Biotech Beat NVIDIA in 2025. Can It Do It Again?

Summary

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Motley Fool Money

Episode: Biotech Beat NVIDIA in 2025. Can It Do It Again?
Date: February 2, 2026
Host: Tim Byers
Guests: Carl Thiel, Tom King

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Episode Overview

This episode dives into the recent surge in biotech stocks, how the sector unexpectedly outperformed tech darling NVIDIA in 2025, and whether this momentum can hold through 2026. The panel discusses industry headwinds—most notably, regulatory uncertainty at the FDA—before moving into detailed earnings predictions for Eli Lilly, Novo Nordisk, and Twist Bioscience. The conversation is candid, rich with market context, and sprinkled with expert insights for long-term investors with an eye on biotech.

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Key Discussion Points and Insights

1. The Biotech Boom: Outperforming NVIDIA (00:30–01:46)

• 2025 was a banner year for biotech:
  • Carl Thiel notes the XBI (S&P Biotech ETF) outperformed NVIDIA after "a very, very long, bleak period."
  • Despite the optimism, Thiel issues a caution: “There’s a few alarm bells or a few flags out there that I think are interesting and that people need to be aware of.” (01:26, Carl Thiel)

2. FDA Uncertainty and Its Market Impact (01:46–09:22)

Regulatory Turbulence at the FDA

• Leadership Turnover and Regulatory Chaos:
  • The FDA saw an unusual amount of change—“one of five people who headed up the main drug approval division just in 2025.”
  • Richard Pazdor, ex-head of the oncology division, warns at a recent J.P. Morgan conference that “the firewall between political appointees and drug reviewers has been breached... the pharma industry is continuing to underestimate the damage that’s already been done.” (02:10, paraphrased from Carl Thiel)
  • Confusing regulatory signals risk both longer approval times and inconsistent outcomes for biotech firms.

Balancing Quick Approvals with Safety

• Attempts to Modernize the FDA:
  • “...Martin Curry, the current commissioner... has been very, very forward looking about how he wants to speed approvals... including a plausible mechanism pathway... where the agency could approve drugs based on limited clinical data, basically if the biology makes sense.” (04:00, Carl Thiel)
  • Despite this, investors face mixed signals; in some instances, the bar for approvals in rare disease is increasing, not lessening.

Real-World Examples of Regulatory Contradiction

• Case of Regenex Bio and Hunter Syndrome:
  • Regenerative medicine and gene therapies have faced sudden setbacks—e.g., FDA halted approval of a Regenex Bio drug after a benign tumor appeared in a related trial, even though the drugs used slightly different vectors.
  • “...it seems to contradict what FDA had been saying previously, which is that they were going to be more tolerant of these fatal rare diseases. And that's not what we’re seeing.” (07:23, Carl Thiel)

Implications for Investors

• Adjusting the Investment Lens:
  • Extra risk is required around gene/cell therapy investments: “You have to maybe build in extra timelines for more questions for things being delayed and stuff like that.” (08:44, Carl Thiel)
  • Tom King adds, “We've seen the current skepticism around vaccines and MRNA based therapies... you just got to factor that into your risks.” (09:30, Tom King)

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3. Biotech Earnings Predictions (11:03–20:57)

Eli Lilly (LLY): The Weight Loss Juggernaut (11:03–13:46)

• Consensus: Both Tom and Carl predict a “beat” for LLY’s earnings.
• Key driver: Blockbuster GLP-1 weight loss drugs—“These GLP1 drugs, they are biotech drugs and they are in the driver’s seat right now.” (12:39, Carl Thiel)
• Risks: The removal of Tirzepatide from the CVS formulary, which could shift patients to competitors, is noted as a potential—but likely manageable—headwind.

