Episode 179 - April 10, 2026

Today I'd like to start with some high-level comments on where we are in the biotech market. From a public-market perspective, for the week starting Monday and through at least yesterday's close, using the XBI, an ETF, as a proxy, biotech is up 2%. This compares with the S&P 500 and Nasdaq, both of which are up 4% for the week, so that is relative underperformance.

With that said, looking at the bigger picture, the XBI is now up 8% year to date. That's strong outperformance versus the S&P 500, which is essentially flat for the year and up only 0.3%. It's even stronger outperformance for the XBI compared with the Nasdaq, which is down 2% year to date. In addition, importantly, with the XBI closing yesterday near 132, this encouragingly marks a new 52-week high.

1. The Biotech Comeback Continues

From my perspective, this reflects an incredible comeback for biotech, especially if we look back at this time last year, when the markets were reeling from the aftershocks of so-called Liberation Day and the current US administration's announcement of a new tariff policy. For context, a year ago today, the XBI stood at 71 and change—that's the exact 52-week low level. For numbers geeks and perhaps stock nerds out there like me, that is a nifty and healthy 84% positive return.

That compares with a 30% return for the S&P 500 and a 39% return for the Nasdaq. While those numbers certainly reflect truly great returns over the past year, a public-equity investor would have more than doubled their money investing a year ago in biotech, using the XBI as a proxy. That's an opening statement on the biotech market that I thought was worth sharing with you all today.

2. Biotech Financing Finds Its Footing

In terms of the financing environment, I'd like to highlight a few things. First, there was the S-1 filing for Avalyn Pharma this week, for that Boston-based company to go public. For some background, Avalyn Pharma was founded in 2011 and is working on inhaled formulations of 2 approved and well-established oral drugs for idiopathic pulmonary fibrosis, or IPF: Esbriet and Ofev.

While terms have not yet been disclosed in its S-1 filing, the company is looking to raise $100 million to fund an ongoing Phase 2b study for its lead candidate, an inhaled version of Esbriet, as well as an ongoing Phase 2 study for a second drug, an inhaled version of Ofev. The IPO plans come after the company successfully raised $100 million in a Series D financing last July. It also raised $175 million in a Series C round in 2023 and $36 million in a Series B round in 2020.

This S-1 filing comes on the heels of an S-1 filing for Calera Therapeutics, an obesity-focused biotech, a few weeks ago. Overall, keeping in mind the 6 or so biotech IPOs we've seen year to date, while we would always like to see more, I think this continues a very healthy trend for US public biotechs.

Finally, with a number of US public and private financings taking place this week, including a $345 million equity raise for publicly traded Celldex Therapeutics, from the European biotech perspective I wanted to flag the successful close of a new €1 billion fund by Paris-based Jeito Capital. Sam, did I get that right? Is it Jeito?

You did.

Okay, thanks. At €1 billion, or roughly $1.2 billion according to the company, that marks the largest raise ever achieved by a fully independent European fund dedicated to biopharma. All in all, I think relatively speaking, we're in a very decent, if not very good, place in biotech, although sometimes it doesn't always feel that way.

Against this backdrop, I want to turn things over to Sam Fazeli and Josh Schimmer, who will walk us through a host of health care policy and FDA regulatory matters. Let's first start with Sam. Sam, go ahead and please take it away.

Sure. Thanks, Graig. We had a few things from the administration, and Josh, Graig, and Yaron, please jump in when you feel like it.

3. Pharma Policy Takes A Turn

Let's start with the 100% tariffs that the president started talking about for some pharma companies. When you start digging into it, you think, “Wait a minute, didn't we already do this with regard to most-favored-nation pricing about a year ago, roughly?” I can't remember now. There are so many things that have happened that it plays havoc with my memory.

Here we are, thinking we'd settled all these tariff issues, and this announcement comes out. Then, of course, you dig into it, and it's much more about form over substance. First of all, 16 of the 17 largest companies have already done deals with the US. They've gone through the Oval Office for the photo opportunities, and that has required them to pledge to bring manufacturing back to the US.

I'm sure we'll all be out there with our drones and whatever other methods we can use to see how that manufacturing build-out is going. We have one company that hadn't signed yet—or perhaps has signed but hasn't announced it—and that's Regeneron, among the top 17 big companies. This 100% tariff applies to—I really can't figure out exactly whom it applies to. Maybe it applies to Regeneron; maybe it applies to companies like Merck KGaA.

The whole deal is essentially to try to get them to come and sit at the table, do at least some of the MFN agreements with regard to Medicaid, and talk about bringing manufacturing back to the US. It doesn't include generics, for obvious reasons, because you can't tariff generics. There's no market left. It doesn't include biosimilars, orphan drugs, or rare diseases, so quite a lot of the little biotechs that have drugs for these types of indications would be excluded automatically.

