第182期——2026年5月8日

It was a bananas week. Holy smoke. I am literally still clearing out emails from earlier in the week because we had so much going on: earnings, earnings, earnings, M&A, data, analyst events, et cetera.

1. Secondary Raises Test the Rally

Let's dig in, maybe on the markets. Eric, we'll start with you. We have a number of pretty big secondary raises, and I guess the question is: Is too much capital being infused at once? You know the lore that the best way to kill a biotech rally is by bankers just printing too much—printing too many new issuances. Are we in danger of that?

Yeah, I'd love to start this discussion off. Thank you, Josh. Thanks, everyone. Great to participate with you all again this week.

Let's put a little bit of context around it. Another very, very substantial week of secondary offerings. Many of the companies that were raising hundreds of millions of dollars—Cytokinetics, Avalo, today, Josh, your Artiva—are just names that are coming to mind. I haven't done the math or the statistics on it, but these are all companies that are having good data and are deserving of raising capital.

It seems like we've now reached the point where it's an automatic raise, and a very large raise, for anyone who has good results in this space. Q1, as we've heard from others on this show, was a record quarter for biotech secondaries. That was an amazing statistic to me, and one that was surprising given how much money was raised.

Whoa. Did I—Is it just me who's lost Eric, or am I the one who's lost?

No, I lost Eric too.

No, I—yep, I lost him as well.

All right. I'll take over. He's in the office next to me.

Maybe to carry on the discussion of this incredible amount of secondary offerings, it's context-dependent, right? When generalists are coming into the sector, they dwarf everyone and provide more than enough capital to both fund the companies and contain the momentum of the sector. But when we don't have enough generalist interest, like we've started to generate, the question is: Can we keep it? Maybe that'll be our next discussion topic.

If we don't have enough generalist interest, then, yeah, paper can kill a biotech rally, in my view, but I'd love to hear others' perspectives. I'm just going to wander into Eric's office and see if he's still talking.

I'll chime in for a second, and then we can hear from others too. I think there are a couple of dynamics in play. One is that there's just been a lot of M&A, so a number of the specialist funds and long-onlys have cash to deploy. Maybe that's case-dependent, but if people are just putting more money into the next thing because they can, theoretically, that's not a good thing.

But I also think we're acknowledging that a lot of these mega-raises are coming off of data that's really good and better than expected. It doesn't feel like we're seeing big-time opportunistic raises for no reason, right? I think that's where maybe things get a little bit FOMO-ish, and I don't feel like we've seen all that much of that.

The last thing I'll say, Josh, is that it would be interesting if we revisited our conversation from a while ago about IPOs, because it's looking more and more like you could be right on the number this year. I do think we've had some M&A, and investors I talk to are ready for new ideas, right? For stuff that gets de-risked, I think they're expanding their investor bases.

Long story short, I don't feel like anything unhealthy is happening yet. This does not feel at all like 2020. Maybe that's the best way to say it.

Agreed. Yaron?

Yeah, to me, we've all seen these cycles. This continues to be a healthy, early-cycle sort of biotech recovery. Good data gets remunerated with new interest, and those companies capture a lion's share of the interest. But the stocks are doing well and carrying through, so I don't think it's drying out the demand.

I think there is a lot of capital, and investors, even generalists, are willing to go a little bit down into mid-cap biotech land, into the sort of platform companies like Insmed, Roivant, Ionis, and Arrowhead. So I think there's a healthy amount of interest. I actually think this is still very good.

Yaron, let me ask you, as a former operator, what the impact of raising a lot of capital is on a company. Do you think it changes the way they act and perceive how to redeploy capital? Is that a risk that we need to be mindful of?

To be honest, Eric, you would know more than me in that sense. I think it really depends on the plan and the size of the ambition, whether it's a platform or not, and how much of it is going to be committed capital to manufacturing. That's when things can really get, obviously, pretty risky.

You're really much better at answering that because you raise substantial capital in that sense. It really depends on the focus and scope of the studies. If it's really to power up studies based on good biology, that's one thing. But if it's carte blanche to go broad and pretty ambitious and ahead of yourself, probably not.

2. Mergers and China Reshape Biotech

Why don't we bring Allison into the conversation now and talk a little bit about some of the M&A updates? I'm always a little ambivalent about M&A being a headwind or a tailwind for a sector, especially when we pull out companies that have really strong long-term prospects, or we pull out companies that are generating cash flow, because, amazingly, cash generation actually matters as we think about valuations. Allison, catch us up for this week.

As the startups person, I'm always paying attention to M&A because it's one of the only ways that you see money really flow out of this sector for young biotechs and go back into the hands, in terms of financial returns, of venture capitalists and LPs, and then get recycled back into our ecosystem. Everybody that I talk to on the private side is very pleased with the amount of M&A that we're seeing.

Q1 was very healthy, and this week we got 3 more deals added to the roster. Angelini Pharma is acquiring rare disease drugmaker Catalyst Pharmaceuticals for $4.1 billion. Bayer is doing a little bit of a smaller deal. They're buying Perceive Biotherapeutics and its pipeline of ocular disease programs. That's about $300 million upfront, and then we've got close to $2.5 billion in biobucks.

