Taking a company public is a deal with the devil. One does it to gain access to capital, and at the behest of early investors who want an exit. Thereafter, however, one has to deal with all sorts of complications and perverse incentives that make the process of developing therapies that much more challenging. A little of this topic is discussed in this article, in the context of longevity industry biotech companies. Only a few of these companies are public at the moment, but that will change as the field advances and broadens.
When we spoke to Aubrey de Grey recently, he highlighted the potential challenges facing public companies in the longevity field. Juvenescence portfolio company AgeX Therapeutics is publicly traded and Greg Bailey of Juvenesence points out that many of the macro challenges are the same as any other biotech business. "You can go months between positive news, and during that period of time, the shorts can play havoc with your stock. And the other thing is, you fundamentally always have to have two years of working capital. If you don't, the short sellers circle - knowing you're going to have to do a financing and that they'll be able to buy in when you do that financing at a 10 to 15% discount to market."
But the work conducted by companies working on anti-aging and regenerative therapies also adds another level of variability to the challenge. "Now you also need to be concerned about the fact that one of your competitor's trials fails and everybody says 'Ah, anti-aging is rubbish - all hype, no reality' and you get caught in the downdraft. And, unfortunately, there have been a number of downdrafts with public companies where their trials have not lived up to expectations."
With investors beginning to realise the scale of the Longevity market, Bailey feels that this sort of reaction will become less common, but that hasn't stopped Juvenescence from taking action to mitigate the risk by moving AgeX Therapeutics to a licencing model. "So now you can't short because we did a deal with a major Japanese company in January. We did a deal with UC Irvine that'll see us in clinical trials in 18 months from January. So now as a short investor you've got to worry that I sign a license tomorrow, and the stock jumps and you get caught offside."
Like almost everyone in the world at the moment, dealing with the impact of COVID-19 is a significant concern. However: "If Bank of America is right, and the fact that every government investor is going to be looking at boosting the immune system, which is definitely affected by aging, there's going to be an enormous amount of money available in this. So it's just about getting in front of the right people and them understanding there's going to be a company that is modifying aging that's going to be worth 100 billion dollars, sooner as opposed to later. You've just got to pick which model you think is the right business model to invest in to get your institution or entity correctly positioned."