TheChek News Flow

Emad Mostaque’s resignation from group valued at $1bn came after legal skirmishes and battles with investors

The future of StabilityAI, once seen as among the world’s most promising artificial intelligence start-ups, has been thrown into doubt following the chaotic departure of its founder and concern it will struggle to become profitable.

Emad Mostaque resigned last week as chief executive of the London-based group behind Stable Diffusion, an AI model that can create images through simple written prompts, with its app being downloaded more than 150mn times.

The three-year-old company was valued at $1bn in August 2022, following a $101mn funding round led by top US tech investors Coatue and Lightspeed Venture Partners. The deal put it in the vanguard of the generative AI revolution alongside groups such as OpenAI and Inflection.

Mostaque, an Oxford university-educated mathematician who is often described as a “visionary” by those who have worked with him, said he was leaving Stability to focus on a lofty goal of ensuring the technology will benefit humanity.

“The concentration of power in AI is bad for us all . . . I decided to step down to fix this at Stability & elsewhere,” he posted on X. Mostaque told the Financial Times that he retained his shares but was handing over voting control to other board members who would prioritise open source and the company.

However, others, including former executives and existing investors, describe Mostaque as an unreliable leader who had faced mounting pressure from Stability’s financial backers over a string of legal battles, rising costs and a failure to monetise its products.

The conflicting perspectives highlight how confusion had come to characterise Stability’s operations in recent months.

“Emad did not care at all about the commercial mission,” said one person close to Mostaque and Stability.

Mostaque described this assessment as “silly” and said that he had focused this year on “ramping revenue as we moved from early adopter to mass-enterprise adoption”.

Stability said it “develops and will continue to develop best-in-class generative AI models”.

Over recent weeks, Mostaque told multiple people that he was about to resign, including at this month’s Abundance360 conference in Los Angeles, according to people with knowledge of those discussions which were first reported by Forbes.

Stability’s board was shocked to hear that Mostaque had been announcing his exit before officially notifying them, according to one person familiar with the discussions. Mostaque said the board was aware of his intentions.

Stability has appointed chief operating officer Shan Shan Wong and chief technology officer Christian Laforte as interim co-chief executives.

Stability is seeking a permanent leader, looking for executives from the media and creative industries, which could result in the company being moved abroad, said two people familiar with the CEO search. The company has 170 employees, with about 80 AI researchers and engineers.

The new chief will have the job of achieving the company’s first profit. It has $8mn in costs a month with revenues of $5.4mn in February, up from about $3mn in November, according to three people familiar with Stability’s finances.

Last year, as rival AI start-ups were raising hundreds of millions of dollars, Stability tried to raise new funds at a significantly higher valuation but failed to attract enough interest, according to one person familiar with the process. Instead, the company raised about $80mn, including investment from Intel, according to people familiar with the contracts.

“A priced round was never attempted,” Mostaque said. “Over 100 investors have signed [non-disclosure agreements] awaiting data-room access for when that occurs.”

Venture capital backers have grown restive at the company’s seeming inability to cash in on the AI gold rush. Partners at Coatue had sought to oust Mostaque in recent months but had little power to remove him, according to two people with knowledge of the firm’s position. Coatue declined to comment.

According to people close to the situation, investors had also become concerned over his leadership following a Forbes report last year that he had exaggerated his academic and career credentials — allegations that Mostaque denies.

“The media attacks really damaged him and followed him and the company around,” said one person close to Stability. “It was all the growing pains of scaling a start-up, but now that he is no longer part of the conversation about the company, we can move on.”

Mostaque said he had addressed the allegations in his blog and that the “continuous media attacks did drag us down despite being patently false”.

“I stayed to get the company to the best models of every type, round out the research team and put it on the path to profitability. All the researchers would have left if I left when the attacks started, at which point we only had an image model and a mediocre language model,” he said.

