第129期—2025年1月31日

It feels like we have a lot of news, and it feels like things are really starting to get into gear. Without focusing on it too much, because we could go down the rabbit hole, I thought I'd start with the RFK Jr. hearing and all the government-related news. I'll essentially have an open-mic session: If anybody wants to chime in on anything they heard at the hearing, or on any specific policies that have been in the news, go for it.

For example, he mentioned the IRA negotiations, and President Trump seems to support that. Another thing in the news that seemed pretty concerning is that he apparently had private discussions with senators about march-in rights and seemed to be supportive of them. That would be a huge deviation from past Republican administrations, but it's one of those stories where everything was off the record, and his people wouldn't confirm anything.

It may or may not be true, so I'll leave it open. If anyone wants to jump in and comment, positively or negatively, without getting too political, on things they've heard over the last couple of days, go for it.

I'll take a shot at it, Brad. From where investors sit right now, we're all honestly sitting on our hands and waiting for some sign or direction about whether this administration is going to be pro-pharma or anti-pharma. Maybe the most positive thing we've heard in terms of a potential pro-pharma direction comes from the CEOs who have gone down to Mar-a-Lago, met with Trump, and come back saying, “Don't worry, he's pro-business.”

But I have to say, for those of us who were listening to the RFK Jr. hearings this week, I was only hearing negative signs. I was hearing that he is going to put some teeth back into the IRA, or maybe add teeth to the IRA, and that he's very disturbed about the disconnect in drug pricing between the United States and Europe.

He may even allow these march-in rights to come into play, which would be tremendously negative for the group. I don't know. I'm a little bit more nervous. Generally speaking, I don't have a lot of confidence that RFK Jr. and Trump, or that this administration, are really speaking with one voice at this stage. But to put someone like RFK Jr. into this position, I think we're only doubling up on the potential unpredictability of what we might be hearing going forward.

Just this morning, on his Truth Social account, President Trump tweeted in all caps, “America first drug prices,” with 3 exclamation points. That was something he floated during his first administration, and given his whole mentality of tariffs and competition—countries are ripping us off, so to speak—it sounds like that's going to be front and center of drug-pricing policy going forward, for sure.

Brad, there was a comment somewhere—I mean, it's been a bit of a whirlwind trying to keep up with everything that's being tweeted and press-released, confirmation hearings, and so on—that we might go back to the idea of setting prices relative to other countries. I think maybe it was RFK Jr. himself who mentioned it in his hearing. I'm not quite sure where it came from, but in general, our feeling is that he wouldn't be there if there weren't at least 50 votes in his favor.

The hearing tried to expose the variety of things people thought he was for and against. Of course, the biggest focal point was vaccines. He said repeatedly, “I'm not anti-vaccine. I'm pro-science,” which is a great thing if that turns out to be exactly the case.

What happens afterward, of course, is anyone's guess. There are many ways of being anti-vaccine without saying it, and that could mean changing the VICP, the Vaccine Injury Compensation Program, so that vaccine makers become open to being sued, or changing the composition of ACIP. If I'm not mistaken, I think Paul Offit is one of the members of ACIP. I might be confusing that with the FDA's VRBPAC.

If you could change the composition of ACIP, or the rules for the VICP, that obviously creates an opportunity—or a reason—for vaccine makers to say, “Actually, we don't want to play here.” I don't know if there's a coincidence here or not, but we just heard that AstraZeneca has canceled plans to build its U.K. vaccine plant.

Of course, if you're a vaccine maker, wherever you are, one of your biggest markets would be the United States. If you're open to being sued for random science that suggests there is a risk that the vaccine caused the problem, then why would you be in that game?

I'll add to this conversation. First, I think Eric was spot-on that the more concerning and most important things are how they deal with the IRA and march-in rights. I didn't watch every minute of the hearings, but I watched enough to say that this is theater. You can usually track the lobbying interests and the kind of grandstanding from the senators as they get their sound bites in.

What's disappointing about it is that there was very little about how he would govern in the role and how he thinks about the FDA, the NIH, or policy. There's enough out there that he's put out, but this isn't just about the RFK hearing—all of them are less about how someone would govern moving forward and more about brokering past comments and statements. It lends itself to good theater.

Brad, you tried to engage in a very objective manner online, and I was disappointed by some of the responses to you. But we shouldn't be tone-deaf. We have to realize that there are a lot of people—we've lost a lot of trust as an industry and as leading voices of “pro-science.” People pay attention to this stuff, and I think we've lost a lot of ground. A lot of this was during the COVID years, but I think we need to figure out how to get back and restore that trust.

I'll throw out a contrarian view. I don't know if RFK Jr. will get approved and confirmed, but if he doesn't, I think we still have issues with convincing the public to trust the authoritative voices for our industry. The contrarian view is that if he does get in, we don't know what he's going to do, and it could be damaging. But I can tell you that half the population—or whatever percentage you want to assign to it—is now going to have no excuse.

