Episode 179 - April 10, 2026

Summary

• Biotech has staged one of the great comebacks in the market, with the XBI closing near 132 — a fresh 52-week high — up 8% YTD against a flat S&P 500 and a Nasdaq down 2%. Graig Suvannavejh’s anchor stat: a year ago, in the wreckage of “Liberation Day,” the XBI sat at its 71-and-change low, making the trailing return “a very nifty and healthy eighty-four percent” versus +30% for the S&P — an investor “would’ve more than doubled her or his money.”
• The SEC filing behind Merck’s $6.7B, $53/share bid for Terns Pharmaceuticals explains the widely criticized 6% premium: the data degraded inside the data room. An unnamed Party C opened at $58 in late December, raised to $61 plus a $9 CVR, then bidders saw an updated cut of the Cardinal CML study showing efficacy had slipped from the 64% six-month MMR presented at ASH — Party C walked, Merck cut to $50, and the parties ultimately agreed at $53. Graig’s counterfactual: had Terns stayed independent and disclosed the slippage, it “could have been potentially catastrophic for the stock.”
• Replimune’s second CRL for its melanoma oncolytic virus, breaking mid-show, punctured hopes that the FDA is “back open for business.” Sam Fazeli said response rates “seem okay” and tolerability looks “pretty decent,” but the apparent issue is the single-arm design, prompting his question: “how could this company have been allowed to refile if this is what the FDA was gonna say?” Graig called the process “a bit cruel and harsh,” and Josh Schimmer concluded “we’re still trying to figure out exactly where the bar is set on a case by case basis.”
• Neurocrine’s ~$3B purchase of Soleno (VYKAT XR for Prader-Willi, annualizing north of $400M with $1–2B potential) doubles as Josh’s structural bull case: keeping cash-flowing companies inside the XBI matters more than pharma takeouts. His argument — generalist interest “is going to have a much more meaningful impact on the sector and its valuations than pharma M&A” — while Oliver Barnes flagged the narrowing bid-ask spread and mid-cap buyers (Servier/Day One, BioMarin) as reasons Q1’s M&A pace could hold.
• Gilead’s $3.15B upfront acquisition of Germany’s Tubulis — its third deal this year, roughly $10B of cash deployed with Arcellx and Ouro — is a platform buy that challenges the “everything ADC comes out of China” assumption. Sam noted Gilead paid only $20M upfront in the December ‘24 partnership, so the takeout implies real conviction in the differentiated ADC platform; Tubulis had just raised a $400M+ Series C in October ‘25, one of Europe’s largest ever.
• On policy, Sam read the president’s 100% pharma tariff threat as “much more about form over substance”: 16 of the 17 largest companies have already made manufacturing deals, while he was unsure whom the tariff would cover, mentioning Regeneron and perhaps companies such as Merck KGaA. More consequential could be the proposed optional, risk-based expedited IND pathway using non-animal (NAMs) methods, aimed at erasing China’s first-in-human speed advantage — while changes to the ACIP charter appear intended to make Kennedy’s gutted committee changes stick, with new members Sam “frankly would not trust.”
• Obesity news kept pricing and efficacy in flux: Novo’s high-dose 7.2mg Wegovy launched April 7 at $399/month self-pay (~21% weight loss at 72 weeks vs Zepbound’s ~22% at $499–699), and Lilly’s oral Foundayo (orforglipron) became available April 9 starting at $149/month. Sam paired this with a Nature/23andMe paper finding a GLP-1 receptor missense variant associated with nearly a kilogram of extra weight loss per effect-allele copy — reinforcing his refusal to compare efficacy across trials, even as “share price will go up and down on the back of that.”
• Data round-up: Ascendis’ 52-week achondroplasia combo data showed growth at 97% of normal (vs ~50% for CNP alone) plus improved body proportionality, which Yaron Werber’s KOLs see becoming “core of the standard of care”; Insmed’s brensocatib failed its hidradenitis suppurativa study — a second label-expansion miss after chronic rhinosinusitis without nasal polyps (CRSsNP) — but ≥$1B first-full-year guidance and ~$9B peak-sales estimates keep the bronchiectasis thesis intact.

Deep dive

1. The XBI’s 84% round trip from the Liberation Day low

• Graig’s scene-setter: the XBI closed near 132, a new 52-week high, up 8% YTD versus +0.3% for the S&P 500 and -2% for the Nasdaq — even after underperforming this week (+2% vs +4% for both indices). Measured from the 71-level low exactly a year ago, that’s “a very nifty and healthy eighty-four percent positive return.”
• The financing tape backs the tape: Avalyn Pharma filed an S-1 seeking $100M to fund an ongoing Phase 2b study of inhaled Esbriet and a Phase 2 study of inhaled Ofev, the two approved oral IPF drugs it is reformulating. It follows a $100M Series D last July and $175M Series C in 2023; it joins obesity-focused Calera Therapeutics’ filing and roughly six biotech IPOs YTD.
• In Europe, Paris-based Jeito Capital closed a €1B (~$1.2B) fund, the largest ever by a fully independent European biopharma-dedicated fund; Celldex added a $345M equity raise stateside. Graig’s summary: “a very decent if not very good place… although sometimes it doesn’t always feel that way.”

