# Episode 134 - March 14, 2025 Biotech Hangout · 2025-03-20 · 58 min · https://podcasters.spotify.com/pod/show/biotechhangout/episodes/Episode-134---March-14--2025-e30e9ft ## Transcript Eric Schmidt I think we’re still waiting for John to join, and we’ll try to check in on his status, but we certainly do have a lot to cover. Why don’t we start with the obesity updates in the space? Sam, I know you picked out a couple of things, and it was a very eventful week for both drug development and deal flow in this sector of biotech. ### CagriSema Challenges Novo’s Thesis Sam Fazeli Yeah. Obviously, we started Monday, as you said, Eric. It was one of these weeks where we just turned up in the office in London, and there you go. Novo had its CagriSema data from the REDEFINE 2 trial. This is the follow-on from REDEFINE 1. This was in obese diabetics, and the share price took a major dive, for reasons that I’m a little confused about, because we already expected this trial not necessarily to be a significant result here. This is CagriSema, Novo’s combination of an amylin with a GLP-1: cagrilintide and semaglutide. The data that they reported put something like 8% to 10% pressure on the share price. They reported 12.6% placebo-adjusted weight loss, which seemed to us to be in line with what we’ve seen with Eli Lilly’s Zepbound, which, of course, is not an amylin/GLP-1. It’s a GLP-1/GIP. The interesting thing, of course, is that usually you do lose some efficacy in the diabetic patient population. In the REDEFINE 1 trial, which was in obese patients, the efficacy data was 22.7%, or roughly 20%, placebo-adjusted. The number of patients who reached the top dose is one of the key things about the design of Novo Nordisk’s trials, REDEFINE 1 and REDEFINE 2, in that it allows patients to down-titrate again or not go all the way to the top dose. In REDEFINE 1, which was in obesity, 57% reached the top dose. In REDEFINE 2, I think they reached about 62% of patients on the highest dose. So people always question whether that’s why the efficacy doesn’t look as good as what Novo had suggested, which is the issue here. The share price was down, and we’re sitting here thinking, well, you’ve got a drug that’s as good as Zepbound in this population, and previously there was a 20% weight loss. I’m definitely in the camp that thinks—Eric, you’re not far from it—that we’re saying it’s enough in terms of talking about these percentages. Twenty, 25%, 30%—some of these patients are not going to feel very good at those sorts of weight losses, particularly if you rush them into it. I think there’s even been some talk that, in some of the trials that are ongoing, people are losing so much weight so quickly that they’re not managing and are having to dose down. That was the story that we started our Monday with, Eric. Eric Schmidt Yeah, I agree with you 100%. There’s just too much investor focus on singular numbers. You can game the system, as you know, Sam, with regard to including female patients or more obese patients in these studies at baseline. We’ve got to get past that. We’ve got to start looking at the more subtle aspects that these products are likely to be differentiated on in the marketplace itself, which isn’t the absolute magnitude of weight loss, but things like convenience, tolerability, and safety. Great summary there. Thank you. Actually, before we get to the deal flow in obesity, maybe we’ll welcome John Crowley. John, can you hear us? John Crowley Yes, I can. Eric Schmidt Okay. John Crowley Hi. Thanks for having me again. Eric Schmidt Great. Thank you for being on. John Crowley Thank you. Eric Schmidt For those of you who don’t know John, he’s president and CEO of the Biotechnology Innovation Organization, BIO. Of course, he’s a longtime executive, having been a founder and CEO at Amicus Therapeutics, a company focused on the treatment of rare diseases, which he led for almost two decades and had tremendous success with. John, thank you again for joining us. We’re thrilled. I think Yaron, Sam, and I are all very keen to get your top-line thoughts on where we are, what BIO is trying to do in this certainly tumultuous geopolitical environment, and how things are going in Washington. ### Biotech Finds A Policy Opening John Crowley Yeah, Eric. Thank you again for having me on. Again, I think it’s pretty timely, given where we are here. I thought what I’d do in my upfront comments is just frame it from a big-picture standpoint: kind of where we are, why I am optimistic that we’re going to have a more favorable policy environment for biotechnology than we’ve had in some time, and give you some specific data points around that. I’ll also touch on what the threats are and how we’re working through and trying to manage those threats, and then talk about some specific opportunities. Then I’ll maybe just conclude with our priorities at BIO. If that’s okay, let me go ahead and start. Again, I do believe that, on balance, there are more positive opportunities than negative ones for biotech. Believe me, I know how hard this has been for 4-plus years in this environment. I was down at an investment conference earlier this week in Miami, and there were a couple hundred investors, hedge fund managers, and mutual fund managers. I understand how difficult the pressures are in biotechnology, and some of them are structural. That’s where I do think we have a unique opportunity to begin to address this broad ecosystem, because at the end of the day, one of our great challenges has been that the system has evolved to the point where we’re developing medicines, and it just takes too long, costs way too much money, is inconsistent even within therapeutic areas, and is uncertain. We need a system that provides certainty faster and, oftentimes, more clearly—positive or negative—so we can decide to advance an asset or move on. One of the fundamental premises that we’ve been working on with the administration, policymakers, and lawmakers is to have them understand why they need to care about biotechnology and why it’s so important. I can tell you there is a strong bipartisan consensus that biotechnology is a critical strategic asset for the United States. I mentioned this before, but I’ll say it again: The world, and everyone living in the world, is better, safer, more prosperous, and healthier when we and our allies lead in biotechnology, recognizing that it is a global ecosystem and that countries like China will continue to play an important part in that ecosystem. But we have to be the leader. That view is