Ep. 345 - TAC to the Future. Plus: GSK Deal, MFN

Next-generation induced proximity technologies are coming of age after a decade of industry focus on PROTACs. On the latest BioCentury This Week podcast, BioCentury’s analysts discuss Senior Biopharma Analyst Danielle Golovin’s four-part analysis of how next-generation targeting chimeras (TACs) are evolving. The analysts assess the $2.2 billion takeout of Rapt Therapeutics by GSK, which gave the pharma an allergy asset that the biotech sourced in China in 2024, and movement in Washington on priority review vouchers, NIH’s budget and the White House’s “most favored nation” drug pricing policy. The analysts also discuss takeaways from their meetings on the sidelines of the J.P. Morgan Healthcare Conference.

View full story: https://www.biocentury.com/article/658112

#InducedProximity #TargetingChimeras #BiotechMA #DrugPricingPolicy #JPMHealthcare

00:00 - Introduction 
03:17 - JPM Highlights
09:17 - GSK's Acquisition of RAPT
14:46 - Next-Generation Targeting Chimeras
21:41 - MFN and Pediatric PRVs

To submit a question to BioCentury’s editors, email the BioCentury This Week team at podcasts@biocentury.com.

Transcript

0:00

[AI-generated transcript.]

Jeff Cranmer: 0:00

Welcome to the BioCentury this week podcast. I hope our listeners who came out to San Francisco last weekend for the JP Morgan Healthcare Conference had a productive and fun week. San Francisco itself certainly showed up for the party with sunny skies. Meetings in oddball spaces. A lot of pink on JPM Tuesday, and live music. And uh, dare I say, even a foosball table in the middle of Union Square. We'll talk about some of our takeaways from JPM. Plus, GSK is buying RAPT for $2.2 billion, eyeing a food allergy opportunity. And after a decade of industry focus on PROTACs, next generation induced proximity technologies are coming of age will go TAC to the future with Senior Biopharma Analysts, Danielle Golovin. And we'll get the update from Steve Usdin, our Washington Editor, on what's happening in the politics and policy world, uh, among other things, president Donald Trump is seeking to codify his Most Favored Nation drug pricing policy as part of his healthcare plan, And the house spending bill includes reauthorization of priority review vouchers. I'm Jeff Cranmer, executive editor here at BioCentury, and joining me to discuss all of this are my colleagues.

Simone Fishburn: 1:43

Simone Fishburn, Editor in Chief.

Steve Usdin: 1:45

Steve Usdin, Washington Editor.

Danielle Golovin: 1:47

And Danielle Golovin, Senior Biopharma Analyst.

Jeff Cranmer: 1:51

Alright, Danielle, welcome to the podcast, making your debut from the sunny east coast of Florida.

Danielle Golovin: 1:58

Yes. Home of the famous Dune Dog.

Jeff Cranmer: 2:01

oh yes, Dune Dog. Danielle and I, uh, are big fans of Dune Dog, which I can't recommend highly enough. It is over in Jupiter Florida and has some of the best dogs and milkshakes around, there's kind of a mini biotech hub near you, Danielle. Isn't that the case or?

Danielle Golovin: 2:19

A little bit, little bit.

Jeff Cranmer: 2:21

A little bit happening. Alright, well, you yourself, you know,

Danielle Golovin: 2:25

I need to start it.

Jeff Cranmer: 2:26

You need to start it. Okay, well, before we get started this March, BioCentury is headed to Seoul to host its 5th East-West East-West Summit. Once again, coordinating the event with BayHelix and McKinsey. Learn how to source innovation from Asia. Or accelerate your own pipeline by finding the right Asia partner at the three day event. Presenting company slots are just about sold out, but delegate tickets are still available. Get yours today, go to BioCenturyEastWest.com. And coming up later this week, we will have a special edition of the BioCentury This Week podcast, featuring Stephen Hansen with his 2026 Public Markets Preview. All right, Simone, it was good to see you last week. Thanks for coming out my way. Did you have a good meeting?

