Episode 164 - November 21, 2025

Summary

• Biotech M&A is setting records in every stage bucket, and public competition is back. Alkermes appears to have won Lundbeck’s unsolicited $23 bid for Avadel, ending at $21 cash plus a $1.50 approval-only CVR ($2.4B) for Lumryz, while J&J paid $3B for Phase 1 Halda — per Tess Cameron, the largest Phase 1 takeout ever, ahead of Merck/VelosBio at $2.75B — with Eric relaying it was “a nearly 10x return for the VCs.” Add Novartis/Avidity ($12 million, described as the largest-ever pre-Phase 3 deal) and AbbVie/Capstan ($2B preclinical) and the record board is full.
• Yaron’s read on why competition intensified: pharma has already priced in the 2026-27 patent cliff and is buying strategically, not desperately. Centerview data show only ~35% of deals in the five years pre-2024 had multiple first-round bidders; possible FTC leniency and peer activity are encouraging pharma to compete, and earlier-stage platform deals are replacing the old “you’re not going to get bought unless you have a Phase 3” regime. Sam adds a twist: Bloomberg Intelligence’s patent team thinks Cosentyx can be protected “way beyond” molecule expiry, Humira-style — so the LOE panic driving deals may itself be overdone.
• The Cidara lesson for every private company: do the pricing and cost-effectiveness homework before the acquirer shows up. Merck put Cidara’s flu-prevention drug’s peak sales above $5B and explicitly cited Cidara’s own research showing cost-effectiveness at up to $600/course with “the potential to not be subject to access restrictions.” Tess’s point: robust commercial work around proof of concept “can really help a potential acquirer gain conviction” on tight timelines.
• The CDC changed its vaccine-safety page to say “vaccines do not cause autism is not an evidence-based claim” — precisely what RFK Jr. promised Senator Cassidy he wouldn’t do. Sam’s demolition: at least 16 well-controlled population studies show no association, particularly for MMR, and he questions the implied prove-the-negative trial — “who’s going to fund it, how ethical is it, which pediatrician would agree to do that?” He stresses hesitancy is global: Canada lost its WHO measles-elimination status without any Secretary Kennedy.
• FDA function is deteriorating in ways that won’t show up until registrational trials fail to align: 82% of companies in NPLB’s November survey are worried about the agency’s ability to function. Case studies include written-response-only meetings, reviewers with no therapeutic-area background, and packages reviewed with key data missed; Yaron warns early-program delays are “not going to be a CRL with six months — it could be two or three year delays” and calls it “a new dawn for us.” The offset: Tess calls Pazdur “definitely a big positive,” though Sam fears a Pazdur–Prasad rift headline; on where the rare-disease bar sits — as Agios sends mitapivat to FDA after missing its VOC endpoint in sickle cell — Sam concedes “it seems to change on a daily basis.”
• Drug prices are moving down, not up. Arrowhead priced its FCS drug at $60K, a 90% discount to Ionis’s $595K, ahead of an SHTG expansion where Ionis is discussing $15-20K (Yaron guesses they land “north of 20”); Novo cut Wegovy’s starting price to $200/month through Q1 then $350 average versus $500 prior, and Sam notes nobody is cutting models because “the lower the prices come, the more likely you’re going to get volume compensating.” Structurally: branded gross prices rose 11.9% over roughly a decade but net just 1.9%, and Cigna’s rebate elimination from 2027 removes a key incentive to list high.
• New business models and fresh data closed the show: Zymeworks is pivoting to a royalty/diversification model after a strong zanidatamab frontline GEA data readout, announcing a $125M buyback and plans to monetize Ziihera royalties. Sam flagged Nuvalent (~$7B EV, $500M raise) as a possible M&A target with lorlatinib-like efficacy and alectinib-like tolerability — though liver toxicity is somewhat higher than Alecensa today — and Olema’s share-price rise on Roche giredestrant’s first-line hit in ESR1 wild-type patients, with Olema’s own data potentially due in 2027.

Deep dive

1. Alkermes outlasts Lundbeck for Avadel — and the biotech auction era is back

• The mechanics, per Yaron: Alkermes agreed October 22 to buy Avadel at $20/share ($18.50 cash + $1.50 CVR on FDA approval of idiopathic hypersomnia by end-2028) for Lumryz, the only once-at-bedtime sodium oxybate for narcolepsy versus Jazz’s twice-nightly Xyrem — approved 2023, expected to generate $240-260M this year, up 50% y/y. Three weeks later Lundbeck “showed up unannounced” at $23 ($21 cash plus a $2 CVR split into two $1 sales milestones), triggering what Yaron described as a five-day match right.
• Alkermes matched the $21 cash but trimmed the CVR to $1.50 — approval-only, no sales threshold — and the board took it; close is expected by Q1. Yaron’s math: ~$2.4B looks like 10x current sales, but if Lumryz reaches $500-750M it’s “three and a half to five times… pretty sensical,” and accretive year one. “Kudos for Alkermes.”
• Eric’s framing: this is the second publicly competitive auction in a month, after Pfizer and Novo competed for Metsera — “I can’t actually remember the last one.” Sam’s aside: “don’t forget the two bidding wars involved Danish companies… I don’t know if it’s got anything to do with Greenland.”

