第128期｜2025年1月24日

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

A few hours ago, we had some breaking news on the obesity front. Brian, do you want to describe the news that broke this morning with Novo? We’d also be happy to hear other comments.

Yeah, sounds great. Thanks, Chris. It was actually a slow week for company-specific things up until this morning. Obviously, there were some pretty big changes at the federal government and HHS levels, but this morning, Novo’s announcement seemed to be the big data point for the week from the companies. The stock was up pretty big this morning, about 7.5% at the moment, after being up almost 10% at the open.

1. Novo Raises the Obesity Bar

This is because Novo announced some early data from one of its next-generation obesity programs. It’s called amycretin, and the drug targets both GLP-1, which is the mechanism underpinning the drugs we all know, like semaglutide and tirzepatide, and amylin receptors. So it’s unique in clinical development in that respect.

What we got today was data on once-weekly subcutaneous administration, exploring weight loss over 36 weeks. It involved a sort of complicated escalation every 12 weeks, starting at 1.25 mg and going to 20 mg by 36 weeks. The key takeaway people are pulling out is that by 36 weeks, those who had escalated to 20 mg and stayed on treatment saw 22% weight loss.

This is on a weight-loss-per-week basis. The headline number looks to be the fastest we’ve seen in studies so far. Tirzepatide, as an example, gets about this much weight loss over a 1.5-year period. Even Amgen’s and Viking’s earlier Phase 1 studies showed around 14% at 6 months, so this is definitely occurring faster than the hurdles that were set as the prior bar for a Phase 1 study. In some respects, I think this does set a new bar.

However, there are a couple of things to consider about the results. First, this is really an as-treated result. It’s only considering results for people who followed the planned dosing schedule for the full trial period without any treatment discontinuations.

The second thing is that there really wasn’t any meaningful tolerability data presented. Novo just said it was consistent with incretin-based therapies, and I think that’s a bit of a cop-out. Roche had done the same thing last year for its CT-996 data. The initial press release passed off the tolerability profile as consistent with incretins, and the stock went up because the weight-loss data was really good. But when Roche presented the actual tolerability data, it looked much more on the tougher end of incretin therapies, and the stock got hit.

I’ve also been pretty critical of how Amgen presented its Phase 1 data, and then in Phase 2 it really fell off on efficacy. I see the same potential issue here, since discontinuations aren’t counted in these results. Any meaningful rate of discontinuation has implications for both the tolerability and efficacy sides.

If you were to do a true ITT analysis or take a conservative view for imputing missing data, that 22% weight loss is very likely to be overstated. On top of the implications that discontinuation could have for efficacy, obviously, high discontinuations would be a bit of a concern.

I don’t know that chasing raw weight-loss improvements at this point in the market is of huge value. I think people are interested in getting this weight loss without the nausea, vomiting, and GI tolerability issues that we see coming along with it. So that’s kind of where I land.

Brian, I didn’t see the press release, but do we have a sense of the N size of the as-treated versus the intent-to-treat populations, and what percentage were not included?

No, and I think that’s the key question. Is it 5% discontinuation? Is it 15% discontinuation? If it was 15%, that would be really bad. If it was 2%, that’s probably good.

Yeah, and I’ll just highlight that this is the same mechanism through which they’re developing the oral product. So depending on the full analysis, when we see it, it could give a signal for the oral product.

Correct.

Yeah. Sam, any comments? You’ve been following the obesity market pretty closely.

Brian did a fantastic job, so I’m not going to comment on the detail. The odd thing here, Chris, is that this was a safety and tolerability study, and we didn’t get any safety and tolerability comments. To Brian’s point, we all know that this is the critical element. The reason people don’t lose as much weight is because they come off the drug.

Is it a cop-out? Why don’t they just do it? Is it because they didn’t have enough time to analyze the data, even though they obviously know that the numbers are similar to what you’d expect?

What I would say also is that this is a weight loss that seems to be just a tad better. But remember, I’m not in the game of 23%, 24%, or 25%. I think we’re scratching or hitting the ceiling here. I’ve been saying that, and I may be proven wrong with the next readouts from Lilly.

This is similar and slightly better at the same time point compared with retatrutide, which is Lilly’s triple-G drug: GLP-1, GIP, and glucagon. Of course, a comparative analysis of discontinuation rates and side-effect profiles isn’t possible because we haven’t got enough data—or any data—to compare.

However, it does look slightly better, and I think both did not have lifestyle changes, at least in the amycretin trial. The actual weight loss relative to placebo was 24%, which is a chunky number. But again, 24%, 23%, 25%—I don’t care anymore.

The other element that’s worth talking about is the read-through to Zealand, which is developing petrelintide as a single-agent amylin drug and also developing it as a combination with a GLP-1. Remember, this is a monomolecular, so it’s a molecule that hits both mechanisms. CagriSema, which is kind of similar to what they’ve got here, is just two separate drugs: an amylin agonist and a GLP-1 agonist.

Maybe the difference between the 2 readouts from Novo, if you want to talk about a difference between the 2, is this issue of a combination versus a single molecule. If that’s the case—which I don’t think it is—then that would have negative connotations for Zealand. But I see this as a positive read-through to Zealand. Its stock is up a little less, obviously, about 4%.

