Finance Watch: Lucky Few Raise Cash While Many Public Biotechs Cut Costs

Public Company Edition: ImmunoGen received the first $75m under a $175m term loan, while Protagonist raised $100m in a follow-on offering, but companies with bankruptcy filings and job cuts outpaced those accessing new capital by a wide margin in late March and early April.

Source: Alamy

ImmunoGen, Inc. and Protagonist Therapeutics, Inc. accomplished in early April what has become increasingly difficult for public biotechnology companies to do when they accessed significant amounts of new capital to fund ongoing research and development and, in the case of ImmunoGen, commercial activities. These feats were achieved as many more of their peers were revealing plans to cut costs, implement layoffs and even file for bankruptcy.

Waltham, MA-based ImmunoGen said on 6 April that it entered into a term loan facility for up to $175m with entities managed by Pharmakon Advisors LP. The agreement provides $75m initially with $50m – or $100m, upon mutual agreement of both parties – available if the Phase III MIRASOL clinical trial for the antibody-drug conjugate (ADC) Elahere (mirvetuximab soravtansine) is positive.

Elahere won accelerated approval from the US Food and Drug Administration in November to treat folate receptor alpha (FRα)-positive, platinum-resistant epithelial ovarian, fallopian tube or primary peritoneal cancer as a fourth-line systemic treatment regimen. Topline results from the confirmatory MIRASOL trial in this indication are expected during the second quarter of 2023 and will form the basis for a regulatory filing in Europe. To date, Elahere’s US launch has exceeded ImmunoGen’s expectations, according to CEO Mark Enyedy. (Also see "ImmunoGen’s First ADC For Ovarian Cancer To Exceed Sales Expectations" - Scrip, 3 Apr, 2023.)

The company will use the proceeds from its new term loan facility to boost its cash balance, which was $275.1m at the end of 2022, as it accelerates the Elahere launch and invests in its pipeline of next-generation ADC candidates. ImmunoGen noted when it reported fourth quarter and full-year 2022 earnings on 1 March that its existing cash was enough to fund its operations through at least the next year and said that runway would be extended by Elahere revenue and milestone payments from ongoing collaborations.

Even so, the company indicated that it still intended to raise additional funding, as it has now done through the term loan agreement with Pharmakon. It also brought in a $15m upfront fee under a new collaboration announced on 1 March with Vertex Pharmaceuticals Incorporated for the use of ImmunoGen’s ADC technology in the development of conditioning agents to be administered before gene-editing therapies. That deal is worth up to $337m in option fees and milestone payments plus royalties for each drug target under the collaboration. (Also see "Deal Watch: Adaptimmune, TCR2 Join Forces As Cell Therapy Company Focused On Solid Tumors" - Scrip, 8 Mar, 2023.)

Meanwhile, Protagonist and its partner – Johnson & Johnson’s Janssen Biotech Inc. subsidiary – reported positive Phase IIb results for their oral IL-23 receptor antagonist JNJ-2113 in moderate-to-severe plaque psoriasis in early March, but Protagonist waited nearly a month to execute a follow-on public offering (FOPO) on 4 April to capitalize on the good news. (Also see "Protagonist/J&J Explore Autoimmune FRONTIER With Positive Psoriasis Results" - Scrip, 7 Mar, 2023.) The company grossed $100m from the sale of 5 million shares at $20 each before the sale of any overallotments.

Newark, CA-based Protagonist said it will use the FOPO proceeds for working capital and general corporate purposes, but primarily to fund continued clinical development and pre-commercialization activities for rusfertide, its hepcidin mimetic for polycythemia vera (PV) and other blood disorders. The company reported in December that rusfertide beat placebo in the 12-week randomized withdrawal portion of the Phase II REVIVE clinical trial, meeting the primary endpoint of phlebotomy eligibility. Enrollment of PV patients is ongoing in the Phase III VERIFY study.

Before the FOPO, Protagonist said its $237.4m in cash as of the end of 2022 would fund its operations through the end of 2024. Janssen is responsible for development of JNJ-2113 in Phase II and later clinical trials under its agreement with Protagonist, amended in mid-2021.

Restructurings, Layoffs And Bankruptcy Filings Continue

ImmunoGen and Protagonist aside, much of the financial news from public biotech companies these days is bleak as drug developers seek to shift capital to their most promising R&D efforts and near-term milestones until they are able to raise cash at favorable terms.

