Episode 180 - April 17, 2026
Chris GarabedianPaul MatteisTess CameronAdam Feuerstein
- Biotech's backdrop is strong, with the XBI at post-pandemic highs—though Tess Cameron cautions that the index itself has changed. The XBI is above all but a two-week period in early 2021; its methodology shifted from a broad, near-equal-weight basket toward larger, more liquid companies that have seen favorable M&A. Adam Feuerstein says the sector is more mature than five to eight years ago, with more companies commercializing drugs profitably.
- The issuance window is seemingly reopening: Kylera priced its IPO above $625M before the shoe, potentially exceeding $700M at a $2B valuation, while S-1 filings included Seaport, eMAb—with John Martinori involved—and Ablynx the prior week. Chris Garabedian also cited activity from Janus, Wellington, Cormorant, and Redmile as a possible precursor to generalist participation. Obsidian paired a several-hundred-million-dollar PIPE with a reverse merger into Galera, suggesting quality reverse mergers and PIPE investors can support a healthy public market. Paul Matteis says generalist interest remains concentrated in Alnylam, Vertex, and perhaps Ionis—not “Bluebird bio with 10 patients of data.”
- Revolution Medicines posted an all-comers overall-survival hazard ratio of 0.4 in second-line pancreatic cancer and now trades at or above a rumored $30B takeout value. The group discussed Incyte and Summit as imperfect precedents, Adam noted Revolution now exceeds Insmed's market cap, and Chris said Tim Opler thinks it could become a $100B company. Following a $2B raise—less than 10% of shares outstanding—the company may have roughly $3B–$3.5B to commercialize independently.
- Travere's sparsentan became the first and only approved medicine in FSGS despite underperforming active control on eGFR across the two-year study; approval rested on proteinuria. Adam Feuerstein says the Parasol Project analyses argued that proteinuria reduction should be an approvable endpoint, while Travere was a major funder of the groups involved. Paul resists drawing a broad FDA-flexibility conclusion from one event but says, to the extent the decision is extrapolatable, it may lower the bar for kidney programs, including Vertex's high-risk APOL1 Phase 3 of enaxopin, which has proteinuria data but no eGFR data yet.
- Allogene's preliminary allogeneic CAR-T data showed MRD-positive patients in frontline lymphoma consolidation could be converted to MRD-negative, but the stock went in the opposite direction. There were 12 patients per arm; Allogene then raised about $175M at $2 per share, below the pre-data price. Adam says many funds avoid cell therapy, with enrollment timelines and a mid-2027 interim analysis creating further uncertainty. The scientific question is whether frontline allogeneic treatment will differ from second-line autologous Yescarta or Brianzi; potential advantages include fewer CRS or ICANS events and outpatient treatment.
- AI clinical-trial prediction markets received Adam's “DraftKings for clinical trials” critique. He questions their value beyond betting. Tess welcomes additional information sources but says black boxes that only produce probabilities are less useful than transparent rationales and doubts AI will clearly beat collective investor judgment reflected in stock prices. Tess's fund bars participation, and STAT added prediction markets to its ethics policy because of inside-information concerns. Chris says early flashpoints are often overhyped, commoditization may come quickly, and collective human expertise using AI tools may beat AI alone.
- Venture's Q1 decline may reflect selectivity rather than a retreat: HSBC's John Norris called it the lowest first quarter since 2023, while Chris says VCs are concentrating bets in more de-risked, clinical-stage opportunities and roll-ups. Bain invested $300M in five BMS pipeline assets, including a lupus lead, and brought in former SpringWorks CEO Saqib Islam after SpringWorks' $3.4B Merck exit and Bain's work with Cerevel. CrossBridge Bio raised only $10M through SAFEs and a seed round, reached an up-to-$300M acquisition within 1.5 years, and reportedly produced a 17× return for SAFE investors despite having no open IND.
- Paul sees investors favoring pipeline “golden tickets” over commercial execution, while obesity remains crowded but open to differentiated products. He cites Biogen and Vertex as hotter names despite opposite commercial trajectories and says development-stage companies can be valued on the dream of future catalysts. Kylera is a GLP-1/GIP dual-mechanism obesity company backed early by Bain, with Adam Koppel on the board, Ron Renaud as CEO, and John Milligan as chair. Tess expects segmentation by patient and treatment setting, with tolerability and duration potentially supporting premium pricing despite Novo's aggressive first-generation pricing.
1. XBI at post-pandemic highs — but read the index's fine print
- Chris's setup: the XBI sits at levels exceeded only by “a two-week period in early 2021.” Tess's technical caveat before anyone celebrates: today's index isn't that index—the methodology shifted from near equal-weight across a broad basket to one “weighted a bit more in favor of larger liquid companies,” and favorable M&A of those companies over the past couple of months “really pushed the XBI up high.” The market showed instability during “the first closure of the Strait of Hormuz”; now “everyone's just shrugging their shoulders,” and stocks keep rising.
- Chris says specialist funds are doing well and can reinvest M&A proceeds into the market. He also cites activity from Janus, Wellington, Cormorant, and Redmile as “sometimes a precursor to the generalists coming in.”
- On generalists, Paul says interest is still “concentrated” around Alnylam, Vertex, and maybe Ionis—a far cry from generalists who once “owned Bluebird bio when they had 10 patients of data.” Tess's archetype for a gettable company is Revolution Medicines: “big enough, liquid enough, and gettable enough.” Adam adds that the sector has grown up, with more later-stage companies that have shown they can commercialize drugs successfully and profitably.
- The financing window is seemingly reopening. Kylera priced its IPO at more than $625M before the shoe, potentially exceeding $700M at a $2B valuation. Recent S-1 activity included Daphne Zohar's Seaport, eMAb—with John Martinori involved—and Ablynx the prior week. Reverse mergers, once “a little bit of a dirty word,” can now look respectable again: Obsidian completed a several-hundred-million-dollar PIPE and a reverse merger with Galera, with high-quality PIPE investors serving as “another anchor of a good, healthy public market.”
2. Venture's “downtick” says less than Bain's $300M and a 17× bootstrap
- HSBC's John Norris called Q1 the lowest first quarter since 2023. Chris reads that as VCs “getting more discerning, concentrating their bets,” and becoming more “intentional and purposeful” about new investments rather than simply tending existing portfolios. Reporting from STAT's Allison DeAngelis and Endpoints similarly pointed to more de-risked, clinical-stage opportunities and roll-ups.