That's the way I've been seeing it. I don't know if anybody else has a slightly different take on it. The market hardly blinked, although the announcement came in the middle of the whirlwind of the Iran conflict. I don't know if anyone else wants to chime in on this particular one. If not, I'll go to the next one quickly, Graig.

The nice news is something that I think we had been expecting, although I'm still trying to understand the substance of what exactly it means. The announcement is to create a new clinical-trial notification pathway to serve as an alternative to the burdensome existing investigational new drug pathway and accelerate drug-development timelines to make America healthy again.

What's the point of this? A lot of people are blaming this, or at least pointing to it, as one of the reasons why there have been increasing deals with China biotechs. It's much easier to get into first-in-human trials in China, in terms of speed and regulatory elements, than it is in the US, Australia, and probably Europe. If anybody regulates things, it's going to have to be Europe first, right? They always win on regulation.

I think the discussion has been, “Can we speed this up and at least get rid of the relative competitive advantage that China has?” That's what this is aimed to do. But when I read the little detail in there—revise the FDA regulatory framework to create an optional, risk-based expedited IND pathway for certain Phase 1 clinical trials where there is existing preclinical data—what does that mean? Is that mice and rats? Where does that stop?

Does that mean I don't have to worry about dogs and nonhuman primates? Probably, because one of the key things it goes on to say is that these studies should satisfy the regulatory standard with validated NAMs, or non-animal methods. It'll be interesting to see whether all of this is essentially suggesting that you don't have to go through the entire process of mice, then whatever other models you use, then dogs, and then nonhuman primates in some circumstances before you get into the trials.

So that's the way I've been trying to get my head around this. I don't know how many pathways this impacts, but I'm assuming it's going to be positive if they manage to do it. So, anyone else want to chime in on that?

I think it's clearly obvious to most of us and listeners that, at least in the US, as it tries to stay competitive globally, particularly with China in biotech, it's a positive thing to see at least some initial movement, particularly perhaps coming out of the FDA. I guess we'll just see how this all plays out over the next bit.

Mm.

Yeah. So what we do need to do is speed things up. That is for sure. How it's actually done, and how quickly we can speed things up—talking about speed, how quickly we can get there to actually make a difference in the next 6 to 12 to 18 months—time will tell. But if you talk to all the good and the great in biotech that we all talk to, they all want to see this process simplified—not cutting corners, not risking people's lives. I'm pretty sure we can get there.

The last thing I was going to talk about from an administration perspective, if you all followed the vaccine world, is what I'm understanding about HHS. First, HHS has been directed to—this is a rumor, and I don't know how much fact there is in it—calm things down a little bit on the anti-vaccine comments, et cetera. So that's at least from the public-facing front.

But one of the significant changes that has happened in the vaccine approval or review process is the complete revamp of ACIP, which is the Advisory Committee on Immunization Practices. It's run by part of the CDC, part of the Department of Health and Human Services. What this group has been doing for as long as I've been around is reviewing vaccine data and making recommendations about vaccination. It's not the FDA, right? The FDA approves things as they do. ACIP was telling people how to vaccinate, who to vaccinate, and when to vaccinate.

Sometimes they would make decisions that were quite consequential for the potential revenues of a vaccine because they limited it to 65-plus, et cetera, et cetera. What happened with Secretary Kennedy, who came in as head of HHS, is that ACIP was completely gutted. The 17 members were pretty much removed, a bunch of new folks were put in, and some of us viewed those people as not necessarily being the types of experts they should be.

Then we had a court ruling that essentially said all these changes were against the charter governing how ACIP members should be appointed. The ruling put a hold on it and was pretty much suggesting that the changes needed to be reversed. What seems to have happened now is that there seem to be some changes to that charter itself to essentially make it easier for these changes to stick.

Now, what does this mean in the end for vaccines? We all know that vaccines have been under pressure. I think we generally believe—I’m not going to speak for everyone—that they are one of the best things that science ever developed in terms of their value to society and prevention of disease.

However, the direction this has been going is to try and prevent or reduce vaccine access or public trust in vaccines. That's where we are, and we have to see whether this change that's potentially going to come to the charter will eventually make it easier to just keep ACIP as it is now, which is essentially people that I frankly would not trust to make a decision on how to vaccinate, whether to vaccinate, and who to vaccinate.

The reality is that most states have essentially moved to doing their own thing, and the American Academy of Pediatrics is making recommendations now. I don't know if I'll be watching ACIP meetings anymore, when I used to watch them religiously. So that's where we're at, Graig.

Thank you so much, Sam, for those comments. Josh, you're on. I think if you could provide some comments on a press conference by FDA Commissioner Marty Makary, that would be great.

