Episode 200 - October 23, 2026
Summary
- Moderna’s cancer-vaccine selloff followed a valuation that “needed absolute perfection.” Sam Fazeli contrasts a market cap approaching $100 billion with roughly $2.2–2.3 billion in annual revenue and established melanoma competition. Brad Loncar disputes the disappointment narrative: the stock had traded at $150 for a month after the success announcement and, after the selloff, remained about $50 above that level; the data made the medical and commercial case “a stronger yes.”
- Unverified position-unwind theories may help explain biotech’s weak tape, but the panel cannot establish them as fact. Matt Gline describes shorts covering Moderna while selling longs, followed by benchmark-driven buying that compounded the divergence. Loncar adds that XBI’s rise from 108 to 150 conflicts with the gloom: expiring acquisition bets can leave options holders losing money during a strong equity year and “poison” the discussion.
- The panel sees a difficult quarter within a stronger financing and acquisition year. Chris Garabedian argues that the optimistic Endpoints survey largely captured conditions before the latest deterioration. Daphne Zohar says dealmaking is “not pencils down,” citing Stifel’s assessment that 2026 could rank second only to 2019 for biotech M&A; falling share prices can nevertheless separate boards’ expectations from buyers’ acceptable premiums.
- Silence’s announced 1.3 billion cash sale follows a long scientific and corporate reset. Ali Mortazavi recounts joining a £5 million AIM-listed company, abandoning an oncology program he distrusted, rebuilding around GalNAc delivery, and watching later management redirect TMPRSS6 development into PV. He calls that indication switch “one of the best biotech corporate decisions ever made”; Merck KGaA’s offer carried an approximately 130% premium.
- Tango’s pancreatic-cancer results provide the episode’s clearest example of strong clinical news meeting a falling share price. Eric Schmidt highlights an 82% response rate and 88% non-progression rate at nine months in heavily pretreated patients receiving its PRMT5 inhibitor. The opportunity concerns an MTAP-deleted subset, perhaps 30–40% of patients; he calls the results “game-changing” and attributes the stock decline entirely to selling the news.
- China licensing remains active while proposed Treasury restrictions could disadvantage venture-backed company creation. Garabedian cites Roche’s 400 million upfront deal with 15 billion in headline “biobucks” and Gilead’s 1.3 billion upfront oral-peptide IL-23 transaction. His concern is conditional: rules that burden venture investment more than direct licensing could give multinational pharma another reason to “bypass biotech.”
- The 2031 debate centers on delivery, commercial execution, and an unresolved AI timetable. Schmidt hopes genetic medicines become commercially successful, first with AATD and Beam’s program; Loncar favors brain shuttles and degraders. Garabedian expects a recognizable industry with AI falling short of its current hype, while Mortazavi argues hypothesis generation and outsourced synthesis could shift value toward clinical operations: “do the trial on time, right patient population, get the result.”
Deep dive
1. Moderna’s valuation reset obscures a stronger clinical story
Fazeli’s starting point is the valuation: Moderna approached $100 billion, roughly $10 billion above Sanofi, against expected annual revenue of $2.2–2.3 billion. The cancer-vaccine expectations embedded in that price were enormous. “You needed absolute perfection,” he says, while questioning whether investors were searching for fundamental explanations for what might simply be “traveling and arriving.”
The competitive objection was already known, Fazeli argues. NADINA’s two preoperative cycles of ipilimumab and nivolumab produced better recurrence-risk reduction than the vaccine trial, in his comparison. The regimen is included in US guidelines and is becoming reimbursed in Europe, even though Bristol Myers Squibb has never filed it. That existing competition suddenly became a profit-taking rationale after Moderna’s roughly 200–400% rise, depending on the starting point.
Loncar’s pushback is worth keeping: “I almost dispute the context of the question.” Moderna traded around $150 for a month after the August success announcement; the subsequent $250 price was an overheated reference point. After the selloff, it remained about $50 and tens of billions of dollars above the earlier baseline. Knowing the actual data made medical success and substantial sales “a stronger yes.”
Fazeli leaves the broader vaccine opportunity open. Kidney-cancer results are coming, while a pancreatic-cancer poster showed T-cell induction in 19 of 20 patients despite that being a “cold tumor.” He explicitly stops short of calling this “a big, big win.” The observation supplies another angle on the platform, rather than establishing a clinical outcome.
2. Positioning and options can overwhelm the fundamental discussion
Schimmer describes a “bearish biotech tape,” partly masked by Moderna. Schmidt adds that diagnostic companies in the XBI are also meaningfully outperforming, masking the underlying weakness. He lists interest rates, upcoming midterms, AI concerns, lack of M&A, and negative catalysts as possible explanations. He sees generalists rotating out of biotech and, to some extent, tech, and into Moderna and a couple of AI names. The XBI is in an unusually challenging setup, but fundamentals still seem strong; he says the sector is well positioned—more profitable, revenue-generating, and appealing to generalists—provided the midterms don’t revive drug-pricing concerns.