Simone Fishburn: 3:24

I did a good meeting. There's a lot of talk about the weather being good. I came back via Houston actually for another meeting, whether the weather was good. I'm now in the nation's capital where it's good to be back though temperatures are in the minus range, I think on almost every scale, except maybe Kelvin. And despite all of that, I'm going to get back at my colleagues now and tell the whole world how you make me sit with a heating off for this podcast. So there you go. The things I do for this podcast, sitting in the cold.

Jeff Cranmer: 3:57

Who is Kelvin, is he, is he one of the The Minions?

Simone Fishburn: 4:00

Look it up, Lord. Lord.

Jeff Cranmer: 4:02

Oh, oh yeah. That always sends me off to,

Simone Fishburn: 4:05

whole scale. He's, he's got his own whole scale, so, um, yeah. You know, I think there's been so much written and spoken about, just say two or three things. Definitely there's a feeling, I feel like we've said this before, but there's still a feeling that this time it's different and the recovery is real, there's also very much of a feeling of yes but, for example, IPO window not gonna slam wide open straight away, it's gonna be a while. And I think, you know, we all know that we, we didn't get any major consolidation or major takeouts or anything. So I think it's sort of a, an interesting place. Everybody I met said that they had, they, and all the people they met had incredibly productive interactions. Yet it really was a lot emptier or less full I should say, than other years. And I think there are two things going into this based on my own observations and what other people sort of seem to say. One is that the London Life Sciences Week Jefferies conference in London in November has taken some of the air out of this. And the other I think is really part of the I dunno if we're gonna call it culling or downturn or whatever, there are a fewer companies, and more companies with not so much money. And so you don't go to JP Morgan now if you don't have actual meetings set up that are likely to be very productive. It's expensive. So in a way, I think this is sort of where the ecosystem needs to be, that it's more focused, it's more real conversations and a little bit less, I'm, I'm there for the fomo. As for us, I sat down with Vas Narasimhan the CEO of Novartis, and we'll be running a Q&A interview very soon that I had with him. We had a range of other conversations and these will also be featuring in our coverage. So there are a few themes within those conversations, obviously, and Steve is gonna talk about that, MFN Most Favored Nation drug pricing and policy is a big part of that. Actually, Danielle's gonna talk another part of that, which is, you know, as we look at the innovation front targeted targeted protein degradation is a very big theme right now, we'll, we'll get into that on this podcast. and then another theme that will be big throughout the year, of course, is speed to first in human trials. So, those are some of the conversations we had and we'll be covering. How about you, Jeff?

Jeff Cranmer: 6:22

I, well, focused a lot of my conversations on meeting companies from Asia. It turned out even some of the companies not from Asia, such as Sier, wanted to talk to me about Asia. So I had a good conversation, with David Lee, the US CEO of Servier. Servier wasn't even in the US eight years ago, and now they're very much in the US and they are doing a lot of deals in China, and are planning to really accelerate their commercial launches in Japan. So, you know, big focus on Asia there. I had the chance once again to moderate a panel the Global IR mini conference, which we put on with KoreaBio and Sidley, it was a lot of fun. Uh, Mazi Z from Kurma, June Lee, uh, Noel Jee from Novo Holdings, joined me.

Simone Fishburn: 7:24

I did hear they were like mixing it up a bit there Jeff.

Jeff Cranmer: 7:27

They mixed it up at, at one point. I mean, apparently Mazi and June are friends, but, uh, at one point Mazi said, I'm gonna take the gloves off now. And, uh, it was the easiest or slash most embarrassing moderating experience I've ever had because I asked one question, and that was how can Korean biotechs attract foreign VCs let's just say Mazi and June didn't really see eye to eye, and it was a really great conversation, which I hope to write up, this week or next, and just put in some thoughts there about what's going on. I think Mazi really feels like Korean biotechs, aren't setting themselves up from the earliest stages stages to succeed on the global stage. They're, they're sort of developing their products for the Korea market rather than the global market. And then hoping to sell them on the global market. He feels like, they need a lot of handholding, whereas,

Simone Fishburn: 8:26

Yeah, I spoke to June actually

Jeff Cranmer: 8:27

Yeah. Yeah. What did June have to say to you?

