第146期——2025年6月27日

I'm Chris Garabedian, and my co-hosts today are Daphne Zohar, Sam Fazeli, Tess Cameron, Paul Matteis, and Tim Opler. Let's start with general sentiment. Sam and I were just chatting about this a little bit, but Tim, your reports are always a must-read every week, and you follow this stuff closely. I noticed that you spoke to Brad Loncar on BiotechTV at BIO and were decidedly upbeat, especially on M&A, but I'd love to hear you kick off with the general sentiment over the last 2 weeks since Biotech Hangout last met.

1. Biotech Sentiment Turns Positive

The XBI is down for the year but up massively since Liberation Day, so it's all a matter of perspective. If you were to back up the clock to April 8, the famous Liberation Day, sentiment after that was just completely disastrous. I would say today's sentiment is mixed to positive.

Specifically, it depends very much on the fund. In my last weekly report, I likened it to the old Star Trek episodes where Captain Kirk would land on a different planet every week. Sometimes the planets were good, and sometimes they weren't. We're seeing the same thing with investors.

Tess and I attended an event this week hosted by Royalty Pharma, which was awesome, by the way. There were several investor panels, and it was quite interesting to see the differences in sentiment. One investor was super negative, and others were more positive. It depended very much on the type of investor and how they saw the world.

I would say overall sentiment has improved, and specifically, what's very important right now is that both IPOs and follow-ons are performing well. Earlier in the year, those were not doing well at all. Since Liberation Day, the average IPO stock that went out earlier this year is up like 50%–60%, and follow-ons are also performing quite well.

The other thing that's really weird right now is that China biotech is just killing it. Last month, China biotech was up almost 40%. Whatever we don't have, they've got right now. If you talk about sentiment, you kind of have to mention China as well.

Hey, Tim, I'm just curious: For the decidedly bearish view from the Royalty Pharma meeting, was that a public investor or a private investor?

It was from Samsara BioCapital. Srinivas Akkaraju does both private and public markets, and so he's obviously experiencing the challenges facing a private VC right now. It's really hard to raise money as a private VC right now. You can have a company that discovered the Lost Dutchman's Gold Mine under your headquarters, and you still struggle to get money raised. It's just very tough for the private companies.

On the public side, he's obviously experienced the full brunt of Liberation Day, so you can imagine his sentiment was different. We also heard from Rajiv Kaul at Fidelity and Rebecca Sykes at Wellington, and they were much more positive. That's because they have a funding base that can ride through the ups and downs, but I wouldn't describe them as rosy either.

They were very optimistic about what they heard at ADA. That was very exciting.

My interpretation is that obviously the public markets will lead us out of this ultimately and make the VCs feel more comfortable that they can get to some exits. When a lot of VCs—let's just throw a number out—might be sitting on 15–20 private investments, they definitely know that they're not going to make all of those public.

I think that's where the pain is being felt more on the private venture side, just because there are so many investments that are hard to get to a liquidity event or an exit in the current environment. On the China trade, I'm just curious: Do you see it almost like an inverse correlation? Things look really bad with the U.S., and we have to get our ducks in a row, so the feeling is that this is an advantage or an opportunity for China to fill the gap. Is that part of this?

It shouldn't be. In theory, we should all go up and down at the same time with the industry. What's happened in China is they don't have Trump, right? They don't have that source of uncertainty, and they don't have high interest rates. All the things that have impacted our sector have not impacted China.

Then they have the wonderful tailwind of big pharma starting to buy into China. We just keep hearing more and more rumors of $500 million-plus deals coming for China, so we're going to see more of those coming in the weeks and months ahead.

Chinese investors know that because they all talk to each other using this thing called WeChat. The markets are just very, very excited in China right now.

Hey, Tim, can I just jump in on that? There are a couple of other things I'd add to Tim's comments. The Chinese government is supportive of biotech—that was embedded in what Tim said—but there's one other element, too.

In the U.S., one of the biggest drivers of the S&P 500's massive performance is the Magnificent 7, and they've been on a tear. Nvidia is knocking on a $4 trillion market cap, right? That isn't really available to this extent in China. They have AI companies and lots of tech, but it's not the same.

Biotech is in a younger place in terms of its position. It's not a 40-year sector. I think those are also considerations that help, especially when they keep pumping out the drugs that, as Tim says, sell for $500 million upfront.

That's great. We haven't met for 2 weeks as Biotech Hangout, and 1 week of that was BIO. I'm going to have Daphne talk to that. Daphne, anything else to comment on the market sentiment or China?

I'll start with China, and then I'll talk about BIO. I think Chinese biotech is a huge problem for small and midsize biotechs in the U.S. A company can be working on a novel target, spending years and money to advance it, and then in China they can quickly move a copycat asset forward. You then see, as Tim and Sam noted, a big pharma company paying a fraction to buy that asset or company compared with what they would pay in the U.S.

That trend is now also impacting startups, with VCs going to China to buy assets. I heard that Umer Raffat is taking a bunch of public investors to China on a tour. What I heard in particular from a number of public biotech CEOs is that this is one of the biggest problems they're facing, because investors are applying a huge discount in areas where the China threat is real.

One aspect of that is that big pharma companies and investors need to consider carefully how the excitement around China and Chinese assets, and the speed of development, intersects with the current administration's messaging around policy priorities, America First, and negative sentiment toward China.

