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- [00:00]
A
You're listening to Biotech Hangout, a live and unedited weekly discussion of all the latest news in our industry with a group of biotech leaders and experts. I'm Greg Savanovich and my co hosts today are fellow sell side biotech colleagues Josh Shimmer and Jeroen Werber. We've got Sam Fazeli and also a special guest today, Oliver Barnes, who's joining us for first time. So welcome Oliver. For more information about our hosts and guest speakers, or to listen to the most recent episode, please go to biotechhangout.com so happy Friday everyone. The sun is out, but there's a slight chill in the air still where I am in New York City, but it's great to be back again as a host on the Biotech Hangout. We had a really fun session last week. I hope many of you joined. And I want to thank my co hosts from last week, Mikey and Eric Schmidt, for their always insightful and amazing contributions today. I'd like to start with some high level comments on where we are in the biotech market. So from a public market perspective for the week starting Monday and through at least yesterday, yesterday's close, using the XBI, which is an ETF as a proxy, biotech is up 2% now. This compares to the S&P 500 and NASDAQ both being up 4% for the week. So that is relative underperformance. But with that said bigger picture when looking at the XPI, it's now up 8% year to date and that's strong outperformance versus the S&P 500 which is essentially flat for the year and up only 0.5%. And that's even stronger outperformance for the XBI when comparing versus the NASDAQ which is down 2% year to date. In addition, importantly, with the XBI closing yesterday near the 132 level, this encouragingly marks a new 52 week high. From my perspective, this reflects just an incredible comeback for biotech, especially if we were to look back at this time last year when the markets were just reeling from the aftershocks of so called Liberation Day with the current US Administration's announcement of new tariff policy. For context, a year ago today the XBI stood at 71 and change. That's the exact 52 week low level. And for numbers geeks and perhaps stock nerds out there like me, that is a very nifty and healthy 84% positive return. That compares with a plus 30% return for the S&P 500 and a plus 39% return for the Nasdaq. And while those numbers certainly reflect truly great returns over the past year, a public equity investor would have more than doubled her or his money investing a year ago had they invested in biotech using again the XBI as a proxy. So just an opening statement on the biotech market that I thought was very worth sharing with you all today. And then in terms of the financing environment, I'd like to highlight just a few things. First, the S1 filing for Avalon Pharma that took place this week for that Boston based company to go public. For some background, Avalon Pharma was founded in 2011. It is working on inhaled formulations of two approved and the most established oral drugs for idiopathic pulmonary fibrosis or ipf, with those drugs being Esbrid and ofev. While terms have not been disclosed yet and accept in its S1 filing, the company is looking to raise $100 million to fund an ongoing Phase 2B study for its lead candidate, which is an inhaled version of Esbriet, and also to fund an ongoing phase two study for a second drug, which is an inhaled version of Ofev. The IPO plans come after the company successfully raised 100 million in a series D financing last July. They were also able to raise $175 million in a C round in 2023 and $36 million in a B round. This S1 filing comes on the heels of a S1 filing for Calera Therapeutics, which is an obesity focused biotech from a few weeks back. And so overall, when keeping in mind six or so biotech IPOs we've seen year to date, while we would always like to see more, I think this continues a very healthy trend for US Public biotechs. And finally, with a number of US public and private financings that took place this week, including a $345 million equity raise for publicly traded Celldex Therapeutics. From the European biotech perspective, I just wanted to flag the successful close of a new 1 billion euro fund by Paris based Jato Capital. Sam, did I get that right? Is it Jato? And then. Okay, thanks. And then at 1 billion euro or roughly 1.2 billion US dollars according to the company, that mark largest raise ever achieved by a fully independent European fund dedicated to biopharma. So all in all, I think relatively speaking we're in a very decent, if not very good place in biotech. Although sometimes it doesn't always feel that way. Against this backdrop, I want to turn things over To Sam Fazeli and Josh Shimmer, who will walk us through a host of healthcare policy and FDA regulatory news matters. Let's first start with Sam. Sam, go ahead and please take it away.
