第183期——2026年5月15日

Looking at this week, we haven't had the busiest week in terms of news, but we've had some events that took place that we're definitely going to talk about, related to the FDA. We're going to start with deals and financing.

1. BMS Partners With Hengrui

We've had another big deal that involves a Chinese biotech company. This one is Bristol Myers Squibb with Hengrui. I'm going to call it a massive deal, but it's not the most massive because we've had bigger ones recently. It continues to show the trend of outsourcing some early drug development to what I would call a potentially still cheaper and faster country for early-stage drug development.

The agreement includes 4 oncology and hematology drugs from Hengrui, 4 immunology assets from Bristol Myers Squibb, and 5 innovative assets to be jointly discovered and developed by both companies. It uses Hengrui's technology platforms, and, of course, some of the assets coming from Bristol Myers Squibb were discovered at Bristol.

Hengrui has an option to co-develop select assets and the potential to conduct certain commercialization activities globally with Bristol Myers Squibb. That's the interesting part that I've not seen before. I've seen these deals where the pharma partner, often a US or European pharma partner, is working with the company, but the local company keeps the region—Macau, Hong Kong, and China—and usually leaves the global commercialization rights to others.

Part of the reason these deals are happening, aside from the good science taking place in China, is because early clinical development is still a little faster, or meaningfully faster, in China than it is in the rest of the world. Of course, this comes back to our conversations that we will have later about the FDA and the changes in leadership.

The deal terms are that BMS pays about $950 million, or up to $950 million, to Hengrui in a tranched investment or payment: $600 million up front, $175 million on the first anniversary, and another $175 million on the second anniversary. This reminds me of their deal with BioNTech, which is interesting. That deal, for Pemetrexed, the PD-L1/VEGF drug that Bristol licensed about a year ago, was also spread out over two years.

The total potential value, of course, is a big number: $15.2 billion, with all those milestones included. This is not the biggest China deal this year. The AstraZeneca-CSPC deal was larger. That was earlier this year, but also in 2026.

With all these details in hand, I want to pass it on to the rest of the team, starting with Josh, because Josh is relatively fresh from China. I want to get your perspective, and I'll have a couple of queries for you as well. Josh?

Thanks, Sam. Our colleague, Lee Watts, does an annual bus tour to China, so I joined this year to get a sense of what all the hullabaloo has been about. It really is impressive seeing it firsthand, including Hengrui, and understanding that the pace, speed, quality, caliber, and affordability of innovation there really brought to life a lot of the discussions that I've been hearing about China being a competitive risk to the US, which it is and is going to increasingly be for all those aforementioned reasons.

In the moment, though, China still seems to be a source for high-quality, validated assets, often better versions of what some of the local innovators have come up with. That creates its own disruptive dynamic, but it is often a wealth transfer from Chinese innovation to US-domiciled companies or investors who can get these cheap assets from China and then bring them to the US, where they can be very lucrative.

That's its own separate dynamic, and it creates a different type of risk for the sector. You just worry: Is there something better that may be licensed out of China into a pharma company or a local biotech company?

What we also heard on the bus tour was that these companies do have plans to ultimately become global commercial entities. Hengrui indicated that its timeframe may be 3 to 5 years to accomplish that. This deal very much aligns with that strategy. They're going to partner with Bristol, find lessons, and develop their own capabilities for commercializing globally, including in the US market.

That's where it now becomes particularly tricky, because the value capture of the innovation may be increasingly shifting to China-based companies. At the same time, it sounds like China is going to open up its own markets for innovation and pay more for new innovative drugs. Of course, this comes at a time when who is better positioned to benefit from that than China's own biotech companies?

In the moment, China remains a very attractive source for low-cost, high-speed, affordable, validated, top-tier innovation. In the race to come up with the best of whatever—the best bispecific, the best monoclonal antibody, the best ADC, the best dual-warhead ADC—China has a clear advantage and remains an affordable, low-cost source of innovation.

But over a 5- to 10-year period, I think the global trade issues are going to be particularly problematic. The US is going to have to figure out what strategy it ultimately deploys to protect its markets and enable local innovators in a race that isn't really a fair race at all, given where China is and where it's headed with its speed of innovation.

Tess, you wanted to come in here, right?

It's a really interesting point. Maybe just extrapolating what Josh shared, roll forward 5 to 10 years, and let's say that Hengrui, Hansoh, CSPC, and a number of these other China innovators have really gone global. I think there's a question of what would still be in the US and what would need to be in the US from a security standpoint.

I think one would be manufacturing, because security of supply is really important. It's critical to have a certain amount of onshore, or very closely allied-country, manufacturing. And sales reps, right? You're still going to need US sales reps, aren't you?

