BioCentury This Week

Ep. 317 - Biotech IPOs, FDA-Stealth & Patent Threat

• BioCentury • Season 6 • Episode 317

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There’s been a rare IPO filing on NASDAQ as LB Pharma looks to test the market during a year that has seen little activity among U.S. biotechs even as green shoots continue to appear on the Hong Kong stock exchange. On the latest BioCentury This Week podcast, BioCentury’s analysts discuss the market for biotech IPOs on NASDAQ and in Hong Kong.
The analysts then assess FDA’s about-face on Stealth BioTherapeutics' Barth syndrome therapy, putting the decision in the context of a changing regulatory agency; and a BioCentury Guest Commentary that argues that the university-industry engine that drives U.S. innovation is under attack. Also mentioned on this week’s podcast: BioCentury’s 33rd Back to School package, which reimagines FDA; the upcoming 12th China Healthcare Summit in Shanghai; the evolution of dealmaking in China; and Annalisa Jenkins’ take on MHRA and the U.K. biotech ecosystem on The BioCentury Show.

View full story: https://www.biocentury.com/article/656849

#Biotech #IPO #Pharma #FDA #RareDisease #Biopharma #DrugDevelopment #HealthcareInnovation #HongKongIPO

00:00 - Introduction 
02:48 – LB Pharma Tests IPO Market
07:01 – Hong Kong IPO Momentum
09:53 – China Summit Preview
13:40 – FDA Reversal on Stealth Bio
18:15 – Bayh-Dole Clash & Innovation Threats

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

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[AI-generated transcript.]

Jeff Cranmer:

There's been a rarity on NASDAQ as late last week LB Pharma filed to go public on the market. This comes as green shoots continue to appear on the Hong Kong stock exchange. We'll discuss the state of the market for fresh paper, on the latest BioCentury This Week, plus the latest twist in Stealth Biotherapeutics decade long regulatory rollercoaster is FDA's about face on Stealth's Barth syndrome application, a positive sign for rare disease therapies, air piece, and the university. Industry engine that drives U.S. innovation is under attack. So says David Beyer and John Osborne in a guest commentary in BioCentury, and we'll hear from our colleague on the BD side, Josh Berlin as he gets ready to head to Asia for a couple of big events this fall. I'm Jeff Cranmer joining me today on the BioCentury This Week podcast. Are my colleagues.

Steve Usdin:

Steve Usdin, Washington Editor.

Paul Bonanos:

Paul Bonanos, Director of Biopharma Intelligence.

Josh Berlin:

And Josh Berlin, Head of Business Development.

Jeff Cranmer:

Excellent. Well, we received a few comments from listeners, uh, last week. one was, Hey, you guys start talking about Japan. there's more, biotech in Asia than just. China. so I promise that we'll be coming in an upcoming episode. I have a Japan story that it was coming out soon. Uh, it'll give us some fodder to chat about things, biotech in Japan. Uh, in the meantime, I do wanna give a shout out to Ken Horn, who's on ventures. recently closed its debut, Japan focused fund. We also received a note from a long time listener who is a licensing and patent attorney who recently headed over to China and he wanted to share some of his takeaways, but had a little trouble getting them to us, and so I had to learn how all this works by working with our production engineer Cole. The Reach us by sending a text link in our episode description is a one way street. That you can use on a mobile device, for listeners to post comments. We can see your messages. We can't reply strangely enough, so feel free to send your comments via email to podcasts@BioCentuy.com, which is our address. If you want feedback from us, we'd love to hear from this longtime listener and get his take on what, he or she is, uh, seeing. On the ground in China, I can also be re reached via LinkedIn, Alright, well, Paul, you signed off Friday to hit the swampy Little League Diamonds of Gainesville. And surprise me by popping back on late last, Friday night to file a story, on an IPO filing. I guess the rare nature of this, uh, little bit of news, not, not an IPO pricing mind you, just a filing, was enough to get you back to your desk. what can you tell us Paul?

