Your Edge In Biotech.
14
Feb
2022

Rethinking the Cell Therapy Business: Derrell Porter of Cellevolve on The Long Run

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14 Feb 2022

Today’s guest on The Long Run is Derrell Porter.

Derrell is the founder and CEO of San Francisco-based Cellevolve. This is a different kind of biotech startup.

Derrell Porter, founder and CEO, Cellevolve

Most startups are all about the R&D. Traditionally, many haven’t built up commercial capabilities in the early days for one big reason — they don’t have anything to sell. They have tended to think that commercial strategy was something they could always figure out later.

Cellevolve was born out of the idea that isn’t necessarily the best way to do things anymore.

Derrell has had a long career in the business side of biotech, including stops at Amgen, AbbVie and Gilead Sciences. He was well-positioned for the new commercial challenge when cell therapy came along a few years ago. Derrell’s insight was that many of the new generation of biotech startups were going to need some help with commercial strategy, even in the early days.

This is a thought-provoking conversation on a couple different levels. Anyone who enjoys learning about the business of science ought to enjoy this one.

Now please join me and Derrell Porter on The Long Run.

10
Feb
2022

Biotech’s Future off The Beaten Path

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10 Feb 2022

Luke Timmerman, founder & editor, Timmerman Report

The future of biotech isn’t limited to a few square miles in Cambridge, Mass. and South San Francisco.

Biotech is starting to spread its wings in minor league towns. That’s good news. It’s also necessary for the industry to grow and continue to better integrate into the wider world.

Let’s look at an example close to my home in Seattle.

Everett, Wash. is a small city of about 110,000 people about 45 minutes north of Seattle. It’s best-known as the home of the world’s largest building in the world by volume – the Boeing factory that makes jumbo jets like the 747.

It’s a blue-collar town that has seen better days. Boeing’s troubles over the past two decades have taken a toll. A lot of post-World War II housing stock is worn and mossy, in need of a good scrub. The Seattle Mariners have a Single-A minor league baseball affiliate there, the Everett Aquasox. A family of four can have some affordable fun watching the Aquasox, but the high-tech cool kids from Seattle don’t go there to hang out.

Except Seagen. The maker of antibody-drug conjugates for cancer and the region’s anchor biotech company looked North and didn’t see a place that’s run-down and tragically unhip.

It saw opportunity.

Seagen grew up in suburban Bothell, Wash. It has 11 buildings there in a hilltop office park with labs, offices, and its own biologics manufacturing space. That’s not enough anymore. Nearing its 25th anniversary, Seagen saw its revenues grow 38 percent last year to $1.6 billion. It now has three marketed cancer drugs, a big partnership with Merck, and a growing appetite for space with 2,675 employees on the payroll.

In June, Seagen made a big investment in the future. It signed a lease to build a 258,000 square foot building on about 20.5 acres of land in Everett. The property is in a business park with an Amazon distribution center, as well as Funko LLC and US Foods distribution centers. Seagen has said in regulatory filings that it plans for this new building to house additional manufacturing, laboratory, and office space.

The company, in its 10-K filing on Feb. 9, said it plans to spend $350 million to $400 million over the next three years in capital expenditures on this facility.

Company officials have declined to comment publicly. Surely there will come a time when they invite the local media and elected officials in for a ribbon-cutting.

Why Everett?

First, infrastructure. The Seattle region, now one of the world’s top tech hubs, has been growing fast for two decades. There’s a need for a second airport, in addition to Sea-Tac. Local officials in Snohomish County have cleverly positioned Everett’s Paine Field to fulfill that need. Paine Field was built in 1936 as part of a New Deal infrastructure project. It has a long history of military aviation and general aviation, and as the home for many maiden flights of new planes built by Boeing. It attracts aviation buffs from around the world. It has a remarkable collection of restored World War II-era fighter planes acquired by the late billionaire Paul Allen.

Over the last couple years, Alaska Airlines, working with local officials, made a long-term investment in commercial passenger flights from Everett’s Paine Field. It surely didn’t live up to expectations in the early days, because the pandemic depressed flight traffic of all kinds. But if you’re a company like Seagen, this easy access to a low-traffic airport has to be extremely attractive for your executives who need to fly, and for your manufacturing operations that need steady and easy flow of supplies.

Second, ground transportation. The local transit authority, Sound Transit, has funding to build passenger light rail that extends all the way from Seattle to Everett. It’s in the planning phase, and isn’t supposed to open until 2037-2041. That might sound impossibly far off, but if you think in long run terms, like a company with lifesaving cancer drugs to manufacture consistently and reliably, you need to think in 30-40-50 year terms. By the time the light rail is complete, making it easy to get around Everett and nearby suburbs, the Seagen facility should be operating full tilt.

Third, housing. The cost of living in Everett is 18 percent higher than the national average, while Seattle is 36 percent higher than the national average, according to Salary.com. The median home in Everett costs $572,000, according to Redfin. That’s not cheap, but it’s a bargain compared with the $765,000 median home price in Seattle (and I can tell you from shopping around, that’s a conservative number in Seattle, where pretty crummy homes sell for $800,000 and up.)

The point here is that if you’re a thriving mid-to-large biotech company like Seagen, you need room to grow. We’ve learned from the pandemic that it makes sense to invest for the long-term on domestic soil for national security reasons, for shipping and logistics reasons, and for domestic economic development reasons. Moving to a location away from the hottest scientific ZIP codes can save a company money. It can also be an attractive lure for employees – especially young employees trying to get established – to be in a place where they can imagine making a decent enough salary to afford a home and put their kids in a decent school.

This scenario can easily be applied in other biotech hubs. Moderna has its key R&D facilities in Cambridge, Mass., and a strategically vital manufacturing facility in Norwood, Mass. (pop. 31,000). South San Francisco-based companies can look for second facilities all over the East Bay, and points north toward Sacramento. Recently, I wrote about a bispecific CAR-T therapy startup founded on technology from UCLA. It decided to start up in Camarillo, Calif. (I needed to look it up on the map). That’s about an hour away from UCLA in Ventura County, a bit past Amgen in Thousand Oaks.

That startup, ImmPACT Bio, wants to stay in touch with the scientific wizards at UCLA. It also needs to invest in an in-house cell therapy manufacturing facility to make these complicated cells. That facility will be close by in the West Hills area of Los Angeles.

Some of the next-generation cell and gene therapy manufacturing facilities will be making custom products. They’ll need to be small and nimble. It helps to be close to the scientists who can have a healthy exchange over various process refinements, and go over subtle differences in products that can happen during scale up. These facilities definitely don’t need to be as big and costly as a Boeing factory.

But these biotech manufacturing jobs are important jobs, and important investments, for the future of the biotech industry. Some of the work being done in these facilities will save lives around the world. The work done in these places will provide upward mobility for a certain number of operators who may or may not have college degrees. These jobs will provide stability, and good pay and good benefits. They’ll provide people with dignity – pride in a job well done.

Boeing showed us what that formula could look like after World War II. It is part of what made the aerospace company so integral to the emergence of Seattle as a dynamo of the Northwest. But Boeing lost its way. It got swept up in the shareholders-above-all-else movement of the past 40 years. It cut costs. It neglected its employees. It allowed its fastidious engineering quality culture to wither. Its community bonds faded.

By putting shareholders above all else, Boeing ultimately has paid a high price.

Biotech would be wise to learn some lessons. The industry has never been stronger, despite what the XBI might say. Many companies are capable of doing things that were hard to imagine a decade ago. The time to invest boldly in the future is now, and to simultaneously do all kinds of things to better integrate into the communities where we live and work, and where patients live and work.

Let’s think 50 years down the road, and break some ground now.  

Lander’s Fall From Grace

Eric Lander resigned as President Biden’s chief science advisor – the first science advisor with Cabinet-level status – after Politico reported he had bullied people repeatedly, especially women. I don’t know Lander, but did attend his famous Introductory Biology course at MIT when I was a Knight Science Journalism Fellow at MIT in 2005-2006. His brilliance is obvious to anyone who meets him within minutes. This brilliance and tenacity served him well during the Human Genome Project, and in building the Broad Institute into one of the world’s great scientific institutions for the 21st century.

I’ve also heard from trusted sources that he can be a real jerk — abrasive and condescending and sharp-elbowed. Especially toward women.

This kind of behavior couldn’t stand because President Biden promised to run the White House with not only a higher degree of competence, but with more kindness and decency. The key questions now center on who will take over the important scientific leadership jobs, and what they will do with the opportunity. The new scientific leaders need to find the right balance of being forceful and demanding enough to push the bureaucracy to get things done with urgency, but without being abusive.

Robert Califf should get the FDA commissioner job ASAP. Senate Democrats should extract a few concessions, like limiting his post-FDA job prospects, to gradually rebuild public trust in the agency. They should also quit the dilly-dallying and let him get to work. Biden would be wise to call on Frances Arnold or Jennifer Doudna or Cori Bargmann or Sue Desmond-Hellmann or Paula Hammond or Amy Abernethy or Carolyn Bertozzi or another outstanding female scientific leader for the top jobs at the White House Office of Science & Technology Policy, NIH, and the future ARPA-H.

Other Views
  • The Lessons of Lander. Science. Feb. 8. (Holden Thorp)
  • The Fall of Lander and the End of Science’s Big Ego Era. STAT. Feb. 9. (Matt Herper)
  • The Tragedy of Lander. Feb. 8. (Michael Eisen)
This Week in Drug Pricing

The class of PD-1 inhibiting drugs for cancer have been hugely important for cancer patients. They’ve also generated tens of billions in sales, with price tags well into the six-figures. Despite multiple market entrants, no one has yet come in to disrupt the category by competing on price. Eli Lilly sought to change that in partnership with China-based Innovent. Lilly pledged to offer its PD-1 inhibitor at a 40 percent lower wholesale acquisition cost than the incumbents. Most people concerned about drug pricing generally want to see market-based price competition. But getting there through China might be tricky. The China-only development strategy was called into question last week when FDA cancer drug boss Rick Pazdur and Harpreet Singh wrote Feb. 4 in The Lancet Oncology that they have increasing concerns about approving drugs based on data gathered entirely in China, as it might not be enough data to generalize the drug’s safety and efficacy profile for the US population. It cast something of a cloud over drugs studied entirely in China, under the headline “Importing oncology trials from China: a bridge over troubled waters?”

The FDA’s Pazdur and Singh, buttressed their points further in a Feb. 10 advisory committee public hearing, saying the key study in the Lilly / Innovent application suffered from data integrity issues. The FDA’s Oncologic Drugs Advisory Committee reviewed the data and voted against the application/ We certainly haven’t heard the last word in this story, as other companies seek to adjust to the FDA’s data requirements, while keeping a lean-and-mean development strategy to bring forward lower-priced PD-1 inhibitors. Cambridge, Mass.-based EQRx has also licensed in a PD-L1 and PD-1 inhibitor program from Cstone in China. (TR coverage, Jan. 2021)

Personnel File

Bayer hired Christine Roth as the new head of the oncology strategic business unit. She comes from GSK.

San Diego-based Halozyme promoted Nicole LaBrosse to chief financial officer. She replaces Elaine Sun, who is stepping down to pursue another opportunity.