The origins of the company are also contentious. Stability co-founder Cyrus Hodes is suing the company, claiming Mostaque duped him into selling stock potentially worth hundreds of millions of dollars for $100. Mostaque said it was a “specious lawsuit” and a “clear sign of seller regret”.

Work on Stable Diffusion, a model which set new standards in image generation, originated at German university LMU Munich and was supported by the team at generative AI start-up Runway ML, according to multiple people involved.

Stability donated computing resources which helped the Munich and Runway staffers train the models who named it Stable Diffusion in gratitude to their benefactor. But they added that Stability had little research input.

The company is also facing hefty legal costs, as it defends a case in the UK High Court brought against it by Getty Images, which claims its library of images was used to train Stable Diffusion. It is also defending lawsuits from artists who claim their copyright was used in models without consent.

Ed Newton-Rex, the former vice-president of audio, left the company in November, saying it was “exploitative” to use creative works without consent. Several executives have also left in recent months, including its general counsel, head of people operations, seven vice-presidents and a number of researchers.

Mostaque said: “Most of these were last year, in particular a big clean-up where a number were let go as they didn’t fit a fast-growing company.”

He added: “Some researchers left after I told them I was leaving, grateful they stayed so long and worked so hard despite being offered multiples of their pay by others.”

One investor in the company said: “The product is actually really special and differentiated. It was just poorly run with [Mostaque] at the helm. We are optimistic a new CEO can clean up.”

The $51.2 billion sports giant has seen burgeoning smaller competitors like Hoka and On chipping away at its dominant ranking.

When most Major League Baseball teams took the field Thursday for the start of their 2024 season in the U.S., many fans’ eyes might have been on more than just the strike zone. Whether in the stadiums, tuning in on TV, or viewing via social media, they also could have been peering closely at their favorite players to see if their uniform pants were transparent.

The sheer fashion trend all over the designer runways recently isn’t typically associated with professional male athletes, but it has been a swirling controversy since the start of spring training, and has put the league, Nike and Fanatics, the manufacturer of the uniforms, on the defensive.

While neither company took ownership of the controversy, for Nike, which updated the uniforms this season to be more stretchable, sweat-absorbent and breathable, it is just the latest in a string of challenges facing the $51.2 billion activewear behemoth, which marked its 50th anniversary last year and may be showing signs of its age.

Nike ended its longtime deals with Tiger Woods and has parted ways with other leading sponsored athletes, including pro tennis player Taylor Fritz. FC Barcelona terminated its contract with the company and Nike was also lambasted for its new soccer kit for the England team, which tweaked the colors of the St. George’s Cross, altering them from the traditional white and red combination to red, purple, blue and black for the Euro 2024 tournament that gets underway in June.

On the upside, though, Nike recently scored a major win by ousting its rival Adidas as the German Football Association’s official kit supplier for its national soccer teams starting in the 2027 season and running until 2034. Another bright spot is Iowa State basketball player Caitlin Clark, whose popularity has soared among women, men and children since Nike first signed her in 2022.

Of the recent missteps, Neil Saunders, managing director of retail at Global Data, pointed to the MLB uniform issue as being “the biggest potential challenge as they undermine Nike’s stances of being high-quality and having very reliable products.”

Although Nike still has an enviable position in the market — it remains by far the market leader in activewear — and is seen by most consumers as being “a leading sportswear company,” it is in danger of “losing its edge — especially as younger companies like On are seen as being more innovative and interesting,” Saunders contended. “There is a sense that Nike is on the back foot right now and it needs to work hard to get its mojo back. The latest stumbles do not help it to achieve this.”

While companies like On and Hoka are tiny compared to Nike, they are generating “fantastic growth and gaining ground with customers,” he said. “This is a threat to Nike. As the biggest player in the market, the danger for Nike is that it sees its share eroded by a lot of other players nibbling away. They don’t need to take big bites to have a material impact.”

