第134期——2025年3月14日

You're listening to Biotech Hand Hangout, a live and unedited weekly discussion of all the latest news in our industry with a group of biotechnology insiders. I'm Eric Schmidt and my co-host today are Sam Vicelli and Eurone Werber, and we are hopeful to have shortly a special guest with us, Bio CEO John Crowley. For more information about our hosts and our guests or to listen to the most recent episode, please go to biotechout.com. I think we're still waiting for Sean to join, and we'll try and check in on his status, but we certainly do have a lot to cover. Why don't we start with the obesity updates in the space? Sam, I know you picked out a couple of things, and it was a very eventful week for both drug development and deal flow in this sector of biotech.

1. CagriSema Challenges Obesity Expectations

Yeah. Obviously, we started Monday, as you said, Eric. It was one of these weeks where we just turned up in the office in London, and there you go. Novo had its CagriSema data from the REDEFINE 2 trial. This is the follow-on from REDEFINE 1. This was in people with obesity and diabetes, and the share price took a major dive for reasons that I'm a little bit confused about, because we already kind of expected this trial not necessarily to be a significant effort here.

This is CagriSema. This is Novo's combination of an amylin analog, cagrilintide, with a GLP-1, semaglutide. The data that they reported put about a 10% or 8% pressure on the share price: 12.6% placebo-adjusted weight loss, which seemed to us to be in line with what we've seen with Eli Lilly's Zepbound. Of course, that's not an amylin/GLP-1; it's a GLP-1/GIP combination.

The interesting thing, of course, is that usually you do lose some efficacy in the diabetic patient population. In the REDEFINE 1 trial, which was in people with obesity, the efficacy was 22.7%, or roughly 20%, placebo-adjusted. The number of patients who reached the top dose is one of the key things about the design of the Novo Nordisk trials, REDEFINE 1 and REDEFINE 2, in that it allows patients to down-titrate again, or not go all the way to the top dose. In REDEFINE 1, which was obesity, it was 57%. In REDEFINE 2, I think about 62% of patients reached the highest dose.

People always question, well, isn't that why the efficacy isn't as good as what Novo had suggested? That's the issue here. The share price was down, and we're sitting here thinking, well, you've got a drug that's as good as Zepbound in this population and previously had about 20% weight loss. I'm definitely in the camp—I think, Eric, you're not far from this camp—that we're at the point where we're talking about these percentages—20%, 25%, 30%—and some of these patients are not going to feel very good at those sorts of weight losses, particularly if you rush them into it. I think there's even been some talk that, in some of the trials that are ongoing, people are losing so much weight so quickly that they're not managing, and they're having to dose down. That was the story that we started our Monday with, Eric.

Yeah, I agree with you 100%. There's just too much investor focus on singular numbers, and you can game the system, as you know, Sam, with regard to including female patients or more obese patients in these studies at baseline. We've got to get past that. We've got to start looking at the more subtle aspects that these products are likely to be differentiated on in the marketplace itself, which isn't the absolute magnitude of weight loss, but things like convenience, tolerability, and safety. Great summary there. Thank you.

Actually, I think before we get to the deal flow in obesity, maybe we'll welcome John Crowley. John, can you hear us?

Yes, I can. Hi. Thanks for having me again.

Thank you for being on. For those of you who don't know John, he's president and CEO of the Biotechnology Innovation Organization, BIO. And, of course, he's a longtime executive, having been a founder and CEO at Amicus Therapeutics, a company focused on the treatment of rare diseases, which he led for almost 2 decades and had tremendous success with. John, thank you again for joining us, and we're thrilled. I think you, Sam, and I are all very keen to get your topline thoughts on where we are, what BIO is trying to do in this tumultuous geopolitical environment, and how things are going in Washington.

2. BIO Maps Washington's Biotech Future

Yeah, Eric, thank you again for having me on, and again, I think it's pretty timely given where we are here. I thought what I'd do in my upfront comments is frame it from a big-picture standpoint: where we are, why I am optimistic that we're going to have a more favorable policy environment for biotechnology than we've had in some time, and give you some specific data points around that. I'll also touch on what the threats are, how we're working through and trying to manage those threats, and then talk about some specific opportunities. Then I'll maybe just conclude with our priorities at BIO, if that's okay.

I do believe that, on balance, there are more positive opportunities than negative ones for biotech. And, believe me, I know how hard this has been for 4-plus years in this environment. I was down at an investment conference earlier this week in Miami, and there were a couple hundred investors, hedge fund managers, and mutual fund managers. I understand how difficult the pressures are in biotechnology, and some of them are structural. That's where I do think we have a unique opportunity to begin to address this broad ecosystem, because at the end of the day, one of our great challenges has been that the system has evolved to the point where we're developing medicines that just take too long, cost way too much money, are inconsistent even within therapeutic areas, and there is uncertainty.

We need a system that provides certainty faster and, oftentimes, more clearly—positive or negative—so we can decide to advance an asset or move on. One of the fundamental premises, if you will, that we've been working on with the administration, policymakers, and lawmakers is to have them understand why they need to care about biotechnology and why it's so important. I can tell you there is a strong, bipartisan consensus that biotechnology is a critical strategic asset for the United States.

