Loading summary
Transcript68 lines
- [00:00]
A
You're listening to Biotech Hangout, a live and unedited weekly discussion of all the latest news in our industry with a group of biotech leaders and experts. I'm Greg Savanovich and my co hosts today are Eric Schmidt, Paul Matias and Oliver Barnes. For more information about our guests and hosts, or to listen to the most recent episode, please go to biotechhangout.com so it is great to be back on as host on the Biotech Hangout. Summer is in full swing here in New York City, a city that is swept up in New York knicks basketball fever. Nixon 6 is the call here, but in any case, we certainly had another busy week in the biotech industry. We're going to try to get through as much as we can with our jam packed agenda and I'm looking forward to having Eric Paul and Oliver chime in. But to start off, as I often like to do as hosts, let's start off with a bird's eye view of where things are in the biotech market. And I'll speak on sector performance and then provide some commentary or initial commentary on capital markets activity as well. So I guess at a high level it's been a bit choppy of late, but I think things overall are still pretty healthy in biotech. Just looking at performance year to date, biotech looking at the XBI as a proxy is still nicely in positive territory. As of yesterday's close, the XBI is up about 10.5% year to date and while the AI data center chip trade, so to speak, has dominated as of late. And of course we have the huge SpaceX IPO taking place today with I believe a modest $75 billion raise and now trading at over 2 trillion dol from a market cap perspective. But Nasdaq is up 11.2% for the year, so only doing about 70 basis points better than biotech or the XBI. The XBI is outperforming the broader S&P 500 by about 350 basis points. Meanwhile, healthcare more broadly speaking is actually in the red so far, year to date it's down 0.4%. So within healthcare, biotech I think has been a clear winner. And of course we'd love to see this trend in biotech continue. Let's take a look at some capital markets activity. And this week in biotech we had the parabolas medicines IPO raising a record, a new record of 771 million in total and that surpasses the 719 million that obesity players, Cholera Therapeutics raised less than two months ago. Parabolis is I think an oncology focused biotech with a proprietary helicon peptide based platform technology. I only first heard of Parabolis after signed a collaboration deal with Regeneron to the tune of over 2 billion in biobucks just last month. And after looking into it just a little bit more this morning, I think it's incredible that this IPO for parabolis comes just five months after the company raised 305 million in January of this year in a series F financing. So congrats to the Parabolis team on great success there. And then we have the IPO of Cardigan, which is a cardiovascular disease focused company. I believe that IPO is set to debut on the nasdaq, I believe early next week. So. And what I think is a great sign for biotech, by mid year we're likely to have had I think 12 or so companies IPO that's raising collectively over 4 billion. And given this positivity, I'd like to think that the window for private companies to consider an IPO remains very open and investor appetite is there. But obviously it will depend on the type of story. Then just quickly, on the private side, we saw a number of financings as well. I'll just mention a few. We had a $125 million Series B for a company called Sonothera, that's a company focused on novel ultrasound based gene therapies that address the issue of trying to get larger genes into a gene therapy construct. Duchenne Muscular dystrophy is a first target for that company. And then we had a series B of 100 million for John Manganori City Therapeutics, that's an RNAi company for cardiovascular disease and ophthalmology. And we also had, lastly that I'll mention a $101 million Series A for a company called Ethereal Bio. And that's a company focused on antibodies for immune diseases. So we've, we've had a number of public market seals as well and I think I'm going to have Eric take that one. But before we talk about public biotech financings that we've seen, I think Paul is on now and Eric, you know, maybe I'll ask this question to you both based on your conversations with companies and investors. Do you want to offer your take on what we're seeing as it relates to private companies and the landscape for them?
- [05:44]
B
I mean go.
- [05:46]
C
No, you go. All good man.
- [05:49]
B
You got more interesting things to say, Paul?
- [05:54]
C
0% chance of that, Eric. I mean, I think there's still like, I, I think you're totally right, Greg. There's still a window. I think all of us probably have a window into some sort of slice of a pipeline. Right. That, that's gonna, that could continue to test the markets later this year. I still feel like the bar is higher than it's been historically. But at the end of the day, given how long the window was closed, I think there's still a backlog of private companies with real data in phase one, two type studies or real technologies that have value. And so I think Shimmer and I last year, each guest how many IPOs are going to be this year? And there's a number of people who've listened to this podcast who've reminded me that I think I guessed 12. So I was totally wrong. Shimmer gets 50. So we'll see. That would be pretty amazing. But it seems like the true answer might end up being at the midpoint. I will say that. And I'd be curious, Eric, if you agree with this or not. But you know, we've talked on past podcasts about how sort of last year was the year of the launch story and this year is the year of the shiny pipeline asset to some degree. Right. And I mean that less about say like a revmed comment and more just like as a generality. Right. Like it feels like large cap companies that don't have an interesting pipeline asset are out of favor. We've seen a number of development stage biotech companies trade up 100% into data. I'm wondering if that's changing just a tiny bit. Right. Like I have a couple big binary events coming up in my coverage and I feel like if those catalysts were reading out even eight or nine weeks ago, the perception from people would be unequivocal that you could get compensated significantly for taking on that risk. I think after a few readouts recently had some stocks trade sideways after trade down, maybe there wasn't a financing when there's expected to be one. I think there's a little bit more consternation among the buy side on do we need to try to or do investors need to play a little bit more defense going into the summer or the second half of this year? I don't think it's been a massive sea change, but I've definitely noticed that. And like a true sell side or I'm a little bit of a lagging indicator sort of reacting to the choppy markets. But I do think on a forward looking basis it feels like the street feels a little bit differently about catalysts and risk rewards than people did a couple months ago. Do you guys. Eric, do you hear the same thing at all?
