Life Science Today 076 – Roche – Novartis, Alphabet, Pfizer, Parthenon, Antios, Mission Bio, Section 32
Originally Published as The Niche Podcast
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, Roche and Novartis part ways, Alphabet likes AI, Pfizer 89%, Series A, B, and the money that gets you there.
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.
Roche and Novartis Say Goodbye
Between 2001 and 2003 Novartis acquired $5B worth of Roche stock, eventually coming to own 33% of their neighboring company. At the time Novartis framed the stocks as a long-term value bid. And they were right. It was. Over the years Roche has grown to a massive company that raking in 10s of billions in revenue. Now, Novartis has decided it’s time to part ways with their Roche shares at a price tag of $20.7B. This is a major repositioning for Novartis and the market.
Both companies have competing opportunities and separating financial entanglement should free them both to maneuver into more advantageous market positions without risking hurting their own revenue stream. For Roche, it’s obviously a massive capital expenditure and that may set them back, depending on how they plan to fund the stock re-acquisition, but the long-term benefits are likely there. For Novartis, I expect to see them making several acquisitions and other investments with the $20B. If history shows anything, Novartis likely already has a number of big deals looming in the next 3-6 months and this is just a portion of a much larger re-adjustment.
After nearly 2 decades of close entanglement it’ll be fascinating to see how the market shifts as these two giants step apart.
Alphabet Betting on AI (No Surprise)
Major tech companies have been making billion-dollar flirtations with healthcare, clinical research, and pharma for a number of years. Each new initiative is rife with amazing opportunity to accelerate and transform, but most have ended with sputters and fizzles. Alphabet has decided to try a different market target, this time, early in the development pipeline.
One Alphabet AI-driven startup is birthing another to tackle drug discovery. DeepMind showed the can tackle the insane complexities of predicting how proteins might fold. This has big potential value and how now spawned Isomorphic Labs to utilize AI and chase down a potential business in AI-driven drug development.
The idea of using AI in small molecule prediction is not new, we’ve specifically noted some examples by Roivant (Episode 036) earlier this year. What’s interesting is that Isomorphic didn’t say they want to develop small molecules, instead this was positioned as a tech development that could then be sold to companies who actually develop small molecules. That at least sounds like a more tech-company business model. I don’t work enough with the early end of small molecule development to make a prediction on how hungry pharma and biotech companies will be for this product, but by being inside Google’s mothership they probably can’t go through the normal grow and get acquired cycle, placing some limitations on where this will go as a business. I’m not sure what this means for their long-term potential value. It will certainly be really smart people doing really smart stuff. The question is if it will see the light of day.
Pfizer’s New COVID19 Therapy
More good news this week for the treatment of COVID19. Pfizer’s anti-viral COVID19 therapy being sold as Paxlovid is seeking emergency use authorization after interim results from a phase II/III clinical trial showed an 89% reduction in hospitalization or death when taken within three days of symptom onset. If approved, the high efficacy therapy with low reported side effects will be competing against Merck’s molunpiravir, which was approved in the EU this week. All of this is good news for the fight against COVID19.
Series A, Series B
Parthenon Therapeutics has raised a $65M series A to develop novel oncology therapies. Their specific target is attempting to reprogram the microenvironment around tumors. The core idea here is if you can break apart the collagen barriers around some cancers, you then allow natural immune infiltration and targeting of mutated cells. This provides opportunities to create a therapy or a therapy-aid to increase impact. Obviously, at this stage of development they’ve just got a dream in their heart, and $65M in the bank.
Antios Therapeutics has raised $75M in a series B-1. This follows the $96M series B they raised back in April. All of this is going to fund their once-daily HBV therapy. Perhaps what is most interesting about this raise is that Antios Product is actually a prodrug of clevudine monophosphate. This is not surprising because prodrugs are rare, but because they rarely see the kind of sequential capital raises present in the biotech startup space for mainline therapies. With this very early stage, time will tell if Antios vision can be maintained.
$1B In New VC Money
Speaking of maintaining ventures. Much of the current market advancement relies on the presence of VC drivers. This last week, two large funds made additional raises. First, Mission Bio doubled their last raise, bringing in $275M to focus on early-stage life sciences. Section 32 has also raised a whopping $740M in a forth fund which will include investments into biotech and life science companies along with other segments of the market. Section 32 was part of Parthenon’s series A and I expect to see them making a range of dispersed bets across the space in the next 12-18 months.
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Story References
Roche - Novartis
Alphabet
Pfizer
Parthenon
Antios
Mission Bio
Section 32
Music by Luke Goodson
https://www.soundcloud.com/lukegoodson
About the Show
The Niche Podcast brings you interviews with industry experts and top stories from last week in biotech, pharma, clinical research, and the life science industries. You can expect highlights about new technologies, biotech and pharmaceutical mergers and acquisitions, news about the moves of venture capital and private equity, and how the stock market responds to IPOs. The Niche also tries to highlight trends around clinical research, including the evolving patterns that determine how drugs and therapies are developed, move through clinical trials, and become approved by regulatory agencies. It’s news, with a dash of perspective, focused on these Niche industries.