And I mentioned this before, but I'll say it again: the world, and everyone living in the world, is a better, safer, more prosperous, and healthier place when we and our allies lead in biotechnology, realizing that it is a global ecosystem and countries like China will continue to play an important part in that ecosystem. But we have to be the leader. That view is widely held in the administration, from the president to RFK to other senior leaders in the administration, but also on Capitol Hill among Democrats and Republicans.

What we continue to emphasize in every discussion is that you start with that as the basic premise and that you need to care about biotechnology for public health, as an engine of economic growth, and for our national security. Those points really ring true. Let me just give you a couple of data points. Believe me, I get all the uncertainty, the chaos, and trying to manage through all of that.

We had, I think, an excellent board meeting with the BIO board in New York back in February. We touched directly on this, and my view—and the view of other speakers for BIO—was that you need to distinguish between what are trial balloons, what is rhetoric, what are extemporaneous comments, and what are even executive orders that may not survive or succeed—they may be withdrawn, they may be blocked by the courts—and then what is actual policy. Then we need to marry that against what are our handful or two of key priorities.

There are many times that we're having these discussions behind closed doors, and many times we have and will raise them to a public level as well. So, just a couple of data points on why I'm increasingly optimistic, mindful of all the challenges and uncertainty, and actually, in many areas, being a strong voice for the things that we care about.

First, I'll begin with the FDA. My almost singular focus toward the back end of February, when there was so much uncertainty and so many threats to the workforce, the culture, and the stability of the FDA, was to figure out who are the influencers here, where are the centers of gravity, and who are the decision-makers. This is a bit of the art of advocacy. This was all done behind closed doors, but I can assure you, very intensely, so that people at the White House, at HHS, and within DOGE understood the critical importance of the FDA and that we need a strong FDA.

It needs to be reformed, modernized, and advanced. We need to implement very bold ideas, and I will tell you that the leadership of the FDA would welcome that. I think Dr. Marty Makary, coming into the FDA, welcomes that as well. We made a lot of progress, and you saw, too, when I put that piece—which many of you may have seen—in STAT 2 weeks ago, relaying the president's State of the Union from 8 years ago, our meeting in the Oval Office, and his comments at that speech and in some forums afterward, talking about the importance of newer and better medicines and addressing redundancies in bureaucracies in the regulatory process. In fact, even beyond that, to the clinical trial paradigm, people are increasingly aligned around that.

We've had very serious conversations with the right decision-makers. There will be change at the FDA. Our job is to make sure that we advocate strongly and fiercely for positive change at the FDA. We've made progress. I think we've stopped some of the bad ideas that were in motion. Right now, I know the FDA, like other government agencies, is coming up with what I know will be thoughtful plans for reimagining the FDA, but we need to make sure we're strengthening the workforce and protecting some key leaders at the FDA as well.

Another couple of data points here. One is on RFK. Now that Secretary Kennedy is in the seat, we've all followed closely the measles outbreak. BIO continues to be a strong advocate for the importance of vaccines. We have a very large campaign that we're going to be launching shortly to inspire people, educate people, and, frankly, frighten them if we don't have vaccines. Again, this gets to the broader issue of trust in data and trust in science. The data is on our side here, and we'll use that.

I do think this is one of the great risks in this environment. We have to be a strong voice for engaging in many forums, privately but now increasingly publicly as well. I will say that with this measles outbreak, there was an interview that RFK Jr. did the other night with Sean Hannity on Fox News. I don't watch a lot of cable news, but I wanted to listen to this, and I heard, maybe for the first time, that RFK specifically said, with respect to measles, that he encouraged parents to get their children vaccinated—not encouraged them to talk to their doctors, but encouraged them to get them vaccinated. So I think that's a step, hopefully, in the right direction, but just one data point.

I'll also point to the fact that Secretary Kennedy held a roundtable with leaders in the stem-cell field. You may have seen that reported today, to talk about how we break down regulatory barriers to advanced stem-cell research. I think that's a positive step forward. Another data point I'll give is that you may have seen HHS put out, earlier this week, a further buyout offer for all employees: a $25,000 one-time payment if they agree to resign their position. The only groups that were exempted from that were FDA inspectors and reviewers. I think that reflects an acknowledgment of the important role that the FDA and a strong FDA workforce play.

We saw the withdrawal of the nominee for the CDC at the last hour yesterday, and that came directly from the White House. The other data point I'll provide, and the last one before I talk briefly about some threats and opportunities, is the President's joint address to Congress a week ago. It was the longest State of the Union or joint address in at least modern history. The President talked about a lot of things in that speech. The one thing we never heard, though, was drug prices. We didn't hear about evil pharmaceutical companies. I'd encourage you to compare that to prior State of the Union addresses. This was very different, and this was not by accident. I think it reflects, again, a view of the increased importance of the biotechnology and biopharma industry.

Those are some small data points, and I think some more significant ones, but I am sensing that there is a much more positive environment from a policy standpoint. With that said, there are threats. I think our most significant threat, again, is vaccines. We've got to get back the trust. This tends to be a very state issue. We're focused on particular states, but again, the data is our friend, and we're working to build a key-stakeholder community of interest, advance data, and build our relationships, particularly at the state level. I think there are more, or at least as many, threats and opportunities in the states as there are in the federal government.