The one that really caught my attention and made me chuckle this week was UCB buying Candid Therapeutics for $2 billion upfront. Candid is working on T-cell engagers, and this is just the second time that Ken Song has tried to be CEO of a public biotech company, and the universe just won't allow it.

The first company, obviously, was RayzeBio, which was acquired something like 2 or 3 months after its IPO. Candid had been planning to do a reverse merger, and that's now off because it's getting acquired. One day, one day we'll see Ken as a public company CEO, but not today.

I've known Ken for some time, and I met with him early, just when RayzeBio was getting off the ground, and again just when Candid was getting off the ground. He is phenomenal: his ability to dive into a new field, size it up, go deep, and see the big picture. I can't wait to see what he's got planned for us next.

So congrats to Ken. Congrats to Arvind as well, and the Candid team. They turned that around quickly.

And by the way, assets pulled out of China—maybe that's a theme to quickly touch upon. I don't think it was necessarily part of the intended schedule, but it's hard to talk about Candid and this rapid success without acknowledging that they got some very compelling, cheap assets out of China, and they quickly turned it into a huge payday.

I'm not sure how others are thinking about China innovation. I know it's come up fairly often on Hangout in the past, but boy, this is all coming on pretty strong and fast. I was with my colleague Lee Wozniak a couple of weeks ago on a China biotech bus tour that he hosted, and it was so eye-opening for me.

This is a really interesting point of conversation and one that I spend a lot of time on these days. I would be curious. Candid was part of this early wave of licensing drug candidates out of China and forming a new company around them. From what I gather, the premiums that companies, whether venture capital companies or newcos, are paying for assets out of China have risen.

I wonder how the financials of some of the companies being formed today look compared with, say, Candid Therapeutics. It's an area where there are certainly a lot of offerings, but there's the eternal debate: Are you getting the best things first? Who's able to get in and really get on the ground? You really have to do a lot of work to look under the hood of these companies to find the best and brightest things.

I hear some inklings from venture capitalists who are on the ground that there's a concern that there are still assets around there that are not up to snuff. The one challenge that the Chinese ecosystem will face over the coming years is that the incentive structure there is to do a lot and produce a lot. Will they kill bad programs? Will they shelve things that are not working? Will the quality continue to be robust in China? That's an outstanding question.

Yeah. My sense of it is that the innovation there is almost too fast, right? Allison, you kind of hinted at this: You go to China, and you may think you're pulling out the best-looking asset, but there's so much innovation, so quickly and so fast, that the next day, the next week, or the next year, there might be something better that someone else pulls out.

And then how on earth do you invest when you're not quite sure how that landscape is evolving? There should be a natural, healthy cadence to innovation, and if you accelerate it, investors don't know what to do with it. That can be a little bit dangerous. We'll see how it all evolves.

3. Commercial Biotech Faces a Test

Maybe moving on to another topic: A number of commercial-stage biotechs are reporting earnings this week. Paul, give us your sense in terms of investor interest and appetite for investing in these names.

Yeah. I would love to hear everyone else's perspective here, too. Look, a company like Rhythm, doing its big drug launch and seeing it take off, certainly has interest there. But taking a step back, it feels like 2025 was the commercial biotech year, right? When you look at the leading companies like Alnylam, Insmed, argenx, and Verona, a number of those names have been laggards this year, and it feels like it's been the year of developmental-stage biotech, right?

I would even go as far as to say that when we entered this year, I cover some large caps, but not all of them. The 2 that people were most interested in were Vertex and Biogen, 2 companies whose commercial businesses couldn't be any more different. But the reason they were in favor is because they both had pipeline events.

So, in that context, I do wonder if we start to see some rotation back into commercial biotechs that are more value-y. You saw a really good quarter from Neurocrine against a backdrop of lower expectations. But I think the interest from investors is still pretty mixed, right? I cover BioMarin, and I think there's a real case that BioMarin, on an actual conservative valuation methodology, is not expensive.

Yet because there isn't this immediate golden pipeline ticket, I think investor interest there is a lot more muted. I've been having conversations with more people about whether something could flip this. Maybe it would take a big old-school type of M&A, like an Alexion-type acquisition, where a strategic says, “Hey, this just got too cheap,” and then maybe people start extrapolating from that.

Earnings this week were good for a number of our companies, but investor receptivity to these types of stories still feels very hit or miss. Do you guys agree?

Eric, Yaron?

Yeah.

Well, I actually would agree. I'll throw in another name: I have Agios, which is launching a drug for thalassemia. These guys reported last week, not this week, but the launch could not be going better. They crushed expectations. My guess is that consensus estimates for this drug in 2026 are probably going to be about 3-fold too low relative to where it ends up, and the stock was up about $2.

They've got some other issues at the company, but that's a launch that seems to be falling on deaf ears. There are a couple of others that come to mind, too. I'm sure you guys can all chime in.