Even as up-and-comers like On and Hoka nip at its heels, Nike has been dealing with mixed sales, including sluggish growth in China in the third quarter of fiscal 2024, its most recent. This has led to rumblings among analysts that, given the company’s woes, Nike chief executive officer John Donahoe’s days could be numbered. Donahoe joined Nike in January 2020 after stints at ServiceNow Inc. and PayPal Holdings. “Nike leadership is in the hot seat,” wrote Stifel analyst Jim Duffy, and a change at the top could help boost the stock price. Morgan Stanley analysts agreed that a CEO change could “reignite bullishness on the stock.”

But Donahoe is digging in his heels and taking steps to address the issues.

When sluggish second-quarter earnings were released at the end of last year, the company revealed $2 billion in cost-cutting measures over the next three years as a way to streamline the organization. This included layoffs — some 1,500 jobs, or 2 percent of the workforce was eliminated in February — simplifying product and increasing automation.

But these cuts could ultimately wind up hurting the company in the long run, according to Williams Trading analyst Sam Poser.

“Nike’s current C-suite leaders lack the levels of brand and Nike institutional knowledge that the leaders had in 2015,” wrote Poser in his pre-Chistmas notes that were titled “The Bain of Nike’s Existence,” (a double entendre about Donahoe’s Bain consulting and nonproduct-oriented experience). “Many seasoned Nike executives across many parts of the corporation were let go or have left the company on their own accord since 2020.” And some newer hires like chief technology officer Muge Erdirik Dogan, a former Amazon executive, lacked the brand-first knowhow, according to Poser.

Having issued a sell rating on Nike’s stock, Poser compared the company’s situation to breaking a bone — “the problems can happen very quickly, but the fixes always take longer. This feels like a version of that. Again, Nike’s not going away or anything. They’re a great big company,” he said.

Even Nike recognizes its challenges. On the company’s third-quarter earnings call last week, Donahoe said: “Looking at our business, Q3 performed in line with our expectations. That said, we know Nike is not performing at our potential.”

In the third quarter, the athletic giant said revenues grew marginally over last year to $12.4 billion, ahead of the $12.28 billion expected by analysts and ahead of prior guidance from the company. Net income was down 5 percent to $1.2 billion.

Changing tack

In a sign of the changing tides, the company is now backpedaling on some of the initiatives that it had instituted in the past, notably its Consumer Direct Acceleration strategy, which resulted in the brand de-emphasizing its wholesale channels to focus on direct-to-consumer. Donahoe acknowledged last week this strategy was in need of “some important adjustments.” That includes the reentry into retailers such as Macy’s and DSW and beefing up its presence in others such as Foot Locker.

In his call to analysts, Donahoe outlined four priorities: sharpen the focus on sport, offer a continuous flow of new product innovation, institute bolder brand and more distinctive marketing and lean in with wholesale partners to elevate the brand and grow the total marketplace. In addition, Heidi O’Neill and Craig Williams are now copresidents, and the company has accelerated the launch of several innovations by more than a year, according to Donahoe.

Donahoe said Nike’s cushioning platform, the Air franchise, is a double-digit billion-dollar business on its own — “larger than some Fortune 500 companies” — and delivers “performance benefits for athletes and defines the future of sportswear.” At the Olympics this summer, he predicted that Air will “drive major advancements in measurable performance benefits on the track, on the court and on the pitch.”

An Olympics innovation summit will be held by Nike in Paris in early April to unveil new Air products in football, basketball and track. And the company is expanding the Air lineup across its lifestyle footwear portfolio as well, he said, with the introduction of the Air Max Dn, that is “deeply rooted in youth culture.” That hit more than 4,000 stores globally on Air Max Day on March 26.

However, its introduction wasn’t quite what Nike had hoped, according to Poser. In notes released Wednesday, he said the Air Max Day and the Air Max Dn release “did not live up to the hype, and demand for Nike continues to wane.”

