第162期——2025年11月7日

You're listening to Biotech Hangout, a live and unedited weekly discussion of all the latest news in our industry with a group of biotech insiders. I'm Graig Suvannavejh, and my co-hosts today are Brian Skorney, Yaron Werber, Paul Matteis, Chris Garabedian, and a special guest, Adam Feuerstein. For more information about our hosts and our guest speakers, or to listen to the most recent episode, please go to biotech.com.

It's certainly been a bit of a helter-skelter week, with earnings, regulatory news, clinical data news, and M&A updates. But things in biotech continue to be volatile. I thought they'd be on the up and up. The tape seems weak today, but let's hope things move in a positive direction as we finish out this year.

1. FDA Leadership Upheaval

I thought we'd start with some high-level policy and regulatory news. Certainly, there have been headlines around George Tidmarsh resigning and a lot of theatrics that seem to be in the background. Adam, do you want to comment on this and start off there?

Yeah, it was quite the start to the week, right, with George Tidmarsh, head of CBER. Depending on which side of the story you're hearing, he was put on leave, he resigned, or he decided to fight the resignation—but now he's gone.

To give you a little backstory, this actually started happening a week ago, when George Tidmarsh was called into Marty's office, as we reported last Friday. George thought he was going to get some good news during this meeting with Marty Makary—that Vinay Prasad was going to be fired from the FDA. Instead, he learned that it was him who was getting the boot.

And this all centered around, as we reported, a complaint that had been filed by Kevin Tang, a health care investor—I think probably a lot of people on this call know or have heard of him—who had filed a complaint with the FDA about the fact that George was using his position as head of CBER to essentially exact revenge on Kevin because of a falling-out that the two of them had years ago.

I think it's created a lot of uncertainty in the markets. Investors had become a bit more comfortable with the uncertainties around the FDA, but Monday's news clearly sets things in a completely different direction. I think we've had some other FDA-related news that has impacts on individual companies, particularly with respect to Sarepta. We've got a couple of analysts who cover Sarepta. Maybe I'll start off with Brian, if you want to comment there.

Yeah, I'd love to bring that up. Actually, Sarepta is something we want to talk about a little further down, because, going back to Adam's commentary on the Tidmarsh resignation, one of the things I've heard a lot from investors—and what came on top of this—is not just his resignation, but the uniQure news. I'll pass it over to Paul to walk through a little bit of that, but one of the big things that came about both through the Tidmarsh news over the weekend and the uniQure decision is this elevation of concern among investors that it is now more of a Vinay Prasad FDA than a Tidmarsh FDA.

Certainly, there's the messaging from Makary that we've had on flexibility: “We're going to approve things for orphan diseases based on natural history data, based on preclinical evidence,” and stuff like that—sort of pushing the classical GOP talking points of enormous flexibility around these things. I think Tidmarsh kind of lost out in what seems to be a bit of a civil war with Vinay, then leading into the uniQure decision.

We'll have to discuss thoughts on that, but there's certainly a concern: Is that uniQure decision tied somewhat to Vinay being more of the emerging victor in the civil war period? It's certainly something where I think those of us who know Vinay—and I know Adam, and I know him from long ago—would say it's the sort of thing that he would look at and scoff at.

Maybe we should jump to Paul first to talk through the uniQure decision itself, since it ties in downstream.

Yeah, thanks, Brian. Can everyone hear me okay?

Yeah, we can.

Okay, great. Thanks, guys. The uniQure thing is crazy because I think, at face value, even if you're a believer that the efficacy of their Huntington's gene therapy looks promising at 3 years—or really, really promising—I think it's still reasonable, no matter how bullish you are, to debate those data. It's not a big sample. We know the study didn't separate from placebo at 1 year. There's a valid explanation for that, but that's just the reality.

I think we all knew—I think people who own uniQure knew—that there are valid nitpicks with those data, even if they look really promising, and the 3-year data were kind of backed up, validating the 2-year breakthrough therapy designation. But the bigger issue here is that it just makes the FDA seem super unpredictable in this space.

None of us were in the meeting. As an analyst covering uniQure really closely, I haven't seen meeting minutes. We've seen companies in the past misinterpret the FDA or think the FDA's vibe is super positive when it's a little bit more neutral. We understand that there's subjectivity to this, but just being close to this uniQure situation, I thought their regulatory alignment for something this flexible was maybe a lot more thorough and rigorous than average.

They had a meeting a year ago using this kind of natural-history control for their analysis. That's one thing: You could just say the FDA is open to it. But then they had a separate meeting in the spring where they essentially aligned on an SAP—a statistical analysis plan—for this 3-year data and incorporated some really specific feedback from the FDA.

The FDA was actually aligned with them using a different natural-history database than the 2-year data, and a slightly different analytical methodology for how you compare the patients in their study to a natural-history study. Alongside this meeting, uniQure got breakthrough therapy designation, which seems like the FDA was saying, “Hey, this 2-year data looks promising. We're setting you up with an SAP that, if you actually corroborate this again, you're set up well.”

For them to have this 3-year data that was considerably better than expected—they essentially had disease slowing versus natural history of 80% at 2 years and 75% at 3 years for their high dose—and then to have this meeting where we don't actually have the minutes or the outcome, but they're saying that the FDA conveyed to them that this natural-history analysis, because it wasn't the goal of the study from the outset, is exploratory and not something that could support a BLA submission, is really surprising.