- The counter-evidence: Bain took five assets from BMS's pipeline, with a lupus program in the lead, invested $300M, and installed former SpringWorks CEO Saqib Islam. Chris notes that Bain's work with SpringWorks and Cerevel led to multibillion-dollar exits. He also says Norris's observation that an “INI” portfolio was ticking down might have looked different if this $300M deal had been included.
- CrossBridge Bio, based on CEO Michael Torres's disclosures, raised $10M through SAFE notes and a seed round, then was acquired for up to $300M just 1.5 years after the seed. Chris hears that a sizable amount was paid upfront, although it was not disclosed. Torres said SAFE investors received a 17× return. The preclinical cancer program had no open IND and was not yet in the clinic, though it was close.
- A founder-friendly firm reportedly passed on CrossBridge a couple of times; Chris says his own venture studio also passed on the Series A. He says founder claims of pharma interest are “easily 9 out of 10 times... a nothing burger,” but in this case Lilly seemed genuinely interested. Chris calls the economics a major success and says Lilly's $12B in EBITDA gives it room to pursue many such early programs at a very small fraction of its market value.
3. “A DraftKings for clinical trials”: the AI prediction-market skirmish
- Amid a wave of AI activity—ChatGPT and OpenAI released a life-science tool, Claude announced one, Anthropic added Novartis CEO Vas Narasimhan to its board, and acquired Coefficient—Adam questioned clinical-trial prediction markets. His reaction, whether AI-based or not, is: “What's the value? What's the point beyond these just being another betting platform? This is DraftKings for clinical trials.”
- Adam says he does not see the value in computers competing to predict trial outcomes, despite the science-based arguments that such markets could advance science or help patients. He acknowledges that he may have sounded too grumpy in a Twitter exchange with someone apparently starting an AI-generated clinical-trial prediction market.
- Tess welcomes additional information sources, including betting markets, but says “things that are a black box and just spit out a probability” are less useful than a rationale that investors can examine. She doubts AI prediction will necessarily outperform “our collective brains,” which are often reflected in stock prices. Her test: “I would love for that AI to start picking stocks, and we'll see how it performs.”
- The compliance layer is significant. Adam says STAT bars staff from individual-stock investing and added prediction markets to its ethics policy late last year because access to inside information creates a similar conflict. Tess says her fund likewise does not participate. Her compliance team's punchline was, “Would you really want to bet on these outcomes with your personal money anyway?”—“Nah, we just do that professionally.”
- Tess also cites The Economist's discussion of commodity prediction markets, where insider information may be part of the risk-management rationale. Her fund's view is different for wars and drug trials: “hopefully not.” Chris's synthesis is that skeptics of early flashpoints are often right, the space may become commoditized quickly, and collective human experience using AI tools may beat AI alone.
4. Travere's FSGS approval: the endpoint moved, and the label shows the miss
- The story per Adam's column: sparsentan is “the first and only approved medicine in FSGS,” but its Phase 3 study did not show an eGFR benefit. The drug “actually underperformed the active control across the entire two-year time point.” Approval instead relied on proteinuria after analyses associated with the Parasol Project argued that proteinuria reduction “should be an approvable endpoint” and “the new regulatory standard.”
- Adam points out that Travere is a major funder of the groups involved in developing that endpoint. The label itself shows the eGFR miss in a prominent graph, followed by the proteinuria result in the next paragraph. Adam still thinks the drug will probably sell well because it is the first and only approved FSGS medicine.
- Paul says it is difficult to extrapolate a broad FDA-flexibility thesis—including whether the regulatory posture is shifting with Vinay Prasad out—from one CDER event. He notes reporting that Prasad overreached his CBER role into some CDER reviews.
- His more direct read-through is the APOL1 kidney-disease space, involving Vertex, Maze, and earlier-stage programs. Vertex's enaxopin entered Phase 3 after a Phase 1b in APOL1 FSGS, but the Phase 3 population is broader APOL1-associated nephropathies. Paul calls it “a pretty high-risk Phase 3 program” because it is unclear whether the mechanism will work broadly. Vertex has proteinuria data but no eGFR data yet, and the regulatory ask remains unclear: “Do they need a clear p-value? What effect size is significant?” Maze recently reported data in FSGS and other subtypes. To the extent the Travere decision is extrapolatable, Paul says it “does seem to lower the bar broadly in the space.”
5. Allogene: the data and the stock “went in different directions”
- Adam separates the data from the stock reaction because they moved in opposite directions. The data came from a preliminary futility analysis in frontline B-cell lymphoma consolidation: patients in complete remission after R-CHOP but still MRD-positive were converted or cleared to MRD-negative with the allogeneic CAR-T cimasel. There were only 12 patients in each arm—cimasel and observation—but the result looked as good as or better than expected and supports the continuing study, whose ultimate endpoint is event-free survival.
- The market's answer was much less positive. Allogene's stock initially rose, then fell, and the company raised about $175M at $2 per share, below the stock price before the data. Adam says the financing did not appear to be executed well. His buy-side canvass found funds that are simply not interested in cell therapy, plus concerns about enrollment timelines and the period of “dead space” before an interim analysis in the middle of 2027.
- Adam says he recently met a “really cool” private rare-disease company pursuing a different cell-therapy thesis, but some investors were reluctant even to take a meeting once cell therapy appeared in the first description. His lingering scientific question is whether frontline allogeneic consolidation will differ from second-line autologous treatment with Yescarta or Brianzi on survival or event-free survival. Potential advantages include a somewhat cleaner safety profile, no CRS or ICANS, and possible outpatient treatment.
- Tess adds that cell therapies have shown “absolutely phenomenal efficacy,” but community-setting access remains difficult. Brianzi is increasingly recognized as having a safety advantage over Yescarta, creating share shifts, but there has not been much TAM expansion. Launching into a market based more on share gains than TAM expansion is therefore harder. Adam's caution, also invoking Sana, is that investors must time these allogeneic investments correctly even when the science ultimately works.