Paul Bonanos:

They, there have not been very many of those lately, and, uh, when they land they tend to land late Friday. So, as you know, and as you said, the IPO market has been very quiet, for biotechs looking to get out on nasdaq. We haven't really seen anything substantial buy a therapeutics pure play rather, in more than six months now, uh, there have been a couple of very small offerings, but nothing bigger than. You know, we usually put the floor at 25 million, for what we think of as a more substantial offering. Um, and the company testing the market this time is LB Pharmaceuticals based in New York. It's more or less a single asset company with a neuropsychiatry program. their molecule is called LB-102 It's an antagonist of serotonin and two dopamine receptors, D2 and D3. There's a generic drug available in Europe called amisulpride, and this is a methylated formulation of amisulpride, with some dosing and potency advantages, and, uh, result in IP protection as well. and as we've said a few times over the past few years since IPO started becoming scarce, the best candidates to get out, generally have some clinical data and LB indeed has some. In January they announced Phase II data showing a treatment effect in schizophrenia, significance on a scale measuring symptoms positive and negative symptoms. It's a PANSS scale you may have seen, and LB believes that the study, could serve as one of two pivotal trials. So it's looking to fund a Phase 3 program now, and that's where the IPO comes in. Its cash position isn't especially strong right now. The prospectus says they have$14.2 million in cash and equivalence at June 30th. So, uh, maybe a year of cash for a lien operation. But they're looking to move ahead with that second pivotal trial and this is how they'll fund it. they are privately held. Uh, obviously they've raised about 120 little more than $120 million in equity funding thus far. Some of the top shareholders I'll name for you, uh, Deep Track Capital, Vida Ventures, Pontifax and TCG Crossover. and I, I should also mention the company's CEO is Heather Turner, who was president and CEO at Carmot Therapeutics. You may remember Roche buying it in a 2023 deal. we don't know how much they're gonna raise, but the banks are Leerink, Piper Sandler and Stifel. which are typically associated with substantial raises, so, we'll, we'll have to see how demand goes. remember a couple of companies that filed for IPOs didn't get out this year and, uh, withdrew their offerings. So, you know, we'll see how it goes for them. Stay tuned.

Jeff Cranmer:

Thanks for that update, Paul, you mentioned a long drought since a few offerings priced early this year. who were those companies? Uh, I recall Metsera maybe being one. And, and how have they done in the aftermarket?

Paul Bonanos:

That is one, and I was actually a little surprised when I looked this morning. There were really four pure play therapeutics companies that went public in January and February and none since I, I don't mean to disregard a couple of life sciences companies that got out since then. there's like a cell analysis company, Caris Life Sciences, but among drug developers. Yes, we had Metsera, a metabolic company, uh, Maze, doing renal and metabolic, Sionna Cystic Fibrosis Company and Aardvark, which, uh, has treatments for hunger disorders, and it turns out Metsera. that one is the big winner. It's almost doubled in value since pricing. Um, Sionna is also up. By about a little more, about 35%. since getting out, Maze is down a few ticks, but not a ton. And, um, Aardvark not so much. Um, it hasn't exactly cratered, but it has lost some value. so aftermarket performance has not been the worst. I did mention some withdrawn offerings as well. Uh, Odyssey Therapeutics, the immunology company, and also Aurion Biotech with an ophthalmic program they filed in January and never made it out.

Jeff Cranmer:

Paul, we've both been watching, uh, what's happening in Hong Kong, uh, certainly a bit more activity than on Nasdaq. what have you been seeing?

Paul Bonanos:

There have been a few. Yes, we've seen some activity, overseas and one company that went public in Hong Kong recently, a metabolic company called Innogen, out this month and it's performed very well. It raised about $87 million U.S. and at Friday's close it had nearly tripled over its first week of trading. a little more than a week. I think it went out the previous Friday. Um, and then since then, since it priced, there have been two more companies called LongBio Pharma and Shanghai Bao Pharma that joined the queue last week to list in Hong Kong as well. So that's encouraging, especially with lots of discussion about licensing deals for assets from China. Here are some companies that are looking to build sustainable businesses, going public and, gaining value, once they gain liquidity.

Jeff Cranmer:

Josh, you're always on the horn with folks, from Japan, China, India, you name it. among, white guys from the East coast, you're probably the number one we chatter. what are you hearing?

Josh Berlin:

maybe I'm an influencer even. Huh? Jeff? Uh, I, you know.

Jeff Cranmer:

You know.

