Episode 187 - June 26, 2026

Summary

• The panel’s verdict on the XBI’s run from the 130–140 range to the mid-150s: warranted, not frothy. Eric Schmidt says the “aren’t we getting ahead of ourselves” question he heard in every European meeting is “PTSD” — fundamentals are “almost a perfect storm” (permissive FDA, M&A, low rates, innovation), and names still drop 20–25% on the week, so it’s “still a good stock picker’s market.” Tess Cameron’s anchor: buying all of smidcap biotech would take a bit under four years of pharma free cash flow, versus over five years at the 2020 top.
• The tail risk investors now fear isn’t biotech-specific — it’s AI. Sam Fazeli: clients are “not just worried about where XBI is going” but what happens if the AI trade — “I’m not going to call it a bubble, but a lot of people do use that phrase” — bursts and drags biotech down with it, a cross-sector fear that “wasn’t necessarily always the case.”
• Josh Schimmer challenged the M&A-drives-biotech orthodoxy with data: his regression of XBI performance versus biopharma deal value over 5–6 years yields an R² of just 0.2, and ~$100B of annual M&A against a ~$1.4T sector may not “move the needle” versus the potential of profitable, independent biotechs attracting generalists. Revolution Medicines is exhibit A — a rumored Merck take-out near $120 never happened and the stock hit $180, with backers now seeing “a future Vertex.” Eric’s counter: $50–100B of deals a year at 40–50% premiums is $20–25B biotech investors “otherwise don’t get access to.”
• AbbVie’s $10.9B Apogee buyout shows why an optimized antibody against a known target can command a major premium over earlier, cheaper China assets. The half-life-extended IL-13 antibody is pitched as a $10B+ peak-sales potential better Dupixent; Tess said she thought this was the first prominent example of the model, while Eric said AbbVie stressed that Part B of Apogee’s trial looked like a global study (“replicability”) and that 2030 sales versus Dupixent’s 2031 atopic-derm loss of exclusivity means “a year maybe worth a lot” — because “order of entry really matters… strategics are willing to pay a lot for that.”
• On China restrictions, Tess’s numbers cut against the panic: 2025’s headline $136B of China out-licensing carried only ~$5.6B of upfronts — less than the single Apogee deal — while ex-China out-licensing has held at $140–160B a year since 2021. Her policy frame: protect physical supply chains, but a ban on innovation supply chains (patent-based) is “self-defeating,” and “a compression of returns in biotech is just going to mean less money for biotech.” Eric’s fatalism: policing what counts as innovation is like “arguing about the weather.”
• Sam declares the FDA “very close to normality”: “Bring your drug, we’ll assess it properly…” The “one year of waste” is being walked back — Moderna’s flu vaccine, REGENXBIO’s resubmitted Hunter BLA, and Replimune’s Q3 oncolytic-virus AdCom — while RBC’s commissioner shortlist is Heidi Overton, John Crowley, Stephen Ferrara, Norm Sharpless, Richard Pops, and Kyle Diamantas; pointedly, “Vinay Prasad is not on the list.”
• The China-newco machine keeps printing: Seraphina reversed YolTech’s in vivo base-editing therapy for AATD (YOLT-202, now SERA-01) into Boundless Bio with a $230M raise co-led by RA and RTW, and Allium Biosciences raised a $330M Series B for Innovent-originated Eylea rival OLN-3024 — triggering a Bob Nelsen–Kolchinsky Twitter spat over copycat innovation. Also flagged: MoonLake’s sonelokimab hit 67.2% HiSCR75 at week 52 in HS versus roughly 60% for bimekizumab, and positive Phase 3 LSD data in MDD kept the interventional-psychiatry wave rolling.

Deep dive

Not yet available upstream; scheduled sync will retry.