Summary

Sentiment has recovered to “mixed to positive” — but it’s fund-by-fund. Tim Opler’s read: XBI is down YTD yet “up massively since Liberation Day” (April 8), with this year’s IPO cohort up ~50–60% and follow-ons working, even as private VCs “can have a company that discovered the Lost Dutchman’s Gold Mine under your headquarters and still struggle to get money raised.”
China is simultaneously the hottest trade and the biggest structural threat. China biotech rose almost 40% last month on rumored “$500 million plus” pharma deals, no Trump uncertainty and no rate pressure; but Daphne Zohar says US smid-caps now carry “a huge discount in areas where the China threat is real” — and policy could flip it: “all those pharma companies doing deals with China are going to drop those assets like hot potatoes soon.”
FDA uncertainty is the new tail risk despite Makary and Prasad “saying all the right things.” Endpoints, citing multiple sources and with initially inferential reporting, described Makary as having told reviewers to issue KalVista a CRL on its oral HAE drug; Paul Matteis, who covers the stock, still sees approval as “very likely” but asks whether a commissioner ordering a CRL over delay optics “passes the smell test” — with a year-plus of subjective, flexibility-dependent reviews ahead.
ADA went to Lilly. Sam Fazeli: CagriSema’s weight-loss composition (fat vs muscle) came in “even worse than Zepbound,” amycretin’s GI rates were “high — I mean high,” while orforglipron’s first oral details showed manageable safety and decent efficacy; Zepbound added 160k prescriptions this year to 366k total vs Wegovy’s 16k gain to 246k.
Bimagrumab pushed fat’s share of combo weight loss above 90%, versus ~70% on semaglutide alone. Tess Cameron flagged additive activin-on-myostatin biology and Sam a surprise 83% hsCRP drop (vs 59% on Wegovy alone) — but Sam doubts commercial tolerance of the side effects in a cosmetic market: “I can’t imagine any level of acne that would be acceptable.”
The tape rewarded prevention and punished psychiatry. Cidara roughly doubled on 76% flu-risk reduction; Nektar’s REZPEG jumped ~200% on an atopic-derm Phase 2b win (“Dupixent may have a new competitor”); COMPASS fell ~40% despite a positive psilocybin Phase 3 — Paul’s contrarian view: investors “grossly overrate efficacy and effect sizes on these scales,” noting Spravato will do ~$1.5B this year having failed half its trials.
DMD is the regulatory barometer. Sam says Peter Marks overruled reviewers and pushed Elevidys to all patients, including the non-ambulatory group; Sarepta’s second death — both deaths were in non-ambulatory patients — left the stock near $17 versus almost $170 a year ago. Capricor’s canceled adcom is what investors are watching for true FDA flexibility, while reports around Nicole Verdun’s exit remain qualified and disputed.
Deal flow stayed creative even as capital stays scarce. Royalty Pharma put $2B (part royalty, part debt) behind RevMed’s RAS pipeline so biotechs can “stay independent”; Novo dumped Hims, which Sam called “basically a parasite” and “a shady company overall”; and Daphne relayed a conference claim that Nvidia’s market cap now exceeds the top 10 pharmas combined, with Lilly driving all of big pharma’s cap growth.

Deep dive

1. Sentiment depends on which planet you land on

Tim’s framing from his weekly report: like old Star Trek, where “Captain Kirk would land on a different planet every week… sometimes the planets were good and sometimes they weren’t.” XBI is down for the year but up massively since Liberation Day (April 8), the average IPO from earlier this year is up ~50–60% since, and follow-ons are performing — “both IPOs and follow-ons are performing well” is the key shift.
At the Royalty Pharma event he and Tess attended, Samsara’s Srinivas Akkaraju was “super negative” — private VC fundraising is brutal, and Chris’s gloss: VCs sitting on 15–20 privates know they won’t take them all public. Fidelity’s Rajiv Kaul and Wellington’s Rebecca Sykes, with funding bases that ride the cycle, were optimistic (especially on ADA) but “I wouldn’t describe them as rosy either.”
On China’s ~40% monthly rally: “whatever we don’t have, they’ve got right now” — no Trump uncertainty, no high rates, big pharma buying in, and Chinese investors “all talk to each other using this thing called WeChat.” Sam’s addition: China has no Mag 7 (Nvidia “knocking on $4 trillion”) absorbing capital, and biotech there is a younger, less picked-over sector.

2. Daphne’s warning: the China trade may be over-hyped — and it’s crushing US smid-caps

Her mechanism: a US company spends years and money on a novel target; China quickly advances a copycat and pharma pays “a fraction” of the US price. VCs are now asset-shopping there too, and Umer Raffat is reportedly taking public investors on a China tour. Public biotech CEOs tell her this is one of their biggest problems — investors “applying a huge discount in areas where the China threat is real.”
The counterweight: proposals under discussion include incentives for US deals and penalties for advancing China assets. One quote she heard: “all those pharma companies doing deals with China are going to drop those assets like hot potatoes soon” — she won’t put full weight on it, but concludes “there’s some hype here” and dealmakers should apply “a balanced lens.”