I think you're right, Paul. We're in a bit of a buy-the-dream phase with regard to developmental-stage biotechs, and everyone wants that open-ended 5- to 10-bagger upside associated with a readout or pipeline event, as opposed to, “Hey, let's grind higher with 20% earnings upward revisions.”

Yaron, a question for you.

Hopefully you can hear me. I think I'm glitching a little bit.

Paul, it's very interesting what you said. Sometimes I zoom out, and whether a drug beats or not is really a function of the quality of the data, obviously, competitive positioning, formulary placement, and the price of the drug. We'll come back to that in a second.

But it's really a function of investor expectations and sell-side expectations, which I think a lot of times emanate from the actual market cap of the company. When it's low, numbers are low. When it goes high, numbers get revised upward.

You're right: I think we're seeing a catch-up effect this year, with the great launches from last year now getting revised upward. Those companies are also having a hard time beating estimates because of that, and that's giving them a little bit of a chilling effect.

We're also definitely seeing a Q1 effect that is very real. We're seeing seasonality, and usually now a big bounce back in Q2. I think that's been giving some of these stocks pause, and a lot of them have had fairly dramatic moves downward into the Q1 print, even starting in January, in anticipation of weak prints.

I think these companies are still very healthy. It is jolting the generalists who've gone into the Alnylams, Insmeds, argenx, and UCBs of the world. UCBs, you can argue, were there already. But I think that's probably fueling a lot of the pronounced volatility in the stocks.

They're in, and they're like, “What the hell did we just buy, and why is this down 15% in the last 2 weeks?” I think there's an element of that. It's definitely time to start moving downstream.

What's really amazing is that 2 years ago, I didn't think we were going to have a huge innovation cycle, and that was clearly wrong. We've flipped a lot of positive data cards. Things that come to mind include BridgeBio, Roivant, and Ascendis.

These launches are now doing really well, and we think they will continue to do well because drug pricing has gone up so much. These launches are now becoming fairly meaningful drugs a lot faster than when we all started growing up.

I would just add that many biotech companies still run their companies for specialists, and the more companies run their companies for generalists, the better the sector is going to do.

4. FDA Turmoil Tests Trust

All right, let's move on to regulatory updates. Allison, I'm trying to wrap my head around what happened with this teplizumab Commissioner's voucher withdrawal from Sanofi. Maybe catch us up on what's going on there and what the implications are.

There's still some information to be learned here, but what we know is what my colleague Lizzy Lawrence reported this week: Sanofi has asked the FDA to pull its type 1 diabetes drug, teplizumab, out of the Commissioner's voucher program. It had been accepted into the program, and the agency was supposed to deliver a decision on the drug by April 21. That date has obviously come and gone.

What Lizzy has heard is that the move comes after Tracy Beth Høeg, who is now the acting head of CDER, disagreed with a staff decision to approve the drug. Now this decision date has passed, so it seems like Sanofi might be waning in its enthusiasm for this Commissioner's program.

It speaks to some of the larger issues percolating around this program. Sources have told Lizzy and other folks at STAT that the drugs in this program are vulnerable to political influence. Within different areas of the FDA, the question of how drugmakers work through the agency right now, in certain sectors of the agency, is really challenging.

Yeah. Richard Pazdur’s recent comments, if you saw that, he’s saying he didn’t leave the FDA; the FDA left him—

Mm-hmm.

That points to ongoing disarray at the agency. Very frustrating. Eric, maybe, before we get to the topic of Makary and the outlook for him, talk a little bit about what’s been going on with Replimune. That’s been one of the most amazing whipsawing names of regulatory prospects I think I’ve ever seen.

Well, yeah. First, great reporting on the part of STAT News and the Sanofi commissioner’s voucher story. I find that story to be highly ironic. The same week that Dr. Makary, who we’re going to be talking about in a moment, is essentially fighting for his job and going on CNBC to defend himself and his agency around the criticism that the agency has been too conservative in terms of the approval of Replimune’s RP1 for melanoma, many of you know this drug has now been rejected twice by the agency, despite having clear activity in melanoma and despite having the support of many in the community.

Dr. Makary’s defense was all based around the fact that senior FDA officials should not intervene in review staff decisions. They obviously didn’t intervene with regard to Replimune, or it appears they did not intervene with regard to the Replimune application. But certainly, as was just pointed out, senior administration officials have intervened in many decisions under this administration.

So the irony that he’s defending himself and saying it’s “disastrous” when senior administration officials do intervene in review staff decisions, and yet the very same week we have one more example of this. That also brings us to the Atara news this week, too, Josh. For those of you who don’t know Atara, now, seemingly with their partner Pierre Fabre, they have an opportunity to bring their EBV cell therapy to the market. This is after it was also rejected.

That rejection seemingly was all about Vinay Prasad. Vinay actually wrote a piece in JAMA about how he thought that cell therapy drugs should not be approved on single-arm studies, and then subsequently went and rejected the Atara product. Now it looks like Atara and Pierre Fabre are going to have an opening opportunity to refile despite not having any new data. So, great to see that reversal, but yet again, it highlights another example of senior administration officials interfering with the agency.