Yeah. It was an interesting press conference that Dr. Makary hosted to tout the progress that the FDA has made under his leadership, ranging from the food additive issues they've addressed and approved biosimilars to some of the expedited reviews that they've completed.

Generally true to form, as perhaps more of a politician than anything else, it was very much an “everything is awesome, things are going great” discussion. For the things that haven't been going great, it was “don't blame us, blame prior leadership,” perhaps in an effort to solidify his role as head of the FDA, considering he's also come under a fair amount of fire for some of the turmoil that we've seen coming out of the agency. I think we can all agree that we would be better without him.

Separately, this will be really interesting. RFK Jr. is going to start his own podcast where he will be talking about issues that he says will be uncomfortable for folks to potentially hear about. He'll have his array of guest speakers. It'll be fascinating to see what he covers on that podcast.

I'm sure it'll give us plenty of fodder for some really interesting discussion here on Hangout, based on whatever it is he's going to come up with to talk about. But I think we can all confidently say whatever it is will probably be issues and items that many of us are likely not to agree with. So the saga continues for now.

Thanks, Josh, for that. It will be interesting to see what happens on that podcast. We'll shift now to the section of our podcast where we highlight notable deals of the week.

4. The Terns Merck Deal Unpacked

We're actually going to start today with a discussion of what I would describe as a highly controversial M&A deal that was announced a few weeks ago, and that was Merck's proposed $6.7 billion acquisition of publicly traded Terns Pharmaceuticals, a company that I was involved with when it went public via an IPO back in February 2021.

Terns, as some of you may recall, initially was focused on advancing a pipeline of multiple assets to treat liver disease, NASH. After positive Phase 2 data, and when no one came to the table for an out-licensing deal for what I thought then was a very good THR-β asset for NASH, or MASH as we call it now, the company then pivoted to obesity and oncology.

The shares actually hit a low of $2 last year after the Liberation Day-related weakness in the markets. Then last fall, after its oral GLP-1 drug ultimately proved uncompetitive, it pivoted to being an oncology-only-focused company with a very novel allosteric tyrosine kinase inhibitor for treating chronic myelogenous leukemia, or CML.

With what were then considered truly spectacular efficacy data announced at the ASH meeting last December, the company was able to raise almost $750 million in an equity raise at $40 a share, only to then be the subject of Merck's M&A bid at $53 per share, announced on March 25.

The really interesting aspect of that offer was that, at $53 per share, it only reflected a 6% premium versus the last prior day's closing price for Terns shares. Trust me, as I cover Terns, I heard from many disgruntled investors, and I think Yaron covers Terns as well. He probably heard the same thing.

In particular, given street views on how exciting and compelling the prospects were for Terns's TKI for CML, this comes in direct contrast to the $6 billion or so deal we saw last week. Many of you may recall from our podcast last week when we discussed Biogen's acquisition of Apellis Pharmaceuticals, a company I also cover, with Biogen offering a 140% premium over Apellis's prior-day closing stock price.

In that case, Apellis—or at least Biogen—seemed to be overreaching with perhaps a surprisingly large, if not outsized, premium for a company that features an emerging orphan kidney disease drug, but at the same time, a flagship drug in Syfovre for geographic atrophy with much greater potential revenue that had previously shown pretty slow, if not flat, growth over the past year.

Getting back to Terns, the SEC filing that details how the deal went down became available this week, and I encourage you, for entertainment, to go to that SEC filing. Wow, did we see many twists and, dare I say, turns when it comes to the play-by-play on how that deal finally came to fruition.

I'll summarize, and maybe at the end I'll have Yaron add his comments, but how the M&A discussions went down was something like this. In late December, after Terns had announced earlier in the month its ASH data, where we saw a 64% six-month major molecular response, or MMR, rate in an initial ongoing Phase 1/2 study compared with an abstract that was initially made available earlier in November, an unnamed party—and in the filing, the party is known as Party C, which was not Merck—initially came in with a $58-per-share unsolicited offer. That then kicked off an M&A process that led to other parties, including obviously Merck, getting involved in M&A discussions.

That Party C increased its bid to $61 per share with an additional $9 CVR. Then Merck came in and initially offered $61 per share on its own. The really interesting twist here is that the parties went under confidentiality and got access to a data room. What the companies ended up seeing in that data room was the most up-to-date data cut from the Phase I/II study, called the Cardinal study. The efficacy signal, though not made public, had in fact degraded from the original 64% 6-month MMR.

That led to a reassessment of the deal offers. In fact, Party C ended up dropping out altogether, and Merck ended up lowering its offer to $50 per share. Ultimately, Merck and Terns agreed to $53 per share. I think it's interesting that the public gets a look at what happens behind the scenes in that SEC filing.