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B
Sure. Thanks Greg. So we had a few things administration wise and, and Josh and, and Greg, please jump in and your own's there too. So jump in when you feel like it. Let's start with the 100% tariffs that the President started talking about for some pharma companies. When you start digging into it, you think, wait a minute, didn't we already do this with regards to most favor about a year ago? Roughly. I mean, I can't remember now. There's so many things that happened that it plays havoc with my memory. So here we are thinking that we'd settled all these tariff things and this announcement comes out and then of course you dig into it and it's much more about form, I believe, over substance. So it excludes a whole. First of all, 16 out of the 17 largest companies have already done deals with the U.S. they've gone. And so most of them have been through the Oval Office for the photo opportunities, et cetera. And that has required them to pledge to bring manufacturing back to the U.S. of course, I'm sure we're all going to be out there with our drones and whatever other method we can use to see how that manufacturing build out is going on. But we have one company that hadn't signed yet or has been. If they've done, they haven't announced it and that's Regeneron out of the top 17 big companies. And here this 100% tariff applies to. I really can't figure out who directly it applies to. Maybe it applies to Regeneron, maybe it applies to companies like Mercade, gaa, and the whole deal is essentially try and get them to come and sit at the table and do some, you know, at least some of the MFN agreements with regards to Medicaid, etc. And talk about bringing manufacturing back to the US it doesn't include generics for obvious reasons because you can't if your tariff generics is finished, there's no market theft biosimilars, it doesn't include orphan drugs and it doesn't include rare diseases. So quite a lot of the little biotechs who do have drugs for these types of indications would be excluded automatically. So this is the way that I've been seeing it. I don't know if anybody else has a slightly different take on it or I mean the market hardly blinked. Although it came in the middle of the whirlwind of the Iran conflict. So I don't know if anyone else wants to chime in on that on this particular one. If not, I'll go to the next one quickly, Greg. And that's the nice news, something that I think we had been expecting, although I'm still trying to also understand the substance and what exactly it means. So create a new clinical trial notification pathway to serve as an alternative to the burdensome existing investigational new drug pathway to accelerate drug development timeline to make America healthy again. What's the point of this? Well, a lot of people are blaming or at least pointing to for one of the reasons why there have been increasing deals with China biotechs is the fact that it's much easier to get into first in human trials in China in terms of speed and regulatory elements than it is and Australia than it is in the US and probably Europe. If anybody regulates things, it's going to have to be Europe first. Right? They always win on regulation. And so here I think the discussion has been can we speed this up, at least get rid of that relative competitive advantage that China has? And this is what it's aimed to do. But then when I read the little detail in there, revise the FDA regulatory framework to create an optional risk based expedited IND pathway. Optional is number one right pathway for certain phase one clinical trials. What are they? I don't know where there is existing preclinical data. So is that mice, rats, where does that stop? Can I not have to worry about dogs and non human primates? Probably because one of the key things that it does go on to say is that these things should satisfy the regulatory standard. They validated ENAMS methods, which is the non animal kind of tests. So it's going to be interesting to see whether this is the way that if all of this is essentially suggesting that you don't have to go through the entire process of mice and then whatever other models you use and then dogs and then the non human primates in some circumstances before you get into the trials. So that's the way I've been. I'm trying to get my head around this. I don't know how many pathways this impacts, but I'm assuming it's going to be positive, they manage to do it. So anyone else want to chime in on that?
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A
I think it's clearly, I think obvious to most of us and listeners that, you know, at least in the US as it tries to stay competitive globally, particularly in with China, Biotech I think it's a positive thing to see at least some initial movement, particularly perhaps coming out of the fda. But I guess we'll just see how this all plays out over the next sped.
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B
Yeah, yeah. So what we do need to do is to speed things up, that is for sure how it's actually done and how quickly we can speed to kind of about speed quickly we can get there to actually make a difference in the next six to 12 to 18 months. Time will tell. But if you talk to all the good and the great in biotech that we all do talk to, they all want to see this, this process to be simplified but not cutting corners, not risking people's lives. And I'm pretty sure we can get there. The last thing I was going to just talk about from an administration perspective, if you all I'm sure followed on the vaccine world, what I'm understanding is that first the HHS has been kind of directed to. This is a rumor. I don't know how much fact there is in there to calm me down a little bit on the vaccine, anti vaccine comments, et cetera. So that's at least from the the public front side. But one of the significant changes that have happened in the vaccine approval or review process is the complete revamp of the ACIP which is the Advisory committee for Immunization practices that is run by the part of the cdc, part of the Health and Human Services Division area. So what this group had been doing for the past, not as long as I've been around is reviewing vaccines data and making recommendations about. It's not fda, right. FDA approves things as they do. ACIP was telling people how to vaccinate, who to vaccinate, when to vaccinate, and sometimes they would make decisions that was quite consequential on the potential revenues of a vaccine because they limited to 65 plus, et cetera, et cetera. So what happened with Secretary Kennedy who came in head of the HHS is that the ACIP was completely gutted. The 17 members were pretty much removed. A bunch of new folks were put in and some of us viewed those people as not necessarily being the types of experts that they should be. Then we had a court ruling which essentially said that all these changes were against the charter of how the ACIP members should be appointed and put a hold on it and pretty much was suggesting that they need to be reversed. What seems to have happened now is that there seems to be some changes to that charter itself to essentially make it easier for these changes to stick now, what does this mean in the end for vaccines? We all know that vaccines have been under pressure. I think we generally believe, I'm not going to speak for everyone, that they are one of the best things that science ever developed in terms of its value to society and prevention of disease. However, this is the direction that it's been going is try and prevent or reduce as much vaccine access or public trust in vaccines. And that's where we are and that we have to see whether this change that's going to potentially come to the charter will eventually make it easier to just keep the ACIP as it is now, which is essentially people that I frankly would not trust to make a decision on how to vaccinate or whether to vaccinate and who to vaccinate. And the reality is that most states have essentially moved to doing their own thing and the American Pediatric association is making recommendations now. So so I don't know if I'll be watching ACIP meetings anymore when I used to watch them religiously. So that's where we're at.