Quince Therapeutics, Inc. has no drugs in development and has been on the hunt for drugs it can in-license or acquire since at least January, when it announced plans to out-license its remaining development assets and focus on bringing in new drug candidates for rare diseases. (Also see "Finance Watch: Structure Launches Third And Largest US Biopharma IPO Of 2023" - Scrip, 3 Feb, 2023.) The company was trading at less than $1 per share in March when Echo Lake Capital offered to buy Quince for $1.60 per share – an offer that Quince said its board of directors rejected on 11 April because they determined the bid was not in the best interests of the company’s shareholders.

South San Francisco-based Quince formed last year when the failed Alzheimer’s disease-focused firm Cortexyme Inc. acquired Novosteo, Inc.  (Also see "Deal Watch: Novo Nordisk Links With Flagship To Create Cardiometabolic, Rare Disease Portfolio" - Scrip, 12 May, 2022.) With its new focus this year on bringing in new pipeline programs from external sources, Quince has yet to do so and its market capitalization of about $56m is below its valuation based on its cash on hand – $94m as of the end of 2022 – which is one of the reasons Echo Lake, a Quince shareholder, has stepped in to acquire the company.

Since Echo Lake’s offer became public on 21 March, however, Quince adopted a shareholder rights plan – also known as a “poison pill” – on 5 April to prevent any single investor from accumulating a controlling ownership stake in the company. Quince also disclosed on 6 April that it hired MTS Health Partners LP as a financial advisor to help the company evaluate strategic options.

In other strategic shifts:

• Digital medicine maker Pear Therapeutics, Inc. announced on 7 April that it has filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware with the intention of selling off its assets and shutting down the company’s operations through an orderly bankruptcy process. (Also see "Minute Insight: Pear Therapeutics Files For Bankruptcy, Hopes To Find Buyer For PDT Assets" - Medtech Insight, 7 Apr, 2023.) Boston-based Pear went public in 2021 by merging with a special purpose acquisition corporation (SPAC) named Thimble Point Acquisition Corp. (Also see "Finance Watch: Five Biopharma IPOs Bring US Total To 60 In 2021" - Scrip, 29 Jun, 2021.)

• Boulder, CO-based Clovis Oncology, Inc. is making progress in its dissolution through Chapter 11 proceedings, first revealed in December. (Also see "Finance Watch: SPAC Deals Stumble, Layoffs Continue As Valuations Struggle To Recover" - Scrip, 21 Dec, 2022.) Clovis said in a 5 April filing with the US Securities and Exchange Commission (SEC) that a winning bidder for its PARP inhibitor Rubraca (rucaparib) has been identified. Pharma& Schweiz GmbH will pay $70m up front, up to $50m in regulatory milestone fees, $15m for sales milestones and up to $41m in “cure costs” associated with Rubraca-related contracts. Dr. Reddy's Laboratories Ltd. was selected as a backup bidder in case the Pharma& agreement is not consummated.

• Potentially clearing the way for Kenvue Inc., Johnson & Johnson’s consumer health business spinout, through a future initial public offering, J&J announced on 4 April that its subsidiary LTL Management LLC has re-filed for Chapter 11 bankruptcy to obtain approval of a reorganization plan that resolves all talc litigation claims against the company and its affiliates in North America. J&J would pay out $8.9bn over 25 years to resolve the litigation claims. (Also see "J&J Adds $6.9bn To Talc Settlement Proposal To Smooth Path To Kenvue Consumer Spinoff" - HBW Insight, 5 Apr, 2023.) Kenvue kicked off the IPO process in January. (Also see "Finance Watch: Sun Shines On Biotech Stocks As J.P. Morgan Ends" - Scrip, 12 Jan, 2023.)

• Cambridge, MA-based VBI Vaccines Inc. said on 4 April that it will focus on prevention and treatment of the hepatitis B virus (HBV) exclusively going forward, including broadening access to its FDA-approved three-antigen vaccine PreHevbrio and advancing development of its HBV immunotherapeutic candidate VBI-2601. (Also see "VBI Poised To Take On GSK, Dynavax As Hep B Vaccination Market Takes Off" - Scrip, 1 Dec, 2021.) As a result, the company will reduce its workforce by 30%-35% as it pivots away from non-HBV programs, such as its efforts against coronaviruses, cytomegalovirus and cancer. Also, VBI’s chief financial officer/head of business development Christopher McNulty has resigned and been replaced by chief business officer Nell Beattie as CFO/head of corporate development.

