# Episode 150 - August 1, 2025

An episode of [Biotech Hangout](https://invisiblenetwork.ai/podcast/1568911820), 11 Aug 2025, 1 h 01 min.

Audio: https://anchor.fm/s/55bdff38/podcast/play/106731080/https%3A%2F%2Fd3ctxlq1ktw2nl.cloudfront.net%2Fstaging%2F2025-7-11%2F405487617-44100-2-a1458d07e8c09.m4a

On this week's episode, Daphne Zohar, Josh Schimmer, Brian Skorney, Paul Matteis, Sam Fazeli, Brad Loncar, and Matt Gline cover top news surrounding Trump's pricing letters to 17 major pharma companies demanding U.S. price cuts on new drugs, and the relevance to his MFN initiative. They also touch on Dr. Mehmet Oz’s meetings with biotech leaders in D.C. and looming tariff risks. The group discusses Vinay Prasad’s departure from CBER, opining on implications for biotech, and sharing insights from the CEO listening session with Marty Makary and George Tidmarsh. Next, they review the latest Sarepta news, including Vinay Prasad’s response to the patient deaths and broader credibility themes. To close out the regulatory discussion, RFK Jr.’s proposal to overhaul the Vaccine Injury Compensation Program (VICP) is discussed. In deals and restructuring news, the co-hosts unpack the GSK-Hengrui partnership amid China outlicensing trends, BMS/Bain’s new spinout company, Galapagos’s restructuring plans, and AbbVie’s reportedly targeting a $1B buyout of Gilgamesh. They also highlight drug launch momentum, with strong quarters from Alnylam, Argenx, and Neurocrine, challenging the “shorting the launch” thesis. The conversation shifts to data with Roche’s Alzheimer’s updates and expectations around Lilly’s abeta prevention study, touching on implications for the anti-amyloid class and Biogen’s outlook, including rising use of blood-based biomarkers and earnings commentary. They also discuss Compass’s regulatory strategy for psychedelics. The episode concludes with each co-host reflecting on market sentiment and the industry’s current state. *This episode aired on August 1, 2025.

## Transcript

[0:00] You're listening to Biotech Hangout, a live and unedited
[0:03] weekly discussion of all the latest news in our industry with
[0:06] a group of biotech insiders. I'm Daphne Zohart and my Co
[0:10] hosts today are Josh Shimmer, Brian Scorney, Bradlon Carr,
[0:13] Paul Matisse, Sam Fazeli and Matt Klein.
[0:16] For more information about our hosts and guest speakers or to
[0:19] listen to the most recent episode, please go to
[0:22] biotechhangout.com. We'll start with the top news.
[0:27] And this week, policy and politics are at the forefront.
[0:30] So yesterday, President Trump sent letters to 17 CEO's of
[0:35] pharma companies calling on them and all manufacturers to take
[0:39] the following specific actions within 60 days.
[0:42] Extend most favored nation pricing to Medicaid and that's
[0:47] MFN. I'm going to be calling it going
[0:49] forward. Guarantee MFN pricing for newly
[0:51] launched drugs across Medicare, Medicaid, and commercial
[0:54] markets. Repatriate increased revenues
[0:57] from abroad to lower drug prices in the US.
[1:00] Provide for direct purchasing at MFN pricing through a direct to
[1:03] consumer model. Of note, the letters do not
[1:07] outline any statutory or regulatory authorities that the
[1:11] administration has to enforce these demands, even though they
[1:13] did say they plan to enforce them.
[1:16] Sam and Brian, we'll start with you.
[1:18] Do you want to comment on this? Oh, let's, I'll have a go and
[1:23] then Brian will, I'm sure, add a whole bunch of stuff to it.
[1:28] So 4 elements, Daphne, as you quite clearly highlighted #1
[1:33] extend MFN to Medicaid. I think that's going to be a
[1:37] relatively easy lift for pharma because Medicaid prices are some
[1:40] of the lowest, and they should be able to match that #4 provide
[1:45] direct purchasing to add MFN pricing, whatever that price
[1:48] ends up being, whatever formula is used for it.
[1:52] Again, pharma companies have already started doing some of
[1:54] this. By all accounts, they should be
[1:57] able to cut prices without really hurting their their PNL
[2:00] by thirty 4050% in the direct consumer setting, given the sort
[2:05] of rebates that they give away to insurers.
[2:08] Let's say there's a mechanism that that can actually happen
[2:10] and they start doing it. It's the two elements in the
[2:13] middle that a bit of a complication for me.
[2:16] On the one hand, guarantee MFN pricing for newly launched
[2:19] drugs. So that's the that is the MFN
[2:22] story that's been going around for a while now.
[2:25] Let's get new drugs launched at A at a good price in the US,
[2:28] which is great. The good thing here is it says
[2:32] newly launched drugs. So it sounds like that there is
[2:35] at least an acceptance that he can't retrograde this.
[2:37] So all the products that are on the market would stay at the
[2:40] sort of prices they are. The question then is what
[2:43] happens if somebody comes with a new GLP one and they launch it
[2:47] at a lower price and then what happens to all the other
[2:50] products are on the market, for example, up for discussion.
[2:54] And then of course, the bit that I really don't get my head
[2:56] around, can't get my head around is return your increased
[2:59] revenues from outside the US to patients in the US and
[3:02] taxpayers. Well, how are you going to
[3:04] enforce that and what is the point of MFN if you then do
[3:09] result in the increased and the furnace that that the
[3:13] administration is looking for pushing ex US prices up?
[3:17] What is the incentive in doing that if you they're going to ask
[3:20] for them to send the money back, assuming you could, assuming you
[3:23] had a legal basis to do that. And all of this put together,
[3:28] I'm trying to still understand on the one hand, you're trying
[3:31] to tell pharma companies to bring their manufacturing
[3:34] footprint into the US, continue to invest in US R&D.
[3:38] At the same time you want to hit them with reduced profitability.
[3:43] And your argument has always been you make most of your money
[3:46] here, bring them your drugs over here, send them over here, make
[3:49] them over here. But at the same time, we don't
[3:51] want to pay for it. That sounds like a a not well
[3:54] thought through process. And the last thing I'll say
[3:57] before I pass on to Brian is the goal is set for the September
[4:01] 29. This is getting very close to
[4:04] the next negotiation dates for IRA.
[4:07] Our Washington analyst, Duane Wright believes that in the end,
[4:11] it'll end up being implemented through IRA by just pushing
[4:15] harder on the price negotiations.
[4:17] Brian. Yeah, that, that was a great
[4:21] overview, Sam. You know, I, I, I think I was on
[4:24] the Regeneron call today and, and Lynch life, the CEO was one
[4:28] of the three who were written a letter and then Trump crossed
[4:32] out their, their formal title and wrote their first name.
[4:34] And I, I think Trump missed the ultimate power move to, to
[4:36] actually just put the wrong names.
[4:38] They should have written Leo Dan and Arnold instead of David
[4:41] Lennon Albert. But look, you know, I, I think
[4:45] it's funny when, when, when Trump kind of laid out MFN, you
[4:48] know, maybe a month and a half ago.
[4:50] And, and this has obviously been something coming from even his
[4:52] first administration and IPI, which is the prior duration.
[4:57] I think conceptually, I, I don't think it's a terrible idea.
[5:02] You know, I think there, there are huge disparities between
[5:05] what the US pays for drugs and what, you know, other relatively
[5:11] wealthy countries pay for drugs. And I think UK is sort of the
[5:14] prime example of these massive disparities in, in drug pricing.
[5:17] And I think I think conceptually it's a good idea to try to, you
[5:20] know, find a more common ground or at least a GDP adjusted
[5:25] common ground between the two prices.
[5:26] I think, you know, as Sam, as you highlighted, I think the
[5:28] problem with with a lot of kind of the ideas behind the Trump
[5:32] administration that I think superficially are good is just
[5:36] they're they're kind of so aggressive and not necessarily
[5:39] well thought out. They create much more chaos than
[5:42] sort of like the simple explanation would have.