- [08:35]
B
Well, I loved your comment, Paul, about how this is the year the shiny pipeline drug or candidate. I think you're dead right there. I think that's what honestly made Parabola such an exciting IPO for a lot of people. That we got a drug that maybe for the first time can hit the WNT pathway, which is implicated in so many different cancers. They've got some data. It's still phase 12 data, but it could be in theory the next red med. Right. And that's kind of what people are looking for. We also had. I'm sure we're going to discuss the Tango data, the PRMT 5 inhibitor class tango and others for that matter that are in vogue these days for the same reasons. And I don't know, I haven't seen that end yet. I guess I think that storyline is still perpetuating. Maybe the natural progression is to go from launch in 2025 to shiny pipeline candidates in 2026 to platform stocks in 2027, science projects. Again, that tends to be how some of these. Is that the end of a bull market and that. I don't think I. Yeah, I think we all fear that. Right. And we don't want that. And I think you're right also, Paul, that today's window, today's IPO window is a little bit of a Goldilocks scenario where it's selective and quality driven and data oriented, but not closed. And that's exactly the kind of market that we've always asked for.
- [09:59]
C
Right. Makes sense. Greg, do you have any thoughts? You might be on mute, man.
- [10:08]
A
Yeah, thanks so much.
- [10:10]
B
Yeah.
- [10:10]
A
I think my visibility into kind of private company and aspirations for IPOs are one where I do talk to private companies. Some certainly are hopeful that they can get out this year. I think some of them have more real prospects than others. Given how closed the IPO window has been for so many companies, I do think that always the cream rises the top. And by that I mean just companies with de risk data and a good investor base. But you know, based on where I sit, relative to both your platforms, you probably have much better insight into things than I do. So. But you know, at 12 for the midpoint of the year and Paul, I was on that same webcast when we were talking to Josh and he had 50 and you had about 12. And I chose the easy path and went last and said somewhere in between, but I think we're in a good spot. Again, I think the comments we made back then were we just want to see a very functional biotech IPO market in 2026 that hopefully will lead to an open window for companies in 2027. So, you know, fingers crossed. And for those of you listening, I, I hope you're doing the things that you can to, to get ready. And for those of you who are perhaps not there just yet, you know, let's keep an eye to 2027.
- [11:37]
C
I think one other comment here and it might segue into if Oliver, Eric, want to talk about the inside deal, is that definitely the narrative for many private companies? And obviously this depends on the stage, but it's more for companies that have some proof of concept is this whole dynamic of dual tracking, doing an IPO or looking at whether or not there's a buyer of the company. And I think some people would say that's always been the case, but I don't have a good stat on this, but it feels like over the past year there's been a lot more private M and A at a meaningful dollar level than I really ever remember.
- [12:15]
B
Well, Paul, that's a great question. I wonder if you feel sometimes like I do that we in the public markets get the sort of the worst of the IPO class.
- [12:27]
C
Yeah.
- [12:29]
B
We have seen Tubulus, which we know was gearing up to do a massive ipo. They got picked off. I think Oro is another one that was at least considering going public and got picked off. I don't know what Vega was doing. And that was the company that was just acquired this week by Insight. But, but it's. Yeah, it's a little bit concerning that you kind of know that Pharma is looking at everything and these privates are looking at the dual track process now. That's why to me, something like Parabolas is so wonderful. Maybe Kylera and Maine fall in this boat here too. These are earlier IPOs from, from, from earlier in the year. But these are companies that were able to kind of break through any valuation ceiling that probably Pharma was willing to pay and create a lot of value for public market shareholders, despite maybe there having been a dual track. Who knows? I don't know. But love your thoughts on that.
- [13:24]
D
I was going to say a counterpoint to those, though, which was Metsera, I suppose, because if you look at the filing for Metsera before the listing, I think Novo put a bid in and then it ended up going. And I think one of the things I'VE observed with the dynamic between IPOs, M&A, whether to sell before the IPO. The whole dual track thing is in the last couple years, because broadly speaking, biotech capital markets have been shut down a lot. There's been a degree of desperation driving some of the private sales, whereas I think now we're seeing a different dynamic where there's actual real competitive tension. And the inside deal with Star to buy Vega, this subsidiary of Star is a perfect example. Like Star was working on an IPO simultaneous to working on this deal. And I think generally that's good for the sector. Right. Because it creates real competitive tension in terms of. It gives optionality for the VCs of what they want to do.
- [14:31]
B
Well, you're speaking from a VC mindset which is, I agree, great. From them. But those of us who operate in the public markets, we all, we want all the good stuff for ourselves.
- [14:41]
D
You're getting greedy. You're getting greedy.
- [14:43]
A
Yeah, well let's, I mean we'll eventually talk about the M and A that we've seen in the space and we did just comment on some financings we're seeing on the private side, but we've had some good data sets which have come with some combatant public biotech financings. And Eric, I think I'll turn it over to you just to go through a few higher profile ones that happened this past week.
