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- [00:00]
A
You're listening to Biotech Hangout, a live and unedited weekly discussion of all the latest news. We try to do all the latest news anyway in our industry with a group of biotech leaders and experts. I'm Sam Frazeli and my co hosts today are Josh Shimmer, Eric Schmidt, Paul Matisse and special guest stats Matt Herper. For more information about our hosts and guests speakers or to listen to the most recent episode, please go to biotechhangout dot. So a bit of a wobbly day today for biotech. We've been, I've been looking forward to celebrating a one of the highs of the xbi, but maybe we don't care too much about the xbi, but the index is down. There are some massive share price moves and I can't get my head around it. I don't know why some colleague clients pinned it on the ceasefire is over comment. But then oil prices are moving so. So I don't know what's going on. Maybe it's just a little bit of profit taking. Let's start with that quickly, see if anyone, Josh, who is not muted. Maybe you can start, tell us what you think and then folks, you jump in. Before we move on to the regulatory
- [01:15]
B
and policy stuff, well, XBI is still up 30% year to date, nearly 80% year over year. So a little pullback from time to time is not any cause for concern. We'll see what the future brings. Maybe things were arguably getting a little frothy with some of the M and A speculation, which is always a little bit of a dangerous place to be. But on the other hand, industry fundamentals better than they've ever been.
- [01:43]
A
Yeah, agreed. Eric, anything to add? Oh, we can't hear you. Okay, if anybody else wants to add anything, you can jump in. As I move on to the next subject. You can push into this if you want, but regulatory wise there's quite a bit going on and we got Matt on to talk about all the wonderful stuff he's been writing on and the interviews he's done on AI. Let's start first, all of us can talk about this. I think it was Eric that brought this up. The crl. Walk back the complete response letters where the FDA under Macquarie had said that we're going to publish them and now there seems to be talk of retrenching from that position. And then also there's been some talk about Pasdor coming back. So that's going to be interesting to see. So let's start with the crl. Walk back while Eric waits to join us. Let's go to Paul and Matt just to take your thoughts on that. And Matt, you can tell us a little bit more about Pazdor, given you spoke to him recently.
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C
All right, am I going first or Paul?
- [02:55]
A
Go for it.
- [02:56]
D
You go ahead, Matt.
- [02:57]
C
The CRO walkback. Look, I wrote a lot about Dr. Makari and one of the big issues throughout his tenure was not really worrying about legality or regulation before making a decision. And that can result in things being walked back. I think on the serial transparency, which is, I thought one of the best things he did. But there's a reason that it hasn't happened before and it seems it's been challenged on pazdr. I spoke with Rick shortly at JP Morgan on stage shortly after he left the fda and I spoke with him again at ASCO at our event there. Both of those are long conversations. You can get them through stat if you register for the events and we wrote about them. But I would just caution that I've, I've. I know that there have been discussions that he is definitely in the mix. He is not. When he was at asco, other people on the panel were suggesting him as a potential commissioner. I think Dr. Pazder probably would want a role where he has some substantial control if he were to go back to the fda. And I also think we shouldn't underestimate that the Trump administration hasn't loved people who are critical of the administration and bringing them back into the fold.
- [04:31]
E
So while it would.
- [04:36]
C
While it would settle a lot of nerves to have him in a high up position, I have to imagine that those discussions are ongoing. I don't think that they're necessarily going to be the easiest circle to square. And I think, you know, we don't even know. I think they're going to have to decide on a commissioner first before they decide on who all those other people are, even though they have. We have heard the clump wants to announce all of this at once. So it's great that they're considering him. I think they'd be crazy not to consider him. I wouldn't. I wouldn't say that just because he's being considered. We should all assume that we're going to have Rick Pastor back at the FDA making all sorts of fun noise in the way that we are accustomed to.
- [05:28]
A
Right. So, Eric, while you were rejoining, Matt said that one of the good things that Dr. Macquarie did was the CRL opening, but that there may have been some issues there, legality, et cetera. I just wanted to See if you wanted to chime in on that. And then Paul and Josh, both Pasdir and the crl. Walk back. Eric.
- [05:50]
E
Yeah, thanks, Sam. Hopefully you guys can hear me now. Well, I agree with Matt's comments that one of the very few things may be that Dr. McCarthy Makari had done when he was commissioner was become a little bit more transparent with regard to these CRLs. But we've heard through various sources and Biocentury did a great write up on this this week that almost immediately a variety of law firms challenged the legality of that release, citing that this was a breach of proprietary confidential information on the part of the sponsors and that in fact multiple other prior commissioners had considered releasing the CRLs but ran into the same legal roadblock. So what's interesting to me, and I hadn't appreciated this, we haven't seen CRLs released since April of this year. It's been three or four months now since the FDA has released a CRL. And apparently that stoppage coincided with a citizens petition filed on the part of Covington and Burling, a Washington law firm. So there may be a meaningful challenge underway right now that prevents investors from at least getting some of the transparency that I think many of us have relished. I don't know where we would be had we not seen kind of in gory detail some of the issues that the CRLs have brought to light. I'm thinking about Replimune's RP1, for example. It was very, very clear, of course, a different administration and a different set of criteria used to judge the bla. But at the time it was very clear that the FDA was, you know, come hell or high water, not going to prove that drug under the old administration. And they gave the reasons for that. And we were able to ascertain exactly what that FDA thought of that review at that time. So we may be entering a different, a different era again. Yeah.
- [07:46]
A
So I mean, look, everybody wants to be able to see everything and read everything. But of course, you know, some of the companies that argued that this was one step too far. I agree that I would also like. But we are analysts and this is what we do.
- [08:01]
E
Right.