[5:45] And you know, Regeneron brought up on their call this morning
[5:48] just that the fact that they don't make the price of Ilea X
[5:52] US, right? They've partnered that out so
[5:54] they don't really have an ability to do anything other
[5:58] than be forced to pay a much lower EYLEA price because buyer
[6:02] has no real incentive to raise the ex US EYLEA price because
[6:08] there's there's no equilibrium in terms of profitability there.
[6:11] If someone controlled, you know, the worldwide pricing that, you
[6:14] know, that's a little bit of a different story, but it, but I
[6:16] think, you know, just kind of signals and we'll get into this
[6:19] a little more when we talk about the FDA.
[6:21] But you know, there's so many things that are being tried and,
[6:24] and you know, maybe a lot of it is, is, is in an effort to find
[6:28] better negotiation. But you know, if any, if these
[6:31] are implemented in mass, it's going to create so many
[6:35] disturbances across the sector. And I think that chaos is really
[6:39] what I I worry the most about. Definitely.
[6:44] If I just would add also I think we haven't we've not been able
[6:48] to find a legal framework through which this could be
[6:50] easily implemented. If if the administration decides
[6:54] to go full combat zone on this, then I suspect that comes will
[6:58] bring all their power to to resist it from a legal
[7:03] perspective, You know, and we have a whole bunch of legal
[7:07] brains in the in our in our group, which tell me that.
[7:09] So I'm just the teacher here. And the other element of course
[7:14] is we've just been hearing from these pharma executives how
[7:17] wonderful and productive their conversations with HHS has been
[7:20] with regards to direct to consumer and everything.
[7:23] And then they wake up and get this letter.
[7:25] So I mean, I don't know if the right hand is aware of what the
[7:28] left hand is doing or not or, or whether this is just something
[7:32] we're going to have to get to and cope with.
[7:34] But it's we don't see the risk of this that easily except
[7:42] couple of points that we talked about decade and the direct to
[7:44] consumer. Well, there's there's bipartisan
[7:47] support for drug reform and meaningful drug reform.
[7:50] So if the industry or those companies that were called out
[7:54] want to dig in their heels and and fight back, I think that was
[7:57] kind of the point that Trump was making in the letter, which is
[8:01] play ball with us. Because if you don't play ball
[8:03] with us, it's it's going to be potentially much uglier for the
[8:06] sector. And then, of course, you know,
[8:07] in the background, you have China emerging as a lower cost
[8:11] provider of innovation. And so, you know, if you're
[8:14] going to try to force countries around the world to pay a higher
[8:18] price, you're going to have to figure out how to make sure that
[8:20] they're not going to get a better price out of comparable
[8:23] therapies coming from China. So, you know, I think the the
[8:26] industry is somewhat lucky that China's not at the stage yet
[8:29] where they were ready to step in as that, you know, across the
[8:33] board low cost provider of pharmaceuticals.
[8:35] But you know, China's changing by by the minute in terms of
[8:40] their competitiveness. So we'll have to see where this
[8:43] all goes. Yeah.
[8:45] And China, we're going to come back to China in in a little
[8:47] bit. Paul, go ahead.
[8:48] Sorry. Yeah, I was just going to say
[8:50] like I think the in the backdrop of this like the investment
[8:53] community is still like massively discounting this
[8:56] becoming a reality. I think, I mean when I just look
[8:59] at certain stocks I cover that have big XUSUS price
[9:02] discrepancies and what this could actually mean for them.
[9:06] Like, I know, I know Sam was opining on the pharmas, but some
[9:09] of like the biotech companies that have concentrated revenues,
[9:11] like, you know, companies like Vertex or Neurocrine, who, you
[9:16] know, it doesn't have a big ex US presence, but Ingress is sold
[9:18] in Japan. I mean, this could be super,
[9:20] super meaningful. And I still feel like most
[9:23] investors are looking at how tariffs played out, right?
[9:26] Where, you know, the first offer was something that decimated the
[9:30] stock market and was seen as extremely recessionary.
[9:33] And then how it ultimately played out over time, right,
[9:35] was, you know, considerably more benign.
[9:38] So I think that that is just at least where the reality is as it
[9:41] relates to how the sector is trading on this.
[9:44] And we'll see if that ends up being right or wrong.
[9:46] But but you saw this letter came out yesterday and yeah, the
[9:50] market was under pressure, but you know, it wasn't at all like
[9:53] day one the the liberation day trading that we saw.
[9:56] Keep in mind though, the nuance that companies are expected to
[10:00] submit their pricing data overseas to the US government.
[10:03] So when you have one company selling a drug in the US and a
[10:06] very different company selling the same drug outside the US, it
[10:09] may be difficult to get that other company to disclose their
[10:12] their prices. So there may be some nuances,
[10:15] right, that would pertain perhaps to A, to a neurocrine
[10:18] and contrast so much, so much we don't know that we need to
[10:22] better understand if and how this is going to play out.
[10:25] But I don't think many are at this point arguing that this is
[10:28] a a good thing. Although you know the, the
[10:30] offset here is if you can get higher prices ex US and
[10:34] reasonably protect your, your US prices, then you know there's,
[10:38] there's a plausible, perhaps not likely, but plausible scenario
[10:43] that that some companies can come out of this ahead.
[10:47] Yeah. I mean, Josh, like the if this
[10:49] is applied, if the, if there's some sort of negotiation at the
[10:52] end of the day, this is applied to new launches and there's not
[10:58] that many existing drugs that are getting hit hard.
[11:00] I mean, you could argue that that's that that's bullish for
[11:04] certain drug areas. Yeah.
[11:06] And I think is it directionally just one second.
[11:09] So I think directionally it's it's where the administration is
[11:13] going, but my sense is that it's not written in stone.
[11:17] And so the investor perspective of let's wait and see how it
[11:20] actually plays out is probably correct.
[11:22] And I spent some time in DC with advisors to the administration
[11:27] as well as Doctor Oz. I'm happy to comment on that in
[11:30] a minute, but go ahead, Sam. Can I just postulate a possible
[11:33] future? Let's say the agreement is in
[11:35] place that new drugs will launch at the most favoured nation.
[11:40] However, we all know that new drugs almost always launch first
[11:44] in the US. So I'll postulate this and Josh,
[11:47] you guys can shoot it down or modify it or say it's not
[11:50] possible. I'm, I'm the, I've just got a
[11:53] new drug. I'm bringing it to the US
[11:54] market. The price that we would use in
[11:57] our models would be the average of what we think the drug should
[12:01] get relative to the other drugs that are on the market in the US
[12:04] plus a premium because it extends survival by 500 years.
[12:09] And therefore instead of 300,000, now I am in this new
[12:14] world, I've got a new launch. I'm going to price it at
[12:16] 600,000, say, right. And then wait two years, which
[12:19] is about the sort of time it takes to get the European
[12:22] launches going usually. And then launch over there maybe
[12:25] at a slight premium and then bring it down to a premium to
[12:28] what the history would have been.
[12:29] Then bring it down in the first two years.
[12:31] I've bashed enough in there to to to make up the difference for
[12:36] the next three or four years. Does that have any?
[12:38] Does that make any sense to anyone?
[12:39] It's. Kind of like the practice in
[12:44] Germany, right? I think what you see now with
[12:49] high-priced drugs in the band that you're talking about, it's
[12:52] things like F cartigimod, right, where the price is actually
[12:55] basically the same in Europe as it is here.
[12:57] And roughly they've just given up on European access.
[13:00] I mean, like you look at our Genex's sales, such a huge
[13:02] percentage of that's coming from the USI think we're talking
[13:05] about that price band. I think that's what most
[13:09] companies will do. I think the tough questions here
[13:11] for like the Glit manufacturers and things like that, where
[13:14] where it's, it's a more complicated situation.
[13:17] The one thing I'd say just just I don't have a lot to add to
[13:20] this conversation is the honest answer.
[13:21] But the one thing I would say is I think this whole thing that I
[13:25] hear a lot of, like we don't know what legal framework the
[13:28] administration could use to accomplish this.