We also see what Terns' initial projections were for peak sales for its TKI, and that was about $5 billion. Perhaps in retrospect, we can come to a conclusion, whether right or wrong, about whether the 6% premium that Terns ultimately got from Merck—which was not well received by investors—represents a fair deal or not.

The last thing I will say is that if Terns had remained independent, if there had never been an M&A offer, imagine that sometime later this year it would have had to update the market on how far the efficacy for its TKI might have degraded. In the SEC filing, there is a statement that goes something to the effect that it would have fallen to the low end of the range that Terns was projecting. This could have been potentially catastrophic for the stock and, of course, shareholders. So, it's really interesting what happened in the Terns and Merck deal that's been proposed. Yaron, would you like to add some other comments?

Yeah, absolutely, Graig. Thanks for a really nice summary. There are a couple of things in the SEC filing. The response rate potentially dropped, but it was still within the range, just at the lower end of the range, because of the inclusion of patients who had failed Scemblix in the past. Scemblix is Novartis' drug, as you mentioned, and is also a STAMP inhibitor. Terns' drug has the same mechanism, better exposure based on PK, and looks to be a little bit safer, so they can get to the right dose.

Again, the data is a bit early. Recall that Novartis ultimately was using a lower dose because they did get into some kind of AEs at the higher doses. If you're going to go with the same mechanism of action again, what was very intriguing and important here was that their drug was still very active in a patient who had previously been treated with Scemblix. Of course, if you're going to add those patients in, your response rate is going to come down.

That's probably why Merck ultimately stayed. We don't know, so I'm obviously hypothesizing, but they did trim the offer and also said that it was still within the range. Just to give the audience some context, we're talking about a response rate that is dramatically higher than what Novartis showed in the past. Novartis had a 26% response rate. The data was early, but the data was between 64% and 75%. So even if you go to the lower end of the range, you're still in the 40s versus Novartis at 26%.

There's a competitor from Enliven Therapeutics that is sort of an ATP-competitive inhibitor using the older sort of receptor-binding approach. But overall, we do have to remember that the stock was up sevenfold, if not more—much more than sevenfold—from the bottom. From pre-ASH to M&A, the stock did great, so investors were remunerated overall.

I would add that, going back to the December equity raise of almost $750 million that the company did, that deal was priced at $40. For new investors who came in at $40 in December to be able to get a return of $53 less than 3 months later, or about 3 months later—obviously, the deal has to close—but that's still a really good return for investors.

Again, we wrote a fair amount about that deal. With that said, I think it will end up being a very interesting case study for M&A deals. Speaking of more recent M&A deals, we did see 2 deals this past week. We're going to start with Gilead's acquisition of Tubulis, which is a German-domiciled company working on ADCs. Sam, I believe you're going to comment on this.

Yeah, thanks, Graig. This is a company that I've seen present 2 or 3 times as I go to some of the VC-type conferences in Europe. The metrics first: Gilead is paying $3.15 billion up front. This is the third deal this year, so that's $3.15 billion, plus $5.36 billion up front for Arcellx, and $1.6 billion for Ouro. That comes to about a $10 billion cash spree so far this year. Or does that count? Okay, so far this year.

What's interesting is that Gilead already had a deal with this company. To a degree, you could say it's like Arcellx. The involvement with Arcellx was much more advanced, and the drug that they bought with Arcellx for multiple myeloma was potentially going to be approved this year, whereas this is a lot earlier. But the access that Gilead had through the deal that they signed in December 2024, where the upfront payment was only $20 million, clearly gave Gilead sufficient understanding and knowledge about the potentially differentiated methodology—or product-development approach—that Tubulis has in its ADC program.

That's what they do. They call themselves a differentiated ADC platform. It comes with a couple of assets. The data for those assets are interesting, and there's opportunity there. But I think Gilead did this to access the platform, having gotten into the ADC world through its acquisition of Immunomedics back in, I think, the 2020-ish timeframe, which gave them the Trop-2 ADC Trodelvy.

First of all, I kept seeing these guys and thinking, "Okay, that's great. This is an ADC company." But most deals for ADCs are going to China. A lot of Chinese companies are pursuing differentiated approaches to ADCs. It's really good to see that, just because of the volume of what's been going on in China, when somebody has a differentiated approach somewhere else, people don't just keep going to China—which I'm a fan of—because of what we think is cheaper, cheaper, cheaper. I don't think that's necessarily the case, but in any case, for ADCs, having made up my mind that the world is going to go to China for any ADC they want, here's one that surprised me a little bit.

