Episode 184 - May 29, 2026

Summary

• Ginkgo’s Jason Kelly laid out the national-security case for restricting China biotech deals: genetic engineering is “our other programmable substrate alongside computers,” and since ~90% of the cell-engineering market sits downstream of therapeutics, “whoever controls that application area ultimately controls genetic engineering.” His evidence that the frontier is already leaving: Massachusetts saw a 1,100-job R&D decline in 2024—the first decrease since MassBio began tracking it—with a third of area lab space empty, which he calls “not cyclical… a consequence of offshoring.”
• Kelly dismissed RA Capital’s “Euro-washing” objection as “a nonsense term that just got made up,” arguing the US holds the decisive market leverage because 70% of drug profits originate with US consumers who are 4% of the world’s population. “We are the market for drugs… When you are 70% of the market, you can set the rules”—and “the US voter pays for the profits of the drug industry, period,” so voters can condition that market on domestic capability.
• Chris Garabedian’s counter: China licensing is just “the next incremental step of outsourcing,” and the Coins Act risks unintended consequences worse than its intent—with the sharper threat being pharma bypassing US biotech to deal directly with China (GSK–Hengrui, BMS, Pfizer–Innovent). Kelly’s reply to that last point: “that is exactly what I’m talking about.” Neither side moved, but the fault line—free-market access to assets versus strategic-technology protectionism—was drawn precisely.
• Capital markets look healthy but not frothy: Cardigan’s filing is the 11th biotech IPO filing of 2026, already matching or beating 2025’s total, and the Endpoints sentiment index rose from 78 (Q4 2025) to 96 (Q2 2026), with finance/investment stakeholders at 120. Skorney says follow-ons are working (“strong companies with strong data… trade up”), while Graig emphasizes the clinical-stage cohort: Cardigan is led by the former MyoKardia team (BMS bought MyoKardia for $13B), with three phase 2b assets and more than $500M raised in under 18 months.
• Lilly bought three vaccine companies in one day for up to $3.8B in bio-dollars—CureVac (shingles, up to $1.5B), Vaccine Company (Epstein-Barr, $1.55B), and Limitless (staph aureus, $780M)—after hiring former FDA vaccine official Peter Marks. Meanwhile, China deal flow rolls on regardless of the debate: Pfizer’s $650M-upfront Innovent deal, a WuXi–Veridian manufacturing pact, and WuXi growth in 2025 despite concerns about the Coins Act.
• Apogee posted positive phase 2 atopic-dermatitis data, with a debated dose response because the high dose underperformed the middle dose, but instead of a follow-on announced up to $1.3B in nondilutive Blackstone financing: an $800M synthetic royalty plus $500M senior debt. Graig calls the structure creative; with Blackstone’s large fund recently closed, he suggests more such deals may emerge.
• ASCO is “relatively light” on stock-moving data, but Sunday’s plenary includes Revolution Medicines’ RESOLUTE 302 phase 3 study in second-line pancreatic cancer, top-lined at 13.2 versus 6.7 months of median overall survival—“practically a doubling”—and Summit’s China-in-licensed PD-1/VEGF bispecific, potentially a better Keytruda-like drug versus Keytruda’s $32.5B in sales. Graig’s small-cap watchlist: Corbus (nectin-4 ADC, 43% ORR in oropharyngeal cancer versus response rates in the teens for standard care), Immuneering (17-month median OS in first-line pancreatic cancer), and Immatics, which needs to show its PRAME platform can reach beyond melanoma.
• Post-Makary FDA developments look more positive: Skorney cites a melanoma BLA resubmission agreement announced by Reata, Outlook’s class 1 bevacizumab resubmission with the company saying FDA agreed there was substantial evidence of effectiveness, and Dyne’s on-time DMD filing. On the exon-skipping precedent described on the episode—dystrophin expression supporting approval—Dyne “would think this would be a layup,” although the program remains controversial; Garabedian says approval risk “would have gone up” had Vinay Prasad stayed.

