Substantial fundamental progress in the portfolio throughout 2024

Q1 2024

Vertex Pharmaceuticals reported encouraging Phase III results for VX-548, the first non-opioid pain treatment in two decades. While it did not outperform hydrocodone in acute pain, the company is now focusing on more promising chronic pain studies, with results expected in 2026. Chronic pain affects approximately 50 million US adults, presenting a substantial market opportunity for effective non-opioid alternatives. The shift away from opioids is particularly relevant amid the ongoing opioid crisis, reinforcing the strong commercial potential of VX-548 if successful. This program is now a key growth driver for Vertex, expanding its pipeline beyond cystic fibrosis.

Celldex Therapeutics' barzolvolimab showed strong Phase II data in chronic spontaneous urticaria (CSU), demonstrating significant efficacy, including in patients unresponsive to standard-of-care treatments like Xolair. The drug is positioned as a best-in-class therapy, but its safety profile requires monitoring due to risks of neutropenia and hypopigmentation. Currently in Phase III, barzolvolimab faces competition from «me-too» drugs and oral KIT inhibitors but retains strong commercial potential.

Argenx achieved a major milestone with positive Phase II data for efgartigimod in Sjögren’s disease, representing its largest potential indication and more than doubling Vyvgart’s current label. With 330 000 US patients, Sjögren’s offers a substantial opportunity, and the company has already initiated Phase III trials. Despite anticipated FcRn competition, Vyvgart continues to lead the field.

Crispr Therapeutics and Vertex Pharmaceuticals secured the first-ever FDA approval for a gene-editing therapy, Casgevy, in transfusion-dependent beta thalassemia. However, the commercial opportunity remains limited due to a small eligible US patient population. Given strategic concerns over Crispr’s pipeline, BB Biotech exited its position after concluding that their approach to allogeneic CAR-T therapies and widespread disease targeting lacked long-term viability.

Q2 2024

Alnylam Pharmaceuticals’ HELIOS-B Phase III trial for vutrisiran in ATTR cardiomyopathy delivered one of the most significant biotech milestones of 2024. The therapy demonstrated a 30-35% relative risk reduction in all-cause mortality, a transformative clinical outcome in a high-value cardiovascular market. With over 100 000 US patients and Pfizer’s Vyndaqel/Vyndamax already generating multi-billion-dollar sales, vutrisiran is positioned to become a dominant therapy upon its anticipated 2025 approval. Alnylam is also advancing ALN-SC04, a next-generation RNA therapy with a lower royalty burden and potential for annual dosing, reinforcing its leadership in RNAi-based cardiometabolic disease treatment. This result strengthens our conviction in Alnylam’s ATTR franchise and marks an inflection point in its evolution from a rare disease company to a broader RNAi-based biotech leader with multi-therapeutic area ambitions.

Agios Pharmaceuticals reported positive Phase III data for mitapivat in transfusion-dependent thalassemia (TDT), reinforcing its first-in-class position as a pyruvate kinase activator. However, safety concerns arose with liver injury observed in a small number of patients, requiring label updates. Agios is also developing mitapivat for sickle cell disease, where competitors have struggled. We expect approval for TDT in Q3 2025, and for sickle cell disease in 2026 if the upcoming Phase III data are positive.

Intra-Cellular Therapies’ Caplyta (lumateperone) reported some of the strongest Phase III data in major depressive disorder (MDD), showing a significant MADRS score improvement across two consistent studies. MDD is a massive market, and Caplyta’s peak sales are projected to exceed USD 5 bn, with Johnson & Johnson acquiring the company for USD 14.6 bn. A key driver of value was a patent litigation settlement extending exclusivity until ~2040, removing major IP risks.

Macrogenics’ vobra duo (B7-H3 ADC) was discontinued following five treatment-related deaths in the Phase II TAMARACK study in prostate cancer. The company has pivoted to a next-generation ADC with a novel payload and linker, now in Phase I clinical trials. However, competition has intensified, and Macrogenics is now trading near cash levels, relying on non-dilutive funding sources from partner milestones.

Sage Therapeutics suffered another setback as SAGE-718 (dalzanemdor) failed all Phase II trials in Alzheimer’s, Parkinson’s, and Huntington’s disease. This latest failure compounds issues stemming from SAGE-217 (Zurzuvae), which was only approved for postpartum depression (PPD) and not MDD, with questionable efficiency of economics for Sage given the profit sharing with partner Biogen.