2. Public Markets Stay Selective

Just to highlight the ups and downs of this obesity market from a valuation standpoint, Novo is still carrying an over-$300 billion market value. But even with the uptick in the stock today, it’s still trading below the data release in August 2023, when Novo had the SELECT cardiovascular-outcomes data for the first time. It went over $90 a share at that point and even traded up to $140.

That just shows you that even with positive news, it’s really hard to recover with some of the other dynamics that have been happening vis-à-vis Lilly in this marketplace. Speaking of the public markets, valuation, and sentiment, Tim, I know that after the end of the year there have been a lot of reports and analyses, including yours from Stifel. Just give us your perspective on the current public-market sentiment and IPO and capital markets, a week after JPMorgan ended.

Thank you. Going into the J.P. Morgan Healthcare Conference, the market had been down almost 20% for 3 months, at least as measured by the XBI. A lot of folks were hoping that we’d see a nice bounce at the conference, but that really didn’t materialize, despite the fact that we had some pretty reasonable M&A announcements there.

If you start calling investors, what you hear is a great reluctance to participate in basic activities involving the capital markets, like doing a wall cross. People are saying, “No, I don’t feel like I’m going to do a wall cross this week. I don’t really care what your PIPE deal is. I think we’re just going to hold pat.”

What’s interesting in the last week is that the XBI is actually up. It’s up about 5%. I’ve been calling investors and asking, “Hey, obviously someone’s buying. This looks really good. What’s going on?”

Sometimes things aren’t exactly what they seem. Apparently, there’s a fund or 2 that are under significant pressure right now and engaged in very heavy short covering. Once 1 fund is short covering, that creates concern about a squeeze. Yesterday, the market was up quite a bit.

This is not, to my knowledge—and I’d love to hear what others have to say—a rally caused by a giant inflow of fresh money into mutual funds or anything like that. Rather, I think something more technical is going on. So, fortunately or unfortunately, sentiment is not great.

That said, we’re seeing good IPOs get done. For example, Ascentage got done last night, although the pricing of the Ascentage IPO deal was not what people might have hoped it was. I think there will be some more IPOs getting done in the weeks ahead.

In addition, the follow-on market has been functioning pretty well. For example, Stifel was one of the underwriters on the Disc Medicine follow-on that took place this week. That deal was actually upsized. Depending on the stock, the market seems to be just fine.

The venture capital side of the market is very different. Chris, I’d love to hear your thoughts. I met with a ton of VCs at the conference, and sentiment was pretty good. People like their portfolios, they’ve been able to raise money from LPs, and the outlooks seem positive. It’s just this funk that’s hit some of these public-market hedge funds that is notable.

Yeah. Look, I think you were quoted in an article in which Arda Ural of one of the accounting firms highlighted that we can remove the “cautious” moniker from “cautious optimism.”

There’s always been a lot of dry powder on the VC front, on the sidelines. I think we’ve talked about this on other hangouts: There are investment periods, and you have to put that money to work. We know this phenomenon of larger rounds going to proven management teams.

But I do think that whether you think the recovery is going to be in full this year or next year, VC time horizons are longer. I think there is a feeling that it’s safer to deploy that capital, albeit with a better lens on efficiency of capital deployment and a little more discernment about the right targets and the right clinical and regulatory strategy.

VC is always a lagging indicator, both on the downside—in admitting that there’s a problem and that we need to adjust—but also a precursor on the upside. They’re going to be looking at this, and I look at short covering as an example of certain investors realizing that there’s more risk that the market is going to raise all boats and valuations are going to start to increase. So I think it is a little bit of a signal that there’s concern among investors that maybe this down market is over.

On the follow-on side, you mentioned that I’ve always seen follow-ons as either being done from a place of desperation—you’re going to run out of cash and need to raise money, even if it dilutes current shareholders and isn’t done at favorable valuations—or, typically, from a position of strength. Those deals do get done because these are the best of the lot. They have healthy valuations, and that’s why they want to do a follow-on: to shore up their balance sheet.

Any comments about the discernment around which ones are the higher-quality names that you’re seeing go for follow-ons?

Yeah, and I’m happy to cover that. I was going to talk a bit—and we can cover it later—about the Wall Street Journal article that discussed some of the current sentiment in the venture capital market.

Chris, I completely agree with you. There’s definitely a big difference, at least now and certainly at J.P. Morgan, between public and private investors, especially private investors focused on earlier-stage, seed, Series A, and Series B investments.

One thing is that, yes, there’s some optimism now. There are fewer mega-rounds. People are actually looking for new innovation and making investments in more novel companies. But the one consensus certainly still is, as it was last year, that there’s interest mostly in clinical-stage companies because investors are wary of risk.

Last year, they made sure to protect themselves from risk by joining mega-rounds. Now they’re protecting themselves from risk by going a little bit outside their comfort zone and going back into areas such as oncology. There was too much excitement and too much focus last year on obesity and some neuro. So people are turning back to oncology and some novel mechanisms now, but they’re partnering that oncology interest with clinical-stage assets to de-risk the investments.

