David Berry, Valo Health CEO (Flagship Pioneering)

UP­DAT­ED: In a sur­prise move, Flag­ship's Va­lo Health and Khosla Ven­tures SPAC call off merg­er

By most ac­counts, the biotech sec­tor has boomed through­out the Covid-19 pan­dem­ic, par­tic­u­lar­ly for com­pa­nies look­ing to go pub­lic through a tra­di­tion­al IPO or the ever-more-pop­u­lar SPAC route. But as one Flag­ship biotech found out, some of the lus­ter might be wear­ing off.

Va­lo Health and its SPAC part­ner, the first of Khosla Ven­tures’ three blank check com­pa­nies, called off their merg­er late Mon­day in a state­ment cit­ing on­ly the vague “cur­rent mar­ket con­di­tions” as the rea­son. The ter­mi­na­tion came just one day be­fore a share­hold­er meet­ing where a vote on the merg­er was ex­pect­ed.

Ac­cord­ing to pre­pared state­ments from both sides, the de­ci­sion was made am­i­ca­bly. Khosla man­ag­ing di­rec­tor Samir Kaul de­scribed Va­lo as a “strong com­pa­ny” and wished it fu­ture suc­cess, while Va­lo CEO David Berry not­ed the com­pa­ny re­mains in an “op­ti­mal po­si­tion of strength.”

The Khosla SPAC was the first of three launched by promi­nent biotech in­vestor Vin­od Khosla, who set up the trio of blank check com­pa­nies in Feb­ru­ary. Trad­ing un­der the tick­er $KVSA, it will con­tin­ue to seek out busi­ness part­ners be­fore the two-year dead­line ex­pires.

Com­bined, the SPACs had raised more than $1.2 bil­lion, with the ve­hi­cles con­tain­ing trusts of rough­ly $300 mil­lion, $400 mil­lion and $500 mil­lion, re­spec­tive­ly. The sec­ond SPAC merged with so­cial net­work­ing ser­vice Nextdoor, de­but­ing on the New York Stock Ex­change last week, while the third blank check com­pa­ny is yet to find a com­pan­ion.

Va­lo’s merg­er had been ex­pect­ed with the $300 mil­lion out­fit, though by the time the sides an­nounced the deal in June the trust had grown to $333 mil­lion. Ex­pect­ed to close this quar­ter, the agree­ment would have seen Va­lo net an ad­di­tion­al PIPE fi­nanc­ing of more than $200 mil­lion, fol­low­ing new in­vest­ments last week, and a $2.8 bil­lion val­u­a­tion.

Mon­day’s move blunts the biotech’s mo­men­tum fol­low­ing what had been a quick rise. Flag­ship un­veiled the com­pa­ny back in Sep­tem­ber 2020, mak­ing a bet that mar­ry­ing ar­ti­fi­cial in­tel­li­gence with cloud com­put­ing — in a bid to an­a­lyze mas­sive amounts of hu­man da­ta — would prove the next fron­tier in drug de­vel­op­ment.

Berry told End­points News in a pre­vi­ous in­ter­view he orig­i­nal­ly set out to pur­sue a tra­di­tion­al IPO for Va­lo, but changed course due to Khosla’s rep­u­ta­tion and his 20-year pro­fes­sion­al re­la­tion­ship with Kaul. In an email Wednes­day morn­ing, Va­lo spokesper­son Jen­nifer Han­ley told End­points Va­lo now plans to go af­ter an IPO, but there’s no word yet on tim­ing.

The com­pa­ny had pre­vi­ous­ly se­cured a $100 mil­lion Se­ries A and a $300 mil­lion ex­tend­ed Se­ries B pri­or to June’s SPAC an­nounce­ment.

SPACs had proven ex­treme­ly pop­u­lar in­vest­ment tools in late 2020 and ear­ly 2021, with the mar­ket rais­ing more than $300 bil­lion in the first quar­ter across all sec­tors. Fol­low­ing a spring slow­down af­ter the SEC hint­ed it may crack down, ac­tiv­i­ty ramped back up over the sum­mer.

This ar­ti­cle has been up­dat­ed to in­clude com­ment from Va­lo spokesper­son Jen­nifer Han­ley. 

Alexander Lefterov/Endpoints News

A new can­cer im­munother­a­py brings cau­tious hope for a field long await­ing the next big break­through

Bob Seibert sat silent across from his daughter at their favorite Spanish restaurant near his home in Charleston County, SC, their paella growing cold as he read through all the places in his body doctors found tumors.

He had texted his wife, a pediatric intensive care nurse, when he got the alert that his online chart was ready. Although he saw immediately it was bad, many of the terms — peritoneal, right iliac — were inscrutable. But she was five hours downstate, at a loud group dinner the night before another daughter’s cheer competition.