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A
Greg, thank you so much, Sam, for those comments. Josh, you're on. I think if you could provide some comments on a press conference by FDA Commissioner Marty McCary, that would be great. Yeah, it was interesting press conference that
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C
Dr. Makary hosted to test of the progress that the FDA has made under his leadership, ranging from the food additive stuff that they've addressed and approving biosimilars and some of the expedited reviews that they've completed and generally Trudeau form as perhaps more of a politician than anything else. It was very everything is awesome. Things are going great and for the things that didn't haven't been going great, don't blame us, blame prior leadership kind of kind of discussion perhaps in an effort to solidify his his role is that as head of fda. Considering he's also come under a fair amount of fire for some of the turmoil that we've seen coming out of the agency. I think we can all agree that separately this will be really interesting. RFK Jr. Is going to start his own podcast where he will be talking about issues that he says will be uncomfortable for folks to potentially hear about. We'll have his array of guest speakers. It'll be fascinating to see what he covers on that on that podcast. I'm sure it'll give us plenty of fodder and for some really interesting discussion here on Hangout based on whatever it is he's going to come up with to talk about. But I think we can all confidently say whatever it is will probably be issues and items that many of us are likely to not agree with.
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D
So the saga continues for now.
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A
Thanks Josh for that. It will be interesting to see what happens on that podcast. We'll shift now to the section of our podcast where we highlight notable deals of the week. And we're actually going to start today with a discussion of what I would describe as a highly controversial M and a deal that was actually announced a few weeks ago. And that was Merck's proposed $6.7 billion acquisition of publicly traded Turns Pharmaceuticals, a company that I was involved with when it went public via an IPO back in February 2021. Turns, as some of you may recall, initially was focused on advancing a pipeline of multiple assets to treat treat the liver disease Nash and after positive phase two data and when no one came to the table for an out licensing deal for what I thought then was a very good THR beta asset for Nash, or MASH as we call it now, the company then pivoted to obesity and oncology. The shares actually hit a low of $2 last year after the Liberation Day related weakness in the markets. And then last fall after its oral GLP1 drug ultimately proved uncompetitive, it pivot to being an oncology only focused company with a very novel allosteric tyrosine kinase inhibitor for treating chronic myelogenous leukemia or cml. With what then was considered truly spectacular efficacy data that were announced at the ASH meeting last December, the company was able to raise almost $750 million in an equity raise at $40 a share only to then be the subject of Merck's M and a bid at $53 per share share that was announced on March 25. So now the really interesting aspect of that offer was at $53 per share that only reflected a 6% premium versus the last prior day's closing price for Turns shares. And trust me as I cover turns, I heard from many disgruntled investors and I think your own Covers Turns as well. He probably heard the same thing, but in particular given given street views on how exciting and compelling the prospects were for turns as a TKI for CML. And this comes in direct contrast to the 6 billion or so deal we saw last week with many of you recalling from our podcast last week when we discussed Biogen's acquisition of Apellis Pharmaceuticals, a company I also cover with Biogen offering a 140% premium over Apelles prior day closing stock price in that case Apellis or at least Biogen seemed to be overreaching, with perhaps a surprisingly large if not outsized premium for a company that features an emerging orphan kidney disease drug, but at the same time a flagship drug in sif ovary for geographic atrophy with much greater potential revenue that had previously shown pretty slow if not flat growth over the past year. So getting back to Turns, the SEC filing that details how the deal went down became available this week and I encourage you for Entertainment to go to that SEC filing and wow, did we see many twists and dare I say Turns when it comes to the play by play on how that deal finally came to fruition. I'll summarize and maybe at the end I'll have Jeroen at his comments. But how how the M and A discussions went down was something like this in late December after Turns had announced earlier in the month its ASH data where we saw a 64% six month major molecular response or MMR rate in an initial ongoing phase 12 study versus an abstract that was initially made earlier in November. So later in December an unnamed party and in the filing the party is known as Party C, which was not Merck initially came in with a $58 per share unsolicited offer that then kicked off an M and a process that led to other parties and including obviously Merck getting involved in M and A discussions that Party C, that other party increased its bid to $61 per share with an $9 CVR. And then Merck came in and on its own offered initially $61 per share. Now the really interesting twist here is that parties went under confidentiality and got access to a data room. And what the companies ended up seeing in that data room was the most updated data cut from the phase 12 study. It's called the Cardinal Study Efficacy Signal, though not made public, had in fact degraded from that original 64% six month MMR and that led to a reassessment of deal offers. In fact, Party C ended up dropping out altogether and Merck ended up lowering its offer to $50 per share. And again ultimately Merck and turns agreed to $53 per share. So really interesting, I think it's interesting that it's interesting that the public gets a look at what happens behind the scenes in that SEC filing. We also see what Turn's initial projections were for peak sales for its TKI and that was about 5 billion. And perhaps in retrospect we get to come to a conclusion, whether right or wrong, the 6% premium, which was not well received by investors that we saw Turns ultimately get from Merck, does it represent a fair deal or not? And the last thing that I will say is if Turns had remained independent, if there was never an M and A offer, then if you imagine that sometime later this year were to have to update the market on what the efficacy for its TKI might have degraded down to. And in the SEC filing there is a statement, statement that goes something to the effect of that it would have fallen to the low end of the range that Turns was projecting. This could have been potentially catastrophic for the stock and of course, shareholders. So really interesting what happened in the Turns and Merck deal that's been proposed. Your roan, if you're on, would you like to add maybe some other comments?