Of course, it's really good for the European sector, or the VCs that were in it. The company had just raised, in October 2025, one of the largest Series C rounds I've come across, at least for Europe: $400 million, or just over $400 million. Since this is a private company, and I'm not saying anything specific here, it's possible that the investors had a good feel for how the relationship between Gilead and Tubulis was going. It's a massive raise when their previous raise, about a year and a half before, was $138 million. That's especially true when you're in the world of ADCs, where you again have that worry that everything ADC is going to come out of China, like everything GLP-1 is going to come out of China.

That was a very interesting raise and clearly positioned the company to be able to develop its assets by itself. Of course, Gilead decided to bring them in-house. I don't know what will happen with regard to the organization. I'm assuming a lot of the science will stay in Germany. It's good for the European sector, and it's interesting for Gilead in that it's a platform that they bought rather than assets, which is what they did with Ouro and Arcellx. I'll stop there in case there are any questions.

Thank you so much for that, Sam. We also had another very interesting deal earlier this week from Neurocrine, which, for almost $3 billion, acquired an orphan-disease company called Soleno. I believe it's Soleno Therapeutics. Josh, I don't know if you cover the company or Neurocrine, but you may have some comments. I'd also like to invite Oliver to come in, again for the first time. Welcome, Oliver, for any comments he might have as well.

Yeah. So I think we've all been wondering what Neurocrine was going to do with its growing cash position. They've definitely committed to being prudent in terms of their capital allocation, and they seem to have accomplished that. They paid a modest premium for Soleno, a company that's selling VYKAT XR for treatment of Prader-Willi syndrome. It's off to a pretty good launch already, annualizing north of $400 million, and seems to be on pace to become a blockbuster, north of $1 billion, maybe even a couple of billion, assuming that there are no new safety signals that come up.

There have been a couple related to hyperglycemia and diabetic ketoacidosis, and a couple of patient deaths potentially not related to the drug, although it can always be hard to know for sure. So, as long as safety remains consistent with what we've seen so far, the product should be a meaningful bottom-line contributor to Neurocrine, giving them a third leg to their stool to complement Ingrezza and Crenessity. Crenessity is having a pretty good launch as well, and there are some synergies, perhaps more complementarity as opposed to true operational synergies between Soleno and Neurocrine. Not an expensive price to pay at all, again assuming that there are no new safety issues to emerge that would change VYKAT XR's trajectory.

It also accomplishes a couple of other things. One is that it takes some of the pressure off of Neurocrine's later-stage neurology pipeline, which I think many of us view as a little bit higher risk. And so it gives us a fully de-risked, essentially commercial-stage asset in that mix, so a nice balance for them.

The other thing that's noteworthy is that it keeps these companies in the XBI, right? One thing that has been helping biotech lately is this increasing trend of companies transitioning to profitability and bottom-line growth, and really meaningful cash flows that we're starting to see emerge throughout the industry as a whole. And that's in contrast to the many years that the industry spent essentially not returning cash, not generating cash, really guzzling cash, and being an industry that can be very hard for generalist investors to wrap their heads around, because how do you invest in an industry if it doesn't make money?

So we're starting to see this trend within the XBI, within biotech, and being able to maintain strong cash flows within the XBI instead of transferring them to pharma, in my mind, is actually very powerful and a potential force to continue to draw generalist interest into our space. At the end of the day, generalist interest in biotech is going to have a much more meaningful impact on the sector and its valuations than pharma M&A.

There have been circumstances where we've seen a fairly dramatic transfer of value, essentially, from the biotech sector to the pharma sector as a result of M&A. And so, as the biotech sector continues to mature and continues to look quite investable for those who are attracted to things like cash flow and cash flow at reasonable valuations, these trends are important and noteworthy, and I think are going to prove to continue to be very powerful for the biotech sector.

You know, Graig, as you talked about earlier, it's been a little up and down lately. I think we agree there's a rosy outlook, but lately we keep getting dragged back into that 120 to 130 range. The hope, though, is that the fundamentals of this industry, as we play them out over the next couple of years, are really going to create a strong sector breakout.

Yeah, thanks for that, Josh. Oliver, welcome to the podcast.

Yeah. What Josh said encapsulated it really neatly, and thanks for having me, guys.

We may have lost Oliver with his connection.

Actually, I can't hear him either.

Is that better?

Yeah, that is better, Oliver. We can hear you now.

Perfect.

He's gone again.

I think we may have lost Oliver again.

Yeah.

Hopefully we'll get him back in. In the meantime, there's one other deal that we're going to talk about. We'll shift things back to Josh on a deal where Assertio was acquired by Garda Therapeutics. Interesting smaller deal, but Josh, do you want to go ahead?

Yeah. Much smaller potatoes, but still some interesting potatoes on this one. Assertio used to be called Depomed, if anyone remembers that.

Oh, Depomed.

But they rebranded as Assertio.

Ah.