He said the Air Max DN has been deemed a “dud” by a number of retailers, and “is not the beginning of a Nike turnaround.” Poser said the men’s black/purple did sell well, as did the neon yellow, but the other colors were “non-starters, and we would not be surprised if the Air Max Dn gets marked down in stores within the next two months.”

Other analysts are also skeptical. Although they acknowledge that Nike is still the largest and most successful sports brand, they’re looking for more newness and impactful marketing for the company to regain its mojo.

“Nike has lost some of its brand heat,” said Craig Johnson, president of Customer Growth Partners, attributing that to its “lack of newness and innovation.” In contrast, Hoka and On are “both hot brands” and even the more-established companies such as Asics are “doing a better job on innovation.” In its third quarter, Hoka reported a sales jump of 22 percent to $429.3 million from the same period last year, and Swiss brand On Holdings continues to raise its profile in the U.S. with sales rising 22 percent to 447 million Swiss francs in its fourth quarter.

Even Lululemon is making inroads. Already a strong competitor to Nike with its apparel, the Vancouver-based company recently introduced men’s sneakers, and results on the product in the fourth quarter far exceeded expectations, according to CEO Calvin McDonald. Women’s footwear debuted in early 2022.

In addition, Johnson said, Nike has to “correct the issue of moving too far toward the direct-to-consumer business. That was the big bugaboo.” He said the company shouldn’t abandon DTC, or its flagships, “but overexpanding beyond major flagships” and not beefing up its presence at major department and specialty stores is a bad idea. “They need to restore a more-traditional balance,” he said.

Johnson said that consumers in the sports sector are “fairly fickle, driven by social media,” and Hoka and On are the brands with the most buzz today. In the past year, On increased its market share in the sports market to 2 percent from 1 percent the year before. Although still small in comparison to Nike, which has a 26 percent market share, and Adidas, with about 9 percent, On still has limited distribution and “so much runway” to expand its reach — and scarcity generally leads to higher demand from some sneakerheads.

“Nike lost half a step but a lot of kids still love them and they’re still the dominant brand,” Johnson said, so don’t count the company out just yet.

And he doesn’t expect Donahoe to be the fall guy. “If Nike does a transition, it won’t be sudden, like Under Armour,” he said of the surprise announcement earlier this month that the Baltimore-based UA was bringing back its founder, Kevin Plank, as CEO, replacing Stephanie Linnartz who had held the top spot for only two years.

“If Nike is in the same soft patch a year from now and they continue to lose market share, the board will have to do something,” he said.

Retail analyst and author Bruce Winder also weighed in: “Nike is no stranger to controversy and that in part helps define its brand. They push the envelope whether through design, social issues in advertising and other components of their go-to-market strategy. “

He added, “When you’re the queen of an industry, everyone is gunning for you — trying to dethrone you and grab the crown. They are used to that and somehow always come out on top.”

But Winder thinks that one day “we will see Nike fall from grace as newer generations will find alternative brands more attractive and Nike will be seen as a legacy brand, losing accessibility based on its premium pricing strategy in a world of lower disposable incomes for youth overall.”

Tom Nikic, senior vice president of equity research for apparel and footwear at Wedbush Securities, said, “The biggest issue we’ve seen has been the lack of product innovation, which is something we have seen from Hoka and On. Nike became so fixated on their DTC strategy and where they were selling their stuff, they lost focus on what they were selling. So other companies caught the attention of consumers by offering styles and colors they’d never seen before.”

Been Here Before

Of course, this is not the first time Nike has had to look over its shoulder at its competitors. Reebok, Adidas and even Under Armour have caught the attention of consumers at various times over the course of Nike’s half century-plus in business. “And in the past when they’ve gotten into situations like this, they’ve pulled themselves out with product innovation,” Nikic said.