Somerville, Mass.-based Finch Therapeutics, the developer of orally administered biologics that act on the microbiome, brought in a new management team. Bryan Gillis is the new chief technology officer, Alka Batycky is the new chief development officer, and Howard Franklin is the new senior vice president of late-stage development and GI therapeutic area lead.

San Diego-based Biosplice, formerly known as Sanumed, cut 41 workers, or 22 percent of its workforce. (STAT).

Boulder, Colo.-based OnKure Therapeutics, a precision oncology drug developer, hired Jason Leverone as chief financial officer.

San Francisco-based Verge Genomics said Al Sandrock, the former EVP of R&D at Biogen, joined its board of directors. (TR coverage of Verge, December 2021)

San Francisco-based VIR Biotechnology hired Johanna Friedl-Naderer as EVP and chief business officer. She comes from Biogen.

Cambridge, Mass.-based Strand Therapeutics, the developer of programmable mRNA therapies for cancer, hired Prashant Nambiar as SVP of research and translational development. He previously worked at bluebird bio.

South San Francisco-based CytomX Therapeutics, a cancer drug developer, promoted Amy Peterson to president and chief operating officer.

San Francisco-based Sixth Street, a global investment firm, said Jennifer Doudna will be its chief science advisor.

Cambridge, Mass.-based Generation Bio promoted Antoinette Paone to chief operating officer. (TR coverage).

Boston-based GentiBio, a company developing engineered T-reg cells as therapies for immune diseases, hired Chuck Silberstein as chief financial officer.

France-based Transgene, the developer of viral based immunotherapies for cancer, hired Steven Bloom as chief business officer.

Regulatory Action

The FDA approved sutimlimab-jome (Enjaymo) to reduce the need for red blood cells transfusions for adults with cold agglutinin disease. The drug was first developed by True North Therapeutics, and is now part of Sanofi.

Waltham, Mass.-based Ardelyx failed in its appeal to the FDA. The company received a Complete Response Letter in July 2021 for its application to market a treatment for control of serum phosphorus in chronic kidney dialysis patients.

The FDA said it’s investigating the possible increased risk of death in cancer patients on umbralisib (Ukoniq) from TG Therapeutics.

Financings

Watertown, Mass.-based Seismic Therapeutic raised a $101 million Series A round. Lightspeed Venture Partners led, and was joined by founding investors Tim Springer and Polaris Partners. The company is combining structural biology expertise and protein engineering, aided by machine learning in each area, to enable discovery of new drugs for autoimmunity. Jo Viney is the CEO, and is being reunited with several colleagues from Pandion Therapeutics. (TR coverage).

Jo Viney, co-founder, president and CEO, Seismic Therapeutic

Seattle-based Curevo Vaccine raised a $60 million Series A financing led by RA Capital Management. The company’s lead asset is a shingles vaccine candidate in Phase II development. If successful, the sub-unit vaccine would be the first non-live varicella (chickenpox) vaccine for shingles.

New York-based Koneksa raised $45 million in a Series C financing to advance its work on digital biomarkers. AyurMaya, an affiliate of Matrix Capital, led.

Boston-based Day Zero Diagnostics raised $21 million in a venture financing led by Sands Capital, with new investors, including BD, Panacea Venture and Hongkou Capital. It’s developing infectious disease diagnostics with whole genome sequencing and AI.

Montreal-based Congruence Therapeutics raised $50 million in a Series A financing led by Amplitude Ventures. It’s using computational and medicinal chemistry to discover small molecules for rare diseases of protein misfolding.

Waltham, Mass. and Montreal-based Ventus Therapeutics secured $140 million in a Series C financing co-led by SoftBank Vision Fund 2 and RA Capital Management. It’s using structural biology and computation assist small molecule drug discovery.

Watertown, Mass.-based Arkuda Therapeutics raised $64 million in a Series B financing co-led by Cormorant Asset Management and Pivotal bioVenture Partners. The company is working on lysosomal and microglial biology to treat neurodegenerative diseases.

San Diego-based Endeavor BioMedicines raised $101 million in a Series B financing to advance precision medicines for oncology and fibrosis. Ally Bridge Group and Avidity Partners led. Endeavor said it plans to have three drug candidates in the clinic by the end of 2022. Serial entrepreneur John Hood is the co-founder and CEO. He sold his previous company, Impact Biomedicines, to Celgene.

Emily Leproust, co-founder and CEO, Twist Bioscience

South San Francisco-based Twist Bioscience, the DNA synthesis company, said it plans to raise $200 million in an underwritten public offering.

San Diego-based 1859, Inc., a company seeking to discover small molecule drug candidates with AI, raised $40 million in a Series A financing led by Northpond Ventures and OMX Ventures.

San Francisco-based Indapta Therapeutics raised $50 million in a Series A financing to develop engineered NK cell therapies. The deal was co-led by co-led by RA Capital Management, Vertex Ventures, and Leaps by Bayer. Mark Frohlich, formerly of Juno Therapeutics, is the CEO.

Vaccines

Cambridge, Mass.-based Public Health Vaccines LLC said it started its first clinical trial with a live, attenuated vaccine candidate for the deadly Nipah virus. The program is supported with $43 million from the Coalition for Epidemic Preparedness and Innovations (CEPI).

Science
  • A highly virulent variant of HIV-1 circulating in the Netherlands. Science. Feb. 3. (Chris Wymant et al University of Oxford)
  • Caffeine blocks SREBP2-induced hepatic PCSK9 expression to enhance LDLR-mediated cholesterol clearance. Nature Communications. Feb. 9. (Paul Lebeau et al McMaster University, Hamilton, Ontario, Canada)
Science of SARS-CoV-2
  • Long-term Cardiovascular Outcomes with COVID-19. Nature Medicine. Feb. 7. (Ziyad Al-Aly et al VA St. Louis and Washington University in St. Louis)
  • Effectiveness of Face Mask or Respirator Use in Indoor Public Settings for Prevention of SARS-CoV-2 Infection — California, February–December 2021. Feb. 11. CDC Morbidity and Mortality Weekly Report.
  • Pseudovirus Data Suggest Sotrovimab Retains Neutralizing Activity Against Omicron Subvariant BA.2. Additional live virus tests are underway. Company statement. Feb. 10. (VIR Biotechnology)
COVID’s Tragic Fallout
  • South African Scientists Copy Moderna’s COVID Vaccine. Nature. Feb. 3. (Amy Maxmen)
  • Covid-19: WHO efforts to bring vaccine manufacturing to Africa are undermined by the drug industry, documents show. BMJ. Feb. 9. (Madlen Davies)
  • &J. pauses production of its Covid vaccine despite the persistent need. NYT. Feb. 8. (Rebecca Robbins)
  • Novavax underdelivers on COVID vaccine delivery promises. Reuters. Feb. 8. (Carl O’donnell, Francesco Guarascio and Neil Jerome Morales)
  • The Omicron Story: Our Winter of Discontent. Timmerman Report. Feb. 9. (Larry Corey)
  • COVID Takes a Serious Toll on Heart Health – A Full Year After Recovery. Science. Feb. 9. (Meredith Wadman)
The Infodemic
The Market Downturn
  • ‘The music stopped’: Biotech rout leaves drug startups grounded as demand slumps for IPOs. Biopharma Dive. Feb. 7. (Ben Fidler)
  • Biotechs Face Cash Crunch after Stock Market ‘Bloodbath.’ Financial Times. Feb. 9. (Jamie Smyth, Nikou Asgari and Hannah Kuchler)
  • Going Private: The Public Market Downturn Will Soon Hit Private Companies. Timmerman Report. Feb. 9. (Alex Harding)
Deals

Palo Alto, Calif.-based Medable announced a partnership with CVS Health to expand access to more patients who might enroll in clinical trials. CVS MinuteClinic locations will use Medable software. Medable, in a press release, specifically pointed to the opportunity to improve enrollment in diverse populations.

San Diego-based Resilience said it secured a contract from the US military worth up to $250 million to make a monoclonal antibody treatment to defend against a botulinum toxin nerve agent attack. The military considers botulinum toxin to be a top priority biowarfare threat. Resilience will manufacture the antibodies in Florida for US government stockpiling.

Cambridge, Mass.-based Foundation Medicine formed a partnership with Eli Lilly to develop tissue and blood-based assays as companion diagnostics for Lilly’s RET inhibitor and other therapies from its Loxo Oncology unit.

Biotech Family Ties

Janice Chen of Mammoth Biosciences got to celebrate her 22-year-old brother Nathan Chen winning the Gold medal in figure skating for the US at the Winter Olympics.

9
Feb
2022

The Omicron Story: The Winter of Our Discontent

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09 Feb 2022

Larry Corey, MD

The Omicron wave has been shocking. We in the virology community knew the SARS-CoV-2 virus had an exceptional ability to mutate, but the pace of its evolution was surprising.

We were just as surprised by the even-faster speed by which this variant spread.

Omicron became the dominant variant almost two years into the pandemic because it’s more transmissible and able to escape immunity that people had developed from prior infection and vaccination.

The virus has made a lot of people sick. We’ve seen confirmed cases rise a breathtaking 10-fold over the Delta peak. Hospitals were overwhelmed. Tests, N95 masks, and vaccine boosters couldn’t arrive fast enough for many people.

It has brought us all a winter of discontent.

The Omicron variant was first recognized in mid-November in sub-Saharan Africa. It arrived in the United States, including my own city of Seattle, three weeks later. Omicron dampened the feelings of scientific accomplishment that had buoyed us all. Just 12 months prior, in December 2020, we celebrated the success, and the Emergency Use Authorizations, of the mRNA vaccines from Pfizer/BioNTech and Moderna.

The national vaccination program that ramped up in the first half of 2021 significantly curtailed the Alpha wave. The success of that campaign fueled hope that we were winning the war. Yes, the Delta variant arrived in late summer, creating a tsunami of infections, hospitalizations and deaths. But that tsunami came because we were unable to implement mandatory vaccination policy, and we had a large reservoir of unvaccinated people here, and around the world.

The Omicron variant’s ability to spread more rapidly than the Delta strain is disconcerting.

It leads me, today, to step back and ask: How did this occur?

I can look at my own thinking and writing. But if you don’t take action from thinking and writing, it doesn’t do much good, does it?

The Origins of Omicron

Some knowledgeable colleagues in the virology community say an animal reservoir likely played a role in Omicron’s genesis and the animal passed the virus to a human. That’s the zoonotic spread theory.

I have long suspected that it’s more likely that an immunocompromised person served as the critical host. I raised that possibility in Timmerman Report last July, and again with colleagues in the New England Journal of Medicine in August.

Researchers from South Africa published a preprint case report in June 2021 about an individual with HIV who was co-infected with COVID-19 and accumulated mutations of interest over a period of 200 days. More data have now arrived from South Africa, published this week in Cell Host Microbe, to strongly support this view that humans are the reservoir and genesis of Omicron.

My colleagues and I discussed saltational evolution and the rapid, multimutational steps that SARS-CoV-2 can take in immunosuppressed persons. (In biology, saltation, which comes from Latin saltus, “leap” or “jump,” is a sudden and large mutational change from one generation to the next.)