Novo Nordisk (NVO): In Transition (13:46–17:03)

• Earnings Outlook: Tom sees a “miss” as slightly more likely, given company struggles; Carl is looking for a “meet” or modest “beat.”
• Dividend prospects: Both agree the odds of a dividend this quarter are low, given a new CEO’s focus on acquisitions and a desire to conserve cash.
• Key theme: Focus is on the oral WeGovy launch, with Carl noting, “Oral wegovy numbers have been strong.” (16:06, Carl Thiel)

Twist Bioscience (TWST): Solid Execution in a Tough Market (17:03–20:18)

• Quarterly Results: $104M in revenue—exactly as previewed, and part of a strong, consistent upward trend.
• Business model: Twist “makes DNA for other people”—mostly supporting researchers and other biotechs, making it less directly exposed to FDA volatility.
• Resilience: Despite the “biotech winter,” revenue has grown by ~$60M per year, cash burn is decreasing, and profitability is getting closer.
• Valuation perspective: Shares swung from a 111x revenue multiple during the 2020–21 craze down to 3x in 2023; now sits at a reasonable 7x revenue.
• Carl’s take: “Tremendous technology. It's a great, great beat and raise quarter.” (20:39, Carl Thiel)

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4. Notable Quotes & Memorable Moments

• On FDA turbulence: “The firewall between political appointees and drug reviewers has been breached... the pharma industry is continuing to underestimate the damage that’s already been done.” (02:10–02:40, Carl Thiel relaying Richard Pazdor)
• Practical investing advice: “You have to maybe build in extra timelines for more questions for things being delayed and stuff like that.” (08:44, Carl Thiel)
• About biotech’s new status: “I love that you’re referring to Lilly as a biotech company. That’s such a victory for biotech. This is like a century-old big pharma company.” (12:39, Carl Thiel)
• Valuation lesson from Twist Bioscience: “It traded at an eye watering 111 times revenue multiple. It subsequently reached a low of 3 times revenue in May of 2023... Now it’s at a more reasonable seven times.” (19:12, Tom King)

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Timestamps for Important Segments

• Biotech Outperforms NVIDIA, 2025 market recap: 00:59–01:46
• FDA upheaval and Richard Pazdor’s warning: 01:46–04:00
• Contradictory FDA signals & gene therapy case studies: 06:03–08:44
• Guidance for biotech investors (risk narrative): 08:44–09:51
• Earnings Predictions — Eli Lilly: 11:03–13:46
• Earnings Predictions — Novo Nordisk: 13:46–17:03
• Earnings Recap — Twist Bioscience: 17:03–20:18
• Exposure to FDA risk for DNA tools companies: 20:18–20:57

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Panel Tone

Engaged, expert, and pragmatic—offering actionable insights, industry anecdotes, and a healthy dose of caution amidst enthusiasm for biotech’s renewed momentum.

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Final Takeaways

• Biotech’s historic outperformance vs. NVIDIA in 2025 has emboldened the sector but major regulatory headwinds remain, especially in gene and cell therapy fields.
• Investors should add a risk and timeline premium for early-stage biotech, particularly those in complex, fast-moving regulatory categories.
• Mature, diversified players like Eli Lilly may continue to thrive via blockbusters; others like Novo Nordisk face more challenges but have strategic levers, like new drug launches or M&A.
• Enablers like Twist Bioscience, serving the broader research ecosystem, show signs of resilience regardless of FDA swings.

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Want more insights? Tune in tomorrow for a dive into AI and gaming innovations on the next Motley Fool Money.

Transcript

[Tom King]

Foreign.

[Tim Byers]

Getting unfairly ignored. You're listening to Motley Fool Money. Welcome, fools. I'm your host, Tim Byers, and with me are two of my longtime rule breakers teammates, Carl Thiel and Tom King. Thanks for being here, guys.

[Carl Thiel]

Yeah, it's great to be here.

[Tom King]

Good to be here.