Gline carefully labels the widely discussed squeeze explanation an “elaborate conspiracy theory,” whose truth he does not know. Moderna shorts were allegedly forced to reduce both short and long exposure, selling good stocks and buying more Moderna and other names they were short; that drove prices further apart. Moderna’s growing benchmark weight then prompted long-only asset managers to buy it, driving the price up further. His complaint is that headlines instead imply prices continuously reflect considered assessments of clinical data. Such technical noise adds another difficulty for operators.
Schmidt says sector-wide “degrossing” is being discussed this way for the first time in his experience. Expanding, neutral-weighted platform funds may add little net capital while generating large swings. An unidentified co-host extends the account: heavily shorted Iovance and Twist rose as pod funds’ longs fell, and structural issues may now rival fundamentals. That speaker says they don’t know whether the explanation is true, but it “feels like” the best explanation for the valuation swings.
Loncar adds a different distortion: “too many people own options and not stocks.” XBI began the year at 108 and reached 150, yet normal pauses become crises for holders of decaying options. Abivax illustrates the problem: investors betting on a particular acquisition month can lose everything while owning exposure to an exceptionally successful stock. Those incentives “poison” the discussion because prices must keep rising on the holder’s timetable.
3. Strong annual activity coexists with a difficult quarter
Garabedian reconciles Endpoints’ optimistic sentiment readings with today’s difficult market through survey timing. Every constituency was well above the index’s 100 level, but fieldwork ran from mid-August through September 15, reflecting a strong Q2 for M&A, IPOs, and XBI. He notes that the Fed raised interest rates immediately afterward. Q3 subsequently brought weaker M&A, flat XBI performance, and questions about whether the IPO window remained meaningfully open.
His prediction is a return to a healthy market, rather than the beginning of another prolonged downturn. “Modulate our expectations” quarter to quarter, he urges: reverse-merger PIPEs, IPOs, valuations, and acquisitions still make this one of biotech’s best years in a long time. A co-host who had just attended Forbion’s 20th-anniversary gathering in Amsterdam adds its 2.3 billion raise and an engaged LP audience as evidence of interest in science, while noting that wars, energy issues, tariffs, and MFN create external volatility.
Zohar says bankers and senior pharma executives continue working on deals, including a couple of potentially substantial announcements: it is “not pencils down by any means.” Her caveat is that falling share prices can leave boards seeking premiums buyers will not pay. She cites Stifel’s projection that 2026 could become biotech’s second-most-active M&A year, behind 2019’s two mega-mergers, with an unprecedented patent cliff sustaining pipeline demand.
4. Silence’s sale followed painful decisions and a decisive indication switch
Mortazavi joined Silence around mid-2012 at a £5 million AIM market capitalization, betting on foundational siRNA-chemistry IP. Alnylam’s human proof of concept with patisiran, and the roughly $600 million market-cap increase he recalls that day, supplied fortunate validation. By 2015, Silence raised £50 million, an astonishing UK financing in his telling. His advice about the journey: “Don’t try this at home, kids.”
His family’s experience of leukemia treatment and stem-cell transplantation sharpened his objection to advancing Atu027, a pancreatic-cancer program already in Phase Ib. Despite preparations for manufacturing and Phase II, he stopped it: patients deserved the best chance. Silence then benchmarked Alnylam’s GalNAc delivery, rejected its own lipid-nanoparticle approach as unworkable, and rebuilt around LPA and TMPRSS6. The share-price collapse made this “the ultimate game of Snakes and Ladders.”
To extend runway, Silence bought 10% of Arrowhead in 2016 after its shares fell roughly 90% and traded at a 70% discount to cash. Mortazavi believed Arrowhead’s GalNAc technology was a couple of years ahead. Selling at a profit funded survival, although he reckons retaining the stake would have made it worth $900 million within around four or five months. “Would I do that today? I’m not sure.”
Mortazavi credits Laura Rocco Alonso, Ian Ross, and subsequent management, especially whoever redirected TMPRSS6 from MDS and beta thalassemia into PV. That was “one of the best biotech corporate decisions ever made,” he says, and probably explains most of Merck KGaA’s announced 1.3 billion cash acquisition, at approximately a 130% premium. His account ends with a “team effort,” rather than a single-founder victory.
5. Execution drives progress while public CEOs shape the industry’s reputation
Mortazavi notes that Silence had no CEO in the year before the sale and calls platform biotechs “hedge funds in disguise.” Gline says a CEO could be dispensable: biotech is a “game of inches” driven by people close to the work. His “wood chipper” comment came in a STAT discussion with Adam Feuerstein about AI’s eventual impact on pharma; his point was how hard development is. He cited a viral report of a weak scorpion-antivenom binder and a post saying an actual treatment could still be ten years away. Garabedian framed the metaphor as a warning to younger tech-bio entrants not to assume drug development will be easy.
