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.


Daniel O'Day [via AP Images]

UP­DAT­ED: Look­ing to re­solve lin­ger­ing doubts, Gilead un­leash­es a $5B late-stage cash al­liance with Gala­pa­gos

Daniel O’Day is executing his first major development deal since taking over as CEO of Gilead $GILD. And he’s going in deep to ally himself with a longstanding partner.

O’Day announced today that he is spending $5 billion in cash to add new late-stage drugs to Gilead’s pipeline, picking up rights to Galapagos’ $GLPG Phase III IPF drug GLPG1690 alongside adoption of the biotech’s Phase IIb drug GLPG1972 for osteoarthritis. And Gilead is also putting billions more on the table for milestones, gaining options for everything else in Galapagos’ pipeline, with a shot at all rights outside of Europe.

UP­DAT­ED: Am­gen, No­var­tis scrap Alzheimer's stud­ies -- is BACE fi­nal­ly dead or will Bio­gen and Ei­sai car­ry on?

The BACE theory of controlling Alzheimer’s died with failed pivotal projects at Merck, Eli Lilly and their partners at AstraZeneca. Now Amgen and Novartis have come along to bulldoze it under a mound of safety threats — leaving only Biogen and Eisai to carry on with a less than zero chance of success — with the notable addition that they may actually be doing harm to patients.

After the market closed Thursday, Amgen and Novartis announced that they were dumping two pivotal programs underway with the Banner Alzheimer’s Institute on their BACE drug CNP520 (umibecestat) after an independent review of the data indicated that patients’ cognitive abilities were actually worsening at a faster pace than the placebo arm.

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Christi Shaw at JP Morgan 2019. Jeff Rumans for Endpoints News

Fresh out of Eli Lil­ly, Christi Shaw sur­faces as Daniel O'­Day's new CEO at CAR-T pi­o­neer Kite

Well, that didn’t take long. 

We found out Thursday evening that Christi Shaw has given up her top post as the head of the Bio-Medicines group at Eli Lilly for the helm at CAR-T pioneer Kite. New Gilead CEO Daniel O’Day, a Roche veteran, had made finding a Kite CEO a top priority on his arrival at Gilead. And he went right for a headliner.

O’Day was clearly excited about the coup.

“We conducted an extensive search for a new leader at Kite and we believe that Christi’s unique set of skills will allow us to continue to build on our leadership position in cell therapy,” he said in a prepared statement. “Christi’s vast experience across complex therapeutic areas, and particularly in oncology, will serve Kite very well. She is clearly a leader who will bring teams and individuals together and I am confident she will build upon the entrepreneurial spirit at Kite as we seek to help more people with cancer around the world.”

Christi Shaw at JP Morgan 2019. Jeff Rumans for Endpoints News

Eli Lil­ly's Christi Shaw bows out of top post at the Bio-Med­i­cines unit

Less than 3 years after Eli Lilly CEO David Ricks recruited Novartis vet Christi Shaw to run their big Bio-Medicines business, she’s out.

In a statement put out Thursday morning, Lilly said that Shaw’s last day will come at the end of August. Patrik Jonsson, currently president and general manager of Lilly Japan, will succeed Shaw once he gets the paperwork sorted out.

Lilly’s shares dropped 4% on the news.

Jeff Poulton

Al­ny­lam’s Maraganore switch­es ‘per­haps the best CFO in mid-cap biotech’ with Shire vet Jeff Poul­ton

There’s a new CFO taking charge of the numbers at RNAi pioneer Alnylam.

Alnylam chief John Maraganore says that CFO Manmeet S. Soni is leaving in the proverbial pursuit of new opportunities. And he’s being replaced by ex-Shire CFO Jeff Poulton, not long after the Takeda takeover obliterated that position.

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Analy­sis: In most of the Big Phar­ma world, R&D spend­ing tow­ers over rev­enue from new drugs. Guess who beat the odds

It’s always been the case that there’s no medicine less useful than one that doesn’t make it to patients (unless you regard the task of R&D to be perpetually learning about swimming, while under water…). Yet, launching new medicines that physicians want, that payers will cover, and that patients will take, is a discipline that is unevenly distributed among the big players.

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President Donald Trump at State of the Union. AP Images

White House changes course to kill re­bate re­form

So what exactly is the White House’s plan to tackle rising drug prices? It doesn’t look like we will get definitive answers anytime soon. On the heels of President Donald Trump’s surprise revelation that an executive order is in the works to implement a “favored nations clause,” his administration is now putting out word that it has abandoned an earlier proposal to overhaul rebates.

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Janet Woodcock, AP Images

The FDA's Janet Wood­cock talks about some big changes she's push­ing for in drug de­vel­op­ment, and agency re­views

Janet Woodcock is perhaps the most influential regulator at the FDA. And when the head of CDER talks about the changes being made at the agency when it comes to clinical trial designs, or the need to reorganize for a specific disease arena, an assessment of the expansion of gene therapy or I/O, common development mistakes, and so on, you can be sure the industry pays attention to every word.

So it was with some eagerness that I opened up Geoffrey Porges’ summary of their recent conversation about the FDA. And I wasn’t disappointed. In a wide-ranging exchange with the SVB Leerink analyst, Woodcock discussed the growing importance of patient-reported outcomes in clinical trials, a campaign underway now to see if CROs would help spur more basket studies to compare drugs head-to-head, and much, much more.

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Ex-DARPA di­rec­tor pur­sues all-in-one can­cer pill as NED CEO; Karyopharm los­es com­mer­cial chief ahead of drug roll­out

“Why not try?”

That’s what Geoffrey Ling told me over the phone when asked about what led him to his journey to the position of CEO at NED Biosciences — a company with a lofty goal of creating an all-in-one oral drug to treat all types of cancer and making this drug available to not only developed nations, but also the developing world. 

Ling comes from an extensive background in medicine and the government. He is the co-leader of The Brain Health Project, a professor of neurology and an attending neurocritical care physician at John Hopkins University and Hospital, as well as the assistant director for Medical Innovation of the Science Division in president Obama’s White House Office of Science and Technology Policy (OSTP).