Archive for category: In the News

 

By David Lyons
November 3, 2024

One would think that less than a month before Thanksgiving, and two months before the Christmas-New Year’s holiday season, this is not an ideal time for news pages to be filled with reports about an airline’s possible bankruptcy filing, or renewed takeover talk by an old suitor, or a spate of layoffs looming in January.

But the public discussion is one of the realities facing South Florida-based Spirit Airlines as the carrier’s management labors to raise cash and plot a course to return to profitability amid fierce industry competition.

Travelers have choices when they book trips for the year’s busiest travel seasons. As Spirit alters its route network, sells airplanes, cuts capacity and arranges hundreds of furloughs as part of an $80 million cost-cutting program, customers would like to know whether they will be facing changes in their plans.

“I think Spirit is going to do everything possible to minimize disruptions to its customers for the holidays,” said Henry Hartveldt, founder and president of Atmosphere Research Group, an industry consultancy in San Francisco. “One challenge Spirit faces is unfortunately there is a lot of bad news swarming around the airline, and that inspires concern among travelers.”

Spirit, which publicly acknowledged Thursday another round of 330 furloughs among its pilot ranks planned for January, was less clear when asked if the airline plans any route changes that might impact the forthcoming holidays, and whether customers would be notified in advance.

“We don’t have any route adjustments to share at this time,” a spokesman replied by email.

In 2023, Spirit was the leader in passengers carried at Fort Lauderdale- Hollywood International Airport, whose annual report placed the discount airline’s share at 29%, or more than 9.8 million travelers using the Broward County airport. JetBlue Airways was second at 20% and Southwest Airlines third at 14%.

“We are a month away from Thanksgiving,” Harteveldt said. “I don’t think we are going to see Spirit make any major changes to the Thanksgiving schedule. If bookings are strong enough I expect the airline will fly the flights scheduled for the Christmas and New Year’s period as well.”

Ivan Reich, a lawyer who lives in West Palm Beach, said he remains a fan of Spirit for its low prices. Asked if he’d continue to fly with the airline amid its turmoil, he replied, “most likely.”

“If you’re flying the next two or three weeks, it’s still the best deal,” he said. “The price difference between Spirit and everybody else is a lot. And you get to fly nonstop, which is the other thing.

“Will I keep an eye on the news? Of course,” he added. “I’m presuming between now and January they will be fine.”

Capacity reductions

Of late, the airline has engaged in substantial scheduling adjustments, and in a regulatory filing it forecast year over-year capacity reductions of 20% in the fourth quarter and in the “mid teens” for the entirety of 2025. The reductions are partly attributable to the sale of 23 Airbus jetliners, which will be removed from its fleet.

Late last month, The Points Guy, the travel website for airline passengers, reported Spirit had cut 32 routes, many in the West. The site also noted seven routes were dropped from Logan International Airport in Boston. Only one route was cut from Fort Lauderdale — to Salt Lake City.

Clint Henderson, managing editor at The Points Guy, said he doubts any further reductions are in the offing until at least January because the airline already has instituted deep cuts.

“If I had a flight booked for the holidays I would not be worried at all,” he said.

“Hopefully passengers have already been notified and have made alternate arrangements for the holidays,” he added, speaking of flights that have been removed from the schedule.

Specific figures for the third quarter are hard to come by as Spirit has yet to report its quarterly results, saying it will do so in mid-November, well after its peers. In the second quarter, Spirit posted a net loss of $192.9 million. The airline hasn’t posted a net profit since before COVID-19.

Spirit’s shift into downsize mode came after a variety of setbacks for the airline, starting with a federal judge’s rejection of Spirit’s proposed $3.8 billion takeover by New York-based JetBlue Airways on antitrust grounds. JetBlue,
which has had its own financial losing streak, is also in the midst of a campaign to make money again.

The proposed takeover by JetBlue would have meant the end of Spirit as an independent carrier. A previously proposed merger with Frontier collapsed in the face of JetBlue’s offer.

Once the merger and takeover offers went off the table, Spirit was left to fend for itself.

