Please find attached an update on the biopharma market for the week of May 19, 2025.
Last week kicked off with a fall in U.S. producer prices and postponement of China tariffs.
The result was that the S&P 500 notched a welcome 5% gain for the week.
Biotech itself showed some signs of life last week with two M&A deals, a series of remarkably positive clinical developments and several follow-on offerings.
The XBI was up 3% last week despite a somewhat vague Executive Order from President Trump pushing for most-favored-nation policies.
The macro backdrop for the life science sector remains decidedly mixed.
We heard from RFK Jr. in his Senate testimony last week.
What he said did not necessarily cause investors to want to leap into the healthcare and biopharma sector.
We spoke at events last week at the Mayo Clinic in Rochester MN and the FT / Endpoints conference in NYC.
We continue to be optimistic on the FDA (more on that below), however managers continue to report that getting capital into specialist funds is particularly challenging as we scrape bottom in a period of extended policy uncertainty.
Normally, we don’t hear so much as to what is going on with healthcare systems but can report that listening to a prominent health industry lobbyist speak at Mayo, there is just as much uncertainty now on the provider side as what is going in Washington DC. Changes in Medicaid rules are not likely to be good for healthcare providers, and the changes are likely to put major pressure on state governments.
There are numerous potential changes in store for the healthcare system under the Trump administration and the lobbyist indicated that we are in early innings of the developments there.
Politics in Washington, Healthcare and Biopharma
President Donald Trump's "One Big Beautiful Bill" faced challenges last week when it first failed to advance out of the House Budget Committee. The bill, encompassing tax cuts, increased defense and border security funding, and spending reductions in programs like Medicaid and green energy subsidies, was rejected in a 16–21 vote. Notably, five Republicans joined Democrats in opposing the measure, highlighting internal divisions within the GOP. By Sunday night this bill got out of committee with the conservatives abstaining.
Key challenges facing the bill include demands from fiscal conservatives for deeper immediate spending cuts, particularly to Medicaid and food assistance programs. These lawmakers criticized the bill for delaying significant reforms until 2029, arguing that it would exacerbate the national debt, projected to increase by $3.3 to $5.2 trillion over the next decade.
Additionally, Republicans from high-tax states expressed dissatisfaction with the proposed cap on state and local tax (SALT) deductions, seeking higher limits to benefit their constituents.
This all coincided with Moody's downgrade of the U.S. credit rating, intensifying concerns over fiscal responsibility. As negotiations continue, GOP leaders aim to reconcile these differences to advance the legislation through the House by Memorial Day.
We have previously noted that President Trump is acutely aware of his popularity ratings, and we believe that his policy actions are, in part, linked to how he is doing in the polls. Last week’s abysmal University of Michigan consumer sentiment data highlighted the populace’s broad fears of inflation linked to tariffs. It is striking to us that in the so-called “China negotiations” the Trump Administration essentially unilaterally backed off its previous tariffs.
The Economist ran a story last week entitled “America Has Given China a Surprisingly Good Tariff Deal” in which it noted:
“The financial chaos following Liberation Day included a bond-market revolt and a plunging dollar. This disturbance persuaded Mr. Trump to offer a 90-day reprieve to most of America’s trading partners on April 9th. After the Geneva talks, China has now been added to the list. Its reciprocal tariff of 10% is as low as any country enjoys. Moreover, this low rate applies even though China, unlike other countries, still has a 10% retaliatory tariff in place.”
Recent approval tracking polls from Ipsos and Bullfinch Group show that Trump’s approval numbers improved after the China tariff retreat but barely.
MFN Announcement Aftermath
This, in our opinion, is why Trump is now trying to beat on the pharma industry with the MFN announcement.
The idea we think is to improve his perceived legitimacy as a leader and to help get his tax cuts through Congress.
As one might imagine Trump’s MFN initiative received more than a little discussion at last week’s FT/Endpoints event – which, by the way, was very nicely done. Chris Boerner, CEO of BMS, noted the history pricing and policies in Europe and said “we should not import failed policies” into the United States.
