TheChek News Flow

Verge says ALS therapy is one of the first to be developed by a tech-enabled platform

A biotech backed by Merck, Eli Lilly and private equity group BlackRock says it has begun one of the first clinical trials in humans of a drug discovered using artificial intelligence to analyse a vast database of brain tissue.

Verge Genomics, which was founded by Alice Zhang, a 33-year-old former neuroscience doctoral student at University of California, told the Financial Times that it has dosed its first patient with a novel therapy named VRG50635 to target ALS, a neurodegenerative disease for which there is no known cure.

The San Francisco-based company is one of a new generation of biotechs using AI technology in drug discovery, a fast-growing sector that is attracting billions of dollars in venture capital despite a crash in valuations across the sector.

AI platforms can crunch vast amounts of data to rapidly identify drug targets — proteins in the body associated with particular diseases — and molecules that can be made into medicines. Experts say the technology can slash the time it takes a drug to go from initial discovery to approval, cut the costs of development and reduce the high failure rate in clinical trials.

Last year Verge raised $98mn from high-profile investors to grow its drug development work and fund its ALS clinical trial. It also signed a partnership with Lilly to develop treatments for the same disease. This deal earned Verge an upfront payment of $25mn and potential milestone and royalty payments worth an extra $694mn if certain targets are met.

Big Pharma and investors are chasing a $50bn opportunity in AI over the next decade, according to Morgan Stanley, which forecast in a June report that the technology would increase the viability of early-stage drug development and could deliver an extra 50 therapies within 10 years.

Several biotech companies have recently announced drugs discovered or developed using AI that have progressed to clinical trials, including Exscientia, Evotec and Insilico Medicine.

Zhang said in an interview it took Verge four years to get its ALS drug through the discovery process and into clinical trials. This is faster and more cost effective than standard drug discovery techniques, which often relied on trial-and-error, she added.

“Hypothesis are usually sourced from academic discoveries or publications and tested in a sequential way, mostly in animals, mice or even cell models to predict which of these drugs would actually work in humans. Hundreds of millions of dollars later you are entering clinical trials and, unsurprisingly, the drug fails,” said Zhang.

“We are saying why not start in humans from day one, using a data driven approach if we want to succeed in humans?”

Verge has built a database of human tissues from the brains and spinal cords of patients with neurodegenerative diseases such as ALS, Parkinson’s and Alzheimer’s. It has created what it calls a “human disease map” through genetic sequencing, which can be mined using its AI platform to identify therapeutic targets for disease.

Verge said it discovered a new causative mechanism in ALS — the loss of endolysosomal function that impacts human cells — by evaluating more than 11.4mn data points, which uncovered a promising new therapeutic target.

Zhang said Verge’s approach removes the requirement to undertake large scale experiments or screen thousands of drugs and potential disease targets. “Using human data from day one means that we start with higher quality targets that are more likely to succeed in clinic,” she said.

But experts say success is far from guaranteed. Verge’s first drug entering trials is targeting one of the most challenging diseases. At least 50 clinical trials on ALS therapies conducted over the past two decades have failed to show positive results. In the US only three drugs have been approved and these have provided only modest benefits to patients.

“Animal models have been poor predictors of efficacy in clinical trials for neurodegenerative diseases,” said Alix Lacoste, AI computational biology director at Invitae, a genetics testing company.

“Verge is quite unique in the way it is using AI to analyse human data rather than relying on animal models,” she said.

Talks over buying up to 20 per cent of miner reflect carmakers’ concerns over supplies of battery metals

Tesla held talks with Glencore about taking a stake in the Swiss commodities group, in a sign of how global carmakers are seeking to build ties with the mining industry to secure materials needed for the rollout of electric vehicles.

Preliminary discussions about Elon Musk’s electric car and battery maker buying 10-20 per cent of Glencore began last year, according to two people familiar with the matter.

They continued in March this year, when Glencore chief executive Gary Nagle visited Tesla’s factory in Fremont, California as part of a roadshow for the mining company’s annual results.

However, the discussions ended with no deal reached, according to the two people. Tesla had concerns over whether Glencore’s extensive coal mining business was compatible with the carmaker’s environmental goals, and was reluctant to take a minority equity stake.

The rise of electric vehicles has prompted concern among carmakers and battery makers about securing supplies of raw materials such as cobalt, lithium, and nickel that are needed to manufacture batteries.

Glencore is the world’s largest listed trading house and biggest producer of cobalt through its mines in the Democratic Republic of Congo, Australia and Canada. Two years ago Tesla secured a cobalt offtake agreement with the Swiss group to supply its factories in Shanghai and Berlin.

Musk has previously outlined Tesla’s intention to take greater control of all manufacturing steps of its batteries, including processing the raw materials and even buying lithium deposits still in the ground, if the supply chain fails to deliver.

