
Via Aimee Raleigh, Most important at Atlas Undertaking, as a part of the From The Trenches function of LifeSciVC
“It was once the most efficient of occasions, it was once the worst of occasions…”

Any other JPM is in the back of us, and whilst a lot of the small communicate was once focused at the stunning climate, spectacular sea of red in toughen of the Biotech CEO Sisterhood, and Monday’s offers (congratulations to ITCI, Scorpion, and IDRx groups!), general sentiment was once bifurcated. Whilst many early-stage non-public VCs (and particularly the ones taking part in contemporary M&A) are feeling just right going into 2025, public traders lamented the deficient efficiency of public portfolios and indices. In a similar way at the corporate facet, a couple of megaround darlings have captured a big proportion of the capital up to now yr (just about 100 raises >$100M). By contrast, the temper is extra nervous for the ones firms with knowledge or timing setbacks, particularly on best of probably the most perfect charges of RIFs in 2024. The previous yr has been a combined bag, particularly when factoring in tenuous macro headwinds similar to uncertainty in regards to the new management, debate on drug pricing, and consistently excessive rates of interest. You’ll pay attention from different retailers that JPM sentiment ranged from deficient to cautiously positive – whilst I gained’t upload extra adjectives to the pile, beneath are a few of my key takeaways as we commence the brand new yr.
Sooner than we dive in, I’d be remiss if I didn’t name out the truth that a lot of ultimate yr’s topics proceed to be entrance and heart, together with M&A and investor bucks involved in “scorching” spaces. With out additional ado – my key topics from this yr’s JPM as we sit up for every other productive yr in biotech…
Courageous New International: China Belongings are Right here to Keep
In spite of grandstanding from Washington, China out-licenses to U.S. and EU-based biotech and Pharma have by no means been extra considerable than up to now yr (Fig. 1). Whilst our business will proceed to discuss whether or not the speedy timelines and considerable systems to be had in China are a growth or a bust for our biotech financial system, there is not any denying the panorama for healing building is transferring (and particularly for “validated” objectives for “best-in-class” performs). Pharma particularly larger China-sourced deal quantity considerably ultimate yr, a vote of self belief for the sturdy discovery and building ability there in addition to extra environment friendly timelines to scientific proof-of-concept. Stifel not too long ago reported that ~1/3 of Pharma licensing offers in 2024 have been sourced from China, an improbable statistic and person who issues to the transferring panorama for asset-centric offers.
A number of questions are best of thoughts for traders when fascinated with China-sourced sources:
How lengthy will those offers stay aggressive, particularly within the context of abruptly expanding economics (in advance, general milestones, royalties, fairness)?
How will we type evolution of this marketplace – do we proceed to look in large part “me-too” or “me-better” performs? Or will the China ecosystem evolve to ship first-in-class systems involved in riskier biology or difficult druggability?
Associated with the above, what number of unbiased systems in opposition to the similar goal can the marketplace rather toughen? One day we will be able to achieve a saturation level in sources, past which there aren’t sufficient consumers to credibly elevate a program thru late-stage building and commercialization.
The long run right here isn’t all or none – it’s extremely not likely China will utterly exchange Western nations in drug discovery and building, and it is usually not likely that destiny regulation will utterly block collaboration. It’s to our get advantages as an business to paintings in opposition to a brand new paradigm that leverages cross-geography collaboration, whilst additionally making sure the U.S. and Europe stay aggressive in executing on building for first-in-class performs.
There and Again Once more: Traders Tiring of “Me-Too” Performs
Relatedly, investor pleasure for asset-centric performs has performed a job within the rush to supply (in large part clinical-stage) sources from China. As my colleague Bruce wrote in a contemporary submit (right here), the sentiment in 2024 was once overwhelmingly “assets-in, platforms-out.” Corporations elevating cash for first-in-class biology or previous platforms tended to have a tougher fundraising adventure ultimate yr, with few standout exceptions. On the other hand, the pendulum will inevitably shift, and the query is whether or not we as an business can foresee that shift early and alter or whether or not we have now already oversaturated positive indications and objectives. Given the motion in opposition to giant indications of the previous 18 months (weight problems, broader cardiovascular, excessive prevalence oncology, and big I&I indications), it’s essential to bear in mind the large value, experience, and time dedication required to run a couple of Segment 3 trials and commercialize in those aggressive areas. It’s not likely that many firms past Pharma and large-cap biotech can pull it off. Thus, if you end up comparing the seventh antibody program in opposition to Goal X, believe whether or not the patron pool is saturated and what incremental alternative is obtainable through any differentiated options. I haven’t any doubt many extra of those systems will “paintings” clinically than can also be feasibly commercialized.
