Summary

MFN, not tariffs, is the sector’s real overhang — and per Paul Matteis it’s “nowhere near priced into stocks.” He reads Trump’s threatened 250% pharma tariff as “a first offer that might be more draconian” than the landing zone, and is “a little bit less worried” about tariffs because he believes companies may mitigate them through COGS and transfer pricing — especially if the number lands near the EU deal’s 15%. His nagging concern: “this has not been weighing on the XBI as much as it could be… a lot of people are just kind of almost jaded at this point to the Trump news cycle.”
A Vinay Prasad return to FDA — floated by Makary, who says he’s in “almost daily conversations” and has invited him back — would be “pretty destabilizing for the market.” Eric Schmidt was “honestly flabbergasted”; Paul notes the jury never came in on whether Prasad’s CBER was actually stricter, since his rare-disease and gene-therapy companies reported no change in dialogue, and a comeback would make FDA interactions even harder to interpret: “was your meeting with the FDA during the first tenure or the second?” John Maraganore instead called for healing and a stabilizing presence, with George Tidmarsh potentially filling in.
The Novo-owned, ex-Catalent Indianapolis fill-finish facility is a live CRL risk: two Regeneron CRLs already, and Scholar Rock may face the same issue before its September 22 SMA PDUFA. Paul explains that the facility has 43 Form 483 observations going back several years that seemingly have not been remedied. FDA’s leverage is withholding new approvals, while the companies are “caught in the middle” and dependent to a significant extent on Novo, even though Scholar Rock’s drug looks “seemingly approvable from a safety and efficacy standpoint.”
HHS’s cancellation of 22 BARDA mRNA projects (~$500M) “cut the knees out from under” a proven pandemic-response platform, per Maraganore, and could leave the U.S. at a national-security disadvantage if other countries strengthen their mRNA capabilities. Grace Colón noted a report that Cambodia may have nominated Trump for a Nobel Peace Prize for Operation Warp Speed — the same mRNA effort the current administration is now cutting — and said she believed Trump 1.0 deserved credit. Paul’s bedside data point: his newborn’s hepatitis B vaccine came with a triple-checked “are you sure” dynamic absent four years ago — in Massachusetts.
Vertex fell over 20% as its pain blue-sky case took a major hit — a case study in what happens when a “loved stock” loses its halo. A next-gen pain asset failed, FDA said it could not generalize from specific indications to a broad neuropathic-pain label, the suzetrigine launch is “okay… but slow,” and revenue guidance wasn’t raised for the first time in years. Paul’s critique: Vertex ran the CF proof-of-concept playbook in neurology, where “you just can’t do that” — “Prozac’s the poster child… failed in more trials than it worked in” — and he’d have “five phase 2 studies ongoing right now.” Grace’s read was that the mechanism may not “pack the punch” needed for a major pain franchise and that this could be a transition point. The CF and pain programs trace back to Vertex’s ~$600M 2001 Aurora Biosciences acquisition.
Alnylam’s Amvuttra blowout let John Maraganore uncork “two bottles” under his champagne-per-$50-of-share-price tradition, with $100B the next horizon “which I expect it will” reach. On managing a beat far above the ~$420M IQVIA-implied number, his CEO-seat answer: “you definitely try to dampen enthusiasm” so expectations don’t create “new sets of estimates that are not going to be met.”
The Agios FAERS fire drill — a sell-side report of four potential database deaths linked to Pyrukynd knocked the stock 20%+ before the rebuttal (three deaths, none seemingly drug-related) — drew Eric’s warning to analysts. The real risk was leakage into the patient community: “think a little bit more carefully before we come up with conspiracy theories… our greatest asset [is] the patients.”
Avidity may be in play (per the FT) earlier than Paul expected, with John pointing to Novartis — “on a tear with RNAi” after The Medicines Company at $9.7B, DTx, Regulus, and China deals — as a possible buyer ahead of news that could make Avidity more expensive. Eric hopes the rumors are not true because he believes the muscle-oligo platform could produce “the next Alnylam or the next Vertex.” John says that if a deal happens, “boy, I hope it’s a huge premium,” given the rare white-space opportunities in FSHD, DM1, and DMD. Biogen, meanwhile, launched a strategic venture arm aimed at corporate priorities, not returns.