Boerner, a superb speaker, avoided criticism of the Trump Administration but artfully noted the risks inherent in ongoing policy reforms saying, “It’s relied on, for decades, an interaction between government and academia, academia and industry. And so, as we look for opportunities to improve components of that ecosystem, we’ve got to recognize that while we’re looking to advance and fix things, we don’t break them at the same time. Let’s also remember that while the US is in a leadership position today, that’s not an inalienable right. This is a global ecosystem.”
We agree with his comments wholeheartedly.
U.S. success in biosciences is not preordained in any way.
Pharma Middlemen and Managed Care in the Spotlight
As the policy laser pointer is increasingly focusing on the role of middlemen in the pharma supply system, we are seeing weakness in PBM and managed care stocks.
While pharma stocks held up well after his MFN announcement last week, we saw the shares of both CVS and Cigna (owners of PBMs) drop. This was linked to the discussion of the need to limit PBM abuses in the MFN executive order.
Even more disastrous was the peremptory dismissal of Andy Witty as CEO of UnitedHealthcare.
We learned why a day later when the WSJ announced that United is facing a criminal Medicare fraud investigation. United stock is down more than 50% in the last month.
The board of UnitedHealthcare is bringing back former CEO Stephen Hemsley, who is widely credited as the architect of the company’s previous growth and integrated strategy. UNH responded to the news story indicating that it stands “by the integrity of our Medicare Advantage program.”
RFK Jr. Testimony at the Senate HELP Committee
In congressional hearings before both the Senate HELP Committee and the House Appropriations Committee, RFK Jr. addressed a wide array of health policy topics tied to the HHS budget, including vaccine safety, domestic manufacturing, MFN drug pricing, staffing reorganization at HHS, and the role of AI in regulatory science.
RFK Jr. praised Eli Lilly and other companies for recent investments in U.S. manufacturing capacity, suggesting that the administration is considering new “incentives” to further boost domestic pharmaceutical production. While RFK did not specify what these incentives might entail, he emphasized close collaboration with industry leaders and expressed optimism about bringing more drug production onshore.
On drug pricing, RFK signaled support for aggressive measures to lower costs, invoking President Trump’s executive order on Most Favored Nation (MFN) pricing as a model. He stated that the president “doesn’t care how we get there,” reinforcing the administration’s flexibility on mechanisms to reduce prices.
Notably, he suggested MFN could apply broadly, including to 340B drugs (supplied to non-profit hospitals and health centers for the poor), which surprised observers given past assumptions that MFN reforms would be confined to Medicare or Medicaid.
Meanwhile, pharma stocks have rallied recently, interpreting the latest MFN developments as less menacing than initially feared. However, uncertainties persist, especially around how implementation would work and whether a 180-day negotiation period would be preserved.
RFK also made controversial remarks on vaccine safety, claiming that most vaccines aside from COVID had not been tested against placebo—a statement quickly challenged by Senator Cassidy, who cited placebo-controlled trials for rotavirus, HPV, and measles vaccines. RFK Jr. also said that only the sickest kids “die of measles” implying that the vaccine might not be needed.
Ouch.
On staffing, RFK declined to comment due to a federal court order but indicated the intent was consolidation, not elimination, of HHS roles.
RFK also voiced support for incorporating AI into drug development, particularly Phase III clinical trials, and potentially for use in expediting FDA approvals, though he offered few specifics.
Medicaid Cuts
There has been significant concern of prospective Medicaid Cuts.
Robert Greenstein, Visiting Fellow of the Brookings Institution last week said: “40 years ago, one of every four children in America, about 25%, had no health insurance, today it’s 5%. Among the population as a whole, the share of the population that’s uninsured has been cut in half primarily because of the Affordable Care Act enacted back in 2010. We’ll see poverty go back up, and we will clearly see, if you cut Medicaid substantially, you’re going to have millions more people who lack health insurance.”
Separately, the House Energy & Commerce Committee advanced a budget proposal including $912 billion in cuts, with $715 billion targeting Medicaid.
The proposal includes new work requirements (80 hours) for adult enrollees, though parents of dependent children are excluded—a key exemption that benefits companies like Vertex Pharmaceuticals, which has substantial Medicaid exposure through cystic fibrosis patients.