I understand there are a number of proposals being discussed, including incentives for doing deals with U.S. biotechs and penalties for advancing China assets. One quote I heard was, “All those pharma companies doing deals with China are going to drop those assets like hot potatoes soon.” I don't know how much weight I'd put into that one quote, but I do think we need to recognize that there's some hype here. In the meantime, a smart investor or pharma dealmaker should view the opportunity with a balanced lens.

2. BIO Confronts A Capital Drought

In terms of BIO, BIO was in Boston this week and was, as usual, a very big conference. There were around 22,000 participants, with around 50% notably being international, 70 countries represented, and lots of partnering meetings.

The vibe was mixed. The capital drought, both private and public, was a major overhang, and everyone was navigating the uncertainty and looming threats that have weighed down the sector. Those threats include most-favored-nation, or MFN, pricing; tariffs; China; and the need for clarity and consistency from the FDA.

On the positive side, there are some opportunities as the new administration takes shape. Its stated priorities are increased speed to market, removing red tape, and excitement around cell and gene therapy and AI in drug development.

I know there are some big and justified concerns regarding vaccine policy, but from a small- and midsize-biotech perspective, the administration has put out some very encouraging messages. RFK posted on X that MAHA also includes MABA, or Make American Biotech Accelerate. He particularly called out the need to stop giving an edge to foreign interests and large incumbents, which I read as negative for China assets and big pharma.

FDA Commissioner Marty Makary announced this new National Priority Voucher, which sounds intriguing and is a nice testament to the FDA's commitment to moving medicines through regulatory review more quickly. But we need to better understand the criteria, considerations, and process for granting and using the vouchers.

I'm on the board of BIO, and I see several people in the audience who are also on the board of BIO. From a BIO perspective, in addition to pushing back on threats like MFN and tariffs, BIO has been working on a few priorities in the One Big Beautiful Bill, including an immediate R&D tax deduction.

So that would allow for the immediate deduction of R&D costs. I don't know how many of you have been following this, but over the past few years, companies couldn't deduct R&D in one swoop. Rather, it had to be amortized. So you get a ridiculous situation where, for example, you get partner income for R&D, and that could be taxable if you can't deduct the expense that year.

BIO also continues to push for reauthorization of the SBIR program, which Congress needs to reauthorize by the end of September. Additional top priorities include educating the administration and Congress on the negative impacts of tariffs and MFN. Industry is going to be watching closely to see if there's an MFN amendment in the reconciliation bill. Lastly, BIO has been encouraging Congress to pass the pediatric priority review voucher reauthorization. This program costs taxpayers nothing and has significant bipartisan support.

We also hope that the Orphan Cures Act will stay in the bill. It would allow for additional indications of an orphan or rare disease drug, and we heard that might be at risk of being removed. So push to let your members of Congress know that that's important.

That's great, Daphne. Now also, as the week of BIO, Dr. Makary was part of the listening tour in Boston. I know these were somewhat closed and very structured meetings, and I actually had a colleague who attended the Washington, D.C., meeting at DIA and heard the comments. She came away with a positive take, generally speaking.

But any comments on the listening tour? Then we'll go to Paul for a specific action that Makary was perceived to have taken on KalVista. Any general comments on summarizing the listening sessions that took place?

3. FDA Leadership Faces Early Tests

Yeah. I had a chance to meet both Makary and Prasad, who came across to me as earnest, very well informed, and motivated to work with industry. In person, Prasad, I think, is very different from the one some of us have gotten to know on social media. I think an outsider perspective has some benefits.

There were over 100 CEOs in attendance. We each had a minute on the clock to make comments in the general session. Some of the key themes, which I think we heard back from the FDA that they're very interested in, are a desire for regulatory reform; a focus on speed and efficiency; addressing cultural and structural issues at the FDA, like removing silos and hierarchies; transparency and flexibility; surrogate endpoints and real-world data; and maintaining U.S. leadership in biomedicine. Some of this is going to speak to the next point, I guess.

I'll give you one example that's a flavor of the tactical ideas that they seem interested in implementing. They're calling it a one-card or two-card system, where each sponsor has a card they can use to request an immediate response or clarification during an FDA interaction. This is to address the lack of clarity sponsors sometimes experience in the long, cumbersome, and bureaucratic process of getting answers while a company is burning cash.

That was, I thought, a really interesting example, but there's a lot more that was discussed.

Great. Paul, obviously, in the news, Makary—everybody on the concerned side is focused on the politicization of decisions coming out of the FDA and the influence of the commissioner and his appointees. Do you want to comment on what's going on with KalVista and the controversy there?

Yeah, sure. Thanks, Chris. In general, just to bridge to the investor-sentiment conversation, I think the market is telling this story, too. I think investors, more or less, have become a lot more comfortable with FDA risk in the sector, outside of the vaccine space, of course.

If we think about the past few months and a lot of the public commentary from Makary and Prasad, especially in the rare-disease space and the gene-therapy space, it sounds more like Peter Marks than not. So I think, in general, the perception is mostly good, with the caveat that I think investors are watching a number of the upcoming decisions in rare disease, and certain decisions that center around flexibility, to try to figure out the true direction and where this FDA stands on the spectrum.

