Episode 140 - May 2, 2025
Eric SchmidtSam FazeliAdam FeuersteinPeter Kolchinsky
- The XBI’s three-week rebound looks real, but the panel treated it as stabilization rather than an all-clear. Adam Feuerstein sensed that “the sky is not necessarily falling yet,” supported by strong launches, better-than-feared earnings and two deals. The durable bull case remains functioning science and medicine demand; the unresolved discount remains policy uncertainty around FDA operations, vaccines, tariffs and reference pricing.
- FDA disruption is already affecting smaller biotechs even while large pharma publicly reports business as usual. A MassBio survey found 50% of 88 respondents had experienced some regulatory change, while No Patient Left Behind found problems among roughly 25% of companies with recent FDA interactions. Peter Kolchinsky’s explanation: frontline reviewers are “doing everything in their power” to cope, but questions requiring departed senior staff can simply leave meetings canceled.
- Vaccines are the clearest test of whether Commissioner Marty Makary can preserve scientific independence from RFK Jr. Peter argued that demanding placebo-controlled trials for improved existing vaccines can be unethical and could make it impossible to keep pace with changing seasonal flu and COVID strains. Adam was more alarmed, seeing a possible “grand bargain” that lets anti-vaccine forces “run wild in vaccines,” with spillover into drug regulation the larger tail risk.
- Tariffs appear absorbable for many U.S.-based drug developers, but they still destroy value—and multinational pharma faces greater exposure. U.S.-based drug developers often keep IP domestically and import European-made product at low transfer prices, whereas companies housing IP abroad could incur tariffs on much larger transfer values. Peter’s warning was that “you can do the math”: even survivable costs reduce NPVs, acquisition economics or shareholder returns.
- Commercial execution remains biotech’s strongest fundamental counterweight to Washington risk. BridgeBio’s Attruby launch supported the thesis that ATTR has a larger undiagnosed or untreated population, while Madrigal and Verona also delivered encouraging starts. Alnylam’s decision not to separate Amvuttra sales by polyneuropathy and cardiomyopathy, however, makes direct comparison with BridgeBio harder and raised transparency concerns.
- Several heavyweight disappointments showed how unforgiving valuations and fragile franchises remain. Regeneron missed Q1 revenue consensus by 7%, with Eylea roughly 11% below expectations; Moderna’s lower 2027 operating-expense plan may avoid a cash shortfall but still requires billions in revenue; and Lilly fell as much as 12% despite an 8% EPS beat because it did not raise guidance and CVS favored Wegovy over Zepbound on part of its formulary.
- Summit’s ivonescimab remains a major asymmetric oncology story, but U.S. validation is now the pivotal de-risking event. Preliminary HARMONi-2 overall survival produced a 0.77 hazard ratio versus Keytruda—clinically meaningful in Peter Kolchinsky’s view, though investors wanted nearer 0.75 and still need subgroup detail. Midyear U.S. HARMONi results could test whether the efficacy and tolerability seen in China replicate across populations: “one of the key data points for this class.”
1. Biotech’s rebound rests on working products, not resolved policy risk
Feuerstein’s mood had improved after weeks as “the messenger of doom”: the XBI had rebounded from its early-April low, launches were strong and deals had returned. His deliberately modest conclusion was that “the sky is not necessarily falling yet.”
Schmidt saw more good than bad across Q1 earnings, but questioned what had fundamentally changed. Launch strength had been visible for six to 12 months, two smaller deals did not establish an M&A trend, and FDA instability still hung over the sector.
Kolchinsky called April “one hell of a stress test” that showed both biotechnology’s resilience and the value of organized protest. Beneath tariffs, pricing threats and regulatory disruption, the operating model persisted: “Their disease is their whole world,” so patients seek care, physicians prescribe and insurers ultimately cover medicines.
2. Vaccines are the sharpest test of FDA scientific independence
Kolchinsky grew more optimistic after signals that FDA would avoid a major reorganization, but warned against complacency as formerly reliable “constants” become variables. Science and portfolio programs still work in the near term; prolonged damage to NIH funding would be felt more heavily years later.
His vaccine distinction was categorical: requiring a true placebo when developing a broader or improved version of an established vaccine may be unethical and inconsistent with clinical practice. Calling placebo comparison the only legitimate science would be “demagoguery,” not rigor.
Seasonal timing makes the policy commercially consequential. Requiring fresh pre-approval trials for every flu update could leave the season largely over before approval; applying that standard to COVID could make it impossible to keep pace with strain changes.
Feuerstein was less sanguine about Makary’s autonomy, seeing little evidence that he would confront RFK Jr.’s vaccine agenda. A possible bargain allowing anti-vaccine actors to “run wild in vaccines” would be bad itself—and a warning that political pressure could migrate into drug reviews.
3. Small-company evidence reveals strain hidden by large-pharma assurances
Fazeli heard uniformly reassuring messages from large pharmaceutical companies at AACR and on earnings calls: interactions with FDA remained normal, even for an oncology drug previously approved from a single-arm study. He could not reconcile that confidence with what smaller companies were reporting.
Schmidt cited MassBio’s survey of 88 members, half of whom reported some change after workforce reductions—pushed meetings, stretched timelines or other disruption. Stealth BioTherapeutics also passed a PDUFA date without a response, making delays more than a theoretical concern.
No Patient Left Behind isolated companies with genuinely recent interactions; roughly 25% reported problems. Some found crowded Zoom rooms of FDA staff visibly signaling “we can handle this,” while others had meetings canceled because no available senior official could answer the issue.
Kolchinsky turned those examples into a public letter after Senator Cassidy asked for specifics and proposed solutions, then gathered signatures and connected reporters with affected companies. Fear of retaliation, he said, “is a hallmark of tyranny”; Schmidt added that elected officials also needed public backing to resist political repercussions.
4. Tariffs buy political leverage by taxing industry value
Kolchinsky credited industry engagement—including Dave Ricks’s discussions with the president—with buying time on tariffs, not solving the problem. His preferred framing was that America funds innovation primarily for itself, while foreign payments are effectively a subsidy toward what U.S. patients want created.
Many U.S. drug developers have limited direct exposure because their IP resides domestically and overseas manufacturing is often European, with product transferred into America at low cost. Multinationals that placed IP abroad for tax optimization could instead face tariffs on a much higher transfer price.