Additionally, Trump hinted at softening his stance on pharma tariffs, noting that companies like Lilly might avoid them due to recent U.S. investments. However, Roche warned it might reconsider U.S. manufacturing if MFN pricing is enacted, renewing focus on the role of PBMs (“middlemen”) in the pricing debate.
If there was a takeaway from the RFK Jr. Senate hearings last week it was that there is high policy uncertainty in healthcare with the current Trump Administration. This is not attracting investors to our sector.
One fund manager who has been in conversations to pick up additional LP money last week said to us: “Pension funds, endowments and wealthy individuals listened to those RFK hearings and don’t want to put their dollars into the harm’s way of the healthcare sector right now.”
Our own view, for what it's worth, is that we are getting closer to the point where the market enters a strong healthcare rally.
The current gloom will recede soon enough.
FDA Developments
We have previously argued that the FDA under Martin Makary will work hard to accelerate approvals for drugs that could meaningfully impact the lives of patients with intractable diseases.
We think that FDA headwinds have gotten far too much attention in comparison to tailwinds.
This administration has been attempting to reform the FDA and there is no doubt a lot of change underway.
Some have said that the FDA will not be serious about accelerating approvals and, if anything, under Vinay Prasad, at CBER, the FDA will be tougher on industry.
And more erratic to boot.
Tim Hunt, CEO of the Alliance for Regenerative Medicine spoke at the FT / Endpoints Conference, indicating that none of their members have complained of FDA delays under Makary.
Others have noted that a tough FDA is essential and that accelerating approvals will turn important drugs into “nutritionals” – with light labels that cheapen pharma.
It feels like no matter what it does, the FDA can’t win.
There is incredible anxiety in many quarters about any change in the FDA’s regulatory frameworks.
As important backdrop, it has been argued for years that the FDA’s criteria for approving new medicines don’t necessarily work as well as they could for patient’s benefit.
One might recall that former FDA Commissioner Mark McLellan previously argued that the FDA should try to titrate requirements to make sure that drug approvals balance patient interest with industry interest in developing products at the least burdensome cost.
Implied and later discussed was the notion that efficacy and safety requirements shouldn’t be cookie cutter but instead could be thought of in a Bayesian perspective and might also be able to leverage real world evidence.
The FDA has been open to this type of idea since issuing guidance shown at right in Aug 2023 on the use of real-world data, particularly when the number of patients with a disease is small.
One needs to obtain enough data for an investigational drug to rule out the hypothesis that it might not be safe or effective.
In theory, one could use an incredibly small dataset to make inferences that a drug is working. For example, one would never expect to see a child with osteogenesis imperfecta get up and win a 100-meter race. So, if a kid gets treated and runs the race well three months later you wouldn’t need to see that much more. OK, perhaps, three kids might be enough. As for safety, one would like to see more than three kids, but probably thousands of cases would not be needed.
Our own view is that there is an opportunity to improve FDA regulatory frameworks, and we believe that the FDA communications in recent months on the topic have been constructive. It feels to us that there are so many diseases like Parkinson’s, lupus and countless rare conditions where drugs could and should be getting to patients more rapidly.
Many observers appear to believe that new CBER head Vinay Prasad’s views on past approvals from companies like Sarepta are incompatible with those expressed recently by Commissioner Martin Makary.
In a rapidly evolving regulatory landscape, two of the most prominent voices in medical policy, Dr. Vinay Prasad and Dr. Martin Makary, are increasingly aligned in their views on drug approvals, particularly for rare diseases. Both have been critical of inefficiencies in the current approval process and have advocated for a more rational, transparent and patient-centered approach. Their compatibility lies in a shared belief that evidence standards must remain rigorous, but also adaptive enough to accommodate innovative science and real-world constraints.
Dr. Prasad has long emphasized the importance of evidence quality, calling out approvals based on surrogate endpoints or weak trials. His past work on cancer drug pricing and approvals has been well done and highlights opportunities for improvement in the oncology treatment ecosystem.
