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Reporter’s Notebook: On Day 2 of J.P. Morgan, Start-Ups Soliciting Cash and VCs Eschewing High Risk

The CEOs of Lumen Bioscience (Brian Finrow) and Eligo Bioscience (Xavier Duportet) share remarkable advancements that need funding, while Khosla Venture’s…

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Rain can symbolize many things: unhappiness, rebirth, foreboding, determination, the breaking of a drought, and a pause for introspection. And Day 2 at the 2023 J.P. Morgan Healthcare Conference saw a downpour—literally and metaphorically.

With the rain and wind coming in sideways, executives in mostly blue and gray suits scrambled to take cover between hotel entrances. As I left my first meeting of the day with Alto Neuroscience en route to another interview at the Westin St. Francis San Francisco on Union Square, I was stopped at the door for not having a badge. As I pulled out my phone to find some identification, soaked attendees huddling under an awning debated a possible move for the conference to a more spacious, warmer location.

Act I: Lumen Biosciences

Brian Finrow

Once retrieved at the door by Brian Finrow, CEO and founder at Lumen Bioscience, I was stopped several more times by security for not having a badge before finally getting to the dated Oak Room for some overpriced coffee and a tardy but informative chat.

Finrow told me that 2022 started with tremendous optimism—COVID would no longer be an issue and markets would normalize with a potential huge round of funding brewing. Lumen had the clinical and regulatory path all figured out with a GMP plant humming. All they needed, Finrow told me, were “coins to put in the machine to make it run.”

Then Russia invaded Ukraine, which led to skyrocketing oil prices that sent investors into “skedaddle-mode,” which has continued to the present day. Finrow feared that it could be the end of Lumen.

But not only were they able to hang on, but they were also more successful than most in getting funding. Lumen closed an equity round of $43 million last June and received non-dilutive funding totaling $20 million from Biomedical Advanced Research and Development Authority (BARDA), Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator (CARBX), The Bill & Melinda Gates Foundation, and U.S. Army Medical Research and Development Command and Medical Technology Enterprise Consortium (USAMRD/MTEC).

In addition to supporting their existing programs for the prevention of C. difficile infection and a biologic cocktail for treatment of inflammatory bowel disease (IBD), they grew programs in traveler’s diarrhea, COVID-19, and antibiotic-resistant bacterial infections as well as an intranasal malaria vaccine.

“Knock on wood, we’ve got four clinical trials we’re going to kick off this year. We’re hiring like crazy, and we built out a second GMP plant last year,” said Finrow. “We took the rest of our building in the Fremont neighborhood, so that more than doubles our lab and office square footage.”

Finrow attributes a change in course during 2022 to simply trying to break even. “In software, there’s this thing where they pivot to break even—we’re going to slow down the spending and try harder and we’re going to break even,” said Finrow. “I said, ‘This is not how it’s done in biotech, but what if we just did that. We would need to work a little harder for the grant funding from the foundations and the federal agencies, and we’d have to hustle more on the business development.’ We did some loose modeling on it and it looked like it could work.”

Act II: Eligo Biosciences

Xavier Duportet
Xavier Duportet

My next meeting was moved from the locked-down Westin St. Francis to a Marriott lobby a few blocks away. All of the seats were taken and being watched by people standing in the hope of snagging an opening. Eligo co-founder, CEO, and chairman Xavier Duportet, PhD, and chief business Officer Aurélie Grienenberger, PhD, joined me on a dash to find a lobby with some empty seats. We ended up at the historic Beacon Grand Union Square Hotel, where Duportet and Grienenberger squeezed onto an already crowded couch, and I propped myself up on an ottoman.

The reason Duportet and Grienenberger attended J.P. Morgan this year was to find new sources of investment to take their programs to the clinic. Typically, that would be a bit easier given a couple of recent announcements on patents. The first set of patents dealt with in-situ microbiome editing.

The second has to do with delivering CRISPR using a topical ointment to treat acne. “We’re delivering CRISPR into the microbiome of the [patient’s] face,” said Duportet. “The CRISPR is specifically programmed to target the pro-inflammatory genes that are expressed by these bacteria and that drive the inflammation in the hair follicle. The whole point is to precisely remove the cause of acne, which stems from the microbiome.”

Eligo plans to advance a program on acne by themselves. “The beauty is that with a single Phase Ib/IIa [trial], we can have first-line efficacy in patients,” said Duportet. “Our first trial will already be in patients and, because we’re using a topical, we don’t need too many patients. The amount of cash required to get to this inflection point is actually is about $10-12 million. Regarding the inflection point, it will be a question of whether or not to partner. For now, we’re pushing it ourselves.”

