Loading summary
Transcript64 lines
- [00:00]
A
If you're listening to the 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 am Eric Schmidt and my co hosts today are Sam Fazeli, Greg Savanovich, Matt Glein and Chris Garabedian. For more information about our hosts and guest speakers, or to listen to the most recent episode, Please go to thebiotechhangout.com We've got a ton of content this this afternoon, so thanks everyone for joining. We're going to cover sort of the broader market dynamics and IPO trends in the biotech industry. We'll talk a lot about some, some deal flow, both M and A and, and collaborative deal flow. We'll discuss much of the key data sets and conferences that are upcoming and then hopefully we'll have time to end with some, some regulatory developments and maybe even a little bit more company news. We'll try and squeeze that all into the broader hour here. Before we kick off, let me just start with a quick shout out to two scientific luminaries that unfortunately passed away in the last week. Biotech industry is for the worse off for sure. I was specifically referencing Craig Venter, who was a key figure in the Human Genome Project, a former CEO at Celera Genomics and the first person ever to not just invent shotgun sequencing, but to use it to analyze a whole genome. H. Influenzae back in the 1990s and then also Eugene Braunwald. Dr. Brownwald was kind of recognized as the founder of modern day cardiology. His textbook and his presence in the cardiogeology world were pretty much unmatched resources for many of us. I personally got to know Craig a little bit when his Celera days were front and center. To many in the industry, he was certainly a force of nature, a true character. Dr. Brownwald consulted with many Wall street firms and was revered everywhere he went. So both will be missed and just a quick shout out to each of them. But let's get on to some of the more relevant news in our industry and the market dynamics that continue to be, I don't know, hard to put a finger on them. Greg, I think you're going to help us out understanding what's going on in the markets these days.
- [02:29]
B
Thanks, Eric. It's great to be back on the biotech hangout.
- [02:32]
A
Yeah.
- [02:32]
B
So I thought we'd start with a review of where things are in the biotech market and I'll speak on sector performance and then provide some commentary on the capital markets and deals we're seeing. So at a high level, I think things overall are still very healthy in biotech year to date, performance is still in a positive territory. The XBI is up about 8% year to date and that's still about 300 basis points points of outperformance versus the S&P 500 and about 100 basis points of outperformance versus the NASDAQ. Also within healthcare more broadly speaking, when using the XLV as a proxy, with the XLV down 6% year to date, the XBI is outperforming by 1400 basis points. That said, since I last reviewed how biotech is doing about three weeks ago, the gap between biotech and the S and P and Nasdaq has tightened considerably over the past month. The XBI is up 1% but the S and P and NASDAQ have had huge rebounds. They're up 10 and 14% respectively. We did see a recent 52 week high level for the XBI of almost 139 a couple of weeks ago, but since then the XBI has retrenched about 6%. I've tried to dig up some information or dig into what's going on. I'm not not exactly sure. I will point out a few things and this is color from our trading desk and also my health healthcare sector sales specialist Jared Holt. First, data point trading volumes for the XBI have come down a little bit this past week versus the 30 day average. And secondly, and this is an alarming stat that I got today, April 2026 was the worst month, relative month for healthcare versus the S&P 500 since 2009. So I'm not really sure what. If there are really good reasons behind this, it could purely be apathetic response to healthcare versus perhaps more interesting segments of the market like tech, who knows what. Later in the podcast we might have some time to talk about the recent Phase three data for Revolution Medicines. And I think when combined with the recent media coverage of ex US Senator Ben Sasse and his battle with pancreatic cancer, biotech did get a lot of broad attention. With that now in the past, perhaps people have moved on. So I do think this is something we'll have to monitor closely. That said, I do think sector fundamentals are still quite good. In the past few weeks we saw the $719 million upsized IPO for Calera Therapeutics, that's an obesity focused company. And just this week we saw the upsized IPO for Avalon Pharmaceuticals, that's a respiratory disease company that raised 300 million. That deal priced at 18. And in real time, as I'm checking my Bloomberg, it's almost at $29. So a very nice performance there for Avalon. Today we are seeing two companies making their debut on the nasdaq. That's Seaport Therapeutics, that's a CNS company that many of us here on the podcast are familiar with and know well. They had an upsized IPO that raised $255 million and which is a blood disorder company with an upsized IPO that raised over $300 million. So in what I think is a great sign for biotech, year to date, we've now had 10 companies IPO raising collectively about $3.2 billion. Given this positivity, I like to think the window for private companies to consider an IPO remains pretty open. And then just quickly to review other recent capital markets activity and deals, I'm just going to highlight two. First on Revolution Medicines, they did announ excellent phase three data for its Panras inhibitor and pancreatic cancer last week. They subsequently raised a total of $2.2 billion in a mix of equity and debt, and that was upsized from an original $1 billion target. And then second, we had an emerging biotech company called Aruca Therapeutics, which is in the INI space. They raised $700 million, up from an original $500 million goal. So all in all, I still think very encouraging and bullish signs for biotech, at least from a public market perspective. And with that, that's my review. I'll stop here and pass the mic back to Eric.
- [07:01]
A
Great, thank you for that. I'm actually surprised by that underperformance in health care relative to the broader markets. Certainly a little bit of the bloom seems to have come off the rose in biotech in the last week or two. But Sam, what are you seeing from the larger cap pharma names, Lilianovo in particular?