6. Revolution Medicines at $30B: hunting for a development-stage precedent
- Revolution Medicines has a pan-RAS and KRAS inhibitor franchise, including pan-inhibitors, targeted inhibitors, and combinations. Tess describes its second-line PDAC data as “best in disease,” with an all-comers overall-survival hazard ratio of 0.4. The company is also studying small-cell lung cancer and colorectal cancer, creating several expansion opportunities.
- The development-stage company is valued around $30B, following a rumored $30B takeout, and now trades at or above that level. Tess's multiple logic is that parallel next-generation combinations make the company “less about just one particular drug” and more about building a franchise. The data are phenomenal, though there is still room to improve tolerability.
- The group struggled to find a true development-stage precedent. Chris asked about Incyte reaching the twenties; Adam could not imagine it reaching $30B. Adam also cited Summit as having traded high but not this high. He noted that Revolution now exceeds Insmed's market cap, while Chris said Tim Opler thinks it could become a $100B company. Adam joked that Revolution would eventually be large enough to buy Merck.
- Revolution raised $2B “no problem,” likely receiving somewhat less in net proceeds, and the raise represented less than 10% of outstanding shares. Tess estimates the company could have roughly $3B–$3.5B to commercialize independently. Chris calls the sequence—a possible-sale head fake, strong data, then a $2B raise—“a little bit of a master class.”
- Adam also stresses the medical importance beyond valuation. On the podcast, NYU Langone pancreatic-cancer expert Paul Oberstein discussed the reaction of physicians treating these patients. Former Senator Ben Sasse, who has advanced metastatic pancreatic cancer and is taking the drug in a different study, also discussed it in The New York Times. Adam says a potential doubling of survival in pancreatic cancer is meaningful.
7. Spire's open-label tease: better-than-Entyvio, not yet proven
- Spire reported 12-week induction data from an open-label study of its alpha-4 beta-7 antibody in moderately to severely active ulcerative colitis. The program is a version of Entyvio with a longer half-life and a thesis around better coverage and PK, plus subcutaneous administration. The uncontrolled outcomes compared favorably with historical benchmarks, and the stock rose.
- Tess links Spire's strategy to Revolution's: rather than relying on one drug, Spire is building an IBD solution around alpha-4 beta-7, TL1A, and IL-23, including combinations of alpha-4 beta-7 with TL1A and IL-23. The excitement is that the reported data were from monotherapy, while combinations could potentially raise the efficacy and safety bar. Spire raised $463M to fund the pipeline.
- Paul asks whether the open-label UC data prove that Spire's drug is more efficacious than vedolizumab. Tess says that is “too speculative to be definitive,” especially because placebo rates matter, but views the results as potentially supportive of the thesis. She also points to the exposure-efficacy relationship for Entyvio itself.
- Paul notes that Spire is a Fairmount company and that his colleague Alex Thompson is “a total believer.” Given the validated mechanism and exposure hypothesis, Paul says the program has a good chance, from his less-educated view, of at least trending better.
8. Dream the dream: pipelines over launches, and obesity's crowding test
- Paul's regime read is that last year felt like “the biotech launch year,” with Alnylam, Insmed, Argenx, and Magical among the companies on steep launch curves that carried the group. Now investors seem selectively bullish on large-cap companies with “a potential golden ticket in the pipeline,” almost irrespective of the base business. He points to Biogen—possibly before the controversial Sepalis deal—and Vertex, whose commercial businesses could not be more different: one is growing and one is declining, yet both have attractive perceived pipeline catalysts.
- Alnylam and Insmed have been pulled into the broader “what's next” conversation. Paul revives the idea that it can be better to be a development-stage company where investors can “dream the dream” than a commercial company judged on quarters, inventory, and selling weeks, while stressing that the situation is not yet that extreme. Adam had also described the Allogene, Revolution, and Spire releases as one of the better Monday-morning data groupings in a while.
- Kylera is the obesity test case: a GLP-1/GIP dual-mechanism company with early Bain backing, Adam Koppel on the board, serial CEO Ron Renaud, and former Gilead CEO John Milligan as chair. Chris asks whether the sector has reached “peak obesity.” Tess says it is crowded but that important improvements remain.
- Tess expects the market to sort into different patient segments and treatment settings. Elderly patients with obesity and bone-density issues may need something different from younger people seeking weight maintenance. She also sees tolerability and duration of therapy as possible differentiators.
- On pricing, Paul asks whether next-generation obesity drugs can escape the first-generation “race to the bottom.” Tess says Novo has been “super aggressive” on pricing to maintain market share, but better tolerability and potentially longer duration could be a different pitch to health plans—particularly if patients stay on therapy rather than coming off it. Paul notes that large CNS and I&I markets can still support blockbuster drugs even in the face of generics.
Full transcript
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 Paul Mateos, Tess Cameron, and special guest Adam Feuerstein. For more information about our hosts and guest speakers or to listen to the most recent episode, please go to biotechhangout.com.
So we started talking about this, but we're going to start with the market update. The public markets are looking pretty good right now. The XBI is at post-pandemic highs. There's only a 2-week period in early 2021 when there were higher levels of the XBI, so that's good news.
1. The IPO Window Reopens
The IPO window has seemingly started to open up. We saw additional S-1 filings this past week. Specifically, our own Daphne Zohar's Seaport filed an S-1. eMAb—John Martinori is involved in that—also filed. This followed Ablynx's S filing last week.
The big news is that Kylera priced its IPO today and raised more than $625 million. That's without the shoe. That could put them over $700 million at a $2 billion valuation. We were just speculating whether trading has started and whether it trades up. This is a big one. Tess, do you want to comment on the public markets currently and how they're looking?
Look, I think the public markets are looking really strong. We haven't seen the XBI at these levels for many, many years. Part of that, just to get into a bit of a technical discussion for a minute, is a function of XBI construction and the fact that, going back to the last time we were at these highs, which was around 2021, the XBI was constructed quite differently. It was more of an equal-weight index across a very broad range of stocks. The XBI methodology shifted and is now more—it's not quite market-weighted, but weighted a bit more in favor of larger, liquid companies, and we've seen some very favorable M&A of those companies over the past couple of months. That's really pushed the XBI up high.
I thought it was interesting that we saw so much instability in the XBI during the first kind of closure of the Strait of Hormuz, and now everyone's just shrugging their shoulders, and we see stocks go up. We see stocks go up the next day. So I think that the—
Yeah.
—the acquisitions and just the performance of a lot of the biotech companies have really reflected there.
