第135期 - 2025年3月21日

So we're going to start the conversation today with a discussion about HIV funding. We heard the U.S. Department of Health and Human Services, HHS, was weighing plans to cut federal government funding for domestic HIV funding. A lot of U.S. funding through USAID has already been impacted across the board, but now this is coming home.

That would be quite interesting if it's true. Share prices of a couple of companies involved in the HIV space did get hit, so, Brian, do you mind walking us through your take on this, how you think about the whole story, and whether it's warranted that some share prices weakened a bit?

1. HIV Prevention Faces Uncertainty

Yeah, sure. Thanks, Sam. The new administration is obviously a big X factor across many things, and what I hear from investors across the board is just the uncertainty around the introduction of the new Trump administration. With RFK Jr. as Secretary of HHS, there are a lot of questions as to what direction the administration is going to take on numerous issues.

I think there are some things that people are clearly concerned about, like the vaccine side of the story, and others that people are just questioning. One of the things that I found really interesting—and I cover Gilead, and every time I've seen them in the last few months since Trump's win, I've asked them what they're hearing from the administration in terms of HIV funding, and in particular HIV prevention funding.

This is really important because Gilead has had an enormous move over the last year, and I would say that's very largely due to enthusiasm around their twice-yearly HIV prevention drug, lenacapavir. The data from their phase 3 studies have looked really good, effectively superior to the PrEP options that are out there right now: Truvada or Descovy.

One of the major reasons is that it's not only a very effective drug for prevention, but it's also a sort of forced compliance of 2 injections per year versus taking the drug on a daily basis, as is the case with Descovy. We've really seen that across the studies, where, if patients are noncompliant and they're high-risk patients, you see breakthrough infections. The very high efficacy we've seen with twice-yearly lenacapavir, along with the convenience of just going in and getting a quick injection once every 6 months, means there's a lot of enthusiasm that this is going to be a really big launch.

If you look at consensus right now, in 2030, consensus has lenacapavir PrEP at about $4 billion and growing very substantially after that, versus about $2 billion that they currently do for Descovy PrEP. This is really the big growth driver for Gilead. But the question winds up being: How committed is this administration to HIV prevention?

Obviously, there are a lot of questions around how the CDC is going to issue recommendations or change recommendations. Vaccines have a lot of controversy as to what the CDC is going to do and how much of the recommendations that they have right now will be maintained. There has historically been commentary from RFK Jr. that isn't exactly super pro-HIV prevention. One has to wonder: Will they have the same level of commitment?

I think the Wall Street Journal report said that HHS was looking to substantially cut HIV and other prevention efforts. Right now, the CDC spends about $1.3 billion on HIV prevention each year. But on top of that are the policies that drive a much more substantial amount of funding, not just in terms of Medicaid and Medicare, but also the guidelines and recommendations that have downstream effects on payers, too.

That came out Tuesday night, and by Wednesday there were already people from the Trump administration sort of walking that back. But I think it opened people's eyes to the idea that here's somewhere where the Trump administration can have an impact, and we really have to have a clear understanding of what that impact, if any, is going to be.

With all the efforts DOGE has had, and with all the efforts that RFK Jr. has had, I understand David Weldon is no longer being positioned for director of the CDC. But there were a lot of concerns that some of the public things that he said across the board would be very concerning for future funding and future recommendations for programs such as this. That's why I think Gilead took a little bit of a hit. It has been trading down basically since that Tuesday announcement.

Yeah. I mean, it was the surprise—well, to some people, anyway—great stock of the biotech space, having been a laggard in terms of performance for some years, I would say. So it's a pity that policy gets in the way of what is clearly good for patients.

On that same front, a meeting of the Advisory Committee on Immunization Practices, ACIP, was scheduled for February 26–28, which is the one at which they would have discussed flu vaccines and so on, and that was canceled. I don't know if you want to call this a walk-back, but it's back on the agenda. We just had the announcement: It's going to be on April 15 and 16. Of course, there's no agenda yet, but it seems like the topics they're going to be talking about are the same as the ones that were previously scheduled.

These include a discussion on flu vaccines and the effectiveness of the vaccine program this year or last year. There will also be a discussion on the RSV drug clesrovimab, which is a potential competitor to nirsevimab. Clesrovimab is from Merck, and nirsevimab is from Sanofi and AstraZeneca.

Then, of course, you've got a conversation on respiratory syncytial virus vaccines. Moderna and GSK are both looking for approval for 18- to 59-year-olds. We don't believe that it's likely that ACIP will change its view and vote in favor of expanding to this group. There's really no need for them, is the view that I think a lot of people hold.

They've already reduced use in under-70s, and they talk about clarified use, not necessarily wanting it to be reduced, but that's what they've done. There will also be a discussion of the new Moderna COVID shot and, of course, an interesting discussion on CMV, cytomegalovirus.

That will be quite good to see, to understand what ACIP thinks of cytomegalovirus in general, because Moderna does have a vaccine, and we're all waiting for the data from a phase 3 trial of a CMV vaccine. So the conversation at ACIP may help us bracket where expectations could be, perhaps from a commercial angle or at least in terms of clinical-data expectations.

That's all we had on policy, unless anybody—Matt or Eric—wanted to jump in or add anything to what we just said, or Brian, any other topics that I've missed on that front.

Well, Sam, thank God we only have 1 topic on policy. This is just a wonderful turn of events in the last 6 to 8 weeks here.

