第170期 - 2026年1月23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 leaders and experts. I'm Grace Colon and my co-hosts today are Tim Opler, Graig Suvannavejh, and Eric Schmidt. For more information about our hosts and guest speakers, or to listen to the most recent episode, please go to biotech hangouts.com. I hope everyone has recovered from a busy and fun week at JPM and it was sunny and nice, a little cold and I hope that many of you were able to make it to the hangout event. I didn't get there until very late, so I heard most of the co-hosts that were there had left, but I hope to make it earlier, but it was super packed. Um, and we'll have another one next year. And also, please join us. Uh, those of you who joined Pink Day on the Tuesday, it was phenomenal. We had hundreds and hundreds of people show up including a lot of allies. So please mark your calendars for the Tuesday of JPM next year and join us for that as well. Um so let's get started with Tim. Tim, it's always a pleasure to have you on. I think many of us devour your weekly reports, and there have already been a couple this year that were very interesting and timely given everything that's going on. I think we're going to start and set the stage with the one you released a couple of weeks ago, “The Biotech Case for Optimism.” Obviously, after a brutal few years, with the XBI up more than 30%, M&A is back and the capital markets are reopening. I'd love to hear your perspective and share it with the audience.

Grace, thank you very much, and happy to do that. Maybe I'll just comment a little bit on what's happened in the last few weeks, and then we can dive into the report.

1. The Biotech Case For Optimism

The XBI is up 5% this year. We've had extraordinary financing activity. The amount of M&A rumors on Monday was unprecedented. There were 5 or 6 different M&A rumors on the tape. The actual volume of M&A this year has not been that high. So far, we've seen $6.7 billion in deals, including 3 biotech takeouts: the RAPT takeout this week, the Ventyx takeout by Lilly, and the acquisition of Dark Blue Therapeutics by Amgen.

The biggest M&A deal this year was Hims & Hers going private for $2.5 billion. If you annualize the pace of deal activity so far this year, it would be less than half of last year's pace. So we're all watching to see what's going to happen to companies like Revolution Medicines. I'm personally—and I'm not an insider, just to be clear—not so sure that Revolution Medicines gets bought anytime soon. It's an incredibly high price tag that the company would command, and buyers have to think very carefully before they pull that trigger.

At the beginning of the year, we published a piece arguing for optimism in biotech. What that means practically speaking is that, at the time I wrote the report, the XBI was around 122. Now it's up at 130. I said, “Hey, I think it's going to go over 150 this year.” But that's really just the beginning. I personally think biotech could go much higher. I'm not the one to predict that biotech is going to go up so much next week or whatever. It's hard for any one of us to know.

The reasons that I think we all talk about for optimism are twofold. The first is that the macro environment is under control, and the second is that M&A was high last year and is likely to be high this year. Just to comment a little bit on the M&A, one of the things we wrote about in the report is that pharma has at least a $90 billion revenue hole that needs to be covered by M&A; it can't be covered by the pipeline. The average M&A deal last year took place at 6.5 times forward revenue, and I defined forward revenue at the time as 2030 revenue.

Last year, pharma spent $90 billion. So if you do the math, pharma covered less than 1/6 of its revenue hole with the M&A that happened last year. They have a lot more to do, and if anything, I'd expect M&A to be busier this year than last year.

Other factors that people need to talk about, which are very important and certainly causes of uncertainty, include what's happening with the policy environment. Every day is an interesting day with this administration. I think it's important to keep an eye on valuations. At some point, valuations get high enough that people aren't going to go out and buy as aggressively, and maybe it's time for the market to go the other way.

In the report we put out, we argued that valuations are still very much under control. We looked at that 6.5-times-revenue purchase and where the market is now. The typical company is still trading at roughly half that benchmark. So I think there's still plenty of room to run.

Our big argument, though, in the report is that markets have just gotten bigger. If you go back in history and look at when we had bull markets in biotech, what you'll see is that when there are big changes in the underlying drivers of the market, that's when you saw the market take off. The big time that happened was when other companies started adopting Genzyme's model of charging much higher prices. Back in the day, oncology drugs didn't cost $200,000 a year. They cost $20,000 a year. Then the market took off when people started to reprice those drugs.

The biggest event, I think perhaps the biggest event, to hit the pharmaceutical industry in recent years was the agreement last year between Eli Lilly, Novo Nordisk, and the Trump administration. The Trump administration put out this press release saying, “Hey, Medicare, Medicaid, you're going to get such a bargain. You can now buy your Mounjaro or your Ozempic for $4,000 a year.”

If you do the math, they just agreed in theory to fork over hundreds of billions of dollars to the pharmaceutical industry. That's great for obesity. But what I thought was so interesting and so important is that the government essentially just ratified a new price benchmark for drugs for large markets. In the report, I call this “large markets, medium prices,” as opposed to “small markets, high prices.” I think that trend is going to reshape our industry for a decade to come.