I got a question, maybe—
Yeah.
Maybe for Paul or Tess. But just talking about that whole generalist-versus-specialist debate in biotech, the specialist funds are doing really well right now, and particularly with M&A, they're able to reinvest those proceeds back into the market. Do you think we're seeing an uptick in interest from generalist investors in the sector, or maybe it doesn't really matter right now?
Maybe it doesn't really matter because I still think, Adam, it's concentrated. And look, my coverage isn't perfect for it. I don't cover Lilly and Novo, but in my world, where I cover some stuff that's super-early in high science and then other stuff like Alnylam and Vertex, it's really concentrated around Alnylam, Vertex, maybe Ionis, right?
But it's not—I remember much earlier in my career talking to generalists who owned bluebird bio, Adam, when they had 10 patients of data and were a huge market cap, right? I don't think we're back in that world, and it's probably a good thing we're not in that world.
Yeah, I'll just add that I also think that—
Yeah, I would tend to agree with that. I think it's your companies that are close enough to market and understandable enough that are getting that generalist attention, right? I would point to Revolution Medicines as a company that is in that phase now of being big enough, liquid enough, and gettable enough that generalist investors can get involved.
But yes, unlikely to be your equivalent—
Yeah.
—of bluebird bio with 10 patients.
Yeah.
Yeah, and it seems like the market right now—I mean, the sector—we've all—The sector has grown up. The companies are generally sort of later-stage. We're not dealing with pie-in-the-sky type stuff, and a lot of companies have shown that they can commercialize drugs successfully—and do it profitably, right?
So it's a market that may be more attractive to generalist investors, even if they may be only just dipping their toe into it. But it's certainly a totally different, more attractive market overall than it was, like we said, back 5, 6, or 8 years ago, whatever.
Yeah, my reception's a little bit spotty. Can you guys hear me okay?
Yep. We got you.
Oh, we can.
Okay. I was just going to add that I also look at the broader public investors, not necessarily the specialty crossovers, but we are seeing activity from Janus, Wellington, Cormorant, and Redmile. I think that is sometimes a precursor to the generalists coming in when you have to put more money to work and you have higher-valuation public companies to support. So I think all of that is good.
I'll just add also, PIPEs and reverse mergers have been performing pretty well over the last couple of years, and we saw another one this past week: Obsidian, which did several hundred million dollars in a PIPE and a reverse merger with Galera. Again, reverse mergers used to be a little bit of a dirty word. I think we're seeing quality reverse mergers and high-quality investors in the PIPEs—again, another kind of anchor of a good, healthy public market.
2. Venture Capital Gets Selective
Let's move to privates, and I'll just speak a little bit on the VC market. HSBC's John Norris just gave an update on the first quarter, and his conclusion was that it was lower. It was the lowest first quarter since 2023. He thought it was a downtick. I do think that's largely a reflection of VCs getting more discerning, concentrating their bets, feeling like they want to be more intentional and purposeful in the new investments that they make, as opposed to just tending to their existing portfolio.
STAT's Allison DeAngelis did a great report a couple of weeks ago. Endpoints did a report on just talking to a bunch of VCs, which kind of reinforced this idea of going to more de-risked opportunities, more clinical-stage opportunities, and then some roll-ups.
But in the first part of Q2, we've seen M&A activity. One big one was Bain's deal to take 5 assets from BMS's pipeline, including a lead program in lupus. Bain led a $300 million investment and brought in former SpringWorks Therapeutics CEO Saqib Islam to lead the company. SpringWorks exited in a $3.4 billion acquisition by Merck. Bain did this with SpringWorks and then Cerevel, and both led to multibillion-dollar exits. So it looks like they're at it again with a pipeline.
Interestingly, John Norris said, “Oh, INI looked like it was ticking down.” This was an INI portfolio play. If we added Bain's $300 million and this INI, it might have changed the conclusion of Q1. But I think that's all a good sign.
And then, Adam, I wanted to touch on your tweet about this clinical-trial prediction market. I'll just add that we're seeing a lot of AI chatter. ChatGPT and OpenAI just came out with a life-science tool, Claude announced its life-science tool, and Anthropic brought Novartis CEO Vas Narasimhan onto its board and acquired Coefficient. So there's a lot of activity in AI, but this is a different angle on using AI to predict clinical trials. What are your thoughts on this? And, again, I always like your curmudgeonly take.
I was going to say, Chris, are you calling on me because I'm the grumpy old man? Is that what you're doing?
Well, I didn't call you old, but grumpy maybe.
Again, look, I am not the best person to talk to about AI. I admit that. I am old school. But at the same time, my knee-jerk reaction to these prediction markets—these clinical-trial prediction markets, whether they're AI-based or whatever—is: What's the value? What's the point beyond these just being another betting platform? This is DraftKings for clinical trials.
I know that I didn't really mean to get into an argument with this guy on Twitter this week who was apparently starting up some kind of AI-generated prediction market for clinical trials. Maybe I came across as too grumpy. But I just don't see the value in having a bunch of computers competing against each other to see who can best predict the outcome of a clinical trial. He has all these science-based rationales for how this is going to advance science or help patients, and I don't quite understand that.
Well, look, I'll just speak for one as a contrarian. We appreciate those who are willing to speak up. I would say in general, those who bet against these early kind of flashpoints usually are right. We saw this a little bit with aging companies. Some of these things take a long time. It's not to say they'll never... Stuff is moving so fast, it's hard to see how it doesn't get commoditized and how these AI first movers are going to win the day. Again, I think if you look at OpenAI and Claude, you can imagine that they're going to try to get the market share of some of the tools. But I don't know. It's moving so fast, it's hard to predict who would win on this. So I think the old guard, as we call it, are saying, “This seems too good to be true.”
I want to hear what Tess has to say about this because I always feel like—
Yeah.
Tess, what's the RA angle?
Tess—Paul, anyway—
Yeah. Tess, what's the RA—
Yeah.
What's the RA angle? What are your thoughts on AI prediction markets?
Great question. We were actually having a fantastic discussion with our compliance team about this, specifically the markets that you can bet on with money—the Polymarkets of the world.
Right. Yeah.
We love having other sources of information. We like talking with smart people in the industry and other investors. Whenever we're not invested in a company and we see people we know who are, we want to hear the thesis and get their views. So, in general, it's fine to have more sources of information, including betting markets.