[Tim Byers]

We're going to preview some biotech earnings. We're also going to check in on one that reported this morning. And we're going to paint a picture of an industry that probably deserves a little bit more love, a little bit more attention. So get your coffee ready because it's biotech time. Let's talk about biotech approvals, Carl, and what's going on at the fda, because it does seem as though things are a little bit, let's call it turbulent.

[Carl Thiel]

Let me just paint a little quick background here, which is that 2025 was an absolutely tremendous year for the industry. I don't know if many people realize this, but biotech as a whole, the XBI, for instance, outperformed Nvidia in 2025. It was a very strong year after a very, very long, bleak period. And so I do think there's actually a lot of enthusiasm continuing into 2026. But I don't know what it is about me, Tim. I got cold water on stuff. I just want to sound, you know, there's, there's a few alarm bells or a few flags out there that I think, you know, are interesting and that people need to be aware of. And one of them is the sort of continuing chaos, I guess, that we're seeing at FDA for, for want of a better word.

[Tim Byers]

Well, and it does seem as though there is a, there was a warning from one of a former senior executive here. I think this, this man's name is Richard Pazdor, who is the former longtime head of the, the oncology division. I've often heard you talk about the J.P. morgan conference, Carl, that how important it is to the biotech industry, but sounds like he had some spicy things to say at that conference.

[Carl Thiel]

Yeah, he did. And this is, this is just a couple weeks ago in, in January, mid January. I mean, he's not, he wasn't just the head of oncology. He is one of five people who headed up Cedar, the main drug approval division. So kind, you know, extremely senior position at FDA. One of five people who did that during 2025 because there was so much turnover in the, in the role. And you know, one of the things that he told the big pharma people at the conference was that he was worried that the Firewall of, between political appointees and drug reviewers has been breached is, was, was his quote and that the pharma industry is continuing to underestimate the damage that's already been done. Now you know, you can certainly dismiss that as the thoughts of a long serving bureaucrat who doesn't like, like the changes that he's seen at the industry. But you know what he called chaos. And whether that's the results of just turnover or politics or anything else going on, it does seem to describe some of the seemingly contradictory approaches that we've been seeing to regulation recently.

[Tim Byers]

I mean, what's interesting here is that, and especially when you say that it makes me wonder that some of the companies we would look at for the biotech side of the scorecard and rule breakers that are dependent upon the FDA for fast approvals of promising drugs that are in clinical trials and then suddenly there's a bit of maybe some extra risk here. So can you talk me through when he's talking about that, is he talking about longer approval cycles? Is he talking about inconsistent approvals? What's the risk for companies that we follow?

[Carl Thiel]

We can think about it as just trying to read the tea leaves on how the agency is going to, is going to regard various submissions. Right. And I think one area, so, so I think you have these two different sort of themes going and one is that that under Martin Curry, the current commissioner of fda, he has been very, very forward looking about how he wants to speed approvals, how he wants to make this easier for industry and something that industry is super enthusiastic about. And so that includes everything from, you know, there's, there's been talk about doing less animal testing, there's been talking about having easier standards for rare diseases where you can basically get on the market for, with a single study as long as you have some confirmatory evidence which would, would make that faster and easier. There's been talk about a, a quote, plausible mechanism pathway basically where, where the agency could approve drugs based on limited clinical data, basically if the biology makes sense. So you, it's like if you have a disease that's marked by an enzyme deficiency and you give them the enzyme, that kind of makes sense that that would work. So you know that when you have that kind of plausible mechanism, you can take basically less data to support it. These are all things that industry is super excited about. The thing is there's sort of an operating reality on the ground that seems to be coming out differently than that. And that's, that's where I think there's A lot of confusion right now is because in some ways the FDA actually seems to be raising the bar on rare disease rather than lowering it. And we've seen that come out in a few different ways.

[Tim Byers]

Well, let's talk about those. Like, I would love a couple of examples here of where this is, because what we want to understand as investors is do we need to be more careful about the types of biotech companies we're looking at here? Because what we thought would be a reasonable approval cycle is no longer. So what, what are some examples of what we're seeing in the industry right now?

