Episode 169 - January 16, 2026

Summary

• Consensus out of JPM 2026: sentiment is a healthy “seven out of 10,” and the week’s lack of M&A was read as bullish, not bearish. Paul Matteis’s calibration: “you don’t want it to be three out of 10. You don’t want it to be 10 out of 10 because 10 out of 10’s scary, too.” Chris Garabedian’s venture read: after a record pre-JPM financing week and a healthy last quarter, companies are flush with cash and don’t need to sell — a shift toward “a sellers’ market” — with VCs deploying so as not to miss out if the 2026 IPO window opens.
• Mike Yee sees generalist money moving from “renting the space” to “wanting to own the group,” and it’s broader than the momentum large caps. An all-time-high S&P and expensive growth stocks make pharma and biotech look inexpensive — “Lilly at 30 times is not expensive if Costco and Walmart trade at 40 times” — and interest now extends past Lilly and AbbVie to Merck, Bristol, and Pfizer, with Gilead and Amgen beneficiaries. He also cited a potential AbbVie–Revance deal after which the stock was up 6% for at least an hour.
• Moderna has nearly doubled off its November low ($23 to $41), and the March Arbutus patent trial is now the swing factor. Mike’s damages math: the initial government contract shields the pandemic portion, but ~$15B of non-pandemic U.S. COVID sales at a 5% to 15–20% royalty means multiple billions in potential damages — though a settlement is plausible and Moderna has beaten BioNTech on patents in Europe. Positives: burn cut from $3–4B to ~$2B, ~$8.1B year-end cash, a ~50% probability of success for the melanoma phase 3, and a phase 2 adjuvant renal-cell readout that “could be filed to the FDA if it’s positive.”
• AbbVie became the second straight pharma to license a Chinese PD-1/VEGF asset — pointedly not from Summit, despite the Pharmacyclics alumni running it. Sam Fazeli compared AbbVie’s $650M upfront with $1.25B for 3SBio and $1.5B for Biotheus, saying the AbbVie payment was much smaller; the transcript’s ranking references are inconsistent. Summit is first to market if its trial works and provides sufficient clinical benefit, and Mike is “fairly confident Summit is going to have to partner up at some point.”
• FDA flexibility still looks like “more talk than reality” at the program level, even as the commissioner’s voucher offers a path to two-month approvals. Atara’s CRL (stock −50%) after believing it had alignment extends the uniQure pattern, and one analyst told Paul “I don’t remember the last drug that got approved on time.” Mike’s counter on orforglipron’s slip to an April 10 approval target (Lilly −3%): still far faster than an eight-month priority review, and “you’d want them to take a look at stuff rather than just blindly approving drugs in two months.”
• Obesity forecasts were debated: Paul cited a roughly $210B 2030 estimate while also saying he was “not that high,” against Albert Bourla’s cited $150B; Mike reacted to the gap without stating his own figure. The next race is monthlies: Pfizer/Metsera amylin data at ADA in June, possibly with earlier disclosure, and Amgen finishing phase 3, though Amgen’s two-year update had “no numbers, no datas, no charts” and disappointed investors. Every large pharma Mike met is still shopping for obesity assets. Sam noted that the U.K.’s reimbursed NICE population may be only 150,000–200,000 eligible patients, leaving most use cash-pay.
• Alnylam’s polarizing 2030 guide — 25% revenue CAGR but only a 30% operating margin — looks better once you strip the Sanofi royalty. Paul’s math: with roughly a quarter of peak Amvuttra going to Sanofi, the underlying margin is “really over 50%,” and a company spending 30% of revenue on R&D with four INDs a year shouldn’t optimize beyond that. The real trap is the “whisper number” dynamic after quarters of crushed estimates.
• The catalyst Paul is “by far the most interested in” over 12–18 months: Lilly’s TRAILBLAZER-ALZ 3 Alzheimer’s prevention study, reading out in 2027. “This is not a stock call on Lilly, but I am super bullish on this readout” — earliest-disease amyloid subsets show outsized effects, so prevention should too — and clean positive data “can really change the narrative on this class,” with Biogen largely exposed via lecanemab. Also flagged: BioMarin’s DMD exon-51 data reached 5% dystrophin, which Paul said was, to his knowledge, the highest for that exon, but said nothing on safety — the salient question for both Paul and Chris.