Beyond that is MFN index pricing—most-favored-nation pricing. The President still believes in it. I think we've evolved the conversation, even before the election, to where he and the administration are of the point of view that it's not that Americans pay too much for drugs; it's that other countries pay too little. It's kind of a NATO analogy, if you will. How we solve for that, I think the first principle is that it's not going to go away. There has to be a constructive conversation. We have to be thoughtful and proactive in policy solutions here. I think it ties into another threat, and that's, of course, everything going on with tariffs as well.

BIO just completed an industry survey that we had sent out. We're just now finalizing and going through the raw data from the last couple of days. Probably not surprisingly, I think some of the key takeaways are going to be that significant tariffs on our industry will harm access to medicines, could potentially raise the prices of medicines, intentionally or unintentionally, and will also highlight just how dependent we are on an overseas supply chain, particularly in Europe. Those are some major threats that we have to continue to be deeply engaged in and shape in a way that doesn't harm the innovation environment or access, and perhaps also ties into some other key opportunities.

On the opportunity side, I do think there is an increasing likelihood this year that we're going to see real reform of the PBMs and the middlemen. We came very close to it, of course, in December, and that whole bill blew up for a whole other set of reasons well beyond PBMs. But there is a strong sense in the White House that there are inefficiencies in the system, and that the middlemen—or “the middles,” as President Trump refers to them—are not advancing the interests of patients, the economy, or public health. We're getting a really good series of conversations continuing there. What legislative vehicle that could be put into, and whether some of that could be done by executive order, is something BIO, PhRMA, and others are exploring.

I do think we'll at least have serious discussions, negotiations, and hearings on fixing the IRA. The 2 parts that we're focused on are the orphan part of it, with the Orphan Cures Act—that's now been reintroduced in this new Congress—as has the EPIC Act and the MINI Act together, addressing the disparity, the pill penalty, on 9 versus 13. This is also where I'll highlight that this is a more favorable Congress for us as well. You no longer have Bernie Sanders as chair of the HELP Committee. You have Dr. Bill Cassidy on the Senate side.

On the House side, you have Chairman Guthrie, Congressman Guthrie from Kentucky, a West Point grad. We know Congressman Guthrie quite well. He is a strong champion for our industry, for innovation, and for patients, as is the Health Subcommittee chair, a pharmacist by training, Buddy Carter from Georgia. He also aligns, I think, with the way that we see the world. I would expect that in the months ahead, into the summer, we'll have hearings on the dangerous impact that we're seeing—the dislocation of resources because of these mistakes in the IRA that need to get fixed. Nine versus 13, of course, is a much heavier lift than orphan financially. Again, this will be part of a broader discussion and negotiation. We, PhRMA, and others are coming up with ideas for what the pay-fors would be.

Other acute, near-term opportunities: we're going to see significant tax-law work coming forward, and this is where Speaker Johnson has a really tough needle to thread. He literally has a 1-seat margin on this. There's going to be an awful lot of lobbying and advocacy from every industry you could imagine when it comes to this tax law. For us, things like the R&D tax credit, perhaps even the orphan tax credit, and potentially also encouraging a renaissance of manufacturing here in the United States could all be tied into that. I think that tax law will be a very important vehicle for that.

Another opportunity that we continue to work through, and this is really frustrating, is the priority-review voucher for pediatric diseases. Again, we almost had this in the December bill. There was some opposition, but we were able to move it through on a bipartisan basis. It's not going to be in the continuing resolution that it looks like the Senate will take up and move forward today. There are other vehicles into the spring that we, with the advocacy community and pediatric cancer and pediatric rare diseases groups, are working on. That has to get done, and there is very, very strong bipartisan support for it. It's almost like the perfect program: encouraging resources into some of the rarest diseases that affect children, including cancers and metabolic disorders, and it doesn't cost the government a dime.

Our more intermediate priorities—and by intermediate, I mean through this Congress over the next 2 years and into the next Congress—again include some unique threats and opportunities. I think that's going to be in women's health. We have to address the disparities in women's health. When 2-thirds of Alzheimer's cases, 80% of autoimmune diseases, and very, very differing impacts in cardiovascular disease affect women, we've underinvested there tremendously. As an industry, we've not had the focus that we need to. We need to think about incentives and programs that will drive more research for women's health.

Secondly, cell and gene therapy, where in many ways the entire model is broken. Third is intellectual property, and fourth is vaccines. What we're doing at BIO is putting together task forces, and I'll be a co-chair of the task forces. Each will also have 2 co-chairs from our board of directors. We'll have formal meetings, we'll define our remit, and I'll then be able to, with the guidance of the board and our membership, allocate specific resources to programs, again aligning our policy, our advocacy, and our communications.

But these are areas where there are unique threats—in intellectual property, for instance, and vaccines, among other areas—and now is the time. I think this rises to be an important priority for BIO. I'll just conclude with the strategic initiatives and then be happy to take any questions.

Eric, Yurun[?], and others, on the strategic initiatives, again, putting them in the buckets of innovation and access: for innovation, there are a number of different initiatives. Our view is that this is a multiyear effort, hopefully within this administration but perhaps even beyond, and it's critically important for big, bold ideas to shape the ecosystem. In some cases, I think we could have early wins here as well.

The first is reigniting the renaissance of manufacturing. We continue to advocate at BIO that, yes, this needs to be anchored in the United States, but we need to think about this more broadly among our allies. For instance, tomorrow morning I'm leaving with a number of BIO staff, a number of CEOs on our board, and senior executives to go to Japan for 5 days.

