Episode 160 - October 24, 2025

You're listening to Biotech Hangout, a live and unedited weekly discussion of all the latest news in our industry with a group of biotech insiders. I'm Chris Garabedian and my co-hosts today are Brian Skorney and Sam Fazeli. For more information about our hosts and guest speakers or to listen to the most recent episode, please go to biotech hangouts.com.

We like to start a lot of these with a market update. Finally, after many years, it feels like things have shifted and that we're in a better news, better sentiment environment. Obviously, we've talked previously about the XBI breaking 100 and staying there. There have been a few ups and downs and pullbacks, but nothing significant, and it's maintained itself.

The public markets are looking good, and M&A is generally good. I'll speak a little bit about venture capital, but Brian, why don't you kick us off from your perspective of what you're seeing and how you would describe the current public-market environment?

Yeah, thanks, Chris. I've been saying this over the last couple of weeks for Biotech Hangout: It's a really optimistic, enthusiastic public market out there right now. I was out marketing in New York yesterday, but across all my meetings recently, investors have been really upbeat.

Underpinning this is the concept that this isn't just upbeat because we're in an uber-bull market. There's a lot of comfort that we're in this upward-swinging market without crazy valuations or companies that are 4 years from going into the clinic IPOing at a $1 billion valuation. We're still kind of in liftoff from the trough we've seen after multiple years of XBI underperformance.

I'd say sentiment remains very high. I think there's an occasional mention of, “Is there going to be a shoe to drop? Is this exuberance irrational? Is Trump going to say something or do something? Is something going to blow up on the clinical-trial side of things and take us down?” But when you look at the last month or so, or even the last 3 months, health care has this month been one of the most net-bought sectors, and biotech exposure has really been pulling to 5-year highs.

Thematically, we think this is a realization of something that we've certainly been talking about. We've seen chasing of risk in other sectors, obviously the AI trade in tech, which has pushed valuations to historical extremes. Biotech kind of sat it out for a really long time, but at some point it was inevitable that people would think of this as a catch-up trade, given that it's a sector that historically has had the opportunity for massive alpha capture, certainly on individual names.

We're seeing that in individual names, whether it's names like uniQure last month or even Praxis last week. You're getting these data sets where you're seeing hundreds of percent upside on catalysts, and that type of thing cannot go unnoticed. I think that's what's happening.

Yeah, absolutely. I think one of the things that even in some of the data we'll describe on this call is that the stocks are reacting, good or bad. You're seeing good volume and good movement, and for a while we weren't seeing that. You'd see a kind of a sell-off on good news if there was a run-up, or almost a fickle response to data. Here, it seems like the market's becoming more efficient. Would you describe it that way?

I think so. Some of it is that some of the data is an upside surprise. Like I mentioned, Praxis—it wasn't just that it was positive data, which I don't think people were really expecting to happen with something that had a futility look go poorly and where they continued the study anyway. It was really positive data, with every endpoint hitting.

There is that unexpectedness to the sector, where something is worth nothing and then just becomes worth an enormous amount because of better data. But for sure, even on things that are potentially expected data sets, maybe arguably a little better than expected, you're still seeing stocks perform in the aftermath of that. We'll talk about this in a little bit, but I think you also see that in the follow-on offering environment as well.

Yeah. What's your take? I know the follow-on market's been strong, but how would you predict IPOs over the next couple of quarters? Usually, we'll see a flurry after disclosures, and I'm definitely interested to see what happens after the year-end disclosures. We saw the last really big push around IPOs in the early 2021 time frame. I just remember that February, early-February peak. How are you thinking about what we'll see with IPOs over the next couple of quarters?

I think you're going to see an acceleration. You're coming from such a trough in terms of IPOs that even a couple of IPOs is suddenly opening up the floodgates relative to earlier in the year.

We went through this prolonged period where we had a desert of IPOs, not necessarily because people weren't willing to invest in IPOs—although certainly the tolerance for public investing in IPOs was missing—but for fundamental reasons. We saw this huge, I would argue, bubble into COVID, where banks were pulling companies from such early stages at high valuations. It was inevitable that when it crashed down, you would wind up waiting for private companies to catch up.

We're kind of at the catch-up point. If everything IPO'd that was 3 years from the clinic 5 years ago, everything that didn't IPO is now getting close to the clinic. That's where you have reasonable IPO potential—when you're past the early-discovery phase and nominating a drug in a big indication, or in Phase 1 in a smaller indication.

Yeah, I think there was nervousness, too, about not trusting the markets and not knowing if you would trade down if you went public, even if you got a good price at launch, and how the aftermarket performance was going to be. I think there's also this increased trust and comfort that stock prices will hold, that there will be better valuations and perhaps better price discovery, like we saw with LB Pharmaceuticals in its IPO.

As a venture-capital investor, I'm pleased that we're a lagging indicator of public-market sentiment. That's true on the way down, and it's true on the way up, so we get very encouraged and much more comfortable deploying capital and even starting new companies when we feel there's a healthy IPO market and healthier valuations in the public market.