Yeah. I feel like once we get to a point of stability, reliability, and transparency from the FDA, we’re going to be so appreciative, having gone through this era of almost the opposite. Very frustrating, very challenging.

But I think the other thing that Richard Pazdur noted is that he’s optimistic that there are still enough appropriately oriented decision-makers left at the FDA that the wheels have not fully fallen off the agency’s bus, and that things actually can continue and hopefully feel far less choppy and volatile. But I guess, speaking of that, Allison, catch us up on the point that Eric alluded to: what’s gone on with Dr. Makary and his tenure at the FDA?

Yeah. First, to one of the comments that Eric made, I have heard from folks—investors on the private side who are dealing with the agency these days—that there are certain segments of the agency that are functioning as normal. Things are moving through the system, and there are other areas where they are experiencing contradictory guidance. We are seeing some of these seemingly play out in public examples, as with Atara.

I think that kind of brings us to this week. It seems like there’s really been a fever pitch of conversation around Commissioner Makary’s tenure at the FDA and what the agency looks like now after a little over a year of his leadership. I think this is something that STAT has been covering since the get-go, but we also saw a lot of reporting this week from Bloomberg and The Wall Street Journal talking about the personnel issues inside the agency.

There’s also been pressure that apparently the White House and President Trump have put on Commissioner Makary to approve fruit-flavored vapes. According to a Wall Street Journal story, Commissioner Makary had initially opposed the approval because of the public health concerns: if you’re introducing grape-flavored vapes, that appeals to children, and what’s the public health concern about that? But this week, we did see those actually get approved.

There’s been a lot of other conversation about what’s been going on with the agency. Even Lizzy, this week, noted in this great piece that, Josh, I think you quoted, Rick Pazdur saying that he didn’t leave the agency—the agency left him. In Lizzy’s piece this week, looking at what we’ve lost over the last year, the agency, after having laid off 3,500 people last year, is now aiming to hire 3,200 people.

So there still seem to be big questions swirling about the agency, and the tenor of the conversation is that patience with Commissioner Makary might be wearing a little thin. The Wall Street Journal, in an op-ed, said as much: it’s time for President Trump to pull the plug on Makary. And we did see Commissioner Makary on CNBC this week; he was at Milken defending his leadership.

Hey, Allison. Can I ask a question? Who do you guys think is picking the head of CBER, and what do you think the criteria are that they’re weighing between rare-disease flexibility versus someone who maybe is still a little bit unorthodox on vaccines or COVID?

I haven’t gotten into this myself, but I know from my colleagues’ reporting and the conversations that we’ve been having internally that there’s a question about whether Commissioner Makary is the one who will ultimately make that pick or whether the White House is going to be asserting more control over that decision. I do find myself wondering if we’re going to land in the latter stage, given everything that we saw between Prasad and Tim Marsh and some others, and then Rick Pazdur leaving the agency in a very high-profile way.

There’s also been reporting out there that the White House’s confidence in Commissioner Makary to set up a leadership team is on thin ice.

Mm.

But that’s not my direct knowledge. That’s just kind of what I’m hearing.

I was just going to say, I think Kalshi is saying that the odds of Dr. Makary making it through the end of the month are about 50/50. We’ll see, but that’s very interesting.

Oh, no. We’re putting Kalshi bets on this? I’ve got to stop that.

I feel like I need to start a Kalshi account. I feel like I’m a late adopter.

I will note that it’s STAT policy that we do not bet on any of these topics that we’re covering, so I have to refrain.

By the way, that was a joke, for the record. That was a very poorly delivered joke.

Yes.

The FDA has always made controversial decisions: approving drugs, not approving drugs, issuing CRLs, and then eventually turning them into approvals without necessarily requiring new clinical data. So here are some questions for the group. Why is it different now? Is it the way that these decisions are being made or communicated? Is it because CRLs are now being published, and we get to see some of the FDA concerns that we never got to see in the past? Is it because we no longer agree with the agency’s decisions on some of these more subjective judgment calls? Why is there so much scrutiny of this FDA’s decision-making process compared to prior FDA leadership?

I think the way they’ve drawn attention to themselves or gone on TV—and the whole thing with, whatever you think about uniQure, going on TV and talking about morbidity with the procedure—the way they’ve defended themselves has definitely been more defiant and specific than I think I’ve ever seen, right? And we can see it in the markets as well, because—

Did we lose Paul, or did we lose me?

We can hear you both.

Oh, I’ve lost Paul.

Yeah, I can hear you both.

Okay. I was just saying, the way that they communicated publicly has been really different. I think the second thing, at least from the rare-disease side, is there’s been such a crazy contrast between what some of the companies were saying, what the FDA’s own guidelines were saying, and then what’s actually happened, right?

Because I can remember with this whole uniQure situation that has been really close to me, they had their data and there was their 3-year data, and then a week later there were published guidelines from the FDA around—

Open-label studies, natural-history controls, right? That was Vinay Prasad’s CBER, right? Maybe that was drafted months ago and was almost published, but not actually indicative of what the current agency was thinking. But I’ve never seen...

