Two major shoutouts to Stern IR clients this week!
- To Cara Therapeutics and Vifor Pharma on the U.S. FDA approval of KORSUVA™ (difelikefalin) injection for the treatment of moderate-to-severe pruritis in hemodialysis patients!
- To Sandra Glucksmann, CEO of Cedilla Therapeutics, who was recently named to the Forbes 50 Over 50!
We want to take a moment to remember Tadataka “Tachi” Yamada, a renowned physician-scientist, who passed away suddenly earlier this month. Tachi had a long and impactful career in the life sciences industry: he led the R&D organizations for Takeda and GSK, was a former president of the Bill & Melinda Gates Foundation Global Health Program, and, most recently, in his role as a Venture Partner at Frazier Life Sciences, co-founded and helped launch several Stern IR clients, including G2Bio, Passage Bio, and Scout Bio. Our colleagues at Stern IR are deeply grateful to Tachi for his partnership and staunch loyalty; our team will always remember him as a terrific friend and mentor, and we stand in awe of his lasting legacy and tremendous impact on the field of medicine.
NASDAQ’s Board Diversity Rule: Now Effective!
NASDAQ’s Board Diversity Rule, which was approved by the SEC on August 6, 2021, is a disclosure standard designed to encourage a minimum board diversity objective for companies and provide stakeholders with consistent comparable disclosures concerning a company’s current board composition. It requires companies listed on NASDAQ’s U.S. Exchange to (1) publicly disclose board-level diversity statistics using a standardized template; and (2) have to explain why they do not have at least two diverse directors. The rule also provides additional flexibility for Smaller Reporting Companies and Foreign Issuers, which can meet the diversity objective by including two female directors, and for all companies with five or fewer directors, which can meet the diversity objective by including one diverse director.
SPACs are exempt from the Board Diversity Rule.
Bill Ackman Gets Sued – with Potentially Far-Reaching Consequences
Last week, Pershing Square Tontine Holdings, Bill Ackman’s SPAC got sued in a case contending that the SPAC is not an operating company, but an investment company – like Ackman’s funds – which should be regulated by the Investment Company Act of 1940. It argues that Ackman’s SPAC has only ever invested in securities: for example, Ackman tried to negotiate a stock deal between his SPAC and Universal Music Group, under which his SPAC would have spent $4B to buy a 10% stake in the company. While this transaction was ultimately abandoned, the lawsuit suggests that Ackman’s decision to pursue this deal raises the question of whether his SPAC was really an investment company that was deliberately mischaracterized to avoid legal requirements to the detriment to investors.
If the suit succeeds, it could make professional investors more wary of SPACs and the attendant legal challenges, chilling the market as the case addresses underlying issues about the motivations of some SPAC sponsors. And its analysis of the meaning of investing in securities — part of any M.&A. deal — raises existential questions about the purpose and treatment of SPACs in general.
Enhancing Access to Financial Disclosure Data
The SEC recently announced open data enhancements to provide better access to financial statements and other disclosures made by publicly traded companies on its EDGAR system. For the first time, the SEC released APIs that aggregate financial statement data, making disclosures quicker and easier for developers and third-party services to use. The free APIs provide access to EDGAR submission history, as well as XBRL data from financial statements (including 10Ks, 10Qs, Forms 8-K, 20-F, 40-F and 6-K), and they are updated in real time throughout the day as EDGAR submissions are made public.
An Influx of New Funds Launch!
- Adam Koppel’s Bain Team Takes In $1.9B for Life Sciences: Adam Koppel, Bain Capital’s life sciences veteran, has closed his third life sciences-focused fund, to the tune of $1.9B. This fund will practice what Koppel calls “practical realism,” favoring a value approach to life science investing, as opposed to ultra-growth, higher risk opportunities. It will invest in therapeutics names across medical devices and drugs, with a preference for companies that already have proof-of-concept or go-to-market for label enabling data. That said, Koppel’s team have left the door open also for companies working with newer modalities – like cell and gene therapy – potentially investing up to ~6 months prior to human experience.
- Sands Capital Closes $560 Million Life Sciences Fund: Sands Capital closed its second life sciences fund, Sands Capital Life Sciences Pulse Fund II, L.P. (Pulse II), raising $560M. The fund will continue investing with an emphasis on private therapeutics, diagnostics and life sciences tools businesses.
- Former Capital Group Partner Craig Gordon is Prepping a Long-Bias Equity Hedge Fund: Carl Gordon, former Capital Group partner, has founded a firm called GordonMD Global Investments and is targeting a fourth quarter 2021 launch. GordonMD Global Investments will manage both a private fund and public fund, which will pursue a long-bias strategy focused on global biopharmaceutical stocks.
The overall markets rebounded this week after last week’s decline, with the NASDAQ, DJIA and S&P 500 closing up 3%, 1% and 2%, respectively. The VIX declined 13% this week, sitting at 18.8 as of market close on 8/26. Biotech markets had a very strong week, with the NBI, XBI and BTK increasing by 4%, 8% and 4%, respectively.
Continuing the August doldrums in financing activity, biotech public capital markets continued slower, with only a handful of IPOs and follow-ons pricing in recent weeks, including the following:
- IPOs: Dermata Therapeutics ($18M), Eliem Therapeutics ($80M)
- Follow-Ons: SIR Client Fulcrum Therapeutics ($144.2M), ProMIS Neurosciences ($20.1M), Sonnet BioTherapeutics ($30M)
- SPAC Announcement: SIR Client GreenLight Biosciences ($282M)
In addition, there were numerous private financings, including:
- Abogen (Series C, $700M), Atavistik Bio (Series A, $60M); Beckley Psytech (Series B, $80M); Cardior (Series B, €64M); DiCE Molecules (Series C, $60M); Elixiron Immunotherapeutics (Series A, $27M); EpiEndo Pharmaceuticals (Series A, €20M); GentiBio (Series A, $157M); Immunitas Therapeutics (Series B, $58M); Jnana Therapeutics (Series B, $50M); Neurogastrx (Series B, $60M); Ranok (Series B, $40M), SolasCure (Series A, £15M); Stern IR Client Vigil Neuro (Series B, $90M); Visus Therapeutics (Series A, $20M); Xalud Therapeutics (Series C, $30M); XtalPi (Series C, $318.8M)