Episode 180 - April 17, 2026

Summary

• Biotech’s backdrop is strong, with the XBI at post-pandemic highs—though Tess Cameron cautions that the index itself has changed. The XBI is above all but a two-week period in early 2021; its methodology shifted from a broad, near-equal-weight basket toward larger, more liquid companies that have seen favorable M&A. Adam Feuerstein says the sector is more mature than five to eight years ago, with more companies commercializing drugs profitably.
• The issuance window is seemingly reopening: Kylera priced its IPO above $625M before the shoe, potentially exceeding $700M at a $2B valuation, while S-1 filings included Seaport, eMAb—with John Martinori involved—and Ablynx the prior week. Chris Garabedian also cited activity from Janus, Wellington, Cormorant, and Redmile as a possible precursor to generalist participation. Obsidian paired a several-hundred-million-dollar PIPE with a reverse merger into Galera, suggesting quality reverse mergers and PIPE investors can support a healthy public market. Paul Matteis says generalist interest remains concentrated in Alnylam, Vertex, and perhaps Ionis—not “Bluebird bio with 10 patients of data.”
• Revolution Medicines posted an all-comers overall-survival hazard ratio of 0.4 in second-line pancreatic cancer and now trades at or above a rumored $30B takeout value. The group discussed Incyte and Summit as imperfect precedents, Adam noted Revolution now exceeds Insmed’s market cap, and Chris said Tim Opler thinks it could become a $100B company. Following a $2B raise—less than 10% of shares outstanding—the company may have roughly $3B–$3.5B to commercialize independently.
• Travere’s sparsentan became the first and only approved medicine in FSGS despite underperforming active control on eGFR across the two-year study; approval rested on proteinuria. Adam Feuerstein says the Parasol Project analyses argued that proteinuria reduction should be an approvable endpoint, while Travere was a major funder of the groups involved. Paul resists drawing a broad FDA-flexibility conclusion from one event but says, to the extent the decision is extrapolatable, it may lower the bar for kidney programs, including Vertex’s high-risk APOL1 Phase 3 of enaxopin, which has proteinuria data but no eGFR data yet.
• Allogene’s preliminary allogeneic CAR-T data showed MRD-positive patients in frontline lymphoma consolidation could be converted to MRD-negative, but the stock went in the opposite direction. There were 12 patients per arm; Allogene then raised about $175M at $2 per share, below the pre-data price. Adam says many funds avoid cell therapy, with enrollment timelines and a mid-2027 interim analysis creating further uncertainty. The scientific question is whether frontline allogeneic treatment will differ from second-line autologous Yescarta or Brianzi; potential advantages include fewer CRS or ICANS events and outpatient treatment.
• AI clinical-trial prediction markets received Adam’s “DraftKings for clinical trials” critique. He questions their value beyond betting. Tess welcomes additional information sources but says black boxes that only produce probabilities are less useful than transparent rationales and doubts AI will clearly beat collective investor judgment reflected in stock prices. Tess’s fund bars participation, and STAT added prediction markets to its ethics policy because of inside-information concerns. Chris says early flashpoints are often overhyped, commoditization may come quickly, and collective human expertise using AI tools may beat AI alone.
• Venture’s Q1 decline may reflect selectivity rather than a retreat: HSBC’s John Norris called it the lowest first quarter since 2023, while Chris says VCs are concentrating bets in more de-risked, clinical-stage opportunities and roll-ups. Bain invested $300M in five BMS pipeline assets, including a lupus lead, and brought in former SpringWorks CEO Saqib Islam after SpringWorks’ $3.4B Merck exit and Bain’s work with Cerevel. CrossBridge Bio raised only $10M through SAFEs and a seed round, reached an up-to-$300M acquisition within 1.5 years, and reportedly produced a 17× return for SAFE investors despite having no open IND.
• Paul sees investors favoring pipeline “golden tickets” over commercial execution, while obesity remains crowded but open to differentiated products. He cites Biogen and Vertex as hotter names despite opposite commercial trajectories and says development-stage companies can be valued on the dream of future catalysts. Kylera is a GLP-1/GIP dual-mechanism obesity company backed early by Bain, with Adam Koppel on the board, Ron Renaud as CEO, and John Milligan as chair. Tess expects segmentation by patient and treatment setting, with tolerability and duration potentially supporting premium pricing despite Novo’s aggressive first-generation pricing.

