Episode 157 - October 3, 2025

Summary

• The Pfizer–Trump deal substantially defuses pharma’s two biggest macro tail risks — “a very draconian most-favored-nation pricing strategy” and the threatened 100% October 1 tariffs — but Brad Loncar cautions that it is not a guarantee of smooth sailing. Sam Fazeli calls it “a win-win and a lose situation,” expects a template for further deals, tallies about $432B in pharma and large-biotech pledges, and expects companies to launch every product first in the U.S. to establish the reference price. Brad calls it “a genius move by Bourla,” who “basically gave away almost nothing” while giving Trump a political victory; Sam sees Europe as the loser.
• Yaron Werber characterizes the XBI breakout as a rotation into biotech rather than a confirmed bull market — but real generalists are finally inbound. He reports calls from “real generalists,” not “the biotech fringe,” rotating on lower-rate expectations and tech-cycle concerns into Ionis, argenx, and UCB. Yaron says the sector is “finally back to value recognition,” while Brad warns that optimism could turn into indiscriminate belief in management teams, market sizes, and political headlines.
• FDA execution risk is front-of-book: Brad Loncar counts four recent CMC-driven CRLs — Biogen, Ultragenyx, Scholar Rock, and Fortress — while George Tidmarsh deleted a LinkedIn post citing Aurinia’s fully approved Lupkynis. The post raised questions about Tidmarsh’s prior relationship with Kevin Tang and Tang Capital, which was Aurinia’s largest shareholder in the last filing. Brian Skorney’s diagnosis is “chaos and inconsistency,” with outcomes increasingly affected by which senior official overturns the review division.
• FDA told IO Biotech it needed another study after its frontline-melanoma vaccine narrowly missed PFS significance at p=0.06. Yaron notes the study was underpowered and very safe on top of Keytruda; Brad says, “I think the FDA made the wrong call,” calling it “an example of p-value worship that’s not in the best interest of science or patients” and a potential accelerated-approval case. The next flexibility test is Exelixis’ zanzalintinib CRC data at ESMO, where most patients enrolled ex-U.S.
• Genmab’s $8B, 41%-premium takeout of Merus for petosemtamab extends five straight weeks of biotech M&A — and competitor Bicara, at roughly one-eighth of Merus’ valuation, jumped almost 50%, versus about 37% for Merus. Brian says Genmab is now “fully levered,” taking on about $430M of annual interest expense and foregone interest income while fighting the Darzalex cliff. Brad’s cautions are uncertain pembrolizumab response rates in this setting and the availability of comparable Chinese bispecifics at potentially much lower cost.
• Data week was ugly but the tape did not care: MoonLake’s sonelokimab failed to differentiate from UCB’s Bimzelx and missed significance on one of two hidradenitis suppurativa Phase 3 studies, sending the stock down more than 85%. Larimar showed skin frataxin above 50% of normal in 10/10 patients at six months and a 2.25-point median mFARS improvement, but 7/39 patients had anaphylaxis. Enanta missed its RSV primary endpoint, yet Brian viewed the clear viral-load reduction, broad metric improvement, and stronger high-risk-subgroup results as potentially partnerable data.
• At ESMO, the key late-breakers are bemarituzumab’s FORTITUDE-101, zanzalintinib plus atezolizumab in CRC, and Akeso’s ivonescimab HARMONi-6 versus Keytruda plus chemotherapy in squamous NSCLC; other watch items include IDEAYA’s darovasertib and Verastem/GenFleet’s KRAS G12D program. For Q3, argenx is expected to be in line, Legend’s Carvykti may be a “smidge light” at mid-teens sequential growth, and COVID-vaccine sales look lower: Brad floated a 50% decline for Moderna and BioNTech, while Sam said he would not go that far and noted Pfizer pricing increased while Moderna’s did not. Launches to watch are Gilead’s lenacapavir PrEP, Vertex’s Journavx, and Neurocrine’s new product alongside Ingrezza.