The really odd piece of news, though—and I know we're going to talk about Capricor as well, and I think there's some thematic overlap there, even though it's a really different situation—is the interesting news that came out this week from Endpoints, which cited multiple sources in its reporting. It described a situation where KalVista, which is developing an oral drug for the acute treatment of hereditary angioedema, came out a few weeks ago and said that the FDA had notified them that they weren't going to meet their PDUFA goal date because of resource constraints. This was the language that KalVista used in its press release. KalVista is a micro-cap company, so they have to say something, right, from just a materiality perspective.

The interpretation by myself and most investors was that the product was still very likely to get approved. The data really aren't that controversial. There are a lot of drugs approved for this indication that give us analogs, and they had said that they were pretty deep in labeling discussions.

So it was a surprise this past week when Endpoints reported that Makary had essentially told the review team to issue KalVista a CRL. The initial reporting was a little bit inferential because it was citing people at the FDA who did not directly hear that this order came from Makary, but said that they knew it did. There's now an updated piece that came out this morning with more reporting on the topic.

From a practical perspective for KalVista—I cover the stock—we still think that drug is very likely to get approved. I think if there truly was any sort of political impetus to give it a CRL, that's probably even less likely now that it has been reported.

The question is really, why would this happen? If this did happen, was it because the commissioner felt it would be better to give this a CRL than have a delay, and what are the optics of that? It's really hard to speculate, but, back to what you were saying, Chris, and as we'll talk about with the Capricor situation, it does raise concerns around politics at the FDA.

When I talk to investors about a certain basket of biotech companies that have these very favorable FDA agreements—some of which they attained with the prior FDA and may or may not have reaffirmed with this new FDA—I think everyone has heard what Makary and Prasad have been saying on the listening tour, and it all sounds great. But there still is a little bit of unease as we head into maybe a year and a half of important regulatory reviews and PDUFAs.

We've heard what they've said. They've said all the right things. They sound like a partner to industry and innovation. But where do they stand on the spectrum? Ultimately, a lot of the upcoming reviews are subjective, and flexibility is subjective.

The Capricor situation is in its own bucket because, unless there's something we don't know, it doesn't feel like it's really about the merits of the product, and it sounds like this issue was paused. But for purposes of guessing again about how this agency will behave, it's a topic that still comes up in a lot of my investor discussions.

Yeah. I'll just comment a little bit on this. Again, I'm always a little skeptical of anonymous sources and inferential data without the company and what it can formally communicate, or what the FDA is formally communicating.

But I'm also a little sympathetic to Makary in that I've been part of post-merger integrations. When you acquire a company, you're inheriting a lot of new people. At Sarepta, when I took over the CEO role, there was a decades-old management team. Many of them were not the right fit, and we needed to replace some of them.

When you're coming in new with a different kind of framework, the first thing you want to do as a leader—and I think most CEOs can relate to this—is ask, “Do I have people who are aligned with this vision?” It's not going to be implemented tomorrow, but over the years, you're going to see displacement. You're going to see people quit and leave, and become disgruntled.

I always think about what would happen if the tables were turned. Let's say 4 years later, a new administration comes in. The same people who are booing and jeering against every action and every departure are going to be cheering and saying, “This is amazing. This is great. We're getting rid of all of these people.”

I think it's expected that a leader needs a team he can rely on. I also think about KalVista, and maybe Capricor. I think he should delegate to the people he's put in place, like Vinay, et cetera, and not be visibly involved in these decisions as commissioner.

But you have to believe he's going to get the criticism for any misstep. The microscope is on. The spotlight's on. I'd imagine that he wants to be leaning in to almost every key decision, because if he just lets it play out, then he's going to be the one, as the new commissioner, who's going to get the criticism.

So I would expect a little bit more intervention to figure out, now that it’s on his watch, what he is going to see. And then the last thing is that there’s been a decades-long battle between the divisions and the hierarchy. The hierarchy’s policy doesn’t always align with the divisions or specific divisions, and that’s got to play out. We have to figure out what this looks like.

So, again, direct intervention is not common, but I think in this period and stage, while the new administration and the political appointees are trying to work out how the new administration is going to operate as an FDA, I would expect a little bit of this uncertainty and a question of how it’s going to work out division by division. So that’s my perspective on this, and why I always feel like we could all go to sleep for 6 months or 9 months and wake up and see how things are operating. That’s probably better.

Yeah. Chris, do you think it’s believable that an FDA commissioner would, in effect, order a CRL because that’s better than the optics of a delay? I mean, it feels like that’s what’s been inferred here without really saying it. Again, I think what you’re alluding to—and I’m trying to think out loud about—is whether that actually passes the smell test. If it is true, that’s certainly disconcerting. How do you make sense of that?

I don’t think it should be a unilateral kind of helicoptering in and saying, “This is what my guess is.” This is just from personal experience: He’s getting a lot of information, right? We don’t know who’s bending his ear, and it could be that somebody’s raising an alarm and they may be misguided.

But I would expect that if he’s got an internal dispute, and if they want to listen—it sounds like they want to hear everything and make the right decisions—he’s probably hearing countervailing views that he has to consider. He’s hearing what the division leader or the clinical reviewer is saying, or the CMC reviewer, and I think he’s trying to really get to the right decision. That’s my guess.

Now, if that is interpreted as, “Oh, he’s ordering a CRL,” which doesn’t sound like it’s going to play out that way, I would imagine it’s based on his believing the group that thinks it should get a CRL. I’d be hard-pressed to believe that he’s unilaterally looking at the IND or the NDA and then realizing, “Oh, yeah, I would definitely give this a CRL.” He’s listening to people internally.

