• CYTK presented detailed ACACIA-HCM data at ESC Congress 2026 investigating aficamten in nonobstructive HCM (nHCM) (topline data shared in ~May). We were encouraged by the totality of the data & consistency of results across endpoints

• However, the stock fell ~7% on 8/28 following the presentation, on top of general weakness in the biotech market (XBI -3%) (and continues to be weak)

• We disagree with two bearish views that might be holding the stock back:

  • Bear view (1): “Magnitude of clinical benefit was modest.”

    • We think that lower effect sizes in ACACIA is a reflection of the difficult nature of treating nHCM, not a failing of the molecule

    • Therefore, we think the bar for competitors to show even equivalent data is that much harder. Recall, BMY’s mavacamten previously failed its ODYSSEY trial in nHCM

  • Bear view (2): “Imbalance in safety, particularly heart failure (HF) events, makes aficamten’s clinical profile less favorable.”

    • We think the market is over-penalizing the imbalance of HF events as a safety event, a known effect of cardiac myosin inhibitors (CMI’s)

    • All HF events were during the ACACIA titration period (and treatable with diuretics). In the context of a clinical trial, ACACIA was designed to titrate aficamten to LVEF and to maximally tolerated dose (and blinded)

    • In clinical practice, the physicians will monitor LVEF changes unblinded and use clinical judgment to titrate their patients’ dose levels, akin to the long-term FOREST-HCM trial where >80% of eligible ACACIA patients enrolled and there were no HF events from aficamten

• We remain optimistic on aficamten’s outlook in nHCM given no other treatment options (including surgery). We added to our long CYTK position and will continue to collect additional physician feedback. PT remains at $105.

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On Friday 8/28, CYTK presented detailed data from the ACACIA-HCM trial investigating aficamten in non obstructive hypertrophic cardiomyopathy (nHCM) at the European Society of Cardiology (ESC) Congress 2026 in Munich, Germany. CYTK also hosted an investor webcast here. The ACACIA data was simultaneously published in the NEJM article here.

We’ve had a positive outlook on aficamten in nHCM going into the ACACIA data (review our posts here and here) and following the topline disclosure in May (post here). After reviewing the detailed data (pending additional physician feedback), we continue to be optimistic on aficamten’s outlook in nHCM where there are no other treatment options (including surgery). We think market uptake, assuming approval by YE 2027/early 2028, will be swift.

For those involved with CYTK, we recognize that the stock reaction following the presentation is not ideal. CYTK fell ~7% on 8/28 following the ACACIA presentation, on top of general weakness in the biotech market (XBI -3%) based on Fed Chair Warsh’s earlier comments on their ongoing battle against inflation. We’ll take a moment to review the ACACIA data in detail.

ACACIA-HCM Data Review

KCCQ-CSS (Quality of Life):

• KCCQ data was positive & statistically significant as disclosed in May, with the delta diverging from +3.1 vs. placebo at week 36 (p=0.021) to +7.0 by week 72 (p<0.005). The curves converged after washout within 4 weeks, as expected.

• Bears will point to the fact that the +3.1 difference at week 36 is below the conventional minimal clinically important difference (MCID) of +5-points in general heart failure (not specific to nHCM), but we think it’s important to note that the difference diverged to +7.0 points by week 72 and statistically significant - we think the longer time point matters even more.

• We’re believers that symptomatic improvement is an important driver of patients willing to go on therapy (particularly given that patients have to come back for their echocardiograms).

Source: CYTK presentation (at ESC 2026)

Peak VO₂ (Exercise Capacity):

• Peak VO₂ data at week 36 was positive with an LSM difference of 0.67 mL/kg/min (p=0.003) vs. placebo, as previously disclosed. We recognize that there is controversy on the Street over the magnitude of a +0.67-point benefit, whether that constitutes as clinically meaningful in the eyes of physicians & patients. We of course would have loved to see a larger effect, but remind that nHCM is difficult to treat and CYTK’s aficamten has been the only drug that has demonstrated a positive signal on this endpoint. Early physician feedback on ACACIA, knowing their magnitudes of benefit, has been favorable for nHCM.1

Source: CYTK presentation (at ESC 2026)

• CYTK added additional color with respect to improvements in exercise capacity, noting improved comprehensive exercise performance from aficamten as measured by CPET Z-score with a mean difference of 0.14 (p<0.001). Statistically significant improvements were seen in peak oxygen uptake (pVO₂, which measures maximal exercise tolerance) and ventilatory efficiency (VE/VCO₂, which measures submaximal exercise and reflects more day-to-day) vs. placebo.

Source: CYTK presentation (at ESC 2026)

• We like the consistency of benefit for both endpoints observed across subgroups. Most patients derived similar degrees of benefit across both endpoints favoring aficamten, meaning that the effects were not driven by super responders, outliers, etc. Note that most patients were already on beta blockers (1L therapy) and still symptomatic from their nHCM, and derived benefit in both endpoints from aficamten.

Source: CYTK presentation (at ESC 2026)

NT-proBNP (cardiac biomarker):

• NT-proBNP levels were reduced with a geometric mean ratio of 0.43 (p<0.001) at week 36, with quick rebound after washout. Note the large magnitude of reduction from aficamten from baseline (estimated ~500 pg/mL). We found it a little odd that confidence intervals (CI’s) overlapped at week 72, but NEJM article noted that they’ve not been adjusted for multiplicity, and so they should not be used to infer definitive treatment effects.

Source: Masri, A. et al. N. Engl. J. Med. 2026 (latest issue).

• We think NT-proBNP is an important biomarker because it is an independent predictor of long-term cardiac events in HCM, and one that cardiologists look at it to monitor their patients, even in the absence of symptom improvement.¹ Using the HF-Registry as reference, a KOL on CYTK’s investor call noted that the sustained reduction in NT-proBNP from aficamten should lead to ~50% reduction in hazard ratio (HR), shifting the population to a lower risk profile. We would need to see longer follow-up data to see if this holds true in clinical practice.

NYHA Functional Class

• In addition to the KCCQ-CSS improvements, CYTK also noted a significant number of patients on aficamten improving by >/=1 NYHA Functional Class, which measures improvements in HCM-related symptoms and functional improvements: +14.1% difference (p<0.001) vs. placebo at week 36. We’re also encouraged that percentages continued to diverge out to week 72 (53% vs. 29%, or +24%).

• We think it’s worth reiterating that we think symptomatic improvement is an important driver of patients willing to go on therapy (particularly given that patients have to come back for their echocardiograms). Note in ACACIA that symptomatic benefit started for patients as early as 2 weeks.

Source: CYTK presentation (at ESC 2026)

• Responder analyses were encouraging, which helps provide contextual context around the mean data. Particularly striking was the responder analysis where 63% of patients on aficamten achieved >/=50% reduction in NT-proBNP vs. <10% in placebo.

Safety

Market was very focused on the imbalance of serious adverse events (SAEs) in the study that may have contributed to stock weakness:

Source: CYTK presentation (at ESC 2026)

• Heart failure (HF) events occurred in 4.7% of patients on aficamten vs. 1.2% on placebo. The KOL on CYTK’s investor call noted that all events happened during the 12-week titration phase - per protocol, aficamten was titrated to LVEF and designed to get patients to the maximally tolerated dose (MTD). This is not how the patients will be managed in clinic - physicians will monitor LVEF changed unblinded and will use clinical judgement (akin to 5-year FOREST-HCM extension trial, where there were no HF events on aficamten). All HF events (leg edema) were manageable by a short course of diuretics, and median time to discharge was 3.5 days.

• Left Ventricular Ejection Fraction (LVEF) <50% occurred in 10.5% of patients on aficamten vs. 0.8% on placebo. Again, per protocol the patients were titrated to LVEF during the titration period and so reduction in patients is expected. Only 2 (0.8%) had serious cardiac failure. Also, 21/27 (78%) of the aficamten patients completed treatment at same or lower dose (no treatment interruptions). Seven patients (2.7%) on aficamten had LVEF <40% vs. none on placebo, of whom 2 patients discontinued permanently.

• At week 36, LVEF LSM difference between aficamten and placebo was -4.4% - similar to oHCM trial. Only ~3% of ACACIA patients receiving aficamten had treatment interruption due to reduced LVEF. But contrast this with BMY’s mavacamten where ~20% of patients had treatment interruption due to systolic dysfunction.

• Also importantly, there was no difference in new onset atrial fibrillation (AF) between groups (1.6% vs. 1.2%). This was important for CYTK to highlight given that the competitive dynamic with Edgewise Therapeutics (EWTX), where the jury is still out on whether their lead asset EDG-7500 leads to higher rates of new onset AF.

• There were 3 deaths in the study, all in the placebo arm (none on aficamten).

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We remain optimistic on aficamten’s outlook in nHCM given no other treatment options, including surgery. Overall, we’re encouraged by the totality of the data in the direction & consistency of results across endpoints for aficamten in nHCM in ACACIA-HCM. We understand that the dataset as a whole may not appear as compelling as in oHCM - but we’d argue that the data is a reflection of the difficult nature of the nHCM as a disease itself, not a failing of the molecule. As such, we think the bar for competitors to show even equivalent data is that much harder, ensuring long-term that the market belongs to aficamten.

A few more points not to overlook beyond the ACACIA data:

• >80% of eligible patients from ACACIA-HCM are enrolled in the long-term FOREST-HCM trial, and from the KOL commentary it seems that most patients are continuing on aficamten therapy with little to no dropouts (despite having to come in for echocardiograms). We think this speaks to how nHCM patients might respond to aficamten in the real-world.

• Aficamten is the only drug that has shown positive results in nHCM - it achieved statistically significant improvements in both KCCQ-CSS and exercise capacity. Recall, BMY’s mavacamten previously failed the ODYSSEY trial in both endpoints in nHCM. Competitor outlook remains uncertain (i.e. EWTX), given their issues with new onset atrial fibrillation.

• CYTK management previously spoke of a potential “halo effect” on the launch dynamics of oHCM due to the positive ACACIA results in nHCM. We’re believers that this can be a real effect, as we believe it would help simplify physician workflow with aficamten approved for all HCM. We’ll continue to collect physician feedback, but so far the Myqorzo launch in oHCM is tracking ahead of expectations.

We estimate aficamten revenues reaching ~$2.5 billion WW in nHCM by 2034 (risk-adjusted).

Concluding Remarks: We understand that the stock reaction on Friday was not ideal, and that the stock continued to be weak on Monday. It should come as no surprise that at least one of our names we’re invested in should be tested - and we’re in that difficult phase for CYTK. Myqorzo is still in the early launch phase in oHCM, and despite the positive ACACIA results the nHCM launch for aficamten won’t start until at least ~late 2027/early 2028 - so CYTK cannot dispute controversies on commercial uptake until launch is underway. At the same, it is times like these that make for great opportunities to accumulate shares.

We bought additional shares on Friday at ~$73/sh,2 and (outside our self-imposed Restriction Period for this post) we may continue to add in the low ~$70’s or below. We are long-term shareholders, so we have no problem waiting out years for our thesis to play out. We maintain our long position in CYTK with a PT of $105.

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• Q2 earnings updates have been strong across the board in our coverage universe, showing good launch metrics for their respective assets of interest

  • GH delivered an exceptional Q2 across its oncology & screening business segments, leading the stock to trade +14% the following day

    • We bumped our GH PT to $195 (from $155)

• INSM’s Brinsupri sales for Q2 came ahead of consensus and even the “buyside whisper,” turning sentiment around which has been negative

  • INSM traded up +34% the following day

  • PT maintained at $160

• CYTK’s Myqorzo launch in oHCM is proceeding well with initial launch metrics exceeding expectations

  • Next milestone is ACACIA study details for aficamten in nHCM at ESC 2026 Congress on Aug 28

  • PT maintained at $105

• VRDN’s initial launch metrics for Lumvoa in TED appears favorable, albeit still very early

  • PT maintained at $45

• Our conviction in each of these names remains high, and we maintain our long positions in all of them

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Author’s note: Apologies that this Q2 earnings digest post took a bit longer than usual - I’ve been traveling and also starting work on a new consulting project that I’m excited about. I’m back from my travels and playing catch up!

1.1 Guardant Health (GH): Strong Q2 Across Oncology & Screening Segments

2Q Highlights:

• Revenue: $335M vs. cons $314M

• EPS GAAP: $(0.90) vs. cons $(0.76)

• 2026 revenue guidance raised to $1.34-1.36B (vs. $1.31-1.32B previously)

  • Oncology revenue $219M and 104k oncology tests (+63% y/y)

  • Screening revenue $52.9M and ~66k Shield screening tests (+50% q/q)

• GH stock traded up +14% following its Q2 earnings report

• We’ve raised our PT to $195 (from $155)

Solid Q2 Beat-and-Raise: GH delivered an exceptional Q2 across its oncology & screening business segments. Overall revenue was $335 million, up +44% y/y (or +11% q/q), beating consensus of $314 million.1 We remind that GH is now annualizing at >$1 billion in revenue. GH raised FY 2026 revenue guidance to $1.34-1.36 billion (vs. $1.31-1.32 billion previously), representing a +35% increase from the mid-point. Breaking it down:

• Strong Oncology Growth: GH’s Oncology segment volume impressively grew +63% y/y (or +20% q/q) with 104k tests, driven by strong results in therapy selection and MRD. Guardant360 Liquid volume grew >30% driven by their Smart Platform, and Guardant360 Tissue growth also accelerated. GH’s Reveal assay continues to be GH’s fastest growing product, with volume growth accelerating to >100% y/y. GH will launch Reveal Ultra later this year, which promises to be an ultra-sensitive tumor-informed MRD test. We await spec details, but could represent a meaningful bump to our numbers (not included in guidance). GH is guiding to ~30% y/y growth for FY 2026 (up from ~28-29% y/y growth).

• Biopharma & Data: The Biopharma & Data business continues its steady growth (+15% q/q). Their Companion Diagnostics (CDx) franchise continues to build momentum with now 28 FDA approvals (4 approved in 1H26). Guidance for its Biopharma & Data segment remains at low double-digit growth for FY 2026.

• Screening Revenue Also Continues to Impress: Screening revenue was $52.9 million with ~66k Shield screening tests sold (+313% y/y, +50% q/q). Shield launch in CRC continues to be the core of our bull thesis for GH. We expect GH’s distribution collaboration with Quest Diagnostics which took full effect in Q2 and their active direct-to-consumer (DTC) campaign may have contributed to the strong performance. There were two other catalysts in Q2 that had important implications for Shield:

  • Shield inclusion in the American Cancer Society (ACS) guidelines for colorectal cancer (CRC) screening

  • Major coverage decision to include Shield from UnitedHealth Group (UNH), which means 70 million lives are now covered for Shield

    • We remind that UNH coverage is set to begin in August - so the benefits of coverage won’t even be felt until ~mid-Q3 - we view this as a major tailwind to Shield growth in the years to come.

Source: GH Q2 presentation

• Shield FY 2026 Guidance Raised: GH raised their guidance for Shield to $218-230 million on ~270-286k Shield volume (up from $186-198 million on ~230-245k volume). We expect Shield assay to start annualizing to ~$1 billion in revenue on its own sometime in H2 2026. GH has also completed workflow that allowed for a step down in cost/test for Shield and expects by YE 2026 that the cost/test will be reduced by ~15% from ~$410 to ~$350, improving margin (long-term target of ~$200/test by Q4 2028). Curiously, GH did not discuss Shield’s updated adherence rate (previously >90% in 1Q26). We suspect that it may have slipped, but we would expect some downward drift over time.

FCF Expenditure Guidance Up, But GH Commits to Company-wide Cash Flow Breakeven by End of 2027: EPS (GAAP) came in at $(0.90)/sh vs. consensus at $(0.76)/sh. At end-Q2, GH had ~$1.2B in cash & investments. GH raised their FY 2026 free cash flow burn, now expected to be ~$195-205 million (vs. ~$185-195 million previously), up +$10 million. This reflects increased CapEx spending to accelerate Shield lab capacity expansion to support further growth in the coming years. GH reiterated its commitment to company-wide cash flow breakeven by YE 2027. Excluding screening, GH is already FCF+.

Source: GH Q2 presentation

Concluding Remarks: We see GH as a company with incredibly strong & durable growth ahead. After updating our model, we’ve boosted our PT to $195 (from $155). This comes from even stronger growth from Oncology and a boost to our estimates in its Screening business. We now estimate ~$2.0 billion in Shield revenue in the U.S. by 2035 (up from ~$1.5 billion previously) in CRC, driven by a boost in overall market penetration that is still conservatively <10%.

While we can continue to push our Shield estimates higher in CRC & plenty of upside still remains, we note that 1) Freenome (FRNM) is entering the fray (with v1 of its SimpleScreen assay, and v2 to come soon) and the market dynamics must be monitored, and 2) Shield success in lung cancer (NSCLC) and multi-cancer early detection (MCED) are the key ingredients to catapult GH to the next level (we don’t include either in our current valuation). We have our reasons to be cautious, but we’re hopeful they’ll succeed - we’ll post a deep-dive on these in the future.

We maintain our long position in GH (though we have trimmed in the ~$150-170-range), with a PT of $195 (from $155).2

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1.2 Insmed (INSM): Shareholders Breathe a Sigh of Relief Following Strong Q2 Report

2Q Highlights:

• Total product sales: $425M (v. consensus $394M)

  • Brinsupri sales $309M (+49% q/q!) (vs. consensus ~$280M, buyside whisper ~$300M)

• INSM raised FY 2026 Brinsupri revenue guidance to $1.25B to $1.40B (vs. at least $1B)

  • 7k new patient starts (vs. 7.8k in 1Q)

• Raised peak revenue estimate for 3 lead programs to >$14B (>$7B for Brinsupri, >$6B for TPIP, >$1B for Arikayce)

• INSM stock traded up +34% following its Q2 earnings report

• We maintain PT of $160

INSM Shareholders Breathe a Sigh of Relief Following Strong Q2 Report: INSM reported total product sales of $425 million, ahead of consensus of $394 million. Importantly, the beat was driven by a strong Brinsupri number for treatment of non-cystic fibrosis bronchiectasis (NCFB) of $309 million (+49% q/q!), also ahead of consensus of ~$280 million and ahead of buyside whisper of ~$300 million. As a result, INSM raised its FY 2026 Brinsupri revenue guidance to $1.25-1.40 billion, up from at least $1 billion. We find it quite remarkable for a drug to reach >$1 billion in annual revenue after just ~1 year of launch.

Long-term Revenue Guidance Raised for Brinsupri and TPIP, with Total Peak Revenue Estimated at $14B+: Notably, INSM raised their long-term guidance for Brinsupri to $7+ billion (up from $5+ billion). Peak estimates for TPIP3 (not yet approved) is expected to be $6+ billion in PAH, PH-ILD, PPF, and IPF - indicating management’s confidence in TPIP being successful in these additional indications. Long-term Arikayce revenue guidance remains at $1+ billion. In total, the updated peak revenue estimate is expected to be $14+ billion.

We note there is still some conservatism in INSM’s updated $7 billion long-term guidance for Brinsupri: 1) it assumes another strong DPP-1 inhibitor & competitor enters the market (likely Boehringer Ingelheim), and 2) it does not include contributions from comorbid COPD and asthma populations. These represent potential additional upside drivers if: 1) the competitor fails to come to market for whatever reason, and/or 2) Brinsupri succeeds in the comorbid COPD and asthma populations.

Source: INSM Q2 presentation

Further Details on Brinsupri Launch in Q2: The Brinsupri launch metrics appear to be trending well now in its ~fourth quarter of launch. INSM reported there were ~7k new patient starts in Q2 (vs. ~7.8k in Q1) and INSM expects ~7k new patient starts per quarter for the remainder of 2026. Prescriber breadth also improved with total prescribers increasing by ~1.3k in Q2 and >6.3k cumulatively since launch. We got only qualitative comments around discontinuation rates this time around (a key controversy in Q1), other than to say “it [Brinsupri] has a low dropout rate.” This is consistent with our diligence from physician feedback.

INSM noted on the call they are working on expanding the diagnosed bronchiectasis population by improving diagnosis among patients with comorbid COPD or asthma - we leave these patients out of our model (for now), and represents upside. But we continue to have a positive outlook on Brinsupri within NCFB, and we expect Brinsupri sales to reach ~$7B worldwide by 2032.

Source: INSM Q2 presentation

Concluding Remarks: We’re happy to see Brinsupri (and ultimately INSM stock) get back on its feet after a difficult Q1. The Brinsupri launch appears to be trending well and we expect it to continue. We think INSM’s updated Brinsupri guidance of $1.25-1.40 billion is still conservative given that in only implies +7% growth from its current run-rate for the remainder of 2026. There could therefore be at least one more ‘beat-and-raise’ coming in 2H26. We think INSM is well on their way to becoming a cash flow positive company.

We maintain our long position in INSM, with PT of $160.4 Our PT is somewhat lower than most sell side analysts (~$170-210+), but likely due to our more subdued & conservative estimates for its TPIP asset than the Street in general. We intend to do additional work on this asset to better assess how it fits in INSM’s valuation.

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1.3 Cytokinetics (CYTK): Full Steam Ahead for Myqorzo Launch in HCM

2Q Highlights:

• Myqorzo (aficamten) launch in obstructive HCM (oHCM) is proceeding well and generated $25.3M in revenue in Q2 (vs. consensus of ~$16.5M), exceeding expectations

• Details of ACACIA trial for aficamten in non obstructive HCM (nHCM) will be presented at ESC 2026 Congress on August 28

• Next regulatory milestone is sNDA for aficamten vs. metoprolol (beta blocker) based on successful MAPLE-HCM study, which is under review with a PDUFA date of November 14, 2026

• We maintain our PT of $105

Myqorzo Launch in oHCM Exceeding Expectations: Myqorzo launch is proceeding well in obstructive HCM5 (oHCM), posting net revenue of $25.3 million for Q2 (vs. consensus of ~$16.5M). Of the total net revenue, U.S. net product revenue was $23 million driven by robust demand, and EU net revenue was $2.3 million reflecting inventory purchases by distributors in Germany. As a reminder, we view Myqorzo as a differentiated asset among cardiac myosin inhibitors (CMI), including vs. BMY’s Camzyos. For comparison, when Camzyos was launched in April 2022, BMY recorded revenues for its second full quarter of launch (4Q22) of only ~$16 million.

With respect to some Myqorzo launch metrics in Q2, there were ~2k cumulative written Rx’s, of which ~1.5k patients were dispensed therapy (therefore, >80% were paid drug). This compares with Q1, where they were 680 Rx’s, of which 400 were dispensed. Thus, in Q2 we saw a nearly tripling (+275% q/q) of the number of patients that were dispensed therapy.

At this stage of the launch, CYTK noted that its emphasis is to deepen the prescribing among high volume CMI prescribers that historically generate ~80% of CMI prescriptions (Rx’s). Out of a universe of ~10k healthcare providers, CYTK is prioritizing engagement with high volume prescribers. By end-Q2, CYTK’s sales team had reached >90% of the high volume CMI prescribers. CYTK plans to maintain that emphasis until they reach >50% of new-to-brand Rx share (currently estimated at >40% exiting Q2), which they expect to achieve by YE 2026.

Source: CYTK Q2 presentation

Potential Myqorzo Approval vs. Beta-blocker from MAPLE-HCM Study Could Help Move Myqorzo into Earlier Lines of oHCM Treatment: The next regulatory milestone is sNDA for aficamten vs. metoprolol (beta blocker) based on the MAPLE-HCM study that demonstrated aficamten’s superiority, and is under review with a PDUFA date of November 14, 2026. Approval could help move Myqorzo into earlier lines of oHCM treatment against the standard-of-care of beta-blockers (though cost could be a consideration here). CYTK noted that its sales team is already bringing the MAPLE-HCM data to the oHCM community.

