Yet Another Value Podcast - Adam May on $ABVX's blowout data and subsequent stock crash

Episode Date: June 10, 2026

Abivax posted maybe the best ulcerative colitis data anyone's seen, then crashed 60% on a cancer signal Adam May argues is statistical noise. We dig into whether $ABVX is now a mispriced takeout: the maintenance efficacy that beat Rinvoq, how the scary "seven cancer cases" collapse to two, the blackbox question, the Crohn's skew, and the part two safety data due within weeks. Then a quick look at Nectar (NKTR), its alopecia areata data, and the Eli Lilly lawsuit.This episode is sponsored by AlphaSense, and specifically Andrew's upcoming AI webinar with them: breaking down the modern AI stack for investors with Dave Wang (Wall Street Prompts) and Ben Collins (AlphaSense). Goes live June 25. Register here. Chapters:00:00 Intro and disclosure (long ABVX and NKTR)01:03 Sponsor: AlphaSense AI webinar for investors02:33 The biotech "GOAT" returns03:33 Abivax setup: induction vs maintenance, the stakes06:38 The bar: clinical remission and Rinvoq10:14 Blowout maintenance data, and endoscopic remission that doubles Rinvoq14:23 The data drops, then a 60% crash16:31 The cancer scare, taken apart case by case24:45 Why it's statistical noise: mechanism, clustering, base rates28:50 Adverse-event capture and the phase 2 safety database33:57 Bear case: hasn't the market had time to digest this?38:00 Blackbox or no blackbox, and does it matter at $10040:32 The Crohn's readout and the skew45:36 M&A: timing, the new CCO, what Adam wants them to do47:38 Part two safety data due within weeks54:46 The cash question: secondary vs sale57:49 Nectar: strong data, then an unexplained selloff59:54 The Eli Lilly lawsuit and the jury-trial angle01:03:26 Ox40 read-through and the Q32 Bio overhang01:06:07 Most mispriced pick, targets, and the CEO's Cincor parallel01:12:10 WrapLinks:Yet Another Value Blog - https://www.yetanothervalueblog.comSee our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimerProduction and editing by The Podcast Consultant - https://thepodcastconsultant.com/Disclosure: Long ABVX and NKTR

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free of charge. BetMGM operates pursuant to an operating agreement with Eye Gaming, Ontario. You're about to listen to yet another value podcast with your host, me, Andrew Walker. Today, I'm happy to have back on for the second time, Adam A. Adam is kind of the goat of biotech investing. I don't think it's crazy to say that if you listen to the first podcast we did a couple months ago, just absolutely rave reviews, one of the best rated podcasts we've ever done. People love hearing Adam because he has a deep, deep knowledge base, and he's just a lot of fun to talk to. So today we're going to be following up. I'm we record, I'm recording this

June 8th, Monday afternoon, AvVax, which is one of the companies we talked about a lot there. released data last week. So we spend probably if this is an hour and 15 minute podcast, we spend the first 55 minutes talking about Advx. And then we dive into nectar a little bit at the end there. But I think you're going to learn a lot. AvVax is a fascinating situation right now because they reported, not to spoil what's about happening, they reported blowout data, but there were some safety concerns with it. And the stock is, it's just in a really interesting place. And if you've got to read, and I think Adam does, I believe it, it's very interesting. So disclosure, I'm long, a little bit of ad backs and a little bit of nectar.

So there's your disclosure, full disclosure, disclaimer, all that sort of stuff at the end of the show notes and in the at the end of the episode and in the show notes. So we're going to get to the podcast in one second. But first, a word from our sponsors. This podcast is sponsored by Alpha Sense and more specifically my upcoming AI webinar with Alpha Sense. Look, the AI landscape is crazy if you're investor. It's crowded. It's confusing. Everyone's telling you to adopt AI, but nobody is telling you what tools to use.

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improve, develop AI-enabled workflows, you're not going to want to miss this webinar. Join us on, we're going to record it next week, middle of June 18th, and it'll be going live June 25th. So there'll be a link to register in the show notes. And please, feel free, lob in any questions you have on using AI, whether it's general tools or AI-specific tools like AlphaSense. So thanks, thanks, Alphicense,

and I'll see you for the webinar soon. All right, hello and welcome to the end of the value podcast. I'm your host, Andrew Walker. With me today, I'm happy to have one for the second time, The Man, the Myth, the Legend, Adam, how's it going? Going great. Glad for, glad to be back. Thanks for having me. I'm super excited.

I'm going to tell you how excited in one second, but just remind everyone, disclaimer, nothing on the spot is investing advice, full disclaimer at the end of the podcast and in the show notes. Adam, when I said I was, you were coming back on, obviously people are thrilled because I think the Twitter comment has like 100 comments at this point. But somebody sent me an email that said,

this is like having Victor Wendam Yama on the podcast directly after an NBA finals game. I was like, wow, high praise. Hi, that's probably a little too high, but I guess I'll take it. It's been crazy. I'm wearing my Nick shirt today for those you can't see. We've got game three tonight.

But Adam, the proximate reason for having you come on, I mean, there's actually been, A, the first podcast guy, unbelievable reviews, but there's actually been quite a bit of news for both Abivix, the ticker there is ABVX and nectartherapeutics. I think the more dramatic and more interesting, more timely one is Abvix. So I'm happy to just toss it over to you and we can chat on it, or I can provide background and everything.

But however you want to go, why don't we start off with Abbex? Yeah, yeah. So Abbex, there's a lot to digest there. And so I probably could ramble on uninterrupted for like an hour on this. So definitely interrupt me if I start doing that and ask what I would have. I probably will not. I'm just scared of all right. Come to mind.

But when we last talked about AviVax, we kind of were talking about how I had approached predicting the data that they showed in what was called an induction trial, meaning sort of the first readout of a phase three study in a disease called ulcerative colitis that looked at the short-term efficacy of the drug. And that was sort of the first, that's the bigger riskier catalyst because it basically says either this drug is active or it's not. It was very successful. It was absolutely very active during the induction phase.

phase, cross-trial comparison, caveat probably was the third most efficacious drug that had ever been studied in ulcer of chlytis. And so huge upside on that. But then the second big catalyst that would follow that was the maintenance trial, which is induction was measuring efficacy at only eight weeks of treatment. And then it would add 44 more weeks of treatment for the maintenance phase to see does this work for a year? And if so, how much better or worse do these responses get over that period of time. And the second big thing that you can see from a maintenance trial is safety, right? So treating somebody with a drug for eight weeks,

certainly you can see if there's some big, really rapid side effect, safety problem. But generally speaking, if there's a problem with a drug from a safety side of things, you're not going to find out in eight weeks. You need longer. And actually, frankly, we'll talk about this, but even a year as a pretty short period of time to determine the safety of the drug. So when we last talked, we were waiting on the maintenance data update. Safety had actually largely been de-risked at that point when we talked last because

there was something called a data safety monitoring board, so a group of independent physicians usually who are looking at the data from the phase three trial as it's running. So they are unblinded, unlike anybody else in the world. Even the management of the company could not have told you what the response rates were in different arms. They were completely blinded to the results of the trial as it was running, but the data safety monitoring board can actually look at unblinded data to see who's on drug, and their main purpose is to see, are there atypical side effects that appear to be occurring on the drug arm versus not? And if they see that, they stop trial early or pause it and review some

