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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 Chris Garabedian and my co hosts today are Paul Mateus, Tess Cameron and special guest Adam Forstein. For more information about our hosts and guest speakers, or to listen to the most recent episode, please go to biotechhangout.com so we started talking about this, but we're going to start with the market update and the public market's looking pretty good right now. The XBI is at, you know, post pandemic highs. You know, there's only a, like a two week period in early 2021 where there were higher levels of the XBI. So that's good news. And then the IPO window has seemingly started to open up. We saw additional S1 filings this past week specifically. Actually our own Daphne Zohar seaport filed an S1 Hemab. John Margaret is involved in that, also filed this followed Avalon's S filing last week. And then, you know, the big news that today kylera priced their IPO and raised more than 625 million. That's without the shoe that could put them over 700 million at a $2 billion valuation. We were just speculating if trading has started and if it trades up. This is, this is a big one. But Tess, you want to comment on kind of the public markets currently and how they're looking.
- [01:31]
B
Look, I think the public markets are looking really strong. We haven't seen the XBI at these levels for, you know, for many, many years. Part of that just to, you know, get into a bit of a technical discussion for the minute. You know, part of that is, you know, a function of just XBI construction and the fact that, you know, going back to the last time we were at these highs, which was, you know, around 2021, the XBI was constructed quite differently. It was, you know, more of an equal weight index across a very broad range of stocks. The xbi, you know, methodology shifted and is now, you know, more, you know, it's not quite market weighted but, you know, weighted a bit more in favor of larger liquid companies. And we've seen some, you know, very favorable M and A of those companies over the past couple of months and you know, that's really pushed the XBI up high. I thought it was, I thought it was interesting that the, you know, we saw, we saw so much, you know, instability in the xbi, you know, during the first, uh, kind of Closure of the Strait of Hormuz. And now everyone's just kind of shrugging their shoulders and, uh, you know, we see stocks go up, you know, we see stocks go up the next day. So I think that the, you know, acquisitions and just performance of a lot of the, you know, biotech companies has, you know, really, you know, really reflected there.
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A
Yeah. Paul, how do you see the XBI as a, as a true indicator and any comments on, on that and just the public markets in general?
- [03:09]
C
I mean, I think Tess's point is a really good one, that it's hard to like compare across our little mini eras of biotech. But I mean, I feel like the sentiment right now checks a lot of the boxes that both specialists and even generalists are looking for. Right. I mean, I think we're seeing people get rewarded on clinical data. Companies with good clinical data, to say the least, have been able to raise a lot of money on the back of that and even have a number of these stocks trade. Well, not to be the sell side cliche to bring up M and A, but hey, there's been a bunch of M and A and really different types of M and A. Right. Like the kind of higher science early stage asset deal like a Sentessa or the more value deals like Amicus and Apellas and Salerno. And so I mean, I find in my conversations, like people are super engaged on stories that have a clinical catalyst and feel comfortable taking on that clinical risk. And then on the generalist side, it doesn't feel like there's generalists buying high risk biotech stocks. But I do talk to generalists who are looking for alternatives to kind of their tech investments. And for some of the bigger companies that are more growth, like I still think there is a good amount of interest and you know, maybe to kind of finish it off. Right. I mean, we'll see how long this lasts. But you know, the impact to drug pricing and this administration has been pretty benign too. And we've seen a lot of drugs, you know, price above expectations. And so, you know, there's always like risk that one or two of these things can flip. And obviously the FDA unpredictability has been like a whole other story. But like, in general, like, I think this is a really, really healthy environment for biotech investing.
- [04:43]
D
I got a question. Maybe Paul, or for Tess, but just talking about that whole. We always have this sort of generalist versus specialist debate in biotech and obviously the specialist funds are doing really well right now and particularly with M and A, they're able to reinvest those proceeds back into the market. Does it really, do you think? I wonder, are we seeing. Paul, you mentioned, are we seeing an uptick in interest in general investors in the sector? Or maybe it doesn't really matter right now.
- [05:13]
C
Maybe it doesn't really matter because I still think, Adam, it's like concentrated and look like my coverage isn't perfect for it. Like, I don't cover like Lily and Novo. But, you know, in my world where I cover, you know, Adam, I cover some stuff that's super early in high science and then other stuff like Al Milam and Vertex. It's really like concentrated around the alum. Vertexes, maybe in Ionis. Right. But you know, it's not. I, you know, I remember much earlier in my career, like talking to generals who owned like Bluebird Atom when they had like 10 patients of data and were like a huge market cap. Right. Like, I don't think we're back in that world and it's probably like a good thing we're not in that world.
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A
Yeah, I'll just add.
- [05:52]
B
I would tend to agree with that. I think it's kind of your companies, your companies that are like, you know, kind of close enough to market and understandable enough that are getting that, you know, getting that kind of generalist attention. Right. Like, I just point to, you know, revmed. Right. As a company that is, you know, in that, in that phase now of big enough, liquid enough, you know, gettable enough that generalist investors can. Can get involved. But yes, unlikely to be. Unlikely to be your equivalent. I would just add all over 10 patients.
