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

The clinical-stage company, which is based in Carlsbad, Calif., on Dec. 27 listed on Nasdaq after merging with FS Development Corp. II, a special-purpose acquisition company sponsored by venture-capital firm Foresite Capital. Pardes said it raised $274 million, including $199 million from the SPAC’s trust account and $75 million in the form of a private investment in public equity from Foresite, investment manager RA Capital Management and biotech giant

Gilead Sciences Inc.,

among others.

Pardes is one of several drugmakers—alongside

Pfizer Inc.,

Watertown, Mass.-based

Enanta Pharmaceuticals Inc.

and Japanese drugmaker

Shionogi

& Co. Ltd.––that are developing oral antiviral pills against Covid-19. The U.S. Food and Drug Administration last month cleared Pfizer’s Covid-19 pill for use, making it the first drug that newly infected patients can take to treat the disease at home.

Pardes’s funds will be largely earmarked to finance the clinical trial and commercial production of the pill, Chief Financial Officer Heidi Henson said. 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 the clinical trial, in which it will test the safety and efficacy of its pill, by midyear, 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 the role for about a year. “We’re still…trying to figure out what that bucket of cost looks like for us,” she said. Ms. Henson said she expects FDA approval by the end of this year at the earliest.

Pardes also wants to use some of the funds to grow its head count, particularly in clinical development and commercial manufacturing. The company is evaluating how many new workers it will hire on top of 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 before its listing in a single funding round in January 2021 from Foresite, venture-capital firm Khosla Ventures and GMF Capital, an investment-management platform.

The company decided to go public to get better access to funding in the public markets, Ms. Henson said. The SPAC merger provided Pardes with more money than it likely could have raised within the same time frame through a traditional IPO, she said. “We received the term sheet from the SPAC and it was just too good to pass up,” she said.

The company doesn’t generate revenue yet, but expects to do so once it receives regulatory approval for the pill. Foresite, which has invested about $44.4 million in Pardes, has said it expects the company will claim a portion of the Covid-19 pill market, according to

Jim Tananbaum,

chief executive of Foresite. “They have plenty of money to do a great deal with the program,” Mr. Tananbaum said.

Pill-developers such as Pardes will likely generate profits with their products, but not as much as the manufacturers of vaccines against Covid-19, said Michael Breen, director of infectious diseases at GlobalData PLC, a data and analytics firm. That is because the demand for the pills is expected to decline as the number of unvaccinated people continues to shrink, he said. The number of unvaccinated adult Americans has fallen to 35 million from 90 million in the past six months, President Biden said last week.

The market for Covid-19 vaccines is estimated to be worth more than $50 billion globally, according to Mr. Breen.

Write to Mark Maurer at [email protected]