Ep. 372 - Biotech IPOs, Biosecure Act, cachexia pipeline

Biotech IPOs that are getting out remain hot — but will that continue into the fall? On the latest BioCentury This Week podcast, BioCentury’s analysts discuss the market for fresh biotech paper on NASDAQ, including the $770 million debut by  Parabilis, the largest IPO in the sector’s history.
The analysts also discuss the Biosecure Act and U.S. policy toward China; the cachexia pipeline; and BioCentury’s updated Innovation Distillery.

View full story: https://www.biocentury.com/article/659773

#BiotechIPO #NASDAQ #BiosecureAct #Cachexia #ChinaBiotech 

00:36 - Innovation Distillery
03:56 - Biotech IPOs
10:13 - Biosecure Act, WuXi AppTec
16:03 - Cachexia Pipeline
22:03 - Ouster for RFK Jr.?

To submit a question to BioCentury’s editors, email the BioCentury This Week team at podcasts@biocentury.com.

Transcript

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[Autogenerated Transcript]

Jeff Cranmer: 0:02

Biotech IPOs that do go out remain hot, but will that continue into the fall? Impact of the Biosecure Act is starting to come into focus, and WuXi AppTec is once again in the crosshairs of the US government. We'll discuss both on this week's BioCentury This Week podcast. We'll also take a look at how the political calendar will shape biopharma's future and what's in the clinic for cancer-associated cachexia. But first, BioCentury is expanding its horizon-scanning tools, data, and analysis to help drug hunters track where translational science is heading next. Here to tell you about that is our Editor in Chief, Simone Fishburn, and our colleague Karen Tkach Tuzman Director of Biopharma Intelligence. So what's new Simone, Karen?

Simone Fishburn: 1:04

Well, what's new is really just an expansion of what we've done. And so what we really lean into at BioCentury is horizon scanning. We now have, as you've been hearing, not one, but two Grand Rounds conferences each year, which is, you know, our horizon scanning, very forward-looking, what's-the-next-science and solving scientific problems conferences. But the distillery or the innovation distillery is a product we've had for a while, and we've now just expanded this in several dimensions and ways. So one is there's just many more items, 200-plus a month that we're putting in there, the other is the scope of items. Now, what is the distillery? Karen will explain a little more. But briefly, it is a tool that lets you find Innovations from the academic literature that let you find items with translational potential that you might wanna license or partner or just know about for competitive intelligence. So it's pretty exciting, and it's a handy new interface that we've got

Karen Tkach Tuzman: 2:11

so yeah, this is a really exciting time for the Innovation Distillery. It's come a long way since the PDF-based products of 2008 when we launched it. Now it is a database that's part of a module within BCIQ that is focused on the scientific papers coming out of the literature that highlight a really wide spectrum of innovations. not just targets and compounds but actually going beyond that to things like enabling tools and technology, both wet lab and computational, to modality design and optimization approaches um things around, say, manufacturing or the little tweaks that make cell therapies better. and emerging disease biology that is not just when a paper has arrived at a neat conclusion around a specific target, but the disease atlases we've highlighted some of these in, in analyses where they kind of capture more here's broad look at patient samples to understand the heterogeneity and mechanisms of disease, biomarkers and you'll see some analyses from our colleague Danielle highlighting that in Alzheimer's. Basically what we do is, you know, we've always considered the spectrum of translational research to be wider than just here's a target and here's a compound. but now we're really bringing that to the fore in a findable, filterable, searchable way within our Innovation Distillery

Jeff Cranmer: 3:39

Awesome, KTT. Where can our subscribers find this new hub for the distillery?

Karen Tkach Tuzman: 3:45

yeah. Well, as I mentioned, it's part of our BCIQ database. so within the BCIQ tab you can find it, and we'll put a link directly in the show notes

Jeff Cranmer: 3:53

Awesome. Thanks, KTT and Simone. Let's head over to the public markets. While the IPO spotlight last week was on SpaceX, investors were still pouring plenty of cash into biotech, including the largest IPO in the sector's history. Stephen Hansen, our lead finance writer and man in the U.K., is here to talk about it. Stephen, how's the market for biotech IPOs?