changes, increase monitoring, whatever. It's every investor in a biotech's nightmare, right? You wake up on a Monday you're not expecting and it says, hey, the same board said liver talks, cholesterol off this chart or something and we stopped dosing while we were. And then you say, oh God, this drug is, it's it. So yeah, absolutely. With very rare exceptions, you do not want to hear from the DSMB as a trial is running, right? So what we did hear from management at that point when we talked, 80% of the trial had already been reviewed by the DSMB with no new safety signals. A few weeks after we talked, 90% had read out, safety signals. So safety was very largely the risk. The large question that investors were asking

is how effective is this going to be? There's two endpoints that really matter. The one that we talked about and the one that is the primary endpoint, the one that the FDA will use to assess efficacy for this drug to decide approve or don't approve is clinical remission delta. So how many patients end up in clinical remission versus placebo? And the range that people were looking at, as the plausible range for Abivaxe was 20 to 30% placebo-adjustic clinical remission delta. On the podcast last time, I'd said, yeah, I'm going to guess 25%. And 25% is a pretty good number. That would put Abivax ahead of most of the other, what we call biologic treatments,

these kind of safe, effective treatments for ulceroclitis. But it would have put it behind a class called the Jack inhibitors, namely a drug called Renvoke that had produced this otherworldly clinical remission delta of 39% in its face retrial at the high dose and 3030% at the low dose. So it's like there's this clustering of really safe drugs around 20, 22, 25, and then a huge gap in efficacy with Renvoke, this jack inhibitor, at 30 to 40%. the caveat for Renvoke is it has a huge black box warning for safety problems multiple. So five points really on the Renvoke black box warning, cancer, severe fatal infections,

blood clots, heart attacks and strokes, and what we call Mace, major adverse cardiac events, blood clots, all those are on the black box warning. So it is incredibly effective. but very unsafe. And I'm just like because it's just, it's every way it can kill you except for like human causes, right? It won't cause a gunshot wound, but pretty much everything else it can do.

Yeah, and on top of that, those are all the safety warnings you have to tell a patient about it. I mean, if it's in a black box, you've got to discuss it with a patient when you're prescribing a drug, black box being kind of like the highest form of warning that the FDA can sign to a drug. On top of that, there's lab monitoring requirements for the drug. So it can cause, it doesn't have a black box warning for these things, but it can cause lymphopenia,

meaning you can make your white count drop very low. It can cause abnormal cholesterol and lipid elevation. So you have to have blood draws on top of all this safety problem. So it's a very clunky prescribing and user experience. Although it's very effective, very dangerous, and hard to prescribe and use because you have all these kind of hoop to jump through. So the kind of like blue sky bull cases for Abivax and the maintenance readout were projected to be a clinical remission delta starting with a three. So if you could get it into a three handle on the clinical remission delta, you would be right up there with Renvo with the 30 to 39 percent from the high dose to low dose range. And that would be standing alone above everybody else if you could get to that.

level. What actually happened was a four-handle for Abivax on the high dose, so 40-40% at the high dose and 39% miraculously at the low dose. So the low and high dose matched and exceeded Renvo on clinical remission delta, which as far as people that I talk to, and I've probably talked about this doc as much as almost anybody else in the world, that was not something that people were thinking was feasible. But step further on the efficacy, glowing out expectations, that the second endpoint, it's not the primary endpoint, but if you talk to a lot of GI doctors who prescribe these drugs,

some of them, their favorite, or really many of them, their favorite endpoint, the endpoint that they rely on the most to assess efficacy is actually indestructory. remission. And that basically is an endpoint where the GI doctor is performing a colonoscopy on an ulcerative clitis patient and says, I see zero evidence of any disease in this patient, meaning I could not tell you if this colonoscopy came from a perfectly healthy 20-year-old or a 40-year-old with severe ulcerative colitis because it's been completely healed. And GI doctors like that endpoint because it's regarded as more objective. Clinical remission,

the other primary endpoint. It involves some kind of like patient questionnaire type responses, how many bowel movements a day, subjective answers that can be a little noisier and more variable. So this endoscopic remission, Delta, although not the technical primary endpoint of the study, could be viewed as an equally big deal as far as the commercial uptake of a drug goes in ulcerous. Can I add one thing just because I'm a generalist and you're like so far beyond me as a specialist and I would guess most of the audience comes seen. I mean, alternative collitis is no joke, like diarrhea, bloody diarrhea, urgency, all this sort of stuff.

Like one of the treatments is, you talked about an alternative treatment, an alternative drug. One of the treatments is just removing the colon, right? Like just taking the colon out. So I only say that because if you are taking this drug and you have a healthy colon, like it has completely clear. Oh, it changes your life. lengthens your life. Yeah. So what, I mean, what you're talking about just to frame that. I mean, we're not just talking about just cutting out a diseased colon. This may be a little graphic compared to what is normally on your podcast as a finance podcast. But when you cut out somebody's

colon, you have to create a new hole in the stomach where your processed food will exit into a plastic pouch that you carry around on your stomach called a colostomy for the rest of your life. And the location where that used to exit is stitched shut. So it is a beyond life-changing experience to have uncontrollable ulceroclitis. And this is something that happens to many patients with it. So absolutely no joke. So the endoscopic remission discussion, we covered that Avivax met the unexpectedly high bar of Renvoke on clinical. remission. But on the endoscopic remission delta, which again is this endpoint that GI doctors kind of favor, it crushed Renvoke. And this is the same sort of dynamic for Renvoke

where it was sort of head and shoulders above the existing competition to begin with. The high dose of Renvoke had an 18% endoscopic remission delta. Abivax's high dose endoscopic remission Delta was 38% more than double the endoscopic remission delta of this drug that had previously been the undisputed champion of long-term efficacy and ultraloclitis. So that result in particular was beyond the wildest bull case dreams. You know, I can be sometimes a little critical of cell-side projections where it's like, oh, what if it comes in incredibly, incredibly good? And it's like, we don't even need to talk about that because it's never going to happen. This outcome was not even listed on the scale for any of the scenario analyses of these data.

So that data gets press released Monday after hours, Monday, June 1st at like 4.5 p.m. And in the press release, it also says no new safety signals identified. So everybody's celebrating. I mean, this is the greatest high visibility biotech readout ever. The sock is 130 to 180 and half a second. That's right. So it was halted on these data. It had been trading really as far as a sustained stock price goes an all-time high. It had briefly ticked up into the 140s at one point in the past on an M&A rumor. But the stock had been trading around 130, 132, and that's about as high as it had ever been able to sustain. So from essential all-time highs, the stock unhalted and went to 175-185 range. And then people are selling. All of a sudden, a few minutes later, the stock is kind of selling off, it's down to 160, 150, and it starts accelerating 110, and then it breaks below triple digits. And people are asking around, like, what is it going on?