- [24:02]
E
Yeah, absolutely, Greg. So thanks for a really, really nice summary. So there's a couple of things
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that
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E
are in there that in the SEC filing and that is that the response was potentially dropped to still within the range, but just at the lower end of the range because of inclusion of patients that failed Semblix in the past. Semblix is Novartis drug, as you mentioned, that is also a STAMP inhibitor. They are the same mechanism. They a better exposure based on PK and looks to be a little bit safer so they can get to the right dose. Again, the data has been early recall. Novartis ultimately was using a lower dose because they did get into some kind of AES at the higher doses. And of course, if you're gonna go with the same mechanism of action again, and what was very intriguing and important here is that their drug was very active still in a patient that was experienced to Semblix. But of course, if you're going to add those patients in, your response rate is going to come down. And that's probably why Merck, again, we don't know. So I'm obviously hypothesizing. But Merck ultimately did stay. They did trim. But they did also say that it still is within the range. Just to give the audience we're talking about a response rate that is dramatically higher than what Novartis showed in the past. Novartis was at a 26% response rate. You know, the, the data was early, but the Data was between 64 and 75. So even if you go to the lower end of the range, you're still in the 40s versus Novartis, you know, at 26. So definitely interesting. Yeah, we agree the stock probably would have gotten down because there's a competitor from Enliven which is sort of an ATP inhibitor that's the older sort of receptor binding but interesting, you know. But look, overall we do have to remember the stock was up like sevenfold if not more from the bottom. Much more than sevenfold. And from pre ash to M and A it was. Stock did great. So investors did get renumerated overall.
- [26:17]
A
Yeah, I would add that going back to that December almost $750 million equity raise that the company did. That deal was priced at $40. And so for even new investors who came in at $40 in December and then to be able to get a return where you're getting $53 less than three months later or about three months later or I guess obviously the deal has to close but that's still a really good return I think for investors. So again we wrote a fair amount on that deal. And with that said, I think it will end up being a very interesting case study for M and A deals. But speaking of perhaps M and A deals and some more recent M and A deals, we did see two deals this past week. We're going to start off with Gilead's acquisition of Tubulus which is a German domiciled company working on ADCs. Sam, I believe you're going to comment on this.
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B
Yeah, yeah, thanks Greg. So this is a company that I've seen present two or three times as I go to some of the VC type conferences in in Europe. And so metrics First Gilead's paying $3.15 billion up front. This is the third deal this year. So that's 3.15 plus 5.36 up front for our Sellics and 1.6 something for Euro. So that comes up to about a $10 billion cash spree in the first quarter of this year or does that count? Okay, so far this year. And what's interesting is that this company, Gilead already had a deal with them. So to a degree you could say it's like Arcelix. I mean the woman with Arcelix was much more advanced. And you know the deal that the drug that they bought with arcelics for multiple myeloma was, you know, it's potentially going to be approved this year whereas this is a lot earlier. But the access that Gilead had through their deal that they signed in December 24th. Sorry where the upfront payment was only $20 million.
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F
Right.
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B
Clearly has given Gilead sufficient understanding and knowledge about the differentiated potential, differentiated methodologies that or product development approach that Tubeless has in its ADC program. That's what they do they call themselves the differentiated ADC platform? It gave Gilead sufficient knowledge and confidence to go and do this deal. So a couple of things that I particularly like about this, it comes with a couple of assets. The data for those assets are interesting and there's opportunity there. But I think Gilead's done this to access the platform. Having got into the ADC world through their acquisition of Immunometics back in, I think it was 2000, 2020ish timeframe which gave them the top two ADC Trudelvi. So first of all I kept seeing these guys thinking, okay, that's great, this is an ADC company. But, but Most deals for ADCs are going to China. A lot of China companies are doing differentiated, different approaches, et cetera, et cetera, ADCs. And it's really good to see that just because of the volume of Westminster in China, when somebody has a differentiated approach somewhere else, people don't just keep going to China, to China, which I'm a fan of, but because of what we think is cheaper, cheaper, cheaper. I don't think that's necessarily the case. But in any case here for ADCs having kind of made up my mind that the world's going to go to China for any ADC they want. Here's one that sort of surprised me a little bit. And of course it's really good for the European sector. All the VCs that were in it. The company had just raised in October 25th about one of the the largest Series Cs that I've come across, at least for Europe, 400 or just over $400 million. And of course this being a private company, and I'm not saying anything specific here, but it's possible that the investors had a good feel for how that relationship between Gilead and Tubulus was going. It's a massive raise when their previous raise about a year and a half before was $138 million. And especially when you're in the world of ADCs where again you have that worry that everything ADC is going to come out of China, like everything GLP1 is going to come out of China. So that was a very interesting raise and clearly positioned the company to be able to develop its assets by itself. And of course Gilead decided that it's going to take care of bring them in house. I don't know what will happen with regards to the organization, etc. I'm assuming a lot of the science, etc. Will stay in Germany. But it's good for the European sector and it's interesting for Gilead also in that it's a platform that they bought rather than assets which is what they did with Oro and Arcelix. I'll stop there in case there's any. Unless there's any questions
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D
over.