I think there are some investors who have come out and said, “This data's had issues. We've known that.” To me, that's not the point. The point is that they had a meeting around an SAP 4 months ago. Are we supposed to believe that was a sham meeting, for lack of a better word?

I just think, for the investor community, if we take a step back, obviously we'll see how the uniQure situation plays out. There was a Wall Street Journal op-ed this morning that seems to be applying the same sort of pressure on the FDA that we saw over the summer with Replimune and Stealth BioTherapeutics.

But separately, there's this broader flow-through to the gene therapy space, because there are a number of other companies in the space that are running single-arm Phase 3 studies. I think what a few of those companies have come out and said, rightfully so, is, “We've prespecified this from the beginning.”

But as Skorney's talking about, all these things are changing in real time. If Prasad has just won the recent power struggle, I think investors are asking, “What are the implications for everybody else?” The other complicating thing here, too, is that in late September we got FDA draft guidance for gene therapy and cell therapy that sort of aligns with what uniQure and many of these other companies are doing.

Again, late September feels like a year ago to me emotionally, but it was 5 weeks ago. All of this is still really dynamic. The Tidmarsh situation, even though it's potentially unrelated to what's happening at Sarepta, feels to me like it opens the FDA up to more political pressure, just because of the broader optics around instability. But guessing what the next move is is hard.

And Adam, I'm not saying this just because you're on the call...

Some investors have been asking me, “What’s the next catalyst for uniQure?” And I’m like, “Well, let’s see the STAT News exposé and what’s happening at the FDA.”

Well, we’re working—we’re trying to do that, Paul. But I want to ask you a follow-up question because I think you made a good point about the fact that there has been some debate about the data and the way it’s been analyzed with the natural history.

Do you feel like these kinds of issues are review issues? Meaning that, in a different time and place within the FDA, these are the kinds of things where the filing would have been accepted and you’d see them brought up at an AdCom. These are the kinds of things you’d want to deliberate over during the review process, and not just tell a company, “No, you can’t file.”

I mean, you would think so. And, Adam, I follow closely what you guys write. I follow what you’ve been saying about this on Twitter. You were saying, “Hey, none of us were in the meeting. We don’t know if there’s something else about this data that we haven’t seen, or if there’s a nuance with it that’s an issue.” All of that is true, but again, at least as I understand it, they’re going to have to do sensitivity analyses around different ways to analyze this data, compare the analytical methodology, and determine how you compare it with natural history.

I understand it like this: The Enroll-HD study they used versus TRACK-HD, and there’s one other natural-history cohort that they could use—they’re all very, very similar. So, to your point, Adam, if this actually got rejected under greater scrutiny from the FDA, it feels like that would have happened during a review. I guess what I’m trying to say is, I don’t know what could have happened at this meeting, with the data we’ve seen and my understanding of what the basic, high-level sensitivity analyses would be—

Did you all lose Paul?

Yeah, he’s coming in and out.

Okay, just lost Paul. Maybe what we can do is—I know we were talking about inconsistencies with the FDA, and gene therapy has been a space that has had its ups and its downs. I kind of feel that—

Well, there he is. Right.

Hey, Paul, you’re back.

Oh, sorry.

We lost about 45 seconds.

Oh, that’s awful. Okay. I’m sorry, guys. I was getting another phone call, and I just ignored it. I thought that was good enough. This is the platform we’re using.

I mean, I guess what I was saying—and I’ll just be very, very brief, and then everyone can kind of take it over—is that, based on the high-level disclosures I’ve seen, and then also the high-level sensitivity analyses that you would do with this data versus other natural-history databases, it’s hard for me to see what would have come out of a high-level meeting where you’re looking at the data, again, not on a super, super detailed patient level.

I don’t know what would have come out at this meeting that would have shut the door. It feels like this should be reviewed, to your point, Adam. I think the question is just: uniQure said Vinay Prasad was not in this meeting, so is he directing the clinical team and the stats team separately? Is this the clinical team that had been ambivalent but maybe couldn’t convey that back when others were at CBER, who’ve since left—folks who were under Peter Marks?

There’s just a lot of uncertainty. I’m sorry for cutting out, and I’ll just stop talking.

I would hope—I would hope to see radical transparency here. Something I wrote this week is that the FDA has talked about radical transparency. We now get CRL letters in almost real time. But it can work both ways, right?

It seems like it’d be good if uniQure feels like it’s in the right here and this is just sort of a unilateral power grab by Vinay to put his stamp on this. It would be great to see all those meeting minutes from uniQure—all the past meetings, all the agreements, everything that the FDA told them. I feel like they should put that out in the open so that we can all see it.

Can I just jump in? I just want to add, on that topic: As much as we can say, “Is it Vinay specifically, as a result of a power struggle, inserting himself here?” I think it’s going to be less explicit than that.

I think what you see in the FDA is that review teams feel emboldened one way or another based on the leadership mentality, right? Peter Marks really pushed for this flexibility, and I think the review teams felt that push from leadership for flexibility. Wilson Bryan was less flexible, but he was sort of shown the door by Peter Marks in an effort to be more flexible, right?

So, I wouldn’t be surprised if this isn’t Vinay very specifically stepping in and saying, “Whoa, hey, this is why this is not going to fly, and we’re not going to review this.” I think it’s more that he is the de facto leader of CBER. He has very, very clear views that we know are well publicized on his YouTube channel and on his podcast, so we basically know his take on natural-history studies for slowly progressive diseases. You could pretty much pull slides up on that.