Simone Fishburn: 8:30

Yeah, pretty similar. But she, I mean, I think that I, I think this is important because I think we do this a lot. I think she feels that many of the criticisms that were leveled are also true of U.S. innovators, and I think that that's a really important thing for us to think about as we say, well, are they really this or are they really that, actually those criticisms or comments, not always criticisms, are true. Like how many US companies really start with a global view and so on. I think, I think that sort of carries through in lots of ways. So yeah, I think that that's gonna be an interesting space to watch.

Jeff Cranmer: 9:02

Excellent. Yeah. we'll have a, a series of stories coming to you over the coming weeks and months, that we got at JP Morgan. A lot of company updates, some big picture pieces as well, some Q&As, and more. GSK company from your motherland, Simone, uh, doing a little deal today. What'd you think?

Simone Fishburn: 9:23

Yeah, interesting days, Jeff, when we're talking about a $2.2 billion takeout as a little deal, I think, uh, I wouldn't mind that kind of money. I know Paul Bonanos, our, our colleague, he's gonna have a story in BioCentury today. For me, I'm looking at this as this is the beginning of Luke Miels tenure as Chief Executive officer as CEO of GSK, it's a new chapter in that company story. Let's be honest, the company's not done great recently, but it has done a few interesting deals roughly of this size. I have seen seen analyst reports and, you know, Paul's analysis. This could bring a significant or non-trivial revenue stream to GSK, which is, I think, important. It's sort of in their sweet spot. I think we'll, we'll see, I, I don't think this alone is gonna solve GSK's problems. It's not a massive sort of shot in the arm to GSK. I expect it to be one in a stream of deals. I think that, you know, Tony Wood as the Chief Scientific officer there, knows what he's doing. So I think that once they get a program like this, they'll be able to execute, as needed. But yeah, we'll, we'll see. It will be all eyes on GSK to see how it manages to build from here.

Jeff Cranmer: 10:40

Couple more things about the deal. The program at the center of the deal, RAPT had inlicensed most global rights, uh, late in 2024, from China. And so that's a 13 month turnaround here. The product is in Phase IIB. And let's see, prophylaxis against food allergy and GSK I would imagine believes it can be a best in class therapy with a dosing advantage over Xolair, results are due in about a year from that study. And the premium, 65% over RAPT's close on Friday, net of cash the deal is worth about $ 1.9 billion.

Simone Fishburn: 11:31

I just wanna add one thing, Jeff, you're absolutely right, I should have mentioned the source of this molecule from China. And by the way, you know, every single conversation I had at JPM involved China, but this one is, got a particular point because as you noted, and as we've started to note, there's a lot of China innovation. In fact, Danielle will talk about that also for her targeted degradation conversation. But here's something that was taken a year ago and then this company gets bought and all the conversations, and Steve you might have a comment on this, sort of seem to indicate that partnering and licensing products from China is one thing, but very little expectation that there will be takeouts by Western companies of China companies. That sort of seems like a whole new geopolitical barrier. Steve, I don't know if you wanna weigh in here.

Steve Usdin: 12:22

I think there's several issues. You know, I think, you said that all of your conversations at JPM involved China, many of the conversations in Washington around biotech and the life sciences also involve China. I think that there's, there's sensitivity, there's concern on Capitol Hill about entanglements between US life sciences companies and companies in China that are closely associated with the Chinese government or with the Chinese military. But it's a real question of how those concerns are going to be translated into action, if at all. And, I think that really remains completely unclear. So I think that my read on it is that industry is just going full speed ahead and assuming that they'll be able to navigate around any kind of restrictions, that the Congress or the Trump administration impose on Dealmaking between China and the United States at this level.

Jeff Cranmer: 13:18

Yeah, and James Huang, who was on our JPM Special podcast podcast touched on this and he said, there's a whole host to reasons why you wouldn't see a western company take out a China company. the bottom line. He is just like, why do you want the headache when you can just take the asset? and speaking of this asset RAPT paid $35 million up front in the deal, with the Chinese company Jeyou, eligible for almost $700 million in milestones plus royalties. We're gonna take a quick break and we'll come back and talk a little TAC.

Alanna Farro: 13:56

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Jeff Cranmer: 14:45

All righty, we are back. Danielle, welcome to the pod.

Danielle Golovin: 14:49

Hello.

Jeff Cranmer: 14:50

So why now, four part series on TACs what triggered you to write about this at this time?

