[AI-generated transcript.]

It's JP Morgan Monday in sunny San Francisco, I've been waiting about six years to say that.

Biotech BD folks running around Union Square are reporting that suits, and stylish shoes are dry.

No umbrellas have flipped inside out, and there is yet to be a simultaneous flash flood warning to thousands of cell phones in the Hilton Union Square lobby.

There also is yet to be a mega deal announced, no deal the level of Celgene BMS few years back.

Yet rumors are swirling around Abivax, Rev Med and a few other companies.

We'll get to that in a minute, on the latest BioCentury This Week podcast.

We also have Washington Editor, Steve Usdin, who is safely miles, and miles and miles away from San Francisco, as is Lauren Martz, Steve will have his 2026 politics policy and FDA Outlook.

And Executive Director of Biopharma Intelligence, Lauren Martz will have her look at the regulatory approvals of 2025.

But first BioCentury is getting ready to host its 5th East-West Summit in Seoul in March.

Learn how you can source innovation from Asia or accelerate your own pipeline by finding the right Asia partner.

Join us, BayHelix and McKinsey to talk Asia innovation in Seoul, and I hear there'll be a little karaoke too.

All righty, Stephen, well, we've had more than 20 deals announced in the runup to JP Morgan.

Three M&A deals, an option deal, oodles of follow-ons and venture money.

I think we've had $1.7 billion in venture money raised so far this year.

$2.2 billion in follow-ons.

And, uh, the M&A, Lilly acquiring Ventyx, Amgen acquiring Dark Blue, $ 2 billion.

What are you hearing, Steven?

You were up a lot earlier than me, but of course you have a bit of a time zone advantage being in the U.K.

Well, thanks Jeff.

off, I probably have to call you out a little bit on this one because you, you assured me that there were gonna be lots and lots of deals on JPM Monday.

I did, I promised.

So I was up early, I was scouring the wires, I was getting myself sort of hyped up to have to write some big story about a massive deal.

And all we've got are rumors at this point.

So, um.

two primarily, you know, one that came out sort of late last week, which was these rumor take out of, Rev Med, the full name Revolution Medicines.

Which there were some reports that that could be taken out for up to $32 billion, I think was the number, which seems a lot, I guess it seems expensive, but, uh, maybe that's, you know, maybe once a deal comes through, we can get into more of the specifics about whether that's a, uh, an overpay or not, for that company.

But then the other one that sort of surfaced today, which I was kind of thinking might happen around lunchtime my time, but has yet to come out was reports that Eli Lilly was in talks to acquire Abivax, which has had positive Phase III data for their, miR-124 program in, tested in ulcerative colitis and Crohn's disease.

Had pretty good data this past summer that saw the stock shoot up.

I want to say it was like, it, it was a lot, it was hundreds of percent it went up.

Um, so that's one that currently, you know, as of as of this morning was evaluated about $9 billion was its market cap and the reports out there were suggesting that Lilly could pay upwards of $17 and a half, so nearly twice what it's currently valued at.

But again, those are, as of right now, just, just rumors.

So, uh, we're sort of waiting to see if those, those play out.

But those are the types of deals that I think investors were kind of expecting to see.

'cause, you know, we had a great run of M&A last year, and there was, you know, all expectations that that run of M&A would, would continue here into the new year.

What we did get sort of the one big deal so far today as of this recording.

was the announcement of a deal between AbbVie and RemeGen for a PD-1/VEGF bispecific another one of these deals to come in there with AbbVie stepping in.

Lauren, I know this is your wheelhouse, one of the areas that you spend a lot of time on these, uh, bispecifics.

So, I think it was $650 million upfront, I think was the number.

and we can maybe talk about where that kind of fits in the other deals we've seen, but maybe if you could just.

give us a quick download on the asset here and kind of what your, what your thoughts are on the deal.

Sure.

So, um, this is RC148.

It, like you mentioned, PD-1 bi VEGF bispecific antibody.

That's in a few Phase I/II trials run by RemeGen.

All of the studies that we've seen are in China.

We've seen a limited amount of clinical data from this program.

specifically there was some Phase I/II data as first line monotherapy in non-small cell lung cancer, and then after a PD-1 and chemo in a different non-small cell lung cancer group.

With this class, you know, because there is not a ton of clinical data that's comparable across these different indications, it's hard to tell where exactly this bispecific lies in, in the overall landscape when you're talking about efficacy and trying to compare that.

But you mentioned where this fits sort of in terms of the other PD-1/VEGF bispecific deals, and I'm thinking of, Pfizer's deal with 3SBio that was less than a year ago.