widely held in the administration, from the president to RFK to other senior leaders in the administration, but also on Capitol Hill among Democrats and Republicans. What we continue to emphasize in every discussion is that you start with that as the basic premise, and that you need to care about biotechnology for public health, as an engine of economic growth, and for our national security. Those points really ring true. Let me just give you a couple of data points. Believe me, I understand all the uncertainty and chaos in trying to manage through all of that. We had, I think, an excellent board meeting with the BIO board in New York back in February, and we touched directly on this. My view, and the view of other speakers for BIO, was that you need to distinguish between trial balloons, rhetoric, extemporaneous comments, and even executive orders that may not survive or succeed—they may be withdrawn or blocked by the courts—and what is actual policy. Then we need to weigh that against our handful or two of key priorities. Many times, these discussions are behind closed doors, and many times we have—and will—raise them to a public level as well. So, just a couple of data points on why I’m increasingly optimistic, mindful of all the challenges and uncertainty, and on how BIO can hopefully be a strong voice for the things that we care about. First, I’ll begin with the FDA. My almost singular focus toward the back end of February, when there was so much uncertainty and so many threats to the workforce, the culture, and the stability of the FDA, was to figure out who the influencers were, where the centers of gravity were, and who the decision-makers were. This is a bit of the art of advocacy, and this was all done behind closed doors, but I can assure you, very intensely so, that people at the White House, at HHS, and within DOGE understood the critical importance of the FDA and that we need a strong FDA. It needs to be reformed, modernized, and advanced. We need to implement very bold ideas. I will tell you, leadership at the FDA would welcome that. I think Marty—Dr. Makary—coming into the FDA welcomes that as well. We made a lot of progress, and you saw that too when I put that piece in STAT 2 weeks ago, relaying the president’s State of the Union from 8 years ago, our meeting in the Oval Office, and his comments at that speech and in some forums afterward about the importance of newer and better medicines and addressing redundancies and bureaucracies in the regulatory process. In fact, even beyond that, to the clinical trial paradigm. People are increasingly aligned around that. We’ve had very serious conversations with the right decision-makers. There will be change at the FDA. Our job is to make sure that we advocate strongly and fiercely for positive change at the FDA. We’ve made progress. I think we’ve stopped some of the bad ideas that were in motion, and right now I know the FDA, like other government agencies, is coming up with what I know will be thoughtful plans for reimagining the FDA. But we need to make sure we’re strengthening the workforce and protecting some key leaders at the FDA as well. Just a couple more data points here. One is on RFK. Now that Secretary Kennedy is in the seat, we’ve all followed closely the measles outbreak. BIO continues to be a strong advocate for the importance of vaccines. We have a very large campaign that we’re going to be launching shortly to inspire people, educate people, and frankly frighten them if we don’t have vaccines. Again, this gets to the broader issue of trust in data and trust in science. The data is on our side here, and we’ll use that. I do think this is one of the great risks in this environment: We have to be a strong voice for engaging in many forums privately, but now increasingly publicly as well. I will say that with this measles outbreak, there was an interview that RFK Jr. did the other night with, I want to say, Sean Hannity on Fox News. I don’t watch a lot of cable news, but I wanted to listen to this. I heard, maybe for the first time, that RFK specifically said, with respect to measles, that he encouraged parents to get their children vaccinated—not merely to talk to their doctors. So I think that’s a step, hopefully, in the right direction, but it’s just one data point. I’ll also point to the fact that Secretary Kennedy held a roundtable with leaders in the stem-cell field. You may have seen that reported today, to talk about how we break down regulatory barriers to advance stem-cell research. I think that’s a positive step forward. Another data point is that you may have seen HHS put out, earlier this week, a further buyout offer for all employees: a $25,000 one-time payment if they agree to resign their positions. The only groups that were exempted from that were FDA inspectors and reviewers, and I think that reflects an acknowledgment of the important role that the FDA and a strong FDA workforce play. We saw the withdrawal of the nominee for CDC at the last hour yesterday, and that came directly from the White House. The other data point I’ll provide—and the last one before I talk briefly about some threats and opportunities—is the president’s joint address to Congress a week ago. It was the longest State of the Union or joint address in at least modern history. The president talked about a lot of things in that speech. The one thing we never heard, though, was drug prices. We didn’t hear about evil pharmaceutical companies. I’d encourage you to compare that to prior State of the Union addresses. This was very different, and it was not by accident. I think it reflects, again, a view of the increased importance of the biotechnology and biopharma industry. Those are some small data points, and I think some more significant ones, but I’m sensing that there is a much more positive environment from a policy standpoint. With that said, there are threats. I think our most significant threats include vaccines. We’ve got to get trust back. Again, this tends to be a state issue, and we’re focused on particular states, but the data is our friend. We’re working to build a key-stakeholder community of interest, advance the data, and build our relationships, particularly at the state level. I think there are more—or at least as many—threats and opportunities in the states as there are in the federal government. Beyond that is MFN index pricing—most-favored-nation pricing. The president still believes that—I think we’ve evolved the conversation, even before the election, to the point where he and the administration