- [08:02]
A
We want to find as much information in detail as possible. Eric, while you're on, do you want to also talk about the AGO's priority review for as you'd rightly said to me, as for a drug that missed its primary endpoint, what do you think is going on there?
- [08:19]
E
Yeah, and I'd love to hear others views on this new FDA and whether Maybe we're swinging a little bit too far to the right in the other direction, the direction of just kind of lowering the bar and approving anything that looks active in rare diseases despite maybe not having met the statutory requirements for proving efficacy. What we have with Agios, a drug admitted pvat for sickle cell disease. These are obviously patients who are very, very, very poorly off and in need of new the. There's probably very few unmet needs that are any more substantial than this one. But nonetheless the drug missed its co primary endpoint, a reduction in VOCs pain crises. That data came out, I think it was November of last year, stock got hammered, everyone pretty much gave up on the program and the company, after talking to the FDA moved forward with the filing. This week we learned that that filing was accepted for priority review. So not only was it accepted, but it was accepted under the auspices that there's a meaningful data set here and a meaningful unmet need. And I'm told that an ADCOM will not even be required here. So if anyone needed any sign or signal that you know, the FDA is open for business with regard to pretty much seems any orphan or rare disease opportunity, here it is yet again. And I guess the question again for this group is whether this is a good thing or not. I mean obviously it may be a good thing for sickle cell patients who can try the drug and may get benefit from it, but that benefit has not been proven in clinical ways just yet. And of course there's going to be cost to society to having another very expensive drug in the marketplace that hasn't fully justified its cost benefit.
- [10:11]
A
Paul and Josh, you both cover sectors where there are or companies where there are sectors, this type of difficult endpoints and rare disease type situations. So do you want to just chime in here maybe Paul first and then Josh?
- [10:25]
D
Yeah, sure. Can you guys hear me?
- [10:26]
E
Yep.
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D
Okay, great. Yeah, no thanks. I1 you know, I want to throw something at Eric too at the end of this because you know, some of the situations that I'm following the most closely here are you know, one related to obviously this unicure saga which was not a CRL walk back but seems to be a. You can't file now. You're more than welcome to file dynamic.
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C
Right.
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D
And the stock chart follows that Regenexx and Hunter syndrome. What's happening in dmd, you know, I mean Sarepta got filings accepted for, you know, Exxon Skipper filings for on the back of trials that technically didn't work. Right. You know, Dyne still Following on dystrophin. I mean, I've, we've like debated this in a number of these. I at least feel like to, to a few of the situations I'm close to, like the unicure situation, I felt like they didn't get their fair shot. I feel like that's something that should get reviewed with an ad. Com. But I guess from my seat, like I'm, I'm not yet assuming that like all of this is just unequivocally gonna go in favor of the sponsors that are getting back in front of the fda. Like maybe every situation is different. And I'd be curious what Eric thinks about like, you know, replimune at this point can actually be rejected again. But you know, for unicure, like I still think we'll have to see, like we'll have to see if there's an adcom. And I think the street agrees too because the Stock is, you know, 40 ish dollars, which is probably pricing something halfway onto the way what it would be if, if the drug got approved with a favorable label that people saw de risking a big commercial opportunity. So. So I mean, I think for some of these, like at least getting their day to get it reviewed and assessed, especially the companies that, you know, invested money and ran trials based on a certain premise is probably the only fair thing to do. Do you think, Eric, in the situations that you're following that, you know, like an agios or a Replimune, like are those, are you just assuming that those are largely de risked?
- [12:26]
E
I think you make a great point, Paul. There's a spectrum, I guess, of probability successes here that we're talking about. And, and maybe the point that I was trying to make less eloquently was that that spectrum is kind of shifted massively to the right. Right. So if you used to assume that Rep immune or agios had a 10 or 20% probability of success, I don't know, I'd probably put that well above 50% for both of those two drugs right now. Maybe that's amazing. 70 or 80%. Yeah. And I don't know, I don't know where you are with cure or Aldine I think was always a pretty high probability success. They would really have to walk back some of the regulations around dystrophin production to reject that drug. But you know, for some of the others you mentioned, Regenexx et cetera, my guess is they're right shifted by a meaningful amount too. But I don't know, do you guys think that less of a right Shifting is the right way of looking at this. Am I too optimistic in thinking these are 70, 80% probabilities?
- [13:25]
A
Let me just get Josh onto this, because I remember the discussion with Sarepta and whether it brought the. Whether it should have been approved or not approved, Peter Marks, et cetera, et cetera. Josh, you had some strong views at the time. Do you want to chime in on this?
- [13:40]
B
Well, you know, Tarek's point, it is a spectrum, and every program and product is different. I guess where I'm thinking about this or the lens that I'm coming at it from is wondering, you know, we're making decisions on behalf of patients. I think many kind of lose sight of that, but also lose sight of the challenge that that represents. Right. Patients obviously want options. They want hope, and they'll probably be willing to take more chances in pursuit of that hope. The FDA obviously needs to safeguard those patients from drugs that may offer more harm than benefit. And I think one could have argued around some of the Duchenne therapies that they actually did offer more harm than benefit because the data package was really not compelling at all. But then where along the spectrum do we shift from? Okay, the FDA is going beyond protecting interests of patients and approving drugs which may not be detrimental, but which may offer some small benefit. Everyone's going to draw that line in the sand a little bit different. And that is probably what makes the FDA's job so difficult, is that because everyone's line in the sand is different, whatever decision you make. I mean, there's obviously the black and the white, but we're talking about the gray. And rare diseases data sets are often in the gray because you're not able to run rigorous, placebo controlled, phase three trials. Right. But due to the subjective component of it, you know, there are always going to be disagreements of where it should be set. Anyone who's tasked with that job is always going to be a nearly impossible position. And as a result, the more transparency that the FDA can bring to their decision making process, the more they can at least try to align everyone around where that line in the sand is being drawn. And why.