Is that what US biotech will be in 5 to 10 years? Will it basically be manufacturing and sales reps? I think that's a bleak view. I like to think that US biotechs are really competitive, want to win, and want to make great drugs. We'll figure out ways to do that.

Maybe that means they're going to have to do more in China in order to be competitive, and maybe it means they're going to have to do more in India to be competitive. Hopefully, the big hope is that it means the US is actually going to have to do more things like the CTN pathway legislation that's being proposed.

There's a lot of work and a lot of changes at the IRB and other levels that would have to go in to actually make a non-IND path for early clinical development feasible in the United States. Let's hope it gets there, and that the US can be more than manufacturing and sales reps.

Josh, I'm interested in that vision of the future and how you think US biotechs can really compete in this new order.

It's ever-evolving, right? China's focus right now is in certain therapeutic categories and certain modalities. There are still areas where US bioinnovation is relatively insulated. Of course, the question is how long it's going to remain insulated.

One of the most challenging dynamics to me is that US innovation—the new ideas and new concepts—is, I think, far superior to anywhere else in the world.

Where China is really excelling is building on those innovations to take them to the next level, right? Innovation is where the risk is. Optimizing is where the value is. And that's kind of where, Tess, probably what you're seeing as you're painting that picture: How do we find ways for the US to not just be the innovator, but also continue to optimize?

Part of it will come from AI. Great efforts in AI will help level the playing field. Part of it may come from more US companies engaging in China for development so that they can move quickly as well to proof of concept, while we're waiting for the US ecosystem to hopefully speed up as much as it can. China's always going to have a cost, scale, and speed advantage. I don't think that's anything that the US will ever be able to match, and that's where it probably gets most tricky.

The idea that we want access to the best innovation means that, at some point, there may be tough decisions to be made in the US market about whether that also includes innovation in China. Again, balance-of-trade issues are going to be very important, and this is a very important sector now for both countries to defend. It's so hard to predict what the future is going to look like when it's moving so fast, and there are legislative considerations down the road that may change the landscape and the dynamic.

Maybe just building on that one layer more: If optimizing is now the way that investors get paid, is that something that becomes more commoditized? Is that something that becomes more commoditized, and zero-to-one innovators, which are scarce, can have their choice of optimizers because it's something that's more commoditized and can be done very efficiently?

With the current patent system, that's probably hard, but that's just another big-picture thought to throw out there about how things could evolve.

When I got back from China, I emailed all the companies that I cover or work with and basically said, “You need to have a China strategy,” even if there's no strategy to be had at the moment. But part of the strategy may be that if you are the zero-to-one, if you are the original innovator, you need to think about, more so than in the past, cannibalizing yourself with me-better-type innovation, and you can go to China.

There's still a window where China itself is split between the haves and the have-nots, and they're very dependent on external capital, funding, and validation. They are commoditizing innovation, absolutely, and potentially to the advantage of the US. Where it does, as I said, become challenging is when China now wants to commercialize into the US market at the high drug prices that we spend, after having basically shut their market off from high drug prices up until what may be the coming years.

You guys are both touching on a really important topic, which is the strength of the US capital markets, right? That may actually be our best defense in terms of protecting the US biotech ecosystem. There's no capital market in the world like the one in the US.

Tess, I know RA Capital might feel comfortable going over to China and investing in private companies. But for the great majority of funds that are willing to put literally hundreds of billions of dollars into biotech each year, they're not going to go invest in Chinese markets, right?

So maybe, in addition, in terms of your view of the future, in addition to having manufacturing capabilities and capabilities in sales and distribution, the future of US biotech is to have investor relations and analyst responsibilities, things like that. I know for all of our vocations, we'd probably enjoy that.

But I just wonder whether it is possible for Chinese companies to truly penetrate the US from a capital-market standpoint, and whether you guys see that evolving or changing—whether that hurdle, that bar, is going to become so low in terms of fund flows from Chinese listings in the US, or whether US investors will always want the management teams to be here, to speak English, to press the flesh, and to reside in the US.

I would say that's probably why I look at it as a 5-to-10-year consideration, right? Certain companies are really starting to thrive in China, and as China pays more for drug spending, their revenue and profitability are going to improve, and their resources are going to improve. They're going to be learning along the way from partners like Bristol Myers Squibb how to commercialize.

It's not rocket science. There are many different ways to approach that, and that is what they're gearing up to do. But they're not there yet, right? That's what creates this window where there's probably more opportunity than risk right now to license assets out of China and bring them into the US market or even globally and capture all that value in the process.

But over 10 years, that's where it becomes hard to anticipate, because China will have more and more capital to enable its commercial efforts and the expertise as it partners with companies like Bristol Myers Squibb.