hold the view that it’s not that Americans pay too much for drugs; it’s that other countries pay too little. It’s the NATO analogy, if you will. How we solve for that, I think the first principle is that it’s not going to go away. There has to be a constructive conversation. We have to be thoughtful and proactive in developing policy solutions here. I think it ties into another threat, and that’s, of course, everything going on with tariffs as well. BIO just completed an industry survey that we sent out. We’re now finalizing and going through the raw data from the last couple of days. Probably not surprisingly, I think some of the key takeaways are going to be that significant tariffs on our industry will harm access to medicines, could potentially raise the prices of medicines, intentionally or unintentionally, and will also highlight just how dependent we are on an overseas supply chain, particularly in Europe. Those are some major threats that we have to continue to be deeply engaged in and shape in a way that doesn’t harm the innovation environment or access, and perhaps also ties into some other key opportunities. On the opportunity side, I do think there is an increasing likelihood this year that we’re going to see real reform of the PBMs and the middlemen. We came very close to it, of course, in December, and that whole bill blew up for a whole other set of reasons well beyond PBMs. But there is a strong sense in the White House that there are inefficiencies in the system, and that the middlemen—or “the middles,” as President Trump refers to them—are not advancing the interests of patients, the economy, or public health. We’re getting a really good series of conversations continuing there. What legislative vehicle it could be put into, and whether some of it could be done by executive order, is something that we, PhRMA, and others are exploring. I do think we’ll at least have serious discussions, negotiations, and hearings on fixing the IRA. The 2 parts that we’re focused on are the orphan part of it, with orphan cures, which has now been reintroduced in this new Congress, as has the EPIC Act—EPIC and MINI together—on the disparity, the pill penalty of 9 versus 13 years. This is also where I’ll highlight that this is a more favorable Congress for us as well. You no longer have Bernie Sanders as chair of the HELP Committee. You have Dr. Bill Cassidy on the Senate side. On the House side, you have Chairman Guthrie, Congressman Guthrie from Kentucky, a West Point graduate. We know Congressman Guthrie quite well. He is a strong champion for our industry, for innovation, and for patients, as is the chair of the Health Subcommittee, a pharmacist by training, Buddy Carter from Georgia. He also aligns, I think, with the way that we see the world. I would expect that, in the months ahead and into the summer, we’ll have hearings on the dangerous impact that we’re seeing—the dislocation of resources because of these mistakes in the IRA that need to be fixed. Nine versus 13, of course, is a much heavier lift than the orphan provision financially. Again, this will be part of a broader discussion and negotiation. We, PhRMA, and others are coming up with ideas for what the pay-fors would be. Other acute near-term opportunities include significant tax-law work coming forward. This is where Speaker Johnson has a really tough needle to thread. He literally has a 1-seat margin. There’s going to be an awful lot of lobbying and advocacy from every industry you could imagine when it comes to this tax law. For us, things like the R&D tax credit, perhaps even the orphan tax credit, and potentially encouraging a renaissance of manufacturing here in the United States are important. I think that tax law will be a very important vehicle for that. Another opportunity that we continue to work through—and this is really frustrating—is the priority review voucher for pediatric diseases. Again, we almost had this in the December bill. There was some opposition, but we were able to move it through on a bipartisan basis. It’s not going to be in this continuing resolution, which it looks like the Senate will take up and move forward today. There are other vehicles into the spring that we, with the advocacy community and pediatric-cancer and pediatric-rare-disease groups, are working on. That has to get done, and there is very strong bipartisan support for it. It’s almost like the perfect program: encouraging resources into some of the rarest diseases that affect children—cancers, metabolic disorders—and it doesn’t cost the government a dime. Our more intermediate priorities—and by intermediate, I mean through this Congress over the next 2 years and into the next Congress—again, where there are some unique threats and opportunities, I think, are going to be in women’s health. We have to address the disparities in women's health. When two-thirds of Alzheimer's cases and 80% of autoimmune diseases affect women, and when there are very, very differing impacts in cardiovascular disease for women, we've been underinvested there tremendously. As an industry, we've not had the focus that we need. So we need to think about incentive programs that will drive more research for women's health. Secondly, cell and gene therapy, where in many ways the entire model is broken. A third is intellectual property, and fourth is vaccines. What we're doing at BIO is putting together task forces, and I'll be a co-chair of the task forces. Each will also have 2 co-chairs from our board of directors, and we'll have formal meetings. We'll define our remit. I'll then be able, with the guidance of the board and our membership, to allocate specific resources to programs, again aligning our policy, our advocacy, and our communications. These are areas where there are unique threats—in intellectual property, for instance, and vaccines—and in other areas where now is the time. This rises to be an important priority for BIO. I'll just conclude with the strategic initiatives, again putting them in the buckets of innovation and access, and then I'm happy to take any questions, Eric, Yaron, and others. For innovation, there are a number of different initiatives and strategies. Our view is this is a multiyear effort, hopefully within this administration, but perhaps even beyond, and it's critically important for big, bold ideas to shape the ecosystem. In some cases, I think we could have early wins here as well. The first is re-onshoring, the renaissance of manufacturing. We continue to advocate at BIO that, yes, this needs to