• Freeline Therapeutics Holdings PLC in London said on 4 August that it will implement a restructuring plan to extend its cash runway into the second quarter of 2024; the company had $47.3m at the end of 2022 and received $25m in February from the sale of its German subsidiary, first announced in November. (Also see "A Tale Of Two Gene Therapy Biotechs: Freeline Divests As Kriya Invests" - Scrip, 17 Nov, 2022.) Freeline plans to reduce its workforce by nearly 30% to about 65 employees and will pause development of FLT190, its gene therapy candidate for Fabry disease, to focus its resources on the development of FLT201, a Gaucher disease gene therapy. Data from the first cohort of the Phase I/II GALILEO-1 clinical trial of FLT201 are expected in the third quarter of 2023.

• Tonix Pharmaceuticals Holding Corp. in Chatham, NJ announced a pipeline prioritization plan on 4 April that keeps the company in infectious diseases despite giving up on longer-term COVID-19 programs, with central nervous system (CNS) diseases as its top priority. Tonix had $120.2m in cash at the end of 2022 and is focusing on product candidates with 2023 milestones, such as Phase III results for TNX-102 SL (sublingual cyclobenzaprine tablets) in fibromyalgia, interim Phase II results for TNX-1900 (intranasal potentiated oxytocin) in chronic migraine, interim Phase II results for TNX-601 ER (tianeptine hemioxalate extended-release tablets) in major depressive disorder, and initiation of a potentially pivotal Phase II study of TNX-1300 (recombinant double-mutant cocaine esterase for injection) for emergency room reversal of the effects of cocaine intoxication. Infectious disease programs, including a smallpox and mpox vaccine, will continue but all COVID-19 antibody and vaccine programs will be discontinued. (Also see "Monkeypox Vaccine, Drug Pipeline Grows Despite Signs Of Slowing Infections" - Scrip, 20 Sep, 2022.) A study of TNX-601 for post-traumatic stress disorder (PTSD) in Kenya will be postponed and TNX-102 will no longer be studied in long COVID. In immunology and rare diseases, Tonix will continue development of its anti-CD40L monoclonal antibody TNX-1500 for prophylaxis of organ transplant rejection and treatment of autoimmune disorders as well as TNX-2900 (intranasal potentiated oxytocin) for treatment of hyperphagia in Prader-Willi syndrome.

• South San Francisco-based NGM Biopharmaceuticals, Inc. continues to shrink its operations in the wake of multiple mid-stage clinical trial setbacks, most recently the Phase II failure of NGM621 in geographic atrophy in October. (Also see "NGM’s Second Phase II Miss Raises Questions For Option Deal With Merck" - Scrip, 17 Oct, 2022.) NGM said in January it would focus on its solid tumor development programs and out-license NGM621, non-alcoholic steatohepatitis (NASH) candidate aldafermin and NGM936 for hematologic malignancies; aldafermin failed in a prior Phase IIb NASH trial in 2021 but results from a Phase IIb trial in NASH cirrhosis are due in the second quarter of 2023. (Also see "NGM Phase IIb NASH Failure Could Darken Competitors’ Prospects" - Scrip, 24 May, 2021.) Now, as of a 3 April SEC filing, the company has implemented a restructuring plan to conserve cash, which will result in 33% of its workforce (75 employees) losing their jobs. Also, chief scientific officer Jin-Long Chen has resigned. NGM had $271.5m in cash at the end of 2022, which the company said should be sufficient to fund its operations into the second quarter of 2025.

• Sumitomo Pharma Co., Ltd. agreed three and a half years ago to buy several Roivant Sciences Ltd. subsidiaries for $3bn to help offset the upcoming loss of exclusivity this year for its blockbuster product Latuda (lurasidone) and now it is consolidating several of those acquired entities under a single US operation. (Also see "$3bn Roivant Deal To Fill Holes At Dainippon" - Scrip, 6 Sep, 2019.) Sumitovant Biopharma Inc. was formed in 2020 as the parent company for the five Roivant subsidiaries purchased initially, but Sumitomo said on 3 April it will consolidate those and other entities into a single US subsidiary, Sunovion Pharmaceuticals Inc., effective 1 July, and Sunovion will be renamed Sumitomo Pharma America Inc. (Also see "Sumitovant Keeping Sumitomo Dainippon-Acquired Roivant Companies On Track" - Scrip, 29 Jan, 2020.) The US subsidiary will combine seven entities – Sunovion, Sumitomo Pharma America Holdings Inc., Sumitomo Pharma Oncology Inc., Sumitovant, Urovant Sciences, Inc., Enzyvant Therapeutics, Inc. and Myovant Sciences Inc., the latter of which Sumitomo Pharma acquired for $2.9bn last year. (Also see "Myovant Accepts Higher Sumitovant Offer In Deal That Values It At $2.9bn" - Scrip, 24 Oct, 2022.) With the Latuda loss of exclusivity nearing, the Osaka, Japan-based company said it is streamlining its US operations, which will involve the pursuit of “efficiencies, cost synergies and global governance,” but Sumitomo Pharma said the number of US employees once the consolidation is complete is to be determined.