[Carl Thiel]

Yeah, so I, and you said what types, what types of products or what types of approvals? And I think that's, that's a very good point right there. A lot of controversy seems to come particularly around things that go through the, the sort of the, the cber, the biologics division, the SO gene therapies and cell therapies. Things in that space seem to be particularly unpredictable right now. And so we just saw that this past week a company called Regenex Bio was expecting approval of a drug on February 8 for a disease called Hunter Syndrome. That's almost certainly not going to happen now. And what's interesting is that it's because a different drug, a different gene therapy had a, a complication come up in clinical trials that basically they found a tumor that had developed in somebody that had been treated with the drug four years ago. And so they put it on clinical hold to investigate that further. Now that's, and I want to point out these, these are bad, fatal diseases. Right. So you, you have some, there, there's some tolerance for, for side effects and bad outcomes and stuff with therapies. When you're addressing a fatal, rare genetic.

[Tim Byers]

Sure.

[Carl Thiel]

And so this was a benign tumor, but a tumor nonetheless. It developed in. Somebody had been treating four years earlier. Unclear if it's related to the, the gene therapy itself, but certainly a red flag. And, and putting it on hold to investigate that is. Is called for. That's the, that's the right call. What's weird is that they put another drug that is just about to get approval supposedly on hold because it's similar. There was no evidence of problems in that it uses a somewhat different vector. I mean, all these things use slightly different vectors, even if they're all technically in the same class. It seems to contradict what FDA had been saying previously, which is that they were going to be more tolerant of these fatal rare diseases. And that's not what we're seeing last.

[Tim Byers]

Point on this or last question, I guess I should say before we move on to our next section here, but does this make you raise the bar for what we would consider a reasonable biotech investment and say, like rule breakers, do we need a bit more development like a biotech company that's more mature before they make it to the scorecard, or does this really not change anything?

[Carl Thiel]

I think that you have to realistically put extra risk around anything in the gene therapy, cell therapy space. Okay. You know, I mean, we're just seeing that we've seen it too many times at this point to not recognize that. I still think there are some really, really interesting possibilities in that space. But you, you know, you have to maybe build in extra timelines for more questions for things being delayed and stuff like that. Unfor. On the other hand, you know, we may finally start to see some things get sped up and we can talk about that a little bit maybe in our next segment.

[Tim Byers]

Okay, Tom, any, any thoughts on this? Does it, does it make you more or less interested in, in biotechs to bring to, to the scorecard?

[Tom King]

You know, I think Carl said it pretty well. I think we've seen the current skepticism around vaccines and MRNA based therapies. So that I think Carl put it pretty well. You just got to factor that into your risks when you consider the sector and those particular subsectors within the biotech industry.

[Tim Byers]

All right, still like biotech, maybe lengthen your timeline for how long you're going to stay invested in these companies. Up next, we're going to do some biotech earnings predictions. Stay tuned. You're listening to Motley Fool Money.

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[Tim Byers]

With Carl Thiel and Tom King. I'm Tim Byers and let's start with some earnings predictions here. We've got some big names that are reporting this week, guys, and I'm going to start with Eli Lilly Ticker lly and I'll give you some of the background on this. This is a, this is a big company and they have like for, for some others. We're going to get into another one here but weight loss drugs, oh boy. That has been a big driver for, for Lily. Earnings per share consensus estimate a range of $6.99 to $7.86. The consensus estimate is $7.48. Revenue of 17.85 billion roughly. I mean this is over 30% relative earnings growth year over year. So big numbers here. Tom, I'll start with you. Are you expecting a beat, a raise or a mission for Eli Lilly in its upcoming quarter here? They're going to report I believe on the 4th. So Wednesday this week, what do you think?

[Tom King]

I'm going to go with the beat because I think that guidance is always arranged so that it's possible, easy to, more likely to beat. So that would be my guess.