I did think about adding a whole bunch, because you can, right? But then it just gets a bit depressing, and you don't really want to keep doing that.

2. Batoclimab Data Favors The Next Drug

So, right, we're going to go to data, and of course Matt is here. We're going to have to talk about the data for batoclimab. Have I pronounced that correctly? B is the easiest way to refer to it.

Matt, why don't you just walk us through the announcement, the data, and your decision to clearly move to the next product, and how you want to think about setting this up as a commercial success at some point in the future, hopefully against what you could call a well-entrenched Vyvgart, at least by then? The floor's yours.

Perfect. Can you hear me okay? Just making sure.

Yeah, we're loud and clear.

Yes, and thanks for having me, actually. A confession for the field, which is that I was invited to do this before anyone else knew that the readout was coming out, and to be sort of a general commentator. I was like, “This seems like a convenient week,” because I obviously knew it was coming.

So I'll answer all those questions. Actually, I had just 1 inside-baseball sort of anecdote that I thought was interesting before I actually talk about the Immunovant data, which is just about biotech public-equity market structure.

We announced this data on Wednesday morning. The thing that companies do when they announce data that the market cares about is you email all your investors and go out, and then you wind up filling your day with meetings. It's actually kind of a fun day in the sense that you get to tell your story and get a lot of feedback. I learn a lot in these meetings. Investors have thoughts on what we should do, what the competitors are saying, and what the chatter is, and it's a really busy day.

So we did 25 meetings on Wednesday, and one of the things that I think is interesting is that Immunovant is a very heavily shorted stock.

This was a very controversial data release. 20% of the float was short, probably making it one of the more shorted stocks in the index. The general consensus on this stuff is that a lot of those shorts are what I call pod funds. For those who aren’t close to it, these are groups of investors who work as a unit at an enterprise like Citadel or Millennium. They’re on a short leash, and they run what’s called market-neutral, so they’re short about as much as they’re long. They’re betting against as many stocks as they’re betting on.

Pod funds have a reputation in the current market for being the prime movers of stocks up and down against a backdrop of market volatility. We did 25 of these meetings, as I said, on Wednesday, and I’m curious, with Aaron, Eric, and Brian on the call: What percentage of those 25 meetings would you guess were pods? An event like this, with a heavily shorted stock, would presumably involve a lot of pods.

Certainly more than 50%, if you agreed to take more than 50% of them.

Oh, I would go lower. I was going to say 25%.

I’ll tell you the number. The number is 0. 0 pods took a meeting, which I thought was really interesting. It’s not like we turned them down. Basically, 0 pods asked for a meeting.

The reason I believe that no pods asked for a meeting is that they didn’t care what I had to say about the data. They were positioned short in many cases. It was a short that fit with their overall strategy. I don’t begrudge anyone this—this is their business model—but it was just this super-interesting moment for me. They’re not looking for my opinion on whether this data is good or bad. They have a position, they have a setup as a fund, and they were going to run with that position. The market didn’t blow up their short, and so they sort of continued to operate.

This was an interesting experience for me because, ideally, you want equity research analysts who took our calls. We got ones who loved the data, but we got ones who pushed back on the data. You have a discussion with all sides. Most of the funds who took the calls were pretty positively inclined on Immunovant, whether they held the stock or not, and were giving constructive feedback. The whole side of the market that was betting against us just skipped it.

As a company, it makes it very hard to position and figure out what to do. You don’t get that feedback. You don’t understand what’s going on. Frankly, you feel a little bit like the object of a prop bet at the Super Bowl, where what you’re doing is a little bit beside the point for the business of the people trading the stock. It was an interesting reflection on the day that we put the data out.

This is fascinating to me, Matt. You’re right that it speaks to the market structure that we have right now, and maybe whether it’s broken or not, which is a topic that we’ve been discussing a lot at Cantor. I also wonder if, because the event had happened and you were speaking to folks after the data came out, they had just played you, as you say, for this event. Whether they were short or long, the event was now over and they were on to the next event.

We often find that there’s short-termism in the marketplace, where all a pod-shop investor cares about is the next milestone. Whether they made or lost money on Immunovant this week, perhaps they were on to the next one.

Yeah, totally possible. Totally possible. It was not at all like I expected. That morning, I was like, “Okay, I’m gearing up for battle. We’re on the ground with shields and swords and whatever, and we’re going to have the conversation.” Then the starkness of literally 0 of our detractors speaking to me was an interesting moment.

Unless there was anything else to say on that, I’ll skip to the data now. I just thought that was an interesting—let’s call it an anecdote—but it is pretty good because it’s nice and fresh.

On the data itself, the setup here—which, again, some people may be familiar with and some aren’t—is that there’s this very promising, successful class of drugs called anti-FcRn antibodies. They work by affecting the rate at which the body recycles a particular category of antibodies called IgG antibodies. If you inhibit the IgG-binding domain of what’s called the neonatal Fc receptor, you lower the overall level of IgG antibodies in the body, which could, in theory, make you more prone to illness and things. In practice, we’ve seen very little of that, down to quite deep levels of suppression of IgG.

What it does do is affect a bunch of autoimmune diseases where the body produces IgG autoantibodies to some form of self. If those antibodies are to the neuromuscular junction, it’s called myasthenia gravis and it has neuromuscular symptoms. If they’re to the thyroid, it causes Graves’ disease and thyroid-related symptoms and ultimately thyroid eye disease, and so on.

