Transcript
[00:00:00] Jeff Cranmer: Welcome to BioCentury this Week, I'm Jeff Cranmer, Executive Editor of BioCentury and I'm joined by
[00:00:10] Simone Fishburn: Simone Fishburn, Editor in Chief,
[00:00:12] Steve Usdin: Steve Usdin, Washington Editor,
[00:00:14] Virginia Li: Virginia Li, Associate Editor,
[00:00:17] Jeff Cranmer: This week, we'll bring you up to speed on last week's meeting at FDA to discuss COVID-19 vaccines, as well as the latest on monoclonal antibodies for COVID-19. But first we want to turn to finance, we have Virginia here with us, she was editor on our story about the return of SPACs. Virginia, what's a SPAC, and why are we seeing so many of them right now?
[00:00:40] Virginia Li: A SPAC is a special purpose acquisition company, which is a publicly traded shell company that's designed to acquire and take a private company public without having to go through your typical IPO process. A SPAC usually has a two year window in which to find a target company and close a deal. Investors in a SPAC are able to pull their money out at any point before a deal is completed. Now this type of vehicle has been around for decades, but they're making a comeback right now. We've seen at least 21 SPACs formed this year that are targeting a merger with a healthcare company, they've collectively raised about $3.8 billion so far, we've seen four SPACs announced healthcare deals this year. Going public via a SPAC is much faster than the typical process, which involves raising a crossover around, doing a road show, doing your IPO that can take a year or two. Through a SPAC a biotech can raise the equivalent of a crossover round in a IPO in a single deal within a few months. With so much general uncertainty right now, it's quite attractive for a company to get a deal done quickly, and for investors, there's less risks since they can pull their funds at any time before a deal closes.
[00:01:47] Simone Fishburn: Virginia, I first heard that SPACs were going to be big this year in say March, and I have continued to have eye rolls over this "oh...SPACs again." Maybe you can first of all tell us why the eye roll, because I think they were big in the mid two thousands, and then went away. And is there any reason to believe that they're here to stay, or that it's different this time?
[00:02:11] Virginia Li: All right, so SPACS of the past haven't performed that well they've historically been a last resort option for companies looking to go public if they weren't able to do so the usual way. They've traditionally been sponsored by the subset of hedge funds that invest in SPACs to gain access to warrants that come with IPO shares, and these allowed them to buy larger stakes in a merged company to discount. But these investors weren't typically interested in being long-term investors in the company. So what's different today particularly for these life sciences SPACs rather than being backed by these SPAC specialists they're being backed blue chip specialist investors MPM Capital, 5AM Ventures, Foresite, EcoR1 just to name a few of them. The motivation is different for these investors they're not just in it to gain access to warrants that could bring value in the future. They're really here to bring companies to the public markets faster, and be long-term shareholders. And It also gives them a little bit more control over how big of a stake they get in the public offering. Now whether they're here to stay, or whether they're just a trend is going to depend a lot on the performance of these early SPAC deals, and that's something we're not going to see right away.
[00:03:22] Jeff Cranmer: What types of companies benefit most from going public via a SPAC rather than a traditional IPO?
[00:03:28] Virginia Li: SPACs are most suitable for companies that have not yet raised a crossover round, they have the most to gain in terms of an efficient path to the public market. It's also best for companies with a management team that has a good track record, so they don't need to take as much time to establish those investor relationships. A good example of this is Nuvation, which raised $644 million last week through a reverse merger with EcoR1 SPAC Panacea, that was the biggest healthcare SPAC deal this year. That company was founded in 2018, raised an enormous series A round last year. Its President and CEO David Hung, formally led Medivation. He has a long track record and is known among investors already. They have a big cancer pipeline with six programs that are soon to enter the clinic, and so this gave them a way to raise a significant amount of funding quickly.
[00:04:20] Jeff Cranmer: The first one that really caught my eye, was Tony Coles took Cerevel public via SPAC, and you know obviously a big name there... it certainly suggested to me, these might be different than they were back in the day. Are there any downsides to these types of deals?