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A
Okay, thank you so much for that, Sam. We also had another very interesting deal earlier this week from Neurocrine which for almost $3 billion acquired an orphan disease company called Celino. I believe it's Celino Therapeutics. Josh, I don't know if you cover the company or Neurocrine. You may have some comments and then I'd also like to add Oliver to come in again for the first time. Welcome Oliver for any comments he might have as well.
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F
Well,
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D
yeah, so I think we've all been wondering what Neuron was going to do with their growing cash position. They definitely committed to being prudent in terms of their capital allocation and they seem to have accomplished that modest premium for Celino Co. That's selling Vicat XR for treatment of Prader Willi Syndrome. It's off to a pretty good launch already annualizing north of 400 million. Seems to be on pace to become a blockbuster. North of a billion, maybe even a couple of billion assuming that
- [33:02]
F
there are
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D
no new safety signals that come up. There have been a couple related to hyperglycemia, diabetic ketoacidosis, a couple of patient deaths potentially not related to drug although it can always be hard to know for sure. So as long as safety remains consistent with what we've seen so far, the product should could be a meaningful bottom line contributor to Neurocrine giving them a third leg to their stool to complement Ingrezza and Kronesity. Chronicity having a pretty good launch as well and some, some synergies, perhaps more complementariness as opposed to true operational synergies between Celano and Neurocrine. You know, not, not an expensive price to pay at all. Again assuming that that there are no new safety issues to emerge that would change bycatxr's trajectory. It also a couple of other things that the deal accomplishes. One is it does take some of the pressure off of Neurocrine's later stage neurology pipeline which I think many of us view as a little bit higher risk. And so it gives us a fully de risked essentially commercial stage asset into that mix. So a nice balance for them. And the other thing that is noteworthy is that it keeps these companies in the xbi. One thing that has been helping biotech lately is this increasing trend of companies to transition to profitability and bottom line growth and really meaningful cash flows that we're starting to see emerge throughout the industry as a whole. And that's in contrast to many years that the industry spent essentially not returning cash, not generating cash, really guzzling cash. And being an industry that can be very hard for generalist investors to wrap their head around because how do you invest in an industry if it doesn't make money? So we're starting to see this trend within the xbi, within biotech, and being able to maintain strong cash flows within the XBI instead of transferring them to pharma, in my mind is actually very powerful, powerful and a potential force to continue to draw generalist interest into our space. And at the end of the day, generalist interest in biotech is going to have a much more meaningful impact on the sector and its valuations than pharma M and A. And you know, there have been circumstances where we've seen a fairly dramatic transfer of value essentially from the biotech sector to the pharma sector as a result of M and A. And so as the biotech sector continues to mature and continues to look quite investable for those who are attracted to things like cash flow, cash flow at reasonable valuations, these trends are important, noteworthy, and I think are going to prove to continue to be very powerful for the biotech sector. Greg, as you talked about earlier on, it's been a little up and down lately. You know, it's, it's, I think we agree there's a rosy outlook, but lately we're, we keep getting dragged back into that 120 to 130 range. The hope though is that, is that the fundamentals of this industry as we play them out over the next couple of years are really going to create a strong sector breakout.
- [36:26]
A
Yeah, thanks for that. Josh. Oliver, welcome to the podcast. You want to add some additional color?
- [36:33]
G
Yeah. What Josh said kind of encapsulated it really neatly and thanks for having me guys. But the other, the other thing that I Neurocrine transaction, which I think is interesting, is all these mid sized.
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A
We may have lost Oliver with his camera.
- [37:00]
B
Actually, I can't hear him either.
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A
Okay.
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B
Hopefully.
- [37:04]
G
Is that better?
- [37:05]
B
Yeah, that is better.
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E
Oliver.
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A
Hear you now. We can hear you now.
- [37:09]
G
Perfect. So what I was saying was one of the things that's interesting about, you know, these, a deal like Neurocrine buying Seleno is that now there's more like mid Side.
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B
He's gone again.
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A
I think we may have lost again. Hopefully we'll get him back in, but in the meantime, there's one other deal that we're going to talk about. We'll shift things back to Josh on a deal where Assertio was acquired by Garda Therapeutics. Interesting. Smaller deal, but. Josh, do you want to. Go ahead?
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F
Yeah. Much smaller potatoes, but still some interesting potatoes on this one. So Assertio used to be called Depomed, if anyone remembers back. Yeah, I think in part, maybe to shed some of the.
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B
I wonder whether this is Twitter that's playing us, giving us trouble.
- [38:17]
F
Oh, no, sorry. Yeah. Somehow it just went back on mute. All right, you're good. You can still hear me.
- [38:22]
C
Me.