[Tim Byers]

Yeah. So low bar, set the low bar and leap over it. Carl, when you look at the Lilly business, I assume it's way, way bigger than just weight loss drugs. But is this still like, is this the weight loss trade? Is that what Lily is?

[Carl Thiel]

Yeah, it effectively is. And first of all, I just have to say, by the way, I love that you're, you're referring to Lily as a biotech company. That's such a victory for biotech. This is like a century old big pharma company. Yeah, but it's true. I mean it's like, like these GLP1 drugs, they are biotech drugs and they are, they are in the driver's seat right now. Yeah, I would put, I would put Lily down for a beat. I think they've beaten in last three or four quarters. I think they're, they're in a super strong position right now. The only thing that could they probably a decent candidate to raise to the only sort of question mark right now is that CVS pharmacies took Tirzepatide, which is the active ingredient in both Zepbound and Mounjaro. They took that off their formulary last summer and you saw, you saw a little bit of a ripple of it in the third quarter. But this fourth quarter is when we're really going to see if that makes a difference or not that, because there were some people switching over to semaglutide after that happened and that could have some impact, but I, I think they'll be able to drown that out.

[Tim Byers]

Okay, fair enough. So we've got two, two beats for Eli Lilly. Moving on. We're going to move on to Novo Nordisk, another one. I think that's in the, you know, the weight loss trade, for lack of a better, a better term here. Ticker NVO. They are also reporting on Wednesday the 4th. So Tom will come back to you and give you some numbers here. So the earnings per share expectations are between 89 and 90 cents a share. That's versus 91 cents in Q4 of last year. So flat to slightly down. Revenue of 11.96 billion. And there is the possibility of a dividend coming into this quarter. So what do you think? Beat, raise or miss? And I will ask you, what do you put the odds for a dividend from Novo Nordisk coming into this quarter? Do you have any thoughts on the odds?

[Tom King]

Well, in terms of the possibility of a miss, I would probably put that a little bit higher than for Eli Lilly. Novo Nordisk has been on the back for a little bit the last couple years. They've got a new CEO. Things haven't been, they've been having some struggles with various things. So just for that reason, I would rank the possibility of them as slightly higher. And the same sort of logic applies to the initiation of that dividend. I'm guessing that in a time of uncertainty for them, they'd rather hang on to the cash. So I would say that's probably unlikely, but there may well be more to it than that.

[Tim Byers]

So less than 50% is what I hear you saying.

[Tom King]

Yeah, sure.

[Carl Thiel]

Yeah.

[Tim Byers]

Okay, Carl. To beat, raise or miss. And I'll put the dividend question to you this way. Given that Novo Nordisk has been a little shakier, as Tom points out. Is the dividend what you do to stabilize things amongst the investors or is it like, let's conserve the cash and go again?

[Carl Thiel]

I think it's, it's. I think they would frame it a little bit differently. They have a new CEO, the first non Danish CEO in their company's history, who's already signaled that he's going to go big on acquisitions.

[Tim Byers]

Oh boy.

[Carl Thiel]

Which to me is. Is which. Which also, by the way, I think they need to do that like Novo Nordisk has been traditionally very, very shy about doing M and A and I think this is a good, that would be a good move for them. But it does, that does make the timing of introducing a dividend make a little more questionable to me. So I towards. No okay on that. And then for the earnings, you know, they've already cut guidance twice I think in the last year. So, you know, I'm, I'm looking for them to hopefully meet. It'd be great to see them beat. I do think they're kind of due for a relief at some point. But yeah, I'm, I'm, I'm a sort of a meet or, or maybe, you know, slightly ahead. I'd like to see. A lot is riding on obviously their oral WeGovy launch and that's very recent. So it's a little hard for it to move the needle too, too much. But it can will certainly play into their, into their guidance going forward for the rest of the year. But the numbers for Oral wegovy have been strong.

