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. 

ZS Per­spec­tive: 3 Pre­dic­tions on the Fu­ture of Cell & Gene Ther­a­pies

The field of cell and gene therapies (C&GTs) has seen a renaissance, with first generation commercial therapies such as Kymriah, Yescarta, and Luxturna laying the groundwork for an incoming wave of potentially transformative C&GTs that aim to address diverse disease areas. With this renaissance comes several potential opportunities, of which we discuss three predictions below.

Allogenic Natural Killer (NK) Cells have the potential to displace current Cell Therapies in oncology if proven durable.

Despite being early in development, Allogenic NKs are proving to be an attractive new treatment paradigm in oncology. The question of durability of response with allogenic therapies is still an unknown. Fate Therapeutics’ recent phase 1 data for FT516 showed relatively quicker relapses vs already approved autologous CAR-Ts. However, other manufacturers, like Allogene for their allogenic CAR-T therapy ALLO-501A, are exploring novel lymphodepletion approaches to improve persistence of allogenic cells. Nevertheless, allogenic NKs demonstrate a strong value proposition relative to their T cell counterparts due to comparable response rates (so far) combined with the added advantage of a significantly safer AE profile. Specifically, little to no risk of graft versus host disease (GvHD), cytotoxic release syndrome (CRS), and neurotoxicity (NT) have been seen so far with allogenic NK cells (Fig. 1). In addition, being able to harness an allogenic cell source gives way to operational advantages as “off-the-shelf” products provide improved turnaround time (TAT), scalability, and potentially reduced cost. NKs are currently in development for a variety of overlapping hematological indications with chimeric antigen receptor T cells (CAR-Ts) today, and the question remains to what extent they will disrupt the current cell therapy landscape. Click for more details.

Graphic: Kathy Wong for Endpoints News

What kind of biotech start­up wins a $3B syn­di­cate, woos a gallery of mar­quee sci­en­tists and re­cruits GSK's Hal Bar­ron as CEO in a stun­ner? Let Rick Klaus­ner ex­plain

It started with a question about a lifetime’s dream on a walk with tech investor Yuri Milner.

At the beginning of the great pandemic, former NCI chief and inveterate biotech entrepreneur Rick Klausner and the Facebook billionaire would traipse Los Altos Hills in Silicon Valley Saturday mornings and talk about ideas.

Milner’s question on one of those mornings on foot: “What do you want to do?”

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FDA+ roundup: FDA's neu­ro­science deputy de­parts amid on­go­ing Aduhelm in­ves­ti­ga­tions; Califf on the ropes?

Amid increased scrutiny into the close ties between FDA and Biogen prior to the controversial accelerated approval of Aduhelm, the deputy director of the FDA’s office of neuroscience has called it quits after more than two decades at the agency.

Eric Bastings will now take over as VP of development strategy at Ionis Pharmaceuticals, the company said Wednesday, where he will provide senior clinical and regulatory leadership in support of Ionis’ pipeline.

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Chamath Palihapitiya and Pablo Legorreta

Bil­lion­aires Chamath Pal­i­hapi­tiya and Pablo Legor­re­ta hatch an $825M SPAC for cell ther­a­py biotech

Three years after Royalty Pharma chief Pablo Legorreta led a group of investors to buy up a pair of biotechs and create a new startup called ProKidney, the biotech is jumping straight into an $825 million public shell created by SPAC king and tech billionaire Chamath Palihapitiya.

ProKidney was founded 6 years ago but really got going at the beginning of 2019 with the $62 million acquisition of inRegen, which was working on an autologous — from the patient — cell therapy for kidney disease. After extracting kidney cells from patients, researchers expand the cells in the lab and then inject them back into patients, aiming to restore the kidneys of patients suffering from CKD.

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Sec­ondary patents prove to be key in biosim­i­lar block­ing strate­gies, re­searchers find

While the US biosimilars industry has generally been a disappointment since its inception, with FDA approving 33 biosimilars since 2015, just a fraction of those have immediately followed their approvals with launches. And more than a handful of biosimilars for two of the biggest blockbusters of all time — AbbVie’s Humira and Amgen’s Enbrel — remain approved by FDA but still have not launched because of legal settlements.

Hal Barron (GSK via YouTube)

GSK R&D chief Hal Bar­ron jumps ship to run a $3B biotech start­up, Tony Wood tapped to re­place him

In a stunning switch, GlaxoSmithKline put out word early Wednesday that R&D chief Hal Barron is exiting the company after 4 years — a relatively brief run for the man chosen by CEO Emma Walmsley in late 2017 to turn around the slow-footed pharma giant.

Barron is being replaced by Tony Wood, a close associate of Barron’s who’s taking one of the top jobs in Big Pharma R&D. He’ll be closer to home, though, for GSK. Barron has been running a UK and Philadelphia-based research organization from his perch in San Francisco.

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CBO: Medicare ne­go­ti­a­tions will ham­per drug de­vel­op­ment more than pre­vi­ous­ly thought

As President Biden’s Build Back Better Act — and, with it, potentially the Democrats’ last shot at major drug pricing reforms in the foreseeable future — remains on life support, the Congressional Budget Office isn’t helping their case.

The CBO last week released a new slide deck, outlining an update to its model on how Medicare negotiations might take a bite out of new drugs making it to market. The new model estimates a 10% long-term reduction in the number of new drugs, whereas a previous CBO report from August estimated that 8% fewer new drugs will enter the market over 30 years.

Joshua Brumm, Dyne Therapeutics CEO

FDA or­ders DMD tri­al halt, rais­ing ques­tions about a whole class of promis­ing drugs

Dyne Therapeutics’ stock took a nasty hit this morning after the biotech put out word that the FDA had slapped a clinical hold on their top program for Duchenne muscular dystrophy. And now speculation is bouncing around Biotwitter that there could be a class effect at work here that would implicate other drug developers in the freeze.

Dyne execs didn’t have a whole lot to say about why the FDA sidelined their IND for DYNE-251 in DMD while “requesting additional clinical and non-clinical information for” the drug.

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CEO Lex Rovner (64x Bio)

A George Church spin­out fight­ing the vi­ral vec­tor bot­tle­neck in cell and gene ther­a­py lands $55M

A synthetic biology company spun out of George Church’s lab is set to tackle the gene therapy manufacturing bottleneck, and it just landed $55 million in a Series A financing round to do so.

64x Bio comes out of the Harvard Department of Genetics. CEO Lex Rovner and her team — which right now, sits around 10 people — are looking to tackle a key hurdle for major companies: manufacturing cell and gene therapies.