Deep dive

1. XBI at post-pandemic highs — but read the index’s fine print

• Chris’s setup: the XBI sits at levels exceeded only by “a two-week period in early 2021.” Tess’s technical caveat before anyone celebrates: today’s index isn’t that index—the methodology shifted from near equal-weight across a broad basket to one “weighted a bit more in favor of larger liquid companies,” and favorable M&A of those companies over the past couple of months “really pushed the XBI up high.” The market showed instability during “the first closure of the Strait of Hormuz”; now “everyone’s just shrugging their shoulders,” and stocks keep rising.
• Chris says specialist funds are doing well and can reinvest M&A proceeds into the market. He also cites activity from Janus, Wellington, Cormorant, and Redmile as “sometimes a precursor to the generalists coming in.”
• On generalists, Paul says interest is still “concentrated” around Alnylam, Vertex, and maybe Ionis—a far cry from generalists who once “owned Bluebird bio when they had 10 patients of data.” Tess’s archetype for a gettable company is Revolution Medicines: “big enough, liquid enough, and gettable enough.” Adam adds that the sector has grown up, with more later-stage companies that have shown they can commercialize drugs successfully and profitably.
• The financing window is seemingly reopening. Kylera priced its IPO at more than $625M before the shoe, potentially exceeding $700M at a $2B valuation. Recent S-1 activity included Daphne Zohar’s Seaport, eMAb—with John Martinori involved—and Ablynx the prior week. Reverse mergers, once “a little bit of a dirty word,” can now look respectable again: Obsidian completed a several-hundred-million-dollar PIPE and a reverse merger with Galera, with high-quality PIPE investors serving as “another anchor of a good, healthy public market.”

2. Venture’s “downtick” says less than Bain’s $300M and a 17× bootstrap

• HSBC’s John Norris called Q1 the lowest first quarter since 2023. Chris reads that as VCs “getting more discerning, concentrating their bets,” and becoming more “intentional and purposeful” about new investments rather than simply tending existing portfolios. Reporting from STAT’s Allison DeAngelis and Endpoints similarly pointed to more de-risked, clinical-stage opportunities and roll-ups.
• The counter-evidence: Bain took five assets from BMS’s pipeline, with a lupus program in the lead, invested $300M, and installed former SpringWorks CEO Saqib Islam. Chris notes that Bain’s work with SpringWorks and Cerevel led to multibillion-dollar exits. He also says Norris’s observation that an “INI” portfolio was ticking down might have looked different if this $300M deal had been included.
• CrossBridge Bio, based on CEO Michael Torres’s disclosures, raised $10M through SAFE notes and a seed round, then was acquired for up to $300M just 1.5 years after the seed. Chris hears that a sizable amount was paid upfront, although it was not disclosed. Torres said SAFE investors received a 17× return. The preclinical cancer program had no open IND and was not yet in the clinic, though it was close.
• A founder-friendly firm reportedly passed on CrossBridge a couple of times; Chris says his own venture studio also passed on the Series A. He says founder claims of pharma interest are “easily 9 out of 10 times… a nothing burger,” but in this case Lilly seemed genuinely interested. Chris calls the economics a major success and says Lilly’s $12B in EBITDA gives it room to pursue many such early programs at a very small fraction of its market value.

3. “A DraftKings for clinical trials”: the AI prediction-market skirmish

• Amid a wave of AI activity—ChatGPT and OpenAI released a life-science tool, Claude announced one, Anthropic added Novartis CEO Vas Narasimhan to its board, and acquired Coefficient—Adam questioned clinical-trial prediction markets. His reaction, whether AI-based or not, is: “What’s the value? What’s the point beyond these just being another betting platform? This is DraftKings for clinical trials.”
• Adam says he does not see the value in computers competing to predict trial outcomes, despite the science-based arguments that such markets could advance science or help patients. He acknowledges that he may have sounded too grumpy in a Twitter exchange with someone apparently starting an AI-generated clinical-trial prediction market.
• Tess welcomes additional information sources, including betting markets, but says “things that are a black box and just spit out a probability” are less useful than a rationale that investors can examine. She doubts AI prediction will necessarily outperform “our collective brains,” which are often reflected in stock prices. Her test: “I would love for that AI to start picking stocks, and we’ll see how it performs.”
• The compliance layer is significant. Adam says STAT bars staff from individual-stock investing and added prediction markets to its ethics policy late last year because access to inside information creates a similar conflict. Tess says her fund likewise does not participate. Her compliance team’s punchline was, “Would you really want to bet on these outcomes with your personal money anyway?”—“Nah, we just do that professionally.”
• Tess also cites The Economist’s discussion of commodity prediction markets, where insider information may be part of the risk-management rationale. Her fund’s view is different for wars and drug trials: “hopefully not.” Chris’s synthesis is that skeptics of early flashpoints are often right, the space may become commoditized quickly, and collective human experience using AI tools may beat AI alone.