The undisputed leader in this field right now is a company called argenx, which has a $40 billion market cap or something, and a very successful drug called efgartigimod that has launched in both myasthenia gravis and CIDP.

We have a next-generation anti-FcRn antibody. We actually have a couple of them, which is relevant for this discussion, but they’re both what I would call next-generation in that they achieve a couple of things that efgartigimod doesn’t. One is sort of boring, which is important to patients, but they’re formulatable in a well-concentrated, relatively low-dose subcutaneous injection. It’s a very normal shot. I think it’s literally maybe the same device as Cosentyx, for example.

The other thing they both do is suppress IgG more deeply in our studies, generally, than we see with efgartigimod. Efgartigimod usually suppresses IgG in the mid-60s. Every now and then you have a study that’s a little higher or a little lower, but it’s generally in the mid-60s percent range. Our antibodies suppress IgG in the high 70s. Every now and then you have a study that’s a little bit lower or a little bit higher.

This was a study that we ran on our first-generation anti-FcRn antibody called batoclimab, which was developed by HanAll, a South Korean company. It’s a really interesting drug, except it has one not-so-small issue: In addition to interrupting IgG binding to FcRn, it interrupts albumin binding to FcRn, and so it reduces blood albumin levels. On my 5th day as CEO of Roivant, we found out that one unexpected consequence of that is that it significantly elevates LDL.

We got to work on a phase 3 program, which is the study that just read out this week. But we also got to work developing a next-generation drug called IMVT-402, which is designed to have all the same properties as batoclimab except for that interference with albumin. I think it was on Biotech Hangout that we talked about a year and a half ago about the fact that we had achieved those goals—that IMVT-402 does the same things as batoclimab except for the albumin effect.

That said, we were still running this study in myasthenia gravis with batoclimab, and that study read out this week. There are a lot of interesting directions we could take this conversation, but we were very happy with the data from the study because it showed 2 things that we really cared about.

One is that it showed quite a deep dose response. The lower dose of batoclimab, which is similar to efgartigimod in its IgG suppression, produced clinical data that looked, on the face of it, pretty similar to the data shown by efgartigimod: a 4.7-point reduction in MG-ADL from baseline. The high dose—680 milligrams of batoclimab—showed a 5.6-point reduction in MG-ADL, which is the largest absolute reduction in MG-ADL ever shown in a big, late-stage study in myasthenia gravis. That’s a very impressive number.

The other contentious, interesting talking point around this data is that our placebo response rate was a 3.6-point improvement in MG-ADL. When efgartigimod ran its studies, it showed, I think, a 1.7-point improvement in MG-ADL on placebo, so a much lower placebo response rate. Consequently, our placebo-adjusted deltas were smaller than theirs, even though the absolute magnitude of benefit at the high dose was larger.

That’s a complicated setup, to be honest, because I think one of the earliest lessons you learn in biotech is that you can’t look at drug effects alone; you have to look at placebo as well. The placebo and the drug point in pretty different directions in terms of the quality of the drug, and so that’s been an interesting controversy. I’ll pause there and say I can go a couple of different directions with this, but any questions or comments at this point? I don’t want to give an uninterrupted monologue.

You were doing quite well there, Matt.

Okay.

Eric, did you have a question?

No, no. Loud and clear. Keep going.

Okay. Sorry. So—

Oops. Can you hear me?

Oh, yeah. That’s better.

Sorry. The question is: What do we do from here? Basically, one of the questions we wanted to answer was whether deeper IgG suppression improves clinical benefit. We’ve shown this in a number of other studies, including in Graves’ disease and some other places that we’re really excited about. No one had ever really shown it to this level in myasthenia gravis. So that felt good to us, and it sets us up, we think, well for IMVT-402 in myasthenia gravis.

But we faced all along this sort of nagging decision about what to do with batoclimab. This is a registrational study. We could file with the FDA, and we think get approved on it. But it has the fact that it drives up LDL cholesterol and lowers albumin, and even though it produces an impressive absolute clinical benefit, it is both hampered by its placebo-adjusted delta and, more importantly, hampered by this lab abnormality that it creates.

We had decided and said publicly a long time ago that it was unlikely we were going to launch batoclimab because, as Sam started with, Vyvgart is such a great approved product. It was going to be hard to compete, and so we are focusing on the next-generation drug IMVT-1402, which is now going to be in 6 studies imminently. Most of those are pivotal or registrational. The announced indications are MG, CIDP, Graves, and difficult-to-treat fourth-line RA, and then 2 others that we're going to announce in the future.

Our view is, look, in indications like MG and CIDP, where argenx is clearly ahead of us, we're going to fight based on the properties of our drug to take share. We've also put out some CIDP data this week that looks fantastic. It's earlier and a little bit more complicated data, so it's hard to know for sure. But if that pans out, I think we have a huge commercial opportunity in CIDP and MG.

Look, we're going to fight for it, but we're coming from behind, and I think it'll be tough to unseat the king, as it were. But in every other indication, we can be first-in-class or close to first-in-class. We'll be running our studies at the same time as they are, so we won't be hampered by differences in time.

We talked more about why the placebo response rates were different, but I think a big piece of it is they ran their studies before patients knew that FcRn worked, and we ran our pivotal studies after patients knew that FcRn worked. There was a lot of expectation bias embedded in the placebo response rate, which we won't have in these other indications.