EU Rollout for Myqorzo is Also Progressing Well: Myqorzo is also now launched in Germany, the first EU country that will set the foundation on which CYTK will build broader access in Europe. Recently, Myqorzo was approved in the U.K. and launch is expected in 4Q26. Outside of Europe, regulatory reviews are active for Canada, Hong Kong, and Taiwan.

Aficamten sNDA to be Submitted in 4Q26 for Nonobstructive HCM: On the heels of the successful ACACIA trial readout in nHCM announced in April (see our post here), CYTK intends to submit the sNDA for aficamten in nHCM in 4Q26, setting up potential launch in late 2027. CYTK also expects to engage with EU regulatory authorities for submission there as well.

Notably, ACACIA details in nHCM will be presented at European Society of Cardiology (ESC) Congress on August 28. We should get additional trial details, including aficamten’s impact on cardiac structure & function. CYTK will also hold an investor event at the meeting.

Q2 Financials: As of end-Q2, CYTK had ~$1.7 billion in cash & equivalents and are well capitalized to fund both launches in oHCM and nHCM. CYTK has access to further capital through its Royalty Pharma agreement, if needed.

Concluding Remarks: We continue to like CYTK. Myqorzo launch in oHCM is proceeding well, and though CYTK stock had a muted reaction the day following Q2 results, we expect investors to more fully appreciate the story over time as management executes on the launches across the HCM spectrum.

We maintain our long position in CYTK, and our PT of $105.6

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1.4 Viridian Therapeutics (VRDN): Early Lumvoa Launch in TED is Underway

2Q Highlights:

• Lumvoa for treatment of TED has only been on the market for ~1-1.25 months, but early launch metrics appear favorable

• Elegrobart, which could be the first IGF-1R antibody to be delivered subcutaneously via auto-injector, is on-track for BLA submission in 1Q27

• As of end-Q2, cash & equivalents were $982M - VRDN is well capitalized to fund the launch through to profitability

• We maintain our PT of $45

Positive Early Launch Metrics for Lumvoa in TED: Lumvoa for thyroid eye disease (TED) was only recently approved on June 26, ahead of its scheduled PDUFA, and so VRDN has only had ~1-1.25 months to get launch underway. But initial metrics are encouraging (albeit qualitative):

• Field sales team achieved ~95% engagement with the targeted ~2k core prescribing physicians in TED. Positive early feedback was noted

• Market access coverage efforts for payer access are on-track

• First doses of Lumvoa were administered in July. Patient enrollment forms (PEP) indicate broad & strong physician demand

Elegrobart On-Track for BLA Submission in 1Q27: Elegrobart that may be the first IGF-1R antibody7 to be delivered subcutaneously via auto-injector and at home is on-track for BLA submission in 1Q27, setting up for potential FDA approval in late 2027 or early 2028. VRDN added that the current commercial & medical affairs infrastructure (for Lumvoa) will support & accelerate elegrobart launch in TED, given the same indication.

Pipeline On-Track: VRDN has a TSHR antibody8 program also for treatment of TED (and subcutaneous) that is set for IND submission in 4Q27. Their FcRn portfolio also remains on-track with initial Phase 1 data in healthy volunteers for VRDN-008 expected in 2H26. As a reminder, we don’t include any pipeline value in our VRDN valuation, and represents upside.

Strong Financial Position to Execute Launch: As of end-Q2, VRDN had $982 million in cash & equivalents following completed convertible debt & equity financing in May, and is expected to fund its operations & business plans (assuming elegrobart is approved) through profitability.

Concluding Remarks: VRDN Q2 was eventful in the sense that it got Lumvoa to the finish line (FDA approved) and completed strong financing to fund the launch. As previously described (see our post here and here), our VRDN thesis lays more heavily on subcutaneous elegrobart (expected launch in ~2028) but we view the Lumvoa launch as important in helping to lay the groundwork for a successful commercial launch in TED (of both). As such, it may take time for our thesis to fully play out.

We maintain our long position in VRDN, with a PT of $45.9

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• In Part 2, we review how we think about Lumvoa launch dynamics in the thyroid eye disease (TED) market and VRDN valuation

• In our previous post, we detailed why the investor community shouldn’t underestimate the demand for patient convenience

  • This applies to both Lumvoa (shorter & fewer infusions over total course of therapy) and elegrobart (subcutaneous delivery that could be done at home)

  • We think this is particularly the case given the demographic of the average TED patient, who tend to be female ages ~40-50 with working jobs & families

• Given that it takes ~90 days from Rx for patients to be dosed with Lumvoa and infusion centers will have to deal with a temporary J-code, we don’t expect meaningful revenues for the remainder of 2026

• Permanent J-code for Lumvoa is expected in ~1Q27 (~January). We expect revenues could ramp starting in ~2Q27 - thus, patience may be required for thesis to play out

• We hold a long position in VRDN; our DCF-based PT is $45

Note: VRDN reported Q2 earnings on 8/6, and this post does not reflect those updates (stay tuned for our Q2 2026 earnings digest).

This post (Part 2) is a continuation of our previous post (Part 1) published our VRDN thesis published on 8/6 (see post here). In the previous post, we detailed the reasons why we believe Lumvoa and elegrobart can still do well in the TED market, even if the efficacy profile of elegrobart fell a bit short of investor expectations. In this post, we discuss Lumvoa launch dynamics and how we think about VRDN valuation.

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2.0 How We Think About Lumvoa Launch

Lumvoa was recently approved on June 26, and launch is underway with their sales team of ~100 targeting the ~2k core physician prescribers. Based on VRDN’s market research, ~30% of TED patients refuse Tepezza due to its inconvenience – so this is their initial target market.

VRDN estimates that Tepezza currently treats ~6-7k patients/year which represent single digit market penetration that make up its ~$2 billion annual revenue.1 Thus, VRDN believes the TED market is large enough at ~190k moderate-to-severe TED patients in the U.S. to support new entrants, and that Lumvoa and elegrobart will help expand the market. We would agree.

As with Tepezza, we note that it takes ~90 days from Rx for patients to be dosed and infusion centers will have to deal with a temporary J-code; therefore, we don’t expect meaningful revenues for the remainder of 2026. VRDN management noted that they expect to take ~6-9 months before reaching “critical mass,” (i.e. don’t expect a bolus effect). Lumvoa’s permanent J-code is expected in 1Q27 (likely ~January).

Consensus estimates for 2026 is still at $21 million,2 which we expect is still high. We don’t expect Lumvoa to start generating meaningful revenue until 2027 and even then, we expect Lumvoa revenues of $119 million (still below consensus of $232 million). We think 2026-2027 consensus numbers may need to come down – but starting ~Q2 2027 (and beyond) we believe Lumvoa revenues will ramp meaningfully.

2.1 Our Thoughts on VRDN Valuation

We’ve initiated a starter position in Viridian Therapeutics (VRDN).3 At $1.3 billion enterprise value (EV), we think the risk/reward favors the potential for upside for VRDN. We model worldwide Lumvoa revenues of ~$700 million by 2037, with U.S. revenues contributing ~$600 million (so note that we’re conservatively only modeling ~1/3 of current Tepezaa revenues). For elegrobart, we model worldwide revenues of ~$2.0 billion by 2038 (risk-adjusted with ~85% approval probability), with $1.7 billion risk-adjusted coming from the U.S. (Figure 1). As implied by our numbers, our thesis leans more heavily on elegrobart.

Note that our peak elegrobart revenues are still below Tepezza’s current annualized sales of ~$2.3 billion, acknowledging the fact that Tepezza could maintain market leadership in this space. If Lumvoa ends up exceeding expectations, there is upside to our numbers.

We include some ex-US sales for Lumvoa and elegrobart but given AMGN records little ex-US sales for Tepezza,4 our ex-U.S. forecasts for VRDN’s products are also small as the commercial dynamics for rare disease ex-U.S. territories tend to be different vs. in the U.S.

On pricing assumptions, VRDN announced it priced Lumvoa at parity to Tepezza with a WAC of ~$450k for all 5 infusions of Lumvoa for a typical 75 kg patient. VRDN expects coverage that is consistent with the class.

Figure 1. Risk-adjusted NPV calculation of elegrobart in TED in the U.S.

Source: Lucent Ion’s rNPV calculator & assumptions. DCF parameters: discount rate 9.5%, no terminal value.

Note: The revenues in the graph are risk-unadjusted (for rNPV, the risk-adjustment is applied at the rNPV level).

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Our DCF-based price target (PT) for VRDN is $45. Our PT implies an EV of ~$5-6 billion, which we think is appropriate but conservative for a company with its assets. We do not include a terminal value (TV) in our VRDN valuation but given that Lumvoa and elegrobart are biologics we’ve included a more gradual erosion tail than a small molecule. We model YE 2026 shares outstanding of 124 million.5 By our modeling, we think it will take some time for VRDN to become cashflow positive on an operating basis – we estimate in ~2030.

We should caution that patience may be required for the VRDN investment thesis to work (depending on overall XBI enthusiasm). Because we think the real value will come from elegrobart, with the Lumvoa launch helping to lay out the groundwork in the TED market until it reaches critical mass, we’re not expecting our thesis to work until ~2H27.

Finally, we think VRDN’s product portfolio have strategic value. As pharma patents continue to expire over the foreseeable future, we expect mergers & acquisitions (M&A) to continue. Recall, in December of 2022, AMGN announced it would acquire HZNP for $116.50/sh, or $27.8 billion– largely for Tepezza in TED. We don’t anchor VRDN to that number (which would imply ~20x VRDN’s current EV), but we think their product portfolio has strategic value such that it could be an acquisition target. As always, this is not our base case – we see an acquisition as upside optionality. But from its current valuation of $1.3 billion, we think the probability for upside from a potential acquisition is favorable.

Our downside PT is $8, or ~60-65% downside. Lumvoa is FDA approved but there could be greater commercial challenges than we’re assuming. Elegrobart, while it has demonstrated two positive Phase III clinical trial results, has yet to be approved and therefore there is some risk of a delay, or risk of not succeeding under Medicare Part D reimbursement. In our downside PT, we assume punitive penetration assumptions for both Lumvoa and elegrobart. We are currently assuming no value for its pipeline.

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• Thyroid eye disease (TED) is a disfiguring autoimmune inflammatory condition that can lead to proptosis (“eye bulging”) and in advanced cases, blindness

• AMGN’s Tepezza (IGF-1R antagonist) was the first FDA approved antibody therapy for treatment of TED in 2020 (from Horizon), and now annualizes at ~$2.3B in revenue

• VRDN is pushing forward two next-generation IGF-1R antagonists, Lumvoa (now approved) and elegrobart (BLA submission in 1Q27), to take on the lucrative TED market

• Lumvoa and elegrobart have different administration profiles, but we think each can do well to expand the market

• At current EV of ~$1.3B (as of 8/5), we think VRDN is at a compelling valuation to offer potential upside on launches of both products

• Stay tuned! In Part 2, we’ll review how we think about the Lumvoa launch, TED market opportunity, and VRDN valuation

Note: VRDN reported Q2 earnings this morning, and this post does not reflect those updates (stay tuned for our Q2 2026 earnings digest).

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VRDN market data:

• Market capitalization (as of 8/5/26): $2.3 billion

• Net cash (debt) (as of end-1Q26): ~$1.0 billion

• Enterprise value (EV): $1.3 billion

Summary: We’ve initiated a starter position in Viridian Therapeutics (VRDN) (price target of $45), a small-cap biopharmaceutical company focused on the development of medicines for serious and rare diseases.1 Our thesis is based on two products: 1) Lumvoa (approved on June 26) and 2) elegrobart (with two positive Phase III results), both IGF-1R2 antibodies for the treatment of thyroid eye disease (TED) - a disfiguring autoimmune inflammatory condition that can lead to proptosis (“eye bulging”) and in advanced cases if untreated can lead to blindness (see Appendix for TED background). VRDN estimates ~190k patients with moderate-to-severe TED in the U.S. alone.3

For background, the first FDA approved antibody therapy for treatment of TED in 2020 was Tepezza (teprotumumab) developed by Horizon Therapeutics (HZNP). Tepezza was a huge success in a treatment landscape that previously consisted of steroids and surgery. In December of 2022, Amgen (AMGN) announced it would acquire HZNP for $116.50/sh, or $27.8 billion – largely for Tepezza in TED.4 Tepezza is now annualizing at ~$2.3 billion in worldwide revenue.5

Preclinically, VRDN developed Lumvoa (veligrotug) and elegrobart as full antagonists to IGF-1R providing near-complete (~100%) inhibition of IGF-1 binding,6 in contrast to Tepezza which is a partial antagonist and plateaus at ~50% inhibition. This has important clinical implications of Lumvoa and elegrobart vs. AMGN’s Tepezza as will be discussed.

Year-to-date (YTD), VRDN has struggled, falling -29% (vs. XBI +27%). It fell particularly hard following elegrobart’s topline data from REVEAL-1 in active TED, and even further following AMGN’s topline disclosure of Tepezza on-body injection (OBI) data. For reasons we detail in this report, we think VRDN’s current valuation is overly punitive and that Lumvoa and elegrobart are able to garner enough market share in the TED market to warrant upside.

Figure 1. VRDN stock performance year-to-date (YTD).

Source: Google Finance

Our thesis for Lumvoa and elegrobart differs somewhat given their different administration profiles, despite both being used to treat the same disease. We’ll go through each one-by-one.

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1.1 Lumvoa (veligrotug)

We first summarize our Lumvoa thesis:

• Comprehensive Label for Active and Chronic TED: Lumvoa has a label that includes clinical data from both active and chronic TED, unlike Tepezza which is largely limited to active TED. Chronic TED is the much larger market opportunity with ~70-90k moderate-to-severe patients without targeted pharmacological options.7 In the chronic TED population (THRIVE-2), we think a key differentiating feature on Lumvoa’s label is the statistically significant improvements in diplopia (double vision) and complete resolution,8 a key complaint among TED patients.

• Lumvoa has a More Convenient Dosing Regimen: Lumvoa’s clinical efficacy from the THRIVE-1 and -2 pivotal studies are generally viewed as comparable to that of Tepezza by the investment community – and we’d probably agree. Lumvoa is still delivered via intravenous infusion (IV) that must be done at infusion centers. However, Lumvoa has distinct advantages (vs. Tepezza) in how it is administered:

  • 5 infusions over the course of treatment (vs. 8 infusions),

  • ~30-45 minutes per infusion (vs. 60-90+ minutes) and

  • ~12-week total course duration (vs. ~21 weeks).

Based on physician feedback, we think the fact that Lumvoa is only 5 infusions over only a 12-week total course duration will be a big draw for patients. Lumvoa’s time of treatment onset is also only ~3 weeks (vs. Tepezza at ~6 weeks), and while incremental we believe early treatment effect gives feedback to the patient that the drug is having a positive effect.

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1.2 Elegrobart

VRDN also has elegrobart, next-generation IGF-R1 antagonist that can be delivered subcutaneously (SC) rather than by intravenous (IV) infusion, also for treatment of TED. Elegrobart recently delivered positive results in two Phase III pivotal trials REVEAL-1 and -2 in active and chronic TED, respectively.

Despite our optimism on Lumvoa, our VRDN thesis leans more heavily on elegrobart. On the heels of positive REVEAL-1 and -2 pivotal trials in both active and chronic TED, BLA submission for elegrobart is expected in Q1 2027. We see a several distinct advantages for elegrobart over standard-of-care (SOC):

1. Subcutaneous Delivery (SC): Elegrobart will be administered subcutaneously through an autoinjector that can be done at-home, whereas Tepezza must be infused intravenously (IV) at an infusion center,

2. Fewer Injections Over its Treatment Course: Elegrobart treatment can be completed with only 3 injections (at every 8-week injection frequency) or 6 injections (at every 4-weeks), compared to Tepezza at a total of 8 infusions over 21 weeks,

3. Short Injection Times: As an SC injection, elegrobart is delivered in only ~10 seconds, whereas Tepezza is delivered via IV infusion over ~60-90 minutes,

4. Lower Rates of Hearing Loss: Given the way elegrobart was designed, it has demonstrated lower rates of hearing loss in Phase III trials,9 a key side effect of Tepezza that can be severe and permanent. We think this is an important differentiator.

As a SC injection that can be done at home, elegrobart brings a new level of convenience for TED patients. Our thesis on a subcutaneous product in TED is supported by two physician checks with an ophthalmologist and oculoplastic surgeon who actively treat TED patients, the latter who noted that the “vast majority” [of patients] are going to be treated with subcutaneous (SC) [injection] in the future.10

Figure 2. Comparisons of administration profiles of Tepezza, Lumvoa, and elegrobart in TED.

Source: VRDN presentation

As it applies to both Lumvoa and elegrobart, our overall message is that one shouldn’t underestimate the demand for patient convenience, particularly given the demographic of the average TED patient (many of whom are working females ages ~40-50 and have families).11 We can think of two analogous launches, notably Briumvi (TGTX) in multiple sclerosis and Yutrepia (LQDA) in pulmonary arterial hypertension, that have been very successful while the Street believed their advantages to be incremental (limited to dosing/regimen advantages) compared to the standard-of-care.12

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1.3 What’s the Pushback?

VRDN currently trades at an EV of only ~$1.3 billion (as of 8/5), after having fallen ~60-65% from its peak of ~$33 in early 2026 to as low as ~$13 in May, following elegrobart’s results from REVEAL-1 and -2. Investors are clearly not giving it credit, given the potential opportunity.

• Elegrobart’s is less competitive on proptosis responder rate (PRR) than Tepezza: In REVEAL-1, the placebo-adjusted PRR from elegrobart was 36% (54% vs. 18%) and 45% (63% vs. 18%) at the Q4W and Q8W dosing regimen, respectively, lower than Tepezza’s 73% (83% vs. 10%) from OPTIC.

  • Lucent Ion’s Take: While the placebo-adjusted PRR for elegrobart is indeed lower than Tepezza, we make two points:

    • 1) Cross-trial comparisons are fraught with danger given differences in baseline characteristics. On X, OldGrape did an interesting analysis on how patient dropouts (in the Q4W arm, 9 patients or ~20% discontinued) may have distorted the primary analysis given that patients who leave the study for any reason are counted as treatment failures (as if their eyes never improved).13 In their analysis, when they back out the administrative dropouts, the (placebo-adjusted) PRR would have been closer to ~50% (for both Q4W and Q8W arms).

    • 2) We think the results should be taken in context with its lower rates of hearing loss. Tepezza’s impact on hearing loss (ototoxicity) can be severe, sometimes permanent, per its label. A small study (n=26) showed that up to 65% of patients taking Tepezza reported new or worsening hearing symptoms.14 In elegrobart’s pivotal trials, the rates of hearing impairment were largely limited to tinnitus (ringing in the ear), with no reductions in hearing observed in REVEAL-1.15 Physicians & patients must weigh the overall benefit / risk.

• Tepezza administered subcutaneously via an on-body injection (OBI) showed good results in Phase 3, setting up a potentially strong competitive dynamic: Tepezza via OBI delivered a 57% placebo-adjusted PRR (77% vs. 20% placebo) and improvements in diplopia (double vision) in the Phase 3 TEPEZZA OBI trial in active TED.

  • Lucent Ion’s Take: Elegrobart will use the same autoinjector as SNY/REGN’s Dupixent, a hugely successful drug annualizing at ~$24 billion in revenue.16 While the injection can still be mildly painful, we think patients will prefer the handheld autoinjector to the on-body injection (OBI). VRDN noted that AMGN’s OBI will be the same as the one used for Repatha (PCSK9 antibody), which was discontinued in June 2024. We also think this is a situation where first mover advantage (VRDN) is important – so VRDN needs to move quickly.

• For chronic TED, why not just do orbital decompression surgery? Orbital decompression is a viable surgical option for chronic TED patients with good results, leaving physicians & patients to choose between surgical or therapeutic (i.e. elegrobart) options.

  • Lucent Ion’s Take: We think this is fair, but we think ultimately a therapeutic will be preferred among patients. Surgery is still invasive and requires general anesthesia, and there are always risks. In an interview with an oculoplastic surgeon at Ascension Seton Medical Center in Austin TX who manages ~120 chronic TED patients, the physician noted that as younger surgeons (with less training for decompressions) replace older ones, he expects fewer decompressions over time and that patients will move toward the therapeutic option.17 He continued to say later that he believed that the SC option will “take over.”

• Physicians may lose the financial incentive to give SC injection over infusions: Physicians are reimbursed for injections/infusions under Medicare Part B medical benefit (i.e. buy-and-bill) when administered in the clinic,18 and thus physicians & centers have a financial incentive to push this option. But if elegrobart is administered as an SC injection at home (i.e. self-administered), the reimbursement would shift to Part D pharmacy benefit, which would remove that incentive.

  • Lucent Ion’s Take: We are not ones to underestimate physician financial incentives that drive adoption. Whether elegrobart reimbursement shifts to Part D will depend on the label and if administered at home (vs. in the clinic). VRDN will have to tune its commercial strategy for elegrobart to target physicians who have less incentive to drive IV infusions. Furthermore, as noted above, despite the potential shift physicians believe the SC drug will be much more popular option.

Stay tuned! In Part 2, we’ll review how we think about the Lumvoa launch, TED market opportunity, and VRDN valuation.

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Appendix

• Thyroid Eye Disease (TED) Background: Thyroid eye disease (TED) is a disfiguring autoimmune inflammatory condition commonly associated with Graves’ disease (GH) and hyperthyroidism that impacts the orbital and periorbital tissues. About ~25-50% of patients with Grave’s disease will develop TED. More commonly affects women. Leads to a variety of ocular symptoms, including eyelid retraction, proptosis (eye bulging), conjunctivitis, eye pain & pressure, and diplopia (double vision). Left untreated, TED in advanced cases can lead to blindness.

  • TED is broadly characterized into two types:

    • Active (inflammatory, progressive phase): Early phase of disease driven by ongoing autoimmune inflammation with progressive inflammation & expansion in the orbit. Patients experience pain, eyelid redness/swelling, conjunctival redness, and diploplia (double vision)

    • Chronic (inactive, fibrotic phase): Inflammatory signs are diminished but there are residual structural changes due to tissue expansion and fibrosis/scarring. Symptoms include proptosis (eye bulging), eyelid retraction, diplopia (double vision), etc.

  • VRDN estimates ~190k people in the U.S. alone with moderate-to-severe TED^[3]

  • Prior to the approvals of AMGN’s Tepezza and VRDN’s Lumvoa, the only treatment options available to treat TED were steroids and surgery.

Figure 3. Background on thyroid eye disease (TED).

Source: VRDN presentation

Table 2. High-level comparison of AMGN’s Tepezza IV, Tepezza OBI, VRDN’s Lumvoa and elegrobart in treatment of thyroid eye disease (TED).

Tabulated by Grok

Source(s): Prescribing information: Tepezza and Lumvoa

Elegrobart: VRDN presentations

Note: We caution that these are not based on head-to-head trials. There are differences in patient baseline characteristics that should be considered before drawing any conclusion.

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• We are temporarily pausing our KRYS coverage until we approach key data catalysts from its pipeline in 4Q/YE 2026

  • KRYS is in execution mode on its ex-US Vyjuvek launch in dystrophic epidermolysis bullosa (DEB); we think they continue to do well

    • We continue to model $1.3B in worldwide Vyjuvek revenue, including KB803 in ocular DEB

  • We will return in the fall as the data catalysts approach and we look for new opportunities to re-rate the stock

• Freenome (private) provided updated data for their SimpleScreen v2 assay for colorectal cancer (CRC) screening

  • What it means for GH:

    • We view Freenome’s data as positive and we think this is a win for the field

    • Despite being a competitor, we think their launch will help expand the blood-based CRC screening market

• INSM provided a positive 12-month update from its Phase 2b open-label extension (OLE) trial for TPIP in pulmonary arterial hypertension (PAH)

  • We view the data as consistent with our expectations and generally consistent across measures

  • We’re primarily in INSM for the Brinsupri launch in bronchiectasis - but we’re watching TPIP’s development given it represents upside optionality, if successful given its potential for once-daily administration

• We’ve initiated some new positions recently - more to come soon!