[13:31] I think that represents A fundamental lack of creativity
[13:34] and imagination relative to like what the administration has done
[13:37] to higher Ed or what they've done in the tariff sphere or in
[13:40] other places. I think if the administration
[13:42] got really serious about this, they would absolutely be able to
[13:45] find tools to make life unpleasant, including by the
[13:48] regulatory agencies, by FDA and HHS and other places.
[13:51] Like, I think there's a lot of tools the administration has, if
[13:53] they really decide they care about this, to to to put real
[13:56] pressure. What's interesting and, and that
[13:59] even in your comments, you know, we kind of focus on Europe when
[14:02] we think about most favoured nation, we don't think about
[14:05] China despite the China prices being a fraction of the European
[14:09] prices. And it's interesting dynamic.
[14:11] I think we'd all, Daphne, love to hear what you heard in
[14:13] Washington though. That's right, F Guard is much
[14:14] cheaper in China than it is in Europe.
[14:16] That's absolutely true. Yeah.
[14:18] So I what I heard in general was that the administration is
[14:21] actually looking to collaborate with industry.
[14:23] They want proposals from industry.
[14:25] They are going directionally in this on this path, but they are
[14:29] open to ideas and they're also open to hearing what's flawed
[14:33] about their proposals. And I, I found that to be very
[14:36] reassuring. In terms of Oz, who will be
[14:39] involved in the implementation of this.
[14:41] I had a chance to meet with him and hear from him a little bit,
[14:45] and some of the themes that he was commenting on were that CMS
[14:49] really wants to work with industry in a collaborative way
[14:52] and CMS is really targeting fraud, waste, and in particular
[14:56] middle men inefficiencies, so PBMS, 340B misuse while ensuring
[15:02] that vulnerable populations access innovative therapies.
[15:05] By the way, one of the ways of enabling MFN would be to
[15:08] eliminate the middle men in the US because that doesn't exist.
[15:11] That whole framework doesn't exist in Europe or X US.
[15:15] I also heard that CMS is committed to sustaining early
[15:18] stage biotech and not just CMS. Everybody I met in Washington
[15:22] and CMS in particular through reimbursement clarity and
[15:25] regulatory support, they really want to hear from innovators.
[15:28] And another theme that I heard from everybody I met was a major
[15:32] concern around China and China's IP theft and its threat to US
[15:38] biotech leadership. So this is a big theme for the
[15:40] administration and I think that this is kind of the bullish
[15:44] piece of it. But we can come back to China,
[15:47] but actually maybe we'll go to China now and then come back to
[15:50] Prasad afterwards. So in terms of well, yeah, in
[15:55] terms of trying, there are some deals.
[15:57] But I think that the key thing on China is that it now accounts
[16:02] for 30% of global clinical trial starts.
[16:05] It's nearly matching the US share, which is 35%.
[16:08] In 2023, China's drug assets represented 24% of the entire
[16:12] global biopharma pipeline and that's up from just 2% a decade
[16:17] earlier. And most concerning is Chinese
[16:19] companies copying IP and then moving to fast track
[16:22] development. So they're basically able to
[16:24] read about something either in a patent filing or in a
[16:27] publication and then move much faster.
[16:30] They can get multiple companies working and, and, and with the
[16:34] regulatory framework obviously surpass their US counterparts.
[16:37] And that's coupled with pharma companies then going and doing
[16:40] big deals deals in China with cheap me too programs.
[16:44] So as I said, I spent some time in DC also talking to economic
[16:47] advisers to the administration and propose some ideas.
[16:50] You know, I think these are really early, but they seem to
[16:53] be open to them. So one concept would be
[16:57] introducing regulatory reimbursement and funding
[16:59] related penalties to protect US intellectual property.
[17:03] And then another idea or another general theme was around
[17:06] incentives around M&A that only apply to US based biotechs.
[17:11] For example, amending the Internal Revenue Code to allow
[17:14] US based biotech companies to retain their Nols.
[17:18] So following dilutive financing and M and A transactions, which
[17:22] would make those companies much more attractive.
[17:24] So those are some ideas. I know we're going to come back
[17:26] to the China deal, but anybody want to comment on that before
[17:30] we go to Prasad, which was the other big news of the week?
[17:37] This is Brad's favorite topic. Come on, Brad, what do you think
[17:43] of those? Proposals on NFM or on the
[17:47] China? No, on the China, the ones that
[17:49] definitely just spoke about. I think the tax thing should
[17:53] should definitely happen. I, I'm in the minority.
[17:57] I, I think that something politically big is going to
[18:00] happen with China over the next two or three years.
[18:05] Like I don't like the GSK thing and like all of the deals that
[18:09] are happening. Like I don't fault anybody for
[18:13] doing those deals. Like everybody's acting in their
[18:16] own self-interest. But the, the thing that you have
[18:19] to take a step back and, and look at is that our industry's
[18:25] relationship with China is the exact opposite of every other
[18:30] industry, meaning every other industry is outsourcing the
[18:35] stuff that doesn't matter, like the cheap manufacturing.
[18:39] So like, you know, I always use this analogy.
[18:42] It's that iconic slogan on every Apple product designed by Apple
[18:49] in California. Our so like nobody cares that
[18:54] iPhones are being made in China because that's not the valuable
[18:58] part of the equation of what Apple is doing.
[19:01] The valuable part is inventing new technologies.
[19:06] Our industry is doing the exact opposite.
[19:09] We are outsourcing the innovation part.
[19:13] So like the GSK drugs, like if they had that label, it would
[19:18] say designed by Hangrui in China.
[19:22] And if you're GSK, you're doing what's in your best interest
[19:26] because they can do R&D, they can get to a, a Phase 1 proof of
[19:31] concept on those drugs literally years faster than they could do
[19:37] themselves doing their own R&D. So I don't fault them for doing
[19:41] what's in their best interest. But if you're a politician and
[19:45] most of the politicians like our industry is too technical, they
[19:48] don't understand it yet. Like another thing to keep in
[19:51] mind is the semiconductor industry has gone through this
[19:55] and it took the politicians years to understand the
[19:59] semiconductor industry. Like we're next and we're even
[20:02] more technical than that. So it's going to take them a
[20:05] little longer to understand our industry.
[20:08] But when the politicians. Whose job is to think of the
[20:12] long term competitive like GSK you would.
[20:15] I mean, obviously it's a, you know, an Anglo Swedish company,
[20:18] but like their job is not to think of the long term
[20:23] competitiveness of the United States and like what could
[20:26] happen geopolitically further on down the road.
[20:30] That is the job of a politician. So when the politicians start to
[20:34] understand that we're outsourcing the innovation part,
[20:38] we're outsourcing the science part of what we do, they're
[20:43] going to freak out and they're going to make changes that's
[20:47] going to make it a lot more difficult to do business with
[20:50] China, just like has happened with the semiconductor industry.
[20:54] So I'm in the more minority on that opinion, but but I do think
[21:00] it's inevitable that something happens like that unless our
[21:04] relationship with China somehow magically got better.
[21:07] And I think the odds of that are practically 0.
[21:11] So I think something big is going to happen on this over the
[21:13] next two or three years. Yeah, I don't think you're in
[21:16] the minority, Brad. I think you're spot on and I
[21:18] think it might happen sooner. Can I say, I think this is a
[21:22] conversation though that I hear all the time and I agree with a
[21:25] lot of Brad. I think I agree with you on a
[21:27] lot of things about China. But I think again, I feel like
[21:30] all of this discourse that's like we're outsourcing the
[21:33] innovative part to China. I think that is just missing a
[21:36] transformation that is happening in front of our noses, which is
[21:39] that this is not the innovative part anymore.
[21:42] Generating 50 CD19T cell engagers, each one a novel
[21:47] molecule, and generating phase one data for 50T cell engagers,
[21:51] each one a novel molecule. It just turns out that's a
[21:53] commodity. Good.
[21:54] Now we built an industry in the US that was like designed to
[21:58] think of that thing as the innovative thing.
