Legend Biotech’s deal with Novartis is a reminder that biotech’s bear market has a few haves, and many have-nots

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Hello, everyone. Damian here with the latest twist in the Ozempic panic, polarizing data in genome editing, and another biotech in search of “strategic alternatives.”


The Ozempic panic might be waning
The foregone conclusion that GLP-1 medicines will dramatically reshape global business has led to dramatic changes in valuations in a disparate group of industries. And then, following this weekend, when Novo Nordisk finally presented detailed data from a key clinical trial, a strange thing happened: Medical devices stocks went up.

While the study, which tracked the long-term cardiovascular benefits of Wegovy for patients classified as overweight or obese, was a success, the details suggested Novo’s medicine had only a nominal effect on rates of nonfatal strokes and heart attacks. That, TD Cowen analyst Joshua Jennings wrote in a note to clients yesterday, suggests makers of stents and cardiovascular balloons aren’t about to get put out of business by GLP-1 treatments. Shares of Boston Scientific, Medtronic, and other medical device companies rose on the news.

The reaction to Novo’s data could be an emerging pattern in global markets, where the vague promise of GLP-1 ubiquity sets in motion an overreaction that is gradually normalized by the revelation that these medicines, while potent and potentially disruptive, are not going to change the world overnight.


Good data sometimes go over badly
To heart specialists, Verve Therapeutics was among the winners of the weekend’s big cardiology conference, presenting early data showing its one-time, genome-editing medicine could substantially lower patients’ bad cholesterol. To investors, those positive results weren’t quite positive enough, sending Verve’s share price down 40% yesterday.

The problem isn’t that Verve’s treatment, called Verve-101, doesn’t work, but rather that it might not be substantially better than a twice-a-year treatment already marketed by Novartis. Both medicines target PCSK9, a gene that plays a role in the production of bad cholesterol. Verve’s therapy, which edits the gene into irrelevance, should in theory be more powerful than Novartis’, which silences its expression. But the early data don’t suggest Verve’s treatment is a runaway success, which apparently posed problems for the company’s valuation.

In fairness to Verve, the company presented data from just 10 patients, only three of whom received the dose the Verve intends to take forward in further clinical trials. It was always framed as a trial that would test the very concept of using genome editing to reduce bad cholesterol, lighting the path to further development. The outsized stock reaction suggests Wall Street had expectations beyond reality.

Another beneficiary of the boom goes in search of ‘alternatives’
Theseus Pharmaceuticals went public back in 2021 at a nearly $1 billion valuation on the promise of finding targeted cancer therapies that could treat tumors that have evolved beyond the reach of available medicines. Two years and one biotech correction later, the company is laying off the majority of its staff and “exploring strategic alternatives.”

The news, disclosed last night, is that Theseus will reduce its headcount by about 70%, part with R&D chief William Shakespeare, and “consider a wide range of options with a focus on maximizing shareholder value,” corporate jargon for mounting a fire sale.

Theseus’ decision is a little odd in light of its balance sheet. The company’s cash reserves, totaling more than $225 million, are enough to support its operations into 2026, Theseus said in August. The decline of its stock price, down about 90% since that 2021 IPO, left the company with a deeply negative enterprise value, which apparently convinced management that its pipeline of cancer treatments might be better served in someone else’s hands.

Legend strikes a canny deal
Legend Biotech, the Chinese firm famed for outfoxing its larger rivals in CAR-T cancer treatment, is the rare biotech company that can deal from a position of strength in 2023.

Yesterday, Legend signed a deal with Novartis in which it gets $100 million up front and up to $1 billion more, plus royalties, in exchange for the rights to a CAR-T with potential in small-cell lung cancer and other tumor types. The agreement tasks Novartis with conducting and paying for all of the clinical development necessary to get the treatment to market, meaning Legend got paid to offload work on a pipeline treatment to a capable partner while retaining the rights to make money on the back end.

The agreement is a reminder that biotech’s bear market has made for a select few haves among a sea of have-nots. Legend’s stock price is up more than 30% on the year thanks largely to Carvikti, its approved and Johnson & Johnson-partnered CAR-T therapy, and the resulting good will allows the company to strike agreements its peers cannot.

More reads
• UnitedHealth pushed employees to follow an algorithm to cut off Medicare patients’ rehab care, STAT
• Drugmaker resumes making generic cancer therapy in shortage, Bloomberg
• Former MIT biologist, who lost positions after engaging in a prohibited sexual relationship, accepts new science position in Prague, Boston Globe
• Biotech companies tap Saudi Arabia for venture funding, Wall Street Journal