Emerging biotech

Initial public offerings in biotech have appeared to be on the upswing in the first two months of the year, with a handful of launches reaching over $100 million. The offerings brought back some excitement after a few tough years marked by the rising cost of capital due to higher interest rates, other macroeconomic headwinds, a sluggish investment environment and fewer IPOs than during the pandemic.

The strong start has been hailed as a possible rebound for the industry, but it’s not quite time to celebrate, according to David Crean, managing partner of M&A and strategic advisory firm Cardiff Advisory. 

“It's a good start to the 2024 IPO class, but I think there needs to be a little bit more energy and momentum going into [the market],” Crean said. “It's not a switch you're going to just turn on.”

Instead of a flood of biotech IPOs in 2024, there may be a steady stream through 2025 as economic conditions improve and the market becomes more favorable. Looking at the performance of some of the companies that have launched in the first two months of the year is a good indicator of which biotech areas are now ripe for IPO success.

Top biotech IPO target areas

Companies that reaped millions in fundraising during the pandemic years when investors were “spending like drunken sailors”  due to historically low interest rates, may be readying for an IPO in the near future, Crean said. The sector’s troubles, defined in part by rising layoffs last year, may be symptomatic of a spending hangover rather than an ongoing challenge for the entire sector. 

And for those readying an IPO, the move may be to “survive to 2025,” according to Crean, who predicts more IPO announcements in the next 15 to 18 months. Interest rates could also fall in the coming months, which could rally the sector. 

The fundamentals that make for a good IPO candidate in biotech are largely derisked companies with late-stage therapies, according to Crean, although early-stage companies will still sometimes go public.

“For very early stage companies that are looking to go public, it represents some challenges,” Crean said. “As a public market investor, they'll want to see high-quality clinical candidates from drug development companies being prioritized over the earlier states that exit the risks.”

Beyond those fundamentals, investors are eyeing specific areas within biotech, including oncology, autoimmune and cardio metabolic disease. And 2024 biotech IPOs in these areas have already seen success. 

CG Oncology, the sector’s first IPO of 2024, initially raised a larger-than-expected sum of $380 million in its public offering and has since seen its stock rise further. The company, which is focused on developing therapeutics for patients with bladder cancer, launched its IPO at $19 per share and is currently trading around $35 per share as of market close March 12. The success of its launch and subsequent value growth makes the company one to watch, according to Crean, who pointed to the oncology focus and late-stage candidates as possible triggers for future IPOs.

Cardio metabolic disease and “anything to do with diabesity” — diabetes and obesity, said Crean — are other areas likely to see more IPOs. The success of Novo Nordisk’s Wegovy and Ozempic and Eli Lilly’s Mounjaro are indicators of investors’ appetite in the space. 

Crean also clocked autoimmune as a top target, and pointed to Kyverna Therapeutics, which launched an IPO in February that raised $319 million. The developer of cell therapies for autoimmune diseases launched its IPO with shares priced $22 a piece and is now trading around $29 per share as of market close March 12.

Biotechs to watch

While 2024 started off with a bang, a surge of IPOs could still be coming this year and into 2025.

“I don't anticipate a broadening of the big IPO market until maybe the second half of this year,” Crean said.

Recent moves by high-profile investors, the timing of the latest funding round and the financial momentum in the industry’s subsectors are all key factors when predicting potential biotech IPO candidates. With these fundamentals in place, some biotechs may be ready to pounce on improving market conditions. Here are some of the biotechs to watch for a potential IPO and some that have already announced their intended offering, according to Crean.

Boundless Bio: Precision oncology startup Boundless Bio recently announced its planned IPO, and the company has a strong cap table of “significant investors” behind it, including Bayer, RA Capital, Vertex Ventures HC and more. The early-stage biotech’s pipeline is focused on ecDNA-driven cancers. 

Alumis: Fresh off a series C funding round that brought in $259 million, Alumis is a clinical-stage biopharma company developing oral therapies for autoimmune diseases. The company plans to use the financing to initiate pivotal phase 3 clinical trials for its lead TYK2 candidate, ESK-001, which treats moderate to severe plaque psoriasis. The company has called its candidate “best in class,” and if approved, the drug would compete with Bristol Myers Squibb’s psoriasis pill Sotyktu, which scored an FDA nod in 2022. With recent funding, it’s unlikely Alumis will seek an IPO in 2024, but it could go public in 2025 or beyond, according to Crean.

