Fundamentals have been bad in biotech land, something that is reflecting in share prices and IPO performance (XBI has halved since peak).
Positive news flow among small and mid-cap biotechs, which hit 60% in 2020, has just fallen below 30%.
“But it’s not just small caps, it’s across the sector: Jefferies’ Michael Yee said of 45 major clinical readouts from large and small players, only 20% were positive.”
Clinical holds have also spiked – 2022 is off to a bad start (13 holds in 8 weeks) and could surpass the already bad 2021 (>50 vs. 30 average historically.
The full article offers some explanations of what is going on.
Excellent review by Bruce Booth, partner at Atlas Ventures, of 2021 Year in Biotech.
It covers the impact of the pandemic (both good and bad), current pipeline (5,000 compounds, $180bn of R&D spend), policy picture, the abundance of capital against constrained talent (here and 25:30) and so much more!
Yet according to this article, reality is very far away, if not unachievable.
First, you need a bioreactor facility – even one that is equivalent to 1/3 of all the volume of the entire biopharmaceutical industry today would only yield 22m pounds of lab-grown protein or 0.02% of US meat production.
To get to 10% of global meat consumption in 2030 you need 4,000 of these at a cost of $1.8 trillion.
The bigger problem is these are live animal cells and hence are very vulnerable to any contamination. Bacteria would crush these cells as they grow much faster, while viruses would infect as the culture has no immune system. These cascade shutting down entire production facilities.
The solution – clean rooms – are very expensive.
Full paper on the topic and h/t NZS Capital (which lists many other problems from the article).
We previously covered one brilliant tool to emerge from his lab – Project Alpha – which tracks in real time probability of success for clinical trials.
This is a good article about him and how his ideas about pooling biotech research into a mega-fund has come to life with BridgeBio (IPOed in 2019).
A really brilliant article on the state of Covid vaccine development.
It gives a great overview and introduction into vaccines in general.
There are 115 vaccines in development (78 currently active).
There is a vast range of vaccine types (as the diagram shows). The article explains what all these types are.
“We are only going to find out, in the end, by dosing people. Lots of people. With therapies targeting the immune system, there is in the end no other way to know, because of the complexities of the human immune response and its wide variation in the human population .. some of the steps are going to have to be done on a scale never before attempted … there are going to have to be some shortcuts.“
There is one thing that can’t be skipped – how long immunity lasts. This question can only be answered with time.
On safety – “Now you see the exact bind that vaccine development has always been in, because the whole point is to treat millions, even billions of people who are not currently sick, to protect them against disease while not doing more harm along the way by setting off the body’s fiercest and most alarming biological responses.“
On manufacturing – “My guess is that scale-up and manufacturing could well be the biggest chance for the timelines mentioned earlier to blow up“.
There is a willingness to pre-fund manufacturing, across all these varied types of technology, before efficacy is established by Bill Gates and others.
However, these views are outdated (data tends to run to 2010), often fail to account for start-ups (i.e. by following a pre-existing cohort) and are an extrapolation of a trend.
The pictured chart is an updated graph of the number of new drugs or new molecular entities (NMEs) per $bn of R&D spend.
Interestingly it has actually been stable for much of the 2000s and can be explained in part by the industry having better information and how it is used. This article explains in depth.
“In this cohort of patients hospitalized for severe Covid-19 who were treated with compassionate-use remdesivir, clinical improvement was observed in 36 of 53 patients (68%).”
Crucial to understand the limitations of this data – the need for a randomised placebo controlled trial.
Gilead’s (GILD) CEO Daniel O’Day in an open letter expresses this.
These trials are ongoing with results coming in end of April/May.
“While it may feel like a long wait for data given the urgency of the situation, it has been only two months since the first clinical trials began. Given that it can take a year or more to have the first clinical data for an investigational treatment, it is remarkable that we expect to have the first remdesivir trial data so soon.”
The latest buzz from Chicago is also just a snapshot and drawing conclusions is “scientifically unsound“.
Under the radar the FDA has introduced a new regulatory pathway for insulin biosimilars (generic copies of biologic drugs).
“Today is a milestone for the future of insulin and other important treatments – potentially a new era of proposed biosimilar and interchangeable insulin products.”
This will increase competition.
Likely a big issue for the insulin oligopoly Sanofi, Novo Nordisk and Eli Lilly.
Clinicaltrials.gov counts 104 active studies in the US.
There is also SOLIDARITY, a WHO megatrial announced on Friday.
Drugs in Clinical Trials:
Chloroquine (Plaquenil) – 70 year old treatment for malaria repurposed. Only small open label trials done so far (here, here and here) show encouraging early results.
Siltuximab, Sarilumab and Tocilizumab – all IL-6 inhibitors (for anti-inflammatory conditions) repurposed and being clinically tested.
Remdesivir – previously tested for other viruses including Ebola. Two phase III studies initiated.
Fascinating article about why viruses, like the current Corona virus outbreak, tend to come from bats.
Why Bats? They are mammals, so sufficiently close to us, not domesticated, and live in huge flocks
Bracken Cave, in Texas, is home to roughly 20 million breeding Mexican free-tailed bats, similar to the (human) population of the Mexico City urban area. In places there are 500 bat pups per square foot on the wall. To a virus that represents a tasty buffet.
Citron Research, famed for short selling reports, are recommending long this stock – Schrodinger (SDRG).
They describe it as – “the most disruptive software platform to ever hit the pharmaceutical industry, which also happens to be backed by the world’s most sophisticated investors, has just gone public.“
Looks interesting and is worth investigating. The shares are sadly ca. +100% since IPO already.
As always with investing – this is not a recommendation, do your own work, use common sense.
Biotech investors take note – Eli Lilly are out for deals.
“Eli Lilly and Co aims to announce roughly one $1 billion to $5 billion deal every quarter in 2020, its chief financial officer told Reuters, as the U.S. drugmaker looks to build up its pipeline of future products.“
“It will focus largely on earlier stage opportunities across key therapeutic areas including oncology, pain, immunology, and neurology“
