Yet Another Value Podcast - Adam May on investing in biotech $NKTR $ABVX

Episode Date: March 23, 2026

In this episode of Yet Another Value Podcast, host Andrew Walker speaks with Adam May, a physician, dermatologist, and biotech investor, about how he built an edge in small- and mid-cap biotech. Adam walks through his path from medical school investing to launching a small biotech fund during the 2021 peak, then explains how he sources ideas, studies trial data, and looks for situations where the market is missing something important. The conversation focuses on NKTR and ABVX, including trial design, maintenance data, market skepticism, buyout setups, and how Adam thinks about risk, beta, and asymmetric upside in biotech.__________________________________________________________[00:00:00] Andrew introduces Adam[00:02:44] Adam’s biotech investing background[00:07:16] Alpha versus biotech beta[00:09:51] Finding edge in biotech[00:17:01] How Adam sources ideas[00:20:49] Handling concentrated biotech positions[00:22:59] Biotech drawdown created opportunities[00:24:49] NKTR thesis and setup[00:27:53] Lilly data analysis mistake[00:29:34] Why drugs miss patients[00:30:34] Eczema need remains large[00:33:55] Trial nuance drove conviction[00:36:11] Reverse split scared investors[00:37:14] NKTR rerating after data[00:41:21] Why maintenance data mattered[00:43:32] Buyout versus commercialization path[00:45:17] Alopecia setup in NKTR[00:52:25] ABVX background and skepticism[00:55:00] Maintenance data built conviction[00:58:54] The killer ABVX slide[01:01:50] Why ABVX looks acquirable[01:08:11] ABVX maintenance data ahead[01:11:27] Andrew closes the episodeLinks:Yet Another Value Blog - https://www.yetanothervalueblog.com See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimerProduction and editing by The Podcast Consultant - https://thepodcastconsultant.com/

You're about to listen to the yet another value podcast with your host, me, Andrew Walker. Today, I have Adam Aon. Adam is a doctor and one of the most popular people on biotech, Fintwit. You'll probably hear it. I was a little starstruck having him on, but it was a really fun conversation. Adam, it's actually my first time talking to him. I've only followed him on Twitter, but he is really well-spoken, really thoughtful. I think you're really going to enjoy the podcast.

You'll hear me just like soaking into the information and learning a ton of stuff from it. So you're going to enjoy it. I don't need to say anymore. See a full disclaimer at the end because biotech is risky. So people should remember that. You know, there are 10 X's ups and there's zeros on the downside. So see the legal disclaimer in the show notes at the end of this episode, all that sort of stuff. We're going to get to Adam A in one second.

But first, a word from our sponsors. This podcast is sponsored by Trada. Look, I've been meant you've heard me talking about Trada for months on this podcast. There's a reason. It is a really, really good fit for you if you like this podcast. Trada is interviews between two bysiders who are talking about stocks they like. Sometimes you get a bear and a bear. Sometimes you get a bull and a bull.

Sometimes you get a bull and bear. Whatever it is. It is two bysiders who are interested enough in a stock that they've done research and they want to go on and talk to someone else about the stock. And you kind of get to be a fly on the wall and listen and learn. I'll tell you what. I am recording this in the middle of February. It has been the SaaS Pocalypt.

And Trada has been so, so good. So many different companies are covered. And, you know, in real time, you're seeing people talk about, hey, is the AI risk real here? Hey, I talked to a CIO of a company who, you know, they were looking into this and they don't need this anymore. Hey, I talked to a CIO who said there is no chance in hell that we will get off of this product. So I just think Trada, if you have not tried it, you should try it. The most frequent feedback I get from people who try it through this podcast, they come to me and say, hey, I really like it.

I wish there was more of it. I wish there were more coverage. I love it. So look, if you haven't tried it, you should go to try trotra.com. that's try, T-R-Y, Trota, T-R-A-T-A-T-A-D-A-com, and go check it up. All right, hello, and welcome to you at another Value Podcast. I'm your host, Andrew Walker, with me today. I'm really excited to have on Adam May.

Adam, how's it going? Going great, glad to be here. Thanks for having me on. I'm super excited. I'll tell everyone why in one second, but before we get there, a quick disclaimer, remind everyone nothing on this podcast is investing device. There's a full disclaimer at the end of the podcast.

There's a legal disclaimer on the show notes you can do that. Adam, I'm excited to have you on because I feel like I'm I'm talking to a biotech wit celebrity. I mean, I said you're coming on and I don't think I've ever gotten this many in bounds on people asking questions on just everything about you, everything about life, the meaning

of life, just everything. But I'm really excited to dive into it today. Wow, that's flattering. But yeah, excited to get started too. Cool. Maybe we could just, you know, you've got a little bit of different background than most the people I talk to. Maybe we could just start a couple quick minutes on your background, what you do, how you got into the biotech

Finchwit scene. Yeah, sure. So my training and by profession, I'm a physician. So I'm actually still currently practicing as a dermatologist, which I've only done for not quite a year, actually. So by training, I'm an MD. I've been investing in small to maybe mid-cap biotech for almost a decade now and kind of got interested in that back in the early med school days when I realized that I might be able to learn something that might give me some edge or alpha in the markets. And so just with a few thousand dollars that I could scrape together as a broke medical student basically started messing around in small cap biotex. And so from there, the path got a little bit more interesting.

I had performed kind of well just on my own over the course of a few years during the med school era. And I had a very close friend who was also kind of joining me on some of these biosec investments and trades. He was about to go out to Stanford to the Graduate School of Business. And I was about to go into residency after graduating medical school. And he kind of came to me and said, hey, I'm going to make a lot of connections with people out at Stanford. And do you want to start kind of recording our thesis and our track record more formally, basically, so that if I make some connections out west,

we could maybe parlay that into something professional in the investing space. And so we started to do that, document our thesis, track our performance. And this was like 2020, early 2021. And so we looked great. Like we did great with that starting to track the formal record there. Low interest rate environment, biotech did fantastic. And over like 18 months or so, we had returned like 1,400 or 15,100. So a lot of beta in there, maybe a little bit of alpha.

But that kind of got the foot in the door for a few months. higher profile meetings than we probably would have expected with that kind of return that we could show people. And eventually we started talking to Alex Robertson from Tiger Management, so Julian Robertson's son, who manages now Tiger Management, which I'm sure a lot of your listeners know a lot about them. But historically, a hedge fund eventually evolved into a fund of funds, so to speak, or really a fund that provides seed capital to people starting.

new hedge funds. We really thought we were talking to Alex just for kind of advice, but we kept having meetings with him and eventually he kind of proposed to us, hey, I know you guys don't want to, Adam, you don't want to quit your residency and Joe, you don't want to quit your Stanford MBA, but we could give you a couple million dollars and you could raise a friends and family round and kind of start running something somewhat formal, but also somewhat informally, basically part-time starting a very small hedge fund in small cap biotech. And so that's what we did. It was called Rare Life Capital. We got up to an AUM of maybe $12 million, so pretty small in the grand scheme of things.

And I basically ran that in what would be my spare time as an intern medical resident. So like 80-hour weeks in the hospital, peak of the COVID pandemic, come home from a 24-hour shift and try to dilate in some biotech stocks. And then anybody who followed the biotech market over that period of time would know that we launched in the second quarter of 2021. So kind of right at the peak, we had run the peak, gotten that momentum to launch. And then the XBI, which is the main index that kind of at that time tracked our portfolio, it drew down about 55% peak to trough over the next roughly one year. And so we closed down the fund at the one year anniversary. of its launch with almost that 50% drawdown that the index had and just finished out our education.

