Covid-19 Pill Developer to Spend SPAC IPO Funds on Clinical Trial, Hiring

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Pardes Biosciences listed on Nasdaq late last month following a merger with a blank-check company

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The clinical-stage company, which is based in Carlsbad, Calif., listed on Nasdaq on December 27, following a merger with FS Development Corp. II, a special-purpose acquisition company sponsored by venture-capital firm ForeSight Capital. Pardes said it raised $199 million from SPAC’s trust account and $274 million in private investment in public equity from Foresight, investment manager RA Capital Management and biotech giant Gilead Sciences. Inc.,

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among others.

Pardes is one of several drug manufacturers along with Pfizer Inc.,

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Watertown, Mass.-based Enanta Pharmaceuticals Inc.

and Japanese drugmaker Shionogi & Co Ltd–who are developing oral antiviral pills against COVID-19. The US Food and Drug Administration last month approved Pfizer’s COVID-19 pill for use, making it the first drug that newly infected patients can take at home to treat the disease.

Chief Financial Officer Heidi Henson said Pardes’s funds would be earmarked for large-scale clinical trials and commercial production of the pill. The pill is being developed to treat anyone infected with COVID-19, vaccinated or not, against all known variants, the company said.

Pardes plans to enter the second phase of a clinical trial, in which she will test the safety and efficacy of her pill by mid-year, Ms Henson said. The company is meeting with contract research organizations that will manage the second phase, said the finance chief, who has been in this role for almost a year. “We’re still … trying to figure out what that bucket of costs looks like for us,” she said. Ms Henson said she expects FDA approval at the earliest by the end of this year.

Pardes also wants to use some of the money to grow its head count, specifically in clinical development and commercial manufacturing. The company is evaluating how many new employees will be hired from the 28 full-time employees it already has, Ms Henson said. “We’ve been running very lean and mean over the last 18 or so months, so it’s time to add some expertise as we continue to develop programs,” she said.

Pardes said it raised $52 million in January 2021 ahead of its listing in a single funding round from Foresight, venture-capital firm Khosla Ventures and GMF Capital, an investment-management platform.

Ms Henson said the company decided to go public to gain better access to funding in the public markets. He said the SPAC merger provided Pardes with as much funding as possible within the same time frame through a traditional IPO. “We received the term sheet from SPAC and it was great to pass it,” she said.

The company doesn’t generate revenue yet, but expects to do so once it receives regulatory approval for the pill. Foresight, which has invested about $44.4 million in Pardes, has said it expects the company to claim a share of the COVID-19 pill market, according to Jim Tanenbaum, chief executive officer of Foresight. “They have a lot of money to do with the programme,” Mr Tannenbaum said.

Michael Breen, director of infectious diseases at data and analytics firm GlobalData PLC, said pill-developers like Pardes will make profits with their products, but not as much as makers of vaccines against COVID-19. This is because the demand for the pills is expected to decline as the number of people who are unvaccinated continues to decline, he said. President Biden said last week that the number of unvaccinated adult Americans had fallen from 90 million to 35 million in the past six months.

According to Mr. Breen, the market for COVID-19 vaccines is estimated to be more than $50 billion globally.

Write [email protected] . on Mark Maurer

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