Yeah, that’s great, Luba. I think part of this is also the China licensing trend and the idea of fast followers and good targets that are getting interest.

I don’t have the data to support this—maybe you do—but I tend to see it’s in the hyper-bull markets where platform valuations really start to increase. I think it may be a while before, with the exception of selected cases, we see the level of exuberance we saw circa 2018 to 2021 around platforms.

I do think it’s going to be data-driven, product-driven stories: When are you going to be in the clinic with clinical proof-of-concept data to drive valuations or to be able to take a company public?

3. Pharma Deal Flow Accelerates

Tim, I want you to comment a little bit on the deals—the M&A and licensing. Sam, I know your group has done some work as well, but Tim, you’ve highlighted this idea of ITCI exceptionalism and that you’re maybe a little more optimistic about the high flow of deals on the M&A and licensing front. Then, Sam, I’d love you to comment as well.

Yeah, I mean, Stifel is a good financial adviser on M&A, but we’re one of a number, right? So I assume whatever we’re seeing, other advisers are seeing as well.

Our M&A and licensing deal flow right now is at a historic high. In other words, the pipeline of projects we’re working on is very high at the moment. Pharma is active across the board. You name it—AbbVie, Roche, Novartis—they’re all in the market working on transactions right now.

This notion that the ITCI deal was this one-off—I’m just scratching my head and saying, I guess all of your portfolio didn’t get bought on the Monday of J.P. Morgan, but it’s going to be a pretty interesting year.

It is a very different time. My portfolio includes plenty of China deals and India deals. It’s not the same market that it used to be, but it is a very active deal market right now. I think this is going to be a pretty strong year, assuming this isn’t just a one-off—and I’m pretty sure it isn’t.

Usually, in the past—I remember 2008, during the financial crisis—I’d say, “God, my pipeline’s just not very good,” and I knew Lehman Brothers had gone down. Pretty soon, it became clear that everyone had a bad pipeline.

Sam, I know you’ve either put out or are putting out a report soon on licensing deals, and then maybe following that up with M&A. What is your data telling you, and what’s your sentiment around deal flow?

Yeah, thank you, Chris. Just before I give a few headline numbers, Tim, one of the things that I heard Johnson & Johnson say—and it’s the only company that’s reported so far—was that the Intra-Cellular Therapies deal, in terms of size, was an outlier for them. “Do not expect deals of this size going forward.”

Pharma companies give you these kinds of statements, and then they go and do a deal. So, when you comment about Intra-Cellular, are you suggesting that we should not assume that was a one-off? At least it was 28 28 for this year? Or, when you’re referring to the M&A backlog or portfolio, is that size-agnostic?

I mean, I do think by definition that $10 billion-plus deals are relatively rare. So for any company, whether it’s J&J or anyone else, that’s not something one should expect frequently—maybe 1 a year or 1 every couple of years.

But what I can say is that, in what I’m looking at—either what I’m working on personally or what I can see in deals that I’m aware of—there are 4 or 5 billion-dollar-plus transactions, in some cases significantly larger transactions, that are in the works at the moment.

So it’s going to be a pretty active time, and whoever’s out there short-covering is actually pretty smart. This is not a good time to be short this market.

Well, these are great.

Sorry, Luba. Go ahead.

Oh, sorry. I was just going to provide a few numbers here. I agree with everyone here in terms of the increase in M&A, and it certainly will continue in 2025.

Just some numbers: If you look at the number of M&A deals with upfront payments of over $75 million, that rose from just 6 in 2023 to 17 last year. The highest M&A activity was in 2020, with 20 deals that had over $75 million upfront.

So right now, again, nobody has a crystal ball, but it’s projected to go over that 2020 number of 20 deals.

Yeah. And then on the licensing data, I’ve personally been collecting licensing data since 2000—sorry if I’m aging myself here—but on the Bloomberg Terminal, we’ve got data that goes back to 2011.

It says the same thing as what Tim put out earlier: China represents a significantly higher share. We calculate about 9% of all agreements. Remember, we try to cut it a little bit more, thinking about pharma companies as opposed to the whole universe.

In fact, the fourth quarter was the busiest in terms of deals with Chinese biotechs.

We counted 19 deals. Why is that? Is it because folks have been thinking, “Gosh, a new administration is coming in, and we need to get these deals done in case Brad is right”? Our friend Brad has a view that, in the end, they're going to start blocking these. Or is it simply because the opportunities are there and we're going to take them? I don't know. Whatever it is, it seems to be going that way.

Actually, I was listening to the Readout LOUD podcast from STAT today, where they were talking about their feelings around JPMorgan, and I'd love to hear what others said. I wasn't there, but they were talking about how lots of people are continuing to spend quite a lot of time looking for assets. Assets are assets, right? Interestingly, in terms of upfront payments, some of the biggest deals were for Chinese assets when they were licensed, and the total value continues to go up. We can't see any difference between assets coming out of China and assets coming out of the U.S. or Europe.