- [07:19]
C
So, Eric, the companies have all reported pretty decent numbers. Some clearly beat a lot more significantly and particularly if you look at the share price performance and still up again today, I think, when I'm just doing what Greg just said. Checking my Bloomberg here, Lilly is up another 3%. He was up about 5%. That's after having been up 9% or 10% yesterday. So most of large pharma is doing okay. Some of the beats are better than the better quality, for want of a better phrase than others. But the one that really stood out for me, what of course was of course Lilly, because I think there'd be some hyper focus on this new launch that they have, which is the true small molecule oral pill for obesity, which has been on the market for a few weeks, just, just a very few weeks. And I was hyper focused on that. And some, some analysts had downgraded. The expectations are too high. And of course they came and beat not because that drug was doing particularly better, but because the obesity drugs are flying off the shelves. Ex us. So the $2 billion increase in their full year guidance from 80 to 82 billion on the low end of the guidance is pretty much all driven. At least a lot of it is driven by EX us, which is quite interesting because I think mostly an out of pocket market. And you know, they talked about Fondao and they've now got this new route to which they're going to be working on. It's not going to be immediate to getting drugs, these drugs to patients, which is the employer, direct to with employer work that they're doing. Which is quite interesting because as we see at least this pharma company is in this space is disenfranchising the PBMs to a degree. I'd love to hear what others think about that because that's an interesting evolution. But, you know, so. And then of course what's weird is that usually what's good for Lily is bad for Novo. But of course the flip side of this was, well, so the Foundeo drug is not doing that great at the minute. And I think Lily was kind of saying, look, we don't, you know, it's going to take a while. And of course Nunovo was up because the drug that's out there that people are taking is the oral Wegovy, which is the oral peptide, which has some issues with. Not issues, but you need to take it three, half an hour before breakfast, et cetera. So that was the most big moves that I saw in the market. Otherwise it was a relatively ordinary results for the large farmer. So far over.
- [10:04]
A
Thank you, Sam. Maybe Matt for you. I know Greg gave us a few statistics on the IPO market. What are you seeing from where you sit?
- [10:14]
D
Yeah, perfect. And Greg took care of the capital market stuff, which is great because I'm just a CEO. It is fun to see the IPO market working. Generally. I've had lots of private companies come to me over the years asking for experience in going public, creative ways to go public, because frankly, it's been hard. And my hope is they're all pushing the button now because what's the expression about feeding the ducks when they're quacking or whatever. One of the ones I just wanted to comment on because that was interesting. By the way, Seaport, I think those of you know Daphne's been involved with this program. Congratulations to Daphne. Not a space that I follow very closely, but seems like an awesome deal. Avalon, which went public yesterday and had a great outcome. A couple comments on that space, which I think is an interesting space. First of all, companies focused on inhaled therapy for respiratory disease, especially ipf, which is a space that's been up until recently, I'd say, dominated by Boehringer Ingelheim with a couple of older systemic drugs. And I think you've seen a trend in the pulmonary hypertension space where pulmonary hypertension patients with lung disease have increasingly been treated with inhaled versions of classes that have been very successful in pah. So you've got Tyvaso, for example, and the treprophenols. We have a drug in development of a different class, an SGC modulator or activator in our case. I think you're seeing something similar with Avalon and IPF here where they're taking some of the very same drugs that are multibillion dollar blockbuster drugs as systemic therapies and IPF and developing them in targeted inhaled formulations or the idea of delivering either similar clinical benefit with better safety and tolerability or maybe even better clinical benefit because you can dose higher if you get the therapy locally. So I think it's an interesting thing to watch them succeed so much in the capital markets here, given these are older drugs but with some interesting novel science pulling them forward. Lyn used to work for one of the Roiven companies, so again, congratulations to Lynn and the Avalon team. What a great outcome, but a cool one to watch. And IPF is a space that's developing quickly, including actually some of the PHLD drugs I mentioned, where for example, Tyvaso has put out some data now in IPF directly. So I think ipf, which has, as I said, been a pretty concentrated space historically, really going to explode an opportunity over the next couple of years and certainly we're watching it closely, so I think it'll be an interesting one to follow.
- [12:26]
A
Thank you for that. Yeah, congrats to Lynn and team. We weren't part of that ipo, but I know my colleagues know her well and wish her and Evelyn the best. Sounds like they're off to a great Chris, from where you sit in the VC world, what do you make of today's IPO market? Are we getting a little bit overheated or is this kind of window that you're looking forward to?
- [12:53]
E
Yeah, I'll just mention. So sorry, I keep getting kicked off so hopefully you guys can hear me. Okay. And I'm on. So look, VCs, we really need the IPO market. I mean to be, to be working. Like Matt said, it's, you know, we're looking for a healthy IPO market, one that's not too exuberant. We were private investors in Avalon, we co led the Series C. So it's always good to see liquidity event for any portfolio company in, in the venture space. And we also have a private company that's in stealth that we're going to be coming out of stealth probably in the next year in the ipf, you know, ilv, you know, PH markets as well. So we're really excited about all of that. And Obviously the other IPOs in the queue look good. I think the reason I am less concerned about this moving into a frothy territory this year with the number is that we've had so many years of companies that have gotten extended private rounds and got them into the clinic with clinical data really waiting for the big pivotal value inflections or large phase 2 value inflections. So I think this is a different profile of company that is going ipo and I think from my vantage point, I think there's a lot of them out there, we might have a big year. But most importantly, we want to see them trade well. We want to see good aftermarket performance. And it does seem like Avalon at least had, you know, demand there and it traded well in the aftermarket. So I think we're going to be watching that pretty closely on the venture side, I'll just mention also, you know, venture changes their behavior if there's a thriving IPO market and we're starting to see maybe a little bit of looking at more of the earlier stage VC and startups and all of that. So I'll just highlight two things. One, NPM has a company, K2. They announced three products out of China. This is a little bit of a Nimbus type model where they're going to have each of them in their own kind of subsidiary underneath the K2 umbrella. They expect to do this a lot. They're calling it complementary and kind of synergistic with their other strategies. But they wanted to keep all of these China assets under one roof. And the thesis is if they can even go after newer targets. Not me too targets, but test out novel targets more quickly in China, this can add a lot of value. So it'll be interesting to watch. It's the more formalized. A lot of VCs have moved into the China space, but often in a one off manner. So this is a more formal and kind of clear mark in the sand of this China strategy by npm. And then Deerfield did something I think really a service to the industry. It's always hard to try to reach into academic centers for early projects to start companies around and they launched this week a database that's accessible to really value different academic institutions, the programs within it and they have different parameters that you can screen by. So I haven't tested it out fully yet, but it, it was nice to see somebody in the industry in the VC space stepping into that.