- [15:49]
C
If I could.
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A
Perfect, Josh, if I could. Matt, I'm going to come to you. I'm going to come to you.
- [15:53]
E
All right?
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A
So I'm going to pass it on to you to talk about all the AI stuff, but open with this response and then just move on to telling us what you learned from Dario and everything else.
- [16:07]
C
Oh, okay, sure. So the simple point here is just that I think that a lax FDA is what we probably would have expected, the beginning of the Macari Terminal. So I think that is what you'd expect from the rhetoric from the administration earlier. I think what kind of happened was full of surprises. Right. But I'd also just remind everyone that we're dealing with an FDA that's really been decimated and has lost a lot of seasoned people. And that makes it a lot harder to be instead of lax or tough, just get it right. I think that that's a very tough thing for people at the agency now who are facing a lot of these decisions as a lot of people are gone.
- [16:50]
D
Hey, Matt, can I ask you a question? Does, like, the loss in experience at the agency make the agency intrinsically less flexible? Because I think about some of the rare disease.
- [17:03]
C
Exactly what I.
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D
Well, yeah, because, like, because, like unicure, like, I think Nicole Verdun was a huge champion of. That is my, like, sense. Right? Like, I don't know that 100%, but, like, it sort of makes sen. She was like the deputy to Peter Marks, like, kind of fit into, like, sort of stuff that was said publicly there. And then you wonder right when you go down a rung or two at the fda, like, is there really going to be the champion that's going to want to stick their neck out for something like this? So how does that, like power vacuum play out here? When we look at some of these refi.
- [17:30]
C
I'm less concerned about the power vacuum than just. And I don't remember the specifics or I remember the specifics for oce, but I just know when I've spoken to people who were recently at the FDA that they're just like, so many people are gone. And it's just doing your job when the person down the hall that you went to for expertise, that you went to for counsel is not there anymore on a really big scale, starting with Doge. I mean, before Macquarie ever came in, we were looking at an FDA that had lost a lot of people. That's really tough. And then you had this suspension of normal process over the past few months. I just think it's, it's, it's really. They, they always have a really tough job and all that makes it harder. And I don't know how it plays out. It's certainly if you're, if you had a Peter Marks or if you had Nicole Verdun, those are people who pushed for these applications, who had opinions and pushed for flexibility. I don't know whether we land on. Well, we're in a right to try administration. And there's a lot of flexibility or we need to fall back on the regulations. I mean, I think the administration's biggest issue with the FDA is they don't want to be hearing about it in the news all the time.
- [18:49]
E
Right.
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C
I think that's which is traditionally how the FDA is managed, but it's now, after all of this, this mess we've had this year. So that's what I think.
- [19:00]
A
All right, Matt, tell us about AI.
- [19:02]
C
And AI is really cool and nobody knows what to do with it. But I did have this. I had this amazing experience. I was asked to go moderate a panel with Lotta Knudsen, who had, who's basically the leader of the development of Ozempic, and Dara Elmadai, the CEO of Anthropic, when they launched this new product, Claude Science, which is really built to help people in science, but in particular drug companies do work, a lot of it very research work. This is really kind of an ultimate lab notebook product that helps you think about your experiments, it helps you draw your diagrams, it helps you analyze your data. It can keep in mind kind of a corpus of all the stuff you're working on. And there were also a bunch of big executives who were obvious AI believers to one level another. People like Vas Narasimhan, Aviva, gev, Chris Burner from Bristol Myers Squibb, who were there talking about both why they're big believers and what the kind of issues are. And I do think there are two things we have to separate for the whole AI field and for Anthropic in particular, which are. Is there useful stuff you can do now? Which I think the answer is yes, and people are going to learn more. And there was one point where Chris was talking about for Bristol, 5 to 10% efficiencies, but across the board, which, hey, that sounds great. And then there's this big pie in the sky stuff that, that Ahmadi's always talked about where this is going to change biology we're going to do. Every year is going to be like a decade, is his actual prediction. He now says that won't happen for at least a decade. And there I think the jury is still out. It's certainly plausible that this helps industry pick better targets, that it helps lower the failure rate. That is the toughest job for AI, both when we're talking about just LLMs, which are the specific set of tools, but also when we're talking about all of our favorite biotech AI companies. Like, I also got to talk to Mark Tessier Levine a few months ago. And what do you do with these technologies in order to make drug development better? I mean, we know that the track record of new technology and drug development is it makes it more expensive.
- [21:45]
A
So, Matt, these folks, Dario and Demis Hassabis, these are luminaries in the space of AI and they do allow themselves to opine on a subject that is very complex, which is biology and translation of biology. And so I do wonder whether, and they are very visible and a lot of people hear them. I do wonder whether, whether you think that there's some. So, so at least Demis Hassabis from DeepMind does have a PhD in neuroscience.
- [22:20]
C
So he's got some. Well, I mean, Amadis is in biophysics as well. They're actually because the neuroscience led to the AI work. So they have some. But yeah, but yeah, I think that's true.
- [22:33]
A
Do you, do you think they. Because so this point of it's going to be one year is going to be equal one decade. It's going to take us a decade to get to that point. Do you think they really know what they're. I mean, I'm not, I hope I'm not casting these versions. Anyone really know the topic well enough to, to. For us to should be listening to them more?