In the last couple of years, however, business has not played out like Nike expected, Nikic said, pointing to significantly higher overhead expenses and a larger workforce. “They made a lot of investments, but the return hasn’t panned out,” he said. “Nike isn’t a company that succeeds because it cost-cuts itself to prosperity. They invest in product development and innovation and the DTC experience. So we hope this [$2 billion in cost cutting] is a one-time thing.”

The upcoming Olympic Games could be just the catalyst Nike needs, he said, as long as the company has new product innovation to market. “There are billions of eyes around the world on your brand and Nike will spent a lot on marketing, but success will depend on the quality of the product they have to sell to the consumer.”

Martin Lindstrom, an author and branding expert, believes Nike needs to take a more-localized view of its business in order to regain its popularity. “The idea of being a global brand is fading away,” he said. “We are in an existential crisis with depression and anxiety as high as we’ve ever seen in the U.S. People are looking for purpose and not for a brand to be everything to everyone. Consumers have changed 180 degrees and brands need to change 180 degrees too. They need to reconnect with the consumer, be more nimble and shift quickly.”

In contrast, Simeon Siegel, an analyst with BMO Capital Markets, offered what he calls a “contrary view” to other analysts and observers.

“Nike is an incredible company with global reach, and just like digitally native start-ups never killed the department stores, even if Nike’s brand heat is less than it was, they’re still selling a lot of sneakers. The demise of Nike has been exaggerated.”

Siegel pointed to the long history of competition that Nike has faced, such as Adidas poaching Kanye West and launching the Ultraboost, “but Nike still had its foundation. It doesn’t mean they catch every trend, or need to, to be relevant to the consumer. They still have $50 billion of revenue and every high-level endorser.”

Even though it lost Tiger Woods and other high-profile athletes, Siegel doesn’t think that ultimately makes a difference to Nike’s long-term success. “Outside of Jordan, they’re not dependent on any one person. Nike had Steph Curry at the beginning of his career. They’ve lost people before and survived.”

And with the Olympics now just months away, it could help jump-start Nike’s rebound. “The Olympics are good for all sport,” he said. “This is the ultimate stage and you’re going to see a lot of swooshes on people’s feet. It will show a business that has not lost its luster.”

A new book argues that the low cost of green energy is not always an asset

Are wind and solar simply bad business?

In a provocative new book, British academic Brett Christophers argues that free enterprise cannot deliver renewables at the rapid pace required to tackle climate change.

The Price is Wrong: Why Capitalism Won’t Save the Planet finds that while wind and solar can now produce cheap electricity, their low cost is not always an asset. In fact, Christophers argues, the rates at which renewables can now be supplied to the grid may actually depress profits and dampen private investment.

Christophers, a professor at Sweden’s Uppsala University, is the rare academic who can weave references to Italian radical Antonio Gramsci into fine-grained analysis of feed-in tariffs or offshore wind contracts. His deeply researched study concludes that wind and solar profits, across a wide variety of markets, are structurally lousy.

If renewables just aren’t a very attractive business, what then? Coverage of the book has suggested that state ownership could overcome the hurdles facing wind and solar. Yet, Christophers told me in an interview, the question of how governments could stimulate investment is far from solved.

Much of what afflicts renewables, he argues, dates back four decades to electricity market liberalisation, privatisation and, especially, “unbundling” — that is, the separation of generation, transmission and distribution of energy.

Power market restructuring was a global story. Tackled zealously by some rich countries, it was thrust on to poorer ones in the 1990s by the World Bank’s commitment to “aggressively pursue the commercialisation and corporatisation of, and private sector participation in, developing-country power sectors.” Christophers finds that even China, which did not set out to privatise or marketise its energy sector, “substantially unbundled”.

Since the 1980s, governments have been largely successful at fostering competition in energy generation, with measures such as requiring grid operators to let independent power producers plug in. Yet lower barriers to entry for generators have ground down profits and stifled investment.