And I can tell you, just from my own experience, internal debates at the FDA are alive and well, of course. So that’s my interpretation of it: Who’s he listening to? Who does he believe? What does the data tell him in terms of who’s right? That’s what I read between the lines of what was communicated.

Yeah, makes sense.

Yep. All right, let’s move on to some data. We got a lot of news over the last couple of weeks. ADA was the big medical meeting this week. Sam, do you want to kick us off? We’ve talked a lot about diabetes and obesity, and this is a big conference. Why don’t you kick us off?

Sure. The first thing I’d like to say is whether we should still be calling it ADA rather than AOA, the American Obesity Association. Of course, these 2 diseases are metabolic diseases and related, but let me set the context here.

There’s this loggerhead between Lilly and Novo. Just as an illustration, Novo’s Wegovy has gone from 230,000 prescriptions at the beginning of the year to 246,000—a 16,000 increase. Zepbound’s gone from 160,000 to 366,000 total. So we’re dealing with a 160,000 increase for Zepbound and a 16,000 increase for Wegovy. Zepbound is now, as I said, at 366,000 total versus 246,000 total.

So we have this competition going on, and Zepbound and Lilly are winning it. I have to say that I think the data that came out over the last weekend gives Lilly the upper hand in terms of what we’ve seen.

Novo came out with some CagriSema data, and what were we looking for that was new in there? We already knew that the efficacy was 22.7%, whereas they had previously suggested 25%, but that’s already been covered. What was interesting in the detail is that, for CagriSema, the weight loss was not as favorable in terms of how much fat you’re losing versus muscle. It was even not as good as Zepbound.

These are the details we were thinking about. Remember, here we have an amylin analog and a GLP-1, semaglutide. The idea was that by adding amylin, you might not only manage some of the side effects better, but you might also push the weight loss toward more fat versus muscle. That didn’t turn out to be the case. In fact, it turned out to be worse than what we’ve seen for Zepbound. But this wasn’t a head-to-head, so this was the key data set as far as we’re concerned for CagriSema.

There is, of course, a head-to-head trial versus Zepbound, REDEFINE 4, and that’s due to read out sometime in 2026. Sticking with Novo and exactly the same mechanism—GLP-1 plus amylin, but in 1 molecule as opposed to 2 molecules being delivered in CagriSema—that’s amycretin. It’s moving directly into Phase 3, but we have questions on the dosing that continue to be essentially unanswered.

There was 24% placebo-adjusted weight loss. That wasn’t bad. That’s pretty good at 36 weeks, right? Remember, we’re trying to touch that 25% boundary. At least that’s what some people have focused on. This response was at 20 milligrams versus 60 milligrams, with overlapping curves at the lower doses. There are some questions there, where shorter durations were tested.

The rates of gastrointestinal side effects for amycretin were high—high—and they need to be viewed in the context of a Phase 1 trial, of course. But we hope they can get the dosing in a place where they can manage that. There were also heart-rate increases beyond what’s been seen for Zepbound and Wegovy, so there are still questions on this combination.

When I add all this up and then look at what Lilly reported, which was the first details of orforglipron, their oral drug, the safety seemed manageable, with good tolerability and decent efficacy, and even some benefits on the cardiometabolic metrics. I think you’d have to agree to give this conference to Lilly.

There’s no question that the market is so big that Novo can continue to have a significant share, remain a big player, and continue to grow. But they do have something to deal with in their competitive pipeline.

MariTide from Amgen also reported some details. The tolerability concerns continue to eclipse the weight-loss data. Remember, this is an antibody that tries to be an antagonist of the GIP receptor and an agonist of the GLP-1 receptor, just like all the other GLP-1 agonists.

This is slightly different from tirzepatide from Lilly, which is an agonist of both. The data showed compelling weight loss, but we have that issue with safety and some questions about the way the trial was designed, with KOLs questioning it, et cetera. There’s more work to be done here.

I’ll move on quickly to Metsera’s GLP-1. Remember, Metsera’s share price has been doing relatively well on the back of this well-tolerated drug. It’s called MET-097i, and it’s a GLP-1 in a Phase 2a obesity trial. It achieved weight loss that, in our eyes, rivaled Lilly’s tirzepatide. It’s titration-free, and possibly monthly dosing could provide differentiation, obviously.

We just have to wait and see whether they can repeat that in Phase 2b, and we have data coming over the next year or so. The drug is a while away from the market, in 2028, but it’s got a fighting chance, especially given its dosing regimen. Of course, the next one is bimagrumab, but I think we’re going to try to cover that with Tess.

Yeah. First, I like your comment about Novo. It’s not out of the game at all, right? Even though Lilly is prevailing across these products, there was a really great tour de force of data coming out of ADA. Tess, do you want to highlight Lilly’s bimagrumab?

Yeah, absolutely. So, bimagrumab—this is a myostatin/activin drug that Lilly has been developing. They acquired it from Versanis. What this addresses is the question with the GLP-1s: You lose a lot of weight—isn’t that great? But you also lose a lot of muscle. Are there issues with losing a lot of muscle?

I think that’s an unanswered question. Many who are bullish on some of these muscle agents were hoping for the FDA to be a little bit more positive about this as an unmet need in its obesity guidance that came out. But the FDA, in its guidance, was really saying that, at this point in time, there isn’t anything indicating that it’s an issue.