In April, the billionaire took to Twitter, the social media site he bought this week, to voice his concerns about lithium costs: “Tesla might actually have to get into the mining & refining directly at scale, unless costs improve”. The price of lithium has risen eightfold since the start of 2021,

Tesla is also advancing with plans to build its own lithium hydroxide refinery on the Texas Gulf Coast.

Glencore produces cobalt, nickel, copper and other minerals, and is also one of the world’s largest recyclers of batteries. It does not mine lithium but recently started to trade the metal.

Analysts have been broadly sceptical over whether Musk has the appetite to invest in mining groups or trading houses, suggesting his comments have largely been intended to jolt raw material suppliers into increasing output.

As electric vehicle manufacturing increases, carmakers are scouring the globe to secure the raw materials they need, triggering a flurry of offtake agreements — multiyear deals to supply raw materials.

Glencore already has cobalt offtake agreements with battery makers SK Innovation and Samsung SDI, and carmakers BMW and GM.

As well as its cobalt offtake agreement with Glencore, Tesla has struck a long-term deal for nickel supply from Brazilian mining group Vale.

Ford has a lithium offtake agreement with Australia-based Liontown Resources that includes stumping up financing for the project upfront, and has taken a minority stake in a nickel ore processing plant in Indonesia.

Carmakers Stellantis, formed by the merger of Jeep owner Fiat Chrysler and Peugeot owner PSA last year, and General Motors have invested in early-stage mining groups.

However, big car groups have so far been reluctant to take direct stakes in mining majors. Many in the industry believe that more ambitious investments will eventually follow.

Tesla did not respond to a request for comment. Glencore declined to comment.

World’s biggest listed producer says shortage will make it ‘very difficult to meet aspirations’

Global plans to electrify economies and cut carbon emissions could be slowed down by copper shortages, the head of the world’s largest listed producer of the metal has warned.

Richard Adkerson, chief executive and chair of US mining group Freeport-McMoran, said surging global demand for copper for the rapid rollout of electric cars, renewable electricity and power lines would cause a shortfall.

“There is going to be a very significant shortage in copper,” he said. “It’s going to be very difficult to meet the aspirations that have been set.”

Copper is crucial for “greening” the economy because of its ability to conduct electricity. An electric car can use three times the amount of copper as a combustion engine counterpart, while renewable energy projects tend to need five times the volume of the metal as traditional gas, coal and nuclear power plants.

In a report issued last week, consultancy Wood Mackenzie said 9.7mn tonnes of annual supply needs to come from projects yet to be sanctioned over the next decade. The market size is currently 25mn tonnes a year.

“To date, a shortfall of this magnitude has never been overcome,” the authors wrote, predicting that $23bn of annual investment in new projects was needed, two-thirds more than the average over the past 30 years.

Maximo Pacheco, chair of Codelco, the world’s largest copper producer, told the Financial Times he expected a deficit of 6mn-7mn tonnes of copper over the next decade.

Codelco has been struggling to maintain output at its mines, with Pacheco saying it would not be able to recover to last year’s production levels for up to four years. “It’s a tremendous effort to replace the resources.”

Mining executives say the supply challenge is compounded by the downturn in the global economy, which has dragged copper prices lower and led commodity strategists to predict a market surplus next year.

“This current economic turmoil is only making the problem worse,” Adkerson said. “Companies are reluctant to invest in today’s world.”

Visible copper stocks, which make up a small fraction of the inventory held but heavily influence purchasing managers’ decisions, are running at record lows, creating a risk of volatile price changes.

Geopolitical tensions are also shaking up supplies of metals, including copper. Industry executives said the shunning of Russian supplies had led to a more immediate scramble in Europe, where buyers have been willing to pay hefty premiums or sign longer-term deals to secure material.

Copper producers say a host of factors from lengthy government permitting processes and projects where extraction is more difficult to a lack of shovel-ready projects makes it challenging to meet long-term demand growth.

Jonathan Price, chief executive of Teck Resources, which is developing one of the world’s largest copper projects in Chile, said at the FT Mining Summit last week that “the equation just doesn’t add up” between the rise in demand and obstacles for new supply.

However, a supply response by increasing production from scrap copper could ease some of the pressure, and Adkerson said unforeseen technological advances could also unlock supply.

“If we just stick with today’s technology and you look at the challenges, the aspirations are outrunning the reality,” he said.

Johnson Matthey chief says UK has fallen behind in hydrogen power race

Head of FTSE 100 group says it may take more business to US without more supportive domestic policies

The UK has lost its position as one of the leaders in the global race to develop hydrogen power, the chief executive of Johnson Matthey has warned, as he said the FTSE 100 group could take more business to the US as Washington unleashes funding for green projects.

Liam Condon said businesses would bypass the UK if the country did not introduce more supportive policies, and that an “incredible bureaucratic layer” was holding Europe back from developing the infrastructure needed to support hydrogen power.