We have meetings at the most senior levels of government in Japan: on the health side, and on the industrial, manufacturing, and economic side. We're meeting patient groups, and we're meeting with the PMDA, the Japanese FDA equivalent, talking about strengthening our ties with Japan, including on the manufacturing side. I think there are some real opportunities to put policies and programs in place through a number of different vehicles that will drive private capital toward a renaissance of manufacturing. We'll have more on the actual policies of that coming out soon.

The other important part of innovation is going to be reimagining, again, the FDA and the clinical trial paradigm. There is a real appetite to do that in the administration, and we continue to advocate for a very strategic, thoughtful approach. I know Dr. Marty Makary, coming in as FDA commissioner, is strongly supportive of that as well. I'll be coming back to you guys for ideas about what that could be that we could take back to the FDA and to the administration. By “you guys,” I mean certainly everybody on this call, but also broadly our entire biotech ecosystem.

On the access side, for us, it's again about identifying and breaking down the barriers. Why do people go without their medicines? Whether they be economic reasons, out-of-pocket costs, or increasingly, insurance practices, insurance is out of control. We've gotten to the point where, again, take a CAR-T therapy in cancer.

It's almost like the doctor writes a prescription for a very serious, life-threatening disease, advocating or instructing the patient to go on a therapy, at the patient's consent, of course, with some of our most advanced technologies. Then it's almost like that recommendation goes to the insurance company to decide. When we look at these prior authorization steps and the broad utilization management—certainly within the Medicare Advantage programs, but well beyond that into the private insurance market—we've got to take that head-on.

These are big, bold issues that we're going to be working on. Those are my comments up front. I'm happy to take any questions.

Well, thank you for all those updates, John. It's great to hear your optimism. I think we need a little bit of that in biotech, and also the fact that BIO has quite a bit of influence behind the scenes. I know Sam and Yaron are going to want to chime in here, but let me just start with 1 question, which is about this period of chaos and uncertainty that we've been dealing with.

As you well know, there's nothing investors like less than chaos and uncertainty. You make the point that we need to separate the wheat from the chaff. There's some policy and some extraneous material, but from where most of us sit, it's hard to know what the administration may or may not mean when it floats these trial balloons.

So how is this going to play out? Are we going to need to get just a little bit less attuned to what's happening in Washington in these early days of the administration, or might things change in a way that's more helpful for us?

No, Eric, I would encourage you to stay very attuned to what's happening in Washington because this policy environment is so critically important. When I came into biotech 25 years ago, I didn't pay attention to policy at all. I cared about science and technology, scouring the world to find ideas for some of these rare diseases.

Now there are so many ideas, tools, and technologies, but most of our challenges now are man-made, whether they be around basic research funding. Again, we do advocate—I want to emphasize this virtuous circle of innovation that we talked about. I talked about it on my first day on the job a year ago at BIO, looking at every part of that circle and what it takes to make newer and better medicines, always beginning at our academic research centers.

The NIH is an incredible strategic advantage, and we need to continue to invest there. We've emphasized a lot of that behind the scenes. You'll see more of it publicly going forward as well. But again, you've got to separate the wheat from the chaff here and look at what's actually happening.

I refer back to what wasn't said. That was very significant: the president had an almost 2-hour State of the Union and never mentioned drug prices, even in passing. He never railed against evil pharmaceutical companies. I'd encourage you to think about what's not being said as well.

There's 1 other data point I'll provide. The first week in April, the week of April 7, will be a very important week. I'd mentioned before that Congress, from time to time, authorizes these multiyear national security commissions. They've done it with cyber and with AI, and they're doing it now.

A couple of years ago, they formed the National Security Commission on Emerging Biotechnology, and its report is going to come out. We've been working very closely with them, particularly over the last year, as we've emphasized the critical importance of biotech for our national security.

I think you'll see very specific policy proposals around manufacturing, the FDA, and clinical trials, looking at a whole bunch of areas where we can break down barriers. I think it'll be very favorable for our industry, and there'll hopefully be a lot of media attention around that. I would really encourage you to look at that report because these reports don't sit on a shelf. They are implemented.

Senator Todd Young of Indiana is chairman of the commission, and he, Senator Alex Padilla from California, and others take this very seriously. We have private-industry folks like Eric Schmidt involved as well. This will be a very important and very serious report.

When we see something of prominence like that coming out of Washington, it's coming from Congress, but it goes directly to the White House. Now the job is to take those policy recommendations and find the vehicles to implement them over the next year or so.

So, yes, you've got to think about what's rhetoric, what's trial balloons, what are executive orders that aren't really going to go anywhere or be stopped, and what's most important. Where are the threats? Where are the opportunities? You've got to prioritize.

John, it's Sam here. I'm sitting on the other side of the world from the United States, so this is all something that's a lot harder for us to keep an eye on because you obviously see it through the lens of other media, et cetera.

First, I wanted to add to what Eric was saying: thank God you were here, because your optimism is something that we've all needed, given the state of the sector. But let me just throw a couple of things at you.

I've just been talking to somebody from the CDC, and it was one of those folks who was let go and then rehired. They've also got a situation where I think a lot of people are wanting to leave, partly because they don't want to be involved in doing a study looking at vaccines and autism, which is something that a lot of them, in their professional opinion, believe is settled.

