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- [00:00]
A
You're listening to Biotech Hangout, a live and unedited weekly discussion of all the latest news in our industry with a group of biotech leaders and experts. I'm Chris Garabedian and my co hosts today are Greg Suwanaway, Paul Matisse and Tess Cameron. For more information about our hosts and guest speakers or to listen to the most recent episode, please go to biotechhangout.com so Tess, we often like to just start with a pulse on the markets. We you like to share. How are you thinking about the public markets as we sit here today?
- [00:34]
B
You know, public markets have been really positive. You know, the xbi, you know, has, has been, you know, performing, performing really well. And you know, I think what's important though is that we are seeing strong performance, but we are also seeing kind of selective performance. Right? So it's not, it's not that like everything is going up, right? It's like IPOs are performing well, but like also the companies that are going public are like really strong companies with like really strong data. You know, companies that have, you know, negative updates which we'll talk about a couple of those, you know, those stocks are going down pretty dramatically. So it's, you know, the market is, the market is strong but it is also discerning, you know, which is, which is important. So I think like healthy, know, healthy. But discerning is like a really good way to describe this market.
- [01:25]
A
Well, I kind of look at it when the markets are on fire, right? Everybody can look good as a biotech investor, but it's the specialty investors, right. Of which ra perceptive others. You know, this is where I think specialty investors thrive, right? That discernment and understanding. Right. Where value goes and when the markets are behaving, whether it's on the upside or the downside, I think that favors the, the longstanding. Right. Decades long investors who've been doing this for a long time. And I think that's a good thing for our industry.
- [01:58]
B
Yep, absolutely. Absolutely. I think we're seeing, you know, at a general level, right? We're seeing rational responses to data and that's really important.
- [02:07]
A
And you've talked a little bit about, which we've noticed this past year, the kind of bifurcation of tech and biotech. I mean we've seen, you know, anthropic going out in an IPO worth trillions or over and SpaceX, et cetera. And so these tech investors are very different and the generalist investors that invest in tech. And so we've seen this separation And I know you, you had some thoughts on that. Would love to hear your perspective on that.
- [02:37]
B
Yeah, absolutely. So there was a great article this week from the Wall Street Journal that I loved that was called Health Care Investing is Now an AI Short in Disguise, you know, about how, you know, health care companies are really, you know, kind of treating like opposite to tech. And you know, I think, I think there's, you know, for the past year, you know, year and a half there's been this kind of like flow of funds question. Right. Which is like, oh my gosh, it's just like all the money is like going into AI and like, you know, where is everyone getting their money from? Are they like, you know, getting money out of Lilly? Are they getting money out of like, you know, other companies, you know, to other healthcare companies to kind of invest that in AI? And you know, the Wall Street Journal article was kind of, you know, taking a bit of a different view on that where like, you know, we look at some of the AI related sectors that have done super well. It's a lot of the picks and shovels companies that are going into the AI infrastructure chip and other companies and those are really cyclical. Healthcare is not cyclical. So they were kind of pointing to this, hey, actually healthcare stocks are doing a bit better when AI is doing poorly. And is that people looking for something of a hedge on their AI exposure, which I thought was really interesting. It's like we still don't know like exactly how much money are AI firms like you know, going to make? What's that revenue curve going to look like? And people are going to need medicines. Right. You know, so that is, you know, a good, it was a good, it was a good reminder with a nice punchy title.
- [04:21]
A
Yeah. Who, who knew that we might be considered maybe a safer, more predictable type of investment strategy? I think 20. Yeah, 20 years ago. Right. You know, we saw the dot com bubble combined with the genomics bubble. But I think this is a very different mature market for the IPOs today. And so I think there, there are some good distinctions to draw from when we would be lumped into these tech. We can't predict it. I think frontier, there is a lot of uncertainty. So I think that that's an interesting one to watch to see if we end up converging at any point with tech in terms of how we trade as a sector.
- [04:56]
B
Yeah, I think it's also interesting because like just, you know, again, going back like a while and this is obviously after like the tech, you know, tech bubble and Everything like you know, the dot com bubble. But you did see like just more consistent multiples. Right. And kind of forward growth rates. And now those like forward growth rates have obviously just diverged significantly. And hey, I guess like healthcare looks cheap on like a relative basis.
- [05:23]
A
Yep. So before I talk about the private markets, Paul, Greg, do you guys have any, anything to add to the, to the public market sentiment?
- [05:32]
C
I mean I agree that like it's sentiment continues to be pretty good, the fundraising environment looks pretty good. But you know, unlike past periods like this. Right. Like I still think most investors and myself like don't feel like things are, are super overheated.
- [05:47]
B
Right.
- [05:49]
C
And you know, like Tess said, like there's, there's variance in market, in this market that is going, that's going in both, in both directions. I will say that like despite this being like a good year for sort of biotech sentiment and vibes, like when I talk to different investors, it hasn't been a great year for, for everybody. You know, depending on your investment strategy, depending on if you owned some of the takeouts that happened this year were really big takeouts for companies that didn't have like an imminent catalyst. Not everyone was there. And you know, maybe it goes back to what you were saying, Chris. Right. Like this is a market that feels healthy, but it's also kind of like an inefficient stock pickers market with an IPO window that's open. And it feels like a bunch of these factors are just like usually all these factors aren't in play at the same time. Right. Usually when we've got an open IPO window, a big fundraising window, it's like everyone's just making a ton of money and I don't feel like that's the case.
- [06:46]
A
Greg, anything to add?