Yeah. To summarize this, I'm going to take the other side of the conversation and assume that I'm sitting in China right now, either in the government or running one of these companies. I think what I would want to watch is to make sure that my current competitive advantage, which I would classify as brute force, is maintained. You can call it whatever you want. It's cheaper, but also the number of companies that can iterate on the same idea—PD-1 versus PD-L1, PD-1, CTLA-4, whatever you want it to be—is so high that, by sheer mathematics or arithmetic, they'll end up with one of the assets being potentially one of the best out there.

If I were looking at the region, I would worry that that sheer-force capability will eventually erode, partly because the US catches up with the idea that it has to be able to do science faster. You mentioned AI, Josh. And then the fact that we eventually will wake up. I think that process started with Marty Makary trying to streamline clinical development so that drugs can get into early trials faster, so that we can catch up at least on that front as well.

The question I have is whether there's this risk appetite, and maybe some of these companies are now getting so well-funded that their risk appetite goes up to do that hardcore innovation. No question they can do it. Human brains over there are as good as the human brains in the US. Access to capital is the issue, which is what Eric brought up.

So will they be able to get to the absolute early innovation stage? We know for a fact that they've been able to do that in the materials-science world and the chemistry world. So there's nothing stopping them. It's just that this needs a different level of risk appetite, and that's what I think needs to evolve over there in China.

2. Isomorphic Raises Two Billion

Great conversation here, guys. Thank you. I think maybe on that particular front, and talking about AI and how it can make a change to the world, I want to talk about one of the largest fundraisings that I've come across: Isomorphic. Remember, this is the biotech—or, I would call it, an AI biotech company—that's run by Demis Hassabis as CEO, who is also the CEO of DeepMind, Google's AI business or segment.

They just raised just over $2 billion from investors. Now, this is Series B, right? Tess, you tell me how many Series Bs you've come across that are this big. They had only just raised $579 million in March last year, so this is $2.58 billion of cash going in here.

I'm assuming they're seeing development or evolution in their assets, which is what they're talking about in the press release that they put out, but these are huge numbers. The one little thing that worries me somewhat is that I don't see any biotech-type investors in there. Maybe they were excluded, maybe they couldn't put up with the valuation that was going in here, or a mix of both of these things.

I know Zehra had a billion dollars that came from ARCH Venture Partners and one other whose name I forget. Of course, I'm pretty close to Insilico Medicine. They're doing relatively well in the world of AI, and there's a whole host of other companies. This is where we're going to see whether they're going to be able to really, genuinely get the speed going.

Now, Isomorphic has proven part of its efforts, which is AlphaFold and AlphaGenome, et cetera, that are openly available and are everywhere. Pretty much every chemist that I come across is using them.

So I just wondered if Tess wanted to comment on the $2.1 billion that was raised. I'm sorry. I don't know why I'm laughing, but it's a huge amount of money for a Series B.

It absolutely is. It absolutely is a huge amount of money, and I think, for biotech specialists, we're going to be focused more on assets, right? What is the value of the assets that are being developed? I think too many biotech investors, including us, have been in situations where we put a lot of value on a platform and technology, and it ends up not necessarily translating into assets that can be commercialized.

Kudos to the Isomorphic team for attracting that capital. But I do think that is much more of a tech mindset: getting a technology that is scalable and can help make drug discovery and development more efficient. Let's hope that technology works and can help our companies compete better. But it's certainly a very different type of deal and type of underwriting than your biotech specialist would do.

I mean, just to put on more of a skeptical hat, Tess is such a nice, wonderful person. She's probably a little less snarky than I am. But Sam, Tess, and Josh, you all know this isn't the first time we've seen big tech wade into healthcare waters, right? Whether it's IBM, Amazon, or other initiatives in the past, they've all started with a bang, like this seems to be doing, and ended with a bit of a whimper.

The divide between tech and healthcare, I think, is still very great. I think it takes a certain mindset to develop drugs, and as Tess mentioned, that is where the value is coming from. It's not coming from platforms. Somewhere between an interesting platform, which Isomorphic has—the technology is certainly valuable, as you noted, Sam—and turning it into a drug discovery and development business is a huge, huge gap that just hasn't been breached by anyone else before.

Mm-hmm. The only thing I would say to finish on this is that Demis Hassabis is actually a neuroscientist, and he has surrounded himself with some true biotech-type, or at least biology-knowledgeable, folks. So let's hope it works out, because they are good people. They're among the more concerned people when it comes to AI, right? A little bit like Anthropic in terms of their attitudes toward the safety risks of AI, et cetera.

So let's hope that it works out for them, but I completely hear you, and you always worry about that when this volume of money goes into a company. With that in mind, let's talk about the other key subject of this week, which is Marty Makary's resignation. I had a conversation with a good friend early in the week who said to me, “I've met with Marty recently, and there's no way he's leaving.” So all these folks were wrong—or at least, he wasn't getting fired. And now that's what happened, right?

