Summary

The immediate investable policy signal was uncertainty, not a settled pro- or anti-pharma program. Paul Matteis heard downside in RFK Jr.’s confirmation hearings around tougher IRA negotiations, the US–Europe drug-price gap, and possible march-in rights, while Eric Schmidt recalled discussion of setting US prices relative to other countries. Trump posted “AMERICA FIRST DRUG PRICES!!!” Chris Garabedian’s counterpoint was that genuine transparency and prospective evidence could help restore public trust if RFK is confirmed, but Brad Loncar expected confirmation and advised industry to “make the best of it.”
Vertex’s Journavx is a genuine scientific breakthrough whose acute-pain commercial curve remains unusually hard to price. Paul Matteis called the NaV1.8 drug a major advance because it separates analgesia from the neurological “liking” that drives opioid addiction, yet consensus requires roughly 300,000 treated patients in 2025 and acute-care launches for non-life-saving drugs “tend not to go well.” Chronic pain could still support a $5 billion–$10 billion opportunity at pricing above $10,000 annually.
Biotech’s IPO window reopened selectively, with quality and scarcity mattering more than broad risk appetite. Roughly 15 companies had been waiting for a first-quarter opening, but Maze and obesity player Metsera led what Eric expects to be a tightly curated group, often backed heavily by insiders. Metsera raised $275 million at $18 and Bloomberg reportedly showed it trading at $280, implying roughly a $3 billion market cap, while Paul warned that smaller binary names require investors to be “right and lucky right now.”
Akero’s 96-week MASH data delivered the kind of public-market reward biotech needs. About 39% of F4 patients receiving efruxifermin had cirrhosis reversal—about twice or more placebo—in a population with roughly five-year average life expectancy, while GLP-1s have not shown fibrosis benefit in F4 disease. Akero rose more than 100%, 89bio gained about 35% in sympathy, and Akero raised $400 million: “good fundamental news flow being rewarded.”
Sarepta’s EMBARK crossover data strengthened the case that Elevidys has a real treatment effect despite its controversial approval. Children treated one year later were a year older, addressing the criticism that younger children may improve while growing, and results aligned across placebo, crossover, and matched natural-history comparisons. Chris said the dataset now puts “an exclamation point” on Elevidys, though investors still debate whether gene therapy produces a short revenue bolus or an ongoing stream from new incident patients.
Cargo Therapeutics showed how dramatically compelling Phase 1 cell-therapy data can fail to reproduce. Its CD22 CAR-T missed on response durability and produced a high incidence of HLH, forcing termination of the program and layoffs affecting half the workforce despite roughly $360 million remaining. Eric questioned rolling capital into riskier assets, while Brad defended the CD19/CD20/CD22 multispecific program as the field’s evolution from “a Swiss Army knife with one tool” to genuinely multi-tool cells.
Large-pharma capital allocation continues to favor bolt-ons and private assets even when buybacks dominate headlines. Sam Fazeli argued Merck’s $10 billion authorization does not preclude further deals given its cash generation and debt capacity; 68% of large-pharma acquisitions in 2024 involved private companies, versus just over half across 2019–2024. That supports Eric’s warning that attractive companies such as IDRX and Scorpion are being removed from the IPO queue before public investors can participate.

Deep dive

1. Washington uncertainty has become a biotech valuation input

Paul Matteis’s investor read was blunt: the market is “sitting on our hands” waiting to learn whether the administration will be pro- or anti-pharma. CEO reports from Mar-a-Lago suggested Trump is “pro-business,” but Paul heard negative signs from RFK Jr.’s testimony around stronger IRA negotiation, concern over US-versus-European drug prices, and potentially destructive march-in rights.
Trump’s all-caps “AMERICA FIRST DRUG PRICES!!!” reinforced the risk of international reference pricing. Eric Schmidt recalled discussion of setting US prices relative to other countries, while Paul said he lacked confidence that RFK Jr. and Trump were yet “speaking with one voice”—making unpredictability itself the central near-term policy problem.
Eric Schmidt’s vaccine concern was less RFK’s declaration—“I’m not anti-vaccine. I’m pro-science”—than the administrative levers beneath it. Changing the Vaccine Injury Compensation Program or ACIP’s composition could expose manufacturers to litigation or alter the operating environment without an overt ban, giving vaccine makers a reason to say, “Actually, we don’t want to play here.”
Chris Garabedian offered the episode’s contrarian frame: industry has lost public trust, particularly since COVID, and dismissing physicians with large audiences misses the “zeitgeist.” If RFK uses transparent, prospective evidence to address his constituents’ concerns, that could help restore trust; Chris repeatedly stressed that this was a possible pathway, not an endorsement of a health crisis or worst-case outcomes.