Fazeli said the largest disclosed hit he saw was at Johnson & Johnson, largely through medical devices and China, while Novartis called its exposure immaterial. Hundreds of millions may be absorbable, but headline promises of $20 billion, $30 billion or $50 billion in U.S. investment may include ordinary R&D and maintenance capex; incremental jobs are the cleaner test.
Europe cannot simply be forced to raise prices while also expanding defense budgets, and access delays matter alongside list prices. Kolchinsky recalled a NICE official acknowledging that incorporating post-patent generic years would make medicines roughly three times more cost-effective—but doing so would weaken the rationale for denying reimbursement.
5. Strong launches coexist with selective opacity and franchise pressure
BridgeBio’s Attruby Q1 was the standout launch: uptake supported the view that ATTR contains a sizable undiagnosed or untreated population and could be broader than assumed. Feuerstein also highlighted Madrigal’s progress despite uncertainty around MASH competition from GLP-1s; Schmidt placed Verona among the strong early launches.
Alnylam told Feuerstein it would report total Amvuttra revenue without splitting polyneuropathy from cardiomyopathy. That is common for multi-indication drugs, but unusual scrutiny follows from BridgeBio’s competing ATTR-CM launch and detailed reimbursement and patient metrics: “When one company is being less transparent and one company’s being more transparent,” comparison becomes its own story.
Regeneron’s revenue came 7% below consensus and EPS missed about 2% despite expense management; Eylea was roughly 11% light amid competitive pressure, inventory write-downs, reduced copay-foundation funding and compounded-product use. Another complete response letter for an Eylea prefilled syringe added uncertainty, though several pipeline catalysts remained.
Moderna guided 2027 operating expenses meaningfully below consensus, enough to avoid going cash-negative in 2027 or 2028 under the team’s estimates, but still needs a couple of billion dollars of top-line revenue. Vaccine-policy risk and a delayed flu/COVID combination increasingly make the company an oncology story.
6. mRNA’s scientific promise now depends on rebuilding public permission
Fazeli argued that oncology applications will ultimately be judged by the data: physicians’ answer remains, “Show me the data.” The platform’s future will be decided by clinical readouts, not assumptions about its potential.
Schmidt described a congressman repeating claims that mRNA could alter the genome, illustrating how weak scientific literacy can become policy. Kolchinsky compared the dynamic with hormone-replacement therapy, whose benefits were lost to millions after a study was misread: facts acquire an “uncertainty variable” through public reception.
Kolchinsky argued that industry needs communications “R&D” because technical work does not speak for itself. mRNA vaccines “saved the world” and restored trillions of dollars of activity, yet myocarditis fears prompted some people to sow doubt despite the virus itself causing higher rates of myocarditis and more harm; abandoning the fastest pandemic-response platform would also deprive the rest of the world of innovation.
7. Lilly and ivonescimab show how valuation amplifies every data point
Lilly beat EPS by 8% but did not raise guidance, a disappointment at roughly 40 times earnings. CVS’s selection of Wegovy over Zepbound for part of its formulary—after Novo Nordisk moved to about $499 per month—added pressure, briefly cutting Lilly’s shares by roughly 12%; Fazeli still saw lower prices, oral drugs and eventual generics as potentially necessary for the market’s full scale.
Summit and Akeso’s HARMONi-2 update produced a preliminary 0.77 overall-survival hazard ratio for ivonescimab against Keytruda. Kolchinsky considered that meaningful if preserved and likely statistically meaningful, but Fazeli wanted OS split by PD-L1 expression to ensure benefit was not concentrated among patients below 49% expression, who in the relevant U.S. treatment framework would be expected to receive Keytruda plus chemotherapy; he noted that this was not necessarily standard care in China.
The midyear U.S. HARMONi trial in second-line EGFR-positive lung cancer is the translational test. Replicating China’s HARMONi-A efficacy—especially its apparent discontinuation and toxicity advantage versus current U.S. options—would materially de-risk a class whose supporting trials have so far all come from China.
Elsewhere, Fazeli saw improving non-muscle-invasive bladder-cancer options from CG Oncology, Johnson & Johnson’s TAR-200 and Pfizer’s subcutaneous PD-1. At AACR, Artios had very interesting ATR-inhibitor data in colorectal and pancreatic cancer; Feuerstein declined to predict a fourth positive XBI week, offering the honest close: “Who knows?”
Full transcript
You're listening to Biotech Hangout, a live and unedited weekly discussion of all the latest news on our industry with a group of biotech insiders. I'm Eric Schmidt. I'm joined today by my co-host Sam Fazeli and special guests Adam Feuerstein and Peter Kulchinsky. For more information about our hosts and guest speakers or to listen to the most recent episode, please go to biotechout.com.
Adam, Peter, Sam, thank you very much for joining. Busy, busy week in the industry this week, with not just earnings but a bunch of news, data sets, events, and stock-moving impacts all over the place. I was taken, Adam, by your tweet from earlier in the week about the fact that I think it's now 3 straight weeks we've had the XBI moving in the right direction.
People do seem like they're a little bit less unhappy, maybe even somewhat happy about things. Tell us about your take on mood and sentiment out there.
Yeah.
Is the worst really behind us?
I mean, we hope so, right? After being the messenger of doom for weeks and weeks and weeks, I felt like it was time to maybe be a little bit more constructive. I do sense that there is a little bit of this feeling that the sky is not necessarily falling yet. Relatively speaking, that is being happy.
We've seen a nice rebound in the XBI off the early April low, and it seems like it's sticking around. Plus, we've got some good news—some really strong drug launches. We had a couple of deals, so I think things are improving.
Are we really in recovery mode? If so, what actually has changed?
Well, you tell me, Eric. I think maybe by your question, you're casting doubts on that. What are your thoughts on it?
Well, I guess I'm still scratching my head. I don't pretend to have any of the answers. We'll bring Peter and Sam into this conversation in a moment. From where I sit, some of what you tweeted certainly does ring true. The drug launches are working.
That's been a constant theme for probably the past 6 to 12 months, not just the last 3 weeks, but certainly we saw that in spades with Q1 earnings. Generally speaking, I thought there was more good than bad in the earnings.