Duportet says that Eligo hopes to get two years’ worth of funding and to generate clinical data by 2024. “This will really be the big value inflection we’re all looking for.”

Act III: Khosla Ventures

Samir Kaul
Samir Kaul

My last interview of the day took me up to a penthouse suite in the Grand Hyatt San Francisco to meet Samir Kaul, founding partner and managing director at Khosla Ventures. Kaul gave me a window into his strategy for venture capitalism in the current economic climate.

Kaul thinks that the private markets have yet to correct but will probably start to do so in Q2 or Q3 of this year, which, he says, is a great opportunity for funds like Khosla.

“I think way too many entrepreneurs got ahead of their skis and shot the moon on valuation, and they’re going to be in a tough spot,” Kaul told me. “The good entrepreneurs will just take their medicine and make sure they do what they need to do to retain their key team members and just say, ‘It is what it is. Let’s move on.’ That’s the advice I give my entrepreneurs.”

Given the current market climate, Kaul thinks there will be a real separation between those that know what they’re doing and those who don’t across many fields. The key for an entrepreneur, according to Kaul, is to make the move once they’ve hit the critical milestone—get a drug approved, get a product launched or get profitable. “You just make sure you bring on the right partners, hire the right people, stay frugal and disciplined, and hit your milestones.”

But it’s all for nothing if the ship can’t stay afloat. “You have to stay alive long enough to get lucky because that’s the game,” Kaul told me. “Every successful company in tech has had those moments of luck. I’ve seen a lot of companies that deserve to survive, not survive. They didn’t survive long enough to get that luck—whether it’s a customer, key hire, acquisition, a competitor falls on their face, who knows.”

The post Reporter’s Notebook: On Day 2 of J.P. Morgan, Start-Ups Soliciting Cash and VCs Eschewing High Risk appeared first on GEN - Genetic Engineering and Biotechnology News.

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Four burning questions about the future of the $16.5B Novo-Catalent deal

To build or to buy? That’s a classic question for pharma boardrooms, and Novo Nordisk is going with both.
Beyond spending billions of dollars to expand…

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To build or to buy? That’s a classic question for pharma boardrooms, and Novo Nordisk is going with both.

Beyond spending billions of dollars to expand its own production capacity for its weight loss drugs, the Danish drugmaker said Monday it will pay $11 billion to acquire three manufacturing plants from Catalent. It’s part of a broader $16.5 billion deal with Novo Holdings, the investment arm of the pharma’s parent group, which agreed to acquire the contract manufacturer and take it private.

It’s a big deal for all parties, with potential ripple effects across the biotech ecosystem. Here’s a look at some of the most pressing questions to watch after Monday’s announcement.

Why did Novo do this?

Novo Holdings isn’t the most obvious buyer for Catalent, particularly after last year’s on-and-off M&A interest from the serial acquirer Danaher. But the deal could benefit both Novo Holdings and Novo Nordisk.

Novo Nordisk’s biggest challenge has been simply making enough of the weight loss drug Wegovy and diabetes therapy Ozempic. On last week’s earnings call, Novo Nordisk CEO Lars Fruergaard Jørgensen said the company isn’t constrained by capital in its efforts to boost manufacturing. Rather, the main challenge is the limited amount of capabilities out there, he said.

“Most pharmaceutical companies in the world would be shopping among the same manufacturers,” he said. “There’s not an unlimited amount of machinery and people to build it.”

While Novo was already one of Catalent’s major customers, the manufacturer has been hamstrung by its own balance sheet. With roughly $5 billion in debt on its books, it’s had to juggle paying down debt with sufficiently investing in its facilities. That’s been particularly challenging in keeping pace with soaring demand for GLP-1 drugs.

Novo, on the other hand, has the balance sheet to funnel as much money as needed into the plants in Italy, Belgium, and Indiana. It’s also struggled to make enough of its popular GLP-1 drugs to meet their soaring demand, with documented shortages of both Ozempic and Wegovy.

The impact won’t be immediate. The parties expect the deal to close near the end of 2024. Novo Nordisk said it expects the three new sites to “gradually increase Novo Nordisk’s filling capacity from 2026 and onwards.”

As for the rest of Catalent — nearly 50 other sites employing thousands of workers — Novo Holdings will take control. The group previously acquired Altasciences in 2021 and Ritedose in 2022, so the Catalent deal builds on a core investing interest in biopharma services, Novo Holdings CEO Kasim Kutay told Endpoints News.