be anchored in the United States, but we need to think about this more broadly among our allies. For instance, tomorrow morning, I'm leaving with a number of BIO staff and a number of CEOs on our board and senior executives to go to Japan for 5 days. We have meetings at the most senior levels of government in Japan on the health side, on the industrial and manufacturing side, and on the economic side. We're meeting patient groups. We're meeting with the PMDA, the Japanese FDA equivalent, talking about strengthening our ties with Japan, including on the manufacturing side. I think there are some real opportunities to put in place policies and programs, and a number of different vehicles that will drive private capital toward a renaissance of manufacturing. We'll have more on the actual policies of that coming out soon. Another important part of innovation is going to be reimagining the FDA and the clinical trial paradigm. There is a real appetite to do that in the administration. We continue to advocate for a very strategic, very thoughtful approach, and I know Dr. Makary, coming in as FDA commissioner, is strongly supportive of that as well. I'll be coming back to you guys for ideas on what that could be that we could take back to the FDA and to the administration. By “you guys,” I mean certainly everybody on this call, but also broadly our entire biotech ecosystem. Then, on the access side, we're identifying and breaking down the barriers: Why do people go without their medicines? Be they economic reasons, out-of-pocket costs, or increasingly insurance practices, insurance is out of control. We've gotten to the point where you can take a CAR T therapy in cancer. It's almost like the doctor writes a prescription for a very serious, life-threatening disease, advocating or instructing the patient to go on a therapy, at the patient's consent, of course, with some of our most advanced technologies. Then it's almost like it's a recommendation that goes to the insurance company to decide. When we look at these prior authorizations, step edits, and broad utilization management, it's certainly within the Medicare Advantage programs, but it's well beyond that into the private insurance market. We've got to take that head-on. These are big, bold issues that we're going to be working on. Those are my comments up front. I'm happy to take any questions. Eric Schmidt Well, thank you for all those updates, John. It's great to hear your optimism. I think we need a little bit of that in biotech, and it's great to hear that BIO has quite a bit of influence behind the scenes. I know Sam and Yaron are going to want to chime in here, but let me just start with 1 question, which is about this period of chaos and uncertainty that we've been dealing with. As you well know, there's nothing investors like less than chaos and uncertainty. You make the point that we need to separate the wheat from the chaff. There are some policies and some extraneous stuff. From where most of us sit, it's hard to know what the administration may or may not mean when it floats these trial balloons. How is this going to play out? Are we going to need to get just a little bit less attuned to what's happening in Washington in these early days of the administration, or might things change in a way that's more helpful for us? John Crowley No, Eric, I would encourage you to stay very attuned to what's happening in Washington because this policy environment is so critically important. Twenty-five years ago, when I came into biotech, I didn't pay attention to policy at all. I cared about science and technology, scouring the world to find ideas for some of these rare diseases. Now there are so many ideas and so many tools and technologies, but most of our challenges now are man-made. Be they basic research funding, it... Again, we do advocate. I want to emphasize this virtuous circle of innovation that I talked about on my first day on the job at BIO a year ago, looking at every part of that circle of what it takes to make newer and better medicines, always beginning at our academic research centers. The NIH has an incredible strategic advantage, and we need to continue to invest there. We've emphasized a lot of that behind the scenes. You'll see more of it publicly now as well. But again, you've got to separate the wheat from the chaff here and understand what's actually happening. I'd refer back to what wasn't said. It was very significant that the president had an almost 2-hour State of the Union and never mentioned drug prices, even in passing, and never railed against evil pharmaceutical companies. I'd encourage you to think about what's not being said as well. There's 1 other data point I'll provide. The first week in April, the week of April 7, will be a very important week. I'd mentioned before that Congress, from time to time, authorizes these multiyear national security commissions. They've done it with cyber and with AI. A couple of years ago, they formed the National Security Commission on Emerging Biotechnology, and its report is going to come out. We've been working very, very closely with them, particularly over the last year, as we've emphasized the critical importance of biotech for our national security. I think you'll see very specific policy proposals around manufacturing, around the FDA, around clinical trials, looking at a whole bunch of areas where we can break down barriers. I think it will be very, very favorable for our industry, and there will hopefully be a lot of media attention around that. I would really encourage you to look at that report because these reports don't sit on a shelf. They are implemented. Senator Todd Young of Indiana is chairman of the commission, and he, Senator Padilla from California, and others take this very, very seriously. We have private industry folks like Eric Schmidt involved, among others. This will be a very important and very serious report. When we see something of prominence like that coming out of Washington, it's coming from Congress, but it goes directly to the White House. Now the job is to take those policy recommendations and find the vehicles to implement them over the next year or so. So yes, you've got to think about what's rhetoric, what's trial balloons, what are executive orders that aren't really going to go anywhere or will be stopped, and what's most important. Where are the threats? Where are the opportunities? You've got to prioritize. Sam Fazeli John, it's Sam here. I'm sitting on the other side of the world from the United States, so