Deep dive

1. Eleven IPO filings by May, and sentiment surveys turning bullish

• Cardigan’s IPO filing—the 11th biotech filing of 2026, already matching or beating 2025’s full-year total—is Garabedian’s exhibit for market health: the former MyoKardia team under CEO Tasos Gianakakos (MyoKardia was acquired by BMS for $13B), three distinct-mechanism assets in phase 2b for genetic cardiomyopathy, severe hypertension and aortic-valve atherosclerosis, and more than $500M raised across Series A and B in under 18 months. Garabedian says the amount raised by a company on track to IPO within 18 months would be record-setting.
• Skorney’s read: capital markets look healthy for biotech, especially follow-ons, where strong companies with strong data have traded up. He recalls an earlier forecast above 50 IPOs and another forecast corrected to 15; with 11 already filed, the lower forecast will likely be undershot unless things go badly. Still, he says the market is nowhere near the COVID-era froth.
• Graig’s quality argument is that this IPO cohort is later-stage and clinical: “if this were a preclinical company… I’d be much more worried” than with three phase 2b shots on goal.
• The Endpoints sentiment index backs the mood: overall sentiment rose from 78 in Q4 2025 to 90 in Q1 2026 and 96 in Q2 2026. Finance and investment stakeholders reached 120; business conditions rose 50 points, the funding climate 54 points, and the 12-month regulatory outlook 53 points. The timing of responses relative to the commissioner’s departure was unclear. Other stakeholder groups remained below 100 but were moving in the right direction, while private-side venture deal flow remained good.

2. Kelly’s thesis: biotech is a strategic technology, and the US is offshoring its frontier

• Kelly, who chaired the US National Security Commission on Emerging Biotechnology for two years and said Senator Young now chairs it, frames the issue through the logic of an earlier commission chaired by Eric Schmidt: the US should keep the frontier of strategic technologies happening domestically, without needing to be the only country developing them. His visceral test is that if Anthropic, OpenAI and similar AI activity were centered in China, he would feel much less secure about the technology.
• His timeline argument: computers were invented in the 1940s and 1950s, IBM built them out through mainframes in the 1960s and 1970s, and consumers noticed them in the 1980s and 1990s—roughly 60 years into computation moving to machines. Genetic engineering began in 1978, followed by Genentech in the early 1980s and Monsanto in the 1990s, so biotech is only about 40 years into its journey.
• He argues that genetic engineering is an additional programmable substrate alongside computers and that its uses extend beyond protein therapeutics. He points to food being made with genetic engineering, the atmosphere being produced by biology and human bodies being made of biology. COVID, he says, showed that a single RNA virus can shut down whole countries, making biotechnology a dual-use strategic technology.
• The load-bearing step: about 90% of the cell-engineering market—proteins, cell therapies, gene therapies and RNA—currently sits downstream of one application area, therapeutics. “Whoever controls that application area ultimately controls genetic engineering.” Kelly says US investors and pharmaceutical companies are actively supporting the offshoring of the biotechnology innovation engine: “I’m just not going to watch it happen.”
• His evidence that it is already underway: Massachusetts saw a decrease of 1,100 R&D jobs in 2024, the first such decline since MassBio began tracking it. He describes these as discovery scientists who lead the frontier, alongside one-third of Massachusetts-area lab space sitting empty. “This is not cyclical in my opinion; this is a consequence of offshoring.”

3. Garabedian’s pushback—and where the two actually agree

• Garabedian’s continuum argument is that chemistry has gone to India and China for decades, phase 1 trials can go to Australia, and licensing a well-characterized or even clinical-stage Chinese asset is “the next incremental step of outsourcing” on which the industry relies. He notes that more than 99% of drugs that look good in rodent models do not reach approval and that BIO’s latest annual review found 97% of products entering the clinic do not reach FDA approval. His conclusion is that the industry needs access to technologies wherever they come from.
• Garabedian also cites his own work with the Department of Defense when Sarepta was still AVI BioPharma, including medical countermeasures and bioterror threats. He agrees there is a place for protecting the country from misuse, but argues that the Coins Act could overreach by restricting licensing and development of human therapeutics.
• On RA Capital’s white paper, Kelly rejects “Euro-washing” as “a nonsense term that just got made up,” because drugs are not operating in a free market: he says 70% of therapeutic profits originate with US consumers, who make up 4% of the world’s population. Unlike cars, electronics or software, “quite simply, we are the market for drugs,” so US rules matter and there is no obvious way for a Europe–China combination to evade them: “who will they sell to?”
• Kelly’s central point is that the US voter and consumer pay for the drug industry’s profits. If domestic biotechnology capability is valuable for national security and jobs, he says, the US can decide to condition its market accordingly.
• The convergence moment: Garabedian argues the bigger threat is pharma skipping US biotech entirely—GSK–Hengrui, BMS–Hengrui and Pfizer–Innovent—and dealing directly with China. “They don’t need US biotech… they’ll just go direct.” Kelly replies: “That is exactly what I’m talking about.”
• On the jobs irony of Ginkgo’s autonomous labs, Kelly cites a 1952 IBM advertisement for a mechanical calculator that did “the work of 150 extra engineers,” pictured alongside 150 older men with slide rules. He argues that automation raised the value of what engineers knew and made their work less manual, ultimately expanding engineering jobs. His broader point is that no one objects to making US R&D or clinical trials more efficient; the resistance arises when he proposes measures to slow China’s capability-building.

