Behind the Departure of Two CEOs, There's Clearly a Big Thunder

For Valo's CEO, releasing the clinical data of OPL-0401 seems to be a hot potato, as Valo has seen two CEOs depart in just over half a year in 2024.

Recently, Valo Health released the top-line data from the Phase II SPECTRA clinical trial of OPL-0401 in patients with diabetic retinopathy. The results showed that the trial failed to meet its primary or secondary endpoints, and Valo has paused its development.

Two CEOs Depart

OPL-0401 is an oral, non-selective ROCK (Rho kinase) 1 and 2 inhibitor used to treat non-proliferative diabetic retinopathy. The company licensed it from Sanofi in 2021. Before the release of the Phase II SPECTRA clinical results, the company had already gone through two CEOs.

In January 2024, Valo announced that David Berry, who had been CEO since the company's founding, would step down. At the same time, Graeme Bell, the company's Vice President and Chief Financial Officer, was appointed as the interim CEO. However, just six months later, this interim CEO also left before the critical Phase II clinical data for OPL-0401 was released.

While there is no direct evidence linking the departure of the two CEOs to OPL-0401, it raised concerns about the upcoming clinical data—was it because of poor clinical performance of OPL-0401?

As expected, the SPECTRA trial failed. In the primary endpoint—DR severity score—OPL-0401 did not show statistically significant improvement compared to the placebo. Based on this, the company decided to halt the development of OPL-0401 and plans to seek external partners.

The news of the clinical failure was announced by Brian Alexander, the newly appointed CEO, who is a partner at Flagship and was previously the CEO of Foundation Medicine, which was acquired by Roche in 2015.

In his statement, Alexander emphasized that OPL-0401 was not developed by the company itself, and its clinical failure did not reflect the failure of the company's platform, nor would it affect the company's future direction. The company will now focus on the Opal platform and continue discovering new targets.

What Other Pipelines?

Valo Health, founded in 2019, is an AI-driven pharmaceutical company incubated by the well-known venture capital firm Flagship Pioneering. The company's core technology platform, Opal, combines real-world patient data with tissue modeling and machine learning models to accelerate the discovery of new molecules.

OPL-0401 was the company's leading pipeline. While the CEO stated that this wouldn't impact the company's future development, the company also abandoned the development plan for another clinical-stage pipeline, OPL-0301, which had reached Phase II and was being developed for myocardial infarction.

With OPL-0401, its most advanced pipeline, now abandoned, Valo has no active clinical pipelines left. The company's last financing round was in 2021, and no new funding has been disclosed since then. It also failed in an attempt to go public through a merger with Khosla Ventures' SPAC. However, in 2023, Valo reached a collaboration agreement with Novo Nordisk and received a $60 million upfront payment.

At present, Valo still needs to accelerate its clinical progress to validate the value of its platform technology and restore market confidence.

Summary

In recent years, AI-driven pharmaceutical development has rapidly gained traction, becoming a favorite in the capital market. However, drugs designed using AI face a significant gap between expectations and reality once they enter clinical trials, with most not making it past Phase II. This year, several AI pharmaceutical companies, such as Recursion and Bioage Labs, have experienced failures in their core pipelines. Compared to traditional drug development, whether AI significantly improves the clinical success rate remains an unanswered question.

Reference

https://www.valohealth.com/press/valo-health-announces-topline-results-from-phase-2-spectra-study-of-opl-0401-in-patients-with-diabetic-retinopathy