Biopharmaceutical Sector - Market Update - February 28, 2022 - Torreya
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Biopharmaceutical Sector
Market Update – February 28, 2022
© 2022. All rights reserved. Securities offered in the United States are offered through Torreya Capital LLC, Member FINRA/SIPC. In Europe
such services are offered through Torreya Partners (Europe) LLP, which is authorized and regulated by the UK Financial Conduct Authority.
1
Ukraine and the Stock Market
2
Unwelcome Geopolitical News
Source: New York Times, Feb 24, 2022
3
Ukraine Invasion Is Putin’s Most Aggressive Move Yet to
Restore Russia’s Place in the World
The Russian president has sought for two decades to recapture status lost with the Soviet Union’s collapse
WSJ 2/24/2022 —Russia’s invasion of Ukraine is President Vladimir Putin’s
most aggressive move yet in his two-decade-long campaign to reassert Russia’s
place in the world and redeem the humiliation of the fall of the Soviet Union.
It is an extraordinary gamble.
In invading his smaller neighbor, Mr. Putin now faces a breakdown in Moscow’s
ties with the West, which will slap sanctions on Russia aimed at inflicting deep
pain on its economy.
Members of the North Atlantic Treaty Organization, which have already sent
fresh military equipment and forces to its eastern members in recent weeks,
have found new unity in deterring Russia. “He’s given priority to his own
obsession over Russia’s interests,” said Kadri Liik, a senior policy fellow at the Russian President Vladimir Putin now faces a breakdown in Moscow’s ties with the West.
European Council on Foreign Relations. “But he risks Russia’s economic
development, Russia’s global position and also Russia’s internal stability in
order to get hold of Ukraine.”
Source: https://www.wsj.com/articles/ukraine-invasion-is-putins-boldest-move-yet-to-restore-russias-place-in-the-world-11645731030
4
Invasion Has Been Associated with an Increase in
Energy Prices
Feb 25, 2022: Russia’s invasion of Ukraine threatens to restrict global energy supplies, with the resulting rise in
oil and natural-gas prices likely to hit Europe hard and potentially ripple out to the U.S. and other global
markets.
It’s the last thing the global economy needs: Another “supply shock,” or a sudden shortage of key products—in
this case oil, natural gas and other commodities—that is likely to exacerbate a global inflation problem and
make matters harder for the Federal Reserve and other central banks, which are trying to prevent consumer
prices from rising out of control.
The global economy is still recovering from a series of supply shocks over the past two years, having suffered
shortages of grains and meats, durable goods and other products. Now, military conflict in Ukraine, Western
sanctions against Russia, and Russian economic retaliation have driven oil prices near $100 a barrel, and
natural-gas prices are also up.
5
Market Moves on Friday, Feb 25, Positive Feb 25, 2022: “U.S. stock benchmarks, led by the Dow Jones Industrial Average, ended sharply higher Friday, as investors who were cautious about buying at the onset of the military clash in Eastern Europe turned eager to hunt down bargains. The upbeat tone on the markets was tied, at least in part, to reports that Russia was in favor of talks with Ukrainian leadership. However, Moscow’s military force was on display as it pressed toward the capital of Ukraine. How did stock indices perform? The Dow Jones Industrial Average DJIA, +2.51% surged 834.92 points, or 2.5%, to close at 34,058.75, with the blue-chip gauge notching its best daily gain since early November 2020. The S&P 500 SPX, +2.24% rose 95.95 points, or 2.2%, to end at 4,384.65. The Nasdaq Composite Index COMP, +1.64% added 221.04 points, or 1.6%, to finish at 13,694.62. For the week, the Dow dipped by less than 0.1% while the S&P 500 rose 0.8% and Nasdaq Composite climbed 1.1%. The S&P 500 and Nasdaq benchmarks wiped out losses from earlier in the week.” Source: https://www.marketwatch.com/story/u-s-stock-futures-fall-amid-ukraine-invasion-jitters-despite-late-rally-on-wall-street-11645752694 6
Market Reaction to Ukraine Invasion Has Been
Manageable
Barrons (2/25/2022): “It’s been a pretty seismic 36 hours and at some points yesterday
the outlook for markets and economies felt very bleak,” said Jim Reid, a strategist at
Deutsche Bank DB-11.07% . “S&P 500 and Nasdaq futures are down again this morning
but this is still clearly well off the lows.”
Markets have been on edge for weeks over the threat of war in Europe. Russian troops
had been massing at the country’s borders amid Moscow’s objections to Ukraine’s
possible membership in the North Atlantic Treaty Organization, the Western defensive
alliance. The situation darkened from Monday as the prospect of a diplomatic resolution
faded, before Moscow ordered a full-scale invasion early Thursday, attacking Ukraine from "There are decades
the south, east, and north.
where nothing happens;
and there are weeks
One of the greatest concerns for investors is how conflict could impact the oil market.
where decades
Global crude supply remains tight and prices were already around seven-year highs before
happen."
