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- [00:00]
A
You're listening to Biotech Hangout, a live and unedited weekly discussion of all the latest news in our industry with a group of biotech leaders and experts. I'm Sam Fazeli and my co hosts today are Brian Scorney, Jaron Werber, and Strand CEO Jake Beecroft. For more information about our hosts and guest speakers, or to listen to the most recent episode, please go to biotechhangout.com Now I got the charts of XBI up. I do remember last week, folks were listening to the conversation last week. There was a little bit of it's not looking great, we've got a down month. I was chatting to a whole bunch of clients who just said that they're very happy that last week is over. I'm hoping that they are happy also that this week is over, but that it's looking a lot more positive than it did at the time. The bounce has come. I don't know what it was about last week. I think we talked about it a bit macro, some bad news, et cetera, some misses, some from the big companies, et cetera. So let's get a little gauge of how we're feeling today. And we start with Jeroen and Brian. First, get your nag out of the way with regards to reporting and why everybody piles their reporting into the Thursday yesterday. And your suggestion about how they should deal with this, although you keep saying it and the company's still doing it, Brian, get that off your chest.
- [01:37]
B
Yeah, so, yeah, I mean, you know, I guess we're just doing it more from a crotchy old man complaining standpoint. I, I actually don't mind them reporting. You know, it's just a lot of work.
- [01:47]
C
Right.
- [01:47]
B
I mean, you know, I cover close to 30 names, you know, supporting people on another 10 names. So it's just Thursday, that Thursday, or you sort of have a bunch of mid caps and small caps all reporting on the same time that was yesterday in this case. You know, usually happens the, you know, like fifth or sixth Thursday after the close of the prior quarter. Just a really busy time. You know, I, I actually like holding management's feet to the fire on calls. So, you know, even though I say I'd rather like put it in cruise control and not have to go through the process, you know, I actually still think I do want them to go through the process. But yeah, I mean, it would be nice to like spread it out a little bit more. You know, I know it's harder to do earnings on like a Monday. Certainly no one wants to do them Friday afternoon. But for one reason or another, that Thursday just seems way too jam packed.
- [02:40]
A
Yeah, you're on. Do you want to ditto that or say you're on?
- [02:44]
D
Well, I mean, so let me, you know, I spent a few years as some of, you know of it, three, four years as a cfo. So maybe I know a little bit kind of what goes on inside the company and hence it kind of kind of opened my eyes to be honest, when I was inside a company. The reason there's a magical Thursday like that is because the way things work internally, where, think about it, they need, they have a lot of work to do to close the books, get all the SEC documents together. They got to go through the auditors, they got to go through their auditor committee and their board and imagine it's
- [03:15]
C
a lot of work.
- [03:16]
D
So they try to do it late. Also a lot of times their board members are busy at other boards. So it's a little bit of a juggling act actually. Never appreciated that before when an in house type thing. So that's why it becomes a magical Thursday. The other thing that really opened my eyes is, you know, for us sitting on our side, I never appreciated how much, and it's an understatement, how much work these calls are for the management. And you can imagine how many people need to be involved, how many drafts they go through, how many people have to be involved internally at the board, at the legal level. And that's why a lot of times, you know, we've honestly, I'm very, we're kind of very sensitive to how much time it takes to them versus to whether it's actually that useful onto people on our side. And I realize sometimes there's a mismatch. The amount of effort on their side probably doesn't really justify the bang that they're getting if they're just a, you know, kind of a young company or a smaller company that doesn't have a lot changing. We've been advising them, take your hundred hours that you're spending internally on this and parlay them to something else. Because we, we, we'd rather you spend the time elsewhere, you know. But look, I, I, I very much appreciate why companies want to do calls. A lot of times it's just it, you know, it just does, it's not, it's not worth their time. I know we, we've a lot of companies, I do have to say when we've told them Thursday is really busy, they have been moving and we commandeer them, but then inevitably Other companies take those slots. So it is what it is. But look, we're just appreciate to have to be involved.
- [04:52]
A
So we also have Jake today, Jake Beecroft on our call, CEO of Strand Therapeutics who is a private company. So Jake, are you looking forward to this? I don't know, what do you call it? Merry go round of reporting and that magical Thursday?
- [05:07]
C
I can't say that I am. I think the public markets are this beautiful creation that our capitalist free market system has created. But it sounds like, well, you pay a price way or the other. I think these giant AI companies like Anthropic and OpenAI have somehow found a way to continue raising tens of billions of dollars while being private for better or worse. But we don't have that same luxury here in biotech. So we do what we can and we actually hired a pretty like an incredible CFO back in April that we announced. So I'm happy to at least have some support in the whenever that time comes for us.
- [05:53]
A
Some of the AI drug discovery companies tend to seem to be, have been able to get the billion to billion, you know, the early money. So but there I think I can count them on the fingers of one hand. So just, just before we go to the, to the broader conversation, of course the week started with the, with the fun and games of AstraZeneca, Bristol Myers supposedly merging, not merging, demerging, etc. Brian and Jeroen, can you give us a feel for how earnings have been going this quarter? You're two thirds of the way through roughly, I don't know, depending on your companies. Now just give us a feel for how you're thinking and the XPI tells me things are good as I said, if things are up. So let's, let's, let's go with your own first this time.
- [06:46]
D
Yeah, I mean I think that they've been good to in line, a little bit less predictable than our trackers historically have been. And I would say overall probably in some ways knock and wood a little bit. It's been a little bit of a quieter quarter.
- [07:07]
A
All right, Brian?