That, upfront was about double what AbbVie is now paying for for RemeGen.

That one was facing

I think it was$1.25 billion, I think upfront.

And then there was an additional$100 million in stock as well.

Mm-hmm.

That was Phase III ready.

But all the, you know, no US data from those trials either.

So I think that just raises some questions of has the perception of this class changed at all as we've seen additional data from the Akeso Summit program that generated all of the interest to begin with.

Is there something specific about the different molecules that differentiates them?

I don't think we have the answer to that.

Yeah, it's, uh, it's been unusually quiet, but, uh, you know, at the same time, M&A really kicked up in the second half of last year and it's kind of, gotten folks feeling a little more optimistic.

The XBI is riding high.

once again, and, uh, we did have a NewCo deal.

If you remember back to JPM 2025, we saw, Stephen, dare I say, a bolus of, uh, new NewCo Deals.

Stephen's my editor, and he is, he is, he is been, uh, cutting that word out of, uh, every story that I write and, uh, you know, kill your darlings, you can't hang on to those precious things that you think are so clever.

But last year really, um, we've talked about this on the podcast a lot, it was really the year that, starting at JP Morgan, the West, those who were sleeping on China really woke up to China and we did see I think four or five NewCo deals this year so far.

Just one I believe, and that is a company called Haisco.

Their nickname and hopefully they won't get mad at me for saying this is Little Hengrui.

Hengrui, of course, has been around for a while, they have a huge pipeline, they've been the originator in multiple NewCo deals.

Haisco Younger company, 25 years old.

50 generics, antibiotics on the market in China.

Around 2012, they went public in Shenzhen, and at that point they shifted to innovation.

And now, uh, Lauren, I know you looked at their pipeline quickly, it's innovative, right, anything catch your eye, Lauren?

I think my takeaway from the pipeline was that.

Incredibly broad.

They're going into a lot of different technologies, a lot of different disease areas.

But some of the things that we're watching, the, the bispecific ADCs, for example, I think are an emerging modality that that could be big.

I mean the thing that jumped out to me was just the fact that you can have, 'cause I took a look at the pipeline as well, and that you can have such a broad pipeline like that from a company that, I'd never heard of before Jeff mentioned it to me.

at least to me that sort of highlights that there still are a bolus of opportunities, for companies to license assets from China.

So,

I hadn't heard of them either, and I talked to, James Li, of Frazier, and he said, you know, Jeff, don't feel bad, China's a big place.

But I think that's just what you're saying there, Stephen.

There is, so much going on.

This asset, Stephen, uh, what do you make of it, the asset around the deal?

So, asset class the PD 3/4, is one that where we saw a huge deal this past summer.

This was the asset that Merck acquired when it acquired Verona for $10 billion over the summer.

that was from an asset obviously that was approved, and on the market and launching well, but that was launching, I think it's delivered using a nebulizer.

And I believe what this program is aiming to do is to basically go after the same target, but in a dry powder sort of inhaled formulation.

So maybe a little bit easier for patients to take a little bit, know, more convenient.

But, um, clearly, you know, a class that people have a lot of sort of high hopes on in terms of, um, targeting COPD there.

Yeah, an program for them to, uh, for them to take out for sure.

Yeah.

And just quickly, some of the investors in this NewCo, the NewCo is called AirNexis.

It's going to be led by Maria Fardis.

she's a venture partner at Frazier, she, was at Iovance back in the day.

James Li, investor company builder, executive, co-founder of CAR T company JW, KPCB partner, now at Frazier.

So James is the chairman of this company and alongside Frazier, which led the deal, Goldman Sachs, Innovate, Longitude, SR One, quite a roster of investors, many of whom have been to this rodeo before with the NewCo model.

It's slowed down in terms of the new co deals, but, uh, not dead yet, apparently.

All right, we're gonna take a quick break and we'll come back and head to Washington

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Steve, well, you've written your policy and FDA 2026 Outlook.

It's in my inbox for editing.

I'll probably do it in a coffee shop near Union Square.

Tell me what I have to look forward to.

You know, so it can be summarized by one of my favorite dad jokes, road work ahead, sure hope it does.

you

I do.

so

sleep on dad jokes either.

You know, life science leaders who, who think that last year's high velocity policy turmoils, know, in the rear view mirror, they're, they're gonna be disappointed by 2026.

I think there's gonna be bouts of chaos, that's gonna continue.

But in a way, they're almost a distraction from the changes that are I think undermining the pillars of biomedical innovation in the United States.

The big risk, and I think we'll start seeing this in 2026, is not volatility.

It's the normalization of political and ideological influences on science-based regulation and research funding, and that's been coupled with arbitrary populous drug pricing policies.