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Krystal Biotech (KRYS):

Pausing KRYS Coverage (For Now): Given that we’re months away from key data catalysts in 4Q/YE 2026, we’ve decided to temporarily pause our KRYS coverage. KRYS is in execution mode on its ex-US Vyjuvek launch in dystrophic epidermolysis bullosa (DEB); we think they will do well, and we’ve little commentary to add. We’ve been extremely pleased with KRYS stock and we see our Vyjuvek thesis largely realized, and we look to new opportunities in KRYS’ pipeline to assign further value. We think the current stock price of ~$355/sh (or $10.5B market capitalization) largely reflects the Vyjuvek opportunity (we model ~$1.3 billion, including KB803 for ocular DEB) and pipeline optionality (given data risks).

Data Updates Galore Coming in 4Q/YE 2026: We promise to return to KRYS in the fall when the readouts are approaching, including a deep dive on NK801 in neurotrophic keratitis (NK), an asset we’ve been very eager to see the data. KRYS has a whole host of other pipeline data updates in 4Q/YE 2026. To be clear, a few of these assets have significant upside potential (+$1-2 billion opportunities) if the data are positive and clear FDA approval, so we’re watching closely.

We have previously shared our own views on each of these pipeline assets. Jefferies shared their views of the potential upside/downside scenarios for each catalyst in a note (Table 1) - note that we do not necessarily share their views, but it should give readers a framework for how the stock might move on the data.

At a high level, we are:

• Optimistic about KB801 in NK and KB803 in ocular DEB (KB803 is already in our valuation)

• Skeptical on KB407 in cystic fibrosis (CF) and KB408 in alpha-1-antitrypsin disease (AATD) for the time being until we see evidence of functional improvement (i.e. FEV₁ benefit in CF)

• Intrigued with KB111 in Hailey-Hailey Disease (HHD) - we like the similarities to Vyjuvek in another rare skin disease. We look forward to seeing the initial open-label data

• Watching inhaled KB707 in non-small cell lung cancer (NSCLC). We’re encouraged by their objective response rates (ORR) but we need to see durability and more complete responses (CRs)

• Still looking for updates on KB304 in Wrinkles of the Décolleté and other assets through the Jeune Aesthetics subsidiary

Table 1. KRYS catalysts and potential upside/downside

Source: Jefferies note on H2 2026 catalysts (7/12/26).

Note: Upside/downside potential movements are Jefferies’ estimates.

Concluding Remarks: We maintain our long KRYS position.1 While temporarily pausing coverage we’ll not comment on upcoming 2Q earnings, and focus our time on newer coverage. We will return to our KRYS coverage in the fall as we approach the exciting data catalysts and see new opportunities to re-rate the stock.

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Guardant Health (GH):

Competitor Freenome Provides Updated Data from their Blood-based Assay for Colorectal Cancer Screening: On 7/9, Freenome (private) shared their updated results for SimpleScreen v2 assay (a competitor to GH’s Shield) for colorectal cancer (CRC) screening trial from a pivotal clinical validation study, which met all primary and secondary endpoints.2 To remind our readers, our bullish GH thesis is largely based on a positive outlook of their Shield assay in CRC screening, and is the largest valuation driver in our model. We think Freenome’s updated results for the SimpleScreen CRC v2 assay are positive and a win for the field, and that their launch will help expand the overall market of blood-based assays for screening.

To briefly review the results, Freenome’s v2 trial showed:

Table 2. Summary of SimpleScreen V2 results in CRC screening.

Source: Freenome press release (7/9).

Abbreviations: CRC = colorectal cancer, APL = advanced precancerous lesions, HGD = high-grade dysplasia

As a high-level comparison to GH’s Shield (note that there are no head-to-head studies):

• GH’s Shield has shown 83% sensitivity for CRC and 13% for advanced adenomas (AA) / APL, respectively

  • This implies differences of GH’s Shield sensitivity vs. Freenome’s SimpleScreen v2 of:

    • Sensitivity in CRC: +3%

    • Sensitivity in AA/APL: -5%

• Both assays have 90% specificity

We think the performances are the assays are comparable for CRC (difference of ~3%, in favor of GH’s Shield), but we would highlight the improved sensitivity of Freenome’s SimpleScreen v2 assay for advanced adenomas (AA) / advanced precancerous lesions (AA/APL) (difference of ~5%). Detection of AA/APLs are important given that they can progress into CRC if left untreated. AA/APLs can be detected and removed if the patient consents to a colonoscopy (which has sensitivities for AA/APLs of ~75-93%), but as we’ve noted the adherence to recommended colonoscopies is poor (see our full post here). Blood-based assays are designed for patients who refuse their recommended colonoscopies and stool-based tests, and therefore the ability to detect AA/APLs is important.

That said, for broad-based acceptance and uptake in the CRC screening market, particularly if desired to be used 1L (i.e. ahead of all other screening modalities), there is room to improve the performances of the blood-based assays. Sensitivities of <20% implies that the assays will still miss AA/APLs when they are present in >8 out of 10 people (high rate of false negatives). This is a key challenge for the class.

Why We Remain Positive on GH’s Shield Outlook:

Despite Freenome’s SimpleScreen being a competitor to GH’s Shield, we think Freenome’s update is a win for the field. We continue to have a positive outlook on GH’s Shield given that:

1. GH has been on the market since July 2024 and has an important lead (Freenome expects FDA to complete their review of their v1 assay ~mid-2026 which will compete first, and they expect to submit a supplemental PMA for their v2 assay);

2. GH is promoting Shield in direct-to-consumer (DTC) ads (including ads with actor and cancer advocate Patrick Dempsey) and is actively expanding its Shield salesforce;

3. In late Q1, recall that GH officially launched their Quest Diagnostics collaboration, which they expect to meaningfully increase the depth of ordering among the ~650k connected physicians. The Quest national sales team is now actively promoting Shield;

4. United Healthcare (UNH), the largest U.S. commercial insurer, now covers Shield which means ~100 million total covered lives have access to the assay (and recall, the UNH policy was suggestive that Shield be used in 1L).

We think Freenome’s SimpleScreen launch will help expand the liquid biopsy market as a CRC screening tool, as their salesforce helps to promote the merits of blood-based CRC screening. This is not a winner-take-all; the total addressable market (TAM) is large enough with 45 million average-risk Americans to accommodate multiple players and both can be winners in this market. For GH, we model ~$1.5 billion in Shield revenue in the U.S. from only ~mid-single digit penetration by 2035.

Concluding Remarks: We continue to view GH as a high-quality company in the midst of its high-growth phase, and we maintain our long position in GH.3 While GH has largely reached our PT of $155, we will continue to hold a long position and will revisit our PT following Q2 2026 earnings. GH is still quite early in its Shield launch for CRC screening, so there could be room to run.

GH expects to report Q2 2026 financial results on July 30, with a conference call after-market at 4:30pm ET / 1:30pm PT.

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Insmed (INSM):

INSM Provides TPIP Phase 2b Open-Label Extension Update: On 7/16, INSM provided a 12-month update on its pipeline asset, TPIP (treprostinil palmitil inhalation powder), in their Phase 2b open-label extension (OLE) study in pulmonary arterial hypertension (PAH). While we’ve not discussed TPIP in detail, as it is not a core part of our INSM thesis, we’re watching its development given it represents upside optionality, if successful given its potential for once-daily administration.

To refresh readers on TPIP, it is a prodrug of the active drug treprostinil (used to widen the blood vessels in the lungs to reduce pressure) that can be inhaled and delivered directly into the lungs. Once delivered TPIP is converted slowly to active drug to allow consistent 24-hour coverage - this is its value proposition, according to INSM.

We view the efficacy overall of the Phase 2b OLE study as sustained and consistent. To summarize, at 12 months:

• 6-minute walk distance (6MWD): +55.7m improvement in continued TPIP group, +54.1m in placebo-crossed group

• NT-proBNP: ~60% reductions in both groups

• WHO Functional Class data: ~80% of patients achieved functional class I or II by month 12

• >25% achieving Functional Class 1 - meaning patients are asymptomatic with no limits on physical activity

• REVEAL Lite 2.0 score: Improved by +2.0 points in continued TPIP group, and +1.4 points in the placebo-crossed group

  • The REVEAL Lite 2.0 score is a validated instrument shown to predict mortality and morbidity

• TPIP appeared safe and well tolerated, with no new safety signals identified

  • 89% of patients experienced treatment-emergent adverse event, but vast majority were mild/moderate

Figure 1. Sustained improvement in 6MWD by TPIP at 12 months (mean is presented, but both mean and median data shown on the graph).

Source: INSM presentation.

We View 12-month OLE Data as Encouraging, and TPIP Can be a Meaningful Drug in PAH if it Can Replicate the Data in Phase 3: We remind that our INSM thesis is largely based on the Brinsupri outlook in bronchiectasis (see our latest post here). We currently have no view on TPIP and its outlook, but we view it as important pipeline optionality for INSM, with some analysts predicting peak revenues as high as $8 billion.4 With the usual caveats of an open-label trial, we view the 12-month OLE data as encouraging, but the data needs to be replicated in Phase 3 to give us confidence in the asset.

We currently assign ~$1B in risk-adjusted revenues for INSM’s pipeline, which includes TPIP (at 50% risk-discount). Our downside PT is $145 if TPIP fails completely (but our Brinsupri thesis remains intact). In other words, we believe our INSM thesis can work on Brinsupri and Arikayce in 1L MAC lung disease alone, but TPIP will most certainly be a swing factor. We’ll do a deep dive on TPIP when the time is appropriate, where we will review the data in more data and provide more context within the PAH landscape.

Concluding Remarks: We maintain our long position in INSM.5 We’ll provide a 2Q earnings preview as we approach their earnings date (expected end-July or early August).

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• We’re revisiting our INSM thesis following the disastrous Q1 earnings report on May 7. Stock has struggled since, falling as much as ~33% from its pre-Q1 stock price into early June

• We think what happened during the Q1 call was an investor relations (IR) blunder, not a fundamental deterioration in the INSM story

• We own INSM for:

  1. Brinsupri launch in non-cystic fibrosis bronchiectasis (NCFB),

  2. Arikayce label expansion into 1L MAC lung disease (MACLD), and

  3. TPIP optionality (a pipeline asset) in pulmonary arterial hypertension (PAH)

• We do a deep dive on Brinsupri in NCFB and why we think it can ultimately be a ~$7B drug worldwide at peak

• With tremendous execution, we think Brinsupri in NCFB alone is worth ~$100/sh worldwide (as part of a Sum-of-Parts valuation)

• We have an updated price target (PT) of $160 (from $170); we’ve added to our position on recent weakness

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Summary: We think now is a great time to revisit INSM as a follow up to our first post on May 6. To recap, INSM fell disastrously following their Q1 earnings report after there were investor concerns regarding Brinsupri discontinuation rates and filing in ex-US territories on most-favored-nation (MFN) drug pricing challenges. INSM fell as much as ~33% to $91.88 on the close of June 10 (and that was after already dismal performance YTD), before bouncing back to ~$105 (now down ~24% as of 6/25). INSM stock has been struggling since. To boot, it was announced recently that INSM would be removed from the Nasdaq 100 index starting Jun 19.^[1]

From our perspective, we think what happened during the Q1 earnings call was an investor relations (IR) blunder, not a fundamental deterioration in the INSM story.^[2] Management provided quite a few details around Brinsupri launch metrics, but in so doing revealed a higher-than-expected discontinuation rate and they made a comp to statin therapy that wasn’t the easiest to interpret (against already high sales expectations). As investors we appreciate their transparency, but there are times where it can work against management. Ultimately, we believe in the long-term INSM outlook, and we’ve added to our position on recent weakness.^[3]

To review, INSM is a mid-cap commercial biopharma company focused on the development and commercialization of therapies in three therapeutic areas: respiratory, immunology & inflammatory, and neuro & other rare diseases. We own INSM for:

1. Brinsupri launch in non-cystic fibrosis bronchiectasis (NCFB),

2. Arikayce label expansion into 1L MAC lung disease (MACLD), and

3. TPIP (Treprostinil Palmitil Inhalation Powder) optionality in pulmonary arterial hypertension (PAH)

Both (1) and (2) are large & meaningful revenue opportunities for INSM that we touched on in the last post. The TPIP opportunity (3) is a recent addition to our thesis, but one worth reviewing as it does provide meaningful potential upside optionality. TPIP has the potential to be administered as a once-daily inhaled dry-powder therapy, which could be meaningfully differentiated in the PAH market. TPIP is now in the Phase 3 PALM-PAH trial opened in April, and we should get an update from the Phase 2b open-label extension (OLE) study in Q3. We’ll dive deeper into TPIP in a separate post.

In this post, we’ll review our Brinsupri (brensocatib) thesis and why we like it as a first-in-class drug for the treatment of non-cystic fibrosis bronchiectasis (NCFB).

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1.1 Why We Like Brinsupri

Brinsupri is a First-in-Class DPP-1 Inhibitor that Addresses a Large Market of Unmet Medical Need

We’ll review the key tenets of our Brinsupri thesis:

• Bronchiectasis Symptoms are Burdensome: Bronchiectasis is a chronic lung disease where the bronchial tubes (airways) are permanently dilated & scarred, impairing the ability for the lung to naturally clear mucus. This leads to a range of symptoms, including chronic coughing, sputum production (containing pus indicating bacterial infection), difficulty in breathing, sleepless nights, fevers, and hospitalization. Patients with the most frequent exacerbations^[4] carry the highest risk of future exacerbations and 5-year mortality.^[5] Left unmanaged, the patient succumbs to the “vicious vortex” where the patients’ condition continues to decline, leading to a poor quality of life (Figure 1). We think the high burden of symptoms is what will drive patients to seek treatment.^[6]

Figure 1. “Vicious vortex” of bronchiectasis.

Adapted from: Barker, A. F. et al. JAMA 2025, 334, 3, 253-264. See Appendix for examples of different types of insults that can lead to bronchiectasis (Figure 4).

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• Standard-of-Care Antibiotics Only Address One Leg of the Disease: Standard-of-care (SOC) treatment for frequent exacerbators, which includes airway clearance, macrolide therapy, inhaled antibiotics, and mucoactive agents, is far from adequate - leaving patients feeling frustrated about their underlying condition. Antibiotics only address one leg of the disease, leading to a high likelihood of returning infection. Furthermore, physicians are cognizant & cautious of the potential for antibiotic resistance, which would further complicate their patient’s clinical picture. Overall 5-year mortality for bronchiectasis patients is only ~12% in US and European registry data.^[7]

• Brinsupri is a Welcome “New Kid on the Block” in the Armamentarium of Treatment Options: Brinsupri is the first FDA approved oral, reversible DPP-1^[8] inhibitor that addresses the underlying pathophysiology of bronchiectasis of neutrophilic overactivation.^[9] In the Phase 3 ASPEN trial (n=1,721), Brinsupri at 10 mg and 25 mg doses demonstrated a statistically significant ~20% reduction in exacerbation relative to placebo over 52 weeks. This compares with ~22% reduction from inhaled antibiotics and ~42% from macrolide treatment (see Appendix; we caution there are no head-to-head trials).^[10] Patients on the Brinsupri 25 mg dose also showed a significantly slower decline in lung function on FEV₁ after 1 year of treatment, which is meaningful to patients (See Appendix – Figure 5). Brinsupri is safe and well-tolerated; hyperkeratosis (thickening of the outer skin layer) was noted in some patients on Brinsupri in the trial but is generally considered manageable.

Figure 2. Exacerbations improvement from Brinsupri in Phase 3 ASPEN trial.

Source: Chalmers, J. D. et al. NEJM, 2025, 392, 16, 1569-1581.

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• The Bronchiectasis Market is Significant Where There are No Other FDA Approved Treatments: Non-cystic fibrosis bronchiectasis (NCFB) is the third most common chronic pulmonary disorder after asthma and COPD.^[11] There are ~500k adults in US have NCFB,⁷with prevalence rising sharply with age. INSM guides to ~250k for patients who have 2 or more exacerbations who may be eligible for Brinsupri. There are no other FDA approved options for bronchiectasis.

• Diagnosis has been Increasing, Implying a Potentially Even Larger Prevalent Pool: Diagnosis of bronchiectasis, which requires high-resolution CT (HRCT) scans, has been described as challenging given disease heterogeneity; it is sometimes described as a “collection of features” rather than single disease.^[12] Diagnosis has been increasing – there has been an estimated +8.7% annual increase in the Medicare population that may be driven by expanded clinical awareness and CT use.^[5] Furthermore, the bronchiectasis patient journey is long, spanning years visiting various specialists before even reaching a pulmonologist, suggesting there may be a substantial pool of latent demand from patients waiting to be properly diagnosed.^[13] On the Q1 earnings call, INSM management discussed different ways to leverage AI to improve patient identification that may benefit from Brinsupri.

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1.2 How We Value Brinsupri

To recap, in January 2026 INSM provided mind-blowing FY 2026 guidance for Brinsupri: at least $1B, essentially over its first year of launch^[14](and $5B long-term). This is an extremely high bar – very few drugs in history have met it (GILD’s Sovaldi for HCV comes to mind). We think this speaks to management’s confidence in the outlook of Brinsupri. We’re anticipating peak Brinsupri sales of ~$7B worldwide by 2034.

We estimate a risk-adjusted net present value (rNPV) of ~$16.2 billion, or ~$75/sh,^[15] for Brinsupri for NCFB in the U.S. alone. This is based the estimate of ~500k adults in US with NCFB,^[7] and ~250k for patients who have 2 or more exacerbations who are eligible for Brinsupri. We have it reaching INSM’s long-term guidance of ~$5B at peak.^[16]

We don’t consider this a stretch given this assumes Brinsupri reaches ~25% peak market penetration (~62.5k treated patients out of ~250k eligible population) – a reasonably conservative estimate given there are no other current FDA approved options for NCFB. We leave plenty of room in this market for potential competitors, such as verducatib (BI 1291583) from Boehringer Ingelheim. For the record, we don’t model tailwinds such as improving diagnosis rates or overlap with asthma and COPD, which could bring additional upside.

The WAC price of Brinsupri is ~$88k/yr, and we assume ~28% gross-to-net discount and ~1% annual price increase. As a small molecule, we model a sharp erosion curve after its exclusivity period (we assume exclusivity until early ~2040) (Figure 3). We assign no terminal value (TV).

We have less visibility of the ex-U.S. opportunity, particularly given INSM’s commentary around MFN pricing which impacts timing. We think with reasonable estimates we arrive at an rNPV of ~$25/sh in additional value (assume wider error bars), bringing the total worldwide rNPV of Brinsupri to ~$100/sh.^[17]

This implies that at current INSM market value of ~$105/sh, the market is either fully valuing Brinsupri and nothing else, or valuing Arikayce + pipeline and heavily discounting Brinsupri. We don’t see either scenario as totally fair.

Figure 3. Risk-adjusted NPV calculation of Brinsupri in NCFB in the U.S.

Source: Lucent Ion’s rNPV calculator & assumptions. DCF parameters: discount rate 8.5%, no terminal value.

1.3 Our Updated Thoughts on INSM Valuation

We’ve discussed how INSM has been a significant underperformer (-41%) year-to-date (YTD) relative to the XBI (+25%) – the gap has widened since early May. We clearly stepped into the stock too early, but we’ve been building up the position to our target weight. At $21B EV, trading at a 2026 EV/Sales multiple of ~12x, we think INSM’s valuation overall is much more reasonable to realize upside potential of our thesis points (1-3). That said, INSM is still trading at a premium to its peer average (2026 EV/Sales ~8.2x).^[18] We note that their commercial plans require tremendous execution - their long-term guidance of $5B on the 250k patients is no guarantee. We still don’t consider INSM stock “cheap” - and investor expectations remain high. But we will take the chance the team can execute on their goals.

Our revised DCF-based price target (PT) for INSM is $160 (from $170). We will publish our thoughts on the Arikayce and TPIP opportunities in separate posts. INSM has a net cash level of ~$0.5B, or ~$2/sh. Regarding INSM’s pipeline, we assign ~$1B in peak revenue for TPIP and other candidates (risk-adjusted by ~50%). When we remove this value completely (if TPIP and all others fail), our INSM valuation falls to $145 – so there is still reasonable upside from here if their pipeline fails, assuming our other assumptions hold.

We think INSM is well on its way to becoming a cashflow positive company (we anticipate late 2027 or 2028) and do not anticipate them needing to do additional capital raises to fund the launches. However, INSM management has hinted at investor conferences that they could do a raise to fund certain business development deals, which we view as likely.

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2.0 Appendix

Figure 4. Bronchiectasis represents a final common pathway of many different insults to the airways:

Source: OpenEvidence.ai; O’Donnel, A. E. N Engl J Med 2022, 387, 533-545.

Table 1. High-level comparisons of different bronchiectasis treatments.

Source: OpenEvidence.ai; Bell, S. et al. N Engl J Med, Ed. 2025, 392, 16, 1647-1648 and references therein.

Note: Not based on head-to-head clinical trials.

Figure 5. Lung function stabilization seen for patients on Brinsupri at 25 mg dose.

Source: Chalmers, J. D. et al. N Engl J Med, 2025, 392, 16, 1569-1581.

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^[1] Nasdaq press release 6/11/26 (link)

^[2] We discussed the controversy in some detail in our previous post here [link]

^[3] As of 6/24, we have a ~6.7% weighting for INSM in our biotech-dedicated portfolio. For a strong conviction idea, we’re targeting ~8-10% weighting, if weakness persists. We may change our plans at any moment.

^[4] Exacerbations are characterized as worsening cough, increased sputum, breathlessness, fatigue, or hemoptysis lasting over 48 hours

^[5] OpenEvidence.ai; O’Donnel, A. E. N Engl J Med 2022, 387, 533-545.

^[6] For a glimpse into the real-world experience of a bronchiectasis patient and her experience with Brinsupri, watch her YouTube videos here and here.

^[7] Barker, A. F. et al. JAMA, 2025, 334, 3, 253-264; Aksamit, T. et al. Am J Respir Crit Care Med, 2024, 210, 1, 108-118.

^[8] Abbreviation(s): DPP-1 = Dipeptidyl Peptidase 1

^[9] A short video describing Brinsupri (brensocatib) and how it works can be found here (Pharmacology Insights 2025)

^[10] Bell, S. et al. N Engl J Med, Ed. 2025, 392, 16, 1647-1648.

^[11] Abbreviation(s): COPD = chronic obstructive pulmonary disease

^[12] Bronchiectasis Decoded: Pathophysiology, Diagnosis, and Emerging Treatments. The France Foundation 2025 (link)

^[13] TDCowen note (5/20/26): ATS Field Report 3: Strong Tolerability Supports Use, Diagnosis to Drive Upside

^[14] Brinsupri was FDA approved in August 2025, so it’s had ~1.5 quarters to go through its initial phases of their launch before starting 2026. FY 2025 sales for Brinsupri were $173M.

^[15] Lucent Ion’s rNPV calculator link here

^[16] Based on addressing the 250k patients only. INSM Q4 2025 earnings conference call

^[17] We caution that an rNPV is not meant to be a company-wide valuation; it does not consider the Company’s cash or debt levels, Arikayce, or its pipeline. The rNPV calculation is meant for a single asset in a single indication.

^[18] Included in this peer group: ARGX, UTHR, NBIX, KRYS, SRPT, and ALNY. Estimates from: Godel Terminal.

Risks

• Risks include clinical, commercial, regulatory, competitive, and financing risk

Disclaimers:

The information provided by Lucent Ion LLC (“the Company”) is for educational and informational purposes only. It should not be considered financial, investment, or trading advice. All opinions expressed are personal views and are not guarantees of future performance. Investing involves risk, including the potential loss of capital, and past results do not indicate future returns.