this is all something that's a lot harder for us to keep an eye on because you obviously see it through the lens of other media. First, I wanted to add to what Eric was saying: Thank God you're here, because your optimism is something that we've all needed, given the state of the sector. But let me just throw a couple of things at you. I've just been talking to somebody from the CDC, and it was one of those folks who was let go and then rehired. They've also got a situation where... I think there are a lot of people who want to leave, partly because they don't want to be involved in doing a study looking at vaccines and autism, which is something that, in the professional opinion of a lot of them, is settled. John Crowley Yeah. Sam Fazeli So there are these elements that are still ongoing, and then you've got the feeling of what looks like anti-science, from this side at least. Sam Fazeli So I may be completely wrong, and I've heard everything you said, but you still have confidence that these are things that are not going to be an issue in the long term and that science is going to prevail? John Crowley I do. And again, I think it's perhaps misplaced to say that there is an anti-science view in the administration. All the challenges you point out are absolutely right, and those are ones that we push back on very hard. There is no question that there is no link between autism and vaccines. We were pleased to hear Dr. Makary in his hearing say that point-blank. We hadn't heard that in a prior hearing. So those are things that we need to be incredibly vigilant and engaged on, and when we see anti-science views or areas that undermine the public trust in science, technology, and leadership, we need to be really vocal about that. Sometimes it's very vocal privately. This isn't all going to be fought by press releases and clever commercials, and those tend to be the most persuasive discussions, I find. But at times it does need to rise to a higher level. When I wrote that piece in STAT, and it came out 2 weeks ago, none of that was a surprise to lawmakers or policymakers at the White House, HHS, or anywhere. They've heard all of that from me and from others. This was going on the record and framing it in a very public way, but it was also directed to other stakeholders, including you guys, our companies, our community, and, for instance, the workforce at the FDA. We have emphasized repeatedly to DOGE that you can't go in with a wrecking ball. You lose key people, you lose key talent. It's not going to be, "Well, we'll make mistakes, and we'll fix it down the road." No, you're going to harm innovation, you're going to harm patients, and you might as well just give the whole industry to China. You can't do it, and we've given them examples of why that doesn't work. I think that when you look at this buyout offer this week and the fact that FDA inspectors and reviewers were exempted, I think they get it. There are some people who are aligned around wanting more medicines and wanting a successful biotech industry—not without its challenges, not without its opposition, but that's kind of our job: to manage and balance that on behalf of the industry. So again, I wouldn't say I was wholly enthusiastically positive. I said, on balance, I believe there are more positive opportunities than there are threats, but there are threats. ### China Reframes The BIOSECURE Debate Yaron Werber John, it's Yaron, and again, thanks. Always great to hear from you. So I'm actually going to ask a question about China, because we've discussed— John Crowley Yeah. Yaron Werber We've discussed this on the show many times, right? The innovation now that's coming out of China, and where IP and drugs are now getting funded, but they're actually coming here more for development and commercialization, which is another avenue of innovation. I think some view it as a threat, but along with that, obviously there's become a question of what is BIOSECURE really going to mean, what about manufacturing, and then, of course, there's BIOSECURE broadly in this industry. I think many of us thought that it was a done deal. We have a Washington research group that thought that was going to get done last year, and it didn't get done, and that was very surprising. It did seem like there were a lot of stakeholders behind the scenes that had a lot of input, and, of course, you and BIO had a lot of input. What are you expecting, and what's the timeline? John Crowley Yeah, Yaron, I think it's important to realize BIOSECURE is 2 things. It is a piece of legislation, and as it came out last year in a very public and forceful way, again, our job at BIO, we were perfectly aligned around the concept—the second part of BIOSECURE, the concept of biosecurity. On the specific piece of legislation, we said we had some areas of concern. We did our survey, of course. We met privately with members of the China Select Committee and members of the intelligence community to share our thoughts, including the fact that you can't cut off access to some of these key partners, particularly the manufacturing partners, because again, you'll slow biomedical research, you'll harm patients, and you'll actually work against your national security interests. They listened to that. They made the changes. In fact, there were so many changes to that bill that, while it did pass, it wasn't overwhelming. There are some people—and you talk to Jake Auchincloss up in Boston, Congressman Auchincloss—he'll tell you he voted against it not because he's against the concept of biosecurity. At the end of the day, he thought the legislation was so watered down as to be ineffective. So it didn't pass. It wasn't included in the National Defense Authorization Act at the end of the year. Our view is that it's possible, but it's in a form right now that's largely ineffective or toothless, and it's increasingly unlikely that it will even become law. But what it has done is raise that second part of what BIOSECURE is, and that's the concept of biosecurity. A lot of it, again, is grounded in supply chain resiliency, but it's even broader than that. It's the entire biomedical research establishment, including, of course, our industry. What it's done is elevate that view: that, okay, that is a threat. But the mistake, I think, of the BIOSECURE Act was to think that you're going to prohibit activities, or somehow penalize investment or partnerships—the sticks, if you will. That doesn't work really well. There's some incredible science going on in China, and they're moving very, very