And you guys have done this longer than me, but I've never seen this many real-time contradictions in a matter of weeks or months. And then maybe the last thing I'll say is that, at least, I've generally thought of a Republican administration as somewhat more libertarian, at least as it relates to the regulatory environment. This has been the opposite. So, I mean, those would be my factors.

I'm shocked by how much The Wall Street Journal publishes on it—not because I don't think they do good work, but because I didn't even realize how broadly the world outside of our bubble would really care about this.

Well, thanks for—

Right.

Referring to us as the old-timers, Paul—as the folks with gray or no hair. But I remember a time when Rick Pazdur came in and really disrupted the oncology division, really raising the bar for innovation. He rattled some cages and ruffled some feathers, but at the end of the day, it was a very defensive position, expecting oncology innovators to generate stronger data sets and better drugs. But he never came under fire like this.

So, Paul, I really like the point you're making: they came in and shifted the goalposts in the blink of an eye, and maybe if they just hadn't shifted them so rapidly and nudged them, we wouldn't have so much drama. But, on the other hand, didn't Rick Pazdur kind of get away with it without this kind of attention? Maybe it was before social media. Maybe that's part of the difference. I'd love to hear others' thoughts.

Well—

Yeah, Yaron.

You know, I love the question. I think you're right, Josh. I love the question. We could probably spend a whole episode on this, and Paul had some great initial thoughts.

The one thing I would add is science. At the end of the day, this is a scientific organization, and when the public trusts that decisions are being made in a rigorous way—analytically, based on the best science—you get the benefit of the doubt. Unfortunately, under this administration, whether it started with the anti-vax stuff or even the COVID vaccines, which have their own political angle to them, we're not always talking about science. When you lose that credibility, it's a very slippery slope.

Well, for the most part, I'm going to push back on that. I hear what you're saying. We've definitely lost some of the scientific rigor in certain realms, but many of these CRLs were, to Vinay Prasad's credit, brilliant and really very thoughtful. Maybe the way that he led the agency was far from brilliant, but he had robust rationale for each of these decisions. Many are actually judgment calls, not clear science calls.

So, I'm going to push back that these were antiscientific decisions, but I would love to hear if you disagree on these CRLs in particular.

Well, look, on vaccines, I think we can all agree that it is antiscientific. I think there was an article just this week saying that the FDA has suppressed an internal report on the safety of vaccines.

Yeah.

That won't see the light of day because the safety has been supported publicly in the vaccines that have been approved for public use. That's very concerning.

I mean, on other hard CRL-type decisions, sure, it's a judgment call. I do think that when you have a leader at the FDA—maybe this isn't Vinay Prasad, but potentially Marty Makary—who has said and done things that are abjectly political, it undercuts the entire tone from the top. I think that's what's happened.

Well, do you blame them? I mean, they report to HHS leadership, and they either have a job or they don't have a job. If you're not going to play that ball, you have no job. Is there anyone who's going to fill that role and be able to withstand pressure from senior administration?

So, again, what's the root cause? I think these are all great points that we're bringing up to create a bigger picture, maybe to explain the nuances.

Well, Josh, I think there are a couple of things going on, in the way I guess we see it, and I think you just nailed it on the head. I think there was a sea change that came from outsiders, which is not necessarily a negative. But the way it was translated into practice was fairly haphazard, in a way that really was a little bit of a scorched-earth, “We're going to go in a very different direction,” and tear down an organization that was mostly very successful in its history.

Then they brought in outsiders who are not experienced managers, certainly not in organizations of that size, and put together policies that seemed to have been crafted aspirationally, very quickly, and then very poorly translated into practice and inconsistently implemented. On top of a lot of political overtones that were concerning, that's why I think it's drawn so much scrutiny.

I mean, Pazdur was a maverick. Pazdur—the first thing he did was drive accelerated approvals, right? We all remember Velcade and the magical 20%, which actually expedited therapies to the market very quickly. But they also made very good scientific judgments, and the things that got approved very much deserved to get approved, at least the vast, vast majority of them.

So, I think maybe their track record and the way they went about it was also very different.

Allison, were you going to hop on?

Yeah, I was going to say, from my perspective, I like Yaron's comments about the manner in which things are being approved. The introduction of this Commissioner's voucher program as a new avenue for drug approval was naturally going to get everybody asking a lot of questions: How are companies being selected for this program? What are the criteria by which they're being judged? Why weren't they candidates for a more traditional drug approval?

That's just one example, but I'm going to go back to the fundamental concept. When this administration started, they very quickly laid out that there were big, big changes coming to this agency. From a journalist's perspective, any time an organization says, “We are going to lay off thousands of people, and we are going to change the way that this agency does some things,” that's going to make us look and say, “Okay, well, how is that process of change going? What does that look like?”

There have been areas, I think rightly so, where there are contradictions that are raising questions. We're getting the CRL letters, but now where are all of the AdComs? The flow of information out of the agency has also changed, and I don't think that is helping the situation.