[22:00] And it's not anymore. And I feel like that is an
[22:03] adjustment that we're all going to have to make.
[22:05] Because I feel like even if you figured out how to block it from
[22:08] happening between the US and China, it turns out that there
[22:11] will be other like, it's just not that hard to generate a new
[22:13] T cell engagement now. And so people are going to be
[22:15] able to do it. And I feel like that change is
[22:18] something that we like, need to start reacting to as an
[22:21] industry. So I agree with that, but what
[22:28] you're describing is what's going on today.
[22:31] Like we are literally by and by the way, another thing that's
[22:35] important to know about all of this is China's actually on we,
[22:39] we talk about China's biotech sector as if it's unstoppable
[22:44] and and inevitable. They're on thinner ice than we
[22:48] are because they are 100% reliant on succeeding in the
[22:53] United States to even have a biotech sector.
[22:56] Like one of the biggest disappointments of the last like
[22:59] 6 or 7 years is how China's pharmaceutical and innovate like
[23:04] what they pay for drugs has never materialized.
[23:07] So like there's like we talk about them as if they're
[23:12] unstoppable, but they're not like they're in really thin ice
[23:16] if we make major changes here. But the thing that I would
[23:19] disagree with Matt is we are right right now what they're
[23:25] doing is like what I would agree with you is not like super
[23:29] innovative like new inventions, but we're basically funding
[23:33] their knowledge. And at the same time, we've
[23:36] stopped funding our startups that are working on discovery
[23:42] and early stage science like that 30% of deals, it's going to
[23:45] Chinese companies. That means it's not going to
[23:47] U.S. companies. And there's companies that don't
[23:50] exist today that like would have existed like, like under, like
[23:55] our traditional and like, you know, under our, our traditional
[24:00] way of doing this. So the challenges that these
[24:04] Chinese companies are going to get if we keep funding their,
[24:08] their, their growth, like if we're like paying for their
[24:11] college, like tuition, so to speak.
[24:15] Like there will absolutely be in a couple of years, if not
[24:19] sooner, a new phase to this where we have funded their
[24:24] knowledge to the point that they are innovating on, on
[24:28] everything. And it the way that the
[24:31] regulatory structure is today and their costs, like you can
[24:35] have five people there for everyone here.
[24:38] It's just like simple math of like like what salaries cost and
[24:42] same with manufacturing, like everything I would say like when
[24:46] it comes to China, everything that we have here, they could
[24:50] have 5 there for the same cost. Like it's going to be really
[24:54] hard to regulate. Like just make FDA rules looser
[24:59] and say, well, we'll be able to compete hand in hand with them.
[25:02] I don't think so. So, so if we get to a point
[25:06] where anyway we could talk for hours about this, I'm going to
[25:11] stop. But but this will go to a new
[25:13] phase that where they're, if they're out innovating on things
[25:18] that are truly new and we do not have the ability to keep up
[25:22] because things are so much cheaper and quicker there that
[25:26] like it's impossible to change the regulatory structure here to
[25:30] level that playing field exactly.
[25:32] Yeah. Do you have one more second on
[25:35] this or not? You're the boss.
[25:37] If it's something new, go ahead. Let me see, can I provoke and
[25:41] say replace Prasad China just as President Trump did in his
[25:45] letters and put Europe, If this was Europe, which we would, I
[25:51] don't know. I would love it to be, but it's
[25:52] not. What would we have the same
[25:55] consternations? Would we have the same issues?
[25:57] Yeah. So I think that the the biggest
[25:59] issue is around theft of IP and if there was a way to tie that
[26:03] to other, you know, for example, regulatory or reimbursement or
[26:09] other other aspects, I think that would be a good deterrent.
[26:12] I don't think that's as big of an issue in Europe.
[26:15] And I also don't think, you know, they're not, they're not
[26:17] doing what China's doing in terms of the speed.
[26:19] But let's move on because we have a lot of topics to cover.
[26:23] And one of the other big news items of the week, of course,
[26:27] was Vinay Prasad, FDA Sieber director, stepping down after
[26:31] some controversial direct decisions, including actually
[26:34] reportedly over ruling his reviewer 6 times in about that
[26:37] many weeks. He was only three months in the
[26:39] position, which translates into around 8 Scaramucci's for those
[26:43] who followed that. And all eyes are on who will
[26:46] replace him at sea with rumors of a potential restructuring at
[26:49] FDA to spin out the vaccines division and combine Seaburn,
[26:53] Cedar, Scorney. You predicted Prasad leaving, so
[26:56] let's start with you. Yeah.
[26:59] Well, you know, I certainly felt the, the actions that he took
[27:03] and, and sort of the response in particular on, on sort of, you
[27:06] know, some, some on, on the MAGA side of things, on the Maha side
[27:10] of things, you know, was, was particularly aggressive.
[27:13] And look, I mean, a lot of us have been following Vinay for,
[27:16] for the last decade. I mean, he is, he is a person to
[27:19] rock the boat, whether you agree or disagree with him, He, he is
[27:22] loud and he is, you know, pretty forceful with his views.
[27:28] So, you know, I, I just think he tried to do too much too
[27:33] quickly, rock the boat too much and, and ultimately that, you
[27:38] know, drew the ire of of sort of a MAGA Maha crowd and, and for
[27:43] reporting, you know, maybe Trump himself.
[27:46] And, you know, he, he, he is gone.
[27:48] And I think it's, you know, it has a lot to do with sort of him
[27:52] coming in and and taking aggressive tactics on a, on a
[27:55] number of applications. But, you know, most notably is
[27:58] probably his response to the surreptic controversy with with
[28:05] the two DMD deaths on 11 SA third LGMD death with a related
[28:11] product and and a another DMD death on 11.
[28:15] It's from not the same liver toxicity, but you know,
[28:19] potentially related immunosuppression and and, and
[28:24] resulting in an infection that resulted in in a patient's
[28:27] death. So, yeah, I mean, I think the
[28:30] it's a very it's a very pot, you know, I think for for stocks,
[28:33] given the concerns that industry had over him in particularly
[28:39] holding programs to a much higher bar than, you know,
[28:44] certainly were used to for for Peter Marks, but arguably a bar
[28:48] that we've never really seen before in industry at the FDA.
[28:52] His removal is is has been viewed by investors as, you
[28:56] know, a net a net at least near term positive for stocks.
[28:58] And that you know a lot of these companies with with small data
[29:03] sets, more ambiguous data sets, but in indications that are very
[29:07] tough to develop drugs and might be given more leniency on under
[29:12] an FDA that doesn't have him running Sieber and being CMO and
[29:16] CSO. So.
[29:17] So was he too lenient with how he handled Surrepta, or was he
[29:22] not lenient enough because of how he's handled Surrepta and a
[29:26] bunch of other applications? I think it had to do a lot with
[29:31] this inconsistency with his review team.
[29:34] So the idea of over ruling your team and also inconsistency with
[29:38] previous guidance. And I think that was 1 angle.
[29:42] The other was political. And actually, I'd love to come
[29:44] to Matt. You mentioned that Doug Ingram
[29:47] has a history of fighting FDA on things and winning.
[29:50] I'm not sure how much Serepta actually was behind any of this,
[29:53] including a political pushback. Yeah, I mean, obviously I'm not
[29:57] either. You know, Doug at Allergan was
[30:00] heavily involved in the Botox sort of marketing lawsuits.
[30:03] Obviously, he was involved at Surrepta when Elevatus was first
[30:07] approved and in sort of mobilizing the patient groups.
[30:11] Then I guess my honest view is it would be a little bit
[30:16] surprising if you had a coordinated campaign.
[30:19] From Laura Loomer, the Wall Street Journal op-ed page and
[30:23] all the patient attitude and everything else.
[30:25] And it turned out that Serepta had nothing to do with it.
[30:27] So especially given his history, I guess, like, my view from the
[30:30] outside is it? I'm not like a conspiracy
[30:32] theorist, but it seems like there's something there, right?