Yeah, it's the old Depomed name change, presumably to shed some of the opioid baggage that Depomed got caught up in, but not nearly as much as some of the other opioid players. It keeps muting me. It's really weird. I don't know what's happening.

I wonder whether it's Twitter that's playing us and giving us trouble.

Got it.

Oh, no, sorry. Somehow it just went back on mute.

All right. We're good.

You can still hear me?

Yes, we can hear you.

Yeah. So it's the old Depomed name change, presumably to shed some of the opioid baggage that Depomed got caught up in, but not nearly as much as some of the other opioid players.

It is Twitter, I'll bet you.

Got it.

Yeah, it keeps muting me. It's really weird. I don't know what's happening.

I think it also turned off my join, so I'm taking complete blame for this now.

I led you to this place.

But we can hear you now, so that's good.

Yeah, it does.

Exactly. I have to watch my mute button and make sure it's not changing on me.

Just checking that we've got it.

We're good.

So Assertio acquired Spectrum a few years ago to bring in Rolvedon, which is basically a branded version of Neulasta to compete in a biosimilar-heavy space by offering some of the more meaningful ASP-plus-6% economics to certain centers. By the way, the Rolvedon launch for Spectrum looked to be going exceptionally well, arguably too good to be true. It looked like there was a little bit of channel activity that impacted the trajectory of that asset after Assertio acquired it.

Now this company, Garda Therapeutics, something many of us have heard of before, a private company, has put in a bid to acquire Assertio for basically half the price Assertio paid for Spectrum. What's also interesting about this one is that there's a go-shop window where Assertio can continue to solicit higher bids from other companies before closing the transaction.

So I think this is deal number 11 for public biotech companies year to date, so off to another good start in terms of at least deal number. The dollar volume, though, has been more of an average year for M&A.

Maybe I could take this short respite from the technical issues to come back to the Soleno thing. One of the super interesting trends we're seeing a lot of is these midsized drugmakers transacting, and that's going to be good for the sector, right? That means more buyers, right? More bidders.

We saw it with Neurocrine during the Soleno deal, we saw it with Servier buying Day One last year, and BioMarin did a $5 billion deal. The market seems to be reacting well to these deals, right? They like the fact that these midsized drugmakers are bulking up for size. I think that means a lot of these processes are going to be a lot more competitive.

I think there's another takeaway from the Soleno transaction, which is bullish too. We often heard on earnings calls from some of the CEOs in large-cap pharma who are looking to buy biotechs that one of their issues was a bid-ask spread, right? A lot of the sellers wanted a high premium off all-time highs. You look at a company like Soleno and the journey that it's been on: it sold for around $3 billion. At one point, it was valued north of $4 billion after its launch got started around March last year, and it was doing gangbusters in terms of scripts.

Then the market cooled a bit on it. The fact that the board and management were willing to transact at a lower price shows that right now we've got this very ripe market where there are lots of active buyers. There are midsized drugmakers, there are also large caps dealing with patent cliffs, and on the other side, we've got sellers not necessarily looking for unreasonable premiums.

I think that's why what we've seen in Q1, which was a really good quarter for M&A, is probably likely to be replicated for the rest of the year. God willing.

Okay, Oliver, thanks for that. I'm glad we've hopefully gotten through our technical difficulties. I'll just add a very brief comment on Depomed. I remember covering that company in 2001 and 2002.

It's happening to you, Graig.

Oh, okay.

I guess it's happening to everybody. I was just commenting on Depomed and how it's evolved over the years. Interesting. Sometimes biotech has 9 lives. I'll save my comments for another day on Depomed. And I'm still here.

Yeah.

I'm here. Okay. I'm going to check my internet too.

The moral of the story is that you need to change your name, and you need to have a good name. Assertio is a really good name. Depomed just sounds like a restaurant, you know, a place to buy pens.

But Yaron, Terns didn't change their name.

But that's a great name.

It is.

I think, Graig, maybe we should move to data.

Yeah, let's—

And then we can come back to—

Sure. Sure. What time? Oh, man. Yaron, why don't you start with the Ascendis data?

And by the way, it is happening to all of us. I—

Yeah. Apologies to all of our listeners. It's not our fault.

Okay, so I'll speak very quickly while you can actually hear me.

5. Clinical Data Brings Mixed Results

Ascendis released its 52-week data. Achondroplasia affects patients with short stature, I should say. They already have an approved drug. It's called Skytrofa. It just got approved about a month ago and launched last week. It's weekly—a weekly version, essentially—and has better data than BioMarin's daily drug, which is called vosoritide.

Both of them are CNP hormones. They basically do a very nice job of fixing the biology, so to speak, of achondroplasia, or correcting the biology. They then tested it in combination with their weekly growth hormone, and we've seen the 26-week data. That data was incredible. The CNP drugs alone boost your growth rate to 50% of normal, and the combination gets to 97% of normal. I mean, that's fantastic.