I think we’ll talk about some other diseases that he’s been vocally critical of in a couple of minutes here. But I wonder if it’s less that these are a bunch of applications that are really on the bubble, right? I don’t think anyone’s looking at the uniQure data and saying, “Oh my God, this is a Lazarus effect.” You’re looking at the data and you’re hopeful that, when you do a comparison to natural history, you’re showing a slowing in the progression of the disease, but I think the level of certainty is certainly not there. And that’s true of a lot of these applications.

So, when you think of these bubble applications, I just wonder: Is it just the tone from leadership in the FDA that’s shifting things one way or the other?

Well, for whatever it’s worth, we spoke with Ultragenyx this week. We did a session with them, and they did mention that the bar and agreement they had with the previous CBER, under Peter Marks, for the filing in MPS IIIA, UX111—it was a gene therapy—that discussion and that plan then shifted under this new FDA.

They believed they would be able to do things during the review process in terms of manufacturing documentation and finishing some experimentation. Ultimately, the rug was pulled out from under them, and they got a CRL out of nowhere. The FDA wanted all of that settled ahead of time, so that was an unexpected change.

Is anyone else a little confused, though? It felt like the obvious backlash that came out when Peter Marks left and we basically had Vinay Prasad and Marty Makary was that they did their listening tour, they did their podcast online, and it felt like their commentary around rare disease was very Peter Marksian, right?

Then they put out these guidelines at the end of September on cell and gene therapy, and, again, five weeks ago, they read pretty bullish for the space. Why are we seeing—at least my read on their public commentary on this stuff is super flexible—I think we’re all reading these recent actions as much more inflexible.

Are we supposed to believe that the public commentary is a little bit more like politics? How do we think all of this sort of—

Resolve.

And I think you hit it. You’re exactly right. It’s the dissonance between the commentary and the things that Marty Makary is saying, and even, in some respects, the things that Vinay is saying when they get together and do their little podcast or give speeches, versus the actions that we’re seeing. They just don’t line up.

Yeah, but let me just weigh in here, because I don’t think this is new. I think, going back honestly a couple of decades, and definitely—we’re going to talk about Sarepta—but the hierarchy was always signaling flexibility. “We don’t look at phase 1 versus phase 2.” I remember Janet Woodcock saying, “You can get approved on a small patient study if you have an effect size.”

So, there was always this disconnect between what the hierarchy was doing—rah-rah, “We’re flexible, we’re willing to work with you”—and the divisions, which wanted to go old-school and apply that rigor. I look at this because we all heard this from the hierarchy, but translating that into practice is what has taken time.

Some would say it was never fully realized, but we did see this slow creep with accelerated approval and rare disease. That pendulum can always swing back. But I’m not that surprised by the hierarchy, because their job is almost promotion, right? Market the FDA as willing to be flexible for the sake of patients, not getting in the way of industry.

So, I’m not too surprised that there’s this dissonance, because I’ve seen it too many times in the past.

2. Sarepta Fails Its DMD Test

I don't even know that there's that. I mean, I think there is definitely some element of dissonance, but when you listen to the words, I think there's certainly at least a rationalization that it's not just a political leaning in terms of the dynamics.

You can go on PubMed and type in “Prasad parachute,” and you'll pull up a bunch of publications that he has published where he has this view that if you have a parachute—a medical parachute—where your effect size is 100%, you don't need controlled trials, a lot of study, or many patients because it is so profound. Absolutely, you do a natural-history study. Absolutely, you do a 10-patient approval for a parachute. But his whole career arc is showing how most medical interventions are not actually parachutes.

I'll maybe segue into Sarepta and the history here because, to me, I think to some extent—and this was earlier in my career, but certainly not early early in my career—a lot of us can mark the Sarepta decision on Exondys 51, going back 10 years ago, as sort of the first shift.

It's the first time I remember the intervention of a CBER director to change what was the normal designated signatory authority's decision. Ellis Unger's decision to recommend a CRL for eteplirsen, and Janet Woodcock's decision to overturn it, led to a bunch of controversy. Bob Califf reviewed it eventually and supported Janet's decision to overturn it, although not necessarily giving a lot of scientific support to it.

Chris and I go way back from basically the early days of Sarepta and going through the regulatory approval process. What happened earlier this week is Sarepta announced earnings, and in concert with the earnings, they announced the failure of a large phase 3 study—to my knowledge, the largest, longest DMD study that has ever been done—not for eteplirsen, but for the 2 other exon-skipping agents that they subsequently got approved by the FDA, golodirsen and casimersen. That study failed.

We could talk about the data, and Sarepta certainly tried to make the best argument for why, even though the primary analysis failed, the trends were favorable. They made this argument around excluding COVID patients, but it didn't work. I'd love to hear Adam and Chris's take on this because all 3 of us have really been in the weeds on this historically, and at different points really did believe that this drug, or this PMO exon-skipping method hypothesis, would lead to a benefit.

It's kind of a wake-up moment for me. I don't think it worked like this, and Chris will probably remember that I really pushed Sarepta to do a 2-year study because I've always said, “Look, it's a slowly progressive disease. You might never pick up a signal in a 50-patient, 1-year study, but in a study of this size, to not show an effect size really calls into question what we're doing here.”

I went full snark on Twitter, or X/Twitter, during the call—the Sarepta call. Brian, you probably saw it. We all know we went from the 6-minute walk test being the best endpoint, and then that endpoint failed. Then we went to the North Star—the North Star was the best endpoint—and that failed. Then we went to the stair-climb endpoint that they just used, and that failed.