[00:04:40] Virginia Li: The downside is that this might limit post-market performance, and valuation in a hot IPO market like the one we're seeing this year. Companies listing are jumping double digits at the gate, and because there's less outreach to investors in a SPAC merger you might not necessarily see that kind of upside after going public. That said, these deals are still pretty fresh, and we're just going to have to see how they perform in the aftermarket.
[00:05:07] Jeff Cranmer: Yeah it's certainly continues to be the best IPO year on record, isn't that the case? I think we've seen about $16 billion raised by NASDAQ companies alone, more than ever before. I think the previous high water mark was the year 2000, and we're well beyond that at this point.
[00:05:28] Simone Fishburn: I think it's just worth saying that the story Stephen Hansen wrote last week on SPACs has some really good statistics and there's some data in there about how many, and how much money is being raised. I think he also lists the companies that have participated in SPACs this year -- so just one question Virginia, you have said we'll have to wait to see how they perform. How long is that thread, what's the sort of timeline, that is it really something you're just waiting for them to fail, and then you would say it doesn't work, or is there a timeline at which you could say okay this was a success?
[00:06:06] Virginia Li: I think what investors have told us is that we'll get a better idea of how these are doing in the next year or so.
[00:06:13] Simone Fishburn: All right so Jeff, you can put that on the podcast for this time next year let's check in on the SPACs.
[00:06:20] Jeff Cranmer: SPAC to the Future, baby.
[00:06:22] All right let's turn to Washington, Steve you had another busy week, last week. FDA has vaccines advisory committee met to discuss COVID-19 vaccines. The meeting was mainly intended to reassure the public that career staff at the agency will make decisions about vaccines and will not be influenced by political preferences or timetables. A second priority was to bring companies and the public up to speed on FDA's thinking about criteria for authorizing or approving COVID-19 vaccines. The most important advice the committee provided was to strongly urge vaccine sponsors to avoid unblinding Phase III trials for as long as possible.
[00:07:07] Steve, how did it go?
[00:07:10] Steve Usdin: It was a long day, it was eight hours, six hours of it was taken up with presentations only about two hours of discussion by the committee. Some of the discussion was really not very useful, there was a great deal of talk about whether or not FDA and the companies that pick the correct end points for Phase III trials. That ship has already sailed, you know those trials aren't going to be changed and they're not going to be done again... so I don't really know what the point of that discussion was. I think they're two take homes for me from it were, one there was a great deal of concern on the committee about whether there needs to be more safety data for vaccines that are based on technologies that have never been used before, that have never been licensed before. Really addressing the mRNA vaccines, from Pfizer and Moderna which are likely to be the first two. The FDA said that it wants a median of two months of safety data for a vaccine. Committee members were okay with that for most vaccines, but there were quite a few of them who said that they believe that the amount of safety data should be greater for mRNA vaccines. Not because they know of any particular concern but just because they haven't been used before and these are going to be used in potentially tens or hundreds of millions of people.
[00:08:23] The other big concern was about whether trials will be unblinded. Before the meeting Pfizer said that their intention is to offer patients who have been on their trials the opportunity to know whether they received the vaccine, active vaccine, or placebo. And if they got the placebo, they give them the chance to get the vaccine prior to the end of the trial. The committee was adamantly opposed to this they really want to see these Phase III trials continue as long as possible. Really they're they're going to be very reluctant I think to grant Emergency Use Authorization (EUA), or to recommend Emergency Use Authorization (EUA) if they believe that the companies are going to intentionally unblind the trials early. So one of the things that came up at the meeting and that I understand that FDA Commissioner Hahn is considering is the possibility of rather than granting Emergency Use Authorization (EUA) using expanded access which is otherwise called compassionate use access to grant early access to vaccines. If there's a possibility that doing that would make it less likely that trials would be unblinded.
[00:09:29] Simone Fishburn: So Steve, do those companies have to make any commitment to the unblinding?