And so since then, I've done a little bit of consulting for some small biotech hedge funds and basically just invested my own capital. But in the last few years, things have gone really well in that front. So it's something that probably I'll be doing full-time here soon. So A, that's a fascinating background. I'm really glad to ask because, again, I only know you through Twitter. And I knew you were practicing as a Durham and all this sort of stuff. But yeah, that's just a fascinating background.

And as soon as you said launch Q2 of 21, I was like, oh, I know it's coming next, the real bear market. I have so many questions for you. And we'll talk about the successes and failures and current stuff. But let me ask you one question. You mentioned like, I think you're being a little bit humble when you say, hey, you know, the 14 or 1500% from 2020 to 2021, a lot of beta. but, you know, it's not lost to me exactly what you said, right? Like, XBI, I've had some big wins. I know you've had some huge wins in the biotech space since the absolute bottom, you know,

of March and April of 2025 when, you know, RFK is coming in and people are freaking out and then the tariff transom and everything just blowing up. How much do you think, like, Alpha in the biotex space in general is just driven by the wave of, hey, you know, beta starts going up and then the big techs, Merck and Pfizer start throwing out big checks to buy things and everything's going up versus, you know, No, technically it should be kind of uncorrelated, right? Even when everything's drawing down, your ABVX reports good numbers and the stock should go up no matter what. So how much, how do you think about kind of that, like, I am just writing hyper beta versus the alpha of the picks?

There's still a lot of beta. I mean, if you look, if you zoom way out, like, yes, this is probably the most, if not one of the most discorrelated sectors to the broader market. That's for sure. I mean, honestly, like, biotech would be probably. pretty pleased with a recession because we get interest rate cuts. Interest rates go down and yeah, everybody's. Small cap biotech is a lot of the time doing the inverse of what the broader markets do. But I put some caveat on that because it swings so far in each direction with sentiment

to the extent that even very obviously positive readouts, when things are looking really bad, like when I say readout, I mean a data readout for a company like a drug showing clinical trial data. I can think of examples in the last year, like you said, March and April 25, where things were very clearly positive and stocks would go down 30 to 40 percent just because there was a liquidity event. And the same, the inverse is true, that a company that's an obvious scam can put out a phony press release whenever you have ZERP in the background and go up 300% in one day. So there's a lot of beta in this industry for sure. Let me ask you about Edge.

So Edge and the meta game of investing is something I think about a lot. And you've done great work. And I want to talk about, especially the ABVX stuff, because I thought that was so unique last year. But I just want to ask you about Edge. You said something that is going into an obviously very positive readout, right? And I always think about that because this is competitive. Even if you're talking about 100 million biotech,

like if it has a positive readout, these things can go up 10 or 15 X, Like anyone can change their life on this type of stuff. They're very competitive. So I'll hear people, they'll be like, this readout is a slam dunk and stuff. And I'll kind of be like, well, yeah, but the market's competitive. If it's 95% to read up positively, like, these are prices. So how do you think about the edge and the meta game? And I'd love to just all of that sort of stuff.

Because the other thing I think about is cure. I've got no unicure. You know, I've got no huge dog in that fight. But I know, you know, some people would accuse, and I'm sure the FDA would accuse you're in a unicure of presenting their data in a very favorable light. So the other thing is, you know, when you're reading this, you're reading a lot of times kind of how management is presenting the data to you and how they're painting the best light.

So you're like, it's 95% but it's on management side. So I throw a lot out there. I just love to get your thoughts on that. Well, I mean, I guess to kind of go towards the question of like Alpha and Edge, I think that if you think you have a read into something being positive or negative if you're short, you've got to. have an equally good explanation as to what other people are missing about that. And so a lot of that comes for perhaps talking to people, understanding what the

misconceptions are or the concerns are. But ABVX is the example that you mentioned, and I had a lot of medical data that I thought said that was going to be a successful drug readout. But a lot of people were not interested in the stock for a few reasons. And I thought none of them really mattered in the grand scheme. The biggest one was that people did not know, still, frankly, do not know what the true mechanism of action of that drug was or is. So fundamental biotech investors want to know how a drug works. They want to know down to the very nitty-gritty.

What does this drug do? What is it hitting in the body? And how is that going to make it work? And this drug, Obifazamod from Abivax, we still don't really truly know the mechanism of action. And what we knew or what I thought I could tell was that it was going to work in ulcerative colitis. But everybody I talked to was like, yeah, that's like some weird drug from this tiny French company. They weren't even listed in the U.S.

They were trading on the Euro Nex for the longest time. And people wrote off that drug because they didn't know how it works. And for this one example of a drug with a mysterious mechanism of action that ended up working, we can give you 100 others where shady management teams were kind of doing a hand-waving motion to tell you how the drug worked and those did not turn out. So in some ways it's fair. But to me, in this particular example, I had enough data to tell me that the drug was actually working. So I didn't care about the mechanism. I didn't care about the main concern that most people had against it that prevented them from investing in it. So it's really two parts to find Alpha and

biotech. You have to think that you figured out what's going to happen in a trial or at least approximate what you think is going to happen in a trial. And you have to have a reason to explain why other people don't think that, which I guess zooming out is kind of a simplistic thing, but I do think it's it's overlooked sometimes. No, it's fascinating because the other one, like I kind of know you from is nectar therapeutics and KTR, which I'm sure we'll talk about. And there, you know, I remember I read your work. I read a few other people. And there, the answer was, hey, it was Eli, he was partner with them, right?

Yeah. Eli Lilly was partnered with them, and they handed the drug back and said, this trial doesn't work. So you would write bullishly, and I'd be like, man, I think he's got a good read on this. But Eli Lilly's an $100 billion company. Wow. Yeah. Yeah. That's an even more convoluted story as to why it was so overlooked.

There's a few different reasons. But we get into that if it's of interest. But it's all of interest. On Advx, why do you think we don't know? Like, I remember people saying, and I had some other friends who had done work on this, too. Why don't we know the method of action there? Well, that's a good question. It's a repurposed drug.

So it was discovered actually quite a long time ago. And it was originally studied in HIV, actually. It was studied in AIDS patients a long time ago. And the proportionate. ported mechanism of action is that it enhances what's called a micro RNA, MIR 1-24 is the name of it. And so it makes your body make more of this anti-inflammatory molecule, basically, is the simplest way that I could put it. That's the thought process.

But that was put forth as the hypothesis and maybe perhaps shoddily validated as the mechanism of action by a very small Parisian biotech company. So if that molecule had been brought forth and maybe a higher profile pharma pipeline, maybe the results would have been different. But they had a drug. They had some signs that it was doing something in the body. They picked something. That's kind of the way I think that it played out most likely is you can give somebody a molecule. You can measure 100 different things, see what goes up, see what goes down.

They saw that this one thing, mirror 1,24, went up, and they said, okay, that's what this drug does. that's how it works. And it's hard to actually run studies to validate what these teeny tiny molecules are doing inside of the human body. I mean, to really prove exactly what it does is difficult. And in medicine, historically, there's a lot of drugs that we don't actually know how they work. Most of those are drugs that we've been using for like 50, 60 years. So in the modern era, it's a typical to have a drug where you have not completely hashed out what it does. but, you know, it just goes to show that it is difficult to find that out. There are more recent hypotheses that are some fairly well validated about how it might be working.