I guess I just agree. These drugs don't work. All we're hearing are excuses for why we should do something else. I don't understand it.

3. The FDA Evidence Bar

I think there's a debate amongst investors about whether this new regime at the FDA is actually good for the industry or not good for the industry. Obviously, the uncertainty, the flip-flopping, or the unpredictability is not helpful.

I'm wondering what you all think about this new regime in terms of having to have good clinical data that will support an approval, even in these rare diseases where, yes, we want something out desperately for patients. We've seen a bending of the rules, so to speak, to get certain drugs across the finish line.

I'm curious, Paul, for your thoughts, and maybe we'll hand it off to Yaron on whether this is good for the biotech industry, for companies, and for investors as we look to help them make good stock.

Yeah, Graig, I have some thoughts on this, too, but I'll let Paul and Yaron weigh in as well.

Okay, I'll be super quick because I know everyone wants to chime in. I think it can't be good right now unless it's predictable, right?

The uniQure situation—whatever you think of that data, the outcome of them just approaching a pre-BLA meeting after 4 months earlier agreeing on an SAP. Whatever you think of the data, that was not predictable. And, by the way, the market's telling you that was not predictable.

When we look ahead at other companies in the space that have certain regulatory agreements with embedded flexibility in them, even with this current FDA, there are still investors who would be interested in funding those programs and putting capital to work to help bring these treatments to patients. Obviously, to make money on stocks, but at the end of the day, the goal is getting drugs approved for patients.

These investors are having trouble because I think people don't know if what's being said publicly on a podcast is really the truth. I know, Chris, you said this happened before, but people don't know if what's being said publicly is really the truth.

Brian, you and I cover Dyne. Dyne has data coming up in DMD by the end of this year. It's a placebo-controlled study in phase 2, and they make 15 times as much dystrophin. I'm sure, Brian, you get the question from people about what the bar is on the functional data for Dyne to get approved. You don't know and I don't know, right?

I do think that even if we can come to some sort of conclusion that maybe being more rigorous on the data and the efficacy data could be better—which is a theoretical argument, but I'm open to it—what I hate right now is that I cover a number of companies where investors are asking me, “The company has met with the FDA, and the FDA said X or Y. They don't even think the company's wrong, but they're worried: Is that alignment real?”

I just think that in itself is not good for the industry.

Yeah, let me comment on the whole FDA thing. First of all, I want to have mud on my face. I thought George Tidmarsh was one of the better picks because of his biotech experience. And, man, what a rookie mistake he made, because it really hurt, I think, the credibility of the agency by bringing a personal vendetta to the forefront.

People have asked, “Is this how the FDA responds? Do they like certain companies and not like other companies? Do they like certain CEOs?” The idea of having a standard where that should not come into play is kind of evidence that, wow, maybe this does come into play more than people realize.

I think there was some serious damage done. The hierarchy, infighting, uncertainty, and chaos seem to ensue. Again, I don't think this is new.

Going back to Brian, I think you mentioned it. What's interesting is that Califf supported a committee led by Lou Borio called the Scientific Dispute Resolution Board. That Scientific Dispute Resolution Board voted in favor of overriding Ellis Unger's position against approval. Califf supported the Scientific Dispute Resolution Board, which favored Janet's decision.

This idea that hierarchy gets involved—that they have a dispute-resolution process that was followed—all the debate around it, I think they followed the right protocol to ultimately approve eteplirsen.

Brian, I think you said it with the parachute comment: AVXS-101 stands, I believe, as the gold standard. You've got 12 type 1 SMA patients who were still living after 2 years. Nobody was disputing that. That's a clear signal. It should get approval; it should get full approval. We should always have room for that.

I was always on the record saying DMD is not that. You're not going to see that type of effect, even with a gene therapy. And so, just looking at ESSENCE—and, by the way, Brian, I felt a year was enough.

I was against the 2-year study because it just meant we would take longer to get data. And honestly, I'm appalled that it's taken this long because they renegotiated the trial design. They didn't start it until much later.

I was getting pressure as CEO to start that study sooner rather than later, and I was actually the one who got the first master protocol approved, which became ESSENCE. But then they renegotiated that, redesigned it, and it was delayed.

We shouldn't have to take this long to get a readout when that study was approved and designed originally back in 2014. Ultimately, it was a disappointment. I thought the drug would show an effect. I think it hasn't.

I'm more concerned with what they haven't shown. Adam, you said it: It was the 6-minute walk test, then the North Star, and now the 4-stair climb. What else did they capture, and what did that show? If the 4-stair climb is the best data they were able to muster over 2 years—and I don't know, maybe they've shared more or maybe they'll share it at a future conference.

But I wouldn't want to see the full data set to make any decision. The only difference here between the way I see it for gene therapy versus oligo RNA, chronically administered drugs, is that, one, you've got safety that is more clear than the gene therapy safety data sets that are coming out. So that's number 1: the risk-benefit is definitely different.

Number 2, there was always this talk of, if you approve drugs that are not great, that might quell other drugs from getting to market. We have not seen that. Over the 10 years, we've only seen more and more and more technologies being moved into the clinic for development because the FDA used a pretty low standard to approve those drugs.

But on gene therapy, I think the issue still stands because you may have to factor in patients who will not be able to get a better gene therapy down the road without taking significant risk with immunogenicity, et cetera. So I think these are complicated.