Danielle Golovin: 14:57

Yeah, so one of my jobs at BioCentury's is to scan and publish literature, identify translational trends. I would say the first reason is just the sheer mass of publications piling up. I keep a list of, you know, whenever the word TAC is in the title or the abstract, and it was hitting critical mass of what I could really wrap my head around. So I figured, you know, now's the time in that regard. And this includes innovations on, you know, classical PROTACs, like improving tox or PK. And by the way that list ended up being being entirely Chinese. I mean, the innovations coming out of China for formulations delivery is very much Chinese, and that'll probably be a topic for another day, just delivery in general the innovations coming outta China for that category. But it's also, it's showing up in this TACs base too.

Simone Fishburn: 15:52

So Danielle, let me break it down a bit with you, it reached critical mass and you wrote us an article and maybe that's what you intended to do, but it actually ended up as a trilogy, if not quadrilogy. This is kind of like reaching Harry Potter levels of a number of books here, but maybe not, but, uh, um, but pretty fantastic I would say. But I, I wanted to break it down because you did break down this field and let's talk about them. You can sort of outline'cause maybe not all of our listeners really know how targeted degradation works and what the classical the classical constructs were, but the classical constructs were getting at intracellular targets. And now you, you've broken it down so that some of the innovation is getting at lysosomal degradation, which allows it to get an extracellular targets. So you've increased the target space. Some of it's using autophagy, so you've increased the targets to sort of of intracellular aggregates, let's say. And then you are seeing it go even beyond proteins to RNA degradation and even beyond degradation to this is sort of induced proximity right to phosphorylation. So let's break them down one by one. First of all, just talk about how the basic premise works and then how you flip from intracellular to extracellular targets.

Danielle Golovin: 17:07

Yeah. So the sort of classical PROTAC, when I say that is what I mean it's a hetero bifunctional small molecule. So one side binds to your target of interest that you wanna degrade. The other side recruits an E3 ligase. It recruits that machinery to then tag your protein of interest with ubiquitin, which then sends it to the proteasome for degradation. And those two sides are linked together. So there's a linker involved. that's sort of the classic, yeah, it uses the E3 ligases to do so. And on that front, the intracellular target front, what we're seeing is using new E3 ligases, so almost all the ones in the clinic use Cereblon and it just limits the target space. So if you wanna get a targets outside of what Cereblon can touch, then you need to go to new classes of E3 ligases. Well, there's hundreds in the genome, when I asked, you know companies how many, 600. But they're not characterized. We don't know what targets they naturally hit. I mean, people were talking about this a couple years ago now, but it was like kind of theory, like yeah, we would love to tap into those, but nobody really was, or we didn't have hints of like which ones were actually working, you know. Yeah, in this story I highlighted one called TRIM21, which I think is super interesting, it's activation requires clustering, if you have one TRIM21 that binds to a single protein it doesn't do anything. But if you have an aggregated protein, you know, especially in this case pathologic, right, like tau, tau aggregates, then multiple TRIM21s will be binding and activate each other, so it's like cross activation. And so then you get degradation of an aggregate protein sparing the monomers, so that's just like a, an example example of an E3 ligase that it's unique, right. That we didn't know about before and this was several publications and now a company Trimtech is exploiting this idea for therapeutics.

Simone Fishburn: 19:00

So we're still waiting to see whether and in what situations degrading is better. Than inhibiting, 'cause it's probably target by target. And maybe that's the reason, Danielle, that we need these new targets and new ways of degrading things. So we've really really talked about small molecules until now, but tell us just a little bit about the bispecific degraders.

Danielle Golovin: 19:23

Yeah, so last year I wrote a story about degrading extracellular targets. So this is a departure from the classical PROTAC where they're going after intercellular targets, and the first company in that field is Lycia. they're using molecules where one side binds the target of interest, and that was using some sort of biologic and then it was attached to some ligand that would bind to a lysosome targeting receptor. So this is an internalizing receptor that will pull the target into the lysosome. So again, a departure from the classical PROTAC which would use the proteasome, in this case they use the lysosome. Well now there are two companies that actually both just got fresh capital, Epi biologics and Laigo. And they're going to develop classic bispecific antibodies that degrade but one side targets a target membrane protein or soluble protein, and the other side of the bispecific binds a membrane E3 ligase. That's kind of going back a step to the classical PROTACS, like using the E3 ligase, but these ones are transmembrane and so that represent, I told you there were 600 E3 ligases in the genome. There's about 30 to 35 Laigo told me that they're focusing on, that are sit at the membrane. And actually I just learned this, that that pathway can utilize the proteasome or the lysosome for degradation. So that's super interesting new biology that we're waiting to see unfold.

