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

Scoop: Boehringer qui­et­ly shut­ters a PhII for one of its top drugs — now un­der re­view

Boehringer Ingelheim has quietly shut down a small Phase II study for one of its lead drugs.

The private pharma player confirmed to Endpoints News that it had shuttered a study testing spesolimab as a therapy for Crohn’s patients suffering from bowel obstructions.

A spokesperson for the company tells Endpoints:

Taking into consideration the current therapeutic landscape and ongoing clinical development programs, Boehringer Ingelheim decided to discontinue our program in Crohn’s disease. It is important to note that this decision is not based on any safety findings in the clinical trials.

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Alex­ion puts €65M for­ward to strength­en its po­si­tion on the Emer­ald Isle

Ireland has been on a roll in 2022, with several large pharma companies announcing multimillion-euro projects. Now AstraZeneca’s rare disease outfit Alexion is looking to get in on the action.

Alexion on Friday announced a €65 million ($68.8 million) investment in new and enhanced capabilities across two sites in the country, including at College Park in the Dublin suburb of Blanchardstown and the Monksland Industrial Park in the central Irish town of Athlone, according to the Industrial Development Agency of Ireland.

Members of the G7 from left to right: Prime Minister of Italy Mario Draghi, European Commission President Ursula von der Leyen, President Joe Biden, German Chancellor Olaf Scholz, British Prime Minister Boris Johnson, Canadian Prime Minister Justin Trudeau, Prime Minister of Japan Fumio Kishida, French President Emmanuel Macron and European Council President Charles Michel (AP Photo/Susan Walsh)

Biden and G7 na­tions of­fer funds for vac­cine and med­ical prod­uct man­u­fac­tur­ing project in Sene­gal

Amidst recently broader vaccine manufacturing initiatives from the EU and European companies, the G7 summit in the mountains of Bavaria has brought about some positive news for closing vaccine and medical product manufacturing gaps around the globe.

According to a statement from the White House, the G7 leaders have formally launched the partnership for global infrastructure, PGII. The effort will aim to mobilize hundreds of billions of dollars to deliver infrastructure projects in several sectors including the medical and pharmaceutical manufacturing space.

State bat­tles over mifepri­s­tone ac­cess could tie the FDA to any post-Roe cross­roads

As more than a dozen states are now readying so-called “trigger” laws to kick into effect immediate abortion bans following the overturning of Roe v. Wade on Friday, these laws, in the works for more than a decade in some states, will likely kick off even more legal battles as states seek to restrict the use of prescription drug-based abortions.

Since Friday’s SCOTUS opinion to overturn Americans’ constitutional right to an abortion after almost 50 years, reproductive rights lawyers at Planned Parenthood and other organizations have already challenged these trigger laws in Utah and Louisiana. According to the Guttmacher Institute, other states with trigger laws that could take effect include Arkansas, Idaho, Kentucky, Mississippi, Missouri, North Dakota, Oklahoma, South Dakota, Tennessee, Texas, and Wyoming.

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Deborah Dunsire, Lundbeck CEO

Af­ter a 5-year re­peat PhI­II so­journ, Lund­beck and Ot­su­ka say they're fi­nal­ly ready to pur­sue OK to use Rex­ul­ti against Alzheimer's ag­i­ta­tion

Five years after Lundbeck and their longtime collaborators at Otsuka turned up a mixed set of Phase III data for Rexulti as a treatment for Alzheimer’s dementia-related agitation, they’ve come through with a new pivotal trial success they believe will finally put them on the road to an approval at the FDA. And if they’re right, some analysts believe they’re a short step away from adding more than $500 million in annual sales for the drug, already approved in depression and schizophrenia.

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A Mer­ck part­ner is sucked in­to the fi­nan­cial quag­mire as key lender calls in a note

Another biotech standing on shaky financial legs has fallen victim to the bears.

Merck partner 4D Pharma has reported that a key lender, Oxford Finance, shoved the UK company into administration after calling in a $14 million loan they couldn’t immediately make good on. Trading in their stock was halted with a market cap that had fallen to a mere £30 million.

“Despite the very difficult prevailing market conditions,” 4D reported on Friday, the biotech had been making progress on finding some new financing and turned to Oxford with an alternative late on Thursday and then again Friday morning.

Fed­er­al judge de­nies Bris­tol My­er­s' at­tempt to avoid Cel­gene share­hold­er law­suit

Some Celgene shareholders aren’t happy with how Bristol Myers Squibb’s takeover went down.

On Friday, a New York federal judge ruled that they have a case against the pharma giant, denying a request to dismiss allegations that it purposely slow-rolled Breyanzi’s approval to avoid paying out $6.4 billion in contingent value rights (CVR).

When Bristol Myers put down $74 billion to scoop up Celgene back in 2019, liso-cel — the CAR-T lymphoma treatment now marketed as Breyanzi — was supposedly one of the centerpieces of the deal. After going back and forth on negotiations for about six months, BMS put $6.4 billion into a CVR agreement that required an FDA approval for Zeposia, Breyanzi and Abecma, each by an established date.

Chris Anzalone, Arrowhead CEO

Take­da, Ar­row­head spot­light da­ta from small tri­al show­ing RNAi works in a rare liv­er con­di­tion

Almost two years after Takeda wagered $300 million cash to partner with Arrowhead on an RNAi therapy for a rare disease, the companies are spelling out Phase II data that they believe put them one step closer to their big dreams.

In a small, open label study involving only 16 patients who had liver disease associated with alpha-1 antitrypsin deficiency (AATD), Arrowhead’s candidate — fazirsiran, previously ARO-AAT — spurred substantial reductions in accumulated mutant AAT protein in the liver, a hallmark of the condition. Investigators also tracked improvements in symptoms, with seven out of 12 who received the high, 200 mg dose seeing regression of liver fibrosis.

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No stranger to gene ther­a­py woes, Astel­las runs in­to an­oth­er safe­ty-re­lat­ed clin­i­cal hold

Astellas Pharma, which has been at the forefront of uncovering the risks associated with gene therapies delivered by adeno-associated viruses, must take another safety alarm head-on.

The FDA has slapped a clinical hold on Astellas’ Phase I/II trial of a gene therapy candidate for late-onset Pompe disease, after investigators flagged a serious case of peripheral sensory neuropathy.

It marks the latest in a streak of setbacks Astellas has encountered since making a splashy entry into the gene therapy space with its $3 billion buyout of Audentes. But the lead program, AT132 for the treatment of X-linked myotubular myopathy (XLMTM), had to be halted more than once after a total of four patients died in the trial — and the scientific community still doesn’t have all the answers of what caused the deaths.

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