Episode 169 - January 16, 2026

You're listening to Biotech Hangout, a live and unedited weekly discussion of all the latest news in our industry with a group of biotech leaders and experts. I'm Chris Garabedian, and my co-hosts today are Mike Yee, Paul Matteis, 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. So we're going to go ahead and get started. First, obviously, this was the biggest week of the year and probably the biggest signal for sentiment coming out of the J.P. Morgan conference, which just ended yesterday or today if you've got some follow-on meetings. It was my first JPMorgan conference since 2019, and it felt really good. I think all the positive signals were there. Mike is going to talk about this a little further in terms of investor sentiment.

The big news was that there wasn’t as much M&A. Actually, Adam Feuerstein and Daphne Zohar posted an article and did a really nice job, I thought, explaining why this is a good thing and why it could mean some positive momentum that there wasn’t as much M&A announced this week. I think there are some good reasons for that. Overall, short of a macro, existential, non-biotech geopolitical crisis, I think things should look good for 2026.

Paul, why don’t you weigh in on this? What were your thoughts coming out of the week?

I think, in general, on Monday some of the chatter was that there wasn’t much news or much going on. The XBI sold off a little bit on that. But it feels like a lot of investors are coming off a great year last year, to say the least.

I think we’ve talked about a lot of structural tailwinds to the sector. It feels like drug-pricing risk is, knock on wood, not that significant right now; there have been a lot of successful commercial launches and a lot of great data readouts; and investors are getting rewarded for taking data risk. We saw some financings early in the year that were really significant, and they didn’t take the wind out of the sails.

Especially with the Redman[?] news the week before—which, realizing that’s not a done deal, is a really, really big M&A ticket—my conversations were generally very positive. I also think things are positive but not overheated, which is good.

If you’re an investor or a company in this sector, you almost want sentiment to be 7 out of 10. You don’t want it to be 3 out of 10, and you don’t want it to be 10 out of 10, because 10 out of 10 is scary, too. I feel pretty good.

Sam, I know you didn’t attend, but I’m curious about your thoughts from reading the news flow, following X, and seeing any posts. Did you have any takeaway?

Everybody went in looking for some M&A, as Paul said. Of course, you look at the healthcare space, and we didn’t get that, did we? We didn’t. You look at the share-price action during the week, and it tells you a little bit about what the feeling was coming out of the conference.

On our drug chat, we have a pretty hefty drug chat with over 2,000 people. It just felt to me that people were taking it in their stride—is that the best phrase? That’s the best phrase I can come up with now. There wasn’t overenthusiasm. There were some questions about the way that people were commenting on their week, but I think the sentiment was in that same zone of 6 to 7 out of 10, which is great.

We also started the year with a super-strong week, where we got M&A and a whole host of secondaries. I’d love to hear what Mike thought.

Mike, you talked to a lot of investors and companies. We’d love to hear your perspective from the insider-investor scoop. Did they have similar sentiment?

Yes, we can. The first bucket is specialists and hedge funds, those that we’re quite familiar with, and then, of course, the broader mutual-fund and generalist community, which is important.

I think you guys said it well. A lot of things have passed. Drug-pricing stocks are acting a lot better, and folks coming into the specialists are definitely more optimistic about putting money to work. You’re seeing follow-ons. Obviously, there was also an IPO that happened that traded up well, which I think is notable.

There’s definitely a buzz in the specialist community about privates, crossovers, and all that sort of action getting done, on the expectation—and I would say I agree—that a lot of this is coming down the pipe and is all going to go public this year. That’s all a good telltale sign. Obviously, there is some anticipation, expectation, and ability to go out, and that’s all from a lot of specialist money.

I think that’s important, and it’s a reflection of the optimism that people generally see. It’s not one of those frothy, bull-market, climactic periods where IPOs are trading up 100% or 200%. Those are probably bad signs. It’s also not a situation where IPOs are presumably just going to tank.

The other side of the coin is also important: the broader market, broader portfolio mutual funds, and portfolio managers at mutual funds, where they don’t obviously traffic so much in small biotechs. The idea that people feel better about putting more money to work in large pharma, large biotech, and broader biotech is also important.

That’s a bit of a reflection of the fears and concerns about the broader S&P 500, which is at an all-time high. Obviously, the whole AI trade is not so relevant to this podcast, but there are fears that growth and things that are a little bit expensive make pharma and biotech look inexpensive. Lilly at 30 times isn’t expensive if Costco and Walmart trade at 40 times.

That’s good, and it makes our group a little bit more focused as money comes in. It’s good for both sides of the coin.

Do you feel like generalist interest in the sector is still largely restricted to the momentum-oriented large caps, or do you get the sense that it’s actually even broader than that?

That’s exactly why we’re more optimistic about the whole pharma-biotech group, and pharma to some extent. It’s more than just, “I like Lilly” or “I like AbbVie.” People definitely care more about Merck, Bristol Myers, and Pfizer. That means that Gilead and Amgen, which, by the way, have traded pretty well in the last 6 months, are also beneficiaries.