- [06:29]
D
Yeah, it seems like the market right now, I mean, the sector, I mean, look, we've all the sector has grown up. It's become, you know, the companies are generally sort of later stage. You know, we're not like pie in the sky type stuff. And a lot of companies have shown that they can commercialize drugs successfully. So all of that points to. And do it profitably. Right. So it's a market that may be more attractive to generalist investors, even if they may be only just dipping their toe into it. But it's certainly a totally different, more attractive market overall than it was like we said back five, six or eight years ago. Whatever.
- [07:10]
A
Yeah, my reception's a little bit spotty. Can you guys hear me?
- [07:12]
D
Okay, we got you.
- [07:13]
B
Oh, okay. Yeah.
- [07:14]
A
No, I was just going to add, you know, I also look at the broader public investors, not necessarily the specialty crossovers, but we are seeing activity from, you know, the Januses and the, you know, and the Wellingtons and the, you know, cormorants and the red miles. And so I think that that is sometimes a precursor to the generalist coming in when you have to put more money to work and you have higher valuation public companies to support. So I think all of that is good. I'll just add also, you know, pipes and reverse mergers have been performing pretty well over the last couple years. And we saw another one this past week, Obsidian, which did, you know, several hundred million dollars in a pipe and a reverse merger with Galera. And again, you know, reverse mergers used to be a little bit of a dirty word. I think we're seeing quality reverse mergers and, you know, high quality investors in the pipes to again, another kind of anchor of a good healthy public market. Let's move to privates and I'll just speak a little bit on the VC market. So HSBC John Norris just gave an update on their first first quarter and his conclusion was that it was a lower. It was the lowest first quarter since 2023. He thought it was a downtick. I do think that that's largely a reflection of VCs getting more discerning, concentrating their bets, feeling like they want to be more intentional and purposeful in the new investments that they make as opposed to just tending to their existing portfolio. Stat news Allison DeAngelis did a great report a couple weeks ago. Endpoints did a report on just talking to a bunch of VCs which are kind of reinforcing this idea of going to more de risked opportunities, more clinical stage and then some rollups. But in the first part of second quarter, we've seen activity and one big one was Bain did a deal where they took five assets from bms, their pipeline, a lead program in Lupus, and they led an investment of $300 million, pulled the former CEO of Springworks, Saqib Islam to lead this company, and Spring Works was exited at 3.4 billion, an acquisition by Merck. And you know, Bain was doing this with springworks and then Saraval. Both led to, you know, multi billion dollar exits. So it looks like they're at it again with a pipeline. Interestingly, John Morris said, oh, INI looked like it was ticking down. Well, this was an INI portfolio play. So if we added in Bain's $300 million and you know, this INI, it might have changed the conclusion of Q1. But anyway, I think that's all a good sign. And then Adam, I wanted to touch on you. You tweeted about this clinical trial prediction market and I'll just add we're seeing a lot of AI chatter. ChatGPT OpenAI just came out with a life science tool. Claude announced their life science tool, Anthropic, brought in Novartis CEO VAs to their board and acquired coefficient. So there's a lot of activity in AI. But this is a different angle on using AI to predict clinical trials. What are your thoughts on this? And again, always like your curmudgeoning, I
- [10:29]
D
was gonna say, Chris, are you calling on me because I'm the grumpy old man? Is that what you're doing?
- [10:35]
A
Well, I didn't call you old, but grumpy, baby.
- [10:39]
D
I mean, I guess I just. And yeah, again, look, I am not the best person to talk to about AI. I admit that. Right. I am old school. But at the same time I just do wonder, I guess, sort of my knee jerk reaction to these prediction markets, these clinical trial prediction markets, whether they're AI based or whatever, it's just like kind of is, what's the value? What's the point? Beyond these just being another betting platform? Like this is like a DraftKings for clinical trials. And I know that, you know, I didn't really mean to get into an argument with this guy on Twitter this week who was apparently starting up some kind of AI generated prediction market for clinical trials. And maybe I came across as too grumpy or. But I just don't, I don't see the value in having a bunch of computers competing against each other to see who can best predict the outcome of a clinical trial, you know, because he has all these sort of science based rationales and how this is going to advance science or help patients and I don't, I don't quite understand that.
- [11:58]
A
Yeah, well, look, I'll just speak for one as a contrarian. We appreciate those who are willing to speak up. I would say in general, those who bet against these early kind of flashpoints usually are. Right, right. We saw this a little bit with aging companies. Right. Some of these things take a long time. It's not to say they'll never. Stuff is moving so fast, it's hard to see how it doesn't get commoditized and how, you know, these AI, you know, first movers are going to win the day again. I think if you look at OpenAI, you look at these hefty players, you can imagine that they're going to try to get the market share of some of the tools. Right. But I don't know, it's moving so fast, it's Hard to predict who would win on this. So I think that the old guard, as we call it, I think are saying this seems too good to be.
- [12:51]
D
I want to hear what Tess has to say about this because I always feel like, yeah, Tess, what's the rating angle? Thoughts on AI prediction markets?
- [13:05]
B
Great question. We were actually having a fantastic discussion with our compliance team about this. Specifically, the markets that you can bet on with money, like the poly markets of the world. We love having other sources of information that are like, hey, let's, you know, we like talking with, you know, smart people in the industry. We like talking with other investors like, you know, whenever we're not invested in the company. And we see, you know, people who we know who are like, we want to hear the thesis, we want to get their views. So I think in general, like, fine, to have more sources of information. Right. And you know, including, you know, including betting markets, you know.