Endeavor BioMedicines: With $163 million in funding already raised, California-based Endeavor Therapeutics’ pipeline includes two candidates for idiopathic pulmonary fibrosis. The company also penned a licensing agreement with Hummingbird Bioscience last year for exclusive rights to HMBD-501, a next-generation HER3-targeted ADC. With the company’s last fundraising round in 2022, it could be looking to raise capital through an IPO next. 

Autobahn Therapeutics: San Diego-based Autobahn Therapeutics develops regenerative medicines aimed at CNS disorders. Its early-stage pipeline includes small molecule therapies for both rare and prevalent CNS disorders, while its lead molecule, a CNS-directed thyroid hormone receptor beta (TRβ) agonist, is initially targeting major depressive disorder. Autobahn has raised nearly $109 million and counts Biogen, Pfizer Ventures and BMS among its major investors.

Biotech investments have rolled up and down over the past few years, but companies developing innovative platforms with a revolutionary bent have a leg up, according to an analysis by McKinsey & Company. Investors are funneling money into companies focused on cutting-edge science like gene editing, cell therapies and machine learning. And in a crowded sector, having a headline-making story to tell doesn’t hurt, either. 

From resurrecting extinct species to using CRISPR gene editing in animal-to-human organ transplants, these companies are making futuristic technologies, products and platforms for real-life science. 

Ginkgo Bioworks’ cell programming tech is a hot commodity for biopharma partners

What sets it apart: Billing itself as “the organism company,” Ginkgo Bioworks offers its cell programming technology platform and capabilities to partners in industries like biotech and agriculture. In pharma, the company has worked with Merck & Co. to engineer biocatalytic enzymes for potential use in drug manufacturing processes, and with Prokarium to engineer bacteria for cancer treatments.

What’s new: Ginkgo Bioworks recently acquired AgBiome’s platform assets, which include its development pipeline, as well as more than over 115,000 fully sequenced and isolated microbial strains and more than 500 million unique gene sequences. The company also recently expanded their R&D partnership with Novo Nordisk to improve manufacturing of Novo’s medicines for “serious chronic diseases, including diabetes and obesity medications.”

What’s coming: Ginkgo Bioworks has many irons in the fire including one of its most recently announced projects: building an open-access, AI-enabled measles forecasting model with Northeastern University researchers. The work will be supported by a newly awarded grant from the Bill & Melinda Gates Foundation.

eGenesis uses CRISPR to make animal-human transplants possible

What sets it apart: The FDA made a landmark approval of the first CRISPR drug last year, and this milestone for the gene editing technology is one of many that could be on the way. 

eGenesis is leveraging CRISPR to edit animal organs for human transplants. According to eGenesis, more than 100,000 people in the U.S. need an organ transplant, and every day, 20 people die waiting for one. eGenesis is working to develop human-compatible, genetically engineered organs.

What’s new: eGenesis made history in March when, for the first time, a genetically engineered pig kidney was transplanted into a living human recipient. The key to the transplant’s success were three classes of gene edits that prevent rejection. The eGenesis kidney used for the transplant, EGEN-2784, is the company’s lead product candidate for kidney transplant and was authorized by the FDA under the expanded access pathway for the end-stage renal disease patient who had no other therapeutic options. The patient was discharged at the beginning of April.

What’s coming: The eGenesis pipeline comprises candidates for heart, kidney and liver human-compatible organs, and it’s making clinical strides in showing their viability. In addition to the successful kidney transplantation, the company announced a major milestone in its liver program. In a partnership with Penn Medicine, eGenesis showed it was possible to circulate blood through a person using a genetically engineered pig liver outside the human body combined with an extra corporeal liver cross-circulation device made by the company OrganOx. The solution could provide a much-needed bridge for liver failure patients waiting for a transplant. They conducted the study on a recently deceased patient

Colossal Biosciences pushes the boundaries of gene editing 

What sets it apart: This gene editing, “de-extinction” company aims to “resurrect” the woolly mammoth, among other species. By creating what Colossal CEO and co-founder Ben Lamm described to PharmaVoice as “proxy species,” the company could reintroduce eradicated species back into the wild and fill “ecological voids that were left in their absence.” 