We showed that this happened with the Alpha variant in early 2021. While most of the variants that are generated in immune suppressed persons don’t jump to the community, some do. What defines the ones that do and those that don’t is unclear—much depends on the virus finding a way to persist, as well as to enhance its ability to spread to others.

With Omicron, it seems like it may have found an efficient and alternate way into the cells of our throats and noses and onward from there. Yes, it’s not as likely to cause pneumonia deep in the lower lungs as other strains—that’s good. But it’s adept at immune evasion.

There is no reason to believe the SARS-CoV-2 virus’s tricks are over.

The story of Omicron shows 50 mutations between its ancestral origin, nearly 20 of them in the immunodominant region of the receptor binding site. The genetic tree of Omicron points its origin way back to early 2020 in the time of B.1.1.7—or around the Alpha variant time frame.

The phylogenetic tree also shows that the Omicron sub-variant 1 and variant 3 have recombination events—when two molecules of DNA exchange pieces of their genetic material with each other—essentially showing that they existed from the same person or from a small group of coinfected people. Variant 1 and variant 2 also have some recombination events that look like they also came from the same individual or small group of people. Were they the exact same individual? Or someone who transmitted to another immune-suppressed person and it took a few weeks to emerge as BA.2? Hence there are two immune compromised persons but they are essentially epidemiologically related?

No one really knows the answers, and for Omicron it’s uncertain we will ever be able to decipher this. But the likelihood of two immune compromised people being in close contact is pretty high in townships and communities with high HIV prevalence.

But it’s clear Omicron variant 1, or BA.1, got into the population first because it spread throughout the world first. Now, some six weeks later, we’re seeing variant 2, or BA.2, start to emerge and take over. We initially thought BA.2 to be the weaker sibling, but as it turns out, it might be the stronger one because it’s more rapid. The best explanation we in the field can come up with is that BA.2 emanated from the same person or some small initial group of people that were infected with BA.1, and the virus evolved into BA.2 in another person, transmitting slightly later into the community—six or eight weeks later—and it’s taken off by itself, after it learned how to become even more transmissible than its older sibling.

I’ll use a sports analogy. It’s like the Williams sisters, Venus and Serena. Venus was the initial breakout tennis star. Serena is younger, but eventually surpassed her sister, in time and space. And that looks to be the case with the Omicron siblings.

The analogy falls short though because you can get beaten by both Venus and Serena and I’m not sure you can get beaten by the Omicron variant BA.2 if you’ve had BA.1. I think our immune systems know how to play against BA.2 if we played against BA.1 since our cells are left with the memory of playing the immune match with the virus—and that memory arms us against the other sibling. We’ll see how the cross-protection plays out. At present, very few BA.1-infected people have gotten BA.2.

The good news is that our vaccine booster dose saves the day, taking efficacy against hospitalization from 70% to close to 90% and from infection from 40% to 70%. But Omicron is a  tougher adversary for the vaccines. There are still breakthrough cases of Omicron infection in people who received three vaccine doses. We saw very few breakthrough cases when the ancestral strain was circulating, and many people had two doses.

That’s what’s hard to like or accept. Why can’t we get back to December 2020 in our level of protection?

Powerful Treatments on the Way

Scientists have created a few new tools — primarily the monoclonal antibodies sotrovimab and Evusheld and the antiviral pill Paxlovid — but supply shortages are making it difficult to implement these treatments at scale.

Controlling an epidemic takes combination strategies, which my colleague Myron Cohen and I wrote about at the beginning of our battle with SARS-CoV-2 in May 2020 in Science, before we had medical countermeasures.

Behavioral measures such as social distancing reduce the risk of exposure. High-quality masks work. But people can’t be asked to maintain vigilance on non-pharmaceutical interventions forever.

The three primary biomedical interventions are vaccines, monoclonal antibodies, and antivirals. Vaccines and monoclonals came earliest and were hugely effective. Monoclonals have been shown to be effective for early outpatient therapy and as prevention for persons with high exposure or at greater risk (e.g., household exposure or immune compromised).

When available, monoclonals provide the backup treatment for the breakthrough infections. They are more expensive than vaccines but also highly effective in preventing hospitalization, death, and more recently for unvaccinated persons — reducing the risk of getting COVID-19. Their disadvantages are the requirement for more frequent administration and higher cost than vaccines.

The new tool that has emerged more recently are antiviral medicines. Few people were working on antiviral research against coronaviruses before SARS-CoV-2. The SARS-CoV-2 virus is complicated enough that figuring out what to target and what compounds would selectively inhibit the viral genes and not inhibit important proteins in our cells took time.

Remdesivir was one potential solution. An off-the-shelf drug initially tested for Ebola that had efficacy against other coronaviruses such as MERS, remdesivir has been useful in hospitalized persons and has been available since early in the epidemic. But we couldn’t build on this knowledge and needed a better drug against the viral protein. So, different targets of the viral life cycle needed to be evaluated.  

This is where Paxlovid, an inhibitor of the viral protease enzyme comes in. Unfortunately, little has been published on the drug yet, but in one study, when taken early after infection, the pill prevented hospitalization in nearly 90% of persons. This is a great outcome.

Importantly, it appears additional drugs against the viral protease enzyme are also emerging. Antiviral therapies will I think be a major part of the medical response tool kit. I believe it’s important for people to know there is an oral pill that can prevent severe disease progression if you get sick with SARS-CoV-2. Another antiviral drug called molnupiravir has also been discovered and authorized for Emergency Use by the FDA. It has its advocates and detractors; the main issue for my discussion of antivirals for COVID-19 is that recent data indicate it’s not nearly as good as Paxlovid. 

Peace of Mind

Why is conceptual reassurance from therapies needed? Obviously, it helps the unvaccinated, but it is important for vaccinated people as well. We have seen that for Omicron, even the vaccinated can get ill and some get pretty sick, especially the elderly and those who have several risk conditions for severe illness. Waning immunity increases this chance. Knowing there is a backup medicine has enormous implications medically and psychologically.

I think if we knew we had a therapy we could get at a pharmacy, whether a monoclonal injection or an oral antiviral pill that would keep us from getting really ill, our ability to cope with COVID-19 would markedly change.

Healthy people could start going to restaurants and feel closer to a sense of normalcy. For the less well, perhaps with rapid testing and the availability of these therapies, people would feel more comfortable in restaurants or at family gatherings. Flying on an airplane wouldn’t feel risky, nor would one feel like they might get trapped in another city or country in quarantine or worse, hospitalized.

Our options would expand, our economy open up fully, and our social well-being would improve.

When will this happen? These additional tools to ward off Omicron are to become widely available in April or May. They are, in some cases, more available than currently known. More education for physicians, pharmacists, and the public is needed.

What happens next with the virus?

What happens next is speculative but recognize that the virus has learned to select itself against many of the immune responses that we currently have. I think it’s hubris to feel confident that we know all of the virus’s immune-evasion strategies or all of its ways to increase its transmission efficiency. The host immune response that we avidly test is evasion of antibodies, but not the other factors that slow virus control especially escape from host non-antibody responses. These are less predictable.

One strategy I think must be pursued is to improve our vaccines so they prevent one from acquiring infection in the first place. No sickness, no breakthroughs, no hospitalizations, no complications. By not acquiring it, or just getting transient infection in the nose at a level not associated with high likelihood of transmission, we really get what people called “herd immunity” — immunity that stops the carriage to others. This is what I call population-based control of the epidemic. 

The monoclonal antibody work suggests that at really high neutralization titers, we appear to prevent people from acquiring the virus in the first place. We have some evidence that when the vaccine matched the ancestral strain, in the first couple of months, maybe 40% of the time it decreased acquisition.

My own bias is that if we could make vaccines that achieve the level of neutralization we see in the monoclonals — currently 10 times higher than we presently achieve — we might be able to prevent acquisition and truly reduce the widespread dissemination of disease.

There are a lot of people who will say to me, Larry, that’s just naïve—but I’ve always been an optimist. Conceptually, I think it helps in research to say, well, can our current technologies push our antibody titers to the circulating strain up a full order of magnitude? That’s ten-fold, so let’s say from 800 to 8,000 neutralizing titers in blood. Such titers appear to protect monkeys from experimental challenge in the nose…no virus is detected even with high-grade challenge.

I can’t guarantee this will happen in humans, but I can feel pretty comfortable that if I can maintain a level of 8,000 for a long period of time, I’d take that over 800. And it would be harder for a viral escape to occur, since as we’ve seen, the escapees generally originate in the immunocompromised population, which have low antibody and cellular immune responses. So, I do think it would help. It may require augmenting current vaccines with a mucosal vaccine delivered by drops or spray—these technologies exist. They need to be developed and administered.

Personally, I rank developing vaccines or vaccine regimens that achieve population control a higher priority than what people call universal coronavirus vaccines — a vaccine that might provide baseline immunity to all types of coronaviruses. Of course, accomplishing both goals is best.

Personal Reflection

Now, back to my own personal admonition of writing without action. I wrote about immunosuppressed people being an important source of new variants and needing better medical monitoring. I wrote the article mainly directed to cancer patients and what was going on in our country at that time. But having worked with HIV, I know that the very largest number of people who are immunosuppressed who walk our planet are the number of people with chronic, inadequately treated HIV. And in sub-Saharan Africa, that’s up to 20% of the population. This is twice as great as the number of immunosuppressed people in Europe or the United States.

Is it surprising then that the Beta and Omicron variants came from sub-Saharan Africa where population coverage of highly effective vaccines is less than 20% of the adult population?

We in the western world; governmental, pharmaceutical and, yes, our global health implementation bodies such as the WHO did not do enough to provide early enough access to effective vaccines. We have learned that the implementation of vaccine science is far behind the research discovery process. Moreover, African governments have also been, to this observer, passive in their insistence of protecting their citizens from this pandemic. Solving this inertia is perhaps our greatest current challenge.

This failure means we still have millions of immunocompromised, unvaccinated people walking around with a high likelihood of becoming the next host for a new variant.

We haven’t proven that vaccinating people will help reduce the emergence of Variants of Concern, but it’s pretty logical. It certainly couldn’t hurt and probably would help. And if that’s not true, then we should at least try and prove it one way or the other. Health services have gone down in low- and middle-income countries because of the COVID-19 epidemic. Most would argue that there’s an 80% likelihood vaccination would decrease the percent of people with persistent COVID-19 and hence, the milieu for generating multi-mutational variants of concern.

Nor is there proof yet that developing vaccine strategies for HIV-infected people would alter the emergence of variants. But, again, it’s logical and I could have raised our collective awareness about these issues sooner.

True, suggesting an idea in the summer of 2021 wouldn’t have changed what happened in November 2021. But there is a momentum for everything that leads to a call to action. I hope to build some more momentum for the idea of vaccinating immunocompromised people in need around the world, in the hope that it will compel us to determined action on global distribution of vaccines.

It is this reflection that leads to my personal “winter of discontent.”