Russia attached Ukraine. Sanctions against Russian oil—which have yet to materialize—or
major disruptions to crude production due to war could lead to the price of the
commodity surging even further. Vladimir Ilyich Lenin
Source: https://www.barrons.com/articles/stock-market-today-51645784920 7
No Quick Victory for Putin. Increasing International
Consequences
Vladimir Putin was facing growing international isolation and the prospect of pariah status on Saturday night as long-
term allies dramatically turned against him following the invasion of Ukraine, and western nations planned further
decisive military and financial action against Moscow.
As his hopes of a quick victory evaporated in the face of fierce resistance by Ukrainian soldiers and armies of citizen
volunteers, Russia’s president was deserted by his key ally, China, and had his ultimatum demanding Kyiv’s surrender
Feb 26, 2022 defiantly brushed aside by Ukraine’s president, Volodymyr Zelenskiy.
In perhaps the most striking development, Germany announced on Saturday night that it would supply Ukrainian
troops with 1,000 anti-tank weapons as well as 500 Stinger missiles from its own military reserves.
“The Russian assault on Ukraine marks a turning point,” Germany’s chancellor, Olaf Scholz, said, signalling a major
shift in his country’s postwar military stance. “It threatens our entire postwar order. In this situation it is our duty to
support Ukraine to the best of our ability in its defence against the invasive army of Vladimir Putin. Germany stands
closely on the side of Ukraine.”
Significantly, the German government was also said to be bowing to intense pressure from Britain, the US and Canada
to ban Russia from the crucial Swift banking payments system after repeated appeals from Kyiv for the west to do so.
Sources in Berlin said German ministers’ views were shifting on the issue and they were actively discussing measures
that “would hit the right people”, having previously resisted, partly because of fears that a ban would affect the flow
of funds to aid agencies in Russia.
8
Potential Impact on the Global Economy Feb 25, 2022: A conflict that could develop into Europe’s biggest since the second world war has shattered hopes of a strong global economic recovery from coronavirus at least in the short term. Russia’s invasion of Ukraine on Thursday shook financial markets and the increased geopolitical tensions are set to exacerbate high inflation and supply chain bottlenecks. The direct impacts of lower trade with Russia, economic sanctions levied on Moscow by the US and EU, and financial contagion are likely to be outweighed by the indirect consequences from the effect on business and consumer confidence and commodity markets, economists said. These repercussions could range from relatively limited to extremely serious. If energy prices continued to soar, for example, it could easily tip the global economy into a second recession in three years. Source: https://www.ft.com/content/a6227910-751b-443c-883f-2ed41a828426 9
Geopolitical and Industry Implications
There are obvious negative geopolitical implications of Russia’s invasion of
Ukraine. We were surprised to see a positive market response on Feb 25th.
Our own sense is that the invasion may presage destabilizing geopolitical
changes.
We live in a world that principally features economic rather than military
competition between powerful countries. It’s surprising, obviously, to see a
sitting member of the UN Security Council engage in a conventional military
attack on a neighboring country. Russia had historically given the Ukraine a
security guarantee under the 1994 Budapest Memorandum as part of
Ukraine’s agreement to give up its nuclear weapons. Russia has received
quiet support from China which is also not happy with its neighbor, Taiwan. There are obvious potential repercussions on the life
There are implications as well for NATO membership in countries such as sciences sector which is present in every country.
Finland and Sweden. Multinationals with direct presence in the Ukraine and
Russia include Bayer, Sanofi, Novartis, Menarini, Recordati,
The U.S. and other Western countries have thus far responded with Servier, Sun Pharma, Reddys and Teva. To say nothing of
economic sanctions and one could expect retaliatory moves from Russia. The highly successful Ukraine pharma companies such as
context is potentially disruptive given the possibility of cyberattacks, Darnitsa and Farmak. Some Ukrainian companies are also
countersanctions and the like. deeply embedded in the biotech sector’s drug design
efforts. Ukraine is also an important site for clinical trials.
The long-term implications of changing geopolitical sands are not good for The current dispute has potential to slow a host of ongoing
the world’s order and, by implication, the market’s circumstances and clinical trials.
background.
10How Russia's invasion of Ukraine may impact pharma-
biotech R&D
Feb 26, 2022: “As the Russian invasion of Ukraine continues, several pharma and biotech companies have exposure to both countries through
clinical trials being conducted there.
One biotech, Karuna Therapeutics (NASDAQ:KRTX), has already said the disturbance has impacted a late-stage trial. On Thursday, the company
indicated that a top-line data readout of the EMERGENT-3 trial of KarXT for schizophrenia expected in the second half of this year may not
happen. The study is ongoing in the U.S. and Ukraine.
Jefferies analyst Chris Howerton noted that any delays in Ukraine may not have as big an impact as feared if data from the EMERGENT-2 trial,
which has U.S. sites only, has a positive readout around mid-year.