But there’s more to the company than this singular goal. After it builds its capabilities, Colossal plans to become a springboard for other spinoffs, such as Form Bio, a computational life sciences platform focused on speeding drug development that launched in 2022.

What’s new: In March, Colossal announced it was able to reprogram elephant iPSC cells, which had never been achieved before. iPSC, or induced pluripotent stem cells, can propagate indefinitely and grow into any cell type, such as heart or lung cells. According to the company, this breakthrough showed they could grow elephant sperm and egg cells for gestation, and eventually, edit them into mammoth cells for the same purpose.

What’s coming: In addition to “bringing back” the woolly mammoth, Colossal’s work could be applied to a host of other ecological and human health problems, from boosting endangered animal species, to enabling applications like plastic-eating bacteria, sustainable agriculture and disease remodeling.

Spiderwort’s regenerative medicine tech uses plant-based biomaterials

What sets it apart: Spiderwort is developing plant-based biomaterials that can repair and regenerate living tissue, acting as the “scaffolding” for regenerative medicine, including treating spinal cord injuries and soft tissue regeneration.

What’s new: Spiderwort was accepted last year into the MaRS Health Science Portfolio, which supports socially impactful health companies and institutions as they bring products to market.

What’s coming: Spiderwort has two products in development: CelluBridge, for the repair and regeneration of the spinal cord, which received a breakthrough device designation from the FDA, and CelluJuve, a cellulose-based dermal filler for injury recovery and cosmetic enhancement.

Michelle Werner is a powerhouse in biopharma, balancing the macro and micro environment and tackling venture capital along with the nitty gritty science.

She currently serves as a CEO-partner at Flagship Pioneering, a leading biotech venture capital company, and CEO of Alltrna, a preclinical biotech backed by the VC. But her previous experience boasts some of the biggest names in pharma, including roles at Bristol Myers Squibb, AstraZeneca and Novartis. After her entrance into the biotech startup space at Alltrna in 2022, Werner now finds herself at the forefront of development for a novel therapeutic modality using tRNA biology.

Fresh off a $109 million series B funding round from 2023, Alltrna is preparing to advance its “most promising” molecules toward the clinic, leveraging proceeds for next steps. The company’s platform revolves around transfer RNA, or tRNA, which is involved in translating genetic instructions into proteins. 

According to the company, many diseases, “stem from the same nonsense mutation, where the code for an amino acid has been mutated into a ​’stop’ codon.” Alltrna said tRNA therapeutics could work by reading stop codons and delivering “the desired amino acid, thereby restoring the production of the full-length protein.”

Alltrna makes bold claims that the tRNA technology platform has the potential “to treat thousands of diseases,” but the potential of this emerging class of therapeutics has yet to bear out in the clinic. Alltrna has also yet to disclose its initial disease targets.

“We haven't been specific about the diseases that will be included in the first basket,” Werner said. “However, we are formulating our tRNAs with lipid nanoparticles as part of our first program.”

Alltrna will explore rare genetic liver diseases within its first set of diseases, with the intent of demonstrating the company’s concept, Werner said. Although a preclinical platform is a shift from Werner’s Big Pharma background, her combined personal experience with rare disease and an understanding of the pharma space may be the key to leadership success.

Here, Werner, a 2023 PharmaVoice 100 honoree, reflects on her deep resumé and how her work experience and personal familiarity with rare disease have influenced her career in the startup space.

This interview has been edited for brevity and style.

PHARMAVOICE: With Alltrna developing a preclinical platform, what are some of the biggest differences for you as a leader moving into this space compared to the senior level at some of the big pharmas in your background?

MICHELLE WERNER: At the end of the day, the things that get me really excited are our opportunities to take innovative science and break ground when it comes to that science. And that's something that we're doing here. It doesn't matter that we're a preclinical stage company right now, because those elements are there. And we have that in spades. It's the same in this setting, as it would be perhaps in some of my previous experiences that I've had in later-stage drug development and commercial roles.