There's been little movement in the types of therapeutic areas. It's interesting, to Luba's point: cancer continues to be in the 25% to 30% range, so about a third of the deals. Of course, you did have that big jump in I&I recently on the back of CAR-Ts in lupus. I think the story is that we're going to continue to see some Chinese deals here. I think what we'll come on to talk about is whether the administration is actually creating a world where the science is going to continue to be weighted toward other countries as opposed to the U.S. We'll come back to that.

4. The Science Pause Takes Hold

Good overview of the markets, both public and private. Thanks, everybody, for the contribution there. Sam, obviously there wasn't a lot of data news this week, but with the Trump administration, do you want to highlight what's impacting our sector as a result of his first actions?

I'm trying to get my head around, Chris, whether some of the moves are just normal or atypical of a new administration coming in. My Washington colleagues tell me that, at least with regard to the NIH, the freeze on pretty much everything—no more meetings, no travel, nothing—isn't typical. It's beyond what you would expect during a transition. Their view is, and I hope they're right, that this block that's been put on any activity—all travel has been canceled, advisory meetings have been canceled—is all to do with the transition.

The reason I'm worried is because of what RFK has said, because he's on his way to potentially being the head of HHS. Previously, back in November 2023, he was very clear about what he would say to NIH scientists: “God bless you all. Thank you for your public service. We're going to give infectious disease a break for about 8 years.” This is one particular comment, and I don't know how much of it to believe. Interestingly, it ties in with the WHO withdrawal. A lot of the withdrawal activities are related to infectious disease and information sharing.

I really can't tell where this is going to end. I'm sure you guys have a better view of this, actually being in the U.S. On the WHO front, the money that the U.S. spent over the past 12 months or so was about $700 million. Can I just say that's a quarter of the overspend on the new Air Force One? It's nothing. What is the value of this? How much does the U.S. gain by blocking and not continuing to support the WHO?

Of course, one of the issues is that a lot of the activity supported by the U.S.—polio eradication, tetanus, flu work, and so on—will be in limbo at the moment. Let's see how it all pans out. Is it all a negotiating tactic to cut that $700 million down to $500 million? A lot of it was discretionary, not because the U.S. is a member of the WHO funding bodies. It's been an interesting week. I hope it's not going to lead to this continued assault on science.

Luba, I want to hear from you, especially related to the FDA hiring freeze. Clearly, you typically see some kind of grace period. It's not usually an immediate directive to stop activities and travel. Even people who might have had offers prepared have to rescind them or stop those offers from going forward.

I do think this will have the effect of everybody reassessing and almost having to justify activities. The simple, overriding message I'm seeing from the Trump administration is, number 1, that it's being pro-business and that he wants to support business leaders. This is clear, and we'll talk a little bit about Larry Ellison and mRNA. Clearly, having all of the tech titans at his inauguration—and I did listen to his WEF comments and Q&A—the message is that, number 1, it's pro-business, and number 2, it's about pulling out waste and inefficiency and trying to find more effective means.

Of course, we have to look secondarily at what that means from a policy standpoint, but I feel like this is more of a tactic to drive the intended consequence. To some degree, I think the WHO withdrawal is similar. I don't think anybody is realistically going to ignore the United States. It's less about saying, “I'm going to take my ball and go home and not play with you,” and more about saying, “If you're going to engage with us, it's going to be on our terms, not the world's terms.”

We can debate whether that's the right thing politically, or whether we should have a more collegial and optimistic approach, but in my opinion, I think this is a tactic being employed in the near term to try to ultimately get more influence and more of a seat at the table on various policies moving forward. RFK Jr. aside, Luba, I'd love to hear your thoughts on the news that you've heard come out of this week.

You are right. I've been reading a number of articles and listening to people, including people we are in contact with at the FDA for our program, and people are really worried. Those biotech companies that are in discussions with the FDA aren't hearing back from the FDA, or they're getting a sense that people aren't paying attention.

But that is just this week, actually. As a matter of fact, the FDA expedited a lot of its reviews at the end of the year. A lot of companies were able to receive the information they requested, and a lot of their conversations were expedited at the end of December, right before the Christmas break. That has to be balanced with this pause.

I do believe it's a short pause right now, as the administration is reprioritizing its activities. I agree that, from what I'm seeing and hearing from the transition team and others, things are going to trend in a positive direction, and the outcome is going to be more pro-business and pro-biotech. I would encourage companies to give it an extra few weeks for a lot of this to be ironed out and for the proper direction to be set.

The same thing applies to NIH grants. I myself am on an NIH review committee, and I understand that this has been paused. I would love to hear others' thoughts on that as well. Again, this is just a pause to reassess priorities, which I think in the end will be beneficial to the industry.

STAT News did an interview at JPMorgan with David Ricks, the Lilly CEO, and he met with Trump at Mar-a-Lago. Of any sector, I thought pharma might still get the ire of this administration, but he seemed to have very positive things to say. From a large-pharma standpoint, that was encouraging to me.

Tim, even NIH funding has been the ante that drives our industry to some degree, with grants driving drug discovery and all of that. What's your take on some of these actions from the Trump administration?

