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. 

The FDA’s Oncology Center of Excellence has been a bright spot within the agency in terms of speeding new treatments to patients. That flexibility was on full display this morning as FDA released new draft guidance spelling out exactly how oncology drug developers can fulfill both the accelerated and full approval’s requirements with just a single randomized controlled trial.

While Congress recently passed legislation that will allow FDA to require confirmatory trials to be recruiting and ongoing prior to granting an accelerated approval, the agency is now making clear that the initial trial used to win the AA, if designed appropriately, can also serve as the trial for converting the accelerated approval into a full approval.

Digital therapeutics company Better Therapeutics announced on Thursday that it’s cutting 35% of its staff as it awaits FDA clearance for its first product.

The company, which launched eight years ago, is one of a growing group of companies seeking a digital alternative to traditional medicine. The space saw a record $7.5 billion in investments in 2021, according to Chris Dokomajilar at DealForma, with uses spanning ADHD, PTSD and other indications. However, private insurers have been slow to hop on board.