Latest / BioSpace / Q2 earnings underway, FDA’s CRL kerfuffle, IPOs full speed ahead in H2
Transcript
- Jef: Hello, and welcome to Biospaces the Weekly. I'm your host, Jeff Axt. We are just entering second quarter earnings season, so we'll preview some updates that we'll be looking out for there. Plus, Eli Lilly just handed the psychedelic space its greatest validation yet with a multi-billion dollar purchase of a tie Beckley. We'll also provide some updates to the FDA's ongoing initiative to publish completely response letters. This is an effort that has faced legal questions. and finally we'll take a look at the latest biotechs looking to take advantage of the now wide open IPO window. Let's get started. Hi guys, how are you doing? Anybody watch the World Cup final on Sunday? Heather: Hi, I I I started watching it at about five o'clock Eastern when I thought it would be the last five minutes of the game. I ended up watching it for an hour and a half, I think. Yeah. Jef: Yeah. Right. That extra time was pretty critical. And that's of course when all the excitement happened after basically a stalemate, although all the momentum was in Spain's favor the whole time. Heather: Right. I saw a couple of awesome goal not goals, sorry, they were blocked goals. A couple of awesome saves, which was which was pretty exciting. Jef: Yeah, that Argentine goalie did his job, that's for sure. Although Argentina didn't get any shots on goal. Although I have questions about what defines a shot on goal, 'cause I saw a couple of things I would have called shots, but they weren't being marked as such. So I don't know the details there. I'm not a I'm not a soccer super fan. I watched when World Cup comes around every four years. Heather: Mm, gabby: This was the first game that I watched out of like all the games and it was a good one, honestly. So I was I always kind of root for an underdog, but I'm not very vested in soccer. Jef: Yeah, I guess Argentina was the underdog, but with Messi I think, you know, that can be debated. But certainly Spain was the dominant team and I'm glad they walked away with the victory for that reason alone. Heather: When I was watching them, I was just thinking every time somebody hit the ball with their head, I was like, You guys are gonna have massive concussions. I mean, this is gonna be really bad. Jef: No, the problem is when they hit heads with each other. That's a problem. gabby: I turned. Heather: Okay, that's even worse. Yeah. gabby: I know, I turned to my friend and I was like, Do you think they have the same CTE rates as football? and she was like, I don't think so, honestly. Heather: I pose the same question. Jef: would doubt it, but it's a good question. Heather: I mean I guess soccer balls aren't that hard, but I mean if if it's coming at you really fast and you smash it with your head, I I think that's gotta be hard enough. Jef: Not as hard as the ground though, which is what football players are hitting over and over again. Heather: that is true, yeah. Jef: All right, well, a little bit of soccer fun, but we will move on to biopharma. Let's start with introductions. Gabby, why don't you g get us started today? gabby: Yeah, I'm Gabrielle Mason, senior editor, and I curate our manufacturing brief, which goes out every week on Tuesday. And then I also curate our daily brief, Gene Pool. Jef: And Heather? Heather: And I am Heather McKenzie, senior editor, and I put together Clinica Space, which hits your inboxes every Monday. Jef: And once again, I am Jeff Axt, managing editor. We are again short, Annalie Armstrong. She's the tail end of a long family vacation. We hope she's having a great time and hope she hurries back for all of this earnings that's coming our way. But in her absence, I will put in a plug for BioFarm Executive every Wednesday on the business dealings. So it really targeted towards that C-suite. Definitely check that out and subscribe. So, like I said, earnings is coming our way. So we did have JJ report last week. They're always first to kick it off. Novartis just reported on Tuesday, and Roche is also coming this week. But Hell Week is next week. And like I said, we will be very glad to have Annalie back. She looks forward to it in a way that none of us do. but we will have lots and lots next week, and then a few more the week after. But next week we've got AstraZeneca, GSK, Biogen, Sinofi, BMS, and there are more. So all coming to you next week. We did last week publish an earnings preview with things to watch. So let's just run through a few of those. What's top of mind for you guys, Heather? Heather: Well, I'm really watching for AB. so they're they're really interesting. They're they've made mention a number of times about their their efforts to diversify. but still analysts are most eager for updates on their Apogee acquisition. just a reminder, that last month AB agreed to pay nearly eleven billion dollars for Apogee and its lead inflammatory asset. AVIA is hoping to complement its existing immunology blockbusters, Skyrizi and Rinvoc. so analysts are still you know, this is they still call AVIA an immunology company, which it very much is. and they're also interested in hearing about how the March approval of J and J's plaxoriasis pill icotide is changing the competitive dynamics in that space. Jef: Awesome, yeah, all good things to watch out for. We know that Sky Sky Rizzy and Ringbok have really done the lion share of the work in helping Abby survive the Humera Patentcliff, but they're looking to add to it for sure. Gabby, what are you looking forward to? gabby: Yeah, then I'll be on the Amgen call and they will certainly be asked about Tabnios, which, you know, the FDA other regulatory bodies are looking to have pulled from the market. So we've been