So basically what the company says the drug does, a lot of investors don't think that's what it does. But what matters is that it works. No, it's just everything you're saying, you know, we're living in the age of AI taking over and everything. And I know people are really worried about whether it's CROs or on the market drugs. People are really worried about AI discovering drugs or however you want to do it. And then you talk to people who've actually done drug discovery and they're like, yeah, I think we're going to be okay for another 20 or 30 years. They will laugh out loud at you.

If you tell them that AI is going to replace drug discovery, it can augment it for sure. But you've got to put a molecule in a human body. You have to put a molecule in thousands of human bodies to know what it actually does. So last thing, and then maybe we'll hop into next RABVX, whichever you want to start about. But look, you described, it sounds like you're looking for, let's say, companies with drugs that have some hair on them where, you know, investors are kind of debating over if the drug. There's a debate over if the drug works. You can give an edge on thinking if the drug works or not. How are you sourcing them?

You know, you're practicing derm. You've got a full-time job. I know you're at the center of VigR, but how do you kind of source these and how do you read through stuff? And you've got some background as a doctor and stuff. But how do you read through them and say, hey, I've got an edge here or I've got a route to finding an edge here? It's got to be high throughput. I mean, that's, I think that for me is the only way.

I run a very concentrated portfolio. So at any given time, I may have only five or maybe 10 names. But to get to that, I've probably looked at several hundred biotech companies. And some of that can be pretty cursory. I mean, I can look at a company whose ticker I've seen, and I look at the corporate presentation for 15 minutes. and I can say, oh, that's relatively fairly valued. But, you know, out of looking through 300 names, you might look at 50 that are, you know,

if you can say, well, what this corporate presentation is telling me is legitimate, then this could be worth a lot more than it is right now. And then the diligence gets, you know, second, third, fourth round. And eventually you'll narrow it down to just a few that you actually spend a lot of time on. And at that point, what you're usually doing is looking at, other people's data, which is, I think, a mistake that probably a lot of people make is they rely on what comes from a company to try to diligence of biotech. If you're really going to go along something or really get high conviction, in aggregate, you need to be spending more time

diligenceing other drugs, other competitors, other parts of the market than the drug that the company is developing or the data that they've developed for that drug. There's a lot of competition and you can't expect the company, unfortunately, to give you an unbiased view of what their competition actually looks like. So I scan for names regularly, even just on X. I mean, I have a very concentrated follow list on X of almost exclusively small cap biotech investors. And so I see names come up there a lot. I keep a running list of names in the sector that I'll go back to and run through quickly every so often, maybe quarterly. And then sell, puts out a lot of catalyst calendars.

And so when trial readouts are happening each quarter, you can have a good idea of, oh, I need to catch back up on XYZ because they're going to have data soon. That's a 20,000-foot view of the process, as well as how names come up, basically. No, because I'm a complete balance of either when it comes to science, most of time when I'm doing biotech, I'm just like, hey, this drug failed, but there's $10 of cash on the balance sheet,

and it's trading at five. Let's go liquidate this thing. But I love following it and learning more about it. Okay, actually one more. And then we'll get through next to a BVX. And this will be a nice transaction. And we can talk about the whole stories and everything. But I do want to ask you, you were longed these before both of them reported great results.

And the stocks have gone up a lot. And I believe you can disclose. You can say, you're still longed them. And when I see that, I say, hey, he was longed on the thesis that I'm just going to say simply the phase three worked. Right. He was longed on the thesis, the phase three worked. And now he's still longed them. I guess, like, how do you think about when you're running this concentrated portfolio and you

were long on a thesis, phase three worked? It works. Still holding it after that, right? Because now you're playing a different game. For ABVX, anyone who follows biotech knows this is people are waiting for maintenance data in June or July or whenever, and then they think the company is going to sell, right? But it is a very much different game. So how do you think about kind of morphing that position?

I think that for me, having a small concentrated portfolio is it means that I don't want everything in there to be an impending catalyst all the time. So I need some stuff that's post data and still mispriced or sometimes a commercial name, like a drug that is launching. And I think that either the market has not appreciated how well the launch is going or I think the launch of the drug is going to go better than the market thinks. And so the most high profile stuff is always going to be like the thing that people are interested in is going to be, hey, there's a clinical trial readout coming up. The stock's going to be now 90% or up 500%. But you don't want 100% of your portfolio to be in names like that. So when a stock kind of graduates from the unvalidated

$100 million market cap phase into a $500 million validated phase, that's not necessarily a reason for me to ditch it. Obviously, there's like tax considerations and things like that that that matter for the bottom line. But part of it is keeping that balance of impending catalysts. It's huge upside downside, mixed with some more moderate stuff that is validated. It should not crash. Like, Abby Vax is never going to zero, whereas my catalyst longs could. But the other thing is, especially recently in biotech, because the biotech sector, a lot of people

probably do not appreciate how absolutely bombed out small cap biotech was this time last year. I mean, just like absolutely biblical levels of... I did some posts on it. The index was down more than the S&P and the financial indexes were in the great financial crisis. I mean, it was so bombed out. And also, you were buying these things for like 50% of cash. And this is why I got so interesting.

It didn't even matter if the science worked. And actually, it was better to buy one's hindsight, It was better to buy ones with good science that were trading at 80% of cash than I just bought the shittiest ones that were trading at 50% of cash. It all kind of worked, but I kind of wish I had been a little bit higher quality there. Yeah. And so, I mean, I could talk a long time about how bombed out it was. But like, we're talking over a decade worth of negative returns as of one year from today,

one year ago today. So just absurd levels of crash during a secular bull market otherwise. So that's an aside. my point there was to say the sector got so bombed out that you could have good data like Abivax or transformatively amazing data like Abivax had. And the stock would go up 500%, which it did. And you can sit there and say, wait, well, this should double again, like very obviously. It's not up enough, basically.

And what was the cause of that? Was it that the sector was so weak? Was it that the specialist money had shrunk so much because some specialists' biotech funds had been forced to close due to redemptions during that time span? Whatever that inefficiency was, it was very obvious to me that even after the rise on those positive readouts for both nectar and avivacs that they had not appreciated even remotely enough. So nectar traded to about $25 a share after the readout that was positive. and now it's at 75. And that's one year ago, or not even a year ago. And Abivax was the first day or two in the low 60s, if I remember correctly.

And today, like 120. So you have a 3x for nectar, 2x for Abivax. And I was just sitting on the stuff that was up two or threefold already. So the opportunity was there as well as that diverse portfolio. Well, nectar had positive maintenance data since then. And ABAVax had 15 different articles from French newspaper saying that they were going to get sold to basically every big farm at this point. Yeah, yeah, yeah, that has not hurt. Let's transition to a nectar.