I like to look at things in a historical context. I'm a bit of a history nut. If you go back, say, 500 years, we didn't really have these ideas of science. We didn't have a government that had a science agency, much less the United States in existence. Galileo eventually came up with some really cool ideas, and he was threatened with either being burned at the stake or being imprisoned for life.

There's always been resistance to scientific progress. More recently, in the 1800s, you saw all sorts of antiscience movements. You had pseudoscientific things like mesmerism, hypnotism, and using electricity as medicine. Those were very popular, and politicians frequently referenced them.

What we're seeing today, which is a U.S. politician who is a populist attempting to appeal to antiscientific instincts, particularly with respect to vaccines, is nothing new. What is concerning is that the scientific progress we've seen in our industry has been absolutely stunning, and the NIH has actually been a key instrument in that growth. In other words, it's unlikely that people inside large pharma companies right now are doing a ton of basic science.

So most of that gets funded through academic institutions and the NIH, at least in the United States. If you look at the history of China, most people don't think about it, but during the Cultural Revolution, China was going through its own populist movements. They were busy executing academics, putting them to work in communes, burning books, and now China is the opposite, right? China is all about science, and they've created a much more capitalistic environment. All of a sudden, we're seeing a huge amount of innovation coming out of China.

I'm very sympathetic to Sam's point, which is that you couldn't pick a worse moment for the U.S. to decide to go through one of these periodic populist, antiscience movements. I will say that if you look at the long arc of history, science is winning, and I don't think the Trump administration is really going to change anything there. But it is an inconvenient moment to have the cancellation of NIH study sections and so on. Chris Garabedian

And Tim, I personally try to avoid framing things as science versus antiscience or cutting them across political lines.

Just a comment, Chris: I'm not so sure that you actually sit down and read what some of these folks coming into the administration have written. There isn't a consensus that we should exit the business of being a scientifically driven country. But I think it's also very clear, based on the comments that I've already made, that the Trump administration is essentially trying to throw sand in the gears of some of these governmental institutions, arguably for good reasons. I personally don't see it, but all I'm saying is that, at the very moment our geopolitical competitors are ramping things up, maybe we should be looking at it a little bit differently.

Yeah. I think part of it is a little bit about whether we're doing everything right and optimally, or whether we're doing a lot of things wrong. That's the spectrum that I see: where each of us sits along the spectrum of things we can improve and do better on. There are different tactics for that. One is to stop doing things and then try to rebuild them from scratch, and I don't think anybody's advocating for that. But I think there is a spectrum of how much we're getting right versus how much we're getting wrong, and whether we can be doing a better job. I think that's a healthier way to look at it.

I expect the outgoing administration is going to say, “Califf, we did a lot of great things, and we did a lot of things right.” There are going to be people on the other side saying, “Wow, we think we can see improvements.” Just picking on the FDA—which we don't like to talk about as an industry—it'll be interesting to see what changes Makary might implement and how that changes things.

Most of us who've been in the industry for a long time recognize where the FDA is not optimized and is not efficiently tuned. This goes back to hierarchy versus divisions, the expertise within the divisions, and the inconsistent feedback to biotechs and sponsors along the way. It could go in the other direction; it could get worse. But I think there is a possibility that we could see some improvements come out of these changes.

5. Carvykti Extends Its Lead

Let's move on. There wasn't a lot of news, but there was some fourth-quarter revenue for Carvykti. Brian, do you want to cover that? And Sam, if you can comment on this CAR-T BCMA.

Yeah, thanks for coming back to me. J&J reported the other day, generally not a very controversial quarter from what I can tell. But one of the things in the SMID-cap and large-cap biotech sector that was a talking point was that they reported $334 million in Carvykti sales. This is their BCMA CAR-T that they partnered with Legend on for multiple myeloma.

This pretty handily beat expectations and has now had a very successful launch. I think it's the best CAR-T to date, like Yescarta in large B-cell lymphoma. Myeloma is impressively one of the largest indications out there. I know Pomalyst had been with Celgene back in the day, but I remember when they were first launching it and people were questioning whether it would even be worth the cost of marketing.

For frame of reference, the other impressive number J&J put up was quarterly sales of Darzalex, which were reported to be over $3 billion. So this is also for myeloma, and it's now the biggest brand J&J has ever had. Myeloma is now delivering to one of the largest pharmaceutical companies in history its biggest brand ever.

But back to Carvykti: There's a potential competitive dynamic here with Gilead and its partner Arcellx, which has a BCMA CAR-T that looks very similar in terms of efficacy to Carvykti, at least in late-line patients, but without some of the significant neurological side effects that have emerged with Carvykti.

To frame up the debate on the J&J/Legend side of the story, there's an argument that they are becoming so entrenched in the landscape of myeloma CAR-T treatment that Gilead and Arcellx are really going to be too far behind to catch up.

Carvykti has controlled surv.

We lost him there.

Did you guys lose him? He was on such a roll, too.

Yeah, he was. I know.

Let me pick up exactly where he was going.

Yeah, please, Sam. Go ahead.