But how much you place on that is really going to come down to your own judgment. Things that are a black box and just spit out a probability are going to be a lot less helpful than when you can actually dig into the rationale and ultimately see if you agree or disagree.
Right.
More information, more sources, is always better and more helpful. Ultimately, it's hard for me to think that AI in predicting clinical trials is really going to be much better than our collective brains, which are often reflected in stock prices. That is what the market shows now: a lot of people thinking about the same thing, coming to different conclusions, and that gets reflected in a price. Is AI necessarily going to be a whole lot better than that? We'll see. I would love for that AI to start picking stocks, and we'll see how it performs.
The compliance side is interesting, right, Tess? If you go down the Polymarket or Kalshi type of prediction market, internally at STAT, we're not allowed to invest in individual stocks for obvious reasons—for financial conflicts of interest. In our ethics policy late last year, we added that we're not allowed to participate in prediction markets either, because it's kind of the same thing if you have access to inside information. I'm assuming that from an investor side, that's also a concern, and certainly a concern for anyone working inside a drug company or biotech company who has that kind of information.
Absolutely. It totally is. I'll just share 2 anecdotes on that.
We have a great compliance team, and they were chatting through our regular training sessions. Someone brought up Polymarket and was reiterating our policy of not participating in those. One of the compliance guys said, “Would you really want to bet on these outcomes with your personal money anyway?” And it's like, “Nah, we just do that professionally.” I thought that was great. We don't want to mix those too much.
The other one that I thought was really interesting is that The Economist had this whole thing about prediction markets, actually talking about these markets as maybe having inside information being what you want. With commodity markets, for example, that's really what they were referencing. You're making bets on commodity pricing, and you have an idea of what might happen when you're doing that for risk management as an insider. Is that okay, that you're including inside information? Maybe that works for commodity markets.
Wars—hopefully not.
Yeah.
Drug trials—hopefully not. That is very much our stance on it as a fund. But it's really interesting to have another source of information. I want to see the Twitter AI algorithm on biotech stocks, actually, and run that against the Polymarket one and the OpenAI stock indices. I think that's what we'll need to see to know if any of these are worth anything.
Well, Tess, you mentioned it's hard to beat the collective experience of firms, but that's also true with AI tools, right? I would bet on that collective experience and brainpower with AI tools to beat AI alone. That's what this feels like: AI is trying to do all of it. But all right, let's move on. There was one deal I wanted to highlight that I thought was very impressive.
Michael Torres was CEO of a company called CrossBridge Bio, and he put out the specifics around this deal on Twitter and communicated them. The company was acquired for up to $300 million. A lot of people look at that with derision and ask how much was paid up front. I’m hearing that a sizable amount of it was paid up front, although that was not disclosed.
What he communicated was that they raised only $10 million through SAFE notes and a seed round. The exit happened within 1.5 years of the seed round. He mentioned that the SAFE investors got a 17× return. He tweeted that there was a founder-friendly firm that passed on CrossBridge a couple of times. I have a venture studio that we think is founder-friendly, and we also passed. I don’t think he was referring to us, but we passed on the Series A.
It’s been very hard to get preclinical cancer programs approved. This is a program that doesn’t even have an open IND and is not in the clinic yet, but it’s close to it. The idea that they were able to bootstrap this without a Series A, on $10 million of investment capital, to get up to a $300 million exit is impressive. Kudos.
A lot of times, we hear founders talk about their interest and say they’ve been getting meetings with pharma and that there’s real interest. Honestly, easily 9 out of 10 times, that’s a nothing burger and there’s really nothing there. This is a case where we heard that, and it was true. Lilly seemed to be interested in this program.
Those economics are hard to deny as a big success for a founding team. Michael Torres also mentioned the two scientific ads, so, based on the amount of equity that he had, it sounds like everybody who was involved in the founding did well. Again, as venture investors, we like to see these stories. We think it encourages a lot of entrepreneurs to bootstrap, find a way to invest in their programs, and advance them, even if the top-tier VCs or seed investors are passing.
Again, congrats to the CrossBridge Bio team for executing that. For Lilly, they generated $12 billion in EBITDA. The number of deals they could do like this early on, with just a quarter of cash flow, is pretty overwhelming. It’s a very small fraction of their market value. Lilly can change the game as it relates to early-stage biotech land grabs, if you will, and still look good in the end. That was an interesting deal.
3. Travere Tests FDA Flexibility
Let’s move to regulatory and policy positions. Paul, let’s go to you first, and I think Adam may have some comments on Travere.
Yeah. Thanks.
They got an approval.
I’m sorry—
It surprised a lot of people, but go ahead, Paul.
No, thanks, Chris. I’m going to tee it up, and then I want to hear Adam’s perspective because, Adam, I read your curmudgeonly article on it, and I really enjoyed it.
Travere secured approval for sparsentan in FSGS. FSGS is a super-hot space for drug development. Renal in general has seen a renaissance over the past couple of years, and there are a number of different treatments. This is a drug that has been around for a while, and some of the data that led to approval are a couple of years old.
One of the issues with this drug was that it did show a benefit on proteinuria, but not on eGFR. I think there are some broader implications for other kidney programs that I’d love to touch upon. Some of the questions that investors are asking and grappling with are, first, FSGS is a big unmet need, but what do these data mean for the commercial prospects of sparsentan?
Second, what does this mean for the FDA and kidney disease, but also more broadly? Are we seeing a shift back toward flexibility with Vinay Prasad being out? This was a CDER product, but there’s been a lot of good reporting from STAT and others about Dr. Prasad overreaching his CBER role into some CDER reviews. Travere stock was up a lot, and we’ll have to see how this unfolds and what it means for the space.
Adam, let’s hear your perspective, and then I want to round it out with some other drugs that I think this has implications for.
I guess I’m just playing to type today with the curmudgeonly thing.
No, it’s awesome, dude. You did a great article on it.
I did write a column about it, as you said, Paul. It was after the fact, and I think that the drug will probably sell well—this is the first and only approved medicine in FSGS, so there’s that.
But I did find the story behind the approval and how it got there interesting. For those who aren’t familiar or who didn’t read my story, this was a company that ran a Phase 3 study, your traditional kidney disease study, where proteinuria is the intermediate endpoint. Ultimately, what you want to see is an improvement in kidney function, measured by eGFR, which is the traditional full-approval endpoint.