I'm definitely seeing that trickle down. There's more of a willingness to write checks, and I think we'll see more VCs getting more active moving forward if these public signals hold. We've done 3 investments over the last 6 weeks or so: 1 device, 1 diagnostic out of the venture fund I manage, and 1 therapeutic in the gout space, Crystalis.

I'm seeing the peer group really start to feel like this is the time when we can be comfortable deploying capital. The M&A environment has an impact on that, too. We're really encouraged by the XBI, by what the IPO market might look like, by healthier valuations and not exuberance. Nobody wants to go back to what you were describing, with preclinical companies going at a $1 billion valuation, because I think overall that wasn't healthy. But the M&A environment is good, too.

Why don't we start off with deals of the week? Let's start with a $2+ billion acquisition. Do you want to lead this one, Brian, for Avadel?

Yeah, absolutely. Alkermes, which we cover here at Baird—my colleague Luke Hermans is the lead analyst on that—did a $2.1 billion acquisition for a narcolepsy drug from Avadel. This drug is Lumryz. It's an oxybate treatment, and it competes pretty directly with Jazz's Xywav.

They're expecting Lumryz to do between $265 million and $275 million in revenue in 2025. It's a growing product, and they have a couple of label-expanding studies that are ongoing. Certainly, both Xywav and Lumryz have grown together, so every expectation is that this isn't a peak. We'll continue to see some pretty meaningful growth for both products over time.

It's also a really interesting way for Alkermes to get a commercial foot in the door in narcolepsy. Many people will be familiar with Alkermes' orexin 2 receptor agonist.

Alkermes has one of the leads there in ALKS-2680, which is one of these hot new classes. So it has the benefit of creating something that's pretty near-term accretive to Alkermes, but also builds out commercial capabilities for competing in the orexin-2 class once we see ALKS-2680 through Phase 3. So it's a very interesting combination of both a strategic, accretive deal, but also building into infrastructure and commercial capability, and showing confidence in their orexin-2 narcolepsy drug here.

Certainly, seeing a multibillion-dollar acquisition—it's not a megablockbuster, multibillion-dollar acquisition, but it is needle-moving for the sector. I think it just adds to the bulk of evidence that you're seeing more and more enthusiasm for paying for these assets.

Yeah. I saw on Twitter someone made the parallel to—I think they talked about it last week—but a company we were investors in, Astria, got acquired by BioCryst. Again, similarly in the same space, BioCryst having a commercial drug launch but also trying to increase its footprint in the HAE space and consolidate therapies. So, again, it's very interesting to see companies really wanting to maintain a leadership position in specific indications.

Brian, I think you and Sam have something to say on the Summit financing. Again, a big follow-on. Do you want to start, and then Sam, you can come in?

Yeah. Summit did a $500 million deal. This is one of the most hotly debated names, and I know Sam's going to go into much more depth on some of their data over the last week. But the primary story here is their VEGF/PD-1 bispecific.

The interesting thing here is the Summit management team. They're one of the more interesting management teams out there. A long time ago, I covered PCYC, which was really the CEO's introduction to the biotherapeutic space and wound up being one of the biggest deals of all time, and certainly one of the best products of all time. It's also the basis of a really great book by Nate Vardi called For Blood and Money.

Bob Duggan, the CEO here, has a history of doing this—of really putting his money where his mouth is. He's quite unique in the world of biotech CEOs in that, with all of his companies, he's really been the main financier to push their drugs through clinical development. Sometimes that's been less successful, but certainly in the example of PCYC, it's been enormously successful.

So far, Summit has seen a much greater valuation than the money he has put into it, so his basis is way lower, although his basis is rising with this financing here. But it's certainly a bullish signal when you get a management team to put effectively half of the deal together from their own personal checkbooks.

Yeah, I mean, it's definitely another endorsement for For Blood and Money—just a great, great story for biotech with the Pharmacyclics–Acerta kind of battle. Perceptive was obviously featured in that as well as an early investor in Acerta.

And Pharmasset.

Yeah, right, exactly. And so, yeah, great. Sam, do you want to comment on this? It's something we're going to talk about—the data from it—in a bit.

Just very quickly: This is one of those situations where, in pretty much every case, management putting money up into their own company is a bullish signal. It's just that, in a situation like this, where you have a Phase 3 drug with meaningful data behind it, you do wonder why they couldn't go and get more from institutional investors—or did they not want to get more from institutional investors?

It's very hard for me to criticize Bob because it's such a successful story behind him. And, of course, I've also read the book. If anybody hasn't, we all get royalties off it, right?

Well, the fastest way to become a biotech billionaire is to have a very big, concentrated position. He's kind of literally proving the fact that he believes in this data. The thing is that we all need to see, as we come to it later, is—I’ll do the bull side of this data set that just came out and then talk about it. But, yeah, 50% coming from insiders: bullish, bearish, I don't know.

Yeah, yeah. I can tell you on the venture side, if I equate insiders to institutional investors, that's pretty common when you have insider institutions doing half of a round. On the venture side, these are private companies, so you have bigger positions and you want to take your pro rata, et cetera.

But for a late-stage clinical-stage company and that level of money, it's big. So it's hard to read the true courage of their convictions: How much of that was Bob Duggan's own money, and what is that in terms of his overall net worth? All of that needs to be considered, but we're going to talk more about the data coming out of ESMO and the bull-and-bear thesis on that.