- [06:49]
D
Yeah, I think I'll add that generally, yes, I agree with what Tess and what Paul had to say. BXBI is year to date still outperforming the broader market. You know, biotech has been the darling within healthcare. So I think fundamentals are still really good. But biotech is always a nervous type of a market. There's always skittishness, especially around individual names. You still see some disappointing data readouts and I think we're going to talk about two very high profile ones not too far away. But it is, as Paul said, it's still very much a stock picker's market. I know I've been asked this one prior to biotech hangouts, whether the generalist investor is back in yet. And I don't really know that the generalist investor is fully back in. I think they're seeing the IPO performances year to date have been pretty solid. As Tess mentioned. We've had I think by my count 19 issues on NASDAQ this year so far, which is a really healthy number. So again, yep, I'm very positive what we're seeing in the space. But at the same time, like you know, any day is, is a different day and you know, our stocks are very volatile.
- [08:03]
A
Well, well, some are predicting as the tech gets overheated and frothy or the perception of that, that they might, as Tess was described, might look to biotech to. As a, as a safer shelter for that. So we'll, we'll have to see. But I agree it hasn't begun in earnest and I think that's something to watch. I just wanted to highlight on two other trends.
- [08:22]
B
Maybe, maybe just one, maybe just one other point and I'd be interested. You know, Paul or Greg, you may have more insights into this. But like as you're talking about fun performance. Paul, like I think that short exposure has also played like a pretty significant role in that where I think, you know, some of the neutral stuff has been harder to, you know, harder. Harder to kind of manage this year than, you know, than maybe in the past.
- [08:46]
C
Yeah, I mean I. The subtext of what I was saying is I don't have the exact numbers, but my perception was that Kinetics Apogee, some of these companies were pretty heavily shorted stocks. Not necessarily because they were seen as bad companies or anything like that, but they were kind of seen as companies where clinical pieces of the story were already de risked. There wasn't a major binary event coming up. And I think what people listening to this call have to understand is that there's a whole bunch of biotech funds out there that have some mandate on the percentage short they have to be. Some of which it has to be completely market neutral. And the reality is those funds often look for certain companies that lack catalysts but are liquid stocks to kind of be short to fund their longs. Right. And so you know, I, without talking about anyone specific, I mean that that type of model I think has been more. Has been more challenging this year. You know, probably the long only model hasn't been as challenging and then you know, sort of in between. Right. It depends on have you been in the right places with the right events or the right takeouts.
- [09:50]
A
Great comments. So on the venture side, we often track and lag the public markets and overall I think it's been a safe place for venture investing. This week we've seen a range of venture investors. I'll just name a few without going into the details, but we've seen three deals that were announced this week. We had Boulevard Bio, which was a spin out of a Deerfield company. So company creation with a good amount of capital behind it. We've also seen EPI, what is it? EPI CRISPR, which is a series C90 million going after FSHD. It's been a challenging clinical indication, an epigenetic target silencing ducks 4. And then we also saw another. My notes now are escaping me here, but there was a Series B to support a phase three pivotal study for allosteric inhibitor of AKT12 being developed for the treatment of a rare disease. HHT. And again, so the venture investments are thriving. We're seeing a lot of a range of deals, but there's still a lot of opportunities that are later stage, clinical stage. And we haven't seen the real big tick up in seed and Series A. So aside from some specific company creations like boulevard, I think Q2, we saw the numbers go down in terms of the number of seed and Series A round. So I'm looking for the next year to see that start to pick up and a little bit more risk tolerance in the venture community. But the other piece which was alluded to is the pipe markets and reverse merger candidates are also buttressing the health of the market, in my opinion. And it's almost like every time there's a failure of a largely single product, binary biotech that has a failure, there's almost a frenzy of like, okay, are they going to be the next reverse merger candidate? Let's call the banks. Let's figure out if this can be a pathway to go public. And I think this is partly because there's a lot of the public funds. You know, many of them might have some PTSD for all of the private crossover rounds when the market turned against them that they were sitting on that actually prefer either a direct IPO or a pipe reverse merger that will fast track the public trading as opposed to the traditional crossover mezzanine round, which are still happening. And so I just wanted to highlight that dynamic, which I think is healthy. And so even when there are failures, they could end up working well for those companies ending up, you know, with a reverse merger. And two of those companies were announced Monday of this week. Tess, you want to cover 10x and then I'll have Paul cover Siona.
- [12:43]
B
Yep, absolutely. So Tenex was developing a drug for HFpEF, which is a notoriously very, very challenging indication. But you know, also enormous, also enormous unmet need. Also enormous unmet need. So very, you know, very highly anticipated readout, you know. So the company reported earlier this week that they did not meet the primary endpoint of six minute walk versus placebo. They didn't meet the secondary endpoint of kccq, which is kind of a patient, you know, patient reported outcome. Actually, let me take that back. I can't remember if it's a patient reported outcome, but it's, it's really measuring, you know, measuring symptoms. They did see a reduction in, you know, NT Probin P. And, you know, what was kind of, you know, interesting here is that, you know, there was a, there was some kind of treatment effect by, you know, disease severity where it seemed like, you know, in healthier patients, you know, there was kind of a question around, you know, did this actually become like, kind of harmful in like, you know, healthy patients just based on the, you know, decline in six minute walk that they observed throughout the trial? So I think, you know, a lot of, a lot of open questions but, you know, clear kind of myths on the, on the primary and secondary and maybe some, you know, questions about, you know, the observations on NT Probe and
- [14:21]
D
P,
- [14:24]
B
which they pointed to as like a, you know, mechanistic kind of rationale to, you know, believe, believe this is having, you know, the right mechanistic impact and, you know, a question of how that would translate.