I think that opens us up to be a class leader in every indication but 2. In MG and CIDP, we may be behind, but the biology of FcRn is very broad. There are literally probably 2 dozen indications or more currently being studied, and I think in all but those 2 we should be expected, in my opinion, to produce competitive or better-than-competitive data and a really attractive profile.

You asked originally about the question of commercial competition. I think that's really the reason why we're focusing on IMVT-1402.

Matt, since you didn't get the pushback on your data that you were hoping to—no one was willing to engage with you and debate the results—maybe just a question from me is, I don't cover your stock, but one thing we always hear from investors is just how crowded the IgG-lowering space is, whether it's degraders or agents like your own. It seems like they're a dime a dozen these days. Can you address that?

Yeah, there are a lot of different people looking at this biology now. argenx obviously paved the way and showed what you can do commercially, and myasthenia gravis is one of these great orphan indications with a lot of unmet need where I think the market size has so far meaningfully surpassed antecedent expectations. It's attracted a lot of attention, and therefore, whatever imitation is the finest form of flattery and, in biotech, the scariest form of competition. A lot of people are trying to do the thing now.

I think there are actually 2 things that are interesting about that comment, which I've tried to get away from. One is that the FcRn space literally is not that crowded. There are maybe 4 real late-stage FcRn programs: ours, UCB's, J&J's, and argenx's. J&J and UCB have good programs, but slightly more complicated profiles in different ways. argenx is the leader, and I believe we should be number 2 or number 1 depending on where and when.

Unlike, say, CD19 bispecific T-cell engagers, where it feels like there are 150 of these in development, mostly unlicensed by either big pharma or smaller companies from China, you just saw yesterday—I think Sanofi announced a CD20 bispecific deal. Unlike that area, which is related, with similar biology, the FcRn category itself doesn't have as many imitators as, like, Vyvgart and a couple of others kind of coming, but not that many.

I think part of that's because, bluntly, FcRn is a difficult target to drug. You have to avoid albumin, and you have to think about pH and other things. It's just been harder to create these antibodies.

On B-cell depletion, IgG immune reset, and autoantibody work generally, my view is it's pretty myopic to call it crowded when you compare it with RA or UC or even HS, where it feels like there are 15 different mechanisms in development in HS. On the inflammatory side, inflammatory disease is a much more advanced commercial landscape. We've been working in anti-inflammatory mechanisms since forever, but certainly since Humira.

I think the IgG/B-cell landscape is much newer, but I think it's a really big tent, and people forget that sometimes. They focus on what it means to slice up the pie of MG or the MG-plus-CIDP pie, which looks big but maybe isn't as big overall as it could be. But they forget that there are 330,000 prevalent Graves patients who have failed all available therapeutic options other than surgical removal of their thyroid.

There are tens and tens of thousands of patients with myositis. There are tens and tens of thousands of patients with—there's a bunch of cardiac indications that are not even yet being pursued. There's pemphigus and bullous pemphigoid, which argenx has done some work on. There's so much biology under the tent that, yeah, there will be multiple mechanisms approved.

But we are in Humira's second year of launch—or maybe Enbrel's second year of launch—in the analogy to inflammatory disease. What I think is that the size of the market and the number of available indications are so far expanding much faster than the number of competitive classes.

That's great, Matt. Thanks very much for a very good, passionate detail, I would say—no less than every other time. That's great and an interesting update.

Now, in the interest of time, I think we do have some other data points we need to move on to. I want to pass it on to Eric to talk about the Incyte data. The headline was positive, and the share price was telling you something else. I'm interested in your take on that, and then we'll move on to talking about exon skippers and siRNA and et cetera related to DMD, to start with Eric.

3. Povorcitinib Faces New Competition

Yeah, thanks, Sam. This is the povorcitinib data that you're referencing. It's a JAK1 inhibitor for hidradenitis suppurativa, or HS, as Matt Gline was just speaking to. It's a dermatology indication that is very large. We think this is probably a $10 billion market. It's still quite young in terms of its market penetration. We only got the first couple of drugs approved for hidradenitis suppurativa 4 or 5 years ago, and those were the TNF inhibitors.

More recently, we've had some IL-17s that were approved, and now we're heading into brand-new classes of agents. There are many in development coming behind povorcitinib, many of which feature different mechanisms.

The pivotal data were kind of designed to be maybe a third-line therapy here after TNFs and IL-17s. As you mentioned, Sam, the data were pretty good. I wouldn't say they were great, but there were 2 different trials, with 2 different treatment arms in each study, and there was a consistent, consistently higher drug effect over placebo in all cases, with statistically significant results. I think it's very, very likely that povorcitinib is going to be approved.

And yet, as Sam mentioned, the stock was down. Why was that? Well, the data were just so-so on povorcitinib. They weren't particularly strong, and I think there are a lot of questions now with the competition. In particular, with another JAK1 inhibitor coming—AbbVie's Rinvoq, which will read out in the first part of next year—there's a fairly wide-open opportunity for Rinvoq to do about as well as povorcitinib.

Incyte had been suggesting that povorcitinib could be dosed higher to achieve a higher level of JAK1 inhibition, and the povorcitinib data kind of line up with the IL-17s. They're not particularly stronger, maybe on the margins somewhat weaker than UCB's Bimzelx.