- [15:12]
B
Yeah, there's maybe one interesting area here to discuss and debate which was the summit deal that didn't get done. But first, let's start with the two that did a couple of very large offerings. One from Tango, one from Idea, kind of just continuing the, the trajectory that we've seen from earlier in the year where companies that have data, especially good data, and I don't know, we'll probably talk about the Tango data either now or later in the podcast. But the data were exceptional. Unprecedented results in pdac, which pancreatic rata cancer is still a huge unmet need and better data than we've ever seen before from any other drug combination. So hats off to the guys at Tango. They deserve to have been out there raising 500 plus million dollars, $600 million and they could put it to good use. Idea was able to raise on the heels of that same data set because they too were in the PRMT5 field and are beginning to generate probably also similarly very interesting combination data. So again, a company that was able to raise several hundreds of millions of dollars on the heels of what looks like a terrific clinical result that's going to help a lot of patients. The anomaly here was Summit. Right. And Summit, of course had their data set last week at asco. I'm sure we talked about that on Biotech Hangout. It wasn't part of last week's episode. But you know, the data were criticized from a few different angles. I actually thought they were very good. Summit went public with a raise of about $500 million. Certainly this company has a very substantial market cap. Certainly, as we've talked about, the environment for fundraising is very good. Certainly this company can use the money. They don't have a particularly strong cash balance and certainly they've got a lot of things they can do with the money. They're running multiple phase three studies. So all signs pointed to that offering being successful and yet it was pulled. I assume there was a price at which the deal would have cleared. I assume that price was distasteful to the Summit management team, which to their credit remain huge owners of the security, huge shareholders. So they must have chosen to pull away when the price wasn't right. Don't know what kind of advice they got or why they expected the price to be a lesser discount than I guess it was. But now they're seemingly a little bit stuck because the world kind of knows that they're half pregnant with the need to raise capital and, and there is a pretty binary event coming from them toward the year end. So we sometimes see this happen. I'm sure, you know, guys, you've, you've seen it before but love your views on, you know, kind of where this leaves Summit or, or when companies do go out and don't quite get the price point they want what they ought to be doing.
- [18:15]
A
Yeah, I,
- [18:17]
C
go ahead.
- [18:18]
A
No, you can go again.
- [18:19]
C
I don't, I mean, I feel like it's, I feel like it puts you in a really tough spot, right, Eric? I mean, it almost like creates the self fulfilling prophecy of there could be a deal. And this isn't a Summit comment necessarily, but just in general right now, if you're an investor looking to buy the stock, you're almost wondering if there's going to be a better entry point or a better liquidity event. And you know, we've seen how concerns about how a stock might trade can transcend the actual fundamentals of the stock sometimes. So yeah, again, I don't cover Summit. I don't know anything about the, the transaction. But it's just, you know, people can create like a financing overhang into being a much bigger deal than it actually is. And this Feels like it would add fuel to that fire. I don't, I don't know what you do. I mean, you know, look, I'm not a banker. Royalty deal or rip the band off and just do the financing anyways. Try to do a pipe. I mean, I think I don't really know what else you can do or just, or just wait it out and roll into the catalyst.
- [19:15]
A
Right, yeah, I'll just add that I don't cover summit. I don't know the story well enough but I was at asco, I was at the plenary session where they did announce the data. And Eric, I would agree that on the face of the data in themselves like the data are good. It would be very interesting to have seen what would have happened to the stock if the follow up presentation by a KOL to opine on the data went very differently. And for those who were maybe not familiar with what happened at Asco, but after the formal presentation there was a US based Kol who was incredibly cautious around the data side of things. And again these data for context were from a Chinese study, very good data as Eric referenced. But the criticisms were things like hey, longer term follow up is needed to verify this limited applicability to a US patient population. We're going to need results of a global phase three. And because of this not really quite sure if the OS benefit will be maintained because we just need a longer follow up period. So it was quite a destructive type of rebuttal of the data and I'm just curious if the receptivity to that data would have been different at asco. It'd be curious to know if this company could have maybe much more easily raised 500, if not more million dollars. I don't know what the next catalyst for this company is, so I don't know. Eric, you might be in a better position to know what the news flow is and whether there's another financeable event. But I do think it puts the company in a pretty tough spot.
- [21:25]
B
No, no, I agree with your views. It's interesting to think about how many, you know, billions of dollars that discussant may have cost the company in terms of market value. And unfortunately there's a third party here at Kesso which ran the study and probably was maybe responsible for communicating to ASCO and the discussant and maybe hoping helping her get to a better point. And I don't know where that communication fell apart but, but it was, I agree, a little bit disingenuous of her to prompt all those criticisms against seemingly very good data set. But yeah, we're left with what we have. And the next data point is going to be the Harmony 3 study. This is the global study that everyone's been waiting for. You referenced just that, Greg. And the data are coming at year end and it's going to be binary. So I think the company wanted to put another 500 or so million dollars in its coffers because it's running now. Multiple phase three studies and other indications, non squamous lung cancer and colorectal cancer, these are studies are going to read out in 2027 and beyond. And if this Harmony 3 study at year end doesn't go their way, they're going to have to raise a lot of capital to fund these ongoing phase threes at probably a lower valuation. So it's not ideal from a strategic standpoint.
- [22:46]
A
Yeah, and I think I'll just comment too. Just having had the benefit of doing business development at two rather large companies that, you know, it's really important for smaller companies to be able to raise, not only to be able to fund their trials, keep the lights on, keep the staff employed, but it's also having cash is a very important strategic asset, especially as you're negotiating with, you know, potentially interested partners. I'm not saying that in the summit case that, that was, you know, that is a main consideration, but just generally speaking, when you see companies raise money, it is obviously to capture some meaningful value inflection and you know, hopefully to extend the cash Runway. But many times too, which is often unsaid, is it's really just to be able to have a substantive cash position so that when you're talking to strategics, strategics aren't there saying, well, we know you're not in a good position from a cash perspective and so we'll dictate terms. And usually if you're the smaller company with ample cash, you can use that as leverage to say things to the degree of like, you know what, thanks for your interest, like we're good on cash, we don't need you and you know, we'll just continue on and if you want to re engage under better terms, like, we'll have that conversation. So, you know, I've got my fingers crossed for all biotech companies. And so without knowing specifically the, the summit story, I, I hope that data for them from Harmony 3 is a positive one.