- [22:55]
C
Well, I think they know the topic well enough to have opinions that we can say are informed. I also think the opinion. I'm being a little bit of a journalist here, but I also think the opinion of somebody who's watched a whole bunch of technologies be adopted in biotech and had to make things worse or not make things easier also has a pretty valid viewpoint. I was really impressed with Amadi, that he does seem to have been. And I mean, Vaas is on his board, right? He does seem to have been listening to the thoughts about this and he did recognize expertise. And the point is really very much that he thinks that this is going to be a multiplier in what a single biologist can do, which I think there is a good argument for and that he does believe. The big question to me is the differences between the kind of does the reasoning that these models do become, the kind of reasoning that gives you a brilliant insight and how much of it is doing things in parallel and how much of it is not. But there was kind of Narasimha made a comment as if it would be a minor thing that, well, you can't get rid of all of the time in drug development, but maybe you can decrease it by 30% and go from a decade to seven years, and maybe you can go from an 8% success rate to a 16% success rate. And for any of us sitting in the room who've been looking at drug development for any length of time, those are astounding numbers. I mean, kind of the. The point is you don't have to do what Dario says we're going to do for things to change a lot.
- [24:44]
B
Yeah.
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C
I think the biggest question in this field, broadly, and not just about cloud life sciences, which is really just, can you. Can you make your people in your research labs more efficient? Right. Which is very much along the Claude code path. Like, that's. They're really just trying to make another Claude code. You know, they had such success there.
- [25:12]
A
Yeah. We call those apps, I suppose, one way. I mean, I think a lot of people or Google didn't make as much noise about this at the time, but a couple of years ago, maybe it was a year ago, I don't know. Things move very fast in this world. They published a paper on Google Scientist, which is, I think three or four or five agents who hypothesize and check each other and. And then actually give you a biological hypothesis for a particular disease, which is quite interesting. But I haven't seen anything come out of that any further beyond that paper, but I haven't looked either.
- [25:45]
C
That is. That is the kind of thing that this, that this Claude. You know, if you've used Claude for getting. Just for writing reports, it is really great that you can go into this thing and you can say, give me a report on HPV and head and neck cancer, because that's the last one I did. And if you actually know what you're talking about, it'll give you a report that's good enough. It's not perfect, but it's really fast and it's a lot of information at once. And the idea is that you can have your five agents and they're arguing with each other and you can do all these things. My big worry for biology, and I did ask them about this, and the answer was, yeah, that's the problem is that with coding, you get an answer pretty fast about whether or not your. About whether or not your code runs right. Like there are some early tests, if it works. And it's very. The whole problem with drug development is you can be a brilliant person who can spend a decade chasing the wrong thing, spending hundreds of millions of dollars, and it turns out it was the wrong approach the whole time. And you don't really get the same level of checkpoints along the way. Certainly not in the way you do if you're running. And I think that that is a big issue. But then you have to look. There are a lot of things that do. We think that for very rote things like regulatory documents are obvious, but so are clinical trial enrollment, but so are keeping track of all the stuff in your lab notebook and making sure that and coming up with new hypotheses. Could these tools be additive? They could. I mean my worry if I were managing a lot of people with them would be how do you differentiate between people becoming more efficient using AI and people doing what I think we all do when we first encounter the tools, which you sit and argue with grok for a few hours and never get that part of your life back. So I think there's a management challenge.
- [28:02]
A
Yeah, absolutely it is. And we're all waiting to see the productivity gains that the pharma companies talk about. I had a podcast recorded with Christian Massacrese from Bristol where he talked the same numbers. 30% reduction in the time for drug development. We need to see some of those things come through. But in the interest of time, thank you, Matt, for that. I'm sure there's a ton more that we could talk about on this here. Let's talk about some follow ons and M and A, et cetera. Paul and Josh. Vertex bought a company going into a new world, a new disease area. Who wants to pick that first one of you?
- [28:44]
D
Yeah, okay, I'll go. Okay. Yeah, yeah. So I cover Vertex and maybe Josh covers Kinetics. I can at least give a little bit of angle on the Vertex side. So Vertex this week bought Kinetics for close to $10 billion, closer to $9 billion on a net of cash.
- [28:58]
B
Basics.
- [29:00]
D
Karnetics is an endo company and this sort of specialty, rare endo space has kind of quietly become pretty hot and. And it feels like it's sort of the next, the next little niche space to get hot and become its own little sub vertical. Kind of how like the renal space has in the past, say three to four years. You know, the chronic has two key drugs, Ponifi and then also Adamelnin. And a lot of the discussion on the call was about the second drug, which is in phase three development for cah, congenital adrenal hyperplasia. Neurocrine has validated that that is a huge market via their drug Chronicity, which, you know, in my. I cover neurocrine. I've covered it for a long time. I think Josh has Covered it for about as long, too. I mean, chronicity, I feel like it's one of those drugs that works decently well. But really the big selling point is that it's super safe, easy to use, and this disease is a big unmet need. Patients have been using steroids for 50 years to treat it. And it's on newborn screening. Right. So if you're a rare disease company, like, there's. There's a lot of patients out there right away that you don't have to find. You know, I think the only real debate I've heard from the Vertex side of this deal is just like, did they overpay? I mean, it was almost 100% premium. Kinetics is a stock that had kind of lagged the tape in part because of, you know, long timelines, things like that. I mean, I think from our perspective, like, it's, it's. I almost don't know how much it matters to Vertex if they overpaid by a little. As long as there isn't a big issue without a Melman. I mean, I think the only sort of risk question there is on the liver safety side. And you know, Vertex talked about seven liver enzyme elevations in the program so far, all mild, self resolving. That was a higher number than I had heard before. But you kind of have to give Vertex the benefit of the doubt. I mean, if there's anything that Vertex has extremely outstanding expertise in, right, it's small molecule drug development. So, you know, assuming they got that point right, I mean, it feels like the floor value for both of these drugs is. Is probably a billion, if not more. Vertex is saying 5 billion combined. I don't really know if you have to like, really believe that, but yeah, I mean, I think just also broadly right, Vertex is kind of at this point too, where they have the kidney angle behind cf. But this adds another important angle too, to a company where it's 130 billion market cap, right? So this is the kind of stuff they should be doing, even if people debate the price of it. What do you think, Josh?