4. Travere’s FSGS approval: the endpoint moved, and the label shows the miss

• The story per Adam’s column: sparsentan is “the first and only approved medicine in FSGS,” but its Phase 3 study did not show an eGFR benefit. The drug “actually underperformed the active control across the entire two-year time point.” Approval instead relied on proteinuria after analyses associated with the Parasol Project argued that proteinuria reduction “should be an approvable endpoint” and “the new regulatory standard.”
• Adam points out that Travere is a major funder of the groups involved in developing that endpoint. The label itself shows the eGFR miss in a prominent graph, followed by the proteinuria result in the next paragraph. Adam still thinks the drug will probably sell well because it is the first and only approved FSGS medicine.
• Paul says it is difficult to extrapolate a broad FDA-flexibility thesis—including whether the regulatory posture is shifting with Vinay Prasad out—from one CDER event. He notes reporting that Prasad overreached his CBER role into some CDER reviews.
• His more direct read-through is the APOL1 kidney-disease space, involving Vertex, Maze, and earlier-stage programs. Vertex’s enaxopin entered Phase 3 after a Phase 1b in APOL1 FSGS, but the Phase 3 population is broader APOL1-associated nephropathies. Paul calls it “a pretty high-risk Phase 3 program” because it is unclear whether the mechanism will work broadly. Vertex has proteinuria data but no eGFR data yet, and the regulatory ask remains unclear: “Do they need a clear p-value? What effect size is significant?” Maze recently reported data in FSGS and other subtypes. To the extent the Travere decision is extrapolatable, Paul says it “does seem to lower the bar broadly in the space.”

5. Allogene: the data and the stock “went in different directions”

• Adam separates the data from the stock reaction because they moved in opposite directions. The data came from a preliminary futility analysis in frontline B-cell lymphoma consolidation: patients in complete remission after R-CHOP but still MRD-positive were converted or cleared to MRD-negative with the allogeneic CAR-T cimasel. There were only 12 patients in each arm—cimasel and observation—but the result looked as good as or better than expected and supports the continuing study, whose ultimate endpoint is event-free survival.
• The market’s answer was much less positive. Allogene’s stock initially rose, then fell, and the company raised about $175M at $2 per share, below the stock price before the data. Adam says the financing did not appear to be executed well. His buy-side canvass found funds that are simply not interested in cell therapy, plus concerns about enrollment timelines and the period of “dead space” before an interim analysis in the middle of 2027.
• Adam says he recently met a “really cool” private rare-disease company pursuing a different cell-therapy thesis, but some investors were reluctant even to take a meeting once cell therapy appeared in the first description. His lingering scientific question is whether frontline allogeneic consolidation will differ from second-line autologous treatment with Yescarta or Brianzi on survival or event-free survival. Potential advantages include a somewhat cleaner safety profile, no CRS or ICANS, and possible outpatient treatment.
• Tess adds that cell therapies have shown “absolutely phenomenal efficacy,” but community-setting access remains difficult. Brianzi is increasingly recognized as having a safety advantage over Yescarta, creating share shifts, but there has not been much TAM expansion. Launching into a market based more on share gains than TAM expansion is therefore harder. Adam’s caution, also invoking Sana, is that investors must time these allogeneic investments correctly even when the science ultimately works.

