第178期｜2026年4月3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 Greg Savanovich, and my co-hosts today are Michael Yee and Eric Schmidt. For more information about our hosts and guest speakers, or to listen to the most recent episode, please go to biotechhangout.com. So it's great to be back as a host on the Biotech Hangout. I'd like to wish a good Friday to those who celebrate. For those of us who work on Wall Street, we enjoy Good Friday because the stock market is closed today, and it gives us an opportunity to rest and recharge—or, for those inclined, an opportunity to catch up on some work.

In any case, we certainly had another busy week in the biotech industry. We're going to get through as much as we can with a pretty jam-packed agenda. Starting off, we'll do a high-level view of current sentiment and the outlook for biotech. Let me welcome Mike Yee and Eric Schmidt. Mike and Eric, it's great to have you both. Mike will lead off with some comments, and then we'll have him pass it off to Eric for his perspective. So, Mike, please go ahead.

1. Biotech Outruns The Market

Yeah, absolutely. It'll be great to have Eric's comments as well. Look, I think it's an interesting time as we close out the first quarter, because we were going into 2026 on a pretty big move. I think everyone was super excited, and we had a huge rally. Then, in March, I guess we had a pullback, and investor sentiment reflected a lot of worry and concern.

Obviously, the market pulled back, pharma pulled back. I'll make a comment about that. XBI pulled back about 10% or so. There was obviously the start of the Middle East conflict. One would think that with a global conflict and concerns about oil prices, there was then chatter about how there was going to be a pause on interest rates. As you know, I think Tim has commented about this before: rates coming down have been an important theme, an important factor in the backdrop helping drive biotech over the last year.

With that, I think people felt like, okay, if rates aren't coming down and we have a global conflict, this is probably a risk-off environment. We did see biotech have a pretty sharp pullback. We'll get to last week—I know Eric wants to talk about that—but I wanted to reflect that there were a lot of concerns about biotech over the last 4 weeks because of the conflict and because of rates.

I was out there, and I think my peers were out there, saying it's probably not going to be a big concern. The tailwinds of biotech fundamentally, with drug pricing and M&A, are still out there, so use the pullback as a buying opportunity. And, of course, we got to last week, and Eric will talk about that.

So the sentiment, I think, is that all of the pieces are still in place for a very solid year. We've been reflecting on that. There have been financings. There's still M&A, obviously. I think the only wild cards right now are the conflict and rates, and we'll see how that plays into it. But a lot of the other pieces are still in place, so that's good as we start the second quarter.

I think Eric might chime in there too if he wants to talk about biotech. Obviously, there was a sharp move back up, and boom, right back at it after the 2 deals that just took place.

Yeah. Thanks, Mike, for that background. Generally speaking, I agree. If anything, investors just got a little bit accustomed to the strength that we've had in our industry for much of the back half of 2025. As we came into a little bit of choppier waters for the group, mostly driven by macro factors, there was a little bit of unease and uncertainty.

Honestly, I think that reflected much more what was going on outside of our industry than what was going on inside of biotech. Throughout the choppiness in Q1, I don't think the XBI ever trended below the S&P 500. In fact, I think it's been comfortably outperforming the broader indices. Right now, for example, the XBI is up about 7.4% on the year, and I think the S&P 500 is down about 4%.

When you look at that outperformance of over 11%, it's really startling. Relative to the broader markets, it's been a terrific year for biotech. I think that statistic shows you just how much biotech is really leading the charge out there. And yes, biotech is certainly at the whims of the broader market too. The conflict in the Middle East is not good for any industry.

But I think what you saw on Tuesday of this week, where the XBI had this massive 1-day gain—a 7%+ gain in a single trading day—just highlights how, when the macro does come back, the XBI is top of people's minds and biotech is top of people's minds. That XBI performance, I think, was the fourth largest or fourth-best day we've had in trading in the index over the past 10 years. So that's a very, very substantial move.

Again, it was macro-driven for sure. We do need the macro to work in order for the micro to come to the fore and for people to want to invest in anything. But what's remarkable to me is just how massive the outperformance has been despite how mixed the macro has been. As Mike said, this is not usually thought of as a risk-off kind of performance sector. We're really seeing that 11%+ move on top of the S&P 500, no matter what's going on out there in the rest of the world.

Hmm.

And Eric, let me add: I think it's not just macro, but I do think the micro is so solidly in place, in my opinion, and the stocks have been so cheap and out of favor that they are more important than the macro. Obviously, there's the macro, with rates—which have come down—and uncertainty about the conflict. But just in general, obviously, there's been a lot of positive data sets.

There's the financing window that's open to fund these things. Drug pricing is out of the way for the most part, and I'll get to that with pharma. I talk about the pharma sector a bit. And again, M&A—once again, I think in the last few months we were talking about how there wasn't that much M&A, and then bam: 2 in the same day, Eric. 2 in the same day.

I think you're right.

Wow.

I think you're absolutely right, Mike.

Yeah. Wow.

I think it's the micro. The great micro is what's allowing us to outperform—

Yeah.

—the broader markets. I guess it's the macro that sort of determines by how much both the broader markets and biotech are up or down.