What’s more, Christophers argues, renewables selling into wholesale markets are especially prone to price crashes due to their intermittency. When the wind blows and the sun shines, the grid is awash in electrons. Government subsidies intended to stimulate renewables investment may intensify this price “cannibalisation”.

The problem for Christophers is not only that profits are low but they are also uncertain. Revenue from selling into wholesale power markets is volatile. “Developers are often willing to take on that risk, but banks are very reluctant,” he said. Political risks, like the threat that subsidies will vanish, have a further chilling effect.

Don’t just subsidise, stabilise

The oil and gas sector runs through the book as a dramatic counterpoint. As a far more mature industry, it is more able to self-fund new investment out of operating cash flow.

Last year, oil majors rewarded shareholders with record profits. Christophers writes that their snub of wind and solar, at a time when companies such as BP and Shell had promised a strategic pivot and had the cash reserves to pull it off, may be the best evidence of renewables’ poor underlying returns.

The market structure of fossil fuels contains another lesson. “Probably the biggest factor in shaping relatively low profitability in renewables is that, unlike in oil and gas, there’s a market absence of monopoly or oligopoly power,” he told me. “The Opec cartel plays a very important role in providing investment confidence [for fossil energy].”

The US shale revolution of the 2010s, however, disrupted Opec’s stabilising role by bringing a huge new source of oil supply on to the market. Indeed, the story of shale would seem to cut against Christophers’ story about the importance of predictable profits. Shale was “long considered a cash furnace” by investors, as our former colleague Jamie Powell wrote.

Profits in fracked natural gas were uncertain and, for long intervals, low, yet investors repeatedly backed shale projects even when they had been burned. One reason may have been US policymakers’ commitment to achieving energy security.

What does Christophers make, then, of US President Joe Biden’s new energy investments, including the Inflation Reduction Act? Could this kindle animal spirits?

“The IRA is very important, but those tax credits subsidise; they don’t stabilise,” he said. Renewable developers have had to seek out tools to boost investor confidence and lock in more predictable returns, such as financial hedging instruments and corporate power purchase agreements (PPA).

Christophers points to two long-delayed onshore wind projects in Norway that struggled for years to borrow to finance construction, until they secured PPAs from major corporate energy buyers Norsk Hydro and Google. But corporate offtakers hardly solve the bigger problem of stabilising profit expectations, he argues. There are simply too few of them.

Big green state

Christophers hopes to see the public sector take a more active role in building or financing renewables since, in theory, the state could tolerate lower profits. But to date, he acknowledges, state-owned companies and public utilities in the US and Europe have not been leaders on decarbonisation.

“I think they have completely internalised the types of incentives we see in the private sector. My expectation is that if Labour gets into power and launches Great British Energy, it will operate in exactly the same way,” he said, referring to a Labour party plan for a new publicly owned clean energy company.

Still, Christophers wants to see more public ownership in rich countries. But he says it would take an enormous political effort to make the public sector bear lower returns for faster build.

In the developing world, Christophers thinks, the outlook is even grimmer. Flows of private capital for green projects have been weak, but Christophers is sceptical of proposals that developing countries turn their attention instead towards building a “green developmental state”.

“It’s kind of a western conceit to say the public sector should do it,” he said. “Where half of GDP is going to existing debt repayments, that’s not remotely possible.”

What’s more, even if macroeconomic risk in emerging markets were no longer seen as a problem and private-sector finance started flowing tomorrow, Christophers thinks, investors would still hit the same profit hurdles he has identified in richer economies.

“Governments in the Global South have been persuaded that all of this can be done cheaply. They’ve been persuaded you can have zero-subsidy renewables,” he said. “When developers turn around and say, actually we can’t do this without subsidy — understandably, they’re like, ‘What do you mean?’”

Just 379,000 babies were born in 2023, despite PM Giorgia Meloni’s efforts to reverse demographic decline

New births in Italy dropped 3.6 per cent last year to a new all-time low, highlighting the uphill battle facing Prime Minister Giorgia Meloni as she seeks to reverse the rapid ageing of the Italian population.  