Deep dive

1. Tariffs vs. MFN: bluster you can trade through, and the threat you can’t

Paul’s framing: taken literally — 250% tariffs, or Medicaid getting the lowest net price across a collection of countries — “this is objectively bad for the industry,” and those worst cases are “nowhere near priced into stocks.” But the lesson of every other tariff fight is that “this is a first offer that might be more draconian” than the outcome; pharma will give something up, how much stays open.
On tariffs specifically he’s calmer: companies he covers with ex-US supply chains claim minimal impact, and he has to believe “really, really smart lawyers and accountants” are working on COGS and transfer-pricing mitigations — especially if the rate lands near the EU deal’s 15%. MFN is “the far scarier thing here for the sector,” though it could end up IRA-like: a few drugs at first, or newly launched drugs only.
Eric agrees 250% is “probably a lot of bluster” and leverage; Trump’s floated chip-tariff exemptions suggest pharma might win one too — but his “strong suspicion” is that this would happen only if the industry “comes to the table” on MFN, negotiations several large pharmas confirmed on recent earnings calls.
Paul’s complacency worry: “a lot of people are just kind of almost jaded at this point to the Trump news cycle” — the XBI isn’t carrying the risk it should.

2. A Prasad comeback would be a distraction — and the jury on his tenure never came in

Eric was “honestly flabbergasted” by Makary’s defense of his friend: Prasad left CBER by his own decision after 84 days, they speak almost daily, and Makary is trying to convince him to return. John instead called for “a little bit of healing… a stabilizing at the FDA,” with George Tidmarsh potentially filling in as a calming presence.
Paul’s internal Stifel debate was whether Prasad was “really that much more strict.” Ultragenyx’s CRL was manufacturing-related; Capricor’s may reflect FDA flexibility being pushed “farther than usual” by an unconventional mechanism and dataset; his rare-disease and gene-therapy companies felt their dialogue, breakthrough designations, and pivotal-trial sign-offs had not changed. A return would make the analytical map even harder to read — “was your meeting with the FDA during the first tenure or the second?” — when it’s already “hard as an analyst or an investor to be right more than 50% of the time.”
Paul on reports that Prasad may not have driven the Replimune CRL: given Prasad’s decisive style, assigning responsibility may be “semantics.” Prasad likely had a view, the review occurred on his CBER watch, and “if he had wanted the drug approved, he would have done it.” Grace said STAT was probably the best current source on the FDA while cautioning that the source and motives behind any report remain uncertain.

3. One troubled Indianapolis facility, multiple CRLs

Paul’s explainer: Regeneron (two CRLs) and Scholar Rock both fill-finish at the ex-Catalent, now Novo-owned Indianapolis site — “a troublesome facility” with 43 Form 483 observations going back years that “seemingly have not been remedied.” Product still ships daily; the issues do not seem to involve safety, purity, or contamination, so FDA’s leverage point is withholding new approvals: “the FDA is really able to throw down the hammer.”
Both companies are “caught in the middle,” dependent to a significant extent on Novo. Scholar Rock’s SMA drug looks “seemingly approvable from a safety and efficacy standpoint” for kids with severe disease; Paul hopes FDA errs toward access before the September 22 PDUFA, but the company itself lacks visibility.
Paul’s broader question is how outsiders can calibrate whether FDA is genuinely becoming more conservative when CMC situations involve so much informational asymmetry.

4. BARDA’s mRNA retreat: $500M cut, hesitancy at the bedside

John on HHS canceling 22 BARDA mRNA projects (~$500M): it “cut the knees out from under” a platform “fundamental in helping us get out of the pandemic,” and if other countries strengthen in mRNA it “would put us at a disadvantage from a national-security perspective.” He expects no reversal until there is a change in philosophy: “we’re dealing with a set of views… that are very firm, albeit misguided.”
Paul’s control-group anecdote: with his second child born a month ago in Massachusetts, the hepatitis B vaccine came with a triple-checked “are you sure” dynamic that didn’t exist when his son was born four years earlier — and the pediatrician was “so psyched” they’d accepted, because many families now don’t.
Grace’s “stark irony”: a press report said Trump had been nominated, perhaps by Cambodia, for a Nobel Peace Prize on the strength of Operation Warp Speed. She said she believed Trump 1.0 deserved credit for bringing mRNA vaccines to the world, even as BARDA mRNA funding is now being cut. The round-table’s lament was to get back to a day “when science gets to lead and not follow the politics.”