That's true. That's true. We think the macro will drive some of this month to month, but overall, for the course of the year, we think the micro is so strong, the deals are in place, and there's still more to come. Again, I can go right into pharma.

2. Pharma Reclaims Its Momentum

Investors are getting paid off. At the end of the day, are investors getting rewarded for taking on that risk? Are they getting rewarded for data? Are they getting rewarded for being in these stocks? The answer seems to be yes. Until I've seen that materially turn around—where good data is just sold off really quickly, or pharma says something, or there's something else going on that's going to impact these names—I think there continues to be broad support for the group, and I think you see that.

So let me reflect that, because I think that goes into a bit of pharma. You talk about how XBI has had such a material outperformance. Pharma, which has been pretty rough for the last 3 to 4 years, large-cap biotech, and large-cap pharma as well have all seen significant outperformance.

Names like Merck are up 10% year to date, while the S&P 500 is down. Bristol Myers is up 10%. Pfizer, funny enough, is one of the largest outperformers, up 13% year to date. And Lilly, while down and obviously coming off a big year—we'll talk about Lilly, of course, in obesity—overall has been a good stock over the last year.

We had a big report coming out about all these tailwinds in pharma, and we've also been saying that pharma, on the back of biotech as well, is thematically the same thing. You have names that have been out of favor for a while. You have a global conflict and a risk-off environment where, obviously, pharma is going to do better, and we feel good about earnings. Importantly, drug pricing is out of the way as well.

When you put those pieces together and see that these companies, half of which have patent cliffs, are actually going out there and buying up biotech and fixing these stories, that is a story fund managers can understand. These names that are trading at 9, 10, 11, 12, 13 times—Gilead now at 15 times—are an attractive place to be this year, and I think we continue to see that.

We've been fans of pharma this year. We think there's a turnaround in that sector, and a lot of these names are deploying capital and putting it to work to buy up biotech names, which is probably benefiting biotech as well. These stocks have room to move this year. So that was the genesis and thesis for the playbook, and I think a lot of that makes sense and jibes with what we're saying about biotech as well.

Well, that's really great stuff from you both, and thank you for that. We did speak on deals that we saw—

Mm-hmm.

…this past week, so we're going to move on to deals. In particular, we're going to focus on 3 on our podcast today. First, Biogen's acquisition of Apellis Pharmaceuticals; then we'll talk about Eli Lilly's acquisition of Syntessa Pharmaceuticals; and then a really interesting reverse merger that we saw between publicly traded Cyclerion Pharmaceuticals and a private company called Corsana Biosciences.

But let's start with Biogen and Apellis. Mike and Eric, I believe you both cover Biogen. I used to work at Biogen. But with that said, I also cover Apellis, so we're going to have lots of views to offer here. Eric, why don't you start from the Biogen perspective, and Mike, feel free to add your color—

Yeah.

—and then I'll give my thoughts from the Apellis perspective.

Graig, I had forgotten about your stint at Biogen, so I'm very curious to hear your views on how that company has changed. It's changed dramatically since you were there, but that would be of interest to me.

3. Biogen Pays Apellis Premium

Biogen buying Apellis: what's notable to me is, number 1, the premium being paid here. They paid a 140% premium over Apellis's last close. Now, granted, as I'm sure you'll talk about, Graig, Apellis as a stock was a troublesome investment that had been abandoned to a certain extent by Wall Street and was certainly compressed in its valuation relative to prior trading.

But the 140% premium is very substantial, especially for a deal of this size—about $5.6 billion. In fact, I can't remember seeing anything nearly as large in terms of premium for a multibillion-dollar acquisition. So that's notable, and it's especially notable coming on the heels of last week's deal where we saw Terns get acquired by Merck for a very modest premium.

Some of us had been bemoaning the 6% premium that was ascribed by Merck, and that transaction is paltry and really disappointing in terms of acquisition premium. From a small-cap biotech perspective, it's great to see that there are deals to be had at much more meaningful premiums. I'm sure we're going to talk about Lilly and Syntessa, which wasn't 140%, but still a meaningful premium.

Let's step back here. When Chris Viehbacher came in as CEO 3 or 4 years ago, he came in as a deal guy and said, “Don't hire me unless you want to do deals.” Immediately, he did a transaction acquiring Reata and Sky Clarus for $7 billion or so. He's done some smaller deals since, but the narrative at Biogen has transformed in the meantime to one of cost-cutting, execution, and pipeline investment. Now we're on the tape with a much more substantial deal a few years later.

I don't know if this is so much a Chris Viehbacher deal as it is a Robin Kramer deal. She's the CFO over there. To me, this isn't about buying a great new shiny toy and growing from this acquisition. It's a bit more about financial management.

Apellis does have about $1 billion in sales. They haven't had much profit associated with those sales. It sounds like Biogen is going to take a knife to the Apellis organization. I think that's a core skill set at Biogen these days: They know how to reduce costs and reorganize businesses.

In doing so, they'll take on some sales and, hopefully, some profits. They expect the deal to be accretive next year. Most importantly, they are inheriting a kidney drug that can help pave the way for their own pipeline. Their drug filzaratimab is in 3 Phase 3 studies in various kidney indications, and with the Apellis product for C3G nephropathy, they'll have a commercial platform that's ready to go.