 

Dr. Larry Corey is the leader of the COVID-19 Prevention Network (CoVPN) Operations Center, which was formed by the National Institute of Allergy and Infectious Diseases at the US National Institutes of Health to respond to the global pandemic and the Chair of the ACTIV COVID-19 Vaccine Clinical Trials Working Group. He is a Professor of Medicine and Virology at University of Washington and a Professor in the Vaccine and Infectious Disease Division and past President and Director of Fred Hutchinson Cancer Research Center.

8
Feb
2022

Behind the Scenes of BD: Maude Tessier on a Megamerger Curveball

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08 Feb 2022

Vikas Goyal, former SVP, business development, Pandion Therapeutics (now part of Merck)

[Editor’s Note: this is part of a series of interviews with business development executives about some of the surprises, subtleties, and human aspects of biotech dealmaking.]

Maude Tessier is the chief business officer of Boston-based Ikena Oncology, a developer of targeted small molecule cancer drugs.

Like a lot of people in business development, she considers herself a “recovering scientist.” She got a PhD in cancer biology before turning to the business side. Before joining Ikena in 2018, she worked in business development at Merck for about four years.

One of her first major jobs at Ikena was crafting a partnership with Celgene. That was an important validating event for Ikena while it was still a private company. But then a megamerger altered the landscape.

Today we’ll hear Maude tell the story.

Maude Tessier, chief business officer, Ikena Oncology

What deal would you like to talk about? What was your role in the process?

Ikena is a young, recently public, Boston-based targeted oncology company. We are really focused on biomarker-driven cancer R&D. We have a pipeline of programs focused on targeted oncology and the tumor microenvironment, and we have programs across several signaling pathways that we believe are drivers of cancer.

Today we’ll be chatting about a partnership we executed with Celgene, now BMS, in January 2019 on two of our tumor microenvironment programs.

Why did you do the deal?

Ikena really has a unique approach to the kynurenine pathway, with two interesting programs in development. First, we have an aryl hydrocarbon receptor (AHR) antagonist which at the time was really the only program available for partnering. Second, we have a kynurenine degrading enzyme (Kynase) which is a very differentiated approach to targeting the critical kynurenine metabolite in the tumor microenvironment.

In 2018 we had set a goal to finance the company, and we were pursuing parallel discussions with investors and partners. We had real optionality at the time based on the parallel approach we took as well as the interest in our science.

Partnering with Celgene rose to the top as a very attractive option. Celgene/BMS is a top-tier oncology company and there was great validation for Ikena’s work by collaborating with them. And Celgene also had a great approach to partnering with young companies, sharing long-term upside, giving companies like Ikena the independence to do our work, and offering meaningful upfronts. In exchange for an option to both our AHR antagonist and Kynase programs, Celgene paid $80M in non-dilutive cash plus $15M in equity upfront — this provided significant resources to fund Ikena’s operations and help us build our company.

Celgene also had a deep understanding of the kynurenine pathway and its therapeutic potential in cancer. And they really liked the way our company was approaching the science and developing our programs.

The partnership focused on two of our pipeline programs, while leaving us with full control of our lead program at the time, IK-007, an antagonist of EP4 (prostaglandin E2 receptor 4) which was just starting clinical development.

All of these factors made us want to go forward with this partnership.

Congratulations on some great economic terms!

The science discussions had been pretty advanced by the time I joined Ikena in July 2018. So I got started right away on preparing for due diligence and possible business discussions by evaluating a few different datasets.

I certainly looked at comparable deals to benchmark our programs. I also evaluated precedent deals that Celgene had done to understand the range of what might be possible. Though it’s important to note that comps never tell the whole story.

We also did an internal analysis to understand how much capital we needed to achieve our company goals. As a BD exec in a small biotech you wear a lot of hats. So I also built some high-level risk adjusted budgets to get comfortable that the proposed payments would be sufficient to support our R&D expenditures, both on the partnered programs and on our own programs.

And I gathered feedback from the rest of the management team and the Board to get comfortable that expectations were qualitatively aligned internally. I consulted with a subset of our Board, , on and off, as needed, during the negotiations to ensure continued alignment with my and our CEO’s vision for the deal. 

So we had the usual back and forth you’d expect for this type of deal, but when Celgene put their initial proposal in front of us, I felt we were in a close enough range to get something done.

How did you and Celgene approach the financial negotiation together?

The option deal structure meant we would be responsible for continuing significant efforts on our AHR antagonist and Kynase programs through the end of Ph1b. So we spent a lot of time working with Celgene on the potential collaboration plans themselves.

There was one key meeting on Halloween 2018 when we flew out to Seattle. No one was in costume but I did wear a Halloween themed scarf and our dinner with Celgene at a local restaurant was very festive! We were working through critical issues around future indication and clinical development strategies, designs and budgets for the Ph1 trials, evolution of the competitive field and the framework for our plans. Once we got a good handle on our shared scientific and clinical goals, the collaboration budgets and economics became pretty easy to work out.

It sounds like a very straightforward deal. Was there any drama?

This was actually really smooth for almost the entire process. From the very beginning I could feel that both parties were aligned on the science goals, had a shared collaboration vision, and wanted to get this deal done. Our BD and science teams also had great personal interactions. We worked with Celgene’s head of BD and CSO, as well as the heads of the oncology R&D teams, a lot of whom are still at BMS.

So the real drama was the absolute complete surprise announcement of Celgene’s acquisition by BMS on January 3, 2019. We were right at the end of our deal process and had planned to go into JP Morgan 2019 with our deal already announced. Both deal teams had been working frantically through the December holidays to get this done.

Suddenly I was now running up and down the San Francisco hills in the rain jumping from investor meetings to phone calls with Celgene and our counsel. And unfortunately I was definitely not using my JP Morgan week to talk up the deal like we had hoped.

How did you and your team (and Board) handle the surprise news?

Fortunately for us, Celgene handled it really well. We were on the phone with them within 20 minutes of the BMS acquisition announcement and they walked us through exactly what was going to happen and assured us the deal was still on.

And they worked with us right through JP Morgan, stealing any quiet spots we could in sushi restaurants, coffee shops, and even other company’s partnering receptions. Ultimately, we announced our collaboration just a few days later on January 18, 2019.

Looking back now, would you do the deal again?

Working with Celgene and BMS really helped us pave the way to where Ikena is today. The collaboration provided significant resources that let us build out the team, grow efforts like our Hippo /TEAD program, and build momentum for our subsequent Series B and IPO. A few months after the deal in late 2019 we actually completely rebranded from Kyn Therapeutics to Ikena Oncology to reflect the expansion of our pipeline and the new breadth of our pipeline.

And the collaboration has been really productive. For us it has not felt like “we’ve given the programs away”. It really feels like a continuation of our programs, now with the additional significant support and expertise of BMS. We are in the clinic with one program and in IND enabling studies with our second program. Celgene’s original collaboration vision and culture has been retained post their acquisition and we continue to work really well together. And BMS is providing great support, including their knowledge of the tumor microenvironment space, and clinical supply of nivolumab for our ongoing nivo + AHR antagonist combo study in bladder cancer.

What advice would you share with your BD peers based on how this all went with Celgene-BMS?

I’ll start by commenting on the deal structure. Like many biotechs we were of course focused on the upfront and total bio-dollar economics. But while that may have been top of mind, we also worked to protect our ability to regain ownership and control if Celgene/BMS chose not to move forward with the option exercise. So that’s the first point.

Next, I think this whole deal process reinforced two core principles I’ve had throughout my BD career. First, timing is everything in deal-making. Both parties had a relentless urgency to get our partnership done — this really helped us overcome the surprise of BMS’ acquisition. The whole negotiation was 6 weeks, including me redlining documents while sitting on a beach in Bermuda during my birthday.

Second, every deal has its ups and downs and twists and turns, and a deal is never done until it’s done. I think it’s important for a BD exec to be tactically and emotionally prepared for the curveballs. This was a great outcome where we closed the deal, but we all have war stories of deals that fell apart at the very end. And the BD exec has to keep even-keeled through all of this.

So my advice to my BD peers is to try to stay in a good emotional range, think through the range of possible long-term as well as short-term outcomes, and be prepared for surprises!

7
Feb
2022

The Cancer Moonshot Relaunched

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07 Feb 2022

Julie Grant, general partner, Canaan Partners

Last week, I had the honor of attending the Biden Administration’s relaunch of the Cancer Moonshot at the White House.

The Cancer Moonshot dates back to 2016, when then-Vice President Biden, mourning the death of his son Beau, spearheaded this bold initiative to accelerate the rate of progress against cancer on a national scale.

The initiative resulted in the 21st Century Cures Act, which included $1.8 billion for efforts including expanded NIH funding, new federal institutions within the FDA, new clinical trial networks, and much more.

When Obama and Biden left office, Joe and Jill Biden formed the Biden Cancer Initiative, a nonprofit organization that continued the work. I was invited to serve as a board member. It was one of the most meaningful experiences in my career and continues to motivate me when forming new oncology companies at Canaan Partners.

Julie Grant with President Biden at the Cancer Moonshot relaunch. Feb. 2, 2022.

Now in the White House, President Biden, Vice President Harris, and the First Lady are in position to bring back the early momentum and set new goals. Many of the headlines from this week’s ceremony focused on the goal of reducing the cancer death rate by at least 50 percent over the next 25 years.

But the Cancer Moonshot isn’t just an aspiration, it has matured into an action plan with many components.

It includes:

  • Accessible prevention screening for all Americans irrespective of race, gender, region, and resources – ideally at or near home.
  • Faster and more open distribution of scientific insights to accelerate the discovery of better treatments, including for rare and childhood cancers.
  • Navigators to reduce confusion, anxiety and trauma for families.

These are important components of a multi-faceted plan to reduce the toll of cancer over time. More leaps ahead in the biology, and the development of new treatments for specific malignancies, will be necessary to achieve the goal.

The interesting question for me and many members of the biotech community is how can we get there? Where should the country focus its efforts? Will this have sustained attention within the White House?

Despite the many urgent issues facing this administration, the President and his senior team showed up in person on Feb. 2, outlined clear priorities, and called out stakeholders to take action – including the public and private life science sector.

That caught my attention. There’s work here for us to do in the biopharma community.

I’d encourage you to watch the recordings from the White House here (start at time point 18:00). FAQs and priorities are outlined here.

Cancer Is a Priority for Biden and Harris

The President, Vice President and First Lady spoke at length about their personal experiences and motivations. They went well beyond a few welcoming words.

The event was hosted in the East Room, a large formal ballroom. It was full of mask-wearing attendees, including directors of the NCI Comprehensive Cancer Centers from around the country, leaders from the largest patient advocacy organizations, scientific luminaries, government staff, active military members, and the press. Members of Congress attended. Members of the Cabinet were on stage.

The President announced he is forming a new cabinet — a Cancer Cabinet.

This new Cancer Cabinet will coordinate the many federal agencies with a hand in this multi-dimensional health problem. The White House will be organizing people from the NIH, FDA, CMS, Department of Veterans Affairs, EPA, Office of Science and Technology Policy and more. This is the kind of high-level coordination among agencies that can really only be done by a fully-engaged White House.

The White House hired a full-time coordinator to drive forward the Cancer Moonshot objectives from the Executive Office.