- [31:36]
B
Sad to see Kinetics go endo is one of my favorite spaces because there's essentially no target risk. There's very little in the way of competitive dynamics. There's large unmet medical needs. And so Kinetics was really just at the start of what I thought was going to be a very, very sizable effort across its programs, including its preclinical programs. Like when there's no target risk, you can actually start to look into those preclinical programs and Fairly easily envision a clear path through development and regulatory and ultimately commercial. The only real risk you take to some degree is medicinal chemistry risk. And Kinetics had proved themselves quite adept. So kudos to Scott and his team. Wonderful group in San Diego. Within a year, we've lost Davidity and Kinetics from the San Diego ecosystem, which hurts. But there's still tremendous innovation happening here and across the world. So personally, I think everyone benefited from the deal.
- [32:43]
A
I think it's time to move, Josh, see if the deals stop. Right. Yeah. Let's come to London. So there's been a couple of. A few other deals which are quite interesting. There's been a recent, I would say past six months, nine months extra activity out of European buyers and some that you, you know, some private European pharma companies, some public. The latest round was IPS buying two companies and paying decent amounts of money upfront payment of $450 million for Cartos Therapeutics, which is the US and then the other one was a 200 million cash deal for Memo Therapeutics, which sound. That's euros. So both companies have assets in phase two or phase three for I would say one of them in renal, the memo, which is quite interesting for patients with renal transplant complications. And then the first one, which is Cartos in myelofibrosis, which is in phase three with data expected in 2027. So that continues a spate of activity by UCB Recordati. If I'm not forget, I'll probably forget all of the list. I didn't make a point of listing all the companies of some Europeans taking advantage of this. I don't know what it is M and a window or feeling a bit aggressive with regards to their ability to obviously finance these and gain access to them. And then another interesting thing was Novartis buying Myrix, which is an ADC company. It has an interesting story. I would go and read about how this, which was a Sofinova Brandon Capital seeded company quite a few years ago in the uk, started off developing drugs for oncology and then changed strategy and moved into the ADC space. So Novartis is paying this $1.1 billion cash up front. It's a private company, not in the clinic yet. And there's a total of another $400 million they can pay. It felt a little bit rich for a private company. So there must be something really exciting in there for Novartis to have done this. And this is the second ADC deal out of Europe. The other one, of course, everybody knows, was Gilead buying Tubulus, which was at a different stage of development. And Gilead had already had a deal with them for a while. So they probably had quite a lot of knowledge with regards to the drugs that were being developed or the linkers, et cetera, that they have. So we keep being drawn to China, looking at deals that people do for ADCs, et cetera. And of course, here are two that happen based out of Europe. And to Josh's point, I mean, you know, the capital markets in Europe are very tough. I don't know if either of those companies would have ever considered listing in Europe. They would have probably gone directly to the US but now they're of course, owned by others. So hopefully we'll see some of the results of these drugs that they've been developing coming to fruition. In terms of other deals, we had a raise this week or last week. Remember, we're covering two weeks here, which was Bridge Bio billion dollars financing from 6th street and KKR Healthcare royalty deal that provides obviously capital for the company to go ahead. And I think, Josh, you look at Bridge Bio and of course this happened. And then earlier this week we've had a failure of the clinical trial, which we'll talk about later, of AstraZeneca's cardiomyopathy drug. So do you want to just touch on that and do you think they regret waiting?
- [36:43]
B
Well, no. The Ebola and Turson updates, far more relevant. Bridge is about to launch three new drugs over the next, say, 12 months, and that's obviously going to be capital intensive. The launch of their product Truby, which we'll talk about as we get to the Epple and Tursen data, has been exceptional, but they're still burning cash. So prudent to provide just a little bit more of a buffer as you go into three new meaningful product launches.
- [37:15]
A
Yeah. And it didn't look like a particularly expensive deal in terms of the numbers in there. So I think this is a perfect move into the data conversation that we're going to have. And I'll start off with the AstraZeneca news that came. As I said, the weeks get all squished into one day in my head sometimes. I think it was yesterday. So Astra Ionis Wainua failed to meet the primary endpoint in a late stage trial in AATR cardiomyopathy. And the stock was down 10% yesterday. And there was a lot of conversation in our drug chat and et cetera about whether that's fair or unfair or Bloomberg tv. I might have used the Word unfair a couple of times. It does have an impact on a whole bunch of companies that the good folks on this call cover. And of course, when you have a major trial readout like this, go the opposite direction to where I think everybody was expecting. Astra was quite positive about it too. It's not a surprise to see such a big share price move. On the other hand, it doesn't impact their $80 billion, 2030 target. Of course, it takes one option out of the equation to a degree. How this gets developed going forward in a subgroup will depend on what that subgroup data is. I'm Josh and Paul and Eric will comment on these. And of course, part of the problem for Astra now is that this was supposed to be the easy one. And now we've got avanza, which is TROP2 in lung cancer, and we've got Serena 4, which is an oral surge in breast cancer. Both people have got worries about that are coming up during the second half of this year. So I think that's why I think some people may be reticent to be the buyer in this equation of buying and selling the stock, which is what we've ended up with, potentially. The pressure on the stock wasn't there to be absorbed by anybody else. And you're looking to a second half where there is risk with these trials, which we've written about very openly, very much on the terminal, et cetera. So that is perhaps one of the reasons why the, the stock has been so, so under pressure. Nevertheless, I think some people view this on the, on the investment community as a, as a buying opportunity. Some analysts have even said that. So let me pass it on. To start with Josh again, Bridge bio. And then we talk about our Nylom Ionis, of course, we know what happened there. And Josh, Paul and then Eric jump in as you want. And Matt, of course.