Josh Berlin:

Yeah, I, you know, I, I think, um, the Hong Kong Stock Exchange has really, been a, you know, a, an amazing story this year that I'm not sure is fully sort of understood by, by everyone in our network. but you know, the, the China partnering craze really in part started because of the bear market in Hong Kong, and it was really the. First bear market in biotech history in China. And that forced a lot of companies to become, much more creative in terms of, finding ways to, finance the company, primarily via deal making. and now you see the deal making is really starting to have an impact, I think, on, the Hong Kong exchange itself. So you're, you're seeing. The IPOs that, you know, Paul was just talking about. and I think the other thing you're seeing is, uh, you know, if you just go look at the, the Hang Seng biotech index over this year, since the beginning of the calendar year, you know, I think at the beginning of the calendar year was around 8,000. It's now around 17,000.

Jeff Cranmer:

Yep. Year, year to date up. Uh, yeah. Sorry to cut you off there, Josh. Year to date up a hundred, and 8%. And I remember, uh, back in March, Josh, you and I were, uh, hanging out in those, Super cool artificial super trees in Singapore and, uh, chatting up some bankers biotech bankers and, at that time they were still saying, you know, NASDAQ's the only game in town for Asia biotechs. And, you know, it's, it's changed now. When I talk to CFOs, they're, looking seriously at Hong Kong. they're weighing the best place to tell their story. so look, we'll see how this continues to develop. Well, first up this will be a big theme at our China Healthcare Summit. that will be in Shanghai. It will be October 22nd to 24th. Is that right, Josh?

Josh Berlin:

correct. Yeah. October 22 to 24 in Shanghai.

Jeff Cranmer:

Excellent. So this will be a big theme of that. advanced rates for the meeting, end Friday. Uh, we're still recruiting, presenting companies. we have some great names there. And, we'll have some big names on the panels as well. Josh, who do we have? We have, uh, the CEOs of Duality, Innovent. Who else do we have?

Josh Berlin:

Yeah, we have, uh, just sort of a who's who of, CEOs, like you mentioned duality, Inno vent we have 3SBio Chairman and CEO, Argo Bio, another company that's, done some deals. Crystal Q in of LaNova Medicines just confirmed, you know, they were the biotech that was just bought out by Sino Biopharma. and, Dajun Yang of Ascentage will be there, you know, which is a, a dual listed, China biotech, also on NASDAQ. So it's gonna be a, a really good opportunity to meet a lot of these CEOs that you've been reading about, via all the deal flow in the news.

Jeff Cranmer:

not China. We'll have a great. Asia Biotech, CEO panel will have Piers Ingram of Hummingbird. we'll have the CEOs of, Gexval from Japan and Korea's Orem Therapeutics. the CEO uh, SJ Lee was, recently a guest on our sister podcast. the BioCentury show. and, the CEO of Immuneel, from India. I think it should be, uh, quite a fun event. But you're, before that you're heading to Japan, is that right Josh?

Josh Berlin:

Yeah, I'm, I'm looking forward to getting out to, uh, BioJapan this year, which I haven't been to, in a very, very long time. really thankful to our friends at, uh, JBA for the invite to come out there, join a panel. and sort of see what BioJapan is all about. It's become a much, much bigger event than it used to be, is my understanding. And then we're also, uh, gonna be co-hosting a reception, for those of you who know, Tim Kendall and his company ConneKTia in Japan, Tim and, and BioCentury teaming up on a reception, uh, October 7th, in Yokohama the night before. BioJapan. So if you're uh, in town and, and wanna join the reception, please send, uh, me a note or send Jeff a note or we'd be happy to have you join us.,

Jeff Cranmer:

Yeah, Tim is great. he, really knows his Japan, uh, had a good chat with him from my Japan story. Recently and, he knows his stuff. Alright, we're gonna take a quick break and then we will, uh, come back and, uh, welcome Mr. Usdin back, from his travels and talk about Stealth Biotherapeutics and IP and quite a bit more.

Alanna Farro:

By Century this week is brought to you by the 12th China Healthcare Summit in Shanghai. From in-licensing to New cos cross-border deals from Asia are transforming global biopharma. Meet top decision makers and investors at the 12th China Healthcare Summit. To explore emerging opportunities and tackle key challenges in this rapidly evolving landscape. Join us in Shanghai, October 22nd to 24. To get a firsthand look at China's dynamic life sciences ecosystem, register and learn more at BioCentury China summit.com.

