Ep. 388 - Biotech IPOs, CAR T safety & pharma tariffs

The episode opens with discussion of Electra's $350 million NASDAQ IPO, which upsized during pricing but fell 12% on its first trading day, breaking a nine-trade winning streak for biotech IPOs in 2024. Electra focuses on SIRP-targeted therapies for secondary HLH and other immune disorders. The decline may stem from investor skepticism due to previous failures in CD47-targeting approaches, though Electra's mechanism differs. The company has multiple catalysts in 2027 including phase 2-3 enrollment completion and data readouts. Adarex Pharma is preparing to price a similar $350 million offering with an siRNA platform targeting complement factor B and other indications. The episode notes that while traditional IPOs remain robust this year, reverse merger transactions with nine-figure pipes have re-emerged as an alternative path to public markets.

The CAR-T discussion focuses on three deaths from inflammatory toxicity (IECHS) in a Novartis autoimmune CAR-T trial. Companies developing competing CAR-T therapies attribute the toxicity to Novartis' rapid T-Charge manufacturing platform, which produces more naive, highly potent cells that generate increased interferon gamma. This amplified cytokine release may trigger disproportionate macrophage activation in autoimmune disease patients, whose macrophages are inherently more reactive to interferon gamma than those in cancer patients. Other modalities like in vivo CAR-Ts and T-cell engaging antibodies are being explored as potentially safer alternatives, though their safety profiles remain unproven. Kyverna's rolling BLA submission for stiff person syndrome represents the next major milestone; approval would mark the first autoimmune CAR-T on the market. Companies like Cabaletta and Kyverna have treated approximately 200 autoimmune disease patients with no reported IECHS cases, suggesting the toxicity may be rare or technology-specific.

The Washington segment addresses Heidi Overton's upcoming FDA commissioner confirmation hearing before the HELP Committee. Overton is a vocal supporter of the Trump administration's vaccine and MAHA (Make America Healthy Again) agenda, creating concerns about whether she independently holds these views or would comply with administration demands that contradict FDA's mission. Steve Usden notes President Trump's recent demand to split childhood vaccines into five doses—a change unsupported by safety evidence and contradicting vaccine science. Health Committee Chairman Bill Cassidy previously called MAHA a "racket" and "ideologically driven" but ultimately supported other administration nominees. The annual MAHA Summit on September 29th will feature sessions on FDA reform with Acting Commissioner Kyle Diamantis and White House advisor Callie Means, raising potential conflicts of interest.

The tariff discussion reveals significant ambiguity in implementation of up to 100% tariffs on patented pharmaceuticals and APIs beginning September 29th. While the administration announced exemptions for orphan drugs, nuclear medicines, plasma therapies, fertility treatments, cell and gene therapies, and antibody drug conjugates, no guidance has been issued on how exemptions will be awarded or determined. Lawyers disagree on whether existing products receive automatic exemptions or only new products meeting undefined conditions. Only 13 companies with HHS MFN and onshoring agreements are confirmed exempt. The Bio trade group warns these tariffs will disproportionately harm small and mid-sized biotech companies least equipped to navigate regulatory complexity, while large companies have largely secured exemptions. With fewer than nine days until implementation, widespread confusion persists about which specific products, ingredients, and companies will be affected.