4. Deal flow ignores the debate: China licensing rolls on, Lilly buys into vaccines

• Deal flow continues despite the China debate: Pfizer’s China deal included $650M upfront and followed the BMS–Hengrui deal; WuXi announced a manufacturing deal with Veridian and reported growth in 2025 despite concerns about the Coins Act. Garabedian says biotechs are still outsourcing to China and that the final provisions of the Coins Act remain important.
• Lilly bought three vaccine companies in a single day for up to $3.8B, including milestones: CureVac for a shingles vaccine, up to $1.5B; Vaccine Company for an Epstein-Barr virus vaccine, $1.55B; and Limitless for a staph aureus vaccine used to prevent hospital-based infections associated with surgery, $780M.
• Lilly also hired Peter Marks, described on the episode as the former FDA official in charge of vaccine approvals. Garabedian sees the deals as evidence that Lilly is becoming firmly established in vaccines.

5. Hepatitis is quietly interesting again: 19% HBV functional cure, first HDV approval

• Skorney’s context: hepatitis B was expected to follow hep C’s short-course cure arc a decade ago but has had a long, slow development path. GSK’s bepirovirsen, an antisense oligonucleotide and “one of my oldest drugs,” produced about a 19% functional-cure rate across two phase 3 studies. Functional cure meant undetectable DNA and surface antigen in the blood for at least six months after all therapy stopped; eligible patients stopped therapy after 48 weeks, and about 19% maintained those markers without relapse.
• Skorney called the result “not fantastic,” but potentially meaningful against the roughly 5%–10% functional-cure rates reported for very long pegylated-interferon combination therapy. He wondered whether it could bring interest back to hep B.
• The drug does not directly target cccDNA, the latent reservoir in hepatocytes that is thought to drive relapse. Skorney says the mechanism behind sustained inhibition producing functional cure remains unclear; possibilities include immunomodulation or hepatocyte turnover. “If you really throw the kitchen sink at this virus for a long time,” some patients may achieve functional cures.
• Gilead received accelerated approval for Hepcludex, the first treatment for chronic HDV infection; the product had already been approved in Europe, and Gilead does not break out its European sales. Hepatitis D uses hepatitis B surface antigen and requires HBV for infection. Skorney says HDV itself can take a decade to impair the liver untreated, but HBV/HDV coinfection progresses rapidly and creates substantial need.
• Hepcludex is not expected to be a major Gilead driver. Skorney points to Mirum’s S-antigen-targeted approach, intended to prevent HDV from binding to and using S antigen, as one of several efforts to improve on it, and sees pricing power despite saying the disease is concentrated mostly in third-world countries.