We can talk about it from, we can talk about now. We can talk about historically. I'd love to talk about just how you got involved in nectar and kind of what you see the story from here. Yeah. So everybody in the biotech space has been involved with nectar in some way over the course of its lifespan. It's been around for decades. It was really high profile, maybe eight years ago. or so when they had a big cancer drug that got partnered with Ristel Myers and that failed and a

bunch of other drugs for nectar failed. So it has had this really bad reputation actually due to serial failures of their drug candidates. The drug that I was invested in and am invested in, it's called RESPEG for short, and it's a drug to treat eczema, atopic dermatitis, which is one of the biggest indications in the immunology field in medicine. So it probably is going to be a $40 billion market in the next few years here. Huge, huge market. Like you had mentioned earlier, Nectar had partnered this drug, Respeg with Eli Lilly, so huge pharmaceutical company, to develop it in a few conditions, lupus, psoriasis, and atopic dermatitis, eczema. And several years ago now,

Lilly presented data from the eczema trial, and it looked awful. I mean, it looked like it maybe did something, but the data were not competitive at all with what was on the market. So it looked at it. And Nectar's stock basically crashed on that data. Almost a year later, Eli Lilly still had not forfeited rights to this drug. And Necter demanded it back and press released that Eli Lilly had botched the data analysis, basically. Yep. and the correct analysis showed that the drug was actually much more active than Eli Lilly had said,

enough to actually be competitive. So we could get into the nitty-gritty of what the response criteria are and what the numbers are. I would just put it this way. The name of the endpoint is the Easy-75 and the Delta versus placebo. So how many more patients achieve that response versus placebo is what really matters. the benchmark in the market was probably about 30%, so let's just say that nectar wanted that 30% response delta mark. The botched data that Eli Lilly had presented showed that it was at 9% awful.

Never could you take that drug to market. The renewed analysis showed low 20s, which is actually competitive for what this drug is meant to do, which is being the sort of second line therapy. to people who don't succeed with what's available to them already. But a lot of people just didn't believe them. But I knew how that input was calculated. I mean, that's what I do in dermatology. And I knew that what nectar was saying was correct.

A lot of investors, I think, don't believe them maybe because of the reputation or just didn't believe that Eli Lilly could have messed that up so badly. I did not believe. I was like, there's just no way this giant company with a potential billion-dollar-plus drug could botched the data this badly. I just couldn't believe that it could have happened. And you actually could find, eventually you could dig up some public legal documents that showed that that was an undisputed fact of the lawsuit that they're engaged in now. So I left that out.

But Mector is suing Willie over this, understandably so. Claiming damages for losing a couple years of development time of this drug. And so you actually could go. Like, I still talked to a lot of investors back then. They were like, no, this is bogus. but the legal documents literally said that Eli Lilly did not dispute that that that data set was misanalyzed. So, okay, so that is like one point of dispersion from what the market believed. And I'm like, this is definitely legit, even though the market doesn't think so.

Another thing was that the market probably didn't think that there was a need for this drug, because there's a very famous drug called DuPixant that is a huge drug in atopic dermatitis. and it has this really great image. People basically had the perception that DuPixin is good enough, and we don't need other drugs for eczema. But that's absolutely not the case, and that's something that I could see as a dermatologist because I see it all the time.

Again, though, you could look at the clinical trial data and see that only about half of patients respond to DuPixant in the first place. So only about 50% of the patients, they enrolled in those trials, ever responded to it. But everybody you talk to would say, oh, Dupi's great, there's no need. Well, half of the market fails the drug that everybody's using. So what's the other half of the market do?

Can I ask you a dumb question? Again, I drew out my mouth when I look at science, but I follow a lot of this, especially the cancer stuff. And I'll see the cancer stuff and they'll be like 35% of the people who we put on this drug responded. And that'll be incredible. You just mentioned Dupy, 50% of people. Why doesn't it, like I get everybody's biology is different, but it seems weird to me, cancer.

Again, I'm just dumb dumb. You put a radioactive chemical into someone's bloodstream, and only 35% of them have response. Dupy, 50, it's a coin flip. Why doesn't it work a lot more? Well, it's really, I mean, if you really boil it down, it's hard to say. But I think that we group like clusters of different diseases into one kind of name brand disease like atopic dermatitis. Gotcha.

And really, there's probably a bunch of different pathways that drive it, which is why big immunosuppressant drugs like Jack inhibitors, dangerous immune-suppressing drugs work really well for these conditions because it's actually probably 20 different conditions that we put under this umbrella of atopic dermatitis. Makes total sense, yep. Yeah. So people didn't believe the data were real. People didn't believe there was a need. I could see that the reanalysis was real.

I could see that there absolutely was a need from my experience as a dermatologist and a huge one at that. I could see that there's this other drug called Nimluvio that has a different mechanism of action than DuPixent, but is very inefficacious. And people are using it because we need another mechanism of action. I could see that happening. When I said that nectar is 9% delta was not anywhere close to being good enough, and Livios is 13, 13, 1-3 versus DuPixin a little bit over 30. But that's going to be now almost a $4 billion per year peak sales drug because there's just nothing else other than unsafe immunosuppressive drugs that we can use if you're part of the half of the population that fails the first-line treatment of DuPixit or this other medication called Ablis.

But they have the same mechanism of action. So they get lumped together. But then there was a third thing that I felt like, this is where I felt like I kind of found or discovered something that probably most people wouldn't realize. And it was that the phase one data that we're referring to, the data that Lilly initially misanalyzed and that went from that 9% response. level to the low 20s, whenever it was analyzed properly. That was a 12-week readout.

So they treated the patients for 12 weeks, and you looked at the responses at 12 weeks. You could look, there was this one slide in Nectra's corporate deck, and they were not advertising this at all. I don't know why still they didn't like advertise this issue, because it, to me, made a huge part of the thesis come together. You could look kind of at the bottom, almost in the footnotes, and see that the responses at weeks six, eight, ten were really high. And then at week 12, they went back down.

And then a week 14, they went back up. Well, the primary endpoint that everybody's talking about was at week 12. And so they got kind of unlucky that the response went down, right? Right there at week 12. And then you could also see that the placebo response was low, low, low, low, low, up again at week 12 exactly, and then back down. So it was really, it really compressed that delta. badly.

So for one thing, there was only one week. They measured this, they measured efficacy 18 times on the trial. Out of 18 measurements, only one week were there two placebo responders, only one. And it was when the primary efficacy endpoint was assessed at week 12. All the others were zero or one. That's a big deal because that's what you use to calculate the delta. But then the other thing was that dip in the efficacy of the drug, where it went down. Well, if you look at the foot.

You can see the number of patients that were assessed at each week, and that number went down just at week 12 by one patient and then back up, which to me meant that that efficacy went down, not because the drug wasn't working. Somebody missed an appointment. Yep. The idea didn't show up at week 12 who was in response. They showed up at week 10. They were measured as a response. They didn't show up a week 12. Then they showed up again at week 14. And the efficacy went like this.

So the placebo went up. The efficacy went down. And both of them were just bad luck. I'm so angry because I remember reading your paper on this. And as you say that I'm like, this is incredible. I want to go buy this doc right now. I'm like, no, it's already gone up 10x, Andrew. You can't go buy.

Let me, if they had presented that data, as you said, in an FDA to the FDA, to the FDA, and maybe it's this FDA, maybe to it. But, you know, it was kind of like if you and I sat down and said, hey, look at week 10, look at week 14, like the Delta's different. But if the primary endpoint was week 12 and they had presented, would the FDA reject or accept based on, would they be willing to modify and say, hey, we saw it in week 10, we see it in week 14, but you missed week 12, even though you'd hit the other two? Or would the FDA be kind of rigid and say, no, sorry, you missed the job.