I had reviewed everything that was available in the press release, which included the main efficacy data, the statement that there were no new safety findings and a brief safety table that laid out that there were no headache problems, no pancreatitis, no cardiac fibrosis. these were all things that have been talked about as possible safety problems ahead of time, all clear there, and it listed a few cases of cancer, totally passed a sniff test to me. I didn't think anything of it. You see cases of cancer in large phase three studies all the time. And so I was waiting for the slides with the conference call to come out so I could pour through that and try to find why I was selling off. I'm looking, I'm looking, I'm looking, can't find anything.

and I start hearing people messaging me, posting on social media about seven cancer cases in the high-dose 50-mogram arm of the drug versus one cancer case on placebo. And so it does turn out that a perceived cancer risk is the reason that the stock really, I mean crash. I think crash is probably a fair word to use for how many. it sold off. I don't even know if cash is a fair word because I follow a lot of the pharma companies. And, you know, Advix, again, 130 to 180 after hours to, I mean, it opens the next day

around 80, right? And I think every non-mecacap pharma is down 5% the next day just as, you know, like the swoosh of margin calls and, like, it crashed the whole pharma sector for a day. So the index that tracks it was down like four or four and a half percent that day. And, yeah, I mean, it went as low as. 68 something that day, so 185 after hours down to roughly 68. I mean, we'll talk about this more. That is beyond an overshoot to the downside.

But it all stemmed from this perceived cancer risk signal. And so now I've written about this and published this stuff online at this point, but I think there's objective reason, data-based reason, say that this thought or concern that there is a safety risk of cancer being caused by this drug, Obifazimod, is demonstrably false. And so there's a lot of, there's a lot of ways to attack that issue. But to first of all, frame this, I think that management, that Bavac's management severely mishandled the way that they presented the data, and they presented it in a way that led to people perceiving a problem that wasn't there.

But they themselves, as experts in this field, were able to review the data and see very clearly, as I feel like I can see, there is no cancer risk with this drug, and they took that for granted. They took for granted that the market would be able to rapidly interpret that same, or come to that same conclusion. In reality, they didn't even need to show the cancer cases in the way that they did.

If you go back and look at top line phase three press releases from other companies with ulceroplitis drugs, even ones that do have black box warnings for causing cancer, they're not press releasing the cancer cases in the level of detail that Abibax did. So in one way, it was sort of being overly open about the data that they had. They could have very easily, they could have very easily showed it in a different way that, I don't know, I wouldn't call it hiding the data, but there's precedent to say that it did not need to be disclosed in the way that it was. That's one problem. There's two other problems with the way they presented it, and they're actually really very, very glaring. One is a huge issue.

So we have seven cases of cancer that we need to explain on the 50 milligram drug arm versus one in the placebo arm. First of all, one of those cases was something called colonic dysplasia, which is by definition not cancer. Displasia is a term for a pre-cancer. is something that's very common in ultra-claditis patients because they have inflamed colons and they have a higher risk

of developing cancer in their colon over their lifetime. But the reason the term exists is to distinguish it from cancer. And they listed it under the cancer cases and in the footnote, specifically referred to it as

colon cancer, completely wrong. And it turns out that that was probably what they would refer to as like a coding error. But basically, some of these data sets are automatically compiled based on predetermined categories. And the colonic dysplasia probably fell under a neoplasms category that includes cancers, but also benign stuff like cysts and lipomas. And they just failed to take it out. But beyond failing to take it out of the list of cancers, they also specifically referred to it

verbatim as colon cancer, which is just factually incorrect. So from the get-go, one case can be completely eliminated. So now we're down to six versus one. Four of those cancer cases were something called non-melanoma skin cancer. That is a totally, totally different category than what colloquially most of us would call or think of as cancer, meaning something that you get diagnosed with, you tell your family to sit down and tell them the bad news. non-melanoma skin cancer is 15 to 20 times more common than the second most common type of my dad had it in the last year and it was like hey not a big deal we're going to go it was on the

bottom of his nose they cut it out and it wasn't a big procedure you can tell me if i'm wrong sorry to jump in 100% no that's exactly probably everybody listening knows somebody even within their their family who has had non-melanoma skin cancer there's probably like five million cases of this per year in the the United States. And it's almost always cured by roughly 15-minute procedure performed under local anesthesia. So you numb somebody up with a shot and then you cut it out. And sometimes you just cauterize. Sometimes you stitch them up.

In any case, they drive themselves there. They drive themselves home. They go back to work afterwards. You are cured of cancer that day. Correct. So some of the not-so-experienced specialist money in the name clearly thought, that these squamous cell carcinoma and basal cell carcinomas that fell under the category of non-melanoma skin cancer were, for lack of a better term, legitimate or real cancer. I don't want to

diminish it too much because it is, you know, I'm a dermatologist, so it's kind of my career to treat those. So I don't want to overly diminish it, but it really is not a big deal. And that's what I'm telling patients 10 times a day whenever I diagnose it 10 times a day and cure it 10 time today. So you could eliminate one of the seven because it was literally not cancer and it was just as simple as them putting almost a typo in the table. You can eliminate four more because they were non-melanoma skin cancers and the FDA literally measures cancer risk with drugs with an endpoint called non- melanoma skin cancer. So it was a mistake to really even talk to, really even talk about those five types of cancer. So then you're left with two quote unquote real cancers in the 50

milligram arm, zero in the 25 milligram arm, and zero on placebo. Those two cancers in the 50 milligram arm were the two most common types of cancer in the world besides these pseudo cancers, prostate and breast. And so right off the bat, just distilling this. Just distilling this from seven down to two cases of cancer probably would have prevented this entire crash from happening in the first place. You said two, and I just want to be clear, it's one case of prostate cancer and one case of breast cancer, right? So this is an end of almost 200, and you have one in one.

And I'm sure people can see where I'm going to. It's like, hey, if I had this big trial, 200, and I said one person got prostate cancer, you'd probably like, oh, well, we should investigate, but that might have just been one person drew a bad luck. It's not like you had 1% of a 5,000, 500,000, and you say, oh, that's kind of, it's one, it's literally one. Exactly. This is, in my opinion, statistical noise without a doubt. And there's a few ways that the FDA is going to look at this to clarify that and I think confirm that.

One is that there is no smoking gun mechanism for how Obifazimod would be causing cancer. There's classically two ways in which the FDA considers a drug to be carcestine, in a genetic, meaning that it causes cancer. One is that it causes DNA mutations. This was well-studied years ago. The data have been public for a long time. Obifazamod does not cause DNA mutations. It's not what they call genotoxic.

So no smoking gun there. The second is the one that we weren't quite sure about until this data came out, which is immunosuppression. So a drug can increase your risk for cancer because it turns down your immune system to the point that it stops seeking early cancers and killing them. And the way you can tell whether or not a drug is immunosuppressive is typically by whether or not

it increases your infection risk. Severe infections in this study were more common on placebo than on the 50 milligram dose. So unequivocally, the drug is not immunosuppressive. So from the very beginning, there's no suspicious mechanism by which we would expect that this drug could be causing cancer. So that's point number one. Speaking to the idea that this is just statistical noise, and like you said, if you follow a bunch of people for a year, you're going to have some people who have cancer, no doubt. One other big point that the FDA will look at in cases of cancer is, is there what they call clustering of a specific type of cancer?