Again, that’s partly because the whole sector has been so bad for the past few years, and everyone is nervous about the rest of the market getting a little toppy. That makes our space better. If fundamentals are good, too—which is happening right now—that makes it better. It’s not just what we call renting or leasing the space, but rather wanting to own the group more this year.

You can also see that AbbVie was potentially going to buy Revance. The stock traded up when AbbVie was looking to buy Revance; for at least an hour, the stock was actually up 6%. It speaks to the fact that people do care about wanting to buy the group if these pharma and biotech companies are putting money to work and making their stories better.

The patent cliffs are so bad that there is broader money going into the space. It certainly takes enough specialist buying of Novartis or Merck to move the stock that much.

Can I just ask: I heard from folks who were there that it felt like a lighter JPMorgan conference. Do you have the stats already? When I listened to the very nice STAT podcast that they have, they started off by saying it was actually very easy for them to get there. It wasn’t difficult to book a flight, and the flight wasn’t full. It just felt like they were saying it wasn’t as busy. Did anyone else get that feeling?

I haven’t been since 2019, as I mentioned, but one noticeable thing was that there wasn’t as much street traffic. What I remember from old JPMorgan conferences is that the streets seemed as crowded as the hotel lobbies and everything else.

I do know that the traffic was still very tough. Getting an Uber to go half a mile was really challenging. You still saw many lobbies full, but I think activity abated during the downturn, and I don’t think we’re totally back. I don’t know the numbers. I’m sure somebody’s capturing that.

I wouldn’t necessarily put stock in the fact that the flights weren’t full out of Boston, although that is notable. There was definitely a lot of activity. It felt good, and it felt buzzy, but I don’t know if anybody else wants to comment.

Let me comment on how I see all of this as it relates to the venture side. First, venture is a lagging indicator, so we very much follow the public markets, the valuations, and the IPO window. All of that tells us that it is a safer market for VC, especially if we have portfolio companies that might be candidates to go public.

And here’s my take on it. First of all, the last quarter was really healthy. It was the best quarter for a long time, and the valuations came up. I think that’s why companies were comfortable raising money, usually off data readouts and stock movement—stocks are moving on data, generally speaking—and so that bodes well for follow-on offerings.

The first week was a record week before J.P. Morgan. Somebody did an analysis going back at least 10 years, I think, and it was the best first week of financings prior to J.P. Morgan, or at least one of the best. The reason I think this is important is that management generally doesn’t look to sell quickly unless they have to. They’ll take a big premium, they’ll take an exit, and I think you’re seeing a wave.

This is related to the idea that we didn’t see as much M&A this week. I think you’ve got more companies that are flush with cash; they don’t need to be acquired. They can still execute and continue to grow value. We’re seeing a larger group of companies with data that has a pathway forward toward a commercial product and that have the dream of becoming a $10 billion, $20 billion, $30 billion, or $40 billion stock.

You’ve got a number of companies that have entered that category who want to be the next Vertex, if you will. I think that’s part of the theme I see as to why there may not be as much M&A. I think this means that maybe the market is shifting a little bit to being a biotech market versus a pharma market—a sellers’ market versus a buyers’ market.

I think that really bodes well, and I think people are seeing that companies that stay independent do reap the rewards of that. I’m intrigued by that, because what it means for VC is that there will be more opportunities for companies to feel like, if they have a good data set or a really differentiated product, and if the IPO window—that’s what we’re all waiting for—opens, they can IPO and hold their value.

That’s what we’re going to be looking at. I also think VCs are deploying capital not to miss out on 2026 if the IPO window does open. They don’t want to be on the sidelines if a lot of those bets go public and have good aftermarket performance, because their LPs—all of our LPs—are waiting for money to come back. If M&A isn’t possible, then the IPO is the other way to exit.

I’m feeling pretty optimistic for venture in 2026. Like we’ve all been saying, it’s not exuberant, but it’s a healthy, steady state that I think we’ve all been hoping for.

You know what’s interesting there, Paul? You pretty much said what he said about the M&A: companies are cash-rich and can just wait. You literally described RevMed there, right? Which is perhaps why it hasn’t come to pass, because they’ve got plenty of cash. They just did the deal with Royalty Pharma a few months ago. They have assets that look really interesting and have meaningful probability of getting to market. So, what’s the rush?

Yeah, absolutely, Sam. That was Chris who made those comments, but I’m going to go to Paul next. Alnylam is interesting. They borrowed a little bit of the playbook from John Maraganore, if we all remember, way back when, when he had that 5-year plan and then updated it again and kind of delivered on that pipeline. Now Yvonne Greenstreet had another kind of longer-term plan unveiled. Do you want to speak to that, Paul?

Alnylam had a really interesting J.P. Morgan going into this year, right? They launched Amvuttra in ATTR amyloidosis. It’s been one of these biotech launches that we’ve seen over the past few years, with a mid-cap graduating to a large cap, like argenx and Insmed, where it really just crushed numbers to the point that the stock arguably got ahead of itself, right?

I think the chart tells you that. For 3Q, they destroyed the sell-side number, and yet the stock traded off. Then, going into 4Q, there was a lot of concern. Shares traded down due to weak script data.