3. BIO and the listening tour: earnest regulators, a one-card idea, and a policy wish-list

BIO Boston drew ~22,000, notably ~50% international from 70 countries; the vibe was “mixed” under the capital drought, MFN, tariffs and FDA uncertainty. Positives: RFK Jr.’s post that “MAHA also includes MABA — make American biotech accelerate,” calling out edges given to “foreign interests and large incumbents” (Daphne’s read: negative for China assets and big pharma), and Makary’s new National Priority Voucher — intriguing, but criteria and process still opaque.
BIO’s legislative priorities in the reconciliation bill: immediate R&D tax deduction (ending the “ridiculous situation” where partner income is taxable against amortized R&D), SBIR reauthorization by end-September, watching for an MFN amendment, pediatric priority review voucher reauthorization, and keeping the Orphan Cures Act in — “we heard that might be at risk of being removed.”
Daphne met Makary and Prasad on the tour: “earnest, very well informed, motivated to work with industry,” and the in-person Prasad “is very different from the one some of us have gotten to know on social media.” Over 100 CEOs got a minute each; her tactical example is a “one card or two card system” letting each sponsor request an immediate response or clarification during an FDA interaction “while a company’s burning cash.”

4. The KalVista CRL report: politics at FDA, or a new commissioner adjudicating disputes?

Endpoints, citing multiple sources, reported that Makary had essentially told the review team to issue KalVista a CRL for its oral acute HAE therapy — a few weeks after the micro-cap disclosed that the FDA would not meet its PDUFA goal date because of “resource constraints.” The initial reporting was inferential, but Paul, who covers it, says the data “really aren’t that controversial,” labeling talks were deep, and “we still think that drug is very likely to get approved” — while a politically driven CRL is “probably even less likely now that that’s been reported.”
His broader unease: investors have become more comfortable with FDA risk outside vaccines because the rare-disease rhetoric “sounds kind of more like Peter Marks than not” — but upcoming reviews hinge on flexibility, and “flexibility is subjective, right?” So the question stands: “where do they stand on the spectrum?”
Chris’s sympathetic take from his Sarepta CEO experience: new leaders inherit teams, displacement is expected, and with “the microscope on” Makary may lean into key decisions rather than absorb blame for letting them play out. He’s likely weighing one side of an internal dispute, not “helicoptering in” on an NDA — “internal debates at the FDA are alive and well.”
The discussion then asks whether it is “believable that an FDA commissioner would actually in effect order a CRL because that’s better than the optics of a delay?… does it actually pass the smell test? But if it is true, that’s certainly disconcerting.”

5. ADA scorecard: “you’d have to agree to give this conference to Lilly”

Sam’s numbers: Zepbound added 160k prescriptions this year to 366k total vs Wegovy’s 16k gain to 246k. CagriSema’s detail disappointed — 22.7% efficacy vs the 25% once suggested, and the fat-versus-muscle split of the loss was “even worse than Zepbound,” undercutting the amylin thesis; the head-to-head REDEFINE 4 reads out in 2026. Amycretin hit 24% placebo-adjusted at 36 weeks, but GI rates were “high — I mean high,” with heart-rate increases beyond Zepbound/Wegovy and dosing questions “essentially unanswered.”
Lilly’s oral orforglipron: “manageable safety, good tolerability, decent efficacy, even some benefits on the cardio metrics.” Novo isn’t finished — the market is big enough for share and growth — “but they do have something to deal with, and that’s their competitive pipeline.”
Elsewhere: Amgen’s MariTide, an antibody designed as a GIP antagonist and GLP-1 agonist, saw “tolerability concerns continue to eclipse the weight loss data,” alongside trial-design questions and KOL criticism. Metsera’s MET-097i, in Sam’s eyes, rivals Lilly’s tirzepatide; it is titration-free with possible monthly dosing, but needs Phase 2b confirmation and is a 2028 story.

6. Bimagrumab: leaner loss, unexpected cardio signal — and the acne problem

Tess on Lilly’s Versanis-acquired myostatin/activin drug atop semaglutide: 48- and 74-week data at 30 mg/kg showed ~7% completer / ~5% placebo-adjusted ITT weight loss, strengthening over time; fat’s share of the loss went from ~70% on semaglutide alone to over 90% on the combo — consistent with Regeneron’s data, and versus Scholar Rock’s myostatin-only readout the activin component “seems to be important.” Open questions: the subQ profile (Lilly’s ongoing trials pair it with Zepbound) and whether patients see “any kind of functional benefit.”
Sam’s surprise: cardiometabolic markers improved beyond fat loss — hsCRP down 83% on combo vs 59% on Wegovy alone, plus adiponectin gains — “something else going on in there which is not just fat loss.” His caveat: “you are trying to lose weight to look good. I can’t imagine any level of acne that would be acceptable… I don’t know if it’s going to be as easy as that when it comes to actual commercial use.”
Chris’s through-line for the space: products can win on efficacy, safety, or combinatorial design — “this is too big of a market to not try to pursue a better or best-in-class.”