The President also wants more resources for cancer, and not just through the traditional channels. He called on Congress to fund ARPA-H (the Advanced Research Projects Agency for Health), a new entity inspired by DARPA, the military agency best known for developing the Internet. The ARPA-H agency’s mandate is to invest in high-risk, high-reward capabilities to drive biomedical breakthroughs — ranging from molecular to societal — that would provide transformative solutions for all patients.

President Biden’s passion for cancer, which I remember from his private summits in 2017 and 2018, was evident.

“I committed to this fight when I was Vice President. It’s one of the reasons why, quite frankly, I ran for President. Let there be no doubt: Now that I am President, this is a presidential White House priority — period.”

Personal Narratives Have Purpose

First Lady Biden and President Biden bring the experiences of cancer patients and their families to life. They’re aware of the challenges. The confusing diagnoses. The waiting with nauseating fear for scans. The frustration when accessing medical records for a second opinion. Begging physicians for a bit more time and explanation. Guilt from accumulating bills resulting from expensive treatments. Sleepless nights wondering if this could have been prevented.

Many Americans can relate on a human level, regardless of their party affiliation. Many Americans know the Bidens care deeply about this issue because they have lived it. It is their story of their son, Beau, and their closest friends. They know the problems. They get it.

Being Bold and Ambitious

The Biden-Harris Administration’s stated goal is to reduce the cancer death rate by at least 50% over the next 25 years and improve the experience of living with and surviving cancer. Having worked in early-stage oncology drug development for over 15 years, I appreciate how rare it is to see overall survival increase by 50% for any particular form of cancer.

The White House is asking us to aim high.

“In America, we not only dream, we do,” Vice President Harris said in her closing remarks. “We not only see what can be, we see where we can go.”

In the last 20 years, the age-adjusted death rate from cancer has fallen by 25%. That’s an ongoing success story that many people haven’t heard. It’s also just a beginning. Last week, Carl June and colleagues reported in Nature about two severely ill leukemia patients who are still alive and in remission 10 years after receiving CD19-directed CAR-T cell therapy.

Because of these therapeutics and the work of thousands of life science workers across the private and public sectors, people like my mother who received a CD19 CAR-T and is currently in remission, have renewed hope for that ever elusive word — cure.

Many in biopharma can see where this is heading. Overall response rates approaching 100% (a measure of tumor shrinkage among trial participants) are increasingly common in clinical trials. Resources, information sharing, and improved technology reduce the time to develop inhibitors to emerging resistance mutations to targeted therapies. Surgery can offer the chance of a cure if disease is detected through improved diagnostic tests and removed early.

Perhaps the White House did set obtainable goals.

Direct Feedback When Necessary

The President, Vice President, and First Lady have convened world leaders across disparate fields to learn about the roadblocks holding back progress against cancer, so they can craft the most effective solutions. They have listened in forums large and small. They are willing to challenge academic scientists, and the private sector, to do better if they are standing in the way of patients’ goals.

Watch to the 47-48 minute mark of the ceremony. Here, the President shows he’s aware of one of the longstanding, thorny issues in cancer R&D – the career incentives and financial incentives that often discourage data sharing. He showed an understanding of this issue, and that he’s not buying some of the classic excuses people make when they defend the status quo.

“We don’t learn enough from patients’ experiences, or their data,” President Biden said. “When we first started this work, one of the first things we did was make sure that doctors, that researchers, work together, share information, and allow patients to share their data with other doctors and researchers to help others…

“I was told that ’Well, patients don’t want to share their data.’”

President Biden then paused, leaned over close to the microphone, and whispered as if to let everyone in on a secret.

“They all want to share their data,” he whispered.

The audience laughed.

“Sometimes you all don’t want to share what you know,” he added, pointedly.

He raised his eyebrows and surveyed the room.

There was less laughter. Maybe some nervous laughter. Then came a smattering of applause from those who saw that moment for what it was – a President willing to shake things up by challenging some dogma from people who say they stand for patients. It will take some follow-through to change the incentive structures to ensure more data sharing happens, and that we can get closer to a healthcare system that learns more from each and every patient.

Julie Grant with Janet Demeter, a parent who lost her son, Jack, to DIPG (Diffuse Intrinsic Pontine Glioma) and became a committed patient advocate. At the White House, Feb. 2, 2022.

The President is making specific requests. For scientists: “Share data as best you can.”

He then turned to industry. “I’m calling on the private sector to develop and test new treatments, make drugs more affordable, and share more data and knowledge that can inform the public and benefit every company’s research.”

Patients are being asked to take some responsibility as well. “I’m respectfully calling on people living with cancer and caregivers and families to keep sharing their experience and pushing for progress,” the President said. “You’ll have a voice and a seat at the table, I promise you.” 

One person can wear many hats when it comes to cancer – patient, caregiver, family member, scientist, doctor, advocate, industry. I wear more than one of these hats and you may, as well. The Biden-Harris Administration is asking for everyone to do something within their sphere of influence. They called out to us all.

More than anything, the Cancer Moonshot relaunch is a direct invitation for all of us to contribute toward a bold, shared goal.

2
Feb
2022

TR’s 7th Anniversary: Thank You

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02 Feb 2022

Timmerman Report is 7 years old today.

On Feb. 2, 2015, I rode my bike to the office on a wet Seattle morning and turned on the lights. I thought there was a need for clear, probing, contextual biotech journalism.

It was a leap of faith, like any entrepreneurial venture. I couldn’t have predicted 90 percent of what came next.

Thank you to all of the loyal subscribers who have made this happen.

I’m grateful to have built this platform for editorially independent biotech journalism, and to steward it as a trusted source. TR seeks to understand, to inform, to enlighten, and to challenge readers to think. It’s about exploring the frontiers of science and drug discovery, and thinking through the implications of all this work for society.

That’s not necessarily the formula for getting maximum clicks. Yet the business is thriving with record numbers of individual and group subscriptions. The Long Run podcast, similarly, has attracted an audience that has grown 40 percent year-over-year.

Looking at biotech from unusual angles.

Building Timmerman Report has opened up new avenues for me to give back, to mobilize the biotech community around good causes. My campaigns for the Climb to Fight Cancer at Fred Hutch, and Timmerman Traverse for Life Science Cares have raised more than $3.7 million combined for cancer research and anti-poverty nonprofits since 2017.

Those trips have been deeply meaningful. I’m proud that we, together, have catalyzed so much good work. This work will continue. The impact will grow.

Sometimes we all need to stop and think about what we’re doing, where we’ve come from, and where we’re going.

Thank you. For reading. For listening. For supporting quality journalism. And for doing the day-to-day, bit-by-bit work of improving human health and creating a better world.

1
Feb
2022

Targeting Integrins With Small Molecules: Praveen Tipirneni on The Long Run

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01 Feb 2022

Today’s guest on The Long Run is Praveen Tipirneni.

Praveen is the CEO of Waltham, Mass.-based Morphic Therapeutic.

Praveen Tipirneni, CEO, Morphic Therapeutic

Morphic Therapeutic is developing oral small molecule drugs aimed at integrin targets. There’s some fascinating biology and computational technology underpinning this work, which I discussed a couple years ago on The Long Run with Morphic scientific founder Tim Springer.

Just to review the basics, Morphic knows that integrin targets ‘morph’ from one conformational state to another. The challenge is how one might use that knowledge as part of a small molecule drug development strategy.

Morphic has started off with a lead candidate against the alpha-4, beta-7 integrin target that is well validated by Takeda’s blockbuster antibody drug vedolizumab, marketed as Entyvio for inflammatory bowel disease. Morphic showed last year that its orally available small molecule could replicate the mechanism of an antibody, but in the more convenient form of an oral pill instead of an IV-infused antibody.

Praveen and his team need to show that this initial program can live up to its promise in clinical trials, and that it’s not a one-off – there are other small molecules with potential in the pipeline.

He’s a fun and engaging speaker, and I think you’ll enjoy hearing how Praveen’s career led to this point of possibility with Morphic.

Now please join me and Praveen Tipirneni on The Long Run.

31
Jan
2022

Sridhar Iyengar on Figuring Out the Key Element to Success: Customer Needs

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31 Jan 2022

Lisa Suennen

Sridhar Iyengar (Sri) is one of those vaunted serial entrepreneurs. He had successfully sold his second company and was ready to do it all over again. 

Sri long ago learned that the trick to creating a successful startup was finding a difficult problem to solve – one that vexed companies that had money to spend.

It was 2015, and he was thinking about where to focus his entrepreneurial efforts. He reflected on challenges of his own making at previous companies.

Then he remembered. 

When Sri was leading engineering and product manufacturing at AgaMatrix more than a decade back, scale-up challenges in the commercial production process had cost the company dearly. Small shifts in the diabetes management environment led to very high device scrap rates. That meant millions of dollars down the drain, followed by many months of investigation trying to figure out how to collect data, identify the specific culprit, and act to make the problem go away.

Sridhar Iyengar, CEO, Elemental Machines

What made the problem even more painful was that it kept happening over and over. If only he had had real-time visibility into the details of the production line, this would not have been the case. 

Aha! he thought.

This is the perfect target for a solution that many companies face, especially life sciences companies, where small environmental glitches can make entire batches of product to go bad. By introducing data and analytics to the manufacturing line to enable rapid environmental and machine adjustments, Sri thought, you can create “non-linear value creation”—a small change in process which unlocks huge revenue opportunity.

“That’s the most boring problem I ever heard of,” said Sri’s constant co-founder and friend, Sonny Vu.

But to Sri, this was a personal challenge as well as a big professional opportunity. 

He himself had lost many hours of sleep over this specific problem in the past and he knew he was not alone. Sri knew more than most about sensors from his stints at AgaMatrix and Misfit Wearables. Now, instead of applying sensors to bodies, he set out to apply them to the manufacturing process. 

That insight led to the creation of Elemental Machines, a Cambridge-based company founded in 2015. The company makes connected process management sensors that enable production data analytics.

Sri and his team developed a system of simple connected sensors that can show how micro changes in environment and handling can have an outsized impact on what comes off the line. The system was fed by a symphony of potential troublemakers: humidity, visible light, ultraviolet light levels, air pressure, air quality, VOC contaminants, machine de-calibration were some of the suspects now subject to arrest. And it worked. 

But there was a problem.

Production leaders at biopharma companies would not buy. They were suspicious of putting everything into the cloud; they worried about information security; and, most of all, they worried about regulatory compliance – Elemental Machines would need to get ISO901, 27CFR Part11 and a multiplicity of other box-checking accreditations before manufacturing leaders would take a chance on the upstart company. Sri met with dozens of manufacturing leaders at biopharma companies and kept coming away without the sale. 

It wasn’t until someone suggested that biopharma research and development (R&D) labs had similar problems did Sri shift the business.

These labs dealt in materials that were the antecedents of future manufacturing lines. More importantly, biopharma products might never come to be if certain R&D failures go undetected. Best of all, the labs didn’t require the regulatory certifications that the manufacturing line did – the product could be used as is and bring a significant leap forward in simplicity, connectivity and analytic ability. 