- [14:39]
C
Tess, do you think there's like a path forward for this, given that context?
- [14:44]
B
I mean, I think it's an open question. Right, but I think it's tough, right? It's like, what does that suggest? Does it have to be a much longer trial? Does it have to be like a different patient population? Does it have to be like a much larger trial to kind of see the effect? Right. It certainly doesn't seem like a straightforward path forward. Right. I would expect that there's, you know, really, you know, kind of getting into the data and trying to think about like, you know, what, you know, is there, is there a path forward and, you know, what they could do next. So they're going to meet with fda, right? They have a, they said they're going to look at a type C meeting. They'll meet with the ema, you know, see what can they do to like enrich patient population or their subgroups. Right. Maybe they focus on this like, more severe patient population where like, there was a benefit in, you know, six Minute walk. But I think, you know, you'd want to understand, like, mechanistically, like, does that make sense? Right. And, you know, really have confidence that this would work in like, a larger trial. So I think, I think that's really going to depend on some of those additional analyses. Very curious in your thoughts.
- [15:53]
C
No, I mean, I'm not as close to it. I just know this point's like super controversial and it's always tricky, right, when you, like, don't meet the expectation, like, can you kind of like, can you pivot? Right. And still, like, keep. Keep the show going with the program. So. Yeah. Thank you. That's super interesting.
- [16:11]
A
Paul, you want to cover Fiona?
- [16:14]
C
Yeah. This one was such a bummer for a few reasons. One, I mean, it's a bummer that, you know, from a cystic fibrosis disease perspective, even though Vertex has made crazy, crazy strides in making this a livable disease, it's still a bummer that there's not, at least for now, seemingly going to be another option with a new mechanism too. I mean, the CIONA team is an awesome team of good people who I think really did their best to try to make this work and also be transparent. And third, I really thought this was going to work. So this industry always really humbles you, but basically SIONA was developing a, or is, I guess still developing a novel mechanism to try to stabilize a domain of the CFTR protein called NBD1 that the CFTR gene is mutated in. Cystic fibrosis patients don't make enough functional protein. Vertex, for 90% of patients that have at least one F508 delta mutation has made this a very livable disease. But not everybody responds to the same magnitude. There's some patients that have side effect issues. And so Siona was trying to come into the game to offer a novel option. And the study that they were running was a very clever study. They were essentially, because it's hard to enroll a placebo controlled trial in this disease. And also you try to think about what's the right patient to select, what's the right duration. They had this clever idea of adding one of their NBD1 correctors on top of patients who inadequately responded to trikafta and to look at sweat chloride reduction as a pharmacodynamic biomarker. Since this has been super historically predictive for the Vertex drugs and for this disease, it's used as a diagnostic, it's used in newborn screening. So it's a pretty controversial biomarker. They had guided to hoping to see at least a 10 millimole change. And this is our work, not Siona's, but we had tried to do, we tried to kind of recreate what their PKPD modeling could look like ahead of that.
- [18:09]
A
Right.
- [18:10]
C
You know, try to figure out why did they guide to 10. And, you know, I think the answer was that the confidence interval suggested that 10 could potentially be conservative. Right. Depending again on the study population and things like that. So they didn't meet that bar and they didn't come close. They saw only a 1 millimole reduction far from stat segment stock was down 90%. The investor expectations were pretty high. I think people were even debating if 10 would have even been enough to move the stock, given how much higher expectations had been. And so, I mean, the question kind of like was, Tess was just talking about the question with this one is sort of is there a path forward? They think there could have been this potential drug, drug interaction with Trikafta. And so if patients were getting the Ciona drug and then the trikafta exposures were going down, I mean, that could, could easily erase a pharmacodynamic effect. But it's unclear if they're going to be able to look at this data set, which is only 14 patients, and find an unequivocal explanation. The other nuance is that the end game of this company was really never to develop a combo drug on top of trikafta. The end game was to develop their own combo therapy, but use this data from this TRIKAFTA study to be able to better understand and calibrate their PKPD modeling, which all stems back from, from this human bronchial epithelial cell assay, the CFHBE assay that Vertex had used for years, that SIONA had thought that they had kind of cracked the way Vertex does it from a predictiveness perspective. And I don't know if we'll ever really know 100% if it was the assay or something else, but that ultimately did not translate. And so tough situation for a really smart and good group of people. I think they're going to try to come back at some point in the not too distant future with a better explanation of what happened here. And, you know, maybe or maybe not a plan on trying to run another study. They have this other MBD1 corrector, they have these other molecules they could combine it with, but yeah, total bummer. And for this one, like, you know, this company as a stock was somewhat controversial. One because it's biotech. And two, because I think there's a debate on the street of just, hey, Vertex has set such a high bar, right? Like what, what, how much more do we really need? But the perception was this study was pretty likely to work. And so, you know, big unfortunate surprise on Monday this week.
- [20:24]
A
Yep. All right, well, let's move. There was a deal this week and again, what I've been encouraged by in the marketplace is these bolt on acquisitions and these, I'd call it half a billion to 3 billion acquisitions. And then you've got the kind of bigger acquisitions from the 5 to 15 billion. But we had one this week. Greg, you want to start and maybe Paul can comment on the acquisition by Jazz.