That's the real reason I'm optimistic. I think the macro environment has to some degree been priced in. I think the M&A has to some degree been priced in. But what people have not gotten their arms around is that our industry is just going to be a lot bigger and a lot more successful in the future due to changing pricing regimes.

Those are super helpful perspectives. In particular, it would be great to see more focus on large-scale treatments for chronic diseases, especially complicated ones with a lot of comorbidities, like we see with the GLP-1s. We're starting to see other benefits beyond diabetes and obesity, right? It'll be interesting to see that data emerge, and it would be great to get more coverage. It'll save money in the long term, obviously.

Eric, I know you had some comments on this, and you wanted to have a bit of a bull-and-bear debate on the sector. We're going to spice things up a little bit. Did you want to add your comments?

Well, thank you, Grace. First, let me just say kudos to Tim. I love reading his stuff. He writes with such clarity of thought and precision of language that the concepts are so well communicated. I'm also going to give him a shout-out. I remember reading a piece of his—I think it was in mid-2025, about 6 months ago—that was similarly bullish and laid out a very positive outlook for stocks in the sector. Of course, the XBI has gone nothing but straight up from that point in time. So not only is he doubling down, but he deserves to take a victory lap for being very spot-on correct over the last 6 months.

I'll also share that I generally share Tim's positive view. I could even one-up him here and call out that I think the XBI is going to end up maybe in the 150-plus range this year. I don't see any signs of a change, at least from where we sit today. The year is still long, and we know in biotech things can turn on a dime. But I agree with him: from where we sit, we're seeing good fundamentals, very positive fund flows, and a pricing dynamic that is underappreciated and favorable.

2. What Could Break The Thesis

With all that said, what am I worried about? What could go wrong? There are some things that we definitely need to be mindful of. The FDA is in a really tumultuous place. We even saw last week, again, a complete response letter—I'm thinking of the one Atara received for tab-cel.

This is a cell therapy that's been through the works. It seemingly treats a rare and severe oncologic indication that has no therapies, and it was on the cusp of approval prior to Vinay Prasad inserting himself into the discussion and derailing it. Anytime an agency like this, responsible for approving new drugs, is acting this erratically and potentially on the cusp of almost imploding on itself, as we've talked about time and time again on this call, I think that's extraneous risk that's very important not to gloss over.

Tim mentioned the Trump administration and the deal that was signed with Lilly and Novo. I think we've now seen, even for a longer period of time, launch prices of new drugs come out at higher and higher and higher levels. So I agree with him: we've set new standards for medium-sized markets and even smaller markets.

Everything is being priced for billion-dollar blockbuster peak-potential success these days. But how long can that really go on for? So, are we really able to count on the Trump administration to maintain its side of these bargains and not go back and reopen the MFN debate? There’s still almost weekly dialogue about whether MFN is now behind us or still in front of us. And, of course, if we get into an election cycle and the midterm elections, where Trump feels like he’s losing the population’s favor and drug pricing is an issue, I think all bets are off. We could completely reopen that can of worms. That would be another substantial threat to the industry.

The last thing I’ll say is China. I think Tim argues that China can be a good or bad thing for our industry, and I’m not sure I have a strong view on that. I would just say it’s potentially a disruptive force. It’s a new thing for our industry, and I think we just need to be mindful that what we think about biotech drug discovery—what we’ve considered it to be for the last 30 or 40 years, having the whole pipeline of preclinical through clinical-development activity sourced out of the United States—that’s changed. It may not necessarily be a good thing all the time for the U.S.-based industry.

I’ll pause there. I’ve probably taken up too much time and would love to hear your views, Grace and Graig, on this.

Yeah, Graig, do you want to go first?

First of all, it’s great to be back on this podcast. It’s an honor to be on. In terms of the broader market, I’ll just add a few comments. I certainly agree with both Tim and Eric about fundamentals being in a good place.

Sentiment is so important in this sector, and over the past 6 months or so, we finally seem to be in a place where, from my conversations with the buy side, they are looking positively at biotech again. This is beyond the biotech specialists. I do think we’re going to have a good year in biotech for all the reasons that were mentioned previously. I also think that, while geopolitical factors and perhaps FDA risk are certainly going to be factors in the performance of the sector this year, if it is indeed important for the current administration to continue looking to lower interest rates, that can only help with the narrative.

For the innovation reasons, the progress that we’re seeing, good fund flows, companies being able to announce positive data sets and then raise nicely around those data events, and many of those deals getting upsized, I do think that we’re going to have another very good year in biotech. Deals right now seem to be subscribed anywhere from 4 to 10 times, depending on the deal.

Fantastic. I have a question for you guys, because we hear a little bit of debate back and forth on this, given that the IPO markets seem to be opening up—knock on wood. It used to be a complete buyer’s market with respect to M&A because companies didn’t have other options. With the market open, is that going to change the dynamics and maybe the valuations for M&A, or will companies try to move before companies can get out?