What's the why for you? Why did you join Alltrna?

My own personal connection to the rare genetic disease space is a huge motivator for me. When my son was diagnosed with Duchenne [muscular dystrophy] in 2020, it was that catalyst to think about how I [pivot in] a career that I've been able to dedicate mostly to the oncology setting over the 20 years prior to that time, and [where] I've had an opportunity to make a small difference. I understand that there hasn't been as much progress in the rare disease setting as we can be making, and I want the next 20 years of my career to be dedicated to that space because these are patients [who] are just as deserving of innovation as anybody else. 

You also have a role with Flagship Pioneering. What's your advice to leaders who wear many hats like you? 

I am a CEO-partner at Flagship Pioneering, and that role is really also to enable the broader Flagship ecosystem to be successful.The experiences that I bring to the table can be an asset for other companies as well. And vice versa, I can learn from many others within the ecosystem too. We need to be driving innovation forward. We can't just wait for it to happen.

I've spent a lot of time in Big Pharma where I have been on the cutting edge of science, but I've also been in Big Pharma where we've been in the sort of adjacencies, maybe less novel work. But I think being bold and taking risks is going to make a transformational difference for patients at the end of the day. That's advice that I certainly wish I had embraced earlier in my career and moving forward is going to be fundamentally important. 

But I also think it's about being authentic and true to who you really are, and it's taken me up until now to get comfortable with that. Instead of trying to be the leader that somebody else wants me to be, somebody else that I admire, maybe a mentor or sponsor of mine, it's about me being the leader that I can be, that I want to be. That's something all of us can embody, but it comes from having the courage to be true to yourself, authentic to yourself. And being authentic requires vulnerability at times, which isn't comfortable for everybody. But I encourage people to try to get comfortable being vulnerable, because I think that's when we become our best selves.

As you're moving along toward the clinical stage, what are some of the lessons you're learning? What's been new to you?

I think being in a startup environment is newer to me than certainly the types of environments I've had in the past. When we think about events that are taking place, I'm going to call it the macro world,it's really important for me to have an understanding of that and to translate an understanding of that external environment to our relatively small company of 60 employees. Sometimes it takes a little bit more to unpack what's happening in that environment and what it means for us, and how we're using that information or understanding of that environment to help us make strategic choices with our platform and planning for the future. And being able to share that transparently with the team at Alltrna …  is something that has been hugely important over the course of the last couple of years so people understand the direction we're going in and the why behind some of the decisions we've made as a company.

Not too long ago, neuroscience was a disappearing field in the life sciences, with pharma giants like Pfizer, Amgen and others greatly reducing their presence and even leaders like Eli Lilly and Merck & Co. taking a step back. Now, with clinical and regulatory advances in Alzheimer’s disease, ALS, depression and more, the brain is once again a place investors are staking a claim.

The truth is, venture capitalists have been working behind the scenes to bring new treatments to the table, despite Big Pharma’s reticence of the risk-benefit pitfalls in neuroscience drug development. For the SV Health Investors-managed Dementia Discovery Fund, which had over $500 million in committed capital to invest in the space, that means focusing on science outside the mainstream to bet on the next wave of advances.

“We have a huge demographic and a huge unmet medical need, and DDF was created to invest in new companies with a diversified pipeline of dementia therapeutics,” said Jonathan Behr, partner at SV Health Investors and co-head of the DDF strategy. “The conceit was that the large pharmaceutical companies were focusing a lot of their resources on the same mechanisms like anti-amyloid antibodies and over-investing in a really narrow set of drugs.”

The investment exodus from neuroscience is often blamed on its high failure rate compared to therapeutic areas like oncology and immunology. But in reality, Behr said, the slower investment was a result of “a lack of fundamental understanding of the underlying disease.”

Factors like difficult drug delivery, low target engagement, a lack of biomarkers and an inability to biopsy held neuroscience back while therapies for cancer and inflammation thrived, Behr said. In particular, risky and expensive clinical trials that stretched on with only symptomatic endpoints drove investors away.