2. Confirmation may be likely, but IRA reform still cuts both ways

Brad’s pragmatic conclusion was that RFK would probably be confirmed because the hearings never “went off the rails.” Unlike lower-profile nominees, RFK was visibly part of the electoral proposition: voters who see an unhealthy rich country wanted someone who might “shake that up and maybe change the status quo.”
Brad raised the clearest constructive policy ask: parity between small and large molecules under IRA negotiation—extending small molecules from nine years toward the 13-year treatment afforded biologics, not shortening biologics to nine. Chris called that an “easy fix” under the current administration and Congress, while Eric insisted it needed to be fixed in the right direction.
Paul noted that some retrospective views held the IRA’s additional haircut—the trim from already discounted CMS prices—was not as bad as feared. Chris cautioned against reducing every possibility to a “black-and-white scenario,” arguing that targeted repair could preserve rigorous safety, efficacy, and drug development rather than discarding the system.
Paul remained nervous about tougher negotiation and march-in rights, while Sam called the IRA and march-in issues the most important questions and criticized the hearings as largely theater. The disagreement was whether the administration’s pragmatism would moderate those risks before they became durable policy.

3. Journavx separates medical importance from launch-model uncertainty

Paul Matteis called Vertex’s Journavx approval unequivocally positive scientifically and for public health. Pain drugs face the difficult task of making patients feel better without making the medicine itself desirable; the NaV1.8 drug works more on peripheral pain transmission than on the neurological awareness of pain, creating separation from opioid-like reinforcement.
The efficacy debate remains legitimate, but Paul rejected dismissing the drug: it beat placebo across studies, and “beating placebo in any neuroscience study is not a trivial feat.” The approval also puts other NaV1.8 and NaV1.7 programs in focus, even as investors question whether Journavx matches opioids closely enough for widespread acute use.
Chronic pain is easier to underwrite. Patients may have to fail drugs such as Lyrica, but sustained treatment above $10,000 per year could support a multibillion-dollar market—Paul allowed scenarios of $5 billion–$10 billion—even if efficacy is imperfect because existing chronic options are also weak and long-term opioid prescribing is deeply unattractive.
Acute pain is the modeling trap: at the pricing used in consensus estimates, roughly 300,000 patients would need to be treated during 2025, depending on duration assumptions. That can sound enormous or like tiny penetration; Paul’s practical victory condition was simply exiting the year with Journavx embedded in treatment pathways and broadly reimbursed, especially after Vertex’s sciatica setback complicated chronic expectations.

4. The IPO window is open only for best-of-breed stories

Eric had once counted roughly 15 private companies preparing for first-quarter IPOs, with four now publicly on file. Banks and VCs know a choppy market demands their strongest offerings first, so Maze and Metsera should be read as curated test cases—not proof that indiscriminate issuance has returned.
His concern was receptivity: excluding obesity’s high-flyer, early deals could be heavily insider-led because many public investors are still “licking their wounds” and unwilling to entertain roadshows. Strong first trades may improve demand, but the market remains “snake bitten” by companies that initially rallied and then rolled over.
Paul saw the same caution in secondary trading. Vertex rebounded from about $390 after its sciatica failure, and Neurocrine similarly retraced a pipeline-driven decline; he interpreted both as defensive demand for profitable, scarce, high-quality companies rather than renewed pipeline enthusiasm. In smaller binary names, “you got to be right and lucky right now.”
Metsera nevertheless supplied a bullish specimen: $275 million raised, 15.3 million shares sold at $18, and Bloomberg reportedly showing a trade near $280, which the panel described as implying roughly $3 billion in value. Sam liked the breadth of its appetite-hormone portfolio but withheld judgment on safety and tolerability; Brad’s earlier-stage interest was D&D Pharmatech’s oral-peptide approach, given his skepticism toward small-molecule GLP-1s.