Yeah, it's kind of a moot question because what you're talking about is an FDA interaction that would happen after phase three where they're saying, hey, this is the efficacy analysis we want to present and put in the marketing documents. Like this is the number we want to tell. Yep. Yep. And that would be a trial with thousands of patients. So this was a big one. Yeah, great point. Yeah, great point. And so they get bigger and bigger. So these small errors. And this is where I think there, this is where alpha comes in for a small cap investor is you can look at these tiny little minute details. In this case, one patient. missing an appointment had a huge impact on how good these data looked.

So that took 9% from the Lilly Miss analysis. That was the number that everybody had had for years in the back of their mind. That's how efficacious nectar's drug is. 9%. Terrible number. Well, the reanalysis says low 20s. If you exclude that one extra outlier placebo responder, then it's in the 30s. And then if you added back in, that patient who missed their appointment, all of a sudden,

the delta would have been around 43%. And now we've got a blockbuster. Yeah, that'd be blowing efficacy out of the water. And that was the biggest source of alpha, I think, for that trade probably. In addition to understanding there was a need that people didn't see and just believing that the reanalysis was actually legitimate, not a small microcap making some stuff up against a big cap pharma. And so nectar was trading it less than half cash into that readout. They had done a reverse split a few weeks before the data were to come out.

And I know people were the reverse split. I remember and I was kind of with them too. I was like they're going to do a reverse split before they do data. Like why not just if the data is good, report the data in their stocks up byback. The chief medical officer left the company a few weeks before the data. And that was for totally personal reasons. I think that she might that she was sick. And so everybody was just spooked out of their minds.

It traded as low as like 0.36X their cash on hand. So couldn't possibly be more negative than that. And then into the readout, I actually was surprised that it didn't go up more than it did. So the phase two trial reported, and it took the response delta to about 27%. And it went up almost 200%, kind of settled back down after an offering since then. And this is kind of what would bring us to today. the stock has risen quite a bit more. And I still think it's actually, like, if I had to pick something that was the most asymmetric upside on my book, it would still be an actor.

It's at about 70, 75 now, was roughly 25 after data. Really two main things have happened that have improved the narrative to bring the stock up to the 70s. One is what you mentioned earlier, which is that that was the induction data that they presented back in the summer of last year, which means the short term, you start people on the drug, how many respond over the courses of four months. But then you treat them for a full year, and you want to see how many patients maintain their response. The induction data were good. They were a little bit less effective than that market leader, DuPixant, but that's okay because the idea for the drug is to be. The different patients who failed DuPixant. but then the maintenance data were exceptionally strong, stronger than probably I had even hoped.

And basically, a higher percentage of patients maintained their response on RESPEG, nectar's drug, than DuPixen. And not only that, they tested two different dosing intervals of the drug. So it's an injection. They tested once every four weeks injections, and they tested once every 12-week injections. And that once every 12 weeks, so four shots a year, that regimen did just as good as a once every four-week injection, which is a huge marketing benefit for any drug. The biggest drugs in dermatology are drugs like Skyrizi that are given that sparsely. Patients love that.

Whereas DuPixant is given once every two weeks. So 26 injections a year versus four. Huge, huge deal for nectar. That's one thing that made it go up. But really, I think maybe the more important thing that made it go up over the last several months is there was one other mechanism of action, one other type of drug that was going to get to market before nectar and compete for this post-Dupixant second line atopic dermatitis market share. And that was a drug class called OX40, OX40. Big Pharma was in on this one already. So Amgen had a drug, Rokatinlamab that targeted it, and Sanofi had had, has maybe.

a drug called amletalamab that targets it. Both of them had multi-billion-dollar net present values assigned to them for these drugs because the market was acknowledging that there's a huge unmet need in atopic dermatitis. These drugs are going to be a very big deal. Basically, over the course of the last few months, several phase three trials have read out, and their efficacy just fell off a cliff. So in phase two, they looked promising, and in phase three, their efficacy is much worse. So you've got nectar now in phase two at about 27 percent on this delta number that we're talking about, they had thought that Ox 40 might be in the high 20s as well. Now we're talking mid-teens, like 16% or so.

But not just that, they started seeing a form of cancer appear in the patients who were treated with these drugs called Capizisarcoma. And it is caused by the drug because people who have a mutation in Ox 40 in their Ox 40 gene, which is what this drug targets, they develop this type of cancer. So there's no doubt that it's being caused by the drug, in my mind at least. Amgen has already just canceled their drug. They say we're not even going to take this to market. Sanofi is still kind of being stubborn about it and saying they're going to. I think another case or two of caposea sarcoma and they're going to can it as well. So this just created a massive vacuum for nectar to take up huge market share.

I mean, Sanofi actually is still saying that they project three to five billion dollar peak sales for amletalab after these cases of cancer, after the efficacy went down. Nectar is not shown any sort of safety risk like that. Nectra's efficacy so far is better. So if somebody believe that nectar was a $3 billion peak sales drug right now, its market cap would probably be about 3x. I mean, we could argue about what sort of multiplier you want to put on it. But I think it's still not getting anywhere close to the amount of credit that it deserves as the next to market new mechanism of action in atopic dermatitis.

Two questions on nectar. Yeah. First question. You and a lot of people were really convicted on the maintenance data here that read out in early February. What were you seen that made you so convicted in the maintenance data readout? Yeah, you actually go back to the phase one, the phase one day that we were talking about that Lilly had analyzed and messed up and sent back to nectar. So that data set was really unique. They dosed patients for only 12 weeks, a really short treatment period.

But then they watched them for a year after that. So they wash them for an extra 40 weeks without ever treating a patient. And in most eczema patients, when you stop whatever drug you're taking, the disease comes back. There's no cure. None of these things are blocking molecular pathways of inflammation. Most drugs for eczema just turn down inflammation. They don't do anything to rewire your body or try to cure you of the disease, more or less. Nectar's drug, Respeg, is a very unique mechanism of action where it makes your body

create an anti-inflammatory type of cell called T-Regs. And so these cells live in your body after they've been made for the long term. And so it's not blocking inflammation. The drug is creating an anti-inflammatory population of cells that then live in your body. And so mechanistically, there is some rationale to say, hey, even after you come off of the drug, those T-Reg cells that the drug made you create are still there turning down inflammation. So mechanistically, there was an argument to say the maintenance is going to be great. But the bigger argument probably was the data from that phase one data set where they stopped

treating the patients for 40 weeks and they all kept their responses. So nobody was getting a treatment of any drug, no topical steroids, no more doses, and they stayed in response for almost a year, which is really, really atypical. Could have been luck or noise, but it looks like there may be some, what they call remittive potential with this drug, meaning that it actually kind of rewires your immune system a little bit, and you can take it for a while and perhaps come off of it and still have a response. So that would give me some confidence for the maintenance readout. Last question on nectar.

I mean, this is the classic question with any biotech. Do you think, is this a sales candidate at some point, or do you think these guys actually want to go and commercialize? I would prefer that they sell, probably. I think that's the answer for anyone that doesn't have a commercial sales force, but I think they might want to go the other way. Yeah, they might. They very well might.