[00:09:35] Steve Usdin: I think the advisory committee is going to press any company that comes before it on what their plan is to ensure that the Phase III trials are going to continue. Because remember the first Emergency Use Authorizations (EUA) are likely to be based on interim analysis of ongoing Phase III trials. The premise is you're going to get good data after a short period of time, after a certain number of events have happened, that's gonna be good enough. You're going to go to the FDA and you can say we want Emergency Use Authorization (EUA). If FDA grants it's going to be contingent on the companies completing the trials, and going on hopefully to apply for a full BLA for full licensure. If the companies are coming to the FDA, or coming to the advisory committee and saying look we've gone this far, we've gotten the interim data, we're going to unblind the trials, we're never going to learn anything more about it, it's all over. So the advisory committee has made it quite clear. They're not going to recommend approval based on that, or authorization based on that.
[00:10:32] Simone Fishburn: But is it still for other companies that aren't yet in Phase III, just going to make it really hard for them to recruit?
[00:10:39] Steve Usdin: Everything that I've mentioned is about trials that are already ongoing. There's a real question about once Emergency Use Authorizations (EUA) have been issued how companies that haven't even started, their Phase III trials would do it. Basically I think that once an Emergency Use Authorization (EUA) has been issued that vaccine will become the standard of care. And new Phase III trials are going to have to be run as non-inferiority trials against the vaccines that have already been authorized. Anyways, that's one of the things that FDA suggested might happen. If that is the case, it's going to be extraordinarily difficult to run new Phase III trials, because of non-inferiority trial has to be enormous, bigger than would be feasible. The only way that it could be done would be if you could find subpopulations or geographic areas where there hasn't been anything approved or authorized, and you could still do a placebo controlled trial in those subpopulations or in those areas.
[00:11:38] Simone Fishburn: We did have some data coming out last week about age differences, in responsiveness, to the trials. So could you imagine a vaccine going forward saying we think we're better in a certain age, let's say elderly age population, and carving a path that way?
[00:11:58] Steve Usdin: Yeah, that's what I mean by subpopulation...
[00:12:00] Simone Fishburn: Right.
[00:12:00] Stephen Hansen: The thing about that would be the subpopulation would have to be a population that either wasn't included in the Emergency Use Authorizations (EUA) of other vaccines, or that did particularly poorly compared to the broader population in order for that kind of a strategy to work. I think that the main thing is that there's still a lot of uncertainty about how all of this is going to work. You have to think about the bigger picture, not just getting something authorized as quickly as possible, which I think everybody wants to have happen as quickly as it can be done safely. But then also thinking about how do you do it in a way that doesn't make it impossible to one learn better characterize the safety and efficacy of what's been authorized. And to continue to learn about new vaccines, because everybody agrees there's going to be a need for multiple vaccines to be authorized, and ultimately approved.
[00:12:54] Jeff Cranmer: So Steve, does this mean that this advisory committee meeting will meet on each EUA application?
[00:13:02] Steve Usdin: Yeah, FDA's committed that they're going to bring each EUA or BLA to the committee. Interestingly, they haven't said what they would do about expanded access, but I assume that they will also bring that to an advisory committee. The FDA is really they've they're bending over backwards. They're doing everything they can to try to assure the public that every decision about COVID-19 vaccines is going to be made in a transparent way, and that it's going to be career scientists uninfluenced by politics who are making these decisions.
[00:13:33] Jeff Cranmer: And will it be the same committee members that met last week?
[00:13:37] Steve Usdin: Yes.
[00:13:39] Jeff Cranmer: Sounds good.
[00:13:40] Well your other story last week Steve looked at the state of play for COVID-19 monoclonal antibodies. FDA could soon grant Emergency Use Authorization (EUA) to one or more. I think the front runners are Llily, and Regeneron is that right, Steve?
[00:13:58] Steve Usdin: Yes, I think, FDA likely to issue Emergency Use Authorizations (EUA) for monoclonal antibodies probably as early as this week, that's what a senior HHS official said last week. And the two that have been submitted are from Regeneron that's the one that President Trump got, and from Lilly that's the one that Chris Christie got.
[00:14:15] Jeff Cranmer: But Steve, you flagged that even though this is potentially very good news, and could keep hundreds of thousands of Americans out of hospitals, the announcements may mark the start of yet another round of pandemic pandemonium. Why is that?