Deep dive

1. The Pfizer–Trump deal: “a win-win and a lose situation”

• Sam Fazeli frames the Pfizer agreement as the first of several likely template deals between pharma and the administration. It puts to bed “a very draconian most-favored-nation pricing strategy” and the 100% tariffs President Trump had said would begin October 1. Trump gets U.S. manufacturing and jobs; pharma gets more certainty. Sam tallies about $432B in pledges from pharma companies and some large biotechs, including ongoing R&D, capex, and new manufacturing facilities.
• Sam expects companies to launch every product — “not the majority” — first in the U.S. to establish the price and then seek comparable net pricing abroad. He notes that even determining foreign net prices can be difficult: a U.K. physician told him that nobody really knows the prices and that many pharmacies cannot disclose their net prices. He also expects much of the impact to run through Medicaid, Medicare, and potentially direct-to-consumer channels, with the possibility of greater volume.
• Europe is the loser in Sam’s scenario. Payers may raise drug budgets, restrict access more severely while accepting the higher price, or reject a product altogether. The first two outcomes can preserve pharma revenue, with higher margins offsetting lower volume; the last is worst for European systems and patients. Sam leaves specialty-drug treatment under MFN unresolved.
• Brad Loncar calls it “a genius move by Bourla.” Citing Wall Street Journal reporting, he says Albert Bourla and Pfizer negotiated independently rather than through a coordinated industry effort. Bourla’s COVID-era visibility gives him unusual public gravitas among pharma CEOs. Brad’s conclusion: Bourla “basically gave away almost nothing and gave Trump the political victory that he needed,” creating a rare PR win for the industry. He still cautions that the deal is not a guarantee of smooth sailing.
• Sam also wonders whether RFK’s handshake with Bourla means the pressure on mRNA vaccines is easing, while acknowledging that may be wishful thinking.

2. Rotation, not yet a bull market

• Yaron Werber calls the move “a rotation to biotech,” following an awakening to health care as an undervalued sector amid overvalued areas elsewhere. Biotech has been one of health care’s biggest laggards, so he sees at least a reversion toward normality. It is “definitely a two-month bull market relative to where we were,” but still a relative bear market against 2020 levels, with substantial room for valuation recovery.
• Yaron says the change feels real because the desk is receiving calls from “real generalists,” not just biotech specialists. Their rationale is that rates may fall, the technology cycle may be closer to ending, and biotech offers the next risk level and potential alpha. Names they are examining include Ionis, argenx, and UCB.
• Yaron’s preferred description is “finally back to value recognition,” not yet a bull market. His trackers still point toward a flat year for the sector after earlier underperformance.
• Brad Loncar hopes the sector is entering a glass-half-full environment but warns that it could overshoot. Datasets might receive the benefit of every doubt, buyers could believe everything management says, market opportunities could be treated as if “trees grow to the sky,” and political headlines could be dismissed too readily. He says biotech has historically handled the optimism/pessimism line poorly.