Before making any investment decisions, you should conduct your own research or seek guidance from a licensed financial advisor. Neither the Company nor I are responsible for any financial outcomes resulting from actions taken based on the information provided.

By engaging with this content, you acknowledge and agree that you are solely responsible for your own investment choices.

Disclosures:

As of the date of this publication, Lucent Ion LLC and/or its principals have beneficial positions in the following companies:

• Insmed (INSM): long

• Gilead (GILD): long

• Krystal Biotech (KRYS): long

• Neurocrine Biosciences (NBIX): long

• All other companies mentioned in this report: none

The Company does not receive direct compensation from the companies listed above for this research. Our views are our own, based on publicly available information, and are provided for informational purposes only.

As a matter of policy:

• We do not trade in securities within 24 hours before or 48 hours after publishing research on those securities (the exception is when we announce Trade Alerts where we explicitly share what we’ve traded)

  • Restricted List for this post includes: Insmed (INSM)

• We may buy or sell securities mentioned in our research at any time after this cooling-off period, without notice

• Trading decisions are made independently of our publications

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• In Advanced mode, we have 5 therapeutic modality settings: Small Molecule, Biologics, RNA interference, Cell & Gene Therapy, and Other

  • Each modality setting has a set of defaults that can help inform inputs for the user’s asset(s) - they can be overridden with a user’s proprietary data

• We added customizability to COGS, R&D, and SG&A expense ramps

• Inputs remain fully downloadable to Excel. The rNPV build sheet can be re-written with live formulas using AI extension (i.e. Claude.ai) and can then be connected to your DCF model

• We think we’ve built a great tool if you’re a:

  • 1) Biopharma investor and you need to build many rNPV models quickly, or

  • 2) A student new to biopharma investing and wish to understand the mechanics and drivers behind rNPV modeling (standard practice at institutions)

• We added a Sensitivity Analysis page to complement the rNPV calculator. A sensitivity analysis allows one to evaluate how the rNPV changes with varying specific input variables. It is a widely used tool among equity analysts and BD professionals

• Coming soon!

  • We’re working on providing Case Studies, where we will detail historical examples to help guide the inputs for future assets

  • We’re working on additional tools that will complement the rNPV calculator (like the Sensitivity Analysis), such as an advanced epidemiology build

Our risk-adjusted net present value (rNPV) calculator & sensitivity analysis tools can be accessed HERE.

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Our apologies for being MIA for a bit. We assure that we’ve been busy keeping up with our companies under our coverage (a lot has happened) and looking for new interesting names & topics to cover. We hope to publish a follow-up post on INSM and pick up a new name in the near future.

In the meantime, we’ve been very active to completing the finishing touches to our risk-adjusted net present value (rNPV) calculator to make it a broadly usable tool.1 We’re quite excited about the addition of a Sensitivity Analysis page, as it allows a user to test the sensitivity of the rNPV with varying input assumptions. We remain believers that modeling, or some sort of valuation framework (it does not have to be DCF), should be a core part of any investor’s process. We have DCF-based models for all the core names that we cover.

User’s Guide

For those interested in really learning how to use the tool, we’ve created a full user’s guide that outlines each step on how to use the rNPV calculator and goes into full detail regarding our methodology. The user’s guide can be downloaded here.

We remind that this tool is designed to provide a framework to estimate single-indication, single-asset risk-adjusted net present values (rNPVs) (as a standalone and on a per share basis) and may be appropriate to apply in sum-of-the-parts (SoP) analyses. It is not meant as a company-wide discounted cash flow (DCF) model and it does not incorporate cash or debt balances. However, an Excel sheet is fully downloadable from the calculator and the rNPV Build can be linked directly into your DCF model for a company-wide valuation.

New Features to the rNPV Calculator:

Advanced mode for rNPV Calculator (latest version: v1.8.3):

• In Advanced mode, we have 5 therapeutic modality settings: Small Molecule, Biologics, RNA interference, Cell & Gene Therapy, and Other

  • Each modality setting has a set of defaults that can help inform inputs for the user’s asset(s). The calculator is intentionally opinionated about the defaults.

  • The modality presets are calibrated to publicly reported industry benchmarks; use the defaults as a sanity check, then override any input — including expense ramp weights — with your proprietary intelligence on the asset

• We’ve added customizability to COGS, R&D, and SG&A expense ramps:

  • COGS - we added option to modify slope from launch to maturity

    • Curve shapes include: (1) Linear, (2) Concave (Fast Early), (3) S-curve, or (4) Flat

    • The curve starts at the user’s input At Launch until the user’s input At Maturity (both calculated as % of revenue) under COGS

    • Each year’s margin until loss of exclusivity (LOE) is fully customizable

• R&D - we’ve changed how pre-launch and post-approval expenses are calculated in Standard and Accelerated Approval settings

  • Pre-launch weight schedule can be modified. Note the weight schedule is governed by relative cost of different development stages:

    • Standard Approval (SA): preclinical, Phase I-III, and FDA filing. Phase III trials are commonly the most expensive as many companies are required to run two large, randomized, and placebo-controlled Phase III trials for approval

    • Accelerated Approval (AA): preclinical, Phase I/II, and FDA filing. Drugs can be approved on an accelerated basis on smaller Phase I/II data alone, but often require confirmatory trials later

      • Under AA, the effective pre-launch R&D will be percentage of lifetime revenue. Pre-launch budget is reduced to avoid double-counting against the confirmatory R&D premium

  • Pre-launch weight schedule is fully modifiable at each year

  • The pre-launch weight schedule is customizable independently of post-approval profile

    • Under AA, pre-launch weight schedule can be modified but since post-approval R&D is independent, the user should be aware of confirmatory trial cost and modify the post-approval profile as the user sees fit

• SG&A: the user can change the ramp profile at each year through the launch ramp:

• A light/dark mode has been added (light mode is now default)

• Inputs remain fully downloadable to Excel. The rNPV build sheet can be re-written with live formulas using AI extension (i.e. Claude.ai; note that this consumes API tokens) and can then be connected to your DCF model

A list of all changes can be found in the Changelog at the bottom of the rNPV calculator.

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Sensitivity Analysis

Latest version: v1.4.2

A Sensitivity Analysis is a tool that allows one to evaluate how the rNPV calculation changes with varying specific input variables (while holding all other assumptions constant). It is a widely used tool among biopharma equity analysts and business development (BD) professionals. We added a Sensitivity Analysis button to the bottom-right (in teal) of the rNPV calculator:

• This opens up a separate sensitivity analysis page:

• If you have a set of inputs for your asset already in the rNPV calculator, you can save your inputs from the calculator for the Sensitivity Analysis into a .json file by hitting Save for Sensitivity (.json) button at the bottom of the rNPV page, and then load them up in the Sensitivity Analysis page:

• Sensitivity Analysis page Includes Tornado Charts, Sensitivity Tables, and 2-variable heat maps

• SG&A weights, COGS ramp, and R&D phasing are kept fixed at configured base values on the rNPV calculator & not customizable on Sensitivity Analysis

• We’ve added the same toggles to the Sensitivity Analysis page for Accelerated Approval, Erosion Tail, and Terminal Value from rNPV calculator2

• Below is an example of a Tornado Chart where one can see the bull and bear cases of your rNPV at the extremes of your assumption(s):

• Below is an example of a 2-variable heat map, or a Sensitivity Analysis table, : where one can see the full table of rNPV outcomes at various increments of your assumption(s)

  • The x- and y-axis variables can be selected in the menu (and at what increments) to show the various calculated rNPV’s (base case in yellow)

  • A 5x5, 7x7, or 9x9 grid can be selected (defaults to 7x7 grid)

  • In sellside models using DCF modeling to value their companies, we commonly see Sensitivity Analysis tables of Discount Rate vs. Terminal Growth Rate

• We added the ability to carry over inputs from Accelerated Approval and Erosion Tail into the .json file for the Sensitivity Analysis

• Note: Inputs from Accelerated Approval and Erosion Tail in the rNPV calculator can be carried over to keep base rNPV consistent but do not sweep through the sensitivity analysis (only Terminal Growth Rate)

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Concluding Remarks: Give it a whirl and see what you’re able to build! We welcome feedback. We think we’ve built a great tool if you’re a:

1. Biopharma investor and you need to build many rNPV models quickly, or

2. A student new to biopharma investing and wish to understand the mechanics and drivers behind rNPV modeling, which is standard practice at institutions

More tools coming soon! We’re actively working on additional tools that will complement the rNPV calculator, including:

• Case Studies where we will detail historical examples to help guide the inputs for future assets

• An advanced epidemiology build for more detailed construction of the addressable patient population (that can serve as an input to the rNPV calculator)

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• (+) GH: Positive news came out yesterday for GH, sending shares up +6.5% on 5/27 to $127.51/sh on top of already strong performance last week:

  • (1) ACS guidelines were updated to include GH’s Shield assay for colorectal cancer (CRC) screening, which could help drive further utilization & coverage

    • ACS was explicit about it not being the ‘preferred’ option, and should only be given if stool-based tests and colonoscopies are refused, given low sensitivities towards precancerous growths

    • This is inline with our expectation of how we think Shield will be used → the goal of a blood-based test (if positive) is to get the patient to undergo colonoscopy, where if early-stage cancer is detected it can be removed

  • (2) FDA extended the PDUFA date for AZN’s camizestrant for 1L treatment of patients with HR(+)/HER2(-) advanced breast cancer whose tumors have an emergent ESR1 mutation, using Guardant360 CDx to test for the mutation

    • The extension was granted to review additional data, which AZN may present at ACSO 2026 (Jun 2)

    • This opens the door to potential approval in ~3 months (despite a negative panel vote last month), although we keep our expectations low

• We maintain our long position in GH and PT $155.

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1.1 ACS Guidelines Updated to Include Shield Assay for CRC Screening

• ACS Guidelines Updated to Include Blood-based Assays for CRC Screening: GH announced that the American Cancer Society (ACS) updated their guidelines to include GH’s Shield assay for colorectal cancer (CRC) screening for people of average risk age 45 and older (GH press release here; and ACS link here). ACS was also clear that there is currently only one FDA-approved blood-based test for colorectal screening in people who are at average risk: the Shield test (see here). This is a positive & expected development for GH and may help drive further utilization & coverage.

• But, ACS Notes that They Are Not Necessarily the Preferred Options: ACS was explicit that:

  • “Blood-based screening tests are not preferred screening options at this time. You should only use a blood-based test if you’re not willing to get a stool-based test or visual exam. You’ll need to get a follow-up colonoscopy if the blood-based test is positive. These tests aren’t as good as the tests above at detecting precancerous growths, which may limit their potential to prevent colorectal cancer.”

  In other words, ACS is recommending that blood-based assays be done only if the patients refuse stool-based tests or visual exam (i.e. colonoscopy), given their lower sensitivity towards advanced adenomas (AA) of ~13%1 - this compares with stool-based tests of ~20-45%2 and colonoscopy of ~75%+.

• In-line with Our Expectation; Our Shield Thesis is about Patient Behavior: We’d remind that this is in-line with our expectation, as our thesis is really based on blood-based tests being used in patients who simply refuse to do either the recommended colonoscopy or the stool-based tests (see our CRC screening deep dive here). Adherence levels for colonoscopy and stool-based tests remain far below target levels of ~80%, and CRC prevalence, particularly amongst younger people, is on the rise. Our thesis on Shield CRC is not about one of having best-in-class data, but rather one of consumer (patient) behavior.

  • We note that thus far, adherence to GH’s Shield assay has been high, at 90%+ as of their Q1 2026 earnings update, This compares to ~60% for colonoscopies, ~71-85% for mt-sDNA stool-based tests, and only ~35-42% for FIT tests. Over time, as Shield expands its market share, we expect the adherence rate to settle at ~75%, but time will tell.

  • We’d further note that AA’s are slow growing. So a miss from a negative test is not necessarily immediately consequential, but obviously a stronger ability to detect AA’s is preferable. We think patients should continually be pushed to undergo through their recommended colonoscopy.

  • In their Q1 earnings call, GH reminded investors that ACS guideline inclusion was not part of the FY 2026 guidance of $1.31-1.32B, so we may see some potential upside now that inclusion is secured.

Concluding Thoughts: We think that this is a positive development for GH and the field, and may help drive further coverage and pricing leverage. We should remind that we have our Shield assay penetrating only ~6% at peak of the ~50M screening-eligible patient population to accommodate potential upcoming competition, such as Freenome that has shown improved AA sensitivity.3 We think the market is large enough to support multiple players and we can still justify ~$1.5B+ in peak sales potential for Shield with modest penetration.

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1.2 FDA Extends PDUFA for AZN’s Camizestrant in Breast Cancer to Review Additional Data

• FDA Extends PDUFA for Camizestrant to Review Additional Data: Separately, AZN announced that the FDA that it will extend the PDUFA date to review additional data requested to support the NDA for camizestrant (next-generation oral SERD) in combination with a CDK-4/6 inhibitor for 1L treatment of patients with HR(+)/HER2(-) advanced breast cancer whose tumors have an emergent ESR1 mutation.4

  • As a reminder, the NDA is based on the pivotal SERENA-6 Phase III trial results presented at the 2025 ASCO Meeting and published in the NEJM (link). SERENA-6 employed the Guardant360 CDx to test for ESR1 mutation serially in the patients on 1L therapy,5 switching patients to camizestrant upon detection rather than wait for radiographic progression.

  • Recall, in April the FDA and Adcom panel expressed concern that SERENA-6 was not adequately designed to show overall favorable benefit-risk. The panel voted against supporting approval of camizestrant and the new paradigm.

• Final PFS2 Data Should be Presented at ASCO 2026, and Could Provide a Clue on What the FDA will See: We don’t know what additional data the FDA will be reviewing. We are likely to get an update on SERENA-6 at 2026 ASCO Annual Meeting (abstract title here, final text to be available on June 2, 2026) which should have final second progression-free survival (PFS2) data. Recall, at ASCO 2025, the HR for PFS2 was 0.52 (p=0.0038), but remained immature - AZN believed the benefit from PFS1 should carry through to PFS2 on longer follow up. We hope to also see an update on overall survival (OS), but we doubt this data will be mature enough6 at this stage to sway the FDA.

Concluding Thoughts: We think this development is a net positive as it opens the door for potential approval, even if the chance is low. We estimate the extension will be ~3 months, and therefore we would expect an FDA decision in late-Q3. For now, we will leave the SERENA-6 testing paradigm out of our model and leave as upside, until we have at least had the chance to review the new ASCO 2026 data and we have greater clarity on its prospects for approval. Suffice it to say, with additional data entering the mix, the chance of approval is not zero.

We maintain our long position in GH and PT $155.

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• (+)INSM: Leerink publishes a KOL survey of >30 pulmonologists that has a bullish outlook on Brinsupri in non-cystic fibrosis bronchiectasis

• (++)GH: FDA approves Guardant360 Liquid Companion Diagnostic (CDx), the largest FDA-approved liquid biopsy panel with a 100x expanded footprint

  • Approval sets the stage for potential pricing upside

  • Guardant360 Liquid CDx not included in GH’s FY 2026 guidance - potential for upside, but bulk of impact should come in 2027+

• (+)GH: AZN receives positive EU CHMP recommendation for camizestrant in 1L advanced breast cancer based on SERENA-6

  • Recommendation was based on SERENA-6 and uses Guardant360 CDx to serially test for ESR1 mutation

  • In stark contrast with US, where the FDA and Adcom panel were negative

• (+)NTRA/AZN/Diagnostic space: Signatera FDA approved as a companion diagnostic in muscle-invasive bladder cancer

  • This marks the first FDA-approved use of personalized molecular residual disease (MRD) testing to guide treatment decisions

• PT changes: On Q1 updates:

  • GH PT moves to $155 (from $145). Made a trim on stock strength, GH remains a core holding

  • INSM PT moves to $170 (from $185). INSM remains core holding; added post-Q1 weakness. Deep dive coming!

• From where valuations sit today, we like CYTK (PT $105) and INSM (PT $170), as both are execution stories and have the attractive risk-adjusted upside potential. We continue to like KRYS and GH as core holdings.

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(+)INSM: Leerink Publishes KOL Survey of >30 Pulmonologists

• Leerink Publishes Bullish KOL Outlook on Brinsupri: On 5/18, Leerink published a key opinion leader (KOL) survey of >30 pulmonologists to gauge their experience & outlook on Brinsupri in non-cystic fibrosis bronchiectasis (NCFB), particularly given the controversy following INSM’s Q1 earnings report. Importantly, the physicians surveyed noted a discontinuation rate that is well below the INSM-cited benchmark of statins (<30%), as well as chronic oral respiratory comps. Physicians estimated a ~78% six-month continuation rate for Brinsupri, and expect broader use over time.

• Physicians Expect High Penetration into NCFB Market: The physicians’ expected peak usage has not changed since Leerink’s previous survey. The physicians expect ~75% penetration of their NCFB patients with 2+ pulmonary exacerbations, which implies >$10B peak, according to Leerink. Survey results tend to be overly optimistic, so we estimate ~25% peak penetration for Brinsupri to arrive at peak sales of ~$5 billion.

• Leerink has an Outperform rating and a PT of $215.

Our Thoughts: We’re encouraged by the results of Leerink’s physician survey that the discontinuation rate appeared to be trending inline with expectations, and that worries about it are likely overblown. We think INSM stands at a more attractive valuation today on opportunities for Brinsupri in NCFB and Arikayce in 1L MAC lung disease. On Q1 updates (among other changes), our PT moves to $170 (from $185). We maintain our long position in INSM, and we added following Q1 weakness.1 We are actively working on a deep dive and we hope to come out with it soon!

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(++)GH: FDA Approves Guardant360 Liquid CDx

• GH announced that the FDA has approved their Guardant360 Liquid companion diagnostic (CDx): This is the largest FDA-approved liquid biopsy panel with a 100x expanded footprint (link here), and the announcement sent GH shares up +15% on 5/20. The liquid biopsy panel integrates genomic + epigenetic data to provide a more complete, actionable view of cancer from only a blood draw. The 7 previously FDA-approved CDx indications for Guardant360 CDx transfer to the new test with the FDA approval of Guardant360 Liquid CDx.

• FDA Approval of Guardant360 Liquid was Anticipated, But Still Welcome News: During their Q1 call, GH noted that Guardant360 Liquid will become the most comprehensive FDA-approved liquid biopsy for therapy selection. We think the panel that integrates both genomic + epigenetic data meaningfully expands GH’s competitive moat around blood-based comprehensive molecular profiling (CMP). It will also help simplify ordering across their therapy selection portfolio with better connectivity across their testing ecosystem. The Guardant360 Liquid platform already delivered ~30% y/y volume growth driven by Smart Platform, and launch of the new panel should help drive share further.

• FDA Approval Sets the Stage for Potential Pricing Upside: In Q1, the average selling prices (ASPs) were stable sequentially with Guardant360 Liquid in the ~$3,000-$3,100 range. If Guardant360 Liquid can qualify for a new ADLT designation (Advanced Diagnostic Laboratory Test) it could secure a potentially much higher Medicare reimbursement rate. Some analysts are expecting ~$8k per test under ADLT status compared to a current list price of ~$5k.2

• Potential Upside to FY 2026 Revenue Guidance; Bulk of Impact Could Come in 2027+: GH noted that FY 2026 revenue guidance of $1.3-1.32 billion does not include Guardant360 Liquid CDx approval; therefore, this update represents another upside lever to FY 2026 guidance. That said, we expect the bulk of the impact to come in 2027+ if GH can secure new ASP. It’s worth reminding that GH’s Reveal assay saw +100% y/y growth in Q1 2026, and we continue to expect it to make further in-roads, despite the market’s competitiveness. We would also highlight that we expect GH’s Reveal Ultra, an ultra-sensitive tumor-informed MRD assay, to be launched later in 2026.

• On the Other End, GH is Reducing Test Cost, Thus Improving Margins: Recall in the Q1 earnings call, GH’s non-GAAP gross margin improved to 66% (up from 65% the same time in 2025), driven by lower Guardant360 Liquid cost per test, reflecting the transition to NovaSeq X (to be completed in May 2026). The transition reduced Guardant360 Liquid sequencing cost per test by nearly ~$200 vs. Q1 2025. We see significantly improved margins as GH tackles both ends.

Our Thoughts: The FDA approval of Guardant360 Liquid CDx represents a significant milestone for GH, as it helps them move beyond “mutation detection” alone assay-type to a more sophisticated multiomic assay, leading to stronger competitive positioning. We think the approval sets the stage for higher ASPs for their Liquid CDx platform that can drive further revenue growth in 2027+. Note that this is ancillary to our core thesis around Shield assay growth in CRC screening - ACS guideline inclusion should be a major upcoming catalyst. We think GH is well positioned as they strive towards cash flow breakeven by YE 2027.

We’ve updated our GH model after Q1 updates, but we’ve not (yet) made changes on the Guardant360 Liquid CDx approval. We took a slight trim in our GH position on stock strength (considering we super-sized it on April weakness), but we overall maintain our long position in GH.3 On Q1 updates, our PT moves to $155 (from $145).

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(+)GH: AZN Receives Positive EU CHMP Recommendation for Camizestrant in 1L Advanced Breast Cancer, in Stark Contrast with US

• Separately, AZN Receives Positive EU CHMP Recommendation on SERENA-6 in Breast Cancer: In an interesting turn of events, on 5/22, AZN announced that they received a positive EU CHMP recommendation on camizestrant (next-gen oral SERD) in 1L advanced breast cancer based on SERENA-6 clinical trial, which uses Guardant360 CDx to serially test for ESR1 mutation. This is in stark contrast from the U.S., where the FDA and the Adcom panel expressed their views that the trial may not be appropriately designed to answer the question of clinical benefit (see our note here). While the EU regulatory authorities don’t have to follow the CHMP’s recommendation, they often do, and marks an important milestone for the field if approved.

Our Thoughts: This is an unexpected turn of events for GH and AZN, and while we wrote off this opportunity for Guardant360 CDx following the negative Adcom panel vote in April (which would have enabled serial testing instead of just once at progression), we may have to re-think its outlook if they are approved in the EU. Sometimes, approval from one regulatory agency can have an influence on the approvability from another regulatory agency - so U.S. approval may be in the cards yet. It is still not our base case, and we will continue to leave it out of our GH model.

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(+)NTRA/AZN/Diagnostic Space: Natera (NTRA): Signatera FDA Approved as a Companion Diagnostic in Muscle-Invasive Bladder Cancer

• FDA Approval of Personalized MRD Testing is Finally Here: On 5/15, Roche and Natera announced the first FDA approval of Signatera as a companion diagnostic (CDx) to adjuvant atezolizumab (Tecentriq) in muscle-invasive bladder cancer (MIBC) (link here), marking the first FDA-approved use of personalized molecular residual disease (MRD) testing to guide treatment decisions. We expect NTRA’s approach to treat on MRD (TOMR) to be the new standard-of-care in MIBC, which enables precise interventions for MRD(+) patients while sparing MRD(-) patients unnecessary treatment, which add toxicity and cost (see our GH piece on MRD here). This marks an important milestone for the field moving it from clinical validation to validation from a regulatory agency. Circulating tumor DNA (ctDNA) is not just a “prognostic” indicator - there is clinical value to intercepting patients early who are MRD(+) with an appropriate therapy, rather than wait for radiographic progression.

• Signatera CDx Approved on the Success of IMvigor011 Trial: The FDA approval of Signatera CDx was based on the success of the landmark, global Phase III IMvigor011 trial, sponsored by Genentech (Roche). The study was published in The New England Journal of Medicine in October 2025, and demonstrated that Signatera MRD(+) patients treated with adjuvant atezolizumab (Tecentriq) immunotherapy achieved significant improvements in disease-free survival (DFS) and overall survival (OS) (Figure 1). Signatera MRD(-) patients achieved 97% 2-year OS with no adjuvant therapy at all, sparing them from unnecessary treatment.