“The UK was a frontrunner [in supporting hydrogen power],” said Condon, who since taking over Johnson Matthey in March has set out a plan for the 205-year-old industrial conglomerate to focus on developing sustainable technologies.

“But we’ve now got to keep competitive with US policies, which have clearly moved ahead,” he told the Financial Times. “Otherwise, investment will simply drift off to the US.”

Many countries have looked to hydrogen power as they set decarbonisation targets to meet climate goals. The UK, which is aiming to achieve net zero emissions by the middle of the century, declared its ambition in 2019 to become “a world-leading hydrogen economy”, as it announced £105mn in funding for businesses to develop low-carbon fuels.

But in recent months businesses have turned to the US, where the Senate in August passed the $369bn Inflation Reduction Act to support clean energy programmes, which includes tax credits for hydrogen projects.

Condon said Johnson Matthey, which manufactures fuel cell components and catalysts for generating hydrogen power, is “reviewing additional investments” in the US as it anticipates rising demand in the country, adding that the group remained committed to the UK.

In mainland Europe, however, he said organisational obstacles were holding back progress.

“The money is there, the intent is there . . . but there’s an incredible bureaucratic layer that slows down that money actually getting to the companies,” he said. “It’s unlikely that any single private company can afford to build the infrastructure [to support a net zero economy]. So there needs to be governmental support.”

Johnson Matthey is doubling down on hydrogen following an ill-fated move into manufacturing chemicals for electric car batteries. The group announced an exit from the business this year, months after touting it to investors as pivotal to future growth.

Condon, who joined Johnson Matthey after Robert MacLeod stepped down as CEO in the wake of the fiasco, admitted that previous management had committed a “cardinal sin” by entering the business before securing any customers.

He said the group, which has supplied technology to the hydrogen industry for several years, will now focus on core businesses and areas where it can be a market leader.

Johnson Matthey hoped to generate £300mn from the sale of up to four more subsidiaries, Condon added, including its businesses producing medical device components and measuring instruments.

Pursuing battery materials “turned out to be a bad business decision”, he said. “But the lessons out of that were really important . . . for the new strategy and to put in place principles that would make sure we do not end up there again.”

The new not-for-profit organization is tasked with putting on watch and jewelry exhibitions in Geneva and abroad, starting with the next edition slated for March 27 to April 2.

PARIS — Rolex, Richemont’s watchmaking division, Cartier and Patek Philippe have teamed together to launch the Watches and Wonders Geneva Foundation, the Fondation de la Haute Horlogerie announced on Thursday.

The show’s second edition is slated to take place from March 27 to April 2 in Geneva.

After the return to a physical format in 2022, creating a new organization that reflected the arrival of important watchmaking names like Patek Philippe and Rolex in Geneva was the obvious next step, said Matthieu Humair, the incumbent chief executive officer of the Fondation de la Haute Horlogerie, who will now also serve as CEO of the new body.

“Its mission will be organizing watchmaking shows in Geneva but also elsewhere in the world across the Watches and Wonders ecosystem,” he told WWD in an interview, noting that Shanghai or the U.S. were among possibilities “depending on the demands of exhibiting brands.”

The new foundation will be managed by a board headed by chairman Jean-Frédéric Dufour, who is Rolex’s chief executive officer. Emmanuel Perrin, president of the Watches and Wonders fair’s organizing body, Fondation de la Haute Horlogerie, and leader of the Specialist Watchmakers division at Compagnie Financière Richemont, will serve as vice chairman.

An exhibiting committee, made of representatives of participating brands, will oversee operational decision-making.

Among its first moves was opening to the public, who will be able to purchase tickets for April 1 and 2, the closing weekend of the show. Tickets will be sold at 70 Swiss francs in early 2023.

“It was a longstanding desire of the exhibiting brands, particularly given the growing importance of the business-to-consumer angle,” continued Humair, who described the move as congruent with the desire to turn Geneva into a watch-focused destination and make the city come alive with a week’s worth of watchmaking content.

Though some may see competition heating up in the shape of the Geneva Watch Days, positioned in late August and organized at the initiative of seven brands including Breitling, Bulgari, De Bethune, H. Moser & Cie and Ulysse Nardin, Humair saw opportunity to further the industry’s reach.

“The more people talk about watchmaking, the better,” he said. “Today, watchmaking needs to exist all year long, so we are thrilled to see this initiative come to life.”

For the 2023 edition of Watches and Wonders Geneva, 49 brands are slated to show during the seven-day showcase, including newcomers Bell & Ross and Frédérique Constant, up from 38 in this year’s edition.

They will join last year’s participants which included the four foundation founders as well as Chanel, Chopard, Hermès, Tudor, Tag Heuer, Van Cleef & Arpels, Zenith in a heady mix of Richemont and LVMH-owned brands, plus major players and independent watchmakers, shown in the Carré des Horlogers.

The full program of the 2023 edition is expected in late January.