- [13:49]
D
Yeah.
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B
But you know, how much you kind of place on that is really going to come down to your own judgment. So it can't. Things that are a black box and just kind of spit out a probability are going to be a lot less helpful than when you can actually dig into the rationale and ultimately see if you agree or disagree. But more information, more sources, is always better and more helpful. Ultimately. It's hard for me to think that AI in predicting clinical trials is really going to be much better than our collective brains, which are often reflected in stock prices. Right. Like, that is kind of like what the market shows now is like a lot of people thinking about the same thing and coming to different conclusions and that gets reflected like in a price. Is AI necessarily going to be, you know, a lot, like a whole lot better than that? Well, like, we'll see, like, you know, would love for that AI to start picking stocks and we'll see how it performs.
- [14:53]
D
The compliance side is just interesting, right, Tess? Because I know just from if you go down like the poly market or the Cal Sheet type of prediction market, just internally at stat, we're not allowed to invest in individual stocks just for obvious reasons, for financial conflict of interest reasons. But in our ethics policy late last year, we added a policy that we're not allowed to participate in prediction markets either because it's kind of the same thing if you have access to inside information. And I'm assuming that from an investor side that's also a concern and certainly a concern for anyone working inside of a drug company or a biotech company that has that kind of information.
- [15:36]
B
Absolutely. No, it totally Is. And I'll just share two anecdotes on that one. That was really funny. We have a great compliance team, and they were chatting through and doing our, you know, our regular training sessions. And, you know, someone brought up these. These, like, poly market, and they were talking about the poly market and just reiterating our policy of, like, not participating in those. And. And it was great because one of the compliance guys was like, you know, and, like, would you really want to just, like, bet on these outcomes with, like, your personal money anyways? And it's like, nah, we just, like, do that professionally. Like, I was like, that was. That was great. Like, you don't want to. Don't want to mix those too much. And, you know, but the other one that I thought was actually, like, really, really interesting is, like, the economist had this whole thing about these prediction markets, and actually talking about these prediction markets is like, you know, like, maybe having, like, inside information in these prediction markets is kind of like what you want, right? Like, you know, with commodity markets, for example, like, that's really what they were referencing. It's like, with commodity markets, like, yes, you're making these bets on commodity pricing, and you kind of have an idea of, like, what might happen when you're doing that, right? And you're. You're doing that for, like, a risk management standpoint as, like, an insider, right? So, like, is that okay that you're kind of including that, like, inside information? And it's like, okay, maybe that works for commodity markets, you know, wars. Like, hopefully not. Yeah, you know, drug trials. Like, hopefully not. So that. That is, you know, that is the. That is very much our stance on it as a fund. But it's really interesting to have another source of information. I want to see the Twitter AI algorithm on biotech stocks, actually, and we can run that against the Polymarket 1 and the OpenAI stock indices. I think that's what we'll need to see if any of these are worth anything.
- [17:38]
A
Well, Tess, you mentioned it's hard to beat a collective experience and firms, but that's also with AI tools, right? So I would bet on that. Collective experience and brainpower with AI tools to beat AI alone. And that is kind of what this feels like, is that AI is trying to do all of it, but. All right, well, let's move on. There was one deal I wanted to highlight that I thought was very impressive. Michael Torres was CEO of a company called Crossbridge Bio, and he's put out there on Twitter and communicated the specifics around this deal. The company for up to $300 million. Now a lot of people look at that with derision that how much was up front. I'm hearing that a sizable amount of it was upfront, although that was not disclosed. But what he communicated was that they raised $10 million only through safe notes and a seed round. The exit happened within 1.5 years of the seed round to the exit. He mentioned that the SAFE investors got a 17x return return tweet that there was a founder friendly firm that passed on Crossbridge a couple times. You know, I have a venture studio that we think is founder friendly. We also passed. I don't think he was referring to us, but we passed on the Series A. It's been very hard to get preclinical cancer programs approved. This is a program that doesn't even have an open ind, is not in the clinic yet, but close to it. And so the idea that they were able to bootstrap this without a series A on $10 million of investment capital to get up to a 300 and you know, kudos. You know, a lot of times we hear founders who talk about their interest, that they've been getting meetings with pharma and there's real interest. And honestly, easily 9 out of 10 times that is a nothing burger and there's really nothing there. This is a case where we heard that and it was true. And Lily seemed to be interested in this program. So again, those economics, hard to deny that this was a big success for kind of a founding team. Also, Michael Torres mentioned that the two scientific, the amount of equity that he had. Sounds like everybody who was involved in the founding did well. So again, as a venture investor, we like to see these stories. We think it encourages a lot of entrepreneurs to kind of, you know, bootstrap and find a way to invest in their programs and advance it even if the top tier VCs or seed investors are passing. So again, congrats to the Crossbridge BIO team for executing that and for Lilly, I mean, look, they generated 12 billion in EBITDA. The number of deals that they could do like this early on, just a quarter of cash flow is pretty overwhelming. It's a very small fraction of their market value. So again, Lilly can kind of change the game as it relates to early stage, right. Biotech land grabs, if you will, you know, and still still look good in the end. So that was an interesting deal. So let's move to kind of regulatory and policy positions. Paul, let's go to you first. And I think Adam may have some Comments on Trevir.