Bad actions will be revealed. I think there are others, not just RFK Jr., but people with MD and Ph.D. credentials whom a lot of the country is following, whether we agree with it or not. We are part of the industry. When Jay Bhattacharya has more followers than Eric Topol, or when you have people like Peter McCullough or Robert Malone with over 1 million followers and significant engagement, we can say, “Well, they're not smart. It doesn't matter. We're the ones who are the experts.” But you're losing a sense of the zeitgeist out there.

How do we restore trust? Part of that comes with a focus on transparency. Do we trust the VAERS system as a population? Do we?

I think there are some benefits that could come out of restoring half the population's belief in medicines, vaccines, or what have you, because I think we're losing that battle. It might only be made worse by the types of hearings and grandstanding that we see.

Cassidy is a good example. Cassidy is supposedly the linchpin on whether confirmation goes through the committee. I went to his website because I don't know anything about him. I know he's a Republican, and, wow, he had this huge initiative focused on hepatitis B vaccines. So I'm thinking, “Where did that come from?” because he had this exchange with Rand Paul, who made a case about why hepatitis B is an issue.

It just shows that there are conflicts of interest throughout. I think the exchange with Bernie Sanders or Elizabeth Warren, and seeing how much money they're getting from lobbying efforts, means that for the outside person looking in, they're going to view all of this as corrupt. They're going to side with those who are, quote, against the establishment.

It's something we have to be realistic about and not just throw mud at anybody we disagree with. That's a perspective as I think about this longer term.

Chris, I have a question for you because what I'm hearing in what you're saying is super interesting. This may be a dark way to look at it, but is the underlying thought here that if RFK Jr.

Well, I hope not. I'm not suggesting that that is what I think is good.

But it could, right? I'm not saying that that's the right solution, but it might ultimately be how it plays out.

Yeah. No, what I'm saying is that if he puts some things into place that his constituents support—I’ve never heard people get cheered the way he got cheered in the gallery, for what it's worth—if he says to his constituents, “Hey, we're going to clean up the vaccine system. We're going to do prospective studies that look at the entire childhood vaccine schedule with a modified childhood vaccine schedule versus no vaccine,” whether it's the Amish or whatever people cite for differences, and you start to employ some of this for real—let's get the data and let's get transparency—again, I'm not saying we want a health crisis, and I know that's the fear that we all have, but I'm saying that there is a pathway.

Being pro-business, there's the idea that, using the IRA as an example, this could result in “better negotiations” for industry. I worry about the black-and-white nature of this, that we put all of these things in. I think the confirmation hearings are designed to do that kind of black-and-white scenario.

Normally, what I see—and again, we've had Trump, and we can all argue—we had him for 4 years, and I think he's a pragmatist. I think he wants to modulate, and I think this is why so many people see it as a revolving door: he doesn't like the extreme ends of things, and he'll quickly remove someone if it gets in the way of his various constituents.

I don't know. Again, all I'm saying is a different countervailing voice to say, yes, we all know what the worst-case scenario could be, but are we looking at what could be a modulated benefit? Everybody out there who hates the government, hates Fauci, Francis Collins, and Peter Hotez—if RFK is actually in charge, what are they going to say then?

If he's not in, I don't think we've fixed anything with public perception or with a change in embracing the institutions that we all hold in high esteem. Anyway, that's just a countervailing view. I'm still working out what the right pathway is here.

I always feel that we're in a bubble sometimes, and we don't look to the outside—to the other MDs and PhDs who have countervailing views. The Vinay Prasads of the world, whatever you think of him, people are listening to him. They're really deconstructing what he's saying, juxtaposing it, and making up their own minds. That can be a good thing or it could be a bad thing. For what it's worth—

One of the things that could happen in the new term that wouldn't be negative, of course, would be parity for the IRA negotiations between small molecules and large molecules. What does anyone believe the probability of that is, whether it applies to the list that's just been published or not, retroactively or going forward? Does anyone have a view as to what the probability of that is?

I mean, look, for the IRA, just retrospectively, we've seen that there are some who say, “Well, the additional haircut—the additional trim off of the already discounted CMS prices—wasn't as bad as we thought.” I don't think people are thinking Trump is going to make it worse. We all know rhetoric has happened on both sides, Democrats and Republicans, for decades, and what ultimately comes out is more moderated.

I don't know. Is it going to be the same? Is it going to be better? Is it going to be worse? I really wish we would focus on the fact that, while there is a unified Congress, we should focus on the pro-business work of getting what needs to be fixed about the IRA. Throw out what we need to throw out and modify what we need to modify.