So there are these elements that are still ongoing, along with what looks like an anti-science feeling, at least from this side. I may be completely wrong, and I've heard everything you said, but you still have confidence that these things are not going to be an issue in the long term and that science is going to prevail?

I do, and again, I think it's perhaps misplaced to say that there is an anti-science view in the administration. All the challenges you point out are absolutely right, and those are ones that we push back on very hard.

There is no question that there is no link between autism and vaccines. We were pleased to hear Dr. Makary say that point-blank in his hearing. We hadn't heard that in a prior hearing. Those are things that we need to be incredibly vigilant and engaged on.

When we see antiscience views or areas that undermine the public trust in science, technology, and leadership, we need to be really vocal about that. Sometimes it's very vocal privately. This isn't all going to be fought by press releases and clever commercials. Those tend to be the most persuasive discussions, I find.

At times, it does need to rise to a higher level. When I wrote that piece in STAT, which came out 2 weeks ago, none of that was a surprise to lawmakers or policymakers at the White House, HHS, or anywhere. They've heard all of that from me and from others.

This was going on the record and framing it in a very public way, but it was also directed to other stakeholders, including you guys, our companies, our community, and, for instance, the workforce at the FDA. We have emphasized repeatedly to DOGE that you can't go in with a wrecking ball. You lose key people; you lose key talent. It's not going to be, “Well, we'll make mistakes and we'll fix it down the road.” No, you're going to harm innovation. You're going to harm patients. And you might as well just give the whole industry to China. You can't do it. And we've given them examples of why that doesn't work.

And I think that, again, when you look at this buyout offer this week and the fact that FDA inspectors and reviewers were exempted, I think they get it. There are some people who are aligned around wanting more medicines and wanting a successful biotech industry. It's not without its challenges or its opposition, but that's kind of our job: to manage and balance that on behalf of the industry.

So, again, I wouldn't say I was wholly enthusiastically positive. I said I was unbalanced. I believe there are more positive opportunities than there are threats. But there are threats.

3. China Reshapes Biotech Competition

John, it's your turn. And again, thanks. Always great to hear from you. I'm actually going to ask a question about China because we've discussed on this show many times the innovation that's now coming out of China and where IP and drugs are now being found, but they're actually coming here more for development and commercialization, which is another avenue of innovation. I think some view it as a threat.

But along with that, obviously, there's the question of what is BIOSECURE really going to mean? What about manufacturing? And then, of course, there's BIOSECURE kind of broadly in this industry. I think many of us thought that it was a done deal. We have a Washington research group that thought that was going to get done last year, and it didn't get done, and that was very surprising. It did seem like there were a lot of stakeholders behind the scenes that had a lot of input, and, of course, you and BIO had a lot of input. What are you expecting, and what's the timeline?

I think it's important to realize BIOSECURE is 2 things. It is a piece of legislation, and as it came out last year in a very public and forceful way, our job at BIO was perfectly aligned around the concept—the second part of BIOSECURE, the concept of biosecurity. With the specific piece of legislation, we said we had some areas of concern. We did our survey, of course, and we met privately with members of the China Select Committee and members of the intelligence community to share our thoughts, including the fact that you can't cut off access to some of these key partners, particularly the manufacturing partners, because, again, you'll slow biomedical research, you'll harm patients, and you'll actually work against your national security interests. They listened to that. They made the changes.

In fact, there were so many changes to that bill. While it did pass, it wasn't overwhelming. And there are some people, when you talk to Congressman Jake Auchincloss up in Boston, who'll tell you he voted against it—not because he's against the concept of biosecurity. At the end of the day, he thought the legislation was so watered down as to be ineffective. So it didn't pass; it wasn't included in the National Defense Authorization Act at the end of the year.

Our view is that it's possible, but it's in a form right now that's largely ineffective or toothless, and increasingly unlikely to even become law. But what it has done is to raise, again, that second part of what BIOSECURE is, and that's the concept of biosecurity. A lot of it, again, is grounded in supply-chain resiliency.

But it's even broader than that. It's the entire biomedical research establishment, including, of course, our industry. What it's done is to elevate that view that, okay, that is a threat. But the mistake, I think, of the BIOSECURE Act was to think that you're going to prohibit activities, that you're going to somehow penalize investment or partnerships—the sticks, if you will. That doesn't work really well. There's some incredible science going on in China, and they're moving in very, very fast. I think in some ways we've got a couple of years till we're at par or worse with China.

And again, we're of the view that we need to continue and maintain our lead, with the United States among our allies as the critical center of excellence in biotechnology. But don't look at what you're going to do to punish China. Look at what we're going to do to break down our barriers and to allow biotechnology to flourish. And that's when I come back to this National Security Commission report, which, again, I think will be very, very positive in changing the ecosystem for us. But a lot of this is against the backdrop of this great rivalry with China.

John, thank you very much for your time. We know how busy you are. All of us at Biotech Hangout owe you a debt of gratitude for all the work that you're doing, and we really appreciate the time. Hope to connect soon.

Thank you so much, guys. Have a great day.

Okay, we can head back to our week's worth of high activity in obesity. Josh, did you want to touch on the 2 key deals that were done—or not done, maybe—with the Zealand–Roche transaction and then Viking going at it alone with their manufacturing contract?