Simone Fishburn: 20:44

So I think it's really interesting. I think this area's exploding actually what you and I talked about is probably like 10% of all the stuff that's in your articles, you know. So, uh, definitely recommend people check that out. It's really an interesting field that you're right, it's been around a while and it's had a, you know, I dunno if I would say fits and starts, but it's sort of still discovering its way, but it really seems to be poised to go in lots of directions.

Danielle Golovin: 21:10

Absolutely. Yeah, we didn't even really touch on the going beyond, you know, degradation with J&J's acquisition of Halda for $3 billion, that sort of underscore the rise of these TACs that are doing things other than degrading. You can stabilize, you can alter post-translational modifications, you can alter what a protein's doing, where it's going. Yeah, the field is just really starting to mature.

Jeff Cranmer: 21:32

All right, and you can find Danielle's excellent piece on BioCentury.com BioCenturypodcast.com. Let's head to Washington, Steve, woo, MFN, where are we at?

Steve Usdin: 21:47

MFN so President Trump put out a statement last week saying that he wants Congress to codify MFN in legislation. This is leading to some really awkward conversations for pharmaceutical CEOs. They're calling members of Congress to ask them urgently, not to codify MFN. Even the hope they have, a lot of them have publicly praised the policies in meetings with Trump and Trump administration Officials in the White House. So why, why, are they doing that? A few reasons. One, the deals that they've negotiated with the Trump administration last three years, legislation is not so likely to fade away that quickly. Another reason legislation's gonna require a public definition of exactly what MFN means. Remember, all the deals that have been negotiated with the White House have been private, the details haven't been disclosed. If there's a public definition of MFN, it may be worse for pharmaceutical companies. Than the deals that have been negotiated. Remember the deals that have been negotiated use a definition that is the second lowest price out of eight industrialized countries. There are a lot of other ways to define MFN, and all of them are basically worse for pharmaceutical companies than the one that has been included in the private deals that they've done. And of course, legislation would apply MFN policy to the entire industry, not just big multinational companies that did deals with the White House. It's likely that it would have a much more chilling effect on smaller companies that are less able to navigate around it. And those small companies, of course, are really the engines of innovation that drive the entire, the entire industry. Having said all of that, okay, so you're, the question you're gonna ask me, Jeff, is, well, is this legislation gonna pass? And my answer is, I don't know. Nobody knows. betting against things passing in this environment is probably wise simply because Republicans have such a narrow margin in the House, that it's gonna be very, very difficult for them to do anything controversial. On the other hand, the impacts of MFN legislation would be enormous, and saying that something is unlikely to happen doesn't mean it's impossible. And that's why you've got the CEOs of the biggest pharmaceutical companies in the world scrambling to try to prevent Congress from doing what the President has asked them to do. Trump feels he has the political headwinds behind him. He's said publicly to members of the House, look to the Republicans, look you, you need to have an issue around healthcare affordability to run on in the fall, and MfN and bashing the pharmaceutical companies is your best way to to do that. So we'll see what happens, I think that whatever happens, this isn't the last that we're going to hear of this. One of the things that's interesting about efforts to impose price controls on the United States or to benchmark U.S. prices to prices that are paid by other industrialized countries is that there is, uh, bipartisan support for that. So even if it doesn't get through now, it's an idea that isn't going away.