That’s where they missed, in an active-control-arm study in which the Travere drug actually underperformed the active control across the entire 2-year time point of the study. Then there was this scientific effort among a bunch of different groups, under something called the Parasol Project, in which they did some analyses and basically came to the conclusion that reductions in proteinuria should be an approvable endpoint. It should be the new regulatory standard, and that was accepted.
I did point out that Travere is a big funder of these groups that came up with this new endpoint. Again, that’s not necessarily a surprise to any of us, but that’s just the way the game works. I think the label is interesting. Paul, you probably looked at the label, and the label points out that the Phase 3 study did work.
Yeah.
There’s a big graph, a big chart in the label that shows eGFR missing. Then you go down to the next paragraph, and it says, “Oh yeah, they hit on proteinuria.” We all know that doctors probably don’t read labels, so none of this probably matters at all, but I found it interesting enough to write about.
Yeah, I thought it was a great article. I think extrapolating the implications to a broader FDA flexibility conversation is really hard to do from just this one event.
The other interesting space we’ve been looking at in kidney disease is the APOL1 space. This is a scenario involving Vertex, Maze, and some other earlier-stage programs. It essentially applies to FSGS, but also to a number of different types of kidney disease in which patients have APOL1 mutations that are significant risk factors for kidney disease.
There’s a pathological description of how they create pores in the kidney and are pathogenic, and Vertex has gone into Phase 3 here with its drug, enaxopin, based on some early FSGS data. Maze had some data recently from its program in FSGS and a couple of other subtypes.
My perception from covering Vertex in this program is that it’s a pretty high-risk Phase 3 program. They only did their Phase 1b in APOL1 FSGS, but their Phase 3 study is in a broader population of APOL1-associated nephropathies. I think there’s a debate over whether this mechanism is going to work more broadly.
Back to the regulatory side, Vertex has proteinuria data, but we haven’t seen eGFR data yet. It’s been unclear around this program exactly what the FDA wants to see in eGFR. Vertex has talked about something related to an analysis of the slope of decline. At least from my seat, it’s been a little unclear: Do they need a clear p-value? What effect size is significant? To the extent that this is extrapolatable, it does seem to lower the bar broadly in the space.
I think, Chris, are you there? Chris may have moved on or might have had to dial back in.
Reception, but let’s—
Oh, we hear you again. We hear you again.
4. Allogene Tests Allogeneic CAR T
Okay. All right, good. Do we want to move to data? Adam, Allogene had B-cell lymphoma data. Everybody’s been waiting for some good allogeneic CAR T data. What’s your take on the Allogene data and their stock reaction?
We should probably separate those 2 things out, Chris: the data and the stock reaction, because they went in different directions.
Yep.
The data, I thought the data looked really good.
Yep, yep.
This was basically a very preliminary look. It was a futility analysis based on MRD negativity. They wanted to show that patients who were MRD-positive with a complete remission after R-CHOP, in that frontline consolidation setting, could then be converted or cleared to MRD negativity with the use of this allogeneic CAR T called cimasel. And they did that.
Again, there were very small numbers of patients—12 in each arm between the cimasel arm and the observation arm. So it's encouraging for the rest of this study, which ultimately will be looking to show an improvement in event-free survival. I think the company did a pretty good job of explaining what they wanted to do and then executing and delivering data that certainly looked as good as or better than what they had expected.
There's a lot more work to do here. The stock reaction was really very mixed, right? It initially went up on the data, went down, and then fell. They did an offering. I think they raised about $175 million, and they priced it at $2 a share, which was actually lower than the stock price before the data came out.
I don't know. Maybe someone else on this call could explain to me how that works. It doesn't seem like they executed the financing very well. I did ask around about it. In terms of the reaction to this from the buy side, I heard a mix of things.
I heard some folks who are just not interested in cell therapy generally. That's probably a theme: A lot of funds are just like, “This is not an area they want to invest in.” There are some concerns about the timelines here, whether Allogene can meet enrollment timelines, and the fact that the company goes kind of dormant after this, right?
I mean, they continue to roll the study. There's going to be an interim analysis in the middle of 2027. So there's that typical sort of dead space where maybe people get out of it. But, like I said, it had good data, and the stock just went in the other direction.
We lost you, Chris, but I'll—sorry, Tess. Go ahead.
I think I was just going to say that Chris was about to say he remembers when they were one of the high-flying, high-profile companies in the space.
Yes, they certainly were.
No, totally. And to your point, Tess, cell therapy now is just a nonstarter for a lot of people, and it's not just in oncology, right? I met a really cool private rare disease company that was doing cell therapy with a really, really different sort of thesis. But the fact that it was cell therapy in the first one-liner about it, I think it took a lot of people just to get over that and take a meeting with them.
I think, from a scientific or medical standpoint, one of the interesting lingering questions that's not answered yet is whether this is really going to be any different. Again, this is sort of a frontline consolidation treatment, which slots between first- and second-line treatment for B-cell lymphoma. So I think there are a lot of people who wonder whether treating somebody with an allogeneic CAR T in that setting is really going to be any different from treating patients in the second line with an autologous one, let's say with Yescarta or Brianzi.
Are you going to see any difference in survival or any difference in event-free survival? That's still a question that's up in the air. Now, there are certainly some logistical and safety reasons why you would want to use an allogeneic CAR T in that setting.
From a safety standpoint, it's maybe a little bit cleaner. You don't have CRS or ICANS. You can potentially treat patients in an outpatient setting versus having them be hospitalized. But that all remains to be seen.
Yeah. I think another important point here is that the cell therapies have shown absolutely phenomenal efficacy, but it's still been pretty tough to get into the community setting, right?
I mean, we obviously see shifting share in the U.S. market in that space. Brianzi, for example, is increasingly recognized as having a safety advantage over Yescarta, so there are certainly share shifts. But there hasn't been a huge amount of TAM expansion, which I think maybe people were hoping for.
That then becomes a more challenging argument around launching into a market that is more about share gains than TAM expansion. Launching into that market is probably harder, right? I think that may be part of it.
I'll just say I think it's hard to time these allogeneic investments, as is indicated by Allogene's stock this week. Sana, I think there's a lot of parallel there. A lot of money has gone into these before there was really de-risking data.