2. J&J pays $3B for Phase 1 Halda — the king of prostate cancer sends a signal

• Sam’s historical rhyme: J&J paid $1B for Phase 3 Zytiga via Cougar Biotech in 2009; “here we are in a Phase 1… about $3 billion — should we take a signal there?” HLD-0915 is a first-in-class oral “hold and kill” small molecule binding the androgen receptor to a key transcription factor, with “pretty impressive” late-line data at the TRIO meeting in a space where radioligands and ADCs are inconvenient and not obviously super effective — and it could combine with J&J’s existing prostate franchise ahead of a looming patent expiry.
• Tess’s fact-check makes it the highest-priced Phase 1 acquisition ever, ahead of Merck’s $2.75B for VelosBio (likely); Eric adds the comparison to Cougar is apples-to-oranges because Halda brings a platform, and says he’s heard this was “a nearly 10x return for the VCs” — congrats to RA and others.
• Tess’s base rate: her assumption is that any private deal over ~$1.5B is typically a competitive process — and Centerview stats show only ~35% of deals in the five years before 2024 had multiple first-round bidders, so today’s public bidding wars mark “a real shift.”

3. Merck’s Cidara guidance: commercial homework is now a deal weapon

• Merck’s guidance on the Cidara deal put the flu-prevention drug’s peak sales above $5B — initially among high-risk patients, but “this could be relevant for a broader population as well.”
• Tess’s core lesson: Cidara ran pricing research and a generalized cost-effectiveness analysis around proof of concept, and Merck cited it, saying at price points up to $600/course the drug was cost-effective with “the potential to not be subject to access restrictions.” Every company should do this, because “everyone’s working on tight timelines” and it helps a strategic gain conviction in the market.

4. What’s driving the wave — and whether the rally survives without it

• Yaron’s structural argument: pharma has “sorted through” 2026-27 — the cliff is priced in — freeing them for longer-view platform and franchise deals versus the tone two years ago of “are you not going to get bought unless you have a Phase 3?” That plus possible FTC leniency and fear of losing deals to active peers is encouraging competition.
• Sam’s contrarian data point: Bloomberg Intelligence’s patent team finds Cosentyx can be protected “way beyond this molecule patent expiry,” reminiscent of Humira — so if the big drugs don’t actually expire on schedule, “these acquisitions will be quite significant in terms of the accretion” on top of what didn’t lapse.
• Is the rally M&A-dependent? Yaron says no: large cap trades on growth, small cap is recovering off trough — names up 4x are “making it up,” e.g. a $1B market cap with $400M cash and a potential $1-2B product that on a proverbial 4x multiple should be a $4-8B company. “It was so distressed previously.”
• Eric’s glass-half-empty converse (channeling partner Josh Schimmer): losing Cidara, Halda and Avidity may mean “depriving ourselves of some wonderful midcap success stories” that would strengthen the index long term.

5. The CDC’s autism footnote: prove-the-negative

• Sam read the November 19 change aloud: “The claim vaccines do not cause autism is not an evidence-based claim because studies have not ruled out the possibility that infant vaccines cause autism” — against at least 16 well-controlled population-based studies showing no association, particularly for MMR; he also said thimerosal was not necessarily linked. His reductio: is CDC proposing a prospective trial randomizing newborns to no vaccines? “Who’s going to fund it, how ethical is it, which pediatrician would agree to do that?”
• The wordsmithing is the tell: the page’s footnote says the header “Vaccines do not cause autism” has been removed due to an agreement with the chair of HELP, Senator Cassidy — exactly what RFK Jr. promised at confirmation he would not do. Eric said the words still appear on the page with an asterisk. He also added this week’s Scientific American piece on RFK suggesting peanut-allergy prevalence could be tied to vaccines and aluminum, absent any scientific link — every rising disease incidence can now be blamed on vaccines, with the negative unprovable.
• Sam’s global warning: even “clear-minded folk are becoming a little bit worried,” and Canada lost its WHO measles-elimination designation this year — “they don’t have a Secretary Kennedy there… this is a problem everywhere.”