Those are my thoughts. It's probably an okay deal for Biogen. I'm very curious to hear what you guys think. It's hard not to look at that high premium and get a little bit worried, but on the other hand, you can say, “If they can cut costs and make this profitable next year, not so bad.”

Yeah. I agree. I think it's an okay, positive deal. I don't think it was something that people looked at and said, “Wow, you must have applied some amazing science and R&D insight to buy something, and it's going to become some gigantic blockbuster.” This definitely was not a pipeline deal. This was a commercial transaction that seeks to drive revenue and earnings growth over the next 3 to 5 years, particularly because Biogen faces the loss of exclusivity on the royalty for Ocrevus, which is a meaningful $1.5 billion line item for them and could get cut in half in 2029 and 2030.

The company, with flattish revenue and earnings, faces a problem in a few years. This transaction covers a large part of that. I don't want to say it completely replaces that LOE problem, but it definitely offsets some of it. So this is a commercial and financial transaction.

The company will also seek to drive synergies by probably applying more commercial efforts across the board for GA, but then particularly on the renal side, where they will be launching and finding synergy with filzaratimab. So there are revenue and earnings implications, and then perhaps synergy with future renal drugs as well that they plan to launch.

The one thing we'll want to pay attention to later this year, particularly in the context of the significant premium they paid, is the fact that Wall Street was not only unsure about the revenue trajectories this year—flattish to up on Apellis—but also about the competitive risks that the drug, particularly in GA, faces. Alexion has some data later this year, and Regeneron has some data later this year in Phase 3.

To the extent that those drugs will also add to the competitive landscape, the fact that they did this deal before those data sets read out adds to the uncertainty about whether Biogen will look good buying this asset ahead of those readouts and whether they can significantly grow sales over the next few years for both of them. So, again, probably not a super-risky deal, Eric, just more of a financial transaction.

I'll add my comments first from the Apellis perspective. This is a great outcome if you're an Apellis shareholder. I'm going to assume that if you're an Apellis employee or maybe even management, this is not the way you thought the story was going to turn out.

I think Apellis came to the market with Syfovre, with a lot of hope and expectation and fanfare, as the first FDA-approved drug for geographic atrophy. This is a condition where there are about 1 million to 1.5 million people in the United States who have this progressive retinal disease. It does lead to blindness.

When we launched coverage in fall 2023, peak-sales consensus estimates were in the $2-plus-billion, if not $3-billion, range, and they've come down quite significantly in the time since. Then you look at a stock that—we crunched some numbers—year to date, the stock was down about 32%. Last year, the stock was down 21%. In 2024, the stock was down 47%.

At $41, a level the shares had not seen in about 18 months, I really think this is a tremendous outcome. We spoke about the 140% premium, so it is a great outcome if you are an Apellis shareholder.

From a Biogen perspective, I'm a little befuddled. I don't cover the stock. Maybe there are some revenue gaps that have to be addressed. But Biogen has not historically had a large presence in ophthalmology. Maybe strategically, they will look to do more in ophthalmology, and I think ophthalmology is one of the most exciting spaces right now, given a lot of innovation and new company creation.

It seemed to me—and I'm sure Mike and Eric, you both were on the conference call that Biogen had; I dialed in too—that the strategy here was largely about building out the kidney disease franchise for Biogen and having Empaveli, which just got approved in 2 rare kidney diseases, help create a foundation from which to hopefully launch tezartamab.

With that said, it’s a different type of deal than I would have assumed from Biogen. It’s a different company from when I was there about 12 years ago doing BD. Companies evolve, and this is an interesting one. So again, a great outcome, I think, from an Apellis perspective, and it sounds like maybe a net-neutral to slightly positive one for Biogen. We’ll just see how this all plays out.

4. Lilly Expands Into Orexin

Let’s move on to the Eli Lilly–Syntessa Pharmaceuticals deal. Mike, I believe you cover Eli Lilly. If you want to talk about that, I also have some presence in the orexin space. I’ll add some comments after you’re finished.

Yeah, perfect. It’s interesting because, of course, let me just say 95% of the focus on Lilly, and more than 60% of the revenues, are in the GLP-1 space, and that is obviously the support for the $1 trillion market cap that the company has. So the $6 billion transaction is about—what is that?—like a 1-hour move in the stock’s market cap. It could be less than an hour. I mean, it’s like a tick; a bid-ask spread is about $6 billion. The market cap is $1 trillion.

If we take a step back from a financial impact, the basis of the transaction is that Lilly is obviously thinking about the next 5 or 10 years, and they are thinking about all of the other areas that they seek to be involved in to drive blockbuster products. They have made some transactions in neurology. They have some transactions in immunology.

One other comment, since I cover Lilly: They may have actually made a couple of transactions over the last 12 months involving literally $1 and $2 stocks. They bought Ventyx, which I covered, and then I think they bought the gene-editing company Verve Therapeutics. I think that was about a year ago, when Verve was trading at cash. So it’s kind of interesting, right? You have the biggest company out there, and they were buying the smallest companies and just taking some moonshot plays.