[30:35] Can I just say that I, you know, not to diminish Doug's role in
[30:41] regulatory success, but you know, I would also note Surrepta
[30:43] has managed this enormous regulatory success through three
[30:47] different CEO's. And it's too bad Chris isn't on
[30:49] today because he's one of them, Ed K and Doug or the other two.
[30:53] And you know, I just wonder, is it the person in that seat that
[30:55] was is responsible for this or is it someone else?
[30:58] Because I would argue that it's more likely organizations like
[31:01] MDA, PPMD, Cure Duchenne, a lot of us could probably even call
[31:06] out specific mothers who have had direct influence on ultimate
[31:09] decision makers within the FDA around DMD drug approvals.
[31:13] And it sounds like that may even be the case to some extent based
[31:16] on some of the reporting in this case as well around the
[31:20] elevatist reintroduction and even Van Nuys ouster.
[31:24] So that's fair. I think it's a signal, you know,
[31:28] and this, this goes for advocacy groups at large, but the DMD
[31:31] advocacy groups are extraordinarily powerful.
[31:34] Between I agree that's. A good point between Peter Marks
[31:37] now and Vinay Prasad, who even wants that job?
[31:42] Yeah, it's a great point. George does, maybe?
[31:47] Right. And I think, you know what I
[31:48] continue to hear from colleagues is still generally positive
[31:52] sentiment about Commissioner Mccary.
[31:55] So the 5th FDA listening session with about 60 industry CEOs and
[32:00] senior executives took place in New York right after Prasad left
[32:03] and George Tidmarsh, the new Cedar had joined him on that
[32:06] one. And what Mccary talked about was
[32:09] in line with previous sessions around streamlining FDA
[32:12] operations, eliminating redundancies, reducing duplicate
[32:16] testing, regulatory flexibility kept talking about that,
[32:19] enhancing post market surveillance through centralized
[32:23] adverse event databases, incentivizing US manufacturing
[32:27] via Gold Card and rejecting certain foreign EG Chinese data
[32:33] and emphasizing rare disease, placebo free trials and more
[32:37] timely agency responses. So that you were at this one,
[32:41] what did you take away from it? Yeah.
[32:44] I mean, overall it was a benign, helpful, favorable session.
[32:51] I think he came across to your point about the administration
[32:53] generally, I think he came across as open minded.
[32:56] I think he came across as genuinely interested in figuring
[32:59] out ways to make the agency more effective.
[33:01] I think if a third of what he said came to pass, it would be
[33:06] all good for the, for the biotech industry.
[33:08] And I think he he came across as serious in the attempt.
[33:11] I think the two things that were notable, I mean, Prasad had
[33:14] departed the night before and the name Prasad was not
[33:16] mentioned in the three hour session once, which I thought
[33:19] was like a, A whatever. It was a notable experience
[33:22] sitting in that room with whatever is about 100 people in
[33:24] total and like it just never came up.
[33:26] I thought that was like interesting.
[33:28] And then the other thing that was interesting is there was a
[33:31] specific discussion around cedar and Sieber alignment.
[33:34] And I think he made it pretty clear that a thing that he
[33:36] thinks is useful is getting cedar and Sieber much more
[33:39] closely aligned with one another.
[33:41] He had George sitting right there.
[33:42] George had obviously been sort of appointed interim head of
[33:46] Seaburn addition to his role as Cedar, you know, sort of
[33:48] immediately prior to the session.
[33:50] And I thought that was also an interesting, an interesting
[33:53] note, especially in light of what had happened.
[33:55] And, and and almost whatever lemonade of lemons, whatever it
[34:01] was like almost made made the sequence seem intentional as a
[34:05] part of of bringing the two centers closer together.
[34:09] All right, So we have a few more policy related things, Sam
[34:13] quickly on tariffs and then we'll go to Josh on other drama
[34:17] around RFK. Yeah.
[34:20] So tariffs we had the August 1st came midnight last night, we had
[34:25] the 15% tariff that's been handed out to many countries
[34:29] that weren't that even did deals.
[34:32] So European Union's got the 15% at the beginning of it that that
[34:36] was last week. Obviously there was a a bit of A
[34:38] to and fro between different groups as to whether
[34:42] pharmaceuticals were included or not.
[34:43] And I think the final bottom line was that pharmaceuticals
[34:46] were included and then overnight we had the 35%.
[34:50] I can never remember what the exact is because I've also seen
[34:52] 37% mentioned somewhere but Switzerland, which of course
[34:57] impacts Rosh and Novartis. But then there was a question as
[35:00] to whether that includes pharmaceuticals or not.
[35:03] Semiconductors don't really matter so much to Switzerland,
[35:06] but pharmaceuticals clearly do. And my understanding is
[35:09] pharmaceuticals are included in the conversation.
[35:13] But whoever wants to correct us online, follow up the
[35:17] conversation, do it. But and then of course, you've
[35:20] got everything else that's going.
[35:21] So all that's in place. It doesn't come, doesn't hit
[35:24] until next week. So there's still time for these
[35:27] to be corrected and we'll see, we'll see how that pans out.
[35:31] And that's where that's where we are with tariffs as regards the,
[35:36] the, the overall pharmaceuticals.
[35:37] I don't think there was another element to tariffs to cover, was
[35:40] there Daphne? No, I mean, I think an important
[35:43] practical consideration is that most US small to mid sized
[35:46] biotech companies don't have the capital or capability to move
[35:49] their manufacturing and many rely on CDM OS.
[35:52] So until there's sufficient and affordable US capacity at CDM
[35:55] OS, it's going to be small tough for smaller companies to comply.
[35:58] But you know, 15% is, is not is manageable.
[36:02] Yeah, it's manageable. Manageable.
[36:03] Yeah. Yeah.
[36:04] So Josh, you wanted to talk about other RFK drama?
[36:07] Yeah, look, there's something in the news nearly every week now,
[36:12] A couple of news items. 1, He wants to restructure the
[36:14] preventive health task force that makes recommendations for
[36:18] medical screening, apparently viewing them as too woke.
[36:22] Admittedly, they are quite woke. I don't know what Tuoak means.
[36:24] And he wants it to have fewer doctors and nurses and more
[36:27] dietitians and therapists. And hopefully that will be
[36:30] smoother than what he's done to the ACAIP panel, which is still
[36:34] very contentious. And then the other interesting
[36:37] move that that he's come out with, not surprisingly, is
[36:40] overhauling the vaccine injury program and wanting vaccine
[36:46] injury victims to be compensated, quote, quickly and
[36:49] fairly, which is obviously going to mean a lot of litigation for
[36:52] his litigation friends. I think it's going to be very
[36:55] difficult, though, to prove vaccine injury.
[36:58] It'll be very interesting to see if this whole do vaccines cause
[37:02] autism? No, it's not much of A debate.
[37:04] I think most everyone who understands literature doesn't
[37:07] doesn't view so, but it's that fringe view that vaccines are
[37:10] are associated with autism. Imagine it making its way into a
[37:14] Supreme Court litigation around vaccine injuries.
[37:16] So lots more to come out of out of HHS.
[37:21] Yeah. And you guys a few weeks ago
[37:23] talked a lot about these, some of the panels, and I think that
[37:27] the experts that they're choosing, there are, there's
[37:29] definitely some concern around that.
[37:31] There was also some news yesterday that the Senate
[37:34] Appropriations Committee rejected the administration's
[37:37] proposed funding cut to the NIH advancing a measure that would
[37:40] increase the budget by about 400 million.
[37:43] I didn't have much time to dig into that, but it seems to be
[37:46] good news for the biotech ecosystem if it plays out.
[37:49] So let's move to some deals. Matt, you wanted to talk about
[37:52] the GSK hangry deal and then also Josh and Matt to talk about
[37:57] the BMS, Bain, Spinco. Yeah, I'm GSK hangry.
[38:01] I don't have much to say beyond the conversation we already had
[38:03] on China before. I don't know if if.
[38:07] Yeah, so we can move on. So let's go to the BMS. Bain,
[38:09] Spinco. This is a deal.
[38:11] I mean, so this is a deal structure that that my company
[38:14] Roy even has a lot of familiarity with.