Over time, that’s changed, Behr said.

“Each of those challenges has been addressed in some way,” Behr said. “Our understanding of neurodegenerative diseases has taken a quantum leap forward, and the platforms and tools we have to target the brain are fundamentally different.”

Stepping stones

New drugs in Alzheimer’s disease like Leqembi from partners Eisai and Biogen, as well as Eli Lilly’s late-stage donanemab, have signaled a return to effective neurological drugs for large pharmas. But even as these drugs show unprecedented efficacy, there’s always room to improve outcomes for a large, untreated population, Behr said.

“We need to be realistic that we were never going to cure any of these diseases with a single drug,” Behr said. “Having a drug that meaningfully slows disease progression for select patients is really important and meaningful to the patient community, yet still leaves a lot of opportunity and need for pharmaceutical or biotech companies to address with new drugs.”

Among DDF’s portfolio are clinical-stage companies like Therini Bio, which is focused on reducing inflammation in the brain thought to contribute to Alzheimer’s disease; Cerevance, which has multiple CNS candidates, including one targeting proteins that lead to cell death; and Alector, a biotech harnessing the immune system to treat diseases of the brain.

DDF has chalked up some recent successes, as well. Alector, along with Big Pharma partner GSK, snagged an FDA breakthrough designation for an early onset dementia candidate. Cumulus Neuroscience enrolled the first patient in a study of an early detection method for Alzheimer’s, and Caraway Therapeutics welcomed an acquisition by pharma giant Merck & Co.

And nowhere in DDF’s slate of VC investments will you find a company with anti-amyloid ambitions.

“Back to the premise of DDF, the perception was that large pharma had that covered,” Behr said. “There were so many anti-amyloid strategies, whether they be antibodies or vaccines … and our mission was to see what's next, to develop that diversified portfolio beyond anti-amyloid therapies.”

A specialized approach

Specializing in such a pinpointed area of the life sciences like dementia can be risky, but it’s the kind of risk that pays off for VCs that put science first, said Behr, who holds a doctorate in bioengineering and spent time in neuroscience company creation before joining DDF in 2019.

“By being a specialty fund, we can assemble the expertise, the know-how, the people and the partners so that not only can we identify the best investments in the space, but we can also help actively manage them so that they have the highest likelihood of success,” Behr said. “Especially in a space like neurodegenerative disease, we think that expertise is critical.”

And despite a focus on neuroscience, the fund contains a good deal of diversity, from Alzheimer’s to ALS to Parkinson’s disease, that a generalist investor would be less aware of, Behr said.

Since the fund’s launch in 2015, there has been a critical shift in how pharmas of all sizes — including those that once stepped away — are looking at the neuroscience field.

“To use Alzheimer’s as an example, we now have a market that didn't exist, a patient population that wasn't being addressed, and all of a sudden you have a potential step change and an opportunity to provide benefit,” Behr said.

When Luxturna was approved in 2017 to treat a rare form of inherited vision loss, it became the first one-and-done therapy targeting a disease caused by mutations in a specific gene. Despite the historical achievement, there was a problem. The patient population was tiny, topping out at around 2,000 in the US., and the drug had become the priciest therapy on the market costing $425,000 per eye.

Although gene therapy holds promise for rare diseases, current therapies target small patient populations. But a Pennsylvania-based biotech company Ocugen is hoping to change that paradigm by working on therapies that it calls “gene agnostic,” using a first-in-class modifier gene therapy platform with the potential to treat a range of genetically diverse inherited retinal diseases.

“It’s not gene specific like CRISPR or traditional gene therapy,” said Shankar Musunuri, CEO and co-founder of Ocugen. “We are embarking on something really big that nobody has done before.”

Reaching a larger patient population

Although Luxturna’s approval paved the way for other gene therapies, it also only treats patients with a mutation of RPE65. However, there are hundreds of genes that cause inherited retinal diseases.

For example, people with the RPE65 gene mutation represent just 0.3%–1% of all cases of retinitis pigmentosa, the most common type of inherited retinal dystrophy, according to a 2023 article in the journal Pharmaceutics

“There are more than 100 genes which can cause RP. There are about 100,000 patients in the U.S. alone, about 1.6 million globally,” Musunuri said.