But we don’t know, right? It may be that, particularly in certain patient populations taking GLP-1s—if it’s a frail patient population or otherwise—there may be greater concerns about muscle loss. Bimagrumab is really looking to address some of those concerns, and it was pretty interesting data.

What they presented was both 48- and 74-week data on bimagrumab. At the highest dose, which was 30 mg/kg, they showed pretty high weight loss at 48 weeks—around 7% if you looked at completers, or more like 5% if you looked at the placebo-adjusted results on an ITT basis. That strengthened over time as they got to the later time point.

In addition to that, what they showed was that, in combination, you really saw a much higher proportion of the weight loss come from fat mass. For semaglutide, this was actually a trial of semaglutide plus bimagrumab, since it started before Lilly acquired the asset. Lilly is now running these trials with tirzepatide, but in the semaglutide monotherapy arm, about 70% of the weight loss was due to fat mass, whereas in the combination of bimagrumab and semaglutide, it was over 90%. That was pretty interesting.

What I think is important to note is that, on the safety and tolerability side, there were some side effects that didn’t look particularly pleasant. There was a pretty high rate of muscle spasms, and there was also a pretty high rate of acne. But when this was being discussed, the discussions highlighted that these AEs actually seemed fairly manageable. They didn’t see a whole lot of discontinuations as a result of this.

Also, the way Lilly is studying this in future—and in ongoing—trials with Zepbound is through subcutaneous rather than intravenous dosing, which was used in this trial. So, might there actually be a better AE profile if you have a lower Cmax as a result of subcutaneous dosing?

Bottom line, I thought it was very interesting data suggesting that these agents certainly do have an impact on lean mass, and that there is an additive effect of activin on top of myostatin. That’s consistent with some of the data we saw from Regeneron a couple of months ago, as well as the comparison with Scholar Rock, which came out with its myostatin data a few weeks ago. All of those are interesting, but we do see this incremental activity from activin, which seems to be important in getting to the incremental weight loss, as well as the lean-mass preservation, that these agents could provide.

The big questions remain: What will the tolerability profile look like with this different dosing, and how much does this actually matter to patients? Do they see any kind of functional benefit? That’s something we’ll need to see over time with other studies, but it’s certainly an interesting start.

Yeah, thank you.

Just jumping in very quickly, there were a couple of other things I wanted to add. One was that I was a little bit surprised that the cardiometabolic markers improved for the combination versus semaglutide alone. hs-CRP, the cardiac inflammation marker, showed an 83% decrease in the combination arm versus 59% on Wegovy alone. Remember, there’s Wegovy in the combination.

To me, that was quite an interesting thing to observe and try to understand in terms of the mechanism, along with the improvements in adiponectin and so on. There’s something else going on in there that’s not just fat loss. The last thing I would say is that, if you’re trying to lose weight to look good, I can’t imagine any level of acne that would be acceptable to someone like me. So, I think we can brush this side-effect issue and the muscle spasms away, but I don’t know if it’s going to be as easy as that when it comes to actual commercial use, unless they manage it somehow.

Well, I guess, Sam, it comes down to how you trade off acne versus a leaner look. It’s certainly a good point, but I think the aesthetic aspects may play out in a few different ways. I was wishing they’d had some before-and-after pictures that they could share as part of this presentation, but we didn’t get to see those.

I’m sure there’s some conjoint analysis that can be done of whether a thinner body with acne is more attractive than a larger body without it. What this all speaks to me—and why there’s so much activity in this space and continued investment and interest—is that there are multiple efficacy parameters that a product can win on.

You’ve got safety issues that a product can win on regardless of mechanism. You’ve got combinatorial approaches that are being attempted that could be flanked by a single product, even with multiple potent actions. I think people are realizing this is too big of a market not to try to pursue a better or best-in-class approach with the various mechanisms. So, it’ll be interesting to see how this continues to evolve. Tess, do you want to cover Hims, speaking of Novo being a part of this conversation?

Yeah, I think, continuing on the obesity theme, there were some big announcements last week from Novo and Hims. Novo made a couple of different agreements with a few groups that can help with its direct-to-consumer sales of Wegovy, and Hims was one of those. They signed this partnership just a few months ago. On the back of that announcement, I think the Hims stock went up 30% that day and kept going a bit from there.

Then, just a few short months later, it went back down, with Novo essentially saying that it was no longer going to make Wegovy available on Hims. Novo said that was a result of Hims selling illegitimate knockoff versions of Wegovy that put patient safety at risk. So, it wasn’t just ending the collaboration; it was also coming up with some strong words on Hims.

I know we have several other members of the group here who have thoughts on this. So, Tim, maybe I’ll turn it over to you. What was your reaction when you saw this?

I thought it was weird that Novo and Hims did the collaboration in the first place. The reason is that the business model of Hims and, for that matter, many other players in the market is to sell compounded GLP-1s directly to consumers. There’s an obvious reason why that works: the price is lower, and consumers care about price.

The original deal was sort of weird because you can go buy semaglutide directly from Novo from its direct website, and Hims was literally just selling it for $100 extra per month. It was a very odd deal in the first place. I’m not at all surprised that Novo said, “Why are we letting these guys benefit from an affiliation with us when they’re essentially selling something that’s more or less like a generic version of semaglutide to the market?” So, not surprising.

