US Biotechnology and Pharmaceuticals_ The 2025 US Biopharma Outlook

Industry and Company Overview * Industry: US Biotechnology and Pharmaceuticals * Time Period: 2025 * Key Players: Lilly, Vertex, Gilead, AbbVie, Amgen, Bristol-Myers Squibb, Merck, Pfizer, Biogen, Regeneron, and others Key Points 1. Sector Performance and Outlook * 2024 Performance: The biopharma sector underperformed the broader market in 2024, with the NBI index down 2% and the DRG index up 3% compared to the S&P500's 26% increase. * 2025 Outlook: Citi remains bullish on the biopharma sector for the long term due to high innovation and potential for growth. However, near-term concerns over reimbursement and access may persist. * Tailwinds: Favorable capital markets backdrop, strong pipeline of new approvals and launches, and beatable growth expectations of 3% (revenue) and 6% (non-GAAP EPS) for larger cap biopharma companies. 2. Sector Driving Catalysts * **Lilly's orforglipron phase 3 trials and Amgen's MariTide phase 2 details for obesity. * **Vertex's Alyftrek and suzetrigine launches for CF and acute pain, respectively. * **Merck's Winrevair and Bristol's Cobenfy launches for PAH and schizophrenia. * **Potential M&A activity from Merck, AbbVie, Amgen, and others. * **Opthea's OPT-302 phase 3 data for wAMD. * **Ionis' pelacarsen phase 3 HORIZON data for Lp(a). * **Immunovant's batoclimab phase 2 (CIDP) and 3 (gMG) data. 3. Top Picks * Large Cap Biopharma (growth): Lilly and Vertex * Large Cap Biopharma (GARP / value): Gilead * SMID Biotech: Ideaya, Ultragenyx, Ionis, Immunovant, and MoonLake 4. Healthcare Policy * HC Policy: Policy will continue to dominate the narrative in biopharma in 2025. * FDA Approval Processes: Disruption to FDA approval processes remains unlikely. * IRA Pricing: Downside risk remains due to the gap between current negotiated pricing and G20 pricing. * Medicare Coverage: Amendment of Medicare coverage for GLP-1 for inclusion of obesity is likely. 5. M&A and IPOs * M&A: Subdued M&A activity in 2024, but expected to rebound in 2025 due to pent-up demand and attractive valuations. * IPOs: 2024 saw improvements for biotech IPOs, with 24 biotech companies going public and total proceeds of $3.9B. Expect a recovery in the IPO market in 2025. 6. Valuation and Growth Expectations * **PE Multiples**: Current PE multiples for US Large Cap Biopharma are in line with the broader market, but potential for multiples expansion beyond 2024. * **Revenue Growth**: Expected to accelerate further out, with two-year projections having healthcare (+13$250B in aggregate capital to keep rewarding innovation. * Macro Factors: Continued rate declines and new FDA leadership to defend the need for an appropriately funded agency. 11. High-Profile Catalysts * Ophthalmology: Phase 3 readouts for OPT-302 in wAMD. * Cardiology: Clinical data for firmonertinib in 1L NSCLC EGFR Exon 20 mutations. * Autoimmune: Phase 3 data for pelacarsen in elevated Lp(a) and phase 2 data for batoclimab in CIDP and gMG. 12. Favorite Stocks * Eli Lilly: New approval of tirzepatide for sleep apnea, label expansion for heart failure, and strong pipeline. * Vertex: Multiple product launches, including Alyftrek, suzetrigine, and Casgevy. * Gilead: Continued focus on HIV, lenacapavir launch in HIV PrEP market, and growth in combined HIV franchise. * Ideaya: Robust synthetic lethality pipeline and strong financial position. * Ultragenyx: Significant re-rating potential driven by key catalysts, including Ph3 OI trials and gene therapy pipeline. * Ionis: First two wholly owned assets, olezarsen and donidalorsen, for FCS and HAE, and multiple data releases in larger cardiovascular indications. * Cogent Biosciences: Emerging profile suggests potential to become a market leader for the treatment of NonAdvSM and AdvSM. * Immunovant: Potential to be a best-in-class FcRN inhibitor in gMG and other indications. * MoonLake: Topline Ph3 HS data for sonelokimab in HS. 13. Top 25 Events for 2025 * Clinical Updates: Phase 3 readouts for Lilly's orforglipron, Vertex's suzetrigine, and Gilead's lenacapavir. * Launches: Vertex's Alyftrek and suzetrigine, Bristol's Cobenfy, and Biogen's Leqembi and Kisunla. * Approvals/Launches: AbbVie's Tavapadon, Gilead's lenacapavir, and Merck's Winrevair. * Policy: Impact of IRA Part D changes and RFK Jr. policies. * Regulatory: Biosimilar launch progress for Amgen's Eylea and AbbVie's Botox. * Clinical Updates: Phase 3 data for Regeneron's Itepekimab and Gilead's Dom + Zim. * Launches: Merck's Winrevair launch in the US and Ex-US. * Clinical Updates: Phase 3 data for Vertex's VX-264 in T1D. 14. Therapeutic Themes * GLP-1: Focus on further label expansion opportunities, orforglipron phase 3 datasets, and tirzepatide's ex-US rollout. * Non-opioid Pain: Vertex's suzetrigine launch for acute pain. * Neuro: Focus on Alzheimer's disease, neuropsychiatric conditions, and Parkinson's disease. 15. Conference Calendar * American Society of Clinical Oncology: Gastrointestinal Cancers, Genitourinary Cancers, and General Meeting. * American Academy of Allergy, Asthma & Immunology: Annual Meeting. * American Academy of Dermatology: Annual Meeting. * European Society for Blood and Marrow Transplantation: Annual Meeting. * American Academy of Neurology: Annual Meeting. * American Association for Cancer Research: Annual Meeting. * American Urological Association: Annual Meeting. * Association for Research in Vision and Ophthalmology: Annual Meeting. * International Society for Cell & Gene Therapy: Annual Meeting. * American Society of Gene & Cell Therapy: Annual Meeting. * The American Thoracic Society: Annual Meeting. * American Society of Clinical Oncology: Annual Meeting. * European Academy of Allergy & Clinical Immunology: Annual Meeting. * American Diabetes Association's: Annual Meeting. * European Academy of Neurology: Annual Meeting. * Endocrine Society: Annual Meeting. * Alzheimer's Association International Conference: Annual Meeting. * American Society of Retina Specialists: Annual Meeting. * European Society of Cardiology: Annual Meeting. * European Association for the Study of Diabetes: Annual Meeting. * European Society of Gene & Cell Therapy: Annual Meeting. * Congress of Neurological Surgeons: Annual Meeting. * European Society for Medical Oncology: Annual Meeting. * IDWeek: Annual Meeting. * American Association for the Study of Liver Disease: Annual Meeting. * American Heart Association: Annual Meeting. * Clinical Trials on Alzheimer's Disease Conference: Annual Meeting. * American Epilepsy Society: Annual Meeting. * American Society of Hematology: Annual Meeting. * San Antonio Breast Cancer Symposium: Annual Meeting.