Figure 1. DFS and OS curves from IMvigor011 in MIBC.

IMvigor011: Powles, T. et al. N Engl J Med 2025, 393, 2395-2408.

• More Clinical Validation Needed Across Tumor Types: While MRD-guided cancer care is well supported by many peer-reviewed studies across multiple cancer types, including breast, lung, colorectal (discussed at length in our post here), ovarian, and pan-cancer immunotherapy monitoring, it is not universal across all tumor types (yet). There are differences in shedding rates of ctDNA between cancer types, and each intervention must demonstrate through clinical trials whether the therapeutic intervention in an MRD(+) patient improves clinical outcomes.

Our Thoughts: We’re not officially covering NTRA, although we may discuss updates from time-to-time as it pertains to the diagnostics space and GH. For full disclosure, we continue to own a sizable long position in NTRA as a core position (no PT).4 As we noted, the approval of Signatera in MIBC is a win for the space and we think the approval benefits all players, including GH, as treating on MRD status becomes more accepted among the physician community.

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The Big Picture (TL;DR):

• We review key Q1 2026 updates in our universe (in order of earnings report dates):

  • KRYS (PT $245 → $285):

    • Strong worldwide Vyjuvek revenues led by strong ex-US launch execution, Q1 sales exceeded expectations

    • U.S. sales softer as patients shift to the maintenance phases of treatment - start/stop dynamic can be lumpy, but we see U.S. sales trending higher

    • Several key data updates in 4Q26 to de-risk pipeline - we’re most excited about KB801 in neurotrophic keratitis (NK)

  • CYTK (PT $105):

    • Strong Myqorzo Q1 sales out of the gates in oHCM

    • Recent ACACIA win sets them up to take on the large nHCM market where there are no approved therapies (including surgery)

  • INSM (PT $185):

    • Brinsupri launch continuing strong in bronchiectasis, but concerns around launch metrics spooks investors, causing stock to crash >20%

    • We saw the reaction as a (much needed) valuation reset that offers much more compelling value at ~$22B EV; we have been buyers on weakness

  • GH (PT$145):

    • Shield launch in CRC screening continues its upward trajectory. Though volume came in slightly lower than our expectations, GH noted an “acceleration in momentum” in March, leading them to raise FY 2026 guidance

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1.1 Krystal Biotech (KRYS): Strong Ex-US Vyjuvek Launch Execution; Lots to Look Forward to in 4Q26

• Ex-US Vyjuvek Sales Exceed Expectations - Launches in Spain and Italy Expected in H2 2026: Total Vyjuvek net revenue came in at $116M, beating consensus estimates of $112M (and our estimate of $113.5M) driven by strong ex-US launch execution. KRYS broke out the revenue by geography for the first time, citing $28.9M in ex-US net sales across Europe ($20.7M) and Japan ($8.2M). This revenue exceeds our bullish expectations, and we’re happy that the ex-US launch is proceeding very well with now >140 patients treated across Germany, France, and Japan. Price negotiations are ongoing in Germany and France, with pricing decision expected in 2H26 for Germany, and 2027 for France. Launches in Italy and Spain are anticipated in 2H26 following pricing negotiations.

  • At investor conferences, management has previously noted that ex-US sales could exceed sales in the U.S., given the prevalence of DEB in ex-US territories. We note that we model ~$1.2B in peak Vyjuvek revenue worldwide (WW) by 2036 with an already near ~1:1 breakdown between U.S. and ex-US geographies ($628M and $574M, respectively), but it is encouraging to hear that ex-US sales could trend even higher.

• Patient Behavior in the U.S. Shifts Towards the Maintenance Phases: U.S. Vyjuvek net sales came in at $89.5M in Q1. While KRYS did not break out revenue by geography in 4Q25, there was likely a sequential decline q/q impacted by: 1) insurance switchovers in Q1 (typical of any drug, and now behind them), and 2) patients shifting towards maintenance treatment regimens. Despite higher volume of insurance switchovers, management noted that upstream demand metrics had improved with >60 new prescribers in 1Q26 and >570 unique prescribers since launch. Management noted that start-stop dynamics are challenging to predict quarter-to-quarter, but the overall trend is higher.

• 4Q26 to be a Catalyst-Rich Quarter for KRYS’ Pipeline: 4Q/YE26 is shaping up to be a catalyst-rich period for KRYS. We have our eyes on KRYS’ ophthalmology pipeline readouts (no pun intended), including KB803 in DEB ocular complications and KB801 in neurotrophic keratitis, where we should get updates from both by YE 2026. A summary of key pipeline updates and data timing is provided in the following table:

Source: KRYS disclosures; Clinicaltrials.gov

• Cash & Equivalents of >$1.0 Billion: KRYS now has >$1.0B in cash on Vyjuvek success and prudent capital & expense management - a major milestone. A question on capital deployment was asked - management has been clear that they’re not planning on licensing or buying any asset, and that a stock buyback could be on the table once they have visibility in the launch of their pipeline assets, especially ones that address large markets. We think this is a sensible decision on capital allocation. We like that KRYS has this financial flexibility.

Final Thoughts: KRYS reported a strong Q1 on excellent ex-US Vyjuvek launch execution, exceeding even our bullish expectations. Despite some lumpiness in the U.S. due to fluctuating start/stop dynamics, we expect the U.S. launch to recover & continue its upward trajectory as the patients’ wounds are expected to re-open. KRYS stock initially took a dive post the Q1 earnings report, but rallied strongly into the close - we think investors may have appreciated that the U.S. start/stop dynamic is temporary, and off the back of a strong ex-US launch means that we can expect the outlook for total WW Vyjuvek revenues to be very strong.

Following updates our PT moves to $285 (from $245). KRYS has quietly reached all-time highs at ~$318/sh. We couldn’t be more pleased with the stock performance. We took a slight trim >$310/sh to lock gains, but overall we maintain our long position in KRYS. We look forward to key clinical de-risking events in 4Q to unlock further value. We promise to come back to KRYS with more deep dives this summer!

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1.2 Cytokinetics (CYTK): Myqorzo Launch in oHCM in Full Swing; ACACIA Win Sets Them up to Take on nHCM

• Myqorzo Launch Off to a Strong Start in oHCM: Q1 was the first quarter of launch in obstructive HCM (oHCM) since its approval in late-January (~9 weeks on the market). Q1 net Myqorzo sales were $4.8M with >275 HCPs prescribing the drug to ~680 patients. As a high-level comparison, BMY reported Camzyos (mavacamten) sales of $3M in its first quarter of launch (also a partial quarter where it was approved late in the first month). CYTK shared some launch metrics (see slides below) - we’ll do a deep review of the launch in the future. CYTK has submitted the sNDA for MAPLE-HCM with PDUFA date of November 14, 2026 - a label expansion opportunity. In the EU, following approval in February CYTK is preparing for launch in Germany in Q2. CYTK & partners are also pursuing regulatory approvals in Switzerland, Canada, Hong Kong, and Taiwan.

Source: CYTK Q1 presentation

• ACACIA Win & sNDA Submission for MAPLE Sets the Stage for CYTK to Take on the HCM Market: Off the heels of positive ACACIA topline readout and sNDA submission for MAPLE-HCM, CYTK is now set to take on both obstructive & non-obstructive HCM market with a best-in-class asset.1 To recap the ACACIA results, ACACIA met both dual primary endpoints of KCCQ-CSS (+3.0, p=0.021) and peak VO2 (+0.67, p=0.003), with no new safety signals identified. While some may debate the magnitude of these changes, we’d argue that in a landscape of significant unmet need where there are no approved therapies (including surgery), aficamten can still capture a meaningful share in this large market. We expect additional details from the ACACIA trial at an upcoming medical meeting.

• Strong Cash Position to Get Them Through to nHCM Launch: As of end-Q1, CYTK had ~$1.1B in cash & equivalents. Following the recent public offering which raised gross proceeds of ~$805M, we estimate CYTK to currently have ~$1.8B of cash on hand, which should be sufficient to get them through to nHCM launch (we estimate ~H2 2027). FY 2026 GAAP combined R&D and SG&A expenses are expected to be ~$830-870M (unchanged), with $120-130M of non-cash stock-based compensation expense included.

Final Thoughts: CYTK is in a great position. With the Myqorzo launch underway in oHCM and the ACACIA trial reading out positively in nHCM, they are in a position to take on the entire HCM market. Aficamten is de-risked from a data standpoint, and it’s all about commercial execution. And while not our base case, we think CYTK will be a key object of strategic interest from large Pharma.

We maintain our long position in CYTK with a PT of $105. We maintain an ~85% probability of aficamten approval in nHCM following the ACACIA disclosure. Our CYTK model following Q1 updates is under review.

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1.3 Insmed (INSM): Brinsupri Continuing its Strong Launch, But Stock Crashes on Nervousness Around Certain Launch Metrics

• Strong Q1 2026 results for Brinsupri But Missed the Buyside Whisper: INSM reported strong Q1 results for Brinsupri in non-cystic fibrosis bronchiectasis (NCFB) of $207.9M, ahead of sellside consensus but fell short of the buyside whisper number of ~$210-215M. Brinsupri delivered +44% q/q growth with ~7,800 new patient starts in the quarter, despite typical Q1 seasonality that comes with drugs. INSM reiterated their FY 2026 revenue guidance of at least $1B in global net revenues for the product. INSM shared key launch metrics that exceeded benchmarks, including a ~90% payer approval rate through specialty pharmacies, >80% patient enrollment in the enlightened patient support program, prescription refill rates of nearly every 30 days versus an industry benchmark of 37 days.

• Yet… INSM Stock Crashed Following the Q1 Update: INSM stock fell >20% on the day of the Q1 earnings update, falling further the next trading day. The stock did not fall on missing the buyside whisper alone - there seemed to be some investor concern regarding: 1) their ex-US launch strategy for Brinsupri given the MFN pricing issue, and 2) seemingly high discontinuation rates this early in the launch. On 2), the concerns came up despite management noting that continuation rates were tracking slightly above the ~70% six-month statin benchmark. Our guess as to where the concerns are stemming from is that if you back calculate the number of patients in Q1 based on sales, you’d get to ~13.1k. There were ~9k new patient starts in 4Q25 - and ~7.8k new patient starts in 1Q26 (according to INSM). That suggests there were only ~5.3k patients continued from last quarter - implying that at least ~40% had dropped off.

Source: INSM Q1 presentation

• We can understand why this might be concerning, and we believe this is worth watching closely. It is obvious now why INSM brought in the 6-mo statin benchmark of ~70%. A few points we’d highlight: 1) this is one datapoint (derived from back-of-the-envelope math) and we need to see longer follow up to see what is the true rate of discontinuation is, 2) if the discontinuation rate were that high, we don’t think it’s from any safety issue as rates were similar between groups in the ASPEN study (see NEJM slide), and 2) bronchiectasis is very symptomatic (chronic coughing, etc.) and if patients did discontinue therapy, we think symptoms could return and patients would then return to drug. For the moment, we will take INSM at their word that the continuation rate is currently tracking ahead of the ~70% statin-benchmark, but we will see how ultimately tracks longer term.

Source: Chalmers, J. D et al. NEJM 2025, 392, 1569-1581.

• Pipeline & Cash: INSM’s TPIP Phase 3 programs are advancing across four indications, with the Phase 2 open-label extension data in PAH is expected in Q3 2026. INSM reported EPS (GAAP) of ($0.76). At end-Q1, INSM had ~$1.2B in cash and equivalents, and management expects cash burn to decline as revenues ramp. INSM sees a path to cash flow positivity in 2027 without requiring additional capital raises, short of doing a large business development (BD) deal.

Final Thoughts: Overall, INSM reported a good Q1 but their outlook was marred by certain details in the Brinsupri launch that spooked investors more than swayed them, on top of the fact that INSM was already a high multiple stock. Also, to address the elephant in the room, we understand fully that we came out with our INSM piece indicating our bullish stance (see your post here) right before the stock fell >20% the next day following their Q1 update. It’s worth making a point that there will be times where we look like complete idiots.

We obviously didn’t think the stock revaluation would happen so quickly. But as long-term investors, we are not deterred by short-term movements. We saw the reaction as a (much needed) valuation reset for INSM - at an EV ~$22B with an asset (Brinsupri) that could that could see ~$5B in peak revenue along with upside from Arikayce in 1L MAC lung disease - that offers much more compelling value, and we have been accumulating shares on the weakness.2 If the selling continues, we’re prepared to add even more, assuming our thesis does not change.

We maintain our long position in INSM, and have recently added shares with a PT of $185. Our INSM model following Q1 updates is under review.

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1.4 Guardant Health (GH): Shield Launch in CRC Screening Continues its Upward Trajectory; Eyes on Reaching Cash Flow Breakeven by YE 2027

• Strong Q1 Revenues, Driven by Oncology & Shield Growth: GH reported Q1 revs of $302M (+48% y/y), beating consensus of $279M, driven by oncology revenue of $205M (+36% y/y) and Screening revenue reaching $42M (+600% y/y). Oncology volume was 86k tests (+47%) y/y), the highest y/y % growth they’ve seen in nearly 3 years. Oncology revenue guidance . Reveal MRD continues to be their fastest growing test growing +100% y/y, driven by strong adoption across CRC, breast, and lung cancer as well as the newly launched therapy response monitoring indications.

• Shield Assay in CRC Screening Continues its Upward Trajectory: Shield volume reached 44k tests in Q1 2026, which fell a little shy of our expectations (+390% y/y, but only +16% q/q), but may be seasonality-driven. On the call, management noted that they exited the quarter with “accelerated momentum in March,” giving them confidence in their raised FY 2026 guide of 230-245k screening tests (from 210-225k), and revenue of $186-198M (from $162-174M). Using the mid-point of their guide, that implies an average of ~64.5k tests per remaining quarter of the year. Direct-to-consumer (DTC) and Influencer campaigns (including Patrick Dempsey) were launched in conjunction with CRC Awareness Month that could help drive further volume. Furthermore, GH’s distribution collaboration with Quest Diagnostics should begin to take full effect starting in Q2. Shield continues to demonstrate >90% adherence rate - a key differentiator vs. other test types including stool-based tests.

Source: GH Q1 presentation

• FY 2026 Revenue Guidance Raised: GH raised their FY 2026 guidance to $1.31-1.32B (vs. $1.25-1.28B previously), representing 32-34% y/y growth (vs. 27-30% y/y growth previously). It is important to note potential upside drivers not currently included in the guide: 1) for oncology, guidance does not include FDA approval of Guardant360 Liquid or Reveal Ultra tumor-informed test for MRD (expected later in 2026), 2) for Shield, guidance does not include upside from ACS guideline inclusions, which GH expects in the near-term. These are potential catalysts for GH that can drive further upside in 2026.

• GH in Strong Financial Position to Execute - On-track for Company-wide Cash Flow Breakeven by End of 2027: EPS (GAAP) came in at ($0.85)/sh, just missing consensus at ($0.81)/sh. At end-Q1, GH had ~$1.2B in cash & investments which puts them in a strong position to continue to execute. FY 2026 free cash flow burn is expected to be in the range of ~$185-195 million (unchanged), and GH reiterated its commitment to company-wide cash flow breakeven by YE 2027. Excluding screening, GH expects to be FCF+ for FY 2026.

Source: GH Q1 presentation

Final Thoughts: GH reported a strong Q1 and gave a welcome boost in FY 2026 guidance. While the Shield volume was light in the quarter, management noted an “acceleration in momentum” in March that should carry through for the remainder of the year. We’re encouraged to continue to see >90% adherence rate of Shield, which is a key differentiator vs. other test types including stool-based tests, and core to our GH thesis. Other areas of its business in oncology and biopharma are also progressing, with key upcoming milestones such as the launch of Reveal Ultra in MRD that can support continued growth. GH is in a critical transition period as it works its way to becoming a cash flow positive company by YE 2027.

We maintain our long position in GH with a PT of $145. We were glad that we were able to build our position further on recent stock weakness while <$80-85/sh,3 now that it is in the ~$95-100/sh range. We hope to see continued momentum throughout the year. Our GH model following Q1 updates is under review.

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• In the interest of speed, we’re publishing our INSM thesis summary before our deep dive - we hope to publish a deep dive in the future (assuming reader interest)

• INSM is a mid-cap commercial biopharma company focused on the development and commercialization of therapies in 3 therapeutic areas: respiratory, immunology & inflammatory, and near & other rare diseases

• The INSM story is simple – we own it for:

  • Brinsupri launch in non-cystic fibrosis bronchiectasis (NCFB), and

  • Arikayce label expansion into 1L MAC lung disease (MACLD)

• Both indications are large & meaningful revenue opportunities for INSM. We’re anticipating peak Brinsupri sales of ~$7B worldwide by 2034, where there are no other treatment options for NCFB

• We’ve initiated a long position in INSM shares with a PT of $185. While INSM remains a high multiple stock (2026 EV/Revenue ~17x) despite the pullback YTD (and could drift lower), we think Brinsupri and Arikayce in their respective indications are strong enough assets to support higher valuation over the long run

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INSM market data:

• Market capitalization (as of 5/5/26): $29.6 billion

• Net cash (debt): ~$0.7 billion

  • Cash (end-4Q25): ~$1.4 billion

  • Long-term debt: ~$0.7 billion

• Enterprise value (EV): $28.9 billion

Summary: As we continue to scope out the universe for best-in-class assets, we thought it was time to take a closer look at Insmed (INSM). We’re doing things a bit differently for INSM - in the interest of speed, we’re publishing our thesis summary before our deep dive (these take quite some time & effort). We’ll keep this report short - and potentially publish a deep dive in the future. We wanted to let our readers know that we’ve initiated a INSM position on the pullback YTD. INSM will report 1Q26 earnings on Thursday, May 7, which we hope can reinvigorate shares.^[1]

INSM is a mid-cap commercial biopharma company focused on the development and commercialization of therapies in three therapeutic areas: respiratory, immunology & inflammatory, and neuro & other rare diseases. The INSM story is simple – we own it for:

1. Brinsupri launch in non-cystic fibrosis bronchiectasis (NCFB), and

2. Arikayce label expansion into 1L MAC lung disease (MACLD)

Both indications are large & meaningful revenue opportunities for INSM.

Brinsupri is the first and only treatment for non-cystic fibrosis bronchiectasis (NCFB).^[2] Briefly, bronchiectasis is a chronic lung disease characterized by the permanent & abnormal dilation & destruction of the bronchial airways.^[3] It commonly starts with initial insult (i.e. infection, etc.) that leads to a cascade of events leading to structural remodeling with permanent bronchial dilation, causing patients to experience chronic cough. Exacerbations are associated with progressive lung function decline, and purulent sputum (containing pus indicating bacterial infection) is associated with greater hospitalization and increased mortality.^[4]

There are ~500k adults in US have NCFB, with prevalence rising sharply with age. Diagnoses have been increasing. INSM guides to ~250k for patients who have at least 2 exacerbations who may be eligible for Brinsupri. There are no other FDA approved options for bronchiectasis; standard-of-care (SOC) is typically antibiotics, which help with the bacterial infections but don’t help with the underlying cause of neutrophilic overactivation. Physician feedback on Brinsupri appears favorable.^[5]

In January 2026, INSM provided mind-blowing FY 2026 guidance for Brinsupri: at least $1B, essentially over its first year of launch^[6] (and $5B long-term). This is an extremely high bar – very few drugs in history have met it (GILD’s Sovaldi for HCV comes to mind), and it is another thing to guide to that (because they’ll need to beat it). We think this speaks to management’s confidence in the outlook of the Brinsupri launch. We’re anticipating peak Brinsupri sales of ~$7B worldwide by 2034.

For Arikayce, INSM’s current revenues are still limited to the refractory MAC population (~30k addressable market). INSM announced positive data from its Phase III ENCORE trial in March investigating Arikayce as 1L therapy for MAC lung disease, which opens the market to >200k patients worldwide. INSM will submit the sNDA in H2 2026, with potential approval in 2027.

We’ve initiated a long position in INSM with a price target (PT) of $185 on Brinsupri potential in NCFB and label expansion of Arikayce label expansion into 1L MAC lung disease.^[7] INSM reports Q1 2026 earnings on Thursday, May 7. Consensus is expecting Q1 revenue of $299M and EPS (GAAP) of $(0.97).^[8]

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Our Thoughts on Valuation

Year-to-date (YTD), INSM has been an underperformer (-21%) relative to the XBI (+7%). We’ve initiated a long position – but there’s a question if INSM is now at the right valuation to jump in – at $29B market cap with an 2026 EV/Revenue ratio of ~17x, we don’t consider INSM cheap. However, one doesn’t always get the opportunity to acquire shares at the most optimal prices, and we’ve been patient until it has reached more attractive levels. Investors were clamoring for shares at $212 at near $46B market cap in December 2025, but it has cooled off significantly since then reaching $133 to ~$29B just last week, and expectations have come in meaningfully.

INSM shares may have pulled back YTD for several reasons, including: 1) already being a very high multiple stock at >$200/sh at the start of 2026, 2) overhang on the Phase 2b CEDAR study investigating brensocatib in Hidradenitis Suppurativa (which failed), and/or 3) nervousness around the Phase III ENCORE study in 1L MAC lung disease (which succeeded). Given its high multiple (still), we cannot promise INSM can’t drift to $100 or lower, especially if there is a slip in the launches - but we’re accumulating shares here (and giving ourselves room to add should it drift lower). We will give INSM the chance to fully execute on the Brinsupri and Arikayce launches.

Our DCF-based price target (PT) for INSM is $185. We currently assign modest value to INSM’s pipeline. We think INSM is well on its way to becoming a cashflow positive company (we anticipate late 2027 or 2028) and do not anticipate them needing to do additional capital raises, though INSM management has hinted at investor conferences that they could do a raise to fund certain business development deals to bolster their pipeline.

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^[1] While we hope for a reinvigoration of INSM shares following 1Q26 earnings, we intend on holding INSM shares over the long-run, assuming no thesis-changing event occurs over that time

^[2] A short video describing Brinsupri (brensocatib) and how it works can be found here (Pharmacology Insights 2025)

^[3] O’Donnel, A. E. N Engl J Med 2022, 387, 533-545.

^[4] Barker, A. F. et al. JAMA 2025, 334, 3, 253-264.

^[5] TD Cowen physician survey report (4/15/26): Best of Health Care: INSM’s Brinsupri for NCFBE and Arikayce for NTM.

^[6] Brinsupri was FDA approved in August 2025, so it’s had ~1.5 quarters to go through its initial phases of their launch before starting 2026. FY 2025 sales for Brinsupri were $173M.

^[7] As of 5/5/26, our cost basis for INSM shares (~4.5% weight) is $140.49.

^[8] Godel Terminal

Risks

• Risks include clinical, commercial, regulatory, competitive, and financing risk

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The information provided by Lucent Ion LLC (“the Company”) is for informational and educational purposes only and does not constitute personalized investment advice, financial advice, legal advice, or tax advice. The Company is a publisher of financial research and commentary and is not registered as an investment adviser with the U.S. Securities and Exchange Commission (SEC) or with any state securities regulatory authority.

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Disclosures:

As of the date of this publication, Lucent Ion LLC and/or its principals have beneficial positions in the following companies:

• Insmed (INSM): long

• Gilead (GILD): long

• All other companies mentioned in this report: none

The Company does not receive direct compensation from the companies listed above for this research. Our views are our own, based on publicly available information, and are provided for informational purposes only.

