Episode 181 - May 1, 2026

Summary

• Biotech’s lead over the broader tape is shrinking fast: the XBI is still +8% YTD — ~300bps over the S&P, ~100bps over the Nasdaq and 1,400bps over a sagging XLV — but over the past month it gained just 1% against +10%/+14% rebounds in the S&P and Nasdaq. Graig Suvannavejh flags an “alarming statistic”: April 2026 was healthcare’s worst relative month versus the S&P 500 since 2009, with XBI volumes down a little versus the 30-day average, though he still calls sector fundamentals “quite good.”
• The IPO window remains open — ten biotech IPOs YTD raising ~$3.2B — with an encouraging early cohort. The obesity-focused Kalera raised an upsized $719M; the respiratory IPO, called Avlinger/Avalyn by Graig and Avelin/Avellin later, raised $300M at $18 and traded near $29; DeepPort raised $255M and eMab $300M+. Chris Garabedian argues these are “a different profile of company” after years of extended private rounds delivering clinical data at IPO, but concedes there’s no governor on the cycle: “I don’t wanna call it a Ponzi scheme, but… as long as it’s working and no one’s getting hurt, you’re gonna see that behavior continue.”
• Generalist interest is appearing but remains selective — and, per Matt Gline, it can be “this weird transformative mystery.” His issuer’s-eye view: specialists grill you for years for $30–100M positions, while long-onlys “don’t meet with you, and they don’t meet with you… and then the next time a 13F comes out, they own four hundred million dollars of your stock.” Graig cautions that generalists are still focused on de-risked, clinical- or commercial-stage names — “very early days” for a wide swath.
• Lilly is the clear M&A outlier: six acquisitions and ~$14.5B upfront by Sam Fazeli’s count — roughly half of all large-pharma M&A this year — including up to $3.2B for phase-1 type-II JAK2 player Ajax. Sam’s read: Lilly is feathering the nest ahead of a future “$70 billion, $80 billion drug” LOE (“Thank you, Lilly, for helping our sector”), while Chris says the company is doing “land grabs, early and late” and M&A health should be judged ex-Lilly.
• Non-Lilly buyers are showing up — Chiesi/KalVista at $1.9B, Sun/Organon at $11.5B, and ArchiMed’s acquisition of Aspireon Therapeutics for about $1B — but Chris, drawing on Gilead/Celgene corporate-development experience, doubts $20B–$60B takeouts: pharma “might believe they’re overvalued” and can’t justify premiums. Graig still predicts a record M&A year on LOE pressure, strong balance sheets and relatively low-cost debt; Sam counters that expiries “aren’t as bad as they first look,” seeing Keytruda lasting to 2033 in the U.S.
• Revolution Medicines set the pancreatic-cancer bar — OS 13.2 vs. 6.7 months in second line, a $2.2B upsized raise, ~$30B cap — and Erasca, called “Araska” earlier in the discussion, stumbled despite efficacy “even better than” RevMed’s at a similar stage. A single grade-5 pneumonitis death plus a later-that-day RevMed patent suit sank the stock from a $7B pre-data cap; Eric Schmidt, a former RevMed board member, calls the setup “a little bit juiced” and asks “why do we need a me-too?”, while Sam sizes the pan-RAS opportunity at $8–10B risk-adjusted versus bulls’ $15B.
• Summit’s HARMONY-3 interim PFS miss on ivnisimab implies the hazard ratio is likely above HARMONY-6’s 0.60 — reopening the China-translation question and creating a capital-raise overhang. Sam’s two logical readings: not enough alpha was spent at the interim, or the Kaplan-Meier separation is simply narrower than the China trial showed; the silver lining is HARMONY-6 OS data as an ASCO late-breaker that Akeso is “promoting aggressively.”
• Alzheimer’s had a split week: Elektor’s progranulin antibody navisnavart failed futility in a GSK-partnered trial, but Lilly’s drug called “Chrisla” printed $124M vs. $76M consensus and Akopeon won approval for agitation without Rexulti’s black box. Sam dismisses the front-page 14-trial anti-amyloid meta-analysis — 12 trials had failed — as “just wrong because you can’t mix those kind of data up.”