The other thing is, this raises the question: Is accelerated approval even good for the industry? Does it work? When you've got over 10 years and thousands of patients who have been on these drugs, I'm sure there are parents—and, Adam, you guys have showcased DMD gene therapy—who are saying, "Hey, they're benefiting. They're seeing benefits."

So what is the FDA's position when it says, "We're going to pull those drugs from the market"? And maybe what's driving the bullishness from Doug Ingram and Sarepta saying, "Hey, I don't think there's any way these drugs are going to get pulled"? I'm not saying that's necessarily good for the industry, but when you look at the risk-benefit, you can understand where they may allow something.

Then it comes back to reimbursement: Are the insurers taking more of a position to say, "We're not going to reimburse because the evidence isn't there"? And then these poor families are going to have to pay out of pocket. So it's very complex. We could do 3 shows on this, as we've joked about, but I just wanted to highlight those themes.

Yeah. I think this is also super interesting in the context of everything that we are talking about, as well as uniQure, right? Because, in many ways, there's a lot of similarity here. Biohaven received a CRL this week for their drug troriluzole, which was under review not by CBER but by CDER.

So, with George Tidmarsh, last weekend it was Tidmarsh's center. As of today, we have no center director, which is also interesting because people are reporting that Peter Marks has turned it down, as has the OMD director. So we'll see who wants to actually take that spot.

The story here was that they ran a Phase 3 study that had a short follow-up, and it failed on the primary analysis. It had a very, very high p-value—I think it was above 0.9 on the primary analysis. But they found a subgroup in which they thought there was some effect size, and eventually they were trying to get approval for that.

They wound up having a discussion with the FDA about using the open-label extension data they had to compare it with a matched natural-history cohort. They went through a lot of meetings with the FDA, and Biohaven's press release goes through the history of meeting with the FDA to discuss a statistical analysis plan and the way to look at the data sets for this natural history, then to file for a comparison between this 3-year open-label data set and natural history.

The statistical analysis they did hit the primary endpoint and all secondary endpoints, and it was really marketed as, "Hey, for a natural-history, statistically significant data set, this may be the gold standard." They filed for approval, and there was a lot of skepticism.

A lot of us look at these natural-history data sets, and a lot of the comments that FDA reviewers and the biostatistics groups within various centers have talked about concern the problems with natural history and the biases that can be introduced. It goes back to what I was talking about with Vinay's publications on what parachutes are in medical intervention.

They got a CRL, so it wasn't a total surprise because of this natural-history basis. I think it was a little bit of a surprise in the context that the Biohaven management team positioned this as a discussion over a long time with the FDA, going through rigorous statistical-analysis plans for looking at this comparison.

The CRL was issued, and they made an effort within their press release to criticize the FDA and the history, saying, "Hey, this was a big surprise to us, and we really feel like we were not given proper due course in the review." The CRL is out, and looking at it, I think it's unsurprising. The FDA brings up the fact that when you make these selections for studies, there are a lot of biases in a natural-history cohort that you're not accounting for.

They don't have a full review out; it's just a CRL. But they do have a couple of paragraphs on the statistical analysis and tipping-point analyses to say that when you do certain tipping-point analyses around the assumptions, they wind up failing statistically. That seems to be the basis for the CRL.

Here's an example where we're a little blind on what the uniQure discussion is. We're less blind on what the Biohaven back-and-forth was because now we have the CRL, and we can see that this was a review where the statistics were really hammered in the CRL. They just can't look at this 3-year open-label natural-history comparison data set and have real confidence that the effect size is real. That's the driver of the CRL.

Well, the stock got hammered. Speaking of stocks that have been reeling, Yaron, you cover Stoke Therapeutics, which sold off on the heels of the uniQure news. I'd love for you to spend a minute or 2 on that situation as they try to get a drug approved for Dravet syndrome.

Yeah, it's a great point, and these are all interconnected. All these events are linked. Maybe just to zoom out and piggyback on what you said, Chris: Is this positive or negative?

The one concern is, recall what was only about 3 months ago, when the FDA came out with a new draft guidance on behalf of CDER and CBER about using natural history, preclinical modeling, predictive analyses in areas where you can have targeted therapy—genetic medicine—based on biomarkers, and then using real-world data. All of that can support an approval for orphan indications without controlled studies.

Since then, it's been a little bit of a train wreck. So this seesaw situation obviously is not a positive for the industry.

This leads to Stoke. Stoke has a drug called zorevunersen. It's an ASO for SCN1A, which causes Dravet syndrome. The Nav1.1 channel is both excitatory and inhibitory on neurons, and that's a channel that is unquestionably affected in Dravet syndrome and is knocked down. What they're doing is essentially increasing expression.

The Phase 1/2 data overall looked really, really good. They have 4 years of data now showing a profound seizure reduction in patients who had been on 6 previous drugs, and there are neurocognitive benefits as well. It really looks like a disease-modifying therapy.

But there are some questions, because they are upregulating Nav1.1 in preclinical models. There was actually an untoward effect in dogs, admittedly at very high doses. Because of that, the FDA capped their dosing. Subsequently, in the U.S., they had a slightly different trial design than in the U.K.

They also had a partial clinical hold in the U.S. because of a nonhuman-primate finding, which was never seen in patients. The data overall looked really, really good, but it's not perfect because it's against natural history. When you talk about 60% to 80% seizure reduction, it's unquestionable.