- [20:50]
D
Yeah, thanks so much. So Jazz Pharmaceuticals, which is an interesting company in that it's a diversified company focused on both neuro and oncology now, but they beefed up their epilepsy franchise efforts by buying a company called Aktio. It's a deal that's about, in total dollars, about 1.3 billion. It was 820 million upfront with an additional 500 million in regulatory and commercial related milestones. I like this deal for Jazz, which I don't cover. I used to cover it in the past, but I don't cover it now. But they are really beefing up their epilepsy franchise efforts. If you remember, they got big into this space by buying GW Pharma. That was, I think back in 2021, that might have been like a $7 billion deal for their drug Epidiolex, which was a very controversial drug at the time. But that being said, I think Epidiolex is like over a billion dollars in annual sales. So an incredibly very successful drug for Jazz. They've done some other deals in the epilepsy space that have given them a whole pipeline of epilepsy type drugs. And I think a lot of companies are now focused on rare epilepsies. And obviously you can get better pricing. But it's a deal that again, as Chris, you mentioned, you like seeing the big deals that garner the five plus billion kind of price tag. But you also like to see these smaller deals. Not that a billion three is necessarily a small deal, but that being said, I thought a very interesting deal for Jazz. It really helps them with this rare epilepsy efforts. Paula, do you want to add some more comments?
- [22:41]
C
Yeah, sure, I'll try, man. I mean, I thought this was a super interesting deal. I had met with Actio a number of times. I thought what they were Doing was super cool. They also have a Charcot Marie tooth program as well. I wanted to add maybe like a positive side and sort of a, I guess maybe a question just on this space. And that's really on the, on the positive side.
- [22:59]
A
Right.
- [23:00]
C
It's. It's really cool to see that we're getting this rise in targeted therapies in epilepsy. I mean, I think the concept of targeted genetically oriented therapy and neuroscience is like of theoretically very high interest. But then when you think about like Neuropsych or Alzheimer's, I mean, talk about something that's super, super hard to execute in practice, you know, with epilepsy. Right. Because the biology can potentially be a little bit simpler. Right. Some of these targeted therapies, like, you know, Stoke or things like that, like we're seeing like pretty, pretty great data. There's another private company too, that I'm drawing a blank on that has one that works for the NMDA pathway. I do think though, the challenging thing as an analyst with some of these companies has really to kind of been able to garner conviction on how prevalent some of these indications are. Right. Like, I remember with gw there were a lot of questions on how prevalent drive A actually is. And from covering GW, my perception is that Epidiolex is probably less than $100 million product in Dravet. Right. It's really everywhere else that that drug is used. A lot of it's kind of used just maybe more broadly in refractory epilepsy. And so for actio with the KCNT1 program, I mean, it's a super interesting, super interesting concept. Like, but you know, that is the question. Right. There's just usually not a lot of good literature in these. And so I love like the therapeutic thesis, but the market thesis is often a little bit trickier to diligence.
- [24:23]
A
Yeah. And I'll just highlight it wasn't on our list but because Ovid had to announce there was a newly formed company backed by perceptive advisors to develop Soticlostat, the Ovidrug. So they gave new life to that. But the other thing we see a common trend is raising financings off of positive data. Greg, There were a couple this week where large financings on the backs of phase two data.
- [24:54]
D
Yeah, I think there were a number of financings. I'm just going to talk about two smaller ones. I think they're in spaces that probably don't get as much attention as they probably should. The first I want to talk about is a Canadian company, but it is Listed on the NASDAQ, it's called AbCellera. They're much to my surprise, a $3.5 billion market cap company. But they announced positive phase two for menopausal symptoms or what's known as vaso vasomotor symptoms. And they were able to raise announce $175 million follow on offering which ultimately was upsized to 200 million. Again, you don't see a lot of biotechs playing in kind of the women's health space. I think the last drug that was approved is called Vioza, but we hadn't really seen innovation on that side. And I looked at this space in the 2000s when I was covering large cap pharma. There's a lot of antidepressants being used and so it's great to see that a biotech is leading the way with hopefully getting another therapy on the market. And then the other deal that I wanted to quickly mention was a company called Silence Therapeutics which is focused on Sirna. And they announced positive phase 2 data in a condition called polycythemia vera or PV. There aren't too many drugs approved here, I think. I don't know this space particularly well, but I think there's only two approved drugs. There is a drug that's being developed by Takeda in a collaboration with Protagonist that I think has a third quarter pdufa. I think Takeda is a bit, I don't want to say cagey about exact PDDFAs, but I think the guidance is a third quarter PDUFA that should be hopefully a newer entrant for this polycythemia vera market. But that being said, the data from Silence seemed at least on the face of it, pretty competitive, at least with the Takeda data. And again being able to announce off of that that they wanted to raise 150 million, then were able to upsize that to 175 million. I thought was just another a good positive sign for the health in the biotech sector.
- [27:13]
A
Absolutely, Tess. Revolution Medicine has been one of the big stories of the year. They announced the deal. Do you want to talk about that?
- [27:19]
B
Yes. So we have talked a lot about drugs from China coming into the US and this was a great example of a drug developed by an American company, Revolution Medicines, establishing a collaboration with B1 to bring their medicines to China market. So that was, I think pretty interesting. And what was quite interesting is that it wasn't just a deal about B1 being able to commercialize and develop. It was a mix of Derek's on Rasib. There was a Zolden Rasib, Eleron Rasib, as well as the G12V that they're developing. So pretty broad portfolio. And what's interesting is that in addition to the commercialization and development in Asia, they also established a clinical collaboration. And the clinical collaboration includes B1's PRMT5, also an EGFR Met trispecific that B1 has. So that's pretty interesting. I think we're just seeing with, you know, revolution medicine is a really smart strategy of like, you know, just trying to create like a, you know, a lot of really differentiated combinations with their portfolio. And this is another great example of that combined with, you know, market access to. Market access to certain markets in Asia. I didn't see any economics announced with this, so that kind of made me wonder, like, did, you know, presumably like B1 had to pay something for, you know, getting access to these medicines. But, you know, I, maybe, maybe that's kind of offset through the, you know, through the clinical development collaboration. So maybe we'll, we'll find out some more, you know, find out some more details later.