One immediate major problem — beyond its control — involves a manufacturer’s recall of Pratt & Whitney engines that forced Spirit to ground aircraft to allow for an extended program of inspections. Although Spirit has worked out a compensation program that runs into the millions to account for the business losses, the aircraft groundings created a major disruption in its operations.

Heavy debts spawn bankruptcy talk

Earlier this year, Spirit CEO and President Ted Christie, who has labored long and hard to upgrade the airline’s brand and reputation — the latest being a revised menu of more fare and service options for customers — publicly bristled at analyst predictions that a bankruptcy filing might be the only way to relieve the company of its financial pressures.

The company line has been that it prefers to renegotiate its debt obligations without the help of a bankruptcy court and the controlled supervision it provides.

But industry analysts have wondered if the approach can be sustained under pressure from lenders who are owed up to $3.3 billion.

“Spirit fully unveiled its standalone plan with a (still low-cost) premium and passenger-friendly offering that should reinvigorate the brand,” Raymond James analyst Savanthi Syth said in a note to investors. “However, we see risk in the patience of Spirit’s creditors to fund an uphill marketing battle …”

Cash is king, and the airline has spent a number of months building a war chest.

“They have to figure out how to get enough cash liquidity to get to the finish line,” said Joseph Luzinski, senior managing director of DSI, a financial advisory firm in Miami and Fort Lauderdale.

By the end of the year, the company has said in a regulatory filing, it expects to have roughly $1.1 billion in liquidity, in large part on the strength of its recent sale of 23 Airbus jetliners. It also borrowed $300 million from a credit line.

“I think what they’ve done is going to get them through the first quarter of next year,” said Joseph Smith, an investment banker specializing in aviation at Cassell Salpeter & Co. in Miami. “They’ve raised enough cash selling these birds.”

The company has not commented on a more recent Wall Street Journal report that it discussed a Chapter 11 bankruptcy scenario with its bondholders, and that it renewed merger talks with rival discounter Frontier Airlines in the context of a possible asset acquisition through bankruptcy.

The Denver-based airline has declined comment.

If a bankruptcy filing does occur, Spirit would likely continue flying, but under a court’s supervision. “Even if the worst case happens, consumers are still pretty protected when a U.S. carrier declares bankruptcy because it keeps operating,” Henderson said.

It remains unclear how the airline will ultimately fix its finances as it deals with creditors behind the scenes.

“Often these things are on a parallel track,” Luzinski said. “We’re going to file for bankruptcy and blow everybody out. Or as a negotiating ploy you say, ‘if we make a deal we file and get exactly what you want out of this transaction.’”

Whither the discounters?

Whatever happens, customers such as Ivan Reich would like to see the airline preserved. Without discount carriers, he suggested, consumer choices will be narrowed to legacy carriers such as Delta Air Lines, which charge higher prices.

“I like the cheap flights,” Reich said. “If you are going to go away for a weekend and throw everything in an overnight bag, you can’t beat it.”

“Look at the Spirit prices compared to everybody else and there is a substantial difference,” he added. “Where are you going to find bargains? What happens to the marketplace where all you have is the legacy carriers?”

 

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September 6, 2024
By Demitri Diakantonis

There’s the annual summer deal lull, then there’s the flat cycle as dealmakers wait for interest rates to pick up and for the results of the November elections. Still though, there’s nothing positive about the latest numbers, as August deal volume was the worst in three years, according to data supplied by LSEG. Here’s our monthly deal analysis.

There were just 44 mid-market deals in August, the lowest monthly tally year to date and worst since August 2021. Deal value came in at around $19 billion, the second lowest total this year after February’s $16.4 billion output.

Investors are saying deal activity will pick up, eventually. But when that happens, don’t expect the winners to come out of the gate right away, as sponsors are desperate to return liquidity to their LPs, while waiting to get top value for their most prized assets.

“Most of what I think will come out from a lot of sponsors in the next three to nine months are what I call the B-assets,” says Oaktree Capital Managing Director Matt Wilson. “These are not top-tier portfolio companies, but assets that need to be sold to extract whatever returns sponsors can get so they can return capital and raise the next fund. These are probably the most price sensitive assets to interest rates, hence the reason they haven’t had a bid over the last 18-24 months.