Deep dive

1. JPM verdict: seven out of ten — and that’s exactly where you want it

• Paul’s read: investors came off a great year with structural tailwinds intact — drug-pricing risk “knock on wood” not significant, strong commercial launches, “investors getting rewarded for taking data risk,” and significant early-year financings that “didn’t take the wind out of the sails.” His calibration: “you want sentiment to be seven out of 10… you don’t want it to be 10 out of 10 because 10 out of 10’s scary, too.”
• Chris, at his first JPM since 2019, endorsed the Adam Feuerstein/Daphne Zohar argument that light M&A is actually a good thing, and set his own bar: “short of a macro existential… geopolitical crisis, things should look good for 2026.” Attendance felt lighter — less street traffic and a report of an un-full Boston flight — though Chris said he would not necessarily put stock in the flight observation and did not know the attendance numbers.
• Sam, watching the news flow remotely via a 2,000-person drug chat, saw people taking the week “in their stride” — six-to-seven out of ten, no overenthusiasm — after a year that opened with a “super strong” week of M&A and secondaries.

2. Flows: generalists want to own the group; underneath, a sellers’ market

• Mike’s two-sided tape: specialists are deploying — follow-ons, an IPO that traded up (notably not the frothy “100 and 200%” pops, which “are probably bad signs”), and buzz around privates and crossovers expected to go public this year. Generalists, nervous about an all-time-high S&P and expensive growth stocks, find pharma and biotech relatively inexpensive: “Lilly at 30 times is not expensive if Costco and Walmart trade at 40 times.”
• Paul’s probe — is generalist interest still just momentum large caps? Mike: no, it now runs past Lilly and AbbVie to Merck, Bristol Myers, and Pfizer, with Gilead and Amgen beneficiaries — “wanting to own the group,” not “renting the space.” He also cited a potential AbbVie deal for Revance, after which the stock was up 6% for at least an hour. Sam separately invoked “RevMed” in describing a cash-rich company that has little reason to rush into a sale.
• Chris’s lens — “venture is a lagging indicator”: the last quarter was healthy and the best in a long time, while the first week before JPM was a record or near-record financing week. Managements flush with cash don’t need to sell, a shift to “a sellers’ market versus a buyers’ market,” with a cohort dreaming of being “the next Vertex.” VCs are deploying “not to miss out on 2026” if the IPO window opens, with LPs waiting for distributions.

3. Alnylam: the whisper-number trap, and why 30% margin is really 50%

• The setup per Paul: Amvuttra’s ATTR launch has been one of those midcap-to-large-cap graduations (à la argenx and Insmed) where the stock arguably got ahead of itself — Alnylam “destroyed the sell-side number” in 3Q yet traded off, then missed 4Q on weak scripts before pairing strong 2026 guidance with Yvonne Greenstreet’s 2030 goals: 25% revenue CAGR but a 30% operating margin many saw as uncompetitive.
• Paul’s defense of the margin: peak-year Amvuttra pays roughly a quarter to Sanofi, so ex-royalty it’s “really over 50%” — and a company with a real R&D engine spending 30% of revenue on R&D with four INDs a year shouldn’t optimize much beyond that. Some 4Q headwinds — inventory drawdown and price concessions — could flip into tailwinds.
• The meta-lesson: crushing numbers created “what people on Wall Street refer to as… a whisper number… a sort of true buy-side consensus that is always kind of ethereal and higher than the sell-side consensus,” leaving investors unsure whether to value margin, revenue, or platform credit. Still “relatively well positioned even if the stock has taken a breather.”