- [29:23]
A
Yeah. Tess, I'm just curious. When you have the value that Revmed has created and the stock currency and the cash, you know, oftentimes you expect companies just to be able to go alone and build out those operations. Do you think this was just a choice of, you know, it's going to be easier to partner on this than trying to, you know, build out that territory ourselves?
- [29:45]
B
Yeah, I think like, China commercialization is like, really hard. Right? Really hard. Need a lot of people. And so doing something that is, you know, focused there just to get that regional access definitely makes sense. It's like a very different market dynamic both in terms of, like, reimbursement and like, how do you get the right price on, you know, NRDL in order to get the right access? You know, you need, you know, you do typically need like a pretty large, you know, field force as well. So I think it's an area where like, yeah, could revmed, like, raise money to do that, like, no problem. Absolutely. Right. Because they hire, like really smart people to do it also. No problem. Right, but do they necessarily want to be focusing management time and attention there? Like, you know, maybe not. Yeah, so that's, that's obviously me, you know, hypothesizing. I haven't talked with them about that, but I do think it's a, you know, I do think it's a rational approach. And then it also makes me wonder, like, oh, okay, maybe like B1's like PRMT 5 is like awesome, right? Like really want to work with that. And they're like, oh, like, okay, cool. Like maybe you can have these China rights so we can access your drug. So again, like these are, you know, me speculating.
- [30:59]
A
Good trade off though.
- [31:00]
B
Yeah, exactly, exactly. But it's really interesting that like those two things, you know, those two things kind of came together and it wasn't like, you know, there was separate economics announced for each of them or something, you know, something like that. So it does make me wonder like which one of those came first, the PRMT 5 or like the China commercialization? Yep, yep, yep, yep.
- [31:19]
A
Well, we talked about some negative data readouts, but we've got some positive data readouts that we had this week. Paul, you want to start with Definium first?
- [31:29]
C
Yeah, sure. Thanks. So Definium is a psychedelics company developing their, their proprietary formulation LSD for depression and anxiety. They announced positive phase three data from their GAD study, Generalized Anxiety disorder study that succeeded with a very large effect size. And I think there's just a couple quick things that were notable about this study versus all the supportive data we've seen for this company. And also just across the psychedelic space, the first one that continues to just amaze me. And you know, I, I wish we even had a better idea beyond the high level explanation of what's happening biologically here. I mean, Diphenium ran a study for 12 weeks that was placebo controlled. And at 12 weeks, right, dosing is day one, the effect size is still really big. Right. Which is just kind of unbelievable, you know, I mean, I think we've talked about how psychedelics seem to have this plastic, you know, at least temporary, but temporary for quite a bit of time, rewiring effect in the brain. And just to see that in a placebo controlled study, 12 weeks, right, where I think the diphenium data is supporting once quarterly, if not less frequent dosing, I think that's really compelling. And even as people are kind of jaded to it still sort of blows me away. I thought the other interesting thing about this trial, and it sort of gets at maybe a nuance that FDA I think is going to be thinking about in this space as the indications broaden is that Dafinium went a long way in this study to try to find patients with significant anxiety symptoms but without comorbid depression. And that's not easy. Right, because you know, when you think about a psychedelics trial, you generally think about patients with any sort of psychiatric ailment that are at the more severe end of the spectrum.
- [33:17]
A
Right.
- [33:17]
C
To come into a study for something like this. And if you have severe anxiety, significant depression is very common. And so to find patients with a much lower baseline depressive burden and still show such a big effect size. Right. You've kind of de. Enriched your population a little bit to have a significant response. I just thought that was really cool, you know, and I think what's interesting here is it feels to me like reading the subtext, like the FDA now has seen enough data across psychedelics trials that, you know, they sort of know many of these drugs work for depression. But if you're going to be pursuing indications beyond depression, they want to get at the question of pseudospecificity, essentially making sure you're not, you know, by improving depressive symptoms, improving all of these other things as an indirect byproduct. The psych division has been pretty sensitive to things like that. In schizophrenia, you can't get a benefit on your label for cognition if it's in an acutely psychotic population. You have to study it independently. And so, I mean, definium now has. They have three positive large placebo controlled studies, two in anxiety, one in depression. They've kind of proved an independent benefit on both. And now they've got one more anxiety phase three. But they could be looking at an approved product in the not so distant future.
- [34:31]
A
Well, the psychedelic space come a long way. I mean, you know, Greg mentioned jazz acquiring GW back then. And then when you look at, you know, the recent acquisition of Ty Beckley, this data set, I think, you know, across different analogs in the psychedelic space really shows that this marketplace is here to stay.
- [34:50]
C
Well, Greg, you know, Greg, were you. Greg, were you at AbbVie when GW was acquired or were you back on the street?
- [34:57]
D
I was back on the street. I was back on the street when that transaction happened.
- [35:02]
C
Because I was just curious, like, you probably have a perspective from like your industry role, but, you know, you referenced the GW drug is controversial. And I do think, like on the M and A side, right, there had been reporting around that company that there wasn't like a very long list of buyers. Right. And I feel like a part of the reason was just the perception around cbd. I mean, you think about that now with Lily, right, the big dog buying 5 Meo DMT. It's kind of hilarious to think about reticence around CBD 5 years ago.