Brian, some other updates on financings this week—Alto and Erasca.

So, yeah, as I was kind of alluding to in the intro commentary, one of the things we're really seeing is great performance on follow-ons. We're seeing a lot of deals get done, and I guess it's no surprise with the XBI moving up and to the right.

I would always advise management teams to take money when they can and pad the balance sheets to weather harder days. But we've certainly seen a lot of success here. What's really notable is that you see a lot of after-the-fact success: A deal will get done, and then the stocks will appreciate immediately. We've seen that dynamic work a bunch over the last couple of weeks.

We saw it work very well early this week in Alto Neuroscience. They announced an FDA meeting update that was positive for one of their programs, ALTO-207, but the stock is now up 65% on the week, I think in part because of a subsequent $50 million PIPE. Some of your colleagues—some of the biotech investors—have gone in as named investors in this.

I think people buy it after the fact because one of the biggest pushbacks I get from clients over the last couple of years is, “How are these companies going to get to catalysts? These companies are going to suffer massive dilution. They can't raise the capital.” It's really been a bear thesis on the sector: No one's going to be able to finance.

Now you're seeing a little bit of a reversal of that dynamic. When they do finance, it almost creates this FOMO where people are like, “I always liked the story, but I just didn't invest because I didn't think they would be able to finance the company. Now they've financed the company.” So you see good aftermarket performance on these names.

Certainly, with Alto, you saw robust demand earlier this week, and you see it across a number of names. We also saw a little bit of this with Nurix this week. They did a $250 million registered direct. It's up less on a percentage basis than Alto because it's a larger market cap, but they also had really robust interest.

The knock on the story has been, most people say, “Yeah, it looks like they have a really great BTK degrader in NX-5948, but how are you going to finance all the studies that are needed in CLL to move this up the lines when you're competing against a much bigger name like BeiGene?” This is the answer.

It created a much more positive narrative that they're able to finance and put up a meaningful amount of cash on the balance sheet from very well-respected investors. I think this is a good signal for companies: If they can get a good contingent of investors to invest, and they can use additional money, companies have done quite well off that dynamic these days.

Yeah. Despite the overall XBI performance, or whatever broad sector performance you want to look at—which hasn't been good for biotech for probably 10 years overall—it's a stock picker's market. That's what I'm hearing. You're seeing names where investors believe it's going to work and they know there are going to be good returns for that investment, and money's flowing into those names that get that good specialty biotech investor interested.

I think overall, it's what we've been waiting for and something that's healthy for our market. Sam, there's also another strategic deal. Maybe you want to highlight it, which is, again, the other side of the coin for a healthy market: the financings, but also the deal flow.

Yeah, sure. We had, actually, a China deal with a Japanese pharma company. Takeda did a deal with Innovent, and it was a pretty hefty deal: $1.2 billion upfront and about—what was the total?—$4.5 billion. Everybody knows what that means, I think. Takeda also invested in Innovent shares—$100 million at a premium.

What’s interesting here, of course, is that it’s essentially an oncology deal. You have a couple of late-stage assets and then an earlier-stage asset. On the latest-stage asset, IBI-363, a PD-1/IL-2 alpha-biased bispecific, it’s a global co-commercialization and co-development deal.

I haven’t seen too many examples of this where the Chinese partner keeps some of the rights, and particularly where they highlight the U.S. side of it. So I think this is a way for companies to get more international rather than just licensing out their drug or doing a NewCo. Of course, we’ve had data on 363 before. There was some data at ASCO, which I have to say was pretty exciting to us, at least in terms of the efficacy that it showed in lung cancer.

We think that’s an interesting asset. There are a whole bunch of people pursuing this way of trying to get IL-2 back into the system to get the T cells motoring, for want of a better phrase, and a bispecific is one way of doing it. The other asset is the Claudin 18.2-targeted IBI-343 ADC, and then Takeda has taken an option on IBI-3001, which is an EGFR/B7-H3 ADC, so a bispecific ADC there.

We’re seeing more of these EGFR/B7-H3 types of bispecifics with ADCs on them, and so this was a pretty big deal, again, within the context. We’ve just totaled up our numbers for the year, and China has taken—this was a very quick analysis, so just to caveat that—about $4.7 billion upfront in terms of 2025 so far, and total biobucks values of $84.5 billion.

Of course, it comes not so hot on the heels, but it was at ASCO where Pfizer and 3SBio announced their $1.25 billion deal on SSGJ-707, the PD-1/VEGF bispecific that 3SBio developed.

That’s great. And what else do we have? Did you want to highlight what’s going on in Europe? You like to keep a pulse on that. A big deal in Europe?

Yeah, we like to talk about stuff that’s positive in Europe. We’ve had a spate of times where people are writing about how pharma is forgetting about everywhere and just investing all their money in the U.S., which, of course, is never the total truth. Nevertheless, we did have a very interesting company that I saw just under a year ago at a VC conference, Tubulis, that raised $360 million in a Series C.

