1、Biopharmaceutical Sector UpdateMarket Outlook for 2021January 11, 2021 2021. All rights reserved. Securities offered in the United States are offered through Torreya Capital LLC, Member FINRA/SIPC. In Europe such services are offered through Torreya Partners (Europe) LLP, which is authorized and reg
2、ulated by the UK Financial Conduct Authority.Table of ContentsAn Extraordinary Year: Top 10 Biopharma Events of 20204Biopharma Sector Outlook for 202120The Evolving World of Biotech Company Formation26Implications of the U.S. Election on the Biopharma Sector31Update on Covid-19, Capital Markets and
3、M&A Activity39About Torreya 50Key Topics in This UpdateWe have lived through an extraordinary year for the biopharmaceutical industry. Given excellent protection data on two COVID-19 vaccines we now appear to be at the beginning of the end of the COVID-19 pandemic. A “return to normalcy” appears pos
4、sible in 2021 despite a very challenging situation at present with the pandemic.3In this report we discuss three topics that are front of mind in our industry:#1Given the exceptional performance of the biopharma market in 2020, what does 2021 hold?#2It appears likely that with widespread vaccination
5、, the COVID-19 pandemic will recede in 2021. What does this imply for the biopharma sector?#3What are the implications of the U.S. political situation for the global biopharmaceutical sector?4An Extraordinary Year:Top 10 Biopharma Events of 2020COVID-19 Vaccines Portend a New Normal5The number of wo
6、rldwide cases of COVID-19 infection exceeds 2 million according to the World Health Organization.It is likely that the number of cases is substantially underreported given the lack of widespread testing.New case growth went negative in the week ended April 17th, 2020.The FDA has approved two COVID-1
7、9 vaccines as of Jan 2021 and more vaccine approvals are likely. High level of global coordination between regulators and industry a triumph for the industry.Jan 21Feb 21Mar 21Apr 21May 21June 21Jul 21Aug 21Sep 21Oct 21Nov 21Dec 21Sources: (1) Torreya estimates, (2) NY Times (https:/ 3 ResultsFDA Ap
8、provalEarly AvailabilityWidespread availabilityWe expect that much of the world will be able to access COVID-19 vaccines by Q3 2021. 5Event#1Vaccines are a Stunning Outcome for the Biopharma Sector and Involved Companies6November 30, 2020“Continuing the spate of stunning news about COVID-19 vaccines
9、, the biotech company Moderna announced the final results of the 30,000-person efficacy trial for its candidate in a press release today: Only 11 people who received two doses of the vaccine developed COVID-19 symptoms after being infected with the pandemic coronavirus, versus 185 symptomatic cases
10、in a placebo group. That is an efficacy of 94.1%, the company says, far above what many vaccine scientists were expecting just a few weeks ago. More impressive still, Modernascandidate had 100% efficacy against severe disease. There were zero such COVID-19 cases among those vaccinated, but 30 in the
11、 placebo group, including one death from the disease.”December 6, 2020“The worlds hopes have weighed heavily on the quest to develop coronavirus vaccines, with an especially intense focus on two front-runners: one from Moderna, the other from Pfizer and BioNTech. Both were a speedy but risky even co
12、ntroversial bet, based on a promising but still-experimental medical technology. Why, some scientists debated in the spring and summer, would the United States gamble on a type of vaccine that had never been deployed beyond clinical trials when the stakes were so high? Vaccine development typically
13、takes years, even decades. The progress of the last 11 months shifts the paradigm for whats possible, creating a new model for vaccine development and a toolset for a world that will have to fight more never-before-seen viruses in years to come. But the pandemic wasnt a sudden eureka moment it was a