covering the saga and the FDA has raised questions about the data that it underpinned the rare disease drugs approval. The New England Journal recently, you know, retracted a study on Tavmeo. So Amgen though has consistently stood by its drugs. So it will be I'm very interested to see, you know, how they'll answer investor questions. Jef: Yeah, for sure gonna be some questions on that for them. All right. well, I'll just throw out Lily. Of course, everybody's watching Lily. It's probably the most watched, probably the one we got the most analyst notes on already. We all wanna see those numbers. You know, analysts expect continued impressive sales, expecting quarter over Quarter growth on the trazepotide products, setbound for obesity and mandaro for diabetes. And this will also be the first quarter that we get sales numbers for Lily's new obesity pill, Foundadeo, which is of course competing against Nova Nordis or Obagovie, which had a pretty sensational launch. So we want to see if Foundadeo's launch, you know, stacks up and how they're doing. So definitely keep an eye out for that. Over the next couple of weeks, all of those companies will be reporting and Biospace will have it all for you. Moving on now to one of my favorite topics, which we've had the pleasure of talking about several times in the last month, psychedelics. So I thought, you know, we had the big news with Compass and Definium, you know, reporting positive clinical readouts. Everybody's really excited about the space. FDA gave us some finalized guidance. These are all things we've talked about over the last couple of weeks. And again, psychedelics is having a moment. And then last Thursday hit, and psychedelics is really having a moment because Eli Lilly is offering nearly $4 billion to buy out a Thai Beck. Heather: Lily will pay $2.8 billion upfront to purchase a Type Eckley, which is developing a psychedelic compound called 5MEO DMT. and that's for treatment resistant depression. they're also attacking on a contingent value right that could add another one billion to the total deal value. HC Wainwright said in a note on Monday that the deal is quote. The clear strategic validation to date of psychedelics and interventional psychiatry as an emerging pharmaceutical category. So that was that was a pretty definitive statement. So this deal also follows ABI's $1.2 billion acquisition of Gilgamesh Pharmaceuticals Major Depressive Disorder Canada. That deal closed in October last year, and in March of this year, Atsuka Pharmaceutical. picked up Transcend Therapeutics for up to one point two billion. So it's kind of just the the cherry on the top of all these all these deals and it it's really kind of making a big statement right now to analysts. Jef: Yeah, I remember when Abby and Gilgamesh struck that deal and were like, Big Pharma's, you know, maybe paying attention buying in to psychedelics. But now with, you know, Atsuka and Lily, I guess the space is starting to get de-risked and not that big pharma's really buying in. Heather: Yeah, well, at Waimerite analysts made it clear, however, that that the Lilly deal should not be seen as quote, supporting a uniform re-rating of every psychedelic developer. So the the analysts indicated that phase three short duration psychedelics were of particular interest. And, you know, for sure, a a typeley's lead asset led to an antidepressant response in 66.7% of patients by the second day in a phase two a trial. And then Gilgamesh, Gilgamesh's ADB acquired asset is also short-acting. So this really does seem to be what the big companies are going for. In terms of indications, depression seems to be the target du jour, especially treatment-resistant depression, which has an incredibly high unmet need. Then again, transcends methylone treatment is in development for PTSD. And that was awarded one of three commissioners national priority vouchers in April. Jef: Yeah, I just love watching this space evolve. I mean, there's been a lot of back and forth, false starts. So maybe, you I bet that's actually really common with novel modalities. But this one in particular, with most of these drugs being listed as Schedule 1A, we've talked about too the fact that if and when we do get one of these on the market, it will be a delayed launch likely, because these drugs have to be rescheduled. But I just love watching the excitement build here and it's really driven by the efficacy that these drugs have and really hard to treat mental disorder. So really exciting developments. Glad to see that Lily is buying into this. We've talked a lot about Lily keeping the that GLP money funneled back into the industry and love to see it towards psychedelics. So one to watch. We have a couple more stories. What are we going to see in the fall and into next year in terms of readouts and upcoming catalysts for this space? So definitely stay tuned to Biospace for all that coverage. But for now, we will move on from my favorite topic to. A lesser favorite topic of mine, but certainly one that we've covered a lot, and that's the FDA's initiative to release completely complete response letters, so drug rejections. So a couple of weeks ago, news broke that the FDA had paused this initiative to publish complete response letters in real time. This followed a citizen position from an unnamed farmer from back in April. But just a few days after Media Outlets reported the pause, the FDA dumped a fresh cache of rejections on its online portal. So at this point it's completely unclear to me and to folks that we've spoken to what the FDA's approach to publishing CRLs is. And experts continue to question the legality of the program 'cause they have since they first announced it last year. Heather: Yeah, it was funny. We had assigned this