Argenx secured FDA approval for Vyvgart Hytrulo (SC formulation) in CIDP, further strengthening its immunology franchise. CIDP is expected to be a similarly large or larger opportunity than myasthenia gravis (MG), with potential for higher dosing frequency, leading to increased revenue per patient. The subcutaneous formulation improves convenience, but competition from FcRn inhibitors is expected.

Q3 2024

Ionis Pharmaceuticals reported promising Phase I/II data for ION582 in Angelman syndrome, demonstrating consistent improvements in cognition, communication, and motor function. With 330 000 potential patients, Angelman is a sizable, rare disease market. A Phase III trial will begin in H1 2025, positioning ION582 as a strong contender against Ultragenyx’s gene therapy (GTX-102).

Neurocrine Biosciences reported Phase II data for NBI-568, a muscarinic receptor agonist in schizophrenia, which fell short of expectations. Given last year’s Karuna and Cerevel acquisitions, there was heightened anticipation around the disclosure, though Cerevel’s asset has since failed. Our investment thesis remains centered on Ingrezza’s continued growth and the launch of Crenessity, while we see the psychiatry pipeline – including AMPA and muscarinic programs – as high risk but optional value. These modalities face historically high placebo responses and clinical variability. Neurocrine recently advanced its AMPA program into Phase III after Takeda declined co-commercialization, making it a higher-risk, higher-spending, but potentially higher-reward asset.

Biohaven’s troriluzole delivered an unexpected Phase III win in spinocerebellar ataxia (SCA), achieving a 50–70% reduction in disease progression over three years. BB Biotech’s primary investment thesis in Biohaven remains the MoDE degrader platform for IgG-lowering diseases, but this success validates the company’s broader neurology pipeline.

Rivus Pharmaceuticals’ HU6 (controlled metabolic accelerator) reported positive Phase IIa data in obesity-related heart failure (HFpEF), showing significant weight loss while preserving muscle mass. A large Phase II proof-of-concept study in MASH (metabolic dysfunction-associated steatohepatitis) is expected in 2025, and BB Biotech continues to view Rivus as a high-potential private investment.

Edgewise Therapeutics’ EDG-7500 demonstrated the strongest pharmacodynamic effects ever seen in hypertrophic cardiomyopathy (HCM). Unlike myosin inhibitors (mavacamten, aficamten), which reduce LVEF and require REMS monitoring, EDG-7500 selectively targets the sarcomere, maintaining LVOT reductions without impacting systolic function. A Phase II study in both obstructive and non-obstructive HCM will read out in Q1 2025, with potential expansion into HFpEF, a multi-million-patient market.

Wave Life Sciences reported promising interim results for WVE-N531 in Duchenne muscular dystrophy, with dystrophin expression levels on par with the best available data, though cross-exon and assay comparisons remain challenging. The therapy’s favorable safety and potential for monthly dosing could differentiate it, while regulatory clarity on accelerated approval in Q1 2025 would further derisk the asset. We stepped onto Wave based on stereopure chemistry where first generations of exon skipping and ASOs disappointed, later shifting toward RNA editing and the GSK-partnered alpha-1 program. However, with WVE-N531’s progress and the potential for a broader DMD franchise, exon skipping is becoming a more tangible value driver within Wave’s RNA-based platform.

Q4 2024

Scholar Rock’s apitegromab met its primary endpoint in the Phase III SAPPHIRE trial for non-ambulatory spinal muscular atrophy (SMA) types 2 and 3, validating BB Biotech’s investment thesis. As the first muscle-directed therapy for SMA, apitegromab has the potential to enhance motor function beyond existing SMN-targeting treatments and could see broad adoption as an add-on to Spinraza and Evrysdi. With a Biologics License Application (BLA) filing expected in Q1 2025, regulatory clarity is a near-term catalyst. Additionally, its exploration in obesity-related muscle loss (Phase II EMBRAZE trial, Q2 2025 readout) could expand its market potential beyond SMA. Scholar Rock’s TGF-β signaling platform strengthens its M&A appeal for neuromuscular players, positioning it as a high-value strategic asset.

Argenx’s decision to advance efgartigimod SC in the Phase II/III ALKIVIA trial for idiopathic inflammatory myopathies (IIM) reinforces its leadership in FcRn-targeted therapies and confirms expansion potential beyond myasthenia gravis (MG) and CIDP. While FcRn inhibitors are facing increased competition from novel entrants (e.g., nipocalimab, rozanolixizumab), Argenx remains ahead with multiple label expansions, best-in-class pharmacology, a subcutaneous formulation advantage, and long-term physician adoption. IIM is a high-value orphan opportunity, and if successful, efgartigimod SC could unlock a meaningful new commercial market. This progress aligns with our investment in companies executing well on franchise expansion and leadership in rare diseases.

