$2 billion in capital raises mostly by companies that start with the letter A.
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Life Science Today is your source for stories, insights, and trends across the life science industry. Expect weekly highlights about new technologies, pharmaceutical mergers and acquisitions, news about the moves of venture capital and private equity, and how the stock market responds to biotech IPOs. Life Science Today also explores trends around clinical research, including the evolving patterns that determine how drugs and therapies are developed and approved. It’s news, with a dash of perspective, focused on the life science industry.
Welcome to Life Science Today, your source for stories, insights, and trends across the life science industry. I’m your host, Dr. Noah Goodson. This week, we cover $2 billion in capital raises mostly by companies that start with the letter A.
The views expressed on Life Science Today are those of the host and guests. They do not necessarily reflect the opinions of any organizations with which they are affiliated.
2seventy Bio Pulls in $170M
BlueBird Bio who was once a rising star in Gene Therapy and now has faced a series of challenges, announced last year that they were spinning out a separate company, 2seventy Bio, to hold their portfolio of oncology assets. We covered that transition back in episode 068 – but I want to note that since then BlueBird has continued their downward spiral in the markets. The newly minted 2seventy entering without the fanfare and millions associated with IPOs, and has the distinct challenge of raising capital to advance their pipeline as an already public company. The good news is they have an approved CAR T therapy. The bad news, it’s currently 4th line in a single indication. Despite what might seem tough prospects, they’re predicting $250-300M in sales through their commercial partner BMS for this approved therapy. Plus, they’ve made the more uncommon choice to cut expenditures by ~$30M/year while increasing their production capacity.
All of this makes 2seventy a pretty unique animal. It’s a brand new, but straight to public commercial stage biotech, that is predominantly reliant on their earlier stage assets and not their mature ones for long-term success. And while their key asset is just being rolled out, their bottom line is relatively low. Below the surface, I’m sure there is also some institutional baggage from the BlueBird ascendence and more recent descent that further muddy the opaque investment waters. All of this puts their modest $170M raise, with a prediction that it will take them to 2025 in a pretty amazing light. I mean in this industry getting through nearly 3 years on a $170M raise is… well that’s fairly modest. Plus, imagine any other biotech predicting significant sales from a 4th line first approval not seeking a lot more money and planning to spend it too. If 2seventy can maintain this discipline and see further developmental success the BlueBird may lay a golden egg after all.
Ascendis Goes $0.5B for Hypoparathyroidism
Ascendis Pharma has announced a $500M raise in convertible notes. They finished last year out after dropping their annual loss by $50M to minus $379M , which is a hefty burn rate to be sure. Now you might look at a company burning $31M a month and think, they are in a tough spot, but it’s not all bad news. In mid-March results for a lead product TransCon PTH to treat Hypoparathyroidism showed positive results and may be submitted shortly to regulatory bodies. Now, this approval and then commercial rollout will take time, and they’ll be set to burn through cash reserves before an appreciable impact is made, assuming commercialization of TransCon PTH and another asset TransCon hGH goes smoothly. And that all neglects some of their earlier stage assets. So $1/2B in a private offering is their choice to continue both clinical and commercial development at the same rate . They completed a similar financial maneuver back in 2019 on early results from TransCon PTH. Assuming the raise goes well, they’ll surely be expected to achieve commercial results this round or face a significant uphill battle for any future funds.
Apellis Raises $400M
Apellis Pharma has seen an up-and down road over the last year. Their stocks rose to the mid $60s/share on a promising clinical pipeline. But were dashed to $34/share when clinical trial data showed less than exciting results for the treatment of Geographic Atrophy, an advanced form of macular degeneration, with their commercial stage medication pegcetacoplan. The data become more promising in mid-March when their parallel clinical trials both showed significant reduction in long-term lesion growth whether the therapy were injected monthly or every other month. In layman’s terms, this means you’ll go blind slower on the therapy. This suggests to me, and likely investors that they’ll be heading to the FDA in short order to gain an additional indication. This has put their stock on the. They announced last week a plan to extend a public offering of common stock at $47 a share for a $350M raise, but then extended the additional sellable shares Monday to raise just over $400M. This should slide their cash and equivalents back up to close to $1B, money that will be sorely needed as their late-stage clinical development programs begin to burn more and more to discover if pegcetacoplan can access a much broader population.
Argenx Raises $700M
In their 2021 annual financials, Argenx reported $2.3B in cash or equivalents, with an income of nearly $350M, but a net loss of over $400M. Their internal pipeline is heavily weighted towards their recently approved medication Efgartigimod, which is currently in additional phase III trials for 4 indications and multiple modalities. All this explains their hefty burn rate – but it’s also a potential reason for optimism. There are a few additional early pipeline candidates, but most of their value-targets are sold off into developmental partnerships with several BioPharma’s. So, if money is pretty ok, and the pipeline is robust, why set out to raise $700M through selling ordinary shares? I mean, just a year ago in February of 2021, they pulled in $1B on the same schema – so why more when they’re still in the black from that raise and their pipeline?
I think the answer to this is perhaps the answer to what we’ve observed across the episode today. It’s a specific moment in Biopharma investing. Companies are raising money all the time, and it’s not weird to see any of these organizations from today go out and pull in a little extra cash – whether it’s Ascendis who is the most on track to need the money or Argenx who pulled a similar maneuver last year. What is really weird here is that there is no early-stage counterbalance. All of the other early-stage financial raises I’ve seen are relatively small right now, and there aren’t big $1B IPOs looming. In fact, of the companies we’ve discussed today, the only “smaller” raise today, is incredibly moderate across in the context of the last couple of years and represents the newest organization here, 2 seventy.
Let’s take this back to the drum I’ve been beating all year: Think about value-focused investing. Let’s imagine that investors in general remain interested in Biopharma, but are looking for companies with a track record of success. When these organizations can demonstrate they’ve got products, their moving towards additional approvals, and they’ve weathered at least one or two storms, they’re positioned as a much more moderate risk investment. And maybe this is their moment to shine in the market – or more accurately leverage this moment to create cash reserves for a rainy day.
Thanks for joining me for Life Science Today, your source for stories, insights, and trends across the life science industry. Learn more at LifeScienceTodayPodcast.com. If you like what you hear, please tell a friend. Once again, I’m Dr. Noah Goodson, I’ll see you next week.