We've seen the 26-week data, and now this was the 52-week data. What's really important is that they're not only just boosting growth, which is cool, but, as you know, when you're looking at someone who's little, they have body disproportionality, so they're looking proportional. The data now at a year actually showed an improvement in proportionality, and a fairly meaningful one.

This data is really a go. They're now in phase 3; they just launched the phase 3 study. It also comes at a perfect time because, in the meantime, BridgeBio has now released its data with the oral drug called infigratinib, which looked very good. It's an FGFR3 inhibitor, so they're going to file this year. They'll be on the market next year.

The market is going to become a lot more competitive, with the weekly option from Ascendis and an oral option coming next year from BridgeBio. But then, probably in 2 years, we're going to have the combination from Ascendis, which all our KOLs are saying they really believe is going to become a core part of the standard of care. So we're seeing really great innovation here on the metabolic orphan side, and it's great to see.

Thanks, Yaron, for that. I'm going to briefly comment on some negative data that we saw from Insmed. Insmed is a respiratory-disease company that had a tremendous year last year in terms of stock performance. It had some negative phase 2 data from what's called the CEDAR study. It was evaluating what I would call its now-flagship drug, which is called brensocatib.

Brensocatib was approved last summer. It is a DPP1 inhibitor approved for bronchiectasis. Out of the gate, the launch of that drug has been amazing. In fact, in its first full quarter of sales—the fourth quarter of last year—they reported, I believe, about $146 million in revenue. Guidance for this year, its first full year of launch, is, according to management, at least $1 billion.

Again, this is bronchiectasis, which is a very serious coughing-type condition due to infection. Brensocatib represents the very first product ever approved by the FDA for bronchiectasis. With that said, Insmed had been exploring potential use in 2 additional indications. It had some negative data late last year in a condition called chronic rhinosinusitis without nasal polyps, or CRSsNP. That came as a little bit of a surprise and a disappointment.

If you look at the stock chart for Insmed, you'll see a little bit of a cliff that happened probably in the middle of December. Then we were waiting for data from this same drug, brensocatib, in a skin condition called hidradenitis suppurativa. There are several drugs that are approved, but not all that many. While there are no good preclinical models for HS, as I'll call it for short, brensocatib did not achieve the primary endpoint of this kind of signal-seeking study.

So, unfortunately, we've seen 2 setbacks for potential label expansion for Insmed's brensocatib. That being said, with first-full-year sales of at least $1 billion guided in 2026, and peak sales of almost $9 billion, that does not mean that the prospects of brensocatib are not compelling and exciting. That's what has driven the tremendous stock appreciation in Insmed.

With that said, I think I would like to pivot to some breaking news. This wasn't part of our original program, but we saw some breaking news today that was regulatory in nature, and that is, unfortunately for Replimune, a second complete response letter from the FDA.

I don't follow the story all that closely, but for context, this is a drug that was being developed for advanced melanoma. It had been submitted to the FDA. Last year, or maybe even late 2024, there was a first complete response letter that came out, I believe, in July of last year. After some follow-up meetings with the FDA, the FDA allowed them to resubmit.

If you look at the stock chart for Replimune, you can see the highs and lows that correlate nicely with the initial rejection and then the resubmission. But unfortunately, the negative outcome that was just announced midmorning today was that the FDA rejected the drug again, a second time.

I think it does raise some questions around how we, as an industry, should think about perhaps what is happening at the FDA—or maybe not. With that in mind, I'd like to open it up to see whether, Sam, you've got a view on it, and whether others have a view on it.

Yeah. Well, look, Graig, I just asked our resident expert in melanoma, Max Nisen, for his views, and he's given me a huge amount of material about the data and what it does. So, bottom line, if I can dissect all the things that he says and put them into one piece, the response rates seem okay. There's an interesting angle regarding whether the patients have had ipilimumab or nivolumab before or not.

Bottom line, the efficacy is okay. The patient population it has gone into does need this therapy, which is for melanoma, as you rightly said. The side-effect profile is pretty decent, so the risk-benefit profile seems to have been pretty decent.

Let's not forget that this is really a replication-competent virus, potentially treating the tumor and directing the immune response to it. There has been some talk of abscopal effects, in terms of maybe setting off the immune reaction to other tumors where you haven't injected them.

But all of it seems to come down to the fact that it was an uncontrolled study, right? It was a single-arm study, and the data seemed to be fine, as I just said, in terms of the efficacy-versus-side-effect profile. What I'm a bit confused about is that, if the FDA—I mean, they didn't do another trial. The FDA is saying you should have done a properly controlled, randomized controlled trial, if I'm reading it correctly.