Deep dive

1. The XBI’s outperformance is narrowing — and April was historically bad for healthcare

• Graig’s tape check: XBI +8% YTD — ~300bps over the S&P, ~100bps over the Nasdaq, 1,400bps over the XLV (itself -6%) — but the gap “has tightened considerably”: over the past month the XBI is +1% against +10% (S&P) and +14% (Nasdaq), and it has retrenched ~6% from a 52-week high near 139 two weeks ago.
• The statistic he flagged as alarming: April 2026 was the worst relative month for healthcare versus the S&P 500 since 2009, with XBI volumes down a little versus the 30-day average. His honest non-answer on why: “I’m not really sure” — possibly apathy versus tech, possibly the Revolution Medicines/Ben Sasse attention wave passing. “Something we’ll have to monitor closely,” though fundamentals remain “quite good.”
• Sam on the pharma prints: Lilly beat and raised full-year guidance $2B (low end $80B→$82B), driven not by the new oral pill but by obesity drugs “flying off the shelves ex-U.S.” — mostly an out-of-pocket market — plus an employer-direct channel that is “disenfranchising the PBMs to a degree.” The twist: the drug he called “Foundayo” is “not doing that great at the minute,” yet Novo rose too on oral Wegovy — breaking the usual good-for-Lilly-bad-for-Novo seesaw.
• Eric opened with tributes to Craig Venter — including his work on shotgun sequencing, Celera and the H. influenzae genome — and Eugene Braunwald, “the founder of modern-day cardiology,” both lost this week.

2. A high-quality IPO vintage: ten deals, $3.2B, and the respiratory IPO’s inhaled-IPF thesis

• The scoreboard per Graig: Kalera Therapeutics (obesity) upsized to $719M; the respiratory IPO — called Avlinger/Avalyn in Graig’s account and Avelin/Avellin in later comments — raised $300M at $18 and was near $29 in real time; DeepPort Therapeutics (CNS) upsized to $255M; and eMab (blood disorders) to $300M+. Ten IPOs have now raised ~$3.2B YTD, plus Revolution Medicines’ $2.2B raise and $700M for I&I company Aruka Therapeutics.
• Matt’s read on why the respiratory deal worked: it is taking multibillion-dollar systemic IPF blockbusters — a space “dominated by Boehringer Ingelheim with a couple of older systemic drugs” — into targeted inhaled formulations, echoing Tyvaso and the prostanoids in pulmonary hypertension. The goal is similar benefit with better safety and tolerability, or potentially better benefit from higher local dosing. IPF is “really gonna explode in opportunity over the next couple of years.”
• Chris, who co-led the company’s Series C, on why this isn’t necessarily froth: after years of extended private rounds, IPO candidates now arrive with clinical data ahead of pivotal or large Phase 2 inflections — “a different profile of company” — and the key metric is aftermarket performance. A working IPO market also pulls VCs earlier: NPM’s K2 launched with three China-sourced assets in Nimbus-style subsidiaries, and Deerfield shipped a screenable database of academic programs — “really a service to the industry.”

3. Nobody has invented a governor on the IPO cycle

• Eric’s devil’s-advocate push: windows always open with quality names, then “it’s hard for venture investors… even investment banks, to really police the quality and things seem to slip.” Chris’s concession: “you’re absolutely right 100%, and I don’t think anybody’s figured out how to stop that… I don’t wanna call it a Ponzi scheme, but it’s kinda like as long as it’s working and no one’s getting hurt, you’re gonna see that behavior continue” — and you can’t convince a board not to go public when markets work.
• Matt’s taxonomy of how it ends: either “you’ve worked through the good companies… and deals start breaking,” or, as in early last year, the biotech market itself weakens and buyers vanish. “This will end one of those two ways.”
• On the generalist undercurrent Eric says drives every window (“when the faucet turns off and the drain opens up, we’re left holding the bag”), Matt’s issuer experience is the keeper: specialists grill you for years — “much of which is competitive diligence for other things they’re doing” — while long-onlys ignore you, then “you get invited to a room with fifteen PMs who you’ve never met before, who don’t ask any questions. And then the next time a thirteen-F comes out, they own four hundred million dollars of your stock.” Graig confirms generalist inquiries, but only into de-risked and commercial names.