It’s like, go buy that. That’s interesting. If it works, that’s great. It’s, again, a rounding error on today’s GLP-1 sales if we’re on a Tuesday. So why don’t you just do that?

In terms of a meaningful transaction, getting back to Syntessa, it’s $6 billion for the Phase 3-ready orexin agonist. The idea is that there could be many billions of dollars of opportunity in the orexin space, obviously for many different indications across narcolepsy and idiopathic hypersomnia. You could probably comment on what types of peak sales this could have, but obviously, billions. It has some therapeutic overlap, of course, with broader primary-care-type indications across diabetes, obesity, and all these areas.

I think Lilly acquiring it speaks to the significant peak-sales opportunity for them over the next 5 years, a diversification away from obesity, yet with applications that make sense for Lilly as a gigantic pharma company. But we will watch the Takeda and Alkermes products as well, which are ahead. Maybe you can comment on the exact competitive profile, but it looks similar and is obviously a little bit behind. I’ll let you speak to Syntessa more specifically.

Yeah, I won’t comment specifically on Syntessa because I don’t cover it. That being said, we’ve been following the narcolepsy space for quite some time. I used to cover Jazz many years ago, but I also cover Harmony Biosciences. Narcolepsy is a very interesting space—a rare orphan disease.

We’re talking about price points, from a drug-pricing perspective, of about $150,000 a year. There are generic drugs being used, and obviously we’ve got the sodium oxybate products. But the orexins have definitely become much higher profile over the past several years. We’ve talked to a lot of key opinion leaders, and they’re very excited about the orexin space. It’s very elegant biology.

With that said, Takeda is in the lead. They’ve got a lead compound that’s been submitted to the FDA, and there’s a PDUFA for that candidate in Q3. I don’t believe Takeda has specified exactly what that date is, I guess for competitive reasons. There’s also, Mike, as you mentioned, Alkermes, which has a very interesting asset, and Harmony Biosciences, which perhaps has the earliest-phase candidate.

It’s in Phase 1. That candidate is called BP-15205. The company claims it’s the most potent of the orexins. We’ll get the first Phase 1 data for it in the middle of this year. That is a very healthy valuation price for Syntessa, and it does, I think, speak to the overall excitement that exists out there in the narcolepsy space, but also expanding into idiopathic hypersomnia and perhaps some other rare sleep disorders.

So we’ll continue to watch this space closely. I think it is going to be one to watch, especially as we may get the very first approved product by the end of this year, and we’ll see what the launch trajectories are.

What do people have for peak sales for narcolepsy types 1 and 2 and hypersomnia? Do you cover Alkermes, I guess, is my question?

I don’t cover Alkermes. I cover Harmony.

Harmony.

But I would say that, generally speaking, they’re probably in the $2 billion-ish range. I guess it will depend on what the label expansion beyond narcolepsy looks like.

Certainly, we have a very well-established narcolepsy market. But if we think about the sodium oxybate-based products from Jazz in particular, they got to about $1.5 billion, but that is targeting the most moderate and severe patients, which is only perhaps 20% of the entire market. We’ve got a lot of mild-to-moderate patients, and again, we’ve got NT1 versus NT2. So I think it certainly could be a multibillion-dollar market.

5. Shuttles Open The Blood Brain Barrier

All right, let’s move on to the third deal to discuss. It’s a reverse merger that we saw between Cyclerion Pharmaceuticals and a private company called Corsana Biosciences, which just came out of stealth a few months ago. I would consider Cyclerion perhaps a fallen angel of some sort. So quickly, we’re seeing Corsana about to become a publicly traded company. It came with a concurrent raise of, I believe, $380 million.

What’s really interesting about this deal is the spotlight on Corsana. It is a company in the neuro space, a space that is near and dear to my heart. It is one of those companies trying to solve the problems we have with taking larger molecules—namely, antibodies—for neurological conditions, and particularly neurodegenerative diseases, and trying to get them across the blood-brain barrier. Corsana is one such company that has blood-brain barrier technology. There are a host of companies.

With that in mind, this was for a Phase 1 beta-amyloid asset, and they are now funded through 2029, so we’ll get through some important data readouts. I know, Mike, you covered Denali, and with that said, I’ll also add some comments later on. But why don’t you give your perspective on blood-brain barrier technologies?

Yeah. It’s publicly announced that the reverse merger of Corsana with Cyclerion, like you said, is a fascinating transaction. There are some banks on there, so I’ll limit my comments broadly to saying that the blood-brain barrier shuttle technology is exciting, as reflected particularly by the enthusiasm around 2 or 3 programs that are leading the way.

One, of course, is Roche Trontinimab, which is in Phase 3 for Alzheimer’s. They have basically shown that the amyloid-beta antibody—which is essentially the old Roche gantenerumab—tagged to a transferrin receptor antibody brings these antibodies across the blood-brain barrier with 10–20× the effect of the naked antibody.

In the Phase 1/2 data that Roche Trontinumab has shown, let me just make it very clear: Essentially 75% of these patients are getting to amyloid-beta plaque-negative within 6 months, and they have a fraction of the ARIA that Biogen and Lilly show with the naked antibodies. Think about that. They get much higher efficacy, and the majority of people clear the plaque within 6 months.