For what it’s worth, this direct-to-consumer movement with obesity drugs has just gotten very big. Tess and I attended the Royalty Pharma conference, and the CEO of Eli Lilly spoke. He said that sales off the Lilly Direct website are much larger than one might expect—at least, much larger than I would have expected. So, it’s just really interesting. I know it’s controversial, but personally, I think it’s frankly probably good for consumers that they can access these drugs at a price they can afford.

Great. All right. Any other final comments on the obesity theme here, coming out of ADA—Sam, Daphne—before we move on to some other data?

Yeah, I’ll comment. I think the direct-to-consumer aspect is really interesting and probably positive, and I don’t have a problem with compounding per se or selling compounded GLP-1s, especially during a shortage. But I just find Hims to be so hypocritical.

They present themselves as champions of accessible, science-backed health care, criticizing the industry for maximizing profit while profiting themselves. They’re basically a parasite, feeding off the innovation and development that Novo and Lilly did. Then they’re pushing these unregulated compounded drugs and kind of circumventing IP protection through regulatory loopholes.

In particular, what was annoying was that their advertisements were pushing really hard and slamming the industry, saying that the industry is designed to keep us sick and stuck, offers one-size-fits-all solutions, obscures the truth, has inflated prices, and wants to keep us overweight. Then they basically sell a me-too version of the same drugs developed by those companies.

So, I think it’s good that Novo cut ties with them, and I just think they’re a shady company overall.

Yep. Yep. Tess, as you know, Peter Kolchinsky likes to call them rent seekers as opposed to innovators in our industry. And that’s a polite term.

Yes. Yes.

Yeah. So, I want to move to some data. Tess, before we go to Cidara, I want to highlight that my last interview announced on Biotech Venture Voices is with Glenn Rockman. He’s one of the only VCs still focused exclusively on antivirals, vaccines, infectious disease, and neglected diseases around the world. That interview comes out on Monday.

We mentioned Gilead and lenacapavir for HIV, and the data showing prevention of HIV with 2 injections. Cidara has over a $1 billion market cap, and it just shows that the universal flu vaccine still has a play here in the market. So, do you want to cover that one to kick us off on some other data?

4. Universal Flu Protection Breaks Through

Yeah, absolutely, Chris. I think it’s encouraging to see, and an important reminder that we would still like drugs that help keep us from getting sick. Isn’t that important? So, Cidara is a company. I think, just highlighting what happened this week.

On the 23rd, Cidara announced data showing that its flu-prevention treatment reduced the risk of flu by as much as 76% at the highest dose in healthy, unvaccinated adults. The stock was certainly up on this data, going from the low 20s to trading now in the mid- to high 40s. I think this is pretty unprecedented from an efficacy standpoint.

Maybe just a little bit of background on Cidara, because this is one that RA has been close to for a while. Cidara had actually out-licensed this program to J&J many years ago, and we and some others had followed this asset at J&J. We actually had the opportunity to in-license the asset after J&J had deprioritized infectious disease.

RA led the financing for Cidara to reacquire the drug from J&J in April 2024. My colleague Laura Tardif led that transaction and was on the board; she has now transitioned over to my colleague Josh. It is really exciting to see, after this long, very biotech process of out-licensing and bringing things back, the data play out in a way that was really encouraging.

A few reasons why we thought this asset was interesting in the first place: Number 1, the opportunity for universal protection versus the flu variants that you see, where a vaccine is really designed for some of those flu variants. Number 2, the drug was really designed for systemic and lung protection. Number 3, you are not relying on an immune response with the mechanism that Cidara uses.

That is really cool because it is not just the potential to have efficacy on a standalone basis, but something that could also potentially be used on top of a vaccine. It is encouraging to see that even in a market environment where there is a lot of skepticism, and many investors, as a result of the regulatory environment, are not doing a whole lot in the vaccine space, we still have flu and infectious disease. It is important to have medicines that can help people avoid acquiring these diseases.

Yep, and the market reacted with over a 100% return. Congratulations to RA for that investment. Just a shout-out: The CEO is a well-known, experienced executive in the infectious disease space, Jeff Stein. Brad Loncar posted a video of an interview with him from May on BiotechTV, so it is great to see an antiviral get that type of attention.

5. Psychedelic Data Meets Market Reality

Yeah, sounds good. Positive data that was not well received by the market, and a debate going forward, as you are alluding to. COMPASS announced phase 3 data from its first trial of COMP360, psilocybin for the treatment of treatment-resistant depression.

This was a placebo-controlled study, and to some degree it was widely expected to succeed for a few reasons. One, I think at this point we know that psychedelics are efficacious. Two, while depression studies are high risk—we have seen drugs like Prozac fail in half their trials—the psychedelic data has been somewhat more consistent so far. There is a debate as to what degree that is due to the drug class or to a tailwind from functional unblinding.

The stock traded off a lot, something like 40%. The question is why, and how much of that is the data versus the small-cap biotech market and certain nuances. On the data, the interesting debate here was that the effect size was just not as big as people expected. It was a 3.6-point difference on the MADRS.

We have seen other psychedelic trials, like COMPASS’s prior trial, the GH study, or MindMed in an anxiety population with comorbid depression, show bigger effect sizes than this— in some cases, much bigger. I think our view is that it is really hard to compare across these studies because of the differences in time points. COMPASS was 6 weeks. The GH data looks incredible with its effect size, but that was only at 1 week. MindMed is a different population; it is not treatment-resistant depression.