What we're left with is AbbVie having the next shot on goal. If AbbVie is going to be successful with Rinvoq, that drug already has a brand name, of course, and it would have AbbVie's resources behind it. I think investors are just scratching their heads right now and trying to figure out if, in this third-line setting—which may be worth $1 billion or $2 billion in peak revenue potential—it's going to be Incyte's game, or whether Rinvoq won't come in and steal their thunder.

Meanwhile, this is a company that's got a lot of question marks around it, and povorcitinib had been thought of as potentially the most interesting drug in its pipeline as we head toward the eventual patent loss of exclusivity on Jakafi, its $3 billion blockbuster. With the povorcitinib news behind it, maybe, again, as Matt was referencing, it's open season for the shorts. People have come back to this name and don't see the pipeline as being capable of perhaps providing growth through that patent cliff.

Yeah, I mean, I guess there's also the thing, as you said already, that AbbVie has proven its mettle in this general space.

With Humira and then Rinvoq and Skyrizi in the general overall space, AbbVie might have the advantage. I think we can move on to DMD now. You wanted to just touch on the RNAi data set, and then we'd move on to talking about Brian to talk through the general comments from the Muscular Dystrophy Association conference.

4. Next Generation Exon Skippers

Yeah, unfortunately, Brian's going to have to address the sad news in the muscular dystrophy space, which came from, of course, the Sarepta patient death that we had. I guess I get the glass-half-full view and get to talk about a new set of agents that are really starting to provide a different benchmark for what exon skippers are capable of doing.

I'm specifically talking about Avidity's drug del-desiran, which is being developed for a subset of DMD patients who have exon 44–amenable mutations, and DYNE-251, which would be appropriate for patients with exon 51 mutations. In total, there's probably no more than 2,000 to 3,000 patients who might be amenable to these 2 exon skippers. We're probably talking about less than 20%, maybe 10% to 15%, of the total DMD marketplace.

But these drugs seemingly are doing what hasn't been possible before: they're showing the ability to create quite a bit of exon skipping and, in some cases, creating full-length dystrophin in the 10% to even as high as 25% range. Just to put that into context, the first-generation exon skippers were potentially producing full-length dystrophin closer to 1% to 3%. So we've got a sea change going on here.

I think the sea change is best evidenced by the fact that in these studies, you are seeing CK levels—CK being a marker of muscle damage and dysfunction—go down to essentially normal levels in these patients. This is something we have never, ever seen before. In fact, there's been a lot of debate in the DMD community around CK as a biomarker and whether it's even a good biomarker of muscle damage, because nobody has been able to hit it very hard and certainly nobody has been able to hit it consistently in all patients like the Avidity data are showing.

This dramatic reduction toward near-normalization of CK levels is something that I am very excited about. I'm curious, of course, to hear Brian's views on this. But to me, for the first time, I'm very optimistic that if you're truly reducing these markers of muscle damage, you're going to truly benefit patients in terms of functional outcomes. We haven't yet seen that from Dyne and Avidity, but those data are coming.

Avidity will show us a meaningful functional update toward the end of the year, and I'm optimistic that it's going to be better than anything else we've seen. Meanwhile, both of these companies are marching toward BLA filings. I think Avidity is expected to file in the second half of this year, and then Dyne at some point in the first half of next year. But let me turn it over to Brian for his thoughts. I know he's very, very close to the space.

Yeah, it's interesting, right? We've seen sort of first-generation PMOs as the initial drugs approved, with very low expression and controversial approvals. The game here has really been to try to get more and more dystrophin expression. I think if you talk to any of the parents of any of these kids, they'll say that's a very meaningful thing to them: to see more expression. It's believed to be better, I think, given the biology of the disease. That's a pretty obvious statement to make.

Ideally, you want to normalize it, but there's a lot of data historically showing that if you're above 10% dystrophin compared to a normal person, you're phenotypically much different than a DMD patient and more like a Becker muscular dystrophy phenotype. So I think that 10% threshold is something that's very meaningful.

Even if you go back to the controversial approval of eteplirsen, the FDA reviewers who were against the approval of eteplirsen leaned on this 10% to say, well, if it was above 10%, there's much more precedent to say that this is a meaningful threshold versus the sort of 1% that you'd see with eteplirsen. So I think it's great that we're getting more muscle-targeted distribution.

We're getting drugs that hang out a little longer than PMOs, which very quickly get peed out of the system. I think we see this move back and forth between chronic exon-skipping-based therapy, which has to be taken in small subgroups at a time. Exon 51–amenable patients only make up 13% of DMD, and that's the largest subgroup. You get into increasingly small subgroups, so these drugs need to be designed again and again to go into increasingly small patient populations.

Particularly given the controversy around some of the gene therapy, it's nice to see continued evolution here. Obviously, Sarepta has been very successful commercializing Exondys 51 and their 2 other exon-skipping therapies. One of the questions we still have is that we've never seen randomized clinical studies succeed, really, for any of these disease-modifying therapies here. I think that's a big question mark and a bit of a headwind to this entire group of dystrophin-replacement therapies.

I'll use that to segue into MDA. MDA is usually a very good conference in terms of there being a lot of new clinical presentations and scientific presentations that provide a lot of hope, optimism, and encouragement to patients and caregivers with this disease. So it was really unfortunate to have the event somewhat marred by this event that came to light this week.

5. Elevidys Death Reopens FDA Debate

News broke of a Dear Doctor letter that Sarepta issued following the unfortunate death of a patient treated with their gene therapy, Elevidys. The proximate cause was liver failure. This drug was approved under controversial circumstances.