We saw some M&A as well, which we'll talk about this week. I think you or Sam were going to cover that for us. That's always a nice little kicker, but I don't think anyone believes that 2 smallerish deals are going to make a trend in M&A.
My greater concern in the back of my mind is still, honestly, the FDA. Peter, I know that's something that you've been very vocal and focused on. My concern specifically is that, yes, we didn't have any terrible, terrible news this week, but we had a missed PDUFA date.
We had some headlines that certainly make me unsettled, and I think the FDA continues to hang in a balance that's very precarious at this point in time. Maybe, Peter, a good time for you to talk about your views there.
Yeah. I think April was one hell of a stress test of our industry and of the whole market. We weren't alone in this, but we had a few biotech-specific issues. I think what it revealed to us is the power of protest.
You don't just sit back and say, “I'm sure somehow this will get resolved. It can't be that the FDA will be dismantled,” or whatever. It's like a vaccination, right? It revs your immune system up, and that immune system has to actually keep protecting you.
So, in that respect, it was heartening. It was heartening to see that when things seemed to be really unstable at the FDA, a number of us were able to pull together and analyze, frankly, what's going on. You have to talk to the people who are on the inside and then start engaging with some of the people who have influence—members of Congress, people at the FDA, and people in the administration.
You're never quite told, “Oh, yes, we will do this.” Instead, you have to read what's put out there publicly. We've all started to see some of the signals that the FDA won't go through a major reorganization, and that's reassuring.
I hope it doesn't result in complacency—a feeling like, “Oh, now everything's fine”—because we've got a long road ahead of us. Nobody's ever tried to dismantle this many pillars of the economic and drug-development model, throw tariffs and most-favored-nation price controls into the mix, and reorganize the FDA. Who knows how many other constants will turn into variables?
I think we've got to be on high alert. But I agree with you that, but for those new variables, biotech and the whole pharma model is still working. Investors flocked to pharma stocks when the market started to fall apart, and there was a flight to safety.
I love the fact that the world, however much it hates pharma, however much it might be distressed by all that's going on, sees pharma as safe. It's like, “Yeah, that's right. People get sick; they need their medicine. They're not thinking about recession or no recession. They're not worried about geopolitics. Their disease is their whole world.”
They prioritize getting care, and their doctor prioritizes them. They'll write the script, they'll get the prior authorization, and then insurance will cover it. That is ultimately how the return is generated, and that is happening through thick and thin.
Seeing our companies continue to execute through all this is how we ultimately recalibrate to the core of our own portfolio and just say, “All right, the world's crazy, but actually things are working.” We just have to protect all that's working and trust that medicines will continue to generate value.
Certainly, the science is still working. If you completely defund the NIH, we may have less of it in 10 years, but in the very near term, the projects that we're all funding are independent of NIH funding or whatever. Not that the administration is talking about defunding the whole NIH, just changing the way the NIH funds.
I'll pause there. Sam, what are your thoughts? Are you less worried about some of the macro considerations we've been talking about over the past weeks—tariffs, reference pricing, and China competition?
Look, Eric, I've never been particularly worried about China competition because my view has always been the money should go with the science. If you listen to some of the pharma companies, they still keep going on about, “Look, there are assets there that we like, and we're going to go and license them or access them.”
The problem I think we're all facing is just uncertainty. We've all learned that it's possible that, over however many years this lasts, the way it's been going, you never know what's going to happen next or who's going to say what next. The folks in charge seem not to worry about the words that they speak, and it moves the markets.
But specifically in terms of what biotech's been doing recently, I think we bounced back with the rest of the market. There's also that element of possibility that folks are looking for an interest-rate cut. That's always been something we've all wanted to see as a way of making money come back to risk assets, and that's what we're seeing.
The uncertainties around the FDA, HHS, coverage of vaccines, what vaccines you're going to be approving or not, and what kind of reactions the companies are getting from the FDA—all the pharma companies, unless it's because they don't want to put their heads up above the parapet too much, say that their conversations with the FDA have been fine. They haven't noticed anything.
So maybe they see there's a disconnect. Obviously, Adam's probably in touch with—and you guys are probably in touch a lot more with—the smaller biotech, and maybe you're hearing more. I don't know where that disconnect is coming from, if there is one.
Well, let's talk about the FDA in a moment, but maybe, Adam, I'll let you have the last word on this topic.
No, I really agree with what Peter said, particularly about being vigilant. I think that's super important, and I think a lot of people are really tuned into companies, how they're interacting with the FDA, the things that are happening, and the statements that are being made.
There are certain key individuals and officials at the FDA who are still there and maybe hanging on by a thread, but are still there and are really important to the way that place operates and functions. All those things are important. Things can change, as we've seen; things can change day by day. It's a little bit crazy, but I think Peter's right that we just have to keep watching it and adjust on the fly.
Well, Peter, you sounded—or alluded to—being a little bit more optimistic about the FDA in the past week or so. I guess you alluded to some comments that perhaps Commissioner Makary had made about not restructuring the agency.
There have also been, in the last week or two, comments from his office about his views on vaccines, and he is certainly restructuring policy toward vaccine approvals, it seems, both with COVID vaccines and maybe other seasonal vaccines. Do you get the sense that he can separate himself from RFK Jr., and do you think he needs to in order to have a healthy FDA ecosystem? It seems to be evolving day by day, right?
I think vaccines seem to be a special area of chaos at the FDA. I’m more optimistic on everything nonvaccine. But I think that if vaccines go in an unscientific direction, like calling for vaccines to be tested against placebo when you’re really developing a better version of an existing vaccine, maybe with broader coverage, it would be completely unethical to run a true placebo trial. That’s not scientific, and it’s not in alignment with clinical practice.
If they use this facile notion that the only real science is done versus a placebo control, that’s just demagoguery. They’re tricking people into trying to go along with their unscientific agenda. Can the new FDA Commissioner Marty Makary protect us all from that, or will he allow it to go forward? We’re watching, right?
If he caves on vaccines, then I’m going to be a bit more worried that anywhere else where it’s a hot topic, he may cave there. I hope that, for example, we’re not going to see flu vaccines, which are obviously changed every season, have to go through new trials, because then the flu season is going to be mostly over by the time you get your flu vaccine. That would be pretty foolish, but that does seem to be what they’re suggesting for COVID vaccines.