article already that that we just published on Monday. And and then I saw the news come across, the the FDA has published more CRLs. I'm like, okay, so we sent that on to Nick. But the so the FDA first announced this new policy last July when they published more than 200 complete response letters from their i c archive. Most of those were between from between twenty twenty and twenty twenty four, but some were from a little bit earlier. So this move was an attempt to quote embrace radical transparency, according to the agency at the time, which is another topic we've talked about quite a bit on this podcast. So the policy has gotten really rave reviews from biopharma analysts and the investment community as they say that companies have become more forthcoming about the details of of agency decisions in their own disclosures. it's maybe been less popular with some biopharma companies who used to maybe be able to not do that. Jef: Yeah, exactly. So this has been really top of mind for me. I I attended at Bio in San Diego last month month, I attended a session on this radical transparency push from the FDA. And CRLs was definitely something that was discussed. the panelists who were lawyers and former FDA staffers for the most part had their concerns. But what you just said, this idea of ensuring that companies are more transparent about the reasons for the rejections. That is the reason to do this. And in particular, Elizabeth Youngman, she's a partner at Hogan Levels now. She was former FDA chiefs of chief of staff. She would talk about, she talked in the session about how it would drive FDA staffers crazy when they would get see these press releases from companies after receiving a CRL that weren't quite on point with, you know, weren't quite in agreement, not exactly in agreement with what the FDA had said. So for that reason, she she said, she and her FDA colleagues had. Talked about this idea of releasing CRL. So this is not something the FDA is just brand new and this new administration has come to this idea. It's an idea that has been discussed, but an idea that they haven't moved forward with for good reason. And so she elaborated on some of those concerns. One is apparently we can't, you know, some, not all companies will declare when they have filed with the FDA. And so if there's no public disclosure that an application is even in with the agency, the agency can't disclose that by releasing the CRL. So that's a problem. But even in the more common case where you know most companies do let you know, you know, we've got an application in with the FDA, they'll let you know if you've if they've got a decision date coming up. Even in those cases, it's really tricky because they've got to redact all of the proprietary information from the CRO before publishing. So the FDA is doing that. They, you know, these CRLs that we're getting are partially redacted. But the concern here is how well are these redactions done? And is there any you know, commercial information that shouldn't be released that is being released. And so back in the day when Youngman was at FDA and she and her colleagues were discussing this, they decided the way that they would have to move forward with this would be to give companies a chance to respond to the redacted CRL and make sure they didn't miss anything and potentially request for additional redactions as needed. And the FDA just simply didn't have the resources to do that. And it's a really high risk too, because not just the FDA, but the actual FDA staffer who did the redactions could be Personally liable if some of this information got out. So all of that risk aside, you know, all that risk in consideration, the FDA decided not to move forward that initiative under previous administration. So Youngman, you know, she made the comment that this administration has a greater appetite for risk. So maybe that's, you know, okay. They also solved the resourcing problem of just not giving companies the chance to respond. So all of that is, you know, good background to understand what the current FDA has chosen to do. Where I'm really confused is what is the current FDA doing right now? Because we thought there was a pause. There was the citizens' position challenging the legality of this practice. The FDA admitted to media outlets that they had paused the program, and then they released another 14 CRLs a few days later. So I think we need a little bit more transparency for this radical transparency program they have. Heather: Yeah, this is one of those gray areas where there are both pros and cons. There are there are a lot of pros for it, but then you know, there there are the competitive variables that you've gotta watch. And I think that's a great idea, the the response to the redaction idea that that might make everybody happy. but yeah, I really would be curious to see if there was some court decision that came down between like Wednesday and Friday last week. or The week before, I'm not sure. I I'm losing track of time. But but yeah, it's a it's a really there's a lot of lot of gray in this. Jef: Absolutely. All right, so let's turn our attentions now to the public markets. We've talked quite a bit about the uptick in IPOs this year. And Gabby, you just put out a feature last week on the first half totals, which have already more than doubled 2025 IPOs. So we're definitely moving in the right direction. And now, just three weeks into the second half, this trend is showing no signs of slowing. We have several more biotechs that have announced their intention to go public. gabby: Yeah, there's a ton going on. So for the first half of the year, 18 biotechs went public, which already significantly, you know, surpasses 2025's eight IPOs, which was for the entire year. so