3. The IPO Window Reopens

I do think that the supply of IPOs is always something to keep an eye on. Some IPOs can be really good for the market, and others maybe not so good. What I mean by that is that not all IPOs are of the same quality. If you look at the calendar of what’s coming up, there are some very good companies, but they’re not all great. Some of the companies are going public as if they have to go public.

The very best IPO candidates that are out there—to think of a company like Candid Therapeutics—they’re not going public this month or next month, to my knowledge. I guess I think the best is yet to come in the IPOs. I do worry a little bit that there are more than 100 companies looking to go public, and a couple of belly flops could get out there and make the market start to feel a little shakier. I hope that doesn’t happen, and we’ll see how the market trades in the next couple of months. Grace Colon

Thanks, Tim. Anyone else?

Maybe I’ll just say that I do get the sense from where I sit—and Graig can comment too—that there are a lot of companies gearing up for IPOs. I think we saw Actuate Therapeutics price and trade fairly well, at least initially, here. That has spurred a lot of companies to at least begin the process. It can be a 3-, 4-, 5-, or 6-month process, as we all know, and we’re seeing a lot more companies in the last 2 or 3 weeks start that process and get ready to go.

I agree with Tim’s views that the first tranche may not be the best. In fact, if you’re a venture investor and you have what you think is a surefire winner, you probably don’t want to take the risk of a shaky IPO. Many of these IPOs going out in the early part of 2026 are probably holdovers from 2025, in fact, and couldn’t get out in a choppier market. They’re now still on file or nearly filed and trying to make a go of it in 2026. So I agree 100% with that view that we need to be mindful of quality.

On the other hand, I’d say the bigger picture here—and this is something that my colleague Josh has talked about in the past—is that we really haven’t had an IPO market for 3 or 4 years now. There’s been almost no possibility for good-quality companies to go public. They’ve been captive in the private market and forced to mature there, in many cases forced to go through Phase 2 proof-of-concept milestones that historically we tend to see read out in the public markets.

The fact that there has been a roadblock on many IPOs, and that venture investors have been forced to take on the risk of binary events, means that, at least from where we stand at Cantor, we see a lot of well-seasoned, mature companies that have proof of concept behind them. I think they’re going to be very attractive to public-market investors. The other thing is that their valuations are still coming at a very attractive level.

We haven’t seen the private funders flush with cash bidding these companies up because there hasn’t been a public IPO market to guarantee exits. Many of the last rounds have been down or flat rounds, and relative to where publicly traded companies are in their valuations, I think many of those private companies have the potential to come to the market at a valuation that allows for a lot of public stock-price appreciation.

From those 2 angles—from the fact that we’re seeing more mature companies and that they’re priced potentially very attractively—I think this could be a really wonderful IPO window, with the caveat that we need to maintain our quality screen.

I’ll add that I think it was maybe 2 months ago that I was a guest on the Biotech Hangout, and I was part of a very spirited conversation with Paul Matteis at Stifel and Josh over at Cantor about trying to predict the number of IPOs that we might see in 2026. We were talking about over-under numbers. Paul had led off with maybe 15, and Josh came out immediately and said, “I think it’s going to be 50.” I came out somewhere in the middle, and I’m hopeful for 20 to 25.

My bank doesn’t have the visibility that Eric’s bank has, perhaps, on the IPO pipeline and backlog. But I do think it’s really important to think about a couple of things from an investor perspective, and particularly from the generalist investor perspective. Big picture, we really want to see very solid issues come out—de-risked names—and they’re likely to be later-stage names. Maybe they have Phase 2, or even Phase 3, data already in hand or somewhere in that lifecycle.

We want to see a really disciplined market because we do want a very good 2026, but we also want a very good 2027 and 2028. I think the big-picture fear might be that if we do have a window that is wide open, there could understandably be, from a banker’s perspective and from a private-company perspective, a rush to get out. But I worry about what we saw from the 2020-to-2021 period, where it became a little bit bubbly. Valuations at the height were not disciplined at all.

With that said, I do think that if we can keep the number of IPOs within reason so that it sets up the market for success and pull-through to 2027, I think that would be really important.

Great. Well, thanks for your perspectives. We’ll keep our fingers crossed. Let’s go to deals. Eric and Graig, I think you both wanted to cover the GSK and BMS deals announced this week. Why don’t we start with the GSK one? Eric or Graig, who wants to go first?

Eric, do you want me to take the GSK deal?

4. Biotech Deals Keep Moving

Okay, great. We saw a really interesting deal this week where GlaxoSmithKline announced a definitive agreement to acquire RAPT Therapeutics. It’s a publicly traded biotech company working in the allergy space. You don’t see a lot of deals in the allergy space. This is a long-acting anti-IgE antibody. Everyone may be familiar with the drug Xolair, which has been on the market for quite some time.