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A
Yes, we can hear you.
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F
Yeah. So it's the old. It's the old Depot Med name change, presumably to shed some of the opioid baggage that Depot Med got caught up in. Not nearly as much as some of the other opioid players.
- [38:38]
B
It is. It is Twitter, I bet you.
- [38:41]
D
Yeah, it keeps.
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F
It keeps muting me. It's really weird. I don't know what's happening.
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G
I think I joined, so I'm taking complete blame for this.
- [38:52]
F
Well, we can hear you now, so that's good. Yes, exactly. Now I gotta watch my mute button and make sure it's not changing on me.
- [39:00]
G
Just change.
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F
So Serdio acquired Spectrum a few years ago to bring in Rovadon, which is basically like a branded version of new Lasta, to compete in a kind of a biosimilar heavy space by offering some of the more. More meaningful ASP plus 6% economics to certain centers. Turned out like right after that acquisition, it looked like. And by the way, the Robodon launch for Spectrum looked to be going exceptionally well. Arguably too good to be true. It looked like there was a little bit of chip that impacted the trajectory of that asset after Assertio acquired it. But now this company, Garda Therapeutics, on many of us have heard of Garda before a private company put a bid to acquire Sertio for basically half the price of Sertio, half the price Assertio paid for Spectrum. And what's also interesting about this one is that there's a shopping window where Assertio can continue to solicit higher bids from other companies before closing the transaction. So I think this is deal number 11 for public biotech companies year to date. So off to another good start in terms of at least deal number. The dollar volume, though, has been more of an average year for M and A.
- [40:22]
G
Maybe I could take this short respite from technical issues to chip into. To come back to the Solano thing, I was just going to say one of the super interesting trends we're seeing a lot of is like these mid sized drug makers transacting and that's going to be good for the sector, right? That means more people, more buy, more buyers, right? More bidders. And we've saw it with Neurocrine doing the Soleno deal. We saw it with servier buying day one last year. Buy Marin did a $5 billion deal. And the market seems to be reacting
- [40:51]
A
well to these deals.
- [40:52]
G
Right. They like the fact that these mid sized drug makers are bulking up for size and I think that means a lot of these processes are going to be lot more competitive. And I think there's another takeaway too from the Seleno transaction which is bullish too, which is often we heard on earnings calls from some of the CEOs and large cap pharma who were looking to buy biotechs that one of their issues was there was a bid ask spread. Right. A lot of the sellers wanted a high premium off all time highs. And you look at of a couple company like Seleno and the journey that it's been on, it sold for like around $3 billion at one point. It was valued north of $4 billion after its launch got started in kind of March last year and it was doing kind of gangbusters in terms of scripts and then the market cooled a bit on it and then the fact that the board and management were willing to transact at a lower price, it shows that right now we've got this very ripe market where there are lots of active buyers, there are mid sized drug makers, there are also large caps dealing with these patent cliffs. And then on the other side we've got sellers not necessarily looking for unreasonable premiums. And I think that's why what we've seen in Q1, which was a really good quarter for M and A, I think probably is likely to be replicated for the rest of the year, God willing.
- [42:14]
A
Okay, Oliver, thanks for that. I'm glad we, I think hopefully have gotten through our technical difficulties. I'll just add a very, very brief comment on, on Depomed. I remember covering that company in 2001, 2002 and that was a company focused on Gastric.
- [42:36]
B
It's happening to you, Greg.
- [42:38]
A
Oh, okay. I guess it's happening to everybody. I was just commenting on, on Depomed and how it's evolved over the years and interesting some sometimes biotech has nine lives. I'll. I'll save my comments for another day on depomed. And I'm still here.
- [42:56]
B
I'm here.
- [42:57]
A
Okay. I'm gonna check my, my, my interface too.
- [43:01]
E
The story, the moral of the story is that you need to change your name and you need to have a good name. Like Assertio is a really good name. Depot Magic sounds like a restaurant. You know, place to buy P.
- [43:16]
F
But
- [43:16]
B
your own turns didn't change their name.
- [43:19]
E
But that's a great name.
- [43:23]
F
It is.
- [43:23]
B
I think Greg, maybe. Yeah, let's, let's maybe we should move to data and then.
- [43:29]
A
Sure.
- [43:33]
E
Oh man, you're wrong.
- [43:35]
A
Why don't you start with the Ascendis data?
- [43:38]
C
Yeah.
- [43:38]
E
And by the way, it is happening to all of us. I'm keep on signing.
- [43:41]
D
Yeah.
- [43:42]
A
Apologize to all of our listeners. It's not our fault.
- [43:46]
E
Okay, so I'll speak very quickly while I'm actually, you can hear me. So Ascend this release their 52 week data.
- [43:57]
B
Just keep an eye on your mute button.
- [44:00]
E
There you go.
- [44:00]
F
Yep.