Ocugen’s lead candidate is OCU400, a modifier gene therapy targeting two families of inherited retinal diseases: RP and Leber congenital amaurosis. It works by delivering a functional copy of a nuclear hormone receptor gene called NR2E3 to target cells in the retina, resetting “retinal homeostasis, potentially stabilizing cells and rescuing photoreceptor degeneration,” the company said.

“If we can reset the homeostasis, restore the function and also create a healthy environment, that’s important for long-term vision restoration. It’s not just fixing one gene,” Musunuri said.

Earlier this month, the FDA cleared Ocugen to initiate a phase 3 clinical trial of OCU400, which also received orphan drug and regenerative medicine advanced therapy designations from the FDA. The company is targeting a 2026 approval.

Ocugen has other gene therapies in development as well, including a candidate for dry age-related macular degeneration and another for Stargardt disease, both of which are in phase 1/2.

Beyond gene therapy

In addition to its specialty in gene therapy, Ocugen is investigating how its platform could be used in other therapeutic arenas.

“Our focus is primarily gene therapy, but these other technology platforms can do a lot of good for patients,” Musunuri said. “We’re focused on unmet medical needs. All the areas we’re working on have significant unmet medical needs.”

One of its most developed assets is on the cell therapy side. Called NeoCart, the therapy treats articular cartilage defects in the knee and was picked up through a reverse merger with Histogenics in 2019. The phase 3-ready candidate is made from a three-dimensional disc of new cartilage grown from patient-derived cells..

Ocugen also has three vaccines in early development for COVID-19, the flu and one being developed as a combination for both. The National Institute of Allergy and Infectious Diseases will study the covid candidate, OCU500, in a trial comparing administration via inhalation into the lungs and as a nasal spray.

The inhaled vaccines are based on a novel ChAd platform designed to reduce transmission and protect against new variants with long-term durability.

“If you look at the COVID landscape, the current vaccines are not durable,” Musunuri said.

An inhaled, rather than an injectable vaccine, could boost uptake among patients.

“Those are all the salient features which are required for people to be more compliant to take vaccinations,” he said.

A global scope

Musunuri’s career spans from small biotechs to big pharma, including nearly 15 years at Pfizer, where he was global operations team leader for the launch of the blockbuster pneumonia vaccine Prevnar 13.

In the world of Big Pharma, “you do so much, from start to finish,” he said, learning “how to take a product from inception all the way to the market, not just in the U.S. but global.”

He has global ambitions for Ocugen, too.

“Our mission is not just to take these cutting-edge technologies to market. We’re going to work even harder,” he said. “We really want to create market access to patients globally.”

We’re only halfway through February, and there’s already optimism that 2024 will bring an upturn for biotech, thanks to buzzy upcoming approval dates and an early crop of successful IPOs that gave the sector its best start since 2021, according to Bloomberg.

The industry is also coming off a year of historic firsts — from a vaccine for RSV and a drug that could slow Alzheimer’s disease, to the first CRISPR-based drug.

Drawing on forecasting reports from Evaluate and Citeline, company news and financial analysis, we’ve compiled a list of four biotechs to watch in 2024.

Alto Neuroscience 

The company’s focus: AI-derived biomarkers that develop precision medicines for the brain.

Why we’re watching: The past several months have been going gangbusters for Alto Neuroscience. The California-based company kicked off 2024 by closing an upsized IPO priced at $16 per share and finished the second half of 2023 with positive data in two phase 2 studies in post-traumatic stress disorder and major depressive disorder.

The backstory: In 2022, Alto CEO and co-founder Dr. Amit Etkin told PharmaVoice about the company’s goal to “have the first biomarker driven drug approval in psychiatry.” The fact that it’s using an AI platform to reach that goal makes the company even hotter. 

Alto’s biomarker-driven approach to matching patients with treatments scored its third positive phase 2 readout in December with positive data for ALTO-300 for major depressive disorder. Those results showed that significantly more patients with the identified biomarker achieved clinical response from ALTO-300 than patients without the biomarker. The company has initiated a phase 2b study evaluating ALTO-300 in 200 patients with MDD, which is expected to read out in the first half of 2025.