We were left with an interesting J.P. Morgan situation where they missed the fourth quarter but gave really strong guidance for 2026 and some interesting 5-year goals for 2030. All of this was received in a way that I thought was somewhat polarizing. On the one hand, the 2026 guidance was strong enough against the backdrop of the weaker 4Q that you had some people wondering, “Is this actually too high of a bar?”

On the 2030 side, there was some satisfaction with the revenue guide that they gave—a 25% CAGR—but some consternation around the margin guide. They gave a 30% operating margin, which I think people look at as not really all that competitive with other large-cap companies.

I’ll just give our view quickly, if anyone wants to say anything else. We thought that maybe this 2026 guide is not as much of a reach as others think. From meeting with Alnylam, they talked about a lot of factors that impacted 4Q that could turn into tailwinds going forward. They had an inventory drawdown and some price concessions that maybe we’re not going to see as big of a one-off over the next couple of quarters.

On the 2030 side, I think it’s a really tricky situation for a company like Alnylam as it relates to managing to a margin. They talked about a 30% operating margin, which, relative to the market caps and revenue of its peers, is not that compelling. But people have to remember that in these peak years, they pay about a quarter of Amvuttra to Sanofi.

When you think about a 30% operating margin ex-royalty, it’s really over 50%. If you’re a company with a real R&D engine, unless you’re a specialty pharma company, you’re not going to optimize your underlying business to something that is that much greater than a 50% operating margin.

We still felt like the update here, from a fundamental perspective, is overall positive for Alnylam as it relates to the TTR franchise and the fact that they’re going to be spending 30% of revenues on R&D. You have to believe that with 4 INDs a year, they’re going to get more meaningful drugs coming out of this company that are not in the model.

It’s just an interesting example of a company that crushed numbers to the point that it created what people on Wall Street refer to as a whisper number. I don’t love that term, but it’s a sort of true buy-side consensus that is always somewhat ethereal and higher than the sell-side consensus. Now I think people are struggling with how to value this company: Do we think about the margin? Do we think about revenues? How much credit do we give to the platform?

It still feels like they’re relatively well positioned, even if the stock has taken a breather.

Yeah, it is interesting to drive an operating margin that far in advance, because they will have many opportunities to adjust for the right reasons, presumably, over time. But I think they’re signaling that they’re going to be a cash-flow-positive company with good R&D. Those are the 2 things people are looking for in any long-term biotech play.

Let’s go to the next topic, which is Moderna. Sam, I know you’ve talked a lot about Moderna. I want to go to Mike, too, on the mRNA space in general. Sam, what was the update from Moderna?

Sure. Chris, this is a name that, if you look at the share-price movement since a low of $23 in November, seems like it’s almost doubled. We’re now at $41. Pretty much 3 things have been driving this.

One, of course, is perhaps a little bit—I’m speculating on some of this—the super flu that people are talking about. Maybe some folks have gotten a bit more into the groove of thinking again: Is this a theme that needs to be invested in? Perhaps a lot of this is retail. I don’t know exactly. Maybe people are getting back into the vaccine names.

Of course, the company’s guidance has been pretty wide—$1.6 billion to $2 billion—which had been cut throughout the year until the first or second week of January, when we got the announcement just ahead of J.P. Morgan. There were several positive things in it.

One, they updated the guidance with regard to cash, which is great. They said they’re going to come out of the year with about $8.1 billion versus $6.5 billion to $7 billion, which was guided in November. That’s a pretty big jump. About $600 million of that—about half of that—is coming from a drawdown on the loan facility that they have, which also brought up some questions in my mind. I’d love to hear what Mike thinks of that later. Why are they drawing down? There’s no obvious need with that cash balance in the bank.

We’ve asked our credit folks. They didn’t say that there’s any necessity to draw down as part of deals, usually, anyway. They also guided slightly above the middle of the range, which was in line with the consensus that Bloomberg gathers. They stuck with their 10% growth in 2026.

I don’t know how much stock you put by that, because at the end of the day, they had pretty big numbers at the beginning of last year, and we ended up at a much lower number in terms of revenue.

And of course, the latest thing is the Arbutus situation, which had a patent invalidated in Europe. Arbutus says this has got nothing to do with the U.S. litigation that's going on; they'll appeal that. I mention this because this is the key bear argument on the name at the minute, apart from COVID shot sales dropping, the company's cash burn being high, and all of that, which they're addressing. The Arbutus court case—I think the trial is coming up in March—and there are people who believe that this is going to be a major, major problem for the company.

We're doing our own analysis, hopefully out next week, with our patent attorney colleagues within Bloomberg, and we'll have a view on that. But this was the one thing that particularly drove the stock up today; the stock is up about 5% today. I suspect it's going to give it some momentum and change maybe people's view of the risk of this trial. Anyway, 2026 is important for them because they might get the cancer vaccine data for the adjuvant melanoma phase 3 trial read out this year.

Although the company says it could obviously push out to 2027—it's event-driven, the usual argument. Over to Mike.

Yeah, I just want to comment on Moderna. Noubar did a couple of interviews, and he definitely was throwing shade on the FDA about mRNA. He's doing his kind of PR to revive why mRNA is so important and needs to move forward. But, Mike, any comments on that?