Howerton added that several other small biotechs he follows have at least some exposure to Ukraine: Applied Molecular Transport
(NASDAQ:AMTI), Intra-Cellular Therapies (NASDAQ:ITCI), TG Therapeutics (NASDAQ:TGTX), and Veru (NASDAQ:VERU).
For example, Veru (VERU) has a phase 3 trial evaluating enobosarm in breast cancer. About one-third of the trial sites outside of the U.S. are in
Ukraine. However, Howerton wrote that since the trial only recently began, the company can make adjustments and meet timelines. Intra-
Cellular Therapies (ITCI) has a phase 3 study of its antipsychotic Caplyta (lumateperone) as a monotherapy for bipolar depression and major
depressive disorder ongoing. Seven of 42 trial sites are in Ukraine, and another eight are in Russia.
There are a few larger pharmas and biotechs with R&D efforts in Russia and Ukraine, namely Biogen (NASDAQ:BIIB), Incyte (NASDAQ:INCY),
and Eli Lilly (NYSE:LLY). Biogen (BIIB) has some sites in Russia for several phase 3 trials, including one for the the Alzheimer's drug lecanemab.”
Source: https://seekingalpha.com/news/3806107-how-the-russia-invasion-ukraine-may-impact-pharma-biotech-research-developmment
11XBI Biotech Index Flat Last Week
NASDAQ Biotech Index, Aug 1,
Biotech Stocks Flat VIX Flat for Week 2021 to Feb 25, 2022
Return: Feb 18 to Feb 25, 2022 Jan 3: 16.6% 5400
Jan 18: 22.8%
5200
Feb 4: 23.2%
Nasdaq Biotech Index: 1.0% Feb 11: 27.4%
Arca XBI Index: 0% Feb 18: 27.9%
5000
Torreya Global Biotech: -1.1% Feb 25: 27.6%
4800
S&P 500: +0.8%
4600
Return: Jan 1 to Feb 25, 2022 Ten-Year Treasury Yield Up
4400
4200
Nasdaq Biotech Index: -15.2% Jan 3: 1.63%
Arca XBI Index: -19.8% Jan 18: 1.87% 4000
Torreya Global Biotech: -38% Jan 28: 1.78%
S&P 500: -8% Feb 10: 1.92% 3800
Feb 18: 1.92%
Feb 25: 1.98%
Source: S&P Capital IQ, Google and Torreya analysis
12Life Sciences Equity Markets is at an All-Time Value
Value of Public Life Sciences Companies Worldwide by Subsector
Record ($8.5 Trillion)
The global life sciences sector rose in value by 1.6% last week ($155 billion). Biotech was down 1.1%.
Diagnostics, CDMO’s and devices were all up.
Enterprise Value Change in Last Week Change in Last Change in Last Year
Sector Count
(Feb 26, 2022, $millions) (percent) Month (percent) (percent)
API 82 $102,158 0.7% 4.0% 7.6%
Biotech 896 $277,086 -1.1% 3.2% -44.8%
CDMO 42 $271,959 3.5% 1.5% 0.6%
Diagnostics 82 $292,234 4.1% 2.7% -14.5%
OTC 33 $27,741 -0.3% 4.4% 1.5%
Pharma 714 $5,600,597 0.6% 1.1% 3.9%
Services 42 $264,776 3.3% -0.1% 6.0%
Tools 54 $803,319 3.0% 2.2% 9.9%
Devices 186 $1,928,234 3.9% 5.3% -3.3%
HCIT 12 $78,217 1.5% 7.4% -37.5%
Total 2143 $9,646,465 1.6% 2.2% -0.9%
Source: CapitalIQ 13145 Negative Enterprise Life Sciences Companies Source: CapitalIQ 14
Global Public Biotech Market Statistics
The pandemic’s impact on our sector is now two years old. Since the start, the median biotech
market cap is up 12.7%. However, since market peak over half of biotechs are down 50% or more.
Market Capitalization Statistics for Worldwide Biotechnology Company Population, Feb 25, 2020 to Present
Over Last Over Last Since Market Over Last Two
Item Week Month Year to Date Peak (2/8/21) Years
Number of Companies 894 891 887 776 644
Market Cap is Down 62% 55% 87% 85% 44%
Down More than 25% 1.5% 7.1% 43.6% 73.3% 32.6%
Down More than 40% 0.4% 1.6% 17.4% 62.2% 24.5%
Down More than 50% 0.2% 0.9% 6.4% 51.2% 20.5%
Up More than 50% 0.1% 1.6% 1.1% 6.1% 37.4%
Up More than 40% 0.2% 3.0% 1.9% 7% 39.8%
Up More than 25% 0.6% 8.2% 6.1% 8.4% 45.7%
Median Return -2.3% -1.6% -21.7% -51.9% 12.7%
Source: CapitalIQ 15Biotech Returns by Country / Exchange
Since Market Over Last Two
Item Over Last Week Over Last Month Year to Date Peak (2/8/21) Years
Australia (N=31)
Negative Return 87% 70% 97% 82% 38%
Median Return -7.5% -5.6% -23.6% -42.9% 104.6%
Canada (N=24)
Negative Return 83% 54% 75% 74% 36%
Median Return -4.2% -3.5% -11.7% -31.1% 25.5%
China/HK (N=26)
Negative Return 65% 50% 92% 90% 65%
Median Return -3.3% -1.0% -25.2% -43.7% -10.2%
Europe (N=139)
Negative Return 80% 82% 92% 83% 38%
Median Return -5.0% -8.4% -21.5% -39.7% 21.8%
Source: CapitalIQ. Biotech is defined as a therapeutics / drug development company without an approved product. Return is defined as percent change in market cap. 16Biotech Returns by Country / Exchange (Continued)
Since These data reveal how the
Over Last Over Last Market Peak Over Last pandemic has impacted
Item Week Month Year to Date (2/8/21) Two Years individual national biotech
sectors over a period of two
Japan (N=24) years.