Jeff Cranmer:

We are back. And Steve, how was the, how was the getaway

Steve Usdin:

I don't know why I came back to tell.

Jeff Cranmer:

to, to talk to us? Yeah. thank you for sending me a cat picture of the day. The cats really look like they, uh, they run that country. All right. No, no further comment. Uh, Steve is, uh, whenever he is in Turkey or Greece, he, uh, he always seems to encounter some amazing cats. But, uh, Steve, you know, I think you, uh, you were writing about Stealth Biotherapeutics when you left. And, you're gonna write about 'em again today. what's going on here? There's a bit of a, an about face. This is a company that for years now has been, trying to get a therapy to the, Barth syndrome, community. it's community where there is a, uh, dire need for, a therapy. Steve, what, is going on with this latest, seeming about face?

Steve Usdin:

So yeah, look, it's another extraordinary turn of events. For stealth and for, birth patients. know, as you said, we've been following this closely for years. It's a Byzantine story, but basically they've been getting the runaround from, FDA for years. The company's bounced between four FDA review divisions over five years. during that time, FDA is told stealth to submit an NDA. Then gave it a refuse to file letter. It approved a natural history study design. Then later declared that the results are uninterpretable. at different points, the agency said approval would depend on a new placebo controlled trial, and then said that, it would be unethical or impossible to conduct that kind of trial. Last year it seemed like things were coming to, to an end. An advisory committee voted 10 to six, that stealth biotherapeutics had demonstrated safety and efficacy of its drug elamipretide. At the end of May, the FDA issued a complete response letter. Big surprise, but it didn't ask for substantial new information. This was devastating for Barth patients and for Stealth. Stealth laid off 30% of its workforce, and it said it didn't know if it would be able to stay in business long enough to receive a response from a resubmission. The patient community has been extraordinarily active, in the media and in lobbying, members of Congress, the Wall Street Journal editorial page called on FDA, commissioner Marty Makary to approve the drug. there have been stories on national television programs last Thursday. FDA said it would grant a final decision on the resubmitted NDA by September 26th. That's months earlier than the deadline. And what's interesting on Friday, Barth syndrome patients met with the FDA commissioner and came out of it, really thrilled and ecstatic. That's really an extraordinary thing. I can't think of another time when an FDA commissioner has met with advocates. For a drug that's under, review, that's pending review, at the agency. So yeah, it looks like it's on the verge of granting accelerated approval. Something FDA ruled out last year, based on data that really hasn't changed, over the last four years. So if that happens, it'll be great news for Barth syndrome patients. But on the whole, I'd say the, the saga isn't really good news for rare disease patients at all.

Jeff Cranmer:

Yeah, that's what I was gonna ask is there gonna be a read through to other, companies developing rare disease therapies?

Steve Usdin:

Well could be, but we, we really need to see what happens. First of all, the only reason it was possible for stealth to consider developing a drug for Barth, which has about 150 patients in the U.S., not all of whom would be candidates for the drug. Is because it was eligible for a priority review voucher, a priority review voucher for a rare pediatric disease. Congress allowed the rare pediatric priority review program to expire last year. If it isn't renewed, there aren't gonna be any more drugs for conditions like, birth syndrome. there's no economic case for doing it in the absence of a priority review voucher. Second. If FDA doesn't create a predictable and rational path for approval, not one that's dependent on getting the Wall Street Journal or NBC News or BioCentury to report about you, it's not gonna be possible to get companies to invest in this space. if you think about it, there are thousands of rare diseases. It isn't possible to have this level of advocacy, this level of public attention. For all of them. There needs to be one, there needs to be priority review vouchers. So there's an economic case for, developing therapies for these very, very rare diseases. And there needs to be a predictable, rational FDA, review process, that can get these, drugs approved or, or not, but at least a decision made on them. in a reasonable period of time, requiring the level of, evidence that's appropriate for the disease. There has to be scientific rigor, but there also has to be, a possibility for making this happen, and companies and patient groups need to know in advance what that path is gonna look like.