Hey, can you hear me? Okay, I got my X working.

Yeah, we got you on X. Cool, cool.

So, 3 things. One, I think coming into the year, obviously Moderna was one of the worst performers and has been. At the start of the year, we were definitely seeing some unwinding of a lot of short positions. That was part of an early move in a hugely crowded short stock.

That also started to unwind as people thought about the cash expenses that Sam just alluded to. They gave improved cost-cutting—or more cost-cutting, I should say—in November at their analyst event, and then again here in January. Because there's a significant fear that this company's just burning through all the cash, it's definitely been helpful that they've cut the burn down from about $3 billion to $4 billion a year to about $2 billion. So that's been helpful.

There were 2 fundamental things going on. One is that there's definitely a view that the cancer vaccine data is coming later this year for melanoma. Sam mentioned that we're at about a 50% probability that it's going to work. That would be a significant catalyst for the stock.

Something we also picked up is that they're talking about a randomized phase 2 adjuvant renal cell carcinoma study reading out this year, and they reiterated that that's also possible. So, if you've been short this stock or have put this one out of favor, they're saying that this renal cell carcinoma study, if it reads out, actually could be filed with the FDA if it's positive on a phase 2. They have statistical protocols and all that kind of thing with the agency on that.

The other part is the patent situation. I agree that there's significant concern because, if the company's burning multiple billions of dollars a year based on various calculations—it depends on whether you're an Arbutus bull or not—then you could be putting 5% royalties on the COVID sales, or 10% to 15% or more in royalty damages on all of the COVID sales in the U.S.

Interestingly, the nonpandemic portion is excluded. If you go back, there's a provision in the initial contract where the government protects you from any damages on the pandemic portion, but excluding the pandemic portion, there were $15 billion of sales outside the pandemic. If you put anywhere between a 5% royalty and a 15% to 20% royalty on that, you're up to multiple billions of dollars in damages. If you're running out of cash and that could happen, that could be pretty bad.

The company pointed out that many people think there could be a settlement. If there's a settlement with the trial starting in March, that could be a positive. And, as of today, again, another example is that they beat BioNTech on some patents in Europe—or I guess this one's Arbutus—but previously they beat BioNTech on some patents in Europe, and no one's paying attention to that. So actually, Pfizer and BioNTech may owe them money.

There's a lot of negativity on Moderna. I don't want to spend too much time on that, but there are some positive things flipping around for 2026.

Great, thanks. All right, we're going to go to the AbbVie deal. Mike, if you want to talk about that, and then we can go straight to Sam to comment as well. By the way, there were other China deals. China is still a presence and a player, and I think it's going to remain so and continue to do deals. But AbbVie did a big one, so why don't you talk to that?

This has been a consistent theme all of last year, right? Here we go again. Actually, this is the second Chinese PD-1/VEGF deal in a row. Obviously, Pfizer and 3SBio connected on one of the largest, perhaps the largest, upfront payments for a PD-1/VEGF deal. Here, AbbVie did one as well, speaking to this whole idea that pharma can go to China and look for all of these assets and bring all of this stuff in.

AbbVie, which definitely has the firepower and capacity to go out and get more things, is jumping into the race in terms of the PD-1/VEGF competition. What's interesting about that is, first, it's another China deal following Pfizer's. Second, it's kind of funny because obviously one of AbbVie's most significant and successful transactions was with Pharmacyclics and that whole crew, which has been phenomenal for AbbVie.

Of course, all of that management team is at Summit, and Summit is theoretically looking for a partner. There was speculation that those 2 could connect there, and of course they didn't. AbbVie went to China to do the deal. Summit is still looking, but they didn't end up connecting on that despite the prior management relationships, which I thought was an interesting angle.

Oh, that's quite interesting. I hadn't—I mean, I remember that deal. I'm old enough to remember the deal. I've just been looking at our licensing data in the Bloomberg Terminal. The Biosion deal was the 6th-largest upfront based on the data I've got from the past 5 years. Above it were, of course, the Daiichi Sankyo–Merck, Galapagos–Gilead, Novartis, and Bausch + Lomb deals. Is that not quite the same kind of ballpark as Zealand and Roche?

Of course, the 6th one was Biotheus, and 3SBio was the 8th-largest. Clearly, there's plenty of excitement here, but AbbVie's $650 million kind of pales into relative insignificance compared with the $1.25 billion that 3SBio got and the $1.5 billion that Biotheus got, perhaps because of the stage of development or whatever.

The other interesting thing is listening to all the companies at the conference. They're all falling over each other trying to suggest that there's a reason why their drug is different, better, et cetera. What we know for sure is that Summit is going to be first to market, assuming the trial works and gives you sufficient clinical benefit.

I'd love to hear how Mike is modeling this. How do you share the piece of the market that they get from future similar PD-1s between these drugs as they come? We can obviously take it and say, well, Summit's going to be first, so it's going to get the largest share, but then they don't have a partner yet. Pfizer or Bristol Myers comes along, so it's going to be quite interesting and quite fun to model this. Hopefully, some of us will get it right.

Mike, any further comments on that?