So a lot of drugs that do have a cancer risk will cause a very specific type of cancer because they're working in some specific mechanism. So some drugs will be found to just increase your risk of lymphoma or some will increase your risk of lung cancer and things like that. So the fact that these were two completely distinct organs, breasts and prostate, there's no clustering. And then you just need to look into the background rate of what you expect. the rate of new cancer development to be in a population like this. And so that's kind of the point that you're getting at, with this being most likely statistical noise. I mean, if you took one case from the drug arm

and put it in the placebo arm, then it's completely balanced with zero signal. So the expected rate of new cancer development in alternative-clayas patients is roughly 0.5 per 100 patient years. And so here's another error that people made in trying to interpret this data. They're comparing the number of cancers in the drug arm to the number in the placebo arm. This study is not by any stretch statistically powered to detect differences in a very rare outcome.

It's powered to detect clinical remission delta, which happens in 50% of patients on the drugs, extremely common outcome. If you wanted to tell a difference in cancer risk, you would have to have thousands of patients in this trial because development of cancer is a very rare outcome. You have to have a huge study to detect differences. So you actually don't need to compare to the placebo rate. What you need to compare to is the background rate, one, and two, for precedent purposes, you want to compare to the rates that other drugs that got approved in an ulcer colitis without a black box warrant. and what rates did they see in their trials? So, yeah, the expected background rate's about 0.5 per 100 patient years.

Patient year is very important because it kind of gets at what we were talking about earlier, like in the induction period where the study was only eight weeks long. If you follow 100 patients for only eight weeks, that's actually a very short number or a small number of patient years. And I don't I know speaking in terms that are kind of foreign to people probably but this is important.

Yeah, I was just going to build on I mean, I think I know where you're going because I saw your tweets, but if I'm just looking at OB-50, right? Let's just round it to 200 people are on the OB-50 and 200 people are in the placebo. Those are roughly the right numbers. I think what you're driving is, too,

is only 66 people finish the placebo over the 44 weeks. And I'm looking, 160 people finish the OB-50. So even if you're saying, oh, we had two cases in the OB-50 and zero cases in the OB-40, or sorry, in the placebo, you say, oh, well, it's a lot more likely in the OB-50. The answer might be, yeah, but you had 4-X

that just sheer time from the OB-50 because more people are on that thing and they're not dropping out. So if you start looking at background rates, it actually might be less cancer. Maybe this is scaring cancer. Who the heck knows? Am I driving that correctly? Yeah, you are. So what you're speaking to is what we would call adverse event capture.

So what happened in this trial was almost all of the patients who were on placebo dropped out of the trial because there's severe ulcerative colitis patients who were not getting any treatment. And they couldn't tolerate it. I mean, it's literally dangerous to some of these people to not be on treatment. So they had to drop out of the study. When you drop out of the study, you're not being followed anymore for adverse events. And so if one of the over 100 patients who dropped out of the placebo arm early on in the study, six months later got diagnosed with lung cancer, we'll never know.

We won't know because they dropped out of the trial. And so the adverse event capture on the drug arms was much higher because about 80% of those patients completed the study. So they were actually being followed. They were actually being assessed for potential cancers. So these are all sort of ancillary points. In the long run, what really matters is, does, the signal that we have at 50 milligrams, the high dose,

does it look like we're seeing a higher rate of cancer with those cases that we have versus what we should expect in severe ulcer of gladys patients? The answer, in my opinion, is objectively no or not. So another big mistake the market made was only looking at the phase three data. We have hundreds of patient years. We actually have the largest safety database

for this drug comes from the phase two study, which is counterintuitive because it had fewer patients in it, but that phase two study has been running for seven years versus one year of this phase three trial. So as far as the number of patient years of adverse event capture that we have, the phase two study is actually a much larger safety data set. So I think a lot of the initial reaction to the phase three data was doing a very quick, rough calculation only from the phase three data and forgetting the fact that we have this

big phase two study that had only one case of cancer over hundreds more patient years. So when you take those three cases, one from phase two, two from phase three, and this is also making an assumption that the phase two case was from a 50 milligram dose, which we don't know. The rate is 0.59 per 100 patient years. 0.59 cancers occur for every 100 years that a patient is on this drug so far. And that is compared to what the literature tells us, the background rate is about 0.5. So perfectly enraigned with what you should expect these patients to have as far as their development of cancer goes.

But that takes some work to get those numbers. And certainly people were not prepared to look at that in depth after hours on Monday night whenever the stock was trading down 60% or whatever. I want to give one more bull case that I heard and then I want to actually provide some pushback because I think it'll be useful for people. But the other bull case I had was a friend who was buying this after hours at 80 and he was kind of like, okay, he was just working off the seven number. He was like, okay, cool.

There's a three to five percent increase chance of cancer. Go talk to a gastro and a gastro about having UC and see if they'd favor a three to five percent of increased chance of cancer versus being deep into UC and see which one they would pick. and they're like, this is going to be a blockbuster, even if you black label, a 3 to 5% increase in cancer. So that's the last bull case room kind of supporting you. I'll pause there, and then I want to hit you with some bear cases. Yeah, so that's a great point, and I'll echo it by saying,

Renvoke, this drug whose efficacy obfazimod just beat in maintenance. Remember, it has cancer as a black box warning and has four other points of potentially fatal adverse events on black box that this will whack, and it has lab monitoring. worse efficacy, four more black box warnings and lab monitoring requirements. And it is probably going to do peak sales and IBD around $4 billion, $4 billion across ultraloclitis and Crohn's. So there's no argument that even in the worst case scenario, which I now think we can

objectively show is unlikely that the FDA gives this a single black box warning for cancer, there's no argument in my mind that this isn't going to be a multi-blockbuster drug. And when this stock got down into double digits, it was it was pricing in worse than a worst case scenario, basically. Let me provide some pushbacks. And the first we talked about, oh, the stock 130 to 180, down to 80, it's at 100. And we can talk about opportunity everything there. But as you and I are recording, it's about 100. I think both of us probably think it's attractive.

But I think the first pushback you would say is, look, Adam's a super sharp guy. Andrew Drew was out of his mouth when he talks science, but Adam's a super sharp guy. The market has had a lot of time to digest these results. There's a lot of cell side research. It's not like the old days back when it was at 10 before. There's tons of cell side research. This is probably the most talked about name in the biofarm sphere right now. Lots of event people.

People think it's going to get taken out. But the market has gone from 130 to 100. People are scared and people have had more than a week to digest this news right now. Adam sounds super bull. She sounds like this is a small potato's issue that will get ignored. probably no black box people just look at this this one was the market is not saying that and you know I saw a lot of banks that downgraded not the moment after this happened but two days when they had time to digest it so I think a lot of people and myself included when I say hey is this really where you're

going to find edge Andrew will look at this and say the markets have a lot of times to look at this 130 to 100 they're worried about this and I'll follow up with the separate report but I think you see where I'm going with that yeah absolutely I mean I think that neither of us would be on podcast right now are doing what we do to make money if we believed in efficient markets. So I don't, you know, philosophically we could go there. But I am repeatedly amazed at the things that the market is able to ignore when it comes to deep analysis of data. These are not, these are not obvious insights.