fast. I think in some ways we've got a couple of years until we're at parity or worse with China. Again, we're of the view that we need to continue and maintain our lead—as the United States among our allies—as the critical center of excellence in biotechnology. But don't look at what you're going to do to punish China. Look at what we're going to do to break down our barriers and to allow biotechnology to flourish. That's when I come back to this National Security Commission on Emerging Biotechnology report, which again, I think will be very, very positive in changing the ecosystem for us. But a lot of this is against the backdrop of this great rivalry with China. Eric Schmidt John, thank you very much for your time. We know how busy you are. All of us at Biotech Hangout owe you a debt of gratitude— John Crowley No Eric Schmidt ...for all the work you’re doing. John Crowley No, thank you for having me. Eric Schmidt And really appreciate the time, and hope to connect soon. John Crowley Thank you so much, guys. Have a great day. ### Obesity Deals Meet Manufacturing Reality Eric Schmidt Okay, we can head back to our week's worth of high activity in obesity. Yaron, did you want to touch on the 2 key deals that were done—or not done, maybe—with the Zealand-Roche transaction, and then Viking going at it alone with their manufacturing contract? Yaron Werber Yeah, absolutely. One of the things that has driven up the obesity sector, the biotechs in obesity, is the chance for M&A, and that comes naturally because this is a game for really big companies. There are 2 companies that were widely expected to have been acquired. One is Zealand Pharma out of Europe, and the other one is Viking Therapeutics in the US. Earlier this week, Zealand announced a deal with Roche, essentially combining the GLP-1 injectable from Roche, which they bought as part of the $3 billion deal for Carmot. That's CT-388, combined with petrelintide, which is the amylin analog from Zealand. It's a 50-50 deal with a huge upfront. I think it's $5.6 billion altogether. Roche made a huge upfront payment that then enabled Zealand to do 50-50 on the back end of the deal. Just to give you a sense, the upfront was $1.65 billion. It's fairly sizable. They're both now going to take that into phase 3 studies. CT-388 from Roche looks very good. It had a 19% reduction at 24 weeks. It did have some dropouts, almost 12% in all between the uptitration and the maintenance, and there was a high rate of nausea and vomiting as they got to the high dose. So it's unclear exactly which dose they're going to take forward. Petrelintide looks good. It does look better so far than the amylin that's part of CagriSema. It's a higher dose; it's obviously going to be more potent. So this is something very promising to watch, all in. Of course, this area is heating up, but Zealand did come up from the bottom on the heels of this deal. By and large, this stock is down a lot from the peak, with the expectation that they're going to get acquired. But at least they're well capitalized and they have a good partner. The other one is Viking, and that's a small biotech. They have an injectable GLP-1/GIP that's looking really good. They have an oral version of it, which is facing the same challenges. That's a GLP-1/GIP peptide with an oral delivery. Obviously, that has its own challenges, as anything oral does. The efficacy there is not as good as the injectable. Again, this is a company that is well capitalized. They have $900 million, but that's obviously not sufficient long term, and they're expected to get acquired too. Their data look good. Again, I think the big question was, how are you going to develop it by yourself? So what happened this week is they entered into a deal with CordenPharma to produce the active pharmaceutical ingredient. They're going to pay $150 million over 3 years. And just to give you a sense of the volume, CordenPharma is going to have capacity for 100 million autoinjectors annually, 100 million syringes, and 1 billion tablets. I mean, huge volume. Now the question is, does that mean that Viking is more or less likely to get acquired? And there's still a question: How do you finance? So I think that stock is obviously facing those questions and, in general, has also been under pressure. Either way, you do need to get API, so maybe this is another clearing event toward an acquisition, or they're just going to go it alone. But this area is going to become very competitive. You know, there's Amgen coming in, there's Metsera, there's Kailera, and there's a lot going on. Eric Schmidt Sam, I know you follow all these moving parts in obesity very closely. I'd love to get your views. But I guess, in particular, on this acquisition question that Yaron brings up—who may or may not get acquired going forward—we've seen a couple of deals in the amylin space, Gubra last week and now Zealand this week. We haven't seen many deals in the GLP-1 space, and we haven't seen any acquisitions. Are we kind of past peak frothiness in terms of what you would consider M&A, at least with regard to GLP-1s, and maybe even past acquisition windows for amylins as well? Sam Fazeli Well, Eric, I think share prices tell you that, to a degree, when you look at it. Viking, Structure Therapeutics, Altimmune—whichever company you look at, that tells you that. However, there are elements here now that have lined up in a situation where maybe not necessarily M&A, but if you have a company that's got just amylin—let's say AbbVie, which has just entered the fray with amylin—given that everybody is looking at these combinations of GLP-1 and GIP, or GLP-1 and amylin, or whatever shape or form you like, I would say that they would need to build a pipeline here, or a bigger bag for those sales folks. I've been talking about this to a couple of people. If you think about the old world of SGLT2s, which are the diabetes therapies, there are 2 drugs on the market that are very similar in terms of efficacy and side-effect profile: AstraZeneca's and Lilly's. Which one is selling better? Lilly. They have a broader indication base, but also a bigger diabetes business. So is that why Lilly's SGLT2, Jardiance, is doing better than Farxiga? Maybe. If that is true, and I think a lot of people believe that if you have a franchise, you're better placed, then someone like AbbVie would have to create that franchise again. Does this mean a takeout of one of these GLP-1 companies that we've mentioned, or does it mean a licensing deal or a partnership? Yaron Werber Possibly. Either