- [35:33]
D
I think I remember that time. I think I was covering jazz when that deal happened. And I think the feedback from investors was, yeah, the data were very good for Epidiolex and I think they thought that it could be a very successful drug. But there weren't many acquirers where this would fit in the mold. And it could only be someone like Jaz, who for those who know Jaz has been a very successful company, took the orphan drug pricing model, I think to new heights with there's Irem drug for narcolepsy. But with that said, Jazz was looking for. They'd been looking for CNS assets for a while and this was the largest deal that they did. But it was going to require a combination of I guess two players that were a bit off the beaten path. And fast forward to where we are today. Now we're talking about psychedelics, but again with Gilgamesh getting acquired by Abbvie or now you're seeing Lilly buying Atai Beckley. It does take some time, but I think the time is now.
- [36:47]
A
Yeah, we've come a long way in a few short years. I just wanted to highlight real quick, we had another phase three lung cancer readout. Lung cancer has been pretty elusive and a lot of failures in the space. But Cullinan, which has a collaboration with Taiho, which I think was an original Taiho drug that they reacquired co development and commercialization rights for, they already had a second line readout that they have filed. The PDUFA date is in February. They've now got a first line study that just read out this week that was also positive. And this is in a very interesting space. JJ has their combo products in this space that are on track to do over a billion this year. The AZ has some competitive product coming. So just something to watch as we expect a PDUFA data approval potentially in February of next year. And Tess Moonlake had phase three data readout as well. You want to talk about that?
- [37:45]
B
Moonlight announced data for their. They announced data for their IL17 that I think was an important part of the thesis for Moon, for the company, for many people. And they were studying this in psoriatic arthritis and the bar there was really bimakizumab. And I think what everyone was looking for was, hey, is this going to be potentially better than bimkizumab? And I think the PR highlighted positive results in the bionaive patients and the ACR 50, 20, pazi 90 that all looked good. And I think the stock reaction, the stock was down after those data was pretty indicative of, hey, interesting, but how is this going to compete? How is this going to compete against bimakizumab. And I think kind of shows just some of the challenges commercially where that differentiation for any follow on drug really becomes, is really a critical emphasis. And sometimes we've seen things where there's disappointment after clinical data because everyone was excited about the potential for differentiation and then the company gets closer to launch and everyone's like, oh yeah, but they could still sell, right? Like there'll still be a market for this. And you know, then you know, people can often kind of identify some, you know, patient population or you know, commercial strategy that can be a fit and you know, can, can make, you know, can still make the commercialization, you know, really worthwhile. So it'll be interesting to see, you know, how, how Moonlake ends up driving the positioning, the positioning for this asset.
- [39:55]
A
Great. We also had another kind of readout, safety readout from Neurocrine which was the product that they acquired with the Celino acquisition where seven deaths were reported in this indication. Prader Willi syndrome. Greg and Paul, I think both have followed this. Greg, you wanna start on the neurocrine, what was the, the data release there?
- [40:22]
D
Yeah, so I'll just introduce the news and since I don't cover Neurocrine, but Paul does, he'll go into much bigger detail. But this was an interesting development because the news of new safety issues or safety issues for Vicat xr which is approved for Prader Willi Syndrome actually did not come directly first, I believe it didn't come from Neurocrine, actually came from the foundation for Prader Willi Research. So it was basically a communication by, let's call it a patient based organization or a research based organization where they just put out basically what they call clinician recommendations for real world use and monitoring of side effects. And I think importantly the message is really about this is an important new medication to treat the specific symptom of hyperphagia which for those who don't know what Prader Willi is, it's just a genetic mutation which unfortunately creates this insatiable hunger and it impacts particularly children. And with that said, this was really kind of a clinical perspective around kind of how to use this drug. But it did identify seven deaths which I don't think previously had been appreciated. And of course this is heartbreaking for patients who hope for a new treatment that can hopefully change their lives. But I don't think what the foundation for Prader Willi research was trying to do necessarily was to say this is a problem. We need to get this drug pulled off the market. I think it was really just more of a, let's call it a psa. But obviously it raised alarms both in the community but also amongst investors. So with that I'll turn it over to, to Paul for his further comments.
- [42:22]
C
No thanks, Greg. I mean I think from the neurocrine stock perspective, right. They bought Solano. Can't say it was at a distressed price. Right. But not close to Solano's all time stock high. And that is in large part because there had been reports of stuff like this dating back to a year ago, albeit they weren't from as credible as a source as the Prader Willey Foundation. And there was also a stat news article from Adam Feuerstein about all of this. You know, I think just for again like I'm not trying to be, be insensitive to the greater issue here, but from like a neurocrine stock perspective, you know, they bought Soleno for not like a huge value sort of relative to what the drug was already selling.
- [43:06]
B
Right.
- [43:06]
C
I think the deal was a little bit less than, than 3 billion and Selena was already a profitable company on a standalone basis. So I kind of think like the investor expectations here for this drug aren't, aren't huge. Right. I mean it's, it's going to do close to 400 million this year. I think the hope is can it get to 5 to 600, it's profitable for neurocrine, still feels like this disease is severe enough that there's going to be demand to try it. Even if it sounds like people clearly have to be careful. And look from my perspective, the clinical data on efficacy for this drug is not overwhelmingly convincing. The most positive study is a randomized withdrawal trial and those trials tend to I think be better enriched for a larger effect size. So I think for neurocrine, like as a stock and as a company, certainly if this is just the beginning of a lot more noise around this, it becomes I think a bigger problem and maybe a greater question around was this the right deal? But given that we already had some of this noise before, given the unmet need, my perspective is it's still going to be like a viable commercial product that can probably grow at least some from here for them.