That is a drug that is injected every 2 to 4 weeks. I think the differentiation of what RAPT is developing—and again, this is also an anti-IgE—is that it’s an injection that can perhaps be done once every 8 to 12 weeks. It was a very healthy premium—I believe it was around 60% to 65%—to where RAPT was trading the day prior. The acquisition price was, in total consideration, a little over $2 billion.

It is very strategic for GSK. They have quite a nice presence in the immunology space. It is interesting. We haven’t seen too many deals in the allergy space. At one point in my career, I covered a peanut allergy company called DBV Technologies. They are still trying to get a peanut allergy product approved. It’s more of a patch versus an injectable.

I do think they’ve had to run a few more clinical trials than they originally had hoped, but I think they’re looking to refile a BLA sometime in the first half of this year. Prior to that, we did see Nestlé buy Aimmune Therapeutics, and that was a pretty hefty deal way back when. That might have been a $2 billion deal that was announced sometime in the 2020 time frame. It’s interesting; that’s also a peanut allergy therapy. But I think what ended up happening after Nestlé acquired the asset is that, a couple of years later, they ended up divesting this peanut allergy therapy, and they didn’t disclose the sum. That ended up being a disappointment.

I do think that with GSK acquiring RAPT, and given that Xolair is a very established product, this can be a very good product. I don’t cover RAPT, so I don’t know the data personally, but it’s a very good deal to keep the M&A train going for biotech.

I think the other really interesting thing here is the history. Many of our listeners will probably know that RAPT has a torturous history since it went public a few years back. They actually went public on a CCR4 inhibitor that failed in the clinic due to liver toxicity. I think that was being developed for atopic dermatitis, and they found this asset—which they now call RPT904—out of China.

This deal, in which RAPT is being acquired for $2.2 billion, is around the GSK relationship. That asset is coming from China in a transaction that RAPT consummated in December 2024, and they paid only $35 million upfront for this asset. So, this is a great turn of events for this company. They haven’t done anything with this asset since in-licensing it a little over a year ago. The Chinese company that did the initial discovery and development of the asset did have some additional data.

I guess that’s the reason why a drug that was acquired for $35 million upfront 13 months ago is now worth over $2.2 billion. It’s a nice turn of events for this company, this management team, and this shareholder group. It just shows you that biotech always has another life.

Kudos to CEO Brian Wong and board chair Lori Lyons-Williams, who’s also CEO of Eterna. This team has, like you said, really turned it around. Very exciting. Tim, any comments on that deal before we move to the BMS one?

I’ll make a slightly different comment, which is, again, coming to the backdrop of biotech. RAPT is a company that had some bad data, and they pivoted with great results and great success. I cannot tell you how many companies, as a banker, I’ve talked to in the last 3 or 4 years that needed a pivot and just wouldn’t pivot.

Investors are also very hesitant to get on board with these pivots when they happen, so there’s a lot of nervousness about it. If you look at the history, pivots really work. One of the things that was buried in my report in January was that if you looked at companies that had great data in 2022 and compared them to companies like RAPT that didn’t have great data, you would have been better off as an investor buying the portfolio of all biotechs that did not have that great data.

People talk about this notion of the haves and have-nots, a tale of two cities, whatever you want to call it. Today, we’re still in that world. If you look at the market, companies that have really good data sets can raise money all day long. They have high valuations, and then we still have these companies that look like RAPT used to look that are not doing so well. Investors are very much not in a risk-on mode. Investors are very much congregating around certain companies.

I do think that encouraging your companies with mediocre data to think about getting aligned with new stories, like RAPT did, is something that’s probably not done enough in our industry.

Thank you for that. Let’s switch to the other deal. Who wants to go first on that one? I think all 3 of you had comments on the BMS deal.

I’ll just say that Janux is a really interesting company with a conditionally active approach to immunotherapy and T-cell engagers. The company’s stock has come down a lot on some disappointment around its lead programs. I do think this BMS deal this week is a big vote of confidence in the platform, so I’m really happy for Janux that they were able to get that one done.

I don’t know much about the deal myself, so I might see if Eric has any comments.

I think the space is really interesting, too. The area that Janux plays in is masked bispecific antibodies for oncology. There are a couple of other firms in the space that are developing the ability to have these masked antibodies. They’re only activated within the tumor microenvironment.

The idea here, of course, is that you can bring the benefit of an efficacious T-cell-directed therapy to a cancer antigen without having the negative effect of engaging those T cells outside of the tumor mass and triggering cytokine release syndrome or other inflammatory mechanisms. It’s a foundational and fundamentally interesting tool.