Carvykti is the only CAR-T in the space that has overall survival data, and our conversations with physicians and surveys that we've been conducting all tell us that, at the end of the day—I don't want to say it this way, but I think Abecma will be history, at least in terms of meaningful sales. That's the equivalent BCMA CAR-T from Bristol Myers Squibb.

Carvykti is doing amazingly well, and, of course, it came out of a China deal. It's one of the original China deals, I would say. I think it was—I can't remember exactly when it was signed—but the first time we got the data at ASCO, back in 2017 or 2018, most people thought it was all made up, which, of course, didn't turn out to be the case.

The competitive angle is that Arcellx is coming in now with Gilead, a very strong partner. Gilead is not to be sniffed at in the CAR-T space. It'd be very interesting to see how this battle plays out. It's not about efficacy; they're both extremely effective. You're talking about 90%-plus overall response rates and a very deep MRD, or minimal residual disease, impact.

The battle is on the side-effect profile. There's an argument between the two worlds of Carvykti versus Arcellx—which, of course, doesn't have as much data as Carvykti—that Arcellx's safety profile is better and that you might be able to manage that more easily for patients. But at the end of the day, they both have to contend with bispecifics that are coming along, and I have to say there is a lot of interest in pushing those bispecifics earlier. They're off the shelf; you can take them to a community center without much worry.

It's going to be very interesting to see how this all pans out. This year is going to be another year where we get a whole bunch of updates from both sides with regard to delayed neurotoxicity, side effects, or something else. This is certainly an interesting world of CAR-T, where it has become more and more usable and outpatient. So really, it was a surprise beat again in the fourth quarter. They beat in the third quarter, too.

This is all great for multiple myeloma patients.

Yeah. To emphasize what Brian was talking about, when I joined Celgene, it was the year they were launching Revlimid. The way that whole multiple myeloma pipeline has grown over the last 15 years or so has been pretty remarkable.

The crazy thing is, it’s an orphan disease, right? I think it’s the second- or third-most-common hematologic malignancy, but I think that sector did what Genentech did for solid tumor oncology: It showed that it doesn’t take much to drive tens of billions of dollars of value in biotech if you have a good therapy for something that, at that time, there was almost nothing to treat.

I mean, Chris, unfortunately, what you just said means that it’s one of the toughest markets to model because of the endless combinations you can have and the different lines of therapy.

And Brian’s back, right?

I am. I’m sorry.

Could you hear us? Was I doing a good job, Brian?

You know this space better than I do, so I’m sure you did a good job. I couldn’t hear you for about 2 minutes, but I’m sure you picked up very well.

All right. Well, Brian, we’re going to go to the next topic, which is AI. There’s been a lot of discussion, as well as topics and articles, around AI, and obviously part of the Trump administration’s communication is emphasizing a pro-business attitude and an embrace of new technology.

He had Larry Ellison talk about mRNA, with Sam Altman and Masayoshi Son of SoftBank putting up $100 billion. What are your thoughts around this, and what do you think it means for our industry?

I hate to be the eye-rolling skeptic in biotech, but we’re a few days into the government transition. One of the big headlines that’s been picked up is this $500 billion infrastructure project being worked on with Oracle, OpenAI, and SoftBank.

Oh no, did we lose Brian again?

Oh, bummer.

Can you hear me now?

Yeah, we can hear you. So, this $500 billion effort—you’re saying it echoes the cancer moonshot?

Yeah. Throughout my career, I’ve heard this recurrent visionary claim many times, whether it’s from Biden or even within the industry. We’re used to grandiose statements that are likely, if not certainly, overstating the complexity of biology. Within the industry, we maybe take more exception when it’s tech CEOs doing it rather than our own kin within the industry.

But look, I think this is a great thing. These goals are important. Investment in trying to develop mRNA for cancer vaccines is good. It’s not going to happen at the speed that’s being promised here, but investment is good, and it’s very clear that investment in biomedical innovation really has moved the needle for people and will continue to.

I have a love-hate relationship with these grandiose statements because it helps move capital into the sector, which will ultimately help people. I worry about the exaggeration in the promises that get made behind it.

Is Larry Ellison who we would have expected to be the spokesperson for this? How did that come about? I’m just not as familiar with his investment history or knowledge of this space.

I don’t know. I think we lost Brian again. All right. Well, hey, Sam.

Yeah. Brian is having tech issues. Maybe you should stop having a go at tech.

Yeah. So, Sam, you’ve followed this AI space, and there have been some other communications this week. What’s your take on all this?

Larry Ellison, as Brian was so succinctly putting it, is a tech CEO talking about healthcare. I want to hear everything they’ve got to say about how you deal with massive metadata sets or massive data sets, such as healthcare data and imaging data—all of that. In the provision of healthcare, diagnostics, radiology, cardiology, and all of that, I think they will have a much better view of what technology can do to speed up the analysis of that information.

When it comes to drug discovery and biology, I think they should leave that particular conversation to folks who have at least a closer relationship with the conduct of these things—chemistry and so on.

In this particular case, the generative AI buzz lifted everybody. Recursion was up, even though AI has been part of its business and there was nothing new in these announcements or the $500 billion effort that’s going to make a difference to them, as far as I understand.