- [44:01]
E
And I got muted again. So achondroplasia is for patients or people with little stature and short stature, I should say. They already have an approved drug. It's called uvo. It just got approved about a month ago. Launched, Launched last week. It's weekly. It's a weekly version, essentially. And better data than Biomarines Daily, which is called voxogo. Both of them are C and P hormone. They basically do a very nice job actually fixing the biology, so to speak, of achondroplasia, or correct, correct, correcting the biology. They then tested it in combination with their weekly growth hormone. And we've seen 26 week data and that data was incredible. The, the CMP drugs alone kind of boost your growth rate to 50% of normal and the comp to 97% of normal. I mean, that's fantastic. We've seen the 26 week data and now this was the 52 week data. And what's really important is they're not only just boosting which, but as you know, when you look at someone who's, who's little, they're, they have a body disproportionality, so they're looking proportional. The data now at a year actually showed an improvement in proportionality. Fairly meaningful. This is, this data is really a deal. They're now in phase three. They just launched the three study. It also comes at a perfect time because in the meantime, Bridge Bio has now released their data with the oral drug called Infogratinib that Looked very good. It's an FGFR3 inhibitor. So they're going to file this year, they'll be on next year. But now. So the market's going to become a lot more competitive with the weekly option from Ascendis, an oral option coming next year from Bridge Bio. But then probably in two years we're going to have the combination from Ascendis, which all our kols are saying they really believe is going to become a core of the standard. They. So really we're seeing really great innovation here on the metabolic orphan side. So it's really great to see.
- [46:07]
A
Thanks, Jerome, for that. I'm going to briefly comment on some negative data that we saw from insmed. Insmed is a respiratory disease company, had a tremendous year last year in terms of stock performance. It had some negative phase two data from what's called the CDER study. It was evaluating its what I would call its now flagship drug, which is called Brinsupre. Brinsupre was approved last summer. It is approved. It's a DPP1 inhibitor that's approved for bronchiectasis. And out of the gate. The launch of that drug has been amazing. In fact, just if you think about this, in its first full quarter of sales, which were for the fourth quarter of last year, they reported, I believe, about 146 million in revenue and guidance for this year in its first full year of launch is, according to management, at least 1 billion. Again, this is bronchiectasis, which is a very serious coughing type of a condition due to infection. And Brin super represents the very first product ever approved by the FDA for bronchiectasis. And with that said, they had been insmid, that is had been exploring potential use in two additional indications. They had some negative data late last year year in a condition called CRS snp. That came as a little bit of a surprise and a disappointment. And if you look at the stock chart for insmed, you'll see a little bit of a cliff that happened in probably the middle of December. And then we were waiting for data from this same drug, Brin Supri, in a skin condition called Hydrodenitis Superativa. And there are several drugs that are approved, but not all that many. And while there are no good preclinical models for hs, as I will call it for short, in perhaps what wasn't a surprise, Brin Supri did not achieve the primary endpoint of this kind of signal seeking study. So with that being said, we've seen unfortunately two Setbacks for potential label expansion for INS meds. Brin Supri. But that being said, Again, with first full year sales of at least 1 billion guided in 2026 and we've got peak sales of almost 9 billion, that does not mean that the prospects of Brunswupri are not very compelling and very exciting. And that's something that is what's driven given the tremendous stock appreciation in insmed. With that said, I think I would like to maybe pivot to some breaking news. This wasn't part of our original program but we saw today some breaking news that was regulatory in nature and that is a Yet unfortunately for Replimmune, a second complete response letter from the fda. I don't follow the story all, all that closely but for context, this is a drug that was being developed for advanced melanoma, had been submitted to the FDA last year or maybe even late 2024. There was a first complete response letter that came out I believe in July of last year. And then after follow up meetings with the FDA, the FDA allowed them to resubmit. And if you look at the stock chart for Replimmune you can see the highs and lows that correlate nicely with the rejection at first and then the resubmission. But unfortunately in a negative outcome that was just announced mid morning today, the FDA did reject the drug again a second time. And I think it does ask, you know, some questions around how we as an industry, industry should think about perhaps what's happening at FDA or maybe not. And with that in mind I, I'd like to open it up to see if Sam, whether you've got a view on it and whether others have a view on it.
- [51:00]
B
Yeah, well look, so Greg, I've just asked our resident expert in melanoma, Max Nissan and for his views and he's given me a whole huge stuff about the data and what it does. So bottom line, I think if I can dissect all the things that he says and put them into one piece is response rates seem okay. There's some interesting angle with regards to whether the patients have had IP or Nivo before or not. The bottom line is that the efficacy is okay. The patient population that it's gone into, who does need the therapy for this, which is melanoma, as you rightly said, side effect profile is pretty decent. So on a risk benefit profile seems to have been and let's not forget that this is really a, what do you call it, a viral, a replica, a replication competent virus in terms of potentially Treating and directing the immune response to the. And there has been some talk of Abscopol effects in terms of maybe you can set off the immune reaction to other tumors where you haven't injected them, et cetera. But all of it seems to come down to the fact that it was uncontrolled study. Right. So it was single arm study and the data seemed to be fine, as I just said, with efficacy versus side effect profile. What I'm a bit confused about is that if the fda, I mean they didn't do another trial, I mean the FDA is saying you should have done a properly controlled, randomized controlled trial. If I've read it correctly, as you said, it's breaking.