[00:14:31] Steve Usdin: It's really about how they're going to be deployed. The Trump administration has made the decision that they're not going to have a national strategy for deploying monoclonal antibodies, or any other therapies. They're going to give them to the states, and leave it up to the states to figure out how to deploy them. It's not obvious how you do that with monoclonal antibodies. You could think about it, this is an infusion it's going to take between one hour, and three hours. The people who are going to be benefiting from this the most are going to be people who have moderate, severe COVID-19 symptoms. You don't want those kinds of people in infusion centers where people are getting infusions, for example for cancer, or autoimmune diseases, you don't want them in emergency rooms. It's going to have to be someplace where they can get this infusion safely, or it's going to save for them, but also where it's going to be safe for the healthcare workers, and for other patients, that's not an insurmountable problem. I would argue that if we were living in South Korea it could get solved in a week. But we're not living in South Korea, and it's going to take a lot more than a week to figure it out. When the monoclonal antibodies are first approved, there's going to be a scramble to figure out how and where they should be administered safely. You would have thought... since we've had months and months to think about this, that it would have been worked out, but it hasn't been worked out. One of the things that Mark McClellan, a former FDA commissioner and former head of CMS told me is that he's worried that the access problems for antibodies are going to exacerbate the economic geographic and racial inequities that are already a hallmark of COVID.
[00:16:10] Simone Fishburn: So wanted to ask you about that Steve, maybe you can just spell out cause that's quite alarming we know that COVID has had a disproportionately bad effect on racial minorities in many countries, including in the U.S. So why is that a particular vulnerability here?
[00:16:27] Steve Usdin: So basically what Dr. McClellan said is that the disparities and outcomes for COVID-19 so far have been related to people's exposure to the disease, and for their co-morbidities. And what he's saying now is that with a antibody rollout there is likely to be layered on top of that differences in access to life saving therapies. So the COVID-19 monoclonal antibodies at least at first are probably going to be administered in the large academic healthcare centers, or in the large hospital systems the ones that are better funded and that are in urban areas. People who are living in rural areas. People who don't have good access to healthcare. People who don't have somebody who can drive them to the infusion center, and take care of them while they're there, and then take them back home again. All these kinds of people who are distrustful of the medical system. They're going to have less access to these therapies; so they're going to have worse outcomes compared to people who do have access to the therapies.
[00:17:29] Jeff Cranmer: Now is anyone working on solutions to that Steve?
[00:17:32] Steve Usdin: There are people who are of course, Mark McClellan for one, his center at Duke, the Duke-Margolis Center is working with the National Governors Association to try to solve some of these problems. Some of the big healthcare systems Geisinger and Kaiser are trying to develop plans for it. The problem is that the places where this is most needed are the places that are least prepared to solve the problem. It's really needed where the pandemic is raging places like the Upper Midwest where hospitals are overwhelmed. Those are the hospital systems that have the least capacity right now to set up something new, and those are the ones where it's really going to be needed the most. There really is a potential for a kind of a tragedy here where there's going to be therapies that are highly effective, but it's going to take a long time to figure out how to get them to people. And people are going to be hospitalized, people are going to die on necessarily because these therapies haven't been deployed properly?
[00:18:32] Jeff Cranmer: I'd like to end on a positive note, but that's the sobering reality right now I'm afraid.
[00:18:38] That is all we have time for this week. Remember that registration is now open for our 7th BioCentury-BayHelix China Healthcare Summit. This digital event runs from November 9th to 13th and includes strategic panels, one-on-one virtual meetings, company presentations, and two conference reports from our partner McKinsey. Register today to get immediate access to our pre-event program including BioCentury business intelligence on China biotech, Scene Setter Presentations on China financings, and deals. And four Pre-Event Webinars starting next month, you'll also get to enjoy Steve, and Simone are both hosting panels, as well as I will be moderating a panel on the Korean biotech scene, and what opportunities are out there for Western companies and Chinese companies looking to partner with Korean biopharmas.
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