SVB's crys­tal ball points to big mon­ey biotech IPOs, down­shift in the tor­rid pace of ven­ture in­vest­ing

It was a bang-up year for bio­phar­mas in need of cash. In­vestors closed enor­mous funds in 2017, IPOs rolled out at a steady pace, and ven­ture cap­i­tal dol­lars flowed in­to com­pa­nies in record quan­ti­ties.

Sun­ny days are ahead for both the IPO and M&A mar­kets, ac­cord­ing to a Sil­i­con Val­ley Bank re­port, but ven­ture dol­lars may slow down in 2018.

The bank es­ti­mates in­vest­ments in biotech and phar­ma hit a record in 2017, with 548 com­pa­nies pick­ing up a pro­ject­ed $10.5 bil­lion in col­lec­tive in­vest­ment mon­ey dur­ing the year. Back in 2013, with near­ly the same num­ber of deals, com­pa­nies on­ly brought in $5.2 bil­lion to­tal. This in­di­cates the year saw much big­ger rounds, of course. Just in Q4, SVB count­ed sev­er­al mega-rounds, with Cul­li­nan On­col­o­gy, Ar­cus Bio­sciences, and Al­lakos each rais­ing over $100 mil­lion.

Big rounds are al­so re­flec­tive of the piles of cash held by health­care ven­ture firms. Ac­cord­ing to the re­port, health­care ven­ture fund­ing hit a new high in 2017 with $9.1 bil­lion raised by funds dur­ing the year. That’s up from $7.2 bil­lion last year, and sig­nif­i­cant­ly up from the years be­tween 2009 and 2013, when funds raised hov­ered be­tween $2 bil­lion and $4 bil­lion.

The bank pre­dicts that num­ber will de­cline next year, with health­care ven­ture funds rais­ing be­tween $6 bil­lion to $7 bil­lion. That’s be­cause many larg­er firms closed new funds in 2017, the re­port says. The bank al­so ex­pects bio­phar­ma in­vestors will slow their deal pace next year.

Where is this mon­ey go­ing? Pri­mar­i­ly on­col­o­gy com­pa­nies (no sur­prise there), and com­pa­nies de­vel­op­ing plat­form tech­nol­o­gy. Of the 125 Se­ries A in­vest­ments made in 2017, 38 were can­cer drug mak­ers and 19 com­pa­nies had plat­form tech.

“Plat­form com­pa­nies piqued in­vestor in­ter­est, as their tech­nolo­gies showed promise for mul­ti­ple ex­its across dif­fer­ent in­di­ca­tions,” the re­port states.

IPOs and M&As

A few more VC-backed bio­phar­mas went pub­lic in 2017 than the year pri­or, with 31 IPOs com­pared to 28 in 2016. It’s im­proved, but nowhere near the go-go days of 2014, when 66 bio­phar­mas went pub­lic.

It’s im­por­tant to note, how­ev­er, that these IPOs are rais­ing big mon­ey. In 2017, 39% of IPOs, or 12 com­pa­nies to­tal, raised over $100 mil­lion. That’s sig­nif­i­cant when you look at pri­or years. In 2016, on­ly one com­pa­ny raised over $100 mil­lion.

Sil­i­con Val­ley Bank ex­pects IPOs to re­main steady dur­ing 2018, with 28-32 IPOs pre­dict­ed next year.

Al­though IPOs in­creased dur­ing the year, M&As did not. Af­ter a lack­lus­ter 2016 (thanks to un­cer­tain­ty in an elec­tion year), many ex­perts in the in­dus­try pre­dict­ed — with Pres­i­dent Trump firm­ly seat­ed in the White House — that we would see an uptick in merg­ers and ac­qui­si­tions in 2017. They were wrong. Be­sides Gilead’s near­ly $12 bil­lion move on Kite, 2017 was rather qui­et on the M&A front. That has some won­der­ing if ac­quir­ers are on stand­by, wait­ing to see what will hap­pen with tax re­form be­fore mov­ing for­ward on big pur­chas­es.

The bank is ex­pect­ing M&A to pick up next year, with an es­ti­mat­ed 20-plus “big ex­its” based on avail­able cash held by ac­quir­ers — and the need for Big Phar­ma to re­plen­ish their pipelines.

The re­port — called Health­care In­vest­ments and Ex­its 2018 — was au­thored by SVB’s Jonathan Nor­ris, Thomas Joyce, and Caitlin Tol­man.

2023 Spot­light on the Fu­ture of Drug De­vel­op­ment for Small and Mid-Sized Biotechs

In the context of today’s global economic environment, there is an increasing need to work smarter, faster and leaner across all facets of the life sciences industry.  This is particularly true for small and mid-sized biotech companies, many of which are facing declining valuations and competing for increasingly limited funding to propel their science forward.  It is important to recognize that within this framework, many of these smaller companies already find themselves resource-challenged to design and manage clinical studies themselves because they don’t have large teams or in-house experts in navigating the various aspects of the drug development journey. This can be particularly challenging for the most complex and difficult to treat diseases where no previous pathway exists and patients are urgently awaiting breakthroughs.