- [24:22]
D
Can I ask a question, guys, which I'd be interested by? Like, I don't know if any of you guys cover Tango. How much is Tango? Obviously they've got this Trial, which is a combo right with the Revolution medicines pancreatic drug and I'd be interested to know like how much it's seen as somewhat of a threat to the possible end market for the Revmed drug. It's super interesting.
- [24:43]
A
Eric, do you want to comment? I think you cover Tango.
- [24:46]
B
Yeah, I mean, just for those who are maybe a little bit less aware, the data this week showed that Tango drug called bupimetostat, it's a PRMT5 inhibitor. The mutations called MTAP deletions that enable a PRMT5 inhibitor to work are found at about 40% or so of pancreatic cancer patients. So it's a minority of the market though, a large minority that the Popes Metastat drug is directed toward all the data that we've seen. Well, I shouldn't say that the exciting data that we've seen is all in combination with the redmed RAS inhibitor combinations. And most exciting is the combination of diraxon rasib, the multiras inhibitor from redmed with opimetostat. That's the data that showed a 90 plus percent response rate. Just a response that is off the charts that I don't think anyone would have fathomed days ago, let alone months or years ago. That is just a tremendous result in a cancer where we're used to seeing response rates in the teens or twenties at best. Again, hats off to the team at Tango in terms of the competitive dynamic with RedMed. Well, it's interesting. RedMed clearly is in the lead with regard to its RAS inhibitors. Diraxon, RASIB should be approved, I'd hope almost any day now. As soon as they file it should be turned around and ratified and they're clearly going to have a leadership position in this market. But there are some other RAS multis in development that in theory could be Combinable with the PRMT5 class, namely compounds from Alaska and from Adelaide Norte and from Roche I believe. So we'll see how this plays out. Obviously in this case, one plus one equals three. And that in theory could make for some kind of a collaborative or cooperative relationship between Tango and redmed. And I'm told the companies have a very good working relationship and, and hopefully that will continue and hopefully there'll be financial incentives for them to continue to work together because that would be the fastest route to get this combination to patients. There's no doubt that if Tango were to go with any of the other RAS inhibitors, they'd have to take a bit of a pause and restart some development. So their path Forward right now is with Diracs on Rasib. They're talking about a front line combination study and that probably means both companies are going to benefit from longer duration on therapy and joint combined sales. But I don't know if anyone else has views on this.
- [27:35]
A
I don't know much about the Tango story. I do follow Eric, along with you, the PRMT 5 inhibitor space, but that is incredible data. I mean, I do also have exposure to the pancreatic cancer space. I mean, I think maybe from a high level perspective without talking too much about the specifics of Tango plus Revmed, but for all of us who've been covering the biopharmaceutical industry for the past 20 years, like the advances we're seeing in pancreatic cancer are, it's, it's breathtaking. So congratulations to all the companies that are working on this, but it's just great to see this kind of data for patients. All right, with that said, we did reference a couple of deals that we would discuss today and there are three in particular that we're going to talk about. There are also a number of partnership deals. But let's start maybe with talking with two smaller deals first and then we'll shift to a pretty sizable deal that we saw this week and that's GlaxoSmithKline buying new Valentine. But on the first deal, which we referenced earlier with Insight making a splash and buying Vega for I think 2 billion or so in total considerations, you know, Oliver, did you want to lead that or Eric, did you want to talk about that? Oliver?
- [28:57]
D
Sure. I can kind of run everyone through the facts of it and stuff like that. So in a way there's a bit of a line you can draw between the Insight deal and the GSK deal from my kind of very macro, not in the weeds perspective, which is basically like new CEOs with insight. About a year ago, Bill Murie, who's probably pretty well known to the whole like kind of VC biotech community, took over as, as chief exec. He was the chief exec who sold Karuna to bms, then went to that Blackstone life sciences company, Anthos, which ended up selling to Novartis. So he's one of those classic kind of veteran executives often involved in a lot of deals. And I think the market perceived his new seat at Insight as a kind of clear indication that Insight was going to start doing, you know, bigger bolt on M and A. Today really they focus on video deals like sub $1 billion. So this deal for Star or Star's subsidiary Vega is basically the same thing. It's like was up to $2 billion, it was 1.25 billion upfront in cash and then a further 750 dol, $50 million further down the line. Now Insight's main drug is Jack of Ir, which is like a hemonk drug, blood cancer. And so this deal makes a lot of sense for them. What they've basically bought with, with buying Star or buying Vega, the subsidiary of Star is this drug VGA 039 which is a treatment for Von Willebrand disease, which is a common like inherited blood disorder. A kind of version of haemophilia is the best way of kind of thinking about it, which is in phase three trials and you know, could benefit from an accelerated approval process effectively. Right now the standard of care for Von Willebrand disease is a monthly, sorry a kind of several times a week infusion. And this means that the only patients are ever treated with it tend to be those with the most severe cases. Right, A few tens of thousands. Whereas what the offering that this new Vega drug has is basically a monthly infusion. So there's a possibility of converting those patients who are using, who are doing the kind of multiple, multiple times a week infusion and also using it for like a prophylactic reasons, you know, you know, for prevention. So you know, what Insight effectively sees it is potentially, I mean they haven't really guided the market yet, but potentially towards a kind of blockbuster drug. And I've discussed this a bit on, on biotech hangout before, which is that you think about a blockbuster drug, you know, big pharma, the $100 billion market cap companies are tending to go after multi, multi blockbuster drugs. Right? Because that's what they need to fill the hole in, you know, in their, in their revenues that come from pattern cliffs with Insight, with, with Jackify, which is coming off patent in as early as 28, you know, getting a high hundreds of millions of dollars of revenue or towards a billion dollars in revenue is a big deal. And that's why we often see these mid sized drug makers, you know, hunting for these, these smaller biotech targets increasingly nowadays. I don't know if anyone else wants to chip on.