I do think Tim is right. Janux has shown some proof of concept here with this tool in PSMA-masked targets, and this is a brand-new target that Bristol Myers Squibb is buying into for a considerable sum. I’m really interested, as you can tell, from the technological side in how this field plays out. They’re not the only ones doing it, but I think if they or someone else can repeatedly do this successfully, it’s going to be extraordinarily valuable.

5. Policy Reshapes Biotech

We’re going to switch now to some policy topics. Clearly, we are in the midst of trying to finalize the 2026 funding bill. Right now, the House passed all the various parts of it, and there’s cautious optimism about many of the implications for biotech. For example, the administration last year had requested deep cuts to HHS overall, in particular NIH and CDC. The proposal now came in as a slight increase from last year, at about $117 billion overall, which is $33 billion above what the administration had requested. It also protects NIH from the dramatic downsizing plan and keeps CDC funding flat at $9 billion versus the $4 billion that the administration had proposed.

There are other wins as well, including PBM reform, which the industry has been advocating for, with more transparency and other aspects that are really impacting biotech innovation. For example, it prohibits PBMs from tying compensation to drug prices in Medicare and requires much greater transparency. In the commercial market, it forces 100% of rebates to be passed to employer plans. This could still get stripped if the CBO scores it overall as a spending increase, so it’s not fully locked yet, but I know there’s momentum building around PBM reform.

NIH is funded at a slight increase, as I mentioned, at about $49 billion, and it keeps all 27 institutes, as opposed to some of the institutes that were proposed for a cut. There are specific diseases getting additional money, such as cancer, Alzheimer’s, and others, as well as additional support by NIH for women’s health, which we’ll get to later. So, there are lots of promising areas. We’re still not out of the woods, and there’s a lot more detail in some of the articles published this week in the biotech trade.

Another quick policy item, and then I’ll go around for comments on both of these. Just for context, the US officially completed its withdrawal from the WHO this week. This started during the early COVID years, and on Trump’s first day back in office, he issued an executive order. The loss of funding has already forced WHO to cut almost a quarter of its staff, and it’s still about 25% short of the money it needs for the budget.

I think the bigger risk, though, is informational. I think the US will have a lot less access to real-time outbreak intelligence and less influence over how pandemics are managed. This, tied to some of the threats against vaccines and mRNA vaccines, is very concerning in this era, when we expect more pandemics to be coming around. That is an area of concern. Other organizations are stepping up on the vaccine side, such as the Gates Foundation and others, but we’re still going to have a big gap.

I’ll open it up for comments from the group on some of these policy issues. I know, Eric, you have a comment on the FDA guidance on minimal residual disease after that. So first, let’s talk about the funding and WHO and all of that.

Any comments?

I mean, I would just say, whatever your politics are—right, left, middle—in my view, national security and pandemic risk should not be an ideological domain. I personally find it very concerning that the US is pulling out of the WHO. Imagine that the United States said, “Hey, we’re not going to be involved in international air traffic coordination.” That would just be self-defeating. I kind of view the WHO exit as very similar. Somehow, we’ve made this an ideological topic when the reality is the WHO’s role is largely non-ideological. Yeah, very good.

I mean, also, politically, I would hope that no matter where you are on the spectrum—Republican, Democrat, in the middle, et cetera—you’re also a supporter of science and espouse the view that we could use more science and more scientists in the United States. I don’t think that should be a political view either.

The fact that the Trump administration had proposed to cut the NIH budget by 40% and, Grace, as you mentioned, we’ve avoided that bullet—and, in fact, Congress has looked to moderately increase the NIH budget—what a sigh of relief that is for all of us who care deeply about science and think that this should be a national priority and is a competitive edge in our society.

I just feel personally very thankful for congressional leaders who have the foresight to potentially overrule the administration in this regard and move forward with doing what’s right for science funding. I know the NIH budget has massive reverberations into academia, and I know that universities had considered dramatically cutting back on the number of trainees they were going to accept in their graduate programs this year when even the threat of a major NIH cut was being proposed.

Oh, absolutely. The cap on overhead as well was an issue. Sorry, go ahead, Graig.

Yeah, I just wanted to quickly add that, as someone who went to graduate school—I do have a PhD—I think science in the United States has always been viewed as one of the great gems of our country. The threat of funding being cut was very real.

I remember just maybe 9 months ago having direct conversations—and I’m sure Eric might have been having them, too—with folks who were either thinking about graduate school or were in graduate school and then had their funding cut and had to think about pivoting their careers. This was a very real thing and has been a very real thing.

Again, trying as best as possible to be apolitical as well, I do think it’s still important for the US to be part of the global discussions on very important matters, whether it’s the WHO or just being a good actor on a global stage. With that in mind, I was disappointed by the news about the US exiting the WHO organization. I’m sure there are inefficiencies there, but I’m hopeful that we will get some balance from US policy over the next several years.