Jeff Cranmer:

All right. And, you'll be able to find Steve's story, on BioCentury podcast.com. And, Steve, we add a guest commentary. We published last week, David Beier, who's managing director of Bay City Capital, and John Osborn, who's a professor of law at the University of Washington, they argued that the university industry engine driving U.S. innovation is under attack. What's your take on this?

Steve Usdin:

So here's the thing that precipitated it. President Trump demanded that Harvard account for its compliance with the Bayh-Dole obligations across its entire portfolio of almost 6,000 patents arising from research that was supported in whole or in part with federal funds. That's an extraordinary demand for a couple of reasons. the idea of the federal government exercising, marching rights on Bayh-Dole has been, anathema to Republicans. Traditionally. and the idea that a university would have to go back retroactively and justify all of the patents that it's ever received, basically part, from federal funding, is extraordinary. What, David Byer, who by the way was, years and years ago was a domestic policy advisor for Al Gore. he had senior positions at, Genentech and at Amgen. and as you mentioned, he's, at Bay City Capital. what they argue is that this is retaliation for the universities. first amendment protected speech. and basically they say that by going after Harvard on this, that, the Trump administration is creating a threat t o the entire, American biopharma industry. Here's a quote from the end of their commentary. They say, "business leaders, especially those in the life sciences and technology sectors, must recognize that misguided attacks on research universities threaten our innovation infrastructure, and they must raise their voices accordingly." they urge countervailing advocacy to support Harvard and other research universities, and they say that "a failure to enjoin this counterproductive and illegal exercise of presidential power will lead to predictably disastrous effects, undermining intellectual property rights and limiting economic growth."

Jeff Cranmer:

All right, and you can find their guest commentary on BioCentury podcasts. Com, that is in front of the paywall. I'll also drop a link in the show notes, Also on BioCentury dot com, how China speed is reshaping cross-border business development. A perspective, by Josh and myself, looking at how deals are rapidly. Evolving as China biotechs are gaining more leverage at the negotiating table with Western companies. And, Simone, had a great conversation on our sister podcast with Annalisa Jenkins. she is, an influencer, in biotech to say the least. she is, uh, currently chair of Gemma Therapeutics and. She and Simone talked about the future of MHRA and, really dug deep into where things are in the U.K. right now as that biotech hub continues to grow and our Back to School issue is out now. Steve, uh, wrote, uh, it wasn't as short as, uh, you know, I was, uh, I was led to believe it would be. It's a a seven story, series and Steve will be joining Simone, on our sister podcast, The BioCentury Show, first week of September, and there'll be digging deep into the issues. Steve, top line, what's it all about?

Steve Usdin:

Basically what I did was I said, look, imagine that you were starting from a blank sheet of paper and you wanted to reimagine what medical products regulation in the United States would look like. What would you do? and I followed that through. I talked to a number of thought leaders, current and former FDA officials, former FDA commissioners, CEOs of biotech companies, patient advocates, the opinion leaders. And, there were some commonalities, some things that they all agreed on, some things that there was a little bit of, Disagreement about my conclusion is that if you were going to start over again, and I think that at some point it's going to be necessary to do this, one of the things you would do would be to separate out medical product regulation from the regulation of foods, cosmetics, tobacco and veterinary products. I also call for, reorganizing the medical products regulation. Primarily around therapeutic areas using the Oncology Center of Excellence as a model for the way that other therapeutic areas, could be organized. and abolishing the distinctions between, the Center for Biologics in this Center for Drugs in the long run. I think also eliminating the Center for Devices. I think that those are kind of outmoded ways of thinking about things and, and organizing regulation. There's a lot more to it, uh, as you said. We'll, we'll get into the, um, details of it, with Simone when we do show conversation about it.

Jeff Cranmer:

you can find the entire back to school package on BioCentury.com. I'll drop a link in the show notes. This is our 33rd back to school. We've been doing it every year since David Flores and Karen Bernstein founded BioCentury. More than three decades ago and back to school is a forward looking package that looks at a broad issue critical to the biopharma industry. All right. Well thank you to Josh, Paul and Steve, for joining me today. And thank you to Cole Travis, our production engineer, And of course, Kendall Square Orchestra, which provides the music for BioCentury this week. Tickets are now on sale for the group's eighth season, they'll be rocking some Mahler, some Brahms, and you can find more by going to their website. for tuning in. we will catch you next week.

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