In the meantime, they're now enrolling really quickly. Biogen is their partner. The Phase 3 trial is going to be global, looking at a 1-year—I'm sorry, a 24-week—seizure reduction as the primary endpoint, and then secondary endpoints that are important for neurocognition to really get a disease-modifying label.

In the meantime, they got Breakthrough Therapy designation under a new CEO who may be a little bit more savvy, or more willing to engage with the agency under a breakthrough designation than previous management, to see if they could file based on Phase 1/2 data. That's the biggest bottom line, and that's why the stock essentially doubled as of 2 weeks ago. Then the uniQure decision happened.

Now we know Stoke reported that they'll meet with the FDA in December. There are some challenges, though. We've talked to other companies that are developing ASOs for Dravet, and they're saying that filing based on Phase 1 or Phase 2 data is very complicated.

It's a little unclear. Unquestionably, the drug works, but there are some questions. If you really want to get a broad label with neurocognition, you're going to be looking against natural history. The dosing in the U.S. study versus the U.K. study was different, and that's even different from what they're doing in the Phase 3 trial.

Which dose do you even suggest putting on the label? There are some structural issues as to what's going to happen with this.

Hey, question just as a follow-up: Do you think the stock really started moving up over the summer, right when Ed Kaye, their new CEO, started talking about this possibility of the early filing? One of the bear theses—or one of the criticisms—was that it's going to take a long time. So why be in the stock if it's going to take a long time?

This was a potentially faster way to get to approval, and the company started talking about that. It really resonated with investors. Do you think people read too much into that?

I mean, obviously it was always going to be a high-risk thing, right? I mean, as you mentioned, it was always going to be difficult to file on early data like that. People did. Do you think that people just got too far ahead of themselves on that?

Yeah, I mean, as you know, Adam, it gets into a situation where they have a certain amount of cash, and this is going to be a sizable product, right? All of our consultant checks are unbelievably encouraged by this data set. They think this is probably the best-looking product in development ever for Dravet. But we're not going to have data, to your point, until the second half of 2027.

So it's a question of what's the chance that they can potentially be on the market a year or 2 earlier, essentially—let's say, the second half of next year as opposed to the second half of 2028. In a drug that's going to be at $500,000 per year, it's going to be a sizable product, and that's got its own inherent value.

So even when the stock was at $38 a week or 2 ago, people were thinking, okay, it's a $1.5 billion market cap, $400 million in cash, and if it's going to sell $2 billion peak, you can kind of figure out where you think the stock is going to go. It's not a bad risk-reward.

The stock was setting up for an update on the earnings call. People thought—and we all thought—the update was going to be whether they'd already met with the FDA or not. I think there was some hope that they'd already met with the FDA and had the green light.

Look, there's also a question of what the FDA says, and we all know, and then what the company communicates, right? There's probably 3 scenarios. One: thumbs-up, go ahead and file, and we're very encouraged by the data. I'm very supportive—aka, you're getting approved.

Two is, you can file if you really want to; we'll see if we even accept it, and you didn't meet any of your endpoints and things like that. That's probably not going to go well.

And then there's always that gray one. It's going to be a review question or review decision, and what exactly that means for Wall Street is completely opaque, because it could be a review decision and they're just saying it to keep their options open, but they're going to approve it and they're actually very supportive, versus, yeah, go ahead and file; it's a review decision, and just FYI, you're not getting approved. We don't know which one it is, and that's usually the challenge. And the question is, does the company—

Yeah, these are all—go ahead.

I was just going to say, I think one of the ironies about the Stoke situation—and I don't know if there's any, I'm not saying there's tea leaves to read about it—but just to bring things full circle, the outgoing CEO, who left before sort of the concept of filing on this data, was actually the CEO who was at Sarepta when Exondys 51 got approved.

Yeah.

Ed Kaye. A lot of us know him.

Small world. Yeah.

4. Pharma Battles for Metsera

In other industry news, we've got a bidding war going on for Metsera, which is a saga in its own right. I can't believe the back-and-forth. Chris, I think you might want to provide a perspective on what's happening here.

Yeah, sure. And just a final comment on this whole FDA thing: I honestly think it was maybe necessary when the old guard left the FDA, but I long for—I mean, many of us long for—the days when you had Janet Woodcock and Bob Temple, the steady, decades-long leadership.

Now you've got a whole new regime that has not worked together, and I think there were even battles and infighting with the old guard. But, Adam, you had a good, sober-minded view: let's not blame everything on the FDA. Sometimes you have to look at the data.

I'll just add that industry really looks at these decisions less so than guidance, right? What is the FDA's call on all of these? That's guiding all of us.

Moving to Metsera, overall, as an investor now, this is a good thing. We've been 5 years into what was ultimately a buy-side market for investment, meaning that investors would dictate the terms for a startup. This is a clear signal that if you have a good drug, it's in demand, and there's scarcity value for a battle, this is what you ultimately want to see as a biotech investor: pharma is tripping over themselves to get good assets or to not lose out.

When we see these types of bidding wars, I think it's good. At the end of the day, the market caps and the currency value that Pfizer and Novo have—I mean, these become rounding errors, and the beneficiaries are the Metsera shareholders and team.

It's just nice to see even this kind of mudslinging, right, with Novo calling Pfizer's claim on their call that it's antitrust BS. Anyway, it's fun to watch, but I think overall this is good when pharma is stepping in. They realize that biotech has important assets, and it's nice to see when there's a bidding war that ensues over huge billions of dollars of revenues that are potentially going away, with big balance sheets at pharma companies.

