Episode 194 - August 28, 2026

Summary

• Biotech’s rally is real but structurally different from the 2021 peak: XBI up ~80% over 12 months vs. the S&P’s ~20%, yet the plumbing underneath has inverted. Daphne Zohar’s numbers: ~$138B of M&A announced YTD against only ~$59B of equity issuance (vs. a balanced $67B/$66B at the last peak), 20 IPOs vs. nine in 2025, and — tellingly — no preclinical IPO this cycle vs. 19 in the year before the last top. Big pharma’s ~$180B patent cliff through 2032 keeps the bid, even as takeout premiums compress.
• Moderna’s individualized neoantigen vaccine hit recurrence-free and distant-metastasis-free survival in resected melanoma, sending the stock from the $50–60 range to over $170 on August 19 (settled ~$140). Sam Fazeli’s sum-of-parts gets to ~$12B “if everything worked, not risk-adjusted” — with half shared by Moderna in some fashion — versus what the market is now paying, and the company led a $2.6B convertible offering. Eric Schmidt’s durability kicker: the neoantigen-selection algorithm is likely a trade secret, so “there will never be a generic form of this vaccine… a forever franchise.”
• BioNTech’s colorectal vaccine failure the same week brackets the class rather than refuting it. Sam’s framing: “melanoma having worked, hottest tumor, colorectal had a problem, coldest tumor. What happens in the middle?” — with Moderna’s adjuvant RCC readout expected by year-end as the next data point.
• Sam publicly flipped bullish on Akeso/Summit’s ivonescimab after headline PFS and OS efficacy in biliary tract cancer — a tumor where Roche’s Tecentriq-plus-Avastin combination had failed to show an OS benefit. “Something’s going on here that is different… it has to be” than PD-1 plus VEGF. Eric: most clients remain “glass half empty,” so a positive HARMONi-3 in ~6–9 months would send Summit “through the roof” — the same entrenched-skepticism setup that powered Moderna.
• Revolution Medicines’ daraxonrasib (RMC-6236) won pancreatic-cancer approval in just over a month — priced at $478K/year vs. Sam’s $275K assumption, and with a label wedge into frontline. Eric (a former RVMD board member) flags that approval for patients ineligible for multi-agent chemo means frontline drift — “I’d be asking for daraxonrasib as a frontline agent” — which will make first- and second-line trials brutal for follow-on RAS and PRMT5 programs.
• The Heidi Overton FDA nomination splits the panel: pro-innovation talking points vs. thin management credentials and MAHA baggage. Graig Suvannavejh sees rare disease, neuro, cell therapy and psychedelics as potential winners; Eric calls her “a bit of a Dr. Makary clone” and, after measles deaths in Pennsylvania, says he’d “hate to see yet another healthcare leader appointed who shares any of those views.” Daphne on Cassidy’s objections: he talked a lot before RFK’s appointment but supported it afterward — “I don’t really put a lot of weight into what he says.”
• China policy is hardening beyond the usual hawks: US INDs are down >10% since 2020 while China’s Phase 1 count nearly doubled (~600 to 1,100+), and now a Moolenaar–Cline letter wants China-generated data rejected absent a site audit within the prior year. Sam accepts Western manufacturing and Western/US trials “given the current geopolitics,” but says crimping deals with Chinese biotechs “just does not make any sense to me.” Eric argues against blanket restrictions and says to “just let the market make its decisions”; he describes US versus China/Korea IPO performance and capital raised as “chalk and cheese.”
• Negative readouts and premium pricing carried the back half: eplontersen’s CARDIO-TTRansform showed adding a silencer to a stabilizer in ATTR-CM gave no benefit and “a little bit worse” outcomes, so expect less combo use — a read-through to Alnylam’s vutrisiran that Sam says John Maraganore disputes; EyePoint fell 70%+ on its wet-AMD miss with a second Phase 3 due in October; Amylyx’s avexitide hit with a p-value containing at least four, perhaps five, zeros and raised $500M+. Meanwhile Priovant’s brepocitinib launch price of a little over $400K for dermatomyositis fed a debate that ended with a warning that US healthcare and drug costs are “a ticking time bomb.”

Deep dive

1. An 80% rally with inverted plumbing: M&A-led, issuance-light

• Daphne’s scene-set: XBI up ~80% over 12 months vs. ~20% for the S&P; 20 IPOs YTD vs. nine in all of 2025, including some of the largest biotech IPOs on record, Parabilis and Kymera; ~$138B of M&A announced YTD, powered by an estimated $180B patent-cliff impact through 2032. More bidders per deal, less patience to wait for data — yet premiums are compressing, which she suggested may reflect M&A expectations already priced into public stocks.
• The mix is the story: mid-cap biotech M&A ran ~$143B this past year — more than double the 2020–21 pace — against only ~$59B of equity issuance, vs. a balanced $67B/$66B at the last peak. And no preclinical IPO this cycle vs. 19 in the year before the last peak.
• Index churn as memento mori: of the XBI’s 169 components at the February 2021 peak, only 74 remain — roughly a quarter of exits were “the good kind,” acquisitions; a third simply fell below the market-cap threshold.