As a matter of policy:

• We do not trade in securities within 24 hours before or 48 hours after publishing research on those securities (the exception is when we announce Trade Alerts where we explicitly share what we’ve traded)

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• Trading decisions are made independently of our publications

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• CYTK announced the highly anticipated ACACIA Phase III readout in nonobstructive HCM investigating aficamten, hitting on the dual primary endpoints of KCCQ-CSS (quality-of-life) and exercise capacity (peak VO₂)

• This is a big win for CYTK given there are no approved therapies for nHCM, and market size is meaningful - we see peak potential revenue of ~$3.5B by 2036 (non-risk adjusted)

• Some may debate the magnitudes of benefit, but we’d argue given the wasteland of failed therapies we believe aficamten will carve out meaningful share of the nHCM market

• The initial stock reaction is more muted than we expected (we believed +50% to ~$90/sh on hitting both endpoints). But given the outcome, we think the stock could grind higher towards $100+/sh over time

• We maintain our long position in CYTK with a PT of $105 (from $85). We may look to add further & increase our position size now that nHCM has been clinically de-risked

• We think the ACACIA data puts CYTK acquisition potential back on the table

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ACACIA Data - Summary

The topline ACACIA data are summarized in the slide below. ACACIA investigating aficamten hit on the dual primary endpoint and showed placebo-adjusted differences of 3.0 (p=0.021) on KCCQ-CSS (quality-of-life) and 0.67 (p=0.003) on exercise capacity (peak VO₂). There were also statistically significant improvements across key secondary endpoints. Aficamten’s safety was in-line with expectations and with prior experience, although some have made some noise about the 2 participants on aficamten who had serious adverse events of heart failure associated with LVEF <50%.

Details on the ACACIA study results will be presented at a future medical meeting.

Source: CYTK presentation

Looking back at our original CYTK posts on ACACIA (can be viewed here and here), we were almost right on the nose compared to the actual results [we understand it was luck:)]! Recall, we were expecting:

• KCCQ-CSS change of +4.0 placebo-adjusted difference (standard deviation of 15), based on:

  • +10.0 for aficamten vs. baseline, in-line with previous aficamten experience

  • +6.0 for placebo vs. baseline, less than what was observed in ODYSSEY (+10.0)

• Peak VO₂ change of +0.65 placebo-adjusted difference of (standard deviation of 3.0), based on:

  • +0.7 for aficamten vs. baseline, higher than mavacamten in ODYSSEY (+0.47) but lower than the +1.0 change that ACACIA was powered to show

    • +0.05 for placebo vs. baseline, same effect from ODYSSEY trial

Our estimate for KCCQ-CSS adjusted for placebo was a little higher than actual results of 3.0, due to a higher-than-expected placebo response of +8.4 at 36 weeks. Our estimate for peak VO₂ of 0.65 compared to the actual results of 0.67.

Table 1. Our expectations on KCCQ-CSS and peak VO₂ outcomes going into ACACIA:

*Estimated n per arm. Assumes 10% discontinuation rate

Numbers in parentheses are standard deviation assumptions

Source: Cytokinetics (CYTK) Review (Part 1 of 2): Taking a Chance on ACACIA in Nonobstructive HCM post here; based on Lucent Ion LLC assumptions

Magnitude-Shmagnitude

Part of the reason for CYTK’s muted stock reaction could be debates around the magnitudes of clinical benefit and whether they are considered clinically meaningful. On the two endpoints, ACACIA was powered for a +5-point change on KCCQ-CSS and a +1.0 change on peak VO₂. These improvements may also been where KOLs cited their bar(s) for clinical meaningfulness. ACACIA fell a bit short on both.

A few things we’d note:

On KCCQ-CSS, while a placebo-adjusted difference of 3.0 may be smaller than expected, we’d note from the graph that: 1) the placebo response jumped at week 36 which is the time of primary analysis (probably unlucky), and 2) the separation of aficamten with placebo widened to 7.0 by week 72! Given the totality of the data, one could make the case that as patients take aficamten in real-world clinical practice (they won’t just take it for 36 weeks), the clinical benefit (both in KCCQ-CSS and peak VO₂) could become more pronounced with time.

Secondly, given that there are no other treatment options for nHCM (including surgery), we believe physicians will still prescribe aficamten to their nHCM patients even if the benefit is more modest.

Source: CYTK presentation

“Halo Effect” in oHCM?

CYTK management previously discussed a potential “halo effect” on the Myqorzo launch in obstructive HCM (oHCM) should ACACIA succeed in nHCM. They previously brought up +15-20% expected increase in oHCM prescribing, although on this morning’s call, management softened that stance and said that with ACACIA data on hand they would initiate more market research. We’ve not included any “halo effect” on oHCM from these results in our model and will wait for further guidance and/or conduct our own market research.

CYTK Valuation & Our Positioning

In our model, on the ACACIA readout we have reduced our risk discount on aficamten in nHCM to 15% (from 40%), raising our PT to $105 (from $85 previously). On a successful launch, we see non-risk adjusted peak aficamten revenue in nHCM of near ~$3.5 billion worldwide (WW) at ~40% peak share by 2036. Assuming BMY’s Camzyos fails to make it in nHCM despite another trial (announced during BMY’s 1Q26 earnings), or their clinical profile is poorer than aficamten’s, we think our estimates could prove conservative. On the competition front, we are also watching Edgewise Therapeutics (EWTX).

Going into the ACACIA results, we were long CYTK shares + July 65/85 call spread(s). The stock reaction was more muted than we expected. [Trade alert]: We have closed our 85 call(s) as part of the call spread for modest profit, and we’re maintaining our long position in shares and long 65 call(s) position. We may look to increase our position size over time.

Lastly, we think the ACACIA data puts CYTK acquisition potential back on the table. Recall, in early 2023, there was speculation that Novartis (NVS) had been in talks to acquire CYTK while the company was already valued at >$10 billion. We think NVS and the other Pharma could come back to the table. Also recall in 2020, BMY acquired MyoKardia for Camzyos (mavacamten) for $13.1 billion, a ~60% premium to MYOK stock from the previous day’s close - and this was before Camzyos was FDA approved for oHCM and only prospects of the nHCM indication.

Final Word

As our reader, we hope you have found our ACACIA preview helpful in advance of the readout and in navigating CYTK stock. We did a lot of work conducting our research and preparing our previews. If you did, please do us a favor and subscribe and share the word with others! Thanks in advance!

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Risks

Risks include: clinical, data, commercial, regulatory, competitive, and financing risks.

Disclaimer

The information provided by Lucent Ion LLC (“the Company”) is for educational and informational purposes only. It should not be considered financial, investment, or trading advice. All opinions expressed are personal views and are not guarantees of future performance. Investing involves risk, including the potential loss of capital, and past results do not indicate future returns.

Before making any investment decisions, you should conduct your own research or seek guidance from a licensed financial advisor. Neither the Company nor I are responsible for any financial outcomes resulting from actions taken based on the information provided.

By engaging with this content, you acknowledge and agree that you are solely responsible for your own investment choices.

Disclosures

As of the date of this publication, Lucent Ion LLC and/or its principals have beneficial positions in the following companies:

• Cytokinetics (CYTK): long

• All other companies mentioned in this report: none

The Company does not receive direct compensation from the companies listed above for this research. Our views are our own, based on publicly available information, and are provided for informational purposes only.

As a matter of policy:

• We do not trade in securities within 24 hours before or 48 hours after publishing research on those securities (the exception is when we announce Trade Alerts where we explicitly share what we’ve traded)

• We may buy or sell securities mentioned in our research at any time after this cooling-off period, without notice

• Trading decisions are made independently of our publications

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• We’ve added new features to our risk-adjusted net present value (rNPV) calculator that anyone can use to value a drug (or asset)

• As a reminder, we have two versions: Simple and Advanced

  • Our Simple version is designed for beginners, and includes a guide with definitions of key terms

• In Advanced mode, we now have 3 therapeutic modality settings: Small Molecule, Biologics, and Cell & Gene Therapy

  • We’ve added a toggle for incidence- and prevalence-based models to allow for differences in how chronic vs. curative/one-time treatments are modeled

  • We added an erosion period to reflect differences in the way the different modalities are impacted by generic erosion

  • We’ve added Save / Load Input feature to allow users to save their work for later use and/or send the inputs to others

• You can download your work to Excel, and it is free for anyone to use

Our risk-adjusted net present value (rNPV) calculator can be accessed HERE.

Disclaimer: We’ve created the rNPV investment tool that is intended for educational purposes only. It is not to be relied upon for any investment decision that the user makes. Please consult with a financial advisor before making any investment decision.

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New Features to the rNPV Calculator

We’ve worked hard to add new features to our risk-adjusted net present value (rNPV) calculator that provides more granularity & accuracy to the calculation and allows for more flexibility and ease-of-use. The model remains highly customizable. As a reminder, all of your work can be saved & downloaded into an Excel file1 for your continued work.

To see our original post with instructions on how the rNPV calculator works, click here.

Advanced (v1.2.2):

We now have 3 therapeutic modalities - Small Molecule, Biologics, and Cell & Gene Therapy

• Small Molecule - any small molecule

• Biologics - includes monoclonal antibodies, bispecific antibodies, antibody-drug conjugates (ADCs), etc.

• Cell & Gene Therapy (CGT) - includes autologous or allogeneic CAR-T cell therapies, tumor infiltrating lymphocyte (TIL) therapies, gene therapies & editing, etc.

• More are on the way!

The default settings in each of these modes are tailored to that class of drugs. However, they are not meant to be “one-size-fits-all” for all drugs in that category - each can (and should) be tailored to the user’s therapy of interest.

For example, there are significant differences between autologous and allogeneic cell therapies. Autologous cell therapies uses the body’s own cells to manufacture the cell therapy (i.e. CAR-T cells, TILs, etc.) and carry their own logistical challenges. Allogeneic cell therapies, on the other hand, offer a potentially more scalable solution, but may carry a higher risk of clinical success & approval. One can adjust those inputs in the calculator and tailor the rNPV to reflect those differences.

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• We added a toggle between prevalence vs. incidence-based models

  • Allows for differences in how chronic vs. curative/one-time treatments are modeled, particularly from CGT

    • Curative/one-time treatments are defaulted to an incidence-based model

    • Others default to a prevalence-based model

  • Terminal values (TV) are defaulted to (but can be toggled):

    • Small molecule mode: Exclude TV (due to generic erosion)

    • CGT mode: Exclude TV (given dynamics of curative therapies)

• We added an erosion period post-LOE (loss of exclusivity) that extends the last year beyond the last patent year to model generic erosion, which may differ between modalities

  • Erosion tail includes several input parameters:

    • Erosion period (years)

    • Year 1 revenue retained (%)

    • Annual decay rate (%)

    • Post-LOE operating margin (%)

    • Post-LOE tax rate (%)

  • Note: Terminal value (TV) can still be enabled when erosion period is included. However, the TV anchors to the final erosion-year of net cash flow (NCF), not the last patent year. The erosion period (years) can be adjusted to move the final erosion year.

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• We’ve added Save / Load Input buttons to allow users to save their work for later use and/or send the inputs to others (as .json file) (see the top figure)

Other Revisions in Advanced Mode:

• Revised how post-approval R&D and SG&A expenses are calculated. Added input to adjust post-approval R&D that is independent from pre-approval R&D.

  • R&D:

    • Initially, for simplicity, the pre- and post-approval R&D expenses were tied together as a % of total R&D budget which was estimated based on the input

    • Calculation is now:

      • Pre-launch = lifetimeRev x rdRate (phased by schedule)

      • Post-approval = revenue x rdPostRate

    • Post-approval R&D estimates should better reflect the true cost of ongoing commercial-stage research

  • SG&A:

    • Revised calculation so that steady-state SG&A expenses are more inline with industry benchmarks:

      • Steady-state SG&A = Peak Sales x SGA Rate x 100%

  • Excel sheet for download:

    • rNPV Build: Key inputs & formulas are updated to reflect the above changes to the rNPV Build tab to allow smooth transition for Claude.ai to rewrite the page with live formulas

    • Expense methodology tab is also updated to reflect the above changes

• Added a warning about selecting Approved for Development Stage and a positive number for Years to Approval that shows up when they are in conflict

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• Q1 2026 earnings is upon us. We provide a preview on upcoming earnings reports & milestones related to our universe, and include consensus estimates

  • KRYS - focused on ex-U.S. Vyjuvek launch execution and pipeline updates

  • CYTK - ACACIA trial for aficamten in nHCM is imminent; focused on early launch metrics for Myqorzo in oHCM

  • GH - with the negative panel vote from the Adcom panel regarding SERENA-6 in advanced breast cancer behind us, our focus returns to growth in its other areas of its business, notably the Shield launch in CRC screening

• We’ve initiated new positions recently - more on them in another post

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Q1 Earnings Season

Q1 2026 earnings season is upon us! Of relevance to our coverage (chronological order of earnings announcements):

Krystal Biotech (KRYS):

• Q1 2026 earnings:

  • Reports: Monday, May 4, 2026

    • Webcast at 5:30am PT / 8:30am ET (before market open) and can be accessed here

• Q1 Preview: Focus is on ex-U.S. Vyjuvek launch execution in dystrophic epidermolysis bullosa (DEB) and pipeline updates:

  • We may start to see ex-U.S. sales numbers for Vyjuvek: Recall in mid-February, KRYS noted that >90 patients have been prescribed Vyjuvek across Germany, France, and Japan. Assuming by end-Q1, that number has conservatively reached ~120 treated patients (and maybe ~2 vials/pt this early in the launch), we could see ~$1-2M to start (not all may be reimbursed). It was noted in March at an investor conference that pricing negotiations with Germany could finalize in ~Q3 (France to come in 2027), and that the total rest-of-world (ROW) Vyjuvek sales opportunity could be greater than in the U.S. We expect U.S. Vyjuvek sales to grow modestly to ~$112M (+5% q/q), but we’re not expecting a huge step up off the strength in 4Q25 ($107M, +10% q/q).

  • On pipeline, we’re paying attention to their tone on upcoming catalysts & incremental updates: We continue to expect throughout 2026 for KRYS to share: 1) a path forward for KB407 in CF and CORAL-3 study details in H1, and 2) trial design details for KB801 in NK and KB803 in ocular DEB to be shared when the registrational trials has completed enrollment (topline data ~YE 2026). We would honestly like to hear more of how the Jeune Aesthetics subsidiary is doing.

  • Q1 estimates:

    • We anticipate total Vyjuvek sales of ~$113.5M

      • $112M in U.S. and ~$1.5M ex-U.S.

    • Consensus1: Sales $112M; EPS (GAAP): $1.49/sh

• We maintain our long position in KRYS. Stock is likely in a holding pattern between ~$240-290 until the next major clinical de-risking event (~YE 2026), assuming the ex-U.S. Vyjuvek launch is progressing as planned.

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Cytokinetics (CYTK):

• Q1 2026 earnings:

  • Reports: Tuesday, May 5, 2026

    • Webcast at 1:30pm PT / 4:30pm ET (after market close) and be accessed here

  • Q1 Preview: Q1 2026 will be the first quarter of launch of Myqorzo (aficamten) in obstructive HCM (oHCM) and competing against BMY’s Camzyos. Management comments at the recent Needham conference suggests that initial launch metrics are going well. Interestingly, BMY’s Q1 2026 results showed that Camzyos sales were down sequentially ($314M sales WW, -11% q/q), potentially due to entrance of CYTK’s Myqorzo into the oHCM market.

    • Topline Phase III ACACIA Results for Aficamten in Nonobstructive HCM is Still Expected in Q2: We expected April - given that they completed ACACIA enrollment at end-1Q25 + 9-month endpoint + 2-3 months for data analysis - but it seems like it could be May. We sense some market angst on what seems like a delay. To be fair, CYTK management has been clear & consistent that the data is coming in Q2, and the April estimate is our error. We hold CYTK shares + July 65/85 call spread to capture the ACACIA event - we will examine our position & adjust accordingly depending on how the overall data looks.

      • We saw on X that the ACACIA protocol actually requires 200 patients to reach 52 weeks before triggering the primary analysis, which would explain why the data hasn’t been released yet. We haven’t been able to corroborate this and it doesn’t appear in the ACACIA trial design presentation, so it has to be taken with a grain of salt.

    

    • As a side note, during BMY’s Q1 2026 earnings call, management noted that they would be initiating a “new, more focused study in non-obstructive HCM” - to be detailed on Clinicaltrials.gov. To us, this shows that BMY sees enough promise of CMI’s in nHCM to take another shot, despite challenges seen in ODYSSEY.

    • Q1 estimates:

      • Consensus: Revenue: $8.6M; EPS (GAAP): ($1.65)/sh

• We maintain our long position in CYTK, and we look to the imminent ACACIA results in nHCM and we will re-evaluate our position post-data.

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Guardant Health (GH):

• FDA Adcom Panel Voted Against Supporting Approval for AZN’s camizestrant / Guardant360 CDx in SERENA-6 under New Paradigm of Switching 1L Breast Cancer Patients to Camizestrant Upon Detection of ESR1 Mutation:

  • While the panel remained excited about the prospects of molecular detection of known mutations such as ESR1 mutation that could enable switching treatments earlier than radiographic progression, they were unable to say whether the SERENA-6 trial, the way it was designed, answered the question of whether it demonstrated clinical benefit to patients (i.e. PFS2). The panel voted 3 Yes and 6 No.

  • There were no criticisms of Guardant360 companion diagnostic (CDx) itself as a test, as it performed precisely the way it was supposed to in the trial

  • While the outcome is disappointing, this contribution to GH’s future earnings is incremental and we remain focused on its other areas of business.

• Multi-Year Strategic Collaboration with Nuvalent (NUVL) Announced to Develop CDx and Support Potential Commercialization of Target Cancer Therapies using the GuardantInfinity Platform: This morning, GH announced this multi-year global collaboration to leverage their tissue and liquid biopsy portfolio to support clinical development and CDx strategies. We think this is a positive for both companies and good validation of GH’s Infinity platform to develop new CDx strategies. No financial terms were disclosed.

• Q1 2026 earnings:

  • Reports: Thursday, May 7, 2026

    • Webcast at 1:30pm PT / 4:30pm ET (after market close) and be accessed here

  • Q1 Preview: On the heels of a negative FDA Adcom panel vote today, we think GH went through a valuation reset from the January highs. To reiterate, our GH thesis is focused on the successful launch of its Shield assay in colorectal cancer (CRC) screening. We’re optimistic that we will see continued momentum in the launch when they report Q1 earnings. Recall, in 4Q25, GH reported 38k Shield tests (+58% q/q). Our quarterly estimates are still under review, but to recap we’re conservatively expecting GH to sell ~226k Shield tests for FY 2026, implying a quarterly run rate of ~56k tests/qtr. As a high growth name, the Iran War remains a wild card.

  • Q1 estimates:

    • Consensus: Revenue: $279M; EPS (GAAP): ($0.81)/sh

• Competitor NTRA is also reporting their Q1 2026 earnings results on Thursday, May 7, 2026 (webcast after market)

• We maintain our long position in GH. As we’ve shared recently, we increased our position size over the past several weeks on stock weakness, and so long as our thesis still holds we are prepared to add more if the weakness persists.

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• The FDA expressed uncertainty whether AZN’s SERENA-6 results demonstrate overall favorable benefit-risk for patients upon detection of ESR1 mutation (by Guardant360 CDx), leading to GH stock weakness

• The Adcom panel of specialists convenes on Thursday, April 30 to discuss

• While disappointing, this should remove an overhang from GH stock and we remain focused on the Shield assay launch in colorectal cancer (CRC) screening - the largest driver of our valuation

• We previously estimated ~$200M in peak potential sales from the SERENA-6 paradigm, if approved. We’ve removed those sales from our model (out of ~$5B in peak potential sales across GH’s portfolio).

• Our PT moves incrementally to $145 (from $150).

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FDA Expresses Doubt of Clinical Benefit from AZN’s Camizestrant in Advanced Breast Cancer

The FDA briefing documents regarding AZN’s camizestrant in the SERENA-6 clinical trial for ER+/HER2- advanced breast cancer were released this morning. Recall, SERENA-6 is AZN’s clinical trial investigating camizestrant (next-gen oral SERD) under a new paradigm in which it used once an ESR1 mutation (ESR1m) is detected through Guardant360 companion diagnostic (CDx), rather than wait until radiographic progression.

While SERENA-6 met its primary endpoint of improved progression-free survival (PFS) (adjusted HR 0.44, p<0.00001) and the results were greeted with favorable physician reception at ASCO 2025, in the briefing documents the FDA expressed uncertainty whether SERENA-6 results demonstrate overall favorable benefit-risk for patients upon detection of ESR1m, leading to GH stock weakness (on top of general market weakness in the tools/diagnostic space). To remind, the Adcom panel meets to discuss this on Thursday, April 30.

The FDA briefing document can be read here (conclusion on pg 65). To briefly touch on their arguments:

• While SERENA-6 met its PFS endpoint, the FDA disagrees with AZN that PFS in SERENA-6 is like PFS in other trials for HR+/HER2- advanced breast cancer given that it used a new start time for PFS (upon ESR1m detection vs. standard radiographic progression), complicating the interpretation.

• The FDA disagrees that PFS2 (second progression) is an interpretable measure of clinical benefit. This is in part because SERENA-6 did not allow crossover to camizestrant and a CDK4/6 inhibitor after radiographic progression on the control arm (we think this is a fair point). Subsequent therapy was at the investigator’s discretion and followed internationally recognized guidelines. As a result, there were imbalanced comparisons for PFS and PFS2 in the number of new treatment regimens.

• The FDA believes overall survival (OS) data could help overcome some uncertainties, but the OS data was immature at the time of filing (favorable trend observed at HR=0.87) and will not be available until 2028. Furthermore, SERENA-6 was not powered to detect an effect on OS, and so there is concern that a stat sig benefit may not be reached.

We understand that SERENA-6 had a novel and perhaps unconventional design. We sense a general fear from the FDA regarding this new paradigm - fear that future drug development could adopt it for clinical trial design, potentially introducing early treatment switches without clear evidence of benefits. To show this, the FDA proposes designing a trial where switching treatment early at ESR1m detection is beneficial compared to switching at radiographic progression. Whether that would mean AZN restarting the trial remains to be seen - we will have to see how the Adcom panel feels about the current data.

While the FDA’s stance on SERENA-6 is disappointing for the outlook of this new paradigm, we’d note the following:

1. The Adcom meeting is on Thursday, April 30. The Adcom is a panel of specialists that may disagree with the FDA’s assertion and vote in favor of this new paradigm. If it does, the FDA can and will sometimes follow the panel’s recommendations;

2. We’re not banking on this scenario - our base case now is that this new paradigm will not be accepted at first pass, even if the Adcom votes in favor. But with expectations now out of the stock, a favorable vote and/or approval represents a potential upside scenario;

3. The SERENA-6 paradigm for Guardant360 was always “icing on the cake” for us in our valuation, with the primary driver being its Shield assay in colorectal cancer (CRC) screening where we think they could achieve $1.5B in peak sales by 2036.

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Modeling changes

We’ve said if AZN’s camizestrant could be approved, GH could optimistically see revenue of ~$200M at peak given the new treatment paradigm. We’ve removed this from our model and our PT incrementally moves to $145 (from $150). We remain focused on the Shield launch in CRC screening and we’re optimistic GH will report continued positive momentum when they report earnings next week.

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Risks

Risks include test performance, data, regulatory, guideline, agency, payer, commercial, and competitive risks.

Disclaimer

The information provided by Lucent Ion LLC (“the Company”) is for educational and informational purposes only. It should not be considered financial, investment, or trading advice. All opinions expressed are personal views and are not guarantees of future performance. Investing involves risk, including the potential loss of capital, and past results do not indicate future returns.

Before making any investment decisions, you should conduct your own research or seek guidance from a licensed financial advisor. Neither the Company nor I are responsible for any financial outcomes resulting from actions taken based on the information provided.

By engaging with this content, you acknowledge and agree that you are solely responsible for your own investment choices.