“Right now, for a lot of sponsors, it’s about ‘We haven’t sold much in the last two years and we have to return capital to retain our clients and raise the next fund. Let’s try to sell our second-tier assets, get what we can for them so we can return the capital, and keep our real gems, the assets we will make the most money on in 2025 when we have more clarity on rates,” he adds.

Looking at specific sectors, the top two industry staples-technology is down
significantly, while healthcare is still down slightly year-over-year. In other sectors, real estate, consumer products and services are down. On the other end of the spectrum, consumer staples and industrials are on the rise.
Other notable deals that closed last month include:

• Quest Diagnostics‘ (NYSE: DGX) $987 million deal for laboratory test company LifeLabs
• Bank of Nova Scotia’s (NYSE: BNS) minority investment in regional bank KeyCorp (NYSE: KEY)
• Gallatin Point Capital’s minority investment in commercial bank Israel Discount Bank of New York

In the league tables, JP Morgan (NYSE: JPM), Goldman Sachs (NYSE: GS) and Morgan Stanley hold the top three spots in terms of number of deals (34, 29 and 22, respectively) and deal volume (about $16.4 billion, $16.2 billion and $10.6 billion, respectively). A couple of other banks made big jumps into the top 10. Wells Fargo (NYSE: WFC) went from 22nd to eighth place and Moelis (NYSE: MC) went from 18th to ninth place.

“I believe we will see an uptick in mid-market M&A during the last four months of the year,” says James Cassel, co-founder of Miami-based investment bank Cassel Salpeter & Co. “There is a robust pipeline of deals that were preparing to go to market as well as pent up demand on the buy side for companies and PE firms to deploy capital.”

 

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16th July 2024
By Katishi Maake, Brian Yue, Marlene Star and Manu Rajput

Consumer merger and acquisition volume saw a 46% year-over-year increase in 1H24 to USD 31.95bn, and buyout volumes crept up from 1H23, according to Mergermarket data. As concerns over a recession have waned over the past year, dealmakers have become slightly optimistic but cautiously so.

The top global deal is Macy’s [NYSE:M] pending 91.24% stake sale to Arkhouse Partners and Brigade Capital Management for USD 6.249bn, based on a cash offer price of USD 24 per share, which values Macy’s at USD 12.076bn, including net debt. Arkhouse Partners and Brigade Capital Management reportedly increased their offer to acquire the department store chain earlier this month to USD 24.80 per share, roughly USD 6.9bn, according to the Wall Street Journal.

Other major North American transactions include the USD 4.6bn merger of Primo Water Corporation [NYSE:PRMW, TSX:PRMW] and BlueTrion Brands, and Walmart’s [NYSE:WMT] USD 2.3bn acquisition of television maker Vizio.

The first half of the year saw buyout volumes of USD 1.6bn, compared to USD 1.05bn in 1H23. In May, Brightstar Capital Partners agreed to acquire Nevada-based slot machine maker PlayAGS in a USD 1.1 bn deal that’s expected to close in the latter half of 2025. Deal valuations totaled USD 1.48 bn across 19 deals during 1H24, according to Mergermarket data. Sector advisers hope the increased activity will continue in 2H24, but that will be highly dependent on inflation and how the Federal Reserve acts on interest rates.

Beauty and pet products a bright spot
The consumer sector’s perennial strong areas – pet, beauty and consumer services – continued to perform well in 1H24. Pet and beauty continue to be active as investors see continued growth in the space, according to Richard Kestenbaum, co-founder and partner at Triangle Capital.

“We wind up selling companies that identified a way to make great money and be successful in industries that were often tired,” Kestenbaum says. “It’s both industries that are growing and consolidating but it’s also innovation in existing spaces.”

Conversely, sub-sectors such as durables, apparel, hard goods, furniture, and discretionary items are not performing as well due to tighter consumer budgets, Christopher Petrossian, managing director at Lincoln International says.