6. Revolution Medicines at $30B: hunting for a development-stage precedent

• Revolution Medicines has a pan-RAS and KRAS inhibitor franchise, including pan-inhibitors, targeted inhibitors, and combinations. Tess describes its second-line PDAC data as “best in disease,” with an all-comers overall-survival hazard ratio of 0.4. The company is also studying small-cell lung cancer and colorectal cancer, creating several expansion opportunities.
• The development-stage company is valued around $30B, following a rumored $30B takeout, and now trades at or above that level. Tess’s multiple logic is that parallel next-generation combinations make the company “less about just one particular drug” and more about building a franchise. The data are phenomenal, though there is still room to improve tolerability.
• The group struggled to find a true development-stage precedent. Chris asked about Incyte reaching the twenties; Adam could not imagine it reaching $30B. Adam also cited Summit as having traded high but not this high. He noted that Revolution now exceeds Insmed’s market cap, while Chris said Tim Opler thinks it could become a $100B company. Adam joked that Revolution would eventually be large enough to buy Merck.
• Revolution raised $2B “no problem,” likely receiving somewhat less in net proceeds, and the raise represented less than 10% of outstanding shares. Tess estimates the company could have roughly $3B–$3.5B to commercialize independently. Chris calls the sequence—a possible-sale head fake, strong data, then a $2B raise—“a little bit of a master class.”
• Adam also stresses the medical importance beyond valuation. On the podcast, NYU Langone pancreatic-cancer expert Paul Oberstein discussed the reaction of physicians treating these patients. Former Senator Ben Sasse, who has advanced metastatic pancreatic cancer and is taking the drug in a different study, also discussed it in The New York Times. Adam says a potential doubling of survival in pancreatic cancer is meaningful.

7. Spire’s open-label tease: better-than-Entyvio, not yet proven

• Spire reported 12-week induction data from an open-label study of its alpha-4 beta-7 antibody in moderately to severely active ulcerative colitis. The program is a version of Entyvio with a longer half-life and a thesis around better coverage and PK, plus subcutaneous administration. The uncontrolled outcomes compared favorably with historical benchmarks, and the stock rose.
• Tess links Spire’s strategy to Revolution’s: rather than relying on one drug, Spire is building an IBD solution around alpha-4 beta-7, TL1A, and IL-23, including combinations of alpha-4 beta-7 with TL1A and IL-23. The excitement is that the reported data were from monotherapy, while combinations could potentially raise the efficacy and safety bar. Spire raised $463M to fund the pipeline.
• Paul asks whether the open-label UC data prove that Spire’s drug is more efficacious than vedolizumab. Tess says that is “too speculative to be definitive,” especially because placebo rates matter, but views the results as potentially supportive of the thesis. She also points to the exposure-efficacy relationship for Entyvio itself.
• Paul notes that Spire is a Fairmount company and that his colleague Alex Thompson is “a total believer.” Given the validated mechanism and exposure hypothesis, Paul says the program has a good chance, from his less-educated view, of at least trending better.

8. Dream the dream: pipelines over launches, and obesity’s crowding test

• Paul’s regime read is that last year felt like “the biotech launch year,” with Alnylam, Insmed, Argenx, and Magical among the companies on steep launch curves that carried the group. Now investors seem selectively bullish on large-cap companies with “a potential golden ticket in the pipeline,” almost irrespective of the base business. He points to Biogen—possibly before the controversial Sepalis deal—and Vertex, whose commercial businesses could not be more different: one is growing and one is declining, yet both have attractive perceived pipeline catalysts.
• Alnylam and Insmed have been pulled into the broader “what’s next” conversation. Paul revives the idea that it can be better to be a development-stage company where investors can “dream the dream” than a commercial company judged on quarters, inventory, and selling weeks, while stressing that the situation is not yet that extreme. Adam had also described the Allogene, Revolution, and Spire releases as one of the better Monday-morning data groupings in a while.
• Kylera is the obesity test case: a GLP-1/GIP dual-mechanism company with early Bain backing, Adam Koppel on the board, serial CEO Ron Renaud, and former Gilead CEO John Milligan as chair. Chris asks whether the sector has reached “peak obesity.” Tess says it is crowded but that important improvements remain.
• Tess expects the market to sort into different patient segments and treatment settings. Elderly patients with obesity and bone-density issues may need something different from younger people seeking weight maintenance. She also sees tolerability and duration of therapy as possible differentiators.
• On pricing, Paul asks whether next-generation obesity drugs can escape the first-generation “race to the bottom.” Tess says Novo has been “super aggressive” on pricing to maintain market share, but better tolerability and potentially longer duration could be a different pitch to health plans—particularly if patients stay on therapy rather than coming off it. Paul notes that large CNS and I&I markets can still support blockbuster drugs even in the face of generics.