That’s a pretty hefty number, certainly for Europe. Even globally, I think that’s a pretty chunky number for a Series C, and it’s an ADC company, which we don’t seem to be able to get away from. Its latest asset, TUB-040, is an anti-NaPi2b ADC, and we just saw some data for it at ESMO, which actually I have to say was pretty decent in ovarian cancer.

Those were response levels that you don’t expect to see: a 59% response rate in the overall dose-ranging trial. That was really pretty impressive. The question now is, do they have enough money to take this to Phase 3? That’s essentially the plan at the end—potentially lung cancer and ovarian cancer, if I’m not wrong.

That then leaves us with the question of whether this is a “load up with cash and then go and partner” situation, where we can get a much better deal in a potential partnership, versus going ahead with coffers that are empty. But that’s a really good sign of success and support in Europe.

Sam, I didn’t see the press release. Who were the investors, and do they have deep pockets to help continue investing in it?

I’m going to read it out. The round was led by Venrock, with participation from additional new investors Wellington Management and Sanderling, and existing investors who also supported were Nextech, EQT Life Sciences, Frazier, Deep Track, Bayern Kapital, and others. It’s a great syndicate, and they’re going to have to figure out how to get it financed if $350 million doesn’t do it.

Yeah. I have to say, I looked at argenx’s stock for the first time in a while, and it’s over $50 billion. It’s had a good year in value creation. Just a few weeks ago, I was invited to do a panel at BioSpain, which is a little bit like Bio-Europe. It attracts a lot of other countries to exhibit and do partner meetings there.

I was part of an investor delegation, with both U.S.-based and local investors, and I can tell you that in Europe there’s a lot of activity and a lot of waiting for the market to improve. It seems like over the last 3 to 5 years, they’re just toiling away as best they can, waiting for the financial markets to catch up to where they are.

I was impressed with what I saw going on in some of the European interactions I had at that meeting.

And, Chris, on that point, I’ve always had this feeling that Europe kind of waits 6 months, 9 months, 12 months to see how solid the recovery in the U.S. is. Do you get that feeling still? You did actually use the word “wait.” Do you feel that they’re all hanging around, waiting to see whether the excitement and resurgence of interest in U.S. biotech will continue?

I’m being a little bit kind. I think it’s partly necessity, right? They have to wait. As an investor, I can tell you that people want to seriously look at the technology first and be less concerned—this isn’t true with every VC—but less concerned about where it comes from and who the management team is, if they’re capable.

There are a lot of good examples of great science and great technology being developed successfully in Europe. Brad Loncar does a good job of making BiotechTV global in nature, and he does a lot of these tours and showcases a lot of these companies. I think that’s a good thing for our industry.

But when I say “waiting,” I think they’re waiting for the appetite for investment to tick up, and, of course, the U.S. is always going to be the lion’s share of that. Obviously, we’re seeing China play a big piece in that, but Europe still has to compete for it, right? There are still a lot more companies that aren’t going to get funded the way they want versus those that get selected, but I think they’re waiting for investors to start to get interested.

That’s very different on the private side than the public side, obviously. But, yeah, I think all of the signs lift all boats, right? All of these positive signals we’re seeing—I’m hopeful that all of the discovery research and basic research is not that expensive.

That’s what I mean: they’re toiling away. They can get stuff done and get ready for that $30 million Series A round or that $80 million Series B. I think that’s what they’re waiting for—for people to have an appetite, if that makes sense.

Yeah. Fingers crossed it will come.

Yep. All right. Well, Sam, we’re going to have you take us on a tour de force of ESMO. We’re a little bit of a skeleton crew here, so you’re going to hear a lot from Sam at ESMO, but I think the audience definitely wants to hear the update. You were on the ground there. Maybe let’s start with Summit, since we touched on that to begin.

Yeah. Chris and Brian, jump in whenever you want to say anything on this.

Obviously, Summit Therapeutics is—I mean, this is a massive conference, right? ESMO almost rivaled ASCO this year. Maybe not quite in terms of numbers, but it was certainly clear that a lot of Chinese companies were presenting there. I think partly because the science is evolving and the programs are continuing to become more numerous, but also because I think it’s perhaps a little bit to do with geopolitics at the minute.

Summit’s drug was in-licensed from Akeso. This is ivonescimab, which is their key drug at the minute, mostly, although they’ve just announced that they’re going to start a Phase 3 in colorectal cancer and non-small-cell lung cancer. This is PD-1/VEGF, just in case somebody doesn’t know, because it’s been such a topical story for months now.

Akeso presented the HARMONi-6 data, which is squamous non-small-cell lung cancer in China. It was ivonescimab plus chemotherapy versus a PD-1 plus chemotherapy. You’re essentially putting a bispecific, which brings VEGF with it, versus a PD-1.

There were 532 patients enrolled, with a median follow-up of 10.3 months, and you got a pretty nice PFS difference of 11.1 versus 6.9 months. That’s great—a hazard ratio of 0.6. I think we have to admit that’s pretty good, essentially adding 1 extra mechanism of action here.

AEs were manageable. Remember, this is squamous non-small-cell lung cancer, which has historically been something people have worried about when putting VEGF in because of some early bad experiences. There was a clear effect across all PD-L1 levels, even less than 1%. So this is the bullish side, and that’s quite clear.

