Episode 183 - May 15, 2026

Summary

• Bristol Myers’ new Hengrui deal carries one structural feature the hosts hadn’t seen before: Hengrui gets an option to co-develop select assets and conduct certain commercialization activities globally, not just retain China/Hong Kong/Macau rights. Terms are up to $950M in payments — $600M upfront, $175M on the first anniversary, $175M on the second — against $15.2B in total potential value, across four Hengrui oncology/hematology assets, four BMS immunology assets and five jointly discovered programs. Sam Fazeli notes it isn’t even the year’s biggest China deal; the AstraZeneca–CSPC transaction was larger.
• Josh Schimmer, fresh off a China bus tour, condensed the competitive picture into one line: “innovation is where the risk is, optimizing is where the value is.” Right now China remains “a very attractive source for low cost, high speed, affordable, validated, you know, top tier type innovation,” and there’s “probably right now more opportunity than risk” in licensing assets out. The problem is the five-to-ten-year window, when Chinese companies commercialize into US drug prices after having kept those prices out of their own market.
• Tess Cameron pushed the extrapolation to its bleak end state — US biotech reduced to “manufacturing and sales reps” — and Eric Schmidt offered the counter-moat: the US capital market. “There’s no capital market in the world like the one in the US,” and he doubts most of the funds deploying hundreds of billions annually will follow assets into Chinese markets. Sam’s version of the bear case for China: the current edge is “brute force” iteration on related PD-1, PD-L1 and CTLA-4 ideas, and the missing ingredient is risk appetite for true zero-to-one work.
• Isomorphic’s ~$2B Series B drew open skepticism, with Eric invoking the IBM and Amazon precedents: they “started with a bang, like this seems to be doing, and ended with a bit of a whimper.” Sam said he didn’t see any biotech-type investors in the round — priced out, or excluded — after only $579M raised in March last year. Tess: kudos on the capital, but “much more of a tech mindset,” and value comes from assets, not platforms.
• On Marty Makary’s resignation, Eric was the most categorical: “he didn’t do anything as commissioner that he was supposed to be doing.” The job is to support review staff, shield the agency from political intervention and advocate for a stronger FDA — not to go on CNBC and discuss UniQure or Replimune. Tess said the change impacts RA’s investing “not at all,” citing February’s credible appointments (Chris Klomp, Kyle Diamantas, Grace Graham, John Brooks) and doubting the administration wants a contentious confirmation fight before the midterms.
• REGENXBIO’s decision to hold its DMD filing pending FDA clarity crystallized the Elevidys precedent trap, and Josh named it bluntly. The data: microdystrophin-to-NSAA correlation in nine patients, with about 30 in the study and potential accelerated approval targeted for 2027 — investors want the other twenty. “We got boxed in from a drug approval that probably shouldn’t have happened in the first place… now here we are criticizing the FDA for not approving everything, while we’re literally dealing with the consequences of what happens when you do.”
• Biogen’s move into Phase 3 with its tau ASO despite missing the prospectively identified dose-response primary endpoint reopened the credibility question on capital allocation. Josh’s line on Eric’s note: “Biogen seems to be a moth to a flame when it comes to Alzheimer’s, despite getting burned multiple times by that same flame.” Tess: the drug clearly hits tau, but whether tau reduction moves the disease is unknown for maybe four years. Sam’s defense — different management team, probably more scientific rigor behind tau as a causative mechanism, and a market “possibly in the same ballpark as an obesity product.”
• Inhibrx’s OX40 agonist doubled response rate versus Keytruda in a randomized Phase 2 in head and neck, but Eric thinks the bar has already moved past it. Merus (acquired by Genmab) with pedicicimab and Cara with ficaserafus are “more than doubling response rates relative to Keytruda” and are deep into Phase 3. “I just don’t know what to do with the Inhibrx.” Josh’s context: their DR5 agonist showed low response rate but a dramatic PFS benefit in chondrosarcoma, so a low ORR read here isn’t dispositive.

Deep dive

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