Dr. Prasad supports Bayesian adaptive methods, especially in rare disease trials where traditional large-scale randomized controlled trials may not be feasible. Similarly, Dr. Makary has championed efficiency in medicine and has been outspoken about regulatory waste. He argues that reforms are needed at the FDA to reduce time-to-approval for treatments where the unmet need is severe, and the risk-to-benefit ratio is favorable.
So, our argument is that the FDA will be more Bayesian in considering approvals (weighing the strength of dataset signal versus numbers of patients).
High patient need always matters but may not be so important as it was when Peter Marks waved through Sarepta’s first approval based on a dataset with a relatively weak signal. His argument was that patient need was paramount.
To us, Makary and Prasad, in contrast, are looking for drugs that have strong signals from clinical trials – even from small datasets.
Of course, it is easy to sit in the banker’s study and pontificate about how friendly the FDA is going to be this year. But the question that matters is how has the FDA been behaving in recent months?
Well, we don’t have a huge dataset to work from, so we are going to have to be Bayesian about it.
Here is a compilation of anecdotal data that should, in totum, give a view of the agency’s current functionality and thought process:
1. Bayer’s Late-Stage Pipeline
Sebastian Guth, President Bayer US, spoke at a panel last week at the FT Endpoints pharma conference and indicated that Bayer has multiple pending approvals at the agency and that none of these packages are behind schedule with this FDA. Bayer’s PDUFA dates are for Elinzanetant for menopausal symptoms (July); Finerenone for heart failure (June) and HD Eylea (August).
2. Longeveron (Laromestrocel for Alzheimer’s)
Longeveron announced a positive Type B meeting held on March 20th with the FDA, achieving alignment on the design of a single, pivotal Phase 2/3 adaptive clinical trial. The FDA indicated that, if interim results are positive, the trial could support a Biologics License Application (BLA) submission. Laromestrocel has received both Regenerative Medicine Advanced Therapy (RMAT) and Fast Track designations for this indication.
3. Cabaletta (rese-cell for myositis)
Cabaletta is developing CAR T cells to address autoimmune diseases such as myositis, SLE/LN and scleroderma. Cabaletta last week announced that it has entered into what we hope is the first of many agreements with the FDA under Commissioner Martin Makary to achieve rapid market authorization for an important drug candidate initially for myositis, a disabling autoimmune disease that affects ~80,000 patients in the US. Cabaletta has previously shared data on a patient with this disease who achieved a rapid, very deep response. They will soon share additional data across multiple diseases in three oral presentations at EULAR. Cabaletta had earlier said that it would align with FDA on myositis registrational trial designs for rese-cel. While Cabaletta doesn’t have that many patients the responses are deep, consistent and impressive – what the FDA is looking for.
Cabaletta disclosed the following last week: “Following a Type C meeting with the FDA and receipt of meeting minutes in April 2025, Cabaletta is planning to implement the following design for two single-arm, disease-specific registrational cohorts in the ongoing RESET-Myositis trial, either of which, if successful, enable a future Biologics License Application (BLA) submission for rese-cel in myositis: One cohort will evaluate approximately 15 patients with either dermatomyositis (DM) or antisynthetase syndrome (ASyS) and one cohort will evaluate approximately 15 patients with immune-mediated necrotizing myopathy (IMNM).”
Cabaletta stock rose more than 70% on this news.
The company does need to complete manufacturing work and build a 100-patient database (>40% already enrolled) but it’s clear to us (and other investors apparently) that the company has a very good chance to get to an FDA approval in the next three years with a reasonable resource commitment.
The required efficacy dataset size and safety database requirement is less onerous than what previous sponsors have had to fulfill for 25,000+ prevalence population drug candidates.
The bottom line is that the total cost of getting a therapy to market has come down. Perhaps to give a point of comparison, Trikafta was approved by FDA for cystic fibrosis among patients who had at least one copy of the F508del mutation in the CFTR gene. Vertex undertook three Phase 3 studies with a total of 768 participants as part of its approval package. There have been other gene and cell therapies addressing somewhat smaller markets that have agreed to more modest approval packages (but not as modest as Cabaletta’s). However, these therapies (think Gamida Cell) have not delivered the dramatic type of complete responses seen with Cabaletta’s rese-cell.