But I think there's an opportunity here. I haven't heard RFK—definitely not Makary—or anybody who wants to throw out the idea of drug development, doing good safety and efficacy studies, and getting drugs to patients that need them.

So I think that, vaccines aside, let's make it easier for drugs to move forward. I don't know. That's an optimistic view on it, but—

I was thinking more of the 9 years versus 13 years, maybe.

Well, that's what I'm saying. That should be an easy fix right now. I don't know why that would not be adjusted with this administration and this Congress, but I'm open to others who've thought about this more.

Well, so long as it's fixed in the right direction, with the small molecules going to 13, not vice versa.

Amen. I'll close things out by saying my take is you have to be pragmatic, and I think he's going to be approved. I didn't see anything over the last couple of days. There were a couple of exchanges here or there, but I don't think the hearing went off the rails, which is what I think it would have taken for him not to get confirmed. As business people, I think we have to deal with that.

Chris, you mentioned my tweet, since it did bring up so many comments and emotions on both sides. Sometimes people read into tweets, so I'll clarify exactly what I was saying: whether I agree with him or not on everything or anything, I actually think, more than any of the other nominees, that he deserves to get confirmed. The reason is that people voted for him. Not everybody, but a lot of people voted for him.

Whereas, for all these other nominees, I don't think most people—I didn't even know who Kash Patel was until today. This was a very high-profile thing. I think part of what got Trump elected was that people do feel our country is one of the most unhealthy countries in the world, in contrast to us being the richest nation in the world. They feel that, whether you agree with him on every issue or not, he's somebody who can shake that up and maybe change the status quo.

For that reason, I think if you look at it not from a biotech perspective but from a politician's perspective, it's in part the will of the American people. I think that, as business people, if it happens, we just have to make the best of it. I'm guessing that it will.

Let's move on, because we have a lot of biotech news, and I'll start with what may have been a historic approval yesterday. Vertex announced the approval of JOURNAVX. I keep wanting to say “Journavax,” like it's a vaccine. But this is the NaV1.8. It's the first approval, so it's approved for adults with moderate to severe acute pain.

Paul, I'll kick this one over to you. What do you think is the historical importance of this for the field of pain? Obviously, we've gone through the opioid crisis, and specifically with Vertex, I know from investors that there's some skepticism that this is a truly efficacious pain medicine compared to some other things that are available. What's your take on all of that?

Yeah, thanks, Brad. I mean, I think there's a drug-development, scientific, and public-health angle that is unequivocally positive. Then, as you alluded to, there's a stock angle that is much more nuanced.

On the drug-development side, if you just take a step back, it's a really, really high hurdle for something like pain, mood, or anxiety to have a drug where you can decouple addictiveness or liking from efficacy. To make someone who psychologically or neurologically feels bad feel better, but do that in a way that doesn't actually make the drug addictive, is a really, really challenging problem.

This drug, essentially working more in the peripheral nervous system on pain transmission and not neurologically on the awareness of pain like an opioid, is a tremendous public-health advancement. There's some controversy, as you said, about whether this works as well as an opioid or not. The drug beat placebo in a number of studies. Beating placebo in any neuroscience study is not a trivial feat.

I think it's a really important drug, and it could end up being a big blockbuster drug. There are a number of other companies in the space that we and others are watching that are developing other NaV1.8s or NaV1.7s.

Historically, for Vertex's stock, investors have been much more confident in the commercial prospects of the Vertex pain portfolio in the chronic space. That's more of a health-insurance dynamic, notwithstanding the issue that chronic opioids are just tremendously unappealing and almost unethical to prescribe.

I mean, in chronic, right, you can kind of think of a scenario where you're dealing with your typical commercial payers or Medicaid and maybe you have to step through another drug like Lyrica or something like that, but many patients fail those drugs. And with chronic treatment priced at over $10,000 a year, it's very, very easy to model a multibillion-dollar opportunity, even.

Yeah, I mean, you could go crazy: a $5 billion to $10 billion opportunity there, right, even if the drug doesn't work amazingly well, because many of the other options don't work that well. In the acute launch, this is one of, I feel like, the rare instances where an approval like this, as you said, is so tremendous from a scientific perspective, and yet if Vertex beat consensus this year, I think that would be a big win for the stock.

I think people that I talk to almost have no idea how to model this. If you look at consensus at the pricing that they put out, it requires around 300,000 patients to be treated this year, depending on how you want to model the duration of treatment. You could say that that is an extraordinary amount and say, “Oh my God,” or you could say that's actually small penetration in this market.

Others who've done this longer than me know, but in my experience, acute-care launches for non-life-saving treatments tend not to go well. The adoption curve is so slow, and so I think it's really, really interesting. For Vertex, they just came off a setback for their sciatica study, which has also made the debate around this mechanism in the chronic space a little bit more heated, although I still don't think there's any reason to throw in the towel in other indications necessarily.