The issue isn't that anyone was misinformed, et cetera. I think it's probably still part of the ongoing difficulty of being able to judge where the administration will land on something here or there. Marty Makary did some great things and perhaps a few too many podcasts, presentations, and videos—I don't know. It's a value judgment that perhaps isn't my place to make. There were issues with vaccines and how they were being handled that were allowed to happen, although maybe that's because his ultimate boss was in charge of all those areas.

The story with Vinay Prasad was, in the end, whether you like him or not as a scientist—and, Josh, I've heard you talk about this several times—it wasn't necessarily a positive. Rare diseases were supposed to be a great focus, but nothing really ever came of it. Mifepristone was probably a major factor in what happened in the end, in terms of his decision to resign. And this flavored-vapes thing—I just can't believe, as a father of 4, that it was ever in the cards.

But he did say some great things: streamlining clinical trials, at least the idea of streamlining clinical trials; rare diseases; reducing animal testing; bringing in the plausible-mechanism idea for 1-arm, or single-arm, trials and faster trials; and, of course, this new streamlining of trials, which was quite important. So I'd love to hear from you all with regard to how you think this is going to play out, because it just increases the uncertainty. It's a little bit like the leadership contest in the U.K. government. It just creates uncertainty now: who's going to be in charge?

We do have somebody, Kyle Diamantas, who's in charge, and apparently he's a reasonably straightforward person in terms of how he's been engaging with folks at the FDA. Josh, you're unmuted, so I'm going to pass it on to you.

That's a sly trick right there. I'll take it. It's interesting, right? What you read in the press is a little hard to interpret. Was this him not following all of RFK Jr.'s whims, beliefs, and views, in which case why would we expect anyone better than Makary to come in to lead the agency if they still have to report and kowtow to RFK Jr., which is probably where all of the problems start and finish?

Even there, the frustrating part is that some of his ideas are actually very thoughtful, good ideas. Others seem to be more whims and paranoia than actual scientific merit. You almost have to go through on a case-by-case basis and figure out which is which.

On the other hand, there are also reports that maybe the White House is playing a more heavy-handed role in choosing FDA leadership, recognizing that with the midterms coming up, some of the healthcare policy may actually be working against them, so they kind of have to marginalize RFK Jr. to stay in control of the House. Depending on which of those you're going to follow, it either points to really starting to stabilize the agency with new, credentialed leadership, or to something else entirely.

I think we all saw the No Patient Left Behind advocacy for bringing back pastors as head of CDER, uh, head of the FDA, I should say. If we can start to regroup and re-enable the FDA with the right people in the right seats, then that should be a very good thing. But if we go down this path of more enablement of antiscientific whims, et cetera, that's not a good thing.

We've also debated what it was that Makary did wrong that got him in such hot water, even the same with Vinay Prasad. Their decision-making process for many of these drug approvals was relatively sound, right? So do we want someone who's just going to come in and approve everything no matter what? Do we want to go back to that framework that we used to all complain about?

How do you get the balance right? Or is it not even about any of this, and it's really just about agency morale, which has obviously eroded substantially? There's still a lot that we don't know, and we're just going to have to wait and see how it all plays out.

Josh, how does this feed into your current decision-making? How much do you worry about this when you're making investments? I don't know if these short-term issues impact your process at all.

For the most part, drugs are black and white, right? They work, and they should be approved. They don't work, and they shouldn't be approved. But particularly with drugs that go through CBER more than CDER, because of the smaller patient populations, it's harder to generate the same amount of substantial evidence of efficacy and safety, and you do wind up in much more of a gray zone.

We have to align that gray with the policy and the decision-makers. When those policy and decision-makers are changing, so does that gray zone and its alignment with those drugs that haven't been definitively proven to work, that are often considered for accelerated approval, and that are often judgment calls as to whether the data that a company has generated really does portend a meaningful clinical benefit.

You've seen it. The sector's been incredibly volatile based on commentary and leadership, particularly with Vinay Prasad. We're all trying to guess how he's going to look at the next data set. And then, whoever comes in, we're going to have to go through the same process of aligning the gray with the data and the unmet need.

Right. Right. Tess, Eric?

I would say the change really impacts our investing not at all.

Right? I think if anything, the extent to which Makary was in the news and being loud about what the FDA is doing probably worked against him more than for him. I'd be similar to what Josh shared: I think a lot of the approval decisions ended up being decisions where, hey, maybe they were hard. I'm sure not everyone agrees with all of the decisions he made, but they're also understandable, right? The things that weren't approved are things where there really was debate about whether they met the right evidentiary standard.

I would just highlight another really important thing, which is that in February, Kennedy announced several appointments to his team. That included Chris Klomp, Kyle Diamantas, Grace Graham, and John Brooks. These are credible people, right? They're playing a really important role in managing the FDA and managing succession, and I think that is really important and has contributed to some greater level of stability within the organization. That's really important despite the change with Makary.

