Adam May on $ABVX's blowout data and subsequent stock crash

Episode Summary

Executive Summary: The episode centered on Abivax’s ulcerative colitis program, where exceptional efficacy data were overshadowed by a perceived cancer signal that Adam May argues is statistical noise and a presentation issue, not a real safety problem. The discussion then covered valuation, FDA labeling risk, buyout potential, and a brief update on Nectar’s alopecia areata story, litigation overhhang, and possible competitive pressures.

Main Topics: Abivax maintenance data: efficacy exceeded expectations: May explained that Abivax’s phase 3 maintenance data in ulcerative colitis were far stronger than expected, matching or beating Rinvoq on clinical remission and clearly outperforming it on endoscopic remission. Cancer-signal controversy and safety interpretation: The stock sold off sharply after investors focused on seven reported cancers in the high-dose arm, but May argued one was misclassified dysplasia, four were non-melanoma skin cancers, and the remaining two were likely background noise. How the market and management handled disclosure: The conversation criticized Abivax’s data presentation as too detailed and insufficiently contextualized, which May believes led investors to misread the safety profile and overreact. Valuation, black-box risk, and takeout scenarios: They debated whether Abivax is priced for a black-box warning, whether it still looks cheap even with one, and how much upside remains if FDA labeling is clean or if Crohn’s data later support a broader franchise. Part two safety data as the next catalyst: A key near-term issue is the upcoming release of additional phase 3 safety data from several hundred more patients, which could further weaken or eliminate the cancer concern. Nectar update: alopecia, litigation, and competition: Nectar’s stock weakness was discussed in light of prior positive alopecia areata data, ongoing Lilly litigation, and concerns that competitor Q32Bio or the OX40 class could affect sentiment.

Key Arguments: Abivax’s maintenance results were not just positive; they were best-in-class or near-best-in-class for ulcerative colitis, particularly on endoscopic remission. The apparent cancer signal is not convincing because the trial is underpowered for rare events, the counts were misclassified, and the observed cancers match background expectations. One case labeled as cancer was actually colonic dysplasia, and four of the seven were non-melanoma skin cancers, which the FDA typically treats separately from meaningful systemic cancer risk. There is no obvious mechanistic reason for Abivax to cause cancer because it is not genotoxic and does not appear immunosuppressive based on infection rates. Even if the drug ends up with a cancer warning, the efficacy profile suggests it can still be a multi-billion-dollar product, similar to Rinvoq but potentially safer and more convenient. Near-term upside could come from a resolution of the cancer narrative, additional phase 3 safety data, approval dynamics, and eventual M&A. For Nectar, the alopecia data remain encouraging, but the stock is pressured by litigation uncertainty, possible competition, and shifting biotech sentiment rather than by clear fundamental deterioration.

Data Points: Abivax clinical remission delta: 44% high dose, 39% low dose - Placebo-adjusted maintenance-phase clinical remission results in ulcerative colitis Abivax endoscopic remission delta: 38% high dose - Maintenance-phase endoscopic remission result, more than doubling Rinvoq’s historical high-dose benchmark Rinvoq clinical remission delta: 39% high dose, 30% low dose - Referenced as the main comparator for ulcerative colitis efficacy Rinvoq endoscopic remission delta: 18% high dose - Benchmark Abivax exceeded by a wide margin Cancer cases in Abivax high-dose arm: 7 reported cases - Initial count that drove the post-data selloff Cancer cases after reclassification: 2 real cancers - After removing one dysplasia case and four non-melanoma skin cancers Non-melanoma skin cancers: 4 cases - Included among the seven reported cases but argued not to represent the same risk category as systemic cancers Expected background cancer rate in ulcerative colitis: ~0.5 per 100 patient-years - Used to argue observed cases were broadly in line with expected incidence Observed Abivax cancer rate across phase 2 + phase 3: 0.59 per 100 patient-years - Combined safety database estimate cited by May Phase 3 population cited: ~1,300 patients started; ~600 already reported - Used to explain partial data availability and patient-year exposure differences Placebo dropout/adverse-event capture: ~100+ placebo patients dropped out early - Argued to reduce cancer capture on placebo versus drug arms Stock reaction after Abivax data: About $130-180 AH to ~$68 intraday low - Market response after initial euphoric jump and later cancer fears Potential near-term M&A range for Abivax: $16-18 billion - May’s estimate for a realistic acquisition range if sentiment normalizes Potential stock price at M&A: $175-$200 per share - Approximate implied range discussed for Abivax Crohn’s readout timing: Mid-2027 / Q2 2027 - Delayed from an earlier end-2026 expectation Nectar stock move after positive data and financing: ~$45 to ~$100, then mid-50s - Described as strong post-data rally followed by sustained weakness Nectar secondary offering: Priced at $92 - Raised after positive alopecia maintenance data Lilly litigation timing: Late summer to early fall - Expected resolution window discussed for Nectar’s lawsuit Competitor Q32Bio financing: $55 million raise - Referenced as one factor potentially influencing sentiment in alopecia areata

Pivotal Quotes: "We posit that a good drug does not always equal a good stock." — Jeffries note quoted by Andrew Walker: Used to frame the disconnect between Abivax’s strong biology and weak stock reaction "This outcome was not even listed on the scale for any of the scenario analyses of these data." — Adam May: Describing how far beyond expectations Abivax’s endoscopic remission data came in "I think that the probability of downside is quite low because... the worst case scenario now... is that it has a black box warning, we already know it has outstanding efficacy and is going to be a multi-billion dollar drug in ulcerative colitis alone." — Adam May: Summarizing the bull case for Abivax even under adverse labeling assumptions

Implications: Listeners should take away that Abivax’s science may be much stronger than the market implies, with the main debate now centered on labeling, safety perception, and M&A timing. Nectar remains a longer-dated, litigation- and sentiment-sensitive story with potential upside, but less immediate conviction.