For China, this is a very simple, easy signal. I don’t know whether they need to wait for OS. We saw nothing about OS—not even a commentary about trends or anything—which is slowly bringing me up onto the bearish side of this. What did we not get? What are the caveats?

So we didn’t get any news on OS. That’s always a worry, given the history of VEGF, and I can talk about that a little bit. You do wonder whether the VEGF effect is on the tumor response, on the tumor size, to a degree, but doesn’t translate to OS, which has been the case in many tumors with VEGF.

You’ve got that situation also a little bit with the HARMONi trial, which failed to show a statistically significant OS benefit, although there was a difference. The HARMONi trial was in second-line treatment post-EGFR in China, again.

So that's—and of course, there was an additional patient group in the US—but the PFS didn't translate to statistically significant OS benefits. So this adds that little question mark: Are we dealing with another VEGF set of stories here?

The Kaplan–Meier curves show a big drop at around scan 3, which is always the thing with VEGF. You get an early impact on tumor size at scan 1, scan 2, or scan 3, and then everything is parallel; the lines are parallel. I think the bulls would say that some of the lines were not parallel and were continuing to separate, but in this case, I would say that most of them are.

That leaves you again with a worry that maybe this won't translate to OS. Of course, the hazard ratio was pretty much similar irrespective of PD-L1 expression, so it gives you this little nagging feeling: Is this all about VEGF? Is this just VEGF doing a lot of the work and not necessarily the PD-L1?

Then, of course, they did exclude patients with a risk of bleeding, as they should have, because there's a risk with VEGF. They excluded those patients, and you therefore wonder whether this is going to be easily translatable and what happens to it when it comes to the US.

So really, this was—the positives and the negatives. The other thing that's happening is that we're continuing to see more and more PD-1/VEGF bispecifics showing up. We saw a new one in non-small-cell lung cancer that looked good. Hengrui had a good one in gastric cancer, and we really liked the data.

The other thing that Summit needs to watch out for is who comes rapidly behind them. Lastly, it seems to me that in a lot of these situations with these bispecifics, you do want to try to get a combination partner. Pfizer, with its 3SBio deal; Bristol Myers Squibb, with its BioNTech deal; BioNTech itself; and even some of the Chinese companies, like RemeGen, have a bunch of other ADCs, such as TROP2 ADCs, to combine with.

That's what I think Summit also needs to get on with: figuring out a way of doing more partnerships. They did do one with Pfizer, but then, of course, Pfizer went and did the 3SBio deal.

Yeah.

Did you want to add anything?

Well, no. Brian, did you have any comments on the bull-bear debate? I don't know if you're covering Summit or if one of your colleagues does, but do you have any thoughts on this? It does seem like there are different sides.

Yeah, I mean, I'm largely out of it. I kind of follow it out of interest, and I know Bob and Maky very well. I know Maky very well. I meet with them at every medical conference and try to get a handle on it.

I'm very torn on the bull-bear debate. You just look at it globally and wonder, is this really doing something different from combining Avastin and Keytruda? And does that even matter? Because no one's combining Keytruda and Avastin in any of these studies in a formal manner anyway.

Even if it's the same thing, if you're successful, you're successful and you become the standard of care. But it's a tough one to call, especially as Sam reiterated. Avastin has this weird ability to drive radiographic benefit that hasn't necessarily correlated with long-term survival, given the mechanisms. So when you're dealing especially with things like PFS and overall response rate, trying to figure out how that predicts ultimate benefit to patients can feel quite tricky in this kind of dynamic.

Yeah. Let me ask you both a question about oncology, and especially new targets. I feel like there's this phenomenon where you get peak hype early, and then there's always a slow disappointment, or competition enters the fray. Do you want to comment on whether that's a real thing? I'm thinking of CD47 or TIGIT. There seems to be excitement around a new target after the first positive data set, but it seems like the bloom comes off the rose over time. Would you say that's true, or is it really situation-dependent?

I kind of think it's situation-dependent. Certainly, there is this consistent dynamic in biotech where you can get overexcited about early data, and then, as reality sets in, it can be quite disappointing. But there are certainly examples where people get excited and the mechanism or specific drug continues to generate that excitement.

I go back to PCYC. It was a battle on PCYC as a bull. People were saying, “You're just overestimating how long these patients are going to be on it and how good of a drug it is.” But it turns out that, if I look at my models from PCYC, I still wound up underestimating it as one of the bigger bulls.

But you brought up CD47, and you brought up TIGIT. TIGIT is really unique to me because we do have this tendency—and I would certainly argue for it—of getting overly enthusiastic about a single-arm response-rate study. TIGIT is interesting to me because that's really one of the only times I can remember a not totally rigorous but somewhat rigorous randomized controlled study showing a profound benefit that was just never replicated again.

Yeah. So, look, I think I'm going to remain a bull of TIGIT. We'll wait and see. You can shoot me down when we get to talk about it again, when the trials read out.