It takes work to calculate these numbers and come to these conclusions. And, you know, I just think I think people either haven't done it or read that. cases of cancer are going to come out and we can talk about the part two data release where that that's actually probably going to be the case that there are more cases of cancer but has to be below a certain rate lots of caveats to add there um so i don't know i can't i can't tell you why it doesn't trade to back to at least the 130 range where it was before these these data came out but um in some sense i'm glad that it doesn't because it speaks to the ability to have differentiated analysis. I guess I would also point out, we talked about on the last podcast my assessment of

the induction data and the prediction that one could make with the data from this company's corporate deck that was essentially mathematical proof that the study was going to hit and have thousand percent upside. And I published those data publicly and you know, you can follow the number of views these things. Get, had tens of thousands to 100,000. thousand views on this thesis where I laid out the math number by number showing this is guaranteed to hit essentially as close as a guarantee as you can ever get to a 10x upside. And over the next two days, the stock traded now after tens of thousands of people read that diligence.

And then after hours at hour 48, since I published that, the data came out. It hit and, you know, a thousand percent upside was the result. So it would be not the first time with this very stock that the data are out there. that the data are very objectively clear, in my opinion, and that the market is pricing it wrong. I don't 100% to screw with you, but I would say, like, since it is much bigger now, right? Much bigger. So there are a lot more on you, my friends. So people are looking at your tweets.

Totally fair. I think another thing, another worry, I have as well. This is, AVex at $100 per share is about a $7 billion company, right? MNA premium. We'll talk to MNA a second. Everyone thinks it's going to M&A. Let's just call it a $10 billion bite size to make the numbers real easy.

I think the worry people have is, hey, if you get Black Box or you've got this worried about cancer, this is a huge check, right? Even for Big Pharma, $10 billion is big. I think people are kind of worried and saying, oh, if you get that box, like it's just not as neat. It's not as clean.

It's not as a driven story. And I don't know. Maybe it's just, we'll know by what, early next year, mid-next year, if it's going to have black box or not. So maybe you just need to wait for that resolution, and that's the big cabotist. But I think people are kind of nervous on that. And, hey, does the FDA just say, all right, whatever, it's black box? We just put a black box on cancer warning.

There were some cancer things. I'm not sure. But I think that's the other thing people are worried about. Yeah, no, I think that's the thing that people are worried about is, is this is a black box warning or not. there's one other thing that they could do, which is called adding a warnings and precautions note on the label, which is essentially the same as not having anything on the label at all, as far as I'm concerned.

So it really is a black box warning or no black box warning. That's going to be the question. That's definitely the fair thing to point out. Let me reframe my question. I guess to me, and I'm just a dumb dumb, but with five, you know, five, black box on the competitor versus one block blocks warning here, better data here, right? If there is a black box, it still seems like from this price, if it's going to be a two, three, four billion dollar drugs, it still seems like upside here. And if there's no black box,

guys, I guess my question to you is, does this is the bet at this point all about black box, versus no black box? Or can this work even if it's just the one black box running for some reason, they do put the cancer warning on it? At 100, I think that the M&A premium for a buyer who is assuming a black box would would make this a buy with i guess that's a convoluted way of saying it at 100 i don't i think that you're pricing in a black box warning and i think that somebody could reasonably buy this for 130 150 dollars a share um at least taking on the the high the the odds favoring a black box i guess i mean there's two variables actually it's not just the black box. The second variable is, will this drug work in Crohn's disease? Which there's

going to be a readout for that in mid-2027. Yep. And so there is a huge skew between the absolute worst case and the absolute best case. And so the absolute worst case is this does not work in Crohn's, and it gets a black box warning, meaning you're launching only an ulcerococelitis with a black box. And in that case, I think the proof of concept we have with Renvoke very clearly shows it would still be a multi-billion-dollar product. So in that case, even if a farmer were to buy it for $10 billion and it gets $2 billion peak sales, you're at least going to make your money back by doing that, or it's not going to be a massive failure. But the blue sky case here would be a hit in Crohn's and no black bucks, in which case I think you're talking about

a $4 to $5 billion peak in Ulster of Clydes alone, and $4 to $5 billion in Crohn's alone. So an $8 to $10 billion drug, that is a peak sales drug. That is a number that almost exceeds a pharmaceutical company's ability to buy a company with a drug of that value. I mean, you're starting to talk about a drug that was getting that sort of peak sales projection,

having to go it alone because you're getting in more of like a merger territory than a buyout territory. And so there's a very non-zero probability of that blue sky case playing out. I think that the probability of success in Crohn's has increased because of the magnitude of efficacy that we saw in ulcerative colitis. So it's not that the extreme efficacy we just saw does not just speak to increased sales in ulcer of colitis. It speaks to adjusting the probability of success upwards for Crohn's as well.

So there's a huge skew here. And the M&A premium, if there is going to be one, will be done on a risk-adjusted basis for both of those opportunities, right? So if the low end is a multi-billion dollar blockbuster drug and you see a loan with a black box, you're still looking at a pretty cheap valuation at $100 a share. This is a perfect one to me for CVRs as well, right? CVR based on Chrome 3D, CBR based. And it depends when they sell CVR based on black box or no Xbox. Let me give you one. I don't read a lot of sell side, but literally, as is prepping for this call and for this podcast,

I got a sell side from Jeffery's that I thought was interesting. It said, and I'm just going to hit some quotes, we posit that a good drug does not always equal a good stock. We see this as a situation where the outlook for the drug is arguably better than the near-term outlook for the stock. So those are just interesting things, I think, that hit on to it. But the place I really want to say is we see that the differentiated versus Jacks is narrowed, which makes the stock set up XM&A difficult. And it goes on to detail how versus

RINVAC, the differentiates a difference based on these results. When I read that, you know, when I read that versus both what I see on their slides and what I hear from you, it's a little different, right? Because I think you think this is best in class. And, you know, we just had four better than four over three to start. And they're saying, oh, it's not the different. So what are they saying that's leading them to say, hey, the differentiated is, it's not that differentiated. they must be talking about safety because that's really the only thing they could be talking about.

I think it'd be interesting I haven't read their work prior to the readout but if you go back and read their work prior to the readout, I would be interested to see what their probability was assigned to equivalent efficacy to RINVoke. People were not expecting this to even match, let alone exceed RINBoke on efficacy. So to say that it's not differentiated

ahead of the data, we would have considered a blue sky scenario to match Rainbow's efficacy. Broadly, that's what people were saying. If you could achieve black-like, jack-like efficacy, that would be the blue sky case. So, I don't know. You know, my take from the very brief comments you made there is to me it feels like they're being a prisoner of the stock price movement and not actually evaluating the fundamentals that we're seeing here.

