In a surprise move, Flagship’s Valo Health and Khosla Ventures SPAC call off merger

David Berry, Valo Health CEO (Flagship Pioneering)

By most ac­counts, the biotech sec­tor has boomed through­out the Covid-19 pan­dem­ic, par­tic­u­lar­ly for com­pa­nies look­ing to go pub­lic through a tra­di­tion­al IPO or the ever-more-pop­u­lar SPAC route. But as one Flag­ship biotech found out, some of the lus­ter might be wear­ing off.

Va­lo Health and its SPAC part­ner, the first of Khosla Ven­tures’ three blank check com­pa­nies, called off their merg­er late Mon­day in a state­ment cit­ing on­ly the vague ‘cur­rent mar­ket con­di­tions’ as the rea­son. The ter­mi­na­tion came just one day be­fore a share­hold­er meet­ing where a vote on the merg­er was ex­pect­ed.

Ac­cord­ing to pre­pared state­ments from both sides, the de­ci­sion was made am­i­ca­bly. Khosla man­ag­ing di­rec­tor Samir Kaul de­scribed Va­lo as a ‘strong com­pa­ny’ and wished it fu­ture suc­cess, while Va­lo CEO David Berry not­ed the com­pa­ny re­mains in an ‘op­ti­mal po­si­tion of strength.’

The Khosla SPAC was the first of three launched by promi­nent biotech in­vestor Vin­od Khosla, who set up the trio of blank check com­pa­nies in Feb­ru­ary. Trad­ing un­der the tick­er $KVSA, it will con­tin­ue to seek out busi­ness part­ners be­fore the two-year dead­line ex­pires.

Com­bined, the SPACs had raised more than $1.2 bil­lion, with the ve­hi­cles con­tain­ing trusts of rough­ly $300 mil­lion, $400 mil­lion and $500 mil­lion, re­spec­tive­ly. The sec­ond SPAC merged with so­cial net­work­ing ser­vice Nextdoor, de­but­ing on the New York Stock Ex­change last week, while the third blank check com­pa­ny is yet to find a com­pan­ion.

Va­lo’s merg­er had been ex­pect­ed with the $300 mil­lion out­fit, though by the time the sides an­nounced the deal in June the trust had grown to $333 mil­lion. Ex­pect­ed to close this quar­ter, the agree­ment would have seen Va­lo net an ad­di­tion­al PIPE fi­nanc­ing of more than $200 mil­lion, fol­low­ing new in­vest­ments last week, and a $2.8 bil­lion val­u­a­tion.

Mon­day’s move blunts the biotech’s mo­men­tum fol­low­ing what had been a quick rise. Flag­ship un­veiled the com­pa­ny back in Sep­tem­ber 2020, mak­ing a bet that mar­ry­ing ar­ti­fi­cial in­tel­li­gence with cloud com­put­ing — in a bid to an­a­lyze mas­sive amounts of hu­man da­ta — would prove the next fron­tier in drug de­vel­op­ment.

Berry told End­points News in a pre­vi­ous in­ter­view he orig­i­nal­ly set out to pur­sue a tra­di­tion­al IPO for Va­lo, but changed course due to Khosla’s rep­u­ta­tion and his 20-year pro­fes­sion­al re­la­tion­ship with Kaul. It’s not yet clear whether Va­lo will go back to the tra­di­tion­al route, and End­points has reached out for com­ment.

The com­pa­ny had pre­vi­ous­ly se­cured a $100 mil­lion Se­ries A and a $300 mil­lion ex­tend­ed Se­ries B pri­or to June’s SPAC an­nounce­ment.

SPACs had proven ex­treme­ly pop­u­lar in­vest­ment tools in late 2020 and ear­ly 2021, with the mar­ket rais­ing more than $300 bil­lion in the first quar­ter across all sec­tors. Fol­low­ing a spring slow­down af­ter the SEC hint­ed it may crack down, ac­tiv­i­ty ramped back up over the sum­mer.

For years, paper-based processes and individual point solutions dominated the clinical research landscape, and patient participation in clinical trials was largely an in-person engagement. But when the COVID-19 pandemic took a stronghold, traditional clinical trial methods emerged as inadequate, putting clinical trials and the life sciences industry at a crossroads. Practically overnight, the industry had to rapidly shift to decentralized clinical trial methods, while maintaining data quality and regulatory compliance.