If they require a preapproval trial, then you’re not going to be able to really keep up with COVID strain changes nearly as effectively, if at all. We’re watching, and I honestly can’t wait until we’re done with this phase, because the thing about vaccines is they don’t need us to speak up for them. The disease is doing all the speaking, right?
You wait long enough without vaccines, and people will be reminded why we have vaccines. But there’s a lot of other science that’s less clear, where you’re not going to know what you’re missing. I hope that all this chaos really does stop at vaccines at worst and doesn’t end up infecting other disease areas.
Hey, Eric, can I chime in for a second? I am truly worried that Marty is going to be much less independent, or have much less ability to be independent, from RFK Jr. on vaccines. It seems like maybe there’s been some kind of grand bargain where they’re going to let RFK and that sort of antivaccine element just run wild in vaccines. I think that’s pretty scary and not great.
Hopefully it doesn’t, as Peter said, move over into the drug area. But it sure does seem like, again, as Peter said, these comments about potentially having to do placebo-controlled studies for vaccines and what that means. Everything is being couched. You can look at someone like Calley Means, the lead sort of MAHA guy out there, who’s just mocking people for saying that if you disagree with the idea of running a placebo-controlled trial for a vaccine, you’re anti-science, when we know, as Peter said, that it’s unethical in a lot of ways to do that.
The rhetoric that’s out there is just out of control. I haven’t seen any pushback from Marty on that, and that’s troubling.
Well, let’s leave the vaccine issue aside and hope that it is encapsulated and separated from the rest of what’s going on at the FDA, though we still obviously have concerns about other things that are happening at the agency: the turmoil, the potential for delays, the turnover, and the staff culture.
Sam, you noted that on the pharma earnings calls this week, at least the larger companies were putting on a smiley face and saying that everything was all good. I did come across a MassBio survey. This was actually part of my trip down to Washington, where we met with some congressional leaders to talk about how they might be able to help settle the FDA down a little bit.
MassBio did a survey just a few weeks after the FDA workforce reductions. I think they surveyed 88 of their members, and a full 50% of the respondents said that they had experienced some change in their regulatory discussions. Not always a delay, certainly nothing like a PDUFA delay, though we did, I think, have 1 PDUFA date come and go with no response—a company called Stealth BioTherapeutics, which we can talk about.
I was surprised and concerned about the 50% of respondents who said that meetings had already been pushed out or timelines had been extended, for whatever reason. Sam, I don’t know if that’s something you want to comment on—whether you’re similarly anxious, or whether you think these smaller companies are being more truthful with us.
No. Well, I am anxious because, as you guys just said, you’ve been talking to the little-guy companies, the smaller ones. I was at AACR and then at a pre-meeting at AACR, and a whole bunch of people from a lot of the larger—pretty much all the large pharma companies—presented. Frankly, every single one of them said, “No, we’re not seeing any change in our discussions or interactions with the FDA.”
Where is that difference coming from? What is it that they’re dealing with? Is it because they have better systems in place, or maybe the FDA is prioritizing the larger companies? I hope not, right? It should be driven by the PDUFA, by the work that they’re doing. It’s puzzling to me why this is the case.
In fact, I asked 1 company—I’m not going to name the company. They had a single-arm trial that helped get their drug approved. Oncology, obviously, single-arm trial. I said, “Do you believe that you’d be able to get that same type of trial approved again? It was breakthrough, et cetera.”
The response was, “Yeah, we haven’t noticed anything different about our interactions with the FDA. We’re very confident that we can get this approved again if we had to do it.” So there’s that element. Again, is it because they don’t want to mix things up too much?
If you look at the tariff conversations, they’re all saying, “Obviously, tariffs are not the right way to do things, but we can absorb them, and we’re all ready. We’re all preparing our manufacturing so that we can switch into the U.S. if we need to, or we’re doing it anyway.” Is it because they don’t want to upset the apple cart? I don’t know.
I can offer a quick view on this, if you’re interested.
Well, Peter, yeah, and I also know you’re doing more than just listening. You’re acting. We’d love to hear about what No Patient Left Behind is actually doing. It’s maybe wonderful, in some respects, that a crisis like this forces the industry to come together and push for action.
Thanks for pointing that out. I hadn’t mentioned NPLB, but No Patient Left Behind is a pretty powerful new tool in our community’s toolkit. It really is a gathering spot for concerned leaders to come together and address these kinds of issues.
One of the things we did was run a survey pretty soon after news broke about chaos at the FDA, when it had only been going on for about a week. You wouldn’t have expected to find many companies having problems. We asked people to explicitly indicate whether they had had recent interactions with the FDA. Most people hadn’t.
The fact that they would say, “I haven’t had a problem with the FDA,” was like, well, yeah—if you talked to them 3 months ago, you wouldn’t have. So you had to specifically look at the ones that had very recent interactions with the FDA.
What we saw was that many of those did seem fine. They said what was different was, “We now have a room full of people on that Zoom call. They’re all there in person, and they’re all eager to help us and answer our questions.”
But when you then talk to them, it’s like, “And did that strike you as normal?” A few of them said, “It felt like they were doing everything in their power to say, ‘We can handle this. We can muck our way through it.’” But it didn’t seem like they were relaxed.
It’s admirable that the staff were coming together and doing their absolute best to hold it together and to show these companies, “We’re still here. We can still do our jobs.” Some of them said, “It wasn’t something that the reviewer could handle. We needed an issue that required a senior person to resolve it, and they just canceled the meeting.”
When we asked the person why they canceled the meeting, they said, “We don’t think we can schedule with anybody who can answer this question.” Exactly the kind of thing that you would be afraid would happen if you let a bunch of the senior people go or pushed them out was, in fact, happening to some companies. If you look at this purely from a percentage standpoint, it was a very small percentage of all companies.
When you looked at it as a percentage of the ones that had recent interactions, I think it ended up being about 25% of the companies that had recent interactions reporting problems. And that was just a week or 10 days or something into this crisis. We put those examples into a letter. I’d been talking to Senator Cassidy about this.