14、 catalyst that helped ignite lines of research that had been moving forward for years, far outside the spotlight of a global crisis.”“The COVID-19 experience will almost certainly change the future of vaccine science, says Dan Barouch, director of the Center for Virology and Vaccine Research at Harv
15、ard Medical School in Boston, Massachusetts. “It shows how fast vaccine development can proceed when there is a true global emergency and sufficient resources,” he says. New ways of making vaccines, such as by using messenger RNA (mRNA), have been validated by the COVID-19 response, he adds. It has
16、shown that the development process can be accelerated substantially without compromising on safety.”Dec 18, 2020Unprecedented Access to Capital Built Balance Sheet Strength in Biotech7 7020406080100120201520162017201820192020Equity Capital Raised ($ Billions)Global Equity Raised in the Biopharma Sec
17、tor, 2015 2020($ Billions)Initial Public Offerings of EquityFollow-On EquityVenture EquitySources: CapitalIQ, Torreya internal databases and Crunchbase.By our calculations, biopharma companies raised $120.3 billion in equity in 2020, shattering the all-time previous record of $78.5 billion raised in
18、 2018.Venture (private) equity raised was $36.9 billion up 31% from the previous high year of 2018.Public follow-on equity raised $63.6 billion, up from $39.4 billion raised in 2018.IPO equity raised was $19.8 billion up from the previous high of $8.5 billion in 2015.An additional $5.8 billion was r
19、aised by healthcare SPACs in 2020.Event#2Biotech Balance Sheet Status8$42.5$48.4$77.1$49.9$60.4$91.3$0$20$40$60$80$100201820192020$ BillionsAggregate Balance Sheet Position of Top 500 Global Biotechs(By enterprise value, Jan 1, 2021)Net CashTotal Cash1351512143342713665767172602040608010012014016018
20、0200220240201820192020Number of Companies in Top 500 BiotechsAggregate Balance Sheet / Spend Behavior of Top 500 Global Biotechs(by enterprise value, Jan 1, 2021)Over $100mm in net cashOver $300mm in net cashBurning Over $100mm/yrBurning Over $200mm/yrTotal net cash on the balance sheets of the top
21、500 biotechs by value is at $77 billion, up from $48 billion, the year before. The number of biotechs with $100mm+ in net cash as of Q3 2020 was 214 versus 151 at year-end 2019. Spend is also up with 76 companies burning over $100mm a year versus 65 companies burning this much a year earlier. Not sh
22、own but also important, the number of companies with less than $30 million in net cash is down significantly from recent years.Source: CapitalIQ, Biotechs were defined as companies in the biopharma sector that do not yet have a commercial product.Acquisition of Alexion$39 billionMajor Branded Asset
23、DivestituresCOVID-19 vaccine agreement with OxfordAstraZeneca and Gilead Grow by Acquisition9 9We saw very little M&A activity in the first six months of 2020 and then activity picked up to essentially the same pace as was seen in 2019. Each year for the last five years has generally been dominated
24、by one or two companies who are using M&A to reshape their strategy. In 2019, AbbVie and BMS were both busy with major acquisitions; 2018 saw Takeda buy Shire and Sanofi buy Bioverativ etc. The largest users of M&A and creative structuring in 2020 were AstraZeneca and Gilead. By year-end 2020 AZ had
25、 established itself as one of the world most important players in COVID-19 vaccines and the world leader in immunology. By year-end, Gilead has positioned itself as a major world player in oncology for the first time. Gilead carried out numerous deals including four major oncology transactions.Event