- [40:02]
B
Yeah, this was surprising. And it's a head scratcher. Looking forward to getting the full data presentation next month at ESC to figure out exactly what went wrong. One of the obvious explanations is that between the nearly 60% of patients on tifamidis at baseline, another about 25% went on a stabilizer during the course of the trial. Either TAF or, or acharamatous. But even with that, at least in theory, adding TTR knockdown in addition to the incomplete stabilization from Tefamidis should have had some type of separation. The press release suggests that there was no effect. We'll have to see what that actually means. Does that mean it was not stat sig does it mean there was a trend or literally nothing going on. And if that's the case now, we're going to have to figure out what that likely reflects. Could it be that Tefamidis is a better drug than many of us thought? It was very unlikely just given the totality of data. Could something else have been going wrong with Epilon Turstin? We've known ASOS can have some cardiotox element to them. So is it possible that that manifest in this trial for some reason? Lots and lots of questions. But for the time being it looks like it's going to remain a three way market battle between Bridge, Alnylam and Pfizer, with Bridge and Alnylam really picking up the most market share with more differentiated product profiles. But Pfizer also hanging in there with their massive commercial salesforce and ability to find patients maybe before they get into the fold where they could consider a Truby or Ambutra and start them on Tefamidis first. There are tons and tons of fascinating moving parts for this unmet medical need. Great to see that there are terrific options for patients and that the bar now does seem to be raised so high for care that it's hard to improve upon it. Again, we'll have to see the totality of the data to anticipate what this might mean for other TTR cardiomyopathy programs. There are some who think that this means that we may never see another positive TTR cardiomyopathy readout again because outcomes are just so good to be determined about that though.
- [42:35]
D
Josh, can I chime in with a couple things on what you just said? Yeah, yeah, thanks. So I, yeah, so I caught up with the Ionis team yesterday and they confirmed that in the Tofamidas combo group, which doesn't include the drop ins, it's just the patients on to Famatis at baseline that there's like no benefit means no benefit. It doesn't mean like, like I don't. I thought, you know, maybe it could mean there's a hazard ratio of 0.88 with a P value of 0.4, but it sounds like that has a ratio could be pretty close to one. And they also said there's no benefit in secondaries. And here's the strangest one, like no benefit on CV biomarker. So there's not even a biological effect. And I think what's really confusing to that and this gets into kind of the implications going forward for do physicians look at these data and influence treatment decisions? Does this kind of impact the likelihood of success for Alnylam's really important trial for new Cresceran is that the Alnylam study, Helios B. Right, which read out a couple years ago, showed a really substantial outcomes benefit on top of defamatis with a silencer, maybe a slightly more potent silencer, but but not more potent enough to suggest a difference of 0.2 in a hazard ratio. But it also showed a pretty significant biological effect on things like NT probnp. And so that to me is really confusing. We had spent a lot of time thinking about the powering of the Tifamidis Gamba group in this study because that was one way that this data could have differentiated from others. And I think we were concerned that even if there was effect, it was somewhat underpowered because as patients are treated with Defamidis earlier and earlier with this disease, the outcomes improve. Right. Like pretty much any condition. And there have been these non invasive scans now where patients are identified earlier. And so I think that's probably a piece of this, but it doesn't feel like it can be all of it.
- [44:25]
C
Right.
- [44:25]
D
I still think going into ESC later in August, it's very confusing that this sounds like it was really a dud on top of Tefamidus. And you know, to Josh's point on investors wondering will there be another positive trial in TTR cardiomyopathy? You know, Al Milam stock yesterday opened up about 17% based on the idea that, okay, now they're going to own this silencer market. But the interesting nuance with the Al Milam kind of valuation and longevity of this franchise is that, you know, a 20 to 30% royalty to Sanofi on their drug in Vutra, which, you know, for the drug runs a 50 to 60% operating margin, is a huge element of the NPV in the economics. So, you know, a key thing for Al Milam is eventually having their next gen new Cresorin, which doesn't have a royalty burden succeed, has a convenience advantage at every six months. But Nuchran's in a cardiovascular outcome study right now in TTRCM that, you know, Al Malam hasn't given numbers to it, but the perception is that the vast majority of patients are going to be on to famatous at baseline. So it's almost essentially an adjunctive study. And the question is, does this ionis readout with AstraZeneca, does that kind of undermine the tt, our silencer synergy in a contemporary population or can Alnylam still sort of rely on the synergy data with Ambutra that they have on their label. My thought, assuming that my kind of read on what Ionis was saying is right yesterday, that there really isn't even much of a trend on top of Defamatis. You have to wonder if the most logical thing for Alnalam to do will be to find some way to expand the sample size of the study, try to enroll in territories where you can get more monotherapy patients, because at least we haven't seen the curves. But at face, the monotherapy data for Apelon Tersen with a hazard ratio of 0.71 looks very, very similar to mvutra. So that's what's. So it's so confusing here. I think a lot of investors kind of thought this study would work, but maybe they don't hit a P value on top of Defamatis. But to show nothing is like, I don't know, I think it's pretty shocking. I'm still a little bit dubious though, if this data actually will, you know, outside of removing a competitor, influence the prescribing of like a Voutera or a Truby. I don't know if you had a view there, Josh. That's one thing people have been asking.
