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The Readout Damian Garde & Meghana Keshavan

Editing herpes, molecular glue, and a Covid vaccine: meet the winners of STAT Madness

One group of scientists is using genome editing to target the latent herpes virus against which drugs are powerless. Another invented a technology to make drug delivery more efficient. And one gave the U.S. the only one-dose Covid-19 vaccine available.

They’re the winners of this year’s STAT Madness, an annual competition to identify the year’s top discoveries in biomedicine, which started with nearly 130 entries from U.S. research institutions before 64 were selected to compete against one another in a March Madness-style bracket. The genome-editing approach to herpes, developed at the Fred Hutchinson Cancer Research Center, and the drug-delivery technology, from MIT and Brigham and Women’s Hospital, got the most votes from readers. You can read more about them here.

The one-dose Covid-19 vaccine, which traces its beginnings to the Beth Israel Deaconess Medical Center, is this year’s Editors’ Pick, chosen for its ingenuity, the speed at which it was developed, and the fact that it’s helping beat back a devastating pandemic. Read more about the scientists behind it here.

How do you come back from botching 15 million vaccine doses?

The pandemic had been good to Emergent Biosolutions, whose work on Covid-19 vaccines helped quintuple the company’s contract manufacturing revenue in 2020. Then came the extremely public embarrassment of ruining 15 million vaccine doses, only the most in-demand products in the world. And that mistake could dim what appeared to be a bright future for Emergent.

Johnson & Johnson is now in charge of the Emergent plant responsible for the botched doses, which should in theory prevent it from happening again. But as Cowen analyst Boris Peaker wrote in a note to clients, the reputational damage is done. And in the crowded field of contract development and manufacturing organizations, or CDMOs, being the company that famously spoiled a bunch of vaccine doses is not exactly a competitive advantage.

“EBS's CDMO business does not have a long and established track record upon which to draw to overcome this type of negative press,” Peaker wrote last week. Cowen expects the company’s CDMO revenue to dwindle starting in 2022 after its current crop of Covid-19 contracts run out, suggesting some of Emergent’s clients might look elsewhere once they have the chance.

Royalty Pharma’s medicine chest keeps growing

Nine months removed from the drug industry’s largest-ever IPO, Royalty Pharma is expanding its stable of other people’s medicines and forecasting a future of consistent cash flow.

In its latest deal, disclosed last week, Royalty Pharma is trading $342 million for GlaxoSmithKline’s rights to cabozantinib, an Exelixis-marketed treatment approved for multiple cancers. GSK was entitled to 3% of cabozantinib’s sales, and now that money will route to Royalty Pharma instead. 

It’s Royalty Pharma’s second deal of 2021, following its acquisition of a stake in Minerva Neurosciences’ insomnia treatment, and the company raised its long-term financial projections, expecting to grow revenue by about 10% a year through 2025. Royalty Pharma functions as something of a payday lender in the global pharmaceutical industry, providing companies and academic institutions with cash up front in exchange for points on the back end. And its $26 billion valuation suggests the model has plenty of admirers.

The golden age of the SPAC might be nearing its end

March was unkind to the burgeoning field of blank-check companies. First the SEC started querying bankers about just how legal some SPACs, or special-purpose acquisition companies, really are. Then the returns started to suffer. According to SPAC Insider, the average un-merged SPAC is trading just 1.7%, and the majority of the ones that went public in March have posted negative returns.

For context, we’re still in the middle of a historic run for SPACs, which are publicly traded vehicles that merge with private firms to circumvent a traditional IPO. There were 298 SPAC IPOs in the first quarter of 2021, which beats 2020’s 248, which itself is more than the entire previous decade combined. But the growing glut of blank-check firms trawling the same waters for merger targets threatens to produce more than a few losing deals, and the added risk of SEC scrutiny doesn’t help much with sentiment.

Biotech’s latest SPAC deal could be a sign that investor patience is running a little thin. CM Life Sciences II, a SPAC from Casdin Capital and Corvex Management, picked a merger target within five weeks of its own IPO. It’s possible the target, SomaLogic, was simply so attractive that a protracted search seemed unnecessary. Likewise, CM’s investors may have seen the way the SPAC market was going and decided the smartest move was to merge quickly.

More reads

  • Thank private risk-taking, not public funding, for Covid-19 vaccines, therapies. (STAT)
  • Shortages of key drugs for children spur new hospital coalition. (Bloomberg)
  • Hong Kong to resume use of BioNTech Covid-19 vaccines Monday. (Reuters)

Thanks for reading! Until tomorrow,

Monday, April 5, 2021


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