7. Novo dumps Hims: “rent seekers,” not innovators — but DTC itself is working

Novo killed the months-old Wegovy partnership, accusing Hims of selling “illegitimate knockoff versions of Wegovy that put patient safety at risk.” Tim thought the deal was weird from day one: Hims’ model is compounded GLP-1s, and it was “literally just selling [semaglutide] for $100 extra per month” versus Novo’s own site — “why are we letting these guys benefit from an affiliation with us?”
Tim defends the channel, though: Lilly CEO Dave Ricks says Lilly Direct sales are “much larger than I would have expected,” and affordable access is “frankly probably good for consumers.” Sam’s blast: no problem with compounding per se during a shortage, but Hims is hypocritical — ads claiming the industry “is designed to keep us sick and stuck” while selling “a me-too version of the same drugs… they’re basically like a parasite… a shady company overall.” Chris invokes Peter Kolchinsky’s label: “rent seekers as opposed to innovators — and that’s a polite term.”

8. Data movers: Cidara doubles, COMPASS punished for winning, Nektar up 200%

Cidara’s flu-prevention drug cut flu risk by up to 76% at the highest dose in healthy unvaccinated adults; stock ran from the low-$20s to the mid/high-$40s. Tess’s backstory: RA led the April 2024 financing for Cidara to reacquire the asset from J&J after J&J deprioritized infectious disease — the appeal being universal protection versus variant-matched vaccines and no reliance on an immune response. “We would still like drugs that help keep us from getting sick.”
COMPASS’s Phase 3 psilocybin in treatment-resistant depression hit, yet the stock fell ~40% on a 3.6-point MADRS difference. Paul’s contrarian frame: cross-trial comparisons mislead (the GH data’s “incredible” effect was at one week; COMPASS measured six), and “investors grossly overrate efficacy and effect sizes on these scales that are really subjective and… just don’t seem to be driving prescribing decisions” — Spravato will do ~$1.5B this year having “failed in half its studies” with a smaller average effect size.
His setup lesson: a catalyst vacuum (next Phase 3 in 2H26) plus the perception psychedelics are “lower probability M&A targets” than a Karuna made this a sell-the-news event — “you have to have investment ratings based on fundamentals… but the market’s the market.”
Nektar’s Lilly-returned REZPEG: a “huge Phase 2b win” in atopic dermatitis via IL-2 Treg stimulation — the drug “really made their point” — stock up ~200% by week’s end, and Tim wonders “if maybe the company’s worth even more still” with $10B-a-year Dupixent in the crosshairs.

9. DMD’s shadow over gene therapy, and a deal-heavy wrap

Sarepta: a second Elevidys death, both non-ambulatory patients; shipments to that population halted, stock near $17 versus almost $170 in June 2024 despite $2B+ expected sales and a $1B+ oligo business, with Avidity and others competing on RNA targeting. Sam’s FDA tie-in: Peter Marks “overruled the reviewers and pushed it for all patients” — perhaps what he’ll “be remembered for” — and Sam wonders whether this dents the newfound cell-and-gene flexibility: “I hope not, because this is partly the agency’s fault.”
Capricor: the adcom was canceled; reporting attributed the decision in part to Prasad’s reservations and discussed Nicole Verdun’s departure, while also citing other possible style-related reasons. Paul calls the departure “on its face unfortunate for the gene therapy space,” since companies saw Verdun as “a really good regulator and partner.” With natural-history-controlled data as the crux, this is “one of the decisions investors are looking to as a barometer of FDA flexibility” — read-across to uniQure.
The tape’s deals: Illumina paying $350M for SomaLogic (acquired for about $50M roughly a year ago, per Sam) — “testament to the increasing importance of multiomics.” Bayer shut BlueRock’s R&D lab (~50 people) while keeping the Phase 3 Parkinson’s trial alive; Tim flags challengers like Kenai in a “big space to watch.” And Royalty Pharma’s $2B part-royalty, part-debt deal for RevMed’s RAS pipeline — the CFO’s thesis is helping biotechs “stay independent and create value longer,” and the neutral stock reaction is itself encouraging: no one “sitting around hoping for a buyout.”
Daphne’s closing stats from the Royalty Pharma conference: Ricks says Lilly is “waiting for the right opportunity” to get back into neuropsych after Prozac/Cymbalta/Zyprexa; and Daphne relayed a conference claim that Nvidia’s market cap exceeds the top 10 pharma companies combined — with all big-pharma market-cap growth driven by Lilly.

Episode 147 - July 11, 2025 Zach Dell - Powering the Future - [Invest Like the Best, EP.434]