What are the key takeaways from this Biotech Hangout episode?

Key insights include: **Degrossing Cycle:** Goldman Sachs prime broker data shows hedge funds unwound biotech positions in six of the past eight weeks, representing the largest cumulative degrossing in over five years. Long-short funds cutting gross exposure from $2B to $1.5B create cascading forced selling across crowded trades, making buying pressure unlikely until after October 31 annual fund closes.; **IPO Market Resilience:** Despite XBI correcting roughly 700 basis points from its $169 August high, 28 biotechs have debuted in 2026, with T-Rex Bio, Iambic Therapeutics, and Citi Therapeutics raising a combined $467M this week alone. Private companies with near-term clinical catalysts and technological differentiation continue to access capital at reasonable valuations regardless of broader sector weakness.; **M&A as the Likely Catalyst:** Analysts identify M&A activity as the primary mechanism to reverse the current biotech bear cycle, not time or rate cuts alone. A string of acquisitions would generate FOMO among sidelined investors who recognize undervalued assets but fear catching a falling knife without external validation that bargain prices have arrived.

What did Paul Matias and Brian Skorney discuss on Biotech Hangout?

Biotech Hangout Episode 199 examines the XBI's 700 basis-point two-week decline, record hedge fund degrossing over five years, three new IPOs raising $467M combined, Bristol Myers Squibb's nuanced IPF phase three results, celiac disease emerging as a competitive therapeutic battleground, and Moderna's cancer vaccine data ahead of ESMO. Key topics include: **Degrossing Cycle:** Goldman Sachs prime broker data shows hedge funds unwound biotech positions in six of the past eight weeks, representing the largest cumulative degrossing in over five years. Long-short funds cutting gross exposure from $2B to $1.5B create cascading forced selling across crowded trades, making buying pressure unlikely until after October 31 annual fund closes.; **IPO Market Resilience:** Despite XBI correcting roughly 700 basis points from its $169 August high, 28 biotechs have debuted in 2026, with T-Rex Bio, Iambic Therapeutics, and Citi Therapeutics raising a combined $467M this week alone. Private companies with near-term clinical catalysts and technological differentiation continue to access capital at reasonable valuations regardless of broader sector weakness..

How long is this episode of Biotech Hangout?

This episode is 59 minutes long. SignalCast provides an AI-generated summary so you can get the key insights in about 3 minutes.

Biotech Hangout

Episode 199 - October 16, 2026

October 16, 2026

59 min episode · 2 min read

Paul Matias,Brian Skorney,Yaron Werber

Episode

59 min

Read time

2 min

Topics

Investing, Fundraising & VC, Sales & Revenue

AI-Generated Summary

Published Oct 17, 2026

Key Takeaways

✓Degrossing Cycle: Goldman Sachs prime broker data shows hedge funds unwound biotech positions in six of the past eight weeks, representing the largest cumulative degrossing in over five years. Long-short funds cutting gross exposure from $2B to $1.5B create cascading forced selling across crowded trades, making buying pressure unlikely until after October 31 annual fund closes.
✓IPO Market Resilience: Despite XBI correcting roughly 700 basis points from its $169 August high, 28 biotechs have debuted in 2026, with T-Rex Bio, Iambic Therapeutics, and Citi Therapeutics raising a combined $467M this week alone. Private companies with near-term clinical catalysts and technological differentiation continue to access capital at reasonable valuations regardless of broader sector weakness.
✓M&A as the Likely Catalyst: Analysts identify M&A activity as the primary mechanism to reverse the current biotech bear cycle, not time or rate cuts alone. A string of acquisitions would generate FOMO among sidelined investors who recognize undervalued assets but fear catching a falling knife without external validation that bargain prices have arrived.
✓Celiac Disease Competitive Landscape: Three companies — Teva, Argenx, and FirstTrax — are targeting IL-15 biology in celiac disease with early data showing reductions in intraepithelial lymphocytes and histological improvement across all programs. The pivotal commercial debate centers on reimbursement justification when gluten avoidance is free, making endpoint selection between histology and symptoms critical for regulatory and payer strategy.
✓Brain Shuttle Transferrin Momentum: Arrowhead achieved over 80% tau lowering in CSF using a transferrin-conjugated siRNA antibody drug conjugate, becoming the first to demonstrate clinical data in this modality. Investors tracking CNS RNAi should monitor tau PET reduction data, not just CSF biomarkers, since Biogen's phase 2b showed CSF reductions substantially exceeding PET signal changes.