Stephen Hansen: 4:22

Thanks, Jeff. Yeah, it's uh you know as I mentioned, I think for the ones that are choosing to go out, it's been, it's been good. you know, we've seen some good pricing. Uh, we've seen some good upsizing for deals, some pretty good aftermarket performance. So a few stats so far this year. just looking at IPOs that have priced on US exchanges, we've had 12 so far, eight of them are still trading either at or above their IPO price, so, you know, two-thirds performing well, which is a good sign. Six of the seven that have gone out this quarter are also trading at or above their IPO price, so it's gotten even better uh as we've gotten through the second quarter here. And as you mentioned uh we've had two 700 million-plus IPOs, so IPOs have raised more than $700 million. Uh, Parabilis at 770 million last week, and then uh Kailera raised 719 million earlier this quarter. So, you know, it, it feels like there's plenty of demand out there, kind of despite the, the geopolitical backdrop that was playing. And then, obviously, lots of people focus on the US but, you know, just taking a quick look at Hong Kong we've also had four IPOs get done there as well. also doing quite well. you know, all of them are up, ranging anywhere from 25 to nearly 250%. so I know there's, there's a big queue of Hong Kong IPOs out there, but we've not had as many gotten done yet. But the ones that have gotten out do seem to be performing pretty well

Simone Fishburn: 5:46

Hey, Stephen. Yeah, I mean, the last week's one was Parabilis, of course. That is led by CEO and Chairman Mattai Mammen. Previously was head of R&D at J&J, in fact, and before that, in fact, he was uh one of the drivers of Theravance. So he's getting himself a, a track record there. And you know, I- that technology came from Greg Verdine. And they actually had some very good clinical data last year. And Kailera also had clinical data, and where I'm going with this, 'cause I know that Parabilis raised, you know, what they raised, and there was an over- over allotment as well, actually, which I, I think you guys think is gonna get probably satisfied. a large amount of money. They also had, and you'll remind me the amount uh concurrent investment by Regeneron, right?

Stephen Hansen: 6:34

75 million, I think, concurrent investment. Yep

Simone Fishburn: 6:36

So they're sort of like knocking at the, you know, what, 800 million maybe out of that uh raise

Stephen Hansen: 6:42

you wanna add that on more than that, yep. Yeah

Simone Fishburn: 6:45

you know, I'm gonna do that. Because what I'm getting at with them and Kailera, whatever, they are, you know, raising money that, do you think this money should take them now to product to market? Is this money going to… So it's, it's almost like a kind of old-fashioned model, say, where you have a technology, you raise enough to get you the data that will allow you to prove a principle, bring in investors to then get your product to market with the next raise. How about that for a model? Is that what you're looking at?

Stephen Hansen: 7:18

Could be. I mean, in, in these two specific instances, I don't, uh… I'm afraid you're catching me out. I don't know exactly what they've guided for in terms of this cash, but I think you're right in the sense that this will definitely get them through the late stage, I would think, and into, you know, sort of that pre-commercialization activity and then… Um, but, but, but you're right. This is, this, this is a lot of money that's meant to be able to push these programs far and have these companies operate independently and be able to commercialize independently. I think that's definitely part of the strategy here. The other thing I, I wanted to touch on, though, is you know, I was wondering how the Parabilis deal was gonna happen, given the fact that it was going out the same week as SpaceX. You know, that was one of, I think, the big questions was, when you have these mega IPOs, how much, how much of the air or of the liquidity do they suck out of the market? And, and will there be, you know, will people be basically saving money? will they not wanna go in on the Parabilis deal because they're, you know, wanting to save some of their capital to, to invest in SpaceX? And I think, you know, from what we saw with Parabilis, I think that suggests that's not the case. Obviously we'll have two more mega IPOs probably coming later this year in, in Anthropic and OpenAI. So, that's I think gonna be an open-ended question when we start talking about IPOs in the fall. But you know, I think that's something that we'll be, we'll be looking at. Th-The other thing I wanted to mention,'cause I think that's also something to think about for stuff coming this fall, because it seems like it's a great setup, I think, going into the rest of the year where things stand now. But I think we need to obviously be watching what the Fed does, right? Because the European Central Bank just last week, they raised interest rates for the first time in three years. Mainly that was, you know, determined by rising inflation that was attributed to the conflict in the Middle East. So there's a Fed meeting this week. So, you know, President Trump finally has his own chair at the Fed in Kevin Warsh. So what does he do? You know, does he hold firm? Does he raise rates? It's a lot of moving parts here, obviously, with the, you know, the supposed agreement over the weekend. So I think that'll be…