The way I look at it, there's a confluence of norms that were broken in 2025, CEOs are negotiating drug prices directly with the President.

FDA.

is involved in enforcing drug pricing policy.

The industry is accepting foreign price benchmarks.

And the idea that tariffs on pharmaceuticals can be used to leverage price reductions has become accepted.

I realize, you know, everybody in San Francisco at JP Morgan, it's an optimistic industry.

Biotech likes to look forward.

They don't like to moan about things that have already happened.

But, you know, the things I'm talking about, they're not exactly ancient history.

You know, the April Fools Day firings at FDA, that have really the agency, that wasn't that long ago.

And it wasn't that long ago that the notion that a CEO's relationship with the President would impact the speed or outcome of an FDA review seemed absurd.

It doesn't seem that way today.

Steve, uh, what do you think this means for FDA?

I think that, we're going to see more dissonance between the stated goals of the FDA leadership of, um, FDA Commissioner Marty Makary and CBER Director Vinay Prasad's constant talk about facilitating drug development, especially for orphan and rare diseases.

And the decisions, the CRLs and the reversals of longstanding policy that are kind of wreaking havoc with drug development programs programs going forward.

I think we're also going to see as a direct result of the kind of loss of expertise and of administrative staff at FDA, we're gonna see more slippage of PDUFA dates.

Some of it will be just flat out missing PDUFAs.

More of it might be administrative that are taken to mask FDA's inability to meet PDUFA dates.

You know, and all of this isn't to say that the, the kind of, the underlying substrate of science-based regulation at FDA is going to disappear.

That's gonna remain, staff are working very hard and, and trying to kind of ignore this norm busting that I mentioned and keep things moving ahead.

And, and I think that they will be successful to a large extent.

But there will be problems that will become clear in 2026 and, they're setting us up for bigger problems going forward.

How.

Drug pricing.

So with drug pricing, the MFN agreements that the pharma companies struck with the White House haven't been made public.

It remains unclear whether any binding contracts have actually been signed, but what is clear is that bespoke companies specific arrangements, they're engineered to protect the most profitable products of the large manufacturers are already reshaping the US drug pricing landscape.

There's two voluntary experiments that have been developed by CMSs Center for Medicare and Medicaid Innovation, CMMI, that are gonna begin rolling out this year in 2026.

And there are plans for two mandatory MFN models, that are going to be advanced in 2026.

It's not clear what's really gonna happen with them.

So the voluntary ones the better approaches to lifestyle and nutrition for comprehensive health.

The acronym is balance that's focused on anti-obesity drugs.

It's gonna start taking effect in mid 2026.

Balance allows manufacturers to trade lower unit prices for higher volumes, expanded access and improve relations with the Trump Administration.

It's framed as a voluntary access experiment.

And I think that it's, it functioning really is a proving ground for MFN style pricing and high volume chronic therapies.

Lilly has already said that intends to participate.

I expect the other anti-obesity drug manufacturers are gonna follow suit.

State Medicaid agencies can opt in beginning in May.

Medicare Part D plans will be able to start participating next January.

Before it's even implemented, CMS is planning to launch a, a short term payment demonstration in July, 2026 to kind of bridge the transition.

So all that's to say, we're gonna see this movement toward a voluntary depressed price or lowered price in exchange for higher volume sales in the public payment markets in the United States for anti-obesity drugs in 2026.

The second voluntary model, the acronym for it is Generous, took effect theoretically January 1st, and applies to Medicaid covered outpatient drugs.

In effect, it creates a CMS run marketplace.

In which MFN index net prices, standardized coverage terms and international reference pricing shape Medicaid contracting.

And they're probably gonna spill over, it's probably gonna spill over into other markets.

It's really creating a formal structure for companies that didn't do the kind of MFN bespoke MFN deals with the White House that the pharma companies did.

To kind of jump onto that bandwagon, which they may feel that they have to do to insulate themselves from other kinds of problems.

Then there's the models that aren't voluntary, the mandatory models that have been proposed.

Um, the acronyms for them are Guard and Globe.

One is for Medicare Part D, one is for Medicare Part B.

They're immensely complicated, immensely complicated to try to understand, and even more and challenging to try to explain in a, in a coherent way.

I think that they're gonna change significantly over the course of the year.

I'm not even convinced that they're gonna go into effect, but I think that they're going to, again, impact all of the drug pricing discussions in the United States in 2026.

All right.

Well Steve, uh, thanks for that.

Something tells me you're gonna be even busier this year than last year.

Well, and, and I'm, and I'm sorry if all of that is kind of dense and difficult to understand.