Yeah, look, I don't, I don't disagree, but again, I am not a science person. And the one thing I worry about here is like, I've got a lot of roots. A few and a few other bulls here, but this is like, again, this is the most popular drug I would say in biofron. Just because the skew was so high in everybody's reading. And I'm like, hey, I feel like I get from 130 to 80 when people are saying, oh, cancer. But at this point to me, it seems pretty obvious that it's not a huge, I don't want to say huge risk,

but it seems pretty obvious like this is very small. Again, one prostate, one breast cancer, and even if it's skin cancer, and the stock just hasn't gone off. And maybe I also will say, I have heard that the management team is having private meetings with investors and telling them a bunch of stuff. And I hate when I hear, oh, there's private meetings and I'm not inside of the information, but neither you're nerd there. Let me ask, the last time you were on the podcast, I think it was right before they hired a cheap commercial officer. And both you and I were saying, look, everyone thinks this is a takeout. They do the maintenance data, and then there's a takeout. Now they're in this interesting spot.

I said CVR because we're going to know if it's going to get a black box or not in the next 12 months. And then in mid-20207, we're going to have the Crohn's readout. They're in this weird spot where hopefully they have FDA approval in the short to medium term and crones in the medium term. But they've got this black box overhang. They do have the chief commercial officer. And everyone thinks to the M.A. Target and got this weird thing. So what is your like kind of, and I understand this is moving more from the science to the events and the merger are the merger of space. but what is kind of your read or what would just your hope be on the M&A side?

Do you want them until they clear up Blackbox? Do you want them to pursue commercialization? Do you think they should just hit the bid now? How do you kind of think about this? Well, I'm glad that they hired a chief commercial officer. We talked about that last time. I think it would be silly not to, to not have done that. What do I hope they do?

Well, there's, I do think that the, what has transpired here with the stock price movement and with the fact that this update also brought news that the Crohn's data release got slightly delayed. It was supposed to be the end of 2026 originally. Now it's probably second quarter of 27. So that Crohn's catalyst got pushed back a little bit. So with that, this gap between figuring out

whether or not Crohn's is going to work and all of this turmoil we've had in stock price, I think both of those things have probably increased the probability that M&A happens within the next six months or so by roughly the end of this year. So I think that that is a meaningful increase in the probability of nearer term M&A. But what do I hope they do? Well, there's something we haven't talked about that is actually really, really key. And you may have heard people referring to part two of the phase three data set. That was on my question.

Absolutely. Let's go there. Yeah. So that's actually potentially, that has the potential to completely get rid of what I think is already a very relatively clear lack of a cancer signal. But that could really put this narrative to bed. So basically, part one is what they plan to release all along, which is the primary efficacy analysis in maintenance. It consisted, that consisted of patients who responded during induction. That was only about like a third of the patients in the induction phase because you also had patients on placebo who didn't respond at all.

Basically, roughly 1,100 patients started this phase three, more like 1,300. Roughly 1,300 patients started in this trial. Roughly 600 have been reported on already, 200 on 25, 200 on 50, 200 on placebo. So we got, I think that the number's going to depend on how many people dropped out. Conservatively, I'm thinking like maybe 550 to 600, five to 600 patients in the phase three study that we do not have data on yet because they're in a totally different arm. It gets a little bit convoluted explaining why they're not part of the primary efficacy analysis and really for all intents and purposes

for what this data set is going to be used for, which is safety, it doesn't matter. What matters is there are several hundred patients who have been on 50 milligrams for a year that we do not have data on yet. The efficacy in that population doesn't matter much. What's going to matter is safety. So originally, when management press release

and discussed these data, thinking naively that nobody was going to be worried by the cancer signal, they were telling us that these Part 2 data were going to come in October at a conference. Totally normal. Nothing wrong with that. But when the stock is crashing 60% after hours and you say, hey, the data set that has extra safety sample size in it that could exculpate this cancer risk, we're going to give that to you in four months.

Don't worry about it, right? So people were freaking out thinking they were hiding something. And then the very next day, they are coming out saying, well, okay, well, we will move that data up to before the end of June. So now we're going to get this part two data sooner. It does not seem like they were hiding that data. They just legitimately did not think people were going to be worried about a cancer signal. So within the next, I guess, three weeks or so, we're going to get those extra patients' worth of data. So the question that we have to ask is how many cases of cancer are going to be in that study?

across the 25 and 50 milligram doses, we should expect at background that roughly three cases of cancer are identified over the course of one year in that number of ulcerative colitis patients. So if there are three cases of cancer, this could change depending on which treatment arms the cases actually occur in. It probably would be better if they were in 25 milligrams instead of 50. even if there are three new cases of cancer in Part 2, that would further lower the current rate per patient year, per 100 patient years of cancer that Abibax is seeing.

If it's fewer than that, it'll reduce it even more and totally clear up this cancer risk. It could be higher and spook the market again. So really, a lot could come down to this Part 2 data set that should be released within the next few weeks. In a perfect world, I think you release that data, prove that there is no cancer risk or further cement that there is no cancer risk on top of the data that I think we already have that show that.

And the stock recovers to, you know, the 150 range maybe. Certainly, I don't see, I personally don't see why it couldn't go to where it was headed in the after hours before people got spooked by this cancer signal, which is like 170s, 180s, but if we're going to accept that there's just some sort of scar left behind from that drop that just can't be healed, then sure, maybe it only goes to the 130 or 150 range. And then I would like for M&A to happen after that. That would probably be my ideal. Let me ask a few questions on this.

Number one, you know, the event side of me says, and I am 99% or I know the answer, but management says they're going to put the safety data out in October. Stock drops and they pull the safety data out to, to, to, June, do they already know the safety data or is, do they already know the safety data or is this still blinded? It's a good question. I don't know. I don't think anybody knows. To me, it stands to reason that they would know because the primary purpose of that data set is safety. So if they were to have analyzed anything from that data set already, it probably would have been the rates of rare adverse events in that data set. in a way, you could say it might be a good thing if they know that data because they were so eager to pull it forward. I don't know, and I can't confirm it. I don't know how long it takes for them to collect and clean these type of data. I think people would probably be surprised by how much

complexity there is in compiling this sort of information. But gun to my head, do you think they've seen the data or not? I probably would say yes, but I'd be pretty nervous. I try to ask the question is just like dumbing it down, but I have an idea. I don't know the answer here. My guess would actually be that they did not because they were waiting until October, but my guess would also be that they, they like you, are convicted that this does not cause cancer and they've seen other stuff other than

what we've seen. And I think they were just like, F, it's down 60% and we'll talk. And I think you're just like, all right, unblinded, we'll do this. We've got huge confidence. And it's possible that they're talking, but that was my read. they've just got huge confidence, but I don't think they know, no. You can give some more color to this to say that there's a better chance that they do know. At least they would know the raw numbers because cancer cases are reported to the FDA on a rolling

basis during these studies by the DSMB, right? So it's not like you wait until the very end and then you pour through 1,000 patients and try to find cancer cases. If there was a cancer case in week one, that is mandated to be reported to the FDA by week two of a study. So these cases actually, if there are, the cases of cancer that there should be in part two should have been identified on a rolling basis as the study was going. And those numbers should have been immediately ready to furnish to management from the data safety monitoring board. I would guess they know, but I don't know.

Hell, we might even both be right. They might not know the overall safety numbers, but they might, because of what you're saying, they might know the cancer numbers and the market sign off on cancer. And they're like, oh, we can show there's no cancer risk here. There's like reportable events like cancer, I would think that they would know. Let me, Eminet, we've talked about Eminet a few times. I think one of the reasons the stock bounce, and I hate to keep using the stock bounce, but the stock goes from 180 to 80 or 70, and it's come back up to 100.