Kasim Kutay

When asked about possible site closures or layoffs, Kutay said the team hasn’t thought about that.

“That’s not our track record. Our track record is to invest in quality businesses and help them grow,” he said. “There’s always stuff to do with any asset you own, but we haven’t bought this company to do some of the stuff you’re talking about.”

What does it mean for Catalent’s customers? 

Until the deal closes, Catalent will operate as a standalone business. After it closes, Novo Nordisk said it will honor its customer obligations at the three sites, a spokesperson said. But they didn’t answer a question about what happens when those contracts expire.

The wrinkle is the long-term future of the three plants that Novo Nordisk is paying for. Those sites don’t exclusively pump out Wegovy, but that could be the logical long-term aim for the Danish drugmaker.

The ideal scenario is that pricing and timelines remain the same for customers, said Nicole Paulk, CEO of the gene therapy startup Siren Biotechnology.

Nicole Paulk

“The name of the group that you’re going to send your check to is now going to be Novo Holdings instead of Catalent, but otherwise everything remains the same,” Paulk told Endpoints. “That’s the best-case scenario.”

In a worst case, Paulk said she feared the new owners could wind up closing sites or laying off Catalent groups. That could create some uncertainty for customers looking for a long-term manufacturing partner.

Are shareholders and regulators happy? 

The pandemic was a wild ride for Catalent’s stock, with shares surging from about $40 to $140 and then crashing back to earth. The $63.50 share price for the takeover is a happy ending depending on the investor.

On that point, the investing giant Elliott Investment Management is satisfied. Marc Steinberg, a partner at Elliott, called the agreement “an outstanding outcome” that “clearly maximizes value for Catalent stockholders” in a statement.

Elliott helped kick off a strategic review last August that culminated in the sale agreement. Compared to Catalent’s stock price before that review started, the deal pays a nearly 40% premium.

Alessandro Maselli

But this is hardly a victory lap for CEO Alessandro Maselli, who took over in July 2022 when Catalent’s stock price was north of $100. Novo’s takeover is a tacit acknowledgment that Maselli could never fully right the ship, as operational problems plagued the company throughout 2023 while it was limited by its debt.

Additional regulatory filings in the next few weeks could give insight into just how competitive the sale process was. William Blair analysts said they don’t expect a competing bidder “given the organic investments already being pursued at other leading CDMOs and the breadth and scale of Catalent’s operations.”

The Blair analysts also noted the companies likely “expect to spend some time educating relevant government agencies” about the deal, given the lengthy closing timeline. Given Novo Nordisk’s ascent — it’s now one of Europe’s most valuable companies — paired with the limited number of large contract manufacturers, antitrust regulators could be interested in taking a close look.

Are Catalent’s problems finally a thing of the past?

Catalent ran into a mix of financial and operational problems over the past year that played no small part in attracting the interest of an activist like Elliott.

Now with a deal in place, how quickly can Novo rectify those problems? Some of the challenges were driven by the demands of being a publicly traded company, like failing to meet investors’ revenue expectations or even filing earnings reports on time.

But Catalent also struggled with its business at times, with a range of manufacturing delays, inspection reports and occasionally writing down acquisitions that didn’t pan out. Novo’s deep pockets will go a long way to a turnaround, but only the future will tell if all these issues are fixed.

Kutay said his team is excited by the opportunity and was satisfied with the due diligence it did on the company.

“We believe we’re buying a strong company with a good management team and good prospects,” Kutay said. “If that wasn’t the case, I don’t think we’d be here.”

Amber Tong and Reynald Castañeda contributed reporting.

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Petrina Kamya, Ph.D., Head of AI Platforms at Insilico Medicine, presents at BIO CEO & Investor Conference

Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb….

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Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb. 26-27 at the New York Marriott Marquis in New York City. Dr. Kamya will speak as part of the panel “AI within Biopharma: Separating Value from Hype,” on Feb. 27, 1pm ET along with Michael Nally, CEO of Generate: Biomedicines and Liz Schwarzbach, PhD, CBO of BigHat Biosciences.

Credit: Insilico Medicine

Petrina Kamya, PhD, Head of AI Platforms and President of Insilico Medicine Canada, will present at the BIO CEO & Investor Conference happening Feb. 26-27 at the New York Marriott Marquis in New York City. Dr. Kamya will speak as part of the panel “AI within Biopharma: Separating Value from Hype,” on Feb. 27, 1pm ET along with Michael Nally, CEO of Generate: Biomedicines and Liz Schwarzbach, PhD, CBO of BigHat Biosciences.