Negative Return 88% 58% 88% 95% 75%
The U.S. has, by far, the largest
Median Return -4.9% -3.8% -16.1% -49.1% -25.0% biotech sector. Two years later,
the sector’s value has ended
South Korea (N=41)
close to where it started. The
Negative Return 80% 56% 90% 81% 32% median U.S. biotech’s market cap
is up 5.6%. 47% traded down
Median Return -2.7% -1.5% -23.2% -24.4% 26.3% and 53% traded up. The sector,
Taiwan (N=30) today, is down 60.8% from peak.
Negative Return 53% 37% 60% 33% 22% Unlike the U.S., the biotech
sectors in Australia, Canada and
Median Return -1.2% 2.7% -2.4% 14.1% 86.0%
Europe have fared well and are
United States (N=552) up since the start of the
pandemic. In contrast, China and
Negative Return 52% 47% 87% 89% 47%
Japan have traded down since
Median Return -0.5% 0.7% -24.2% -60.8% 5.6% the start.
Source: CapitalIQ. Biotech is defined as a therapeutics / drug development company without an approved product. Return is defined as percent change in market cap. 17Perceived Risk of a Big Fed Tightening Has Collapsed
After Ukraine Invasion
Probability of a 50 bp Increase in Fed Funds at March 16, 2022 FOMC
US Treasuries have caught Meeting
their usual flight-to-safety bid 100%
and expectations for 90%
upcoming Federal Reserve 80%
rate hikes have collapsed. (See
70%
chart at right.)
60%
All else equal, lower rates and 50%
a flatter treasury yield curve 40%
should be a net positive for
30%
risk assets and is a positive for
the markets in near term. 20%
10%
0%
1/3/2022
1/5/2022
1/7/2022
1/9/2022
2/2/2022
2/4/2022
2/6/2022
2/8/2022
1/11/2022
1/13/2022
1/15/2022
1/17/2022
1/19/2022
1/21/2022
1/23/2022
1/25/2022
1/27/2022
1/29/2022
2/10/2022
2/12/2022
2/14/2022
2/16/2022
2/18/2022
2/20/2022
2/22/2022
1/31/2022
Source: CME, https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html 18Berkshire Hathaway Annual Shareholder Letter
Highlights Market Valuations
Warren Buffet, CEO, Berkshire Hathaway
Berkshire Hathaway’s annual shareholder
letter is out today and makes for great
reading. Warren Buffett and Charlie Munger
complain about high valuations in the
public markets caused by low interest rates.
Source: https://berkshirehathaway.com/letters/2021ltr.pdf
19Industry News
20The Post-Theranos World
Point of care testing is coming of age
That global market is currently valued at ~$208 billion, with an expected
2/8/2022: Advances in technology and changes to healthcare during the combined annual growth rate of 10%. In the United States, blood tests can
pandemic may finally realize the vision of patient-centric blood testing espoused cost hundreds of dollars, depending on the state, clinical center or insurer.
by disgraced Theranos CEO Elizabeth Holmes. And for ambulatory testing, it can take days to receive results, delaying
changes to treatment plans and forcing patients to make multiple trips to
On 10 January, Elizabeth Holmes was found guilty of defrauding investors out of their doctor. As a result, nearly a third of patients getting blood drawn in a
hundreds of millions of dollars. The conviction is the culmination of a meteoric fall doctor’s office never follow up on their test results — not to mention the
from grace — just six years ago, she was the iconic CEO heading blood-testing many who cannot afford to travel or miss work for clinical checkups.
company Theranos, with a >$9 billion valuation and partnerships with the
Cleveland Clinic and pharmacy chain Walgreens. This is what motivated Theranos — and motivates firms like Genaltye and
Cepheid — to pursue integrated POC blood testing. It can transform acute
Of course, Holmes and Theranos never delivered. She habitually lied about the care in neonatal units, emergency rooms and operating rooms; and it can
company’s Edison miniaturized blood analyzer, which was supposedly running be rapid, convenient and integrated into outpatient care. Cepheid’s
~240 tests on a disposable cartridge containing 10 μL of blood. And she went to GeneXpert system (already in 25,000 locations worldwide) runs up to 20
great lengths to conceal the inaccuracy of those tests, all but 12 of which were tests, giving results in 20–120 min; Genalyte’s Maverick photonic ring
running on other manufacturers’ machines modified to work on diluted samples. resonance system runs up to 26 tests on a blood drop in 30 mins — fast
enough to have results back while the patient waits in the doctor’s office.