Restaurants are likely to see restructuring-driven deals in 2H24 as food and labor costs continue to climb, particularly in California where the minimum wage for restaurants rose to USD 20 per hour in April, says Jim Cassel, chairman and co-founder of Cassel Salpeter & Co. These pricing pressures under already small margins have restaurants looking to sell, Cassel says, adding that potential changes in tax laws around capital gains might also lead to the sale of troubled assets.

In CPG, there’s been a lot of activity redeploying cash and selling assets with the intent of assessing where the market will be over the next decade, Andrew Dickow, managing director at Greenwich Capital Group, says. Unilever’s [LON:ULVR] sale of Ben & Jerry’s is exemplary of this, as the company attempts to transition from food and beverage to consumer products.

Food and beverage – a lack of appetite
The food and beverage sector contributed about USD 9.5bn of deal value on 118 deals announced in 1H24, according to Mergermarket data. The largest deal was a still-pending USD 4.6m merger between Primo Water Corporation [NYSE:PRMW, TSX:PRMW] and BlueTrion Brands.

The sector has continued to see significant declines in deal volume compared to pre-pandemic levels.

The macro outlook for food and beverage M&A has been weak since 2021, with deal volume continuing to drop due to a decline in VC funding and the creation of new startups, according to Michael Zakkour, managing director at SellSide Group.

“There were probably too many [startups] at one point, and this is just a natural correction where deal flow is lower because there just simply aren’t as many potential new targets coming online,” Zakkour says.

Consumer preferences are shifting towards discretionary spending on experiences over products, which Zakkour notes could lead to a resurgence in deal flow for health and wellness products and quick service restaurants offering unique experiences.

The continued low number of PE and VC exits in food and beverage compared to pre-pandemic levels is due to increasing consumer acquisition costs and how crowded the sector is, Zakkour says. However, that could change in the next 1 or 2 years as investors better understand how data in e-commerce affects the products brought to market and put on shelves, he adds.

A wait-and-see game with the economy
Consumer M&A activity in 2HQ2 will be largely defined by the larger macroeconomic trends affecting consumer spending and borrowing for transactions.

While there is plenty of available debt for deal, particularly on the private debt side, high interest rates have made it difficult for buyers to borrow funds, Petrossian says. Once the Federal Reserve begins to cut rates, more capital will be available, leading to more M&A activity, he says.

Inflation is also a mitigating factor for deals getting done, Petrossian says. One private equity firm told him that 70% of its 2023 deals that came to market failed due to concerns surrounding inflation and consumer spending and sentiment.

Lincoln International’s approach has been to sit and wait on its backlog of consumer deals until market conditions improve, he says. The firm will reassess its pipeline after Labor Day in case it wants to close deals before the end of the year. Alternatively, it may wait until 1Q25 after the Federal Reserve cuts interest rates and the presidential election is decided, Petrossian says. “Forecasting this year’s fourth quarter and being in the middle of a deal and missing your budget is not a good thing to process,” Petrossian says. “At a certain point, it might make sense to
close Q4, see what it looks like, and go in on a deal early next year.”

A recession, in theory, would be devastating to consumer M&A activity, but Triangle Capital’s Kestenbaum says that’s much less of a concern now compared to inflationary pressures. “The market hates surprises and it wants to see good news, and it wants to be told good news is coming,” he adds.

By Katishi Maake, Brian Yue and Marlene Star, with analytics by Manu Rajput

 

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By Ana Mulero
April 22, 2024

In 2023, cell and gene therapy saw an unprecedented surge with seven FDA approvals, and this year, an even greater number of these treatments could reach the market. So far in 2024, the regulator has given the green light to three new CGTs, and at least seven additional cell and gene therapy products are expected to receive approval by year’s end, according to a March report from the Alliance for Regenerative Medicine.

“All signs point to 2024 surpassing 2023 as a landmark year for cell and gene therapy,” David Barrett, CEO of the American Society of Gene & Cell Therapy (ASGCT), told BioSpace.