4. Moderna: doubled off the lows, with the Arbutus trial as the March event

• Sam’s tally of the run from $23 in November to $41: super-flu chatter, possibly including retail interest; a cash guide raised to ~$8.1B year-end versus the $6.5–7B guided in November — though about $600M, roughly half the increase, came from drawing down a loan facility with no obvious need, which “brought me some questions” — and reiterated 10% growth for 2026, which he discounts given how last year’s guidance eroded.
• The bear case is Arbutus: a European patent invalidation, which Arbutus says has no U.S. litigation read-through and will appeal, with the U.S. trial coming in March. The development drove the stock up about 5% that day; Sam’s team and Bloomberg’s patent attorneys planned to publish their analysis the following week.
• Mike’s damages math on this “hugely crowded short”: the initial government contract shields the pandemic portion, but ~$15B of non-pandemic U.S. COVID sales at anywhere from a 5% royalty to 15–20% means multiple billions — dangerous for a cash-burner. Counters: many expect a settlement, and Moderna has beaten BioNTech on European patents — “Pfizer and BioNTech may actually owe them money.”
• His fundamental positives: burn cut from ~$3–4B a year to ~$2B; the adjuvant melanoma cancer-vaccine phase 3, at about a 50% probability of success, reading out this year but potentially slipping to 2027; and an underappreciated randomized phase 2 in adjuvant renal cell carcinoma that “actually could be filed to the FDA if it’s positive” under agreed statistical protocols. Chris noted that Noubar had been “throwing shade on the FDA about mRNA.”

5. AbbVie’s China PD-1/VEGF deal — past Summit’s front door — plus the AI wave

• Mike’s framing: this is the second consecutive Chinese PD-1/VEGF deal after Pfizer/3SBio, and the irony is thick — one of AbbVie’s most significant and successful transactions was Pharmacyclics, whose team now runs Summit, “theoretically looking for a partner.” They didn’t connect; AbbVie went to China. His call: “I’m fairly confident Summit is going to have to partner up at some point.”
• Sam compared AbbVie’s $650M upfront with $1.25B for 3SBio and $1.5B for Biotheus, saying the AbbVie payment “pales into relative insignificance,” perhaps because of development stage. The transcript’s ranking references are inconsistent, but the competitive point is clear: companies are claiming differentiation, while Summit could be first to market assuming its trial works and provides sufficient clinical benefit. Modeling the share splits “is going to be quite fun… hopefully some of us will get it right.”
• On AI, the NVIDIA–Lilly structure — $1B together over five years — headlined a week where “everybody’s at it.” What stuck with Sam was one company’s claim that “AI was a significant contributor in our ability to take out $5.6 billion of cost plus even more in manufacturing” — he doubts administrative automation moved that number, and BI’s 600-person C-suite survey found “frankly nobody’s really talking about headcount reductions,” just team productivity.
• Sam’s prediction: an actual drug getting through serious clinical trials with AI as a significant discovery contributor is “maybe another three or four years” away. Chris flagged Eric Topol’s answer on whether pharma buys an AI company in 2026: “a definitive no” — organic builds and partnerships instead.

6. FDA: flexibility rhetoric versus CRL reality — and the two-month voucher meets scrutiny

• Paul’s pattern: whether this FDA is “flexible and libertarian or stricter than any FDA we’ve seen” remains the push-pull; companies keep believing they have alignment on single-arm, natural-history or biomarker paths only to have “the rug pulled out” — Atara’s CRL for its EBV T-cell product (−50%) the latest after uniQure became “the poster child.” A peer’s line: “I don’t remember the last drug that got approved on time” — hyperbolic, yet every under-review drug in Paul’s coverage has been delayed in six months. With placebo-controlled, clear-precedent paths “this probably doesn’t matter”; in the flexibility space the overhang persists, and Makary’s CMC-streamlining talk “feels like it’s more talk than reality.”
• Mike on the Commissioner’s National Priority Voucher — 15+ drugs across two rounds, approvals as fast as two months versus eight for priority review, with a drug-pricing-cooperation angle: reported FDA scrutiny delayed Sanofi’s Tzield on safety questions and put Lilly’s orforglipron at an April 10 approval target, later than the Street hoped (−5% intraday, −3% close). His verdict: “it does not matter if it’s Q2 or Q1… you’d want them to take a look at stuff rather than just blindly approving drugs in two months.”
• Sam added that Jazz sold its transferable PRV to an undisclosed buyer for $200M — prices coming down. He also relayed Joe Edelman’s view that FDA policy will work itself out but staffing and timelines were concerns, while calling gene therapy the most underhyped area, due back “after this kind of cold period.”