- [32:32]
C
I just want to say, I just want to say shout out to Dave Gardner who I'm sure multiple people on this know who went to industry and we've seen a lot of times, you know, people from Wall street go to industry and certain strategy roles and hope to maybe be more active or you know, maybe maybe get sort Of, I don't know, I'm generalizing, but maybe a little bit hamstrung by sort of the politics and the impediments to kind of actually deals and things like that. And it's cool to see. It's cool to see Insight transacting on a private company that was, you know, generating a good deal of buzz in the investment community and seems pretty interesting.
- [33:10]
D
Yeah. And and to, to add to that, it wasn't just like creating buzz. It was like. I think the process was a competitive one. I think there may have been other bidders around it. And then second to that, it was thinking about an IPO process. Right. So I think this shows like, you know, I suppose with Dave and with, with Bill, the new CEO, like it shows like the appetite that Insight has to go and do deals. And I spoke to Bill after the deal got announced and what he was basically saying was like, you should consider us as like this is the first of several.
- [33:42]
A
Right.
- [33:42]
D
And, and I imagine they're going to look, you know, like hematology is a natural area for them, but they could also look in I and I and oncology. There are obvious kind of adjacencies. You know, they're not going to do everything. Insight and it generally is going to probably cap out at like a few billion dollars, but there's clear adjacencies which, which they could push into. And I think the markets actually responded pretty well to them. The stocks up over the past year, like 50%.
- [34:10]
B
Yeah. I mean anyone who knows Dave and certainly Bill, you know, they're not wallflowers. These guys are going to be active. So congrats. This is the first somewhat larger deal, at least that we've seen from the new team. I have a lot of confidence in this team and its ability to do diligence and hopefully find some good assets. Maybe just to cut to the chase on this drug in particular, this is a novel acting anticoagulant. It's a protein S antibody. And I don't know, I think a lot of us who do follow Insight are still struggling a little bit with that mechanism and what it entails. So far the data have been very clean showing enhancement of blood clotting without too pro coagulant any activity without any risk of VTE or other blood clots. And if that maintains itself, that's a great profile that could actually go beyond von Willebrand factor disease and into a lot of other indications. Could even be a bigger than $1 billion drug as insight as today claiming it can be. On the other hand, if we wake up tomorrow, this whole thing blows up. If there's a single sign of blood clotting in pretty much any patient. So it's somewhat risky. I love the fact that the team is willing to take some risk. I think that is how you sometimes create value and we'll see how it plays out.
- [35:41]
A
Eric, did you want to mention the J.J. firefly deal?
- [35:48]
B
I think we've talked a lot about private transactions already. This is another one of similar size and ilk. Maybe the thing that's most interesting to me here, Greg, is just that the lead asset that JJ is acquiring Firefly 4 is again, a RAS inhibitor. This is a pathway that's drawing a lot of attention, including from new oncology players like J and J. I think if you look forward to future M and A and business development transactions, especially focusing on oncology, there's probably no pathway that's more ripe for deals and acquisitions and collaborations than RAS inhibition. Right now, the thing's on fire. And as we just talked about a few minutes ago, we're just seeing better and better clinical results from combinations and all sorts of other players in the field. So welcome J and J. I'm sure they won't be the last.
- [36:42]
A
Yeah, and I think it's interesting too that I wasn't familiar with Firefly before, but that being said, it's got a degrader based platform technology and we just saw a whole host of deals in the degrader space, which we'll mention just in a little bit. But you marry degraders and RAS inhibition and pancreatic cancer. And I'm sure Firefly was like, I think we're at the right place at the right time. So congratulations to the Firefly team. But let's shift to like the much larger deal that was announced this week. This was GlaxoSmithKline buying US based oncology biotech New Valent for almost 11 billion. Oliver, I'm sure you were all over this one. Do you want to comment here?
- [37:32]
D
Short so. And I was all over it, but not just because of the English accent. And GSK is being UK pharmaceutical company. Although it's cool to see them do stuff, right, you know?
- [37:43]
A
Yeah, yeah.