In the past, they actually, I mean, they get a lot of, the management team gets criticism, and some of that may be fair. But in the past, their big high-profile drug that was a cancer drug that we kind of touched on earlier, they made that partnership with Bristol Myers with multi-billion dollar, we in the small-tech, small-cap biotech investing space, we're called Biobox. Bio-Bucks, yeah. Yeah, bio-bucks, meaning bristlem Myers paid them like a billion dollars up front and promised them like maybe a billion and a half more in milestone payments as well as nectar keeping over half of the revenue of that drug if it were ever to be commercialized. So nectar made actually a really good deal for that drug back in the day.

That's another option. And I think if they do choose to go in a loan, a partnership would be almost mandatory given the size of the market that they're trying to address. So buyout, certainly possible. Go it alone, certainly possible. But there is a middle ground of partnership where there could be a lot of upside, where they team up with a big pharma and still have some of the benefits of that big partnership. And not all the risk of going it alone as a small cap. Cool. Unless you want to talk about anything on nectar.

And that was fascinating. And again, as you were saying, I was like, God damn, I saw all the writings. Like, why wasn't I huge in this last year? Well, I think one more important. thing to talk about in the present day, which is actually just a few weeks from now, there's going to be a readout in alopecia ariata. So this drug is being used in a second indication, a type of autoimmune hair loss called alopecia ariata.

It's actually a pretty big market. And right now there's only one class of drug approved to treat it, jack inhibitors, which, you know, if you spend much time in biotech or pharma, you know, these are really strong, very effective drugs, but they're dangerous. They have black box warnings placed by the FDA for lymphoma, blood clots, heart attacks, severe potentially fatal infections. And that's all we have to treat this alopecia ariata disease today. DuPixin has been tried for it, but it didn't work.

Lots of safe drugs have been tried. None of them have worked. Nectar has some early data that clearly, to me, show that the drug is active in alpecia ariata. But the market does not seem to agree that it's encouraged. that's actually in December when they presented this data, the stock traded down over 50% because they were disappointed. The market was apparently disappointed with the Alopecia Ariata data.

What the market's missing now is, one, the need for a safe drug. A lot of people are comparing the efficacy of RESPEG so far in Alpecia Ariata, which is admittedly pretty low, to the jack inhibitor class. I would tell you, as somebody who would literally be prescribing this drug, we dermatologists would use a safe, less efficacious drug nine times out of 10, if not 10 times out of 10 first before we went to a jack inhibitor. It's just that nothing else has ever worked except for jack inhibitors for alopecia Ariata. So if you sit down and you look at the numbers on a paper and you say, yeah, nectar's data

so far don't look great compared to jack inhibitors, this drug is dead, then that's, I think, what has happened. They've thrown the baby out with the bathwater there. But we have a perfect analog, which is atopic dermatitis, eczema. DuPixin is this multi-megablogbuster drug that's doing whatever, probably $10 billion in sales in an eczema alone. It's half as efficacious as jack inhibitors in atopic dermatitis. So that shows you what the bar for efficacy relative to a jack inhibitor is.

You've just got to be half as good, and you will dominate the market because it's safe. And you don't have to tell somebody, hey, I know your hair's falling out. Here's a drug that could cause lymphoma, lung cancer, severe fatal infections, blood clots, etc. People don't want to do that. And so that's one thing that the market is missing. So far, the efficacy data that NECTA has shows that it is almost about half as effective as the jack inhibitors. But there were some interesting issues with this trial that distracted investors and I think have led people to think that the alpecia ariad opportunity is not viable.

I think the biggest issue is that nectar's drug works slowly. Jack and others work really fast. If you're going to respond to them, you know. When you look at case studies from nectar's data in alopecia aureata so far, patients that responded did not start responding most of them until like 30 weeks into the study. Well, 40% of the study. 40% of the patients on the drug arm discontinued before 36 weeks. They stopped.

They dropped out of the trial. Not because of side effects. Probably because they saw they weren't getting better. And this drug had never been studied in alopecia ariata before. So we had no idea whether or not it worked. They see that I've been on this drug for over half a year and nothing's happened. I'm done with going to these trial visits every week. But for the few patients who stayed on, responses started.

usually after like 20 to 30 weeks. So if you look at the efficacy now, it doesn't look great because not that many patients responded when you look at the overall sample size for the patients who started. But almost half of them quit the trial before they should have had efficacy. Interesting. So what's going to happen in the next couple weeks is they're going to have maintenance data, just like the Atopic dermatitis readout had maintenance data after induction. It's a shorter maintenance period.

So it's only 16 extra weeks. But what I think we need to see is that just a few. just a couple patients had deepening of response after that 36-week cutoff. Yep. Because it just goes further to show that this is a slow onset drug. Patients will know that in the phase three trial. Dropout rates in phase three trials are much lower for various reasons that we could spend time on.

And their phase three trial is going to be longer. So this was only a 36-week primary induction study. In phase three, they're going to run it for a full year. So what's going to happen is in phase three, in my opinion, it's going to be over half as effective as a jack inhibitor. And it will be the obvious first line treatment for Alpsych, which is a potentially multi-billion dollar indication where four jack inhibitors have all been launched by different pharma companies because the market's that big.

But it is a zero to the NPV right now, according to the market, as far as I can tell. How big would it be? How big would it be? If people were truly convinced that it was going to hit in phase three, the NPV could be $3 to $5 billion for the market cap potentially. Peak sales could, I think, very easily be $2 billion in alopecia ariata alone. We have pretty good validation from another drug on the market, the Nmluvio drug that I talked about, not being effective in eczema.

It has a secondary indication called paragonodularis that is maybe a third as big as alopecia ariata is, it's also a dermatology indication. It's about a third as big. That's going to be a $4 billion peak drug, including eczema and prerogynodularis. So really, if it is a first-line treatment for RESPEG and alopecia ariata, $2 billion peak might be conservative because it also would expand the market because so many people don't get treatment at all because of the only option we have is dangerous. So that is why I think that's it's the most asymmetric upside on my book right now, nectar. I think the alopecia ariata opportunity was written off to absolute zero. The atopic dermatitis opportunity probably is not appreciated as much as it should be,

but like the skew here on this alopecia ariata setup, I think is totally, totally off. We didn't even talk about, I mean, the other thing, I don't know how much it is, but I think Eli Lilly is going to be paying them a pretty penny from the legal lawsuit at some point there. But let's put that aside because we're running long and I'm having so much fun and learning so much. I want to ask you about Abby Vax. I mean, this would have to be, so I do event, I do biotech. I do a little bit of everything. This would have to be the most popular. Every event person thinks this is getting taken out. Every biotech person thinks this is getting taken out. The French press certainly think it's going to get being taken out. But maybe we go quickly

through your background here because, again, you nailed it. I remember the screenshot of the slide. You said, this is the killer slide. I remember it so well. But maybe we can go background, and then we can talk about the opportunity today. Yep. So it was a small Parisian biotech, repurposed drug. Nobody knew how it worked. Red flag, red flag, red flag, management had, and this is old management, not current management. They replaced management when they did the US IPO to get off. Well, they're still on the Euro next, but to get a NASDAQ listing. So I'm not dissing the current management, if you're listening. But huge red flags, they had burned tons of cash. They should have been spending on this

ulcerative clitis study to study this same drug in COVID at some point, which made no sense to anybody. so people hated this stock. Most biotech investors actually knew about it. So it wasn't something that was undiscovered. Everybody had heard of it. Most people had written it off. Definitely there were a few people who were on top of it and believed in it, but it was a small minority. So they had this mysterious drug, nobody knows how it works, that had some phase two data in

ulcerative colitis, which is another massive indication, huge pharma interest in buying out companies with effective drugs in an ulcerative colitis. The phase two data looked okay, but there was a lot of hair on it, on top of all that other stuff that we just rattled off. The biggest issue in the phase two data set was the primary endpoint was the clinical remission delta. It wasn't the primary endpoint in the study, actually, by the trial design, but it was the endpoint everybody cared about. A lot of the secondary endpoints in the trial looked really good and really competitive. but that one that was the most important, turns out just unluckily, was a lot lower. And not only that, there was what was called an inverse dose response in that study,

which biotech investors hate, specifically when they don't know how the drug works. Because it makes it more than the 3 milligram works better than the 6 milligram for some reason. Right. So you give somebody a bunch of the drug and it doesn't work and then you give them a little bit of the drug and it does. It's possible that's statistical noise. but if it's statistical noise, then is the evidence of efficacy just statistical noise? So yes, investors hate inverse dose response. And when you combine that with crummy fringe company with an unknown mechanism of action, it's like a death knell.