In terms of Moderna being up, one of the things I was watching was that the stock had been hammered after January 14, the opening of JPMorgan. They downgraded guidance for 2024, downgraded guidance for 2025, and the stock got hammered. Then, of course, it started picking up again. First was the bird flu issue—the unfortunate death of an individual and now possibly a second one. Then came all the talk about AI and the specific comment about mRNA vaccines.

Larry Ellison didn’t mention Moderna specifically. I was watching Moderna’s share price being up somewhere in the region of 20% to 25% from that low, and yesterday it was up another 8% to 10%. Then I’m looking at BioNTech, which also has an mRNA vaccine for cancer and is using AI, or machine learning, to identify the new antigens needed to design these mRNA vaccines, and that stock is only up 8%.

That got me really confused about what’s going on, which of course has to do with BioNTech, if I may say. It’s my personal opinion: They are not as good as Moderna in terms of putting their story out, and it’s a European company as opposed to a U.S. company.

Nevertheless, that particular comment floated both boats, one more than the other, and now we’re going to see how they’re going to be able to execute. At the end of the day, it makes no difference to the data readout. When the data reads out, we’ll see whether an mRNA vaccine can genuinely help increase the response rate, survival, or progression-free survival with a checkpoint inhibitor, which is what both companies are testing.

Yeah, and I did look at it as a Europe-versus-U.S. response. The focus on trying to lift U.S. sector companies and the tech and biotech sectors here explained it a little bit—that Moderna may be more of the beneficiary.

There was another article by George Yancopoulos from Regeneron, again throwing a little bit of shade on AI. He admits that they use it as a tool, but he doesn’t like the term “AI.” He says it’s not intelligent. He prefers “machine learning,” and he says it can help with pattern recognition. But he’s really making the case that you need the right experience and contextualization of these data outputs, and it’s not going to replace good drug developers, as he’s proven at Regeneron.

Similar to Daphne Koller of insitro, who was also trying to bring some sober-minded views on what questions we can answer with AI and what the limitations are, I think it’s good that our industry is responding to this cancer-moonshot-type discussion and rhetoric with a dose of reality. I’d encourage people to check out that interview or article from George Yancopoulos.

Luba, there was other news, and NVIDIA really made a splash with its investment in AI. Tell us about agentic AI.

Yeah, absolutely. Just one more comment on AI: I wish, and I hope, that over the next few years—and I think this is where we’ll get to—we’ll stop talking about the definition of what AI can do, what it cannot do, and whether we’re better than AI.

I’m not trying to say AI can do everything, but it’s like back in the day when we talked about websites and whether you could sell through a website or sell directly, or when we started talking about digital health. There were panels and panels, lots of people were writing, and people would hire McKinsey to define what digital health was. Now it’s just there. Medical records are digitized, we have access to them, and we can gain insights from that digitization. It’s not just about insights; it’s part of the workflow in healthcare.

We’re still a little behind the ball here in biotech, where we continuously talk about AI. We should just accept that it’s there. Agentic AI is a good example of that, too.

NVIDIA did, in fact, make a big splash with its collaboration with Illumina, which they announced at JPMorgan. Illumina has also been working with NVIDIA. Agentic AI is something that has already been embraced by many other industries. It is coming to biotech and life sciences, so I think everybody has to read up on it. It’s already here.

In healthcare, we generate a lot more information than any other industry in the world. In fact, 30% of the world’s data volume comes from biotech, life sciences, and healthcare. We should not just be embracing it, but also being up to speed on what it is.

So, what is agentic AI? AI agents, for those who don’t know, are systems that help you, me, and everyone else make autonomous decisions.

If you look into it, there’s a recent McKinsey report that talked about and projected that 40% of the workforce will be automated over the next 20 years, and it will start with the use of agents and agentic AI. We did have AI assistants, just to make it clear, but this is not what we’re talking about. They couldn’t act on their own. We’re talking about autonomous decision-making: They make their own decisions. They’re not just creating content for you, such as LLMs that you sift through and spend hours and hours reviewing.

This is the year where we’ll start creating agents that are specialized in tasks relevant to drug discovery. Of course, there are companies that are already doing that; they just didn’t call it agentic AI, but they have been creating agents to do so. There’s a great article in Harvard Business Review, if you want to learn about the use of agentic AI and how it will change work and our processes. It also talks about its use in the healthcare setting. NVIDIA, as I mentioned at J.P. Morgan, did announce that they will be providing AI agents.

It’s not something that you have to do as part of your own company, although if you can, that will actually differentiate you and create your own IP. They’re creating AI agents to accelerate R&D. They’re also doing that to help commercialize drugs, which is probably going to be the first use of agentic AI in the life sciences more generally. The NVIDIA and IQVIA collaboration is really going to use a novel agentic AI workflow to accelerate development and clinical trials.