The first approval this year belonged to Vertex Pharmaceuticals and CRISPR Therapeutics’ Casgevy, which won the FDA’s nod in January for use in transfusion-dependent beta thalassemia. This followed the agency’s December 2023 approval of Casgevy as one of the first two cell-based gene therapies to treat patients with sickle cell disease. It also represented the first FDA approval of a therapy using CRISPR/Cas9 technology. Then, in February, Iovance Biotherapeutics’ Amtagvi was approved as the first one-time cell therapy for a solid tumor and the first tumor-infiltrating lymphocytes therapy, for advanced melanoma patients who have worsened after being treated with certain other therapies failed. Finally, last month, the FDA greenlit Orchard Therapeutics’ Lenmeldy, which entered the U.S. market as the first gene therapy for children with metachromatic leukodystrophy, and the world’s most expensive drug, with a $4.25 million price tag. 

Looking forward, the FDA has upcoming PDUFA dates for several more novel CGTs, including a traditional in vivo gene therapy delivered via viral vector, a couple of gene-corrected cell therapies in which a patient’s cells are modified by gene therapy outside of the body and then reinfused, and a new CAR-T.

Two Q1 reports, from ASGCT and the Alliance for Regenerative Medicine, highlight some of these regulatory actions as potential catalysts for the sector, with approvals poised to propel the CGT space. The ASGCT report includes a list of noteworthy events in Q1 2024, while ARM’s report makes the case that 2024 could be a banner year for cell therapy.

Here, BioSpace reviews five products under regulatory review that were highlighted by both organizations.

Pfizer’s Beqvez

Indication: Hemophilia B

Therapy type: In vivo gene therapy

Action date: April 27

Later this month, the FDA will rule on Pfizer’s gene therapy for hemophilia B, Beqvez. This engineered version of the factor IX coagulation gene carried by an adeno-associated virus is administered via a single infusion.

Beqvez has been approved by Health Canada to treat adults with hemophilia B based on positive data from the Phase III BENEGENE-2 study, which showed a significant reduction in bleeding rate and infusion frequency.

The Big Picture

An FDA approval would put Pfizer in competition with CSL Behring, whose gene therapy Hemgenix, which is also administered via a single intravenous infusion, became the first FDA-approved gene therapy for hemophilia B in November 2022. Pricing details for Beqvez are not yet available, but Hemgenix costs $3.5 million per dose. Chris Boshoff, Pfizer’s chief oncology officer, told BioSpace the company aims to leverage its experience to ensure smooth market entry and efficient delivery to eligible patients.

Abeona Therapeutics’ pz-cel

Indication: Recessive dystrophic epidermolysis bullosa

Therapy type: Gene-corrected cell therapy

Action date: May 25

Next up is Abeona Therapeutics’ pz-cel, which delivers a functional collagen-producing COL7A1 gene into a patient’s own skin cells using a retroviral vector, for the treatment of patients with recessive dystrophic epidermolysis bullosa (RDEB). RDEB, a rare connective tissue disorder, causes severe skin wounds, pain and life-threatening complications stemming from compromised immunity due to a deficiency in the COL7A1 gene, preventing the production of functional type VII collagen.

In November 2023, the FDA granted priority review to pz-cel based on clinical data from the Phase III VIITAL study and long-term results from a Phase I/IIa study, which demonstrated sustained wound healing and pain reduction.

The Big Picture

Ira Leiderman, managing director of healthcare at Cassel Salpeter, underscored the importance of evaluating therapeutic options against the rarity and impact of the disease. A positive decision on Abeona’s pz-cel will help address the high unmet need of RDEB patients and may lead to transformative interventions in this challenging rare genetic disorder, Leiderman told BioSpace.

If approved, pz-cel would follow Krystal Biotech’s Vyjuvek, the first gene therapy approved for recessive or dominant DEB in May 2023. Abeona said in March it is actively preparing for the potential U.S. launch of pz-cel, including discussions with treatment sites and payer engagement.

Rocket Pharmaceuticals’ Kresladi

Indication: Leukocyte adhesion deficiency-1

Therapy type: Ex-vivo vector gene therapy

Action date: June 30

While Rocket Pharmaceuticals initially anticipated a decision on its gene therapy for leukocyte adhesion deficiency-I (LAD-I) by March, the FDA requested more review time and extended the deadline to June 30.