So, again, it's just a cautionary note: You've got to time these things the right way, even when they end up working at the end of the day. Let's pivot to Revolution. That is another big story this week. Tess, you want to kick this off? And Adam, I know you wrote or spoke about this as well.
This was a big data set, and this is coming off a rumored takeout at $30 billion. Now they're trading at or above that today. Tess, you want to kick this one off?
Absolutely. Revolution Medicines has a pan-RAS and really a whole portfolio franchise of RAS and KRAS inhibitors. They have both pan-inhibitors and more targeted inhibitors. They are aggressively pursuing combinations in a number of different indications, with pancreatic cancer really being the furthest along.
Earlier this week, they shared data that really looked best in disease in second-line PDAC. They showed an overall survival hazard ratio of 0.4 in all comers, which is extremely impressive. They're also studying small-cell lung cancer and looking at colorectal cancer, so there are a number of different indication-expansion opportunities.
This is a development-stage company that is now valued at $30 billion. Huge congratulations to the team for executing on that. I think a lot of that comes from the uniqueness of the portfolio they have, the fact that it's a number of combinations, and the fact that they're taking not just a first-generation approach of, “Here is a drug for PDAC, and here's a combination for PDAC.”
They have several next-generation approaches that they're studying in parallel, which really allows you to think about a higher multiple on the company because it's less about just one particular drug than how to build a franchise that can be more than just one drug. It can be a series of combinations that continues to improve on whatever came before. They showed phenomenal data, but there's certainly room for improvement, especially on the tolerability side.
Hey, Tess, we should note—
Some of the combinations can help to solve that. Please go ahead.
No, Tess, I said we should note that Revolution Medicines now trades at a slightly higher market cap than Insmed.
Yes, right?
Yes.
I was also racking my brain, and this is the right group of people to think about this, for other development-stage companies—let's take COVID out of it—that have traded around $30 billion.
I was struggling to think of other companies.
Did Incyte ever get there with Jakafi back in the day?
I can't imagine it got to $30 billion, but that's a good one.
Like in the twenties, maybe.
For a little while, Summit was trading pretty high. It wasn't trading this high, but it was trading pretty high.
Yeah.
Yeah, I mean, it is right now. It's amazing because, like you said, it is technically still a development-stage company, although obviously this is a drug that's going to be approved relatively quickly. It's pretty phenomenal. Just look at this market cap here.
Yep, absolutely.
Well, I'll just add that we all know pancreatic cancer has been that elusive data set that many people have gone after. Some have given up and moved to other high-severity, stage 4, metastatic, relapsed/refractory cancers. But I think even Tim Opler said that he thinks this could be a $100 billion-valued company. A lot of people think this is undervalued.
So it is interesting to see how they end up moving this forward and commercializing some of those—
They're going to buy Merck, Chris. They're going to be so big, they'll buy Merck.
There you go. We might see it. Tess, I'm sorry, you were going to add something here.
Oh, yeah. I was just going to add that they went out and raised $2 billion, no problem, right? They're probably going to get a little less than that in terms of the actual net proceeds, but the company's going to be in an extremely strong position to commercialize independently if that's what they want to do.
And then, exactly as you say, maybe we have another potential acquirer in the space. That's always exciting. I think they'll be in a position, from a cash standpoint, of having $3 billion to $3.5 billion or so, which is a very, very strong position to be in.
Yeah. It is a little bit of a master class to do the head fake of a potential sale, then get the data that looks good, raise $2 billion—which is less than 10% of their outstanding shares—and have the real ability to move it forward and commercialize and become one of the really true breakouts.
Yeah, and Chris, we should note that, at the same time, I know we spent a lot of time talking about stock prices, valuations, and stuff like that. But pancreatic cancer is obviously just one of the most devastating types of cancer. It's been so difficult to advance therapies there.
On our podcast yesterday, we had an oncologist on, Paul Oberstein from NYU Langone. He's a pancreatic cancer expert, and we were getting his reaction to all this. You can imagine how physicians who treat these patients feel.
A lot of you probably saw that interview with former Senator Ben Sasse in The New York Times. He was diagnosed with advanced metastatic pancreatic cancer, and he's also on the drug in a different study. So it's really nice to see these kinds of advances in cancer—this doubling of survival—particularly in pancreatic cancer.
I like how STAT Readout LOUD does deeper dives on some of these topics, so I encourage the audience to really tune in to STAT Readout LOUD.
Non-prematurely, I have to say. That was a data point.
I can be positive. See that? I mean—
Adam, you're not a hero for not disparaging innovation in pancreatic cancer. Adam always surprises us with a different side.
I can like things, guys. I'm capable of doing that.
No doubt.
Positive things are also liked by you, Adam.
I mean, I like all of you.
5. Spire Reframes IBD Competition
There you go. All right. Another area that has been elusive with good data sets has been the IBD space—ulcerative colitis and Crohn's disease. But this week, Spire had good data and a positive stock reaction. Tess, do you want to cover this one?
Yes, I absolutely will. Spire announced some open-label data from their version of Entyvio, right? It's another alpha-4 beta-7 antibody that they're developing. They have a longer half-life, but there's really a pitch here for better coverage and better PK for that target, as well as the ability to do this with subcutaneous administration.
What Spire is doing that is really exciting is similar to Revolution Medicines. Think about both Spire and Revolution Medicines as companies that are looking at the disease area they're involved in and trying to think of solutions. It's not just one drug; it's combinations. It's how you keep upping the bar on what efficacy and safety should look like for an indication.
Spire is really approaching that for IBD. They have their alpha-4 beta-7, they have a TL1A, and they have an IL-23. They're looking at combinations for all of these, including combinations of their alpha-4 beta-7 with TL1A and IL-23. That's the alpha-4 beta-7 for which they presented open-label data.
They looked at 12-week induction data in moderately to severely active ulcerative colitis. What can you do with open-label data? You can compare it to everything else that's out there and look at how it compares. The uncontrolled outcomes compared favorably to the historical benchmarks.
I think that's why the stock was up and why there was a lot of excitement about this, especially when you think, “Hey, this is just monotherapy.” There are all these combinations being studied that can presumably lift that bar. Spire went and raised on the back of this and pretty easily pulled in over $400 million—$463 million—to continue funding its pipeline.