Certainly, in the bispecific space, there are PD-1/TIGIT, PD-1/CTLA-4, and PD-1/IL-2. You could easily bring a good biological explanation for why you want those types of bispecifics, because you're acting on the same cell and you're taking away—hopefully, especially if it's conditional binding, or at least partly conditional binding—some of the side-effect issues that at least some of these drugs have, like IL-2 and CTLA-4. So let's wait till it reads out.

I had an excellent conversation today with Susan Galbraith at AstraZeneca, which will air as a podcast next week. We didn't really get to talk about TIGIT because there was so much going on at ESMO from AstraZeneca on breast cancer, pretty much on everything. We spoke about breast and bladder mostly.

The thing that makes sense is that you want to have these things binding on the same cell. PD-1/VEGF, I don't know. We do know that VEGF has some checkpoint inhibitor activity; at least some people believe it's got some checkpoint activity. That's where I differ.

Yeah, my point was more about what Brian highlighted: The days of looking at a single-arm, 15-patient study where the early signal looks good are over. I think there's skepticism: Let's see a larger cohort over time and see whether the response persists.

But there was a lot else going on at ESMO, so let's go through the list.

Yeah. So Exelixis was another one where the share price initially had a bad reaction, I think, to the STELLAR-303 trial. This was in third-line colorectal cancer for zanzalintinib. My God, it's too hard for a Friday afternoon. It was combined with an anti-PD-L1 therapy, Tecentriq.

What did we see initially when we looked at it, which is why I think the share price had the drop that it did? Again, in third-line CRC, you had toxicity that seemed to be more than Stivarga. You had a benefit—definitely 10.9 versus 9.4 in overall survival. Is that particularly exciting or not?

The OS benefit and PFS benefit didn't really go beyond benchmarks. You would believe that because it's a novel mechanism, it would obviously be more expensive, and of course it is an IV infusion. Those were the main considerations, but particularly the first 2 points I made about efficacy and toxicity. I think those upset folks for a little while, and then, of course, the share price recovered.

I was lucky to have my friends from Leerink and Truist in the office on Wednesday, and we had a webinar. I think I actually posted it. Andy Berens was there talking up the bull story.

By third line, patients will most likely have had 2 lines of chemotherapy already and not really be ready to take another one. That's one of the issues that I think is particularly valuable here, because you don't need chemotherapy in it.

Doctors are eager to identify the sorts of patients who will respond to IO therapy—Tecentriq in this case—in STELLAR-303, to induce a durable response, because that's the opportunity you've got here. I think the folks that Andy, my friend, spoke to thought that they could take care of the zanzalintinib toxicities as they did with Stivarga, and it still performed well post-VEGF agents.

So really, this is where I think the bulls are winning now, post-conference. I think that's probably the right place to be because of the facts that we talked about. That was the initial reaction and then the post-conference reaction, so it was quite interesting to watch.

It was a pretty well-designed trial, and the data was, in the end, compelling, I think, for at least some patients. It is third line, so that's a particularly difficult patient population. I don't know if you guys wanted to have any comments on this.

No comments. Yeah, you can go through the list.

Okay. All right. The other thing that really interested me was Incyte coming into the KRAS G12D world. This is a drug with GenFleet.

It's a novel KRAS G12D inhibitor. Remember, this is a space that's meaningfully dominated by Revolution Medicines, with some very good drugs that we've seen a lot of data for. Of course, that's one of the stories that's been able to raise significant amounts of money, particularly for pancreatic cancer.

Here, we had a data set that we thought rivaled Revolution Medicines' zoldonrasib. That was the G12D inhibitor from Incyte. What did we see? This is NCP, right? Strong, dose-dependent tumor control, up to about 86% at 1,200 mg and 64% in terms of ORR at 600 mg. The response rates dropped since May for the other competing drugs.

That's particularly interesting for GenFleet's GFH375, which is at a lower rate of about 41% now, compared with the early disclosure of that data set. So it's still impressive as a single agent. The KRAS G12D space is heating up: we have Incyte, GenFleet, and the drug from Revolution Medicines.

I think at TRIPLE we'll see some more new agents that we haven't seen data for presented. Hopefully, maybe next week, if we're still together, we can talk about some of those. That really positions Incyte quite nicely, and if you look at the share-price chart, it's been doing reasonably well in terms of performance.

They also had a PD-1/TGF-beta bispecific. Going back to that story, bispecifics potentially give us a much better opportunity to get drugs that previously—TGF-beta, I think a lot of people remember that GlaxoSmithKline had one that it in-licensed, and that didn't work out—have generally been viewed as something that, as a monotherapy or as a single antibody, is likely to be more toxic.

Here, toxicity was well managed, and it showed some very interesting data in an early-stage trial, as Chris said. We have to remember that, but the tox profile seemed a lot more manageable, if not downright easy, relatively speaking in a cancer setting, than you would have expected. So that gives them another interesting bite at a different molecule.

That's the resurgence of Incyte, from what we're seeing from these assets, and that was quite pleasing to see. Lastly, back to TIGIT. I'm going to cover TIGIT really quickly. We had some data from Arcus, which I'll have to say was good.

This was Arcus and Gilead's Phase 2 EDGE-Gastric trial. It was domvanalimab plus an anti-PD-1, zimberelimab, and chemotherapy. They showed pretty good efficacy—promising efficacy—in first-line gastric cancer, which is a reasonably sized market.