6. FDA function: 82% worried, and nobody knows where the bar is

• Tess’s confidence level: “low, until we see something different” — though she separates vaccines (clearly not science-driven) from other decisions, where “there isn’t any drug… that’s like a total home run [that] should obviously be approved and it hasn’t.” The damage is upstream: NPLB’s November survey found 82% of respondents worried about the FDA’s ability to function — companies denied meetings, written-response-only, reviewers with no therapeutic-area background, entire teams turned over, packages reviewed with key data missed. uniQure’s “we have alignment… oh wait, actually the FDA said something different” is the public face of it.
• Yaron’s darker frame: reporting he cited says RFK Jr. and Trump are tight — “most of us didn’t expect that” — meaning “this is going to have legs” and “decades worth of connotation.” Early programs not getting reviewed are the real risk: “that’s not going to be a CRL with six months. It could be two or three year delays… a new dawn for us,” partly cushioned by trough valuations.
• The offsets and risks: Tess calls Pazdur “definitely a big positive”; Sam’s worry is waking up to a headline of a Pazdur–Prasad rift (Sam thinks Prasad still holds the chief scientific officer title) — though “Rick Pazdur is not somebody who you can just steamroll over.” Eric suggested CDER’s new oncology-experienced boss might bring level-headed thinking.
• The live test case: Agios’s mitapivat in sickle cell hit hemoglobin but missed VOCs (a trend only, including in hemoglobin responders), echoing the Oxbryta arc — approved on hemoglobin, then pulled after the VOC confirmatory miss, to the community’s distress. With ~100K US patients and life expectancy around 40, Agios heads to a pre-sNDA meeting; on where FDA sets the rare-disease bar, Sam admits “it seems to change on a daily basis.”

7. Drug prices are going down — Arrowhead’s 90% discount and Novo’s Wegovy cuts

• Sam’s setup: Ionis (monthly ASO) priced its FCS drug at $595K for ~1,000 US patients, discussing $15-20K once the much larger SHTG indication is approved late next year. Arrowhead (quarterly siRNA), running behind with studies geared to higher-risk patients, just priced its approved FCS drug at $60K — a 90% discount — effectively pre-pricing for the high-risk slice of the big market.
• The endgame: “Coke and Pepsi, slight differences” on labels, but very different payer contracting — Arrowhead narrow and high-risk, Ionis broad. Yaron’s guess: Ionis prices “north of 20,” maybe 25-30, Arrowhead eventually discounts, and equilibrium lands between. “As a firm we like both stocks a lot.”
• Sam on GLP-1s: Novo cut Wegovy’s starting price to $200/month through Q1, then $350 average versus $500 prior, with the multidose pen at $299 and oral GLP-1 starting prices at $150 — a play for new patient starts in “a clearly price-sensitive market” where Novo is behind Lilly. Tirzepatide has an arguably better weight-loss profile, supported by a head-to-head trial, plus a sleep-apnea indication. Yet nobody’s cutting models: “the lower the prices come, the more likely you’re going to get volume compensating.”
• The structural picture: a Harvard analysis Sam hosted shows branded gross prices up 11.9% over roughly 10 years but net up just 1.9%; Sam’s gross-to-net database has Part D discounts in the 30s and Part B in the high 40s; Tess flags Cigna eliminating rebates for some private plans from 2027, removing the room-to-rebate incentive — and rehabilitating me-too drugs: “yes, they have merit.” Eric’s caveat: new products launch at higher premiums than ever, so per-patient prices are probably still rising.

8. New models and rapid-fire calls: Zymeworks’ royalty pivot, Nuvalent, Olema

• Yaron on zanidatamab: the HERIZON-GEA frontline study (vs Herceptin, third arm adding BeiGene’s tislelizumab) “looks like the data is going to be very very strong,” likely shown at ASCO GI early next year — Jazz and Zymeworks both went up.
• Then Zymeworks announced a strategic shift: a royalty-based model — monetizing Ziihera milestones and royalties, partnering even its own ADC pipeline, buying undervalued platforms or royalties, plus a $125M buyback. With Anaptys splitting the company (the two share a common shareholder), Yaron sees a move away from “the traditional risk-heavy single-program business model” toward diversification — not break-up activism, but risk mitigation.
• Sam’s picks: Nuvalent’s third-gen ALK inhibitor (EV ~$7B, $500M raised on the data) earns “a very meaningful share” of second- and first-line in his proprietary models — efficacy potentially similar to Pfizer’s best-in-class lorlatinib with adverse events closer to alectinib, though liver toxicity is a little higher than Alecensa today. It could be an M&A target, “not saying that I know anything.” And Olema’s share price rose on Roche giredestrant working first-line in ESR1 wild-type patients — the read-through leaves Olema with “one of the better assets here,” with its own data potentially in 2027 versus AstraZeneca and Roche in 2026.