way, I think it would be good for them, as we've seen with Zealand's share price, even though it's sold off because everyone's now worried that the next catalyst is, whatever, a year away or a year and a half away. That's the world we live in, so that is the way I would look at it, to be honest. And I am on the side that the Viking manufacturing deal is a realistic and important thing for them to have done. A lot of people talk about the manufacturing capacity for these peptides, so they've kind of solved that problem. Either way, whether they're going it alone or with a partner, this is a problem that needed to be solved. So I don't see it necessarily as a signal that there's no M&A deal, although that's what some people said. Eric Schmidt Thanks for those thoughts, and I think a lot of us would feel a lot better if the Viking asset were in a partner's hands, given the inability of a smaller company like Viking to really compete from an execution standpoint. ### Small Cap Oncology Finds Buyers But staying with the deal flow theme, we did see a couple of M&A transactions this week that are worth mentioning. They come again in the small-cap oncology space, with Sun Pharma having acquired Checkpoint Therapeutics and Bristol Myers Squibb consolidating its interest in 2seventy bio. That BMS–2seventy deal, of course, comes just weeks after the other half of bluebird bio is being acquired. And this all follows Jazz–Chimerix, so a lot of, again, small-cap oncology acquisitions. It strikes me that we'll probably see more, to be honest, because these onesies and twosies in oncology—$100 million, $200 million, $300 million-type drug candidates—really ought to be part of a bigger oncology organization from a leverage and margin standpoint. Makes a lot of sense. And also, because of the environment we're in, we have many small-cap oncology companies, some even with marketed drugs, that are trading at or below cash. So I'd expect that type of trend to continue. But Yaron, one small-cap oncology deal that we have yet to see happen is the SpringWorks–Merck KGaA potential acquisition. What's the latest there? Yaron Werber Yeah, I mean, the latest there is that there is no update. So, for everybody listening, recall that this is a company, SpringWorks, that launched Ogsiveo very successfully for desmoid tumors. They're the only drug on the market, and they beat numbers. They just got Gomekli approved. That's the MEK inhibitor for neurofibromatosis type 1, the plexiform form. And the competitor there is AstraZeneca. AstraZeneca only has a label for pediatric patients, and it's got a lot of black-box issues and drug-drug interactions and safety issues, whereas SpringWorks got approved for both adults and pediatrics with a better label, so it should be a better product. Between those 2 drugs, the consensus is that they're going to sell $1 billion to $1.5 billion, and maybe the upside is $2 billion. It's a $3.8 billion company. So Merck KGaA put out a press release toward the latter half of January saying they're in advanced discussions. As everybody knows, Merck KGaA has a division in neuro and oncology, and its oncology products are actually orphan-focused, just like here, so it's a perfect fit. It's a big company that is globally oriented. They have the capital. They have 15 billion of capital. So we all thought that this actually makes sense, because we do think that SpringWorks wants to and needs to sell. And, of course, they need to launch the drugs globally, and they're small. ### Uplizna Advances In Myasthenia Gravis Eric Schmidt Okay, so maybe patience will be a virtue here, but we're in an interesting kind of intermediary timeframe. Let's leave the transaction discussion and deal flow discussion and turn to some data updates. And maybe the highlight of the week could have been Amgen's Uplizna update in myasthenia gravis. Yaron, do you want to take that one as well? Yaron Werber Yeah, so this is an interesting one. Earlier this week, we actually designated argenx as our European top pick, I think maybe for the fifth time in a row. It's obviously one of the premier companies in the biotech sector, and certainly one of the premier companies out of Europe, probably just along with UCB. The competition here is Uplizna, which, as everybody knows, is an antibody that depletes CD19 cells. It can be dosed twice a year, and that's what's really nice about it. We've seen the 26-week data at AAN, and recall that at that time, there was a slow onset of action, but at the same time, they were able to taper off steroids, which is a big positive, and it's very safe. And so now we got the 52-week data as a late-breaker abstract. We don't have the full data. It's going to be on April 8, but we can certainly see, pretty much as expected, that the curves continue to separate. So at that point, you got a dose at 26 weeks and another dose at 52 weeks, and nothing in between, so you're totally off therapy, which is very nice. And the data is not quite as good as Vyvgart. It's pretty good. I mean, the MG-ADL is almost the same. It's sort of -2.8 versus, let's say, -3. The QMG, which is the secondary endpoint, is -2.43, shy of Vyvgart at -5.3. But again, it offers you a very nice option in a huge market that is very much a growth market. It's about $6 billion and growing right now in gMG. So we definitely think Uplizna's going to find a role, maybe to replace C5 antagonists, because it's safer, you don't need to get vaccinated, and it's cheaper and more convenient; or in patients that fail Vyvgart; or maybe as maintenance after patients get into remission. So anyway, the whole CD19 premise is now really playing out clinically. Eric Schmidt And I know investors always like a good fight between 2 competitors in markets like this, but the number-one parameter behind the success of either of these 2 drugs is going to be the size of the market, right? And these I&I markets, they just keep growing and growing and giving and giving. So make sure you don't lose sight of the forest through the trees here. ### Biotech Earnings Test The Pipeline Let's turn our discussion over to earnings recaps. We actually had a couple of stragglers report this week in BioNTech and Legend. Sam, did you want to give us the update from BioNTech? Sam Fazeli Sure. Look, they had a pretty rough week, although it was against a very difficult tape. The results came on Monday, the 10th, and they reported that 2024 was in line, but nobody seems to care about that. Everybody cares about the outlook, which was quite interesting because