Star companies have fallen, microbial pharmaceutical in the end has no future?

In the heyday of innovative drug financing, as long as the clinical value is supported by sufficient data, the failure of the strategy is not enough to be fatal. Today's clinical trials are a bit of a hail Mary. Previously, Evelo tried to ease the financial pressure by laying off employees. In January 2023, Evelo cut 45% of its workforce, with further layoffs in the second quarter. But for innovative pharmaceutical companies, throttling belongs to the far water can not save the near fire.

External funding drying up

On the other hand, in the clinical trial stage, where capital needs are greatest, the two possible external financing channels are tightened at the same time, allowing microbial pharmaceutical companies to lose the opportunity for trial and error. In terms of equity financing, the total amount of money flowing to biotech has shrunk significantly. BioWorld data shows that since 2020, global investment and financing in the field of innovative drugs has cooled rapidly. From the perspective of total financing, the global innovative drug companies in 2022 absorbed a total of 60.8 billion US dollars in financing, compared with the 2020 high of 134.5 billion US dollars, less than half. Meanwhile, in the first half of 2023, the XBI index in the secondary market bucked the trend and fell during a period when the S&P 500 rose 15.9%. In the process, a large number of biotech startups, including microbial pharmaceutical companies, have received delisting warnings.

In June 2022, another microbial pharmaceutical star, 4D pharma, was delisted from the Nasdaq stock market. From the public information, 4D pharma has not made major mistakes, the clinical trial of the product in development is also progressing smoothly, and it is difficult to find other reasons for the decline in addition to financing difficulties. 4D pharma is a global leader in the development of living biotherapeutic drugs, based on the same principle of oral administration of a single bacterial strain to treat a wide range of diseases.

According to the data, 4D pharma has launched six clinical programs at the same time, They are the Phase I/II study of MRx0518 in combination with Corida ® (Pabolizumab) in the treatment of solid tumors, the Phase II clinical trial of MRx0518 in combination with BAVENCIO® (avelumab) in first-line maintenance therapy for urothelial cancer, the Phase I study of MRx0518 in neoadjuvant therapy for patients with solid tumors, and MRx0518 The Phase I study for the treatment of pancreatic cancer patients and the Phase I/II study of MRx-4DP0004 for asthma can be seen in the cash flow pressure.

Among them, in March 2022, just three months before delisting, the company's microbiome based investigational therapy MRx0518 in combination with anti-PD-1 antibody Keytruda reached the primary efficacy endpoint in a phase 1/2 clinical trial for the treatment of renal cell carcinoma. However, at a time when the decision-making threshold of investors has been raised a lot, such clinical progress seems to be difficult to attract sufficient external funding.

For biotech startups, licensing is undoubtedly an important source of funding. The early rise of microbial pharmaceuticals is also inseparable from the heavy layout of multinational pharmaceutical companies. However, in recent years, the enthusiasm of multinational pharmaceutical companies for microbial pharmaceuticals has declined significantly. According to stifel statistics, in 2023, the global pipeline authorization market maintained an almost consistent M&A rhythm with the previous year, but among the top three indications, skin and gastrointestinal diseases, which are the focus of microbial pharmaceutical companies, are not listed.

In fact, the attitude of multinational pharmaceutical companies on microbial pharmaceuticals is not only no longer radical, but has begun to retreat. In August 2022, after a thorough review of its product strategy, Takeda decided to terminate its partnership with Finch Therapeutics on FIN-524 and FIN-525. Shortly thereafter, Finch also terminated the Phase III clinical trial of its core product, CP101, as going concern risks became apparent.

In August 2022, three months after starting to lay off employees, Kaleido stopped all research and development after failing to find a suitable deal, and the Flagship microbial pharmaceutical company entered bankruptcy. However, more than half a year ago, Kaleido CEO Daniel Menichella also revealed to the media that it is expected to start a phase II study in ulcerative colitis in the first half of 2022.

Kaleido was founded in 2017 with $65 million in funding from Flagship and went public in 2019. The company has signed partnerships with J&J's Janssen and MD Anderson Cancer Center. In January 2022, Kaleido was revealed to have laid off employees and subsequently suspended the Phase II clinical trial of KB109. But this news comes just weeks after Janssen Biotech, a unit of Johnson & Johnson, expanded its research collaboration with Kaleido to pursue treatments for atopic, immune and metabolic diseases.

Without the loose external funding environment, the difficulty of commercializing a new drug is undoubtedly much greater.