Thanks, all. I just want to highlight the critical importance of advocacy. A lot of us spend a lot of time on the Hill. I have to give kudos to John Crowley and the BIO team. This involves a lot of work, relationship-building, and education about how all these things are connected.

Talking to senators and congressional representatives whose districts are impacted by cutbacks in biotech, and explaining how it all connects, is really important. I also have to give a lot of credit to the industry advocates who just did not stop going around and trying to educate people and help them understand exactly what’s happening with the money that is supposed to go toward drugs for patients, whether it’s PBM reform, 340B, or other things.

There are a lot of misaligned incentives, and it takes breaking through all that and tying it to something that’s important to the people who are voting on these things. I’m happy to talk about it with anybody if anybody wants to reach out. They’re always looking for biotech leaders to go on the Hill, tell their stories, talk about patients, and really make an impact. We can’t stop. They’re going to continue to try to chip away at this.

I’m very relieved to see this. Obviously, it’s not over. This bill needs to be signed by the 30th, and it still needs to pass the Senate, so there could be some changes. But we’re cautiously optimistic with this bipartisan, strong support for biotech. So, Eric, do you want to talk about the minimal residual disease guidance?

Yeah, we can talk about this quickly. I know you’ve got a lot of other topics you want to cover, Grace, but I think this is very notable for those who haven’t seen it. The FDA issued some new guidance this week in the field of multiple myeloma, and essentially the guidance says that you could use minimal residual disease, or MRD-negative status, combined with a complete response to gain approval of myeloma drugs in the future.

That’s really important because, with all the new therapies that have come into myeloma, this disease has gone from a death sentence within 2 or 3 years to one where patients can live 10 to 15 years with the disease. That, of course, makes it more and more difficult for drugs to prove that they have long-term benefits, especially in overall survival. It’s much easier to prove that you impact survival in a patient who has a 2-year survival prognosis than a 10-year survival prognosis.

A very welcome event this week in the FDA draft guidance is essentially validating what ODAC had discussed a year or 2 ago: that this MRD marker correlates with long-term outcomes and should be used. The reason why I think this is interesting is that, in some ways, it flies a little bit in the face of the efforts that Vinay Prasad has put forth.

Dr. Prasad, who obviously is in charge of CBER drug approvals, has been very antagonistic toward single-arm response-rate outcomes in oncology. In fact, he’s created a little bit of a track record—a history—of not approving drugs like Replimune’s drug. I mentioned earlier on this webinar that he’s rejected a TCR drug. He also seems to have rejected a drug from Regeneron based on single-arm readouts in oncology that use ORR, or response rate, as a marker.

We’re getting a somewhat schizophrenic view from the FDA with this draft guidance. On the one hand, you have the broader FDA putting out a policy that says if you have a CR and it’s MRD-negative, that response rate is robust enough to drive clinical confidence in the outcome. On the other hand, Dr. Prasad is increasingly steering companies in his CBER division toward randomized controlled clinical trial outcomes that are going to take a lot longer and delay, I think, innovation for patients.

In many cases where the response rates are so robust, I don’t think that randomized controlled trials are required. That seems to me to be going back to some prior history where cancer drugs were stymied in their development and where we delayed bringing innovative therapies to patients for many years because we had to prove that everything had a survival benefit. I certainly hope we don’t go back there, but there seems to be a little bit of an internal struggle at the FDA these days.

Great. Very insightful. Thank you for that, and I agree. We need to be cautious about this area and make sure we continue to focus on what’s best for patients and advocate for that.

Why don’t we go to some company news? Why don’t we start with the atopic dermatitis topic, because I know there’s a lot there? Graig, you had a lot of comments on a few companies, Corvus and others. I know, Eric, you were going to comment on 1 or 2 as well. Why don’t we start with that? I know we have another company topic after that.

6. Atopic Dermatitis Attracts Biotech

Yeah. Let me start by saying that, over the last 5 years, the number of companies pursuing the development of therapies in this space has grown substantially. It’s a very large market. For those of you who don’t know, atopic dermatitis is the newer, fancier name for what, for many decades, we used to call eczema.

Depending on the estimates that you want to believe, there are anywhere from maybe 15 million in the US to maybe 42 million-plus in the US who have atopic dermatitis. With that in mind, it is a very large market. Not surprisingly, industry is very interested in tapping into this market.

We do have very good drugs on the market now, and the market leader is called Dupixent. That is a drug from Regeneron. There are also oral drugs, like the JAK inhibitors, that provide very good efficacy, but they are set back by some safety-liability issues, and there’s a black-box warning. That does limit their use, but there is a whole slate of biotech companies, especially smaller, mid-cap biotech companies, that are also trying to get in on the action.

One particular company that I follow is called Corvus Pharmaceuticals, ticker CRVS. They have a very interesting oral drug that is a novel ITK inhibitor. People may be aware of the BTK inhibitors, but this is a novel ITK inhibitor, so it’s somewhat related. The drug is already in a Phase 3 trial in a lymphoma setting, but the company, over a year ago, embarked on seeing if this drug could be used in atopic dermatitis.