Severe LAD-I, a rare genetic disorder affecting children, is caused by mutations in the ITGB2 gene that lead to life-threatening infections. Without regular bone marrow transplants, survival beyond childhood is rare. Kresladi contains patient-derived hematopoietic stem cells genetically modified with a lentiviral vector to carry functional copies of the ITGB2 gene, crucial for leukocyte adhesion and infection-fighting.

In November 2023, the FDA accepted Rocket’s BLA for Kresladi with priority review, following positive efficacy and safety data from a global Phase I/II study, in which all nine LAD-I patients were alive 12 to 24 months post-infusion. Significant reductions in infection rates were observed compared to pre-treatment levels, along with the resolution of LAD-I–related skin lesions and restoration of wound healing capabilities.

Kresladi also holds the FDA’s Regenerative Medicine Advanced Therapy, Rare Pediatric, Fast Track and Orphan Drug designations.

The Big Picture

This marks Rocket’s inaugural product filing and is a notable advancement for patients, offering an alternative to bone marrow transplant, which carries significant risks and may not be readily accessible. Rocket is enhancing its commercial infrastructure in preparation for a potential product launch, including center initiation, channel strategies, education and payer engagement.

Rocket CEO Gaurav Shah told BioSpace the FDA is reallocating reviewers to focus on rare diseases and complex biologics, necessitating changes and a transition period. Shah noted that the delayed decision, based on the FDA’s request for clarity on chemistry, manufacturing and controls information submitted by Rocket, is common among CGTs and does not raise significant concerns beyond ensuring the regulator has sufficient resources for the approval process.

Adaptimmune’s afami-cel

Indication: Advanced synovial sarcoma

Therapy type: T cell receptor therapy

Action date: August 4

 

Adaptimmune is gearing up for the potential launch of its inaugural product in the sarcoma franchise, afami-cel, intended for treating advanced synovial sarcoma, with a PDUFA date set for August 4. Afami-cel received FDA priority review in January.

Synovial sarcoma, which makes up 5% to 10% of soft tissue sarcomas, typically affects individuals under 30, with a five-year survival rate of 20% for metastatic cases. Recurrence is frequent, necessitating multiple lines of therapy and potential exhaustion of treatment options. Afami-cel is a single-dose engineered T cell receptor therapy targeting MAGE-A4-posititive tumor cells. The therapy’s clinical data from the SPEARHEAD-1 trial revealed that about 39% of patients experienced clinical responses, with a median response duration of around 12 months. Median overall survival was about 17 months, contrasting with historical data of less than 12 months for those who received two or more prior lines of therapy. Some 70% of responders to afami-cel were alive two years post-treatment.

The FDA granted afami-cel Orphan Drug Designation for the treatment of soft tissue sarcomas and Regenerative Medicine Advanced Therapy designation.

The Big Picture

If approved, afami-cel would become the first approved engineered T cell therapy for this type of cancer. In November 2023, the Investigational New Drug (IND) for another T cell therapy, lete-cel, was transferred from GSK to Adaptimmune for the pivotal IGNYTE-ESO clinical trial, following an interim analysis showing a 40% response rate in synovial sarcoma or myxoid/round cell liposarcoma patients.

Adaptimmune CEO Adrian Rawcliffe said that the clinical results from the pivotal trial position lete-cel as a complement to afami-cel, potentially allowing the company’s sarcoma franchise to significantly expand its reach. He noted that leveraging the same commercial infrastructure intended for afami-cel could facilitate the efficient delivery of lete-cel to the market. Afami-cel would become the first engineered T cell therapy for a solid tumor. The franchise, including both afami-cel and lete-cel, “is projected to deliver up to $400 million in U.S. peak year sales,” Rawcliffe said in March.