In this specific case, the use of high-dose systemic AAV-based gene therapy has seen liver toxicity across serotypes and diseases. We know there have been deaths in other programs, even commercially, like Zolgensma, which, on label, has deaths due to hepatic failure. So it really does seem that controlling for liver inflammation and liver damage is one of the most consistent safety issues for this systemic gene therapy space.

Each company has different protocols in place to try to minimize immune-mediated reactions that can cause liver toxicity. All of them prophylactically use high doses of corticosteroids prior to treatment and then taper down a month or 2 after treatment. A number of them may use other immunosuppressants as well. I know eculizumab is either used prophylactically or kept on hand in many cases, but clearly it isn't enough—at least in the protocol being used here in this case—to completely mitigate liver failure.

This case is also complicated by what sounds like reactivation of a latent CMV infection, as apparently, post-treatment, this person saw increases in CMV-specific immune activity. Outside of just the tragedy of this event—and it's very sad to ever see a patient lost due to a drug administration—Sarepta's shares were down 25% since the event was made public. I think this is really the case not so much because a liver-related death is completely unexpected, but because it now cements this as something real when the efficacy of this gene therapy is controversial.

It raises the question of the risk-benefit balance here. To just recall for everyone, it failed a randomized, placebo-controlled Phase 2 study that was meant to be used for initial approval, but wound up still being used to obtain accelerated approval following an AdCom where the review division was critical of the application, but the advisory committee members voted in favor of approval. A Phase 3 study then also failed to achieve the primary endpoint, but an application for full approval was accepted.

Elevidys was granted full approval in ambulatory patients and accelerated approval in nonambulatory patients. When that approval came out, the FDA issued some internal documents as well, reflecting that the head of CBER, Peter Marks, essentially made the decision over the objections of a good portion of the review team.

I think the aftermath of this patient death, and what I've heard in client conversations over this week, really raises the question that has to be consistently litigated in the space: How do you effectively balance risks and benefits for regulatory approvals? There's sort of this dichotomy among the population where people really want access to potentially beneficial therapeutics faster. That's why we have things like right to try. That's why we have a lot of advocacy groups pushing for faster development and cutting through red tape quicker.

But we also don't want drugs that wind up having a net harm. This is just the type of situation where, in the aftermath, people struggle with: Did the FDA do the right thing? Does the FDA now have to act to do something to reverse course? Was it still the right decision because it's 1 in 800 patients where there's a liver-related death? But if this drug is really beneficial, then certainly, for DMD, that may be an acceptable safety profile for patients and their caregivers.

I think that's really the big question that gets brought up once again when we have a controversial approval, a safety event, and, unfortunately, a death. How do we really view the U.S. FDA's role as a gatekeeper, and what's too much of an unacceptable risk? What's too much or too little acceptable data for approval? This is something that I think I've been discussing for over a decade in my research, and it's just an area that is always under constant evolution and relitigation.

Thanks very much for that, Brian. Really good, as usual. Matt, Eric, did you want to add anything? Obviously, a very sad situation here. And I have to say, Brian, I agree with you in the general commentary about this: if you had been through a normal regulatory process, which I would say this has not, then it would have been a different conversation. But did you guys want to add anything before we move on to the last bit of data?

I just have a question for Brian. It's one that we've been struggling with a lot here, which is whether microdystrophin is really something that matters to patients. We've seen good microdystrophin expression, as you noted, with both the Sarepta and Pfizer gene therapies. Neither has really amounted to much functionally. The Pfizer drug missed all of its endpoints despite extremely good microdystrophin expression. And yet now, with these exon skippers that produce more of a full-length molecule, we're starting to see, I think, something very different biologically.

To me, at least, I think the FDA may have gotten it completely wrong in approving drugs based solely on the ability to provide microdystrophin expression. Curious about your thoughts.

Yeah, I guess I would say I don't know pretty much across the board. We're talking about the PMOs and the next-generation exon skippers. Again, it has never really been truly determined in randomized, placebo-controlled studies, right? We don't know what level of dystrophin—whether it be the exon-skipped dystrophin, which is like 98% of full-length dystrophin, versus these engineered microdystrophins—would be effective.

Maybe some of them have better efficacy than others, and maybe there's a different threshold. Maybe 80% of microdystrophin would be equivalent to 10% of exon-skipped dystrophin. I think we're all operating in Plato's cave to some extent. We're looking at shadows, and we're just not quite sure.

One thing I have really criticized all of these companies for, again and again, is the length of their studies. I totally understand the counterargument. It goes back to what I was saying: patients, caregivers, and physicians really want things quickly. This is a disease that is horrifically progressive, but it is not that quickly progressive, right? It's similar in my mind to Alzheimer's, to a certain extent. It's more progressive than Alzheimer's.

But in a 1-year study, there is so much heterogeneity in how a patient is going to look, right? You have this simultaneous counterbalancing: patients are growing, and their muscle function is growing along with them, but you also have this damaging disease. If you look at patient-level data—and I remember freaking out about this going into the ataluren review 10 years ago—PTC had this great slide of their study where they had all the patient-level data. You would see patients who were improving 100% on the 6-minute walk test. You'd see other patients going down 100% on the 6-minute walk test. And these are placebo patients, right?

