Biotech 'Death' List 2022: What Did They Do Wrong?

In honor of the creepy biotech market, Fierce Biotech recently launched a list of biotech companies to step into the graveyard in 2022.

The list consists of 7 members, namely Diffusion Pharmaceuticals, Exicure, Genocea, H3 Biomedicine, Kaleido, Orphazyme, and Bone.

Among them, Exicire and Diffusion Pharmaceuticals have not completely closed their breath, but because they have significantly curtailed their research and development work, half of their bodies are lying in a coffin, so they are "on the list".

In a way, the list is not just after-dinner talk in the market.

This is a list of biotechs that collapsed under the weight of financial turmoil and the dangers of clinical failure.

Some of the "experiences" behind the failures of these companies may serve as a warning for the industry as a whole.

 01 

Diffusion Pharmaceuticals – lacks the ability to "sell" itself

For Biotech, the ability to raise funds is also a reflection of strength. Biotech, which lacks the ability to finance, or does not "sell" itself, is undoubtedly more at risk. Diffusion Pharmaceuticals illustrates this.

Diffusion Pharmaceuticals is a biotech that develops "tissue hypoxia" drugs.

The company's TSC therapy, which can improve tissue oxygen supply under low oxygen conditions, has been clinically tested for a variety of indications such as pneumonia, anemia and solid tumors.

Dr. Robert Cobuzzi Jr, CEO of Diffusion Pharmaceuticals, said TSC could also be used as an adjuvant therapy for low-oxygen solid tumors such as glioblastoma multiforme. But only if the company can find a deal or other partner to help it weather the crisis.

Indeed, Diffusion Pharmaceuticals has been stretched thin for a long time. As of the end of September 2022, the company had only $25.85 million in cash on its books. In the cold winter, the company's market value fell to $10 million, and it basically lost the ability to refinance.

In October, Diffusion Pharmaceuticals announced that the company could enter into partnerships, licensing deals, divestitures or even a complete sale.

However, plans may also be mere rhetoric. At the moment, there is no timeline for the completion of these projects, and management has not promised when there will be new news.

 02 

Exicure – Lost to "internal control" companies

Whether scientists can run companies has always been the biggest question in the market. The core reason is that for a company, the core competitiveness includes not only research and development, but also management, internal control, etc. Exicure may be a company that has lost to "internal control".

Exicure is a biotech focused on innovative therapies for neurological diseases.

The biotech, born in Chicago, USA, was born with a golden spoon in its mouth and raised tens of millions of dollars from Bill Gates and others. After the completion of the IPO, the market value once approached $1 billion, becoming a "quasi-unicorn".

Unfortunately, Exicure often makes headlines for various mistakes. The biggest problem for the company is "internal control".

An internal investigation found that Exicure's former neuroscience group leader misreported trial data in the first nine months of 2021. This directly led Exicure to abandon the development of the core pipeline.

Since then, the company has been doomed, cutting pipelines and layoffs, and adjusting the direction of research and development.

After the setback, Exicure shifted its focus to the preclinical pain program SCN9A. However, in animal experiments, the researchers found that the candidate was unqualified, and the company immediately suspended all research and development work.

During this time, Exicure restructured internally and made layoffs to cut costs, adjust its business, and streamline its pipeline. Always stumbling through turmoil, Exicure is now worth just $5.61 million.

At the end of September, CBI purchased 3.4 million shares of the company's common stock for $5.4 million, which allowed Exicure to operate to this day.

03 

Genocea – Running out of money leads to the breakup

In the capital winter, Biotech's biggest challenge is funding. For most biotechs, pipeline development needs to be pushed forward to gain market acceptance, and lack of funding means that it is difficult to complete the above actions.

This will result in the fact that even if you think you are strong, it will not make the market realize that you are really strong. It is in this context that Genocea stepped into the biotech of the cemetery.

Genocea prides itself on its proprietary discovery platform, ATLAS. According to the company, the ATLAS platform can use the patient's own T cell immune response mechanism to identify the best antigen, enabling more personalized cancer immunotherapy.

Based on this platform, the company has developed a tumor vaccine and T cell therapy for specific neoantigens. It is with the story of technology platform + pipeline that Genocea once exceeded $1.4 billion in the secondary market.

Unfortunately, the company failed to prove itself, making it difficult to obtain refinancing. Since 2013, the company's cash on its books has been hovering in the tens of millions of dollars, Alexander.

After years of financial stress, Genocea officially announced its delisting on May 24 and laid off its remaining non-essential employees.

Genocea has been trying to hold on. In April 2022, Genocea announced that its investigational T cell therapy product GEN-011 demonstrated efficacy in phase I/IIa clinical trials, with 4 out of 5 patients in stable condition and plans to continue to increase the dose in the next phase of the study.

Just a few weeks later, however, Genocea announced a strategic review aimed at selling all or part of the company's assets and cutting 65 percent of its workforce.

The final outcome, as mentioned above, is to disperse.

04 

H3 Biomedicine – a microcosm of Big Pharma's downsizing

In recent years, Big Pharma has made frequent adjustments, and its subsidiaries have been cut countless times. H3 Biomedicine, which has closed its doors, is a microcosm of the downsizing of Big Pharma.