4. Lilly is a category of one

• Sam’s ledger: six M&A deals, excluding licensing, and ~$14.5B upfront — about half of all large-pharma M&A — a deal “every couple of weeks,” mostly private companies and including areas Lilly has not previously occupied, such as sleep disorders and myeloma. “Everybody’s jaw dropped a little bit” at the $3.25B upfront for the Colonial deal involving an in vivo CAR-T for myeloma, following Orna Therapeutics earlier this year. The logic: ten years from now, Lilly must feather the nest against whatever “$70 billion, $80 billion drug” faces expiry — potentially bigger than Keytruda or Humira. “Thank you, Lilly, for helping our sector.”
• Graig’s dive on Ajax: up to $3.2B for a phase-1, potentially first-in-class type-II JAK inhibitor in myeloproliferative neoplasms (myelofibrosis and polycythemia vera). Approved JAKs bind the type-I conformation and carry a black-box all-cause-mortality warning; type II could improve efficacy and safety — watch whether others interrogate the class in autoimmune disease.
• Chris’s framing — worth keeping: Lilly is “becoming a little bit of an outlier… doing definitely land grabs, early and late,” so “we should look at the M&A market excluding Lilly to see how healthy it is.”

5. Non-Lilly buyers are back — but the $20B+ takeout may be dead for now

• The tape: Chiesi (private, Italian) paid $1.9B for KalVista and its oral HAE drug, which Graig called Ekterly; Chris said the drug did about $60M last year and “seems rich, which is good.” Chiesi generates over $4B in U.S. dollars, with pulmonary revenue over $2B and its other two franchises at about $1B each. Sam adds Servier/Day One as precedent — private European acquirers are active and welcome. Sun bought Organon for $11.5B — Matt: “biotech companies never die” — and Sun is “a sneaky great operator,” possibly a beachhead for serial U.S. acquisitions. ArchiMed took out Aspireon Therapeutics for about $1B at a little over $3/share; Eric also referred back to the company as Esperion.
• Chris on why the big blue-chip deal is missing, from his Gilead/Celgene corporate-development seat: as valuations ticked up, “they can’t get to the justification to pay a premium” — clarifying, “I’m not saying they’re overvalued. I’m saying that pharma might believe they’re overvalued.” The $20B–$60B range “might be tough”; a roughly $7B Terns deal — called “Turn” by Matt — is “not exactly a bolt-on.”
• Graig’s call, hedged as hedged: “I could be wrong, but” 2026 will be a record M&A year — LOEs, strong balance sheets and access to debt at relatively lower interest rates — just a matter of timing, as post-J.P. Morgan pessimism already proved premature. Sam’s counter: expiries “aren’t as bad as they first look” — his analysis has Keytruda holding to 2033 in the U.S., not 2029 — so pharma pays up mainly when “their back’s against the wall.”

6. Tafamidis settles: “smart lawyers… get in a room and pick a date”

• Matt on Pfizer’s tafamidis ANDA settlement, after debate over 2031 versus 2033: “a reasonable outcome” that moved BridgeBio’s stock — an interesting setup where a biotech is affected by a pharma partner’s LOE negotiation. Context: AbbVie recently secured a 2037 LOE for RINVOQ. Disclosure as told: his board chairman runs one of the ANDA litigants and “felt like it was a fair deal for everybody.”
• His defense of the system: generic companies are “as real as businesses get… these people know what they’re doing.” “It’s sort of weird that the way it works is really smart lawyers figure out how to sue each other and then get in a room and settle and pick a date” — but his neighbor is on tafamidis for ATTR amyloidosis, and it will be a far cheaper drug in four or five years. “Everybody wins,” with “a lot of reapportionment of dollars” along the way.