Simone Fishburn: 9:16

o- one thing I can guarantee you, Stephen, is that you and even biotech are not the only people watching what Warsh at the Fed

Stephen Hansen: 9:26

think you're absolutely right about that. You're absolutely right. Yeah. But it's, you know, we have a biotech IPO that's expected to go out this week, right? So uh Kardigan a cardiac company is looking to target 350 million at the midpoint. they're expected to price this week. So, you know, I think that'll also be a good sort of test to see how the market's, you know, digesting sort of biotech IPOs post SpaceX and most likely post, you know, Fed decision on, on rates. Yeah, we'll be keeping our eyes on it for sure

Jeff Cranmer: 9:52

And uh that over allotment by Parabilis did get exercise underwriters uh taking advantage of the old greenshoe, and so that brought the IPO to just north of 770 in millions. that's the new bar. All right, Stephen, thanks for that. Okay, so the Biosecure Act uh starting to come into focus, the act which President Trump signed into law in December prohibits the federal government from procuring, obtaining biotech equipment services from a biotech company of concern. and now the US government has branded WuXi AppTec a Chinese military company. Steve, what's the significance of that?

Steve Usdin: 10:39

so just a little bit to add on to what you said about Biosecure, it's not only that it prevents the US government from procuring services or goods from biotechnology companies of concern, but it prohibits the government from contracting with companies for products that depend on products or services from a biotechnology company of concern. It's a little bit convoluted, but it's really important because when you look at WuXi, you know, WuXi isn't likely to be providing much services to the US government, but it provides services to companies that do, right? So here's the news. The Department of Defense added WuXi AppTec to a list of Chinese military companies, the so-called 1260H list. That means it will automatically be designated as a biotechnology company of concern under the Biosecure Act if the 1260H listing endures. So WuXi AppTec filed a lawsuit in federal court contesting its listing as a Chinese military company. To me, two things are really interesting about this suit. The most important is that it may bring into light the evidence assertion, which the Department of Defense has now made and which members of Congress have been making for some time, that WuXi AppTec has close ties to the Chinese government that it works closely with the Chinese military and so on. WuXi absolutely denies it. It says it's a public company, its leadership team are US citizens. It doesn't work for the Chinese military, it's been alleged. Hopefully, the courts are gonna do what they're supposed to do, which is render an impartial opinion and let the public see the evidence. The other thing that I found really interesting is the harms associated with being included on the 1260H List. They go beyond bans on defense contracting and on Biosecure, which I've known about. They go down to the state level in the United States. So for example, the complaint that WuXi AppTec filed says that the state of Utah bars companies that are on the 1260H list from purchasing real estate in the state. Texas says that retirement plans can't invest in the stock of, of companies that are listed on the 1260H List, and they have to disinvest when a new company is added. And you know, of course, there's the bigger picture, which um WuXi AppTec talked about, which is Biosecure and the kind of reputational damage that being characterized as a chinese military company has in the United States, which is likely to lead at least some customers to um, make plans to find other companies to provide services

Jeff Cranmer: 13:10

thanks for that, Steve. Uh, how does this fit into the bigger picture of how government officials in the US are thinking about China?

Steve Usdin: 13:19

So the WuXi is, it's really the latest in an ongoing and really vigorous debate that's happening largely behind the scenes in Washington, though it pops into view every now and then. There are some influential voices who contend that biopharma is just like rare earths, and they use that analogy explicitly, and that the US has to do everything that it can to avoid dependence on China or biopharma products will become a chokehold just like rare earths have. This argument resonates with the national security community and on Capitol Hill. There's another group that says,"No, really life sciences are quite different from rare earths, and while supply chain resilience is a clear national security priority, it's really important to take care to understand the biopharm industry and to avoid policies that will hurt patients in the US and US companies, and not to just reach for the, the same kind of playbook that's being used or considered for rare earths and and maybe for semiconductors and for other technologies.