- [07:09]
B
Yeah, I would kind of say the same thing. I mean it feels like most companies have had like modest beats and raises on, on the large cap side of things. But you know, normally 2Q is a pretty strong rebound quarter from, from 1Q for you know, various pay reasons and stocking reasons and you know that sort of materialized in this quarter break. You know, I think while those beaten raises have occurred, they haven't really been like a huge driver to the upside I don't think it's been like massive upside surprises and, and arguably a lot of like the beats and raises are, are, you know, a little bit organic but also just a little bit kind of technical from, from sort of the 2Q seasonal dynamic side of things. But you know, even outside of sort of just revenue performance, you know, I feel like things have gone, you know, pretty more, you know, better updates that. More better updates than, than worse updates, I guess. You know, that's without like really doing, doing hard, hard data search on that. Just kind of my anecdotal feel of how the quarter's been.
- [08:14]
A
Right. And Jake, as a private company, do you keep an eye on what's going on or do you keep an eye only on companies that are related to your business?
- [08:22]
C
Oh, no, absolutely. I mean we keep a, we keep a close eye across the entire market.
- [08:32]
A
I think we lost you there. Yeah, I think we lost you post
- [08:36]
C
Series B company with.
- [08:38]
A
Sorry, we lost you for a second
- [08:42]
C
a later stage post Series B clinical stage with multiple clinical assets. Now company. We're very keyed in on sort of what's happening. Both related companies, other sorts of companies with immuno oncology assets or maybe in direct competition with us. But I think a healthy pulse on the market is it's what any investor who's going to be looking at Strand at this stage is going to be marking the market on. Right. And so it's incredibly important for us to have an eye on it and then also be knowledgeable in terms of how we communicate with the external world. Yeah.
- [09:23]
A
So let's move on to our key topics this week. So obviously the week on Monday, actually Sunday night, I think my colleague John Murphy said to me that he couldn't sleep all night because he kept waking up every hour or two wondering whether there'd be a release in the morning. AstraZeneca Bristol Myers the initial speculation was from Financial Times article. I think then Reuters followed up. I don't know if the Reuters had their own sources or whether it was repetition of the, of the Financial Times story that the two companies had talked to each other about a possible merger which, you know, I don't have a lot of hair, but I definitely scratched my head a lot thinking about this from an AstraZeneca perspective. We've had a CEO, Pascal Sorio, who has very often for a very long time said he doesn't believe in mega mergers. A company that's got pretty strong earnings growth profile. Okay. They've had some setbacks. Every company has some setbacks but they're heading for the $80 billion sales number they're looking for in 2030. We don't believe there's much risk on that. Of course, if everything goes wrong, then of course there will be. And then the thought process of merging with a company that openly is guiding to a weaker earnings growth profile, it just didn't make a lot of sense. And then of course, we all got a bit deflated, although inflated. I don't know why you want to think about it. I mean, the share price of AstraZeneca definitely deflated on the back of this. On the day it was down 9%. And I don't know how he's going to recover from it at the minute, even though the speculation has been put to bed that it really wasn't anywhere near serious. I'm assuming a lot of executives talk to each other and talk to other companies and talk to everybody at the company that's out there and on a regular basis. Doesn't mean that they want to do a deal most of the time. So we thought that if there was any conversation, it might be on some business, some business unit unification or putting it together or finding a reason to maybe the sum of parts being bigger than the individual businesses. So, of course, this then started all the whole thing about whether mega mergers make value or not. But your own, Brian, I know we did this in email, back and forth a little bit. How did you guys think about this? What would you have said if it had happened, et cetera? Just talk to me about how you felt and what you were thinking. And I start with Brian, because he's unmuted.
- [12:10]
B
Sure. So, yeah, I mean, I was a little surprised. Right. I mean, first, the last kind of like mega merger I could even think of was actually Bristol and Celgene in 2019. And, you know, it'd be hard to argue that that has, you know, led to any sort of outperformance from Bristol. I mean, maybe it offset, you know, a worse share performance. But Bristol sort of, you know, has really underperformed, you know, all of its. Not all of its peers, but certainly like the indexes of its peers, large cap names has not done well. So, you know, the idea that like sort of replicating the same thing where you're sort of, you know, merging two big companies, trying to financially engineer value, especially going into like, you know, the loes that both of these companies have, you know, it would be a little surprising, like, to your point about, you know, how Pascal has even talked about mega mergers not being A great idea. It'd be kind of surprising for him to now be pursuing that route. So, you know, it seemed like a strange thing to begin with, but you know, I would have said certainly if it was going through. And I think this was the concern on Monday, like, what does that signal to like the rest of biotech that like these are, this is the best idea these two companies could come up with in their position. And rather than, you know, looking for novel, you know, smid cap names, early launches or new technologies, they're just going to try to financially engineer, you know, a mega company. Look, I think at some value, you know, I don't know that we need 25 different companies with like billion dollar commercial infrastructures. I kind of, I could kind of understand that, that thesis, but you know, I don't necessarily think chasing that right now is a positive signal and I don't know that it's necessary for either these companies. So it didn't, it seems something that most people were skeptical to begin with and certainly reminded me of, you know, the Pfizer AstraZeneca history in 2014, where, you know, similar things happens, where they actually had discussions and then they had to like press release of some of the UK rules. So, you know, by the time like we were getting to Tuesday and we didn't hear anything, I think people started to think, okay, this is more smoke than fire.
- [14:17]
A
Yeah. The problem is it's also set fire to the share price of AstraZeneca. So Jerome, did you have anything you wanted to add on this before I go to Jake for his take?