But four years after Theranos’s lights went out, advances in blood analysis —
including volumetric adsorptive microsampling (VAM), integrated point-of-care Many new startups — Drawbridge Health, Neoteryx, Tasso, Captainer,
(POC) devices, wearables and telemedicine — are reaching an inflection point that PanoHealth, HemaXis and On the Spot — are looking into VAM, a form of
could make Holmes’s fantasy attainable. And, with the COVID-19 pandemic the dried blood spot, which is less invasive than a traditional vein draw and
forcing healthcare providers to adopt a more patient-centric model, the doesn’t require cold-chain transportation. But this also has drawbacks:
centralized laboratory testing market appears ripe for disruption. sample exposure to humidity and temperature swings can accelerate
hemolysis, altering the content of lipids and other analytes and interfering
with spectrophotometric assays. Some companies are seeking to overcome
this by separating plasma from hematocrit before drying.
Source: https://www.nature.com/articles/s41587-022-01242-0
21New Insights into ALS
A pioneering new study led by UCL and National Institutes of Health (NIH) scientists
has revealed, for the first time, why a common genetic variant worsens disease
outcomes for people with the devastating adult-onset neurodegenerative diseases
amyotrophic lateral sclerosis (ALS) and frontotemporal dementia (FTD).
Published in Nature, the study shows how TDP-43 protein depletion, associated with
almost all cases (97%) of ALS and half of FTD cases, corrupts the genetic instructions
for the critical neuronal protein UNC13A.
Strikingly, it found that a mysterious genetic variant previously associated with
disease risk increases the chance of UNC13A's genetic instructions being corrupted
among people with the diseases, thereby worsening risk and severity of ALS and
FTD.
UNC13A enables neurons (nerve cells) to communicate with each other via
neurotransmitter release, and data from animal models suggests its loss from
neurons can be fatal. The researchers believe that the corruption of UNC13A's
genetic instructions in patients may have similarly harmful consequences.
ALS is the most common motor neuron disease and there is no known cure; it
affects the brain and spinal cord by attacking the neurons and nerves which control
movement, causing them to die. There is currently only one approved drug for ALS
in the UK, which extends lifespan by a few months, and is only effective for a tiny
minority of patients. One third of patients die within one year of diagnosis.
22
Source: https://www.sciencedaily.com/releases/2022/02/220223111310.htm23
GSK Consumer Brand Name Announced
Feb 22, 2022
Some cool graphical info on
Haleon at:
https://www.gsk.com/en-
gb/investors/a-new-consumer-
healthcare-company/
24tRNA therapeutics burst
onto startup scene
2/24/2022: Alltrna launched in November 2021 billing itself as “the world’s first
tRNA platform company.” By engineering transfer RNA molecules — the cellular
couriers of protein synthesis — the startup, backed by $50 million in initial
financing, aims to address the mechanisms of faulty protein production that can
trigger all manner of disease.
But Alltrna is hardly alone in its pursuit of tRNA-based therapeutics. ReCode
Therapeutics, Shape Therapeutics and Tevard Biosciences all came before it; and
the field continues to expand with the arrival of hC Bioscience, a startup that
emerged from stealth mode in late February with $24 million and a plan to fight
cancer and rare diseases with tRNA. discovery at the non-profit Cystic Fibrosis Foundation. “It unlocks an ability
to meet unmet need in patient populations that otherwise are completely
All of the companies are focused, at least in part, on designing tRNAs to bypass neglected,” adds Alltrna’s founding CEO and director, Lovisa Afzelius.
premature stop signals and incorporate desired amino acids instead. Such
premature termination codons — which function like misplaced periods in the Yet, for all the preclinical promise of tRNA technologies, it is not yet certain
middle of a sentence to muddle the message encoded in messenger RNA (mRNA) that the platform will outperform small-molecule ‘readthrough’ drugs such
— are responsible for an estimated 11% of all inherited disease. In theory then, as Translarna (ataluren), a treatment approved in Europe and Brazil for
just one ‘suppressor’ tRNA could conceivably remedy thousands of different rare patients with nonsense mutation–mediated Duchenne muscular dystrophy.
inherited disorders, each caused by the same types of truncating ‘nonsense’ Plus, gene-editing strategies under development could rival tRNA drugs as
mutations that result in faulty gene expression. well.
“If it can be done safely, it really opens the door for an entire new class of “We don’t know the efficacy of the suppressor tRNAs in vivo yet,” notes Kim
therapies,” says William Skach, a strategic adviser for research and drug Keeling, a molecular geneticist at the University of Alabama at Birmingham
who continues to search for compounds with improved readthrough
activity. “I’m not sure we can exclude one technology over another yet.”