And I think one of the big reasons is people were worried. I mean, this is a biotech that had 500 million of cash, which sounds like a lot. But when you're running these big trials, 500 million is nothing for this. Oh, yeah. Yeah, yeah. I think the night where the stock was crashing, Bulls bearcase, and I actually think this is kind of silly bearcase, but people were terrified that they were going to have to price a secondary at 60. And the management has been telling people, apparently,

I mean, I've seen this through sell side. I'm sure people have better access. They don't need a secondary in the near term. And I think part of the reason the stocks jumped is because, oh, they're not going to have to blast the secondary into weakness. I guess my question is, I mean, do you think it's, hey, they report the safety numbers and then they do the secondary? Or is there the read that, hey, they're not doing the secondary. So game on, you know, every biotech investor, when there's positive news, they say, if we don't have a raise within 24 hours, they're about to sell themselves. So it could be either. I kind of hate that. But yeah, you're definitely predicting the Twitter commentary, no doubt. Yeah. So, I mean, that'll be the question. If they present the

Part 2 safety data and the stock goes back to 150, the assumption, my assumption would be that they are going to raise. They said multiple times consistently before the main. data released, that they were going to raise money after the maintenance data were released. So my assumption is that if the stock gets back to where they thought it should have been initially that they would raise money like they said they would, people, in my experience, not experienced by side specialist investors, freak out whenever there's a secondary because they say, oh, now MNA's off the table. In reality, MNA's off the table for a couple weeks.

I mean, RNA, last year, I keep harping on this, but they were in rumors and did a secondary and they said, oh, that must be off the table. And then they sold, and if you read the background, they sold it a bigger premium after doing a secondary, which means the main bar was paying even more because they're paying

on more shares. It happens all the time. I mean, it's very simple leverage. You need to have enough cash to content to at least give the appearance that you're going to keep running this commercialization. So it's certainly possible. But you're If they are able to get the stock to recover back to the made, I'm just saying 150,

the 150 area where they might be poised to raise cash and they're not doing it, people will start talking. They might even start talking 120 or 130 and they're not raising cash. With the 5-being, there's an active sales process ongoing. I think we've talked a lot about advocates. I do want to, if we've got like five or 10 minutes, just quickly to connector. So, Nector, the last time we talked, they came out with, if I remember, strong results in mid-April. Stock runs from 45 to 100 big secondary at 92 to like cash this balance sheet up.

And the stock, on no real news that I'm aware of is just drip, drip, drips back down to you. I think it's in the mid-50s today. So I'd love to, you know, I don't have like crazy strong thoughts here, but I'd love to hear how you're thinking about it, any new news, anything while I've got you. Yeah, so when we were on last time, we were talking about basically a maintenance phase of a study for a disease called alopecia ariata and autoimmune type of hair loss. And the hope for nectar was that they were going to show that longer term treatment could deepen responses in alpecia ariata. The stock went into that maintenance update, I think in the mid, mid-70s and traded up to almost 110 on the positive results where they showed that they did have deepening of responses with longer-term treatment. stock was in triple digits. They raised cash at 92, pretty strong pricing.

And since then, the stock has gone from that 92 deal price to the mid-50s, like you say, on no updates. And I'm a little bit at a loss for words as to why this sell-off has been so sustained and severe. Nectar has always traded at a discount to what, like, a fresh new IPO with a fero. flashing management team would trade at if they have this same data set and asset in their, in their possession. So that in some ways is not new or surprising to me, but I do have to say that the nectar sell-off has gone much further than I would have imagined, especially given the fact that the XBI, the index, it sort of tracks this sector, has not done bad.

It's not done poorly over the last few months as nectar has sold off. So I don't know, I've looked around for ways to explain why it is staying weak. There's a few that you can think about. We did talk about, at least briefly on the last podcast, that Nectar has this ongoing litigation against Eli Lilly, where they're suing Eli Lilly for having held on to this drug and misanalyzed data for this drug, which is true. That did happen.

And we're probably going to have resolution on that. sometime late summer to early fall to find out whether or not nectar is going to get paid damages. I do get the sense that some biotech specialists are avoiding the stock until that is cleared because basically it's out of their mandate, right? Like to evaluate the legal case is not something that a biotech specialist typically would be involved in. And so I think there's at least some small contribution from people who may normally be interested in the stock waiting on the sidelines until this catalyst that is way out of their

wheelhouse plays out. That's one thing. The Alopecia Ariata data I thought were encouraging. There's another small biotech that's been rallying lately called Q32 bio that has a drug. QTTV. Yeah, yeah. They're going to be reading out an Alpisha Ariata in probably the very near term, actually, and they've kind of been hyping up the expectations for that. The company has a little bit of the history of hyping up data and then disappointing. They did the same thing with a completely failed atopic dermatitis study with this same drug. The Alopecia Ariata data that Q32 is going to be presenting is open label. They already have some blinded data that is a little bit worse on efficacy than nectar was.

There's definitely a chance that if you just glance at the data that Q32 is going to release this open label data, you might think it looks better. So I wonder if there's some overhang from potential competition. Besides the fact that that trial is open label, that drug, I think, has some significant safety concerns attached to it. So I'm not very worried about it, but the market may be. I think the nectar sell-off started in earnest in kind of late May. And you mentioned QTDB.

I'm just putting the two together, as you say it. In late May, QTTB did a $55 million raise from pretty buzzy. Botech R-A BVF. BVF is one of Nectar's biggest holders. So, I mean, they're believing in both. And I mean, these guys, 55 million tons because it's kind of a drop in the hat to them once you split up. But I do wonder if part of it is people said, hey, you've got these specialized biotech funds investing into this buzzy thing. Like maybe there's some state to that sizzle over there.

And maybe there's not a pot of, as much a pot of gold as we thought over here. Yeah. I mean, I have to say that drug. from Q32, one of its targets is a cytokine called IL-7. And if you have a human who has a mutation in IL-7, they develop a severe form of immunodeficiency. It's called Skid, and it's like fatal in most people. So I have concerns about the safety of that drug,

which that actually echoes what happened. I think we talked about this again on the last podcast with that Ox 40 drug class, where you could say this drug blocks Ox 40, and when you look at humans who have mutated ox 40, they get a type of rare cancer. So I have safety concerns about that drug. I do think it might be contributing to the overhang for nectar,

but I think in the long run, I'm not concerned about it as a competitor. Speaking of ox 40, that's one other thing that could be weighing on nectar a little bit. Last time we talked about this oxford 40 class is what, and recently that that class of drugs had been showing a bunch of these rare cases of cancer called Cappasey sarcoma and as we talked about on the last podcast I was postulating that Sanofi was about to discontinue that drug and letelamab because of those cancer cases and since then

a Sanofi earnings call has happened where they did not yet discontinue that drug they're still projecting it to be a multi-billion dollar drug despite the fact that it's going to to get a black box warning, in my opinion, in atopic dermatitis and eczema. So very different risk-reward discussion than ulcer of clitis like we were having earlier. So other people may have been making the same assumption as I was saying, hey, nectar's biggest competitor amletelamab is about to get canned, and that'll be great. And then when it didn't, at least yet, that may have led to some of the weakness. So there's a few different little things that could be contributing to it.