7. Pancreatic RAS: RevMed’s bar, Erasca’s stumble, and the me-too question

• Graig’s setup: Revolution Medicines’ pan-RAS deruxant rasib doubled second-line pancreatic OS — 13.2 versus 6.7 months, a 60% death-risk reduction — funding the $2.2B raise, then followed with first-line monotherapy data (ORR 47%, 6-month PFS 71%, 6-month OS 83%, better still with gemcitabine and nab-paclitaxel). Erasca, called “Araska” earlier in the discussion, had reached a $7B cap with no clinical data, then posted first data on China-licensed ERAS-0015 that were “actually quite good and even better than” RevMed’s at a similar stage — “this should have easily been a big win” — but one grade-5 pneumonitis death and a later-that-day RevMed patent-infringement suit made it “a double whammy.”
• Sam’s nuances: Revolution has seen grade-4 pneumonitis under axovarigene at a dose roughly ten times higher than Erasca’s, so the death “might have just been bad luck.” His patent-lawyer colleague’s read, quoted directly: “RevMed probably just wants to get them to license their IP, get them to the negotiating table” — absent proven malicious intent or similar misconduct, a judge would be unlikely to enjoin development, and Erasca “can continue to develop.”
• Eric’s dissent (“I’m biased admittedly” — a former Revolution Medicines board member): investors can contextualize a death in pancreatic cancer; the real problem was a “juiced” setup, a 12-month wait for the next update, years behind Revolution, and no pancreatic differentiation — “you could squint” at lung — so “why do we need a me-too?” The excitement should be PRMT5 combinations, including Tango and Bristol Myers Squibb programs, that could obviate chemotherapy.
• On sizing, Sam puts pan-RAS at $8–10B risk-adjusted, with some wanting $15B in pancreatic cancer alone, and pushes adverse-event differentiation as the angle given dose reductions and holidays; Eric’s rebuttal: Erasca topped out at 40mg, backed to 32mg — still 10–20x below Revolution’s dose — but on therapeutic window, “I’m not sure… we just need more data.”

8. Summit’s interim miss, and a split week in Alzheimer’s

• Sam’s two-minute HARMONY-3 recap: ivnisimab (a PD-1/VEGF bispecific, in-licensed from Aikiso and later referred to as Akeso) plus chemotherapy versus Keytruda plus chemotherapy in ~600 squamous NSCLC patients; Summit’s interim PFS analysis missed after hours. Two readings: alpha was spared and the difference exists but was not statistically sufficient, or the Kaplan-Meier separation is genuinely narrower than China’s HARMONY-6 (HR 0.60, with tislelizumab as the comparator) — “which of course then has ramifications as to how much can you translate China data” to the U.S. and Europe, especially since OS is expected to be lower than PFS given the VEGF angle.
• Eric’s addendum: the hazard ratio is likely above 0.60, with a weaker PFS benefit than Summit hoped when it designed the interim, and the capital need is now an overhang — but HARMONY-6 OS lands as an ASCO late-breaker that Akeso is “promoting aggressively,” and little PFS-to-OS diminution there “could bode well” for HARMONY-3.
• Graig skipped obesity (“we talk about obesity all the time”) for Alzheimer’s: Elektor’s progranulin antibody navisnavart failed a futility analysis in early Alzheimer’s in a GSK-partnered program, but the silver lining is a pivot to its ABC blood-brain-barrier platform — “where I think most of the excitement is,” with Roche in the lead via a Phase 2 trial started last year — plus an approval he covers, Akopeon, for Alzheimer’s agitation without Rexulti’s black box.
• Sam’s parting shots: the front-page meta-analysis pooling 14 anti-amyloid trials, 12 of which had failed with some older antibodies, is “just wrong because you can’t mix those kind of data up” — while Lilly’s drug called “Chrisla” “knocked the cover off the ball” at $124M versus $76M consensus, near Biogen’s Leqembi, with subcutaneous dosing helping. “Definitely a lot of room to improve here.”