I don't have a strong view either way on that. I think 2 points: one, how big is the market going to be? And two, I'm fairly confident Summit is going to have to partner up at some point there. So your guess is as good as mine.

Great. Sam, there was some AI news. I know Jensen Huang of NVIDIA was there. A lot of people were capturing selfies, and NVIDIA had its own news this week about China potentially restricting the competition there. What was the AI news of the week?

Yeah. One thing I have to say: I'm not sure what he was wearing. Was he wearing a glittery jacket?

Or a toned-down jacket? He does have his own Steve Jobs-y type look.

Yeah, for sure. No, look, there's never a shortage of interesting comments from the company in general. But the day—the week, again, alongside the Moderna news—started with the NVIDIA–Eli Lilly deal, putting $1 billion together into this structure to fund AI for use in pharma over 5 years. Everybody's at it.

One of the things that stood out as I was listening to these things—sometimes things just get stuck in your head—was: “AI was a significant contributor to our ability to take out $5.6 billion of costs, plus even more in manufacturing if you count.” And now they are ready to scale it up to levels across the entire organization. What does that mean? Did it help the company reduce headcount by handing over some administrative work to AI? I doubt that would have made much of a difference to the $5.6 billion in cost cuts.

Did it help with automation? Hence, maybe, the comment on manufacturing. I wish the questioner—of course, Chris Schott—would do his best in a 40-minute space to get the most out of the conference comments or identify duplication. I don't know.

We know we've recently at BI done a very large 600-person C-suite survey on AI, and frankly, nobody's really talking about headcount reductions. Maybe they're not hiring or are reducing the hiring rate, but they're certainly increasing productivity within teams. Very few are looking at it as a way of reducing headcount, which I think a lot of AI companies actually do say.

What's going to be interesting are all the comments that were made by NVIDIA, Revvity, Salesforce, and Veeva on how their AI systems, through truly agentic systems, are helping pharma and drug development. I think we're going to have to wait a while before we see an actual drug make it through serious clinical trials where AI was a significant contributor to its discovery—maybe another 3 or 4 years. That's my prediction.

Yeah, that sounds right. I think this is going to take a while to see who the real winners are, based on the number of drugs that are truly driven by AI that emerge as truly best-in-class or really differentiated.

I thought it was notable. I can't remember if it was STAT News, Endpoints, or somebody else who interviewed Eric Topol, but the most fascinating thing was a question asking whether pharma was going to step in to buy an AI company. For anybody who would understand and know that dynamic, it would be Eric, and he had a definitive no. He doesn't see it happening in 2026, and he says they're trying to build things organically and internally. They're doing collaborations and partnerships, but he did not see AI M&A on the near-term horizon. I thought that was notable.

So let's go to the regulatory front. Marty Makary was at the conference, and the FDA was there to do some talks, I think, at the J.P. Morgan Healthcare Conference itself. He definitely knows PR, and he was doing little videos and obviously waited until this week to announce some things. Paul, why don't you take one of the notable things, and Mike, you can take the other?

Yeah, sure. Whether this FDA is flexible and libertarian or stricter than any FDA we've seen in a long time continues to be a push and pull that investors are grappling with, especially for some of the smaller companies I cover that are focused on gene therapy or rare diseases.

We've seen a number of instances where a company thinks that it has alignment around something like a single-arm, natural-history-controlled trial or analysis, or a biomarker, and then it says the rug got pulled out from under it. We're left to say, “Okay, when we analyze public companies as analysts and investors, we don't see meeting minutes. We're not sitting in the meeting.” It ends up being he-said, she-said.

But I think at this point we've seen a number of things suggesting that when Dr. Makary is on television talking about expediting things and flexibility, at least so far, that feels like it's more talk than reality. There was another example where Dr. Makary was talking about streamlining certain things on the CMC side for cell and gene therapy, which, Chris, you probably would have a more intimate understanding of the implications of than me. Optically, it sounds very good, but then you had Atara announce a regulatory update for its T-cell product for Epstein-Barr virus, where it received a CRL. The company felt like it had alignment on its path, and, of course, the stock traded down 50%.

We've talked about this on the podcast. I cover uniQure, which has become the poster child for FDA flexibility. The company had alignment and Breakthrough designation, and now it doesn't.

From a sector perspective, in most cases, if you're investing in a company that has a defined clinical trial path with clear precedent, placebo-controlled clinical outcomes, and an endpoint, this probably doesn't matter for the most part. But for companies in that flexibility space, where the data may be more open to interpretation, this continues to be an overhang.

Maybe the last thing I'll say before I turn it over to Mike is that another analyst at Stifel said to me, “I don't remember the last drug that got approved on time.” I'm sure that's hyperbolic, but then he and I were talking about our coverage. All the drugs in our coverage that have been under review in the past 6 months have been delayed. I still feel like the FDA is a small overhang here, as we're all still trying to figure out how to price this risk and uncertainty going forward.

Yeah, Mike.

Yeah. Another interesting development, if you've been following one of Dr. Marty Makary's ideas for accelerating drug development, is this whole Commissioner's National Priority Voucher, or CNPV. Whatever you think about it, the idea of approving drugs in as fast as 2 months sounds pretty amazing. They've given CNPVs to 15-plus drugs, and there have been 2 different rounds of that.