So the stock traded at an absolute pittance for the rest of the evidence that they had. If you hadn't seen that, you would be like, why is this thing so cheap? So we had that phase two data for years. Their phase three trials were enrolling super slow. It was hard to get patients to enroll. It was this kind of sleepy European company. Were they managing it right? And so for years, I was looking at this data set saying,

man, I really think this is real. There were a lot of reasons I thought the data were real. One was all those secondary endpoints looked really good. Another was that I could ignore the inverse dose response given if you pooled all those dosing arms together, the data looked really good. And so you get your higher sample size and that delta looked good that way. But bigger things in that, if you paid attention to how severe the patients were in this trial, it was off the charts.

And so they were the most severe patients, like in terms of their disease characteristics. They had the most severe ulcerth clitis of any trial I could find ever. And so to see evidence of efficacy in such severe patients meant a lot. But the really big thing was the maintenance data. So that came out a little bit later. The induction, just like we're talking about with nectar, induction, the initial treatment period comes out first. They keep running the trial longer, and they show you maintenance data. The maintenance data looked incredible.

The response rates were really high, and people stayed on the drug, which was really interesting. And that was something that I thought maybe one of my edges was in this analysis was I looked at other trials of oral therapies, so pills, and saw like FDA-approved drugs for ulcerclytus. And you could see how many patients stay on the drug at one year, two year, three years for a real active drug, a drug we know works because it's FDA-approved and it's on the market. And at all of these time points, you could look at Abbex's drug and maintenance and say a higher percentage of patients are staying on this unapproved, drug, that nobody knows how it works. Why? Well, it's not because these extremely severe patients are having these random placebo responses for five years. It's because the drug is active. So I was already pretty convinced that the drug was active. But you mentioned this killer slide thing. So I was already planning on taking a pretty concentrated bet on this readout. But the thing

that I discovered, kind of like we talked about, there's this this eureka discovery with nectar, noticing that patient missing their visit. The thing that I felt like I discovered with Advax was there was a nuance in their trial, and it's this way with most ulcerative clitis trials, that only patients who respond to treatment during induction can enroll into maintenance. So that first few weeks, they treat you,

if you're not a responder, you do not continue. Only people who are responding to the drug go into the maintenance phase of the trial. Well, the company and everybody else is blinded to the response rate in these studies, meaning throughout the beginning to the very end, nobody knows what the response rate is. But they knew how many patients enrolled in their maintenance trial. Say they knew what the enrollment rate was. And if only responders enroll in maintenance, you actually know the pooled response rate,

meaning some of those responses are placebo patients who responded, but some of them are drug patients who responded. So if you have a really high enrollment rate into the maintenance phase, then you can break those data down and get a general idea of what the response and then more importantly, remission rate is going to be. So they actually published that data in their corporate deck. I mean, they were doing no meetings. They had not done a fireside chat in over a year.

but just one lonely slide near the very end of their corporate deck said, hey, we're 80% of the way through the trial. And by the way, 600 patients have enrolled into the maintenance phase. And I remember reading that. I'm so mad because I saw your post and I bought some, even though I drew out my mouth in sight. And as you explained it to me, I'm like, it's so good. I sent it to a couple of people and I was like, hey, I think I found some,

material public information here. Like, this is, like, absurd. And it's just sitting there on the corporate deck. But so then taking that the next step, you could kind of, you could kind of look at it and say, yeah, it looks like that's a really high pooled response rate. But what I did was I took all of the phase three trials of once a day pills, and I looked at what their pooled response rates were. So an FDA-approved drug, what's the pooled response rate for these drugs?

What was it in their phase three trials? And then you look at what the placebo. rate was in those trials. And so you take those data sets and you get what you expect a pill's placebo response rate to be. And you can say whatever the difference is between what Abivax is seeing so far and that placebo rate on average, that is probably what Abivax's drug is producing as a response rate. But that's not the primary endpoint. The primary endpoint is remission, not response.

So complete disappearance of disease, not reduction in disease. And so then this next step is to look at that pooled data set of other phase three trials and say, for every patient on drug and response, how many patients were in remission. And so that's like the response to remission conversion. And you could do that for AviVax and say, okay, so I think that after I subtracted the placebo rate out, then I'm guessing I impute the response rate, and then I impute the remission rate using this response to emission conversion ratio that you typically see from pills. And so I did that.

I did all that math. And at the end, I was looking at a number that was like going to be a thousand percent upside if it was real. But it was extremely robust. And it was based on actual data from the clinical trial that was going to be reading out. So at that point, I had already been very bullish on the stock. but I had what I considered basically mathematical proof that the trial was going to succeed. And from there I did a few other imputations where I put in the absolute worst-case placebo response

that's ever been seen in a phase three trial, the absolute lowest response to remission conversion ratio that's ever been seen in a trial. And I could see that even if the absolute worst luck ever happened in this clinical trial for AviVax, it was probably still going to hit. And a stat-sig hit at all was at least 100% upside. And so what ultimately happened was it was right in the ballpark of what my math told me it was going to be. And it was up like 600% the next day.

And since then it's up another 100%. So 14,500% in, I don't know, eight months, something along those lines. I'm going to let's talk about Abbex today. I keep joking. This is probably the fourth time I've made the joke. I mean, there's a French press article that if you believe them every week, or if you believe there's some very weird tracking of Jets on Twitter and stuff, but, you know, everyone thinks they're going to sell.

They've got maintenance data coming up in. I can't remember it's June or July. I mean, they haven't hired a commercial sales force, so you can kind of put two and two together on what the end game here is, but you've got the maintenance data. There's other stuff going on. Where do we kind of sit in the Abbavac story right now? And I don't want to talk your portfolio for you, but I believe you continue to still hold the stock.