- [21:03]
C
Yeah, I'm so
- [21:07]
A
surprised a lot of people, but go ahead, Paul.
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C
Yeah, no thanks, Chris. Sorry to interrupt. Yeah, no, thanks. I'm like going to tee it up and then I want to hear Adam's perspective. Because, Adam, I read your curmudgeony article on it and I really enjoyed it. But Trevir secured approval for Sparsentan in fsgs. FSGS is a super hot space for drug development. I mean, just renal in general, I think, has seen kind of a renaissance over the past couple years and there's a number of different treatments. This is a drug that has been around for a while. Right. And some of the data that led to approval is a couple years old. One of the issues with this drug was that it did show a benefit on proteinuria, but not on egfr. And I think there are some kind of broader implications for some other kidney programs that I love to sort of touch upon. But, you know, I mean, I think some of the questions that investors are kind of asking and grappling with this is one, you know, I mean, FSGS is a big unmet need, but, you know, what do these data mean for the commercial prospects of Sparsentan? And then two, you know, sort of, what does this mean for the FDA and kidney? But also, like, more broadly. Right. Like, are we seeing a shift back towards flexibility with Vinay Prasad being out? This was a Cedar product, but there's been a lot of good reporting from STAT and others about Dr. Prasad kind of overreaching his SIBA role into some sort of Cedar reviews. And so Trevir stock was up a lot. And I think, again, like, we'll have to see kind of what this unfo. How this unfolds and what it means for the space. But, Adam, let's hear your perspective. And then I want to round it out with some other drugs that I think this has some implications for.
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D
Guess I'm just playing to type today with the cursingly thing.
- [22:44]
C
No, it's awesome, dude. You did a great article on that.
- [22:48]
D
No, I think, you know, I did like you said, Paul, I did write a column about it and it wasn't, you know, obviously it was after the fact. And I, And I certainly don't. I think that, you know, the drug will probably sell well and, and this is the first and only approved medicine in fsgs, so, you know, all that. But I did find that the sort of the story behind the approval and how it got there to be interesting. And for those who aren't familiar or who didn't read my story. Just the fact, as you mentioned, Paul, that this was a company that did, they ran a phase three study, kind of your traditional kidney disease study, where yes, you have proteinuria as kind of like the intermediate endpoint, but, but ultimately what you want to see is an improvement in kidney function measured by egfr, which is the traditional sort of full approval endpoint. And that's where they missed an active control ARM study in which the Trevir drug actually underperformed the active control across the entire two year time point of the study. But then obviously there was this sort of, this effort, scientific effort among a bunch of different groups under this kind of something called the Parasol project, in which they did some analyses and you know, and basically came to the conclusion that reductions in protein urea, you know, was, should be an approvable endpoint. It should be the new regulatory standard. Right? And that was accepted. Obviously the FDA agrees with that. You know, I did point out that, you know, Trevir is a big funder of these groups that came up with this new endpoint, which again, that's not necessarily a surprise to any of us, but that's just the way the game works. And I think just the label, Paul, you probably looked at the label and the label is interesting because the label points out that the phase three study did work, right? There's a big graph, there's a big chart in the label that shows EGFR missing. And then, you know, you go down to the next paragraph and it says, oh yeah, you know, they hit on protein area. Now, you know, we all know that doctors probably don't read labels, you know, so none of this probably matters at all. But I just found it interesting enough to write about.
- [25:12]
C
Yeah, no, I thought it was a great, it was a great article. I think extrapolating the implications to sort of a broader FDA flexibility conversation. It's, I think it's really hard to do from just this one event. I do think that the interesting other space we've been looking at in Kidney is this April1 space. This is an area of Vertex and Maze and some other earlier stage programs where essentially it applies to fsgs, but also a number of different types of kidney disease where patients essentially have these Apollo 11 mutations that are significant risk factors for kidney disease. There's this kind of pathological description of how they create pores in the kidney and are pathological. And Vertex has gone into phase three here with their drug Enoxapline based on some early FSGS data. Maize had some Data recently from their program in FSGS and a couple other subtypes. You know, my perception from covering Vertex in this program is that it is like a pretty high risk phase three program in the sense that they only did their phase 1b in April 1 FSGs, but their phase 3 study is in a broader population of Apollo 1, quote unquote apathies. But I think there's a debate on whether or not this mechanism is going to work actually more broadly. And then second, back to the regulatory side, you know, Vertex has Cortneria data, but we haven't seen EGFR data yet. I think it's been grayer on this program. Exactly what the FDA wants to see in egfr. Vertex has talked about, you know, something related to an analysis of the slope of decline. But like, at least from my seat, like, it's been a little bit gray of like, do they need a clear P value? What effect size is significant? And so to the extent that this is sort of extrapolatable, it does seem to lower the bar broadly in the space,
- [27:02]
B
I think. Chris, are you there? I think Chris moved on, might have had to dial back in
- [27:10]
A
reception, but.
- [27:11]
B
Oh, we hear you again. We hear you again. Okay.