4. Obesity M&A Faces A Reality Check

Yeah, absolutely. One of the things that has driven up the obesity sector, or biotech in obesity, is the chance for M&A. Of course, that comes naturally because this is a game for really big companies. There are 2 companies that were widely expected to have gotten acquired. One is Zealand Pharma out of Europe, and the other one is Viking Therapeutics in the U.S.

Earlier this week, Zealand announced a deal with Roche for essentially combining the GLP-1/GIP injectable from Roche, which they bought as part of the $3 billion deal for Carmot—that's CT-388—and combining that with petrelintide, which is the amylin analog from Zealand. It's a 50/50 deal, a huge upfront. I think it's $5.6 billion altogether. Roche made a huge upfront payment that then enabled Zealand to do 50/50 for the back end of the deal. Just to give you a sense, the upfront was $1.65 billion, fairly sizable, and then they're both going to take that into Phase 3 studies.

CT-388 from Roche looks very good. It had a 19% reduction at 24 weeks. It did have some dropouts, almost 12% all-in between the uptitration and the maintenance, and there were high rates of nausea and vomiting as they got to the high dose. So it's unclear exactly which dose they're going to take forward. Petrelintide looks good. It does look better so far than the amylin that's part of CagriSema. It's a higher dose, so it can obviously be more potent. So this is something very promising to watch.

All in, of course, this area is heating up, but Zealand did come up from the bottom on the heels of this deal. By and large, though, the stock is down a lot from the peak, with the expectation that they're going to get acquired. At least they're well-capitalized, and they have a good partner.

The other one is Viking, and that's a small biotech. They have an injectable GLP-1/GIP agonist that's looking really good, and they have an oral version of it. That's a GLP-1 peptide with an oral delivery. Obviously, that has its own challenges as an oral. The efficacy there does not equal the injectable's. But again, this is a company that is well-capitalized. They have $900 million, but that's obviously not sufficient long term, and it's expected to get acquired, too. Their data look good. Again, I think the big question was, how are you going to develop it by yourself?

What happened this week is they entered into a deal with CordenPharma. This is to produce the active pharmaceutical ingredient. They're going to pay $150 million over 3 years. And just to give you a sense of the volume, CordenPharma is going to have capacity for 100 million autoinjectors annually, 100 million syringes, and 1 billion tablets. I mean, huge volume.

Now, the question is, does that mean that Viking is more or less likely to get acquired? And there's still a question: How do you finance? So I think that stock obviously is facing those questions and, in general, has also been under pressure. Either way, you do need to get API. So maybe this is another clearing event toward an acquisition, or they're just going to go it alone. But this area is going to become very competitive. There's Amgen coming in, there's Metsera, there's Kailera. There's a lot going on.

Josh, I know you follow all these moving parts in obesity very closely. I'd love to get your views, but I guess, in particular, on this acquisition question that you bring up: who may or may not get acquired going forward? We've seen a couple of deals in the amylin space, Gubra last week and now Zealand this week. We haven't seen many deals in the GLP-1 space, and we haven't seen any acquisitions. Are we kind of past peak frothiness in terms of what you would consider M&A, at least with regard to GLP-1s, and maybe even past acquisition windows for amylins as well?

Well, so, Eric, I think share prices tell you that, right? To a degree, when you look at it—and Viking, Gubra, Structure Therapeutics, Eli Lilly, whichever company you look at, that tells you that.

However, there are elements here now that I've lined up in a situation where maybe it's not necessarily M&A. If you have a company that's got just amylin, let's say AbbVie, which has just entered the fray with amylin, given that everybody is looking at these combinations of GLP-1, GIP, or GLP-1 and amylin—whatever shape or form you like—I would say that they would need to build a pipeline here or a bigger bag for those sales folks.

I've been talking about this to a couple of people. If you think about the old world of SGLT2s, which are diabetes therapies, there are 2 drugs on the market that are very similar in terms of efficacy and side-effect profile: AstraZeneca's and Lilly's. Which one is selling better? Lilly's. They have a broader indication base, but they also have a bigger diabetes business. So is that why Lilly's SGLT2, Jardiance, is doing better than AstraZeneca's Farxiga?

Maybe if that is true—and I think a lot of people believe that—if you have a franchise, you're better placed than someone like AbbVie, which would have to create that franchise again. Does this mean a takeout of one of these GLP-1 companies that we've mentioned, or does it mean a licensing deal or a partnership? Possibly. Either way, I think it would be good for them, as we've seen with the share price for Zealand, even though it's sold off because everyone's now worried that the next catalyst is a year away or a year and a half away. That's the world we live in.

That is the way I would look at it, to be honest. I am on the side that the Viking manufacturing deal is a realistic and important thing for them to have done. A lot of people talk about the manufacturing capacity for these peptides, so they've kind of solved that problem. Either way, whether they're going it alone or with a partner, this is a problem that needed to be solved. I don't see it necessarily as a signal that there's no M&A, although that's what some people said.

5. Small Cap Oncology Deals Return

Thanks for those thoughts. I think a lot of us would feel a lot better if the Viking asset were in a partner's hands, given the inability of a smaller company like Viking to really compete from an execution standpoint.

