The blowout NFP report last week put the brakes on an additional 50 bp Fed cut in November in favor of a standard 25 bp. In tandem, the 10-year yield traded above 4% for the first time since early August. Geopolitical tensions in the Mideast and Ukraine persist while the US presidential election remain a wildcard. The S&P Select Biotech Index ticked down to the 100-day moving average as volatility comes back off recent lows.
M&A:
The trend for pharma doing deals for Chinese assets continues with AstraZeneca (AZN) licensing an oral, small molecule pre-clinical cardio drug targeting Lp(a) for $100 million upfront and up to $1.92 billion for further development and commercialization milestones plus royalties from CPSC of China.
DRI Healthcare Trust (DHT.UT-CA) announced the purchase of rights to future license fees and other payments from the sale of Casgevy from Editas Medicine (EDIT) for $57 million. Analysts estimate DRI may achieve a 2-3x return form the deal.
Regulatory:
Exact Sciences (EXAS) reported FDA approved Cologuard Plus for colorectal cancer screening.
Sagimet Biosciences (SGMT) announced receipt of FDA Breakthrough Therapy Designation for fat synthesis inhibitor Denifanstat in MASH.
Clinical:
Scholar Rock (SRRK) reported the combined dose groups for myostatin antibody Apitegromab met the primary endpoint in the Phase 3 SAPPHIRE trial in SMA patients. Most of the treatment effect was attributed to the lower dose group and the company noted both dose groups showed similar levels of target engagement. Shares rallied >300% with short interest was upwards of 25% of float going into the data.
Shattuck Labs (STTK) announced Death Receptor 3 (DR3) antagonist SL-235 development will be discontinued after an interim analysis in hematologic malignancy patients showed a modest impact on overall survival. STTK will undergo a 40% workforce reduction and shift focus to bring forward a DR3 antibody in autoimmune indications. Shares fell ~40%.
Corporate Updates and Earnings:
Activist investor Starboard Value took a $1 billion equity stake in Pfizer (PFE) and is seeking a turnaround.
Culling the Herd:
Verrica Pharmaceuticals (VRCA) announced a restructuring of its commercial operations and a headcount reduction that will cut expenses by 50%. Th stock traded down ~20% to below $50 million market capitalization, down from ~$400 million in 2Q 2024 as it appears more cash will be required to reach breakeven. VRCA's paid in capital was ~$250 million as of YE 2023.
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