Source: https://www.nature.com/articles/s41587-022-01252-y
25RNA Continues to be Hot: Lilly Investing $700mm Into a New RNA Medicines Site Source: https://investor.lilly.com/news-releases/news-release-details/lilly-announces-institute-genetic-medicine-and-700-million 26
Decentralized Science Landscape
The notion of science
without traditional
peer review, exploiting
the web and
blockchain has gained
momentum. This
recent chart highlights
progress in this area.
Source: https://twitter.com/UltraRareBio 27CVS Drug Trend Report Highlights Impact of Biosimilars
on U.S. Pharma Market
Source: https://insightslp.cvshealth.com/2021-drug-trend-report.html
28CVS Drug Trend Report Highlights Importance of
Autoimmune Drugs in U.S. Spending Growth
Source: https://insightslp.cvshealth.com/2021-drug-trend-report.html
29Public Equity Offerings
30Weekly Global
Biopharma Biopharma
Sector IPO by
IPO Activity Volume
Month, 2020 to 2021
Last week saw a Lepu’s China IPO price. Otherwise, the market was closed.
Biopharma IPO Volume ($ million), Weekly, May 24, 2020 to Feb 25, 2022
4000
3500
3000
2500
Volume ($ millions)
2000
1500
1000
500
0
30-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan 28-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan
Week Ended
Source: Data from CapitalIQ
31Lepu Biopharma IPO
Feb 24, 2022: Lepu completed a US$116.1 million
initial public offering (IPO) and listing on the
mainboard of the Hong Kong Stock Exchange under
Chapter 18A of the Listing Rules.
The deal underwriters were CICC and Morgan
Stanley.
China-based Lepu Biopharma's product pipeline
features broad-spectrum anti-tumour drugs,
including primarily the anti-PD-1 antibody candidate,
as the backbone, and a dual focus on ADC and
oncolytic virus drug candidates, maximizing
synergies in both drug efficacy and
commercialization.
Source: https://menafn.com/1103753163/Lepu-Biopharma-Co-Ltd-Successfully-Listed-on-the-Main-Board-of-HKEX&source=26
32This is Not the Time to Go Public Biotech IPOs in the current market environment? Experts say it's 'a bit silly, if not suicidal' Feb 22, 2022: But the number of listings can’t be viewed in isolation. The stocks' performance and uptake in investor confidence—or lack thereof—should be considered, too. The average biotech IPO was down 22% last year, according to Jefferies. Jordan Saxe, Head of Healthcare Listings at NASDAQ, said it’s too early to comment on who outshone the competition last year, pointing to Moderna as an example of a biotech that wouldn’t have been expected to produce one of the quickest vaccine developments in history. Put more simply, it takes time to judge the new public entrants. Stampacchia didn’t mince words when he characterized the last 11 or so months as a bear market. As a case in point, nine of the top 10 biotech IPOs of 2021 are now trading well below their initial offering price. The largest debut, Sana Biotechnology’s $675 million raise last February, is a shell of its former self. The cancer and cell therapy biotech priced at $25 and shares are now roughly one-third, at $8.81 apiece in early February. Verve Therapeutics, a heart disease and gene therapy biotech, is the only company to fare better than on its first day of trading among Fierce Biotech’s top 10 list. The stock woes haven't deterred everyone, though, as cell therapy biotech Arcellx launched an IPO anyway earlier this month. The Takeda- and Novo-backed biotech raised about $124 million to fund a phase 2 study of its CAR-T BCMA therapy in multiple myeloma. Biotechs should have two to three years of capital runway, and, in a stock market environment that is “not conducive,” companies should come up with a Plan B, Saxe said. “[R]ight now, it just feels a bit silly, if not suicidal” to consider going public, Stampacchia said. Source: https://www.fiercebiotech.com/biotech/biotech-ipos-current-public-market-dump-its-little-silly 33
Biopharma Sector IPO Activity by Month, 2020 to 2021
Weekly Global Biopharma Follow-On Equity Volume
Last week saw nine follow-on offerings price for total issuance of $434 million. By any measure, it was a slow week. It’s
remarkable, in a way, that there was any activity in this market given the confluence of geopolitical turbulence with an upcoming
Fed tightening.
Biopharma Equity Follow-On Volume ($ million), Weekly, May 2020 to Feb 25, 2022
12000
10000
8000
Volume ($ millions)
6000
4000
2000
0
30-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan 28-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan
Week Ended
Source: Data from CapitalIQ
34Amgen Issues $750 million Green Bond
AMGEN ISSUES INAUGURAL GREEN BOND TO ADVANCE ESG GOALS
THOUSAND OAKS, Calif., Feb. 22, 2022 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced the issuance
of its inaugural $750 million green bond, with a 3.000% semi-annual coupon and maturing in 2029, to advance the
environmental goals that are part of Amgen's environmental, social and governance (ESG) framework.