For example, we will believe one of the “scorching” spaces in 2024 and the mixture inventory efficiency for consultant public firms (Fig. 2). Whilst each I&I and weight problems performs are debatable sturdy performers, it’s profitable to notice that some classes obviously changed into overhyped ultimate yr and therefore bought off. Now and then the sell-off was once because of knowledge that, whilst just right, fell in need of the perfection priced in. At different occasions, it was once associated with aggressive performs rising at the non-public facet. In a marketplace the place there are zero-sum parts, an “glaring” play is handiest valued as long as it’s perceived as best-in-class and aggressive in late-stage building.
Possibly within the near-future traders will once more recognize riskier however doubtlessly higher-reward biology and offers – we would possibly already be beginning to see that during 2025 with one of the broad follow-on financings for next-gen modalities. A commonplace chorus this previous JPM was once that of public traders lamenting loss of “originality” within the non-public offers they have been comparing. There may be an uncanny Catch-22 at play – platform or first-in-class asset performs require substantial funding and conviction, however corporate introduction VCs can’t proceed to put money into those spaces if later-stage traders (crossover and publics) don’t take part in financings sooner than those are de-risked in Segment 2. If we proceed to pay attention bets in “validated” performs, I frankly fear concerning the novelty of our collective pipelines 5 years from now.
New Alternatives & Headwinds in Scientific Building
So the place does an investor or entrepreneur glance when some indications really feel saturated? One house of center of attention could be indications the place trial landscapes are evolving such that chance of luck is greater nowadays than in the past. For example, believe bronchial asthma – up till the early 2010s bronchial asthma trials didn’t use eosinophil ranges as an inclusion standards or stratifier, however slightly some taste of Th2 marker (e.g., periostin). A number of mechanisms that many agree will have to paintings (e.g., anti-IL13 lebrikizumab) failed underneath this trial design – is {that a} learn at the mechanistic relevance itself, or slightly the surroundings wherein it was once trialed? Converting building paradigms be offering a trail ahead for brand new or in the past discarded mechanisms – a couple of of my favorites from the previous ~yr are beneath:
COPD: a herbal extension of the eos excessive vs. low paradigm in bronchial asthma is the applying of this affected person stratification way in COPD. The Dupixent acclaim for sufferers with an eosinophilic phenotype ultimate September issues to the luck of this way. Will anti-IL33s have the similar luck stratifying through smoking standing? We’ll quickly in finding out, as a variety of those readouts are expected this yr.
HFpEF: center failure is a space the place incretins are radically converting the paradigm, together with the concept that that weight reduction can in fact be recommended in sufferers (in comparison to the “weight problems paradox” perception, i.e., weight problems correlates with larger survival charges, implying shedding pounds might be negative to CV results). Novo and LLY have trialed semaglutide and tirzepatide in each T2D and non-diabetic overweight populations with center failure and proven surprising efficacy on CV results, high quality of existence, and serve as. Nearly as essential because the incretin mechanism, those trials established a brand new paradigm for overweight HFpEF in relation to affected person variety, approvable endpoints, and remedy period. Expectantly this converting trial panorama for HFpEF, and doubtlessly broader segments of HF, alleviates one of the threat for biotechs growing new remedies for those sufferers.
Urticaria: the exceptional efficacy of KIT inhibitors in CSU has showed the function of mast cells in riding pathology, and has additionally ushered in the concept that of Xolair naïve vs. refractory as a affected person stratification way. Whilst Xolair is an ok early-line agent for sufferers, potent KIT inhibitors like CLDX’s barzolvolimab have proven to be similarly efficacious throughout each Xolair-naïve and refractory sufferers, suggesting that best-in-class efficacy is conceivable throughout affected person segments when disabling mast cells. Different systems focused on Th2 biology (e.g., dupilumab) have proven mediocre efficacy and handiest within the Xolair-naïve inhabitants, implying restricted have an effect on of the mechanism past present standard-of-care.
Forged tumors: contemporary FDA steering on use of ctDNA as an endpoint for remedies with healing intent for forged tumors is also an early biomarker for a shift within the surrogate endpoint panorama. Whilst extra paintings is had to harmonize assays and interpretation throughout remedies and trial settings, it’s a promising building to expedite sign in quest of in those trials.