3. FDA: a retracted LinkedIn post, an IO Biotech “no,” and four CMC CRLs

• Brian Skorney reviews George Tidmarsh’s LinkedIn post after his appointment to head CDER. Tidmarsh criticized surrogate endpoints and failures to confirm benefit, citing Sarepta’s Exondys 51 and, more unusually, Aurinia’s Lupkynis (voclosporin). Lupkynis has full approval based on a 52-week randomized, placebo-controlled study, making it a questionable example of an unconfirmed clinical benefit based on the public information.
• The post drew attention because Tidmarsh had been CEO of La Jolla Pharmaceutical Company and left in 2019 after Kevin Tang, then La Jolla’s chairman and largest shareholder, was quoted in the departure announcement. Tang Capital was also Aurinia’s largest shareholder in the last filing. Tidmarsh deleted the post, saying it did not reflect the views of the FDA or HHS; Aurinia responded by reiterating Lupkynis’ full approval.
• On IO Biotech, Yaron describes a distinctive IDO/PD-L1 cancer vaccine with striking Phase 1/2 data from an uncontrolled single-center European study. Its controlled Phase 3 frontline-melanoma study missed PFS significance at 0.06, though the result trended favorably, appeared underpowered, and the regimen was very safe on top of Keytruda. Brian says the FDA’s answer was that the company needed another study rather than proceeding.
• Brad’s personal view is that “the FDA made the wrong call.” He regards the result as “an example of p-value worship that’s not in the best interest of science or patients” and a possible accelerated-approval case while a confirmatory study runs. The next potential test of FDA flexibility is Exelixis’ zanzalintinib CRC dataset at ESMO, particularly because most patients enrolled outside the U.S.
• Brad counts four relatively recent CMC-related CRLs in orphan pediatric settings: Biogen, Ultragenyx, Scholar Rock, and Fortress, whose drug was for Menkes disease. He says these are drugs that probably should have been approved and notes that Biogen’s “Ben Roz” is already approved.
• Yaron provides a more equivocal reading of Ultragenyx’s UX111 gene therapy for MPS III Sanfilippo syndrome. It was expected to test Peter Marks’ CBER accelerated-approval pathway, but FDA said the clinical data could support full approval despite being single-arm and based on benefit from baseline rather than a controlled historical comparison. The CRL instead concerned idiosyncratic manufacturing and shipping requirements involving temperature probes.
• Brian’s broader diagnosis is “chaos and inconsistency”: some applications receive enormous flexibility while others receive none. He points to differing views within HHS, including Vinay Prasad’s perceived overregulatory stance versus Marty Makary’s willingness to discuss approvals based on preclinical data or AI. The panel says top-down overruling of review staff has been a decade-plus trend that may have accelerated recently.

4. Genmab pays $8B for Merus — and the competitor rallies harder

• Genmab is buying Merus for about $8B, a roughly 41% premium, to obtain petosemtamab, an EGFR-by-LGR5 bispecific in Phase 3 first- and second-line head-and-neck cancer studies. Genmab has also discussed earlier-stage studies. Merus’ chief competitor, Bicara, rose almost 50% and had been valued at about one-eighth of Merus, reflecting investor interest in a tumor type with limited prior innovation and speculation about further strategic activity.
• Sam asks why a larger pharma company did not buy Merus. He says Merus’ data appear more broadly applicable across HPV-negative and HPV-positive patients, while acknowledging that the datasets are not directly comparable because of different follow-up periods. His read is that Genmab wanted an asset that could reach the market by 2027; Bicara may not fit that timeline. Colorectal and some earlier uses are not included in the valuation calculation and could provide upside.
• Brian says Genmab is trying to offset the eventual Darzalex royalty-stream decline. The deal is “definitely not cheap”: interest expense plus lost interest income on cash totals about $430M annually, and the transaction will be meaningfully dilutive for two years. Genmab is “fully levered,” leaving little room for another major move, but the deal could materially reduce the Darzalex cliff if the data hold.
• Brad highlights two risks. First, nobody knows the definitive pembrolizumab response rate in this setting because randomized data have not been available, and immuno-oncology efficacy can change substantially in randomized trials. Second, he says there are “literally 100 Chinese companies” that may offer comparable bispecifics at much lower cost to a buyer willing to wait. Sam questions the “pennies” characterization but agrees that Chinese competition is a risk.
• On five consecutive weeks of meaningful biotech M&A, Brian remains skeptical that this is an open door rather than random clustering, except in areas with acute pharma demand. Sam points to the prospect of refinancing at lower rates and greater certainty around tariffs and pricing. Brad says deals tend to happen when assets have derisked, buyers are comfortable, and sellers are finally being remunerated by the market; Yaron agrees that the macro environment has improved after biotech and pharma’s “nuclear winter.”