Yeah. I guess, in hindsight, it probably wasn't a good idea to let anyone run wild on health care. It's not a framework that you can run wild on without dismantling it in very negative ways.

5. Heart and Immune Therapies Advance

All right. Why don't we move on to some of the data updates this week? There's a whole bunch cooking. Eric, Cytokinetics had a really interesting update for their non-obstructive cardiomyopathy program.

Yeah, and I'm assuming others have coverage in this area, so I can kick it off and then maybe others can chime in a bit. Cytokinetics had data this week from the ACACIA trial, which was for aficamten in non-obstructive HCM.

The setup here was that I think this was a study and a catalyst that a lot of investors were positioned positively for. Mavacamten, the Bristol compound, did not work in non-obstructive HCM, but when the full data came out, it showed that it was pretty close, which I think made people at least cautiously optimistic that Cytokinetics could thread the needle.

Some of the discussion coming out of the data, and some of the laterals, are just: How strong is the efficacy? The endpoints here are KCCQ and peak VO₂. KCCQ—the effect size wasn't huge in the grand scheme of things, but maybe good enough. There's some debate around safety and EF and things like that.

There are other companies in this area too. There's Edgewise, which, as I understand it—I don't cover it, but my colleague does—is a pretty polarizing company as to whether or not they have something that is better than aficamten and could be safer, or something that actually might have its own sort of issues with AFib.

There's Braveheart, a private company in this space. It's a huge market, though, right? And a huge catalyst—an important catalyst for sentiment. Cytokinetics had some coverage in the media; you can't really verify whether it's right or wrong, but it was reported to be in M&A discussions a number of years ago that fell through. The stock went down a lot, but it's back up well over 100% off the bottom. They were able to raise a lot of money, so, yeah, interesting data and a lot of offshoots and implications for others. I would love to hear your guys' perspective as well.

Maybe I'll cover the Artiva data this morning for their AlloNK platform combined with fludarabine, cyclophosphamide, and rituximab, showing some very good data in rheumatoid arthritis, with ACR50 scores in the 70% range. One really interesting observation is that the responses seem to deepen over time. A lot of the CAR T programs and bispecific programs have kind of the opposite dynamic, where they start strong and then give up some of their efficacy but still finish with robust product profiles. The Artiva product profile actually got better as they followed patients longer.

We'll see how that evolves. They also came out with a pivotal path forward, in agreement with the FDA, for a trial in rheumatoid arthritis comparing against Rituxan, with what looks like a fairly sizable difference in ACR50 rates relative to what Rituxan has reported. Kudos to Fred Aslan for the work he's done at Artiva, advancing this platform and finding, within a very crowded space of B-cell depleters, some pretty significant room to navigate by leveraging the strengths of their platform. Much of that is really around tolerability and not having cytokine release syndrome or ICANS to worry about, which can make the protocol much more amenable to use in the rheumatology community setting.

Those specialists can't really handle even low rates of CRS or ICANS. They're just not really equipped to deal with it. There are also a fairly sizable number of treatment-refractory rheumatoid arthritis patients. Fred has been fairly modest and humble along the way, quietly executing, enrolling, and delivering not only a really meaningful set of data but also a written agreement with the FDA on the path forward for them. I'm not sure if folks are following this general B-cell-depleting space or have thoughts on Artiva or Fred.

I'll just say that this is a space that I'm following. I think there are a lot of really exciting, potentially game-changing treatments in development here for patients. It's an area where there's a lot of conversation, and as we get more and more data, we'll see that become very competitive very quickly.

But just so many patients, as we've seen in the I&I space. There's so much room for so many successful products, even if they're only modestly differentiated—and certainly if they're meaningfully differentiated. So it's nice to see that for Fred.

Josh, I was going to ask you. You're the rheumatologist here, right? Fred's one of the few who seems to be going after RA as a first indication. It's probably not the area of greatest unmet need. I don't know what your thoughts are there, but does it make sense to do rheumatoid arthritis, or are there other areas where you see this going in the future? Obviously, others are doing myositis and MG and everything other than RA.

Maybe it's also common in Sjögren's, because the Sjögren's data, I thought, was what caught my attention.

And scleroderma—systemic sclerosis. I think the challenge right now is that there are a lot of really promising programs, and it's the subtleties and the evolution of each program that will determine the niche it fits. It's nearly impossible at this stage to have precision, right? To say, "Well, this product, this class, this modality is going to get this percent of share in this setting."

From the big-picture perspective, you just have to step back and acknowledge that Otezla is still a multibillion-dollar drug in psoriasis, right? The big picture here is just such a huge amount of unmapped medical need that there should be a seat at the table for differentiated products. They're not all the same, and that means different specialists will gravitate toward different options. Different patients will gravitate toward different options. The error bars are huge, and there is still a lot to sort out. First-mover advantage is going to be super important.