The green bond is part of a $4 billion underwritten public offering of senior notes that were issued on February 22,
2022 and the use of proceeds from the green bond is aligned with the Company's Green Financing Framework.
S&P Global Ratings provided the second party opinion on the Framework and reported that it is aligned with the
Green Bond Principles (2021) administered by the International Capital Market Association.
Since 2007, Amgen has implemented environmentally focused projects resulting in a 33% reduction in carbon
emissions, a 30% reduction in water use and a 28% reduction in waste disposed. These reductions were achieved
even as the Company increased production capacity, expanded its presence to approximately 100 countries, and
grew revenues significantly. In January 2021, Amgen announced plans to achieve carbon neutrality in its operations
by 2027, while further reducing water use by 40% and waste disposed by 75%.
"As a science-based company, we understand the profound impact that climate change is having on human health
around the world," said Judy Brown, senior vice president, Corporate Affairs at Amgen. "This green bond will fund
specific projects across our company that are intended to mitigate our impact on the environment."
35Private Capital Markets Environment
36Weekly Global
Biopharma Biopharma
Sector Venture
IPO Activity Equity Placements
by Month, 2020 to 2021
We saw $810 million in private venture equity placements complete last week. The market picked up from a week ago.
Biopharma Venture Equity Privates Trend ($ million), Weekly, May 2020 to Feb 2022
5000
4500
4000
3500
Volume ($ millions)
3000
2500
2000
1500
1000
500
0
30-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan 28-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan
Week Ended
Source: Data from CapitalIQ, Crunchbase.
37Plexium Raises $102 Million Plexium Announces $102M Financing To Advance Pipeline Of Targeted Protein Degradation Therapies And Technology Platform Feb 23, 2022: Plexium, Inc., a leading next-generation targeted protein degradation (TPD) company, today announced the completion of an oversubscribed $102M financing, led by BVF Partners, L.P. and TCG X, with participation from new investors Softbank Vision Fund 2, RA Capital Management, Surveyor Capital (a Citadel company), and Pappas Capital. Existing investors The Column Group, DCVC Bio, Pivotal bioVenture Partners, Lux Capital, M Ventures, CRV, and Neotribe Ventures also participated in the round. In connection with the financing, Cariad Chester, partner at TCG X, has joined the Plexium Board of Directors. "We are proud of Plexium's significant progress toward becoming the premier targeted protein degradation company. From attracting the highest quality investors in our latest financing announced today to establishing a validating partnership with Amgen for oncology, we continue to enhance our best-in-class platform and expand our pipeline to improve patients' lives," said Plexium President & CEO Percival Barretto-Ko. "Plexium is well positioned to accelerate our programs toward the clinic and broaden our capabilities with a comprehensive and agnostic approach across multiple TPD modalities to address the vast undrugged landscape of opportunity that remains." Source: https://www.prnewswire.com/news-releases/plexium-announces-102m-financing-to-advance-pipeline-of-targeted-protein-degradation-therapies- and-technology-platform-301488513.html 38
Mergers and Acquisitions Environment
39Global Biopharma M&A Activity Continues to Be Soft
Biopharma Weekly M&A Volume, June 2020 to Feb 2022
Through 2021. Quite a Few Smaller Deals Happening.
There was no meaningful M&A activity in the biopharma sector last week.
Biopharma M&A Volume Trend ($ million), Weekly, May 2020 to Feb 2022
50000
45000
40000
35000
Volume ($ millions)
30000
25000
20000
15000
10000
5000
0
30-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan 28-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug 30-Sep 31-Oct 30-Nov 31-Dec 31-Jan
Week Ended
Source: S&P, CapitalIQ
40Taro to Acquire Alchemee From Galderma for $90mm
lchemee’s flagship brand Proactiv® is an iconic product synonymous with acne care
Feb 22, 2022: Galderma and Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro”) announced today they have signed a
definitive agreement for Taro to acquire Alchemee, formerly The Proactiv Company (TPC), from Galderma. The agreement between
Galderma and Taro includes Alchemee’s business and assets around the world, including the Proactiv® brand.
Proactiv® has been used and trusted by millions around the world for more than 25 years. Originally set up as a subscription-
based business, Proactiv® quickly became a leading U.S. consumer acne brand.
The acquisition is subject to customary closing conditions and any necessary regulatory approvals. Financial terms of the
transaction have not been disclosed.
About Alchemee
At Alchemee, we aspire to inspire. We are alchemists at heart, harnessing science to create powerful wellness solutions. The
combination of alchemy and “me” offers the right mixture of science, expertise, and support that empowers our customers with
confidence. Through one-of-a-kind expert-designed formulas and positive guidance, Alchemee provides solutions that are as
effective as they are transformative. At Alchemee, we are committed to empowering the world one person at a time. Alchemee.