26、#3Acquisition of Immunomedics$21 billionAcquisition of Myr GMBH for HDV1.15 billionAcquisition of Forty Seven for immuno-oncology$4.9 billionCollaboration with Arcus to develop IO drugsUp to $2 billionOption to acquire Tizona$300 millionThe effect of the Alexion acquisition is significant. The conse
27、nsus revenue estimate for Alexion in 2024 is $7.7bn. With brokers forecasting AZ at $44.8bn in revenue for 2024, the companys new revenue forecast for 2024 is $52.5bn. Only four other pharma companies are expected to exceed this amount in 2024. Without this deal, AZ would have been ranked #10 by rev
28、enue in 2024.Inflammasome Science and FcRn Biology Reshape Immunology10 10Traditionally, we have seen a very high level of focus in autoimmune disease therapeutics on targets like CD20, TNF-, IL-4, IL-17 and IL-23. These therapies work through B-cell, T-cell and eosoniphil modulation. The science in
29、 autoimmune research has been moving at lightning speed and in 2020 we saw a major upswell in corporate development and capital markets activity in two key new areas: (1) inflammasome and (2) FcRn.Event#4InflammasomeFcRnDefined: regulates the innate immune response going from detection of external t
30、hreats to the mounting of a counterattack. Key upstream targets include caspase-1, Gasdermin-D, MK2 and NLRP3. Key midstream targets include IL-1, IL-18 and IL-1. Downstream targets include IL-6, IL-33, Nf-B, the JAK/STAT system, adhesion molecules and, ultimately, activation of neutrophils and macr
31、ophages.M&A in 2021: Roche acquisition of Inflazome (NLRP3), Sep 2020, $450mmJ&J buy of Bermekimab (IL-1) from Xbiotech, Jan 2020, $750mm upfrontNovo Nordisk acquisition of Corvidia (IL-6), June 2020, $725mm upfrontKey Independent Biotechs:Defined: Fc Neonatal receptor has an IgG binding site which
32、facilitates the transcytosis of circulating antibodies. Blockage of the IgG binding site can treat any disease caused by autoantibodies. Because over 100 diseases are caused by autoantibodies there is broad utility and value to FcRn IgG blocking agents.M&A in 2021: AstraZeneca acquisition of Alexion
33、, $39 billionJ&J acquisition of Momenta, $6.5 billionKey Independent Biotechs:Current Status of the Inflammasome Pipeline 1111The innate immune system is complex and features multiple actors including macrophages, neutrophils and NK cells. A key pathway is the IL-1 pathway. This pathway operates thr
34、ough priming and activation. Once primed and activated in response to a foreign invader or tissue insult (e.g., smoking), the system generates the NRLP3 assembly which activate IL-1 and IL-18. These in turn transcribe numerous cytokines. Other key innate immune system pathways include adhesion molec
35、ules and the JAK/STAT pathway.NeutrophilsPreclinical Pre POCClinical POCApprovedJAK / STAT PathwayAdhesion MoleculesNf-kBCSL324Anti-G-CSFRReparixinCXCR1/2Ligands CXCR1/2JBI-1044PAD4 inhibitorCIT-013tACPAsBT051 MRP2/HXA3SAR443122 RIP 1 Kinase inhibitorR552RIP 1 Kinase inhibitorGSK-2982772RIP 1 Kinase
36、 inhibitorEtrolizumabA4b7/aEb7 integrinATL1102 A4b1 integrinASP5094A9 integrin antagonistMORF-057A5b7 integrinAJM347A4b7 integrinR835IRAK1/4GS-5718IRAK14CC-99677MK2 inhibitorBAY-1834845IRAK4InzomelicNLRP3 inhibitorRG6418NLRP3 inhibitorSomalixNLRP3 inhibitorIFM-2427NLRP3 inhibitorDVF890NLRP3 inhibito
37、rNX-13NLRX1NX-73NLRX1KT-474IRAK4INV-88MIF inhibitorNT-0167NLRP3 inhibitorBermekimabIL-1aFL-101IL-1B ItepekimabIL-33SpesolimabIL-136ZiltivekimabIL-6PF-06650833IRAK4QBECOMicrobiomeM5049TLR7/8 AntagonistGS-4875TPL2BIIB059BDCA2 antibodyTadeking alfaIL-18bp mAbATI-450MK2 ArcalystIL-1LP0145IL-22RG7880IL-2
38、2-FcTD-5202Pan-JAK inhibitorCEE321Pan-JAK inhibitorPX-69PLXDC2ARN-3261SIK2/3 inhibitorAllosteric TYK2TYK2SDC-1801TYK2 / JAK inhibitorARQ-255 JAK1 inhibitorAMT-126IL-22NemolizumabIL-31E-652IL-22RitlecitnibJAK/TeCinhibitorTD-1473JAK3 inhibitorPF-06651600JAK3 inhibitorAR1-252JAK1 PF-06480605TNFSF15PF-0