Autolus Therapeutics’ obe-cel

Indication: B cell acute lymphoblastic leukemia

Therapy type: CAR-T cell therapy

Action date: November 16

In accepting Autolus Therapeutics’ BLA for its lead next-generation CAR-T therapy obe-cel for relapsed/refractory adult acute lymphoblastic leukemia (ALL) in January, the FDA set a PDUFA target action date of November 16.

Obe-cel, an investigational CD19 CAR-T cell therapy, is designed to enhance clinical activity and safety compared to existing therapies by incorporating a fast target binding off-rate, minimizing T cell activation. In December 2022, Autolus hailed the Phase II FELIX trial as a success, as interim analysis showcased an overall remission rate of 70% for obe-cel in leukemia patients. CAR-T cell concentration peaked and persisted at 75% in peripheral blood after a median of 166.5 days post-infusion. The trial also demonstrated positive safety findings. 

Obe-cel holds the FDA’s Orphan Drug and Regenerative Medicine Advanced Therapy status. Earlier this month, the company;’s obe-cel marketing application was accepted by the European Medicines Agency.

The Big Picture

The potential approval of a second cell therapy for solid tumors this year suggests breakthroughs in treating these cancers may be near, Stephen Majors, a spokesperson for the ARM, told BioSpace. There is an “increasing focus on solid tumors,” a previously elusive area for cell and gene therapy, he said.

A recent $250 million deal granted BioNTech access to obe-cel, with the partner to aid in the launch and development program expansion and receive royalties based on net sales. Autolus expects obe-cel peak sales to exceed $300 million.

Autolus could face competition from Gilead Sciences subsidiary Kite, which in 2021 gained FDA approval for its CAR-T therapy Tecartus, the first such treatment for ALL, achieving a 65% complete remission rate.

Ana Mulero is a freelance writer based in Puerto Rico. She can be reached at anacmulero@outlook.com and @anitamulero on X.

 

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Christopher Elliott

Special to USA TODAY

April 9, 2024

If you’d told me a few weeks ago that flying cars will change the way we travel, I probably would have laughed at you. 

But when Elon Musk hinted there might be a flying Tesla soon, the internet started buzzing with flying-car news. And now people are talking.

“There’s absolutely a sense that the time has come,” said aviation industry investment banker Joey Smith at Cassel Salpeter & Co. “Numerous well-funded companies are racing to build a viable production vehicle, and they could take to the skies as early as next year.”

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What’s more, attitudes toward Advanced Air Mobility (AAM) – that’s a fancy term for flying cars and other personal flying vehicles – have shifted. A new study suggests Americans, and particularly younger urban consumers, are warming to the idea of flying to their next destination. Even so, the definition of a flying car is a little hard to pin down. I’ll explain in a minute.

Don’t expect to open your apartment window and see a scene out of a sci-fi movie like “Minority Report” anytime soon. (You know, lanes of flying vehicles lining the sky.) It’ll be a slow rollout, but it has the potential to change the way we travel like we haven’t seen since the introduction of the jet engine.

What kind of flying vehicles are out there?

Personal flying vehicles defy simple classification, which may be part of their allure. There are STOLs and VTOLs, quadcopters, octocopters and hexacopters. Some are electric, some are gas-powered. 

Don’t be confused by all the acronyms. I think it’s OK to just call them flying cars.

Right now, the ones generating the most noise are electric vertical takeoff and landing vehicles (eVTOLs). These aircraft take off and land like a helicopter. For example, Joby’s air taxi service in Manhattan plans to use its eVTOL, which looks like an oversized drone, to shuttle passengers from New York to John F. Kennedy International Airport next year.

My categorization is a little unconventional, but here’s how I see it: There are really just two types of flying cars. The first are cars that can drive on the road and fly, just like the ones in “Back to the Future.” 

One of the most high-profile of these is the Model A being developed by Alef Aeronautics. It’s an eVTOL that looks like a sports car. But once it takes off, the passenger cabin pivots and the vehicle flies sideways, which looks a little jarring but very cool.

The second type of flying vehicle doesn’t even bother with the road. For example, the Lilium Jet is a fixed-wing aircraft and an eVTOL. But you won’t see it on the highway unless it’s making an emergency landing – so technically, it’s not a flying car.