As you said, this is breaking news, so this is what I'm understanding. But then, what? They couldn't have done that fairly to compare it with the first CRL, which was in July. Initially, I thought, “No, this is just a good response to a trial that maybe wasn't done at a higher standard, as the FDA says, apparently.”

What I'm confused about is how this company could have been allowed to refile if this is what the FDA was going to say. Is it pointing to a “mess at the FDA” or not? It's up for debate.

Yeah. I'm just going to quickly offer that, in retrospect, it's unfortunate. Again, I don't cover Replimune, and I don't know the story all that well. But for the FDA to have allowed them to resubmit for approval and then put them through the wringer, of sorts, only to reject them a second time just seems a bit cruel and harsh.

I don't know the asset and the clinical-trial data well enough to be an authority, but it's really not a great sign for the industry, I think.

I mean, yeah, it's possible that what companies often do is say, “No, no, no, wait, hang on. We're going to go and do a whole bunch of data analysis here and prove to you that even though it's a single-arm study, we merit approval.” And maybe get—I don't know what else they do in these kinds of interactions.

But you're right. It just doesn't add up here. If they were going to do this, they should have just said, “No, don't come back. Go and do a controlled trial and come back.”

Yeah, I'd just add that, given some of the turmoil at the FDA and what seemed like, “Everything is awesome, let me keep my job,” speaking to our friend at Truist, they would have approved this one.

I kind of agree with Sam. It looks like an active drug, reasonably well tolerated. There is a subjective component to interpreting the data because there's no obvious survival advantage at this point. So that one, I agree, is a head-scratcher.

It's disappointing because I think we thought that this would be a good test case for the FDA to show that they're back open for business. It just means that we're still trying to figure out exactly where the bar is set on a case-by-case basis.

Thanks for that, Josh. We've got 5 minutes left, and we're going to go to some obesity market-related news. You certainly can't get through a Biotech Hangout without talking about the obesity market. And, Sam, I think you're going to comment on some approvals that we saw this week.

Yeah, Graig, I'm going to try to do 2 things here. One, talk about this Nature paper. As you know, I love reading these scientific articles. It's my upbringing. But it's related to the news that we've had.

6. The Obesity Drug Race Accelerates

So we had some data and some approvals: Novo's high-dose Wegovy, 7.2 milligrams. Remember, the usual dose that people end up on is 2.4 milligrams. This was launched on April 7, priced at $399 per month for self-pay patients, which is a bit lower than what Zepbound is going at, between $499 and $699. Although these prices seem to be changing on a daily basis, almost at the same pace as we get obesity data.

High-dose Wegovy showed about 21% weight loss at 72 weeks in the STEP UP obesity trial, and Zepbound had about 22%. So this is Novo getting its drug to the level of efficacy that we've seen with Zepbound. Remember, Zepbound has 2 mechanisms of action, right? GLP-1 and GIP.

The other approval we saw was Lilly's Foundayo—orforglipron—which is the true small-molecule oral GLP-1 mimetic or agonist. It has been available since April 9, so from next week, I'm excited to look at the prescription data as it comes out.

Foundayo's starting dose is $149 per month for self-pay patients, and the higher doses go up from $199 to $349. That compares to $149 per month for the Wegovy pill. Weight loss and tolerability perhaps look better for Wegovy, definitely on the weight-loss basis. But, of course, the Wegovy pill does have strict dosing requirements.

The reason I said I'm going to link it to this Nature paper that was published recently is that we're saying here that this drug has higher efficacy than the other drug. So what this paper did—and a lot of it is based on 23andMe data—was survey 25,660 subjects to find out whether they were taking GLP-1s or not, and then looked at GLP-1s, tirzepatide, et cetera. They had a good look at that data and tried to figure out what characteristics might drive higher efficacy in some patients versus others.

The study says they identified a missense variant in the GLP-1 receptor that is associated—this is a quote—“significantly with increased efficacy of GLP-1 medications, with an additional just under 1 kilogram of weight loss per copy of the effect allele.”

They also found an impact on the side-effect profile related to nausea, vomiting, et cetera. That was quite interesting. And, of course, they showed again the same bias toward women having better weight loss, et cetera.

So what I'm trying to say is that, with all these studies that we look at and compare data from, we really need to think about what the composition of these subjects is within these trials. And as you know, I've always set up my stall saying I really don't want to compare efficacy anymore with these things, especially across trials. But the market will continue to do that. Share price will go up and down on the back of that.

That was quite an interesting week, particularly with this paper. I'm assuming we'll get even more studies done like this, trying to dissect out whether patients have a higher propensity to respond to GLP-1s or not.

Fascinating stuff, Sam. Thanks so much for that.