The 37th biotech to hit the public markets this year has a potentially $1 billion deal with Merck & Co. Inc. (MRK, Financial).
Janux Therapeutics Inc. (JANX, Financial) stands to be handsomely rewarded by the pharma giant if two of its cancer therapies are successful. Each program includes undisclosed upfront and milestone payments in addition to royalties. Merck said it will be funding the research.
The company's shares got a warm reception last week, with its first trade at $34, double the initial public offering price of $17. The stock has since cooled off dramatically and can currently be bought for under $21.
Earlier in the year, Janux closed a $125 million Series B financing led by RA Capital Management and what CEO David Campbell, Ph.D., called “a world-class syndicate of life science investors.”
The company’s work is centered on a technology that selectively and safely directs T-cells to strike cancer. T-cell engagers, as they are called, are a promising type of immunotherapies that stick to tumors and marshall a patient's T-cells to destroy them. BioPharma Direct reported Janux's proprietary technology is designed to overcome the limits of current therapies.
Because of these limitations, so far only one T-cell therapy has reached the market – Amgen Inc.’s (AMGN, Financial) Blincyto leukemia, although several others are in the pipeline.
With so many biotechs going public, investors have to be wondering if these companies are still good investments. After all, a relatively small percentage of drugs in development eventually reach the market. Pharma research is a high-stakes game with only a few companies walking away from the table with an armful of chips.
It turns out that investing in biotech is no more of a gamble than putting money into non-biotechs, according to a January study published in PLOS ONE by a team of researchers at the Center for Integration of Science and Industry at Bentley University in Waltham, Massachusetts.
Biotech companies may not be profitable, but they still establish worth, said Dr. Fred Ledley, the center’s director and a professor in the departments of management and natural and applied science at Bentley.
“These companies are creating real value by doing what they do, by advancing the science, by advancing the pipeline, by establishing the foundation on which real, traditional value will be recognized at some point," he explained.
The study noted biotech sales were quite a bit below other new companies, but the difference might have been due to the former being bought by bigger companies before their products start generating considerable revenue.
Merck certainly believes in the value of small biotechs. In addition to the Janux deal, a few weeks ago it spent $2.8 billion to acquire VelosBio and its Covid-19 and cancer treatments and also inked a pact with Dragonfly Therapeutics on another oncology program. Earlier in the year, Merck fashioned a $2.5 billion alliance with Tahio and Astex for cancer antibodies and made a $4.2 billion pact with Seagen Inc. (SGEN, Financial) for breast cancer and other tumors.