39、6826647TYk2ATI-502JAK1/3 inhibitor OST-122TYK2/JAK3PeficitinibJAK inhibitorDelgocitnibJAK inhibitorCTP-543JAK 1/2DeucravacitinibPsoriasisAbrocinitinibJAK1Pn-943A4b7 integrinIL-1 PathwayAmazon Gets Serious About Pharma12 12Event#5your margin is my opportunity”Jeff BezosCEO, AmazonAmazon Pharmacy laun
40、ched in November. The service allows customers to make pharmacy transactions through Amazon and receive unlimited, free, two-day deliveries if they have a Prime membership. Combined with its PillPack business, Amazon has finally gotten serious about entering the pharma sector.In the US, distributors
41、 and chain stores like CVS and Walmart routinely negotiate drug prices and have substantial market power and margins due to buying power. More generally, the global supply chain in pharma is both complex and inefficient.Amazon is likely to ultimately have higher market power due to its scale and is
42、also likely to be more efficient because of a sophisticated logistics operation. As a result, Amazon is likely to disrupt the US pharma market. Amazon is reportedly considering entry into other countries where its retail brand and infrastructure is already well established.Important Cancer Advances
43、are Made13 13Event#6Every year in the last decade has seen significant new advances in cancer treatments. Key developments in the 2017-2019 period have included Legends BCMA-directed CAR-t treatment, ADCs from Immunomedics and Daiichi-Sankyo, TIL therapy, data in KRAS G12C modulation, TRK fusion can
44、cers, RET and ROS1. This year, we would like to highlight several additional pieces of good news for patients in cancer care starting with Menin inhibitors:Menin / MLL Fusion BiologyMenin / MLL Fusion Program StatusMenin is a nuclear scaffold protein that participates in a multi-protein complex that
45、 interacts with several transcription factors, and, by doing so, epigenetically regulates gene transcription by coordinating chromatin remodeling. Human ML-2 leukemia (AML) cells lack a normal KMT2A (also known as MLL) gene and exclusively express a fusion protein that associates with menin in ML-2
46、cells. Nine oncogenic gene fusions have been identified in AML, accounting for over 90% of illegitimate MLL gene recombinations. These fusions in turn drive some cases of AML and are associated with a poor prognosis for the disease. All of these fusion proteins signal through menin. Inhibition of bi
47、nding between MLL and menincorrects the aberrant effect of menin/MLL fusions on a subset of AML patients.Syndax: SNDX-5613 occupies the MLL1 binding pocket on Menin. Syndaxreported early results of SNDX-5613 at AACR in June 2020 and noted impressive responses in some patients. Over half of patients
48、treated saw either a complete response (full resolution of their AML) or a partial response.Kura: Kuras KO-539 is an oral drug candidate targeting the menin-KMT2A/MLL interaction for treatment of genetically defined AML patients. Kura reported its first Phase 1 data on KO-539 at ASH in December 2020
49、. Like Syndax, Kura also observed multiple complete and partial response in AML patients that had exhibited advanced disease with MLL gene recombinations.Biomea Fusion: Biomea is taking an irreversible menin inhibitor into the clinic. This should lead to superior target binding. We await their resul
50、ts in 2021.Key Biotechs to Watch in 2021:Important Cancer Advances (continued)14 14Estrogen Receptor Knockout in Breast CancerApproximately 80% of all newly diagnosed cases of breast cancer are Estrogen Receptor alpha-positive (ER+). While approved treatments have produced some success in this patie