6. Apogee’s Blackstone structure and Graig’s ASCO map

• Apogee reported positive phase 2 top-line data for its lead atopic-dermatitis antibody, whose name is unclear in the transcript. The dose response was debated because the high dose did not work as well as the middle dose, but the company is advancing the program to phase 3.
• Instead of the expected equity follow-on, Apogee announced up to $1.3B in nondilutive financing from Blackstone Life Sciences: $800M in synthetic royalty financing plus $500M in senior debt that can be drawn later if both parties agree. Graig calls the structure creative and notes that, unlike a conventional raise, “no banks got paid.” He suggests Blackstone’s recently closed large fund could lead to more such transactions.
• Graig, freshly arrived in Chicago, describes ASCO as the world’s largest cancer conference, with an estimated 35,000–45,000 attendees. He calls this year’s meeting relatively light on data likely to move stocks, but highlights bispecific antibodies, antibody-drug conjugates, CAR-T moving into solid tumors and RAS inhibitors.
• Sunday’s plenary includes Revolution Medicines’ RESOLUTE 302 phase 3 study in second-line pancreatic cancer. The company had top-lined median overall survival at 13.2 months versus 6.7 months for standard chemotherapy, “practically a doubling.” Graig says the full presentation should clarify overall-survival distribution, progression-free survival, duration of response and treatment, safety, tolerability and adverse events. He also cited a New York Times interview with former Senator Ben Sasse, who is being treated with the drug and whose facial rash illustrated a tolerability concern.
• Other RAS programs mentioned include Mirati Therapeutics and Verastem, which are earlier-stage relative to Revolution Medicines’ efficacy bar.
• Summit’s late-stage Harmony 6 study of a PD-1/VEGF bispecific in-licensed from a Chinese company is also highly topical. Investors are watching whether it could become a better Keytruda-like drug; Keytruda generated about $32.5B in sales last year.
• Graig’s other small-cap watchlist includes Corbus’s nectin-4 ADC CRB-701, which produced a 43% response rate in oropharyngeal cancer versus response rates in the teens for the current standard of care; Immuneering’s novel pathway inhibitor, with 17 months of median overall survival in first-line pancreatic cancer, more than double some chemotherapy-based benchmarks; and Immatics, whose PRAME portfolio includes cell therapies and bispecifics and needs to show it can extend beyond melanoma.

7. Biohaven’s degrader is the sleeper, and the post-Makary FDA looks friendlier

• BMS extended its multiple-myeloma franchise with a phase 3 regimen in which the BMS IMiD referred to inconsistently in the transcript as “me domide”/“mezagitamod” was added to carfilzomib and dexamethasone. The combination kept relapsed or refractory disease at bay roughly 10 months longer and produced an 80.2% response rate versus 53.4% for the standard treatment alone.
• Skorney’s caveat is that the comparator did not contain another IMiD. He questions whether lenalidomide or pomalidomide plus carfilzomib and dexamethasone would be the more relevant second-line standard of care and how that regimen would compare.
• Biohaven, “one of the most hotly debated names” in Skorney’s coverage universe and criticized by some investors for dilution, provided a positive incremental KCNQ7 channel-opener update from phase 3 open-label extensions in focal-onset seizures. Full phase 3 data are expected later this year, with investors comparing the program with Xenon’s KCNQ7 program, referred to as ezogabine on the episode.
• Its obesity program is a myostatin antibody intended to address muscle loss associated with GLP-1 weight reduction. Bimagrumab previously showed about 10% monotherapy weight loss; in combination with semaglutide, the goal is to make the loss primarily fat while maintaining or increasing muscle. Bimagrumab had a “pretty hairy” tolerability profile and does not seem to be moving forward, so replicating its body-composition effect with better tolerability could be an important advance.
• Skorney cares most about Biohaven’s molecular degrader and trap program, which uses the asialoglycoprotein receptor on hepatocytes to turn over extracellular proteins quickly. In IgA nephropathy, it targets Gd-IgA1, the pathogenic factor behind autoantibody-driven kidney injury, and showed strong proteinuria-reduction and hematuria-resolution data.
• He contrasts this targeted approach with broader B-cell or immunoglobulin-lowering strategies, noting an IgAN launch from Otsuka and applications from Vertex and Vera. Biohaven plans to begin a pivotal program within the next couple of weeks.
• On the FDA, Skorney says the recent Makary-era group—including Anna Forsythe and Tracy Bethge—was viewed by industry as combining flexibility rhetoric with a series of complete response letters. Interim commissioner Kyle D’Amato, who had previously served under Scott Gottlieb and was described as friendly with Trump, faces tension between GOP and MAHA priorities. Skorney sees signs of companies receiving another opportunity.
• Examples include Reata’s announced agreement to resubmit a BLA for a melanoma therapy, Outlook’s resubmission of bevacizumab in ophthalmology as a class 1 submission, and Dyne’s on-time DMD BLA filing. Outlook’s release said FDA agreed that substantial evidence of effectiveness had been demonstrated; Skorney said that, if accurate, only manufacturing might remain to resolve.
• Dyne’s program is controversial despite showing more dystrophin production than naked PMOs. Skorney says the exon-skipping precedent described on the episode—dystrophin expression supporting approval—would make the filing look like a layup, while Garabedian says the approval risk would have been higher had Vinay Prasad remained at FDA.