On the safety side, the ARIA is a fraction of the ARIA that donanemab and Leqembi show. Roche has been excited about that because, obviously, I think we generally believe that if you reduce amyloid-beta plaque with an antibody, and the only issue is safety, then those drugs should show positive results. So we expect that Roche will have positive Alzheimer’s data with the shuttle technology.

The shuttle technology, of course, is further validated because Denali—which I think you said you cover, and I cover as well—just got approval last week for its BBB transferrin shuttle, pulling an enzyme across the blood-brain barrier for Hunter disease.

So Denali got approval for that last week. Clearly, the transferrin receptor technology works: it brought the enzyme across, and the drug has better data in Hunter disease than the current Elaprase. That's now an approved drug, so congratulations to Denali and further validation that the technology works.

Denali is also tagging an Aβ antibody to cross the blood-brain barrier and bringing that to Phase 1. Denali is also using the same BBB shuttle to take an antisense oligonucleotide for tau into the clinic later next year, to block MAPT—to block tau. We're going to watch the BIB80 data and see if the BIB80 ASL works, because Denali has the shuttle to make it even better.

Then, of course, there's Corsana and Cyclerion. Corsana, of course, also has a BBB shuttle, and they seek to enhance some of these properties. These are very exciting times because you have lots of proof of concept and lots of data showing that these shuttles work. That's great.

Yeah, I think the space has really heated up in the past year and a half or so. Some of those who are on the podcast may remember there was a deal involving AbbVie buying a private company called Aliada. That transaction was announced in the fall of 2024. AbbVie was also a former company of mine that I used to work at.

That was a deal for $1.4 billion, and that certainly spoke to the level of industry's interest in blood-brain barrier technologies. Aliada had, I believe, a preclinical beta-amyloid-targeting antibody, so those were big dollars being shelled out for the acquisition of a company.

I'll also point out that earlier this year, in January, we saw Novartis, for almost similar economics, in-license an asset from Synuro [?], which I believe is a China-based biotech. Novartis in-licensed Synuro's [?] blood-brain-barrier-enabled beta-amyloid asset. The upfront was $165 million, but biobucks could take the deal up to $1.5 billion.

So you're seeing a lot of interest from industry. I also cover a company called Allector that has its own brain-shuttle technology. They call it ABC. They've got a couple of assets that are mainly preclinical right now, but they do have a beta-amyloid asset as well. I believe there's an alpha-synuclein asset for Parkinson's disease.

With their technology, they're also able to use multiple modalities—more than just antibodies. They can also use siRNAs.

Mm-hmm.

There's an enzyme-replacement program. With that said, I think these are very interesting times in blood-brain barrier technology.

That's right.

I think it's certainly one of the hotter spaces to watch for 2026 and beyond.

That's true.

Certainly, I think one of the hotter spaces to watch—

That's right. I feel like it's interesting because there's definitely a lot of good proof of concept. I ran through that. I explained that Roche's drug clearly has great effects. You've got Denali, which clearly works because it's bringing the enzyme across, and it just got approved using the transferrin receptor.

They're using the transferrin shuttle to bring an enzyme—not an antibody, but an enzyme. Roche is bringing an antibody, and Denali can bring ASOs, which are going into the clinic. All of this is happening, and I feel like the market caps of some of these companies, generally speaking, in the market we're in, Graig, are actually not that big.

I know you cover Allector. I know Allector has one coming into the clinic as well, so we'll watch that one on the heels of the valuation of the transaction for Corsana and obviously the valuation that Denali has as well. Very interesting. We were able to say all that, yet Lilly doesn't really have a disclosed shuttle. Interesting. And Biogen gave the shuttle back to Denali for the Aβ one. Uh-oh. So there you go. Interesting times.

Guys, maybe just before we leave the topic of M&A, a high-level comment on how things are looking for the year now that we're through Q1. My partner here, Josh Schimmer at Cantor Fitzgerald, and our colleague, of course, on the Biotech Hangout, keeps a tracker of all the public-company M&A acquisitions in the space.

We obviously don't include things like the Corsana private deal in this listing. But if you step back and look at where we are through the first quarter, now that the Biogen-Apellis and Lilly-Santessa transactions just squeezed into Q1 on the very last day of the quarter, we've now seen 9 different public-company M&A acquisitions. That's actually the best first quarter since we've been keeping track, over 10 years now.

It's quite a meaningful start to the year. I know it's still early, and in terms of aggregate dollars, it's about $32 billion of transactions. Those are meaningful dollars that have been acquired and can be recycled in the industry. Obviously, that could be another tailwind.

I know Mike mentioned at the outset of the call that M&A is strong. Let's put some objective numbers to those trends. We're off to a pretty good start. The $32 billion is more of an average for a typical first quarter. It's not a high watermark by any means, but it's still meaningful dollars that can be recycled back into the industry.

6. Oral GLP1 Drugs Arrive

That's great. Thanks for sharing those stats with us, Eric. We're going to move from the deal space to FDA-related and regulatory matters. You certainly can't go through a Biotech Hangout without talking about the obesity space.