Simone Fishburn: 25:03

Yeah, just, just two follow ups from my conversation with Novartis, CEO, Vas Narasimhan. So, you know, another CEO had told me earlier in the day how bad this MFN policy would be for Europe. And he said the pharmas are just not going to bother launching there. And I asked Vas about that and he said he thinks it's always gonna be a, he used the word nuance, I think he says it's be a bit more nuanced. He says clearly there's places where they're going to be able to launch, like with orphan drugs. And you know, he says there are markets where the price differentials are more manageable and working with governments to find solutions. But, he said that you'll see launches either just in the private market or self-pay, or if those countries that don't enable that, you just won't see launches at all. So he thinks that there are some countries where that'll happen, and he said that that just has to lead to a rethink in how Europe approaches this. Which is something you and I have talked about. It's a really difficult one that, so, you know, I don't know if you got a comment on that, but I wanted just to say one more thing related to your, um, final comment, which is that, I asked him whether this was a sort of way of thinking that they need to get through the next three years and take it from there. And he said, our assumption is that this, the approach we've agreed to or something similar will be continued for the foreseeable future. And that's what they, their assumption is that this is the new normal.

Steve Usdin: 26:27

And I think that's, that's exactly right. This is the new normal, as to whether or not they're gonna be able to use this as leverage to compel European countries to pay higher prices and especially higher launch prices. for drugs. That's really an open question. Of course, multinational pharmaceutical CEOs love the idea that MFN would be a stick that they can use to tell countries in Europe well, you, you have to raise your prices. Uh, if you don't, then we won't launch in your countries, we won't sell into your countries because doing so would jeopardize our pricing in the United States. The European countries don't have huge amounts more money to spend on anything, and they're not going to be enthusiastic about spending more on pharmaceuticals. If I had to guess, I think that what's likely to happen, there'll be a combination of things. There'll be some drugs launches that won't happen in some countries in Europe. There'll be some drug launches that will happen later in Europe than they would've otherwise. And then there'll be some ways that companies and countries can kind of fudge things. They'll be looking for ways to fudge things around the margins, to still provide access to drugs without jeopardizing US pricing that's benchmarked against European prices.

Simone Fishburn: 27:42

Maybe that's BioCentury's speak for nuanced.

Steve Usdin: 27:46

Yes, it is.

Jeff Cranmer: 27:49

Steve, uh, another thing you've been closely following is the Priority Review Voucher saga, it's become a saga now, uh, where, what's the latest?

Steve Usdin: 28:00

Okay, so some good news. Probably,

Jeff Cranmer: 28:02

wait what?,

Steve Usdin: 28:04

probably, I said I, I did hedge it there probably. Over the weekend the House included reauthorization of Pediatric Priority Review Vouchers, through September 30, 2029 in a spending bill that's intended to keep the government open for the rest of the year. It's not quite a done deal. Its fate is linked to the passage of that bigger spending bill that's aimed at preventing a government shutdown. And it's not completely certain that that's gonna happen. I think personally, I think it will happen if it doesn't happen. I think that whatever legislation is passed eventually to reopen the government, if there is a shutdown, we'll probably have the Pediatric Priority Review Voucher extension in it. You know, I've mentioned, Pediatric PRVs before on this podcast. I think they're an almost perfect public policy. It's a transfer of money, usually from big pharma to tiny biotech. That makes it possible to create therapies for the most vulnerable people in society. Patients usually children with very rare diseases, and it doesn't cost the taxpayers a dime. Reauthorization of Pediatric PRVs is an essential precondition for the development of gene and cell therapies for ultra rare conditions. So I think it will be something for patients. And for the industry and for people who appreciate good public policy to celebrate if it does happen.

Jeff Cranmer: 29:26

All righty. Uh, anything else interesting in the spending bill, Steve?

Steve Usdin: 29:31

Yeah, there's a lot. But one thing, again, on the positive side, it looks like Congress will reject the Trump Administration's request to slash NIH funding. Instead there's likely to be a 1% increase in NIH funding. That doesn't address all of the challenges to the basic research enterprise, that have happened, this year, but it is a positive development again, if it happened.

Jeff Cranmer: 29:54

Okay, Steve, always good to end on a positive note when we can. If you like what you're hearing, follow us, subscribe to the podcast, whether you're on Apple, Spotify, or wherever you catch your podcast, drop us line, ask us a question, and we'll catch you on Thursday for a Special Edition of the podcast, as I mentioned at the top, with Stephen Hansen, and his 2026 Public Markets Preview. and special thanks to Kendall Square Orchestra, which provides the music. For BioCentury This Week.