2. Moderna’s melanoma vaccine minted a 200% day — and specialists hated it

• The news: on August 19, the INTerpath-001 Phase 3 of Moderna’s individualized neoantigen mRNA therapy plus Keytruda, vs. Keytruda alone in fully resected stage IIB–IV melanoma, hit recurrence-free survival and the key secondary of distant metastasis-free survival — the latter potentially implying an effect on microtumors beyond the primary site. Sam’s model gets to ~$12B “if everything worked, not risk-adjusted,” with half shared by Moderna in some fashion; the market has decided it’s worth more. Moderna then led a $2.6B convertible offering, with a conversion price meaningfully above spot, pushing its cash runway well beyond 2030–31 assuming its COVID-vaccine expectations hold.
• The tape: after six months in the $50–60 range, MRNA closed just over $170 (up almost 200% intraday), settling around $140. Eric’s read on the sour mood despite an ~7% August for the sector: generalists flooding in “into quote, ‘all the wrong stocks’” left shorts and XBI-benchmarked long-only funds that did not own it “very, very unhappy.”
• Eric’s durability point, worth underlining: the neoantigen-selection algorithm will likely stay a trade secret, so “there will never be a generic form of this vaccine… it could be an extremely valuable franchise” that “lasts and lasts as long as nothing better comes along.”
• BioNTech’s colorectal stumble — its ctDNA-positive trial of vaccine alone vs. watchful waiting had failed for futility in October 2025 and was now stopped after a survival imbalance — draws limited read-through from Sam: “it kind of begins to create a bracket… melanoma having worked, hottest tumor, colorectal had a problem, coldest tumor. What happens in the middle?” Moderna’s adjuvant RCC data are expected by year-end.

3. Daraxonrasib: a one-month approval and a $478K wedge into frontline

• Eric — a proud former Revolution Medicines board member — on the clinical stakes: pancreatic cancer kills 40–50K Americans a year, second-line survival is six or seven months, and the RAS(ON)2 data showed “essentially a doubling of survival,” justifying an FDA review of just over a month.
• The label’s sleeper clause: approval covers patients ineligible for multi-agent systemic therapy, meaning some frail patients can skip chemotherapy entirely. “If I or a loved one were unfortunate enough to have pancreatic cancer, I’d be asking for daraxonrasib as a frontline agent” — and if physicians agree, first- and second-line trials become “very, very difficult” for the RAS isoform inhibitors and PRMT5 programs coming behind.
• Sam on price: daraxonrasib came out at $478K/year vs. his $275K mid-range assumption. He compares that with Vitrakvi at ~$518K and Retevmo at ~$302K, pencils a 20% gross-to-net, and gets to a potential $12B in PDAC. He also notes the drug has been available free since April under the FDA’s special voucher, so the move into the paid group bears watching.

4. Overton at FDA: pro-innovation résumé, MAHA baggage

• Graig’s brief: MD from New Mexico, PhD and residency training at Johns Hopkins, America First Policy Institute chief policy officer, and now deputy assistant to the president on health policy — but only three to four years in government, all under Trump. HELP chair Bill Cassidy has already flagged her management inexperience and role in recent vaccine-policy initiatives under RFK Jr. ahead of post-recess hearings.
• His speculative sector map if confirmed: rare disease “potentially the biggest winner,” plus neuro (long trials, big placebo effects — biomarkers and streamlined designs would help), cell therapy, psychedelics, and precision oncology; vaccines and reproductive-health companies face the risk side.
• Eric’s pushback — worth keeping: she’s “in many ways, maybe a bit of a Dr. Makary clone,” with thin qualifications to run a huge agency — “that’s gonna be problematic, to be honest.” After measles deaths in Pennsylvania this week and “more tone-deaf comments from RFK Jr.,” he’d “hate to see yet another healthcare leader appointed who shares any of those views.” Daphne, on hopes Cassidy blocks anything: he talked a lot before RFK’s appointment but supported it afterward — “I don’t really put a lot of weight into what he says.”

5. China: Trailblazer soundbites vs. a hardening data-rejection push

• Daphne’s ground truth: US INDs are down more than 10% since 2020 while China’s Phase 1 count nearly doubled (~600 to 1,100+), and her company still runs Phase 1/2a in Australia. Initiatives like Operation Trailblazer “become almost like these sound bites” — until FDA divisions actually embrace things like a single pivotal study for approval, “sponsors have to keep planning conservatively.”
• The new letter: Moolenaar and Cline want China-generated data rejected for INDs, NDAs and BLAs unless the site was audited within the prior year — a high bar given FDA staffing — following Endpoints’ reporting on three deaths in Chinese investigator-initiated trials. Her signal-read: Cline sits in the industry-friendly Biotech Caucus, so “this isn’t just the usual China hawks anymore.”
• Sam’s line in the sand: requiring companies to manufacture drugs in the US or West and conduct trials in the West or US “should be the case, given the current geopolitics” — but going further to “crimp the ability to do deals with Chinese biotech companies… just does not make any sense to me.” Eric remains strongly opposed to blanket restrictions and says, “Just let the market make its decisions.” On US versus China/Korea IPO performance and capital raised, he says it is “chalk and cheese.”