- [44:17]
A
Yeah. And presumably right. That that rumor was out there from the short thesis and that that would have been part of their, you know, due diligence.
- [44:24]
C
Right, Exactly.
- [44:26]
A
Deeper on that. And it's always interesting to watch. I mean just even thinking about like Sarepta's gene therapy when the deaths came out that there's always a trade off, a risk benefit that every patient family has to go through. It's always interesting to see there may be those who are aware of these risks and still feel the risk benefit is justified. So it's just interesting to see how these death reports ultimately play out in the market similarly. So Amgen had a drug, Tavnios where it was pulled by the EMA this past week. And this followed the FDA really urging Amgen to pull the drug from the US market of which Amgen initially really pushed against and said and defended the drug's risk benefit profile. But now with EMA pulling that same drug, it does call into question if that puts pressure on Amgen to pull the drug from the U.S. now this was interesting. I didn't really follow this story too closely but apparently Chemocentrix, which amgen acquired in 2022, it was discovered that they really provided incorrect and misleading pivotal data in their filing. Right. And so what this was uncovered to be was there was a unblinding by selected members of the chemo centrics team and they realized that it was going to miss the P value and then they re adjudicated, I think it was nine patients. And by classifying them essentially as responders, the P value was positive and that enabled the drug to be filed and approved under that statistical significance. So I don't know all the details on that, but I'm just reading what has been reported in the press. So it just doesn't look good for our industry in general that this kind of stuff goes on. And you know, Amgen pushing back against the FDA initially and now EMA acts but it really, it's kind of raising the bigger question. You know this happens a lot. I just think of like when GBT sold to Pfizer and Pfizer ends up pulling the market. You know, whether that was right by Pfizer or not, that was their decision to voluntarily pull the GPT drug. But you know, we see this a lot where there's shoes that drop post acquisition, often with multibillion dollar acquisition prices. And just curious if anybody has any comments on that. And like, like I tell you, the biotech that's selling looks brilliant and this is putting aside the fraud or misleading, unethical behavior. But just, I don't know, how do you guys look at that when you see these billion dollar, we celebrate them when they're announced and then you see some shoe drops after the fact and maybe Paul, you mentioned that neurocrine should have been aware of this and probably was part of their due diligence. But any comments about this? Cause it, it's not an infrequent occurrence. Anyone?
- [47:34]
D
I think I'll just say it's. I mean it's a capitalist system that we work in. You obviously want to have honesty and transparency in transactions whether it's in biotech or not. Within biotech it could be real estate. But I have not been following the this story closely. I don't have kind of skin in the game as to who did what. And with that said, I mean it does I think create a little bit of a black eye for the industry when these things happen. But I think by and large these tend to happen in a small minority of cases versus more generally speaking. I guess that's all I'll add on this.
- [48:22]
A
Yeah, I think that's fair. Look, I think for any company, we meet with companies trying to raise money all the time and you have to dig deep in due diligence to make sure that we know that they always put their best foot forward. But we do expect them not to hide or have any kind of misleading data in data rooms, et cetera. But I think it does fall, it is incumbent on the acquirer to make sure that they're digging into that due diligence. And most pharma companies, large biotech, it can be a laborious task to get through their 50 people who might be involved in a multibillion dollar acquisition. So at the end of the day you have to put the onus on them to make sure that they've checked every box and really assess the risks short of anybody being fraudulent in what they present. Paul, were you going to mention anything?
- [49:17]
C
No, sorry. I think you guys got it. Makes sense.
- [49:20]
A
There were two company news events that you followed this week. Belief Bio and Axon.
- [49:25]
D
Yeah, thanks so much. Yeah, I just wanted to mention news flow. Out of two companies that I follow closely, one came from belightbio publicly traded company remarkably has been a darling of a success story over the past several years. For those of you who don't know Be Light Bio, they are a company that is based on the west coast. They have been working on developing therapies for ophthalmology diseases and with that in mind, they have a drug that in news that happened this week. The drug is called Tenleraban. It is being developed for a rare orphan retinal disease called Stargardt Diseases. And with that said there's about 40,000 patients in the U.S. so the EPI data would suggest, but they got their new drug application accepted by the fda. This is following very positive phase three data. I'll remind everyone there are no currently approved drugs for Stargardt disease, which is ultimately blinding and does affect patients as young as when they're in their teenage years or even younger. But with that said, they did get a priority review. They had breakthrough designation, orphan drug designation, had all of the bells and whistles that you would get from, hopefully get from the FDA. So we now have an official PDUFA assigned. That date is February 12th of 2027. So hopefully we could have a new drug approved for the very first time for Pat patients with Stargardt disease. It is caused by a genetic mutation. Interestingly, this drug does not work on correcting that mutation. But there are companies working from a gene therapy perspective. But with that said, it's almost like a DMD story, as I understand it, where like the gene that you would want to kind of fix and put into a gene therapy is a bit too large. So you're going to need some kind of second or third generation attempts at gene therapy to be able to try to tackle it from a genetic perspective. But with that said, there's nothing else out there. This is an oral drug and we do look forward to hopefully getting that approval. But I do think the timing is interesting because last week another company that I follow called Tarsus Pharmaceuticals, this is a company that historically has been just focused on what we call front of the eye diseases. They have a drug on the market called xdemvi. It is one that is an eye drop that treats a condition called Demodex blepharitis, which is caused by eye mites, microscopic eye mites that I