The last question, I think, is that I don't think the administration wants to turn this into a Senate confirmation hearing process that could distract from the midterms, right? I think it'll be very interesting to see how that plays out. The good news is that there are some excellent candidates. Rick Pazdur certainly is, as NPLB highlighted in the letter, but there are others as well. I think the prospect of a very contentious confirmation hearing is probably not one that the administration really wants to pick right now. I may regret saying that, but at least maybe that is my hope, which would suggest a candidate who is not going to be extremely controversial.

Right. Eric, do you want to add anything before we move on?

Well, just quickly, Sam, thank you. Look, I think nobody's going to miss Dr. Makary. That's pretty clear, and maybe Josh is right. Maybe it's a higher-level issue with HHS that we're all bemoaning here. But let's be clear: he didn't do anything as commissioner that he was supposed to be doing.

When we're talking about an FDA commissioner making decisions about different drugs or raising or lowering the bar for approvals, that's not what we should be talking about. We shouldn't have a guy go on CNBC and talk about UniQure or Replimune or any of that stuff. The job of the commissioner is to support the review staff, to protect the agency from political intervention, and to advocate for a stronger FDA and be a leader. He did none of that, as far as I can tell.

I just hope whoever comes to lead this agency going forward reverts back to what traditionally has been the job of the FDA commissioner, which is to run the organization, not to decide FDA review decisions.

Mm.

I love the fact that you guys are literally in offices next to each other, and you have such interestingly—not massively different, but quite different—views on all this sort of stuff, especially when it comes to the regulatory—

Well, that's just because I'm always right, Sam.

3. REGENXBIO Faces FDA Uncertainty

So, actually, Tess, given that we're talking about this, we just had some data. Now, moving on to the company news and data conversations we're going to have, REGENXBIO had what seemed like, at least, a phase 3 trial that worked out. They talked about the percentage of muscle fibers that had expression of microdystrophin, et cetera, et cetera. But we're not going to file because we don't know who's going to be looking at our file, which is a direct result now—or potentially—of what's going on at the FDA.

Do you want to take that? Tell us about the data. The share price was down. Was it because of this, or was it because the news folks seemed to have latched on to 2 side effects, which the company appears to say were manageable? Over to you, Tess.

Thank you. This was a very interesting one. Indeed, they came out with data where they met their primary endpoint, right? They said they were preparing for potential accelerated approval in 2027. What they showed was a correlation in 9 patients between essentially 2 scores. They showed a correlation between microdystrophin expression and NSAA, which is the functional endpoint in DMD. Their argument is that these can serve as strong evidence for accelerated approval.

Now, they do have more patients. This is 9 patients. I think they will have 30 or so in the PR, and so I think there were some questions about, well, how about everyone else? What's going on with them, and what would the full data package look like? There was also a lot of discussion about how the FDA is going to be thinking about this. How about these side effects? What does this mean? There were also questions about what the complete data set would be.

When talking about messaging for the FDA, one key point was the correlation with clinical outcomes. They said, "Okay, well, we've shown that with the 9 patients." But it's like, yeah, but what about the other 20? Are you going to show it with the other 20? That's one key point of uncertainty.

Then there's the question of whether the FDA is going to recommend a randomized controlled trial or whether external controls are going to be sufficient. Together with some FDA uncertainty, I think there are probably a lot of investors who are not willing to give the benefit of the doubt and want to have more certainty on the path forward. They probably want to see a more complete data set before they really start giving a lot of credit for accelerated approval here.

I'm very interested in any other interpretations of the data. I think the correlation point is certainly strong, with strong data from the 9 patients so far. But I think many investors are simply interpreting that as, "Hey, strong data on the 9 patients. Maybe we need to see a bit more, maybe we need to understand the side effects in a bit more context and understand the regulatory path before giving credit for accelerated approval."

Yeah. What makes this so tricky is that Elevidys is approved, so how do you not approve this too? And should Elevidys ever have been approved in the first place? Back when the FDA was really functional, we heard them talk and opine a lot about setting precedent, right? There was concern about setting precedent, because if you approve one thing, then all of a sudden you're almost locked into approving things like it that still may or may not work.

It looks relative to Elevidys like a promising drug, but does that mean it's a promising drug for Duchenne? We got boxed in by a drug approval that probably shouldn't have happened in the first place. Again, here we are criticizing the FDA for not approving everything while we're literally dealing with the consequences of what happens when you do.

Hmm.

You know, there's another point here, which is that Solid Bio is coming. Solid Bio, at least according to our analyst, Chris Terkluska, who follows this space, may have an even superior construct with superior data. I know that the Solid Bio drug has shown some reductions in CK, which I find to be a very important objective biomarker.