[38:15] It's what we did with Pfizer, with Tilavant and Pryavant.
[38:19] The thing that I thought was interesting about it, look,
[38:21] other than I think TLR 7-8 is a promising class.
[38:23] I think it's a little bit interesting to see it, see it go
[38:26] into this sort of structure. Obviously lupus is an
[38:28] increasingly crowded indication. The deal that was done, I think
[38:31] people follow along, but but Bristol did a deal with Maine
[38:33] where they took a collection of assets.
[38:35] The lead among them is a phase three TLR 7-8, mostly in SLE and
[38:40] put it into a Spinco where Bristol kept about 20% of it.
[38:43] Spain presumably owns the rest and made a $300 million
[38:45] financing commitment along with royalty and also obligations
[38:49] back to Bristol. Look, I think this this
[38:52] continues to under score that, you know, even as you know,
[38:55] Bristol's had a pretty good run relative to where they were.
[38:58] But but even as these companies are recovering and figuring
[39:00] things out, they have a lot of PNL pressure.
[39:03] They need to work on their on their portfolios and they need
[39:06] to make tough decisions. And look, obviously I think it's
[39:09] good for all of us, good for the industry if those tough
[39:11] decisions involve creative partnership structures that
[39:13] allow those programs to continue to be developed.
[39:15] So I was happy to see it and expect we'll see more and more
[39:21] similar things happening from them and from others in the
[39:23] future. Yeah.
[39:25] And Bain did the Saraville and that was very successful.
[39:28] They've been very successful in that, Daphne.
[39:30] Yeah, go ahead. And adjusted a couple of things
[39:32] on the GSK hungry, just a couple, OK.
[39:35] In terms of size, it was the third largest deal in terms of
[39:39] bio dollars ever. So the biggest one was Dai Ichi,
[39:42] Merck 22 billion recursion and Roche 12 billion, which was of
[39:46] course 40 targets etcetera. But I think there's one point we
[39:49] need to bring out here and that is that GSK has basically bought
[39:52] a whole bunch of options. And what it highlights is that
[39:56] they've given Henry the they've taken the right to products that
[39:59] Henry takes through phase one. And at that point, they make a
[40:02] decision. And the exact point that we just
[40:05] talked about was they can do these phase ones and that early
[40:08] stage development much faster and much cheaper than currently
[40:12] we can. And that's what we I think
[40:13] that's what Matt was trying to say too.
[40:15] That's what we need to fix. But what GSK is getting is good
[40:20] human data, including non Chinese patients for a fraction
[40:23] of the cost. In the end, of course Henry's a
[40:26] profit in that and they get to the option to take that at that
[40:29] point. That's what I think is
[40:31] attracting people there. So and also it's unfair to say
[40:34] there's no innovation. I mean PD1, VEGF by specifics.
[40:37] Where did that come from? Let let me just.
[40:39] Just just to that point. Yeah, let me just very quickly
[40:43] agree with you and just say think of this deal this way.
[40:47] Like it really shines a light on what a structural problem this
[40:52] is. Henry is not an his.
[40:58] GSK has been inventing new medicines for literally over 100
[41:02] years and Gruey has been doing that for like 4 years.
[41:08] So the fact that GSK is like we need to outsource our science to
[41:15] this company. Like if you'd asked me four or
[41:18] five years ago, what are the, you know, out of the 50 China
[41:22] biotech companies, like rank them in terms of like the
[41:26] impressiveness of their work and grew would be like in the bottom
[41:30] 5 or 10, like it is a traditionally generic drug
[41:34] maker. And so the fact that GSK, which
[41:38] has been at the forefront of science literally for over a
[41:40] century, is like, we need to outsource our science part to
[41:45] these guys because it's just so much faster and better.
[41:52] I think really goes to show what a structural problem this is
[41:58] like clearly. So I think it's a great example
[42:01] of, of, of, of, you know, eventually people are going to
[42:08] pick up on this. And I I think it's a glaring
[42:10] example of like, what the issue at stake is here.
[42:14] Yeah, it's a great point. So Paul, I want to hear a little
[42:17] bit from you talk. Let's talk about the AbbVie,
[42:19] Gilgamesh $1 billion deal rumors.
[42:22] I'm not sure if there's any news on that today.
[42:24] And then also some good launches in biotech and whether short
[42:28] shorting the launch is a dead thesis.
[42:32] Sure. Yeah.
[42:32] So I mean, I think the AbbVie Gilgamesh rumors reported by
[42:36] Bloomberg, I think are are interesting because I think if
[42:39] this happens, it reflects, you know, another player that's a
[42:44] mainstream player in the case of Abby Year and J&J over there
[42:48] going all in on on psychedelics, right?
[42:50] And, you know, taking a step back, you know, psychedelics
[42:54] kind of emerged on the public market scene maybe six or seven
[42:56] years ago. They had very niche interest
[42:59] from investors. And I think there were some
[43:01] really, really significant commercial questions around the
[43:03] scalability of the model with these drugs.
[43:06] But J&J has seemingly validated that to a degree with Spivato,
[43:10] which looks like it's on its way to being a $2 billion plus drug
[43:13] and not that long. And Sporbato is certainly a nice
[43:16] product, but it's given every other week.
[43:19] And even with that cumbersome, cumbersome dosing paradigm, the
[43:24] utilization is growing really, really fast, right.
[43:26] So Abby doing the steel forgivable mesh, who's a mid
[43:29] stage player has some data. We'll see how the data
[43:33] ultimately plays out over time and their and their
[43:35] differentiation. But you know, it's it's
[43:37] validating for the space, right for companies like Compass, GH,
[43:41] mind Med, it's a space we're following closely.
[43:44] And all of these programs have their kind of own sort of
[43:46] idiosyncrasies, their own questions around, you know,
[43:49] safety, their own questions around scalability in the real
[43:51] world. But but I think Josh mentioned
[43:54] this over the e-mail, right? I mean, Compass now has a phase
[43:56] three study in the bag and they're looking to meet with the
[43:59] FDA soon to see if there's even a path to filing sooner than
[44:01] they expected, right? So I think there's a lot of
[44:04] moving parts here, but ultimately feels like there's
[44:05] broad support politically for these drugs and the medical
[44:09] community for these drugs. And I think the Compass
[44:11] situation is going to be super interesting because the
[44:13] psychiatry division is notoriously, I don't see
[44:16] conservative, but like pretty by the book, right, in terms of
[44:19] what they expect for companies. And so Compass having a phase
[44:23] two study and a phase three and not completing the second phase
[44:26] three. I mean, traditionally that would
[44:27] just be a non starter from a filing perspective.
[44:30] But but if it's ever going to change, it could be now, right
[44:33] in this kind of environment for psychedelics.
[44:35] I don't know if anyone wants to add me.
[44:40] Keep going. Let's talk about launches in
[44:43] biotech, Nylum or Genex Neurocrine.
[44:46] Yeah, sure. I mean our team was kind of
[44:48] looking back at some of our older models from companies I've
[44:51] covered for you know like a decade or longer and just
[44:54] looking at, you know what the spend was early days in a launch
[44:59] back then versus now. And I think we're seeing this
[45:03] theme where just mid size, small to mid size companies are just
[45:05] much more well resourced and much more sophisticated when
[45:10] they launch drugs. It also feels like they're more
[45:11] sophisticated at, you know, managing down expectations.
[45:15] And I thought this week was was just interesting, right where
[45:18] looks like it was a second quarter that was pretty good
[45:20] broadly on an industry perspective.
[45:22] But you know, you saw Al Mylam blow out numbers, even the
[45:26] backdrop of super high expectations for bertriticerine
[45:28] and TTR cardiomyopathy. You've seen neurocrine with
[45:31] their drug chronicity in CAH, you know, get over 1000 patients
[45:37] close to starting therapy and, and just a year or two ago.
[45:40] I mean, I think most people thought that that was going to
[45:42] be a fairly small product. I mean, there was Verona
[45:45] Madrigal. I mean, the list sort of goes on
[45:47] here and it's just like interesting, right?