In terms of RA and the unmet need there, I think the answer is that, yeah, there's still important unmet medical need, but you have to have the right product, right? If you're coming with an ACR50 score of 20%, there's probably not a lot of room for you in the treatment armamentarium. But if you can come with a much more meaningful ACR50 score—and by the way, ACR scoring itself is kind of a quagmire of challenging data sets to interpret for nuances that are probably too expansive to get into at this stage—then, yeah, I'm tracking a lot of it. It's hard to know who's going to be left out and who's going to be in, but having a first-mover advantage, a strong data set, and a differentiated profile is a pretty good start.

6. Neurofilament Opens a New Path

Paul, I want to jump toward a different topic, because I know you're going to care about this one. This was the Clene regulatory update for their ALS program. Allison, your colleague Adam Feuerstein wrote a pretty scathing note about his perspective on Clene. But irrespective of that—

What? Adam's scathing?

I know. Old Adam.

Are you sure?

Old Adam.

Biotech's back, and old sassy Adam's back.

Sassy Adam. Paul, the path forward now based on neurofilament data seems like a major shift in the agency's willingness to consider this biomarker.

Well, yeah, I mean, it's interesting. The SOD1 drug tofersen from Biogen and Ionis failed in a placebo-controlled study. But that study for ALS, I think it's widely viewed—whether or not you believe in that drug—that it was too short, right? I think it was 6 months of placebo-controlled data, which is insane for disease modification in neurodegeneration. As they followed patients for longer, patients on drug looked like they were theoretically doing better than natural history, and they also reduced neurofilament substantially.

The NfL reductions they were seeing were closer to 40%. I'm glad you called on me, right? I could just nerd out on neurofilament. I really, really believe that if you reduce neurofilament beyond the signal-to-noise ratio, it means something. I think neurofilament is a metabolite of dead or damaged neurons. I think the evidence is so strong across 10 different conditions.

As it relates to Clene, I'm not super in the weeds on their data, right? But it's not clear if the reductions they're pointing to are maybe as unequivocal. Are you as close to that data, Josh? I understand Adam's perspective, too. The mechanism, whatever—we could get into it. But as it relates to neurofilament, I thought the tofersen example with SOD1 showed that the FDA kind of agrees with our view.

I think the challenge is that no one else across neurodegeneration has really been able to show much on neurofilament. Denali had NfL data that was supportive for their Hunter program, and, to be honest, when the Denali NfL data became really meaningful at 18 months, that made me a true believer that the drug was having a big impact.

Yeah, but Denali was pretty clear that the FDA would not consider the neurofilament data. They focused exclusively on the heparan sulfate data. That was the interesting part to me, right? All of a sudden, for Clene, the agency is saying, "Oh, yeah, well, we'll look at neurofilament."

It is different divisions, though. To be clear, it is. Denali is dealing with the group that's approved all the BioMarin drugs, which just really hasn't done nearly as much in neuroscience. It's a fair point. I guess this FDA has set some precedent for accelerated approval with tofersen, right? The SOD1 drug that, again, did not beat placebo but lowered neurofilament. So maybe because of that, this has to be at least reviewable.

I don't know. Are you aware of other data Clene has, Josh, that suggests the drug is working?

I'm not close to the story. I've covered Denali and have always nerded out on neurofilament as a biomarker, and I've wondered why the FDA was not amenable to considering it.

And so I don't think it's inappropriate that they're considering them now. I just wonder what changed between a year ago and today that they're saying, “Oh, yeah, yeah, file on neurofilament, and we'll consider it.”

Is this—

Yeah.

Is this CBER, or are they both at Neuro CDER?

CDER.

CDER. Which approved—

Yeah.

Tofersen as well. That was CDER.

Yeah. Totally. Yeah.

Same division.

I don't know. I think the biggest issue with neurofilament is that we just don't know how much you need to lower it to be clinically significant. But, you know, if you remember the Huntington's program from Roche, that did worse than placebo in a phase 3, neurofilament was way elevated on drug versus placebo, too.

So there's even, in very different neurodegenerative diseases, bidirectional support for it. I think it's pretty good, but I don't know how unequivocal this Clene data is. I'm just not as in the weeds.

7. Clinical Programs Face a Higher Bar

All right. Cool. A couple of other topics to get through. Allison, coming back to you and into the IBD space, J&J had some interesting IBD data for its combination.

Yeah. Josh, I'll be interested to hear what you thought of this data, which was a closely watched follow-up to a 2022 trial that Johnson & Johnson read out for what is the first combination therapy in development for ulcerative colitis and Crohn's disease. Their initial study a few years ago had shown that this could potentially double the effect in patients, which is great because so many patients with those 2 forms of inflammatory bowel disease just cannot find relief from the treatments currently on the market.

This study, which tested their drugs Tremfya and Simponi together, didn't meet statistical significance. It didn't meet that primary endpoint. But the company was pleased enough with the data that they are going to move it into phase 3 testing. They're going to move it forward specifically for highly refractory patients—patients who have tried 2 or more treatments for IBD and have failed to find relief with them. That's where, looking through the data, Johnson & Johnson said that there are really nice signals in the data for that group, and that could still be a nice market opportunity for them. Josh, what did you think of the data?