- [27:13]
C
All right.
- [27:13]
A
All right, good. All right, so do we want to move to data? Adam Allergene had B cell lymphoma data. Everybody's been waiting for some good allogeneic car T data. But just what's your take on the Allogene data and their stock reaction?
- [27:29]
D
Yeah, we should probably separate those two things out, Chris. The data and the stock reaction because they went in different directions. The data. I thought the data would look really good. This was, you know, they had, they were, this is a, you know, this was basically a very preliminary look. It was, you know, kind of a futility analysis based on MRD negativity. And they wanted to show that they could, you know, this is in that frontline consolidation setting. They wanted to show that patients who were MRD positive, you know, with a complete remission coming, you know, coming after R chop, but who were MRD positive that could then be converted or cleared to MRD negativity with the use of this, this Allerge, a car T called cmacel. And they did that. They did that again, very small numbers of patients, 12 in each arm between the CMA cell arm and the observation arm. So it's encouraging for the rest of this study, which ultimately will be looking to show that they can show an improvement on event free survival. I think the company did a pretty good job of explaining what they wanted to do and then executing and delivering data that certainly looked as good or better than what they had expected. And there's a lot more to. There's a lot more work to do here. The stock reaction was really kind of very mixed. Right. I mean, it initially went up on the data. It went down and then it fell. They did an offering. I think they raised about $175 million. They priced it at $2 a share, which was actually lower than the stock price was before the data came out. I don't. Maybe someone else on this call could explain to me how. How that works. It doesn't seem like they executed the financing very well. I did talk. I did ask around about it. I think, you know, you. In terms of like the reaction to this from kind of the buy side, I heard a mix of things. I heard, you know, some folks who are just like, not interested in cell therapy generally, you know, and that's. And that's probably a theme that a lot of funds are just like, this is not an area they want to invest in. There are some concerns about just the timelines here and whether Allergene can meet enrollment timelines and the fact that really this is kind of. The company goes kind of dormant after this. Right. I mean, they continue to roll the study. There's going to be an interim analysis in the middle of 2027. So there's that typical sort of dead space where, you know, maybe people get out of it. But yeah, you know, I mean, like I said, I had good data and the stock just, you know, went in the other direction.
- [30:21]
A
Yeah, I mean, look, Allergene had a long road. I remember when they were one of the high.
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B
We lost you, Chris.
- [30:32]
C
We. We lost Chris. But. Sorry, Tess, go ahead.
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B
Oh, no, I think I was just. I think I was just gonna say that. I think Chris was about to say he remembers when they were one of the high flying, high profile, you know.
- [30:44]
D
Yeah, they were. Certainly were. Yeah.
- [30:47]
C
No, totally. And like, to your point, Adam, I mean, cell therapy now is like. It's just like a non starter for. For a lot of people. And it's not just an oncology. Right. I mean, I. There was a. I won't say the company, but I met a really cool private rare disease company that was doing cell therapy. That was a really, really different sort of thesis. And just the fact that it was cell therapy in the first one liner on it, I think took like a lot of people to even get over Just to take a meeting with them.
- [31:13]
D
So yeah, I mean, I think from a, from a scientific or medical standpoint, I think one of the interesting lingering questions that's not answered yet is, you know, is whether, you know, this is again, this is sort of this consolidation, their frontline consolidation treatment, you know, which is kind of slots if you think about it. It slots between like first and second line treatment or for bc. For BC for B cell lymphoma. And so I think there are a lot of people who wonder whether, you know, treating somebody with an autologous, with, I'm sorry, with an allogeneic car t in that setting is really going to be any different than if you treat patients in the second line with an autologous, like, you know, with, let's say with the. Yes, Carta or with a Brianzi. Right. Like are you going to see any difference in survival or any difference in event free survival? And that's still a question that's up in the air now. There are certainly some sort of logistical and safety reasons why you would want to use an allo car t in that setting. From a safety standpoint, it's maybe a little bit cleaner. You don't have the crs, the icans. You can potentially treat patients in an outpatient way versus having them be hospitalized. But that all remains to be seen.
- [32:31]
B
Yeah, yeah. I think, I think another, you know, kind of point here that's, you know, an important one is in this space, look, the cell therapies have been, you know, show absolutely phenomenal efficacy. But you know, it's still been, you know, pretty tough to get into the community setting. Right. And yeah, you know, I think it's. And that's kind of capped. I mean, we obviously see kind of shifting of share, you know, in the US market in that space where like, you know, Brian, I think increasingly recognized as having a safety advantage over yes, Carta. So there's certainly share shifts, but there hasn't been a huge amount of TAM expansion that I think maybe as people were hoping. And that then becomes a more challenging argument around, okay, launching into a market that is more about share gains and TAM expansion, you know, is probably, you know, is probably harder. Right. So, you know, I think that, I think that may be, I think that may be part of it.
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A
Yeah, I'll just say I think it's hard to time these allogeneic investments as is indicated with Allergen stock this week. Sana, I think there's a lot of parallels there. A lot of money that have gone into these before you had really de risking data. So again, it's just a cautionary note of like, you gotta time these things the right way, even when they end up working. At the end of the day, let's pivot to revolution. That is another big story this week. Tess, you wanna kick this off? And Adam, I know you wrote or spoke about this as well, but this was a big data set and this is coming off of a rumored takeout of $30 billion. Now they're trading at or above that today. But Tess, you want to kick this one off?