I missed a little bit of that, Graig, but basically, I think the patent cliffs are real. I think this is why we've seen some robust M&A. I think it will continue for assets that have clear clinical proof of concept, that everybody believes are headed to approval. Avidity is obviously a good example of that recently.

So this is all a good thing. Along with the XBI, the follow-ons, and the IPO window—I know BillionToOne is not necessarily drug biotech—but I think there are really good signs that momentum is hopefully going to be sustained.

5. Arena BioWorks Shuts Down

We do have some other company-specific news, but before we go there, Adam, you wrote a really fascinating article on Arena BioWorks. Could you share with us, with that shutdown, what you reported on?

Yeah, that was my colleagues Jason Mast and Allison DeAngelis. Allison actually got a tip a week or so ago, maybe even longer, that Arena BioWorks was having some difficulties.

For those who aren't familiar, it was a very buzzy sort of—I don't know, Chris, maybe you can describe it a little better than I can—but a hybrid between a research institute and a company. They had raised, or had, $500 million in committed capital for this new venture, which was going to be a bridge between academia and industry. You were going to get all these very A-list scientists to come in and tackle big, big, big scientific challenges, and then spin off companies.

Then Arena very suddenly and surprisingly shut down this week. There was an all-hands meeting where they essentially shut down because of the difficult financing market these days, particularly for private companies. They didn't see a way forward and are shutting down.

Yeah. I'll just add to that briefly. First, shout-out to Allison DeAngelis, because she was first on the trail when Arena was being formed. I remember getting calls, and I didn't know, but it was basically taking the best science out of the Broad, the Whitehead Institute, and the Koch Institute, privatizing that, and turning it into a profitable investment model.

Many of us felt that was a dubious goal, because drug discovery is not easy to derive money from. If you're going to pay people top dollar to do benchwork and lab research, you might come up with some potential investment ideas, but $50 million a year over 10 years was the idea to turn out all of these new biotechs.

Many of us were like, “Wow, how are you really going to create value when you're basically just coming up with a new drug with maybe a novel target?”

The other thing is, I think they're dealing with the headwinds of this year alone. When you look at seed and Series A investments, they've essentially been at a 10-year low. Most of the money has been going into de-risked, later-stage, clinical-data-driven biotech—Series B's, C's, and D's—and I think they were probably feeling the effects of that.

But it's already a hard model even in a healthy market, unless everything's going to IPO. So I'm not too surprised, but I think the investors were probably saying, “How are we going to get our money back and make a return after 2 years on a $100 million investment?” Maybe the writing was on the wall there.

What's the pulse from what you guys are all hearing from private companies? Have things maybe gotten a little bit better, or are they still really, really challenging?

I'll just jump in from the venture side. It's a trickle-down. Venture is always a lagging indicator. When the public markets turn down, we kind of say, “Well, let's wait and see. Maybe it'll rebound.” And when the markets start to turn up, it's also, “Wait and see. Is it real? Can we expect more IPOs? Are the valuations going to be higher and sustained?”

So I think right now is probably the most optimistic that venture has been, and we're starting to see more check-writing, but I'd say we're not all-in at this point. We're kind of waiting and seeing, but I think another quarter or 2 of some IPOs, valuations keeping steady, obviously the XBI over 100, and seeing some growth there—all of those signs are going to really bode well for venture private companies receiving money in 2026.

And my guess, Chris, is that it's, as you might have mentioned before, more of the de-risked, later-stage companies, maybe further in the clinic, maybe close to Phase 2 or Phase 3, versus some of the earlier-stage stories, unless you're a unicorn of some sort. Is that fair as an assessment?

Well, yeah. If you look at the IPO queue, there are several flagship companies, and those were the bubble IPOs for a while there. I think we're going to be watching that closely. If the IPO market comes back to supporting an early-stage program that's maybe de-risked with some in vivo PK that shows differentiation or something like that, then you could see more money flowing.

I think you see chasing, following, and crowding around certain targets. So, best-in-class programs have a better chance of getting early money than a new, unvalidated, novel target that is in preclinical testing. I think it will take a while for the checks to really start flowing to those types of companies.

6. Company Catalysts Take Center Stage

Let's switch to some of these more company-specific items. Brian, you cover Soleno Therapeutics, which was a hot stock and certainly one that people were watching. I guess I reported and commented on Soleno.

Yeah. You could say I wasn't only bullish on regulatory stocks this week, but also commercial stocks.

Soleno announced its quarter, and this is a drug that was approved back in March. It wasn't a controversial approval, but it was a debated approval decision because they originally did an RCT that failed. They had a similar explanation to Sarepta that COVID had a role in that failure. But they didn't really file for approval based on the RCT. What they did was a randomized-withdrawal study, and the randomized-withdrawal study looked very positive.

There are obviously debates about how much confidence one can have in a randomized-withdrawal study. There's more potential bias at play there than in a treatment-initiation RCT. But the data looked really good, and the FDA approved it. I don't think it was a really controversial decision. It's on the market for Prader-Willi syndrome, which is a really horrific disease. If anyone has familiarity with these patients, they really need 24/7 care for this really compulsive desire to eat. The drug treats that primary symptom, this compulsive desire called hyperphagia.