He is a lead person overseeing healthcare on the Senate HELP Committee. He said, “I need specific examples. I need to know exactly what’s going on. Don’t just tell me that things are scary. Tell me how they’re actually going wrong. And then make sure you put it out publicly. I need a tool that’s out there that I can share with others.”
So we did. We put these examples in. We went further and asked people within the FDA who were still there what solutions would help stabilize things. We put solutions into the letter. Then we put it out for a bunch of signatures.
Tons of people signed on. God bless everybody who was willing to sign one of these letters. Every signature helps. Then we got it to Senator Cassidy, and the media picked it up. There was interest from journalists in speaking with some of these people, and they were willing, at the very least, to speak off the record.
I think there were 1 or 2 people willing to speak on the record, which is brave. Everybody’s worried about being targeted. That, by the way, is a hallmark of tyranny. When people are afraid to speak up, that’s not okay. Some people were courageous enough to speak up even on the record, and that’s how you push back against this.
It was heartening to see that it’s possible to roll back what appears to be the harm. Now, you saw the same thing play out on tariffs, right? You saw, for example, Dave Ricks doing the hard work of speaking with the president and making the case for why tariffs would be harmful. That appears to have bought time.
That’s not a solution. We need a fundamental solution to international drug-price disparities. Either get America to realize that you’re not subsidizing innovation for the rest of the world—you’re paying for innovation for yourselves—or, to the extent that those other countries are paying anything at all for drugs, treat it like a subsidy of America getting what America wants. That would be a really mature way to look at it.
But human beings can’t stand the idea of somebody getting a better bargain. That sense of unfairness keeps creeping up and is causing us to commit self-harm. Maybe we do need to find a way to get those other countries to pay more. I don’t know what that answer is. Maybe tariffs play a role in that, but it’s not going to be as simple as binding the industry’s hands and forcing them to charge 1 price everywhere.
So we bought ourselves some time. If tariffs do set in, most companies are all right. U.S.-based drug-development companies do not play the kinds of tax-optimization games that multinational pharmaceuticals do. Our companies tend to have their IP in the U.S., and a lot of them even have their manufacturing in the U.S.
If they manufacture overseas, it’s probably still in Europe, where, in this whole trade war, the tariffs are at least lower rather than in China. Because the IP is in the U.S., they transfer the product from their European facility to the U.S. at a still-low price. The markup on their COGS isn’t going to be huge.
If you’re a multinational and you’ve stashed your IP in Ireland and you’re making your drug in Europe or whatever, then yes, you’re trying to minimize taxes in the U.S., and so you’re going to have a massive tariff on your transfer price. That would be a bigger problem. For a lot of our companies, tariffs are not that big a deal.
That doesn’t mean they aren’t a total waste for our industry or that we aren’t going to end up taking a hit somewhere—in the NPVs, the cost of acquisitions, or the rewards from acquisitions. There’s a price to pay. A lot of people want to say, “Hey, I’ll survive this,” and downplay it. But you don’t need people just telling you how they feel about it. You can do the math and see for yourself that there’s a quantitative impact from this stuff. We try to shine a light on that and help people make their own decisions.
Well, that’s a great segue into tariffs. I know, Sam, you’re going to have some views on tariffs.
But before we leave the whole FDA thing, I just want to say—first, thank you to No Patient Left Behind for being willing to step out there, be visible, and try to rally the community. I’m sure you took some heat as well as some praise for doing it. It’s critical that others do the same.
I myself was in D.C. this past week, and to me, the comment you made about tyranny is not just appropriate to tyranny. The fear of speaking out is also appropriate to politics. Unfortunately, I found that some of our elected leaders were fearful of speaking out for fear of repercussions, and that’s not something we can have either in a functioning democracy.
The more we speak out, support the truth and what’s right, express our own views, and talk to our elected leaders, I think the more power we give them to act appropriately. I certainly hope that No Patient Left Behind is going to tip the scales in favor of justice and science. We could all be hopeful. Go ahead, Sam. I just wanted to say that.
No, just 1 other clarifying thing for Peter. The people I spoke to were all large pharma. My assumption was that, at any given time, there must have been quite a lot of interactions with regulators across the globe. Were you focused entirely on the biotech ecosystem?
Yes, we surveyed small companies. At first, I only surveyed my portfolio companies, figuring that at every company where we sit on the board and are already under CDA, they would be more forthcoming. Then somebody blasted out the survey to everybody, and we got a lot more input from a lot more companies.
I have no visibility into what big pharma said, but I would imagine that they’re going to be the last ones to admit that they’ve got problems anywhere.
And actually, if you listen to the Q1s, they’ll repeat the same comment: “Our interactions are fine.” On to the tariffs: the biggest number I’ve seen out there—some companies didn’t disclose what their tariff impact is. Novartis, for example, said it wasn’t meaningful enough for them to disclose it.
I think the largest number I saw was Johnson & Johnson’s, which comes mostly from the medical-device side, and it’s mostly to do with its interactions with China. That was the biggest number I saw, and frankly, those kinds of hundreds of millions of dollars are absorbable within the system.
In general, I think most companies will say, “Look, obviously, this is not the right way to deal with it. The right way to deal with it is to help us lower taxes in the U.S. so we don’t have to play these transfer-price games, if you want to call it a game.”
In terms of international reference pricing, of course, nobody really likes it because you can’t force European nations or non-U.S. nations to raise their prices. Don’t forget, folks, at the same time, Europe is going to have to deal with increasing its defense budget, which is the right thing to do.
But unless they all start printing money, they can’t just go and raise their prices. I think, on average, it’s about 7% of GDP spent on prescription drugs, which in the U.S. is far higher than that, and it should be higher in Europe. It’s not just about the matter of price.
I’ve got to jump in. Not GDP—healthcare spending.
Of healthcare spend. Sorry, you’re right.
It’s closer to—
That would be crazy. Absolutely right. That would be fantastic if it was the right number. Well done. Thank you, Peter.
And then, of course, the other issue is the speed and the amount of time it takes to get a product to market. There’s also the issue of not getting approval, or not getting any of the health technology assessments that allow a drug that’s clearly positive to be approved and used. Those are the other issues that Europe certainly needs to deal with.