they guided to €2 billion in sales. So, for one, assume euro-dollar parity, or, if you want to divide by 1.1, that's €2 billion in sales against consensus of €2.5 billion, based on Bloomberg. So what happened here? They said at the same time—and remember, Pfizer, where most of its revenue comes from the COVID vaccine, said that it was going to have essentially the same revenue as last year, which was about $5 billion. So why is BioNTech not getting the same revenue as last year? The volume, they said, is going to be similar to last year; their assumptions are pricing and also share. So, of course, what's left here is the write-downs. To be fair to them, a few-hundred-million-dollar write-down in inventory happens with vaccines: you manufacture and hope that people buy them. If they don't buy them, you've got the stock, so you have to essentially write it off, especially in a world where the vaccine changes every year. This is the case here; this is the case with flu, so this is nothing against BioNTech—it's just the way it is. It's mostly write-downs. There are probably a couple of other elements, but I think that is the biggest number. Then you add all that up, and you get to a cash burn of something in the region of €1.5 billion to €1.7 billion for the year. On top of that, they spent some more cash: they bought Biotheus, and they've got a couple of settlements, so we think that they're going to end this year with something in the region of €14 billion. Now, why is that a problem? It's not. The reality is, this is a massive cash balance, right? But you do then create a situation in which you have to somehow keep that enterprise value going up, and the only way to do that is through delivering on your pipeline, which Yaron is going to talk about because there's a conference coming up, and I think, in the very near term, there is some data coming. So, Yaron, over to you. Yaron Werber Yeah. Just to give you a sense, because we get a lot of questions on BioNTech—what's the worst-case scenario? What is cash? If we go back a year or 9 months, right before the famous ASCO where PD-1/VEGF bispecifics really hit it, they had about €80 per share in cash. Heading into this ASCO, we believe they're going to have about €60 per share in cash. The stock is at €100 right now. Everything I mentioned, by the way, is in euros, not dollars. So it gives you a little bit of a sense of where they are and why the pipeline is so important. There's going to be a lot of data. We've seen data from Summit, recall, which has a competing product. They showed initial survival data in lung cancer that looks good, with a hazard ratio of 0.8 and about half the survival events happening, and they're going to update that in short order. That's probably going to be the most important data for the class. With BioNTech, we've seen some survival so far in triple-negative. We've seen a little bit of survival so far in non-small-cell. But now we're going to see the small-cell lung cancer data, and that's coming in Paris on March 28. So it's going to be in first-line and second-line, and there's going to be a lot of follow-up. We're really going to be able to begin to tell whether there's really a survival benefit with these drugs. We anticipate that the PFS would look good. The big question always with survival is whether you can actually show a survival benefit, because there isn't a great correlation with checkpoint inhibitors between PFS and survival in small-cell. But that's really it: there's going to be a lot of data coming now between them and Summit over the next 3 months. The risk-reward here is getting pretty interesting to a lot of people, with the stock back at €100, and it's worth following. The pipeline is definitely interesting. Eric Schmidt Well, as you say, there are a number of milestones coming up from these PD-1/VEGF bispecifics, and obviously it's an enormous market where you can potentially take on a PD-1 like Pembro and show superiority to what is today the world's largest pharmaceutical. So there is a lot of action in the stocks coming up, for sure. Thanks for those updates. Maybe you want to take us home, Yaron, with the update from Legend, which is obviously also another exciting and competitive marketplace. Yaron Werber Yeah, so this is where I would say this is the legend of Legend, and it's about Carvykti, obviously the biggest-selling CAR T now, of any CAR T, and certainly the biggest one in myeloma. It's a BCMA CAR T that showed a survival benefit in second-line onward in myeloma. Of course, Johnson & Johnson and Legend just couldn't make enough, and they were totally capacity-constrained last year. They've now opened essentially 2 to 3 new facilities or expanded facilities—new expansions of current facilities—including Allschwil, Tech Lane in Belgium, and the Raritan facility in New Jersey. Novartis, as a contract manufacturer, is actually making commercial supply for them now, too. So they're going to double capacity this year, let's say, from just under a billion to just about two billion globally. They're supposed to finish this year with more than 10,000 doses' worth of capacity, and they've now, for I think the first time, really begun to crystallize that by 2027 they're going to have 20,000 to 24,000 slots' worth of capacity annually. I mean, it's a huge capacity, and no one has anything close to that utilization in the models yet. Of course, we're all waiting for the frontline data, because that's the really big market. As everybody remembers, there are 9,000 transplants in the US alone annually that could ultimately be replaced by CAR-T, per the data, assuming it works, and we do think it's going to. They've now just announced an additional $150 million each—almost $300 million worth—for another expansion at the Tech Lane facility, which will come on board, I believe, in 2027–2028. So, a huge amount of capacity, and of course Gilead will come in with its competitor as well. Look, I remember when we started: sadly, myeloma was a 6-month median survival. Now survival—we're talking about 10 years in some cases. Thank God there are going to be a lot of really good therapies, and capacity is ramping up quickly, which is good to see. Eric Schmidt Well, your last comment really makes everything that John said earlier in our discussion ring so true. It's so critical that the US gets this right, not just from a national security standpoint but from a public health standpoint. Sam, Yaron, it's always wonderful to share the microphone with you guys. Thank you for your insights.