Gline praises Dave Ricks’ direct participation on Twitter, while allowing that he could be wrong in thinking Ricks writes the posts himself. Loncar says he can confirm that and that neither lawyers nor communications staff review them. His Ricks interview drew two dominant reactions: he seemed nice and knew the technical material. Ten to twenty minutes of video made an executive people knew by title feel like a person.
Loncar calls compliance excuses for avoiding public engagement “total nonsense” and wants more executives participating. Another co-host agrees that direct engagement can humanize pharma, but calls social media a minefield, including legal considerations and the risk of being dragged into exchanges. The point is practical: show that pharma leaders are ordinary people who care about patients, counterbalancing advertising and negative headlines.
Gline estimates Abivax chatter on Twitter outpaces discussion in his private investor settings “100 to 1.” He calls its IBD data “unquestionably super impressive,” but focuses on the unresolved launch question if acquisition never comes. Management, pharma buyers, and public commentators may assess independent commercialization very differently. Ricks’ joke about tracked pharma jets captured how acquisition speculation dominates that public conversation.
6. Tango’s pancreatic-cancer results stand out despite the share-price reaction
Schmidt highlights Tango’s PRMT5 inhibitor in very refractory third- and fourth-line pancreatic cancer: an 82% response rate and 88% non-progression rate at nine months. The relevant MTAP-deleted population is a subset, perhaps 30–40% of patients. He calls this “some of the best data I’ve ever seen” in his years covering oncology and a massive potential change for patients with that mutation.
Shares nevertheless fell. Schmidt attributes that entirely to “sell on the news,” connecting the reaction to the earlier discussion of market dysfunction. He considers it a “short-term blip” within a positive long-term trajectory.
7. China licensing could strengthen pharma’s advantage over venture formation
Garabedian cites Roche’s China deal at 400 million upfront and 15 billion in “biobucks,” alongside rationalization of its earlier pipeline and emphasis on Phase III assets. Gilead announced 1.3 billion upfront for an oral-peptide IL-23 drug; Lilly also licensed oral-delivery technology. His point is the continuing intensity of pharma’s direct China activity, despite the surrounding policy uncertainty.
The proposed Treasury language, still subject to public input, appears more punitive toward venture investment and China-derived new-company creation than direct pharma licensing, Garabedian argues. That asymmetry could advantage multinational buyers such as Roche and Novartis. The investment question remains open: will pharma “bypass biotech” and source directly from China, reducing its reliance on acquiring US companies? The eventual details matter.
8. The Sabatini discussion centers on reputational damage before disputes conclude
Garabedian reports a $6 million defamation judgment for Sabatini against Knouse after institutional claims were dismissed on all sides. He says Knouse plans to countersue and appeal, so the dispute remains unresolved: “There are no winners in this.” Garabedian also says Sabatini was recruited by a female NYU faculty member, but public feedback was so strong that the move did not happen. His reason for revisiting the story is that audiences often retain the original headline without following subsequent proceedings.
Zohar recalls Ram Sasisekharan as another case in which, in her account, damaging accusations proved untrue. She urges institutions to be careful about public statements before allegations are established, given reputations built over decades. Garabedian extends the caution to listeners: avoid quick conclusions and retain the principle of “innocent until proven guilty.”
9. The next cycle’s bets combine commercial discipline with new delivery technologies
Schimmer’s biggest change is biotech offering generalists real profitability and bottom-line growth, helped by higher launch prices; Gline likewise celebrates successful independent launches. Garabedian highlights replacement capital from Forbion, Catalio, and corporate venture investors as crossover financing receded. He also sees broader acquisition participation and therapeutic coverage, plus healthier cost discipline through leaner teams, fractional executives, and outsourcing.
Schmidt is surprised by the speed of the asset-centric shift. Five years ago, platforms and internal research dominated discussion; now, among drug-focused companies, he sees “almost none” doing truly innovative in-house research, with molecules sourced from pharma or China. His forward hope is commercially successful genetic medicine through better delivery, cost, convenience, safety, and efficacy, first with AATD and Beam’s program.
Fazeli expected COVID to encourage anti-infective investment; it went “completely the opposite direction.” For 2031, he hopes for progress in difficult cancers, including GBM, and neurological disease. Loncar singles out brain shuttles for more efficient brain delivery and degraders as a “whole new mega class of medicines.” Kymera’s STAT6 program excites him, but his bet spans the modality.
Garabedian expects 2031 biotech to remain recognizable, with AI not fully meeting current hype; Gline jokes it will still be “about to change biotech.” Mortazavi’s competing vision is living-room GalNAc-siRNA design, Claude or ChatGPT target selection, and connection to WuXi in China. If hypotheses become abundant, he thinks clinical operations become the key asset: “do the trial on time, right patient population, get the result.”