Last year began with a surge of hope as the first vaccine doses protecting against COVID-19 rolled out worldwide. Then, in July, that surge of hope was followed by a surge of worry when the Delta variant became the dominant strain of SARS-CoV-2 in the United States. Delta touched off new waves of cases, hospitalizations, and deaths. Toward the end of the year, the Omicron variant emerged, giving rise to even more worry, even while many Americans got booster shots.
The global pandemic dominated headlines and public health policy throughout 2021. Discouraging news about COVID-19’s harms seized attention, but so did heartening news about COVID-19-related R&D. This activity attracted resources at record levels. According to some experts, the figures for COVID-19-related R&D in 2021 will be approached or even surpassed by the corresponding figures for 2022.
Below are seven biopharma-related trends cited by experts and others with a stake in the industry, as articulated in interviews with GEN, or in reports and other public statements.
1. COVID-19: An expanded toolbox
Increased momentum in the development of new vaccines and drugs for COVID-19—the first trend listed in GEN’s Seven Biopharma Trends to Watch in 2021—will continue, especially now that the World Health Organization has identified Omicron as a “variant of concern.” Pfizer and BioNTech on December 8 said their approved COVID-19 vaccine showed effectiveness against Omicron after three doses. Other vaccine developers announced plans for new jabs targeting the variant.
Ongoing development will likely expand the toolbox of shots and treatments for the virus. As of the end of 2021, the Food and Drug Administration (FDA) had issued approvals or emergency use authorizations concerning three vaccines and six drugs. The approvals are for the vaccine Comirnaty (for the prevention of COVID-19 in individuals 16 years of age and older) and for the antiviral drug Veklury (for use in adult and pediatric patients 12 years of age and older and weighing at least 88 pounds for the treatment of COVID-19 requiring hospitalization).
2. mRNA: Beyond vaccines
Successful mRNA-based COVID-19 vaccines reaped billions for their developers during Q1–Q3 2021: $10.7 billion for Moderna and roughly $39 billion (combined) for Pfizer and BioNTech. More important, the vaccines showed that RNA could be used successfully on patients. That appeared to boost investor confidence. Several RNA-based drug developers attracted hundreds of millions in financing, paced by the “more than $700 million” Series C round announced in August by China-based Abogen Biosciences, and the $440 million Series B round announced the same month by Laronde.
3. Artificial intelligence: Attracting smart money
Capital is following the science in artificial intelligence (AI), enough to have spawned 2021’s potentially most valuable collaboration. In December, Roche and its Genentech subsidiary committed up to $12 billion to use Recursion’s operating system to advance therapies in 40 programs that include “key areas” of neuroscience and an undisclosed oncology indication.
“There are companies that create and use well-defined data assets that are so extensive in scope and high in quality that they can shed light on a dark area of biology or medicine,” Vikram Bajaj, PhD, co-founder and CEO of healthcare incubator Foresite Labs, told GEN. “These companies are going to attract a tremendous amount of capital.”
4. Cell and gene therapy: More capital and Phase III trials
According to the Alliance for Regenerative Medicine, gene therapy developers raised $6.4 billion and oversaw 376 gene therapy trials during the first half of 2021—surpassing the corresponding figures for the first half of 2020, a period in which $2.2 billion was raised and 359 industry and academic/government trials were in progress. The number of Phase III trials was 49 (up from 35); the number of Phase I trials was 101 (down from 109); and the number of Phase II trials was 226 (up from 215).
Big financings continued with several billion-dollar collaborations in the second half of 2021, such as Takeda Pharma’s partnerships with Poseida Therapeutics (up to $3.6 billion) and Selecta Biosciences (up to $1.124 billion), and Roche’s alliance with Shape Therapeutics (up to $3 billion) to develop next-generation tissue-specific adeno-associated viruses for gene therapies targeting Alzheimer’s disease, Parkinson’s disease, and rare diseases.
“The first products approved are not only showing really meaningful changes in patients’ lives, but also becoming commercial successes,” Kenneth C. Mills, founding president and CEO of Regenxbio, told GEN. “I’m equally excited that the capital, science, and plans that many companies have are showing that there’s a robust pipeline sitting behind some of those first approvals.”
5. Financing: Private, public deals set records
Investors showered biotechnology companies with a record-setting $24 billion in venture capital (VC) during the first three quarters of 2021, according to Evaluate Pharma, surpassing the nearly $20 billion raised in all of 2020. The 20% jump in capital well surpassed the 7% increase in the number of deals, which rose to 403 during Q1–Q3 2021, up from 378 a year earlier.
Public financings also saw record activity. As of December 10, 74 biotech companies priced shares in traditional initial public offerings (IPOs) during 2021, compared with 88 in 2020, according to IPOScoop.com, while Evercore ISI recorded a quadrupling of biotech special purpose acquisition company (SPAC) IPOs, to 16 in the first half of 2021 from 4 in the second half of 2020.
Biotech companies looking to go public in 2022 are likelier to do so via traditional IPOs since their share prices have risen faster than SPAC IPO companies—and because the U.S. Securities and Exchange Commission dampened investor enthusiasm for SPACs during 2021. In April, the SEC issued a guidance advising SPACs to account for equity warrants as debt, and in September it advised SPACs to treat “redeemable” shares as temporary or “mezzanine” equity.
“Trading for these SPAC companies is down post-closing, as opposed to IPOs,” said David C. Schwartz, a capital markets and corporate finance specialist who is a partner with the law firm Morgan Lewis & Bockius. “At least recent IPOs continue to trade up after closing initially. So, it looks like more of a long-term play for VCs and private equity to get out via the IPO as opposed to the SPAC.”
6. Regulation and politics: Processes and prices
Biopharma will be watching Washington in the coming months over several issues. One is whether Robert M. Califf, MD, MACC, will again serve as the FDA’s commissioner; another is whether the FDA will pursue changes to drug review or advisory committee processes following the agency’s controversial June approval of Biogen’s Alzheimer’s disease drug Aduhelm over objections from members of an FDA advisory committee.
With elections for the U.S. House of Representatives and one-third of the Senate set for November, lawmakers are expected to wrangle again over how to rein in rising prescription drug prices. The option most discussed in recent months, allowing Medicare to negotiate prices, is part of President Joe Biden’s multitrillion-dollar Build Back Better bill, whose fate at deadline was uncertain. Given the partisan divide and longstanding biopharma industry opposition, lawmakers are unlikely to come to consensus on containing prices during 2022.
7. Synthetic biology: Successes and struggles
Synthetic biology attracted $8.9 billion in venture funding during the first half of 2021, according to synbio stakeholder group SynBioBeta, and launched two successful initial public offerings: Zymergen’s $529.6 million traditional IPO and Ginkgo Bioworks’ $1.6+ billion SPAC deal.
But by August, Zymergen’s CEO resigned after a gloomy revenue forecast. Shares plunged 68%. And in November, two months after its IPO, Ginkgo acknowledged a Department of Justice “informal inquiry” into the company after a short seller attacked the company’s revenue reporting practices. Ginkgo said an investigation by its audit committee found that the short seller’s contention was “unfounded and that no restatement of Ginkgo’s financials was needed.”
Notwithstanding those challenges, Christina Smolke, PhD, co-founder and CEO of Antheia, said synthetic biology is on track to achieving full-scale manufacturing across diverse applications that include essential medicines, green chemicals, and foods like dairy and meat: “‘Synthetic biology’ is no longer just an academic enterprise. It has become a booming industry with real-world implications, and this trend will continue into 2022.”