One last thing I wanted to say: I’m not 100% sure that I trust the numbers that some of the companies are giving. I’m not saying they’re lying or covering anything up, but $20 billion, $30 billion, $50 billion here and there in terms of commitments—“We’re going to be spending in the U.S. over the next 4 or 5 years”—I think some of them almost certainly include the standard capex, maintenance capex that they were going to be using, or their standard R&D.
We need to look at what the number is. I think the best measure for me is the number of jobs they’re suggesting they’re going to add, and those haven’t been massive numbers.
Okay. So maybe there is some light at the end of the tunnel when it comes to tariffs and an improving outlook.
Adam, coming back to you, you had already flagged in your tweet the strong launches that biotech is experiencing. This is the lifeblood of our industry. Is there anything in particular that you saw in the first quarter that you want to call out?
Well, probably—like you said, Eric—this is more of a continuation of a trend, right? We've seen this. Probably the most attention in the last week was on BridgeBio and 1Q for Attruby, which was very strong. They posted a really great number, which bodes well and sort of confirms what many people had thought: that there were a relatively large number of patients who were undiagnosed or untreated in that patient population, and that it looks like it could be a much more expansive market than had previously been thought.
Madrigal obviously put up a pretty good number, too. There's always been a lot of question marks about the MASH market as it pertains to these drugs and GLP-1s, and how those things compete. I'd rather see strong drug launches than a bunch of earnings reports where we see a lot of misses, right? Collectively, I think it bodes well.
Did you get a chance to listen in to the Alnylam call? I know our team thought that they were a little bit less transparent about what was happening with their launch metrics.
I did not get a chance, and it's interesting you say that, because I have also heard and picked up on the same thing. I guess I was going to save something for next week, but I'll share it here because I love you guys.
I did ask them after the call specifically how they're going to report out Amvuttra sales going forward. I think a lot of people were hoping or expecting to see them parse the number by indication—by polyneuropathy and cardiomyopathy—and I was told yesterday that they were not going to do that. The plan right now is to report Amvuttra sales in totality and not break them out by indication.
That's obviously their right, and a lot of companies with drugs that have multiple indications do that. This case may be a little bit different because you have this direct competitor competing on the ATTR-CM side, and people want to be able to compare Amvuttra versus Attruby going forward. At least for now, that's not going to be possible from a reporting standpoint.
Our team picked up the same thing. Olivia Brayer is our analyst on Alnylam, and she also let us know that they weren't able to break that out. It's a little bit tricky, right? Not too many companies have the confidence in where their sales are coming from, indication by indication, in order to provide those numbers to Wall Street.
But Olivia also felt that Alnylam, on the margin, was maybe a little bit less forthcoming with other launch metrics that she would have liked to hear—especially given, as you mentioned, Adam, how vocal BridgeBio has been with regard to reimbursement, patient numbers, and uptake. You would really think that Alnylam would have some of those benchmarks.
Yeah, I agree. It's an interesting situation. As a reporter, I love it, right? You've got these 2 companies competing head-to-head, and you can compare the numbers. When one company is being less transparent and one company is being more transparent, it creates that dynamic.
I do wonder. When I reached out to Alnylam, I wasn't there to give them advice or anything, but I did mention to them that I thought it was a little odd that they wouldn't parse out those numbers that way. Who knows? They have 3 months, so we can all revisit this in 3 months to see how Alnylam ends up doing. That was noteworthy to me when I heard back from them yesterday.
Sam, I know that Adam mentioned some successful product introductions and some favorable earnings reports. I think Verona probably also falls into the same bag as BridgeBio or Madrigal. There are a few other midcaps that are having terrific early product introductions, but I think you wanted to pick up on a couple of losers from the 1Q earnings period as well.
Yeah, “losers”—nobody ever likes to label a company as a loser, but I know exactly what you mean. Let's perhaps talk about Regeneron and Moderna quickly.
Regeneron obviously just had its 1Q, and it came in 7% below consensus. It's one that one of my colleagues, Andrew Galla, covers, and EPS was okay—missing only by about 2%. That was due to expense management, which is the right thing for companies to do. Eylea missed by 11%, which is an issue. Regeneron also has a whole range of things that it's dealing with: competitive pressure, inventory write-downs, and reduced funding for copay foundations, which I think Raj also spoke about. Some of it is because of the increased use of compounded drugs. So this turned out to be not a good reporting period for them.
On top of that, they had another CRL for a pre-filled syringe, this time for Eylea, and there was no real clarity on when or how that might get resolved. Not a good 1Q for Regeneron. They do have some pretty hefty pipeline news coming for the rest of the year, so let's see how that all pans out.
One thing that's not exactly their drug is that Lilly has data coming at ADA for its bimagrumab combination with semaglutide. Of course, they've got equivalent-type products, so let's see if Lilly can show us preservation of muscle mass. They also have their LAG-3 that they believe is differentiated, reporting in the second half in the first-line melanoma trial.
Then Moderna had a not-as-bad day, but a tough day, in that I think they've looked at the issues and risks facing vaccines, aside from the general vaccine hesitancy that's been going around. But if what Peter was talking about becomes a reality and they can't get updated COVID shots approved, you're not going to be able to do a placebo-controlled trial ahead of flu season.
They've now guided to 2027 OpEx, which is meaningfully below consensus. According to our numbers, that saved them from going cash-negative in 2027 or 2028, depending on revenue, but that still needs a couple of billion dollars of top-line revenue. A delay in their flu/COVID vaccine combination was also a bit of a drag for them. You see them now becoming more of a cancer story, so those were the 2 I thought were worth mentioning.
I want to add to that. Can I ask Sam a question, and maybe also you, Eric, just when it comes to Moderna and the mRNA platform technology? There's so much hostility—I don't know how else to describe it—against mRNA these days. You see these bills being introduced across state legislatures banning mRNA vaccinations, and Sam, you mentioned that Moderna seems to be pivoting to oncology more than it has been. What do you guys think about the future—right now, the future—of anything mRNA-related, vaccines or drugs?
Eric, do you want to comment? I'm happy to comment.
No, please. Please, Sam.
Yeah. Look, at the end of the day, in an oncology setting, I think there were some earlier comments, way at the beginning of the 100 days, where there was a positive comment. I can't remember who it was. Was it Larry Ellison? Even though, of course, he's not in the administration, I'm assuming he's a friend and still is a friend of the administration, talking about mRNA vaccines and how amazing they are. In fact, I think Moderna's share price moved on that.