5. Akero made advanced MASH a major investable opportunity

Eric called Akero’s 96-week result a “game changer” for Akero, 89bio, and the broader industry. Roughly 39% of efruxifermin-treated F4 patients achieved cirrhosis reversal—about twice or more placebo—in an advanced population whose average life expectancy was described as only about five years, giving the unmet need an almost oncology-like character.
The result also challenged fears that GLP-1 drugs would disintermediate MASH programs: GLP-1s have not demonstrated fibrosis benefit in F4 patients. With roughly eight million US MASH patients, diagnosed cirrhosis patients already under care, and premium pricing plausible for fibrosis reversal, pharma has a large market but relatively little internal exposure.
The market responded exactly as the panel wants biotech to work: Akero rose over 100%, 89bio gained roughly 35%, and Akero raised $400 million. Chris credited CEO Andrew Cheng’s liver-development experience and recalled that the field had made only slow, incremental progress since Intercept’s earlier milestone, making this a notable advance.

6. Sarepta gained confirmation while Cargo delivered a humbling reversal

Chris, who has criticized Sarepta’s prior study designs and selective presentation, found the EMBARK follow-up compelling. Placebo patients crossing to Elevidys one year later were now a year older, reducing the chance that improvement merely reflected growth; stabilization at those ages increasingly looks like a drug effect.
North Star’s two components—the time to rise from the Gowers’ maneuver and the 10-meter run/walk—were consistent with the initially treated cohort and supported by placebo plus matched prospective natural history. Brad connected that evidence to Elevidys’s controversial approval after a missed primary endpoint and staff override: longitudinal evidence can reveal why “it’s not always black and white.”
Cargo produced the opposite lesson. Eric estimated eight or nine of ten observers would have expected success from the Phase 1 data, yet the CD22 CAR-T failed on durability and safety, including a high incidence of HLH. In retrospect, the single-center Phase 1, manufacturing changes, and possible patient selection were warning signs—but only in retrospect.
After terminating the program and laying off half its staff, Cargo retained roughly $360 million-plus. Eric argued investors funded a presumed commercial asset, not riskier pre-proof-of-concept programs; Brad countered that the CD19/CD20/CD22 multispecific embodies smarter future CAR-T engineering. Chris’s verdict, as a Series A investor: “biotech is very humbling.”

7. Capital remains abundant, but its redeployment is under scrutiny

Sam initially read Merck’s $10 billion buyback as discouraging ahead of its large patent “hill,” then reconsidered. Merck has already been active in licensing and acquisitions, and its cash flow plus debt capacity still permit bolt-ons; the authorization alone does not prove management has exhausted external opportunities.
Large-pharma M&A remained overwhelmingly US-focused: about 80% of deals during 2019–2024 involved US-domiciled targets, with AstraZeneca’s Gracell transaction the lone China acquisition in Sam’s dataset. Private targets rose to 68% of 2024 deals from just over half across the full period, consistent with IDRX and Scorpion disappearing directly from the IPO queue.
Private financing also remains available. Curie.Bio followed its roughly half-billion-dollar inaugural fund with a smaller vehicle and a pro-rata fund for follow-ons, while an a16z filing suggested a goal of approximately $1 billion. Brad separately credited retiring Takeda CEO Christophe Weber, who is due to leave in June 2026 and be succeeded by Julie Kim, with turning an inward-looking Japanese company into a global organization with a major Massachusetts R&D footprint.
Scarcity of capital was not 23andMe’s only problem: Chris highlighted data breaches, board resignations, dwindling cash, and a newly announced strategic sale. The company had only about 15 million genetic samples despite enormous brand recognition, underscoring the difficulty of sustaining multiple consumer and data businesses.
Paul saw a related allocation dilemma at Sage and Biogen. Sage may create value independently after turning down Biogen’s offer, but improving Biogen’s proposal could be “the best path for everybody,” while Biogen investors want external development substantially bolder than this Sage deal.

Episode 130 - Feburary 7, 2025 Episode 128 - January 24, 2025