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Dominic Borie, Kyverna Therapeutics CEO

Well-con­nect­ed, Gilead-backed biotech gets an­oth­er stack of cash to pur­sue CAR-Ts for au­toim­mune dis­ease

Almost exactly two years after its debut at the 2020 JP Morgan confab — and on the heels of a new partnership with the gene editing experts at Intellia — a Gilead-backed, autoimmune disease-focused startup has returned to the well with a clearer outline of just what it plans to do with its CAR-T platform.

Kyverna brought in $85 million in its oversubscribed Series B, the company announced Wednesday. Northpond Ventures led the round, and Westlake Village BioPartners, Vida Ventures, Gilead and Intellia all contributed as well.

Bahija Jallal, Immunocore CEO

BREAK­ING: FDA hur­ries up a quick ap­proval for the world's first TCR -- af­ter a 14-year R&D trek

Over the 14 years since Immunocore was spun out of MediGene in a quest to develop a gamechanging cancer med, the biotech has raised record sums and undergone a major shakeup on a long roller coaster ride of valuations for investors. But they survived and thrived and today they’re popping the champagne corks to celebrate an FDA approval of their first TCR drug.

Immunocore flagged the FDA’s green light for tebentafusp Wednesday morning by highlighting a series of firsts.

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Days af­ter Gilead yanks PI3K drug, In­cyte with­draws NDA for its own PI3K — say­ing con­fir­ma­to­ry tri­als would take too long

The FDA’s intensifying scrutiny on accelerated approvals isn’t just putting pressure on drugmakers with marketed products. It is also subtly reshaping the regulatory dynamics.

Case in point: Incyte announced late Tuesday that it has made the “business decision” to withdraw an NDA for parsaclisib, its oral PI3Kδ inhibitor, after deciding that running the confirmatory studies the agency was asking for to support an accelerated approval wouldn’t be worth it.

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Dan O'Day (Getty Images)

In a set­back, FDA or­ders Gilead to hit the brakes on their late-stage, $5B can­cer play

Gilead’s $5 billion drug magrolimab has run into a serious setback.

The FDA ordered Gilead to halt enrollment on their studies of the drug in combination with azacitidine after investigators reports revealed an “apparent imbalance” in the suspected unexpected serious adverse reactions between study arms. And the halt is raising questions about Gilead’s plans for a quick pitch to regulators.

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Graphic: Alexander Lefterov for Endpoints News

Small biotechs with big drug am­bi­tions threat­en to up­end the tra­di­tion­al drug launch play­book

Of the countless decisions Vlad Coric had to make as Biohaven’s CEO over the past seven years, there was one that felt particularly nerve-wracking: Instead of selling to a Big Pharma, the company decided it would commercialize its migraine drug itself.

“I remember some investors yelling and pounding on the table like, you can’t do this. What are you thinking? You’re going to get crushed by AbbVie,” he recalled.

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Mar­ket­ingRx roundup: Pfiz­er de­buts Pre­vnar 20 TV ads; Lil­ly gets first FDA 2022 pro­mo slap down let­ter

Pfizer debuted its first TV ad for its Prevnar 20 next-generation pneumococcal pneumonia vaccine. In the 60-second spot, several people (actor portrayals) with their ages listed as 65 or older are shown walking into a clinic as they turn to say they’re getting vaccinated with Prevnar 20 because they’re at risk.

The update to Pfizer’s blockbuster Prevnar 13 vaccine was approved in June, and as its name suggests is a vaccine for 20 serotypes — the original 13 plus seven more that cause pneumococcal disease. Pfizer used to spend heavily on TV ads to promote Prevnar 13 in 2018 and 2019 but cut back its TV budgets in the past two fall and winter seasonal spending cycles. Prevnar had been Pfizer’s top-selling drug, notching sales of just under $6 billion in 2020, and was the world’s top-selling vaccine before the Covid-19 vaccines came to market last year.

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Roy Baynes, Merck

FDA bats back Mer­ck’s ‘pipeline in a prod­uct,’ de­mands more ef­fi­ca­cy da­ta

Despite some heavy blowback from analysts, Merck execs maintained an upbeat attitude about the market potential of its chronic cough drug gefapixant. But the confidence may be fading somewhat today as Merck puts out news that the FDA is handing back its application with a CRL.

Dubbed by Merck’s development chief Roy Baynes as a “pipeline in a product” with a variety of potential uses, Merck had fielded positive late-stage data demonstrating the drug’s ability to combat chronic cough. The drug dramatically reduced chronic cough in Phase III, but so did placebo, leaving Merck’s research team with a marginal success on the p-value side of the equation.

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Brian Thomas, Metagenomi CEO

Gen 2: Berke­ley spin­out lands $175M megaround to keep it on the cut­ting edge of the boom­ing gene-edit­ing field

The big bucks keep pumping into the gene-editing field.

This morning Metagenomi, allied with one of the biggest names in the mRNA field with a company DNA that includes the ubiquitous Jennifer Doudna, is showing off a $175 million B round that will pay for a rapid swelling of its staff in pursuit of some of the cutting-edge tech that keeps this field in the spotlight. And they’re aligning themselves with some major industry players with an eye on the clinic while getting behind some startups to help expand the work into new fields.

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