- [52:39]
C
Right.
- [52:39]
B
This is what I'm understanding. But then that, I mean they couldn't have done that versus the last crl, which was in July. And so I'm a bit confused here. Initially I thought, no, this is just a good response to it. A trial that wasn't maybe could have been done at a higher standard as the FDA says, apparently. So what I'm confused about is how could this company have been allowed to refile if this is what the FDA was going to say? So is it pointing to mess at the FDA in inverted commas or not? It's up for debate.
- [53:17]
A
Yeah, I'm just going to quickly offer that it's unfortunate in retrospect. Now again, I don't cover rep, I don't know the story all that well, but for the FDA to have allowed them to resubmit for approval and then to put them through, I don't know, the ringer of sorts, only to reject them a second time just seems a bit cruel and harsh. I don't know, you know, the asset and the clinical trial data well enough to be an authority, but it's really not a great sign for industry, I think.
- [53:56]
B
Yeah, it's possible that what companies often do is get. No, no, no, hang on. We're going to go and do a whole bunch of data analysis here and prove to you that even though it's a single arm study that we merit approval and maybe get. I don't know, I don't know what else they do in these kind of interactions. So, so, but you're right, I mean it just doesn't, it's just something doesn't add up here. If they were going to do this, you should have just said, no, don't come back, go and do a control
- [54:22]
A
trial and come back so correct. Josh or Roan, any comments there?
- [54:28]
F
Yeah, I'll just add that given some of the turmoil the FDA and what seemed like everything is off. So let me keep my job speaking to her from the carry that they
- [54:39]
C
would have of approved this one.
- [54:41]
F
I kind of agree with Sam. Like looks like an active drug, reasonably well tolerated. There is a subjective component to interpreting the data because there's no obvious survival advantage at this point in the preservation of the assets. So that one I agree is a head scratcher disappointing. So I think we thought that this would be a good test case to show for the FDA to show that they're back open for business. And it just means that we're still trying to figure out exactly where the bar is set on a case by case basis.
- [55:22]
A
Thanks for that Josh. We've got five minutes left and we're going to go to some obesity market related news. Certainly can't get through a biotech hangout without talking about the obesity market. And Sam, I think you're going to comment on some approvals that we saw this week.
- [55:40]
B
Yeah, I'm going to Greg, I'm going to try and do two things here. One talk about this nature paper. You know as you know I love reading these scientific articles. It's my upbringing so but, but related to the news that we've had. So we had some data, some approvals. The Novo high dose we go 7.2 milligrams. Remember the usual dose that people end UP on is 2.4. This was launched on April 7th priced at $399 per month for self pay patients which is the prices is a bit lower than what Zbound is going out which is between 499and699. Although these prices seem to be changing on a daily basis almost at the same pace as we get obesity data. So high dose wegovy showed what about 21% weight loss at 72 weeks in the step up obesity trial and Z bound had about 22%. So this is Novo getting its drug to the level of efficacy that we've seen with zbound. Remembering Zbound's got two mechanisms of action, right? Glp, one gip, the other approval we saw was Lilly's Foundao. I'm going to pronounce it like that or for Glipron which is the true two small molecule oral glp, one mimic or agonist. So here is going to be it has been available since the 9th of April. So from next week I'm all excited about looking at the prescription data as they come out. Foundeo starting doses at $149 per month for self pay patients and you go up with the higher doses at 199 to 349 compares to $149 per month of the Wegovy pill. And weight loss and tolerability perhaps looks better for Wegovy definitely on the wet life weight loss basis. But of course Wegovy pill does have strict dosing requirements. The reason I said I'm going to link it to this Nature paper that was published recently is that we're saying here that this drug has a higher efficacy than the other drug. So what this paper did is actually a lot of it's based out of 23andMe data, 25ish 6ish thousand subjects that were surveyed to find out if they were taking GLP1s or not GLP1s and then tirzepatide, etc. Had had a good look at that data and tried to figure out at what are the characteristics that might drive higher efficacy in some patients versus the others. So the study says they identify the missense variant in the GLP1 receptor that is associated significantly with increased efficacy of GLP1 medications with an additional just under a kilo weight loss per copy of the effectoline. They also found an impact on side effect profile and related nausea, vomiting, et cetera. So that was quite interesting. And of course they showed again the same bias to women having better weight loss, et cetera. So what I'm trying to say is that all these studies that we look at and we compare data, we really need to think about what the composition of these subjects are, et cetera, within these trials. And as you know, I've always set up my stall saying I really don't want to compare efficacy involved with these things, especially across trials, but the market will continue to do that. Share price will go up and down on the back of that. But so that was quite an interesting week, particularly with this paper. I'm assuming we'll get even more studies done like this trying to dissect out whether patients have a higher propensity or not to respond to GLP1s over.
- [59:37]
A
Fascinating stuff. Sam, thanks so much for that. Well, that's all the time we have for today. My thanks to my friends and colleagues Josh Aron and Sam and my new friend and colleague Oliver Barnes from the Financial Times. And of course thank you all in the audience for joining and see you on the next episode of the Biotech Hangout.