guess live on your eyelashes. But you may have seen commercials on TV or on social media. The DTC campaign is quite robust. And they've, they've been able to grow. This is Tarsus. They've been able to grow XDEMVI to be the guidance was raised on their earnings call last week from 670 million to 700 million this year to now 685 million to 705 million. So the drug is doing well. But they did announce an acquisition of BelightBio's biggest rival, which is a company called Alkias Pharmaceuticals. It's a private company. And with that said, they are working on a very similar drug called Gildoretinol, which works in a somewhat similar mechanism of action. And they are in phase three, their ongoing phase three study, I think is called North Star. They won't get Data until the second half of 2029. So it does create I think some interesting questions for Tarsus as I think about enrolling this phase three North Star study. Because I think the study is going to be somewhat in the neighborhood of about 250 patients. It did recently open up for enrollment but you could have a situation where patients with Stargardt disease are faced with the option of either going into a trial or just getting the drug which is already approved. So I think it'll be an interesting dynamic going forward between Belightbio and now Tarsus Pharmaceuticals which just bought Alkyus. That was about $800 million for that acquisition. And then just very quickly on Axome Therapeut which I cover, they reported results second quarter results Monday. The investor focuses on an antidepressant which has done very well at drug that's called Ovelity. That drug was approved several years ago for depression but it just got approved more recently to treat Alzheimer's disease related agitation. And all eyes are focused on the launch and how that drug is going. There's a lot of sampling. A lot of these patients are Medicare patients because they're older patients. You know they're being treated in Alzheimer's care facilities or long term care facilities. So people are trying to look at the prescription data. It's very hard to basically in my opinion try to directly get a read from what's available through IQV or Bloomberg. But that being said, management comments were very positive. They did say like new to brand prescriptions which is a patient getting a drug for the first time in the 65 year old and older segment are up 126%. So we'll continue to monitor this launch very closely. But so far so good for Axome with its launch for ability and Alzheimer's agitation. I'll turn it back to you.
- [55:15]
A
Yeah, good stuff. Yeah. And also it's nice to see again a diversity and an expansion of the potential acquirers. So even though Tarsus I think is a few billion dollars acquiring Alkyl again it's nice to see these acquisitions happening with not just the large pharma companies out there. For all the private and public companies out there. I wanted to end with Tess, your boss Peter Kalchinsky who's been very vocal about the non protectionist stance and you and he has written white papers about this. There was an interesting debate that Endpoints hosted that I would encourage everybody, it's free online to watch but it was Peter Kalchinsky head of ra. They had a Fiona Marshall from a multinational or Europe based pharma company and then Jason Kelly, who's the CEO of Ginkgo Bioworks. So we had kind of a diverse panel, had very different opinions about this, but Binsa was reestablished. So adding biotech to biosecurity from the Coins act is reigniting this China debate. And what level of, you know, quote, protectionism that we're seeing out there. But would love to hear your thoughts. Tess. We know you know, Ari's position on this. I believe that is the right kind of stance. But you want to share what transpired in that, in that debate?
- [56:34]
B
Absolutely. I mean, I thought it was wonderful that Endpoints did this. So this was Drew, who's one of their editors and you know, I love that, that he just was like, can we just talk about this? And like, let's actually have a real conversation that's like, you know, multiple sides of the debate. So he set it up really nicely. You know, Fiona Marshall was kind of there. She's like a professor at MIT that does a lot of national security, you know, national security work, like really across sectors. Like, you know, biotech is actually more new for her. She said she's like more focused on drones and like other technologies these days. But you know, she was there to really, you know, fact check and kind of provide like the, you know, the, the national security kind of like cross sector lens. You know, obviously, you know, Peter and Jason, being people who are within biotech, have very different perspectives on how to, you know, how to compete with China and how much that, you know, competition should include various protectionist measures. And you know, it was a good, it was a good, like, good discussion, right? Like lots of just disagreements and like, you know, important disagreements to kind of get out. And I thought Fiona did like a really nice job, you know, kind of highlighting how, you know, the current legislation that's being proposed. You know, I think, I think the bottom line, that kind of the debate, the debate came to that I think both Fiona and Drew did a really nice job. Job summarizing was like, look like, you know, there's, there's, there's, there's reasonable and valid like concerns around US competitiveness in biotech. Right. So like, let's like take that really seriously. But you know, is, you know, this a broad based ban? Like that's probably not the right legislative approach. Right. And like that would also take a lot of coordination, you know, for that ban to kind of like be effective. Like one of the big parts points of debate. You know, where Peter was, was really pushing. Jason was on this, like, how do you enact this ban? Because, you know, Jason was saying, like, look, well, the FDA can ban. Like, you know, this. We've talked about this Euro washing thing. We're like, well, can Europeans just, like, get China drugs and, like, bring them over to the US and you know, Jason was like, well, like, the FDA could ban, like, even that. Right? It could just be like something that, like, you discover in China.
- [58:51]
A
But, like, basically, Peter, count him on the details, right? Yeah, yeah. You're not providing the details. I have to applaud Peter. I think a lot of people would have expected him. He doesn't suffer fools gladly, so people were expecting him to lose his cool more quickly. And he was very restrained, in my opinion. And he, you know, and I kind of just let Jason talk and it kind of helped the argument that he was trying to make.
- [59:14]
B
Yeah, it totally did.
- [59:15]
A
Yeah. Yeah, yeah. So anyway, well, we're at the top of the hour. Hey, thanks for all of our co hosts. We appreciate. Hope you enjoyed this session of biotech.