Jeff Cranmer: 14:19

Thanks for that, Steve. Stick around. We'll get back to you in a little bit to talk about some of that inside the beltway gossip about what's happening in government. But first, we'll take a quick break, and then we'll come back to talk about what's in the clinic for cachexia.

Voice Talent: 14:38

This episode of BioCentury This Week is brought to you by the second BioCentury Grand Rounds Europe in Amsterdam, September 23rd to 25th. The 2nd Edition of BioCentury Grand Rounds Europe convenes the leaders shaping the future of biopharma. This time we meet in Amsterdam, September 23rd to 25th, gathering academic innovators, biotech CEOs, pharma R&D leaders and investors to debate the translational science that will define the next decade. Grand Rounds Europe focuses on what matters most: Breakthrough biology. Transformative technologies. And how to make early-stage R&D investable. Grand Rounds is where rigorous science meets real-world execution. Join BioCentury and Regional Host Chairs Forbian and BGV, and take a deep dive on translational opportunities in the Benelux region. BioCentury Grand Rounds Europe. Where discovery moves toward impact. Register at BiocenturyGrandRounds.com.

Jeff Cranmer: 15:49

All right, we're back on the BioCentury This Week podcast. I'm Jeff Cranmer, Executive Editor here at BioCentury and host of the podcast, and I'm pleased to have my colleague Tierney B join us. Tierney, you've been speaking with CatalYm led by CEO Scott Clarke. They're working on cachexia. I know Pfizer's a leading company in the space as well. What did you learn as you dug into this?

Tierney Baum: 16:17

Yeah. So, you know, just to give a little bit of background on the indication for those who aren't as familiar, cachexia is a muscle wasting disorder that's most frequently associated with cancer. So it can be associated with other severe diseases, but it's particularly insidious with cancer because it forms this nasty positive feedback loop where you have severe muscle wasting in advanced cancer patients. They can't be treated with as much cancer therapy, so the tumor progresses because they can't handle it, and then their cachexia gets worse and on and on and on. About 70% of hard-to-treat cancers also have cachexia. And it's been really hard to develop therapies for, and not fully understood mechanisms. So there's been a target that's emerged kind of amazingly that you can target both, And that's GDF-15, which is a cytokine. There's been some cool clinical data coming out, as you mentioned, from Pfizer and CatalYm that are pretty neck and neck in the clinic, both looking at this target inhibiting GDF-15 as a target that can both address cachexia symptoms and also tumor symptoms.

Simone Fishburn: 17:35

So Tierney, I mean, this has obviously been a really difficult area for a long time. I always find it interesting when then two come along at the same time. And, you know, are there any specific sort of breakthroughs or, or reasons why this is happening now? I mean, GDF15 is of course not a newly discovered cytokine or molecule, right? So is it just sort of greater understanding of the biology around it? Because at the end of the day, you have this, as we talk about a lot in cancer, and now we're talking about it in cachexia, we have this sort of overlap with immune evasion, mechanism. So talk a little bit mechanistically. G- geek us out on that, Tierney

Tierney Baum: 18:17

Yeah. So you're correct. The GDF15 was discovered about 30 years ago, and it's kind of an interesting story where it was initially researched in fetal maternal immune tolerance. So women that had high GDF15 levels were more likely to make it to term. And we've not fully understood the mechanism, but we're beginning to understand that basically tumors can co-opt this to evade the immune system themselves. I think the turning point was that Just before 2020, they discovered the receptor that exists in brainstem neurons. So that's GFRAL. And that actually I think pushed the field forward a little bit in understanding where in the central nervous system GDF15 is binding. And we started to understand that by binding in the CNS and brainstem neurons, that's where a lot of appetite suppression was being controlled, nausea, and this metabolic shift that happens in cachexia. Because cachexia is really a syndrome. It cannot be corrected with diet or simply eating more. So there's a much deeper metabolic mechanism going on, and I think understanding its receptor in the CNS made it so that we could target it in the clinic

Simone Fishburn: 19:37

And then one more question, Tierney. Um, you know, here what we're talking about is a sort of a wasting disease, and I know that a lot of the readouts r- aren't j- you know, it's not just sort of eat more, right? A lot of the readouts are actually weight gain. And I am wondering whether there is any synergy or interactional learning that have come from the completely the other side of the coin, all the work in obesity. So i- is there sort of a, from a nutrition angle or from a metabolic angle, any overlaps between these fields?

