The flip side of the hot IPO mar­ket? A chill could trig­ger a sud­den cash crunch in biotech, fol­lowed by more deals

Over the last 5 years biotech IPOs and fol­low-ons have raised a tsuna­mi of cash to­tal­ing some $128 bil­lion, ac­cord­ing to a new es­ti­mate out from Leerink. And these new­ly coined pub­lic play­ers have been spend­ing mon­ey fast.

Ge­of­frey Porges, Leerink

Ge­of­frey Porges says that by the end of Q3 $85 bil­lion was burned in pur­suit of their goals. And with $43 bil­lion still on the books, he’s rais­ing a red flag for the cash crunch that may be await­ing a large seg­ment of these drug de­vel­op­ment up­starts as ear­ly as 2019.

Look­ing at the 222 biotechs that re­main in the group af­ter ac­count­ing for buy­outs and fail­ures, Porges found that they were col­lec­tive­ly spend­ing $3.5 bil­lion a quar­ter at last look. That burn rate could ex­tend out a re­as­sur­ing­ly long way: 3.5 years to be ex­act. But 3 out of 10 of these com­pa­nies have less than 18 months of cash — a fig­ure that is like­ly to hit 50% a year from now.

That could prove a prob­lem af­ter the new pub­lic com­pa­nies in the in­dus­try de­vel­oped a $14 bil­lion per year ap­petite for spend­ing.

With­out a hot mar­ket to turn to for more mon­ey, Porges is look­ing for a re­turn to al­ter­na­tive sources of cash — which may help heat up the deal mar­ket for ma­jor play­ers who have been wait­ing for val­u­a­tions to cool down.

Writes Porges:

By this time next year, the fi­nanc­ing needs of these com­pa­nies will be acute, and just keep­ing their cur­rent de­vel­op­ment plans fund­ed will re­quire ad­di­tion­al cap­i­tal of $3-4bn per quar­ter. With cap­i­tal mar­kets now ef­fec­tive­ly closed to new is­sues, in­vestors are like­ly to find com­pa­nies in the sec­tor in­creas­ing­ly ner­vous about cap­i­tal dur­ing 2019. Oth­er less tra­di­tion­al sources of cap­i­tal, in­clud­ing re­struc­tur­ing, as­set sales, roy­al­ty fi­nanc­ing and con­vert­ible debt, will be much more ac­tive­ly con­sid­ered dur­ing the com­ing year, as­sum­ing cap­i­tal mar­kets re­main in their cur­rent volatile state.

Of course, noth­ing keeps go­ing up for­ev­er. The best of these com­pa­nies will start prepar­ing for lean­er days, be­fore the cash runs low.

Slight­ly less than half of Porges’ co­hort of com­pa­nies has less than 2 years of cash on hand now, with 61% hold­ing enough mon­ey for less than 10 quar­ters and 30% at 3 years-plus. 

This means that with­out fur­ther cap­i­tal, and as­sum­ing con­stant, not grow­ing ex­pens­es, then by the end of Q3 2019, or one year from now, 45% of these com­pa­nies will have on­ly one year of cash, and ~60% will have on­ly 18 months of cash avail­able.

BiTE® Plat­form and the Evo­lu­tion To­ward Off-The-Shelf Im­muno-On­col­o­gy Ap­proach­es

Despite rapid advances in the field of immuno-oncology that have transformed the cancer treatment landscape, many cancer patients are still left behind.1,2 Not every person has access to innovative therapies designed specifically to treat his or her disease. Many currently available immuno-oncology-based approaches and chemotherapies have brought long-term benefits to some patients — but many patients still need other therapeutic options.3

Joseph Kim, Inovio CEO (Andrew Harnik, AP Images)

Caught in a stand­off with its con­tract man­u­fac­tur­er over Covid-19 vac­cine, In­ovio files suit in an at­tempt to break free while ri­vals race ahead

Inovio was one of the first vaccine developers to snag attention for a jab that their execs said promised to end the Covid-19 pandemic. Using their own unique DNA tech, CEO Joseph Kim said it took just 3 hours to work it out.

But while rivals are racing to the finish line with ambitious plans to make vast quantities of their vaccines with billions of dollars of deals, Inovio is still stuck at the starting line on manufacturing.

Is a pow­er­house Mer­ck team prepar­ing to leap past Roche — and leave Gilead and Bris­tol My­ers be­hind — in the race to TIG­IT dom­i­na­tion?