7. Obesity: oral launch, a monthly-drug race, and an unresolved 2030 estimate

• Mike’s three markers: oral Wegovy is approved, with first prescriptions reportedly over 3,000; Lilly is imminent — “this is going to be the year of how big the first year of oral GLP-1 drugs are” — and the race for the next two approvals is monthlies: Pfizer/Metsera, with a monthly injectable and monthly amylin and data expected at ADA in June, versus Amgen finishing its monthly phase 3. But Amgen’s two-year update had “no numbers, no datas, no charts” — the Street was disappointed, perhaps because of competitive concerns.
• Paul cited a roughly $210B 2030 estimate and also said he was “not that high,” while Albert Bourla had cited $150B; Mike reacted to the gap but did not state his own figure.
• Sam’s granularity: U.K. NICE reimbursement covers BMI 40+ with a threshold of perhaps three or four comorbidities, yielding roughly 150,000–200,000 eligible patients, and that pathway had only been operating since June. He did not know how many people had actually received a paid prescription, but was not surprised most use was cash. Novo has about 10% of its U.S. business in the cash/DTC channel versus about 30% for Lilly; watch whether oral launches change that. Every pharma Mike met — AbbVie, Amgen, and Bristol Myers Squibb, which was speculated to have been an early Metsera bidder — is still hunting obesity assets.

8. Rapid fire: BioMarin’s silent safety slide, Lexeo’s overreaction

• BioMarin’s DMD exon-51 oligo surprised on efficacy — up to 5% of wild-type dystrophin, unadjusted for muscle content, which Paul said was, to his knowledge, the highest reported for this exon — yet “really nothing was said on safety at all.” The molecule comes from the Prosensa portfolio associated with drisapersen, which “did make some dystrophin but was super toxic,” and is unconjugated to TfR1 or a peptide, raising risks of immunogenicity, thrombocytopenia, and renal toxicity.
• Chris’s veteran lens: “I always look at what is any company in DMD not sharing, and that usually raises flags”; the dystrophin-to-outcomes correlation still isn’t hard, and Sarepta’s exon-skipping data and the FDA’s response remain important — though another player expanding the targeted exons alongside Avidity and Dyne “is overall good” for the field.
• Lexeo’s PKP2 gene therapy — a “cult following” name with tens of thousands of patients, one of the bigger gene-therapy opportunities — showed NSVT/PVC signals “trending in the right direction” with “a lot of variability”; Paul called the sell-off an overreaction, analogizing to Lexeo’s Friedreich’s ataxia arc, where noisy early data improved over time into a natural-history-controlled phase 3 path. Chris: watch whether names hovering around half a billion, including Lexeo and Solid, mark gene therapy’s re-rating.
• Sam’s one-liner on J&J’s MajesTEC-7 BCMA/CD3 bispecific versus CARTITUDE-4, the Legend/J&J Carvykti comparison: “all you have to do is look at the share price chart for Legend.”

9. CF heats up; TB3 is the catalyst Paul cares most about

• Vertex versus Sionna is “evolving into a really, really interesting year”: Sionna’s NBD1-targeting corrector binds at what Paul described, with appropriate qualification, as a different site than Vertex’s drugs (Vertex resists the word “mechanism”), with Sionna patient data in the middle of the year and Vertex’s undisclosed next-generation CFTR modulators later in the year. It was the first public forum where Paul saw Vertex fielding multiple competitive questions, even though Sionna has no patient data yet.
• Paul’s conviction on Lilly’s TRAILBLAZER-ALZ 3 Alzheimer’s-prevention study: “this is not a stock call on Lilly, but I am super bullish on this readout and I think it can be paradigm-shifting for neurodegenerative disease.” The logic: across the amyloid class, the earliest-disease subsets show the biggest effect sizes, so prevention should be outsized — “who wouldn’t want their plaques taken out if it’s going to lower the risk of Alzheimer’s substantially?”
• The 2027 reaffirmation isn’t negative for probability of success — the open question is whether an interim already happened — and the event-driven design “should be a good hedge against powering,” the biggest unknown since nobody knows the control arm’s progression rate. Biogen is largely exposed via lecanemab, “a really significant disappointment,” but great prevention data with clean safety “can really change the narrative on this class.” Sam, a former amyloid researcher: “I just hope it doesn’t fail because it takes the wind out of the sails of all the other ideas.”