What's interesting, if you go read the criteria for getting the drugs—of course, unmet need and addressing particularly significant areas of health—is that there's an angle where you would work with the administration to also reduce drug prices. That's a whole interesting angle, of course, and perhaps it's a discussion with the FDA.

With all the insights into CNPVs, there were a number of these drugs that could be approved in as fast as 2 months. That's better than priority reviews, which are 8 months. While only 1 or maybe 2 drugs have actually been approved under this, there are a number of drugs on file and currently under review using the voucher. That would include Sanofi's Tzield, a type 1 diabetes drug, and Lilly's orforglipron, which got the voucher as well and has been filed and is under review.

Hopefully, it's going to be a fast approval, and people are thinking that could be very soon in Q1, ahead of Lilly's guidance of Q2. Obviously, the oral Wegovy pill just got approved. If you're walking around the conference, there were some taxis or cars that had a whole wrap on them that said, “The pill is here.” That was the oral Wegovy advertising, which was interesting.

Going back to the point, there was a report that the FDA is scrutinizing a lot of the drugs and that there were at least 2 delays. One was Sanofi's Tzield, because there are some safety issues that they're looking at. The second, specifically, was that Lilly's orforglipron was looking at an April 10 approval. That was a date farther out than Wall Street was expecting, and Lilly traded down as much as 5%. I think it ended the day down 3%.

So what's the point? The point is that not all these drugs are going to get approved in 2 months. Each one is going to be different. I stand by the idea that these are going to be approved faster than a priority review. You should expect the FDA to take a look at things, and you'd want them to take a look at things rather than just blindly approving drugs in 2 months.

They should look at orforglipron. It does not matter if it's Q2 or Q1, even though the stock traded down. It's all very fast. That's kind of a positive, I guess, that's come out of the administration. Anyone have any thoughts on CNPV?

Yeah, let me just add a corollary: the priority review voucher that companies get, which is transferable. I thought it was notable that Jazz was able to sell theirs to an undisclosed buyer for $200 million. Those prices were coming down. That is a higher priority.

A shout-out to my boss, Joe Edelman. He rarely does interviews, but he did one on BiotechTV. He wasn't too concerned about the overall FDA policy; that'll work itself out. But he was concerned about staffing and being able to hit timelines and all of that. He also related that to the gene therapy guidance. He was asked what the most underhyped area was, and he was more bullish that gene therapy is still valid and should come back after this cold period.

But does anybody else want to comment on the regulatory FDA policy? Chris, did we lose you?

I'm still here, Mike.

Oh, Chris is here. Mike, why don't you get going on the next topic that we wanted to chat about, which was obesity? You touched on it to a degree, but you didn't talk about Amgen.

Perfect. Perfect. That is a perfect segue. I just wanted to say that, obviously, obesity remains top of mind. It is top of mind for most mutual fund investors. It is still obviously a huge situation for small-cap and mid-cap biotech investors and biotech.

I just wanted to point to 3 things. Obviously, we already know this, so we don't need to run through that. The oral GLP-1 pill is now approved, and I think the first prescriptions were out. I think that number just came out at over 3,000, which is good.

I think Novo is trading up a few percent on that. But there are 3 developments on the obesity front that I think are important for our audience. One is Lilly is imminent, and it’s going to be big, so this is going to be the year of how big the first year of oral GLP-1 drugs are. The second is the people coming right behind them.

If you haven’t been paying attention in the last couple of months, obviously the Metsera deal closed with a bidding war. I’m sure you guys talked about that. We met with Pfizer, and, as expected, the Metsera data should be out and is going to be presented at ADA in June. We could be getting some disclosure on that beforehand. They have a monthly injection and a monthly amylin.

What’s interesting, of course, is that both Pfizer and Amgen would probably be the next 2 companies getting approvals in obesity, other than Novo and Lilly. Amgen is finishing its Phase 3 trial with its monthly drug, so the race for the next 2 companies is about the monthly drugs.

Amgen was supposed to come out with big data on its monthly drug for the 2-year data, and it did come out with something, except there were zero numbers around it. They came out and did the whole fireside presentation. They said the data was positive. It looks like it’s at least a monthly or a quarterly drug, but there were actually no numbers, no data, and no charts, and Wall Street was left a little disappointed.

I just wanted to say that there’s some controversy around that, but perhaps they’re keeping it close to the vest because of competition. The last part is that it’s still not over, because every single company I spoke with—and I met with AbbVie and Bristol Myers Squibb, and obviously Merck and others—they’re all still looking for more obesity assets. AbbVie has 1 thing and is looking for more. Amgen is looking for more, and so is Bristol Myers Squibb. Don’t be surprised if they do something. In fact, there was speculation that Bristol Myers Squibb was one of the early bidders on Metsera. More to come on that, but we’re going to hear a lot about obesity this year.

So, Mike, where are you on obesity 2030 sales? We had Albert Bourla of Pfizer talk about $150 billion. I’m not sure whose model that is. I think we’re at about $210 billion. Where are you at?

You’re at $210 billion? That’s some $100 billion—$100 billion. Oh my God. [laughter]

So, where do we stand on that? A lot more to come and a lot more interesting.