NVIDIA’s CEO, when he was speaking at J.P. Morgan—and actually, he was talking about this in Japan—gave some examples of where AI agents are used today. As an example, they serve as research and lab assistants, they’re already optimizing manufacturing supply chains, and they’re executing marketing campaigns. It’s already happening, and there’s going to be a lot more of it. I’m actually part of the BIO planning committee and have asked that we should really start talking a lot more about how we’re going to use autonomous agents to optimize our workflow in R&D.

Yeah, that’s a great overview, and I agree. We change terminology, whether it was when we talked about big data or bioinformatics, and ultimately, we have better and better tools and more computational power to drive efficiency and activity. It’ll be interesting—it’s moving so fast—to see how the regulatory constraints stay on top of it. There’s talk of AI making the diagnosis or even prescribing things for your patients, and when you start to take out that human choice and decision, even if AI is better, where’s the accountability? Where’s the liability?

Wow, it’s cool to watch it in the early innings, but I think many want to make sure that we put the right guardrails and safeguards around that.

Hey, Chris, can I just say a couple of things? Sorry, I can’t help myself. One of the things, Luba, that I think the world needs to do is stop creating these random words: Agent—why “agent”? Tokens—why “tokens” when it comes to LLMs and how they function? I mean, I know they’re computer scientists and they have their own terminology, or whatever you want to call it, but in order for people to understand better, if you just call it a lab assistant or automated lab assistant, that’s much easier, right?

I don’t know. Honestly, if you look at it, I think we create a lot more complicated terms than they do in biotech. I mean, target—really? What? Come on. I can tell you, I’ve been at the forefront of actually teaching these agents our terminology, and they’re extraordinarily confused because we come up with a lot more terms. So I wouldn’t be pointing fingers. You can ask me—I’ll create an agent for you. You can ask the agent.

Fair enough. I’ll

Tell you.

Well, there is an element of marketing to this, right? When you come up with a new term, you have to define it, and all of a sudden you can rephrase and reframe exactly what we’re talking about. If you use old terms, they’re going to be like, “Well, I know what that is, and I know how that works.” So I think there is an element of creating new terminology so that people can take a fresh look and have an open-mindedness around adoption. That could be good or bad. It could be used for ill as much as it’s used for good. But point well taken, Sam.

6. Biogen Shrinks Its Research Footprint

All right, there was some other news on the Biogen front. Brian, you want to cover this? Chris Viehbacher has probably communicated a lot since he’s been on board, and they’ve made a lot of decisions, but what’s the latest coming out of Biogen?

Yeah. I mean, it’s funny: With all the talk of cancer vaccines and moonshots and grandiose statements underpinning the complexity of moving from the bench to the bedside, Biogen announced strategic shifts around the research organization. This is actually a first effort by their transitioning CFO, who’s replacing Mike McDonnell, and it’s really a reflection of Chris Viehbacher’s multiyear change at Biogen.

Again, not to point out my age, but 10 years ago, everyone on Wall Street felt this had the most attractive pipeline and research organization in all of large-cap biotech. So it’s been quite a change over the last decade. It sounds like there are going to be staffing cuts. They haven’t specifically broken out how many, but the statement they are making is that they’re focusing on a new footprint that will match the needs of a prioritized preclinical portfolio.

It does seem to come with a greater emphasis on external innovation. I think this is something that CEO Chris Viehbacher has really—I wouldn’t say totally emphasized, but clearly has shown more favoritism toward—M&A and external innovation, rather than the classical Biogen massive investment in preclinical research. That’s probably a reflection of a number of the pipeline failures that they had, which had really great preclinical research behind them and just never materialized in the same sort of clinical efficacy that the preclinical models predicted.

I think it also underpins some of the struggles that the company has, which is really to generate a replacement for the melting ice cube that is their very successful MS franchise. As you know, that’s matured, and they really haven’t found a near-term sales line that has totally been able to displace that yet.

Yeah, you know, it’s interesting. We see this trend a little bit—it varies from company to company—but are you better off cutting internal R&D to drive more earnings, stock price, stock currency, and cash, so that you can use that cash and stock currency to go and acquire products that are de-risked to feed the pipeline? Each company has a different level of spending that they want and target for R&D, but sometimes this is a culling of inefficiency internally, or an acknowledgment that it’s not that easy to do internal R&D and that outsourcing it to biotech is more effective.

So I kind of see this as a little bit of a signal on that. I think Viehbacher said this: The day job is to look for deals. So it’s almost like internal R&D is secondary, supplementing that. It’ll be interesting to watch over the next couple of years.

Yeah, I can do it really fast, Chris. Nature Medicine published online on January 20 the paper “Mapping the effectiveness and risks of GLP-1 receptor agonists.” Remember those—our favorite drugs currently in the obesity space. The summary was 40 positive events, meaning things like Alzheimer’s, schizophrenia, and reduced suicidal ideation, versus 18 negative ones. Remember when they were saying, “Oh, it increases suicidal ideation,” et cetera?

The negative finding that particularly stood out was rheumatoid arthritis, or arthritic changes. Whether it’s genuinely related, I’m not going to question whether the negatives are related if I’m not questioning whether the positives are related. But 40 versus 18—I think I’ll take that. Is it simply through the impact on reducing weight, or is it also something to do with GLP-1 agonism? Time will tell.