I think if they can get this to work, and frankly—and it's another topic that we'll talk about, PD-1—most of the physicians you speak to all say the same thing: “Show me the data.” It's interesting. They all want it to work because it opens a whole new therapeutic or preventative approach, whatever way you want to talk about it, in a trial setting. But show me, and we could analyze, as we might do for PD-1, PD-L1, and VEGF, every single bit of data. The proof will be in the clinical data that reads out. I hope that answers your question, Adam.
I just want to agree with you, Adam. Unfortunately, we live in this world where mRNA has been indicted for poor scientific reasons, right? I mentioned I was down in Washington, D.C., and one of the congressmen we met with was citing some report he had read that mRNA can alter your genome. Put aside the fact that he wasn't quite sure and didn't have the scientific background to know, but the fact that this stuff is out there and reverberating in our own echo chambers and causing this level of focus and inspection on mRNA technologies.
It's just a shame, and we need to do better from a scientific-literacy standpoint to counteract that, because otherwise we're going to miss out on some good drugs.
Go ahead, Peter.
I was going to say that mRNA can alter your genome if you want it to, right? It can do a lot of really cool things.
This whole thing with mRNA reminded me of hormone replacement therapy, right? We talked ourselves out of the merits of hormone replacement therapy for millions of women who would have benefited from it because of a misread of a study way back when. This happens, right? This happens routinely in science and medicine.
The facts don't just stand for themselves. There's this uncertainty variable that you apply to the facts based on how the public will want to receive them. So, if you don't have a good PR strategy—and I don't say that in a way where I know what that is—I'm saying we as an industry need to learn how to convey facts in order for them to be heard in the way they're supposed to be heard.
The public can easily talk itself out of something really beneficial. Something along the way with mRNA vaccines, on the one hand, is that they saved the world, restored normalcy, and restored trillions of dollars of economic activity. On the other hand, those myocarditis signals prompted some people—probably people who were already in the anti-vaxxer world—to go and search for anything they could find that would sow doubt. And they did. They found it, right? “Oh, myocarditis.” Well, leave aside the fact that the virus itself causes much higher rates of myocarditis and a lot more harm.
In the end, because we continue as an industry to assume that our work will speak for itself, we continue to discover that the public has ways of taking a left turn and denying itself the benefits of what we do. So, I'll come back to No Patient Left Behind as a laboratory for messaging. I don't think we're going to solve how to message about vaccines or mRNA, but we do have to figure out how, as an industry, we're going to iterate on the marketing-communications messages with all these different pockets of the public and ultimately keep them, as much as they can be, fans of what we're doing and receptive to the good that we're creating, and able to take the side effects and the risks in stride, right?
The car industry has plenty of negatives to it, but people don't hate on the car industry, right? They choose not to. They choose to ignore the car accidents. They choose to ignore when some company has an emissions scandal or whatever. They just brush that off, right? “Oh, the Autopilot screwed up and killed some people.” Like, “Yeah, I'm still going to drive. I'm going to buy that exact same car,” right?
The public is capable of dismissing bad news if it wants to. We've got to do the R&D to figure out how to ultimately bridge to the public and get them to believe in us and believe in the credibility of the work that we do, so that when these kinds of side effects come up, they're not used to completely dismantle an entire scientific trend.
Cancer vaccines are yet to be proven, in my view. There are promising hints, but the most powerful use of mRNA was and remains the prophylactic vaccine for infectious disease, particularly for pandemics. It's the fastest response that we've got to this. So, I really hope that the country continues to maintain its mRNA armamentarium.
Actually, Peter, one thing that's just occurred to me: if the U.S. steps away from wanting to approve and accept mRNA vaccines, guess where the rest of the world will pay the price for that, too? Which is exactly to the point that innovation happens there and it's rewarded there. If the rewards are taken away, everybody suffers, not just the U.S. So, it would be a perfect study and proof of this to the European countries.
They know it. They absolutely do. I talked to a guy at NICE once. This was years ago, when I first started looking into cost-effectiveness math, and I'm like, “Hey, did you know that when you guys do your math, you're only looking at the price of the drug when it launches?”
What I realized is that if you extend your model decades out and look at the long-term value of the drug, it actually goes generic after 14 years, and yet you get all this benefit. It shows that these drugs actually have a cost-effectiveness ratio that's 3 times more favorable than you calculate.
Here I am—I was younger then; I'll call myself a kid—and he was like, “Oh yeah, we know that. That's called dynamic pricing.” I'm like, “Well, why don't you do it?” He's like, “Well, then it would make drugs look more cost-effective, and we wouldn't have an excuse not to pay for them.” I'm like, “Holy crap, that's insidious.”
So, I realized they know exactly what they're doing. I'm like, “But if the U.S. were to adopt your math, it would stop paying for these medicines, too, and you would end up going without.” He's like, “Yeah, we know that. We do this so that we pay low prices. We definitely hope the U.S. doesn't adopt our math.” They're fully conscious of what they're doing.
I feel like that's a whole other discussion for a whole other day, but scary nonetheless. Thanks, guys, for sharing on the mRNA topic. Maybe, just to keep the discussion moving, Sam, there was one other company that took it on the chin this week. Lilly probably had the most downside, at least in terms of market cap. Do you want to quickly discuss what the issues were there?
Yeah, I'm going to be as fast as I can, which is not my usual forte.
It was a double whammy. They had their results, which, of course, included an 8% EPS beat, but they didn't raise, which is what I think the market didn't like. When you're sitting at those kinds of valuations—40× or whatever the number is, depending on which day you're looking at it—the market's very unforgiving.
What then happened was the news about CVS, one of the bigger pharmacy chains in the U.S., or its formularies, taking Wegovy over as a single product in its formulary versus Zepbound. It's an interesting move because Novo dropped its price to whatever it is, $499 a month.
Lilly then explained that this is not all of CVS, but certain parts of it, which don't really make a difference for us, and we're not going to go into this price fight because we've seen it happen before with insulins and we've seen it happen before with GLP-1s for diabetes.