I don't think we've seen that from REGENXBIO yet, but they're probably going to be there too, with maybe even somewhat better data. So where do you draw that line? It's almost like we're getting boxed in from not just one side, but maybe multiple angles here.

Yeah. So it just makes you wonder whether that original... On the one hand, the Elevidys approval obviously enticed people to continue to invest and continue to develop drugs. That's one of the arguments the regulators, at least at the time, made.

On the other hand, with hindsight, it's created a vacuum, a difficulty, a hurdle, or a bar for people to try to get over. Pity. I hope that at some point, the best drug for these young, often very young patients—boys—gets over the line, because they need it, right? In the middle of all this, we mustn't forget that there are these patients who are potentially losing out if there is a good drug out there that's not making it through.

4. Biogen Bets On Tau

Actually, Eric, you were the last one to have the mic, so I'm going to pass it back to you to talk about Biogen's tau data, which has been a favorite of mine instead of amyloid in the Alzheimer's space. Maybe set the scene a little bit about what's different between tau and amyloid in terms of timing and impact on disease, and then tell us what happened and what your view on the data is.

I'll be really quick on the background here, Sam, because I think this is a juicy topic. It's certainly one that was debated to a great degree on Wall Street this week, and I'd love to hear your view, Tess's view, and Josh's view on whether Biogen's making the right decision here.

In essence, they've got an antisense oligonucleotide, or ASO, called BIB80. It's now shown in both a phase 1 study and, just this week, in a phase 2 study that it has the ability to reduce tau, not just in the CSF but in PET imaging as well. So the drug is working as it's designed. For the first time ever, they're starting to show, at least in smaller phase 2 studies—and to the extent that you can show anything in a small phase 2 Alzheimer's study—some potential improvements in terms of slowing disease progression and improved cognition relative to controls.

I say potentially showing that because, again, we've all been misled by early-stage Alzheimer's drugs in the past, and there's so much PTSD around this whole situation that I know we're going to talk about in a moment. Despite missing the prospectively identified primary endpoint, which had to do with dose responsiveness, Biogen made the decision to move into a phase 3, and that's where the fun started yesterday and a lot of the debate and discussion arose.

This company has been telling us for 3 or 4 years now, post-aducanumab, that it's not going to take big, aggressive, risky bets in neurodegenerative disease. It's moving into I&I, where there's a better return on invested capital, and moving toward more easily de-risked yet still high-value programs. At the first sign that they've got maybe something interesting from a phase 2 study on a novel endpoint, we're back to potentially something much different in terms of the risk quotient. I've had a tough time, honestly, trying to swallow that and come to grips with it.

Of course, we haven't seen any data yet. That will be presented next month at the Alzheimer's conference. But it's a big shift, or a big veering to the right, for this company, and I don't know. Not everyone is comfortable with it.

I think the drug is clearly having an impact on tau. Whether tau reduction will have an impact on the disease is still unknown, so I think we'll know in maybe 4 years or something like that.

I think there were a lot of groups hoping that this was going to unlock a lot more work in this space. We've seen incredible progress on blood-brain barrier shuttles, shuttle efficiency, and how much drug you can get into the brain. People were thinking, "Wouldn't this be another great target to be able to apply that technology to?" I think we're just not going to know until the phase 3 results.

Right.

Eric's note on this was one of my favorite notes I've read in a long time—just so blunt and to the point. Biogen seems to be a moth to a flame when it comes to Alzheimer's, despite getting burned multiple times by that same flame, which is interesting.

The only other thing I'd add is that, at the end of the day, biotech companies that are lucky enough to get drugs approved and become profitable are now businesses. As such, at least in my view, the right strategy for these companies is for their risk tolerance in terms of innovation and capital allocation to fall substantially, and for them to act more like businesses, really thinking about driving top- and bottom-line growth without excessive risk and without wasting excessive capital.

Many of these companies are just stuck in the mindset of, "We're biotech companies. We spend a lot. We take risks. We're not thinking like a real business." They do so not only at their own peril but at the peril of the industry in general.

The thing I would add here is that this is not the same management team that made the initial decision with regard to Aduhelm, right? I hear what you're saying about the fact that they were talking about I&I and so on. I could be flippant and say that Alzheimer's disease is potentially an immune disease, but put that aside.

It is a novel mechanism. In my view, at least, it probably has more scientific rigor behind it as a causative agent in the disease process. The timing is the tougher one here with regard to when tau comes on, because it's very proximal to the start of symptoms. We'll see what the data shows.

I don't cover Biogen. One of my other colleagues does. Still, again, it's a disease. Perhaps that's why this moth keeps going back to that flame, Josh—the fact that there's such a massive demand for it at the end of the day, right? If you get it right, you're potentially in the same ballpark as an obesity product. I don't know. That's just a commentary there.

