Novo Teams Up With Hims & Hers

In the last Issue, we commented that Novo needs to make moves to address their arch competitor, Lilly, who has been taking market share from Novo in the GLP-1 market. Novo is teaming up with Telehealth company Hims & Hers to sell its GLP-1 drugs and stop selling the “copycat” compounded versions it has long advertised despite lacking IP. The move comes after Novo recently filed a lawsuit against Hims & Hers for selling “unapproved” knock-off versions of Wegovy and Ozempic. By aggressively suing H&H Novo was probably able to negotiate a deal with better terms. The partnership also make sense for Novo as Lilly has been killing them with their LillyDirect program which has been capturing and maintaining patients before Novo can get to them. The collaboration between the two companies will offer both the injectable versions of semaglutide and the recently approved oral version of Wegovy.

This shift in business models for H&H is prudent as federal regulators had started to crack down on the sale of compounded GLP-1s. The Department of Health and Human Services had referred Hims & Hers to the Justice Department for possible criminal violations, and last month, the FDA sent out warning letters to 30 telehealth companies for the “illegal” marketing of compounded drugs. In our view, Novo remains an aggressive shopper for new obesity assets like VKTX, WVE or SKYE and any new drugs can be added to their sales partnership with H&H if they want.

GPCR recently announced additional topline data from its Phase 2b ACCESS-II study for aleniglipron (oral GLP-1) in the treatment of obesity, along with other updated data looks, including further data from the ACCESS-I open-label extension (OLE), and the Company’s Body Composition study. Perhaps most surprising from the release is the observation of deeper weight loss with no plateau through week 44 in ACCESS-II and week 56 in the ACCESS-I OLE. Specifically, patients receiving aleniglipron showed an additional ~1-2% weight-loss from week 36 to week 44, to reach a total placebo-adjusted weight-loss of ~16% in the ACCESS-II extension at the 180/240mg dose levels. This trend was consistent with further ACCESS-I OLE data, where patients showed another ~2% weight loss from week 44-56. In our view, VKTX offers a better value than GPCR with more assets, ‘2735 oral and sub-Q, plus the amylin program, and the ‘2735 program has the potential to best in class with a superior safety profile.

FEAR & GREED

The Fear and Greed Index has fallen into the dreaded Extreme Fear zone as the Iran war is causing significant economic uncertainty and the rising price of oil threatens to drive up inflation. Meanwhile, the Fed has voted to hold interest rates steady again in the range of 3.5%-3.75%, where it has stood since December. While Trump continues to pressure the Fed to lower interest rates, policy makers are acting with caution as they balance rising prices versus mixed signals from the job market. The longer the war lasts the less likely we are to see a cut as rising oil prices can be very inflationary.

TECHNICALS – Rates/Inflation Keep Bios Under Pressure/XBI Below 50-Day MA

XBI Relatively Strong Albeit Pulling Back A Drop – Despite continued premium takeover activity with Big Pharma/Big Bios, the XBI remains strongly correlated to interest rates. When the recent inflation reports showed worsening figures, Fed Chair Jay Powell kept rates steady with less likelihood of a cut in the very foreseeable future. Hence, rate sensitive stocks like bios are negatively impacted. On the charts, the index continues its move below the 50-day moving average (MA) – keeping profit taking/traders going the other way after a sustained rally from November until the end of February.

BCYC provided an update on zelenectide-pevedotin (zele p) and the company has deprioritized the program, as the emerging data from Duravelo-2 is inferior to Padcef. With the shift in strategic focus, BCYC will reallocate its resources to focus on BT5528 and next-generation programs, including its Bicycle Radio-conjugates (BRCs) portfolio. With $628 million in cash, the new runway goes out to 2030 with a 30% reduction in employees. While we are disappointed in the announcement, the move appears to be prudent given the preservation of cash and ability to focus on BT5528 and their Radioconjugate (BRC) platform. With the removal of zele p from the BCYC investment we are lowering our Buy to 10 (from 30) and out Target to 25 (from 60).

BCYC reported a confirmed ORR of 58%/62% at pre-27-week/post-27-week cutoff from dose-selection part of Duravelo-2, which we view as largely comparable to Padcev+pembro’s 67.7% ORR. Notably, only one patient discontinued treatment due to treatment-related AEs (vs. ~35% in EV-302). When combined with Keytruda, the drug stimulated a response at 27 weeks in 58% of people with metastatic disease who have received one or fewer treatment lines. By comparison, Padcev plus Keytruda achieved a response rate of nearly 68%. While zele p may have been safer than Padcef, to date it has not translated into better efficacy.

On the conference call, BCYC said the existing Duravelo-2 trial is no longer considered acceptable as an approval path due to the evolving treatment landscape. Management also indicated that an accelerated approval path may still be possible, but aligning on Ph3 design may take time, and it is not time or resource-efficient to keep the Duravelo-2 running.

Focus Now on BT5528 and BRC portfolio: BT5528 (nuzefatide pevedotin), Ph1 combo data with nivo in mUC will be presented at AACR in April, and BCYC recently started a Phase II trial of single-agent BT5528 in PDAC. On BRC, BCYC will initiate the first company-sponsored BRC program targeting MT-1 using 212-Pb isotope in 2027, with additional imaging data this year.

Last week on their 4Q conference call, SKYE discussed how they have expanded upon their dose/PK optimization strategy for nimacimab. Importantly, the company is adding a “part C” to the current Phase IIa trial, which is a key de-risking step before Phase IIb begins (likely in 4Q26/1Q27). The start of the Part C expansion study, evaluating 400mg and 600mg IV cohorts is a strategic move designed to answer the central question from the 200mg experience, which is whether the limited monotherapy signal was due to underexposure in peripheral tissues rather than a fundamental limitation of the CB1 pathway. The IV route allows for clean exposure separation to model peripheral engagement for the Phase IIb dose selection while preserving the CNS-sparing safety profile and probably also speeds up the timeline. SKYE plans to report topline out to 16-wks for 400mg and 600mg IV nima to inform go-forward dose. We do not believe the expansion study is powered for efficacy and expect takeaways to focus on safety and PK exposures.

At the lower 200mg dose, the limiting exposure appears to be peripheral tissue (especially adipose) rather than blood. In that framework, the move to higher exposure is meant to test whether the harder-to-reach peripheral compartments can be brought more meaningfully into range, which is the central rationale for Part C. SKYE believes it can push systemic exposure higher while still maintaining a meaningful CNS-sparing margin, which is what makes the higher-dose experiment worth running.