So, like, how are you kind of viewing the edge and the alpha in the setup these days? So it's, in my opinion, the most obvious buyout candidate of any stock I've seen. This was a big part of the thesis from the beginning, actually, is that every successful ultrative colitis trial in biotech has led to a buyout so far. And we're talking about drugs that have multiple competitors with the same mechanism of action, worse efficacy, safety risks, all of them, huge, multi-billion-dollar buyouts from, and you most of them after phase two this is after phase three um so it's very obvious from that perspective um i think where are we today they haven't hired a commercial sales force yet i think

they should i think they will um to me i mean i know you kind of get the like degenerate gambler community involved in something like this like you talk about tracking jets and going off all these articles and the press would you like me to tell you what their options volatility is right now because you want to talk to Jenner a gambler. Yeah. Yeah. And so what those people want to see is that they never hire a chief commercial officer because the thesis there is it could get bought out tomorrow. They could get bought out tomorrow. They haven't hired a chief commercial officer. The day that they hire a CCO, the next day, it's not going to get bought out, okay? Probably not the next week either. I still think they should. I do personally believe that the company very

likely has been approached, at least has had conversations with big pharma companies about what an acquisition would look like. I don't have any idea how far those could have gone. I would be hard pressed to believe that conversations have not started. If I'm in Abivax's shoes, and we're talking about at this point what could be a 15 to maybe, in the best case, like a $20 billion buyout, you want to have the illusion of we can go it alone in your bargaining power, right? So you hire CEO, pay him a million dollars. If you move the bargaining power of a $15 billion buyout by 1% by saying, hey, we've got our commercial sales force going, that's $150 million. So it's just the math to me, the whatever game theory you want to call it with this, I think they should

hire a CCO. I personally think that they probably should have done it already, but who knows what's going on behind the scenes. I don't disagree, but the pushback to that would be, hey, this is not a scenario where you're talking about one best buyer. Like there's four different mega farms that would be buyers. So if it's one best buyer, then you really have to go to them and say, hey, we will commercialize this on our own unless you pay us kind of top dollar. But when you've got four people who could buy this, you just say, okay, we're for sale, jump ball. Bids are due in four weeks. Yeah, that's a really good point. And it actually speaks to a little bit about what's unique for AbbeVax in that just about anybody could buy them and put this in their portfolio, which is not

typical. I think the only one that probably couldn't is AbVee because that might become an FTC be concerned because of how they've been rumored by the French press though if I remember rightly so they may have been but otherwise just how any pharma company could put this in and the reason behind that is twofold really one is that it's it's super effective and safe and and going to be a big market drug for something that a lot of companies have a drug for already but the second is that it is a totally unique complementary mechanism of action drug so a lot of companies have a one of, you know, any number of mechanisms of action to treat ulcer of colitis. Well, if you already have, let's just say an IL-23 drug, you're not going to buy another

IL23 drug or a drug that works in that pathway. Abivax is the only company with a drug with this mechanism of action, because again, we don't even really know what the mechanism of action is, so it's hard to copy. So that's really, that is incredibly unique in today's age of pharma. The example actually that probably drives us home the best is the biggest ulcerative cladis buyout so far was RXDX, Prometheus biosciences, bought out by Merck several years ago for almost $11 billion after phase two, over three years behind where AbbeVax is right now with arguably worse data.

And there are a dozen other drugs on the market soon with the exact same mechanism of action, TL1A inhibitor. So if you look at Abby Vax, it's later stage, post-phase three, not post-phase two, and this unique mechanism of action, it's a very, very big deal. And it could fit with anybody. And so that kind of going back to the point you were making is maybe they don't have to push the, hey, we could launch this drug on our own if they have multiple bidders. If there ever was a company that was going to have multiple bidders, this one makes a lot of sense.

And then maybe one last thing. The CEO has brought out of retirement to run this thing. he sold his last two companies, so there's that, and he was already retired after selling his last company to AstraZeneca, and they're like, hey, do you want to come run this thing? And I think he looked at the data in a similar way to I did, and was like, yeah, I think I actually might want to come out of retirement to run this. So I'd be surprised if he wants to take it to commercialization. I will not, I will not name specific names that people can press, you know, Bloomberg own and see the top, let's call it 15 shareholders here. And there are some very good funds with some

very concentrated positions, and that is both biotech specialist funds and funds that specialize on betting on people getting bought out. And I can promise you none of them are here to say, hey, let's go commercialize this ourselves. When you're that concentrated, you're saying, we're shifting all that commercial risk to Merck, and Gen, whoever you want to say. But this has been a ton of fun. We can keep jamming for a few more minutes if you want. ABA maintenance data. We talk about other stuff, but wherever you want to go. Yeah, I mean, we should probably touch on the Avidax maintenance data because assuming, they don't get bought out tomorrow or, you know, whatever.

That's going to be the next catalyst. Tomorrow would be funny because we're recording this on Thursday. What is it? March 19th, tomorrow's options expiration. So there would be some people who are very happy. I'd be thrilled to be wrong about this. But I've been saying all along, I think they should sell after the maintenance data. So that's going to be probably in June.

I have a high degree of confidence. No drug that's ever done well in induction has failed. in maintenance. And so Abivax didn't just do well in induction. They did exceptionally well in their phase three induction. They're probably, you could argue, the third most efficacious drug that's ever been studied in this indication. And again, the ones that are more effective are dangerous drugs like jack inhibitors that have all these side effects, none of which Abivax has ever shown. So it's extremely effective. No drug, even much less effective in phase three, has failed in maintenance. And so failure just seems off the table.

But on top of that, like I had been talking about before, my original reason for being super bullish about this company, before I kind of discovered that quirk about the maintenance enrollment response math thing, my main reason for being bullish had been how incredibly strong the maintenance data were in phase two. So what we saw was induction was okay. But then when we went into maintenance, the drug was really effective over the long term. So the cards are stacked and the price is the stock is priced such that we expect the maintenance data to be successful. Yeah.

There's levels to that, like it could come in the low end and maybe be a bit disappointing. It could come at the high end and be a blowout. The range, I think, is probably 20 to 30 percent delta. If you're going to look for a number to watch, it's probably going to land somewhere in that 20 to 30 percent. You made me pick a number, 25. Pick right in the middle. But if it goes below 20 and it's still stat sig, the stock could be down a little. If it goes above 30, and that would make it probably the second most efficacious drug ever

behind only one of the jack inhibitors called Rinvoke, it could be up meaningfully. And even at that 25, it probably could be up for the simple fact that the potential downside catalyst is gone, not just from the efficacy, but from safety. we already have report on 80% of this trial being complete. They do something called a data safety monitoring board where an independent group of docs will look at all the safety data and say, hey, are there any signals from this trial? Do we need to change anything?

They've already reported 80% of that through the maintenance phase with no safety issues. And so getting out to 100 would be potentially something that could remove very small at this point overhang, but still a few percentage points. So mostly the stock is going to trade on buyout rumors. until Crohn's data later in the year, which would be something else to talk about.

Yeah, look, I think we had AVX. I think we'd index her, we hit the background. Anything else you want to talk about or anything else on your mind we should be chatting on? Nothing major. I mean, there's probably a dozen things I could talk about. Well, I'll have to have you back on to talk about them. A, this is our first time chatting, aside for me just working on your Twitter.

This was awesome. I really learned a lot. Really appreciate you coming on. Anytime we want to come on and talk biotech stocks, we'll do this. I'm going to end the recording here. Oh, I'll include a link to Adam's Twitter. I'm sure most people follow him, but the podcast says a lot. I'll include link to Adam's Twitter, and people can follow him for all the elusive and unique

Alpha Insights that he posts on there. I don't know. We'll see. Adam, this has been great. Stay on for one second. I want to talk about one other thing, and we'll go from there. Yeah, sounds great. A quick disclaimer.

Nothing on this podcast should be considered an investment advice. Guess or the hosts may have positions in any of the. the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Thanks.