Our other perspective is that, if you just take a thousand-foot view, while psychedelics are certainly a new class and maybe more cumbersome to use, you could argue that the clinical bar is higher. The converse to that is that, at least in psychiatry, I have long been of the view that investors grossly overrate efficacy and effect sizes on these scales, which are really subjective and, at the end of the day, just do not seem to be driving prescribing decisions.

Case in point: If you are not optimistic about the COMPASS data or some of these next-generation psychedelics, which I am not, Spravato from J&J is probably going to sell around $1.5 billion this year. The drug failed in half of its studies, and its average effect size is less than what we have seen from COMPASS. I still feel like this is a real space, and again, I feel like investors often treat psychiatry like it is oncology. These scales are hand-wavy, and there are so many reasons why one trial might look one way versus another.

I would just say that doctors are often not really in the weeds on what the effect size is for a given drug, or how many failed trials that drug might even have that are not published or on the drug’s label. The other practical issue here—and I would be curious to hear anyone else’s view, like Tess, Tim, or Daphne—is the way it relates to stock setups and sentiment in the market.

I think one thing that was challenging for COMPASS on these data—and we will never be able to run a controlled study to see how it would have traded if the data had shown a bigger effect—is that there is a little bit of a sell-the-news dynamic with some of these smaller companies that head into a catalyst vacuum. The next phase 3 does not read out until the second half of next year.

Right or wrong, there is a perception that these psychedelic companies are lower-probability M&A targets because they are so unique. A conservative pharma company might not be as inclined to buy a psychedelic company as it might be inclined to buy Karuna. I do not know if that is true, but that is the perception. It is probably true in some cases.

I think that is part of this as well. It is a little bit of a cautionary tale: Are we in a good market, or are we not in a good market? I feel like there is more risk-on sentiment in small-cap biotech right now, but I also think you have to be conscientious when you are thinking about how stocks trade around these events and the exact setup. What comes after it? Does the next investor feel like they have to own the stock after the data? What are the timelines? Things like that.

Ultimately, our perspective is that you really have to have investment ratings based on fundamentals, not on these month-by-month stock-setup considerations. But the market is the market, and this is how it played out.

Yep. I will also add that RFK Jr. has been vocal about this being an area where he wants to see more attention and focus. I believe the deputy CDER director has some lineage in the psychedelic space and is perceived as a positive.

Daphne is as well, in the CNS space and the neuropsychiatry area. It is still the bastion of personalized medicine, where you are looking across at that patient and, if something is not working, they are going to try something else. It is an armamentarium-driven kind of disease space.

It will be interesting to watch that, but we have a lot of data to cover still, so we will try to rapid-fire through this. Tim, Nektar has been the roller-coaster company, with ups and downs over the years. What is the latest? They are back in the news?

Yep. Nektar had a data readout this week on a program that was returned from Eli Lilly. REZPEG had a huge phase 2b win this week in atopic dermatitis. The drug works somewhat uniquely through an IL-2 T-reg stimulation mechanism, and they really made their point: T-regs matter in this particular disease.

The effect size was very substantial, and I think all of us looking at the situation think that Dupixent may have a new competitor. Dupixent is doing over $10 billion a year, and by the end of the week Nektar’s stock was up around 200%. You wonder if maybe the company is worth even more still.

Excellent. The other news that came out in the last 2 weeks was out of Sarepta: a second death, and they really saw their stock drop precipitously. Just to put this in perspective, a year ago in June, they hit almost $170, which was their almost 5-year high. They hit over $170 in 2020, but they almost hit $170 a year ago, in June 2024.

And today, they're trading in the $17.40 range. So, again, this is a company that's expected to do over $2 billion this year. The FDA has said they're going to look closely at this. There's been a stopping of shipments to the non-ambulatory population because both deaths occurred in the non-ambulatory population, and people were worried that another shoe would drop. So, I think Sarepta is being closely watched.

They still have over $1 billion in the oligonucleotide business, which doesn't have the same safety risks, but there is a lot of competition coming out of Avidity and others that are gunning for better oligo-sequence targeting for RNA technologies. So, with that, any comments, Sam, on this Elevidys gene therapy from Sarepta? What's your take on it?

Well, first, of course, the second tragedy—and you hope that you never, ever see this happen with any drug. It's being prescribed to the non-ambulatory group, which is where I'll make the connection to the FDA. This is the indication for which Peter Marks did a lot of good things at the FDA, but this is one that he perhaps might be remembered for in the end.

And I'll just add that Vinay Prasad was very vocal via his podcast about that particular decision.

Yeah, yeah. So, he overruled the reviewers and pushed it for all patients, which includes this non-ambulatory group. That is what I think is the one thing that everyone's going to remember here and point to—and we're doing that, right?

I just wonder whether this will at all impact the newfound regulatory flexibility that they're talking about with regard to cell and gene therapies, or at least orphan, very hyper-orphan, ultra-orphan diseases. I hope not, because this is partly the agency's fault.

Yep, yep. And look, related to DMD and controversial data sets, there are arguments on both sides for Capricor. It seems like the FDA wants to take a closer look but canceled an advisory committee meeting, right? So, I think there are mixed feelings on whether this is a positive move versus a negative one. The company put out a press release stating that it just released even more data—stronger data—supporting a potential approval.