- [37:43]
D
Although funnily, I was talking with someone like after, after the deal announced and they were, they were saying actually when you run the numbers on. On. On. Number of. Of deals they've done, it's actually, I think pharma, I think GSK comes out as like fourth. I think it's like number one. Would be Lily. And then I can't remember who goes after that. It's maybe Merck. And then there's one more and then GSK comes as fourth. Now most the deals they've done in the past few years have been small, right? They've done, you know, like 35 pharma, which was like a billion odd IDRX. Those are both. I think one of them is private, one of the public, you know, Boston Pharma, they did too. But on the, on the, you know, on the whole, the thing that's striking about this for GSK is, is kind of its size and it's in a sense it's kind of ambition in oncology. So let's trace the story back. In 2014, GSK did this slightly wacky deal under Andrew Witty where they got out of oncology, they did an asset swap with Novartis and they took Novartis vaccines division, which has helped them build a pretty successful vaccines enterprise, and they got rid of their oncology division. Then when Andrew Witty leaves and Emma Warmsley comes in, she spends quite a lot of time getting GSK back into oncology, right? And Luke Miles, who was the cco, the chief Commercial officer for much that period, who's now CEO of GSK as of the beginning of this year, has effectively taken their biggest swing yet in getting them back into oncology. So New Valent has several drugs targeting different mutations, as I understand of non small cell lung cancer, both of which could get approvals this year, both of which are in quite competitive spaces. So there are other drugs that have been commercialized or going to be commercialized in those areas. And, and then just recently at Asco, one of those two drugs got some new data in terms of Frontline, which actually was a bit of a, was, was perceived by investors as a bit of a setback for New Valent. Broadly speaking, I think New Valent hasn't really had that many inflection like of late. And it's kind of one of those classic biotechs which has just been sitting there as it approaches its PDUFA dates, kind of waiting for someone to come and buy it. And it's an interesting deal for gsk. I mean setting aside the asset swap, it is basically their largest deal ever, which is since the company was created at the, you know, early in the millennium, which is a big, big thing for a new CEO who's just six months in to the job. And, and in that I'm sure he's telegraphing to the market, you know, that this is something that we probably can imagine is going to continue. The reason I think it's an interesting deal and actually you know, after it got announced, speaking to people and getting that, getting the perspective of some of the bankers and the investors on it, I think it's quite smart in a way because they've paid, it was, they paid $124 a share which kind of put new Valence equity value at ten point something billion dollars. Enterprise value because of the cash on the balance sheet at like $9.4 billion. The reason it's a reasonably smart deal is there's a huge variance with New Valent about where people think and where analysts think. And I'm sure you guys want to chime in on this. Where peak sales lands because of how competitive the landscape these drugs are launching into now. I think the most bearish take on New Valent is that peak sales lands at like $2 billion. The most bullish take puts it like maybe 5, $6 billion across its pipeline. Now if it lands at $2 billion that's not great but it's, and they've probably overpaid but it's not a total disaster. Whereas if it does land on the more bullish side, it actually ends up being a very good deal for Luke Miles. So I, I, you know I think, I think that's kind of the bet. It's, it's an arb on a company that probably a lot of other large cap pharma may have passed on. And GSK saw a pretty unique opportunity to take a big swing in Oncology which is where they've done a bunch of their deals recently including Sierra Oncology. They did a big collaboration with Hungry which included a partnership on several early stage cancer drugs. It makes sense. I think it surprised the market but it makes sense be interested in you guys opinion.
- [42:30]
A
Maybe I'll just add that it is surprising that GSK is number four on that list of companies.
- [42:39]
D
I need to verify this list by
- [42:40]
A
the way because I don't think that's the impression that people get. But if the stats are the stats and the numbers are the numbers, I'm not in a position to opine on where GSK's needs are. But that being said I, it is interesting to see how that company has evolved over the past two decades or so. Are you in? Are you out? If you remember they brought in Hal Baron some time ago and then he, he left and obviously there was a big movement to kind of upgrade the R D organization and then I think maybe some Transition. But here we are again. So certainly a big bold move by gsk. I don't know Paul or Eric, any comments you might have?
- [43:26]
B
The only thing that I comment on is their role in oncology or their place in oncology. Yeah. As Oliver said, they got out of the business very vocally so in 2014. But just a few years later, I think it was 2018 or 19, they bought Tesaro and then few years after that, early 2000 and twenties, they bought Sierra Oncology. And then there was another deal just last year, idrx. So they've kind of been dabbling with smaller oncology deals for the last 10 years after expressly stating they're not in oncology. And I guess with new Valent they're full in. Right. I mean you can't do a $10 billion transaction and not be in oncology. So we'll see how this plays out. That sorrow deal didn't. It didn't work out for them. The Sierra deal was a much smaller transaction. IDRx was development stage. They probably need more in oncology if they're going to be real player.
- [44:23]
A
We have a lot to get through still. We're not probably going to get through all of it.
- [44:28]
B
But, but Craig, can I ask Oliver about this, this leakage to.
- [44:33]
D
Yeah,
- [44:36]
A
sure. As well. So yeah, I think there's some controversy out there on like, you know, M&A's getting leaked and what the motivations are. But Oliver, you're in the thick of things. You want to opine maybe for a couple of minutes there.
- [44:52]
C
Sure.
- [44:52]
D
So I think yeah, it's kind of like how the sausage is made or whatever. Yeah. Like I've, I've been following biotech for a couple years now.
- [45:00]
A
For a few years.