This was the second quarter of sales, and it doubled the first quarter of sales. It beat consensus. We were street-high at $58 million, and they came in at $66 million. If you had looked back in March or April and thought they were going to do $66 million in the second quarter, you would think this was a home run of a stock. If you just looked at the headline without knowing much about it or where consensus was versus where sales came in, you'd think the stock would be up a substantial amount. The stock has been down more than 30% on the report, and there are a lot of reasons for this.

Over the summer, Scorpion Capital issued a short report on the company, basically claiming that we were seeing adverse events stack up, in particular hypoglycemia, peripheral edema, and pulmonary edema leading to hospitalizations. The report claimed that patients did not want to go on the drug or were stopping the drug, and that physicians were becoming more and more hesitant to put patients on it. This has really clouded a lot of the Soleno story.

Interestingly, talking to investors, it doesn't seem to get a lot of traction that the short call is right—that patients are going to stop taking the drug and physicians are not going to prescribe it. A lot of the data, even in the quarter, indicates that isn't the case. There were 397 new-start forms, which is certainly down from the initial bolus, but I still think a weekly rate of about 30 is a decent number. The discontinuation rates look like what one would expect for a drug and a disease with this profile.

It's not really showing that things are falling off a cliff. But people are now concerned that this is a drug that has a couple of good quarters and then runs into a plateau. When I've tried to pitch it in the falloff in the stock price this week, a lot of people come back to me and say, "Look at Skyclarys, or look at Daybue," which had 2 or 3 great quarters and then just ran into a wall in this, let's call it, $80 million to $100 million range. Those drugs have just been clicking away, getting maybe a little patient growth, but nothing like what investors have been looking for.

That's where the controversy around Soleno falls right now. Investors are a little worried that it's going to take time to really show that the plateau isn't going to occur in another quarter or 2. I think the criticism in the short report has hammered the ability for people to take more risk on the name.

Adam had some commentary on Twitter while listening to the call, and part of the feedback is that Soleno has a management team that, I would argue, is very much the opposite of Sarepta. I actually like their management style. They're very non-promotional. They talked down their dialogue with the FDA throughout the whole review process. They were never like, "Oh, yeah, look, we're personal friends with this reviewer, and the data is just so crystal clear. There's no problem." They just categorized it and said, "Here's the data. Here are the issues with it. Here's what we think."

To me, they've been a great example of underpromising and overdelivering on things. The pushback now is in this commercial-launch cycle. Investors are calling for more energy and more enthusiasm. One of the things that really turned people off is that they cited the short report on the call.

I think a lot of us would say the management 101 recommendation would be: do not publicly call out the shorts. You can criticize them. You can leave the sell side to try to counter the details of it, but when you give them the air, it takes on a whole connotation. People worry, "Are you worried, and is that why you're doing it?"

Right. I've had experience with Scorpion Capital in my own coverage universe. I cover a company called Harmony Biosciences, which is in the narcolepsy space. We've had some narcolepsy marketplace updates, and Paul, Centessa had some orexin data. Do you want to comment on that?

Yeah, very briefly. The orexin space has continued to be super hot and interesting. We think this could be a big class of drugs across an array of sleep disorders. We've seen data from Takeda in narcolepsy type 1 and from Alkermes in some narcolepsy type 1. There has been some historical mixed data in narcolepsy type 2.

Going into the Centessa readout, I think there were really 2 questions. One is, is their drug going to be differentiated? And 2, are we going to see efficacy outside of narcolepsy type 1? The biological rationale in type 1 is uniquely great, and in type 2 and other indications like idiopathic hypersomnia, it's less clear-cut.

The Centessa data are positive in that the drug clearly works in narcolepsy type 1. There's a big effect size, and there's an effect that's clearly clinically significant in narcolepsy type 2. Maybe the data didn't meet the bull case for Centessa because, at face value, it looks more similar to some of the other products.

In the sleep-disorder space, we've seen data sets from these smaller Phase 1-type studies regress a little bit to the mean in Phase 2 and Phase 3. Maybe the story there isn't over as it relates to Centessa because they will be tweaking their dosing and potentially going higher.

As I think about it, this is validating for the whole class in that you can have success in narcolepsy type 2 when you push the exposures higher than in type 1, because it's a less sensitive population. The next data set here is a bigger, longer Phase 2 narcolepsy type 2 data set from Alkermes, and I think that's going to be a big catalyst for how investors view this Centessa data, because its type 2 data set was small and of shorter duration, and also for the size of the class.

If the Alkermes type 2 data is clear-cut, you can start to dream the dream around other sleep disorders that are more heterogeneous. It continues to be an exciting space.

Yeah, Harmony also has its own orexin program. It's preclinical, and they're going to put it into the clinic. But yes, orexin is really fascinating and is something we'll be watching.

Maybe the last thing I'll wrap up with is a comment on Terns Pharmaceuticals, especially as we head into the ASH cancer meeting in December down in Orlando. Terns has an allosteric site–targeting tyrosine kinase inhibitor for CML. There are lots of debates among investors about another company called Enliven Therapeutics, which has a very intriguing compound that's a little further ahead than Terns.

But Terns had some ASH abstract data where 6-month MMR data of 64% basically blew the doors out when looking at benchmarks for the current other competitor allosteric drug, which had a 25% 6-month MMR. We had benchmarks of 32% for a 6-month MMR for the Enliven compound.

And so, for Terns to show 64% was really a home run. The stock has more than doubled since the beginning of the week.

With that said, it is a small data set. They’re going to have an update at ASH. I’ll be down there in Orlando in early December. Certainly, there are a lot of fireworks happening across lots of therapeutic areas.