4. Cereno Scientific
Cereno is developing a PAH drug and met with the FDA in a Type C meeting to discuss its approval pathway on April 21, 2025. The signal seen in Phase 2a for their HDAC drug was present but not as strong as what had been seen by Cabaletta (positive impact on exploratory biomarkers). FDA responded by requiring that they complete a placebo-controlled Phase 2b trial. This strikes us as appropriate and responsive to the quality of the underlying data.
5. Dyne Therapeutics
Dyne participated in a Type C meeting with CDER at the Food and Drug Administration in May 2025 and discussed the path to regulatory approval, including U.S. Accelerated Approval, for DYNE-101 in DM1.
FDA and Dyne agreed that it would carry out one additional placebo-controlled Registrational Expansion Cohort to wrap up its registrational program.
Full details on this registrational program were not provided but the bottom line is that Dyne does not have to do a Phase 3 program but instead can wrap up an expanded Phase 2 study and file for approval.
Impressive given that there are more than 35,000 patients in the US with DM1.
John Cox, CEO of Dyne said of the FDA’s stance: “Our two lead programs continue to demonstrate compelling and favorable data, including evidence of functional improvement across multiple measures in DM1 and DMD. We are urgently advancing both programs toward potential U.S. Accelerated Approval submissions in 2026 and possible commercial launches in 2027…”
These five recent examples are highly consistent with our characterization of the agency. Constructive, flexible and appropriately cautious about making sure that safety databases are built out.
It is fair to say that the FDA is not a pushover in any sense. This agency isn’t, in any way, abandoning traditional evidentiary standards for drug approvals. They are simply saying to sponsors: once you have proven that your drug works beyond a reasonable doubt there is no need to run up the score with more and more trial enrollment. Once we know the drug is working let’s do what we can to get it to patients ASAP.
Upcoming Oncology AdComm
Next week’s May 21st ODAC will feature a series of important questions: (1) should Genentech be able to get Columvi approved for refractory DLBCL with a study that only has 9% of its patients from within the U.S.? (our sense is that the bar is more like 25% required so this application could run into trouble) (2) should Urogen be able to get an approval with a single arm study? Is their data compelling enough to warrant not doing a two-arm study? Notably, ImmunityBio, Ferring and Genentech all used single arm studies before in applications for BCG-unresponsive NMIBC. (3) is Pfizer’s PARP/ARPI inhibitor Phase 3 data strong enough in prostate cancer to warrant an approval.
These are all good topics for discussion. The rigor of the old FDA that you have known and loved is still very much around.
Biotech Market Update
The Stifel Global Biotech Value Tracker rose by 2.4% last week, slightly less than the XBI (+3.4%) and the BBC (up 3.4%). Treasury yields remain stubbornly high. The XBI is down 12.2% for the year while the Stifel Global Biotech Value Tracker is down 5% for the year.
Biotech stocks, as measured using the Stifel Global Biotech Tracker, are up 24% since hitting a low point six weeks ago. Biotech stocks ended last week down 5% for the year.
Biotech Underperformance vs. Tech Sector Has Deepened
We began 2023 with a 106% differential between the S&P IT Index and the XBI since the start of 2020. By the start of 2025 it had hit 186%. As of last Friday, the gap stood at a difficult to comprehend 197%.
Eeek!
Last week saw Halozyme take a 21% hit on news that HHS may not allow second generations of the same biomolecule to obtain a new exclusivity period.
We continue to live in a “have” and “have not” biotech world. As of last Friday, the bottom 77% of biotechs by value have only 8% of the total EV of the global sector. And the top 7% of the global public biotech population has two thirds of the sector’s total value.
Sheesh…
Last week saw a strong recovery take place in Europe and Taiwan biotech stocks (up 13.8% and 11.8% respectively) while U.S. biotech was down slightly. Canada biotech shed 10% of its value last week.