Disclosures

As of the date of this publication, Lucent Ion LLC and/or its principals have beneficial positions in the following companies:

• Guardant Health (GH): long

• All other companies mentioned in this report: none

The Company does not receive direct compensation from the companies listed above for this research. Our views are our own, based on publicly available information, and are provided for informational purposes only.

As a matter of policy:

• We do not trade in securities within 24 hours before or 48 hours after publishing research on those securities

• We may buy or sell securities mentioned in our research at any time after this cooling-off period, without notice

• Trading decisions are made independently of our publications

  Leave a comment

• We used Claude.ai to help us build an easy-to-use risk-adjusted net present value (rNPV) calculator that anyone can use to value a drug (or asset)

• We’ve created two versions: Simple and Advanced

• Our Simple version is designed for beginners, and includes a guide with definitions of key terms

• In Advanced mode, you can enter asset parameters, assumptions for peak sales, expense assumptions, approval probability, and whether you want to include a terminal value (TV)

• You can download your work to Excel

• It is free for anyone to use

Our risk-adjusted net present value (rNPV) calculator can be accessed HERE.

Disclaimer: We’ve created the rNPV investment tool that is intended for educational purposes only. It is not to be relied upon for any investment decision that the user makes. Please consult with a financial advisor before making any investment decision.

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1.1 Why Build Your Own Model

Well-built financial & market models is a key pillar in making a sound investment decision or business transaction. It is a critical step in the process of trying to understand the “value” of a particular asset, drug or company. The “value” is subject to debate, for sure, but that does not mean it is not useful to do the work to come up with your best estimate for what you think it is worth. We use rNPV and DCF models regularly to justify the investments in our portfolio.

Yes - you can ask AI to simply run an rNPV or DCF for you for any asset or company, respectively. But it’s also important to know & understand what assumptions it is using to arrive at their conclusions. We’ve tried it ourselves - but we find oftentimes that it uses assumptions that do not any make sense. It often lacks context. And you have to double-check all of its work.

To that end, we used Claude.ai to create an easy-to-use risk-adjusted net present value (rNPV) calculator. The distinction here is that you drive the parameters with our calculator, guided by the guardrails that we’ve set based on our many years of Street experience. Further iterations and improvements will follow.

More Art than Science

Investors & analysts have a saying that modeling is more an art than a science. Discounted cash flow (DCF) / net present value (NPV) analysis is arguably the most robust approach compared to ratios,1 particularly for small- and mid-cap biotech, but it has its flaws - it is sensitive to your assumptions (garbage-in, garbage-out), and your projections on the future go out 10+ years (who knows what happens then). We often joke that an analyst can make any price target they want just by toggling a few assumptions, accompanied by some loose justifications.

Yet - we all still use them.2

That is because despite all its flaws, it can you give you a good ballpark of an asset’s value given reasonable assumptions. You can understand where the pushes and pulls are in the DCF / NPV, and where those assumptions escape the boundaries of reason. You know when the stock price just gets silly.

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2.1 How the Calculator Works

We’ve created two rNPV calculators, depending on one’s level of expertise: 1) Simple, and 2) Advanced. We’ve designed both of them to be intuitive to use. If you’re a beginner, we recommend starting with the Simple version first, and then move to the Advanced version when familiar & comfortable. The Simple version contains a guide and has many key terms explained, and is designed as a learning tool.

At the moment, the calculator is built for drugs with a small molecule profile - i.e. high gross margins, high generic erosion after patent life (no terminal value), etc. Over time, we will build profiles for all therapeutic modalities, such as cell & gene therapies, which have very different profiles. The calculator is currently customizable, so you can enter any value for any parameter that you want to fit your modality.

What is an rNPV? Net Present Value converts future cash flows from projected profit of a drug or asset into today’s dollars. A dollar earned in 10 years is worth much less today because of inflation, uncertainty and opportunity cost. The risk-adjusted net present value (rNPV) is the expected value of a drug's future profits, discounted to today and multiplied by the probability it ever gets approved (approval probability).

Asset Parameters

Enter the following:

• Drug / Asset Name - Drug or asset name

• Disease Indication - Disease indication you are modeling for the drug

• Discount rate (%) - Weighted cost of capital (typically between ~9-14% for smid-cap biotech). Higher rates penalize distant cash flows more severely.

• Patent Life (Years) - Post-approval commercial life

• Years to Approval - Time (in years) from today to launch

• Launch Ramp (Years) - Years to reach peak sales

Peak Sales Builder

Enter the following:

• Addressable Patients and the expected Annual Growth rate (%) - Addressable patient population eligible for your drug of interest, net of all subpopulation cuts and lines of therapy

• Market Penetration (%) - Peak share assumption of addressable patients taking your drug. The calculator uses this input and your input for Launch Ramp (Years) to determine your launch trajectory.

• Net Price ($/yr) and the expected Annual Growth rate (%) - Net price assumption per year for your drug, and expected annual growth rate. For simplicity, we’ve left out inputs for gross price and gross-to-net (GTN) adjustments, because net price is what the companies will realize as revenue.

The calculator assumes an S-curve launch ramp and its trajectory will be determined by your inputs on Launch Ramp (Years) and Market Penetration (%).

Expense Assumptions

Enter the following:

• Costs of Goods Sold (COGS) at Launch and at Maturity (as % of Revenues) - There are two inputs: COGS as a % of revenue at Launch and at Maturity. At default, we assume 15% of revenue at launch, declining linearly to 4% by end of the ramp, but this can be highly variable depending on the drug modality. We assume manufacturing costs fall as production scales up.

• R&D (pre-launch) expenses - Total R&D budget is set as a % of cumulative lifetime revenue, and reflects the standard biopharma convention of sizing R&D investment relative to the commercial opportunity. We set 90% of the budget dedicated to pre-launch expenses. We assume 10% of projected lifetime revenue at default, phased across development years. The bulk of the expenses is reserved for the final pre-approval years (for Phase III trials and filing).

• R&D (post-launch) expenses - Covers the lifecycle studies and label extensions. For simplicity, it is calculated as 10% of the total R&D budget, spread throughout the commercial period. We will make this assumption customizable as it may be highly variable (for example, if a Phase IV post-marketing study is carried out).

• SG&A expenses - Modeled as a % of peak sales, reflecting that salesforce & marketing costs are set based on expected commercial opportunity. We assume 25% of peak sales as a base, front-loaded around launch (peaks at 80% of base in Year 1 and tapering to ~27% at maturity).

• Tax expense - We assume a Corporate Tax rate of 21% (U.S. statutory rate) on each year’s pre-tax net cash flow, but it is adjustable and only applies to the profitable years. We include net operating losses (NOLs) to account for accumulated losses during development, which companies use to offset against early post-launch profits. Enter an assumption on the length of the NOL period where we assume 0% tax, which then jumps to the full statutory rate.

Approval Probability

Select one of the following:

• Use Phase Benchmark - Success rate from the current stage to FDA approval, and uses industry historical rates by stage. Only ~10% of Phase I drugs ultimately receive approval — most drugs fail in trials.

OR

• Enter Custom Estimate (0-100%) - You can override the benchmark with your own assumption of approval success. 100% probability represents a drug that is already FDA approved.

Terminal Value (TV)

The calculator uses the Gordon growth model to determine the Terminal value (TV). The TV is added to your sum of discounted cash flows to arrive at your net present value. Select between:

• Exclude Terminal Value - TV can be excluded for small molecules where once the primary patent(s) protecting the drug expire, generic(s) can enter the market, leading to sharp erosion of market share from the branded drug

OR

• Include Terminal Value - TV can be included for other therapeutic modalities, such as certain gene & cell therapies, where even following patent expiry the manufacturing of the branded drug is complex and the likelihood of a generic version entering the market and competing with it is extremely low.

If you choose to include a TV, it will take two of your assumptions for the calculation: 1) the discount rate (%) or r, and 2) the terminal growth rate (%) or g. Be careful that at times, the TV can be greater than the sum of your discounted cash flows, and is sensitive to your assumption of terminal growth rate. If we include a TV, we may use a negative growth rate (i.e. -2%) to reflect the fact that even without generic competition, the share of the branded drug could still erode over time as new branded competitors enter the market.

Export to Excel

You can save all of your work and download the (raw) data as an Excel sheet using the button at the bottom of the page. For a .png file of the graph, click on the ‘Download Chart png’ button next to it.

The ‘rNPV build’ tab has the same data as the ‘Cash Flows’ tab but it is laid out in a style that’s similar to sell side models.

We note that when the Excel sheet is downloaded, it can only download the numerical values. To formularize the cells, one needs to open Excel with Claude integration enabled, and ask it to rewrite specific sheets with live formulas (you can also send it to us, and we’d be happy to do it for you and send it back). This would make the Excel sheet the most useful because it is how the Street generally lays out their models.

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3.1 Our Calculator is Free to Use

For the time being, our rNPV calculator is free for everyone to use. If you find value in it, please show your support by forwarding the tool to others & becoming a subscriber (and invite others to subscribe)! We will use any proceeds to continue developing new & useful tools and to fund our continued research.

We welcome feedback! We’d love to hear your comments. We intend to continue to tweak the calculator and add further functionality.

Our risk-adjusted net present value (rNPV) calculator can be accessed HERE.

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• ABEO → KRYS (Vyjuvek in DEB): ABEO provides FY 2025 financial updates & highlights operational progress for Zevaskyn

  • 1 RDEB patient treated in 2026 so far; more to be treated in the pipeline. 5 QTC’s activated; target 7 by YE 2026

  • Need to reach ~3.5 treated pts/mo to reach “zone of profitability”

• BEAM → KRYS (AATD program): BEAM-302 shows promising proof-of-concept for in vivo base-editing in AATD

  • Single dose of BEAM-302 at 60 mg led to durable levels of total AAT, with all patients consistently crossing the protective >11 µM threshold

  • 60 mg the selected go-forward dose; pivotal trial planned start in H2 2026

• Policy → GH: Diagnostic names noticeably weak; we think concerns around the CRUSH RFI initiative may be culprit

  • CRUSH is part of a broader initiative to expand fraud detection & enforcement, and payment controls, including from genetic / molecular tests

  • Timing remains uncertain; even if implemented, stricter enforcement may benefit field in the long run by removing bad actors

  • We think GH’s Shield assay in CRC screening impact is low (primary driver of our thesis), because: 1) Shield is fully FDA approved, and 2) Medicare coverage is already established

  • We continue to add to GH on recent weakness

• We continue to await CYTK’s ACACIA read-out in Q2 (we expect ~April)

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What’s Happened in Biopharma (3/15-4/10):

Impact to Our Coverage Universe

ABEO → KRYS

• Abeona (ABEO) Provides FY 2025 Financial Updates & Highlights Operational Progress for Zevaskyn: ABEO continues its efforts to scale Zevaskyn, its one-time autologous cell sheet-based gene therapy for treatment of severe RDEB wounds. We’re watching ABEO closely given Zevaskyn is marketed in the same disease area as KRYS’ Vyjuvek.

  • Some FY/Q4 2025 call highlights:

    • Since resuming manufacturing in late January, they’ve treated 1 patient with Zevaskyn in 2026

    • Biopsied 3 additional patients with treatment scheduled over coming weeks - expect to perform additional biopsies this month

    • Know at least 10 RDEB pts going through administrative process, targeting 2Q biopsy (across 4 active QTC’s)

    • Now >100 identified eligible RDEB pts (up from 50)

    • 4 QTC’s activated (5th QTC activated recently in NY) - goal is to get to 7 active QTC’s by YE 2026

    • Active centers treating ~1-2 pts/mo. Need to get to ~3.5 treated pts/mo or more to reach “zone of profitability”

  • Implications on RDEB Landscape: ABEO continues to push forward with their operational scale-up of Zevaskyn. As a complex autologous ex vivo gene therapy, scaling is hard and takes time. We’d remind that in June 2025, ABEO was expecting to treat 10-14 RDEB patients in H2 2025 - and reality is they only treated 1 patient, disappointing the Street. Sellside numbers will likely continue to have to come down (for the near-term). But with now 5 QTC’s activated with a target of 7 by YE 2026, we could start to see Zevaskyn start to ramp. We’re continuing to monitor this name.

    • From a competitive standpoint to KRYS’ Vyjuvek, given Zevaskyn is primarily reserved for large, severe and chronic RDEB wounds only (not approved in DDEB),1 we don’t necessarily see a lot of overlap. In fact, we’ve argued that we think Vyjuvek and Zevaskyn could be complementary in the market. But even with severe RDEB wounds, we think Vyjuvek’s profile is preferable among patients and may be tried before autologous gene therapy which takes months from Rx to treatment.

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BEAM → KRYS

• Beam Therapeutic’s (BEAM) BEAM-302 Shows Promising Proof-of-Concept for In Vivo Base-editing in AATD: At end-March, BEAM provided a clinical update from BEAM-302 in alpha-1-antitrypsin disease (AATD) (see BEAM presentation). To refresh, BEAM-302 is their potential one-time in vivo base-editing genetic medicine, correcting the E342K mutation causing AATD from A → G into the corrected SERPINA1 gene. The update provided a strong clinical proof-of-concept that in vivo base editing is feasible. What was key to us was that treatment with single dose of BEAM-302 (at 60 mg) led to durable levels of total AAT (steady-state mean of 16.1 µM), with all patients consistently crossing the protective >11 µM threshold, and the accepted surrogate for clinical benefit in AATD. Corrected M-AAT (corrected/wild-type) was 94% of total AAT, and Z-AAT (mutant) was reduced by 84%. Interestingly, they showed in one patient with a respiratory infection that AAT was inducible to ~30 µM and retained ~95% M-AAT.

Source: BEAM presentation

• Pivotal Cohort Planned Start in H2 2026 at 60 mg Dose Level: Per the slides above, the optimal AAT changes vs. baseline were at the 60 mg dose, with no additional benefit at the 75 mg dose. BEAM intends to continue enrollment in Parts A (AATD lung disease, with dose escalation & expansion) and B (AATD liver disease +/- lung disease, with dose escalation) at the 60 mg dose level. These data should inform Part C (AATD lung disease +/- liver disease) which will be the pivotal cohort planned to start in H2 2026. This pegs potential BEAM-302 approval ~2028. Primary endpoint is expected to be based on AAT biomarkers over 12 mo. U.S. sites are now activated.

• Promising Proof-of-Concept, But Questions Remain: We view the BEAM-302 as promising - 16 uM steady-state level achieved for total AAT is notable, achieving near-saturation-level editing. We’d first note that the n is small (n=26 across Parts A & B, plus n=3 for multi-dose cohort), particularly at the go-forward dose (60 mg) in pivotal trials. While the AAT biomarker data is strong and an accepted surrogate, we need to see BEAM-302’s impact on clinical outcomes (i.e. FEV1 for lung, fibrosis scores, for liver, etc.). We’re also encouraged that patients consistently crossed the protective >11 µM threshold in the serum, but what are the AAT levels in the epithelium lining fluid (ELF)? While not a dealbreaker if absent, ELF data would confirm that newly produced & functional M-AAT is reaching the lung and neutralizing the elastase where damage occurs.

• Safety is Promising: Single-dose treatment with BEAM-302 appears favorable. In the multi-dose cohort, high transaminase elevations were observed following the second-dose of BEAM-302 with one Gr4 ALT / Gr3 AST, and one Gr2 ALT. Patient was asymptomatic, and resolved without treatment. These leads to questions about redosability, but BEAM intends to move forward with a single-dose at 60 mg in the pivotal study. We need to see additional data regarding off-target editing, vector persistence, and comprehensive immunogenicity.

• Implications on KRYS’ AATD Program - Both Programs Still in Early Stages: Recall that KRYS is developing KB408 for AATD lung disease, an inhaled (nebulized) formulation of their proprietary HSV-1-based vector that delivers 2 copies of the SERPINA1 transgene encoding full-length & functional AAT protein. We note that KRYS and BEAM have very different approaches despite both being genetic medicines. BEAM’s approach hopes to address both the liver and lungs of the disease, where KRYS’ inhaled approach focuses on the lungs.

  • Recall that at the J.P. Morgan conference 2026 in January, KRYS noted that KB408 is part of their ‘Expanded pipeline’ which they are advancing but also hope to find a partner (vs. their core ‘Rare disease pipeline’). We think this is the right move for KRYS. We currently do not include KB408 for AATD lung disease (our thoughts discussed briefly here) in our KRYS valuation, and represents upside.

We maintain our long position in KRYS, and are awaiting key clinical de-risking events (i.e. KB801 in NK towards YE 2026, etc.).

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Diagnostics Names “CRUSHed”

Policy initiative → GH

• CRUSH RFI Policy Initiative Crushes Diagnostic Names: The diagnostic space has been noticeably weak recently, including Natera (NTRA) and Guardant Health (GH). We didn’t see any company-specific news, but we think concerns around the CRUSH RFI (Comprehensive Regulations to Uncover Suspicious Healthcare) early-stage policy initiative2 from the Centers of Medicare & Medicaid Services may be the culprit as part of a broader initiative to expand fraud detection & enforcement, and payment controls. NTRA and GH are impacted given their presence in genetic / oncology diagnostics.

• Timing to Becoming Policy is Uncertain, But Even if Implemented Stricter Enforcement May Benefit the Field in the Long Run: We’d first mention that the CRUSH RFI initiative has been known for some time now, and that RFI (request for information) is not yet a rule - right now, CMS will be collecting input from laboratories, providers and insurers. On timing, if this moves forward, we’d estimate a proposed rule3 by YE 2026 and final rule in H2 2027. Our early read suggests that the initiative is targeting fraud, waste & abuse in high-cost billing areas, potentially making reimbursement more difficult & raising compliance costs for the field. We remind that NTRA and GH have FDA approved tests supported by clinical evidence and guideline inclusion. Strong clinical evidence (in diagnostics & therapeutics) forms the basis of any investment we make. We take the stance that stricter enforcement in the long run will help remove smaller (& fraudulent) genetic testing players, fortifying NTRA and GH’s positions in this space.

  • We reiterate that the primary driver of our $150 PT for GH is their Shield assay growth for colorectal cancer (CRC) screening. Our CRC screening thesis has not changed by CRUSH, because:

    • Shield is fully FDA approved as a primary screening test for CRC,

    • Medicare coverage of the assay is already established,

    • Shield addresses an under-screened population

  • We’ve Added to Our GH Shares on Recent Weakness: Overall, we’ve added +30% to our initial GH position from fall 2025.4 Admittedly, our timing for initiating GH coverage could have been better - but we view current levels as attractive. We’ll continue to monitor the CRUSH situation and (re)act accordingly. The Iran War remains a wildcard, as it disproportionately impacts high-growth names.

  • Upcoming events relevant to GH include:

    • FDA Adcom meeting for AZN’s camizestrant (and Guardant360 CDx) for ESR1 mutant advanced breast cancer (April 30),5 and

    • Q1 2026 earnings (~May) (key event for Shield growth numbers & earnings)

We maintain our long positions in GH & NTRA, and we have added to GH.

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• To recap at high level, we think ACACIA could be positive given:

  • 1) aficamten’s profile could allow more patients to reach more effective doses faster; and

  • 2) its trial & statistical design could increase its chance of showing benefit

• We have a long position in CYTK (shares + call spread) into ACACIA readout

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2.2.1 ACACIA Design Allows for Higher Drug Exposure than in ODYSSEY

Given aficamten’s profile and ACACIA’s titration protocol, we think more patients will be at higher therapeutic doses of aficamten than patients in mavacamten’s ODYSSEY trial, which could translate to a greater delta in clinical effect between the active vs. placebo arms. There are several aspects to this thesis:

• Aficamten’s Attributes Allow ACACIA to be Designed so Patients Can Reach Maximum Dosages Sooner: Aficamten has a shallow exposure / response relationship which allows for more gradual and predictable LVEF changes over a wide range of doses with a half-life that enables dose adjustment every 2 weeks. These attributes allow ACACIA to be designed so patients can reach maximally tolerated doses sooner. So, in ACACIA, one can reach maximum dose of aficamten in 6 weeks in this 36-week trial, vs. mavacamten in ODYSSEY which takes 24-36 weeks to reach maximum in a 48-week trial (Figure 2). Comparing exposures at the highest dose levels, this implies ~30 weeks of aficamten exposure (at 20 mg) vs. only ~12-24 weeks for mavacamten (at 15 mg), respectively. In ODYSSEY, the long titration may have led to less-than-optimal benefit and high placebo effect (in KCCQ-CSS).

• In ODYSSEY, the LVEF Criteria for Dose Down-Titration / Interruption May Have Been Too Strict: Dose titration / interruption criteria and contributed to less-than-optimal dosing in ODYSSEY (see Table 5 for details). In ACACIA (vs. ODYSSEY), patients do not have to down-titrate until LVEF <50% (vs. LVEF <60%) or interrupt their dose until LVEF <40% (vs. LVEF <50%) (which is rare on aficamten). Even if patients do interrupt, they can resume the next lower dose level faster at least 1 week (vs. at least 4 weeks). There is also no protocol for permanent discontinuation for aficamten, compared to ODYSSEY when LVEF ≤30% which occurred in 7 patients (2.4%) on mavacamten that permanently discontinued.

• Aficamten Trials had Lower Dose Interruption / Discontinuation Rates than ODYSSEY: In ODYSSEY, 19.8% of patients had adverse events (AEs) that led to dose interruption (14.6%) / discontinuation (5.2%) of mavacamten, which is quite high. For aficamten in REDWOOD-Cohort 4, that rate was only 2.5% (all interruptions; no patients discontinued treatment owing to AEs during the study). Furthermore, most patients from REDWOOD-Cohort 4 continued into the long-term FOREST-HCM study (34/41).^[1] In FOREST-HCM, only two new cases or 5.9% of LVEF <50% occurred in the study, and both cases demonstrated reversibility after down-titration or short interruption.

• Net Effect is that Most Patients in ACACIA Should Get to Higher Active Doses, Which Could Translate to Improved Clinical Impact: We can compare the distributions of the doses patients were on between mavacamten and aficamten from published trials (Figure 2). In ODYSSEY, only 21.5% of patients were at the 15 mg (maximum) dose of mavacamten by Week 48. In fact, ~40% of patients were at the starting dose level of 5 mg or lower of mavacamten. In FOREST-HCM for aficamten,^[2] 76.6% of the patients were able to get to the highest doses of 15 and 20 mg of aficamten (17.6% and 58.8%, respectively). Only 12% remained at the starting dose of 5 mg at Week 96 (and no protocol to go lower). So, we could see a distribution of more patients at higher active doses of aficamten in ACACIA, which could translate to improved clinical impact.

Figure 2. Schematic of dose titration timelines in the ODYSSEY (mavacamten) and ACACIA (aficamten) clinical trials:

Source: ODYSSEY: Desai, M. Y. et al. N. Engl. J. Med. 2025, 393, 10, 961-972 (Protocol).

ACACIA: Masri, A. et al. Heart Failure Society of America (HFSA) Annual Scientific Meeting, 2023, and CYTK earnings calls

Cross-trial comparisons should be made with caution.

Table 5. Comparison of titration protocols between ODYSSEY, ACACIA and other aficamten trials:

* If baseline LVEF is > or =65%

** If baseline LVEF is > or =60% and <65%

Source: ODYSSEY: Desai, M. Y. et al. N. Engl. J. Med. 2025, 393, 10, 961-972 (Protocol).

ACACIA: Masri, A. et al. Heart Failure Society of America (HFSA) Annual Scientific Meeting, 2023, and CYTK earnings calls

REDWOOD Cohort 4: Masri, A. et al. Journal of Cardiac Failure, 2024, 30, 1439-1448.

FOREST-HCM: Masri, A. et al. Journal of Cardiac Failure, 2025, 00, 1-5.

Cross-trial comparisons should be made with caution.