this year's IPOs already, two of them have broke the record for highest fundraise in the sector. first it was Kylera, the obesity drug maker, in April with 625 million. And then not long after, Parabolis Medicines went public with 670 million. So previously Moderna had held that record. and that was for its 600 million IPO back in 2018. since the high highs of COVID-19, when almost 100 IPOs were recorded in 2021, the most debuts occurred in 2024 for our industry, and that was at 19 IPOs. So I'm, you know, fairly confident 2026 will surpass that with the 18 in the first half of the year, and then seven biotechs already filing plans for an IPO in the second half of the year. So that's a remarkable number. The two most recent of those filings being cancer focused Blossom Hill and non-opioid pain drug developer Latigo. A big Jef: I'll just interject Latigo was one of Biospace's next gen companies, last year in twenty twenty five. So we have you know, had our eyes on this one for a couple of years already. gabby: Yes, we've been watching and now you know they're ready, it appears, to debut on the public markets. a big kind of difference in these planned IPOs that we've seen, the recent ones, versus the ones that were completed in the first half of the year is the type of company and assets that they have. We're seeing earlier stage companies with less de-risk assets file. So a good example of that is the genetic medicine biotech scribe therapeutics. They just entered clinical trials and they're planning to go public. they have recently shared in an SEC document that they hope to raise 96 million. So obviously, you know, that's much lower than some of our kind of record breakers of the first half. But something we've seen is a lot of the later stage companies Have debuted with upsize values. So it will be interesting to see, if the same kind of holds true for earlier stage companies like Scribe. given, you know, all of this IPO activity, we wanted to launch a tracker that gives a clearer picture of how the companies are faring after they list. There's a ton of coverage, kind of fanfare leading up to that moment, and then I feel like it kind of drops off. So We wanted to provide, you know, a continued step snapshot of public performances. We did launch a dashboard last week, and it will be updated every Wednesday with the performances of public biotechs based on their first day stock price compared to now what they're trading at. So definitely check that out on our site. It's under 2026 IPO stock track. Jef: Yeah, you were talking about wanting to see how Scribe would act like how much money they'd actually get when they debuted, because of the other the later stage companies were upsize. I'm really curious how they perform once on the market. We, you know, you did that story and you've tracked a lot of these veridermis being the one that's like six hundred some percent up since it debuted in February. But most of them, a lot of the IPOs this year have done really well. But again, a lot of those are quite later stage. They've got clinical readouts coming. So I'm excited to see these earlier stage companies announcing plans to go public, but I'm really curious how they do, how much money they raise and how they do once they're on the market. gabby: Yeah, you raise such a great point. They have clinical milestones, these later stage companies coming up right away, or even planned around the IPOs planned around them. So it will be definitely interesting to see a very early stage company and how it fares. I think that will be a true test of how well this IPO market is doing. Jef: Right. Absolutely. All right. Well, finally, a little preview of Biofarm and Executive this week and Annalise's absence. We've got a really great feature on AstraZeneca's ambitious goal of hitting 80 billion in revenue by 2030. So, you know, we've been tracking, you know, covering that goal and the various catalysts that could potentially get AstraZeneca to that goal over the past year or two, however long since they announced it. But this is specifically pertains, you'll recall a couple of weeks ago that AstraZeneca announced the phase three failure of its Ionis-partnered drug Wainua for ATTRCM. That's Trans theretin mediated amyloid cardiomyopathy. So we call this ATTRCM to save me the trouble. this was huge news at the time. It had implications for a lot of other companies in the ATTR space, but I was really curious, what does this mean for AstraZeneca and its revenue goal, this 80 billion by 2030? So analysts were already a little bit skeptical that the company would hit this $80 billion number. AstraZeneca has stood by it. And even after the Winua failure in ATT RCM, they say, you know, it they admitted that it decreases headroom, but they still say they're confident in this 2030 goal. So you can read all about that feature that's out in Biospace Wednesday, the day this podcast is released. Heather: And this the this topic was actually so interesting and so so hot that it spawned another piece that we have coming up, taking a a deep dive into the ATTR CM and ATTR polyneuropathy spaces. so most assets in development are being being studied for both. So this piece will look at why an asset like Wainua might work in H A T R P N but but not carry across to cardiomyopathy. we'll also look at some of the other companies in the space like Ionis and Bridge Bio and Al Nylum. Jef: Awesome. Well, yeah, I had forgotten about that one. Thanks for that update. It's definitely a hot space that we'll be tracking closely. So stay tuned for more on that. And of course, stay tuned for the onslaught of updates we'll have coming out from earnings that are coming our way. And be sure to tune in next week for the discussion. Thanks for listening.