- [45:03]
D
And it's probably. And I cover like deals across sectors so I kind of see the dynamics and how they work about media leaks in industrials, in oil and gas, not just in biotech. And biotech I think tends to be one. You probably see more and also sometimes more interest in it. I've often chalked up to a couple of things which is that a lot of retail investors follow the space. Right. And the M and A tends to happen at quite a high premium. So there's kind of lots of incentives to work out how to read the tea leaves and what's going on with M and A and the kind of chatter and gossip in the market. I'm on X or Twitter all the time. Right. And so I see like the kind of the excitement sometimes misfounded that like A lot of the retail investor community in biotech has over sudden like M A leaks. There's a lot of publications where like you read it and it's nonsense, right? Where they like, there's no verification process, they just publish what they hear. But then because they have maybe like a 1 in 10, 1 in the 2 in 2 in 10 hit rate and obviously I'm not talking about the FT, I'm not talking about the Journal, I'm not talking about Bloomberg, I'm talking about others, kind of random ones, you know, people still pay a bit of attention to them, but they're generally like not worth your time. I mean it's interesting, right, because I think most people particularly like kind of VCs, executives at companies, they, they tend to assume that there's like a strategic logic to a lot of the leaks. On the whole, there's not really like sometimes like deal reporting and putting some stuff can put companies in play and can help like get a deal over the line or make it a more competitive process. So that does occasionally happen. And sometimes like in my role I can end up being like a conduit for that whatever strategic leak. But on the whole it's much more to do with the reporters, right? It's to do with myself and the relationships I have and who I spend time with. And I spend a lot of time in biotech and generally like biotech, I kind of like systematically as a type of M and A, because it's one of those ones where like, you know, I'm not an expert, but I can see the chess moves now, like without any inside information, I can see the chess moves of what certain companies would do and wouldn't do in a way with other industries where it's slightly murkier. I mean, like we were just talking about the GSK new Valent deal, for instance. The idea that like a new CEO freshly empowered to do deals in at a company that's been spending quite a lot of its business development, you know, dollars on oncology would go and take a big swing in an oncology company, that's kind of not that surprising. And then on the flip side, you look at a new Valentin and you're like, oh, a company that's had most of its inflection points with regards to data and is awaiting two PDUFA dates and is about to launch, you know, which is the sweet spot for all biopharma acquisitions, right? Because the, the large cap pharma groups are better, you know, often kind of the launch process than the biotechs it makes a lot of sense that they would want to sell.
- [48:35]
A
Right.
- [48:36]
D
So a lot of the work that I do is kind of like is clue work in a way. And, and you know, that's not totally dissimilar I think to a lot of the advisors, right. People who are inside a deal and working on a deal, people are outside a deal. You know, they want to work out what's going on in the industry and, and that, and I, and kind of deal reporters play a role in that. Right. We're trying to ambulance chase a bit and work out okay, what's going on here. And people are hearing chatter about this company and, and I think the thing is my, my, this is my health warning for, for whoever's listening from the kind of retail investment community. There are publications to pay attention to when they report on M and A, whether it's described as kind of early stage or it's happening tomorrow or in a few days. And then there are other publications not to pay attention to because I know a lot of my peers and I know the ones who have very like rigorous checks and balances about when they publish something. Like we would never publish something unless we absolutely know it to be the case. And that tends to, to differ at other places. And I'm not talking about like Bloomberg and the Journal, they're also a one they would publish stuff only when they know it's the case. But I just know in biotech there's a lot of attention paid to these kind of slightly random like kind of publications. And yeah, maybe I would encourage people to pay slightly less attention to them. I don't know if I'm putting shade on people.
- [50:06]
A
It's always fascinating to hear the rumors, whether they are true or not and then see the deals get announced when they do and the sources. So as always, we appreciate high quality work like the work that you do, Oliver. And thanks for that fascinating perspective.
- [50:23]
B
Oliver, can I just. I know we're running tight, but just this trend that we're seeing where companies or, or maybe board members or even investment banks are leaking information the night before a transaction, frequently we'll wait, you know, see something on Sunday night says DLX is going to get done and we wake up Monday morning and it's on the tape. Obviously this has been signed, sealed and negotiated days on end. What's the point of leaking something less than 24 hours before announcement? How do you guys feel about that?
- [50:59]
D
I mean for the, for the average investor it has way less of a value add, doesn't it like, I mean it's simple, right? Like if, if I, you know, for instance, I'll give you an example. Like last year we broke Novartis Avidity and we broke that like when they were in talks like I think the deal printed in October and I think we broke that they were in talks in like August or something like that, you know, for your like Arbitrage hedge fund that kind of has more value, right? Doesn't it? Like, because it's, it's a, it's something that's giving them a long lead, heads up and they can be like, do I trust this reporter? Do I, does this make sense with regards to the stuff that comes like, comes the, the, the night before? You know, sometimes with companies talking in broad terms, sometimes with companies they want to, they have a complex deal that they want to make sure that the, the market really understands. And so like working with someone and explaining that, you know, can be a good way of setting out their stall. But on the whole, as I said like most these things don't have a strategic logic to it and it's more just to do with, with me or my peers and like the energy that we put towards stuff in trying to work it out. And, and generally if you want a simple answer, it's this. The closer you get to a deal being announced, the more people know about it so the more likely it's gonna get out there, right? You know, if, if I, if I, if we, if we think about like GSK New Valentine. I don't know when the talks like kicked off, but whenever they did, the likelihood that anyone who has a slither of that information is going to talk about it like two months ago when it was probably still, I don't know, whatever, like months ago, weeks ago when it was still in a delicate position is I can tell you absolutely zero. Once things are hours away or days away from getting signed and there's more confidence about it and more people know about it. Just like basic human nature, people tend to, to be a little bit more loose lipped about it, but there's very rarely any. There's most the time there's not strategy to it. It's really just like the, the kind of the energy and persistence of you know, my peers basically or myself like in trying to dig this information out.
- [53:31]
A
Thanks Oliver for that. Again, we are got a probably a few more minutes left. I just want to comment on three deals that we saw this past week that were more BD transactions that were partnerships or licensing deals. Novartis Renewed and expanded its collaboration with private company Orianis Biosciences, which has a molecular glue based platform for up to 1.4 billion in bio bucks, as I like to call them. We also saw Eli Lilly in License, a Gamma Secret taste modulator, candidate for Alzheimer's for a billion plus in bio bucks, but interestingly only a $10 million upfront. And that was from a Swedish biotech company called Alzacure. And lastly, in a much smaller deal in terms of the financials involved, San Francisco based Qorvas Pharmaceuticals participated in an investment in their Chinese biotech or pharmaceutical company partner, Angel Pharmaceuticals, which is actually a company that Qorvis specifically helped to create to help develop its drugs in China. But this was for further funding for Soquelitinib, which is a novel ITK inhibitor for both oncology and immune disorders. Let's talk about some data sets and in particular I know Paul wanted to to talk about some Novartis news with one of their candidates in fshd. Paul, Paul, can you summarize that?