Staying with the deal-flow theme, we did see a couple of M&A transactions this week that are worth mentioning. They come again in the small-cap oncology space, with Sun Pharma having acquired Checkpoint and Bristol Myers collaborating or consolidating its interest in 2seventy Bio. That BMS–2seventy deal, of course, comes just weeks after the other half of bluebird is being acquired. This all follows Jazz's Chimerix deal.

A lot of small-cap oncology acquisitions are happening again. It strikes me that we'll probably see more, to be honest, because these onesies and twosies in oncology—$100 million, $200 million, $300 million-type drug candidates—really ought to be part of a bigger oncology organization. From a leverage and margin standpoint, it makes a lot of sense. Also, because of the environment we're in, we have many small-cap oncology companies, some even with marketed drugs, trading at or below cash. I'd expect that type of trend to continue.

But the small-cap oncology deal that we have yet to see happen is the SpringWorks–Merck KGaA potential acquisition. What's the latest there?

Yeah, the latest there is that there is no update. For everybody listening, recall that this is a company, SpringWorks, that launched Ogsiveo very successfully for desmoid tumors. They're the only drug on the market, and they beat the numbers. They just got Gomekli approved, which is a MEK inhibitor for neurofibromatosis type 1, the plexiform form.

The competitor there is AstraZeneca. AstraZeneca only has a label for pediatrics, and it's got a lot of black-box issues, drug-drug interactions, and safety issues. SpringWorks got approved for both adults and pediatrics with a better label, so it should be a better product.

Between those 2 drugs, consensus is that they're going to sell $1 billion to $1.5 billion, and maybe the upside is $2 billion. It's a $3.8 billion company. Merck KGaA put out a press release toward the latter half of January saying they're in advanced discussions. As everybody knows, Merck KGaA has a division in neurology and oncology, and the oncology products are actually orphan-focused, just like here. So it's a perfect fit. It's a big company that is globally oriented, and they have the capital. They have $15 billion of capital.

We all thought this actually made sense because we do think that SpringWorks wants to and needs to sell. Of course, they need to launch the drugs globally, and they're a small company out of Connecticut, so we all thought the deal was going to get done. The stock went up to $60 from $32 at J.P. Morgan. Merck KGaA reported about a week ago, and on the call they really didn't say a lot other than that they have $15 billion in capital and that they're focusing on health care products and in-licensing. I think that was the message.

Of course, SpringWorks immediately went down, maybe as much as $10, over those 2 weeks. We're all waiting. Management are returning calls, but they're not coming to conferences. The next big catalyst is probably when they report the first quarter, in April, and if they indeed do a conference call, I think at that point we'll think that they're probably not getting acquired imminently.

In the meantime, the stock is hovering around $50. It makes a lot of sense to do a deal. We were hopeful for a deal, but we're all back in watchful waiting. We think Merck KGaA is the most likely acquirer based on size.

6. Uplizna Challenges VYVGART

Okay. So maybe patience will be a virtue here, but we're in an interesting kind of intermediary time frame. Let's leave the transaction discussion and deal-flow discussion and turn to some data updates. Maybe the highlight of the week could have been argenx's VYVGART. Eric, do you want to take that one as well?

Yeah. This is an interesting one. Earlier this week, we actually designated argenx as our European top pick, I think maybe for the 5th time in a row. It's obviously one of the premier companies in the biotech sector, certainly out of Europe, probably just along with CB [?].

The competition here is Uplizna, which, as everybody knows, is an antibody that depletes CD19 cells. It can be dosed twice a year, and that's what's really nice about it. We've seen the 26-week data at AAN. Recall that at that time, the onset of action was slow, but at the same time they were able to taper off steroids, which is a big positive, and it's very safe.

Now we got the 52-week data as a late-breaker abstract. We don't have the full data; it's going to be on April 8, but we can certainly see, pretty much as expected, that the curves continue to separate. At that point, you've got a dose at 26 weeks and another dose at 52 weeks, with nothing in between, so you're totally off therapy, which is very nice.

The data is not quite as good as Vyvgart, but it's pretty good. The MG-ADL is almost the same. It's sort of –2.8 versus, let's say, –3.0. The QMG, which is the secondary endpoint, is –2.0 versus –4.3, shy of Vyvgart at –5.3. Again, it offers you a very nice option in a huge market that is very much a growth market. It's about $6 billion and growing right now in gMG.

We definitely think Uplizna is going to find a role, maybe to replace C5 antagonists because it's safer, you don't need to get vaccinated, and it's cheaper and more convenient. It could also be used in patients that fail Vyvgart, or maybe as maintenance after patients get into remission. Anyway, the whole CD19 premise is not really playing out clinically.

Yeah, I know investors always like a good fight between 2 competitors in markets like this. But the number-one parameter behind the success of either of these 2 drugs is going to be the size of the market, right? These markets just keep growing and growing and giving and giving. So make sure you don't lose sight of the forest through the trees here.

Let's turn our discussion over to earnings recaps. We actually had a couple of stragglers report this week in BioNTech and Legend. Did you want to give us the update from BioNTech?

Sure. Look, they had a pretty rough week, although it was against a very difficult tape. The results were on Monday the 10th. They reported that 2024 was in line, but nobody seems to care about that. Everybody cares about the outlook, which was quite interesting because they guided to €2 billion in sales. So, for one, assume euro-dollar parity, or if you want to divide by 1.1, $2 billion in sales, and that's against the consensus of $2.5 billion based on Bloomberg.