Whilst those converting paradigms can assist force additional building, there also are quite a lot of indications the place the trial panorama is in dire want of recent insights on affected person stratification, endpoint variety, and remedy period. Atopic Dermatitis particularly stands proud – whilst the pipeline of energetic brokers is expanding, so too is the collective uncertainty re: constraining placebo reaction. Likewise for ALS, we proceed to look failed mechanisms throughout trials (the previous yr on my own it was once ATXN2, eIF2B, RIPK1, 15-Lipoxygenase, and others) and it’s unclear whether or not we’re seeing trial design noise or true unfavorable reads at the biology. At this level it’s unclear whether or not NfL as a surrogate will likely be related throughout a couple of subtypes of ALS (genetic and another way) and what time frame is affordable to look illness amendment. That mentioned, with a number of high-conviction systems just about the health facility (together with from Hint and others), optimistically 2025 brings further readability on tips on how to ideally suited assessment remedies for this devastating situation.
Herculean Scientific Have an effect on: What Can’t Incretins Do?!
Whilst some traders are rising exhausted with the sheer quantity of weight problems newcos, it’s transparent T2D and weight problems are handiest the end of the iceberg for indication relevance of this category. The “winners” have prospective to command super marketplace proportion given the iconic metabolic get advantages established up to now few years for this category. In 2024 we witnessed stellar readouts in HFpEF, MASH, Obstructive Sleep Apnea, Knee Osteoarthritis, Power Kidney Illness, and T2D prevention. Whilst those datasets are being generated through LLY and NOVO, there may be now a powerful clinical-stage pipeline of incretins in speedy pursuit.
There may be super alternative for any Pharma with a present or destiny metabolic illness franchise to construct abruptly right here – the marketplace is so broad that no 2 avid gamers can feasibly nook all marketplace proportion. Many indications exist the place expanding stage of weight reduction (and corresponding enhancements in lipid profiles, glucose regulate, and many others.) is more likely to force better scientific get advantages. Tirzepatide (Zepbound / Mounjaro) is obviously market-leading for those advantages, however there may be nonetheless considerable healing prospective for an agent that achieves greater weight reduction (coming near ~25% bar set through bariatric surgical operation at 1 yr). Whilst a few of these prospective competition (e.g., CagriSema, MariTide) have disenchanted in relation to differentiation vs. tirzepatide, others in late-stage building (VKTX, Kailera, make a selection others) would possibly rather well reach the excessive bar required for differentiation.
Along with the wide spectrum of metabolic sicknesses the place incretins at the moment are a related first line treatment, there are a couple of high-risk however high-reward readouts forward in 2025. Topline readouts from Novo’s research of semaglutide in early Alzheimer’s Illness (EVOKE and EVOKE PLUS) are expected through the top of this yr. Any other trial through Novo will learn out at the efficacy of semaglutide and cagrilintide (amylin) in alcohol-related liver illness – importantly this trial has excessive prospective to turn get advantages on alcohol intake, doubtlessly paving the best way for broader building in substance use issues. In spite of everything, we’re beginning to see trials for incretins together with anti inflammatory brokers for I&I stipulations with a comorbid weight problems inhabitants (e.g., Lilly’s Segment 3 trial for tirzepatide together with anti-IL17A ixekizumab in psoriasis).
In the long run there are rising “tiers” of mechanistic rationale for incretins in indications past weight problems and T2D:
Staff 1: maximum “glaring” growth of mechanism and associated with have an effect on of weight reduction on frame mechanics. Examples come with Knee Osteoarthritis and Obstructive Sleep Apnea.
Staff 2: much less glaring however most probably associated with each relief in fats mass & irritation. HFpEF and MASH fall into this class, and whilst no longer 100% correlated, advanced weight reduction get advantages (a surrogate for healing efficiency) has a tendency to toughen results for those indications.
Staff 3: indications the place incretin efficiency is more likely to have an effect on efficacy however the place knowledge remains to be rising. Those indications come with dependancy / cravings, cognition / dementia, and long-term CV results.
Whilst the urge for food for brand new incretin-based firms is waning, it’s in large part a results of the compelling late-stage systems (e.g., from VKTX, Kailera, and others) already in line to compete with LLY and NOVO. It’s additionally transparent that incretins as a category have extra to turn out in relation to mechanistic relevance and have an effect on on human well being – this might rather well be the largest healing leap forward of our lifetimes.