5. Inhibrx Tests The Oncology Bar

Now, back to Eric to talk about Inhibrx. We had some data and some machinations there. This is a company whose story I love, as I've said several times before, in the world of biotech, where a stock that was trading at $10.84 at one point in the past month or so was 14X higher. It's like a Lazarus, a phoenix rising from the ashes. Tell us how much of a phoenix it is, Eric, in terms of the data that we saw in head and neck cancer.

Let's see where we start. They've got an OX40 agonist, and we've had some experience with OX40 drugs in the past. We've also had a lot of experience with novel I/O drugs, and they haven't really translated into much tangible benefit.

There's a good phase 2 study here, so give the folks at Inhibrx credit. They've done a randomized controlled phase 2 study in head and neck cancer against Keytruda, and they doubled the response rate, so that's not bad. The numbers are still a little small. Responses in head and neck cancer are a little ephemeral, in that they don't always correlate with stronger endpoints like PFS and OS, so we still have a ways to go here.

Maybe, from my standpoint, most importantly, we've now gotten to a next level of drug development in head and neck cancer, where we have companies like Merus, which was acquired by Genmab, and its drug pedicicimab, as well as Cara, which is developing a drug called ficaserafus. Those drugs are more than doubling response rates relative to Keytruda.

The bar is going up substantially in head and neck cancer, and it's nice to see yet another mechanism and yet another positive phase 2 study. But relative to some of those other candidates, the Merus and Bicara drugs are now much more advanced and deep into phase 3 trials. I just don't know what to do with Inhibrx. You're right, Sam: it's had a nice little rise, a phoenix from the ashes. That's always nice and wonderful to see. I don't know what the next steps are, to be honest.

The things we want to look at are follow-up and how long the follow-up was. Maybe with further follow-up, the responses could deepen. We'll see. I would also be interested to see the HPV stratification, because there could be an edge there.

At the minute, to our eyes, it looks potentially less competitive than the EGFR drugs at this stage, both from a time perspective and, so far, from a data perspective. As I said, there's a lot more to be known.

Go ahead, Josh.

Just to give them credit, they're a San Diego biotech company, and really wonderful people there. They've also got their DR5 agonist in chondrosarcoma, which showed a very dramatic PFS benefit in a full, proper, large randomized controlled trial, leveraging their protein-engineering expertise. DR5 was a very challenging target that they were able to crack.

As we think about the OX40 data, it's a hexavalent, very different approach to a number of the other OX40 agonists out there. I think it's important to have a little bit of that perspective and acknowledge that, at least with 1 hard target, they were really able to get it to work.

And by the way, on the DR5 data, there was a fairly low response rate, but it turned out to have a very meaningful PFS benefit. So there is a little bit of context, I think—

Absolutely.

Relevant to interpreting the OX40 data.

Absolutely right. That's the PFS data that, I think, they indicated is coming at ESMO, where, of course, I will be. And, of course, San Diego is one of my favorite cities in the United States, so that's an additional positive.

I just wanted to quickly touch on the Moderna story this week. We had a hantavirus outbreak, and I just want to hark back to the days when I couldn't talk about anything but COVID, which, of course, is gone. My colleagues in Bloomberg Media and News always call on me when there's pain and misery in the world, which was the hantavirus outbreak on this cruise ship.

The company said what was going on, which is that they are working in collaboration with somebody on a hantavirus vaccine. The share price popped. I even had some professional investors asking me, “What is it? Do we need a vaccine? When can we get a vaccine? When is the vaccine out?” And I'm thinking, “Wow, this thing is so far from being capable of causing a pandemic.”

Of course, it's a virus. It does mutate, and it does cause issues if you get it to enough people and allow it to jump from person to person. But it's very hard for it to jump from person to person. So it was interesting to see that. Now I think Moderna has given up some of those gains, and we're back to the story of when we're going to get the data for the melanoma vaccine they're developing, or individualized neoantigen therapy that we're going to get. That's potentially sometime this year. That is the driving story here.

It was also interesting that none of the other mRNA companies, which, of course, have the technology to deal with wanting to be prepared for the next pandemic or another awful virus to hit us—which is the last thing we need in the middle of everything else we're dealing with—were involved. That need never goes away. That is the right technology to be using, and it's the easiest and most rapid to scale up. So I'm assuming it's not unfair to say there has to be some value ascribed to that, as long as the regulators and healthcare bodies don't keep trashing the technology. Time will tell.

6. The Next Clinical Catalysts

So that was that story. Now, for the rest of the call, if everybody's okay, we just want to—We've only got about 5 minutes left. ASCO's coming up, and we're going to be enjoying the abstracts released on the 21st. Does anybody want to pick 1 thing that they're super excited about and looking for? Excited by, not necessarily thinking the data would be superb, but that you're really excited to see the data. I'm going to go to Josh first, and you can do a hospital pass to Eric if you want.

