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  • Jonathan Poyer

Q1 2023: Biotech Winners and Losers - Clinical Trials and Program Updates




We may have seen the beginning of a vigorous M&A period starting in Q1 2023.


There were three deals announced at the JP Morgan Healthcare conference in January. Chiesi Farmaceutici S.p.A. (certified B Corp) agreed to acquire Amryt Pharma Plc (AMYT) for $14.50 upfront cash or $1.25 billion representing a ~107% premium to the prior close, plus a $2.50 contingent value right (CVR) for up to an additional ~$225 million in payments based on pipeline progress.



The deal was a smaller scale version of Amgen’s (AMGN) acquisition of Horizon Therapeutics (HZNP) from last December as it expands Chiesi’s commercial rare disease offerings.


AstraZeneca PLC (AZN) agreed to buy CinCor Pharma (CINC) for $1.3 billion upfront or $26 per share representing a >100% premium to the prior close.



The deal also included a $10 per share CVR for an additional $500 million, based on a regulatory submission for the lead asset, baxdrostat. CINC had been trading at a negative enterprise value (EV = market capitalization net of cash and debt) following mixed results in a mid-stage clinical trial last November. The upfront deal price was essentially the same value that CINC was trading at before the mixed data release, and well below the 2022 high of ~$43 per share.


Positive program updates came from positive clinical and regulatory updates from the following:

  • Acadia Pharmaceuticals (ACAD) announced the approval of the first drug for Rett Syndrome, DAYBUE (trofinetide). Rett is a rare genetic disease that severely impairs brain development and may be lethal, providing a basis for ACAD’s ~$400k estimated annual cost of therapy.

  • Viridian Therapeutics (VRDN) reached an all-time high on additional favorable updated data from their thyroid eye disease (TED) program.

  • Intra-cellular Therapies (ITCI) rallied on positive topline results from Study 403 evaluating lumateperone as monotherapy in the treatment of major depressive episodes in patients with mixed features. Peak revenue estimates for ITCI’s lead drug now exceed $2.5 billion.



Investing in biotech oftentimes leads us to thinking that it is just important to not own certain securities as it is to own certain securities. Avoiding negative clinical and regular events is important. The following situations where negative program updates resulted in dramatic share price declines:


  • Frequency Therapeutics (FREQ) crashed >80% upon announcing the failure of a phase 2b trial in hearing loss and a subsequent 55% reduction in force. FREQ’s FX-322 previously failed to show benefit in a prior P2 trial and the current negative result leaves no path forward as it was designed to definitively demonstrate efficacy.

  • Sorrento Therapeutics (SRNE) cratered nearly 75% upon filing for Chapter 11 bankruptcy in Texas. Embattled SRNE has been the target of short reports for controversial statements by management.

  • Vera Therapeutics (VERA) fell >60% as their experimental therapy for a renal indication fell short of wall street expectations.

  • Fulcrum Therapeutics (FULC) cratered 55% on announcing FDA placed a clinical hold on their small-molecule inhibitor of Embryonic Ectoderm Development (EED), FTX-6058, in sickle cell disease.

  • Altimmune (ALT) stock was cut in half following mid stage trial data that raised concerns over the tolerability profile of Pemvidutide, a peptidebased GLP-1/glucagon dual receptor agonist. The discontinuation rate was >25% in high dose group leading analysts to downgrade the stock as competitors that are further ahead appear to have a superior profile.

  • G1 therapeutics (GTHX) was cut in half when it stopped a Ph3 trial for trilaciclib in colorectal cancer after reviewing data that revealed the efficacy in the placebo arm was superior.



  • Nektar Therapeutics (NKTR) crashed ~50% on negative Phase 2 data for IL-2 conjugate rezpegaldesleukin in patients with systemic lupus erythematosus.

  • Graphite Bio (GRPH) fell >50% to a negative EV on news the first patient in their phase I CEDAR trial developed prolonged pancytopenia, a severe adverse event.

  • Aclaris Therapeutics’ (ACRS) Phase IIa study of oral zunsemetinib (ATI-450) for moderate to severe hidradenitis suppurativa (HS) did not meet its primary or secondary endpoints sending shares down >50%.

  • Praxis Precision Medicines (PRAX) also fell ~50% on news the Essential1 study of ulixacaltamide for treatment of essential tremor failed to meet the primary endpoint.

  • Fate Therapeutics (FATE) also cratered >50% to a negative EV on announcing an end to a collaboration with Johnson & Johnson / Janssen (JNJ), discontinuation of several pipeline programs and a reduction in force (RIF) of ~60%. FATE was a former high-flyer and is now down >95% from the March 2021 peak of ~$10 billion market cap.

  • Esperion Therapeutics (ESPR) emphasized the risk of dilution as they conducted an emergency $56 million equity and warrant deal at an all-time low valuation. ESPR shares crashed >50% the prior week on news their partner Daiichi Sankyo (4568 JT) disputes their obligation to make $200-300 million in milestone payments based on ESPR’s recently reported CLEAR Outcomes trial data.

  • Cassava Sciences (SAVA) fell as Phase 2 data for simufilam, an oral drug candidate for Alzheimer’s disease dementia, failed to meet analysts’ expectations.

  • Taysha (TSHA) traded down significantly upon announcing FDA is requiring the company conduct a placebo-controlled trial for approval of their experimental gene therapy candidate for Giant Axonal Neuropathy. The management team at TSHA previously ran Avexis (acquired by Novartis) where they were able to get the controversial gene therapy treatment for SMA patients approved through a single arm, historical controlled trial with a limited number of investigators. Novartis subsequently reported issues with data integrity related to the Avexis program that led some analysts to suggest the drug may not have cleared the higher bar for success demanded by a placebo-controlled trial. Program positioning, data quality and management credibility all play a role in regulatory discussions.


The S&P Select Biotech Index continues to consolidate above the 2022 lows as green shoots push through the scorched earth. Favorable regulatory developments continue to furnish a pathway to market for innovative therapies, even those with a measure of controversary. The therapeutics business model continues to perform independent of broader economic headwinds with a growing number of products beating financial projections. Reset valuations, cash flush pharma balance sheets and the strategic imperative for growth heighten expectations for M&A.


The scarcity value of differentiated assets is increasing. For the rest of the sector, capital efficiency and a high bar for program advancement are coming back into vogue as the era of infinite money printing has come to an end. Creative destruction will continue to cull the herd of aspiring development stage SMID innovators, but the resulting group continues to offer an improving risk/reward profile. Although it’s not yet apparent at the S&P Select Biotech Index level, good news is starting to pile up for a growing number of individual components.

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