The problem, to me, is that I honestly don't even think a 1-year study is really going to prove it out. If a patient trips and sprains their ankle, all of these measures are going to look terrible for that patient. That doesn't mean that the drug isn't working. But if they're on the drug arm, that's going to really hurt the 6-minute walk test, NSAA, and time to rise. If one of the placebo patients happens to go through a growth spurt, all of these measures are going to improve for them, right?

I think you really need a lot more patients and a longer follow-up. I do think we'll get a lot more data when Sarepta's study of its exon 45 and exon 53 drugs reads out. That study has taken forever, but I think next year we'll finally see a 2-year study with about 200 patients, and I think that will be really informative.

To me, we just don't really know, outside of what's biologically plausible from preclinical models, whether any of these things could work. We just really don't know that they work as hypothesized in clinical studies yet.

Right. Thanks a lot, Brian. Again, as usual, very well discussed and argued, so I really appreciate that.

6. Alnylam Secures Broad ATTR Approval

I'm just going to mention the last bit of data, which of course is quite interesting because it's from Alnylam. If you remember, last year—some folks, I don't know if anybody on here thought the same—the Alnylam ATTR data was going to be the thing that was going to save the biotech sector. Was it last year or the year before? I can't remember now; it's all merging into one. That was going to be the key driver. The data came, lots of people questioned it, et cetera.

That drug is now approved, with vutrisiran in the second setting, which is the cardiomyopathy indication. It's subcutaneously dosed quarterly, which is a pretty good setup for the drug. It's a silencer, which may have an advantage over the other drugs—Eric's going to comment too—acoramidis and tafamidis, which are stabilizers. The label they got was pretty nice and broad, and I think that is why the stock is reacting, I would say. It covers across the board in terms of the possible indications that you could get for this.

The thought process is that this is, at least from the consensus data that we have in the terminal, possibly a $5 billion product by 2030, more or less. But I'd love to hear from Eric also. I know that Eric's colleague has been a fan of BridgeBio and acoramidis. That's Dr. Josh Schimmer.

Yes, who's one of our friends and regular presenters here.

So, Eric, did you want to touch on this? Anything to add? Share price is telling us a good story, but then—

Well, Josh—maybe Josh may be your friend, Sam, but he's just my colleague.

No, I think the most surprising thing today is that Alnylam is up 10%. This is a drug that, as you previewed last year, we got the Phase 3 data on; they were very strong, and the stock went up. Nobody expected the drug would not get approved. There was a little bit of debate around the margin on whether they would get the full label language they really needed, which was about some kind of survival benefit on the label.

Both acoramidis and tafamidis, from BridgeBio and Pfizer respectively, do have such labels. Alnylam needed to hold serve and get something similar, and they did. The label's generally very good.

But honestly, I think what we're seeing today—and what we've really been seeing over the last couple of weeks in biotech—is a flight to safety. Any larger, stable, earnings-driven organization, which Alnylam certainly is, has seen an influx of funding. Conversely, unfortunately, almost any small- or mid-cap, slightly higher-risk, non-earnings-driven name has seen an exodus of funding. My guess is that that's the dynamic happening today.

But this ATTR marketplace is an interesting one. First of all, it's enormous, it's rapidly growing, and certainly there's room for many, many players. You're right that my colleague and friend Josh Schimmer has been a big fan of acoramidis and the launch that it's having with BridgeBio's support. That drug was approved late last year and had a very good initial month and a half or so of sales data in 2024.

We think that, despite the pending competition between acoramidis and Alnylam's vutrisiran, the two are probably going to coexist quite well. Expectations on Wall Street for vutrisiran, mostly because it's a different mechanism, are very, very high relative to the forecasted sales of acoramidis. We think it will probably be more of an equal game between the two for market share, which, relative to expectations, would seemingly benefit the BridgeBio side of the equation.

But Alnylam has a great drug. Nobody should be raining on their parade today. Again, first and foremost, this is a very large market that is growing at a very rapid pace, and I don't think there are any losers in the space.

The only thing I would add is that you are all very brave for having a conversation about Alnylam and BridgeBio on Twitter, because you will definitely get 8 million comments from people with extremely strong opinions on the back of this.

Yeah, but Matt, I've only got 2 followers, so it doesn't matter.

Send my comments over to Josh, please.

That's right. Now let's move on to deals. We've had an interesting flow, a couple that I'm going to highlight, and then Eric, I know you have a thought on this as well. One's the Sanofi–Dren Bio deal, and the other one is AstraZeneca's acquisition of a Belgian company.

I'll start very quickly with that. EsoBiotec is a company that AstraZeneca has acquired, paying $425 million upon deal close and then $575 million in development and regulatory milestones.

It’s an in vivo cell therapy company—a lentiviral in vivo CAR-T, if you want to call it that. There are now others that are playing here. The hope of all of these companies is to cut quite a lot of the burdensome aspects of CAR-T therapy out of the equation.

Number 1, the fact that you need to go through lymphodepletion. Number 2, the fact that you have to take the CAR-Ts and manufacture them, however long it takes—2 weeks, 3 weeks, 4 weeks, 5 weeks, depending on who says what about their product these days—and then, of course, you have to give it back with a large amount of CRS, et cetera, that you have to manage. Here, you’ve got something that you could truly use as an off-the-shelf product.

