Biotech in 2015 and the Year Ahead with TheStreet’s Adam Feuerstein

Episode Summary

Executive Summary: Adam Feuerstein reviews biotech’s 2015 as a year of strong headline numbers but mixed sentiment: record approvals, M&A, and stock outperformance masked a volatile second half, pricing scrutiny, and disappointment in some hyped areas. He highlights Entresto as the standout approval, criticizes Adya and Valiant’s Michael Pearson, and says drug pricing and dealmaking will remain central in 2016.

Main Topics: Biotech’s mixed 2015 performance (Priority: 5/5): Feuerstein argues 2015 looked excellent on paper—approvals, M&A, and stock gains—but felt difficult because the year split into a euphoric first half and a rough second half with a market downturn and IPO window closure. Best and worst drug approvals (Priority: 5/5): Novartis’ Entresto is cited as the most important approval for its potential to shift heart-failure care, while Sprout’s Adya is labeled the worst approval because of controversy, limited benefit, and concerns about the approval process. Therapeutic categories that underwhelmed (Priority: 4/5): CAR-T therapies and PCSK9 cholesterol drugs are described as promising but not yet transformative in 2015 due to relapse, commercialization challenges, lack of outcomes data, and payer resistance. Hype around CRISPR (Priority: 4/5): CRISPR is called the most overhyped technology of the year because excitement outpaced clinical reality; Feuerstein stresses that meaningful therapies are still far off and that public enthusiasm exceeds near-term proof. Executive performance and biotech dealmaking (Priority: 5/5): Brent Saunders is named CEO of the year for steering Allergan into a massive Pfizer deal, while Michael Pearson is named worst CEO amid Valiant’s unraveling and controversies. M&A remains strong, but valuations may temper 2016 activity. Drug pricing politics and policy uncertainty (Priority: 5/5): Drug pricing is framed as the dominant issue entering 2016, boosted by Martin Shkreli’s notoriety and election-year politics. Feuerstein expects sustained debate but limited legislative action because consensus does not translate into agreement on solutions. Investor mood heading into JPMorgan (Priority: 3/5): Feuerstein says the tone at JP Morgan will likely be more cautious and exhausted than in 2015, though still optimistic, because volatile markets made it hard for investors to make consistent returns.

Key Arguments: 2015 was a strong year statistically for biotech, but volatility and a steep midyear reversal made it emotionally and operationally challenging for investors. Entresto mattered because it offered a real chance to change standard of care in heart failure, unlike many approvals that were merely incremental. PCSK9 inhibitors may ultimately be huge, but insurer pushback and the absence of cardiovascular outcomes data limit near-term uptake. Adya’s approval was controversial because prior FDA rejections, limited efficacy, and a manufacturer-backed grassroots campaign suggested the process was overly permissive. CAR-T therapies still face major hurdles in relapse, expansion beyond blood cancers, and commercialization/manufacturing complexity. CRISPR is exciting science, but therapeutic applications remain years away and the technology has been overexposed in media and investor narratives. Drug pricing will remain a major political issue in 2016, but gridlock and divergent party solutions make meaningful policy change unlikely. M&A should continue, though valuation concerns and regulatory pressure on inversions may slow activity. Brent Saunders’ charisma, dealmaking track record, and youth position him as a likely future leader of the combined Allergan-Pfizer entity. Michael Pearson became the obvious worst CEO because of Valiant’s price increases, accounting concerns, Philidor allegations, and poor corporate defense. The 2016 JPMorgan conference is expected to feel optimistic but less exuberant than the prior year due to investor fatigue and market turbulence.

Data Points: New drug approvals in 2015: 45 - Described as the best year in 19 years for approvals Years since comparable approval count: 19 years - Feuerstein notes 2015 had the best approval tally in nearly two decades Pfizer-Allergan deal value: $160 billion - Used to illustrate Brent Saunders’ CEO-of-the-year selection Sprout/Adya acquisition value: $1 billion - Valiant bought Sprout after Adya’s approval 2015 M&A activity: Record - Biotech saw record dealmaking during the year Biotech stock performance: Outperformed the general market - Overall sector performance in 2015

Pivotal Quotes: "it was definitely, I think it was a difficult year for people, challenging year" — Adam Feuerstein: Overall assessment of biotech in 2015 despite strong headline metrics "a first half, second half kind of year" — Adam Feuerstein: He explains the year’s split between exuberant early trading and a midyear downturn "I think people are really going to be focused on drug pricing" — Adam Feuerstein: His expectation for the dominant issue shaping 2016 biotech and policy discussions

Implications: Biotech enters 2016 with strong science and capital markets interest, but investor caution, pricing scrutiny, and political uncertainty may cap enthusiasm until clearer clinical data and policy outcomes emerge.