I pride myself on spending fairly little time in oncology because it is so hard to get ahead of anything and invest around it. So I don't really have much exposure to ASCO. But I know Eric does.

All right. So, Eric.

Yeah. Well, those of us who are a little bit more intellectually inclined, we like looking at data and trying to parse out competitive landscapes. So I don't know, Sam. I guess we're all keen to see the Summit HARMONi-6 results, right?

Yeah.

This will be the survival data from a frontline study. It's being done in China, and it's certainly not going to be the ultimate arbiter of whether the drug works. We still need to wait for HARMONi-3 and the global readout later this year for that. But certainly, there'll be a lot of interest in whether, in addition to the very strong PFS benefit we saw for ivonescimab in frontline lung cancer, we may also see a strong survival benefit.

Yeah, yeah. And then, of course, we've got the pancreatic data from Revolution Medicines coming. There are a whole bunch of companies snapping at their heels, but they have a good drug from an efficacy perspective. People can raise issues with the side-effect profile, but this is an awful cancer, and you have to remember that. That comes up with other mechanisms of action, like PRMT5, which seems to be 1 that people keep going on about because it causes infections.

A lot of cancer drugs cause neutropenia, lymphopenia, and all sorts of issues. We've also got some data coming for Ribravant in head and neck cancer—overall survival data. So that's what we're looking for. And maybe if that OS data looks really competitive with the bar that's set by Genmab's PITO, then maybe people will start thinking a little bit more about perhaps the first-line setting could also be good, although the data we saw in the phase 2-ish arena didn't look that great.

There's a bunch of myeloma data coming out, which, of course—and remember, myeloma is 1 of those diseases that keeps going through revolutions, right? We had the IMiDs, then we had Darzalex, the CD38 antibody, and then we have Carvykti and bispecifics. So here we've got some combination data coming out that we're looking forward to, which, of course, will also be at EHA. There's more there: MonumenTAL-3 from Johnson & Johnson, which seems to be leading and owning this space.

And then we have ADA, quickly. Is it just—should it not be called ADBA or ADOA? I can't remember now. American Diabetes and Obesity Association, right? We've got a bunch of data coming out there. My colleague Mike Shaw is really keen to see the data, especially the first view of AstraZeneca's oral GLP-1. Let's see what that looks like. And retatrutide, for which the detailed data is going to be there—that's going to be fun to see.

And lastly, we have ATS coming. Does anyone want to highlight 1 or 2 things that they're excited about at ATS? The American Thoracic Society used to be a conference where I used to go, and then after a while, I started thinking, “Why am I going?” because it was all about LAMAs and LABAs, combinations, and so on. Now, of course, the world's changed. We have all these biologics. Tess, do you want to take a stab at that, or Eric or Josh, given that it's not oncology? Or some science.

Well, I guess I'm just going to pick up for the less intellectual of us, Eric, in the non-oncology space. People have been talking about this big whole thing.

I wasn't putting you in Josh's bucket, Tess, just to be clear.

Josh has his own special place.

So, yeah. I think there should be some interesting data coming in IPF that we'll be looking at, which will give an understanding of some different combinations. We have data from AstraZeneca on a drug they've been developing, which is an IL-33 antibody, where the abstracts looked pretty interesting.

This is a drug called tozorakimab. I think everyone probably recalls itepekimab, which Sanofi had been developing and which disappointed a year ago or so. Sanofi had shared that COVID was a big part of that. I think there's still some debate about it, but it was certainly very encouraging to see some of the tozorakimab data in the abstract.

A lot is happening now in COPD, asthma, and other respiratory diseases, and it's great to be following some of these new targets and target combinations as they get unearthed.

Yeah. Now, Tess, it feels like it's going down the same road as psoriasis, RA, and some of these other I&I spaces. Maybe I'll start going back to ATS again and have some intellectual stimulation.

I'll just ask quickly—

Do you want to defend yourself a bit?

Do you want to defend yourself a bit?

It's going to be too complicated, and then we'll just have to have Eric do it.

Oh, no, no. I'm not defending myself. Eric is the intellectual. I just focus more on generating strong returns for portfolios.

Love it.

When it comes to IPF, 1 thing I would flag: there's, again, a San Diego company, Endeavour. John Hood, 1 of the legends of bioinnovation here, is the CEO. They're showing some really incredible data, and if you're looking at IPF at all, you have to look at fluida scans, because they are probably the best signal of a real antifibrotic effect.

There's also some interesting drug-delivery technology that's come along as well, which is quite interesting. There are other things happening in respiratory disease that I think are quite fascinating.

Right. So we need to end here. All 3 of the co-hosts are absolutely brilliant. They're all super intelligent, which is why they're on here.