What is remarkable here is—I’ve tried to find out—this is a company that was in stealth mode, and I think this is something that Eric wants to touch on. What’s remarkable here is that, from what I have found, this company has raised something in the region of $25 million so far. Selling for $425 million in upfront cash, that’s a pretty good return. I don’t know how long it was in stealth mode, et cetera, but it doesn’t really matter. It’s still a pretty good return for that amount of money being invested.

And it’s not that different from the story of Dren Bio, where they’ve sold an asset, from what I understand, for $600 million upfront to Sanofi, with $1.3 billion still to come in development milestones and launch milestones, and the company still carries on operating independently. So this is a myeloid-cell engager—not a T-cell engager, sorry, a myeloid-cell engager—that aims to deplete B cells heavily.

The first one is more about a platform that AstraZeneca has acquired, adding it to its cell therapy platform that it recently acquired, also through Gracell—2 different approaches. Here we have something that’s a bispecific that tries to get very deep B-cell depletion. I would say not necessarily the same return here, because the company, from what I gathered, has raised something in the region of $180-odd million so far. Still, $600 million upfront, and it still carries on.

Now, I know, Eric, you’ve been thinking about these valuations and what it means for biotech in general. Did you want to just touch on that?

Yeah. No, thanks for that great intro, and I’m curious to get Matt’s view on this, too. I know that Roivant spends a lot of time acquiring assets and thinking about valuations. What struck me about these 2 deals is the price tag.

As you noted, Sam, the price tag is not inconsiderable: $425 million upfront in the case of EsoBiotec and $600 million upfront for the asset in the case of Dren Bio. These are enormous valuations in the private sector relative to what these 2 companies would be trading at in the public sector, right?

They’re both phase 1, and they’re both unproven assets. There’s a good chance that neither of these companies would have a positive enterprise value right now, as bad as things are in small-cap biotech. Yet the money that pharma is willing to shell out for private assets is at a strong disconnect from what’s happening in public valuations.

Maybe these deals are being negotiated for the last 3 or 4 months. Maybe pharma felt they couldn’t renege on terms that had been partially agreed upon or something. But there’s something very wrong, because if you were Sanofi or AstraZeneca, you could have gone out and bought something similar—not exact.

I mean, the in vivo CAR-Ts are, for the most part, private. There are still a few other companies that are also trading privately that probably would have liked this valuation. But you could buy a lot of things in the public markets for really pennies on the dollar relative to what we’re seeing here. So, Matt, I don’t know if you have any views on this.

Yeah, look, I think that’s an interesting point of view. I have a pretty different take on a theme that I’ve been watching for the last 18 months, which is, to me—look, I’m not a public-markets biotech investor. To me, one of the biggest, most important questions for the public-markets biotech universe this year and into the future is what we’ve seen an enormous amount of: big pharma companies doing deals like this, right?

$400 million to $800 million asset deals, either at an earlier stage, out of China, or from smaller companies, instead of buying, if you like, T-cell engagers or B-cell-depleting therapies. There are a couple of public companies—Cullinan, whatever—that have later-stage programs that would have cost a multiple of what Sanofi paid in this situation, for example, with premiums and everything.

I think the sort of value buying, as it were—which you think of as a premium to small public deals or as a premium to what you might be able to do in other private situations—is a huge discount to paying $6 billion for a development-stage public company. I think how that balance shakes out, and what kinds of deals these guys are doing, is going to be interesting.

It will clearly have a weird compressing function if it turns out that pharma companies are now looking to buy earlier-stage assets for hundreds of millions of dollars instead of late-stage assets for billions of dollars. It’s going to make the latest-stage assets less valuable and the early-stage assets more valuable, and that’s just been something that we’ve been watching as an acquirer.

We’ve been watching as we look in all different places for things, including the portfolios of big pharma themselves. So it’s an interesting thing to watch overall. I guess I was coming at it from maybe a slightly different angle than you were.

Yeah, thanks for that, Matt. I’ll just take the other side of this. As you said, Eric, at least in the in vivo CAR-T space, most of the companies are private. So if you wanted to play there, it’s easier to go and negotiate a price with some of these companies than try and negotiate a share price, or a price, for a public company.

But they’re also pretty edgy investments. I mean, they are myeloid-redirecting bispecific engagers for deep B-cell depletion, et cetera. I would say that maybe the fact is that they’re trying to get to bits of science or product development that are right at the front.

So then, if it’s AstraZeneca, they’ve done their CAR-T play with Gracell. What else are they going to do in that space apart from going into this at this stage? And now they’re one of the leading companies, because everybody is in the same kind of stage of development in in vivo CAR-T therapy.

I don’t know—does that even hold water? I just thought I’d throw that in. One of the things I wanted to highlight is something that I noticed just today, which is AstraZeneca’s investment in China. I think they announced a $2.5 billion investment in a research center in Beijing—research, manufacturing, AI. That’s a big number, and I have to say there were vaccines in there, too.

They were supposed to be investing something like a $400 million—let’s say $600 million—investment in UK vaccines, which, of course, didn’t happen because there was some disagreement with the UK government. What’s interesting here is that it’s AstraZeneca, which has just had some issues with regard to a probe, and the details are not out there yet, but there were investigations with regard to current and former employees, et cetera.

Everyone thought that AstraZeneca was going to cool down on China, and they’ve doubled down. That’s interesting, especially at the current time, when we’re seeing maybe companies trying to be closer to the US than they’re showing with China. I thought that was quite interesting, and clearly AstraZeneca is thinking about what is good for its prospects as opposed to today’s political environment.