But in acute, I would almost say, when investors ask me, there's almost no consensus in terms of a true number. I think a win for Vertex would be really exiting this year in a position where this truly is part of the treatment paradigm and broadly reimbursed. I think that just tells you how hard this is to sell in this setting.

So I'll leave it with that. If others want to chime in, ultimately, it's amazing from a scientific and medical perspective.

Anyone else on this one? Nope. All right. Let's go. This is like a unicorn day. We actually have IPOs in biotech, and so far, at least, the indications are looking very strong for them.

Eric, you're a banker—or you're at least on the sell side of a bank. Tell us your thoughts: Is the IPO market heating up, or are these just one-offs that are in the right indications, like Metsera, for example, with obesity at the right time?

Yeah, thanks, Brad. I certainly hope I'm not viewed as a banker. Not yet, at least. I haven't worn that cap in my career, but we at Cantor are involved in a couple of these IPOs. In fact, I can't speak specifically to Metsera; that's one we were involved with. And, for that matter, I don't cover any of the stocks that we're going to be talking about today.

At one point, it seemed like we were going to get a deluge of IPOs in early 2025. We had counted about 15 companies that were privately waiting in the wings, likely on file confidentially and ready to go in Q1. But clearly, the markets have not cooperated this week. You mentioned one name. We also had Maze price last night, so the first 2 IPOs of the year are out there, and I'm sure there are a few more waiting in the wings. I think there are 4 that have flipped their S-1s and are at least on file publicly now, so I think we'll get a few more dripping out.

I think there are a few things to note here. Number 1, these are generally high-quality companies, right? The VCs and banks are not dumb. They realize that if they're going to have more IPOs over the course of 2025, they better lead with their best offerings in a very choppy market. So I can assume that the banks have done their test-the-waters meetings, and what we're seeing are some of the best-of-breed companies coming out.

From where we sit, we meet with plenty of other good private companies that are achieving meaningful milestones, so I do think the quality is there. But number 2, where I would be worried is market receptivity. Putting aside the high-flyer in obesity that you referenced coming out this morning, my guess is that these early IPOs will not be well received by investors. They're probably going to be heavily insider-led rounds. That could change with good initial receptivity to some of the better-quality names.

Paul, I'd love to hear your views on this, but from where we sit, we're just not hearing from our clients that they're ready to embrace the IPO market that might be coming. Most are still licking their wounds. Most have still had very poor performance over the last couple of months. There's a cohort of investors that just doesn't want to hear about an IPO roadshow anytime soon. That's more a function of the markets, again, not the quality of what we're hearing.

And number 3, just in reference to this IPO trend that we'll talk about, almost surely there's still a lot of dual tracking going on, with IPOs and private M&A discussions happening behind the scenes. It's notable that a couple of the private companies that were acquired this month, IDRX and Scorpion, were likely acquired right out of the IPO queue. So while that's great for IDRX and Scorpion, that is a little bit problematic for investors who feel like some of the better private names are being picked off before they have a chance to come to the market and be invested in.

So I'll pause there, and I'm sure Paul has some views he wants to share.

Yeah, thanks, Eric. Like you, I'm going to say this with the caveat that I'm not commenting on any of these specifically because we may be involved in 1 or 2 of them. With that, I would just say that, in terms of what I'm seeing from a risk-taking perspective, there's a lot of hiding and a lot of defensive investing.

Not to bring it back to Vertex, but it's always a good symbol of that. Look at Vertex's stock after sciatica failed, right? It went to $390, and now it's retraced almost all of what it lost. I think that is less about enthusiasm for pain and more about embracing the scarcity value of the company and the sort of rhetorical question of, “Hey, what else do I own in large-cap?”

There's another name I cover, Neurocrine, where you've seen this big retrace after a pipeline failure because it's a high-quality company, it's got another launch going on, and it's profitable. The way I would say it in large-cap and mid-cap is that it's defensive investing.

For the smaller stuff that I cover that is more binary, I would say in a lot of those stocks, it's niche interest. There are certain people that I know who really care about them, and there are many others that are just not concerned. To get paid on a catalyst, you've got to be right and lucky right now. I think that's the general feeling.

Sam, I think you had a comment on Metsera.

So, look, it's in the obesity space. Contrary to what we were talking about just before we started, there isn't really a major shortage of obesity plays, or ways to play obesity. You've got Novo, obviously, and Lilly. Then, I'm not judging any of them; I'm not saying whether they're good or bad, but you have a list of Skye, Altimmune, Viking, Zealand, Structure, and then here comes Metsera.

What do they have that distinguishes them from the rest that allowed them to go through this IPO? Just to give you the stats: $275 million raised. They sold, in the end, 15.3 million shares instead of the original offering of 17.2 million, which is great because they got a higher price. They priced it at $18, and Bloomberg just reported that they're trading at $280.