That's TIGIT. Remember, this is an Fc-inactivated TIGIT antibody. Then, of course, we also saw data from AstraZeneca for rilvegostomig from the ARTEMIS-1 trial—not tiragolumab; that's the one that failed, from Roche—from rilvegostomig, which is a bispecific PD-1/TIGIT antibody.

That's showing some very interesting data. This was non-small-cell lung cancer data, and I've done some numbers around it and compared it with KEYNOTE-042. I have to say that in both patients with PD-L1 expression below 50% and those above 50%, the response rates look pretty good.

Again, we need the Phase 3 data to show us that this really works. As I said, AstraZeneca has really put its weight behind this, with, I think, the last time I looked—unless some of the trials have been canceled—about 8,000 patients in the totality of these trials with rilvegostomig. That's just some confidence in this agent.

Yeah. And, you know, just on Arcus, I'm looking at what happens when they present the full data sets at ESMO. The stock had run up almost 50% over the last month and had doubled over the last year or so. It seems that people were anticipating that.

I'm just trying to dissect how the stocks react at a conference like ESMO, or whether these results are already dialed in for the most part. I didn't follow every biotech name that actually moved on presentations, but do you have any comments on what you saw in terms of market reaction?

Yeah. No, look, I think so many people have given up on TIGIT that anything positive is a little bit like the PD-1/VEGF bispecifics. There's always somebody who says, "No, it won't work." You go around talking to most physicians, and they say, "I'm not sure if, for instance, even if it got approved, I would probably use it in some patients."

Then you look at the data, and it looks great. You go and speak to people about TIGIT, and they say, "No, that's not going to work." Then you look at the data, and the data looks good. I think Arcus, in this setting with Gilead, just has to go and prove that this does the job that it's expected to do.

Remember, AstraZeneca makes the case that you need to be bispecific. Arcus and Gilead are saying, "No, you don't. We'll just use a single antibody to TIGIT and an antibody to PD-1 or PD-L1, and we'll be fine." So it's going to be quite interesting to see how that pans out.

As I said, I'm a fan of TIGIT. Arcus and Gilead have both continued with this. Neither of them has given up, and this looks pretty decent in gastric cancer. I think the share price is reflecting that some people are beginning to believe it.

Yep. All right. I'm going to go through some of the data readouts we had this week that were non-oncology and not presentations at ESMO. Brian, I'm going to ask you to comment on the first 3, if you have any comments on any of these. Two of them were negative, and 1 was positive.

The first one was Alector. Alector had a dementia-drug clinical-study readout. This is an antibody, and I'm going to butcher this too, Sam: latozinemab. It's targeting the sortilin receptor for dementia. They have a partnership with GSK to co-develop it.

They looked at over 100 patients with frontotemporal dementia. This is a genetically based target involving the progranulin gene. They hit their endpoint on a co-primary biomarker endpoint measuring progranulin protein in the blood, but failed on the clinical component of the co-primary endpoint, which was slowing disease progression on the battery test they use for dementia.

They also failed to demonstrate any benefit on the other secondary or exploratory endpoints that are often part of these studies to look at everything. Again, this speaks to the challenge of accepting biomarkers without a correlation or concordance with clinical benefit. This is one where they say, "It did what we said it was going to do, and we're seeing it in the biomarker, but we just didn't see the clinical benefit play through."

They do have another antibody partnered with GSK that targets the same gene but has a longer half-life. That's going to read out from a Phase 2 study in early Alzheimer's disease, which is expected to read out in the first half of next year. We'll see how that plays out.

The stock was off about 50% on this news. Also, a year ago, Alector had another drug targeting TREM2 that failed in a study in Alzheimer's disease, after which they laid off employees. Besides being off 50%, they announced layoffs of half of their employees while they await the results from this other Phase 2 study in early Alzheimer's disease.

Alector is one of these companies using a novel technology that binds to a unique region of the transferrin receptor. This has been one of a number of brain-shuttle, or brain-carrier, technologies that people have been excited about to shuttle drugs across the blood-brain barrier.

Again, this is another failure for one of these transferrin-receptor-shuttling technologies to penetrate the blood-brain barrier, leaving the CNS space more excited. The second data readout was a positive one.

This was Ventyx's cardiovascular data with an NLRP3 target. This is a class that has gained a lot of attention. It's an anti-inflammatory drug for both cardiometabolic and neurological indications.

Sanofi has a right of first negotiation on this drug, and this data set should trigger that. We'll see if Sanofi acts. Interestingly, Sanofi acted on another ROFN. One of our companies in the type 1 diabetes space has Sanofi with a ROFN, but they had a ROFN on Vigil Neuroscience in the neurology space, where this drug could have some applicability.

That was a drug for Alzheimer's disease, and they acted on that ROFN earlier this year. This drug has also completed a Phase 2 biomarker trial in early Parkinson's disease with positive data. There could be some synergies there with Sanofi. Again, the stock was up almost 100% on that news.

The other data readout was Arcturus, and this was a failed trial, although the results were mixed. This was for cystic fibrosis: an inhaled mRNA therapy. The stock was down over 50%, even more at one point, but rebounded because the company clarified that it was going to continue moving forward.