We did get a highly anticipated approval for Eli Lilly's orforglipron. Mike, do you want to talk about that approval?

Yeah, sounds good. I'm sure we'll cover some obesity topics. As I've talked about over the past few months, we've definitely been waiting—or perhaps the whole world has been waiting—for the FDA approval of Lilly's oral GLP-1, orforglipron, called Foundeo.

The drug got approved this week. Generally, the timing of that was expected in April, although people thought it could be approved as early as J.P. Morgan in January or February. It was using the FDA Commissioner Priority Voucher, which is interesting because it doesn't necessarily specify an exact approval date, but rather approval as fast as possible.

This will compete with Novo's oral Wegovy, which was approved a few months ago. Both of these drugs are available on the market and direct to consumers with a prescription through LillyDirect.com. What's interesting, of course, and what's most important, is that these drugs are going to have some of the fastest launches of any pharmaceuticals we've seen, save for hepatitis C drugs.

These drugs will ultimately be bigger than hepatitis C drugs within a couple of years. Consensus is about $1.75 billion in the U.S. for Lilly in just 7 months, and consensus for Novo's pill is about $1.5 billion. That's about $3.5 billion in sales in just the first year of these drugs.

Of course, this is just an oral formulation, or oral administration, versus the injectables, which are already doing $20 billion. There will be great focus on this launch coming up and on all the prescriptions. It's also interesting that Lilly got approved with a tablet at 17 milligrams, but all of the studies were done with capsules at the high dose of 35 milligrams.

When we saw the approval, we thought, "Wait a second. The drug was tested at 35 milligrams. How did they find 17? What is going on?" Then it was disclosed that this is a tablet, not a capsule. The tablet was approved through bioequivalence studies that the FDA reviewed and approved, obviously, and it is approximately 50% of the weight of the drug. So it's 17 instead of 35 milligrams, and the efficacy is the same.

Lilly noted in its correspondence to analysts that it uses significantly less API. We weren't aware off the top of our heads that a drug could be approved that quickly using just bioequivalence, and we had never seen the data. Big pharma doesn't have to show you anything, and we weren't aware that it was going to be that way.

Yet it was approved using a tablet and a bioequivalence study that we had never seen, and it all came out in the label. That's the big approval, and we'll follow this quite closely. It's one of the most followed launches for Wall Street this year.

Fascinating. I wasn't aware of that myself, since I don't cover Lilly anymore.

Yeah.

Interesting times. You can't get away from GLP-1s, with Novo and Hims also coming to a deal involving a new subscription model. I don't know if anyone wants to comment here. I'm not following that particularly closely.

Mm-hmm.

I'm not following that particularly closely.

Lots of things are going on in the obesity commercial setting. How do we get people to get on the drug? How do you choose between the 2 different competitors? Hopefully, you use the branded one and not compounded products.

Then Novo went and said, "Let's partner with one of the compounding-type players, Hims." After Hims tried to launch a compounded form of oral Wegovy, which was illicit, the FDA came down on them hard. I think, again, since we can state our opinion, Lilly probably made some phone calls pretty quickly.

Novo probably made some phone calls pretty quickly and said, “You can’t do that.” I would say Lilly probably helped with that, too. We don’t want compounded generic stuff. Within 24 to 48 hours, Hims stock got hit hard because they basically said, “We’re not going to do it anymore.” I think that was after they had budgeted to spend millions of dollars on Super Bowl ads.

In any case, that got shut down. After trying to shut down the player, Novo went out and partnered with Hims and said, “Wait a second. Why are you offering that one? Why don’t you offer the actual real one?” Novo went out and is actually offering the real one through Hims. It’s obviously a very competitive space, and Novo’s doing everything they can.

They’re also offering a subscription model where you can get some discounted pricing if you basically subscribe for the whole year. I hate using the word “subscription.” It’s not like we’re subscribing to a drug. You don’t subscribe to a drug. But in any case, it’s an arrangement to get the drug throughout the year at discounted pricing, and it probably helps people deal with compliance, continue to get the drug, and stay on it. That’s what’s going on there.

Lilly, I don’t think, has a subscription model necessarily, but it did lower the price by $49. The difference between the Novo and Lilly drugs was $100 at the high doses, and Lilly did announce that it had bridged that gap. It’s now a $50 difference. If you want the Lilly one, it’s $50 more; if you want the Novo one, it’s $50 less.

The Novo one requires you not to take food or drink for 30 minutes after you swallow the pill. Drinking or eating interferes with the way the capsule is released in your stomach and gut, where it’s trying to release the peptide. If you drink or eat, it moves the capsule around, and it doesn’t release the drug, so it’s not going to have the same effect. There’s a 30-minute fasting period there, which could be problematic for some people, but that’s the primary difference between that and Lilly, which is a traditional small molecule.

Thanks.

There are lots of interesting things, and we’ll continue to follow it.

Yeah. Thanks, Mike. I’m just going to mention briefly that, staying in the obesity space, we did get an update from a traditionally CNS or neuro biotech called Nomura Therapeutics. They recently introduced an oral NLRP3 inhibitor for obesity, and the NLRP3 inhibitor space has also become an increasingly hot space for industry and investors. I think a lot of that was driven by an M&A deal we saw earlier this year, with Eli Lilly buying Ventix.