Phase 3 U.S. biotech values continue to soften relative to Phase 1 and Phase 2 stocks. As of last Friday, the average Phase 3 U.S. biotech was worth $437 million, down from $701 million at the opening of the year. In contrast, the average Phase 1 stock was worth $184 million, down from $244 million at the start of the year.
Since this year began, obesity and RNA therapies biotechs have held their values best, while other sectors including immunology and vaccines are down rather substantially.
Last week saw strength in the API, life science tools and diagnostics sectors while CDMOs and pharma services companies were weak. Overall, life sciences stocks gained $82 billion in value last week (up 0.9% worldwide).
The count of negative EV life sciences companies worldwide fell from 162 two weeks ago to 168 last Friday.
This metric has remained stubbornly high in recent weeks.
Capital Markets Update
The last company to go public in the biopharma sector was Duality Biologics which went out in Hong Kong in early April. We are now slated to see Hengrui do a $1.27 billion IPO in HK next week. The U.S. biotech IPO market remains largely closed.
We think the biotech IPO market turns around once biotech stocks stabilize and investors begin to make money on these deals again.
The slowdown in the biopharma follow-on market is continuing this month. The last three weeks have seen $556 million of volume, making it one of the slowest periods in recent years. This said, the market is not closed. Companies with good data like CytomX are still able to come to market.
Recent months have seen modest activity in the venture privates market. The market was particularly slow last week with less than $200mm in deals pricing in the market. For the year, we are on pace to a $33bn volume year, which would be the slowest since 2019.
M&A Market
We have seen $6.5 billion in biopharma M&A volume so far this month. If we extrapolate this, we are on track for an $11 billion month.
Overall, the year continues to look like quite a solid year for M&A. Last week saw GSK buy a Phase 3 ready liver disease drug from Boston Pharma for $1.2 billion and BioMarin step in to buy Inozyme for $260 million (a 180% premium).
Industry Update
We were saddened to see former President Biden report that he has advanced prostate cancer last Sunday evening (May 18th).
We wish former President Biden well as he grapples with advanced prostate cancer. There are a number of positive items of note including the fact that the cancer appears to be hormone responsive.
Further, with today’s drug options for metastatic disease such as Pluvicto®, Biden likely has good prospects.
Interestingly, the Biden Administration invested heavily in cancer and championed a major early cancer detection project through the NIH.
Biden has also been a major supporter of the Cancer Moonshot Initiative.
The Trump administration's approach to cancer research funding has been marked by significant budgetary reductions, raising concerns among scientists, healthcare professionals, and patient advocates.
We were as surprised as anyone to see Novo Nordisk CEO dismissed last week. Danish boards are normally quite staid, so this move was highly unusual.
Lars Fruergaard Jørgensen has been an incredibly well-liked CEO and gets credit for pushing to turn semaglutide into a major obesity drug.
In many ways Novo has created today’s booming obesity drug market. While Novo has partially gone outside to build up its next generation pipeline in obesity, it has fallen short of Lilly by sticking to next generation internal candidate Cagrisema.
In retrospect, Novo was quite optimistic about its pipeline and walked away from a triple drug candidate that looks a lot like Eli Lilly’s retatrutide. Novo is now in preclinical testing of UBT251, an emerging triple incretin drug candidate. The company under Jørgensen was slow to react to the manufacturing capacity challenges posed by semaglutide’s success.
This has allowed both Lilly and a large compounded GLP-1 market to emerge. The compounded market persists in a personalized format despite ending the semaglutide shortage. Evidation reports to us that half of the semaglutide market is now compounded – which has not been good for Novo shares.
Despite these failures, the company has a formidable, albeit early obesity pipeline and is in Phase 3 with ziltivekimab for the control of inflammation in atherosclerosis. This drug is late stage and has potential to be huge.
We remain optimistic about Novo Nordisk’s prospects.
The San Francisco Business Times ran a nice story about the history of US biotech last week.
San Francisco has been ground zero of the biotech revolution and the newspaper marked the industry’s 50th anniversary last week, running a series of stories on the history of the industry, remarking, of course, that current policies could make the next 50 years perhaps a little less exciting than the last.
We encourage you to read the issue. There is far too much to pick up here.