Transformation beyond expectation. www.alchemee.com
Source: https://www.businesswire.com/news/home/20220222005795/en/Taro-to-Acquire-Alchemee-From-Galderma
41Amicus and Perceptive call off SPAC merger for gene
therapy spinout after recent setback
Feb 24, 2022: Roughly a month after Amicus Therapeutics reported an unexpected setback in a gene therapy planned
to be spun out in a SPAC deal, the biotech and its blank check partner have called off the merger — the second high-
profile SPAC decoupling in recent months. Amicus will not spin out its gene therapy unit with Arya Sciences
Acquisition IV, the fourth SPAC belonging to Joseph Edelman’s Perceptive, after all. The two say they have mutually
agreed to end merger discussions, leaving Edelman with about another year to find a partner to take public. In a
conference call Thursday morning with investors detailing full-year 2021 results, Amicus CEO John Crowley said the
decision resulted from “current unfavorable market conditions” related to biotech IPOs, SPACs and follow-on
financings. He also described an “increasingly challenging” environment for standalone gene therapy companies —
both on Nasdaq and at the FDA. Additionally, Crowley said Amicus will be laying off about 7% of employees from its
R&D department, or about 35 people in total. The long-term plan is to keep Amicus’ staff flat “over the next several
years,” he said, and the biotech will be hiring additional workers in other areas to compensate for the layoffs. Amicus
shares were down about 9% before Thursday’s opening bell but rebounded to about flat as the market opened.
Source: https://endpts.com/amicus-and-perceptive-call-off-spac-merger-for-gene-therapy-spinout-after-recent-setback/
42DOJ Sues to Block UNH Acquisition of Change
Healthcare
We continue to see signs of an active
Biden administration antitrust stance in
2022.
Source: https://www.justice.gov/opa/pr/justice-department-sues-block-unitedhealth-group-s-acquisition-change-healthcare
43Sartorius in $11 bln bid for COVID vaccine reagent
vendor Maravai -sources
Feb 25, 2022: Laboratory supplies vendor Sartorius AG (SATG.DE) has approached Maravai LifeSciences Holdings Inc (MRVI.O),
a U.S. provider of capping reagents for COVID-19 vaccines, with an $11 billion acquisition offer, people familiar with the matter
said.
Maravai rejected the $42 per share all-cash offer from Goettingen, Germany-based Sartorius earlier this month as inadequate,
the sources said. It is not clear whether Sartorius will return with a new offer or whether Maravai will attract acquisition
interest from other laboratory equipment and supplies providers.
The sources requested anonymity because the matter is confidential. A Sartorius spokeswoman declined to comment,
while Maravai representatives did not respond to requests for comment.
Maravai shares rallied on the news and ended trading in New York on Friday up 11% at $37.11.
Maravai makes reagents used in the production of mRNA vaccines, including the one developed by Pfizer Inc (PFE.N)
and BioNTech SE (22UAy.DE) against COVID-19.
Source: https://www.reuters.com/business/healthcare-pharmaceuticals/exclusive-sartorius-11-bln-bid-covid-vaccine-reagent-vendor-maravai-sources-2022-02-25
44Appendix:
Weekly Transaction Listing
45Biopharma Sector Transaction List. Week ended Feb 25,
2022 (deal size > $15mm)
Date Target/Issuer Transaction Types Value ($mm)
2/24/2022 Provention Bio, Inc. (NasdaqGS:PRVB) Public Equity Offering 150.0
2/24/2022 Kura Oncology, Inc. (NasdaqGS:KURA) Public Equity Offering 150.0
2/22/2022 Lepu Biopharma Co., Ltd. (SEHK:2157) IPO 115.95
2/24/2022 Scipher Medicine Private Equity Placement 110
2/22/2022 Plexium, Inc. Private Equity Placement 102.0
2/23/2022 Wildtype Private Equity Placement 100
2/22/2022 Proactive Co Merger/Acquisition 90.0
2/22/2022 Eyebiotech Limited Private Equity Placement 65.0
2/23/2022 Spatial Genomics Private Equity Placement 56
2/22/2022 Ocugen, Inc. (NasdaqCM:OCGN) Public Equity Offering 53.5
2/22/2022 Automata Private Equity Placement 50.3
2/24/2022 MannKind Corporation (NasdaqGM:MNKD) Public Equity Offering 50.0
2/22/2022 Bio Orchestra Co., Ltd. Private Equity Placement 45.25
2/22/2022 TargED Biopharmaceuticals B.V. Private Equity Placement 44.23
2/22/2022 ImBioray (Hangzhou) Biopharmaceutical Co., Ltd. Private Equity Placement 36.3
2/23/2022 SIYO Bio-Tech Private Equity Placement 31.6
2/24/2022 Ardelyx Private Debt Placement 27.5
2/19/2022 Hunan Kerey Pharmaceutical Co., Ltd. Merger/Acquisition 24.89
2/23/2022 hC Bioscience Private Equity Placement 24
2/24/2022 Vibliome Private Equity Placement 22
2/23/2022 Priothera Private Debt Placement 19.8
2/24/2022 DEARGEN Inc. Private Equity Placement 17.0
46
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