The NLRP3 inhibitors are an area that I’ve been following for quite some time. With that said, different companies are pursuing different indications, and obesity is not a common one for all of them. That being said, Nomura does have one for obesity. We were expecting to get some first clinical data this year, but, interestingly, in an update they provided this week, they mentioned some adverse findings without clarifying exactly what those findings were. They are going to delay the first clinical data until the beginning of next year.

There’s a preclinical toxicology study that they want to rerun at a different CRO, so I’m not here to suggest that there are safety signals. I did confirm with the company that it’s not related to elevated liver enzymes or liver toxicity. But if we’re talking about the obesity space, where there are lots of different mechanisms of action and modalities, the NLRP3 inhibitor space is something that we’ll all be watching quite closely.

Does Nomura want to develop that primarily for obesity? Of course, I covered Ventix, and then Lilly acquired Ventix. Given that I covered Ventyx and Lilly, we understand that Lilly is really doing it for the cardiometabolic—shall I say, cardiovascular—outcomes that would be very plausible for a large Phase 3 oral NLRP3 inhibitor in patients with high IL-1, et cetera. You can reduce inflammation, and that would drive a cardiovascular benefit.

NLRP3 for obesity is attractive, particularly as a maintenance-stage treatment. That’s my thinking. Maybe Nomura can obviously go after both.

Yeah. I think the NLRP3 inhibitor space goes back to my Biogen days, when I was there doing BD in 2014. The company was aware of companies working on oral NLRP3 inhibitors for CNS applications, and Parkinson’s disease is one of those areas.

But the science has evolved in such a way that, as we move into cardiometabolic applications, there are applications there. It’s all around the theme of inflammation. Nomura, with its 215 compound that it introduced last year, has generated some very interesting diet-induced-obesity mouse-model data showing promising weight loss. They’ve also shown data in combination with semaglutide that, at least in a mouse model, gives you anywhere from 25% to 29% weight loss, again, preclinically.

They do intend to investigate this specifically for obesity, with the view that the key would be to keep IC90 levels high and maintained. That’s the hypothesis, and that’s what they’ll test. Instead of unfortunately getting data this year, we’ll get data next year, but that is certainly another mechanism of action for us all to watch.

Yeah. Just to add on there, I think Mike’s right that a lot of the players in the space, not just Ventix but others, have shifted from NLRP3 development in obesity to the cardiometabolic space and outcomes-based trials. Just to name a couple of others, Nathera is right up there with Ventix in addressing that type of indication. There’s BioAge, a public company that’s getting into the clinic and no longer directing NLRP3 inhibitors at obesity, but rather at cardiometabolic disease.

I guess Nomura is probably the last one that’s interrogating the obesity hypothesis. We’ll see. But I would agree with Mike that the data are much, much stronger in terms of the anti-inflammatory component of downstream NLRP3 inhibition, and we’re pretty excited about those opportunities.

Huge market opportunities, absolutely, with oral pills. Good. Let’s keep it moving. More data.

That’s right.

Yep.

There was an interesting development this week with Agios, a company you cover. I’ll let you comment on their sickle cell disease program.

7. Orphan Drugs Test FDA Flexibility

Yeah, and thanks, Graig. The development here is that Agios is going forward with an sNDA for its drug midapevad in sickle cell disease. Many of you might recall that, late last year, the company had fairly mixed Phase 3 results. Midapevad hit 1 of 2 primary endpoints—hemoglobin response—but missed on another very important primary endpoint: sickle cell pain crises.

Generally speaking, investors had a pretty negatively slanted view toward those data. Now, by proposing to file for accelerated approval, Agios is obviously asking for some leniency on the part of the FDA. Sickle cell disease is a huge unmet need. It’s one of the more common rare diseases, but it’s very, very poorly treated and has dire consequences for patients who have a life expectancy in the mid-50s, despite all the available things that you can hopefully use to manage the disease. There just aren’t very many good drugs.

We’ll see. I think investors are still viewing this as a little bit of an uphill battle for approval, but the stock did react fairly well to the view that they have a chance here. I guess the bigger question is what’s going on at the FDA with regard to orphan-drug approvals. We have seen a few more recently. I think Denali was already mentioned in last week’s episode here.

It seems like, in the post–Vinay Prasad era, the FDA is almost going on a public-perception marketing campaign, trying to improve its image and look like it’s kinder and gentler when it comes to orphan-drug approvals and reviews. There was actually a very interesting article in BioCentury on this, about how one of the leaders at the FDA has reached out to companies that have recently gotten CRLs in this indication and had one-on-one meetings with them outside of the normal PDUFA review-calendar schedule, perhaps trying to find a path forward here.

Obviously, Dr. Makary, the FDA commissioner, has been under a lot of public pressure from industry, Congress, and others, saying, “You’ve been too hard on these orphan-drug approvals.” These are very, very interesting times. I’m curious to hear both your and Mike’s views on orphan drugs, and whether this is actually a good environment to try to take a drug to the agency that requires a little bit of leniency, given the political environment we’re in.