- [34:22]
B
Absolutely. Yeah. So recall, you know, Revolution Medicines, they have, you know, a panras and a whole, you know, really a whole portfolio franchise of these, you know, Ras Kras inhibitors that are both kind of pan inhibitors as well as, you know, as well as more targeted, you know, inhibitors. And they are aggressively pursuing combinations in a number of different indications with pancreatic really being the furthest along. Earlier this week they shared data that really looked best in disease in second line PDEC and they showed overall survival hazard ratio of 0.4 in all comers. That is extremely impressive. They're also looking, you know, they're also studying, you know, small cell lung cancer. They're also looking at colorectals, a number of different indication expansion opportunities. This is a company that is a development stage company that is now valued at $30 billion. So you know, huge, you know, huge congratulations to the, you know, to the team for executing on that. I think a lot of that comes from just the uniqueness of the portfolio they have, the fact that it's a number of combinations and the fact that they're taking not like first generation approach to, you know, here is a drug for pdac, right? And here's a combination for pdac. But they have several next gen approaches that they're studying in parallel, which really allows you to think about a higher multiple on the company because it's less about just, you know, one particular drug than, you know, how to kind of build a franchise that can, you know, be more than just one drug. It can be a series of, you know, a series of combinations that kind of continues to improve on never came before. And there, there is a lot of, you know, they showed phenomenal data, but there's, you know, certainly room for, you know, improvement, especially on the tolerability side.
- [36:29]
D
Hey Tess. Hey Tess.
- [36:31]
B
Combinations can help to solve. Please go ahead though, Tess.
- [36:34]
D
I said we should note that Revolution Medicine now tree is now just a little bit more valuable on a market cap basis than insmed.
- [36:43]
B
Yes, Right, Yes. So I was also. I was also racking my brain, and this is the right group of people to think about this, but I was racking my brain for, like, other development stage companies. Let's like, take kind of COVID out of it. But like, other development stage companies that have, like, traded around 30 billion, and I was struggling to think of, like, other. I was struggling to think of other companies.
- [37:05]
C
Did Insight Insight ever get there with IDO back in the day?
- [37:09]
D
Oh, I can't imagine it got to 30, but I mean, yeah, that's a good one. You know, like in the 20s, maybe. Yeah, for a little while. Summit was trading pretty high. It wasn't trading this high, but it was trading pretty high. But, yeah, I mean, it is. It is right now. It's amazing because like you said, it's technically still a, you know, a development stage company, although obviously this is a drug that's going to be approved relatively quickly. But, yeah, it's pretty phenomenal. Just look at this market cap here.
- [37:35]
B
Yep, absolutely. And then they just.
- [37:38]
A
And I'll just add, we all know pancreatic cancer has been that elusive data set that many people have gone after. Some have given up and moved to other high severe stage 4 metastatic relapse refractory. But I think. I mean, even Tim Opler said he thinks this could be $100 billion valued company. Like, a lot of people think this is undervalued. So it is interesting to see how they end up moving this forward.
- [38:03]
D
They're going to buy Merck, Chris. They're going to be so big. They'll buy Merck.
- [38:06]
A
There you go. We might see it. Tess, I'm sorry, you were going to add something here.
- [38:12]
B
Oh, yeah, no, I was just going to. You know, then they went out and just raised $2 billion. No problem. Right. You know, I think they're, you know, probably going to get, you know, a little bit less than that in terms of the actual net proceeds. But, you know, the company is going to be in an extremely strong position to, you know, commercialize independently if that's. If that's what they want to do. So. And then. And then, exactly as you say, maybe we have another potential acquirer, you know, in the space. So, you know, that's. That's always. That's always exciting. So I think they'll be in a position from a cash standpoint of, you know, having, you know, three and a half, you know, three to three and a half billion or so, which is, you know, a very, very strong position to very strong position to be in.
- [39:00]
A
Yeah, well, it is a little bit of a masterclass to, you know, do the head fake of a potential sale and then get the data that looks good and then raise 2 billion, which is less than 10% of their outstanding shares, and having the real ability to move it forward and commercialize and become one of the really true breakout.
- [39:19]
D
Yeah. And Chris, you know, we should. I know we spent a lot of time, you know, talking about stock prices and valuations and stuff like that, but at the same time, I mean, like you mentioned, you know, pancreatic cancer obviously is just one of the most devastating types of cancer. It's been so difficult to advance therapies there. On our podcast yesterday, we talked to, we had an oncologist on, Paul Oberstein from NYU Langone. He's a pancreatic cancer expert and just kind of getting his reaction to all this. And you can imagine how physicians who treat these patients feel. A lot of you probably saw that Ben Sasse interview, the former Senator Ben Sasse interview with the New York Times, who was diagnosed with advanced metastatic pancreatic cancer. And he's also on the drug in a different study. So it's nice to see these kinds of advances in cancer, this doubling of survival, particularly in pancreatic cancer.
- [40:21]
A
Yeah. And I like how Stat Read Out Loud does deeper dives on some of these topics. So I encourage the audience to really tune into, to Stat Read Out Loud.
