Jay Galeota, Kallyope CEO

In putting to­geth­er a $236M Se­ries D, one biotech spurns Nas­daq and sig­nals the dim­ming al­lure of IPOs

As the biotech IPO mar­ket con­tin­ues to floun­der af­ter a record pan­dem­ic run, the ques­tion must be asked: Are com­pa­nies be­com­ing so IPO-averse that they would rather seek ad­di­tion­al pri­vate rais­es than risk go­ing pub­lic? For at least one biotech, the an­swer ap­pears to be yes.

Kally­ope closed a $236 mil­lion Se­ries D on Tues­day morn­ing about two years af­ter its last fund­ing round, aim­ing to push for­ward a slate of clin­i­cal pro­grams in­to fur­ther stud­ies. CEO Jay Ga­le­o­ta told End­points News that while his com­pa­ny nev­er closed the IPO door fol­low­ing its $112 mil­lion Se­ries C in March 2020, the cur­rent mar­ket played, at least in part, a role in its de­ci­sion mak­ing.

“I think it’s fair to say that we were open to mul­ti­ple op­tions,” Ga­le­o­ta said. “And at the same time, as the mar­ket con­di­tions be­came less ob­vi­ous for a pub­lic of­fer­ing, we piv­ot­ed to, if you will — or grav­i­tat­ed is prob­a­bly a bet­ter way to de­scribe it — more to­wards a Se­ries D round to achieve the goals that we have. And that turned out to be the best fit for us.”

Tues­day’s round was co-led by Mubadala In­vest­ment Com­pa­ny and The Col­umn Group.

Af­ter a pe­ri­od that saw near­ly 200 com­pa­nies go pub­lic and raise rough­ly $25 bil­lion to $30 bil­lion in funds, IPO ac­tiv­i­ty has cooled con­sid­er­ably since last sum­mer. There have on­ly been a hand­ful of S-1s filed so far in 2022, com­pared to about a dozen by this point last year when the nine-fig­ure rais­es were com­mon­place.

On the out­side, Kally­ope ap­peared to fit in­to a sim­i­lar mold as many of the oth­er biotechs seek­ing IPOs last year. It had se­cured a nine-fig­ure crossover with some promi­nent back­ers like Cas­din Cap­i­tal and was prepar­ing to en­ter the clin­ic, all while the fa­vor­able pan­dem­ic mar­ket con­di­tions were just be­gin­ning to emerge.

But Kally­ope took a much more de­lib­er­ate route than its biotech cousins, an os­ten­si­bly smart de­ci­sion in hind­sight. The ap­proach has been in­ten­tion­al, Ga­le­o­ta said, though not for the rea­sons one might think.

“Vir­tu­al­ly all of the sci­en­tists have been just head down on the bench do­ing the work. And as a re­sult, we haven’t been talk­ing much about it,” Ga­le­o­ta said. “So we’re at a point now where we’re start­ing to share what we’ve been do­ing, be­cause the progress has been so con­sis­tent and so ex­cit­ing.”

That progress has in­volved mov­ing four ther­a­peu­tic can­di­dates in­to clin­i­cal tri­als over the last two years, he said. The biotech has been re­search­ing how the unique con­nec­tions be­tween the brain and the gut can in­form drug de­vel­op­ment for things like di­a­betes, IBD and celi­ac dis­ease.

Tues­day’s fund­ing gives Kally­ope the abil­i­ty to con­tin­ue ad­vanc­ing its ini­tial leads while al­so help­ing jump­start po­ten­tial clin­i­cal ef­forts on more than 20 oth­er can­di­dates. There’s about three years of cash run­way here, Ga­le­o­ta said, al­low­ing the biotech to take each of its clin­i­cal com­pounds in­to Phase II and file at least one new IND per year.

And if an IPO ever comes call­ing, the new cash will con­tin­ue to al­low Kally­ope to keep its op­tions open.

“This is an en­abler that’s very much aligned with where the com­pa­ny is strate­gi­cal­ly and where it wants to go,” Ga­le­o­ta said of the round. “And it gives us, again, max­i­mum op­tion­al­i­ty. As the sci­ence de­liv­ers, there may be op­por­tu­ni­ties to go even big­ger and even faster, which we’re cer­tain­ly go­ing to be pre­pared for.”

In ad­di­tion to Mubadala and The Col­umn Group, Tues­day’s fi­nanc­ing al­so saw re­turn­ing par­tic­i­pa­tion from Alexan­dria Ven­ture In­vest­ments, Bill Gates, Cas­din Cap­i­tal, Eu­clid­ean Cap­i­tal, Il­lu­mi­na Ven­tures, Lux Cap­i­tal, Po­laris Part­ners, Two Sig­ma Ven­tures and Step­Stone Group. New in­vestors in­clud­ed DNS Cap­i­tal, Hart­ford Health­care En­dow­ment, Park­wood LLC and Tao Cap­i­tal.