What happened here? They said at the same time—and remember, Pfizer, where most of their revenue comes from, said that they're going to have essentially the same revenue as last year, which was about $5 billion—so why is BioNTech not getting the same revenue as last year? In terms of volume, they said it's going to be similar to last year, and their assumptions are pricing and also share. So, of course, what's left here is the write-downs.

To be fair, a few hundred million in inventory write-downs happens with vaccines. You manufacture and hope that people buy it. They don't buy it, you've got the stock, so you have to essentially write it off, especially in a world where the vaccine changes every year. This is the case here. This is the case with flu. So this is nothing against BioNTech; it's just the way it is. It's write-downs, mostly.

There are probably a couple of other elements, but I think that is the biggest number. Then you add all that up, and you get to a cash burn of something in the region of €1.5 to €1.7 billion for the year. On top of that, they spent some more cash. They bought Biotheus, and they’ve got a couple of settlements. So we think that they’re going to end the year with something in the region of €14 billion.

Now, why is that a problem? It’s not. The reality is, this is a massive cash balance, right? But you do then create a situation in which you have to somehow keep that enterprise value going up, and the only way to do that is through delivering on your pipeline, which Josh is going to talk about because there’s a conference coming up and, I think, in the very near term, there’s some data coming. So, Josh, over to you.

Yeah. And just to give you a sense, because we got a lot of questions on BioNTech: What’s the worst-case scenario? What is cash? Recall a year ago, or 9 months ago, right before the famous ASCO where PD-1/VEGF bispecifics really hit, they had about $80 in cash. Heading into this ASCO, we believe they’re going to have about $60 in cash. The stock’s at €100 right now. So everything I mentioned, by the way, is euros, not dollars. It kind of gives you a little bit of a sense of where they are and why the pipeline is so important.

We’ve seen data from Summit and Akeso on a competing product. They showed initial survival data in lung cancer that looks good, with a hazard ratio of 0.8 and about half the survival events happening, and they’re going to update that in short order. That’s probably going to be the most important data for the class.

With BioNTech, we’ve seen some survival so far in triple-negative breast cancer. We’ve seen a little bit of survival so far in non-small-cell lung cancer, but now we’re going to see the small-cell lung cancer data, and that’s coming in Paris on March 28. It’s going to be in first-line and second-line, and there’s going to be a lot of follow-up. So we’re really going to be able to begin to tell: Is there really a survival benefit with these drugs? We anticipate that the PFS would look good. The big question always with survival is, can you actually show a survival benefit? Because there isn’t a great correlation with checkpoint inhibitors between PFS and survival in small-cell lung cancer. There’s going to be a lot of data coming between them and Summit over the next 3 months.

So, look, the risk-reward here is getting pretty interesting to a lot of people. The stock’s back at €100, and it’s worth following. The pipeline is definitely interesting.

7. Biotech Earnings Test The Pipeline

Well, there, as you say, are a number of milestones that are upcoming from these PD-1/VEGF bispecifics, and obviously it’s an enormous market where you can potentially take on a PD-1 like pembro and show superiority to what is today the world’s largest pharmaceutical. So, a lot of action, and the stocks, for sure, are upcoming. Thanks for those updates. Maybe you want to take us home, Brian, with the update from Legend, which is obviously also in another exciting and competitive marketplace.

Yeah. So this is—we always say—the Legend of Legend, and it’s about Carvykti, obviously the biggest-selling CAR-T now, of any CAR-T, and certainly the biggest one, obviously, in myeloma. It’s a BCMA CAR-T; it showed a survival benefit in second-line onwards in myeloma.

Of course, J&J and Legend just couldn’t make enough, and they were totally capacity-constrained last year. They’ve now opened essentially 2 to 3 new facilities—or, actually, new expansions of current facilities—including the 2 facilities in Europe, Beerse and Tech Lane in Belgium, the Raritan facility in New Jersey, and Novartis, as a contract manufacturer, is actually making commercial supply for them now, too.

They’re going to double capacity this year, let’s say, from just under a billion to just about two billion globally. That’s this year. They’re supposed to finish this year at more than 10,000 doses’ worth of capacity. And they’ve now, for I think the first time, really begun to crystallize that by 2027 they’re going to have 20,000 to 24,000 slots’ worth of capacity annually. I mean, it’s a huge capacity, and no one has anything close to that utilization in the models yet.

Of course, we’re all waiting for the frontline data because that’s the really big market. There are, as everybody remembers, 9,000 transplants in the U.S. alone annually that could ultimately be replaced by CAR-T per the data, assuming it works—and I do think it’s going to. And now they’ve just announced an additional 150 million each—almost 300 million worth—of another expansion at the Tech Lane facility, which will come on board, I believe, in 2027 or 2028.

Look, I remember when we started, sadly, myeloma was a 6-month sort of median survival. Now survival—we’re talking about 10 years in some cases. So, thank God, there are going to be a lot of really good therapies, and capacity is ramping up quickly, which is good to see.

Well, your last comment really makes everything that Josh said earlier in our discussion ring so true. It’s so critical that the U.S. gets this right, from not just a national security but public health standpoint. So, everyone, it’s always wonderful to share the microphone with you guys. Thank you for your insights. We are out of time.