Basically, they did a small study—again, this is a rare disease—looking at 6 patients over just 4 weeks. It did show restoration of the CFTR protein biomarker, so it showed mechanistically that the drug was working through its intended mechanism. However, the clinical data on the key lung-function measure, forced expiratory volume in 1 second, or FEV1, did not meaningfully improve. Again, the stock was down over 50% on the news.

The company showed some subset analyses in its press release. Four of 6 patients had mucus-plug reduction. They also had some imaging analyses that they revealed. More importantly, they are looking at 6 additional patients at a dose 50% higher than the 10-milligram dose used in this study. They’re looking at a 15-milligram dose with an additional 6 patients.

They say they have plans for a larger, 20-patient study that will look at a longer duration of treatment—12 weeks instead of 4 weeks. That’s going to begin enrolling in the first half of next year.

The thing I like about this is that this is really indicative of the activity in investing and also pharma interest in non-oncology and these other therapeutic areas. We had one that’s an antibody, one that’s a small molecule, and one that’s an inhaled mRNA, and you’ve got CNS represented here, cardiovascular represented, and rare pulmonary represented. These are all areas that have heated up in recent years for interest in pharma.

Again, not all these readouts are positive: 2 of the programs are continuing to move forward, one with positive data. Overall, it’s encouraging to see, coming out of ESMO, that there’s a lot of activity across these other therapeutic categories.

I’m going to speak about MOA in a minute, but Brian, any thoughts on just these readouts? Again, this is what I was saying earlier: The stock movement is pretty robust on some of these. You may have surprises on the upside or downside, but any comments on any of these data readouts?

I’d generally say I like your point about the diversity of both the different indications and the different mechanisms. You look at the Alector/GSK failure, and this is an evolving space where we’re seeing more and more action in trying to get drugs to hit targets across the blood-brain barrier. Obviously, a number of companies have specifically gone public on that platform hypothesis.

It reminds me a lot of the beta-amyloid history. Solanezumab was targeting amyloid, but it didn’t really cross the blood-brain barrier effectively and totally failed study after study. It could have an impact on blood amyloid, but it was not hitting plaque itself.

We saw the evolution of drugs getting better and better at getting across the blood-brain barrier to target plaque, and now we have 2 drugs that do that effectively and have led to improved clinical outcomes, even though I think people are disappointed compared with what the hope originally was.

This is the sector: You’re working through a process to get better and better at identifying targets. CNS is a very hard area to really understand the pathophysiology, and certainly to get to the target. The mRNA CFTR study is similar. We’ve seen a lot of attempts to get delivery of mRNA—not just to the lungs, but even systemically for broader protein expression—that have not been successful.

But companies are continuing. You think, 20 years ago, everyone was knocking Alnylam and RNAi and how difficult it was to really get proof of concept. Now we’re sort of there, and it’s hit prime time. I think these things will eventually get there. Specifically picking the stocks that are going to do it is a little bit disappointing because we’re not there yet, but they’ll keep trying, and they will get there eventually.

Speaking of mRNA, Moderna had another readout. Its CMV vaccine failed in Phase 3. This was a study in women aged 16 to 40. CMV is the most common infectious cause of birth defects.

They had previously announced that they weren’t seeing enough cases in an interim analysis, so the market had handicapped the study as having a low probability of reading out positively. It wasn’t too much of a surprise that it was a negative readout. They are also ending their development of congenital CMV as a result of this study failure, but they are continuing with a CMV study using the same mRNA drug in bone marrow transplant patients.

The company described it as a completely different goal: preventing reactivation of CMV during immunosuppression, since most of these patients either have CMV when they go into transplant or get it during the transplant. They think they have a higher probability of reading out positively in the transplant population.

Again, with the mRNA headwinds that we’ve seen, we’ve seen one with mixed results and one failure. As Brian said, it’s going to take some time to truly develop these more favorably for other applications, and Moderna has really re-highlighted its cancer applications for this.

No, just to add: Where we’ve seen success has been in the respiratory space, and I don’t think that’s specifically because it’s respiratory disease, such as COVID, RSV, or flu. I think it’s because it’s seasonal and you give it at the right moment, at least for an antibody, and then of course for the T-cell response.

I just wonder whether, in chronic infections like HPV, et cetera, this technology might have a tougher time.

I don’t know. I really need to sit back, think it through, and talk to a few virologists or vaccinologists. It just made me start worrying about whether the CMV readout is related to that issue, and that’s the only thing I would add.

I think they want to slowly try to make themselves more of a cancer company. Of course, the difference here with BioNTech is that BioNTech has gone into a whole variety of places with antibodies, ADCs, bispecifics, et cetera, whereas Moderna is sticking to its guns with mRNA. I think the proof of the pudding will be in 2026 and 2027, as the data starts to flow out. Excellent. All right. Well, look, we're at the time. I want to thank both of my co-hosts. It's harder with three. We all have to do a lot more talking and cover more data. But I thank you both for managing through the hour on that. And thanks to our audience for tuning in to this episode of Biotech Hangout. And we hope to see you all at the next