I’m not that high. I look forward to other future podcasts where we’re going to talk about, if you haven’t already—or maybe you did last month—the NASH stuff, the ADC stuff. That’s cool. Obviously, some of the other agents that are coming are pretty cool.

The numbers in terms of cash pay in the U.K.—the reimbursed version through NICE—is for people with a BMI of 40-plus, with at least a certain number of, and maybe—I can’t remember—is it 3 or 4 comorbidities? I think we’ve worked out the number there is something in the region of 150,000 to 200,000 eligible patients, and that’s only been going on since June. I don’t know how many people have actually gotten a paid prescription, so I’m not surprised that most of it is cash.

Of course, we’ve got the interesting dynamic between Lilly and Novo. Novo has only 10% of its business in the U.S. in the cash channel, the DTC channel, and then it’s about 30% for Lilly. Let’s see if the launch of the orals changes that, or whatever Lilly does—sorry, whatever Novo does—changes that.

Yeah. Yeah. Sam, can you hear me, Sam?

I can hear you now. Yes, I can.

Okay, yeah. So, let’s go a little rapid-fire. We’ve got 5 data readouts before we close. Paul, do you want to cover Lexeo and BioMarin first, and then we’ll go to Sam for J&J?

Yeah, sure. And Chris, I’ll cover BioMarin first because I want to hear your perspective too, given your long history in this space.

BioMarin had some topline data for its DMD candidate, which is an exon-51 drug. It’s an oligonucleotide therapy that, on efficacy, really surprised to the upside. We haven’t seen the full data, but they got up to 5% dystrophin, or 5% of wild type. This was unadjusted for muscle content, so, to my knowledge, that’s the highest number someone has gotten in this exon.

If you follow DMD closely, you know each exon is really different because the baseline dystrophin quantity is different. So, there’s a ceiling, I think, to how well you can do with some of these. Maybe with exons 44 or 45, you might be able to get a lot higher.

It’s really interesting because there’s not a lot priced into BioMarin. I take more of a wait-and-see view here because this drug comes from Prosensa. It didn’t exist when Prosensa was acquired, but it’s out of that project, right, with drisapersen—the original oligo from this portfolio, which did make some dystrophin but was super toxic.

I think the underlying issue here is that these oligos are not conjugated to either TfR1 or a peptide, so they stay around in circulation. They’re immunogenic, and there can be a risk of thrombocytopenia or renal toxicity. Again, we haven’t seen anything, but for this molecule, there’s actually no safety signal that’s been reported. I thought it was notable that really nothing was said on safety at all, and we just need to wait for a medical meeting. To me, that remains the most salient question for the competitiveness of this product. So, Chris, is there anything you want to add from your history here?

Well, yeah. For one, I do think their chemistry is more toxic, and so I always look at what any company in DMD is not sharing, and that usually raises flags. The other thing is that, while I also argued for dystrophin being a good surrogate marker, there still isn’t a hard correlation between dystrophin production and outcomes. We still need to see what happens to Sarepta’s exon skipping and what the FDA ultimately addresses with that.

I still have a lens of skepticism until we see full data sets and really understand what’s going on. But I think it’s good for the field that there’s another player and, obviously, an expansion of the different exons that are being targeted. With Avidity, Dyne, and other players in the mix, I think it’s overall good. But I want to see the full data set before I render judgment.

Makes sense. Maybe very quickly on Lexeo, since we were talking about gene therapy: They had more data for their PKP2 gene therapy. This is a rare cardiac disease. It has a cult following among biotech investors because there are tens of thousands of patients with PKP2 deficiency, so it’s actually one of the bigger gene therapy opportunities out there.

I think the challenge in this disease, and you saw it from the Lexeo data and how the stock reacted, is really finding the right endpoint. Lexeo, Rocket, and Tenaya are forging the path here. Lexeo showed a signal on NSVT, or nonsustained ventricular tachycardia, and PVCs—these electrical measures of how the heart behaves—and they’re trending in the right direction, but there’s a lot of variability.

All I would say is that investors get impatient. They want the signal to be totally unequivocal in the first data set or the second data set. Who doesn’t? But this reminds me a little bit of how the Friedreich’s ataxia program played out for Lexeo, where some of the early data were interesting and there was variability. At 6 months, there was a signal, but people were debating how big that signal was. The data got a lot better over time.

Then they were able to forge a path with the FDA on a prospective Phase 3 study that is natural-history-controlled. There’s still risk here, but I think the reaction maybe was an overreaction because, when you’re first in an indication, sometimes you have to generate some data before you really know what to focus on.

Yeah. I also think gene therapy, if it’s going to come back, people are watching valuations closely. Companies like Lexeo, Solid, and others with gene therapy are hovering around half a billion.

I think it'll be interesting to see where valuations go as these gene therapy companies mature. All right, rapid fire. Sam, do you want to hit Johnson & Johnson on myeloma, and then we'll go back to Paul?