But in the long run, I don't think anything has really changed since we talked besides the fact, that it looks like the alopecia ariata signal is legitimate. No, it's just interesting because I, again, I'm a generalist. I wish I had, as you started in the first podcast, my issue with nectar before the was always, I cannot believe a large farmer would, when you read the lawsuit, would mishandle a drug that could be a blockbuster this badly.

Right, yeah, yeah. But it's just interesting, the lawsuit angle, because you still got that lawsuit in like that, the legal system is much different than what is right and just. But it just kind of seems like based on all the day we're seeing, Lily mishandled a Blockbuster that would be on the market by now if they had done this. Like, I don't know how there's not hundreds of millions of damages there. It's like, okay, I understand your biotech.

You're not focusing that, but you still have the Blockbuster drugging. I don't know. And that's the thing is this is due for a jury trial. That case is due for a jury trial. And exactly what you just said is going to play out in front of a jury if they let it get there. which is big bad, big pharma, stole this drug, messed it up, wouldn't give it back, and harmed this tiny little biotech. It's going to play so well in front of a jury.

I cannot imagine that Eli Lilly doesn't settle. But this stock is not trading as if they're going to get anything out of that lawsuit. So hopefully that's a surprise to the upside. You know the Valley of Disillusionment where like you start learning about something you think you're an expert and then you're like, oh, God, I know nothing. And then you kind of, I'm like on the bottom of the Valley Disillusionment two years ago, I would have been like legal situations. I'm an expert.

And I'm like, I know nothing, man. But if I know anything, I know this. Legal. Big Pharma does not once go to jury trials on botched handling of drugs that can, you know, help millions of people. Last question. And then we'll obviously have you on for part three because you're the MJ of Biotech. We've got to do the three feet.

Between avics, aviics and nectar, what is your, which do you think is kind of more misprice right now? Or you can go off and choose something different. want. No, I think it's Abivax. And I don't know, people, people will interpret like the most mispriced stock in different ways. A lot of time people interpret that as the stock with the most upside. But it's not that. It's the degree of certainty that I have that the current price is wrong based on objective data. And for me, it is Abivax. I think that the probable near-term M&A range would be probably 16 to 18 billion, which actually the fully diluted market,

the fully diluted share counts a little higher than I think what you cited. That would probably be like 175 to 200 stock price, so the 100% upside in the near term, meaning the next six months upside case, blue sky case. I think if they let it go longer, clear up this safety signal that I am comfortable myself clearing up, but I understand that the market has not joined in on that sentiment. yet. And if they let the Crohn's data card flip, you could see at high hundreds to maybe, depending on the strength of the Crohn's data, even a $300 stock at an M&A price. So, you know, six months, maybe 100% upside. One year, maybe 200% upside, both being blue sky scenarios over those

timespans probably. But I think the probability of those cases playing out is high. And I think that the probability of downside is quite low, because as we've talked about, the worst-case scenario now, the phase three data are in. If it has a black box warning, we already know it has outstanding efficacy and is going to be a multibillion-dollar drug in ulcerative colitis alone. So certainly, nectar could have higher upside over the long term. It could three or four or five-x, maybe depending on how phase three trials play out. But given the margin of safety that you have on Abbybacks, and I think the nearer term probability of it going up a lot because of M&A,

I think it's really hard to pass up. No, look, what's really interesting to me is you, and everybody comes to inclusions, but if this is a billion or multi-billion dollar drug with Black Box and only you see, like you're kind of buying it at that because if they sold it sold on a multiple you're kind of buying it there so you're like hey I'm pricing this on the downside case and I'm getting all the upsides for three and as you said the phase three is out we know this works we know this works we know this works really darn well in this indication so it's not like when it was at 10 and I mean you had analyzed this is going to work but it's not like when there's a 10 and we were waiting for see does this drug work we know it works now it's just a question of no black boxers black box more safety data and does it's not like does it work in Crohn's next year? And, you know, the thing I love about this is the CEO is, what, 65, 66? He was already retired before he started running this company.

And he retired after he sold his last company after a disappointing data set. Six weeks after a disappointing data set, just as an interesting parallel for people to keep in mind, his last company was SynCorp. They had a let down in a phase three trial readout six weeks later. The company was sold with a CVR. So, you know, lightning could strike twice in that. If I remember it was a very big premium too. Oh, yeah, yeah, yeah.

They did just fine on that. And we talked a lot about this, this perceived need for Abbivax to overcome this market sentiment around the cancer case to see upside. And I think that this is a case where I'm not as concerned about the market coming around because I think ultimately this is a multiple bidder scenario where the price is going to be determined by who has the best bid, not by what the stock price is or what the premium to the 50-day moving average is going to be. I firmly believe that there will be multiple pharmaceutical companies who are interested in adding this to their portfolio at these prices. And you can look, in the past year, we've had so many companies. Now, the issue is it is getting very big, right? I keep throwing the $7 to $8 billion range. That's where it is right now. So you put a premium. I mean, as you said, you're starting to talk, not acquisition.

You're starting to talk merger. It's getting so big. But you can go look at some of the companies Merck bought in the past year. I mean, what's the one that was the flu drug? It was trading in like 40. Yeah. It's 200. It was 110% premium.

After a huge rally. But, I mean, once you get into the Biddymore situation, you've got the strategy. That is actually the right. That's the appropriate example. actually, yes. And so, so Cedarra had been going up and up and up and up on the open market. And then it was bought out with 110% premium. And it's because there were multiple bidders. So that's, that's actually what I foresee happening with Havi Bax, meaning that the market price,

fluctuations are probably noise. I fully trust pharmaceutical, regulatory affairs and business development teams to be able to calculate the same sort of data that I already have calculated myself to see and come to the conclusion that there is not a cancer risk with this drug. and I think that the prices that they offer for it will reflect that. Well, people are here to listen to you not me, but the other thing that, again, I talked to two doctors who were buying this after hours and they were like, dude, if this is Black Box, again, I said earlier, go talk to a gastro and a small increase in cancer risk versus what this. I mean, we talked about removing the colon. There's a 40% success. There's a 40% chance we're not going to have to remove someone's clon.

There's a reason that Renvoke with five fatal black box warnings is a, multi-billion-dollar drug in these. No, Redbock does a few other indications as well, though, right? That's right, but this is backing out just in ulcerty. It's a multi-billion-dollar drug. Yeah. Adam, this has been awesome. People know where to find you on Twitter and everything. We'll have you on. We'll do the three-ped in the near future, but appreciate you coming on. Appreciate all the work here, and we will chat soon. Sounds great. Thanks. A quick disclaimer, nothing on this podcast should be considered an investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast.

Please do your own work and consult a financial advisor. Hey y'all, it's Kelly Clarkson with Wayfair. Ever order furniture online and wonder what if? Like, what if it doesn't hold up? That sofa was four days old. You should have ordered from Wayfair. With Wayfair, there's no what if. Just style you love and quality you can trust. Visit Wayfair.ca. Wayfair, every style, every home. Thanks.