- [40:29]
B
And then we had another one that was a non curmudgeonly response. Like very non curmudgeonly. So just for anyone out on this,
- [40:38]
D
listening, hey, that was.
- [40:39]
B
See, that was. Yes, you see, that was a data point.
- [40:43]
D
I. I can be, I can be positive.
- [40:45]
B
See that?
- [40:46]
C
Adam, you're not. Adam, you're not a hero for not disparaging innovation and pancreas.
- [40:56]
A
Adam does always surprise us with a different side.
- [40:59]
D
I can like things, guys. I can, I can. I'm capable of doing that.
- [41:04]
B
We're glad that. Unambiguously positive.
- [41:07]
D
I mean, I like all of you.
- [41:13]
C
There you go.
- [41:15]
A
All right, so another area that has been elusive with good data sets has been the IBD Space ulcerative colitis Crohn's. But this week, Spire had good data and a positive stock reaction. Tess, you want to cover this one?
- [41:29]
B
Yes, I absolutely will. So Spire announced some open label data from their. You know, think of it as like the Spire version of Intiveo. Right. It's another alpha 4 beta 7 antibody that they're developing. And you know, they have, they have a Longer half life. But you know, there's really a pitch here that is better coverage, better, you know, PK for that target and you know, know the ability to do this, you know, with subcutaneous administration. And you know, what SPIRE is doing that is really exciting is there, you know, kind of similar to revmed. Right? Like, think about both Spire and Revolution Medicines is like these are companies that are kind of looking at the disease area that they are involved in and they're trying to like think of solutions, right? It's like it's not just one drug, it's combinations. It's how do you, you know, and how do you keep kind of upping the bar on what efficacy and, and SAF should look like for an indication? And so SPIRE is really approaching that for IBD where they have their Alpha 4 Beta 7, they have a TL1A, they have an IL23, they're looking at combinations for all of these, including, you know, combinations for their Alpha 4 Beta 7 with TL1A and IL23. And that is the Alpha 4 Beta 7 that they presented open label data for. And you know, what they, what they shared, you know, what they shared with the, you know, what they shared with the open label data is they looked at 12 week induction data and they were looking at this in moderate to severely active ulcerative colitis. And so, you know, what can you do with, with open label data? Well, you can compare it to everything else that is out there and you know, look at how it compares and the uncontrolled outcomes, you know, really compared favorably to the historical, the historical benchmark. So I think that's why, that's why the stock was up and why there was a lot of, you know, why there was a lot of excitement about this, especially when you think that, hey, this is something that is just monotherapy. Okay. And there's the, there's all these, you know, combinations that are being studied that can presumably, that can presumably lift that bar. So, you know, SPIRE went and raised on the back of this and you know, pretty easily pulled in, you know, over 400 million, 463 million to continue, you know, to continue funding their pipeline.
- [44:02]
C
Hey Tess, do you have a view on just like these data and whether or not this proves that their drug is more efficacious than Vetilizumab? Like do you think you see as a space where you can, you know, draw that conclusion from open label data or is it too speculative at this point?
- [44:17]
B
I think too speculative to be definitive about it, but like Looks interesting, looks potentially, you know, promising as better. Right. So I think, you know, it can't be too definitive about, you know, open label data. You know, this is an area where, you know, placebo rates are really important, but I think it does kind of support that, you know, it does support that, that thesis. Right. Which, which also has, you know, which also has other kind of justification in terms of, of looking at the relationship between. Looking at the relationship between exposure and efficacy for Intivio itself. So not definitive, but. Not definitive, but likely supportive. I don't know, Paul, if you'd think about it differently.
- [45:09]
C
No, I think that makes a lot of sense. Right. I mean, it's worth kind of noting that this is a Fairmont company and, and for a number of these there's been the longer acting, better convenience thesis. And then to your point, the exposure hypothesis, Alex Thompson, who I work with, who's super duper smart, covers this company and is a total believer in it. And yeah, I mean the data looks, obviously there's been data sets in UC that haven't been replicated before, but given the underlying validation of the mechanism and the thesis around exposure, it seems like it's got a really good chance from my less educated view of at the very least trending better.
- [45:44]
A
Yeah, yeah, yeah. Well, I just want to highlight these three data stories. Allergene, Revolution, Medicine and Spire kicked off the Monday morning. Adam, you tweeted this was probably one of the better Monday morning data releases you've seen in a while. A little bit of a trifecta with these three data sets. And Paul, I want to come to you also you believe that you mentioned early at the front of the hour, the clinical data has really been the story behind kind of driving the market and you know, so Adam, I don't know if you want to comment on what you're seeing as a trend of positive data, if you think that's that's real or just happened to be a good week. And Paul, your thoughts around clinical data kind of driving the dynamics in the marketplace?
- [46:26]
D
Go ahead, Paul.