We’ve had some small datasets over the past year, but we had a little bit more data this past Tuesday, right after the holiday, and the results, albeit from very small numbers…

We’re talking about 24 patients or so, but the data were quite compelling. We’re talking about efficacy in atopic dermatitis that almost appears, at least at this very early stage, potentially best in class. Again, it’s an oral drug, whereas Dupixent, which is the current gold standard, is injectable, and it came with a very safe and well-tolerated profile.

The stock this week alone is up over 200%, and now it is about a $2 billion market-cap company. The company was able to successfully announce a financing that was upsized, so good for the company, which had cash only until the fourth quarter of this year. They were able to add in probably close to $200 million, and that will obviously extend the cash runway.

They will be thinking about expanding this drug and its potential use into other I&I-type indications. The company has already announced that they will fund a phase 2 study in atopic dermatitis that will start very shortly, but they’re also expanding into asthma and hidradenitis suppurativa. This is all based on the biology, and these will be proof-of-signal-type studies. For an oral small molecule that shows very good efficacy, there’s a lot of promise here. Again, it’s still early days, but the atopic dermatitis space is very competitive.

I know Eric wants to talk about Aclaris, which has perhaps a similar drug, but I did also want to comment very briefly that other high-profile companies that investors have been gravitating toward in this atopic dermatitis space—and this is not an exhaustive list by any means—include a company called Kymera Therapeutics. They also have an oral drug. It’s an oral STAT6 degrader. They had some data in December. Granted, there were no placebo-treated patients; we don’t really have a control. But the data were well received, again because of their oral nature. The company’s market cap moved up over $1 billion in December based on this phase 1 data, and they were able to raise about $500 million off of that.

There’s also a company, Apogee Therapeutics, which interestingly has perhaps a once-every-3-month injection for atopic dermatitis. So, lots of activity in the space. Eric, I’ll pass it to you if you have comments about Aclaris.

Well done covering this, Graig. Maybe just to add: the atopic dermatitis market is large, growing, robust, and enormous. But what really excites me about these data—and congratulations to you on a terrific call—is that we now have almost a new validated target in terms of I&I indications, and this can go into so many different indications, well beyond AD. That’s fascinating.

You’re right, we still need to learn a little bit more about the safety of an ITK inhibitor, but the efficacy has now been established. What’s fascinating about this is the history. Richard Miller, as you know, who’s CEO of Corvus, was kind of the leading CEO in his prior life in taking BTK inhibitors forward. BTK inhibitors are transforming a lot of B-cell-driven diseases, and an ITK inhibitor may transform many T-cell-driven diseases. So, a little bit of history there.

Aclaris is the other player in the ITK space. They don’t yet have clinical data, but their preclinical results look really good. They claim that they might be a little bit more selective and a little bit more potent for this target. So keep an eye on Aclaris. Aclaris, or ACRS, is another company that my colleague Parker covers, and that stock did extremely well on the coattails of Corvus, now that ITK has kind of been validated as a target.

I do want to also briefly add that we had some news today in the atopic dermatitis space, where Sanofi, the large French pharmaceutical company, has been developing an OX40L, an anti-OX40L antibody. I might butcher the name of it, but I believe it’s amlitelimab. They had some phase 3 data today, and the market did not particularly like this data. It’s interesting: I think this can be studied as a monotherapy, but also as a combination therapy.

With that said, the data were a bit mixed, but the company says that they are going to continue to think about filing this drug for approval. While I’m not going to opine about the anti-OX40L mechanism of action, I do think that the fact that Sanofi had news today is indicative of the widespread interest by industry not only in atopic dermatitis, but just in the I&I space, because these inflammatory and immunological-based conditions affect so many people. While it is a very crowded market, there’s still lots of room for improvement for patients.

Great. Very important topic. I had no idea that the number of potential patients was that high. I was thinking it was more like 10 million or something. You said it was up to 40 million.

Depending on which company is touting the size.

Yeah, exactly. They always pick the highest number, which makes sense. Tim, any comments on that before we switch to the next topic?

No, I think it’s really interesting and exciting to see those data.

7. Women’s Health Finds Its Moment

Awesome. Great. Now we’re going to switch to a topic that I know is near and dear to Tim’s heart and my heart, and we’ve had a few discussions about this, which is women’s health. This, I think, is your second report this year. It was fascinating, and I think it’s going to be part of a series, right?

For context, as folks on the call I’m sure know, there’s been a huge uptick in focus on women’s health in the last few years, and it’s long overdue—a push to go back and have a better understanding of the complex biology and the implications not only for reproductive, women’s, and maternal health, but also far beyond that. There was a lot of activity at JPM, even more this year than last year: a lot of panels and a lot of discussions. I think women’s health is so fragmented. You have to pull together diagnostics and medical devices, surgery, as well as therapeutics, and all these groups are beginning to come together, really advocate, and show that this is an investable market. It’s half the population.