What It Covers

Biotech Hangout Episode 199 examines the XBI's 700 basis-point two-week decline, record hedge fund degrossing over five years, three new IPOs raising $467M combined, Bristol Myers Squibb's nuanced IPF phase three results, celiac disease emerging as a competitive therapeutic battleground, and Moderna's cancer vaccine data ahead of ESMO.

Key Questions Answered

•Degrossing Cycle: Goldman Sachs prime broker data shows hedge funds unwound biotech positions in six of the past eight weeks, representing the largest cumulative degrossing in over five years. Long-short funds cutting gross exposure from $2B to $1.5B create cascading forced selling across crowded trades, making buying pressure unlikely until after October 31 annual fund closes.
•IPO Market Resilience: Despite XBI correcting roughly 700 basis points from its $169 August high, 28 biotechs have debuted in 2026, with T-Rex Bio, Iambic Therapeutics, and Citi Therapeutics raising a combined $467M this week alone. Private companies with near-term clinical catalysts and technological differentiation continue to access capital at reasonable valuations regardless of broader sector weakness.
•M&A as the Likely Catalyst: Analysts identify M&A activity as the primary mechanism to reverse the current biotech bear cycle, not time or rate cuts alone. A string of acquisitions would generate FOMO among sidelined investors who recognize undervalued assets but fear catching a falling knife without external validation that bargain prices have arrived.
•Celiac Disease Competitive Landscape: Three companies — Teva, Argenx, and FirstTrax — are targeting IL-15 biology in celiac disease with early data showing reductions in intraepithelial lymphocytes and histological improvement across all programs. The pivotal commercial debate centers on reimbursement justification when gluten avoidance is free, making endpoint selection between histology and symptoms critical for regulatory and payer strategy.
•Brain Shuttle Transferrin Momentum: Arrowhead achieved over 80% tau lowering in CSF using a transferrin-conjugated siRNA antibody drug conjugate, becoming the first to demonstrate clinical data in this modality. Investors tracking CNS RNAi should monitor tau PET reduction data, not just CSF biomarkers, since Biogen's phase 2b showed CSF reductions substantially exceeding PET signal changes.

Notable Moment

Argenx's Sjogren's phase three trial failed a futility analysis that investors did not know existed, blindsiding analysts who had just concluded a bullish physician panel on the indication hours earlier — illustrating how undisclosed interim analyses can instantly invalidate consensus positioning.

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Episode Transcript

You're listening to Biotech Hangout, a live and unedited weekly discussion of all the latest news in our industry with a group of biotech leaders and experts. I'm Greg Savonovich, and my cohosts today are my fellow cell side biotech analyst Paul Matias, Brian Skorney and Yaron Werber, and also Jake Beecraft, a private biotech biotech company CEO. For more information about our host and guest speakers or to listen to the most recent episode, please go to biotechhangout.com. So happy Friday, everyone. It's a cold and somewhat rainy day where I am in New York. And some might say it's a bit miserable out. And I guess the same can be said of the current state of the by... Public biotech market, which again is trending downward. The XBI is under pressure again today. And with this in mind, maybe let's review just quickly from a high level where things stand in biotech. And I'll touch on performance, and then IPO and deal activity. The XBI ETF is still up a very healthy 20% for the year, and we'll take that relative to performance we saw in the dark period that stretched from twenty twenty two to 2024. But that said, at the current 146 or so level that's flashing in my Bloomberg, the XBI has come down considerably, some 700 basis points since our last podcast two weeks ago. And so that's not a great sign. Further outperformance versus the broader XLV ETF has narrowed, significantly. Recall that the XLV is an instrument that in addition to biotech includes pharmaceuticals, health care equipment and supplies, health care providers and services, life science tools and, services, and health care IT. Whereas two weeks ago, the XLV was up 7% year to date. It is now up 15% year to date. And that would suggest to me that investors are rotating out of biotech into these other health care subsectors. And in the context of the late August high for the x by... XBI of $1.69, we are now definitively in a correction of sorts. So I'll return to the markets in a few moments, but I just wanna point out that at least on the IPO front, we are seeing pretty good momentum. We saw three new names come to the market, T Rex Bio, which is a company focused on Treg targeted biologics for immune mediated diseases. It has a phase one asset for atopic dermatitis and partnerships with Eli Lilly and J and J, and it raised a 117,000,000 in gross proceeds earlier this week. We saw iambic therapeutics, an oncology focused biotech that is leaning heavily on AI with a lead pipeline asset that is in phase one and going after HER two mutated cancers. And it has partnerships with AbbVie, Bayer, or Bayer as I think it's supposed to be more properly referred to as Lundbeck and Takeda. It raised a 150,000,000 in gross proceeds. And then today, Citi Therapeutics is making its debut. Citi …

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