We really liked the discussion of former Genentech CEO Art Levinson’s role in shaping the industry and carry some quotes on him from Hal Barron, his former Chief Medical Officer. Here is a little of what was written, quoting Barron:
"I spend my entire life trying to be like Art. But you could try to be like Art or you could be Art. It's a big difference." One of Levinson's biggest lessons? Seek truth, Barron said. "Sometimes the truth is inconvenient, maybe even really bad, but you take the long view. He ensured balance — the short-term means, the long-term perspective," Barron said. "It's often a luxury that CEOs say they don't have. He rejected that false choice: You always have the option. … He would always instill in people this sense of understanding how to balance those things.“ It's a lesson as the Bay Area biotech industry faces the headwinds of cuts to basic science research support reduced funding for emerging companies and the loss of talent. "Great leaders don't fear failure," Barron said. "(Art) would be the first to say, 'I'm not encouraging anyone to fail, but you can't fear failure, or you won't be doing anything meaningful.' "
Love this.
This month’s Nature Reviews Drug Discovery has carried a remarkably good article on B-cell based autoimmunity.
We were saddened to learn last week that Charlotte Dravet recently died. Born in 1936 Dravet is best known for discovering the eponymously named syndrome that was distinct from Lennox-Gastaut Syndrome.
The International Child Neurology Association wrote an obituary in her honor, noting:
“Her work significantly advanced the understanding of genetic epilepsies, notably through the discovery in 2001 that mutations in the SCN1A gene were present in most Dravet Syndrome cases. Dr. Charlotte Dravet’s extraordinary contributions to pediatric epilepsy will forever be remembered and honored.”
We were blown away by Intellia’s data reported on Sunday, May 18th. Their “one and done” treatment for TTR amyloidosis was shown to result in lasting remissions of transthyretin (ATTR) amyloidosis with polyneuropathy.
We were also excited to see EpCAM data from CytomX last week. This long-suffering biotech has persevered in testing an ADC that takes out EpCAM expressing cells on tumors only.
A 28% ORR rate is highly impressive in fifth line CRC. EpCAM has long been a pan-cancer target of interest and CytomX may have cracked the code on how to drug it with its CX-2051 candidate. This drug has a masking domain which is designed to reduce EpCAM binding in normal tissues.
Cytomx shares rose 183% last week on the news.
Bravo.
Equally impressive was a report in the NEJM that the first ever custom CRISPR therapy for a child with an “N of 1” mutation had been designed and was successful.
Cool!
Also, very impressive was the remarkable data for “remnant cholesterol” and triglyceride reductions reported by Marea Therapeutics with their anti-ANGPTL4 antibody.
We carry a number of slides from LEK on target crowding. It’s a huge problem and one can see its implications last week in news for diseases like ATTR amyloidosis and FGF21’s for liver disease. In contrast, the N of 1 gene edit, CytomX’s EpCAM drug and Marea’s antibody were first-in-class therapies to get good data. The rewards (and risks) are relatively obvious.
In total, just 2% of the target space is associated with 25% of all drugs in development. LEK wrote: “About 2% of active R&D targets — 38 targets in total — were associated with 50 or more drugs.”
They also wrote:
“The annual rate at which novel targets enter the pipeline has dropped significantly — from around 100 a decade ago to just 30 in 2024. This decline in early-stage innovation isn’t due to a lack of new drugs in development or reduced early-stage venture capital funding. In fact, the overall R&D pipeline has nearly doubled in size, growing from approximately 11,000 active drug programs in 2015 to about 21,000 by the end of 2024, even after accounting for product launches, program pauses and terminations.”
LEK concluded:
“There’s still significant untapped potential in novel and underexplored targets. Despite persistent unmet needs, around 55% of the 4,500 druggable proteins in the human genome remain untouched by drug development (Finan et al., 2017). While not all will prove viable, scientific advances are steadily expanding the boundaries of druggable space.”
Wise words aimed at the bold.
Best,
Tim Opler
Managing Director
Stifel Investment Banking
Direct Phone: +1 212-257-5802
oplert@stifel.com
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