- [14:28]
D
Yeah, I mean, look, I agree. I mean, I think that the issues, and as you know, my colleague Steve Scala covers both of them and his view has been that this would be a better merger for Bristol, it would not be good for AstraZeneca. AstraZeneca is stronger as a standalone. You would ultimately be dilutive, combined entity to top line. You could potentially juice the bottom line because of synergies. But Bristol has more patent expirations now, AstraZeneca has more later. So the synergy, the, the, the combo really would not make sense. And as you noted, it's the, the question is why would they even contemplate it? I mean, for Bristol, the concern immediately was, wait a second, they have a lot of pipeline coming. Are they not confident in the pipeline? And then for Astra, you're looking pretty good alone. So what, why would you want to do this and, and kind of dilute the story overall? So it makes sense that it seems to Be not going through.
- [15:32]
A
Yeah, I mean the only let's assume that there was some truth to it that the management teams met. Could it have been that they wanted to put their cardiovascular businesses together? You know their burgeoning new area Astros going with their oral PCSK9 oral obesity drug maybe far exec just come off patents. So maybe, I mean I'm just making this up, right? Other than that I couldn't make any sense of it. Jake, we heard quite a few of our friends generally say also from endpoints, stat news, et cetera, that this is bad for biotech. Do you want to give us your sense of that from being a biotech company that at some point may either be acquired or look for a partnership.
- [16:23]
C
Every time I see rumors or news of mega mergers or just hear people sort of pitch the idea of what they think might happen in the few years, it honestly just disappoints me. From you know, from an early stage in innovation biotechnology sector, a huge piece of what drives development and that in the industry that my company and many others operate in is the ability to do strategic partnerships. And the other piece of that of course is M and as that return a lot of money back to our healthcare invest like Healthcare Centered venture and earlier stage investors. And when you do these mega mergers, you buy up gross amounts of capital, you create like massive R and D uncertainty within the research and development organizations that can last for 18 plus months. We saw that like this is, you know a case study of the BMS Celgene merger that was mentioned a little bit earlier. But you tie up capital from doing larger strategic partnerships or earlier stage discovery deals as everyone within R and D and then you know, as a trickle down effect within business development sort of sits in a waiting game to see who is actually going to be in charge. With BMS and Celgene I remember us having a number of really positive conversations back in the day with the Celgene team which of course just in terms of our ability to not interact with anyone for a year plus as everyone is figuring out how the dust settled, we all sort of had everyone sat around on their hands. And so that combined with the fact that you know, I hear the point around 25 different companies with a billion plus commercial infrastructure might not be efficient but there there are limited amounts of larger, larger pharma partners able to do larger deals that can support big and ambitious innovation. And so biotech sector wise, I think it's an incredibly like bad, bad happenstance when these large mergers happen between tying up the capital Inability to get deals done, uncertainty. And then in general just at the end of you end up with one less partner. Celgene was known as a phenomenal business development partner for biotechnology companies for its entire history as a large cap. And I don't believe that that sort of has necessarily that reputation is hoarded over post mega merger.
- [18:48]
A
I mean on the topic of mergers, we obviously also have these. I don't want to. Do you want to call it trend of reverse mergers that are happening in our sector. But our friend Josh Shimmer, who unfortunately can't be with us today, you know, he always laments when one of the nice potentially revenue generating or revenue generating biotechs gets taken out by a pharma company. But you know, shareholders make the decision then these things. The reverse mergers are a slightly different way for some companies to IPO or get listed. Let's not call it ipo, get listed. And I'm going to just call out two angles here. On the one hand it helps with. I don't want to. I don't like that phrase. It's not my phrase. I think Adam Forstein uses it. Zombie biotech companies that are out there who have a lot of cash but their pipelines haven't worked out or something provide an opportunity for a unlisted company to find a way to get into the market and access that cash and potentially then raise more money. Now I can see positives and negatives here. You help clean up the sector a little bit or at least bring new life into a company that had been left for dead or for want of a better phrase, I don't want to upset anyone here. On the other hand, there's no assessment of the potential of the company that's reversing by the scrutiny that usually a sell side team would put on a situation like that. So I don't know folks, do you want to each of you take turns? I've got to go in reverse alphabetical order again here with Jeroen, who wins on both his first name and last name. How do you feel about this? Do you think it's a positive or a negative or. It depends on each deal.
- [20:50]
D
Yeah, I mean I think it by and large the reverse mergers, you know, historically as you recall, they weren't well received. Now now they are. And even high flying, really promising privates, they wouldn't have no issue going public are going that route. And the reason is because it gives them much more flexibility to do it quicker. It's frankly my understanding is even a little bit cheaper. But it's also quicker and that's why they choose to do it that way. You know, the historical issues with merging into a shell is you inherited a certain shareholder base that you might not, might not be a good match to your company. You, you know, you inherit some finance relationships on the banking side, certainly on the coverage analyst side that sometimes are a little bit of a mismatch and what do you do with the shareholder base. But I think now they've really kind of figured out how to do it because they do it in, in conjunction with a new pipe usually. So it's not just you're inheriting cash and that's it, you're inheriting cash and but more importantly, you're really recapitalizing and refinancing a company. And usually in that point you're bringing in your own shareholder base and that's why it's a win win.
- [22:04]
C
No.
- [22:05]
A
Okay, Jake, I did say reverse order your perspective as a company who may choose to do this.