- [46:28]
C
Yeah, thanks. I mean, I think it's from my vantage point, like last year felt like it was like the biotech launch year and like a number of the stocks that were on these steep launch curves, right. Like Al Milam, insmed, Argenics, Madrigal, where like I felt like really carrying the group especially you know, maybe this time a year ago when, you know, things felt a little bit bleak for the stuff that was higher risk. And I just think, an interesting observation I have across my coverage is, you know, for the large cap companies that I cover or the more mature mid cap companies I cover. You know, investors right now seem to be selectively bullish on the ones that have like a potential golden ticket in the pipeline. Right. Almost irrespective of like the base business. Like I look at large cap biotech and feel like, you know, Biogen and Vertex, you know, and this is maybe Biogen before the Pella Steel that was controversial, but those were two names that have been much, much hotter this year. Right. Their commercial businesses couldn't be any more different. I mean one company's growing, one company is declining, but yet they have like the most attractive array or perceived most attractive array of pipeline catalysts. Whereas like the Al milams of the world or the ins meds of the world have kind of been looped into this whole sort of broader what's next conversation. And then yeah, we've obviously talked about it before with the SMIDs with great data, you know, going back to a month ago when we talked about Xenon and Dianthus and now this week just, you know, great data sets are getting rewarded and fundraising. But you know, it's almost like we said this before in the past with biotech. We're not at this point, by the way, where I think people are just going, oh my God, short the launch. But, but we've made this joke in the past, right, where it's like it's better to be a developmental stage company where people can dream the dream versus the reality of a company that is selling a drug and getting judged on quarters and having people try to model inventory and selling weeks. And again, it's not that extreme. But I do think like this is just like the commercial names are just not. Doesn't feel like it's really what a lot of investors care about right now.
- [48:28]
A
Yep, yep. Adam, any comments?
- [48:29]
D
No, I think Paul, Paul articulated it really well. Yeah,
- [48:37]
A
Great, great. Well, I, I just looked at Kyler again. I don't think it started trading yet, but I think for our audience it's something to keep an eye on of the health. I mean some have commented just to come back to Kylera that, you know, have we hit peak obesity? You know, this was a GLP1 gipsy dual mechanism, very pedigree group around this. This was an early Bain investment. Adam Koppel sits on the board. Ron Renaud has been a serial CEO who sold several companies in the past. John Milligan, my former boss at Gilead, who was the former CEO of Gilead, is the chair of Kylera, you know, so it'll be interesting to watch this. Obesity space continues to drive value and a lot of players in the space. So, you know, definitely encourage our audience to, to keep an eye on that as a signal of, again, further strength. Any other comments from the group on obesity and are we getting too crowded in the space? Are the valuations getting lofty? Any thoughts on that?
- [49:44]
B
I think, look, is it crowded? Yes. Is there still a lot to improve on? Yes. So, you know, I think, I think a lot of it will, you know, will kind of play out over the coming years. But we're seeing, you know, we're seeing new mechanisms that can potentially help with, you know, tolerability, maybe fit in, you know, nicely in maintenance therapy. I think my big question around, you know, a lot of just how the space will play out is like, what are the different. What are some of the different settings and also like patient segments that the, that the market will start, you know, that will start kind of sorting itself into, you know, I think that's, I think, you know, the general thinking is still like, gee, this is a really big market. Maybe there can be, you know, a lot of players. But, you know, as we get more and more mechanisms out there, it will really start to be a question of, you know, what is the sequencing? What are the. Should elderly people with obesity and issues with bone density maybe be taking something different than young people who are looking for something that's more weight maintenance? I think that's something that has yet to play out but will be really important and increasingly necessary as companies think about commercializing in a very, in a very crowded space.
- [51:13]
C
Tess, I. I don't like cover this space that closely, but like, obviously, just how could you not follow it and read all the articles in the headlines like, do people care at all with these next gen obesity plays that like, for the first gen assets, it's kind of like, for lack of a better term, a race to the bottom on pricing.
- [51:32]
B
You know, it's a good question. I think it depends on the kind of quantum of benefit, right. And you know, and the setting and how much of an improvement, like over the first gen. So, yeah, I mean, we'll have to see how pricing kind of plays out for some of these, for some of these next gen, for some of these next gen mechanisms. And that'll take a while. But if you think about it, it's like we have a lot of the first gen stuff where Novo has been super aggressive on pricing. Right. I think they know that's what's gonna. That's kind of what they need to maintain market share. But I think there is kind of niches, right. And there's opportunities in different settings where, especially with better tolerability and potentially better duration of therapy. That is actually a very different pitch to health plans than a drug that adds cost and where certainly payers are seeing a benefit for many individuals who are able to stay on the drug. But you have a lot of people who are just coming off the therapy. Right. And so I think resolving that issue is still an extremely important issue to try and get the best value out of these drugs. And is society going to be willing to pay more for that? Hopefully, but we'll have to see. Depends on how much competition.
- [53:11]
C
What do you think? No, I think that makes a lot of sense. And like, I guess, I guess the way I sort of see it is like, you know, in a lot of these big markets that are mega crowded but impact tons and tons of people. Right. Like we're, we're still willing to withstand blockbuster drugs even in the face of generics. I mean, if you look at like almost every CNS or INI market.
- [53:31]
A
Right.
- [53:32]
C
So, and I'm using those just because like they're, you know, not, not that they're not severe diseases, but most are not imminently life threatening. Right. So like, I think, I mean, I think that makes a lot of sense.
- [53:43]
A
Great. Well, this has been a great session.