• San Diego-based Oncternal Therapeutics, Inc. had high hopes 11 months ago when it reported positive clinical trial results for its p53 mutation-targeting antibody zilovertamab, but the company announced on 3 April that based on the “dramatically changing therapeutic landscape” in hematologic malignancies due to the approvals of multiple BTK inhibitors it will discontinue its Phase III ZILO-301 and Phase I/II CIRM-0001 studies in combination with Imbruvica (ibrutinib) in lymphoma. (Also see "Oncternal And SpringWorks Among Early ASCO Winners And Losers" - Scrip, 31 May, 2022.) Oncternal did not outline specific job cuts related to the decision, but said it will continue to implement prudent cost containment measures so that its $54.3m in cash as of 31 March will fund its operations into 2025. The company’s ROR1-targeting autologous chimeric antigen receptor T-cell (CAR-T) therapy ONCT-808 is in Phase I/II for B-cell lymphoma, its dual action androgen receptor inhibitor ONCT-534 will enter the clinic for prostate cancer this year, and preclinical studies are ongoing for zilovertamab in solid tumors.

• Aridis Pharmaceuticals, Inc. in Los Gatos, CA said on 31 March that it had cut its headcount by seven people to 26 full-time employees after putting the Phase III AR-320-003 clinical trial of AR-320 (suvratoxumab) in the prevention of ventilator-acquired pneumonia (VAP) on hold. Aridis stopped the trial after it said AstraZeneca PLC subsidiary MedImmune LLC failed to transfer technology under a 2021 collaboration agreement for the anti-infective candidate and MedImmune responded to the request to cure the dispute by terminating the license agreement. (Also see "Deal Watch: AstraZeneca Out-Licenses Pneumonia Candidate, Obtains STING Inhibitors" - Scrip, 20 Jul, 2021.) Aridis continues to pursue a second Phase III trial for AR-301 after that candidate failed as an adjunctive treatment for VAP in a Phase III trial earlier this year. The company also is testing AR-501 in a Phase IIa cystic fibrosis study. (Also see "Aridis' Monoclonal Antibody Rouses Analyst Optimism Despite Pneumonia Phase III Miss" - Scrip, 27 Jan, 2023.)

• Austin, TX-based Molecular Templates, Inc., which is focused on discovering and developing targeted biologics known as engineered toxin bodies (ETBs), said on 30 March that it is implementing a strategic reprioritization and cost reductions to focus on core clinical development programs and extend its cash runway. The reprioritization, which will result in a 50% workforce reduction, will make the company’s $61m in cash last into the second quarter of 2024. Molecular Templates will focus its resources on MT-6402 targeting PD-L1, MT-8421 against CTLA-4 and MT-0169 targeting CD38. The company will end clinical development of HER2-targeting MT-5111 and most preclinical development outside of its 2021 collaboration agreement with Bristol Myers Squibb Company. (Also see "Deal Watch: BMS Looks To Molecular Templates’ Engineered Toxin Bodies In Cancer" - Scrip, 15 Feb, 2021.)

• Seelos Therapeutics, Inc. in New York did not indicate whether it will implement any layoffs, but the company said on 29 March that it will conserve cash by temporarily pausing enrollment in the Phase II/III SLS-005-302 study of SLS-005 in spinocerebellar ataxia type 3. Seelos will keep its resources focused going forward on a registration-directed study of SLS-002 (intranasal racemic ketamine) for acute suicidal ideation and behavior in patients with major depressive disorder and a Phase II/III study of SLS-005 in amyotrophic lateral sclerosis (ALS). Readouts from the latter two trials are expected in the third quarter of 2023 and late 2023, respectively. Most of the company’s preclinical work has also been put on hold, Seelos said.

• South San Francisco-based Alector Inc. said in a 28 March SEC filing that it will reduce its headcount by 11%, or 30 employees, to better align its resources with its late-stage immuno-neurology programs. The company said in February that its $712.9m in cash as of the end of 2022 would last through 2025 as it prioritizes spending on its TREM2 and progranulin programs, which are in Phase II and III for frontotemporal dementia and Alzheimer’s disease with readouts expected in 2023 and beyond. (Also see "Lecanemab Set A New Bar In Alzheimer’s, Now Many Drugs Are Seeking To Raise It" - Scrip, 16 Dec, 2022.)