So, again, you can draw a line through the DMD experiences of controversial data sets and how the FDA is interpreting them. Any further comments on Capricor, Paul, since I know you've spoken about this in the past?

Yeah. I was just mentioning the earlier stuff with Merck and KalVista. The reporting here was that Capricor's advisory committee meeting may have been canceled because Dr. Prasad has reservations about that therapy and doesn't want an advisory committee meeting, and that might have been part of how Nicole Verdun may have been let go. There are other potential reasons that were discussed by STAT News as to why she may have been let go, related to style.

I actually think Nicole Verdun's departure is, on its face, unfortunate for the gene-therapy space. I've heard from a number of companies in this area that saw her as a really good regulator and partner. On the other hand, Chris, like you were saying, when you have new leadership in an organization, things like this are going to happen, and they're not shocking.

I think of companies of mine where a CEO or CFO has changed. If the company isn't acquired in the next year, you often see half of the C-suite also turn over as people bring in their own people or people they have better chemistry with.

As it relates to Capricor, this is one of the decisions that investors are looking to as a barometer of FDA flexibility. We've heard Prasad and Marty say all the right things in rare disease and talk about approving something based on mechanism, small studies, or things like that. This Capricor product has natural-history-controlled data over time. That's the crux of the efficacy argument.

I think the cancellation of the advisory committee meeting is probably because of the reporting and because some of the context seen is probably more negative. I don't cover the stock, but it's something we're watching as we think about other regulatory developments in gene therapy, like uniQure, for example.

Great. All right. We're approaching the hour, so I'm going to ask for some quick comments. First, there have been a lot of activities with the ACIP, with members being removed and added. In the first meeting, they basically announced that they want to take thimerosal out of the flu vaccine with the new CDC head. We don't have time to cover all of that.

Sam, I know you would want to comment on that. We have 2 more items I want to cover: Sam on Illumina and SomaLogic, and then Tim, we're going to go to you on the Bayer-BlueRock news before we wrap. Sam, on Illumina.

6. Biotech Deals Signal New Priorities

Yeah, what's interesting here is that this company was acquired for about $50 million about a year ago. SomaLogic was a public company, and now, of course, Illumina is buying them. This is a testament to the increasing importance of multiomics, if you like. The demand for that application is on the rise.

Illumina is paying $350 million. I'm doing this really fast, so I hope I don't get the numbers wrong. There have been a handful of smaller deals that have happened here, and these companies had a partnership before. So, it's a testament to the importance and breadth of what these companies are offering now for research and soon moving into the mainstream.

And Illumina, to their credit, are protecting their business and realizing that the needs and technologies are moving fast and that they need to be ahead of the curve on this.

Bayer bought BlueRock a couple of years ago with a focus on treating Parkinson's with a very innovative cell-therapy program. Bayer shut down the BlueRock R&D lab last week, effectively letting go about 50 people. To be clear, they didn't stop the phase 3 trial for their Parkinson's drug.

What's exciting and, I think, very interesting is that there are a number of other players in this space, companies like Kenai, that look really good. We are seeing a lot of talk about significantly better data coming out of some of the other companies in Parkinson's. So, this is going to be a big space to watch over the next year or so as we start to see the datasets emerge from some of these challengers to BlueRock, which was the first-generation Parkinson's cell-therapy company.

Yeah. And I just want to shout out, lastly, Revolution Medicines and Royalty Pharma. I think the announcement may have timed with Royalty Pharma's meeting to announce this $2 billion deal—a creative structure, part royalty and part debt—for Revolution Medicines' RAS inhibitor pipeline.

Tess, any comments on that? I think you were at the conference. I don't know if they talked a lot about that. To wrap up the final news of the week.

Yeah, I think it's absolutely a very positive note on which to wrap things up. Royalty Pharma announced a $2 billion investment in Revolution Medicines. Obviously, Royalty Pharma is not an equity investor, but they're really taking a bet on Revolution Medicines having a leading drug and a leading franchise.

I had an opportunity at the conference that Tim and I both attended to speak with the CFO, and he shared their thesis on really wanting to support biotech companies in staying independent and being able to create value longer. It's obviously fantastic to have more groups that are really focused on doing that and enabling it.

What was also really encouraging was the stock reaction. I think the stock reaction was fairly neutral to the deal, just looking that up now. But that's always encouraging: You don't have everyone just sitting around hoping for a buyout, right?

Kudos to the Revolution Medicines team for working with Royalty Pharma on what sounds like a really impactful deal.

Excellent. Daphne, just to go to you for any final comments before we wrap.

Yeah, I think generally the thing that seemed to be the most concerning is the lack of capital for a lot of companies. One note on the Royalty Pharma conference, which I thought was pretty interesting, since we're talking a lot about Lilly: Dave Ricks, Lilly's CEO, mentioned that they're looking to get back into neuropsych. They had some big mega blockbusters with Prozac, Cymbalta, and Zyprexa, and they said they're waiting for the right opportunity to get back in.

One last note is that Rajie Khal[?] mentioned that the market cap of Nvidia is actually greater than the top 10 pharma companies combined, and all of the market-cap growth across big pharma has been driven by Lilly.

Great.

So we might see a separate Lilly deal in the future at some point. Who knows?

Yeah. No promises.