Al Sandrock (Biogen via Youtube)

Two years after Al Sandrock jumped from CMO to the top post in R&D — and just months after the hyper-controversial approval of the experimental Alzheimer’s drug aducanumab (Aduhelm) — Sandrock is planning to step out of his long career at Biogen.

Late Monday evening the big biotech put out word that Sandrock, a longtime fixture in the company after a 23-year stint, is hitting the exit.

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Following an oral explanation held at the November meeting of the EMA’s human medicines committee, Biogen received ‘a negative trend vote’ on its marketing application for its controversial Alzheimer’s drug aducanumab, the company said Wednesday morning.

The setback is just the latest in a string of negatives — from an anemic launch to rejection of coverage from the VA — since the surprising June approval of the drug by the FDA that led to multiple resignations from an advisory committee that unanimously rejected it.

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A few weeks after Jennifer Doudna introduced CRISPR/Cas9 genome editing to the world, one of her old students decided to take the central part of the biology-altering invention and kill it.

CRISPR/Cas9, as the name implies, is a two-part system: a string of letters called a guide RNA, that says where to cut the DNA. And an enzyme, Cas9, that does the cutting. Often compared to molecular scissors, it was the first system that allowed researchers to cut DNA with ease and precision, promising potential cures for genetic diseases such as sickle cell and cystic fibrosis.

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Albert Bourla, Pfizer CEO (AP Images)

If you thought Pfizer was raking it in with megablockbuster sales of its BioNTech-partnered Covid-19 vaccine — last projected at $36 billion for 2021 — think again.

As the pharma giant sends off its EUA submission for its antiviral pill to the FDA, the Washington Post, New York Times and others are reporting that the US government is planning a $5 billion contract to purchase 10 million courses of the treatment, dubbed Paxlovid.

A month after conceding a mid-stage failure, Roche is dropping the Covid-19 antiviral pill it was jointly developing with Atea.

The little biotech, which had received $350 million cash upfront from Roche last October and raised another $215 million earlier in the pandemic, said it has both the financial resources and talent to carry on with a planned Phase III trial and eventually steer the drug, AT527, to market. Roche had originally bought in to grab the ex-US rights.

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Catherine Stehman-Breen and Vic Meyer, Chroma CEO and CSO

A handful of the world’s most prominent gene editing-focused academics have been working for over a year on a new company built around a new approach for modifying DNA to treat disease. Known as Chroma Medicine, it launched on Wednesday with $125 million in early funding from Atlas, Newpath, Cormorant and several other VCs.

Chroma will focus on a markedly different way of modifying the genome than most of the gene editing biotechs that have arisen since CRISPR was pioneered nearly a decade ago. Instead of trying to erase or rewrite portions of a patient’s actual DNA — those As, Ts, Cs and Gs — Chroma will try to change the way that DNA is expressed in the cell.

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About a week after Pfizer asked regulators to expand its Covid-19 booster shot EUA to include all adults, the CDC’s Advisory Committee on Immunization Practices has scheduled a meeting to discuss the idea.

ACIP will meet this Friday, and is expected to give an official recommendation soon after, The Associated Press reported on Tuesday.

Pfizer and BioNTech’s booster shot is currently authorized for those 65 years and older, or at high-risk of a Covid infection, including health care workers and others with occupational hazards. Before deciding on those limitations, the FDA’s advisory committee on Vaccines and Related Biological Products (VRBPAC) roundly rejected Pfizer/BioNTech booster shots for all individuals older than 16 by a 16-2 vote.

Shao-Lee Lin, Acelyrin CEO

When Acelyrin closed its Series A late last year, it was met with little fanfare. The biotech had only two employees, the former R&D chief and CBO of Horizon Therapeutics, and didn’t even disclose the size of the raise. Westlake Village BioPartners, an LA-based VC firm and lead investor, proved the most noteworthy aspect of the announcement, having spawned from ex-Amgen R&D head Sean Harper and ex-Kleiner Perkins life sciences director Beth Seidenberg.

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