The people running the labs quickly understood the potential value. And crucially, they didn’t see a lot of other options. Those who were gunning to build the “digital lab of the future” were unable to find simple ways of amassing the right data and bringing all their tools into one dashboard. Elemental Machines realized it could enable its own sensors to read virtually every type of environmental data point that lab instruments might throw off. Elemental could also build a system of application interfaces (APIs) that would allow R&D leaders to turn their own patchwork of hardware and sensors into a single tapestry of information read from Elemental’s small monitoring devices. 

That was the key that unlocked opportunity. Sri saw a way to turn a complicated thing for the right customers into something easy to monitor and manage. That was a way to save customers time, money and heartache.

Elemental’s first application connected cell culture incubators to look for variations in cell growth conditions (due to temperature, CO2, humidity, RPMs) to determine where points of failure may exist.  One lab tested the product and found out that fluctuating humidity was the mystery event causing their nascent medical device polymer to fail (not the human error that was previously assumed). 

Elemental even got asked to improve the age-old problem of refrigerator and freezer monitoring, a problem Sri thought to have been previously solved and commodified by others. It turned out that yes, temperature sensors were already ubiquitous, but the sensors didn’t really tell the right people about the real problem in the right way. Legacy products generally required WiFi (which can fail), wall plugs (which aren’t always nearby), and sent the alerts into the building’s alarm system, not to the lab manager. 

As a result, building security guards would routinely have to go on a treasure hunt to find the offending freezer. Elemental’s product turned out to be a better mousetrap. It relied on Bluetooth vs. WiFi, battery operation vs. wall plugs, and it provided one gateway to hundreds of devices to let lab directors know not just that someone left the fridge door open, but which one — all on one dashboard. 

One customer’s key insight was that certain refrigerators and freezers were opened and closed more than others. Now able to pinpoint the problem, the customer moved highly sensitive COVID testing reagents into rarely used freezers and refrigerators instead of storing them in the conveniently accessed ones on highly-populated routes. 

By avoiding the most-trafficked machines, the customer lost less of its precious materials. When the precious materials were lost, the lab director would know if it was because of a failed compressor, a door left ajar or a case of someone standing and staring into an open fridge for way too long, teenager-style.

The system, with its embedded artificial intelligence (AI), told the customer not just that there was a problem, but the likely root cause.

Interestingly, Elemental didn’t even need to promote the AI magic dust to drive labs’ adoption of their product. AI’s firepower wasn’t what was lacking – the void was just-in-time access to enough specific, integrated, basic information. By focusing on the small potential issues that drive big insight, a sophisticated and elegant system has led to large R&D partnerships. Big companies such as PerkinElmer and Eppendorf are using the system, along with several large pharmaceutical manufacturers, and smaller companies that include Insitro, Ginkgo Bioworks, and Quanterix. Incubators such as IndieBio and LabCentral have also adopted Elemental’s products. 

Since Elemental got itself in the door by providing something of value, the customers have gotten engaged in helping it enhance the product. The product now increasingly allows for any IOT sensor or Electronic Lab Notebook (ELN) or Laboratory Information Management System (LIMS) to connect through an open API. Some of Elemental’s clients have freestyled and thus helped the company add features for compliance monitoring, as well as location and utilization tracking of high-value assets.

Another shift, perhaps, has been moving from a sensor-focused business model to a platform one. This has been accompanied by a change in business model from charging for sensor hardware to charging a subscription for ongoing access to the platform.  

More and more data scientists are populating the halls of biopharma companies. There’s a growing focus on synthetic biology. More companies today are comfortable with the cloud. There’s a relentless appetite for more data and more analytics.

For Sri, this is affirming. But it has also reinforced what he already had learned in his prior two companies: you need to match your solution to what the market is ready to receive when it’s ready to receive it. This may mean leaping over a lower bar than what is technologically possible; but Sri has come to terms with that. He realizes that solving customer problems is what drives revenue, not seeking technical perfection.

For a PhD from Cambridge, this was a hard-won lesson, but a key shift in his own thinking that made success possible.   

27
Jan
2022

A Small Step on Drug Pricing

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27 Jan 2022

Luke Timmerman, founder & editor, Timmerman Report

Mark Cuban, the billionaire-turned-reality TV star, made news this week with the Mark Cuban Cost Plus Drug Company.

Cuban has been saying for a while that he wants to stick it to the man. The biopharma man.

“I could make a fortune from this,” Cuban told Texas Monthly in September. “But I won’t. I’ve got enough money. I’d rather f— up the drug industry in every way possible.”

That was the warm-up act. Now we’re getting a closer look at what he has in mind.

The Cost Plus Drug company model is simple. It purchases generic drugs, marks them up by 15 percent, and sells them online to consumers. It’s a good idea. It doesn’t threaten anyone’s patents in the innovative side of the biopharma world. It threatens middlemen who make substantial profits, but create little to no value. Most people would call it fair. It’s very much unlike the byzantine, opaque and perverse system we have today that most people in the biopharma industry don’t even understand.

There’s something attractive about a simple, fair approach to drug pricing.

But we shouldn’t get carried away patting Mark Cuban on the back for his gift to America just yet. Cuban isn’t in the business of discovery and development of new drugs. That messy work – the work that advances human health – is left to others.

What the world needs is a nuanced, balanced act. The trick will be to reduce prices of generic and branded medicines, make them more easily accessible to patients, and keep the incentives for people to develop new ones.  

The Cuban model, in a way, is in keeping with the original spirit of the Hatch-Waxman Act of 1984 that created the generic small molecule pharmaceutical industry. But it’s a small bite at the apple if you think about the types of drugs we are developing in the 21st century.

Cost Plus won’t help solve the biosimilar pricing problem. It won’t get us to cheaper cell and gene therapies down the road. It doesn’t fix our broken health insurance system, in which people pay through the nose every month in premiums, and then are expected to pay a bundle more in co-pays and sky-high deductibles whenever they actually need healthcare. It doesn’t clamp down on the runaway spending and price increases at hospitals (see the latest from the Massachusetts Health Policy Commission, for what Mass General Brigham charges).

For now, in the early days, the Cuban Cost Plus Drug Company has 100 generic medicines for sale. Some of its initial batch of drugs appear to be offered at modest discounts that could probably be found at the local pharmacy. Others are available quite cheap. The breakthrough drug for chronic myeloid leukemia from two decades ago, imatinib, is now generic. It’s available at Cuban’s store for $17.10 for a month’s supply. That’s down from the usual $2,502 (can someone explain that indefensible price for a generic drug?).

The cholesterol-lowering drug atorvastatin – once marketed as Lipitor, the top-selling drug in the US — is also available dirt cheap. UCSF cardiologist Ethan Weiss was impressed.

I hope the Cost Plus Drug Company can gain access to a lot more medicines, build up a loyal customer base in the millions, and use its growing purchasing power to extract even better prices from generic manufacturers. That would be a way to help more people struggling to pay the bills.

It’s nice to look at this all play out and applaud. But that’s part of the problem. We talk, talk, talk, see something we like, click like, and move on to the next shiny thing, the next raging controversy. Too many people are watching from the bleachers, cheering and booing the heroes and villains, all while furtively hoping someone else will get in the arena to do the hard work.

Our culture craves the quick and easy solution, the shortcut, the silver bullet. Cuban will get a lot of attention in part because his message — there’s a simple solution! — appeals to this base desire for a simple one-and-done answer.

But if we think this billionaire or any other billionaire is going to ride to the rescue and solve the drug pricing problem for us, or fix the broken US healthcare system, then we’re fooling ourselves. Ask Jeff Bezos. Indulging in this fantasy is another way of letting our elected officials off the hook, letting ourselves off the hook, and kicking the can a little further down the road.

We don’t need more snide Tweets and hot takes. We need more people grinding behind the scenes to rebuild our institutions and repairing our social fabric. This means smart people from the public and private sector – people of talent and decency – working together. Even if that means working with people who we disagree with, and who sometimes hold views we find abhorrent. That’s the work required for those of us who care about democratic self-governance of the sort we’ve had for more than 200 years.

It might sound too daunting now. We’re in the middle of a bleak COVID-19 wave in the dark of winter. But if we don’t rally around solving big problems for the common good, when will we? We have been kicking the can down the road for a long time. We know we can’t count on a billionaire celebrity entertainer to come in with a catchy slogan and fix things for us.

Financings

Boston-based Akili Interactive, the digital therapeutics company that won a trailblazing FDA approval for pediatric ADHD, said it’s going public through a SPAC merger. The company is getting a $412 million in gross cash proceeds, including $100 million from Social Capital, the fund led by Chamath Palihapitiya. (TR coverage of Akili, Aug. 2020).

Amsterdam and Boston-based Leyden Labs raised $140 million in a Series B financing led by Casdin Capital and GV. The company is working on treatments to fight respiratory viruses, and it’s thinking about doing something the current vaccines aren’t good at – inducing mucosal immunity in the nose and throat membranes. The company has in-licensed PanFlu, a program developed by Janssen Pharmaceuticals against influenza A and B.

New Haven, Conn.-based Simcha Therapeutics raised $40 million in a Series B financing led by SR One. The company is taking its newly engineered form of IL-18 into the clinic for solid tumors. (TR coverage)

Emeryville, Calif.-based Kyverna Therapeutics raised $85 million in a Series B financing led by Northpond Ventures. It’s working on engineering CAR-T cells for autoimmunity. (TR coverage)

Cambridge, Mass.-based Cellino Biotech raised $80 million in a Series A financing led by Leaps by Bayer. It’s developing automation systems for cell therapy.

South San Francisco-based Fluidigm received a $250 million strategic capital infusion from Casdin Capital and Viking Global Investors. As part of the reboot, the company brought in Michael Egholm as CEO. He’s the former chief technology officer at Danaher Life Sciences. The company is also changing its name to Standard BioTools.

San Mateo, Calif.-based Sierra Oncology, after releasing positive Phase III results for its myelofibrosis drug candidate, raised $135 million in a stock offering at $27 a share.

South San Francisco-based Septerna raised $100 million in a Series A financing led by Third Rock Ventures. The company is working on small molecules against GPCR targets.

Vancouver, BC-based Zymeworks, the antibody engineering company, raised $100 million in a stock offering at $8 a share.

Cambridge, Mass.-based Epizyme raised $85 million in a stock offering at $1.50 a share.

Emeryville, Calif.-based Metagenomi raised $175 million in a Series B financing to advance its in vivo and ex vivo gene editing systems, and to expand its automation and manufacturing capabilities. PFM Health Sciences, Farallon Capital Management, and a leading global investment firm led the financing.

Massachusetts biotech firms raised a record $13.7 billion in venture capital in 2021. Wow. (Boston Globe)

Data That Mattered

San Mateo, Calif.-based Sierra Oncology, which picked up its lead asset in a Gilead garage sale, showed positive Phase III clinical trial results for momelotinib for myelofibrosis. The drug was tested in patients were who symptomatic, anemic, and had previously been treated with an approved JAK inhibitor. The Sierra drug, orally bioavailable JAK1, JAK2 and ACVR1 / ALK2 inhibitor, hit all primary and secondary endpoints. Sierra seized on the momentum from its rising stock price, and raised $135 million in a stock offering at $27 a share.

