Life Science Today 080 – Microsoft + Nuance, Roche + Recursion, Heron, 1E, Alvotech

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, antitrust AI, development AI, expanded approval, mega seeds, and biosimilar SPACs.

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. 

 
Update 

Thanks for your patients in our off week. We’re back with your regularly scheduled news. I’m excited to report we have some fun changes coming in 2022 that I think you’ll like so stay tuned for more in the coming weeks.

AntiTrust AI

Microsoft set out to acquire Nuance for a bumping $19.7B earlier this year. The deal was originally on track to close at the end of 2021 and had most of the required buy-in, including the United States Department of Justice and Nuance’s shareholders. However, the European Commission has stepped in with an antitrust probe. This probe could be business as usual, but it could be expanded on Dec 21. 

Nuance’s AI and language processing are heavily focused on the healthcare industry. Speech recognition for electronic medical records and natural language processing in a medical context are key evolving industries with potentially hundreds of billions of dollars in implications across multiple contexts, from the way doctors take notes, to the workflow within a clinical context. This isn’t AI to do doctors jobs, though there is a lot of assistance in fields like radiology. It’s actually about freeing them to engage with people instead of spending hours a day typing notes into a screen. Like most industry shifts the rise of voice capture won’t be instantaneous, but across a decade expect more systems to become highly sophisticated and standardized. This long game is why Microsoft sees $20B as a pretty good deal. The most likely outcome is a greenlight from the European Commission, however, there is no promise that it’ll arrive in time to close in 2021.

Roche Bets Big on Recursion AI

Speaking of AI, Roche is putting $150M upfront into a mega deal with Recursion to apply sophisticated AI to drug development pipelines. In the most basic terms, this is putting tons of data about the chemical and biological properties of an agent into a specialized computer system to accelerate the drug development pipeline. This could lead to as many as 40 new development programs with a value >$300M/program. No AI company has solved drug development yet, but there is consistent interest in how computers can model multiple stages of the development pipeline and accelerate the rate at which therapies can move to trials as well as what therapies best match what conditions. Unlike the AI applications of Nuance which have a clear iterative B2B business model, drug development AI is useful and necessary, but far less well defined in terms of the output. Basically it’s very easy to say, using this AI saved a doctor this much time in writing notes. It’s a much more difficult and lengthy game to show the downstream outcomes of “accelerating” drug development. Still Recursion is doing well to craft these partnerships as a solo company, compared to other targets in this space which have generalyl been scoped up. To me it suggests a confidence on their part in their ability to deliver value as a company, not just an acquisition target.

Heron Spreads Wings

Back in May, we noted the FDA approval of ZYNRELEF for post-operative surgical paint. The therapy from Heron provides significant relief for post-operative pain and decreases the need to utilize potentially addictive opioids, while beating the standard of care in performance. Last week they received expanded approval into a variety of additional surgical modalities. Expanded approvals don’t always matter, but for Heron this really opens up a much larger scale pipeline to 7 million eligible surgeries per year in the United States.

1E Mega Seed Round

An Israeli RNA targeting Biotech has launched with a stunning $120M seed round. Now biotech’s pull in $100M+ rounds on the regular. But two things make this unique. It is technically a seed round making it very early for this level of raise, and they are an Israeli company. There is a rich biotech and medical device industry in Israel, but this level of funding is rare to see early on. So what’s the interest? Well that’s the mystery. Their website suggests a pretty wide range of therapeutic targets at this time, but their technology seems to be centered around RNA-targeting therapies utilizing a proprietary design platform. The big take-away? The investing craze for all things RNA has made it to the Holy Land. 

Alvotech $2.25B SPAC

The Biosimilars developer Alvotech is going public through a SPAC supported by Oaktree Acquisitions Corp with a $2.25B value and $450M in net proceeds planned. We’ve talked about biosimilars a lot in the past and the market continues to grow. Alvotech’s lead candidate is a biosimilar to Humira, which as the best-selling drug of all time but is also a pretty common biosimilar target. Alvotech was on track to be a big winner in this space with a commercial-ready product but in September they saw an FDA delay on approval. You can bet AbbVie will resist as long as possible, they even tried a lawsuit that was chucked out in October. Regardless of the approval pipeline making biosimilar monoclonal antibodies is certainly not the same as say, a generic ibuprofen. From a development, QC, and approvals perspective there are significantly more complications. Until they have gone public, it’ll be tough to look under the hood and see just where Alvotech stands after investing more than $1B over the last decade. The funds of this SPAC should be used to round out their pipeline of biosimilars and begin commercialization after closing next year.  

Story References
Microsoft + Nuance
Roche + Recursion
Heron
1E
Alvotech 

Music by Luke Goodson


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.