What does that mean for them? Their market cap at that price would be around $3 billion, roughly, although I haven't done the detailed math. Let's take the range that I just gave you: Skye, sitting there with a $53 million enterprise value or a $120 million market cap, and at the other end of it is Zealand at $7.2 billion. So it sits in the middle.

It's got a decent, broad offering of pretty much every hormone that's involved in control of appetite and nutrition. And they've got an interesting asset, which, when we looked at it, we wrote on it when the first data came out. It looks very decent. It seems to be back in that game of 20%, 22%, 25% weight loss, which is not my favorite game to play, but let's just do what the world is hell-bent on doing.

They seem to be better than Zepbound, which is currently the best drug that we have out there, and maybe on par with the triple G, or the retatrutide that Lilly is developing now. And that's saying something, because it's just the GLP-1 right now.

What does that mean for the quality of the weight loss? This is what we keep talking about. I don't know where the side-effect, safety, and tolerability profile is. I've scoured the S-1, and I couldn't find any more detail.

There was no detail at the time either. But that is not abnormal. Only last week, Novo gave us the Amycretin safety and tolerability trial, and they just told us how much weight people lost rather than actually telling us what the detailed safety and tolerability profile was. So, all that will come out. I don't know whether they had it in their presentations.

Nevertheless, it's a pretty healthy sign, and I'm really sad to hear both Paul and Eric being relatively conservative in their thought processes about going forward. We need successes like this because otherwise, what are you going to do with your whole host of private companies? When I get to talk about our little M&A analysis, I'll talk to you about the percentage of deals last year that were private versus public.

One thing I'm watching—this is much earlier stage. I don't think it's baked too much into today's valuation, but toward the end of last year, when I was visiting Korea, I visited Metsera's Korean partner, D&D Pharmatech, which is trying to develop oral obesity medicines. The angle is that they're focused on developing oral peptides, and I'm a big believer in oral peptides; I'm skeptical that small molecules like GLP-1s are going to work out. I think it's going to take something like an oral peptide if we're going to have oral therapies, so it's an interesting thing to watch in their pipeline.

Let's move on and talk about data. We had some interesting data. In fact, one company had some really stellar data and was able to raise $400 million off of it. This is the MASH space, and I would say that the MASH space in general is pointed in a positive direction. The Madrigal launch seems to be going pretty well.

Akero announced 96-week data for its FGF21 agonist, and this was in stage 4 fibrosis, which is basically cirrhosis. Eric, I'll kick it over to you to tell us more about the data and the investor reaction.

I agree, Brad. This is a big deal, not just for Akero and not just for 89bio, which is also in the space, but more broadly for the industry. This is what the industry really needs to see. Sure, it'd be great if we had some well-oversubscribed IPOs that trade well, and Sam, I'm certainly optimistic that we will see that. But we are still snake-bitten from the fall, when we had some stocks trade really well in the first couple of weeks on the market, only to roll over.

The Akero data is a game changer. This is a really big indication, like Brad just mentioned. NASH/MASH probably affects about 8 million U.S. patients. We've had the Madrigal launch for Rezdiffra, which, just 9 or so months in, is selling at a run rate of well over a few hundred million dollars. This is also almost certainly a market that pharma is watching very closely because of the innovation, the size of the opportunity, and because pharma really doesn't have much going on here.

For those who don't know, in the Akero trial, about 39% of patients treated with efruxifermin, or EFX, experienced a reversal of cirrhosis after 96 weeks. That's about twice the level, or more, of those who experienced reversal on placebo. These are F4 patients, right? They're very advanced in their stage of disease with fibrosis. In fact, if you're an F4 NASH/MASH patient, you have a life expectancy of only about 5 years on average.

The unmet medical need here is almost oncology-like. Also, very importantly, GLP-1s have not shown any fibrosis benefit in F4 patients. The data from Akero kind of slams the door closed on the view that was circulating a little bit last year that GLP-1s would somehow disintermediate or disrupt the NASH market, making these drugs obsolete.

It goes without saying that when you have a drug that can reduce fibrosis, you can charge premium pricing, and a lot of these patients, of course, are already diagnosed in the system and under care. Akero and 89bio are really the only 2 companies with an FGF21 agonist in phase 3 development. Pharma is behind here. I think Novo has a drug in phase 2, and Boston Pharma as well.

It's no surprise that Akero was up over 100% this week. That's great for biotech investing. That's exactly what we want to see: people who are already publicly traded making good gains on great data. Even 89bio was up about 35% in sympathy. Nice reactions, nice fundraising from both, and just great to see good fundamental news flow being rewarded. Chris, I know you probably have some thoughts on this.

