How 2 biotechs survived 2022’s rocky market—and why their CEOs see success on the horizon

After a brutal year of biotechs slashing programs and culling staff, the hottest topic at last week’s J.P. Morgan Healthcare conference was whether the frosty market is likely to thaw in 2023. But while some companies are counting every dollar, Fierce Biotech caught up with two CEOs of well-financed companies to find out how they are riding the rocky market waves and why they think they are well-positioned for the next few years.

As of May 2022, the prolonged bear market saw about 150 to 200 public biotechs holding onto less than a year’s worth of cash, according to a report from Hatteras Venture Partners. Of 670 small-cap biotechs, only about 200 had cash runways projected to extend through at least 2024, according to the same report. Two of those companies are Agios Pharmaceuticals and Cerevel Therapeutics. 

When asked how it felt being a publicly traded biotech last year, Agios CEO Brian Goff said it felt great, citing the company’s “incredibly strong” balance sheet, which clocked in at about a billion dollars at the end of 2022’s third quarter. The money is expected to allow Agios—which is developing cellular metabolism therapies for rare diseases—to carry through all its late-stage programs, or into 2026, whichever comes first. The CEO noted that a strong bank balance also comes with great responsibility.

“It's not like we're just walking around with a lot of cash,” Goff explained. “We take that capital allocation very seriously. But if what you're asking is: Does it feel good to not be at the mercy of raising equity constantly? Yeah, that feels great.”  

Goff—who joined Agios in August 2022, succeeding former CEO Jacqualyn Fouse, Ph.D.—said he took time off to look for his next role after serving as Alexion’s chief commercial and global operations officer. The industry veteran—who has also held positions across Johnson & Johnson, Novartis, Shire’s Baxalta, Baxter and Neurovance—eventually decided on Agios.

The biotech's rare disease focus drew Goff in, a feature the CEO believes makes the company nimble and able to look at other potential assets that might be off the radar for some competitors. Alongside five pivotal studies, Massachusetts-based Agios was also coming off a February 2022 FDA approval of Pyrukynd for treating hemolytic anemia in adults with pyruvate kinase deficiency—the first approved disease-modifying therapy for adults in the indication—and received European approval in November with Goff at the helm.  

“The really great part about our story is the consistency of data we've seen now not only across different stages but across three different anemias,” Goff said. The company is currently testing Pyrukynd, also called mitapivat, in a phase 3 trial for adults with thalassemia and a phase 2/3 study for adults with sickle cell disease, while also assessing the drug’s efficacy in pediatric patients.

“It allows us to treat successively larger patient populations,” Goff explained. “But it also adds to the de-risking element in the way people look at us as a company. As we build more data, each of the subsequent indications to come look more and more realized, so to speak.”       

But even Agios wasn't immune from the wave of layoffs and pipeline restructurings that battered the industry last year. The biotech let go of 50 employees and shuffled its R&D leadership team in May, right before Goff entered the picture. The changes unlocked between $40 million and $50 million in cost savings. That spring also saw Agios “remove the non-validated portion” of its pipeline, Goff said, adding that the move was made to prioritize assets that “had a meaningful pathway forward.” So what sets Agios apart from its biotech peers who are struggling to stay afloat? 

“I think companies that are successful stay dynamic,” Goff said, citing Agios’ historical flexibility. After developing cancer drug Tibsovo, the company sold off its oncology arm to Servier for $1.8 billion in 2021 and pivoted toward rare diseases. 

“You have to be strategically bold to make the changes when they're needed,” Goff said, noting that it’s equally as important to make sure “you really take care of the way that people are treated through those transitions.”  

Goff also keeps an ear tuned to what the emerging talent recruited at Agios think about the biotech's direction, arguing that “modern companies need to embrace the fact that the lines are blurred between the purpose of the company, the real experience of the individual and their own personal life.”

The dynamism required to succeed also means that employees are the first to receive information regarding a company change.

“We've spent a lot of time and effort involving our employees and the ‘why’ of where we are, where we're headed and what we need to prepare for,” said Goff.

Keeping your employees onboard by actively communicating with them is also important at Pfizer spinout Cerevel. The neuroscience-focused biotech has grown its workforce from a team of 50 in 2019 to just over 300 at the start of this year.  

“The company was barely six months old and we commissioned work on what our values would be, what kind of culture we want,” CEO Tony Coles, M.D., told Fierce.

Coles believes that the early investment in the company’s ethos has helped guide the biotech’s hiring processes.

“I think people look at the fact that we were intentional about the kind of culture we wanted to build, and that's been attractive,” the CEO explained. “While there has been a lot of fluctuation in the job market, I think companies that have a clear brand—either culture or the value proposition of the employment opportunity—will do better and have done better.”

The biotech—which is focused on neurological diseases including Parkinson’s, epilepsy and schizophrenia—had a balance sheet with just over a billion dollars at the end of last year’s third quarter, money anticipated to carry the company into 2025. Cerevel went public two years ago and has raised $1.4 billion in total since its launch four years ago.  

“We have, in a sense, an embarrassment of riches,” Coles said. “Those riches include largely the breadth of the portfolio. Given that we have a number of things to push forward in development—I think that's been of great interest to a lot of investors.”

Coles suggests that the Massachusetts-based biotech’s wide-ranging portfolio offers “the opportunity to be the premier neuroscience company.” He cites the high prevalence of patients with Alzheimer’s disease who also suffer from neuropsychiatric symptoms (97%) and have psychosis associated with the disease (40%). The company believes this provides ideal market conditions for its drug emraclidine. The muscarinic M4 selective positive allosteric modulator is currently being assessed in a phase 2 trial in patients with schizophrenia who experience psychosis.

Last month, safety data from a phase 1b study validated that the drug doesn’t raise blood pressure—a concern for patients who may require chronic dosing—and the company is now focused on an efficacy readout from the trial set for the first half of 2024. The biotech is hoping to position the therapy as a new standard of care that does not come with debilitating side effects due to blocking dopamine receptors.

That being said, the company faces some stiff competition in the form of Karuna Therapeutics, which is also going after psychosis tied to schizophrenia or Alzheimer’s with its late-stage asset KarXT. The oral, investigational M1/M4-preferring muscarinic agonist is currently being tested in several phase 3 trials, placing Karuna a step closer to crossing the finish line to market than Cerevel if successful. 

While opportunity appears abundant for Cerevel, the company still has much to prove. All of the biotech’s assets are currently in development, including several preclinical programs and four other clinical-stage therapeutic candidates beyond emraclidine.

Ultimately, both CEOs believe 2023 will be a year full of important milestones further validating their pipelines and companies.

“Mainly, 2023 is a big setup for some really great events coming in 2024,” Agios’ Goff said.

“I think it's really just nose to the grindstone and just getting the work done,” Cerevel’s Cole explained. “If we do that, and if we're judicious and disciplined in our spending, I think 2023 will be a very successful year.”