- [22:13]
C
I think it's fantastic to see that they're being well received. I think Yaron just brought up a really good point that really I think the success of their performance post execution hinges on the pipe and the folks, the investors, their reputation and the sort of quality quality of the syndicate that's brought in into that pipe. But in general having multiple different lines of options for financing and also accessing these public capital markets for biotechnology companies I think is a net win. Of course sometimes we jump the shark when we get maybe crazy spacs involved and other thing. Not all spacs are crazy, but a lot of them are. But we having reverse mergers is an option for a company to go public, to have a little bit more control over how they're getting out into the market, to be able to do things quicker and be able to have through the pipe actually some very diligent control of things like the new shareholder base, especially into shelves because of the nature of the market. Over the last few years there are shelves of companies that when they went public had great, had a great investor syndicate behind them. They have a good shareholder base behind them. The science unfortunately didn't work out. Possibly during the COVID heydays of the market the great ideas maybe went out a little too early and the science didn't pan out. And now we have these what you call zombie companies out there. But I think it's a fantastic way for promising companies to have a secondary option to get out there. No comment on exactly what we would whenever we sort of get to that point. But in Terms of a later stage private biotechnology company. Thinking about, you know, watching the public markets and seeing the health of our general financing ecosystem. It makes me happy that we see not only reverse mergers as an option, but reverse mergers with pipes with tier 1 high quality syndicates behind them and subsequent positive trading on the other side. I think generally that that's a net positive for our industry and getting this innovation fund.
- [24:27]
A
So just, just while we close this conversation and we'll move on to IPOs, actual IPOs, in a minute. What do you. Does anyone have a favorite reverse story they want to tell? Brian, you're the next one to talk. Anyway.
- [24:43]
B
I mean, I don't know that I have like a particularly favorite reverse merger. I mean, maybe a name that, that I covered that became a shell and reversed and is now super successful. I think Madrigal was a reverse from, from Cinta. So that was sort of like a notorious blow up in the early days of my career. And, and you know, they reversed and obviously Madrigal is like crushing it now. But, you know, I've, I have interesting memories from pre Madrigal when it was syntha.
- [25:10]
A
Okay, I'm gonna spare your own from having to answer that question.
- [25:15]
D
Yeah, well, we're involved in two right now. We're involved in two in my coverage right now. And I think they're both pretty interesting. I'll probably. But thank you for sparing me. I. John, I'll probably not comment on them since we're involved.
- [25:28]
A
Fair enough. Let's talk about actual IPOs. So we're counting. I'm counting 17. It all depends on how you classify a biotech. I'm only looking at 17. On average. Most of them are up. Some are amazingly up. One that I wish had been public before, which is in the area of hair loss that, you know, that's doing extremely, extremely well. There's a whole bunch of other companies in general. They're all showing pretty nice up on the IPO price. What's interesting is I'm looking at my list here and there's a whole bunch, I think I would say something in the region of 30, 40, 50% of the 17 have upsized IPOs, particularly in the later dates, since the ones in the second quarter have been the ones that have been upsizing and raising large chunks of money. I'm doing a little bit of work to try and look at all the different numbers going all the way back to 18, 19. I'm sure you all have them in your head anyway and looking great. And the best performance of Course are those who also upsized, but that's not necessarily hand in hand, but you know, some of the ones with 190% up, 18% up. What have we got here? 70% up with regards to scribe. So I'm going to go to Jerome now because he docked out the other question earlier and to just get your feel about what we're seeing. You know, as this IPO window opened, I think a lot of us were saying, well, let's hope we don't get any too early companies IPOing, etc. So give us your feel about whether that wish has come true and whether there is meaningful involvement maybe in the later deals versus the earlier deals because that was all testing the market of the actual public as opposed to insiders public, I mean non insiders. So let's start with you, Ron, on that one.
- [27:39]
D
Okay, great, great question. By the way. Tim Opler on your previous question has done amazing job and this is courtesy of Claude on reverse mergers. And it's like so to Brian. Nailed it. Magical was the best. Marathi methylgine was a reversed. Alpine, Nivalis. Alpine got acquired by Vertex for 4.9. Chinook and Adura, remember Adura was one of the original immuno Oncology that didn't work out. Chinook that got acquired by Novartis for 3.2 tourmaline and Telaris. I mean this goes on and on. And obviously Tourmaline was acquired by novo for the IL6. I mean it goes on and on. So there's plenty of these, by the way, Spire and Aglia. And of course Spire ended up being a great success story too. So definitely lots of historical success. Okay, so your question, Sam, was about IPO upsizing, right?
- [28:34]
A
Upsizing. Who's getting involved in IPOs. I mean, I just had a feeling that maybe early on when the window opened, there was a lot of insider support. How is, how, how is it all feeling to you? Is it all. And there's a lot of people that I know who keep nagging about the fact that they're not getting anything in the books. So particularly, I mean the last one, Braveheart, I heard a whole bunch of people didn't get anything.
- [28:59]
D
Right. Yeah. And I think that's kind of the value. You know, increasingly remember the historical mantra was it was friends and family and then venture capital, you know, did round, you know, A to, to B and C. And then it was a crossover kind of started 10 years ago. Those, those days are over. The public investors are now pretty much involved in all strategic capital Pretty much around the table the whole time. And without doing a crossover it's very, very hard to go public. The whole concept of a handoff from VC right into a public sphere rarely ever happens anymore because the book needs to be oversubscribed by the time you go out and you need the crossover public investors in there. So that, that's exactly I think why the, those accounts have become pretty meaningful accounts for the banks and they are such great strategic capital for the management companies that at that point it's a kind of again everything is kind of matched up to, for those insiders to get the lion's share of the capital. They frankly want to syndicate that way as well. And so they're obviously looking for the whole process to go in that direction. And there's obviously some funds that are pretty vocal about their requirements for that. So that's why it's happening. But you're ultimately seeing that these companies can then do very well in the public market as well. So everybody kind of wins.
- [30:27]
A
I'm going to go to Brian next and then to Jake because he's going to do the following topic too. Brian, what's your take? How are you feeling? Is, I mean 17 deals I think that already beaten the entirety of 2020 close to beating the entirety of 25 and 24 put together.