- [46:41]
B
Yeah, we spoke to a couple of docs yesterday. After the data, they weren't going to change their practice, but they were also the ones that were prescribing combination therapy to begin with, which makes unbelievably little sense for the most part, you know, because once you have either a Vutra or a Truby on board, you've nearly fully eliminated the monomers and so there shouldn't really be any incremental benefit to be had. A little bit different for Tefamidus if it is indeed a less effective stabilizer, in which case the addition of a treatment option should have added benefit, which is why this whole data is so confusing, at least from the checks we've done. No major difference from those docs, but they absolutely thought that payers were going to start really pushing that much harder than they already have around the combo use on the combat. That said, it may be difficult because in some Payer dynamics, the part B and the part D payers are operating independently. So the left arm may not know what the right arm is doing in allowing two drugs to be used at once.
- [47:48]
D
Right. And I think that's, you know, you know this really well, but I think that's a big reason why, you know, Nylam has been able to sustain pricing at a really Significant premium is because, you know, this whole cross management dynamic which seems so obvious, obvious to an analyst or investor that's mega in the weeds in the TTR space specifically is just not, it's not really done at all. Major payers.
- [48:12]
B
Sorry.
- [48:12]
E
Go ahead, Josh, go ahead.
- [48:14]
B
I was just going to close out and say we've talked in the past about some of the very sloppy thinking amongst cardiologists when it comes to treating TTR cardiomyopathy. But what's going to be really interesting is as claims data analyses are done over time to provide more evidence for the decision making process to tighten it up, it could have some really profound implications. So keen to see what happens there, Josh, are you?
- [48:41]
A
Sorry.
- [48:41]
D
Oh, go ahead, Sam.
- [48:42]
A
Just in the interest of time, let me just highlight that John Maragonora did say something on Twitter about RNAi versus antisense. I just, I mean I don't know enough about it to know why one would be better or different to the other, but, but just what you say.
- [48:59]
D
Yeah, can I comment on that, Sam?
- [49:00]
B
Exactly.
- [49:01]
D
I actually emailed with John yesterday too. Yeah, I mean the Alnylam drug, M and Nuchrin to even more of an extent get better lowering of the TTR protein with less variance and attain their peak faster. Those are definitely true and I think John makes a fair point on that because it's true, it's the reality, right? I mean I think the alum drug is a little more potent. I think Sirna for almost every target seems to be more potent outside of some of the stuff so far that ASOs have accomplished like in the, in the CNS. So, so that's fair. But again, we're talking about, you know, one study that had a 33% reduction for the silencer on mortality on top of Tofambitis, which is like mind blowing, right? Like almost too good to be true. But it's the data, is the data, right? And then an older Alnylam study, you know, the Apollo B study, right, Showed a trend on top of defamindous on outcomes. And then this study with an antisense drug that maybe lowers the protein 5% less, greater variance, slower onset but slow onset. How much does that? I mean it's a 33 month study, right? Doesn't seem to show any benefit. So I think John makes a good point that the SRNA drugs in this space are more potent. But to me, if I'm Alnylam, I can't bank on that and I can't bet Nuchem on that. And the Alnylam team is obviously super sophisticated. And I would imagine after seeing the ESC data, if it looks how a lot of people suspect that they may try to do some things to mitigate the risk in this new Cresorin study.
- [50:35]
A
Yeah, all great. Thank you, guys. This was a nice deep dive on this very, very important drug and very, very important for such important companies. So. So let's just move on to data that also came out from Revolution Medicine, which seems to be having a nice roll of positive data. So they reported phase 12 trials data for zildanirasib, which is the Rason G12D selective inhibitor. Remember, Daraxan Rasib is the Panras inhibitor that we've seen so much excitement about. So this is two combination chemotherapy regimes for first line method, metastatic PDAC, pancreatic Dr. Lamp carcinoma, 82% overall response rate, 96% disease control rate. I mean, these are fantastic numbers, right? That was with Fulfuronox and then with Gem Nab, paclitaxel, the combo was 61% Orr. I mean, in general, the safety profile was manageable. Of course, a lot of oncology trials say that, but when some of us see the results, we go, oh my God, how is that manageable? And these results again confirmed the potential value of this in first line and it's advancing to phase three. So another positive for Revolution Medicine. And Eric, I don't know if you wanted to add anything to that.
- [51:57]
E
Not really, Sam, I think you covered it well. I do think that Zildanirasib looks good. I guess the question now is, in a Diraxan Rasa world, what incremental benefit does does it provide? Because Diraxon Rasib is so good. Yes. Sildan Rasib for those patients with G12D mutations is going to be a little bit more tolerable. But what maybe caught my attention was the combination of Zoldan plus diroxone, a G12D plus a panras. It didn't look so much better than Panras alone. So I'm not sure there's synergy between these two drugs. And that maybe opens up the opportunity for other drug combinations, drugs that have orthogonal mechanisms, not RAs plus RAs but RAs plus non RAs to work better. And of course, the TANGO data that we've discussed before is probably much superior.
- [52:44]
A
Yeah, yeah, that's going to be quite interesting to see. But also, I do wonder whether some physicians and some patients may just not want to go on Daxaloresive because of some of the side effects, or at least they if they have G12D, it gives them an option to not necessarily have to take directxonrecib if they are scared of the side effect profile. I mean, I don't know. This is a very difficult disease. So it's going to be quite interesting to see how it pans out. The next data we had, I'm going to go back to Paul for which is Skyhawk's Huntington's data. And then before, after that we'll go on to AAIC, which is coming up next week in London, my hometown. So Paul, do you want to just quickly touch on this Huntington's disease data or do you want to rather move on to aic?
- [53:27]
D
Let's do AIC actually, if that's okay.
- [53:29]
A
Go for it. Go for it. You and Eric are going to own this.