Verona Pharma

The company’s focus: Several chronic respiratory diseases with significant unmet medical needs, including COPD.

Why we’re watching: Verona’s lead candidate ensifentrine could be the first novel mechanism available for the maintenance treatment of COPD in more than a decade and is a “potential blockbuster,” according to Citeline.

The backstory: COPD affects 11.7 million adults in the U.S., making the potential market huge for ensifentrine, which has a PDUFA target date of June 26. The first-in-class drug candidate — it’s a dual inhibitor with both bronchodilator and anti-inflammatory effects — has a good safety profile, demonstrated improvements in lung function and substantially reduced the rate and risk of COPD exacerbations, according to trial data. In addition to COPD, Verona is trialing ensifentrine to treat non-cystic fibrosis bronchiectasis, cystic fibrosis and asthma. In January, Verona entered into a into debt financing facility of up to $400 million with Oxford Finance and Hercules Capital

Karuna Therapeutics

The company’s focus: Mental health conditions including schizophrenia and psychosis in patients with Alzheimer’s.

Why we’re watching: Within a month, Karuna announced two big pieces of news that would have a huge impact on how it performs in 2024. First was that its schizophrenia candidate KarXT has been assigned a PDUFA date of Sept. 26. The second was Bristol Myers Squibb struck a deal to acquire the company for $14 billion. 

The backstory: If approved, KarXT would end a decades-long wait for a new schizophrenia treatment. The drug, which has a novel mechanism of action, not only improved schizophrenia symptoms in clinical trials but “was not associated with”  the common and bothersome side effects in currently available antipsychotics, including weight gain, sleepiness and movement disorders, Karuna said. The company is also studying KarXT as an adjunctive therapy for schizophrenia and in psychosis in Alzheimer's disease. Both are in phase 3 trials. It also has several other candidates in its clinical and preclinical pipeline.

Madrigal Pharmaceuticals

The company’s focus: Novel therapeutics for nonalcoholic steatohepatitis (NASH).

Why we’re watching: Madrigal has what Citeline calls a “potential blockbuster” on its hands with resmetirom, a first-in-class treatment for NASH, an advanced kind of non-alcoholic fatty liver disease.

The backstory: If approved, resmetirom would become the first therapy OK’d in the U.S. for NASH, which is now the “fastest growing indication for liver transplantation in Western countries.” Not only was resmetirom effective in clinical trials, it was also safe and well tolerated. 

With a quickly approaching PDUFA date of March 14, Madrigal has spent the past several months shaking up its leadership team in preparation for resmetirom’s launch. In November, it tapped as its new chief commercial officer Sanofi veteran Carole Huntsman, who worked on the blockbuster launch of Dupixent. It also hired another former Sanofi leader, Bill Sibold, as CEO in September, and has made other significant executive hires since.

In focus with: Rob Hill, CEO, TAE Life Sciences

TAE Life Sciences’ vision: Research for a drug-device combo called boron neutron capture therapy died out in the U.S. decades ago. But scientists in Asia never gave up on its R&D, and now, California-based biotech TAE Life Sciences is aiming to develop a radiotherapy with modern particle accelerator technology and commence clinical trials globally.

Unlike traditional radiotherapy, which aims high doses of radiation at cancer cells, BNCT is potentially less damaging to other tissue in the body as it selectively kills cancer on the tumor cellular level.

Through a partnership with Neuboron Medical, TAE Life Sciences’ accelerator-based neutron beam system, a critical part of the NeuPex AB-BNCT system from Neuboron, has already treated 22 patients at Xiamen Humanity Hospital in China with its BNCT program, evaluating the safety and efficacy of the treatment after traditional cancer therapies were exhausted, according to Hill. Neuboron and TAE Life Sciences, also recently won approval to begin clinical trials in China. With its own accelerator-based BNCT system called Alphabeam, TAE Life Sciences plans to expand BNCT studies to Europe and the U.S. in the next few years.  