- [30:47]
B
Yeah, I mean, I mean it is, it's like a double edged sword. Right. And we actually, I think I'm trying to go back and see what our predictions were towards the end of 2025 but I think there was a big disparity between like Josh and Paul on this hangout when we were predicting, I think Paul was saying maybe 13 biotechs and Josh put a big number out there in terms of 50. I think I split the difference. But you know, I think the general commentary has been right like it's good to see a healthy window but it's bad to see just a FOMO driven like anything on a napkin dynamic. Right. And I think we're all very wary of like the you know, sort of 2020, 2021 peak and just so many things that, that were probably under quality, under vetted, getting huge valuations. So you know, look, I don't, I think you look out at most of these names and their most clinical stage. You know, I've been vocal on here saying like I think that the public equity markets are not good at durably valuing sort of preclinical assets and when you see a lot of pre clinical assets start going out, I think that's a negative sign. I don't think we're there yet. I guess I would say if Josh's number comes out to be true and there's 50, I would be a little skeptical about how much is FOMO driven versus how many of these are just fundamentally really good companies and deserve to be on the public market. But for right now, I think it's kind of a healthy number. I don't see negative signal there and I, you know, I, I think this kind of pace should hopefully continue.
- [32:24]
A
Well, I mean that, that takes 33 more to get to that and we have four and a half months left. So if it happens, I'm really sorry for you guys because you're not going to have a life on top of the early earnings. So if, if you want a shoulder to cry and come to me. If it doesn't happen, then Brian will be right. So it's perfect. Jake, obviously you're a private company that might, one point might think about ipoing. How do you feel about all this? How do you think this is looking? Are you, I don't know how to ask this question. Do you see pressure from your investors to quickly look at this and look at an ipo? I don't know what stage you're at, et cetera on this. So tell us what you can, you
- [33:12]
C
know, from a market perspective. I completely agree with Brian. I think the public markets value clinical stage assets and can sort of operate with clinical stage companies in a much better way than historically has proven the case with Preclinical. And there's a whole ton of both scientific and just translational science reasons as to why I think it's much safer to the stability of more open markets such as public markets to stay away from science projects until they get a bit more meat on their bones. Personally, as a company we've been. This is why whenever you start a company, the first thing people tell you is to be very, very, very careful with the investors that you bring in and to be very upfront with what your mission and vision is for how you're going to sort of build the company over time. We've been incredibly selective with who we've worked with and incredibly communicative with what our mission will be. Our mission is to actually build over time, build a real biotechnology company. Differentiated assets, novel technologies, novel approaches. We're a MRNA therapeutics company for those of you that don't know. And we have multiple MRNA drugs in the clinic now in therapeutic non vaccine settings. But I would take extreme exception to investors Pressuring myself and my mayor management team to rush into the public market simply because of windows opening. I think that what we've seen with a lot of the post market, post debut performance of these recent companies is these companies were ready. They had, you know, in some cases multiple clinical assets. They had a real team that was set up around the opportunity and they have a good story with good catalysts on the back end that continues to drive activity on in the market. They're good companies to go public. I don't think as Brian also said, I haven't seen the complete fomoification and companies two and a half years from a first in human trial readout trying to push out into the market quite yet. And so I think that gives me hope that what we're seeing right now is a number of incredibly high quality biotechnology companies that because of the market that we've dealt with over the last few years have been biding their time building private capital, what, what have you. And now as this sort of broader macroeconomic forces swing in the favor of getting these companies public, companies that are very ready both technologically and operationally are pushing out into the public market. And I love to see it, I think like that's, that's incredibly healthy and it's the way that, the only sort of diligent way that, that we would consider something as you know, sort of one, the one you do one IPO right within the company's history ideally. And so you want to make sure that it well received and executed well otherwise you'll deal with the knock on effects for maybe the rest of the company's history.
- [36:14]
A
Right. So Jake, thank you for that. As you've got the mic, do you want to talk to us about China and how us continue to out innovate?
- [36:25]
C
Yeah, of course. So you know, just for anyone that doesn't know, Endpoints News hosted what I think was an incredibly well executed event in Cambridge last night. They had a number of different speakers. Myself and Matt Glein from Roivant did a panel that was supposed to be a debate, but I don't think Matt and I disagree about nearly enough things to truly debate. Jason Kelly, Peter Kolchinsky and Fiona Murphy from MIT Sloan had a much more lively debate about coins and other sorts of protectionism measures in biotechnology policy. And then Andrew Baum from Pfizer rounded out with a fireside chat. The event from what we were told was sold out. It was standing room only despite endpoints charging people $150 a ticket. And I think that really gets to the point that China, China friend foe China, you know, collaborator slash usurper, China innovator or copycatter and what to do across public policy and company building and financing here in the United States is at the front of really everyone's mind. And so you know, I not necessarily want to wade into the mud slinging fest of pro protectionism, anti protectionism that, that did happen. But Matt and I had a really engaging discussion around what we're, what I think US biotechnology needs to do. I think China both fast followers and you know, just other sorts of IP leakage, copycat mechanisms and really their industrialization around their clinical trial ecosystem creates a whole number of challenges to the investability of early stage biotechnology in America. But I my piece on it last night was that what, what China's really doing is it's highlighting how sick our own domestic ecosystem for early stage drug development has sort of become. It's become way too inefficient to get drugs into, you know, to get first in human trial started here in the United States. It's not a marker of China having 4x our population because if you look at Australia, they have 1/10 of our population and they run 4x the amount of first in human trials that we do here in the United States. But it's really a number of self imposed harm between disconnected nodes across the ecosystem as well as regulatory reforms that have been desperately needed for years. And so I believe that the only real way to compete with China's from a company perspective to take actually drastically more bold steps forward in terms of innovation. The days of me too and me better drugs I think are maybe joyfully behind our innovation ecosystem where we really need to be thinking about where the giant leaps forward technologically and at the same time the United States has got to get on the pathway to massive acceleration at point some. If we don't reform our clinical trial ecosystem, if we don't reform how IRBs and clinical sites and everything supporting around that works, we will continue to lose what I think is a national resource which is both our clinical trial ecosystem, especially early stage de risking clinical trials, the associated innovation flywheel that comes with that and financing goes the way that things could continue to look for. Early stage tipping point Jake. There you go.