- [53:33]
D
Yeah, I'll start and I'll be brief because we can hear more from Eric and I think I saw a headline that maybe Eric is a little more bearish here. So I'm psyched for some spiciness. But basically the big thing at AIC coming on Tuesday is Biogen is going to show full data for their anti tau ASO for the treatment of Alzheimer's. The study missed its primary endpoint, but Biogen is moving it to phase three. In my number of conversations with Biogen since this data, they are trying to convey enough enthusiasm about this so that they are defending and standing by their view that it makes sense to move this to phase three while also trying to manage expectations into the data. The oddity here is that the primary outcome was a dose response analysis. So it required there to be a linear dose response or some degree of linearity to it. It when it sounds like the lowest dose did the best. And at face, you know, for a drug that is working at the gene level trying to reduce the production of tau so the brain can clear it, that doesn't really make sense. You know, I think that there's reasons to think that there could actually be a true inverse dose response or maybe a non linear one. I mean, one possibility is that as you push the dose, you know, maybe you get some sort of idiosyncratic safety stuff with the oligo. I mean, we've seen some oligos have dose limiting talks when they're pushed in the brain, right? I mean, Toman Ersen's one, there was an ALS one. Who knows, right? I mean, we've seen this across other companies too. You know, maybe the actual tau knockdown just has a wider degree of variability across doses because this is Intrathecal and the biodistribution is going to be highly variable patient to patient. I mean biologically, I like love this modality and approach and that's, that's why I think I'm like a little bit more hopeful that the data look interesting. And that's really because I think tau has like the strongest scientific rationale for a disease modifying target. In Alzheimer's, it correlates with progression. It also precedes progression in different areas of the brain. Like you can stage the disease based on tau aggregation and we know the antibodies don't really work because they don't actually lower intracellular tau. You know, I think the question here is really like, like is the data good enough to get people excited about the Biogen approach, which is intrathecal, which is its whole other challenge, or is this data basically showing some level of biogen, some level of tau proof of concepts. But then the more interesting play are the brain shuttle approaches like Denali and Arrowhead, which can be given IV right, and just have a different kind of risk benefit profile and maybe a much lower efficacy bar given ease of use. But yeah. Eric, what's your view and prediction on the degree to which this data is encouraging or super messy?
- [56:22]
E
You know, great, great summary. Thanks. Paul and I kind of agree that Tao is the best, maybe the best of the worst, but the best target we have. That doesn't mean it's a good target or doesn't mean that it's good use of capital for Biogen move forward. But I guess, you know, I'm kind of of curious to what your feedback has been. You're right, we've been kind of critical of this decision and maybe folks are preaching to the choir when they call me, but in terms of my buy side interactions, it's like, you know, nine to one sort of negatively inclined toward Biogen's decision to move this forward. And when I speak to people, they kind of just want this to kind of be over, move past it. And the sideshow that has been Alzheimer's for this company for so many years now to maybe hopefully go quiet or quiescent for a few years as this phase three program begins, is that the feedback you're getting as well?
- [57:13]
D
I think for the most part, I think there's some people who like this and maybe don't want to admit it to a sell sider like me because they don't want to talk theoretical credit into the stock. But yeah, I mean I certainly think the Biogen Bull case has become this, this broader pipeline Optionality thesis. And you've just got like lower risk, more proximal opportunities with the two lupus drugs and Felza and things like that. I just thought, Eric, like I, I thought when I talked to Biochen in the past year that they were like pretty cautious on the commercial setup for an intratheagle. And because of that, that made me think that if they were gonna advance it, that the data like just can't be a total mess. But I mean, we'll see like the eyes and the beholder, right?
- [58:00]
E
Yeah. I mean, I also don't get the sense from Biogen even this week that they want to break their pick on this opportunity. Right. They're kind of playing it middle of the road. They're using words like, well, we'll see what the data show. It is what it is. We know we're not going to convince everyone, so it'll be curious to see what they are seeing because you're right. They're making a massive bet in terms of expense and time and, and effort to go through a Phase three program with two very large randomized studies. And I think there'll be something. But I don't know. It's hard, I guess. You and I both have PTSD from Alzheimer's now and it's just hard to have much faith in any Phase two program.
- [58:42]
A
I'm sorry to hear that my friends have got ptsd, but it has been a rough ride with Alzheimer's and Tao is, I would say, a favorite, so it'd be nice to see some good data. But I hear all your arguments and I agree with both of you, which is quite fun. So I think we haven't got a huge amount of. You can have two sentences.
- [59:08]
C
Well, I just want to say that in a world of uncertainty where things are much. I mean, the whole world has seemed to be much more difficult in many ways. It is just really nice to be hearing about an Alzheimer's meeting where we're arguing about trying to read positive results from a face from a Phase two trial and hoping whether we can go on to phase three. It makes me feel like there is some continuity in the world, so I wanted to thank you guys for that.
- [59:38]
E
Very funny.
- [59:39]
A
That is good. Well done, Matt. That was a really good way of ending the call today. I mean, there's a whole host of topics. Everybody knows my list was enormous, so I'm going to leave it at that. I want to remind everybody, look at the Abivax story. What a lovely turnaround. I mean, you might agree or disagree or this might still be a risk. But company got a data set that worried everybody at the beginning of June and they said but don't worry, we'll show you the details. They came and showed us the detail. The share price completely revised, corrected. I'm Talking about a 30, 40% share price moves here, right. And then of course they've gone and raised $920 million on the back of it. So congratulations to them and hopefully this data as it gets presented we'll get to see much of detail and see whether how it all works out. But that looks like we're going to have another successful unless it gets taken out. Josh, European Biotech here which is good to see. I'm going to end on that positive note. Thank you everybody. Thank my co hosts Josh Schimmer, Eric Schmidt, Paul Matisse and special guest Matt Herper from Stat. You can find all our old episodes on biotechhangout.com.