- [55:02]
C
Actually, maybe, Eric, you want to kick it off? You covered Avidity and then I just think there's an interesting conversation with FSHD DM1, like a number of these indications and how we should be kind of thinking about these. Bottom line, you were the Avidity act.
- [55:14]
B
So I mean, bottom line. Well, really, really. Just quick because I know you want to get to the fun stuff. Yeah. Interesting data coming out from Novartis is a phase 12 study, but avidity have been calling it a pivotal study, or at least potentially pivotal study. What they showed in fshd, a rare muscle disease, is that you can essentially hit the target. The target's Ducks 4. There are biomarkers that are turned on by Ducks 4 activation, Ducks 4 being a transcription factor. And one of the biomarkers, KDHDCL1, I blustered that name. I'm sorry. But a bloodborne biomarker was reduced as you would have expected it to be. They also showed some reductions in creatine kinase, a biomarker of muscle destruction. The data looked good. I think what you're going to get at, Paul, is if these data were in the hands of Avidity still, they would have taken them to the FDA and probably aggressively tried to go for accelerated approval. There was a quote in the Novartis press release saying that they're going to have a conversation with regulatory authorities. But obviously Novartis is pulling a little bit back from that gas pedal and maybe being a little bit less aggressive than a smaller company with A lot more riding on this might be.
- [56:27]
C
Yeah, I mean, I think, you know, Eric, I cover a small handful of these genetic medicine companies where there's a sort of a trade or an investment thesis on regulatory flexibility. You know, there's been a lot of reporting or anecdotes from companies that, you know, in light of Makary leaving, that the FDA has been meeting with people in the space and been receptive to kind of trying to get back on track with flexibility. Obviously the dynamic of flexibility is super duper sort of subjective, what that actually means. But I guess I don't know how you feel. I mean, I'm hopeful that obviously Abidov didn't have a setback in the past year, but some of the rare companies that have had setbacks from a regulatory side might, might still get their day in court and may get kind of a replimune like, like situation. And so, you know, maybe it'll take until we have a permanent FDA head or kind of permanent leadership in place, but it feels like the scale's tilting back. And I don't know, I thought the Delbrax data, it seems pretty convincing the drug is, is doing something, wouldn't you think?
- [57:33]
B
I agree. I. There's huge unmet need here. This drug should be approved in my opinion. I hope they can bring it over the goal line. But, but yeah, other than being someone optimistic like you, Paul, we still lack some data points at the FDA to see how things are going.
- [57:49]
C
Totally.
- [57:51]
A
We've got a few minutes left. But Paul, I know you had some interesting things you wanted to talk about in terms of the gene therapy landscape. Maybe as we look to wrap this up, I'll have you talk about maybe two news items of the week.
- [58:07]
C
Yeah, sure. So NER Gene earlier this week announced that they completed dosing in their pivotal study for NGN401. It's a gene replacement therapy for RETT syndrome, which is this terrible neurodevelopmental disease. It's important news for two reasons. One is in their phase 12 study at a higher dose, they had a severe inflammatory event that ended up in a patient death. So I think there had been this kind of, of still lingering question as to whether or not this was a risk at the lower dose in their pivotal study. And as it turns out. Right. I mean the study's not over. Right. They'll still be following these patients, but the perception is that these events, if they happen, would happen early and it didn't. So that's very encouraging. They over enrolled the study. It's Neurogene and Tatiana in this space. Both developing AAV9 based therapies for this and both will have pivotal data next year. This will be another test assuming these studies work or you know, I guess if these studies work of, of regulatory flexibility. Both companies have sign off on these single arm studies looking at developmental milestones. And then Greg, you pointed out that Sensorion is discontinuing the odor furlan program in light of I guess Regeneron getting to market first and giving away for free. You know there's an interesting, I mean this is just a different thread. There's a very interesting conversation. Just the gene therapy space and hearing. You know, we had a lot more buzz here about five years ago. There was a Kooos decibol and I'm sure there's still tremendous potential and people much smarter than me will figure it out. But you know, we've had this success in otoferlin deficiency where these drugs are, you know, amazing, right. And patients don't potentially don't need cochlear implants and. But you know, one thing that one of the CEOs of these companies said to me that I haven't forgotten is that otoferlin is the first, most obvious target because it's one of the only genetic conditions of hearing loss where all of the inner ear biology is preserved at birth and there's the potential to rescue the pathology by just simply delivering the gene. Whereas others, there's kind of in utero changes in the ear how these cells might communicate with each other and as a result the window for intervention might not be as wide. So. So space to monitor. Unfortunate for Sensorion they have another program that looks interesting but might be higher risk.
- [60:26]
A
Yeah, I think this space is fascinating. Lots of different gene therapy approaches. That's great insight you have on this particular mechanism and why it makes the most sense. I just think it's interesting that Sensorion, which probably spent a fair amount of time and resources to develop something where clearly there's an unmet medical need, just decided to give up given the fact that, you know, someone beat them to the punch and they were going to give it away for free and which is, you know, a great service by Regeneron. But I guess, you know, that's how quickly the business environment can move. And let's just hope that there are still going to be plenty of good options for patients who unfortunately go deaf, whether it's congenital or just by some trauma. But I just thought it was a very interesting development. Okay, well with that said, we've been able to go two minutes, and I want to thank all of you for joining another great session of biotech hangout.