Dipal Doshi, Entrada Therapeutics CEO

Ver­tex just found the next big ‘trans­for­ma­tive’ thing for the pipeline — at a biotech just down the street

Back in the summer of 2019, when I was covering Vertex’s executive chairman Jeff Leiden’s plans for the pipeline, I picked up on a distinct focus on myotonic dystrophy Type I, or DM1 — one of what Leiden called “two diseases (with DMD) we’re interested in and we continue to look for those assets.”

Today, Leiden’s successor at the helm of Vertex, CEO Reshma Kewalramani, is plunking down $250 million in cash to go the extra mile on DM1. The lion’s share of that is for the upfront, with a small reserve for equity in a deal that lines Vertex up with a neighbor in Seaport that has been rather quietly going at both of Vertex’s early disease targets with preclinical assets.

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Ab­b­Vie slapped with age dis­crim­i­na­tion law­suit, fol­low­ing oth­er phar­mas

Add AbbVie to the list of pharma companies currently facing age discrimination allegations.

Pennsylvania resident Thomas Hesch filed suit against AbbVie on Wednesday, accusing the company of passing him over for promotions in favor of younger candidates.

Despite 30 years of pharma experience, “Hesch has consistently seen younger, less qualified employees promoted over him,” the complaint states.

Rami Elghandour, Arcellx CEO

Up­dat­ed: Gilead, Ar­cel­lx team up on an­ti-BC­MA CAR-T as biotech touts a 100% re­sponse rate at #ASH22

Gilead and Kite are plunking down big cash to get into the anti-BCMA CAR-T game.

The pair will shell out $225 million in cash upfront and $100 million in equity to Arcellx, Kite announced Friday morning, to develop the biotech’s lead CAR-T program together. Kite will handle commercialization and co-development with Arcellx, and profits in the US will be split 50-50.

Concurrent with the deal, Arcellx revealed its latest cut of data for the program known as CART-ddBCMA, ahead of a full presentation at this weekend’s ASH conference — a 100% response rate among patients getting the therapy. Investors jumped at the dual announcements, sending Arcellx shares $ACLX up more than 25% in Friday’s morning session.

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Christian Itin, Autolus CEO (UKBIO19)

Au­to­lus tips its hand, bags $220M as CAR-T show­down with Gilead looms

The first batch of pivotal data on Autolus Therapeutics’ CAR-T is in, and execs are ready to plot a path to market.

With an overall remission rate of 70% at the interim analysis featuring 50 patients, the results set the stage for a BLA filing by the end of 2023, said CEO Christian Itin.

Perhaps more importantly — given that Autolus’ drug, obe-cel, is going after an indication that Gilead’s Tecartus is already approved for — the biotech highlighted “encouraging safety data” in the trial, with a low percentage of patients experiencing severe immune responses.

David Light, Valisure CEO

Val­isure in the hot seat: New Form 483 over a 2021 in­spec­tion as CEO fires back

The notorious drug testing company Valisure, which has made a name for itself by forcing FDA’s hand with some of its safety-related uncoverings, received a letter this week after the FDA uncovered violations at its Connecticut-based testing lab in 2021.

The letter, which was sent on Dec. 5, stated that the FDA is “concerned” that Valisure was not aware of  drug supply chain security requirements.

Mark Cuban (Jed Jacobsohn/AP Images)

Mov­ing to the em­ploy­er side of health­care, Mark Cuban's Cost Plus Drugs part­ners with a PBM

From “Shark Tank” to direct-to-consumer generic drugs, Mark Cuban has made another inroad in the ongoing battle over prescription drug prices. His cost-plus-15% generic drug company, frequently undercutting many competitors, now has its sights set on the employer healthcare market.

Cost Plus Drugs, which originally pledged to cut out PBMs, has now partnered with the PBM EmsanaRx, majority owned by the Purchaser Business Group on Health, to launch a supplemental drug discount program designed specifically for self-funded employers, the company announced Thursday.

WIB22: Am­ber Salz­man had few op­tions when her son was di­ag­nosed with a rare ge­net­ic dis­ease. So she cre­at­ed a bet­ter one

This profile is part of Endpoints News’ 2022 special report about Women in Biopharma R&D. You can read the full report here.

Amber Salzman’s life changed on a cold, damp day in Paris over tiny plastic cups of lukewarm tea.

She was meeting with Patrick Aubourg, a French neurologist studying adrenoleukodystrophy, or ALD, a rare genetic condition that causes rapid neurological decline in young boys. It’s a sinister disease that often leads to disability or death within just a few years. Salzman’s nephew was diagnosed at just 6 or 7 years old, and died at the age of 12.

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Ahead of ad­comm, FDA rais­es un­cer­tain­ties on ben­e­fit-risk pro­file of Cy­to­ki­net­ic­s' po­ten­tial heart drug

The FDA’s Cardiovascular and Renal Drugs Advisory Committee will meet next Tuesday to discuss whether Cytokinetics’ potential heart drug can safely reduce the risk of cardiovascular death and heart failure in patients with symptomatic chronic heart failure with reduced ejection fraction.

The drug, known as omecamtiv mecarbil and in development for more than 15 years, has seen mixed results, with a first Phase III readout from November 2020 hitting the primary endpoint of reducing the odds of hospitalization or other urgent care for heart failure by 8%. But it also missed a key secondary endpoint analysts had pegged as key to breaking into the market.