How it works: While undergoing BNCT, patients are infused with a non-toxic boron-10 drug that accumulates in tumor cells and then irradiated with neutrons that emit charged particles to destroy cancer cells. Ideally, the treatment spares more healthy cells than other forms of cancer radiation treatment by targeting the cells harboring boron. Plus, most patients receiving BNCT may only need one treatment.

“The idea behind the therapy is if you get enough boron into the tumor and you deliver it selectively to the tumor, you can then destroy the cancer cells from the inside out,” Hill said.

BNCT history: Throughout the decades of research into BNCT, scientists have found it particularly effective for certain recurrent or refractory cancers, such as head and neck cancers, glioblastoma and more. 

The treatment has gone through a handful of generations, beginning in the 1950s when scientists used repurposed nuclear reactors and a borax infusion to treat patients with high-grade glioma cancers. The treatments resulted in lethal toxicities to the patients, who didn’t survive past one year. However, research into BNCT kept moving forward, but by the late 1960s, the U.S. had lost interest in pursuing the treatment while programs continued in Japan and Taiwan. By the 1990s, the treatment was still being used in a “very experimental setting,” according to Hill. BNCT has once again gained momentum thanks to two breakthroughs: new boron compounds that selectively accumulate in tumor tissue and a neuron beam that replaces the use of a nuclear reactor. The neuron beams are delivered via particle accelerators that can be installed in hospitals, making the treatment much more realistic than bringing patients to already-existing nuclear reactors.

“The workflow is more mature and more modern,” Hill said. 

Why it matters: While TAE Life Sciences is working on expanding its BNCT program, “no patient has been treated with this technique for quite some time” outside of the clinical programs in Japan, Taiwan, China and Korea, Hill said. 

“Asia actually has led the way in the adoption of this technology, which is unusual for medical technology,” Hill said. “Usually most new medical advancements begin in the United States, Europe or Canada, and then tend to export from there to Asian markets. With this therapy, the reverse was true. Because of the clinical success in Japan, Asian doctors became more interested in this therapy faster than Western doctors.”

TAE Life Sciences has signed partnerships with five hospitals in Europe and two in the U.S. to begin more trials. The equipment needed for the trials is a significant buildout for hospitals, requiring about two years from the time of starting the project to treating patients. In addition, it’s expensive, Hill said, although he noted it is “competitive” with other approaches to treating cancer. And BNCT has the potential to treat more patients once it's up and running.

“Because you treat most patients only one time, every installation of this system can treat thousands of patients a year,” he said. “This is very different from other radiation machines that might be used to treat 300 or 400 patients a year, because they treat the patient 20 times, 30 times.”

As an alternative to other radiotherapies, the BNCT market could have legs, with one intelligence firm estimating it could reach about $2.2 billion by 2030.

In the pipeline: A critical component of the treatment is delivering boron to cancer cells, and TAE Life Sciences has a pipeline of targeted drugs to deliver non-toxic boron-10 to tumor cells even more selectively than current drugs. The company has three candidates in the preclinical stage that target glioblastoma, head and neck cancers and melanoma, as well as lung, colon and skin cancers. 

Hill said many oncologists want to move quickly to leverage the treatment for patients, but the biotech is facing the complexity of advancing a drug-device combo through regulatory channels, and pitching the approach to investors.

“One of the challenges about our approach is it's both the drug and the device,” Hill said. “The standard in everything about the industry, from financing companies to promoting new approaches and new technologies, [is that] there's this division between the device and the drug world. For us, we have to navigate both of those environments… so that complexity makes it a little harder for us to get the word out to people, makes it harder to get approval of the products, [and] makes it more difficult to attract investor capital.”

With more trials ahead, TAE Life Sciences is preparing for the long haul with the revival of BNCT in the hopes of offering an alternative radiotherapy to treat cancers. They expect the process to take several years.

“The pathway is we install the equipment at multiple hospitals in the United States, then we initiate clinical trials with that equipment,” Hill explained. “Our plan is to treat multiple different kinds of cancer in those clinical trials, and then once the clinical trials are complete, we submit to the FDA for approval. We think that process is going to take a couple of years, but we believe that by the end of the decade we're going to have multiple approved drugs in the United States and Europe in routine clinical use for treating a variety of different cancers.”