Just 379,00 babies were born in Italy in 2023, down from the previous year’s record low of 393,000 — which Istat, the national statistical agency, had then noted was the fewest births since Italy’s unification in 1861.

Istat said data showed no sign of a thaw in Italy’s “demographic winter”, during which fertility rates have slid far below the replacement level of 2.1, as many Italian women choose to have few or no children.

In the data released on Friday, Istat said Italy’s total fertility rate — the average number of children per woman — fell to 1.2 in 2023, down from 1.24 the previous year, and close to the all-time low of 1.19 recorded in 1995.

Of the babies born in Italy in 2023, 13.3 per cent were the children of foreign citizens living in the country, down from 15 per cent a decade ago, Istat data shows.

Meloni, herself a mother of a single child, has said it is a priority for her government to increase the birth rate and encourage women to have more babies “for the simple reason that we want Italy to have a future again”.

But experts warn there is no quick fix to reversing Italy’s gloomy demographic decline, which they say will require long-term policies that address the real economic and social reasons for not having babies.

“There is a lot of rhetoric about the role of the mother, but if you don’t earn money, you can’t be a mother any more,” said Azzurra Rinaldi, director of the school of gender economics at Unitelma-Sapienza university in Rome. “You need to help women go to work, earn their money and then they can decide to be mothers.”

Italian women on average had their first child aged about 32, which reduces their child-bearing window, said Istat.

Fertility rates have fallen below the replacement level in many advanced economies, but Italy’s demographic crisis is one of the most acute in western Europe after decades of economic stagnation.

Istat said Italy now had more than 4.5mn people over the age of 80, while there were 4.4mn children under the age of 10.

Demographer Francesco Billari, rector of Milan’s Bocconi University, said that reversing the trend would “take time and stability of policies . . . which should not be seen as partisan”.

“It’s unlikely that a strong drive from a single government will radically change the way people see becoming a parent,” he said. “We are talking of the most long-term decisions that humans can take.” 

Meloni has continued a child allowance scheme introduced by the previous government in 2021 and slightly increased the monthly sums families receive for small children, but her rightwing government has also experimented with other incentives.

After coming to power in late 2022, the coalition government halved VAT on infant products such as baby formula and nappies, but it has since scrapped those tax cuts. This year, Italy has allocated €1bn in other measures aimed at supporting mothers, including temporarily making pension contributions on behalf of working women who have at least two young children.

But Maria Rita Testa, a demographer at Rome’s Luiss university, said policymakers needed to address other factors, including parents’ economic stability and access to affordable childcare, now in acutely short supply.

“They should try to tackle the problem of reconciliation of family and work tasks,” Testa said. 

Italy had planned to use some of the €200bn in EU recovery funds it receives to build new childcare facilities for 260,000 infants and pre-school aged children, but Rome has now cut that target to 160,000.

Yet even if Rome can make Italy — and its employers — more family-friendly, experts say that the country still faces formidable structural obstacles to stabilising its shrinking population.

Italy has just 11.4mn women of reproductive age — aged between 15 and 49 — down from the 13.8mn women in that bracket 20 years ago.

“We don’t have many potential mothers and fathers now because of past low fertility,” said Billari. “Even if there is a recovery in the number of children per couple, the potential couples are decreasing.” 

Aardvark Therapeutics’ drug has been shown in trials to suppress cravings in patients with rare genetic form of obesity

Aardvark Therapeutics, a US biotech group developing a weight loss pill, is planning to raise up to $200mn in an initial public offering as early as this summer, propelled by investor hype over anti-obesity medications, according to people familiar with the matter.

Aardvark’s lead drug — ARD-101 — has succeeded in suppressing hunger cravings in patients with Prader-Willi syndrome, a rare genetic form of obesity, in early-stage trials. It has shown the same promise among people with general obesity.