Inside Neuro, Epilepsy Is still a Darling for Traders
2024 noticed many positive factors within the neuro area, together with repurposing anti-amyloid antibodies with TfR1 shuttles for advanced mind penetration, the primary approval in Schizophrenia in over 30 years in Cobenfy, and sure mHTT and NfL readouts in Huntington’s. Final yr was once additionally marked through a large number of compelling datasets for epilepsy. Particularly, knowledge in pediatric developmental and epileptic encephalopathies (DEE) and grownup focal epilepsy suggests a paradigm shift to best-in-class task with more secure profiles. One of the compelling readouts up to now yr, and the ones on faucet for 2025, are beneath:
Novel remedies for DEEs would possibly reach illness amendment and thus have a profound impact on babies and kids with refractory epilepsy.
STOK not too long ago gained Segment 3 design alignment from the FDA, EMA, and PMDA (Japan) for the EMPEROR trial of zorevunersen, an cutting edge oligonucleotide to extend SCN1A transcript ranges and thus immediately cope with the haploinsufficiency riding illness. Compelling seizure relief (>85%) is annotated for those sufferers on best of standard-of-care (albeit in an open-label surroundings). As well as, Segment 2 knowledge appearing get advantages on cognitive and developmental scales in addition to inclusion of the Vineland-3 endpoint in Segment 3 suggests prospective for actual illness amendment in those refractory sufferers
Final yr Lundbeck got Longboard Prescribed drugs in large part for its 5-HT2c superagonist small molecule treatment Bexicaserin after studying out compelling Segment 1/2 previous within the yr in DEEs. Given >30% seizure relief (placebo-corrected) throughout DEE sufferers, 2025 will likely be the most important execution yr for the Segment 3 trial for the mechanism
Praxis additionally learn out a compelling Segment 2 dataset for DEEs ultimate yr – relutrigine is a sodium channel inhibitor being trialed in SCN2A and SCN8A DEE sufferers. Topline knowledge confirmed just about 50% seizure relief (placebo-corrected) at 16 weeks in an excessively critical inhabitants and 1/3 of sufferers accomplished seizure freedom
Whilst early, Xenon not too long ago revealed preclinical knowledge for its Nav1.1 sodium channel openers, that have blockbuster prospective for Dravet Syndrome.
The previous yr has additionally observed super advances in remedies for adults with focal epilepsy.
2/7.3 potassium channel openers have abruptly emerged as probably the most highest-potential remedies for focal epilepsy, particularly the ones with selectivity (and thus protection) to allow continual remedy. XENE leads the pack with azetukalner, attaining ~35% seizure relief (placebo-corrected) in a contemporary Segment 2b readout. BHVN’s Kv7 activator BHVN-7000 isn’t too a ways in the back of, and those systems would possibly herald a flood of competition
RAPP’s RAP-219, whilst earlier-stage, has prospective in focal epilepsy as a extra selective AMPA receptor NAM – Segment 2a readouts are anticipated this yr, and curiously will supply a learn on lengthy episodes (by way of implanted intracranial EEG) as a possible PD marker
The mechanisms governing hyperexcitability in seizure era may additionally play a job in different neuro stipulations, and it isn’t surprising a few of these systems also are being advanced for psych, motion issues, and linked stipulations. Even with all of the luck of this box, it’s price noting that 2024 wasn’t uniformly sure in epilepsy – Ovid and Takeda noticed the Segment 3 failure of small molecule inhibitor of ldl cholesterol 24-hydroxylase (CH24H) soticlestat in refractory Dravet syndrome and Lennox-Gastaut syndrome. Whilst no longer all knowledge has been rosy, the longer term hasn’t ever appeared so shiny for epilepsy remedies and 2025 would possibly herald an actual paradigm shift for brand new (and doubtlessly disease-modifying) medications.
Ultimate Ideas – Exits Will Proceed to Dictate Sentiment
In the long run traders are judged on their exits, so M&A and public portfolio efficiency will proceed to play an outsized function in sentiment for 2025. At the former, Pharma patent cliffs proceed to loom broad and thus will most probably force sustained acquisitions for scientific or near-clinical performs. At the latter, we’re nonetheless seeing sturdy knowledge being rewarded (e.g., BMPC, DNLI, others ultimate week). Even supposing shares aren’t at their all-time highs, there may be alternative to select winners and do neatly on this marketplace, particularly taking into account one of the undervalued names.
There’s a bimodal distribution in investor and corporate sentiment and it’s not likely to modify within the very near-term. As a substitute of that specialize in what’s out of our regulate (geopolitical agita, pricing drive, cussed inflation), let’s put power into what we will regulate: doing the entirety in our collective energy to convey medications to sufferers. Cheers to a productive 2025 for our business.
P.S. For the ones of you following alongside, sure the callbacks to literature have been intentional and there are 5 in general!
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