- [15:58]
A
Thanks, Chris. I think you're right with regard to the IPO market. It certainly has started with some very good quality companies that have been incubating very for lengthy periods of time in the private markets. But maybe to play devil's advocate, isn't that always the way that we start these IPO windows? And then when people make a little bit money on the good quality companies and the stocks go up, it's hard for investors and others, even investment banks to really police the quality and things seem to slip and eventually we end up maybe swallowing or biting off more than we can chew. Is there any reason to think we're going to be different this time?
- [16:38]
E
Eric? You're absolutely right, 100%. And I don't think anybody's figured out how to stop that. I think we saw it in the last bubble where we knew this isn't going to end well. But you can't be an investor in the space and not try to take advantage of that. Right. It's a little, I mean, I don't want to call it a Ponzi scheme, but it's kind of like as long as it's working and no one's getting hurt, you're going to see that behavior continue. And I think you're right. If there was a mechanism, a governor on that that we could implement, I think that would be helpful. But when the markets are good, everybody's I think Matt said at the ducks, right, they're going to try to get their money, they're going to try to get their liquidity. And so I have always seen these cycles and what I'm hoping for is that this one is sustained, that we're not going to see this escape velocity and that we're going to be in a problem two years from now. But I think it's a worthy discussion to talk about. But I don't know that you can convince a company or board not to go public if the markets are working.
- [17:45]
D
I mean, I feel like the answer is these IPO markets stop working when people stop buying deals, right? And that happens for one of two reasons. Either it happens because the IPOs themselves are not working because you've worked through the good companies and you start taking less good companies public and deals start breaking and investors stop buying them, which is maybe sort of what happened in like the last quote unquote bubble or it's like early last year where you had a couple of IPOs. I don't know if there's anything like specifically wrong with the companies that went public. But just like the biotech market, that didn't do well enough and so there weren't enough buyers for deals and they went away. I guess I feel like this will end one of those two ways, right? Either the biotech market will get weak and good companies won't be able to go public anymore, or we'll get through the backlog of good companies and eventually too much will go public and deals will start breaking.
- [18:33]
A
I think you're right, Matt. I think maybe the only other thing to say here is that many of these IPO markets seemingly have this undercurrent of generalist investor interest that drives the IPO window to and things are good for a period of time as generalist funds are flowing into the sector. And I don't think any of us as specialists quite understand how and why generalist money comes in or out. But unfortunately, when the faucet turns off and the drain opens up, we're left holding the bag. So maybe there's nothing we could do. As Chris said, there is no governor on the system. But Sam Craig, either of you want to chime in on the IPO topic?
- [19:12]
B
I mean, I will just simply add that it does seem that from period to period, we do get this exuberance that seems to be unstoppable. I think we do want to see a rational market. We've talked about the volume that we're anticipating in 2026. And I think without being able to predict the future, I think it is going to be a good year for IPOs. Let's just see how market participants are able to be somewh that rational during this, this period. Hopeful, hopeful thinking maybe.
- [19:51]
C
My question, Eric, is, is how much of this is. I mean, there has to be some generalist money coming in, although even the big one From Rev. Sorry, follow on from Revman apparently didn't have generalists, particularly a lot of but you guys tell me, is generalist money coming in? That's what we're always looking for, right?
- [20:09]
A
Oh, from where I sit, absolutely. You can't do a $2.2 billion follow on or a $700 million IPO, as Craig was pointing out earlier, without that kind of money. Specialists just aren't that deep pocketed and don't have that kind of new capital put to work. So I think again Greg, I'm interested in your views but from where we say we don't talk to a lot of generalists because honestly they don't want to talk to us. But you can kind of sense when an analyst at Plain Vanilla Mutual Fund calls you up and asks you for new ideas that he's not necessarily asking for his specialized fund within that investment group, he's asking for his PMs, who right now at least see biotech is potentially the best performing subsector in the marketplace. But Greg, your thoughts?
- [20:58]
B
Yeah, I think that at least based on my conversations I am getting generalist inquiries about names that I cover. But I do think that they are still very much into de risked names that they already have clinical data in hand. Sometimes they're looking at commercial stage companies that I cover because they screen well. I don't think we're at a place I could be wrong, but from my perspective, I don't think we're at a place where we're getting generalists coming in and playing earlier stage riskier names. We'll see how the next 12 months works and how biotech performs. But I think we're still in very early days of a wide swath of generalist money coming into biotech.
- [21:46]
D
One just like comment about that as a CEO we had a ton of shareholder rotation last year as larger, long only institutions came into our stock. And I'll say there's nothing more confusing or difficult to predict or understand as a company in that if you're used to dealing with biotech specialist investors, I don't know how many of you have pitched biotech specialist investors as an issuer, but it's basically a terrible experience, right? Like you go and you spend months, months or years and years getting grilled by the same people on the same specific questions, much of which is competitive diligence for other things they're doing. And like when they come in, they come in. You know, most positions held by specialists are 30 to $100 million or something. So they can Own a decent amount of stock, but whatever. And then. And my experience with generalist investors long only who are phenomenal shareholders and have some really smart people is they don't meet with you and they don't meet with you and they don't meet with you. And then one day you meet with their analyst a few times and then you get invited to a room with 15PMs who you've never met before, who don't ask any questions. And then the next time a 13F comes out, they own $400 million of your stock. And it's just like this weird transformative mystery that's very hard to predict. So it's a totally different animal from our perspective.