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In­no­v­a­tive MedTech De­mands Spe­cial­ist Clin­i­cal Tri­al Reg­u­la­to­ry Af­fairs and De­sign

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Gold for adults, sil­ver for in­fants: Pfiz­er's Pre­vnar 2.0 head­ed to FDA months af­ter Mer­ck­'s green light

Pfizer was first to the finish line for the next-gen pneumococcal vaccine in adults, but Merck beat its rival with a jab for children in June.

Now, two months after Merck’s 15-valent Vaxneuvance won the FDA stamp of approval for kids, Pfizer is out with some late-stage data on its 20-valent shot for infants.

Known as Prevnar 20 for adults, Pfizer’s 20vPnC will head to the FDA by the end of this year for an approval request in infants, the Big Pharma said Friday morning. Discussions with the FDA will occur first and more late-stage pediatric trials are expected to read out soon, informing the regulatory pathway in other countries and regions.

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FDA ap­proves sec­ond in­di­ca­tion for As­traZeneca and Dai­ichi's En­her­tu in less than a week

AstraZeneca and Daiichi Sankyo’s antibody-drug conjugate Enhertu scored its second approval in less than a week, this time for a subset of lung cancer patients.

Enhertu received accelerated approval on Thursday to treat adults with unresectable or metastatic non-small cell lung cancer (NSCLC) whose tumors have activating HER2 (ERBB2) mutations, and who have already received a prior systemic therapy.

Tony Coles, Cerevel CEO

Cerev­el takes the pub­lic of­fer­ing route, with a twist — rais­ing big mon­ey thanks to ri­val da­ta

As public biotechs seek to climb out of the bear market, a popular strategy to raise cash has been through public offerings on the heels of positive data. But one proposed raise Wednesday appeared to take advantage not of a company’s own data, but those from a competitor.

Cerevel Therapeutics plans to raise $250 million in a public offering and another $250 million in debt, the biotech announced Wednesday afternoon, even though it did not report any news on its pipeline. However, the move comes days after rival Karuna Therapeutics touted positive Phase III data in schizophrenia, a field where Cerevel is pursuing a similar program.

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J&J to re­move talc prod­ucts from shelves world­wide, re­plac­ing with corn­starch-based port­fo­lio

After controversially spinning out its talc liabilities and filing for bankruptcy in an attempt to settle 38,000 lawsuits, Johnson & Johnson is now changing up the formula for its baby powder products.

J&J is beginning the transition to an all cornstarch-based baby powder portfolio, the pharma giant announced on Thursday — just months after a federal judge ruled in favor of its “Texas two-step” bankruptcy to settle allegations that its talc products contained asbestos and caused cancer. An appeals court has since agreed to revisit that case.

CSL is gathering its four business units under a unified brand identity strategy (Credit: CSL company site)

CSL brings Se­qirus, Vi­for un­der par­ent um­brel­la brand in iden­ti­ty re­vamp

CSL is gathering its brands under the family name umbrella, renaming its vaccine and newly acquired nephrology specialty businesses with the parent initials.

CSL Seqirus and CSL Vifor join CSL Plasma and CSL Behring as the four now uniformly branded business units of the global biopharma. The Seqirus vaccine division was formed in 2015 with the combination of bioCSL and its purchase of Novartis’ flu vaccine business. CSL picked up Vifor Pharma late last year in an $11.7 billion deal for the nephrology, iron deficiency and cardio-renal drug developer.

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Ab­bott pumps $450M+ in­to new Ire­land-based man­u­fac­tur­ing site project and hir­ing spree

As Ireland continues to see more investments and building projects from pharma companies, another contender is looking to place more investment in the Emerald Isle.

According to a report from The Irish Times on Friday, Abbott Laboratories is investing €440 million, or about $451 million, to build a new manufacturing plant in Kilkenny, located in the country’s southeast, to make more of its glucose monitors.

Tony Coles, Cerevel CEO

Cerev­el's Tony Coles is still count­ing his mon­ey as a ri­val's boost helps fu­el a po­ten­tial $609M wind­fall

These days in biotech, you never want to miss a chance to raise money for public companies. As much money as possible.

That survival strategy was in full view over the last 24 hours as Cerevel $CERE announced a major stock/debt raise, then upped the ante with a bigger debt load than initially planned.

The tally: $238 million – net — with a shot at boosting that to $274 million from the stock sale, provided the underwriters come back for more. And there’s $335 million from the debt, provided their first round buyers come back for an added bite. Rounding up, that’s $609 million with the add-on. Even without the add-ons, though, it’s still $530 million in the bank.

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Benjamin Oakes, Scribe Therapeutics CEO

CEO of Doud­na spin­out: With­in five years, genome ed­i­tors will have a 're­al­ly big im­pact' on pa­tients' lives

“CRISPR-by-design” is the idea behind Scribe Therapeutics, a company spun out from Jennifer Doudna’s Nobel-winning lab that’s competing in a closely-tracked field of genome editor companies just starting to make their way to the clinic.

After nabbing $100 million last March for its Series B funding round, Scribe is taking a different tack from some of its competitors, crafting a new enzyme isolated from bacteria called CasX, which has now been tweaked extensively and may be targeted to a range of genome-related diseases, offering a plethora of therapeutic options.

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