6. Sam crosses the fence on ivonescimab

• A rare on-air change of mind, with the psychology named: Sam admits entrenched dislike of a company “colors your judgment” and keeps him “sitting on the fence or the negative side of the fence.” Akeso’s headline PFS and OS efficacy in biliary tract cancer in China “kind of pushed me over the line to the positive side of the fence” — because Roche’s randomized Phase 2 IMbrave151 study of Tecentriq plus Avastin failed to show an OS benefit, with Kaplan–Meier curves “like two lines on top of each other.” An OS signal where PD-(L)1 plus VEGF already failed means “something’s going on here that is different. It has to be.”
• Eric: “welcome to the club… this is yet another brick in the wall” — multiple studies now show ivonescimab working where neither a PD-1 nor the combination should. Yet most clients stay “glass half empty,” so HARMONi-3 in ~6–9 months is “the clear and deciding variable”: if it works, Summit is “gonna go through the roof because people are still so skeptical. Much like Moderna shares have gone through the roof on similar entrenched skepticism.”

7. Readout roundup: EyePoint’s miss, silencer-on-stabilizer harm, Amylyx’s redemption

• EyePoint fell 70%+ after its Phase 3 missed non-inferiority vs. Eylea 2 mg in wet AMD — the every-six-months maintenance thesis into a ~$15B anti-VEGF market. Graig, who still likes the name, dislikes the company’s identification of nine patients as a cohort that skewed the data (“we don’t like seeing companies cherry-pick”), but notes strong secondary-endpoint signals, a second 200-patient-plus Phase 3 expected in October, and FDA precedent for flexibility (Apellis’ Syfovre, Outlook Therapeutics). His tell: a fully written-off drug would have the stock down ~90%, not 70–75%.
• CARDIO-TTRansform (ESC plus NEJM): adding eplontersen atop stabilizers, with about 80% of patients mostly on tafamidis, showed no benefit — “patients on the combination did a little bit worse.” Sam says John Maraganore would argue that this is antisense-specific, with no necessary read-through to Alnylam’s vutrisiran, and adds that he sees some validity in that distinction. Doctors “no longer have any evidence” for the combination stacking seen commercially, so Sam expects “less combination therapy in the market until proven otherwise.”
• The Amylyx arc Daphne wanted told: after pulling Relyvrio when the PHOENIX confirmatory study failed in March 2024 — “they took the high road” — avexitide, a GLP-1 antagonist for post-bariatric hypoglycemia (no approved therapies), hit its LUCIDITY Phase 3 with a p-value containing at least four zeros, perhaps five, moving the stock from the $20s toward the $40s and enabling an upsized $500M-plus raise.
• Housekeeping with teeth: Generation Bio’s draft posters or abstracts for three ERS studies became accessible ahead of the conference embargo; the company then disclosed the abstracts in an EDGAR 8-K. The stock spiked 15–20% before giving back its gains. Eric says the data were “honestly not that remarkable,” but the possible selective disclosure “cost some folks some money” — conferences that “can’t get their act together” are now a recurring every-three-to-six-months hazard.

8. Premium launch pricing is “a ticking time bomb”

• The trigger: Roivant’s Priovant subsidiary won approval of brepocitinib, an oral JAK1/TYK2 inhibitor, for dermatomyositis — which Graig thinks may be the first FDA-approved therapy for the condition — priced at a little over $400K/year, roughly twice or more the nearest JAK inhibitor, black box included. Eric’s warning: “at some point… the system is going to need to figure out whether or not it can handle” a market where new drugs launch at a premium. Separately, J&J’s anti-FcRn IMAAVY added warm autoimmune hemolytic anemia as a second indication; it is one of three anti-FcRn therapies, behind argenx’s Vyvgart, which Graig pegs at over $4B in 2025 sales.
• Graig concedes the optics: “it is serving as a little bit of a black eye to the industry” against US median household income — and his own models keep drifting up, e.g. moving Amylyx’s pricing assumption from a $200K base toward ~$300K because the last eight rare endocrine approvals averaged ~$280–285K.
• Sam’s Machiavellian hypothesis: some companies simply divide the revenue they need by the patient count — he “can’t imagine any other way” J&J arrived at ~$650–700K/year for TAR-200, its non-muscle-invasive bladder-cancer formulation. “Nobody cares about what ICER says… but those are just crazy numbers, right?”
• Graig’s defense from his Biogen/AbbVie years — companies do hire consultants and can justify premiums if they demonstrably save the system money — was followed by a closing warning that US healthcare and drug costs are, in the speaker’s opinion, “a ticking time bomb.”