It's it's difficult stuff, you know, I kind of like sum it up though.

I think it's what, what I started with is this idea really of norm busting the things that, the norms that were broken in 2026 around protecting regulatory decisions from political and ideological influence around around kind of having an exceptionalism to the US pricing environment.

Those have been broken and I don't think that they're coming back.

Alright, well.

It's been a wild ride in a lot of areas in government.

So, one thing, we can turn to, as we bring Lauren back into the conversation with the FDA approvals, is that the number of approvals that FDA put out, kept pace with prior years.

Wasn't that the case, Lauren?

The number of approvals was slightly off what what we've seen the past two years.

So there were 46 new

You guys aren't gonna let me be optimistic are you?

No I can't.

Uh, okay.

There were 46 new drugs approved by CDER, 50 in 2024, so slightly down.

We did see a slight uptick in CBER approvals, depending on how exactly you count them, but we counted 10.

But where we can be optimistic, I think, is that, you know, based on what we've just heard from Steve, there's been so much talk and analysis last year about how all of the changes at FDA will affect the regulatory process and the decisions that are made.

And one of the big take homes from our analysis of the new drug approvals last year was that, at least at a really high level we're not seeing a lot of that, a lot of those effects in this drug approval list.

The metrics that we've used to assess innovation of this new class of drugs that was approved have been really consistent over the past four years.

First in class new drug approvals were pretty consistent, there were 24 in 2025 and 26 the previous year.

And then drugs against new targets, new modality drugs, and first ever approvals for an indication.

Those are other things that we look at.

So as a percentage of total drug approvals for each year.

They've been almost completely flat.

I think that says something.

If we look at accelerated approvals for cancer, it actually went up, there was one more in 2025 than in 2024.

So there was a lot of concern last year about what's gonna happen to the accelerated approval pathway.

Specifically some debate around surrogate endpoints for cancer and, and whether these can keep being used.

I think that was interesting and the pathway was used outside of cancer as well.

Two new drugs were approved for iga nephropathy, for example.

And I would say that, in looking at that and thinking about it, it's not entirely inconsistent.

With the things that I was saying because there's a lag, you know, everything that was approved this year, was obviously in the works long before the changes that we're talking about at FDA hit, and there's a certain momentum where things flow through and I think that what we'll see next year, it may not even be reflected in top line numbers of dramatically, fewer approvals.

it's a little bit, you know, more subtle than that.

Sure, of course.

Yeah.

one area where we did see a difference, which shouldn't be a surprise, is cell and gene therapies.

And again, this, you know, may not have anything to, to do with what's happening at FDA, but there were no CAR T cell approvals this year.

We had five gene therapy approvals, but four of them we're sort of the ex vivo, cell-based gene therapies.

The only AAV that gained approval last year was an intrathecal formulation of Zolgensma, the SMA gene therapy that enables it to be used in older patients who, who may have had high level of toxicity from the intravenous formulation.

And that raises another trend that we saw this year.

So we've kind of characterized 2025 as a best in class year because like many of the last few years best in class or non first in class drugs, outnumbered first in class therapies.

The trend that we saw in that best in class group was a huge focus on formulation and delivery, which I think is, great because it really reflects like the patient focus the patient experience and, and making these things better for patients versus just more effective or just more competitive.

Reaching more SMA patients with the gene therapy is one thing.

The subcutaneous formulation of Keytruda was kind of like the headline news in that area, and there were many other examples.

Um, longer acting IL-5 mab from GSK, for example.

So that was another time that we saw this year.

And I think something else that will be interesting to look for next year is.

The trends in orphan drug approvals in the or orphan drug development, because we've got kind of, competing pressures, right?

We've got bar seems to be raising and perhaps becoming more erratic at FDA on the one hand.

On the other hand, Congress passed an exemption to the Medicare drug negotiation process for, drugs that have only orphan indications.

So that's going to stimulate, I think it's gonna stimulate, the development of more orphan drugs.

We may not see that next year.

I mean, there may be that there's some that get accelerated through to approval, because companies see that there's this economic incentive to do it.

More likely, I think what we'll see is more starts and more, you know, more advances earlier in the pipeline of orphan only indications.

All right, well, you can read Lauren's story, BioCentury.com BioCenturypodcast.com and well, if you're wandering around San Francisco, best of luck with all your meetings.

Like I know some like to do, uh, are hitting the slopes and, uh, avoiding all these meetings, I wish you, uh, much fresh powder.

Stephen, Steve, Lauren, thanks as always and thanks to Kendall Square Orchestra, which provides the music for BioCentury's podcast.