Roche caused quite a stir at ASCO with its first look at some positive — but not so impressive — data for their combination of Tecentriq with their anti-TIGIT drug tiragolumab. But some analysts believe that Merck is positioned to make a bid — soon — for the lead in the race to a second-wave combo immuno-oncology approach with its own ambitious early-stage program tied to a dominant Keytruda.

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FDA de­lays de­ci­sion on No­var­tis’ po­ten­tial block­buster MS drug, wip­ing away pri­or­i­ty re­view

So much for a speedy review.

In February, Novartis announced that an application for their much-touted multiple sclerosis drug ofatumumab had been accepted and, with the drug company cashing in on one of their priority review vouchers, the agency was due for a decision by June.

But with June less than 48 hours old, Novartis announced the agency has extended their review, pushing back the timeline for approval or rejection to September. The Swiss pharma filed the application in December, meaning their new schedule will be nearly in line with the standard 10-month window period had they not used the priority voucher.

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Leen Kawas, Athira CEO (Athira)

Can a small biotech suc­cess­ful­ly tack­le an Ever­est climb like Alzheimer’s? Athi­ra has $85M and some in­flu­en­tial back­ers ready to give it a shot

There haven’t been a lot of big venture rounds for biotech companies looking to run a Phase II study in Alzheimer’s.

The field has been a disaster over the past decade. Amyloid didn’t pan out as a target — going down in a litany of Phase III failures — and is now making its last stand at Biogen. Tau is a comer, but when you look around and all you see is destruction, the idea of backing a startup trying to find complex cocktails to swing the course of this devilishly complicated memory-wasting disease would daunt the pluckiest investors.

GSK presents case to ex­pand use of its lu­pus drug in pa­tients with kid­ney dis­ease, but the field is evolv­ing. How long will the mo­nop­oly last?

In 2011, GlaxoSmithKline’s Benlysta became the first biologic to win approval for lupus patients. Nine years on, the British drugmaker has unveiled detailed positive results from a study testing the drug in lupus patients with associated kidney disease — a post-marketing requirement from the initial FDA approval.

Lupus is a drug developer’s nightmare. In the last six decades, there has been just one FDA approval (Benlysta), with the field resembling a graveyard in recent years with a string of failures including UCB and Biogen’s late-stage flop, as well as defeats in Xencor and Sanofi’s programs. One of the main reasons the success has eluded researchers is because lupus, akin to cancer, is not just one disease — it really is a disease of many diseases, noted Al Roy, executive director of Lupus Clinical Investigators Network, an initiative of New York-based Lupus Research Alliance that claims it is the world’s leading private funder of lupus research, in an interview.

Covid-19 roundup: Mod­er­na read­ies to en­ter PhI­II in Ju­ly, As­traZeneca not far be­hind; EU ready to ne­go­ti­ate vac­cine ac­cess with $2.7B fund

Moderna may soon add another first to the Covid-19 vaccine race.

In March, the mRNA biotech was the first company to put a Covid-19 vaccine into humans. Next month, they may become the first company to put their vaccine into the large, late-stage trials that are needed to prove whether the vaccine is effective.

In an interview with JAMA editor Howard Bauchner, NIAID chief Anthony Fauci said that a 30,000-person, Phase III trial for Moderna’s vaccine could start in July. The news comes a week after Moderna began a Phase II study that will enroll several hundred people.

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José Basel­ga finds promise in new class of RNA-mod­i­fy­ing can­cer tar­gets, lock­ing in 3 pre­clin­i­cal pro­grams with $55M

Having dived early into some of the RNA breakthroughs of the last decades — betting on Moderna’s mRNA tech and teaming up with Silence on the siRNA front — AstraZeneca is jumping into a new arena: going after proteins that modify RNA.

Their partner of choice is Accent Therapeutics, which is receiving $55 million in upfront payment to steer a selected preclinical program through to the end of Phase I. After AstraZeneca takes over, the Lexington, MA-based startup has the option to co-develop and co-commercialize in the US — and collect up to $1.1 billion in milestones in the long run. The deal also covers two other potential drug candidates.

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Fangliang Zhang (Imaginechina via AP Images)

The big mon­ey: Poised to make drug R&D his­to­ry, a Chi­na biotech un­veils uni­corn rac­ing am­bi­tions in a bid to raise $350M-plus on Nas­daq

Almost exactly three years after Shanghai-based Legend came out of nowhere to steal the show at ASCO with jaw-dropping data on their BCMA-targeted CAR-T for multiple myeloma, the little player with Big Pharma connections is taking a giant step toward making it big on Wall Street. And this time they want to seal the deal on a global rep after staking out a unicorn valuation in what’s turned out to be a bull market for biotech IPOs — in the middle of a pandemic.

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