I really like how the NASH/MASH space has evolved. I just remember more than a decade ago, when the Intercept data went to $10 billion with Mark Pruzanski, because everybody knew it was such an unmet need, and we've just seen slow, incremental progress. So this was a nice milestone.

The other thing is that the CEO of Akero—first, I encourage everybody to watch the Brad Loncar BiotechTV interview. Brad, you're really showing that you can get real-time video interviews with CEOs who are in the news, so that was cool.

Andrew Cheng is somebody I met 25 years ago at Gilead. There were a lot of good clinical-development leads at Gilead, but he really stood out. We did a lot in the liver space with hepatitis B and hepatitis C, and he really understood the gastroenterology community.

I wasn't surprised at all that, even though Akero did have some challenges through development, he would know how to navigate them. If there was any failure with Akero, I felt it wouldn't be because of a lack of drug-development expertise. It was really nice to see a former colleague, Andrew Cheng, find success there.

I just want to point out that I know a lot of public-market investors have been pretty depressed lately, but this whole news item—the fact that they had good data and raised $400 million off of it—is a sign of how biotech is healthy for people who are succeeding.

Let's remember that a couple of years ago, there was actually a moment in time when, if you had good data like this, people used it as a liquidity event and got the heck out of there. You weren't even guaranteed a stock pop, let alone the ability to raise up to $400 million.

While things aren't rock and roll right now, in cases like this, where you have good data and good spaces like this, companies can succeed.

Since I left Sarepta, I watch very closely how they communicate data. I've been critical of them in the past in terms of how they've selected data, including study designs and patient selection. But I have to say, with this one, I think it does put an exclamation point on this Elevidys data set.

With a crossover in which those patients went on Elevidys a year later and were now a year older—because one of the criticisms is that these kids are younger and still growing, and you have to caveat some of the improvements, since we see placebo patients improve in that first year—you start to have a more compelling case that any benefit, improvement, or stabilization at these ages is a real drug effect.

Obviously, North Star has 2 components: the time to rise of the Gowers' maneuver and the 10-meter run/walk. Both of those showed consistent data with the first cohort, and they buttressed that not just with the placebo comparison but also with an external prospective cohort that was matched. The natural-history comparison, combined with the placebo comparison and the crossover, makes it compelling.

The stock really didn't move much. I think there was one report that said the FDA database had a death that might have blunted it, but they did have a strong quarter. Given that this is gene therapy, and with a European approval on the horizon, I thought it might show that they're going to continue to generate revenue over the next few years with this product.

It's hard to judge—from HCV cures to COVID vaccines—how much investors handicap this as just going to be a bolus of cash over a couple of years in gene therapy, rather than more of a trickle with new incident patients coming on.

So, anyway, I thought the data was good, and I think it should address some of the questions around how real the drug effect is.

Yeah. I mean, in a way, it almost brings us back to our initial discussion on politics. There were—and still today are—a lot of FDA clinical-trial purists who were not happy that this drug was approved to begin with. Remember, it didn't hit its primary endpoint, and it was a controversial approval: the review staff got overridden and all of that. Maybe data like this shows us that it's not always black and white, and that there are many variables that, over time, bear looking at.

Sticking with data, we had some sad news this week also. Cargo Therapeutics, which is the CAR T company, had a lead program, firi-cel, that was a CD22 program. For disclosure, I want to mention that Chris was an investor in the Series A, and so he can't comment on it. I'm going to kick it over to Eric and ask you: What was your reaction when you saw this news?

I was surprised, Brad, and you're right. This was a really difficult development for the field of cell and gene therapy, which as a subsector is really in need of good news. It's really reeling from disappointment. I think if you had asked 10 people last week whether the Cargo trial was going to work, probably 8 or 9, including myself, would have said yes. The phase 1 data were that compelling.

But this is biotech, and this week we found out that their CAR T therapy, which, as you mentioned, was directed at CD22 and designed to work in patients who were already CD19 CAR T-cell-experienced, failed. It was a double-whammy failure: It fell short on efficacy, where the durability of response just wasn't there, and on safety, where there was a high incidence of HLH, which is, as an aside, a very serious side effect that we're seeing increasingly crop up in these CAR T-cell studies.

Maybe in retrospect, there were probably a few signs that we should have paid closer attention to. The phase 1 was a single-center phase 1. They did change the manufacturing process between phase 1 and phase 2, and they may have even heavily selected the phase 1 patients, but that's all water under the bridge.

Unfortunately, the company has had to lay off half of its employees. It's terminated the firi-cel program and is going to reinvest its remaining cash—about $360 million-plus—into its pipeline. I don't cover the stock, but I guess one question I have is whether it's even a good idea to redeploy that cash into a pipeline of even riskier, pre-proof-of-concept CAR T-cell assets.