2. Tariffs as theater; the expedited-IND pathway as the real China response

• Sam’s dissection of the 100% pharma tariff announcement: “it’s much more about form over substance.” Sixteen of the 17 largest companies have already made deals with the US and pledged to bring manufacturing back; Sam said one company may still be Regeneron, though he could not determine exactly whom the tariff would cover and mentioned companies such as Merck KGaA. Generics (“you can’t tariff generics. There’s no market left”), biosimilars, orphan drugs and rare diseases are all excluded, automatically sparing much of small-cap biotech. The market “hardly blinked.”
• The proposal he takes more seriously: an optional, risk-based expedited IND pathway for certain Phase 1 trials with existing preclinical data, potentially satisfying the regulatory standard with validated non-animal (NAMs) methods — aimed at narrowing China’s first-in-human speed advantage over the US and perhaps Australia and Europe. Sam’s open questions: which pathways, which species requirements drop, and whether it can “actually make a difference in the next six to 12 to 18 months.”
• His hedge is the industry’s: everyone he talks to wants the process simplified, “but not cutting corners, not risking people’s lives. And I’m pretty sure we can get there.”

3. ACIP upheaval and its fallout

• Sam’s account: Secretary Kennedy gutted ACIP’s 17 members, a court ruled the changes violated the committee’s charter — and the response appears to be changing the charter itself “to essentially make it easier for these changes to stick.” His verdict on the replacements: people “I frankly would not trust to make a decision on how to vaccinate or whether to vaccinate and who to vaccinate.”
• The practical consequence — states are doing their own thing and the American Academy of Pediatrics is issuing recommendations: “I don’t know if I’ll be watching ACIP meetings anymore, when I used to watch them religiously.”
• Josh’s read on Commissioner Makary’s self-congratulatory press conference: “very everything is awesome… and for the things that haven’t been going great, don’t blame us, blame prior leadership” — a politician’s move to solidify his role as FDA head amid agency turmoil, punctuated by Josh’s blunt aside, “I think we can all agree that we would be better without him.” RFK Jr., meanwhile, is launching a podcast promising “uncomfortable” topics — “plenty of fodder,” in Josh’s words, for things “many of us are likely to not agree with.”

4. Inside the Merck–Terns filing: how a 6% premium happened

• The play-by-play Graig pulled from the SEC filing: after Terns’ ASH data (64% six-month MMR for its allosteric CML TKI) and a ~$750M raise at $40, “Party C” made an unsolicited $58/share offer in late December, later $61 plus a $9 CVR; Merck matched at $61. Then bidders entered the data room, saw the updated Cardinal Phase 1/2 cut had degraded, Party C dropped out entirely, Merck cut to $50, and the parties ultimately agreed at $53 — a 6% premium that left investors “disgruntled.”
• Yaron’s mechanism for the slippage: the newer cut included patients who had failed Novartis’ Scemblix, the rival STAMP inhibitor — add those in and “your response rate is gonna come down.” Context he insists on: Novartis showed a 26% response rate; Terns was at 64–75%, so “even if you go to the lower end of the range, you’re still in the forties.”
• Graig’s counterfactual is the tradeable lesson: had Terns stayed independent and later disclosed efficacy at the low end of its range — with Enliven’s ATP-competitive inhibitor looming — it “could have been potentially catastrophic for the stock.” Yaron’s balance: the stock was up more than sevenfold from the bottom, and December buyers at $40 got $53 three months later; “investors did get remunerated overall.”
• The foil: Biogen’s proposed ~$6B Apellis deal a week earlier at a 140% premium — in Graig’s words, “perhaps a surprisingly large, if not outsized premium” for Syfovre’s flat-growth GA franchise.

5. Gilead buys the Tubulis ADC platform

• The metrics per Sam: $3.15B upfront, Gilead’s third deal this year after Arcellx ($5.36B upfront) and Ouro (~$1.6B) — “about a ten billion dollar cash spree” so far. The December ‘24 partnership cost just $20M upfront, so the takeout signals what a year of inside access taught Gilead about the “differentiated ADC platform.”
• Sam’s admitted surprise: “having kind of made up my mind that the world’s going to go to China for any ADC they want, here’s one that sort of surprised me a little bit” — a rare counterexample to the everything-ADC-from-China (and everything-GLP-1-from-China) reflex.
• Tubulis’ October ‘25 Series C of just over $400M — versus $138M eighteen months earlier — was one of Europe’s largest, and Sam noted the possibility that investors “had a good feel for how that relationship between Gilead and Tubulis was going.”