- [22:57]
A
Very well said, Matt. That's my experience as well. Well, let's move from, from IPOs and generalist investment current to deal flow and M and A activity in particular. And, and Sam, yet another deal from Eli Lilly. What do you want to tell us about that?
- [23:12]
C
Yeah, look, Lilly's done, To my count, six deals, M& A, not licensing, of course. There's a longer tail of licensing deals. 14 and a half billion dollars upfront, so far from the numbers that I've added up there or thereabouts. And if you think about the number of weeks that we've had in the year, it feels like every couple of weeks they're doing a deal now that's about, I think, half of the large pharma deals in terms of M and A that we've seen. So they're helping our sector quite nicely. Although a lot of the companies they're buying are, are private companies and they're in all sorts of areas. You know, I mean, everybody's jaw dropped a little bit, I suppose, when this, we saw the, the colonia deal in terms of the upfront payment of 3.25 billion. You know, we all saw the data at ASH in terms of a in vivo car T for myeloma. They already had a CAR T deal earlier, but more for the, which was Orno Therapeutics, also in this, more for ini. And the latest one they've done, which is Ajax, is also in a very specific space with a, with a JAK inhibitor that's in the, in the myelofibrosis and polycythemia vera space. So they're really panning out there. And these are all, much of them are in like phase one or maybe very early development stage. Some areas that they've never been to, like sleep disorders like myeloma, they're not in that space. So it's interesting how they're building this portfolio to, you know, wind on 10 years and we'll all be sitting here thinking, oh, my God, what's going to happen to this? I don't know, whatever the number is, $70 billion, $80 billion drug that they have, whatever the number is, right. It's going to be a big one and it's going to be bigger than all the ones that we've had so far, Keytruda, Hemira, etc. So, and the portfolio of Skyrizi plus Rinvoak, let's not forget that that's doing magically in the hands of Abby. So they're going to have to be feathering that nest. And I think that's what they're doing. So it'd be interesting to see how these things pan out. But thank you, Lily, for helping our sector over.
- [25:36]
A
Thank you, Sam, for covering that. Now, maybe to Greg or to Chris. I'm not sure who wanted to cover Ajax maybe in more depth or do you want to move on to with the Calvista acquisition?
- [25:48]
B
Yeah, I'll just briefly talk about Ajax. So again, Lilly, whose dry powder continues to seemingly grow every day off of the success of its GLP1 franchise, this Week announced the acquisition of privately held Ajax Therapeutics for a total consideration of up to $3.2 billion. Ajax is developing a novel and what could be a first in class type 2 JAK inhibitor. And it's currently in phase one for rare blood cancers known as myeloproliferative neoplasms. These include myelofibrosis and polycythemia vera, as Sam mentioned. And I think the interesting thing is, while there are approved JAK inhibitors for use already in these myeloproliferative diseases as well as in autoimmune diseases, the older ones that are approved, they bind to the type 1 confirmation of JAK2. But Ajax's lead acid is a type 2 JAK inhibitor and that gives the potential to improve on efficacy and perhaps more importantly, improve on safety, tolerability. Recall that there is a black box warning for all JAK inhibitors on higher rates of all cause mortality. So I think this could be a really exciting class of compounds. I'll be interested in seeing whether there are other companies that are going to interrogate these type 2 JAK inhibitors for perhaps autoimmune and inflammatory diseases. I guess we'll have to wait and see. And then just quickly I'll comment on another deal. And there have been several in our space this week, but we saw Chiesi which is a private, I believe, Italian pharmaceutical company, acquire publicly traded Calvista. In a $1.9 billion acquisition and acquiring Calvista, Chiesi will get a drug called Ectorly, I believe it's called, and this is approved for hereditary angioedema, or hae. And the HAE space has become quite the commercial market since I first took a look at it some 20 years ago. We've got multiple drugs approved. So an interesting deal in this space with that, I think. Chris, did you want to comment a little bit more on Chiesi, perhaps?
- [27:51]
E
Yeah, yeah. Well, first we had a HAE company acquired by Biocryst earlier this year or maybe late last year. But it is a space, I think 1.9 billion for a oral drug in the space that did about 60 million, I think last year. Seems rich, which is good. You got high premiums for commercial stage products. Ours was a clinical stage product that was acquired for not quite a billion. But I really want to do a shout out to these deals that are not Lilly. Lilly is becoming a little bit of an outlier and I almost feel like we should look at the M and A market, excluding Lilly, and to see how healthy it is because they got so much cash and they are doing definitely land grabs early and late and so. But Chiesi is one that I really didn't have too much on my radar. They have three franchises, Air, they call it Air for like pulmonary rare and care for like they have neonatal drugs and they have prophylaxis for transplant. But they're doing over 4 billion in US dollars. Their pulmonary franchise is over 2 billion in US dollars. The other two franchises are a billion. The billion dollar franchises are growing in double digits and they're very active out there because in our portfolio we have companies that fit into each of those categories and they're always at the table, they're always wanting to meet. So I just get the impression that at least in their verticals, they are really doing it if they can write. I mean, this is a private European company like most European companies are. But to write a check for 1.9 billion for a single asset. Calvista didn't really have much of a pipeline beyond that, besides maybe some pre clinical work. So yeah, I just think it was. It's good. We need to see more of this M and A outside of Lilly. We want to keep Lilly, to keep being aggressive, but I thought it was important to, to make that distinction.