- [40:11]
A
Yeah, you're back, you're back.
- [40:13]
C
That was the end. I just think we could see a tipping point where early stage discovery of innovative medicines becomes hard to invest in here in the United States.
- [40:23]
A
Right, right, right.
- [40:24]
C
That's a, I think a credible risk to the country.
- [40:30]
A
So Jake, this diagnosis, which I'd call it diagnosis, I think it's absolutely correct and I think it's been something that more and more people are becoming aware of. Maybe the fact that all these deals are going to China are shining a light on why that is the case and what we need to do. The question is, when is some action going to be taken? I remember talking to my friend John Connolly at Pisi Parker Institute over a year ago about this over a beer and he said, oh, there's action being done. We're going to be. There's an active team being put together to try and lobby. What do you see in terms of actual steps being taken to address this? Let's try and cover this in a couple of minutes. A whole bunch of other stuff.
- [41:16]
C
Yeah, I'll try to be incredibly brief because I think I was verbose in my last. No, not all at. So yeah, the speed at which government moves is often very slow. But I will say that by government standards, things have been moving incredibly quickly. Even with the sort of tumultuous over original leadership at the fda at the first part of the Trump administration here, especially the new leadership, the interim leadership that's taken over has announced various different initiatives. The first one is Operation Trialblazer. It's announced a while ago, a way to both coordinate research institutions, provide ways for companies to get more active feedback and really smooth the pathway running first in human trials here in the United States. I think that unfortunately, in order for that to, you know, for us to get to a full Australia like system, the H REC system that they use for accelerated first in human trials and direct IRB submissions, it's going to require an act of Congress and that is 537 people who don't always like to agree or do things until it's pressing. But the, I guess the good news for biotechnology writ large here is we're an industry that often does not have many friends in Washington D.C. to be honest. And that's come from a lack of communication over the years with especially with the threat of China and the sort of rapid decay of this crown jewel of our scientific research ecosystem. What we are seeing now is bipartisan support both across Congress and within the administration to break down barriers in a way that is maintained safety but modernizes regulatory frameworks to incentivize the change of behaviors among institutions like clinical research organizations and find ways for us to move this forward. So John, I know John super well and he's completely correct, but it takes time. There's a lot of people who work in the government. And changing the FDA and things at the FDA is no easy beat. That's actually how we ended up in this problem. We just let 15 years go by without trying to change and modernize anything here. I think if we get both the earlier stage and now some bigger pieces push forward on the later stage as well as things like platform designations for crispr therapeutics and other sorts of genetic medicines, we'll see this turnover quite rapidly.
- [43:52]
A
Okay, that's good to hear. I've actually just started writing an email to you, both you and John, just to see whether there's something we can put together on this.
- [44:03]
D
Yeah, do it.
- [44:04]
A
So let's. Thank you for that, Jake. Really good. You know, I'm a fan of biotech and science. I'm a fan of everywhere where there's good biotech and science and that currently includes China, so. And the United States, obviously. It's a big leader there. So let's move on to Brian. We've got a couple of regulatory stuff, two or three to talk about. Brian, maybe you could do them in sequence. Talking about the update from Mirror and then also from Praxis.
- [44:33]
B
Yeah, thanks, Sam. So, yeah, I love following these regulatory names. Try to keep very close to sort of debatable FDA stories. One of the names I follow, Miriam, I would say going into the earnings this week, I would not say this was a regulatory play at all. They have a really good data set that has always been characterized as a pivotal data set in psc. This is a disease where without any approved drugs, they showed very good statistical significance in the reduction of pruritus in psc, which is a very significant primary symptom in this disease. It's the first drug to really show this in this disease area. And they had a pre NDA meeting and announced earlier this week a result of their pre NDA meeting. The FDA actually asked them for phase three study stock, took a hit on it. Management thinks that they could continue to converse with the FDA and convince them otherwise, that they would be able to submit an NDA on this data set. And look, it's very shocking to me because there's actually a history of this mechanism of drugs showing reductions in pruritus in various cholestatic liver diseases, which PSC is one of them, but also some pediatric diseases like ALGS and hific. But most notably the fda, the same division, approved the drug from GSK earlier this year, Linarixibat, brand name Linavoy in pbc. So a similar adult cholestatic indication With a actually much less pronounced effect on pruritus. Slightly lower, a larger study, but PSC is a slightly smaller indication. So really comparable study sizes. Much more dramatic effect for Mirim's drug Volixibat. So it is a bit of a head scratcher, especially as we have conversations around how flexible the FDA is and they're just thinking about the replimmune approval yesterday, the acceptance and review of Capricorn and some of the debates around other applications which may have statistically, may not have hit statistically or relying on sort of surrogate endpoints and trying to understand what sort of the clinical relevance here. This is like a very straightforward data set and it just seems to me like a signal of a really conservative decision on the FDA's part. I think there's some technicalities around the amount of work that had been previously done in this indication with this drug that, you know, I could kind of read through the FDA guidance and see where the FDA is maybe being purposefully overly conservative here. But it is, I found it very notable because I don't think anyone really had it on their bingo card that this was going to be the type of name where there'd be a real question mark as to whether or not the FDA was going to approve this. Another update we got this week was from Praxis Precision Medicines. And this is a regulatory play. They actually have two drugs that are under review right now from fda, Ralutrigine in a subset of pediatric epilepsies. And I don't think there's not much of a debate here. This is a really good data set. I think people widely expect it to be approved. But there is a debatable situation on Ulixocaltamide, which is the first drug to show a statistically significant clinical effect in a central tremor. There's history here in terms of how the company ran the study and there was an interim look and then a decision was made to continue even though the interim didn't get a recommendation to continue on to the full data set, wound up being statistically significant, looking really good. So it's definitely a big debate out there. And management had their earnings call and on their earnings call, and this has been one of the question marks, what would a mid cycle review meeting from the FDA look like? Would there be questions? But the biggest debate was really on whether or not there would be an adcom. When the company got the NDA submission accepted, they indicated that the FDA told them that an ADCOM wouldn't be necessary. A lot of people were Saying, oh, it was new fda, they're going to do an adcom. There's certainly a bear case that they were going to announce an adcom and people would view that negative. So coming out of the mid cycle review meeting, management sounded really confident that the review is going well. The FDA reiterated that they don't think it'll be necessary for an adcom. So it continues to progress along. Stock was up pretty substantially just on that news because it is very sensitive to the regulatory outcome here. And then I think, you know, we. Yaron was going to talk a little bit about the surprise, maybe not so surprise approval, but certainly controversial review and ultimate decision for replimune stroke.