[Tim Byers]

So we've got it, we've got a miss and a maybe a slight beat or meet. Let's move on to Twist bioscience, which is a company that we've looked at multiple times in rule breakers. And Tom, I'm going to come to you because as we're recording this is Monday morning, we got results. You know, they did provide some preliminary results ticker twst on January 12th and now we have the real results. So let me ask you, were you surprised? Were you delighted? What'd you see?

[Tom King]

Well, for the quarter I, you know, it was pretty much what they said it would be. It was 104 million in revenue for the, for the first quarter of 2026, which ended December 31, 2025, which is pretty much exactly what they had said it would be when they announced their preliminary results on January 12th. Still unprofitable, but getting better. The bigger picture here is more interesting for me though, the longer term trend in Twist Biosciences. So it's a company at first crossed my radar in 2020. Basically what twist does is they make DNA for other people. So you're a researcher, you send, hey, you say to Twist, please make me this DNA with this, with this code of nucleotides. And they do that. The researcher then puts it into a cell and sees what it does. So they heavily are dependent on research, the level of research activity. And as we know, and Carl has said earlier in the show, we've been through what you might call a Bit of a biotech winter. The last few years there's been a fair amount of pessimism in industry, lack of investment and so on. But what impressed me about Twist when I looked over their longer term results is that they've pretty, they've consistently grown revenue through this period of the last, from, from 2020 through to last year, adding about 60 million in revenue per year. Their rate of cash burn has gone down. They're still burning through cash, but it's getting a lot less. I would say from a business perspective it's doing all the right things. It's maintained its revenue growth, it's reduced its cash consumption, it's getting towards profitability. And you know, the results they released this morning pretty much confirmed that the trend that has played out over the last five years is continuing satisfactorily. So yeah, it's still an interesting company. It's a lot cheaper than it was at one point in the 2020, 2021 period. It traded at an eye watering 111 times revenue multiple. It subsequently reached a low of 3 times revenue in May of 2023. That was, you know, that would probably translate to a 95% loss or so decline. Now it's at a more reasonable seven times. So yeah, interesting company.

[Tim Byers]

Carl, let me just ask you very quickly on this and then we'll move to our final segment. But because this is a company that's in DNA research, is some of the chaos you talked about at fda, does it apply to a company like, like Twist? Are they in caught in that web of, of chaos?

[Carl Thiel]

Only indirectly. Right? I mean they're not really working with FDA directly. They're working with companies, you know, who are trying to discover new drugs. So they're, they're insulated from it and yeah, just, you know, tremendous technology. It's a great, great beat and raise quarter. So hopefully they'll continue to have good things happen.

[Tim Byers]

There you go. All right, so that's Eli Lilly, Ticker lly, Novo Nordisk Ticker NVO and Twist Bioscience which reported this morning a good beat and raise. Up next, we're going to preview tomorrow's show. Thanks for tuning in. You are listening to Motley Fool Money.

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[Tim Byers]

All right, we are back with our final segment here. Just a preview for tomorrow when Emily Flippen, Jason hall and Lauren Hurst will be talking about AI and gaming. They are going to talk about Project genie, which if you have not heard of this, is an AI model designed specifically for creating 3D worlds. That sounds interesting, honestly, a little bit terrifying. But it'll be Emily, Lauren and Jason, so please stay tuned for that. There are also a lot of biotech earnings that are coming this this week, so please stay tuned for that. At the site. We will have coverage every day for all of the stocks you are following in your portfolio. Carl Tom, thanks for joining me today. Appreciate it. Good chance to talk some more biotech. Please come back to do this again. People on the program may have interest in the stocks they talk about and the Motley fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows motley the full editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. That's it for today's Motley fool money. Thanks for tuning in. Our engineer today is Dan Boyd. Our producer is Ana Chak. I'm Tim Byers. Thanks to Tom King and Carl Thiel for being with me today. Fools. We will see you again tomorrow. Thanks again. And fool on.