H3 Biomedicine, a subsidiary of Japanese pharmaceutical company Eisai, was founded in 2010 in Cambridge, Massachusetts, USA, focusing on the discovery and development of precision oncology treatments.

Since its inception in 2010, H3 has been an innovative discovery platform and development engine for key Eisai, and has so far submitted 4 INDs, signed 2 licensing agreements, and completed the clinical validation of concept for H3B-6545. ”

However, in recent years, multinational pharmaceutical companies have been constantly adjusting under market pressure, and Eisai is one of them. In July, Eisai decided to permanently close its oncology division, H3 Biomedicine, with an estimated 88 layoffs.

It reformed the global research and development (R&D) organization from the previous business group structure to the new research and development organization, DHBL. H3 Biomedicine's research operations will also be consolidated into the DHBL organization.

In this regard, market speculation may be due to investment costs exceeding expectations, changes in tumor line executives, personnel adjustments, and problems with R&D progress, or Eisai believes that the future market potential of Alzheimer's drugs is large, and it has prioritized resources.

 05 

Kaleido, sitting on the world's top resources, is also a failure

In the biotechnology industry, the big guy is a plus, but it is only a plus, and it does not represent a substantial benefit. Historically, examples of big guys losing abound. Kaleido is one such example.

Kaleido appears to be a metaphysical company whose mission is to "unlock the microbiome and change the world of medicine."

The Kaleido background is definitely tough enough, though. It is a star incubated by top investment institution Flagship Pioneering, and belongs to the same brother as Moderna.

Since its establishment, Kaleido has partnered with many bigwigs, including Robert Jenq, MD, MD, MD Anderson, a global leader, a collaboration with the Chronic Obstructive Pulmonary Disease Foundation, and Johnson & Johnson to explore the role of microbiome metabolic therapy in the prevention of atopic and immune diseases.

The company's Series C financing reached $101 million, and its market capitalization exceeded $1 billion after the IPO. However, due to the delay in producing results, investor interest declined, and the company gradually fell into crisis.

Against this backdrop, the company is even desperate.

Kaleido's core product KB109 is a targeted glycan for the treatment of multidrug-resistant bacterial infections that is intended to be used to alleviate and treat new coronary pneumonia without FDA approval.

In this regard, the FDA obviously did not accept it, and issued a warning letter to stop the company's absurd behavior. This also blocked Kaleido's last way of life.

In February, the Phase II clinical study of KB109 for COPD was terminated in the face of dwindling cash reserves.

In April, after failing to find a buyer and "running out" of funds, Kaleido officially announced that "it is impossible to continue operations, and the best option is to end the process in an orderly manner".

06 

Orphazyme – A star player who was dissuaded by the FDA

Small biotech companies often rely on one or two products, which makes them a high-risk, high-return investment type. Orphazyme is a "high-risk" case.

Orphazyme is a Danish biotech specialising in drug development for neurodegenerative diseases. Its core pipeline, arimoclomol, is designed to treat a rare progressive genetic disorder, Niemann-Pick disease type C.

The disease is used in very few people, with an estimated total of about 3000 patients worldwide; However, the commercialization prospects may not be low, and the company expects the treatment price of the therapy to be about 300,000-600,000 US dollars.

In this context, the peak market capitalization of Orphazyme's secondary market is close to $3 billion. Unfortunately, clinical data from arimoclomol show that the drug is not effective.

In the end, arimoclomol was dissuaded by the FDA and EMA. Affected by these negative news, Orphazyme's stock price continued to plummet, and its market value was only $30 million.

More tragically, the core pipeline failed, causing Orphazyme to fall into layoffs and eventually go bankrupt.

Orphazyme ended up being acquired by KemPharm for less than $13 million. Toutie's KemPharm said it will continue to advance plans for arimoclomol's listing application. Here, good luck to KemPharm.

07 

Bone – the stall is too big to "pull the egg"

For Biotech, more pipelines don't mean better. After all, it is doubtful that start-ups have the ability to push many pipelines, and the financial pressure alone is not small.

Bone Therapeutics may just be too big a stall and pull "eggs". Bone Therapeutics is a bone cell therapy company that specializes in addressing unmet medical needs in the field of orthopedics and bone disease.

According to the introduction, the company has a broad portfolio of innovative allogeneic cell therapy solutions covering a range of indications. According to its official website, the company has 5 pipelines.

For an unlisted biotech, this is a huge challenge.

In March 2022, after calming the pain, Bone Biologics decided to overhaul its entire product line, focusing all development resources on allogeneic cell therapies for high-risk tibial fractures.

Subsequently, Bone essentially fired the entire core executive team – CEO, CSO, CFO, CBO were swept away, and non-executive board members were suspended for pay.

It was previously disclosed that if Bone continues to operate normally, it will run out of money in the third quarter of this year.

Luckily, Bone was saved by French Biotech Medsenic, which reversed its merger in August. The two companies merged to BioSenic and will work on inflammatory and orthopedic therapies.

Bone's cell therapy is one of BioSenic's retained assets, and the results of its Phase IIb trial will be announced in the first half of 2023. In this deal, Bone is ultimately valued at just over $10 million.

The merger makes Bone not step foot in the graveyard in 2022, but that doesn't mean it won't in the future. With only $5.1 million in cash on hand, BioSenic is far from safe.