Double approval, double acquisition, $200M for tests, $200M for prostate robots, $450M for $1B worth of gummies
Originally Published as The Niche Podcast.
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About the Show
Life Science Today is your source for stories, insights, and trends across the life science industry. You can expect 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.
Introduction
Welcome to The Niche Podcast – Your weekly rundown of the biotech, pharma, clinical research, and life science industries. I’m your host, Dr. Noah Goodson. This week, double approval, double acquisition, $200M for tests, $200M for prostate robots, $450M for $1B worth of gummies.
Disclaimer
The views expressed on The Niche Podcast are those of the host and guests. They do not necessarily reflect the opinions of any organizations or companies with which they are affiliated.
Incyte Bio Earns Two FDA Approvals in Two Days
Incyte Bio saw back-to-back FDA approvals last week. Their topical Janus kinase (JAK) inhibitor, Opzelura (ruxolitinib) was approved for the treatment of mild to moderate atopic dermatitis in patients 12+. This approval of a topical version of ruxolitinib is not without caveats. First, it’s for short-term non-continuous use. Second, other topical therapies need to fail to adequately control the dermatitis, before it can be prescribed. The clinical trial showed a robust response in about 50% of patients treated with Opzelura. Immune mediated diseases like dermatitis may seem “minor” when compared to life threatening conditions, however the quality-of-life impact of living with chronic skin conditions can be severe. Opzelura is the first FDA approved JAK inhibitor for atopic dermatitis and may mark the introduction of a new field of therapeutic options for immune mediated dermal inflammation.
On Wednesday, Incyte received FDA approval to treat chronic graft-versus-host disease (GVHD) with Jakafi, which is an oral version of ruxolitinib that has previously been approved to treat other conditions. If chronic GVHD sounds familiar, that’s because we spoke about it two weeks ago, when Sanofi acquired Kadmon Holdings who received FDA approval in July to treat cGVHD with their medication REZUROCK. Jakafi’s cGVHD approval is obviously still good news, but with a competitive market and Jakafi marked as second- or third-line therapy, it is not positioned as a block-buster.
Two FDA approvals would seem to be a major victory at many companies. But for Incyte it’s not that easy. A string of challenges in their oncology pipeline sees Incyte shares continue to drop across 2021. All of this is a great example of the challenges of being a publicly traded company – good news for patients, like the approval of Opzelura and a new approval for Jakafi, does not necessarily translate to the shareholder’s maximum benefit, and vice versa.
Site Network Mergers from Velocity Clinical Research
Velocity Clinical Research has announced the double acquisition of two multi-site networks, VitaLink Research and the National Research Institute. This acquisition adds 11 sites to Velocities existing 18 sites. This consolidation is not a big surprise. We mentioned back in Episode 46 in April of this year that Velocity had been acquired by the private equity group NaviMed. We expected continued shake ups as the roles of site networks continues to evolve. It looks like they may go the way of the CRO - that is a consolidating process of continual acquisitions. Site networks have been through tumultuous times as a result of the pandemic. This may position many of them to be ready for new larger management structures, and I suspect there will be a string of sales and consolidating acquisitions in the next 6-12 months. With major shifts in both medicine and clinical research and site networks sitting in the hot-seat, I don’t think this is the last change of 2021. Looming in the background is the larger question of how site networks will evolve across the next decade as the application of clinical research continues to change.
$200M Right on Cue
Cue Health has gone public with a $200M IPO. Cue has been an R&D focused testing provider for more than a decade, but when 2020 hit, they found themselves prepared for a moment in the sun. Their leading technology, a rapid COVID19 testing kit, utilizes a nasal swab and Bluetooth to deliver results on a phone within 20 minutes. The technology has garnered major support driving Cue to $202M in sales in the first half of this year and an award of close to $0.5B from the United State Department of Defense. Investors viewed Cue positively and shares closed at around $20/share on Friday, up 25% from their IPO pricing. With the pandemic an uncertain long-term income source, Cue has plans to develop a range of additional testing mechanisms and continue government as well as commercial partnerships. The path forward with point-of-care testing is anything but clear: It’s a growing industry in a changing landscape with plenty of potential and plenty of competition. We will see if this close to $3B market cap is right on Cue.
Robo IPO
PROCEPT BioRobotics Corporation has closed a $189M IPO. The commercial stage surgical robotics company will use the money to push forward their sales pipeline and developments for additional therapies. Their core product heading to market is called AquaBlation. It removes excess prostate tissue to alleviate symptoms experienced by many men aging. The key with AquaBlation is that it combines robotics, imaging, and treatment for a surgical solution with no cutting, just water pressure. With a hefty and permanent market and promising clinical trials results, PROCEPT is set to make a big splash moving forward. Investors seem to agree with shares settling in at around $38/share, up around 50% from their IPO.
Catalent $450M Senior notes
Catalent has announced a $450M raise through senior notes to fund the acquisition of Bettera. Catalent is a major manufacturer of medical and consumer health products. They announced the $1B acquisition of Bettera at the end of August. This new raise will fund the acquisition of the nutraceutical and supplements manufacturer.
Compared to medicine, nutraceuticals, supplements, and botanical require a unique customer approach that blends active ingredients with core consumer concerns like taste, appearance, and texture. The nutraceutical industry, and particularly the gummy portion continues to experience rapid market expansion by both increased consumer demand and shift in consumer preferences. There are numerous traditional supplements and nutraceuticals opportunities in this space. Additionally, in the long run, the looming broad legalization of Cannabis and related products opens up additional significant industry opportunities.
Catalent may not be heavily involved in Cannabis yet, but the industry is currently growing at a projected 25-35% annually and providing meaningful contributions to the nutraceutical space. It’s not clear if Catalent is interested in Cannabis gummies, but they have certainly positioned themselves with broad market production access through the acquisition of Bettera. This latest capital raise is just a step along that road. Even if Catalent remains focused on traditional supplements lines, the four manufacturing facilities acquired in the deal are on track to be worth their weight in gold as numerous companies look for white label and custom manufacturing sources.