- [29:45]
C
Just quickly, Matt, speaking of, remember that we had another one of these deals just about a month before that of which was Servier in France that bought day one Biopharmaceuticals. So it's quite interesting that these smaller, smaller, these private European companies are active in this M A and, and I'm, I, I, I don't think I've seen this before. So it's, it's good to see as, as Chris says. Sorry, sorry Eric over.
- [30:12]
A
No, thanks for that. And then Matt, speaking of non lily buyers, I think you wanted to highlight the deal between sun and Organon.
- [30:19]
D
Yeah, and by the way, I also just to echo what was just said, I think it's like fun and interesting to see other buyers showing up. Sun Pharma is a cool company to be out there buying. They are, I think like historically I would have thought of them as an Indian generics company that's been working on building a branded business in the US or at least a business in the US for a long time. And then Organon is a reminder that whatever biotech companies never die. It was acquired by Sharing Plough and then became a part of Merck and then got spun out again and has now been acquired by Sun. The total deal value was like $11.5 billion. Obviously a lot of that was not equity. It was, was Organot was a relatively leveraged spec pharma company that had a rough couple of years in some ways, but has some interesting things. I mean one of them, Roiven sold them a skin drug called Vitama a couple years ago or maybe a couple years ago. But an interesting business and should significantly further Sun's objectives of having a U.S. presence. So that'll be an interesting one to watch. And sun is a sneaky, great operator. I mean they're a, a $45 billion company. They've grown a ton in the last little while. I think they're effectively founder led out of India and just incredibly strong operator. So it'll be interesting to see what they do with Organon. And bluntly I would not be that surprised to see them continuing to acquire things in the US as they look to grow here. So I think this could be a little bit of a beachhead to another sort of regular acquirer in the US So that's been cool to watch as well.
- [31:51]
A
Thank you for that. We had one other deal on the tape this morning. Aspirion therapeutics company that's been around for a while and probably has seen better days being acquired by Archimed, which is an investment firm for about a billion dollars. I think the share price at the Acquisition is a little over $3 per share and back in the day, many, many of us will remember that Aspirin was a high flyer once $100 stock. So certainly well off those highs. But nonetheless a decent premium to the last few months. Bit of a smaller deal again, a private equity firm coming in. Bit of an off the beaten path type of an acquisition. And I guess that brings up the broader question. We have seen some of these smaller cats and dogs type transactions lately. We've seen a bunch of private company transactions somewhere at good premiums or at least good valuations. Outside of Lilly, we really haven't seen as much of the kind of blue chip, plain vanilla 5, 10, 15 billion dollar large pharma acquisitions and would love to hear the group's view on what's going on here with that trend. Are we past the window of pharmas acquiring biotechs for 5, 10, $15 billion? I know obviously Revmed didn't get acquired. There's been some speculation around a few other names. We haven't seen maybe a more substantive deal in a while. Who would like to take that?
- [33:15]
E
I'll just comment. This goes back to my Gilead days. You know, we always felt we were sitting on more value internally than the external pharma audiences believed we were worth. And I think as valuations have like ticked up and you know, on, you know, mid cap and large cap, I think it honestly as someone who used to do corporate development for Gilead and Celgene, I think think a lot of times they can't get to the justification to pay a premium on these companies. That's usually we know a lot of deals are done where they can never recoup their the cash flow doesn't work on a discounted present value basis. But I think there is this idea of are we going to put that much money in now? Lilly has enough of a currency where again they're in a kind of rarefied air to be able to do some of these things. But I think for a lot of the other pharma companies, I think there's a challenge of paying premium on very high valuations even in growing businesses.
- [34:16]
A
So Chris, you think the public market valuations have kind of escaped the range that pharma might be comfortable paying a premium on.
- [34:23]
E
That's what I'm suggesting, at least for now. I'm not saying they're overvalued. I'm saying that pharma might believe they're overvalued.
- [34:33]
B
I will, yeah, it's Greg. I'll comment where it's really hard as we all know, it's hard to predict when deals will get announced. Remember JP Morgan, we had a sell off I think in the XBI and biotech names because we didn't really see a level or any real deals consequence announced during JP Morgan and people started to question like oh, is this going to be a bad year for ma? And I don't think that's turned out to be the case. I mean we're only in May now our diligence talking to different folks within the industry, especially those that have portfolio companies when they speak to bankers. I think this is going to be a record year for M and A. I could be wrong but we've got these loes that are coming for all these companies. They do have good balance sheets, they do have access to debt capital at relatively lower interest rates than perhaps other companies. And so I, I think it's just a matter of timing and I, I think as we look through the balance of the year, I, I think we're going to see steady M and A continue.
- [35:45]
D
I mean turns got acquired for what, almost $7 billion like a month and a half ago. Sentesso, which I know we're pretending Lilly doesn't exist for purpose of this conversation, but that was pretty recent too. Feels like it's hard to call and
- [35:58]
E
to be clear, I was thinking really in the north of 20 billion. Right. Like 7 billion is not exactly a bolt on but the 20, 30, 40, 60 billion. That's what I'm saying might be tough.
- [36:11]
A
Yeah. In terms, not quite the premium that many of us had hoped or expected for either but point well taken that that was certainly a good company being acquired for a good asset. Sam, anything you want to add?
- [36:25]
C
No, just to say that we should just celebrate when the cash comes back into the market and, and a lot of the specialists are the ones who are holding these smaller biotechs which are the ones who are going to be then financing, you know, the next, the next round of early biotechs. So you know, the big, the big names. I, I think it's much harder for a pharma company to, to, to do that unless their backs against the wall when it comes to thinking about their revenue growth or earnings profile in the next few years. And according to our analysis, quite a lot of these patent expertise aren't as bad as they first look. Keytruda as a particular one we don't think is going to go in 2029. We think it's going to keep lasting till 2030. Three, at least in the US and then you've got, you know, and you've got the lilies of this world who have the time to wait or at least start doing things at an earlier stage, which by definition is smaller. So back to Greg. Did you think it's going to be a record year volume wise or dollar wise over
- [37:29]
B
either one? I don't know if I'm going to commit to one versus the other, but maybe I do think that generally speaking, when we look back, I think 2026 is going to be a very good year for biotech.