Wave Life Sciences achieved a first-in-human proof-of-mechanism for RNA editing with WVE-006 in alpha-1 antitrypsin deficiency (AATD), nearly reaching the therapeutic threshold at the lowest dose, validating its A-to-I RNA editing approach. With GSK set to take over registrational development, this derisks the path to late-stage clinical trials and potential commercialization. Beyond AATD, Wave is expanding its RNA editing pipeline, while advancing exon-skipping, ASOs, and siRNA programs in obesity and neuromuscular diseases, reinforcing its position as a leading RNA therapeutics platform.

Essa Pharma terminated its Phase II trial for masofaniten in metastatic castration-resistant prostate cancer (mCRPC) after a pre-specified interim analysis showed insufficient efficacy and safety concerns. The trial tested masofaniten in combination with enzalutamide, aiming to improve on standard-of-care outcomes, but the results did not support further development. Given the lack of late-stage assets and increased competition in the mCRPC space, Essa now faces strategic uncertainty and may need to pivot or seek external partnerships. BB Biotech exited its position during the event-driven high liquidity, mitigating further downside risk.

Incyte’s decision to pause patient enrollment in the Phase II study of MRGPRX2 in chronic spontaneous urticaria (CSU) due to preclinical toxicology concerns and to terminate MRGPRX4 (CP) after disappointing Phase II efficacy data raises questions about the strategic rationale behind its USD 750 mn acquisition of Escient Pharmaceuticals. This outcome reinforces Incyte’s suboptimal track record in business development, as previous acquisitions have yet to deliver meaningful late-stage pipeline additions. Furthermore, even if successful, these programs would not have meaningfully addressed Incyte’s looming Jakafi loss-of-exclusivity (LOE) challenge, given their early-stage nature and extended commercialization timelines. Instead, we see Incyte’s best path forward in its disease-modifying CALR and JAKV617F myeloproliferative neoplasm (MPN) programs, which could provide a longer-term strategic solution to sustain its hem-onc franchise.

Revolution Medicines’ RAS(ON) inhibitors (RMC-6236, RMC-9805) are delivering the best pancreatic cancer data ever seen. The multi-selective inhibitor (6236) already outperforms chemo in late-line disease, with a Phase III 2L study underway. The company is also exploring combo with chemo and a doublet regimen with the G12D-specific inhibitor (9805) to enter frontline treatment. Beyond pancreatic cancer, expansion into lung and colorectal cancer remains the major upside driver.

Vertex Pharmaceuticals reported Phase II results for suzetrigine (VX-548) in lumbosacral radiculopathy (LSR), meeting its primary endpoint with statistically significant pain reduction. However, a high placebo response complicated data interpretation, raising uncertainty about its differentiation in neuropathic pain. Despite this, Vertex is advancing a Phase III trial in diabetic peripheral neuropathy (DPN) and planning a broader registrational program that includes LSR, signaling continued commitment to its non-opioid pain strategy. Beyond suzetrigine, Vertex is developing a pipeline of selective sodium channel inhibitors, aiming to create a differentiated pain portfolio. The success of this franchise will determine whether Vertex can extend its leadership in a new therapeutic area.

Neurocrine Biosciences secured FDA approval for Crenessity as an adjunctive treatment for congenital adrenal hyperplasia (CAH), reinforcing its leadership in rare endocrine disorders. With no existing FDA-approved medical therapy for CAH, Crenessity fills a significant unmet need by offering glucocorticoid replacement therapy while managing androgen levels, aiming to reduce long-term steroid exposure risks. While the primary investment thesis for Neurocrine remains centered on Ingrezza’s continued growth, the approval of Crenessity strengthens the company’s endocrine franchise and adds a durable revenue stream. Meanwhile, Neurocrine’s psychiatry pipeline remains high risk but optional. The AMPA program recently entered Phase III after Takeda declined co-commercialization, increasing investment costs but also potential upside. Muscarinic approaches, while mechanistically interesting, remain at an early stage with historically high failure rates in CNS.

Overall, 2024 showcased significant progress across BB Biotech’s portfolio, balancing expansion in high-conviction franchises with disciplined exits in underperforming assets. The year’s milestones reinforce our commitment to long-term value creation through fundamental-driven biotech investing.