The San Diego-based biotech is close to completing a pre-IPO financing round in which it will raise between $75mn and $100mn from a group of blue-chip healthcare investors, according to three people familiar with the process.

Investors are excited by ARD-101, a so-called TAS2R agonist, because it does not just activate GLP-1, the gut hormone used in popular weight-loss drugs from Novo Nordisk and Eli Lilly, but it also harnesses CCK. This second hormone could limit widely reported side effects of nausea and wastage of lean muscle mass associated with GLP-1 drugs.

Big drugmakers are rushing to develop drugs that could compete in the anti-obesity market dominated by Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound. Analysts project the market could be worth $100bn by the end of the decade.

If ARD-101’s phase 3 trial is successful, it would also bring to market by 2026 a treatment for Prader-Willi syndrome, which causes weight gain since sufferers never feel full. The syndrome affects up to 20,000 people in the US.

A single Prader-Willi treatment could be priced at several hundred thousand dollars, according to analysts.

Aardvark is working with advisers from Cantor Fitzgerald on a possible public listing aimed at raising between $150mn and $200mn, the people said. An IPO could happen as early as late July as the company looks to cash in on investor excitement about the next generation of weight-loss drugs and a revival in the biotech IPO market.

A total of nine biotechs have gone public on US markets this quarter, raising $1.4bn between them. This is the highest level of activity since the last quarter of 2021 when the industry was still riding a wave of investor exuberance because of the Covid-19 pandemic, according to data from Dealogic.

Aardvark could be valued at approaching $2bn, the people said. Soleno Therapeutics, a rival biotech which is expected to file for US Food and Drug Administration approval for another treatment for Prader-Willi syndrome later this year, is currently valued at nearly $1.4bn. Aardvark was previously valued at nearly $120mn after its Series B round in 2021, according to PitchBook.

Aardvark plans to use the proceeds from its pre-IPO round to fund a late-stage clinical study into ARD-101’s efficacy on Prader-Willi patients and into patients withdrawing from GLP-1 drugs after weight loss. Typically, GLP-1 users regain all the weight they lost after discontinuing the treatment.

Aardvark and Cantor Fitzgerald declined to comment.

The Shanghai Stock Exchange stopped the review process on Friday

Agricultural giant Syngenta Group has withdrawn its application to list in Shanghai after a yearslong pursuit of an initial public offering.

The seed and pesticide producer decided to withdraw its IPO application on the Shanghai Stock Exchange after thorough consideration of its development strategy and the environment of the global industry, it said in a statement Friday.

“It will look to restart the listing process, either in China or a different global exchange, when the conditions are right. It will also explore alternate sources of funding,” Syngenta said.

The Chinese-owned company first filed for an IPO in 2021 but its listing has been delayed multiple times. The company last cited weak market conditions in November. It had hoped to raise 65 billion yuan ($8.99 billion) via a listing.

The Shanghai Stock Exchange said in a notice on Friday that it processed the company’s IPO application last May, but recently received a withdrawal application. The stock exchange stopped the review process on Friday.

Last May, the company said it would seek a listing on Shanghai’s main market after withdrawing its application to list on China’s Nasdaq-style STAR Market.

The scrapping of the IPO plans comes after Chinese stock markets have experienced volatility in recent months amid softer investor confidence over the world’s second-largest economy’s slowing growth and foreign investment outflows. The benchmark CSI300 fell 12% over the past 12 months and touched a five-year low before the Lunar New Year holiday last month.

Syngenta’s earnings have also been facing pressure. The group reported lower third-quarter sales across all business units. Revenue in the first nine months of 2023 fell 6% to $24.3 billion, while earnings before interest, taxes, depreciation, and amortization slid 22% to around $3.5 billion, dragged by high inventories and rising costs for customers hurt by a significantly weaker market in Brazil.

The Swiss company was acquired by Chinese state-owned company ChemChina for $43 billion in 2017.