- [37:43]
A
Well, let's leave patent X Breeze to patent settlements. And Matt, I know you wanted to comment on this week's news.
- [37:49]
D
Yeah, you know, we were in the news in March for our own litigation on patents sort of unrelated to expiry, which is, it's an interesting one to watch. It's, you know, as somebody who's developing a JAK inhibitor, we watched Abbvie get a 2037 LOE for Rinvoak and thought that was interesting. And then to see Pfizer in these deals, there's been a bunch of speculation around what was going to happen here. This was on Defamadis, which is their HTR drug. Obviously a bunch of speculation, especially as people follow Bridge Bio and there was a debate about whether it's going to be 2031 or 2033 or whatever. It feels like a reasonable outcome. And it's sort of interesting to see these setups where there's a biotech company that's affected by the LOE negotiations of a pharma partner that sort of brought it into the front. It turns out the chairman of our board is the CEO of one of the end of it against. So I didn't have a, he didn't talk to me about it. I didn't have one of the, I didn't have a particularly close seat on it. But it's interesting to watch and hear about it from his perspective as well. I think he was obviously, you know, happy with the outcome and felt like it was a fair deal for everybody. So, you know, it's a, it's an outcome that moved Bridge stock. It may move Pfizer stock a little bit, but interesting just to see all that play through.
- [39:05]
A
Matt, we always used to talk how it was always favorable economically for everyone to find middle ground and settle and no one was ever paid for breaking a patent. Is that kind of still the case? Yeah.
- [39:18]
D
I mean, look, again, I can't say I've been in an endo Litigation settlement. Personally, I think the truth is that these generics companies, we don't talk about or follow the generic space very closely in the biotech world. But these companies are really good at what they do. They're creative, they're aggressive, they've built. I mean, these are as real as businesses get. They are low margin businesses, they're manufacturing low ish margin businesses, they're manufacturing oriented, they're very operational and these people know what they're doing. And I think it's a, you know, I think it's a fair fight. I think it's like, it's very good for the industry, it's very good for like the health of the US population, for innovation generally, that we have a system where these drugs become available inexpensively. It's sort of weird that the way it works is like really smart lawyers figure out how to sue each other and then get in a room and settle and pick a date. But you know, ultimately watching amazing drugs like Tefamidis go generic even in 2031, you know, my neighbor has HCR, amyloidosis is on Tifamidis. And I think about the fact that that that'll be a much less expensive drug four or five years from now, it's an amazing thing to see. So I think in that sense everybody wins. Obviously there's a lot of reapportionment of dollars as the dates are chosen and exactly when who gets what. But you know, I think ultimately it's for the good.
- [40:44]
A
Thank you for that. Let's move on to some of the data updates for the week. And it seems like pancreatic cancer is kind of of the new hot area of biotechnology. Maybe it's even eclipsed SCLP1 in terms of some of the data sets and the visibility we're getting there. And I don't know, Greg, did you want to start with Revmed and Rasco or Sam? Yeah, yeah.
- [41:08]
B
So I'll go ahead and let's just put into context, Eric. You're right. Pancreatic cancer, certainly a high unmet medical need. We've seen a lot of progress in terms of data coming out from biotech companies on hopefully getting drugs in not only the second line setting, but the first line setting. And we've talked about Revolution Medicines a bit in this podcast today, but just to put things in perspective for everyone. So recall in the middle of last month, Revmed Revolution Medicines reported positive top line results for its lead drug called Diraxon Rasib, which is a Panras inhibitor. They reported phase three data in A second line pancreatic, pancreatic cancer trial. And again this came concurrent with some media interviews with Ben Sasse and his role with pancreatic cancer. And he is on that drug. But in any case, on progression free survival and overall survival, we saw just very, very good data on overall survival. A 60% reduction in the risk of death. Median overall survival of 13.2 months for Diraxon Rasib and that compares to 6.2 for chemotherapy. So basically a doubling of overall survival. And with that said, this is what allowed the company to go out to the markets and raise over 2 billion in equity and debt. And then the following week they followed that up with a first look at data in the first line pancreatic cancer setting. And again, the data were very promising as a monotherapy. We saw an overall response rate of 47%, six month progression free survival rate of 71%, a six month overall survival rate of 83%. And then the numbers were even better when they combined it with the standard of care or one of the standards of care, which is Gemcitabine and nab, Paglitaxel or gnp. And so that kind of set the stage for then another company called Orasca, which is a biotech company out in San Diego that I used to cover. For a short time we had been waiting for very first clinical data for its panel or for its RAS inhibitors. And we got data for one particular compound called ERAS0015. This was in license from China. This is an interesting company in that the company used to have a different pipeline several years ago, was in mid to late stage clinical trials. And the company, in a strategic shift, just shelved that portfolio altogether. They pivoted to two preclinical assets that were in license from China. And so we've been waiting for over a year or so for first clinical data. And in that time, especially if you, if you take a look at the stock run for Ayaska ahead of this first data, which came out I believe Monday, Alaska had become like a 7 billion market cap company on no clinical data. So a lot of anticipation from the data. I think many investors were taking a bet that the data would be as good as what we've seen for Revolution Medicines. And you know, we all know that Revolution Medicines has become, you know, one of the hits of the year. It is, you know, a company that is now like a 30 billion market cap company. So I think investors were looking at Irasca as maybe a cheaper way to play the space. But the data came out and A couple of interesting things, and I won't go into all the minutiae of the qualitative data or the, the quantitative data, but the data actually were quite good and even better than the data that Revolution Medicines had presented several years ago for its drug at a similar stage. So this should have easily been a big win. That said, the stocks sold off considerably on the data announcement and that's because the data disclosed that there was unfortunately one patient death. So the efficacy was good, but the patient death kind of put a damper on how people were thinking of the totality of the data. Obviously it's just one patient. The company will obviously look to do larger trials and we'll see whether those data on safety repeat, but they'll also see about safety and tolerability. Unfortunately, the stock did not participate on the efficacy data. And then there was a second double whammy for the company that later
- [45:52]
D
actually
- [45:52]
B
filed a lawsuit against Irasca. This was a lawsuit claim that this 010015 compound was substant substantially equivalent certain formulations that Revolution Medicines drug is comprised of. And so with this patent infringement study, I mean a lawsuit, it just created just another bit of an overhang for Irasca. So good clinical data, I think, on efficacy, but now you've got one patient death and now a lawsuit from its biggest rival. And so it creates a really interesting situation when looking at these two companies in the pancreatic cancer landscape or just the inhibitor landscape more generally speaking. And we might have time to talk about what's in that landscape. But bit. So I'll stop here.