The session will look at how the latest artificial intelligence (AI) tools – including generative AI and large language models – are currently being used to advance the discovery and design of new drugs, and which technologies are still in development. 

The BIO CEO & Investor Conference brings together over 1,000 attendees and more than 700 companies across industry and institutional investment to discuss the future investment landscape of biotechnology. Sessions focus on topics such as therapeutic advancements, market outlook, and policy priorities.

Insilico Medicine is a leading, clinical stage AI-driven drug discovery company that has raised over $400m in investments since it was founded in 2014. Dr. Kamya leads the development of the Company’s end-to-end generative AI platform, Pharma.AI from Insilico’s AI R&D Center in Montreal. Using modern machine learning techniques in the context of chemistry and biology, the platform has driven the discovery and design of 30+ new therapies, with five in clinical stages – for cancer, fibrosis, inflammatory bowel disease (IBD), and COVID-19. The Company’s lead drug, for the chronic, rare lung condition idiopathic pulmonary fibrosis, is the first AI-designed drug for an AI-discovered target to reach Phase II clinical trials with patients. Nine of the top 20 pharmaceutical companies have used Insilico’s AI platform to advance their programs, and the Company has a number of major strategic licensing deals around its AI-designed therapeutic assets, including with Sanofi, Exelixis and Menarini. 

 

About Insilico Medicine

Insilico Medicine, a global clinical stage biotechnology company powered by generative AI, is connecting biology, chemistry, and clinical trials analysis using next-generation AI systems. The company has developed AI platforms that utilize deep generative models, reinforcement learning, transformers, and other modern machine learning techniques for novel target discovery and the generation of novel molecular structures with desired properties. Insilico Medicine is developing breakthrough solutions to discover and develop innovative drugs for cancer, fibrosis, immunity, central nervous system diseases, infectious diseases, autoimmune diseases, and aging-related diseases. www.insilico.com 


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Another country is getting ready to launch a visa for digital nomads

Early reports are saying Japan will soon have a digital nomad visa for high-earning foreigners.

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Over the last decade, the explosion of remote work that came as a result of improved technology and the pandemic has allowed an increasing number of people to become digital nomads. 

When looked at more broadly as anyone not required to come into a fixed office but instead moves between different locations such as the home and the coffee shop, the latest estimate shows that there were more than 35 million such workers in the world by the end of 2023 while over half of those come from the United States.

Related: There is a new list of cities that are best for digital nomads

While remote work has also allowed many to move to cheaper places and travel around the world while still bringing in income, working outside of one's home country requires either dual citizenship or work authorization — the global shift toward remote work has pushed many countries to launch specific digital nomad visas to boost their economies and bring in new residents.

Japan is a very popular destination for U.S. tourists. 

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This popular vacation destination will soon have a nomad visa

Spain, Portugal, Indonesia, Malaysia, Costa Rica, Brazil, Latvia and Malta are some of the countries currently offering specific visas for foreigners who want to live there while bringing in income from abroad.

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With the exception of a few, Asian countries generally have stricter immigration laws and were much slower to launch these types of visas that some of the countries with weaker economies had as far back as 2015. As first reported by the Japan Times, the country's Immigration Services Agency ended up making the leap toward a visa for those who can earn more than ¥10 million ($68,300 USD) with income from another country.

The Japanese government has not yet worked out the specifics of how long the visa will be valid for or how much it will cost — public comment on the proposal is being accepted throughout next week. 

That said, early reports say the visa will be shorter than the typical digital nomad option that allows foreigners to live in a country for several years. The visa will reportedly be valid for six months or slightly longer but still no more than a year — along with the ability to work, this allows some to stay beyond the 90-day tourist period typically afforded to those from countries with visa-free agreements.

'Not be given a residence card of residence certificate'

While one will be able to reapply for the visa after the time runs out, this can only be done by exiting the country and being away for six months before coming back again — becoming a permanent resident on the pathway to citizenship is an entirely different process with much more strict requirements.

"Those living in Japan with the digital nomad visa will not be given a residence card or a residence certificate, which provide access to certain government benefits," reports the news outlet. "The visa cannot be renewed and must be reapplied for, with this only possible six months after leaving the countr

The visa will reportedly start in March and also allow holders to bring their spouses and families with them. To start using the visa, holders will also need to purchase private health insurance from their home country while taxes on any money one earns will also need to be paid through one's home country.

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