created an instant multibillion-dollar market, added his voice to the rising chorus early Tuesday. According to Bancel, there will be a significant drop in efficacy when the average immune system is confronted by Omicron. The only question now is: How much?

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Philip Dormitzer, new GSK global head of vaccines R&D

Glax­o­SmithK­line poach­es Pfiz­er's vi­ral vac­cines lead in rush to cap­i­tal­ize on fu­ture of mR­NA

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Dormitzer had been with Pfizer for a little more than six years, joining up after a seven-year stint with Novartis, where he reached the role of US head of research and head of global virology for the company’s vaccines and diagnostics unit.

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In­tro­duc­ing End­points Stu­dio, a new way to ad­ver­tise with End­points-craft­ed brand­ing cam­paigns

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Tillman Gerngross, the rarely shy Dartmouth professor, biotech entrepreneur and antibody expert, has been warning for over a year that the virus behind Covid-19 would likely continue to mutate, potentially in ways that avoid immunity from infection and the best defenses scientists developed. He spun out a company, Adagio, to build a universal antibody, one that could snuff out any potential mutation.

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In­cor­po­rat­ing Ex­ter­nal Da­ta in­to Clin­i­cal Tri­als: Com­par­ing Dig­i­tal Twins to Ex­ter­nal Con­trol Arms

Most drug development professionals are familiar with the nerve-racking wait for the read-out of a large trial. If it’s negative, is the investigational therapy ineffective? Or could the failure result from an unforeseen flaw in the design or execution of the protocol, rather than a lack of efficacy? The team could spend weeks analyzing data, but a definitive answer may be elusive due to insufficient power for such analyses in the already completed trial. These problems are only made worse if the trial had lower enrollment, or higher dropout than expected due to an unanticipated event like COVID-19. And if a trial is negative, the next one is likely to be larger and more costly — if it happens at all.

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After years as the top spending pharma TV advertiser, AbbVie’s Humira brand finally downshifted earlier this year, ceding much of its marketing budget to up-and-coming sibling meds Skyrizi and Rinvoq. However, now Humira is back on TV with ads for another condition — Hidradenitis suppurativa (HS).

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As a result, 140 of its staffers will be laid off.

The restructuring, which claims the equivalent of 35% of its total workforce, will take place across all departments including commercial, R&D as well as general and administrative support functions, Deciphera said, as it looks to streamline Qinlock-related commercial operations in the US while concentrating only on a “select number of key European markets.”

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FDA can­cels ODAC meet­ing this week to re­view two more dan­gling ac­cel­er­at­ed ap­provals — but won't ex­plain why

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The FDA said in a statement that the meeting “is no longer needed” but did not offer further detail on why exactly it was canceled, telling Endpoints News to contact the companies. Attempts to contact both Secura Bio and Acrotech went unreturned. The companies may have decided to pull these treatments from the market, or they’ve come to new agreements with the agency on their confirmatory trials.