Regulatory Action

UK-based Immunocore won FDA approval for tebentafusp-tebn (Kimmtrak) for unresectable or metastatic uveal melanoma. It’s the first T cell receptor therapy approved by the FDA, and the first bispecific T cell engaging therapy for a solid tumor.

Gilead Sciences said the FDA has placed a partial clinical hold on its anti-CD47 antibody program, magrolimab, in combination with azacitadine. There appeared to be more unexpected serious adverse events in the treatment group than the control group, although Gilead didn’t specify what they were. The drug is being tested for myelodysplastic syndrome (MDS) and acute myeloid leukemia. The hold casts some doubt on the program, which Gilead paid $4.7 billion to obtain through its acquisition of Forty Seven.

New York-based TG Therapeutics said its lead program, a combo treatment for chronic lymphocytic leukemia and non-Hodgkin’s lymphoma, went on a clinical hold. The disclosure was made at an investor conference, and in writing through an 8-k filing with the SEC.

South San Francisco-based Cortexyme said the FDA placed a clinical hold on its atuzaginstat program, which is being evaluated for Alzheimer’s and Parkinson’s disease. The company said it’s doing a cost-saving plan, and will prioritize its next-generation program for Alzheimer’s.

Wilmington, Delaware-based Incyte said it is withdrawing the New Drug Application for parsaclisib, a PI3kinase delta inhibitor for lymphoma, after meetings with the FDA. The company called it a business decision based on the confirmatory study requirements from regulators.

Merck said it received a Complete Response Letter from the FDA, saying it wouldn’t approve its experimental drug for chronic cough, gefapixant. The drug was approved in Japan.

Gilead withdrew idelalisib (Zydelig) from the US market for two indications, after failing to complete the required post-marketing studies outlined when the drug received Accelerated Approval from the FDA in  2014. The drug will still be indicated for chronic lymphocytic leukemia.

Science
  • Pembrolizumab induces HIV latency reversal in people living with HIV and cancer on antiretroviral therapy. Science Translational Medicine. Jan. 26. (Tom Uldrick et al Fred Hutchinson Cancer Research Center)
  • Stanford University scientists led by Euan Ashley set Guinness World Record with fastest DNA sequencing, completing a human genome sequence in 5 hours, 2 minutes. Stanford Medicine News. Jan. 12. (Hanae Armitage)
  • Combining baloxavir marboxil with standard-of-care neuraminidase inhibitor in patients hospitalised with severe influenza (FLAGSTONE): a randomised, parallel-group, double-blind, placebo-controlled, superiority trial. The Lancet Infectious Diseases. Jan. 24. (Deepali Kumar et al University Health Network, Toronto, Canada)
  • Clonally Expanded B Cells in Multiple Sclerosis Bind EBV EBNA1 and GlialCAM. Nature. Jan. 24. (William Robinson et al Stanford University)
Science of SARS-Cov-2
  • Omicron, the great escape artist. Nature Reviews Immunology. Jan. 11. (Alexandra Flemming)
  • Omicron’s Radical Evolution: Thirteen of Omicron’s mutations should have hurt the variant’s chances of survival. Instead, they worked together to make it thrive. NYT. Jan. 24. (Carl Zimmer)
  • Multiple Early Factors Anticipate Post-Acute COVID-19 Sequelae. Cell. Jan. 24. (Jim Heath et al Institute for Systems Biology)
  • Cannabidiol inhibits SARS-CoV-2 replication through induction of the host ER stress and innate immune responses. Science Advances. Jan. 20. (Marsha Rich Rosner et al University of Chicago)
  • Early non-neutralizing, afucosylated antibody responses are associated with COVID-19 severity. Science Translational Medicine. Jan. 18. (Saborni Chakraborty et al Stanford University)
  • Selection analysis identifies unusual clustered mutational changes in Omicron lineage BA.1 that likely impact Spike function. BioRxiv. Jan. 18. (Darren Martin et al University of Cape Town)
  • Structural diversity of the SARS-CoV-2 Omicron spike. BioRxiv. Jan. 26. (Sophie Gobeil et al Duke University)
Epidemiology

Trends in Disease Severity and Health Care Utilization During the Early Omicron Variant Period Compared with Previous SARS-CoV-2 High Transmission Periods — United States, December 2020–January 2022. CDC Morbidity and Mortality Weekly Report.

Science Policy
  • What Japan Got Right About Covid-19. NYT. Jan. 24. (Hitoshi Oshitani)
  • The FDA said the Regeneron and Lilly neutralizing antibodies shouldn’t be used anymore to treat COVID-19 during the Omicron wave, because they aren’t effective at neutralizing the Omicron variant. WSJ. Jan. 24. (Joseph Walker)
  • COVID-19: endemic doesn’t mean harmless. Rosy assumptions endanger public health — policymakers must act now to shape the years to come. Nature. Jan. 24. (Aris Katzourakis, University of Oxford)
Vaccines
  • Unadjuvanted intranasal spike vaccine booster elicits robust protective mucosal immunity against sarbecoviruses. BioRxiv. Jan. 26. (Akiko Iwasaki et al Yale University).
  • A prospective cohort study of COVID-19 vaccination, SARS-CoV-2 infection, and fertility. American Journal of Epidemiology. Jan. 22. (Amelia Wesselink et al Boston University School of Public Health).
  • Myocarditis Cases Reported After mRNA-Based COVID-19 Vaccination in the US From December 2020 to August 2021. JAMA. Jan. 25. (Matthew Oster et al Centers for Disease Control and Prevention)
  • Moderna said it began dosing in a Phase II clinical trial of its mRNA vaccine candidate for COVID-19 that’s specifically designed to elicit immunity against the Omicron variant. Pfizer and BioNTech said they have an Omicron-specific vaccine trial underway as well.
Personnel File

Belgium-based Galapagos NV hired Paul Stoffels as CEO. He’s the former chief scientific officer of Johnson & Johnson, and was closely involved in the founding of Galapagos more than 20 years ago. He replaces Otto van de Stolpe, who is retiring.

The Bill & Melinda Gates Foundation, the world’s largest philanthropy and a power player in global health and development, added a few new members to its board of trustees to shore up its rather shaky institutional governance in the wake of Bill & Melinda’s divorce. Gates Foundation CEO Mark Suzman is joining the 6-member board of trustees, along with Zimbabwean telecom billionaire Strive Masiyiwa, Minouche Shafik, director of the London School of Economics and Political Science; and Thomas Tierney, co-founder and co-chair of The Bridgespan Group, a philanthropic consulting firm. (Associated Press). For background on why the foundation needed to make this move, see this editorial from May 2021 in Project Syndicate by a couple of foundation veterans — Alex Friedman and Julie Sunderland.

Cambridge, Mass. and Switzerland-based Enzyvant hired Johanna Rossell as chief commercial officer. The company won FDA clearance in October to market a tissue-based regenerative therapy for an ultra-rare and life-threatening pediatric immunodeficiency. She most recently worked at Biogen on the ill-fated commercial launch of aducanumab (Aduhelm).

The Cystic Fibrosis Foundation, based in Bethesda, Maryland, hired Steven Rowe as its chief scientific officer.

Boston-based Expansion Therapeutics, the RNA medicines company, hired Sudhir Rao as senior vice president of business development.

Seattle-based Chinook Therapeutics, the developer of precision medicines for kidney diseases, hired Charlotte Jones-Burton as senior vice president of product development and strategy.

UK-based F2G, an antifungal developer, hired Mark Baglin as chief commercial officer and Janelle Anderson as chief business officer. Sylvie Gregoire joined as Non-Executive Director.

Philadelphia-based Adaptimmune hired Cintia Piccina as chief commercial officer.

Deals

South San Francisco-based Atara Biotherapeutics sold its operations and manufacturing facility in Thousand Oaks, Calif. to Fujifilm Diosynth Biotechnologies for $100 million upfront. The deal will lower Atara’s operating costs, keep skilled manufacturing and quality people on the job, and allow for Atara to have flexible access to facility to meet its cell therapy manufacturing needs for as long as 10 years.

Our Shared Humanity
  • What Will It Take to Vaccinate the World? Q&A With Peter Hotez. Bloomberg News. Jan. 18. (Clara Ferreira Marques)
  • Racism as a leading cause of death in the United States. BMJ. Jan. 25. (Harlan Krumholz et al Yale University)
Strategy
Kudos

The Genetics Society of America announced a series of awards this week, honoring Michael Lynch of Arizona State University, Margaret Fuller of Stanford University, Shirley Tilghman of Princeton University, and Harmit Malik of the Fred Hutchinson Cancer Research Center.

11
Jan
2022

Antibody Engineering & Company Building: Bassil Dahiyat on The Long Run

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11 Jan 2022

Today’s guest on The Long Run is Bassil Dahiyat.

Bassil is the CEO of Monrovia, Calif.-based Xencor.

He’s been on a true Long Run.

Bassil Dahiyat, co-founder and CEO, Xencor

Bassil co-founded Xencor in 1997 after getting his PhD in chemistry at Caltech. He’s been through a lot of ups and downs in the biotech markets, and taken the company through a couple big strategic shifts.

The company is known for its work on engineering monoclonal antibody drugs, and engineered cytokine therapies. Few people may realize it, but the monoclonal antibody sotrovimab, developed by VIR Biotechnology and GSK as a broadly neutralizing antibody that still works against the Omicron variant of SARS-CoV-2, was made with help from the antibody engineers at Xencor.

Antibody engineering has come a long way over the past 20 years. These treatments are crucial to the present and future of medicine. Bassil has seen the evolution at close range.

Xencor is now aspiring to make a difference for its partners, but also to develop a few drugs of its own.

This is a fun, freewheeling, insightful conversation with a scientific entrepreneur.

Now, before we get started, a word from the sponsor of The Long Run.

Today’s sponsor, Answerthink, has been consistently recognized by SAP, one of the largest enterprise software companies, as a top business partner for delivering and implementing SAP solutions for small and midsized life science companies. Their SAP certified solutions designed for the Life Science Industry are preconfigured, rapidly deployable and address fundamental business and IT challenges such as:

  • Integrating your business applications
  • Delivering validated reporting
  • Increasing your speed to market
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  • As well as delivering a fully compliant solutions that meets FDA’s strict standards.

Explore how Answerthink can streamline your business processes to ensure growth.

Visit Answerthink.com/timmerman and get a copy of the e-book- “Top Three Barriers to Growth for Life Science Organizations.“

That’s Answerthink.com/timmerman

Now please join me and Bassil Dahiyat on The Long Run.

11
Jan
2022

Brad Prosek on Getting to Know an Unconventional Acquirer

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11 Jan 2022

Vikas Goyal, former SVP, business development, Pandion Therapeutics (now part of Merck)

[Editor’s Note: this is the first in a monthly series with business development executives about some of the surprises, subtleties, and human aspects of biotech dealmaking.]

Cambridge, Mass.-based Constellation Pharmaceuticals lived through the ups and downs of the epigenetic drug discovery field for a decade, before it exited on a high note last year. The company was acquired by Germany-based Morphosys for $1.7 billion, or $34 a share, in June 2021.