The cash they raised was clearly earmarked for firi-cel at the time when investors thought this was going to be a viable commercial product. I don't think anyone would have given them that money to invest in this riskier, pre-proof-of-concept set of assets. I do think we have a bit of a real problem with management teams and boards just rolling their capital from one failure into whatever is up next in their pipeline. This is not an efficient way to use very precious cash reserves in our industry. I'll throw that out there to the team.

Yeah, I'll just comment. I can't talk about what the company might do moving forward. They are sitting on a lot of cash. I will say this is another former colleague of mine, more on the commercial side. Gina Chapman was at Gilead, and I worked with her 25 years ago. She went to Genentech after Gilead in the oncology space.

Our bar has always been high for cancer therapies and for cell therapy. Broadly, as a VC firm, I would say Perceptive sets a high bar, and we were compelled by the clinical data, but it just shows you that biotech is very humbling. I think there was some criticism of calling it a grade 5 adverse event, which means a death. To be clearly transparent for those who might read about what a grade 5 SAE is, this was a real disappointment as an investor, where we had a lot of potential, a great researcher out of Stanford, and encouraging clinical data. Brad or others are welcome to comment.

Yeah, I'll actually jump in and take the other side of the argument on the early-stage stuff. I have to say I haven't followed the story closely. I remember the Series A and following that news, and I remember it IPOing about a year ago, which was very rare, as that was a very difficult moment in time. Actually, the thing that stood out to me was the later-stage program.

They have a multispecific in their pipeline that targets CD19, CD20, and CD22. As a biotech and science enthusiast, that actually stood out to me because the way I view the CAR T space is—I always use an analogy—I always say, think of CAR T today as a Swiss Army knife with one tool. You can hit one antigen, whereas with advances in engineering, the exciting thing is these CAR T cells are now becoming like Swiss Army knives with multitools.

To be able to engineer multiple antigens into one CAR T product, I think, is really exciting—and complicated for sure, and risky. But I think that's the future of where these types of technologies are going, and I think we'll look back on today's version of CAR T and these cells, with the future being just so much smarter and more dynamic than they are today. So if it were up to me, which it's not, I would say go forward with the early-stage program, because I think it's emblematic of future technologies.

Okay, so moving on, Sam, I'm going to kick it over to you. We'll talk about M&A broadly. I know there's a report that you want to talk about. One thing that's been in the news actually the last couple of weeks that may or may not impact M&A is that a lot of companies, like Merck, for example, have announced new rounds of very large buybacks. I think Merck's was like $10 billion.

Tell us about those buybacks and whether that says or doesn't say anything about what's out there to be purchased. Maybe they just can't find anything and are spending the money on their own stock, and just kind of the M&A space in general, and the report that you have.

Yeah, sure, Brad. The first reaction I had when I saw the Merck announcement—$10 billion—was, well, that doesn't sound great for general capital allocation. Why wouldn't they? This is not exactly a secret: Merck's got a big—well, they don't want to call it a patent cliff; they want to call it a hill. Fine, a patent hill to deal with, because it's obviously not going to be as sharp as a small-molecule cliff.

Then you start scratching the surface and thinking about where we are now. Merck's been one of the most active in acquisitions already; at least our data suggests that, both licensing and M&A. Then you think about the fact that these are companies with massive cash flow.

We have a system—a calculator, if you will—that our credit team runs, which works out the debt capacity of any company that you want based on the debt-to-EBITDA ratio that you would put in there. There's no question that Merck can continue to do M&A deals, not obviously of the $10 billion, $15 billion, or $20 billion size, which I'm sure they can if they wanted to, but with cash for companies within the bolt-on range, which is what's been going on anyway.

That was my first reaction, and then I thought, actually, you can't make this conclusion just based on the fact that there's a $10 billion buyback. Talking about the kind of companies they've been buying, I'm not going to go through it all, given the time that we've got, but the 1 key point that I wanted to bring out is, first of all, forgetting the licensing side, 80% of M&A deals were U.S.-domiciled in the 2019-to-2024 range, and there was 1 China acquisition, which was AstraZeneca's Gracell acquisition.

We're talking about M&A here, and that was the first time since 2019, according to our data. Whatever's happening with licensing deals, it doesn't have any relationship to what's going on with M&A. What was interesting that stood out was that private companies were definitely more popular in 2024 versus the average over the 2019–2024 period.

The average over 2019–2024 was just over half of the deals, with large pharma as the acquirer—I'm only looking at them as the acquirers—whereas for private companies last year, according to our data, it was 68%. That doesn't really help our public investors, but it goes exactly down the road of what Eric was referring to, in terms of some of these companies coming along, looking at the IPO market, and then getting taken out, such as Scorpion, et cetera. So that fits in pretty nicely. I'll leave it there.