Tierney Baum: 20:09

I think, I think it's a little bit nascent to say, but when anybody loses a lot of weight, they also lose muscle. And so of course, in the area of GLP-1s, we see people losing a lot of weight, and they're also at risk of losing muscle mass. And so I think it is possible that some cachectic drugs in the future, if not repurposed themselves, could be used to learn more about how to avoid muscle wasting in obesity or type 2 diabetes.

Jeff Cranmer: 20:41

Tierney uh tell us a little bit about the leading drugs in the clinic

Tierney Baum: 20:44

Yeah. So, Pfizer and CatalYm both have anti GDF-15s in the clinic uh and they both really had Phase II successes last year. What's interesting is that strategically they're kind of taking two different routes potentially to the same end, which is Pfizer has focused much more on the cachexia side of things in their Phase II. And in their, Phase II, which was in advanced solid tumors, they showed significant weight gain, and they are now in Phase III for cachexia. CatalYm, on the other hand, they are definitely looking at cachexia, but they're also looking at tumor regression. So they had some positive results in their Phase II, and what's really interesting about theirs is that they were doing it in combination with PD-1 inhibitors, so checkpoint inhibitors. And they were found that they recruited a highly refractive PD-1 population, and they were able to resensitize part of this population to this. that's a really interesting potential for that drug, and both of these drugs have now entered Phase III in the last six months.

Jeff Cranmer: 21:51

thanks for that, Tierney. I will drop a link in the show notes to your story. definitely a space that we'll continue to follow as these products move hopefully closer to the market All right, Steve thanks for sticking around. What's the scuttlebutt in Washington these days?

Steve Usdin: 22:10

There's nothing but scuttlebutt in Washington. I think that the, one of the more interesting dramas that's happening in Washington is a lot of the rumors around the fate of HHS Secretary Robert Kennedy. I wrote a story last Thursday where I predicted that he's likely to be ousted, but probably not until after the midterm elections, and I went through some of my logic as to why I think he's likely to stay on that, that far, basically because the Trump administration w- wants to keep the goodwill of the MAHA voters in the midterm elections. Predictions are perilous. Over the weekend, there was a lot of gossip um going around in Washington. about Kennedy's future. I think it traces back to a um a tweet that um Robert Malone who's um an anti-vaccine activist who was close to um to Kennedy and was uh, Kennedy put him on the advisory committee on immunization practices. Malone tweeted that Kennedy was gonna be resigning or forced to resign as early as July 4th. HHS immediately hopped onto X and refuted that and said that it isn't true So who knows? I think it is pretty clear the consensus among people who are speaking with the White House and people speaking with HHS and watching what's going on, it's pretty clear that Kennedy's days are numbered. But I still think it's more likely than not that he's gonna last until November. The other thing that people are pointing out is that e-effectively, he's, he's kind of checked out from most of the day-to-day operations at HHS. The kind of the day-to-day operations at the department are being handled by Chris Klomp who's also the Deputy Director of the Center for Medicare and Deputy CMS administrator. And the view right now is that what's most likely to happen is that Kennedy will be pushed out or will walk out sometime after the midterm elections. The strongest candidate for taking over at HHS right now seems to be Mehmet Oz, the head of um CMS, and then the betting is that Chris Klomp would take his role at CMS. You know, these things are all subject to change. We're in a very turbulent situation and and I have to say that the whole year has been full of surprises. So we'll just have to, you know, keep the popcorn handy and see what happens

Jeff Cranmer: 24:29

Excellent, Steve. Well uh hope you got a lot of popcorn. All right uh Tierney Simone, Stephen KTT Steve, thanks for joining this week, Cole Travis is our production engineer. always appreciate his good work, and we also are grateful to Kendall Square Orchestra for providing music for our podcast. If you're a BioCentury subscriber tune in later this week. We'll have another edition of BioCentury's Front Row series with our colleague Lauren Martz joining Larry Campbell. until next week, thanks for listening