Like I said, these flying vehicles aren’t easy to categorize. And it hasn’t really mattered until now because you could find them only in aviation magazines and science fiction movies. But now there are serious discussions about flying cars, and developers have started taking orders. The future is almost here.

Flying cars aren’t cleared for takeoff – yet

Don’t get too excited. A few things still have to be worked out, experts say. For example, eVTOL manufacturers have struggled with several challenges. It’s not just how to design lightweight aircraft made from the right composite materials and with adequate battery life. It’s also piloting the flying car. Issues such as autonomous flight capability and pilot training have proven to be big barriers. 

There are also regulatory roadblocks. The Federal Aviation Administration, which has oversight of these new vehicles, has adopted a “crawl-walk-run” approach. And it’s still in “crawl” mode. Last year, it laid down some rules for flying cars. Among them: They have to use existing heliports and they must have a human pilot. But there are no special traffic lanes in the sky for these vehicles yet.

The U.K. is also preparing for flying cars. In March, the government said it envisioned eVTOLs taking to the skies within four years. 

Observers are skeptical of the proposed timeline. Charles Leocha, president of the consumer group Travelers United, has worked on regulations for low-level unmanned aerial vehicles for the last decade. He said the wheels are turning slowly.

“The FAA is at least a decade away from allowing or approving any kind of flying car,” he said.

All of that has made people reluctant to order a flying car – if they can afford one. Most vehicles can cost $150,000 to as much as $10 million.

“Prospective buyers are likely to hold off until regulatory barriers are dismantled,” said Francesco Cerroni, a mobility expert at the design firm Buro Happold.

Where to find personal flying vehicles now

If you want to see a flying vehicle for yourself, here’s where to find them (outside of the movie theater):

• Lift Aircraft, which manufactures a single-seat eVTOL called Hexa, is offering test flights on its single-seat Hexas this spring. It’s scheduled to be in Lakeland Linder International Airport in Florida in April and Austin in May.
• Early next year, you’ll be able to hail an air taxi from Abu Dhabi and Dubai on a four-passenger Midnight aircraft. The eVTOL, operated by UAE-based Falcon Aviation, will cover the 81-mile trip in just 30 minutes. By road, the drive can take a few hours in traffic.
• There’s even a flying car driving school. Netherlands auto manufacturer PAL-V will show you the ins and outs of flying a car. They even have a flying car showroom in Munich where you can buy your own gyroplane/car combination. (It’ll cost you about $550,000.)

Bottom line: Flying cars remain rare. But change is on the horizon.

How flying cars could change the way we travel

High prices and continued doubts about the viability of zipping around town like George Jetson haven’t stopped people from thinking about the future. Experts seem to agree that safe VTOLs with FAA approval could change travel forever.

“It would reduce congestion by removing some traffic on the road and create a new aviation sector, with new jobs,” said Raj Rajkumar, professor of computer engineering at Carnegie Mellon University.

Flying cars could dramatically cut the drive time between destinations typically served by short-haul commercial flights. So instead of catching a shuttle flight from Washington to New York, you’d just fly there in your own car in a fraction of the time it used to take to drive.

But that’s just the beginning. As these vehicles become faster and more affordable, they hold the promise of competing with commercial aviation. Imagine flying your family car from the suburbs of an East Coast city to Florida for your next vacation in less time than it would take you to go to the airport, get through security, wait for your departure, fly, land, collect your luggage and rent an earthbound car?

The thought of ditching airlines, with their awful customer service and addictive loyalty programs, may be the greatest promise of the AAV revolution.

If you’d asked me a few weeks ago if such a future was possible, I would have been very skeptical. Now, I’m just a little skeptical.

This is the second of a two-part series on the future of air travel.

Christopher Elliott is an author, consumer advocate, and journalist. He founded Elliott Advocacy, a nonprofit organization that helps solve consumer problems. He publishes Elliott Confidential, a travel newsletter, and the Elliott Report, a news site about customer service. If you need help with a consumer problem, you can reach him here or email him at chris@elliott.org.