All right. I'm actually going to move on in the interest of time. We've had a lot to pack into this, especially with the political discussion. I just want to mention, since we're talking about large pharma, one thing that was in the news either yesterday or the day before—I've lost track of time—is that Takeda announced that Christophe Weber is going to retire in June 2026.

So it's still a little ways off, and he'll be replaced by Julie Kim, who's the head of the U.S. operations right now. I just want to say I've interviewed Christophe a couple of times for BiotechTV.

Once at JPM a year ago, and then most recently in Tokyo at the headquarters there. I just want to say that, of the people I've interviewed, my take is that I think it's really underappreciated how he's transformed that company. It hasn't quite shown up in their stock price yet.

But in general, the Japanese companies are very inward and insular, and he took a company like that and truly transformed it into a global company. A statistic that people might not know is that it's actually the biggest biotech, it's the biggest life sciences employer in Massachusetts. If you've walked around Kendall Square, I'm sure you've seen the construction of the enormous new headquarters that they're building. It's kind of right catty-corner to Alnylam's building.

I think the vast majority of the R&D and innovation that's going on at Takeda is happening there. I think he's created a pretty solid foundation for future medicines. Anyway, I just wanted to say that because I think he's a good guy who's been doing good things.

And then another thing that we had in the news, Chris, I'm going to kick this over to you since you're our VC expert. Curie.Bio had another huge fundraise that definitely made a splash in the VC world.

Yeah, look, really simple: VC funds are still able to close. This was not too long after they did their inaugural $500 million fund. This is a smaller one. I think one criticism I've had is, how are you going to deploy that many good seed investments? They closed a pro rata fund last year to continue to invest in the companies that they seed.

But I interviewed Alexis Borisy recently on Bio Venture Voices, and he said, “Look, we're planning to do more and more of these seed rounds and actively manage them.” Looking forward to seeing what they're doing. Then a16z made a filing suggesting that they want to aim for a $1 billion fund.

The idea that there's more private capital and a lot of dry powder to continue to fuel investments is encouraging. I also wanted to highlight 23andMe. They're running out of cash quickly, and they announced a strategic sale. This has been a company that's really had a lot of issues: data breaches, board resignations.

For me, it highlights a lot of meta-themes. You have a company that should have been and could have been at the forefront of generating genetic information from patients. The fact that they only got about 15 million genetic samples, to me, was surprising—how little reach they actually had, even though that is a pretty large database compared to other databases used to look at genetic patterns and identify new targets.

It also highlights the idea that it's not easy to have multiple business models here. Consumerization got more commoditized, and here was a big brand with a lot of smart people and big investment behind it that failed. I think it speaks a lot to some of the business models in this arena and some of the challenges in an area where everybody probably would have guessed, 5 or 10 years ago, that they would have been a big player. I thought that was notable.

Great. We only have 1 or 2 minutes left, and we didn't get to our entire checklist today. I'm just going to go around and give everyone a chance to make a closing statement. If there's anything we didn't get to that you'd really like to highlight, this gives you a chance to do that. I'll start with Paul Matteis.

Putting me on the spot, dude. Nothing major. The only thing we were going to talk about was Sage essentially turning down this Biogen offer. I was thinking that over when Eric was talking about this idea of companies raising capital, things not going well, and then using that capital for something else.

This is going to be a really interesting situation to watch play out. I've talked to Barry, whom I've known for a long time from Sage, and he certainly has ideas about how they can create value independently. I respect Barry immensely.

I also think there's an argument here that trying to get more out of this Biogen offer might be the best path for everybody. That'll be an interesting one that we're watching closely.

Paul, remind me, do you cover Biogen?

I do.

A really quick question on that. They were in the news about a week ago. I may have this wrong, but my quick skimming of the news seemed to imply that they're cutting back on discovery work and laid off a bunch of people. Is that a good thing—that they're going to focus on external innovation?

I don't know. I feel like that's such a rabbit hole to go down in terms of how often companies in Biogen's position—a low-multiple stock—really create a lot of value and outperform the market on business development. We all know that's a tough path.

For Biogen, they really don't get any credit for their internal pipeline. If they did a buyback, they wouldn't get credit for that. I think people want them to do business development, so maybe I'll leave it at that. And, by the way, they want them to do something considerably bolder than this Sage deal.

All right. Eric, over to you for any closing statements.

I feel like Paul and I could probably talk about Biogen's woes for a whole hour-long session, but we've had a lot to cover already. Thanks for organizing this, Brad. We've got a lot more going on, probably through the weekend, so stay tuned. I'm sure there are going to be some more headlines from biotech.

Sam?

I'm all good, Brad. Thanks.

Chris, I'll leave it to you to close things out.

Yeah, look, we covered a lot. Really good session. I'll just mention that Ozempic got another indication, and so this obesity theme continues. I'm sure we'll see more and more develop, as we talked about in the obesity space.