The deal gave Morphosys access to Constellation’s two lead product candidates, pelabresib (CPI-0610), a BET inhibitor, and CPI-0209, a second-generation EZH2 inhibitor. At the time of the signing, pelabresib was in Phase III clinical development for myelofibrosis and the EZH2 inhibitor was in Phase II development for hematological and solid tumors. For some of the background on the lead program and the company journey, listen to CEO Jigar Raythatha on The Long Run podcast from December 2019.

One interesting wrinkle in this deal came in the form of a $1.4 billion upfront payment from Royalty Pharma to Morphosys.

I spoke with Brad Prosek, the chief business officer of Constellation at the time, about how this deal came to be.

Brad Prosek, former chief business officer, Constellation Pharmaceuticals

Why did the deal make sense for the two parties?

Morphosys has a long history of developing antibody and biologics products. They have close to 50 collaborations in their 30+ year history, several of which have started to pay off in terms of approved products, bringing royalties and profit shares back to Morphosys. So under the leadership of their CEO Jean-Paul Kress, they have started to turn the page from that platform basis to a product-oriented company.

I had originally reached out to them (as documented in the transaction’s 14D-9) around July 2020, though my initial outreach was not about partnering Constellation’s lead program. I had seen Morphosys print a deal with Incyte that put them on my map as a fellow traveler in the heme-onc space with money to invest in partnerships. Constellation was considering collaborations around our next generation EZH2 program. We felt our EZH2 inhibitor could be a best-in-class program and we wanted to build a data wall around the program – and we felt that with a partner we could deliver a bigger program faster than we could on our own.

As Morphosys got to know the company, I think we started to check a lot of boxes for them with respect to their growth strategy. They wanted to grow into small molecules to complement their monoclonal antibody base. They wanted to build a Boston research site. And they were looking for additional assets in the hematology and oncology spaces more broadly. So the more they looked, they liked a lot more than just what I had initially reached out to them to talk about.

How did you balance their desire to learn about Constellation more broadly vs. keeping them focused on the EZH2 program, which was your more immediate-term partnering goal?

As you’re going to do in any initial BD discussions, we did present the EZH2 program in some context – we showed our pipeline slide and maybe a strategy slide. But to focus on our objective, we did step off of that very quickly onto what I wanted to talk about. At least that was my initial approach.

Ultimately, in the subsequent discussions Morphosys asked us about pelabresib. [Pelabresib, an inhibitor of BET, was Constellation’s lead program and was in a Phase 3 clinical trial for myelofibrosis at the time of the acquisition]. They had seen some of the data we had presented publicly. We had made a few comments here and there about how excited we were in advancing the program. But I tried really hard not to get distracted by that.

I wanted to avoid the trap of getting onto the slippery slope of even discussing structures of interest. When the topic of pelabresib first came up, I had been pretty clear with them that Constellation was not interested to partner, for example, US rights for pelabresib. I tried to head that off at the pass pretty quickly.

Of course, sometimes the more you say no to someone, the more they want something. As Constellation was a public company, Morphosys had the ability to change the dialogue at any time by throwing in an unsolicited proposal. Which is what they did in October 2020. Morphosys must have done additional work on their side to get comfortable that this does check the boxes for something bigger.

How did you build your relationships within Morphosys?

In my view, you have to build multiplex conviction on the other side and use the relationships you build carefully over time to make sure things work. I got introduced to Barbara Krebs-Pohl [SVP and Head of BD&L and Alliance Management at Morphosys] through Mary Martin Roberts, a dear friend and former colleague at Biogen who had gone on to join Morphosys’ market access organization. Barbara had me talk to some of her team to begin the relationship, including Monika Bӓhner and other folks in Morphosys’ search and evaluation function.

As you know, if the technical team doesn’t have conviction, it doesn’t matter how hard you bang on the senior business leaders to make your case. Given the type of deal that I was focused on with our EZH2 program, it was OK for me to let those senior relationships recede into the background as we focused on technical discussions.

As things evolved, having had a good open relationship with Barbara from the beginning was important as we advanced through the later discussions.

How did you balance your ongoing Morphosys relationship-building with Constellation’s desire to get to the right kind of deal?

That is a constant and regular dialogue with your full management team, and sometimes on a more frequent basis with a subset of the management team.

We had what I liked to call our “Gang of Four” – our CEO Jigar Raythatha, our CFO Emma Reeve, our General Counsel Karen Valentine, and myself – that would get together sometimes a couple of times a week to share how we were thinking about things, what we were seeing, and to calibrate what made the most sense. We also regularly updated a strategy subcommittee of the Board, as well as our broader Board of Directors.

It’s good to be clear as a management team and aligned with your Board as to what your goals are for the company. Then you can use what you’re learning from the market to figure out what’s going to get you closer to your goals. Partnerships and straight financings are just two different strategic options in pursuit of your company goals.

At the end of the day, I believe in having as many options as I can on both the financing and BD fronts running in parallel as much as possible. You can’t always program that. But if you can keep things running in parallel, even if some of those options are not the right situations to pursue, it gives you the ability to really think about trade-offs. You can’t do stuff by remote control or through management consulting decks, sometimes you have to have specific opportunities with tangible trade-offs to really think about your path forward. And oftentimes it can be a bit like Goldilocks to get to the path that is just right.

What was the business situation at Constellation and why did you feel this was the right time to work with Morphosys?

It’s important to note that we had a good cash position at the time when Morphosys approached us. We had not gone out seeking an M&A. And the magic here was we had the ability in this period of time to be incredibly selective due to several other options on the table as part of our work towards 2021 goals. That allowed us to not feel like our back was against the wall to any option. So Morphosys’ proposal to us was sort of an epi-phenomenon on top of what we were already trying to execute.

Our goal was to build Constellation into a biotech company where the research engine could keep sustainably delivering even as the lead programs shifted to commercialization. We were building real conviction around pelabresib’s data and clinical opportunity. We also had a great asset in our EZH2 inhibitor and wanted to go fast with that. But wanting to move our EZH2 program fast could also create resource conflicts with the Phase 3 and additional development work on pelabresib.

As we looked at the plan to get to and through early commercialization, we had some really great options to move Constellation forward and manage our cash raises in a thoughtful way. But ultimately we were going to have to finance the company at some point. And there would be additional risk, particularly technical risk, and dilution.

So when we walked into the Board Meeting where Morphosys’ ultimate Spring 2021 M&A proposal was on the agenda, that certainty for shareholders that emerges out of an M&A process was an important consideration.

Why was Morphosys the right partner for Constellation?

Importantly, Morphosys’ proposal valued the full Constellation portfolio. We had worked to build a really exciting company with a broad drug portfolio. What Morphosys was emphatic about and has been very public about since the deal is that they came for more than just pelabresib.

Agreeing to a company sale is a multifactorial analysis, but we’re all in this business to get new therapeutic options to patients as fast as possible with as much data as possible. If that’s your lodestar and where your compass points, then the analysis of any option crystalizes around whether it helps with your goal and is it fair to shareholders. And that’s where we got comfortable with Morphosys.

Paraphrasing Jigar’s commentary, we had this vision of being a fully integrated commercial-stage company acting on a global scale with an ability to work in parallel across our portfolio. Partnering with Morphosys accelerated that vision.

Was there any dataset in particular that drove Morphosys’ interest to acquire you?

At ASH 2019, we revealed data showing proof of concept with pelabresib in front-line, JAK-naive, myelofibrosis patients. We had previously shared data in second line patients, but this first-line activity was the watershed dataset.

We knew the first-line efficacy was going to be a key dataset and we wanted the data to speak for itself. That’s part of why we did the PIPE in October 2019. The PIPE followed by the data enabled our December 2019 follow-on offering that enabled us to be choosy about where to go next.

Given you were publicly traded, how did you get comfortable that the Morphosys proposal would be attractive to your investors?

We spent a fair amount of time over the years that led up to this making sure we knew what sentiment was around all of our programs, including our lead program. So we weren’t starting from square one when Morphosys sent in their initial proposal.

There is this constant tension between looking at your company plans, the cash needs to fund that plan, the options available to raise that cash, and what taking any of those options might mean for your shareholders. Our bankers at Centerview were particularly helpful at boiling that analysis down to the potential risk versus the reward.

As a CBO, you’re not doing your job unless you have these pieces ready at hand. When the game changes as the CBO, you need to be able to confidently sit down with your CEO and your Board and say, “Here’s how we can think about this.”

How did the deal process go with Morphosys?

Every deal has lots of near-death moments. Part of what being in this CBO chair is about is thinking about and trying to anticipate what you can, having the ability to react fluidly in real-time, and always having back-ups to the back-ups to your back-up plans.

Again, you never want to end up against a wall.

One thing with respect to this deal is Morphosys had a very creative and transformational financing that they had to pull together to make this deal happen. When we started the journey with Morphosys’ first proposal in October 2020, from just looking at their financial statements, it was not clear where Morphosys would get the cash to pull off the acquisition.

This ended up becoming effectively a three-party deal with Royalty Pharma coming in with significant funding to Morphosys.

A two-handed deal is already hard to close, and a three-handed deal is very hard to pull off. This was really Morphosys’ problem and not ours, and we didn’t really see any of this come together until the very end, but a lot of this was evolving in parallel on Morphosys’ side. At the end, Jigar and Jean-Paul were communicating regularly so we did know what we needed to.

One thing I felt confident about on the BD side was that whoever Morphosys was going to talk to about their financing needs, we had probably also talked to them. Again, to keep our options open, I wanted the royalty funding groups to have a perspective on Constellation and our programs.

Deal competition also helps to signal that things are moving along, but we didn’t use that card until necessary.

When and why did you bring in Centerview?

Long before anything got hot and before anything like the deal we did with Morphosys was even apparent, I prioritized introducing Eric Tokat [a Partner at Centerview] to Jigar and the Board. An important thing to realize is that bankers like Eric and his team are not just in it for the immediate deal that you might be able to transact right now. Good bankers would far rather help you think about what your options are, would prefer you generate the best return for shareholders over the broad horizon, and ultimately may help you be acquired for more money later on instead of a deal that may be on the table today.

The Centerview team is tremendous. Eric had a long relationship with Jean-Paul Kress, which no doubt helped during the deal process. But having a good banking partner around the table will help a young company. Nobody has a monopoly on relationships, and different folks bring different perspectives and specialize in different types of deals.

You’ve done many transactions over your career – was there anything about this one that was just different?

Feedback can be a gift. I had done a lot of buy-side deals over my career, and one of my goals when joining Constellation was to do more sell-side. One of my learnings was to be incredibly diligent about asking for feedback from counter-parties, seeking clarifications, and really understanding what is happening on their side. We got a ton of free consulting from these discussions. And there is always your vision for the asset versus what is in the eye of the beholder.

And it’s important for any sell-side process to integrate the feedback you’re getting. This helped us understand what partners might have considered as warts in our programs, think of plans to maximize the value of each of our assets, and know when to come back to re-engage and update counter-parties. I really believe that this super-diligent approach to getting and integrating feedback from partners led to us having the multiple options that we did.

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