- [46:49]
A
Thank you for that recap. Sam, do you want to add on.
- [46:53]
C
Yeah, I'll just say that it is possible that grade 5 unfortunate patient death due to pneumonitis at some point may be seen also in the Revolution data because they do get grade 4 pneumonitis under axon Rasib. The interesting angle is that the dose that Irasco's using is like, like a tenth of that that Revolution is using. And yet Revolution hasn't seen a grade five event. So maybe there's. It might have just been bad luck. And then we do have patent lawyers in our group. So I'm very proud of that. So I've asked her what is the situation with this? So her direct response, which I'm going to, because I'm not a lawyer, Revmed probably just wants to get them to license their ip, get them to the negotiating table.
- [47:45]
A
Table.
- [47:46]
C
Unless Rev takes them to court, wins and gets the judge to permanently enjoin instead of awarding damages. And. If I cut off there.
- [48:02]
A
Yeah, you're back. We lost you, but we can hear you now.
- [48:05]
C
No, no. So, so basically bottom line is unless they can prove that there's been malicious intent and stealing and other bad stuff, a judge would be unlikely to allow REVMED to get the, the whole thing stopped now. So it's going to be interesting to watch if this is a tactic to get them to come and license the IP or genuinely they believe that they did steal their ip, what Nebraska can do is continue to develop. It's not that they can't stop that happening. So that's what I'm hearing from my colleague.
- [48:39]
A
Certainly we have, we have safe harbor to develop drugs pre commercially in the States. So as you say, unless there was someone toward underhanded activity, they can develop. I'll just chime in. I'm biased. Admittedly. I used to be on the redmed board. So congrats to my friends Mark and Peg and Jack. You guys have done an amazing job developing this drug. I actually don't think it's all about the death. I think investors are, I don't know, maybe a little bit more savvy than we're giving them credit for. They can put that death into context. These are pancreatic cancer patients. They're obviously going to have bad outcomes and deaths in clinical trials are not that unusual. I kind of just thought the setup in Irasca into the data as you described, Greg, was a little bit, a little bit juiced, a little bit maybe overheated and that there was probably no data set that was going to satisfy investors, given that once the news was out. We're waiting another 12 months or so for another update now from Alaska and they won't be starting a pivotal trial anytime soon and they're years behind revmed. So I think it's just going to be hard for a drug that's not clearly differentiated. You could squint and look at the IRASCA data and say, well, maybe it's a little bit better in lung, but I don't think it's any different in pancreatic cancer, which is where most of the money is likely to be made here. And I think given that lack of differentiation, you know, why kind of do we need a me too? I'm sticking with the pancreatic theme. I'll just throw out the PRMT 5 inhibitor class. Tango and Bristol are leading the charge here. They're both collaborating and combining their PRMT5 inhibitors with KRAS inhibitors with redmed in particular, but others too. And I think that's where kind of the excitement should be in combination therapies with novel, novel targeted therapies. Except could potentially obviate the need for chemotherapy. So we'll see how this pancreatic cancer market develops. It's amazingly robust, it's amazingly large and I don't know, maybe for the group. Do others think that we're a little bit overheated with the excitement here or could this be the next clip? One type of marketplace that gets people excited.
- [50:51]
C
That's a big one, Eric. Big one.
- [50:54]
A
Eric, just how do you size it? How do you size it up? Sam, do you have an estimate?
- [50:58]
C
Yeah, we do. We're in the 8 to 10 billion billion for post all second line and risk adjusted first line. I mean it all depends how they get priced. So that's where we're at. I think some people want it to be 15 billion in pancreatic. Right. But Eric, what about the AES? Isn't that where folks, I mean, you're not going to really get so far with beating the efficacy. But AES do play a role here and there are dose reductions, plenty of them, and there are some dose holidays. So wouldn't AES be an angle that they can differentiate?
- [51:41]
A
Possibly. I mean, I guess the thought is is there a wider therapeutic window with this next generation Neraska compound? It's certainly being dosed much, much lower than the Revmed doses. But we've also seen that they can't go much above 40 milligrams. That was the top dose and they backed off and went I think to 32 milligrams. So. So that top dose, 32 milligrams is still like 10 or 20x lower than Revmed's dose. So. Yes. Are they more potent? Yes, I would agree. Are they safer or have a better therapeutic window at that lower dose? I'm not sure, Sam. I think we just need more data and I don't know, time will tell. The mechanisms are pretty similar and the drug compounds themselves are pretty similar. Well, let's move on. Sam, you can take the Harmony 3 interim analysis, which I think is the other big news, at least of today and maybe even this week, that a lot of people are talking about. Both in my space where biotech investors are following Summit and even Crescent Bio and maybe more your space with Merck and the PD1s.