So, that's what happened to them, and they got down, I think at one point, 12%, which was shocking to me in terms of the billions of dollars that were taken off the value. Of course, there are continuing worries that people have: Is this market as big as everybody thinks?
We're going to stick with our view that, in the long term, it is. But I think for the really big market to come, you do need these price drops, and maybe some of the orals and some of these drugs need to go generic at some point.
Thank you for that clarity. Another name that's been all over the place is Summit and its partner, Akeso, in China. Sam, again, I know you've been following the ivonescimab story closely. This is the VEGF/PD-1 bispecific for oncology.
I think at one point last Friday, Summit was down about 30%, almost 40%, and it's pulled back. It's actually quite strong today. This weakness, of course, came on the heels of the HARMONi-2 updated data set, which provided our first very early look at survival.
Did you have thoughts? I can cover it however you want to do it. Maybe one of us can give the topline results.
Go ahead, and I'd love to hear your view as to whether, even if it comes back at the hazard ratio we've seen, you think it would be clinically meaningful.
I mean, just to recap, this drug is going head-to-head versus PD-1 therapy. We all know the PD-1s are a $50 billion-plus market, growing at a very healthy clip. So, ivonescimab has huge potential, and that probably explains the volatility, or the big swings, in Summit shares.
What we learned last Friday late in the day, unfortunately, was that the hazard ratio, at a very preliminary look for survival, was 0.77. At least in my discussions with investors, folks were looking for a moderately lower hazard ratio—better overall survival at this early juncture—maybe something more like 0.75.
So, again, that triggered a fairly meaningful correction in a stock that had been very strong on another data set earlier in the week. And to your question, Sam, is 0.77 an acceptable final overall survival result, assuming the study matures in the same direction? Yes, I think it absolutely is.
If you take on the world's largest drug today, which is Pembro, and beat it head-to-head, and you have a survival result that is not just clinically meaningful but would also likely be statistically meaningful at that point, that'd be a huge win. So, I think there's still fear right now in the marketplace about how the survival result will mature, whether it will in fact be 0.77 at the end of the study, and also fear about how these data will translate into the U.S. setting, which we could talk about. But I'd love to get your views.
Yeah. So I'll just add a couple of things. The thing I'd love to know before I put my money to work is the split by PD-L1 expression, because in this trial they had Keytruda alone, and it included patients below 49%, where you're supposed to have Keytruda plus chemotherapy.
Now we know that that's not necessarily standard care in China. So the risk for me is that, whenever we see that data split, most of the efficacy—not the PFS benefit; we know that's not the case—but most of the OS benefit is coming in that population. That's what I'd love to see. Why would that be the case? I don't know. I can't think of a biological reason why the PFS wouldn't translate to equal benefit for the high expressers or low expressers, but just to be able to sleep at night, that's what I would like to see.
Yes, exactly. By the middle of the year, we're supposed to hear about HARMONi. HARMONi is in second-line EGFR, so you've had Tagrisso most of the time and will now need a follow-on treatment. That trial is being conducted in the US. It's pretty much a carbon copy of the trial that led to an approval in China called HARMONi-A.
We look at those numbers, and the way I'm looking at it is: Is this going to be able to beat the kinds of things that are current in the US, which is MARIPOSA-2? So, Johnson & Johnson's Rybrevant plus Lazcluze, or Rybrevant plus chemotherapy, which should have had 3 arms in it. Frankly, from a PFS, disease-control-rate, et cetera, numbers perspective, it looks similar. That would be fine; it's competitive. But what is definitely more interesting is that the discontinuation rates and the toxicity seem to be in favor of ivonescimab.
So if it replicates HARMONi-A, this is going to be the first time that we're going to compare an ex-China trial with a China trial, and therefore I think the middle of this year is going to be one of the key data points for this class. Do you agree?
Agree 100%. It's not so much that this second-line EGFR-positive lung cancer population is that large a market. It's not; it's quite small, and as you noted, it's quite competitive. But the 3 data sets that we've seen thus far all come from China. They all suggest that ivonescimab is differentiated and superior in its properties to, say, PD-1 therapy, and yet we have nothing in the US to substantiate that. So if HARMONi does replicate HARMONi-A, which was conducted in China, I do think that's a very important milestone for investors in terms of de-risking.
We also had a bunch of other data sets, and I know we're not going to have enough time to capture all of them. Sam, I think you were at both AUA and AACR this week, and I don't know if there's a callout or two that you want to make that was particularly intriguing, perhaps at AUA.
Very quickly, for non-muscle-invasive bladder cancer, there are great options coming up. CG Oncology's data look good. TAR-200 from Johnson & Johnson looks good. They're both the sorts of things that you would say urologists could use; you don't necessarily have to go to an oncologist.
We also saw some data from Pfizer's sasanlimab, which is its subcutaneous PD-1, that looked good. So there is some hope that bladder cancer is going to see much better improvements in the next few months and years in terms of approvals, on the back of what we've already seen with EV plus pembrolizumab for muscle-invasive or metastatic disease.
And from AACR, there were so many data points. We wrote a lot, but one I want to shout out, which is going right back to where we started: A UK biotech had some very interesting data with an ATR inhibitor. That's Artios, and they've been at it for a long time. This is the same group that gave the world Lynparza under the guise of KuDOS, which AstraZeneca acquired.
This data set actually looks very good in CRC, colorectal cancer, and PDAC, pancreatic cancer. I'm happy to talk about it another time, but we don't have time.
Well, thank you for that great recap. We've only got another minute or so left here. Maybe, Adam, I'll come back to you and give you the last word. Are we going to see the XBI up for a 4th straight week next week? Are you truly optimistic, or do you just want to be less of a curmudgeon?
Eric, you want me to predict that? Come on, man. You don't want me to do that. I don't know. Who knows? It's just good, after talking to so many people for a good 2 months or more, when every conversation that I had with investors was so depressing. I'm sure you've had the same conversations with people, and it was just like, you get off the phone and you're like, “Oh.”
So it's good to see maybe a little bit of a turn and stabilization. So, yeah, let's hope for another good week. We can end it there.
Yeah, that's an optimistic note from me. I'm looking at sunshine in New York City. We've got the weekend ahead; it's Friday afternoon. Thanks everyone for listening in, and I hope we maintain that optimism.