Yeah, one quick one: Johnson & Johnson on myeloma. We've gone from MajesTEC-3; we just had MajesTEC-7, which is the bispecific BCMA/CD3 T-cell engager. Everyone's going to keep comparing it to CARTITUDE-4, which is the trial for Legend and Johnson & Johnson's own CAR-T therapy, Carvykti. And all you have to do is look at the share-price chart for Legend to see what the Street and the markets are thinking about this evolution, not just from their bispecifics but also from competing CAR-Ts overall.

Great. Paul, we've got 2 more news items for you to cover. We started a couple of minutes late, so we're going to go a couple of minutes over. But, Paul, you've got a couple of other news items.

Yeah. Which one do you want me to start with, Chris?

Why don't you go to Vertex, and then you can go to Lilly?

Yeah, Vertex and Sionna, their emerging competitor, had some interesting updates in both of their programs for cystic fibrosis. All I'll say is that this is evolving into a really, really interesting year for both companies. I mean, Vertex has obviously really diversified its pipeline and drug portfolio over the past 5 years, since really the last time there was a competitive overhang with AbbVie in CF. And I don't even want to say that Sionna is an overhang, because Vertex is a huge market cap and Sionna doesn't have any patient data yet.

Sionna has a really, really interesting drug that targets NBD1, which I would call a different mechanism of CFTR stabilization. And I think Vertex is kind of taking issue with the term “mechanism,” right? Because all these drugs are correctors, but it's a different binding site on the protein that is not directly bound by the Vertex drugs, as we understand it. Sionna has some data in the middle of this year, and Vertex has data for its next-generation CFTR modulators later this year. They're not saying anything about those compounds for competitive reasons.

Mike and I attended the Vertex event. It was the first time I really saw them getting multiple questions from different analysts about this in a public forum. I met the Sionna team. We cover that stock, and so it's just kind of heating up as an interesting year in CF, potentially.

I think the other news I wanted to briefly touch upon was the Lilly commentary on their TRAILBLAZER-ALZ 3 study and how people are trying to figure out how to interpret that commentary. You saw Biogen sell off. For context, this is, to me, as a neuro person, the catalyst I am by far the most interested in over the next 12 to 18 months. It's a readout that I am—this is not a stock call on Lilly—but I am super bullish on this readout, and I think it can be paradigm-shifting for neurodegenerative disease.

This is a study where they're essentially trying to prevent the onset of Alzheimer's disease in patients at risk. We know amyloid beta has gone through a very, very long history, but if you look at the evolution of amyloid-beta treatments, the first studies in moderate-to-severe Alzheimer's don't work. Some of the studies in early MCI show a small benefit, but in a subset of early MCI in the Biogen and Lilly trials, in the patients who have the earliest disease, you see a considerably bigger effect size.

Our view is that in these prevention trials, you should see an outsized effect size. And also, again, a lot of the infrastructure has to be built. But I think, who wouldn't want their plaques taken out if it's going to lower the risk of Alzheimer's substantially? As long as these drugs are safe, which I think in an earlier population they likely will be.

Lilly was more affirming that the data are expected in 2027, which is not new, but people have been looking to 2026 as the time for a potential interim. I think the question is: Does this 2027 reaffirmation suggest an interim has already happened or not? I wouldn't interpret this as at all negative to the PoS of the study. I mean, Lilly remains very confident, and I also think an interim analysis here is just going to be subject to a number of events.

The biggest uncertainty with these prevention studies is that no one really knows how to power them, right? No one knows what to expect for the control arm and the rate of progression. But the Lilly study is an event-driven study, which should be a good hedge against powering. So Biogen is largely exposed here with lecanemab, which has been a really significant disappointment, but we think if we get prevention data and it's great and the safety's clean, I think it can really change the narrative on this class.

Sam, do you have any comments on that?

Just as Paul is excited by this, so am I. I used to work on amyloid, and I think this is going to be quite a—we all hope—a shift, the sort of shift that we hadn't seen yet with any of them in the later stages of the disease. And I just hope it doesn't fail, because it takes the wind out of the sails of all the other ideas that people are trying here. So, fingers crossed. Excited.

Yeah. And I know Biogen—I didn't see the presentation or know the specifics—but I heard people saying that they are definitely leaning into other therapeutic areas. So they're trying to make sure they have hedges against the Alzheimer's space. Thanks to everyone. Overall, I think we all came out with a positive feeling that 2026 is going to be a good year coming out of JPM. If you weren't there, I think there are a lot of signs you can read from all the final reports that are coming out today and probably next week. Thanks to everyone who attended this JPM Hangout event earlier this week at JPM. It was a great time. I was there. I didn't see as many co-hosts as I was hoping to see. I saw Brad. I saw Tess Cameron. I was there for about an hour and a half, but I think I missed a lot of the large group there. It was great to meet so many of you in the room. Special thanks to our gold badge sponsors, CFGO, Incubate Coalition, and Cineos Health Communications, and our blue badge sponsors, FTI Consulting, Catalytic Agency, and Mispro. The event wouldn't have been possible without them. We're already looking forward to next year, and I hope we see all of our audience there in turnout next year.

Overall, I think we all came out with a positive feeling that 2026 is going to be a good year coming out of JPM. If you weren't there, I think there are a lot of signs you can read from all the final reports that are coming out today and probably next week.