- [52:42]
C
Yeah, sure. Let's see if I can do this in two minutes. So Harmony 3 is evenissimab, which is a PD1 VEGF bispecific in combination with chemo versus Keytruda with chemo in squamous cell lung non small cell lung cancer. About 600 patients. Phase 3 trial data had always been expected in terms of final PFS and interim OS in the second half of the year. What we heard about a couple of months ago, two or three months ago, is that Summit Therapeutics who has in license this drug from a kiso from China a few years ago now decided to do an interim analysis interim pfs. You look at the Kaplan Meier curve for PFS from the China trial, Harmony six and you know that they hit a interim positive statistical significant interim PFS on Harmony 6 with a very wide dispersion between the. That's the right phrase. Between the treated arm and the control arm arm. The only difference being that or the key difference being it was China and it was also tislizumab that was used in the combination arm comparative arm. So they did that. My theory was that it was there to help them as they said to start discussing with the FDA and give them an opportunity to go and raise money because this is expensive work. Unfortunately last night after hours they said that, that they didn't hit the interim and they're continuing. So logical conclusions here can be that just not enough stat sig there because they didn't want to spend a lot of alpha on that. So maybe the difference is there but it just wasn't enough. Next conclusion is that actually the difference in the Kaplan Meier the distance between the two arms isn't as much as one would have expected from Harmony 6, which of course then has ramifications as to how much can you translate China because data to Europe US and if the HR hazard ratio for PFS in the final read doesn't come up to 0.6 which is what it is for Harmony 6. What does that then mean for the OS hit? Because expectation is that OS will be lower than PFS because of the VEGF angle there. I think I've done it two minutes over.
- [55:03]
A
That was amazing. Not only was it short but sweet and clear and all of the facts that anyone could possibly want to know. I'll just add, you know, obviously this is a disappointing update from Summit standpoint. Any PFS benefit is clearly likely lower than what was observed in Harmony 6. So hazard ratio is likely higher than 0.60 and also any PFS benefit is likely less strong than someone had hoped when they concocted this interim. So that's disappointing. You also mentioned Sam, that they do need to raise some capital. So that that could be an overhang going forward. The one silver lining here though is that we do have survival data coming at ASCO from Harmony 6. That's the China only study that you referenced and it sounds like that's going to be very good. That's a late breaker presentation, one that ikeso is really promoting aggressively. And so if there's little diminution between PFS and OS in Harmony 6, that could bode well for future Harmony 3 results. We'll have to see. But let's continue to move on and I think let's see, is it Greg who's going to start with some of the obesity trials?
- [56:17]
B
You know what I was going to do? In the interest of time, I was actually going to skip the obesity trials just because we talk about obesity all the time. But if I could, I just want to briefly mention that I'm going to switch to the Alzheimer's disease specifically and I think we might have some other comments as well. But I just wanted to highlight that there's a small biotech company called Elector which had a partnership with GlaxoSmithKline or they still have a partnership. They had a phase two trial outcome for a very novel target, Progranulin with an antibody called navisnobart. This was in early Alzheimer's patients. There's a futility analysis that was announced this week. The drug did, did not meet futility or did not pass futility. So they're going to discontinue the trial. But I think from an Elector perspective, this will allow the company in Silver Lining to pivot to its blood brain barrier technology efforts. They've got a proprietary platform called abc. That's where I think most of the excitement is in the Alzheimer's disease platform modifying therapy space. So there are tons of companies we've talked about on the podcast of lots of companies in this space. Roche is in the lead with Trontinumab, a phase three trial started last year. So I do think that kind of a small piece of data, but at the same time didn't want to think that there's nothing promising in Alzheimer's. And in fact, just yesterday another company that I covered called ActOne got FDA approval for a drug for agitation in Alzheimer's in patients. This drug will not have a black box warning as the only other drug called Roxelti does. So I do think that we still have good progress in the Alzheimer's space
- [58:06]
A
and let's stick with Alzheimer's. Sam, you get the last word today. Because I think the analysis that was done by a third party on anti amyloids was certainly not noteworthy.
- [58:16]
C
I mean, noteworthy. To be honest with you, Eric, it's. I'm surprised that anybody. I mean it made front pages of some newspapers. And this is a meta analysis that somebody had done putting together 14 trials, 12 of which had failed with the original, some of the older antibodies. And I have to say I was shocked that anybody even looked at that because it just doesn't. It's just wrong because you can't mix those kind of data up. But. So it's unfortunate that happened. But what was also nice was that we then saw Lilly Report and Casilda. I mean it really knocked the COVID off the ball. Consensus was at $76 million for 1Q and they reported 124. You know, that's pretty much close to what can be from Biogene is reporting. So it's subcutaneous. I think that really helps. So we'll see if these amyloid antibodies continue to actually get to a point where they make a huge dent in the disease and get used a lot. It's tough because of the biomarker testing, etc. So definitely a lot of time to a lot of room to improve here. But it was really interesting to see that Kasulana print over.
- [59:34]
A
Thanks for that. And yes, Leqembi from Biogen also had a pretty good print. So maybe these things are finally catching on. We all know there's a ton of unmet need. We had a few other topics we wanted to get to today. My apologies to all for poor moderation. We just had too much to try and fit into a very, very busy week in biotech.
- [59:54]
B
It did a great job.
- [59:55]
A
Eric, we are out of time and this ends our call. But thank you Greg, Sam, Matt and Chris for another wonderful session.