I would agree. It does seem that the FDA is having a reputation crisis, and I do think—and I'm happy to see this personally—that they are maybe trying to make amends. The article was very interesting, and I think we have seen some very interesting decisions come out of the FDA that have been counter to where investors were thinking and where the market was thinking.

But when it comes to these orphan diseases, where patients don't have anything, I understand there is a need for rigor scientifically and with clinical trials. But there's been quite an outcry from the patient advocate community, and I think we'll see if their voices will be heard at the FDA.

Mike, any thoughts?

Are there a couple of them off the top of your head that people are playing and that are most obviously positively affected over the next 12 months?

Well, just this week we've got the Replimune decision coming. I think the PDUFA date's on Friday. That's a drug for refractory melanoma, so that'll be very interesting. Again, it's probably coming at just the right time.

And, Mike, I think you and I both cover Scholar Rock, which was also in the news this week. Maybe you want to address their resubmission, because that's also probably coming at a reasonably favorable time for them.

Well, first, I'm familiar with the Replimune program and the data, since I used to cover Iobens. Obviously, Replimune—you're right—I think Vinay played a big role in stopping that one. So I don't have a view specifically as to what the probability of approval is on Friday, but that will definitely be an interesting one.

I don't know if you have insight or whether there's a clear consensus view on that. I haven't pulled up the stock price, but I assume it's low-probability. But that one would definitely be a barometer for the administration post-Vinay, even though, of course, each one is a bit different, like the quality of the data, et cetera.

And then on Scholar Rock, do you think that had a lot to do with it, or that it played a role in the development this week? To be clear for our listeners, Scholar Rock resubmitted their BLA for their anti-myostatin antibody, aptenerumab, for spinal muscular atrophy.

The drug was at the goal line to get approved last year, and then they pulled it—or got a CRL, of course—because the manufacturing facility through Catalent had Form 483s and still has not been resolved. They're about to get inspected, but that hasn't happened yet.

Yet Scholar Rock, after guiding to refile when the factory is signed off, went ahead and was able to get buy-in this week.

It's this week.

So it was able to refile using that factory and a second factory that they've always talked about, which is not technically ready yet, but both of these could be ready and signed off by the time the September PDUFA date comes. That was a surprise. It definitely was not talked about as a scenario.

I like that. I think it really speaks to Scholar Rock's ability to navigate and work hard to get this drug approved quickly, despite some of the manufacturing issues at Catalent. But I'm not sure I necessarily read into the idea that the changes at the FDA drove that. I'll leave that to you.

I agree with you. It's great that they're able to get this aptenerumab BLA back on file, and now they have two bites at the apple, right? They've got both the Novo fill-finish facility that's been difficult in terms of its remediation, but hopefully is inspection-ready and can turn things around, and also a second fill-finish facility.

Congratulations to the Scholar Rock team for really accelerating the timelines there and getting that in position to potentially be reviewed and approved later.

I guess in terms of the FDA flexibility, you're right, Mike. I think technically neither of these fill-finish facilities are signed, sealed, and delivered, right? So maybe in allowing Scholar Rock to resubmit on 2 fronts with greater optionality, despite the fact that, as per the letter of the law, neither has a currently existing fill-finish facility, there's a little bit of flexibility.

We all know that in the field of SMA, where aptenerumab is hopefully going to be approved, there's a lot of unmet need, and it would be great if the FDA could act as quickly as possible on the submission.

We've got a few minutes left. We'll try to squeeze in a couple of news items. Mike, Veridien Therapeutics had some positive phase 3 data for a thyroid eye disease asset. Do you want to comment there?

I know that there are a couple of developments that happened, and then the stock sort of sold off. I guess I would view that in the context of a volatile market. I know Tuesday was obviously a big day for biotech.

But Veridien announced positive phase 3 data for its subcutaneous IGF-1R antibody for TED, thyroid eye disease. This phase 3 result is the 1st phase 3 for the subcutaneous form, which would be a significant advantage given that the current treatment for TED is Amgen's Tepezza, which is 8 intravenous infusions over 6 months, and that's doing $2 billion.

A subcutaneous form could be advantageous for patients to take at home. Ironically, Viridian is already on file at the FDA with an intravenous form of 5 infusions instead of 8 and a faster infusion, and that data looks right down the line similar, slightly better than Tepezza, coming 2nd to market. That has a June PDUFA date.

So we'll hear from that hopefully and talk about that in a few months. But the subcutaneous form's 1st phase 3 data came out. Why are we talking about this? Well, the stock went down 30% on that result because the absolute number for the response rate on the primary endpoint was lower than the IV drug's, and the placebo was also higher. Have we heard that before?

So the overall drug arm was lower, and the placebo-subtracted delta was lower, approximately half the effect of the IV form. Even though it's positive and does show good results across the different endpoints, the primary endpoint was lower than the competitor.

So we'll wait to see a 2nd phase 3. Of course, I think the stock is now sort of discounting that sub-Q out. But it is interesting, and they are still up for approval for the IV form coming up this summer.

All right. Well, thanks, Mike. Thanks, Eric. That's all the time we have for today. Thanks again, everyone, for joining, and see you on next week's Biotech Hangout.