5. Data week: MoonLake implodes; Larimar and Enanta claw back

• MoonLake’s sonelokimab, viewed as a potential best-in-class IL-17A/F inhibitor for hidradenitis suppurativa, failed to differentiate from UCB’s Bimzelx and missed statistical significance on one of two Phase 3 studies. The stock fell more than 85%. Investors had been trying to model how differentiated it might be, but the magnitude of the result was unexpected; the XBI nonetheless moved on.
• Larimar’s Friedreich’s ataxia program produced more than 50% of normal skin frataxin levels in all 10 patients treated for six months, with a 2.25-point median improvement from baseline in mFARS. The study is open-label, however, and 7 of 39 patients, or 18%, experienced anaphylaxis.
• Brian says the key debate is whether skin frataxin is a surrogate tissue for the tissues of interest and whether it is sufficiently “reasonably likely” to predict clinical benefit for Subpart H approval. The company is discussing a BLA submission in the second quarter of next year. The stock fell from roughly $5 to the low $3s before recovering toward the mid-$4s. The Friedreich’s Ataxia Research Alliance is viewed by many as having played a significant role in Skyclarys’ approval.
• Enanta’s RSV antiviral missed its primary endpoint, reduction in lower-respiratory-tract symptoms, and initially fell about 20% premarket. Brian’s subsequent review was more positive: the drug clearly reduced viral load, improved several measures across the study, and performed more robustly in the prespecified higher-risk subgroup, including patients aged 75 and older or those with COPD. Hospitalizations were also meaningfully lower in the treatment arm, though that result may be random noise. Brian thinks the dataset could attract a large-pharma partner for use in hospitals or nursing homes.

6. ESMO watchlist: three late-breakers and the PD-1/VEGF question

• Yaron highlights three late-breakers. First is Amgen’s bemarituzumab, obtained through its acquisition of Five Prime, in the FGFR2b-overexpressing gastric and gastroesophageal cancer study FORTITUDE-101. The first interim survival analysis was positive, but the latest survival cut appears less impressive; the doublet and triplet Phase 3 studies are both likely to read out next year.
• Second is Exelixis’ zanzalintinib plus atezolizumab in refractory colorectal cancer. The study showed an overall-survival benefit over regorafenib, but investors need to assess what drove it, including outcomes in patients with liver metastases. Most patients enrolled outside the U.S., and the FDA question is whether a survival benefit over an old, relatively weak standard remains sufficient when newer standards perform better.
• Third is Akeso’s ivonescimab, a PD-1/VEGF bispecific, in HARMONi-6 with chemotherapy versus Keytruda plus chemotherapy in squamous NSCLC. The China study beat its comparator on PFS; the focus now is the control-arm performance, the PFS hazard ratio, and whether overall survival has matured enough to show a trend.
• Sam notes that the ivonescimab regimen includes paclitaxel, nab-paclitaxel, and carboplatin, and that early Chinese PFS data looked better than the KEYNOTE-407 experience at a similar follow-up. He also notes that squamous-cell datasets have not shown the expected hemoptysis signal from VEGF inhibition, challenging the idea that the results reflect only VEGF activity.
• Sam’s off-the-beaten-track item is RemeGen’s gastric-cancer study of RC118, a CLDN18.2 ADC, combined with Junshi’s PD-1 inhibitor toripalimab. Safety will be important. AstraZeneca’s DESTINY-Breast11 and DESTINY-Breast05 are also scheduled for prominent sessions after the company announced statistically and clinically meaningful results.
• Brian highlights IDEAYA’s darovasertib neoadjuvant update in roughly 90 ocular-melanoma patients. Brad adds Verastem’s partner GenFleet and its KRAS G12D ON/OFF inhibitor in pancreatic cancer, where efficacy has looked strong but tolerability remains a consideration.

7. Q3 earnings: Legend a smidge light, COVID vaccines lower, launches in focus

• Yaron expects argenx to be in line after a very strong Q2. Legend’s Carvykti remains capacity-constrained as sites in New Jersey and Belgium expand. He expects mid-teens sequential growth rather than the 20% the Street wants, with additional capacity arriving late in Q4. Legend can probably reach the $1.9B consensus, though it may need to round up; next year should bring relief from the constraint.
• On COVID vaccines, Brad suggests Moderna and BioNTech could be down about 50% year over year. Sam says he would not go that far but agrees that both look lower when placed on a comparable basis. His distinction is that Moderna appears not to have changed pricing much, while Pfizer appears to have taken a price increase. Brad calls COVID vaccines “a nice-to-have” for only certain populations.
• Brian’s launch watch includes Gilead’s first substantial quarter of lenacapavir PrEP sales, the product driving much of its rerating over the past year and a half; another quarter of Vertex’s Journavx pain-drug sales; and Neurocrine’s own launch, alongside its Ingrezza-driven business.