[45:50] I mean, I think like, it's not, this is something that might
[45:53] still, I think there's still a lot of impediments to getting
[45:56] generalists in the sector. But but you know, I think like
[45:59] short, the launch was a was, was kind of the cliche, right?
[46:03] And it feels like now that's become just a lot more dangerous
[46:07] for people. And, and I would even say that
[46:09] in my coverage universe, the commercial stories are, you
[46:12] know, more and more in favor versus how they've been
[46:15] historically. Where I feel like kind of the
[46:16] better way to play biotech was to do, you know, Clin dev
[46:19] stories and, and kind of dream the dream.
[46:21] But once a company launches the drug, the financial reality gets
[46:24] a little bit more complicated and challenging to grapple with.
[46:26] And I just think in this year we've really been seeing the
[46:29] opposite. Yeah.
[46:31] And Josh, you cover bridge bio as well.
[46:34] I saw on you last week. That's another example I think.
[46:38] Yeah. I mean, we're, we're, we're in a
[46:40] different era now. It's an exciting era.
[46:44] I think investors have broadly taken note of it as well.
[46:47] I think for me, what's an interesting theme though is
[46:50] they're looking at some of these companies that are having good
[46:52] product launches, then thinking about what comes next and
[46:55] looking at some of the pipeline programs that aren't really
[46:57] getting a lot of value recognition.
[47:01] Yeah. How much of this is due to
[47:03] analysts also thinking, well, look, we've we've learned from
[47:06] this short launch, so let's be conservative and management
[47:09] being more conservative with guidance or any any of.
[47:12] Them or how much does it come from drug prices being like 3
[47:15] times higher than they used to be?
[47:16] So everything that's multiplied by three and we have unless only
[47:19] adjust. But but Sam, to your point,
[47:20] yeah, I mean there's multi factorial and there have been a
[47:23] lot of adjustments and learning this along the way.
[47:25] I don't, I don't think it's all just expectation setting part of
[47:29] it, but I think there's also operational execution that's
[47:33] that's changed. So Brian and then we have we
[47:38] have Brian, Paul and Sam on Alzheimer's news.
[47:41] We have Biogen earnings, some blood based biomarker stuff and
[47:47] Lilly a beta prevention. So why don't we start with with
[47:52] Brian? Yeah.
[47:54] So, so talking about short launches and when, when do
[47:57] expectations start actually outperforming?
[48:00] You know, I thought Biogen was interesting this quarter.
[48:02] It was really maybe one of the first quarters I remember where
[48:06] La Kembe actually outpaced expectations.
[48:09] I mean it wasn't a mass about outpacing.
[48:11] I mean it was a it was a big outpacing if you included a one
[48:13] time to to China. But even if you unwind that one,
[48:18] one time build in China, it still did outpaced expectations
[48:22] on a revenue side. But but I thought was more
[48:24] interesting commentary. And I think this goes kind of
[48:27] across the class, right? Like MB has been a really huge
[48:31] disappointment relative to where expectations were maybe five
[48:34] years ago for something like an Aducani map.
[48:37] And, and I do think like a lot of the controversy around the
[48:40] Aducani map approval has sort of weighed on, on these next anti
[48:44] amyloid therapies that have been approved.
[48:47] But you know, there's certainly a lot of hurdles to getting
[48:49] patients on on therapy. And one of the things that's
[48:52] really been a big hurdle is, is getting patients diagnosed and,
[48:57] and with a positive PET confirmation of amyloid
[49:04] presence. And one of the things that has
[49:06] really been interesting is we've seen emergence of these blood
[49:08] based biomarkers, biomarkers looking to correlate with
[49:14] amyloid on PET and they're getting better and better.
[49:16] And we're sort of seeing a lot of usage of blood based
[49:18] biomarkers right now to sort of go through a decision tree as to
[49:23] whether or not a patient with maybe mild cognitive impairment
[49:28] should go on for a PET or not. And sort of excluding that, one
[49:31] of the comments that Biogen had was that, you know, they've
[49:33] sought sort of seen that the blood based biomarkers increase
[49:35] threefold over the last year. So I think that's an interesting
[49:39] consideration. And you know, I know Sam has
[49:42] some commentary off of Roche's presentations as well, but I
[49:46] think we're really starting to see the emergence of these, you
[49:50] know, much more easy tasks, which ultimately may may wind up
[49:53] being the primary mode of diagnosing Alzheimer's and
[49:56] getting around PET altogether. Sam.
[50:05] You know, I mean, there's not really much to add.
[50:07] I mean, that was a preclinical story that came through and Rush
[50:11] is still sticking. It's call us to the mass with
[50:14] regards to the trantanumab brain shuttle, etcetera.
[50:18] So, you know, I agree with Brian that it's been interesting to
[50:23] watch this. I mean, these were a class of
[50:25] drugs that in the end they didn't really pass muster with
[50:28] regards to the clinical data they've been seeing.
[50:30] So I think there's quite a lot of that playing out here.
[50:32] But but Russia's, Russia's progress quickly into very much
[50:37] earlier stage Alzheimer's is quite telling.
[50:40] And let's not forget that they're also a company that
[50:44] knows all about diagnostics. So I'm hoping that that is one
[50:48] of the that is a good signal to going forward.
[50:51] Yeah, I maybe I'll just add like, I think, I think at this
[50:54] point, you know, like if in the absence of any more clinical
[50:57] data, it feels like this could be a slow grind.
[51:00] And you know, who knows, maybe like Kennedy ends up getting to
[51:02] being a, a couple billion dollar drug someday.
[51:05] But you know, when we talk to different neurologist practices,
[51:08] right? I mean, I still think the growth
[51:09] here is fairly linear. And it's, it's because of
[51:12] diagnosis, but it's also just because of capacity, right.
[51:14] And Biogen has said over and over that one of the rate
[51:17] limiting features of this launch has been getting people to see a
[51:20] neurologist, which is kind of like a conceptually wild, right.
[51:23] So, you know, I think the interesting readout that we're
[51:26] going to get is in sometime likely in the next year and
[51:28] maybe sooner if we get an interim analysis that's positive
[51:31] is from this Lilly Ahead study that people are calling in
[51:35] Alzheimer's prevention trial. The truth is a little bit more
[51:38] equivocal, right, Because these patients are kind of at that
[51:40] sort of early really tipping point pre symptomatic stage.
[51:45] But if that study works, you know, I think there's an
[51:47] argument that for patients who don't actually yet have
[51:51] Alzheimer's, the level of motivation for seeking a
[51:55] treatment to prevent it might be somewhat different than someone
[51:59] who's already somewhat symptomatic.
[52:01] And, and, and they're being told that the drug is not going to
[52:03] make them any better. And, you know, that patient
[52:05] psychology question is, is really centers around like the
[52:08] debate on on this study. And is this study going to
[52:10] actually really increase the use of these drugs?
[52:12] Could it transform them? Could it just have a marginal
[52:14] impact? But I mean, I guess Brian, like
[52:17] the one issue we still have with that study and even these blood
[52:21] based biomarkers when we think about scaling this to a broader
[52:24] population is if you look at the Lilly trial, the screen failure
[52:27] rate is still like 85 to 90%, right.
[52:30] So that shows that like even people who are seeking out this
[52:32] study who think that they could be a candidate, the vast
[52:35] majority of the time that they're not.
[52:37] So I just like wonder if that's really still going to be viable
[52:40] in the real world and how are we going to implement these tests?
[52:43] Where are they going to be? Are they really going to be in
[52:44] like primary care? Like, and if it also comes down
[52:47] to referral to a neurologist because the Aria monitoring and
[52:50] things like that, like, you know, maybe data that from that
[52:53] study could double the size of this class.
[52:54] But I'm just not sure if it could like 5 exit in the way
[52:56] that some investors are starting to kind of talk about.
[52:59] I'll be at you know, I think Biogen is still a pretty out of
[53:02] paper stock right now. So Galapagos, what's happening
[53:09] over there? I know Henry was originally
[53:10] going to run the Spinco. Now he's running the parent.