Hey, Tess. Do you have a view on these data and whether or not this proves that their drug is more efficacious than vedolizumab? Do you think UC is a space where you can draw that conclusion from open-label data, or is it too speculative at this point?
I think it's too speculative to be definitive about it, but it looks interesting and potentially promising as a better option. You can't be too definitive about open-label data. This is an area where placebo rates are really important.
But I think it does support that thesis, which also has other justification in terms of looking at the relationship between exposure and efficacy for Entyvio itself. So, not definitive, but likely supportive. I don't know, Paul, if you'd think about it differently.
No, I think that makes a lot of sense. It's worth noting that this is a Fairmount company, and for a number of these, there's been the longer-acting, better-convenience thesis. Then, to your point, there's the exposure hypothesis.
Alex Thompson, who I work with, who's super-duper smart, covers this company and is a total believer in it. The data looks good. Obviously, there have been data sets in UC that haven't been replicated before, but given the underlying validation of the mechanism and the thesis around exposure, it seems like it's got a really good chance, from my less-educated view, of at the very least trending better.
Yep. Yep.
Yeah. Well, I just want to highlight these three data stories—Alogene, Revolution Medicine, and Inspire—that kicked off Monday morning. Adam, you tweeted this was probably one of the better Monday-morning data releases you’ve seen in a while, a bit of a trifecta with these 3 data sets.
And, Paul, I want to come to you also. You mentioned earlier at the front of the hour that clinical data has really been the story behind driving the markets. Adam, I don’t know if you want to comment on what you’re seeing as a trend of positive data, if you think that’s real or just happened to be a good week. And, Paul, your thoughts around clinical data driving the dynamics in the marketplace.
Go ahead, Paul.
Yeah, thanks. I think, from my vantage point, last year felt like it was the biotech launch year, and a number of the stocks that were on these steep launch curves—Alnylam, Insmed, Argenx, Magical—felt like they were really carrying the group, especially maybe this time a year ago, when things felt a little bit bleak for the stuff that was higher risk.
I just think an interesting observation I have across my coverage is that, for the large-cap companies or the more mature mid-cap companies that I cover, investors right now seem to be selectively bullish on the ones that have a potential golden ticket in the pipeline, almost irrespective of the base business. I look at large-cap biotech and feel like Biogen and Vertex—and this is maybe Biogen before the Sepalis deal that was controversial—were two names that have been much, much hotter this year. Their commercial businesses couldn’t be any more different: One company’s growing, one company’s declining. Yet they have the most attractive, or perceived most attractive, array of pipeline catalysts.
Whereas the Alnylams of the world or the Insmeds of the world have kind of been looped into this whole broader “what’s next” conversation. And then, yeah, we’ve obviously talked about it before with the SMIDs, with great data going back to a month ago, when we talked about Xenon and Dianthus. Now this week, great data sets are getting rewarded, and fundraising is happening.
It’s almost like we’ve said this in the past with biotech. We’re not at this point, by the way, where I think people are just going, “Oh, my God, short the launch,” but we’ve made this joke in the past, right? It’s better to be a developmental-stage company where people can dream the dream versus the reality of a company that is selling a drug and getting judged on quarters and having people try to model inventory and selling weeks. Again, it’s not that extreme, but I do think the commercial names just don’t feel like they’re really what a lot of investors care about right now.
Yep. Yep. Adam, any comment on that?
No, I think Paul articulated it really well. Yeah.
Great. Well, I just looked at Kylera again. I don’t think it’s started trading yet, but I think for our audience it’s something to keep an eye on. Some have commented, just to come back to Kylera, that we may have hit peak obesity.
This was a GLP-1/GIP dual mechanism, a very pedigreed group around this. This was an early Bain investment. Adam Koppel sits on the board. Ron Renaud has been a serial CEO who sold several companies in the past. John Milligan, my former boss at Gilead and its former CEO, is the chair of Kylera.
It’ll be interesting to watch this obesity space continue to drive value, with a lot of players in the space. So, definitely encourage our audience to keep an eye on that as a signal of further strength. Any other comments from the group on obesity? Are we getting too crowded in the space? Are the valuations getting lofty? Any thoughts on that?
I think—look, is it crowded? Yes. Is there still a lot to improve on? Yes. I think a lot of it will play out over the coming years, but we’re seeing new mechanisms that can potentially help with tolerability and maybe fit nicely in maintenance therapy.
I think my big question around how the space will play out is: What are the different settings and patient segments that the market will start sorting itself into? The general thinking is still, “Gee, this is a really big market. Maybe there can be a lot of players.”
But as we get more and more mechanisms out there, it will really start to be a question of sequencing. Should elderly people with obesity and issues with bone density maybe be taking something different than young people who are looking for something that’s more weight maintenance?
I think that’s something that has yet to play out, but will be really important and increasingly necessary as companies think about commercializing in a very crowded space.
Tess, I don’t cover this space that closely, but obviously, how could you not follow it and read all the articles and headlines? Do people care at all with these next-generation obesity plays that, for the first-generation assets, it’s kind of, for lack of a better term, a race to the bottom on pricing?
It’s a good question. I think it depends on the quantum of benefit and the setting, and how much of an improvement it is over the first generation. We’ll have to see how pricing plays out for some of these next-generation mechanisms, and that’ll take a while.
If you think about it, we have a lot of the first-generation stuff where Novo has been super aggressive on pricing. I think they know that’s what they need to do to maintain market share. But I think there are niches and opportunities in different settings where, especially with better tolerability and potentially better duration of therapy, that is actually a very different pitch to health plans than a drug that adds cost, where payers are seeing a benefit for many individuals who are able to stay on the drug.
But you have a lot of people who are just coming off the therapy. I think resolving that issue is still extremely important to try and get the best value out of these drugs. Is society going to be willing to pay more for that? Hopefully. But we’ll have to see. It depends on how much competition.
Yeah. No, I think that makes a lot of sense. I guess the way I see it is that, in a lot of these big markets that are mega-crowded but impact tons and tons of people, we’re still willing to withstand blockbuster drugs even in the face of generics. If you look at almost every CNS or I&I market—and I’m using those just because they’re not—not that they’re not severe diseases, but most are not imminently life-threatening—I think that makes a lot of sense.
Great. Well, this has been a great session.