I'll say I've been a little perturbed at the way J&J has been reporting some of its clinical trial data and maybe painting it in a brighter light than it should be. I think we saw this routinely with Inlexzo in a head-scratching way that, to be honest, has made me wonder if they continue to really follow the credo of putting patients first and not profits first, given some of the dialogue and watching them try to bash CG Oncology in the NMIBC space. We're going to come back to that in a second if we have time. It was quite off-putting, especially because, at the end of the day, J&J was just way off base with what it was saying its drug was going to do.

So, again, I'm with you on what looks like a clearer benefit in the refractory patients. I'm not sure there's much to do beyond that. To me, I would have preferred a press release that perhaps was a little truer to the data. I don't know if you agree or disagree with that comment as well.

You know, Josh, it's funny that you mention that. Speaking to the team, they really were viewing this as a positive and pitching this as a very positive outcome for the data. I'll tell you some anecdotes offline. But no, they were really pitching this as a very good outcome for the DUET study. That's the name of the clinical trial. They were pitching this as overwhelmingly positive.

But at the end of the day, it didn't meet statistical significance. It didn't meet their primary endpoint. And while they are advancing it, it is in a subgroup of patients. So it's not a total loss, but I do think that it would make me look at some of the other companies that are working on combination therapies to see if they fare better—particularly some of the companies that are working with not just existing drugs, but new candidates that they are folding into combination therapies, which we're seeing AbbVie and Spyre Therapeutics both do.

Yeah.

Maybe—

Yeah, go ahead.

Yeah, no, I was just going to chime in. I think this data is sort of what was expected. I think people expected a much better data set. TNF is sort of the weaker of the new mechanisms—or I would say the weaker of the mechanisms—and there's obviously a lot more interest in newer mechanisms. So, interesting. I don't think it puts to rest the concept of combination, but I think the newer regimens are potentially going to be a lot more interesting.

Yeah.

I had asked one of the vice presidents over at J&J, are you guys thinking of some of these newer mechanisms and folding that in—licensing one of those or acquiring one of those—and trying to create a new combination therapy around that? Because it seems, particularly coming out of this clinical study and the discussion that their IL-23 is not the best IL-23 out there, that the components might not be the strongest out there.

They were very entertained that I tried to ask that question, and basically they were like, “We're not even going to go there. Don't even—We're not going to tell you anything about our plans for potentially a next-gen approach with some newer mechanisms of action.”

This is, by the way, a space that China is very active in. And so you always have to keep your eyes open 24 hours a day, front and back of your eyes, to see what China has. They move fast. They move with speed, obviously at low cost, and now with real excellence.

And so, in the race to figure out what's going to be the best, especially in areas and fields that China is focused on, like IBD and oncology, you've got to be cognizant that there might be things happening there that we're a little bit blind to and can come out of the blue and surprise.

Maybe the last topic, kind of a segue from the discussion of J&J and the NMIBC space: enGene provided an update for its data in NMIBC for its immunostimulant. The previous cut of data looked like it might have been a little bit more competitive with the leaders, which include J&J with Inlexzo and CG Oncology. And kudos to Arthur and Amba and the team there for doing an exemplary job with recruitment, imaging, and navigating this ever-shifting NMIBC landscape.

But it looks like the update for enGene now has fallen a little bit short of expectations, and the stock is down a little today. We'll see what path forward there may be. Also, in theory, there may be multiple lines of therapy that NMIBC patients are able to receive.

I think the question that many of us are struggling with is how many before physicians ultimately say, “We've tried enough medical options, and it's time to move to a cystectomy,” which is not a fun procedure by any means. It has a high rate of morbidity and mortality. But I think it also highlights this world of innovation that we're in.

The bar keeps getting set higher and higher because of the quality of products that are coming along from this really incredible industry. And as a result, when that bar gets set higher, you have to stay competitive, and if you can't stay competitive, figure out exactly where you're going to fit in. I think we're at the top of the hour. Did anyone have any closing remarks or topics that you wanted to quickly touch upon before we close out?

I had a question for Eric from Adam. This was a special request.

Oof. We'll make time for this.

Can we just—

We'll make as much time as needed for this.

Eric should—

Can we just say happy Mother's Day to all and end the call right now, please?

Eric, what do you think about these ivonescimab flyers that are circulating?

Oh, boy. Adam and I have been talking, and both of us have been spending way too much time on this discussion. Fortunately, ASCO is 2.5–3 weeks away. We're going to see the data there, and I can't wait. My guess is it'll be quite good on the overall survival endpoint. But yes, the flyers have been causing much discussion and scuttlebutt on the street.

Yeah.

And Adam's article was terrific.

I was hoping it was going to be so much juicier than that.

Oh, I'm sorry. Don't worry. Next time, I'll get something really juicy. I'm curious: who made these flyers that make it look like this is the drug to end all drugs?

Well, that's the $64,000 question. So far, nobody—well, again, my sources suggested that Keso is in fact the originator of the artwork that you referenced, and it is quite juicy once you get into it.