[53:13] Matt, you've been following this story.
[53:15] I have actually talked about it on here before and I just think
[53:18] it's again, one of these examples of long term laws of
[53:20] unintended consequence where you've got a story that had a
[53:24] very specific meeting under its prior incarnation.
[53:26] And then when Ono left and forgotten and the other sort of
[53:30] original compounds kind of blew up, you wound up with this no
[53:33] man's land. And now they've been going
[53:34] through a series of iterations to try and reboot the story.
[53:38] And the thing that happened last week is there was a a further
[53:42] modest renegotiation of the Gilead pact and some team
[53:45] changes there to try and clean things up and maybe make it
[53:48] easier to sell the cell therapy company that was originally
[53:50] going to be spun out and is not going to be spun out.
[53:54] Look, my take on this from the outside remains what it has
[53:57] been, which is there's an awful lot of capital there.
[54:00] There's some smart people around the story as investors and so
[54:03] on. But that until the economic
[54:05] arrangement and framework with Gilead is truly sorted out, you
[54:08] have a box of cash that has some really complicated encumbrances
[54:11] on it. And I think it's going to
[54:13] continue to to, to flap in the breeze a little bit until some
[54:15] of that stuff gets gets settled. Now, Galapagos has a lot of a
[54:19] lot of say in the matter because I think most of the complicated
[54:21] entanglements with Gilead have sunsets in the next few years.
[54:25] And so I think we'll see that. We'll see that play out over
[54:27] time. Great.
[54:29] Well, we're almost at time. So let's go around.
[54:31] Usually we we start the show talking about biotech,
[54:34] sentiment, capital markets, etcetera.
[54:36] Let's let's end the show talking about that.
[54:39] We'll start with Brad. Well, I would just say like, I
[54:43] feel like we've all been in like a bad mood for a long time.
[54:48] And I would just say that like if you take a step back, like
[54:51] things are going really well lately, like how many clinical
[54:55] trial results have there been over the last three or four
[54:58] weeks where we've seen companies literally quadruple or or
[55:01] quintuple And you know you're talking about al nine of them
[55:06] earlier. I mean they crossed the $50
[55:08] billion market cap. That's that's a major
[55:12] achievement for our industry and just goes to show that if you
[55:16] have really great science, it doesn't happen overnight, but
[55:19] you can, you know, build something that's really big and
[55:23] impressive. And a lot of drug launches are
[55:25] going well, like about Madrigal being in a position to be buying
[55:30] stuff. Their launches is going so well.
[55:32] So I think we're getting caught up on a lot of the like the
[55:36] cleanup from the, the COVID bubble, like the stuff that
[55:40] shouldn't exist. And you know, a lot of that's
[55:42] like weighing down the XBI. But I would say like especially
[55:47] lately in the last few months, it feels like the new slow has
[55:49] been pretty good. So I would say, you know, we
[55:54] should, we should be pretty optimistic lately.
[55:59] Josh. Still a lot of risk out there.
[56:03] The one thing I'd say is that at least from the investment
[56:05] perspective, you can't, you can't rely on the same
[56:08] investment practice or approach irrespective of, you know, the,
[56:14] the broader context, whether it's macroeconomic or, or
[56:17] regulatory or, or China innovation.
[56:19] So I think that's kind of the fun of what we do is where we're
[56:22] try always trying to figure out what is the right investment
[56:25] strategy in the moment and in the moment.
[56:27] Today is different than the moment at the beginning of this
[56:29] year and and and last year, and it'll continue out to evolve.
[56:35] Brian. Yeah, you know, I I agree a lot
[56:39] with with Brad and and Josh, One of the things I wanted to just
[56:42] kind of call back to is, is the commentary about the the drug
[56:45] drug launch out performance. And you know, I sort of have
[56:47] this overarching thesis that a big part of the cycles that we
[56:50] go through are sort of how expectations build, right?
[56:54] I mean, and, and there's this chicken versus the egg argument
[56:56] of like, do people, you know, Dr. valuations higher and then
[57:01] by trying to catch up with valuation and to necessitate
[57:04] higher valuation, you just have higher expectations of launches.
[57:08] And then as things sort of blow up and valuations go down, your
[57:11] expectations just go down along with them.
[57:13] And, you know, I think sort of the last Big Bear market that
[57:16] there were a lot of regulatory issues and short launch was just
[57:19] commonly stated a great thesis and sort of late the, you know,
[57:23] the 2008, 2011 era. And you know, what you saw then
[57:28] is you saw massive outperformances over
[57:29] expectations. You saw launches of drugs like
[57:31] Tecfidera, Eylea, Sovaldi, you know, things that wound up
[57:36] being, you know, 3-4, five times bigger than what people were,
[57:39] were modeling. And I think it was because the,
[57:41] the sector was so depressed. People were just being really
[57:45] conservative. And I think you see the same
[57:46] things with, with clinical trial outcomes these days.
[57:50] You, you see catalysts that can lead to 203 hundred 400% moves
[57:54] because the valuations have been so depressed.
[57:57] So I, I take that as a positive. Look, the whole sector always
[58:00] trades on risk and reward. And, you know, you know, I think
[58:02] what we're seeing now is the reward relative to valuations
[58:06] has become profoundly higher. Arguably there's, there's a
[58:10] little more risk. Certainly there's a lot of
[58:12] regulatory concerns, government concerns, but you know, you're
[58:17] seeing some really big upside moves that I, that I think have
[58:22] create, you know, I think should bring interest back to the
[58:25] sector. Well, the three of you have been
[58:28] consistently like, I think more not pessimistic, but but less
[58:32] optimistic than than most. So I, I find your comments to be
[58:36] really reassuring. Let's go to Paul, Sam and then
[58:40] Matt. You can close out the room.
[58:42] Yeah, not much to add. I mean, it feels like the risk
[58:45] on piece is definitely, it is definitely like emerging, right?
[58:49] We're seeing more financings, stocks have been trading better
[58:53] on data. So not much to add.
[58:54] But you know, outside of this kind of MFN lingering, it feels
[58:57] like the market's in a much more healthy place for the SEC.
[59:00] OK. Sam and then Matt's going to
[59:04] close it out. Yeah, I love, I love hearing
[59:06] this because by by the heart, I'm a biotech analyst.
[59:09] But we did have the opposite stories right now just so we can
[59:12] in farmer land with, you know, we're not as cutting it's sales
[59:16] growth for the year by a half, 14% down to 7%.
[59:21] That's a launch that's not going as well.
[59:23] But that's because their lunch being eaten by compounders and
[59:27] and competition from a very good drug from Lilly.
[59:29] So farmer land was hasn't been as great this week.
[59:31] But biotech I'm really excited and when Josh is happy, I get
[59:35] happy. So I'm waiting to see.
[59:40] Yeah, thanks. Look, I lots more people have
[59:43] gotten to go before me, so I don't have a ton new to say.
[59:45] I think getting away from some of the political turbulence and
[59:50] whatever else that actually feels bizarrely short term, even
[59:54] though maybe it shouldn't. To me, it's been so, so sort of
[59:56] whiplashy. I think it's just like some
[59:58] really exciting fundamental changes happening right bout to
[1:00:01] companies launching products. Well, because the M and a
[1:00:03] climate has changed, so they haven't been bought as clinical
[1:00:06] stage companies. I think it's like a great
[1:00:07] development, people finding. Like actual business models, I
[1:00:10] think it's going to turn out eventually that however the
[1:00:14] China dynamics play out, that like new parts of the industry
[1:00:17] are going to be commoditized and it's going to lead to, like
[1:00:20] interesting developments in other parts of the industry.
[1:00:22] And I'm just like excited to see that play out.
[1:00:23] And I think so much of what we're watching is the early or
[1:00:26] middle stages of some of that transformation.
[1:00:28] And it's complicated, but it's fun to be part of, yeah.
[1:00:32] Well, thanks all for your great comments today and hope you have
[1:00:36] a nice weekend. We'll see everybody next week on
[1:00:38] Biotech Hangout.

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