- [49:24]
A
Yeah, I mean it's a perfect segue actually to that conversation because it's quite similar. It's lots of uncertainty. Some of it to do with the. Can I call it regime Macari regime. I don't know, whatever you want to call it, period. So Euro. Do you want to update us on that and, and, and also tell us about the new drug name?
- [49:46]
D
Yeah. So you know what, I think what caught a lot of people's attention was remember this is this replimmune versus FDA has been one of the most contentious, slash enigmatic, slash confusing, unexpected processes where it kind of embodied, you know, all the, the new realities of ODAC or actually it's actually cellar and tissue and gene therapy on the macro. Obviously the, the White House got involved as well. This has been as untraditional as anything you can ever remember. And unsurprisingly, the name of the drug, I think all of us looked at it and said how do you even pronounce it? So I've had now 24, actually 16 hours to practice. I think the best way to do it is with a Russian accent. It's like it's called. That's what someone, finally somebody on my team was like, just say it with a Russian accent. And now I remember. Exactly. So just to remember everybody, this is a PD1 refractory melanoma approval. It's an oncolytic virus. The. What's the. Remember the PDUFA was August 2nd, which is actually a Sunday. The panel, as we all remember, was July 30th. It was recommended for approval on 10 to 3 and got approved yesterday. So four days after the PDUFA, which makes sense given the PDUFA was last weekend. This was based on the ignite study and I think we've discussed this many times here. The independent review said the response rate was 34% with a 25% durability of response in 140 patients. FDA didn't agree. They thought it was 25% medium duration response was 14 months and recall it was single arm, no control and it was in combination with Nivo, with OP TiVo. And so FDA immediately said we don't know what the drug is contributing versus Nivo. It wasn't clear what the definition of confirmed progression and PD1. They also have an issue with the response versus the modifier response criteria, resist criteria and also which then the reason they threw out 50 patients is because they didn't. FDA had issues with whether they only evaluated one site which was injected. And FDA wanted to look at a second site as well tumor because remember, you injected into the tumors anyway. The price is 450,000, which is in line sort of with a monthly price now of these sort of drugs. So again, great outcome for replimmune. It was very, very contentious in many ways unexpected and will provide another option for patients. Exactly how much traction it's going to ultimately get we will need to see. And colytic viruses have had very much a checkered history. The question is, is this going to now predict what future oncology approvals will look like given the changes in odac? The answer is no, because this went into a, you know, cellular tissue and gene therapy oncology I'm sorry advisory board. And it didn't go through the ODAC's oncology drug advisory Board. So the unexpected continues to be expected these days. It's kind of where we are.
- [53:02]
A
I like that. That could be the title of a movie you're on. The thing that I, I hear from some folks is look, these patients have no options. We can't deny them access to a drug that might help them. What do you say to that?
- [53:21]
D
All true, but let's zoom out for a second. The unexpected is expected in melanoma. This again because it's very much drives correctly. So you know, you and I are following Biontech very closely. They're remember their cancer vaccine had good initial data and then in a randomized study ended up actually failing or both arms including this is the front line, including Keytruda did extremely better than expected. We then had another cancer vaccine from Iobio just miss where again the data looked very different than it did in the past. The Lag 3 from Regeneron missed again in combination because the control did better than historical. What you can see where we're going with this. It's very possible that melanoma now hopefully is having much better outcomes than it did in the past.
- [54:23]
A
So I'm going to use that Jeroen and move on to another topic that we want to just quickly touch on. Both Moderna and Bionic which you mentioned about Biontech you mentioned have reported. I don't think we want to talk about the second quarter but they both have very big second halves or actually something like a second. Is it 3Q or 4Q? I don't know. So let's pick up on another. Their first readout is going to be in melanoma. It's a cancer vaccine, new antigen therapy, let's call it int and it comes off the back of a randomized two to one phase two trial, if you want to call it that, which is the int plus keytruda versus keytruda and that's continuing to show. Now we're into the fifth year data. Pretty strong efficacy signal there. So I'm sitting here thinking what are the risks there? Because that's going to be quite a. I don't want to call it make or break. This is a company with a lot of cash, it's got a business, it's got other approaches. If it doesn't work in melanoma, it doesn't mean it won't work elsewhere. They have other new. With a new medical directory in place, David, the new approach to other ways of trying, you know, RNA in vivo, CAR T et cetera. So but if it doesn't work it's, it's not a. It's not going to be a good day for the share price. And the, the worry I have is that we have a trial that was conducted such a while ago now that maybe given what you just talked about in terms of the continuing evolution of how patients are being treated with these PD1 checkpoint inhibitors in melanoma, the way that patients are treated now is different or the timing of therapy, the combination of the existence of COVID vaccines in the background, maybe that changes the dynamic in the control arm. And then of course they've added a earlier stage group of patients to this trial. So that worries me. Is that fair? And then when you speak to that maybe you want to talk about the big three Q that or second half the BioNTech has with regards to data and the fact that some of it is not necessarily up to them, it's up to some therapeutics data.