There was an interesting report by a16z that came out over JPM, which really focused on the fact that over the last 25 years, there have been $100 billion in realized exit outcomes for women’s health, depending on how you count it. I think part of it is understanding and broadening the definition of women’s health, and almost half of the exits occurred in the past 5 years. Twenty-seven women’s health companies achieved billion-dollar exits.

So I think this really matters. I think there’s the right attention. We’re focusing more on the early part of discovery, and also more on how we tie the value, how we get reimbursement, and all of that. So why don’t you—I’d love to hear the highlights of this first part, which is really fascinating. If anybody hasn’t read it, you really should. It goes back through the history of women’s health and how female well-being moved from superstition and neglect to where it’s moving today. I’d love your thoughts on that, Tim, and thank you for doing this.

Oh, no, my pleasure. And it’s great to hear your comments on the contemporary moment, because my report has been very much a historical exercise. I think we all sort of know this, but it’s very interesting when you write it all down. It is quite striking.

Women have faced unbelievably tough healthcare circumstances for many centuries. What I did is I essentially looked at the history going back 2,000 or 3,000 years, and the level of misogyny that has created barriers to female healthcare has been very high. Women were largely blocked from entering the medical profession. They were blocked from being able to learn. Basic literacy was not something women had access to really until the 1900s in most of the world.

Up until 50 years ago, women were not able in any meaningful way to enter the medical profession, and traditionally female healthcare roles, such as being a midwife, were systematically taken over by men. So, very difficult circumstances. And yet, if you look at the history, things have gotten dramatically better for women from a healthcare perspective over the centuries, on both an absolute basis—sort of absolute life expectancy—but also a relative basis.

We men today have lower life expectancy than women, but in the past it was the other way around. There have been a number of breakthroughs that have really changed things for women, including the advent of mammography, drugs like Gardasil, and the GnRH agonist for endometriosis. No innovation, I think, has been bigger—not just for women but for our civilization—than the oral contraceptive.

The oral contraceptive has enabled women to enter the workforce, to live independent lives, to enjoy sex, right? Not to panic if you’re having sex with someone who’s not your husband. I’m not sure that there’s been anything really bigger than that in our industry ever. There are still many barriers that remain to good female health. But, Grace, it’s great to hear the progress that you’re reporting on.

And that's very encouraging. I'll add one last thing. The 2 most fun chapters to write that were a little bit less grim—one was a chapter on the history of women's liberation, which I didn't know that much about. Starting in the 1960s, women just got so fed up with the health care system that they started opening up their own clinics.

I wrote a chapter about that movement and the lasting effect that it has had. The other chapter that was really interesting is what you were touching on, Grace, which is the study of female-predominant disease. There are tons of these conditions that impact women much more than men, such as autoimmunity. I went back and tried to research who was the first person to notice that women were more likely to have autoimmune disease and document all that. That, for me at least, was very interesting to do.

Yeah. And thank you for doing this, Tim. I think we need to continue to put out information like that. I have to give kudos to some of the VC firms that are really taking this on, like Alice from Foreground. Also, Lucy Pérez, my fellow Puerto Rican senior partner at McKinsey, has been a leader in putting out reports and really looking at the economic impact across all diseases of focusing on women's health.

I think there is a lot of great momentum. One last thing on the oral contraceptive: I think there's a huge issue with health equity. I chaired a panel at Biotech Showcase on that, and we talked about how 50% of pregnancies still today in the U.S. are unplanned. That primarily has huge socioeconomic impacts on those who are most vulnerable.

Simple things like bringing the birth control pill over the counter—the mini-pill was approved a few years ago for over-the-counter use, but that's just 10% of women who are on the pill. I know my friend Samantha Miller at CadenceOTC has been working for many years to get the combination pill over the counter and affordable. Even women who don't have access or time to go to the doctor could walk in and, at a very reasonable price, get it every month at a CVS or a Walgreens.

That would have huge impacts. There are lots of things like that that we need to be thinking about and advocating for, and we really look forward to your next reports. Oh, sorry. Go ahead.

No, Grace, I would simply say I agree with you wholeheartedly. We still have so much progress to make, right? There's a long way to go. I'll make the following comment: I've never had more people write in after getting one of my reports than this report.

I didn't expect that at all. I thought that this was a little bit off-topic, that it was only interesting to women. I got so many emails from men and women saying they enjoyed this topic, they want to hear more, and that this needs to be more important in our sector.

I predict 5 or 10 years from now, we'll all look back and say, "Gosh, why didn't we take women's health more seriously back in 2026?" I think it's a topic whose moment has come.