5. Vertex: the halo takes a hit as the blue-sky case narrows

Grace’s setup: Vertex has been a loved stock on scarcity value — a $10B-plus high-margin CF franchise, no imminent competitors — with the sodium-channel pain portfolio as the dream act two. This week: the next-gen pain asset failed and was discontinued, FDA said the door wasn’t open to generalizing from specific indications to a broad neuropathic-pain label, suzetrigine’s launch is “okay… but slow,” and revenue guidance wasn’t raised for the first time in multiple years. Down over 20% — more than “almost anyone would have anticipated,” because Vertex’s valuation is “more subjective… one of the unique companies with this feasible blue-sky case.”
Paul’s development critique is the keeper: Vertex exported the CF playbook — targeted proof-of-concept bets — into neurology, “where you just can’t do that… endpoints are really tough, no biomarkers, patients are heterogeneous.” His counterfactual: “if I was running that program, there’d be five phase 2 studies ongoing right now” across pain etiologies. “Prozac’s the poster child — failed in more trials than it worked in.”
Grace’s blunter read: the mechanism may not “pack the punch” needed to be a major player, pain launches are historically “very, very slow,” and this may be “a major transition point” in strategy. History note from Eric: both CF and pain originated from the same Vertex source in the ~$600M 2001 Aurora Biosciences acquisition — “what a great acquisition that was.”

6. Alnylam’s victory lap — and how a CEO dampens a blowout

John’s tradition — champagne for every $50 of Alnylam share price — cost him two bottles last week; Amvuttra “is on a rip… just at the beginning,” and the $100B horizon “I expect it will” reach will require continued Amvuttra growth plus probably one or two more major portfolio assets.
Paul’s CEO-seat question after a print far above the ~$420M the IQVIA data implied: how do you project confidence without setting up “some arbitrary disappointment in two quarters”? John: “you definitely try to dampen enthusiasm” so expectations don’t spawn “new sets of estimates that are not going to be met” — CFO Jeff Poulton is “really, really careful,” and management already has line of sight on Q3.
John’s through-line to Vertex and Regeneron: once a mega-franchise drives threshold valuation, “investors just want to see that act two, act three” — and notably these companies develop innovation “organically… largely doing it on their own.”

7. The Agios fire drill: a FAERS scare and a sell-side lesson

A sell-side report flagged four potential deaths in FDA’s FAERS database linked to Agios’ PK-deficiency drug (approved in PKD, in development for sickle cell); the stock fell 20%+ Monday before the company’s rebuttal: three deaths, not four, and none seemingly drug-related — the PKD patients were elderly or had underlying cancers.
Eric’s concern wasn’t investors (“we’re big guys, we can stomach a day or two of volatility”) but leakage into the patient community — “terrible if something like this had persuaded patients to come off their drug prematurely.” His charge: “think a little bit more carefully before we come up with conspiracy theories… our greatest asset [is] the patients who have these conditions.”

8. Biogen’s venture pivot; Avidity in play sooner than expected

Biogen’s new venture arm will back early-stage companies for corporate priorities rather than return on capital — of a piece with Viehbacher’s external-innovation tilt (the Reata deal, the City Therapeutics partnership where John is executive chair, and expansion beyond neuro into immunology and rare disease). John traces the old deal reluctance back to Jim Vincent’s era, teasing ex-corporate-development chief Adam Koppel about the Neurocrine deal “that never materialized”: “Chris is going to right the ship. It’s going to take some time.”
Paul’s defense of the Alzheimer’s capital allocation: after “75 doctor calls” over ten years in which one-off physicians predicted narrow use but most others expected broad A-beta use, “it’s not fair to say in hindsight that this was obvious that these drugs would be niche” — strategy plus genuine bad luck.
On the FT report that Avidity may be in play: Paul finds the oligo-conjugate platforms among the most interesting in small biotech and expected takeouts eventually — but with Phase 3-design and regulatory questions open in FSHD and DM1, “it was earlier than I thought.” John’s context: Novartis is “on a tear with RNAi” — The Medicines Company at $9.7B, DTx, Regulus, and China deals — and “it wouldn’t surprise me if Novartis saw this as something it wanted to grab ahead of news that might make it a lot more expensive.”
Eric’s dissent: “honestly, I hope they’re not true” — he thinks Avidity could become “the next Alnylam or the next Vertex,” a really important company given the platform’s potential in FSHD, DMD, DM1, smooth muscle, and cardiac muscle. John adds that there are very few rare-disease white spaces like FSHD, DM1, and DMD; if a deal happens, “boy, I hope it’s a huge premium.”

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