- [56:44]
D
Yeah, I mean I think everything you said is very much sort of what's top of mind for the field, you know, and, and Moderna. I think the physician feedback has been A bit mixed. The RFAs, the Radiographic Progression looks very good, but if you kind of look at the corresponding data, Biontech is, you know, also has a very prolific sort of vaccine platform and that data historically really hasn't worked out and early initial signs weren't reproducible and in kind of subsequent studies. So I think that's, you know, a lot of the question we've been getting is trying to understand kind of like what are the real differences among them and what can you learn from that. And so that's going to be obviously fairly important for Biontech. First of all, they're going to be onboarding a new CEO. The CEO of Swedish Orphan Biovitrium is going to be joining by February of next year. He brings a different skill set than the previous CEO of BioNTech has been, who's a very accomplished science scientist along with his wife, who's also a very accomplished drug developer. And they've shepherded the company, you know, very well with the MRNA platform. Give them a lot of credit for doing all the right deals for them, bringing the ADC platform in assets and also the PD1 VEGF. So the data and the CTLA4 and so the data coming from Biontech by the end of the year is potentially interim phase three from breast cancer, from late stage breast cancer for HER2 ADC, very competitive market. They also need to decide whether they'll file for late stage endocrine therapy and not endocrine endometrial cancer. They have good data but a very competitive area. So they're trying to figure out whether it's worth it from a market size perspective. And then they have second line squamous lung cancer data with their CTLA4 that's looked very good in an interim showing survival against Docetaxel. Docetaxel as we all know, has been a very tough drug to beat historically. So we're all going to be looking at the next stage two of that phase three. So they have a lot of data and probably the most important readout is actually from their competitor summit, the Harmony 3 data which is the interim results of the probably underpowered still early looks with all the historical issues of China to then global kind of progression in terms of patient enrollment in both squamous initially and then non squamous lung cancer. That's probably going to be the biggest data point for Biontech and that's I think it's coming Q3 certainly this year. So lots to watch for with Biontech.
- [59:29]
B
Yeah.
- [59:29]
A
So do you want to sign us off with a quick comment on Ascendis and Bimarin?
- [59:35]
D
Yeah. So Ascendis has launched the once weekly drug for Chondroplasia. It's their version of cnp. The market leader before that was the daily drug from Biomarin called Voxogo. The drug from Ascendis got approved in February, launched in April and within three quarters they essentially got not just 10% of BioMarin's patients to switch over, but they're also clearly expanding the market. So 43% of the patients that went to their drug were calculating were coming from Biomarin and the rest is market expansion. So they're off to a very strong launch. There's Biomarine, of course, is in litigation with Ascendis because they're claiming patent infringement that went to International Trade Commission. Everything is happening at the same time. So we're expecting the initial decision from the ITC by August 21 and then a final decision from the judges by December 21 on whether ultimately they can enjoin Ascendis because they're importing the drug, it's being produced in Europe and whether they're infringing. It's expected that if they are, they at least are not going to force them to pull patients who are already on the drug off the off the market and off the drug. And so Ascendis will have by, let's say, March of next year if they launch, which is an if to then that that goes into effect. And so right now they're basically racing to convert patients and at the very least obviously grow the market because the drug really based on clinical data does look better than Biomarins. So it's very much a landmark case that's very much patent related, but also very much for patient benefit, you know, would be considered as well. So we'll see what happens August 21st.
- [61:17]
A
I know we try and keep this to one hour, but I don't mind another couple of minutes here. Brian had, because I know there's been lots of discussion about this. The igan Otsuka Phase 3 results for Voigs Act. Do you want to cover that quick?
- [61:33]
B
Yeah, I want to cover it quick because I think it's good to end on a good note and just reflect on how some of the positive things that the sector contributes and I think a good example of it this week is because Atsuka's data they announced and presented at a conference In Hawaii, full 24 month EGFR results for this large 510 patient study in Igan. IGAN is one of the leading causes of kidney failure worldwide. Just coming in third beyond diabetes and high blood pressure. And what they showed is over a two year period, they have basically stopped disease progression. I mean, if you really want to say they actually saw an improvement in EGFR from baseline, I don't think we've seen that in a two year IGAN study ever or in a two year kidney disease study ever. Huge separation from placebo. And I mean this was, in this conference, multiple people were basically saying, look, it looks like this is curing the disease. I mean you have basically resolved to disease progression. It's not a cure because it's not a one time treatment. You have to, there's a monthly injection, but it looked extremely safe, you know, really placebo like in terms of its safety profile and really one of the most, you know, profound data sets that I've seen in a while in terms of just very clearly moving the needle in a disease, you know, that occurs and over, over a period of time leads to dialysis, kidney failure, death, a very, very significant disease. And you know, they have managed with, with this drug and there's other drugs behind it that are sort of mechanistically doing the same thing, but to really, I think offer these patients an entirely new outlook on life where it seems like they are not going to have to worry about progressive kidney disease on this drug.
- [63:24]
A
Fantastic. Thank you Brian. Good news in IGA nephropathy to end on. So you've been listening to Biotech Hangout. For all the various disclosures, etc. Please go to our website biotechhangout.com for all the old series as well. Thank you everybody.