6. Soleno, the bid-ask thaw, and why cash flow staying in the XBI matters

• Josh on Neurocrine’s ~$3B Soleno buy: a modest premium for VYKAT XR (Prader-Willi), already annualizing north of $400M and headed for $1–2B “assuming there are no new safety signals” — the hedges being hyperglycemia, DKA, and a couple of deaths “potentially not related to drug, although it can always be hard to know for sure.” It adds a de-risked third leg beside Ingrezza and Crenessity and relieves pressure on a “higher risk” late-stage neurology pipeline.
• Josh’s bigger thesis: biotech’s transition to profitability, and deals that keep those cash flows inside the index rather than transferring value to pharma, are what draw generalists — “generalist interest in biotech is going to have a much more meaningful impact on the sector and its valuations than pharma M&A.” The hope: escape “that one twenty to one thirty range” toward “a strong sector breakout.”
• Oliver’s complementary read: mid-sized buyers are multiplying (Servier/Day One, BioMarin’s $5B deal) and sellers have gotten realistic — Soleno transacted around $3B after peaking north of $4B — so the bid-ask spread is narrowing, and Q1’s M&A pace is “probably likely to be replicated for the rest of the year. God willing.”
• The small-cap footnote from Josh: private Garda Therapeutics bid for Assertio, the old Depomed, renamed “presumably to shed some of the opioid baggage,” at roughly half the price Assertio had paid for Spectrum, which brought in Rolvedon — with a go-shop window still open. It’s deal #11 for public biotechs YTD; deal count strong, dollar volume merely average.

7. Data week: Ascendis’ combo wows, Insmed’s brensocatib stumbles again

• Yaron on Ascendis’ 52-week achondroplasia data: CNP alone lifts growth rate to ~50% of normal, the combination with weekly growth hormone to 97% — and the year-long data now shows meaningful improvement in body proportionality. With Ascendis’ weekly Skytrofa already approved and launched, and BridgeBio’s oral infigratinib (FGFR3 inhibitor) filing this year and launching next, the market gets crowded, “but then probably in two years we’re gonna have the combination from Ascendis, which all our KOLs are saying they really believe is gonna become a core of the standard of care.”
• Graig on Insmed: the Phase 2 CEDAR study of brensocatib in hidradenitis suppurativa missed its primary endpoint — a second label-expansion setback after chronic rhinosinusitis without nasal polyps (CRSsNP) in December. But the core launch is extraordinary: ~$146M in the first full quarter, ≥$1B guided for the first full year, and ~$9B peak-sales estimates for the first drug ever FDA-approved in bronchiectasis.

8. Replimune’s second CRL: nobody can find the bar

• Sam, channeling melanoma colleague Max Nisen, said response rates “seem okay,” the ipilimumab/nivolumab-experienced angle is interesting, and tolerability is “pretty decent” — the rejection “seems to come down to the fact that it was an uncontrolled, single-arm study.” His unresolved question: “how could this company have been allowed to refile if this is what the FDA was gonna say?” So whether it points to a “mess at the FDA” remains open for debate.
• Graig, not a close follower of the name but blunt on process: letting the company resubmit, “put them through the wringer of sorts only to reject them a second time, just seems a bit cruel and harsh… it’s really not a great sign for the industry.”
• Josh’s takeaway — the episode’s most tradeable regulatory line: he’d expected this to be “a good test case for the FDA to show that they’re back open for business,” and instead “we’re still trying to figure out exactly where the bar is set on a case by case basis.”

9. Obesity: price war meets pharmacogenetics

• The launches per Sam: Novo’s 7.2mg high-dose Wegovy (vs the usual 2.4mg) launched April 7 at $399/month self-pay against Zepbound’s $499–699, with ~21% weight loss at 72 weeks in STEP UP versus Zepbound’s ~22% — Novo finally matching dual-mechanism efficacy. Lilly’s oral Foundayo (orforglipron) became available April 9, starting at $149/month and rising to $199–349, versus the $149 Wegovy pill with its “strict dosing requirements.” Prices, he quipped, change “on a daily basis, almost at the same pace as we get obesity data.”
• The Nature paper Sam paired with it: data from 25,660 subjects, much of it based on 23andMe, comparing people taking GLP-1s with those who were not, identified a missense variant in the GLP-1 receptor associated “significantly with increased efficacy… with an additional just under a kilo weight loss per copy of the effect allele,” plus effects on nausea and vomiting and the recurring finding that women lose more weight.
• His standing position, restated: “I’ve always set up my stall saying I really don’t want to compare efficacy anymore with these things, especially across trials. But the market will continue to do that. Share price will go up and down on the back of that.”