Other Supportive Datapoints

There are other datapoints from REDWOOD Cohort 4 and FOREST-HCM that are supportive of aficamten’s clinical profile in nHCM:

• In FOREST-HCM, ~80% of Patients Improved in NYHA Functional Class of at Least 1 Class: Improvement by at least one New York Heart Association (NYHA) functional class represents a clinically meaningful reduction in heart failure symptoms. In FOREST-HCM for aficamten, 79.4% (27 of 34 patients) improved in NYHA functional class by at least 1 class at 96 weeks, which is further improved from 55% in REDWOOD Cohort 4. The FOREST-HCM authors noted that a typical placebo effect across all studies is ~30-40%, so 79.4% is meaningful. In contrast, only 36.3% of patients in ODYSSEY showed the same improvement vs. placebo at 31.6% - implying little change from mavacamten.

• Many Patients Became Asymptomatic on Aficamten Portending a Favorable Outlook for the KCCQ-CSS Endpoint in ACACIA: In FOREST-HCM, of the 79.4% (27 patients) who improved in NYHA functional class by at least 1 class on aficamten, 74.1% (20 patients) became asymptomatic (or 58.8% out of the total n of 34). This effect was observed even in REDWOOD Cohort 4 at only 10 weeks (29%). This is distinct from mavacamten, where there was no mention of patients becoming asymptomatic in ODYSSEY in the NEJM publication. We think this portends a favorable outlook for quality-of-life in KCCQ-CSS endpoint for ACACIA, which measures symptom frequency & burden.

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2.2.2 ACACIA is More Conservatively Powered to Hit on Moderate Differences vs. Placebo

The second reason for our optimism on ACACIA is that the trial is statistically well powered to hit even on moderate differences in its endpoints. To recap, the trial size of ACACIA-HCM was increased to 516 patients (from 420) to maintain 90% power to show a KCCQ-CSS change of 5 points (standard deviation or SD of 15) and peak VO₂ of 1.0 (SD 3.0) compared to placebo as dual primary endpoints. The alpha is split to 0.025 for each endpoint. ACACIA assumes a 10% discontinuation rate.

Our thesis relies on 2 assumptions:

1. Mavacamten’s effects in ODYSSEY, despite missing statistical significance, are real and not due to chance (setting aside the debate if the changes are clinically meaningful). We think this is the right assumption given that many of the endpoints and subgroup analyses trended in the drug’s favor;^[3]

2. Given we think more patients should be at higher therapeutic doses in ACACIA with potentially lowered placebo effect (see Section 2.2.1), the clinical impact of aficamten could be greater (i.e. >2.7 and 0.47 placebo-adjusted changes by mavacamten on KCCQ-CSS and peak VO₂, respectively)

Reviewing the Statistical Designs

Summary in Table 7:

Table 7. Summary of statistical designs of ODYSSEY and ACACIA:

*Estimated n per arm. Assumes 10% discontinuation rate

Source: ODYSSEY: Desai, M. Y. et al. N. Engl. J. Med. 2025, 393, 10, 961-972 (Protocol).

ACACIA: Masri, A. et al. Heart Failure Society of America (HFSA) Annual Scientific Meeting, 2023, and CYTK earnings calls

Numbers in parentheses are standard deviation assumptions. Cross-trial comparisons should be made with caution.

ACACIA is designed with more conservative assumptions than ODYSSEY on the dual primary endpoints:

1. KCCQ-CSS is assumed to have slightly greater variability (standard deviation assumption of 15 vs. 14, respectively),

2. Peak VO₂ is assumed to have a lower difference vs. placebo (1.0 difference vs. 1.3, respectively), and

3. Peak VO₂ is higher alpha allocation at 0.025 than in ODYSSEY (at 0.01), which means it has more power to detect a difference (but at expense of KCCQ-CSS),

4. ACACIA assumes a 10% discontinuation rate. Given the REDWOOD Cohort 4 and FOREST experiences (no discontinuations due to AEs), this rate could be much lower (~3-5%)^[4]

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2.2.3 Mapping the Probabilities

We asked AI (ChatGPT 5.3) to map out the probabilities of success for ACACIA hitting on its endpoints given what is known about trial design. We asked it to calculate the probabilities of aficamten hitting statistical significance vs. placebo on the dual primary endpoints (for each, and then for both) of KCCQ-CSS and peak VO₂ in ACACIA given:

- Total n=516 patients randomized 1:1 to receive aficamten vs. placebo

- ACACIA is 90% powered to detect:

1. KCCQ-CSS: a 5-point difference vs. placebo (standard deviation assumption of 15)

2. Peak VO₂: a 1.0 difference vs. placebo (standard deviation assumption of 3.0)

- Alpha allocation:

1. KCCQ-CSS: 0.025

2. Peak VO₂: 0.025

- Discontinuation rate: 10%

- Assume actual placebo-adjusted drug effect of:

1. KCCQ-CSS: 4.0-point difference

2. Peak VO₂: 0.65 difference

The AI results are summarized below. Based on our assumptions, ChatGPT is expecting probability of successes of ~74% for KCCQ-CSS and ~54% for peak VO2, with ~40% probability of hitting on both (if independent).

Both endpoints depend on exercise physiology improvement in nHCM – so if aficamten works better than expected, both endpoints tend to move together, thus increasing the chance of both crossing significance. It assumes rho (ρ) of 0.3-0.5 (moderately correlated) based on other nHCM trials.^[5] Under this assumption, it estimates the probability of both endpoints hitting at ~43-46%. The sensitivity analyses are shown in Table 9.

Table 8. AI’s estimate of probabilities of successes for each of the two endpoints in ACACIA:

Note: Drug effect(s) (assumed) are placebo-adjusted differences

Source: ChatGPT 5.3, Grok, and Lucent Ion LLC assumptions

Table 9. Sensitivity analyses given varying effect sizes and standard deviations:

KCCQ-CSS:

Peak VO₂:

Source: ChatGPT 5.3 and Lucent Ion LLC assumptions

Abbreviation(s): SD = standard deviation

AI also helped us build a contour plot of the probability of success on hitting both KCCQ-CSS and peak VO₂ endpoints to help us visualize the probabilities of the outcomes.

Figure 4. Contour plot of probability of success on ACACIA based on KCCQ-CSS and peak VO₂ dual primary endpoints:

Source: ChatGPT 5.3 and Lucent Ion LLC assumptions

Assumes standard deviations of 15 (for KCCQ-CSS) and 3.0 (for peak VO₂)

Yellow=higher probability of success; dark blue=lower probability of success. Dot = Lucent Ion LLC estimate

Why it’s Challenging for ACACIA to Hit on Both Endpoints: A couple of insights arise from the contour plot on ACACIA’s ability to hit on both primary endpoints:

1. Peak VO₂ endpoint is the binding constraint: Even if KCCQ-CSS moves meaningfully (4-5 points), the trial success probability stays modest unless peak VO₂ approaches ~0.8-1.0.

2. Small changes in peak VO₂ assumptions can swing the overall probability of success by ~20-30%: If KCCQ-CSS is 4.0 as we expect but the peak VO₂ ends up slightly below our expectations at ~0.5, for example – the overall probability of success of hitting both falls to ~24%.

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2.2.4 Where We Could Be Wrong

We may be wrong in our analysis and ACACIA could fail. We highlight potential risks to our thesis:

1. Nonobstructive HCM is heterogeneous: Despite potential clinical benefits from aficamten, nHCM is known to be heterogeneous which could lead to wider variability in the patient population. Note from the KCCQ-CSS sensitivity analysis, a standard deviation of 20 instead of 15 causes the probability of success to drop to 47% from 74%, even if the effect is still +4.0.

2. Earlier trials never looked at aficamten’s effect on peak VO₂: While REDWOOD Cohort 4 and FOREST provided some indication on how aficamten could perform on KCCQ-CSS, we’re in the dark on peak VO₂. CYTK management noted that they didn’t look at peak VO₂in Phase 2 just as they didn’t in SEQUOIA for oHCM, but they expect that with improvement in symptoms and NYHA functional class, they should see some improvement in peak VO₂ and reminded that they’re well powered to detect a modest change.

3. A strong placebo effect could derail KCCQ-CSS: ODYSSEY experienced a strong placebo response in KCCQ-CSS of +10.4 that diminished the differential with the mavacamten arm. We think it might have had to do with the long-titration protocol for mavacamten, but we could be wrong. If ACACIA saw a +10-point improvement in the placebo arm, it would set a higher bar for the active arm to show a strong differential, and depending on the where patients start at baseline there may be a ceiling effect on KCCQ-CSS.

4. Cardiac myosin inhibition (CMI) may not be the right approach to address nHCM pathophysiology: We don’t know the real reason for mavacamten’s failure in ODYSSEY. The authors surmised that in oHCM, dynamic left ventricular outflow tract obstruction may have a greater effect on exercise capacity and patient-reported health status. In nHCM, exercise intolerance and symptom burden may be driven more by subendocardial ischemia, diastolic dysfunction, left ventricular compliance, and aberrant cellular energetics – not only hypercontractility. This suggests that CMI’s may simply have limited effect on improving these outcomes in nHCM.^[6]

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For the full & consolidated CYTK report (including more details on Valuation, and Appendix), please message us and we will do our best to accommodate. Thank you for your understanding!

^[1] Among those who did not continue into FOREST-HCM, the reasons for non-participation did not include adverse events related to aficamten

^[2] Caution on cross-trial comparison. REDWOOD Cohort 4 and FOREST-HCM were open-label trials.

^[3] If cardiac myosin inhibitors (CMI’s) truly have no clinical effect in nHCM (i.e. mavacamten’s effects in ODYSSEY were observed by chance), then our point on statistical design is moot.

^[4] This range for discontinuation was postulated during CYTK’s presentation at Leerink 2026 conference.

^[5] We believe ChatGPT 5.3 is referencing this study with mixed HCM where ρ=0.444: Huff, C. M. et al. Quality of Life Research, 2013, 22, 647-652.

^[6] Desai, M. Y. et al. N. Engl. J. Med. 2025, 393, 10, 961-972

Risks

Risks include: clinical, data, commercial, regulatory, competitive, and financing risks.

Disclaimer

The information provided by Lucent Ion LLC (“The Company”) is for informational and educational purposes only and does not constitute investment advice. All opinions are our own and are not guarantees of future performance. Investing involves risk, including the possible loss of capital.

You should conduct your own research or consult a licensed financial professional before making investment decisions. Lucent Ion LLC is not responsible for any actions taken based on this content.

Disclosures

As of the date of this publication, Lucent Ion LLC and/or its principals have beneficial positions in the following companies:

• Cytokinetics (CYTK): long

• All other companies mentioned in this report: none

The Company does not receive direct compensation from the companies listed above for this research.

As a matter of policy:

• We do not trade in securities within 24 hours before or 48 hours after publishing research on those securities

• We may buy or sell securities mentioned in our research at any time after this cooling-off period, without notice

• Trading decisions are made independently of our publication

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• The highly anticipated ACACIA Phase III readout in nonobstructive HCM investigating aficamten, CYTK’s next-generation cardiac myosin inhibitor (CMI), is expected in 2Q26 (we expect ~April)

• If ACACIA hits, it’s a big win for CYTK given there are no approved therapies for nHCM, and market size is meaningful

• There is healthy skepticism given the recent failure of BMY’s mavacamten in the ODYSSEY trial, casting a shadow on the CMI class in nHCM

• We have reasons to think ACACIA could be positive given:

  • 1) aficamten’s profile could allow more patients to reach more effective doses faster; and

  • 2) its trial & statistical design could increase its chance of showing benefit

• ACACIA has a dual primary endpoint of KCCQ-CSS (quality-of-life) and exercise capacity (peak VO₂), where only 1 has to hit stat sig to be considered positive

  • Base case: the trial wins on KCCQ-CSS (+15% move)

  • Bull case: hitting on peak VO₂ (+30% move)

  • Home-run scenario: hitting on both endpoints (+50% move)

• Downside is meaningful (bear case) if ACACIA fails (-40% move), but is supported by aficamten (Myqorzo) launch in obstructive HCM

• We have a long position in CYTK (shares + call spread) into ACACIA readout

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Summary: Cytokinetics (CYTK) is a mid-cap commercial biopharma company focused on the development and commercialization of muscle activators & inhibitors as potential treatments of diseases of the muscle. CYTK’s lead asset is aficamten (Myqorzo), a next-generation cardiac myosin inhibitor (CMI) that was recently FDA approved in obstructive hypertrophic cardiomypathy (oHCM), a cardiac condition of abnormal thickening of the heart muscle, leading to blockage of blood flow leaving the heart. Aficamten competes with BMY’s mavacamten (Camzyos) in oHCM, which did >$1 billion in revenues worldwide in 2025. As the next-generation CMI, expectations are high that CYTK will have a successful Myqorzo launch in oHCM.

Near term, CYTK is set to have the highly anticipated Phase III data readout (ACACIA-HCM) for aficamten in nonobstructive hypertrophic cardiomyopathy (nHCM), a large label-expansion opportunity. Nonobstructive HCM describes a subtype with abnormal thickening of heart muscle, but without the blockage of blood flow. There is a healthy level of skepticism towards this trial given the recent failure of BMY’s mavacamten in nHCM in the ODYSSEY trial, where it did not meet the dual primary endpoints, casting a dark shadow on the CMI class in nHCM. We think this helps skew the risk/reward of ACACIA to the upside.

We have reasons to think that ACACIA Phase III readout for aficamten could be positive in 2Q26 (we estimate ~April). If the trial hits, it would be a big win for CYTK given that there are no approved therapies for nHCM. Standard of care includes mostly off-label therapies which all have limited efficacy and side effects. Unlike oHCM, there are no surgical options for nHCM.

We have a long position in CYTK with a price target (PT) of $85 on aficamten’s potential in ACACIA.^[1] We caution that this is a binary event play^[2] – there is meaningful downside risk if ACACIA fails.

Why ACACIA Can Win:

• Despite ODYSSEY Failure, BMY’s Mavacamten Could Still Have Clinical Effect: Despite not hitting statistical significance, mavacamten showed favorable trends in the primary and secondary efficacy endpoints, suggesting that mavacamten could still have clinical effect. But ODYSSEY had a long dose titration period that may have led to less-than-optimal benefit and high placebo effect. The criteria for dose down-titration / interruption may have also been too strict. ODYSSEY patients suffered from adverse events that led to a high interruption / discontinuation rate of ~20%.

• ACACIA Has Design Differences with ODYSSEY That Could Make the Difference Between Success & Failure: CYTK’s aficamten has a few distinct advantages over BMY’s mavacamten: 1) it has a shallower dose-response relationship, 2) a plasma half-life that allows for personalized dose adjustments every 2 weeks, and 3) fewer drug-drug interactions. The first two enable design differences with the ACACIA trial.

Our thesis is two-fold:

1. ACACIA should have a distribution of patients at higher therapeutic doses of aficamten, which could lead to stronger clinical benefit than observed from mavacamten, and

2. ACACIA is well-powered to show statistical significance from even moderate benefits in KCCQ-CSS and/or peak VO₂, with more conservative assumptions on some measures.

• CYTK’s Aficamten Showed Promise in nHCM in Early Clinical Trials: Aficamten has demonstrated promising early data in nHCM in REDWOOD-HCM Cohort 4 and the open-label extension study FOREST-HCM that showed improvements in KCCQ-CSS (quality-of-life endpoint), a strong percentage of patients improving NYHA functional class by at least 1 class, and a favorable safety profile. Dose interruptions / discontinuation rates in these trials were low as well (2.5% and 5.9%, respectively, all interruptions). If these data can be replicated in ACACIA, we see a favorable probability of succeeding.

CYTK Valuation & ACACIA Outcomes

Year-to-date (YTD), CYTK has held steady at near ~$8.2 EV following the Myqorzo approval in oHCM in December 2025, while the XBI was also flat (~0%). At ~$8.2 billion EV (as of 3/20/26), our modeling suggests that the market is pricing in a successful oHCM launch and some modest probability in nHCM. Our $85 PT is DCF-based and implies an EV of ~$11 billion and includes optimistic assumptions about the Myqorzo launch in oHCM reaching $2.8 billion in worldwide (WW) revenue by 2034, and risk-adjusted value in nHCM (by 40%).^[3]

We have a long position in CYTK into the ACACIA readout in 2Q26 (we estimate ~April). To win, ACACIA must hit on at least one of its dual primary endpoints: change in KCCQ Clinical Summary Score (or KCCQ-CSS) and / or exercise capacity (measured by peak VO₂). ACACIA could hit on both endpoints, but it’s not our base case.

Based on our work, we believe we’ll see placebo-adjusted differences for KCCQ-CSS of +4.0-points (10 vs. 6) and for peak VO₂, +0.65 (0.7 vs. 0.05). We asked AI to calculate the probabilities of each outcome based on these assumptions and estimated variability according to ACACIA’s statistical design (Table 1).

If our assumptions are correct, ACACIA has an ~88% overall probability of succeeding with at least 1 endpoint hitting statistical significance, with a blended expected value of +24.5%. It demonstrates that ACACIA is versy well powered even on moderate differences with placebo.

Table 1. Potential ACACIA outcomes and estimated probabilities:

*Based on P(KCCQ∩peak VO2)=P(KCCQ)×P(peak VO2)

**Based on P(success)=P(KCCQ∪peak VO2)

‘Hit’ means for the endpoint to reach statistical significance according to ACACIA’s protocol.

There are nuances to these outcomes. If only 1 endpoint hits, the other must trend in the direction of benefit

Calculation of both endpoints hitting statistical significance assumes independence.

Source: ChatGPT 5.3, Grok, and Lucent Ion LLC estimates

Note the distribution in potential stock reactions. The most probable outcome, in our view, is a win on KCCQ-CSS (~75% probability), but we expect only +15% move in CYTK stock. If peak VO₂ hits (~55% probability), the reaction could be greater (+30%) given that peak VO₂ could be viewed as more clinically meaningful. This must be weighed against the prospect of failure, which, although small (~12%), could mean a 40% fall in the stock.

Reality doesn’t always match with theory. Our CYTK long position is constructed in a way that reflects a more conservative ~60%(overall)/40% chance of success/failure, respectively, using option spread(s) to capture the convexity of the potential stock move while limiting downside risk.

Stepping back into the forest from the trees, however, we remind that if only 1 endpoint hits, a win on ACACIA opens the door for aficamten to the substantial nHCM market opportunity. There are no approved therapies for nHCM, including BMY’s mavacamten that failed – and the eligible patient population could be as large as oHCM.^[4] We estimate aficamten revenues reaching ~$1.8 billion WW in nHCM by 2034 (risk-adjusted).

Lastly, in late 2020, BMY acquired MyoKardia for Camzyos (mavacamten) for $13.1 billion, a ~60% premium to MYOK stock from the previous day’s close. We view CYTK’s Myqorzo as a best-in-class cardiac myosin inhibitor and while not our base case, we think a CYTK acquisition is also likely, particularly if ACACIA hits.

There are reasons we could be wrong on ACACIA: 1) nHCM is heterogeneous which increases risk of variability, 2) peak VO₂ was never investigated in earlier aficamten trials, 3) ACACIA could have a stronger placebo effect than expected, and 4) CMI may simply not be the right approach for nHCM. If ACACIA fails, downside is to ~$35-40 (-40%) for CYTK, supported by its oHCM opportunity. Longer term, upside from that point could be justified on better-than-expected Myqorzo launch in oHCM, pipeline opportunity, and acquisition potential.

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Executive Summary

1.1 Primer on Hypertrophic Cardiomyopathy and Aficamten

[If familiar, can skip to Section 2.1]

Cytokinetics (CYTK) is a mid-cap biopharma company focused on the development and commercialization of muscle activators & inhibitors as potential treatments of diseases of the muscle where its performance may be compromised and/or declining. CYTK has recently reached commercial stage with the FDA approval of Myqorzo (aficamten) for treatment of obstructive hypertrophic cardiomyopathy (oHCM). We intend to publish a separate deep dive on Myqorzo in oHCM, a meaningful commercial opportunity in of itself. The focus here will be on aficamten’s outlook in the ACACIA clinical trial for nonobstructive HCM (nHCM), a near-term catalyst set to readout in 2Q26 (we expect ~April).

Overview of Hypertrophic Cardiomyopathy (HCM)

Hypertrophic cardiomyopathy (HCM) is a chronic, genetic heart condition where there is abnormal thickening (hypertrophy) of the heart muscle, typically involving the left ventricular wall and septum. Many people with HCM can live without symptoms, but for many others the thickened heart muscle can reduce blood flow out of the heart. Symptoms include shortness of breath, chest pain, fainting, heart palpitations, and fatigue. There are two main subtypes:

• Obstructive HCM: Thickened septum blocks / reduces blood flow from left ventricle to the body

• Nonobstructive HCM: Heart muscle is thick, but it does not block blood flow leaving the heart. If the left ventricle is stiff, it may impair the heart’s pumping efficiency

Physicians can confirm which subtype by checking the pressure difference across the left ventricular outflow tract (LVOT). If there is no meaningful pressure difference, it is nonobstructive.

Cardiac Myosin Inhibitors

BMY’s Camzyos (mavacamten) and CYTK’s Myqorzo (aficamten) are both small molecule allosteric inhibitors of cardiac myosin ATPase, and work by reducing excessive actin-myosin cross-bridge formation that is the cause of obstruction and impaired relaxation in hypertrophic cardiomyopathy. A good overview of CMI’s in oHCM are available in reviews^[5] and a video of aficamten can be viewed here.^[6]

Camzyos (mavacamten), originally developed by Myokardia before being acquired by Bristol Myer’s Squibb (BMY) in 2020, was FDA approved in April 2022 to treat obstructive HCM who remain symptomatic despite beta-blockers or calcium-channel blockers. Camzyos is now annualizing at $1.4 billion in revenue worldwide.

CYTK developed aficamten, another cardiac myosin inhibitor (CMI) like mavacamten but binds to distinct allosteric sites on the myosin molecule and tweaked to have more predictable kinetics and a broader therapeutic window. Aficamten’s clinical benefit has been validated in oHCM in the SEQUOIA-HCM, MAPLE-HCM, and CEDAR-HCM clinical trials, among others (Table 2). There are no direct head-to-head trials comparing mavacamten and aficamten – but there are practical implications of aficamten’s profile in the clinic:

• Aficamten’s shorter half-life (~3-4 days) vs. mavacamten (~7-9 days) enables more rapid dose titration, with dosing adjustment intervals every ~2 weeks instead of every ~4 weeks, respectively

• Aficamten has fewer drug-drug interactions (DDI) which simplifies prescribing in patients who may already be on other medications. Mavacamten has risks of DDI with CYP2C19 or CYP3A4 inhibitors and inducers for all prescription and nonprescription medications

Table 2. High level comparisons with BMY’s Camzyos (mavacamten) and CYTK’s Myqorzo (aficamten):

Source: ChatGPT 5.3, OpenEvidence

Abbreviation(s): oHCM = obstructive hypertrophic cardiomyopathy; nHCM = nonobstructive hypertrophic cardiomyopathy; OLE = open label extension; TBD = to be determined

Nonobstructive Hypertrophic Cardiomyopathy (nHCM)

Nonobstructive HCM describes the disease where the heart muscle becomes abnormally thick and stiff from excessive contractile activity, making it difficult for the heart to relax and fill with blood, but there is no obstruction. Many patients with nHCM have no symptoms (asymptomatic). When they do, they can include shortness of breath (especially during exertion), chest pain (angina), fatigue, dizziness, lightheadedness, fainting, and palpitations. Patients may experience abnormal heart rhythm (arrhythmias), loss of consciousness (syncope), or heart failure. They are also at risk for sudden cardiac death.

There are no approved therapies for symptomatic nHCM. Standard of care includes off-label pharmacotherapies, including diuretic agents, beta-blockers, verapamil, or diltiazem, which have limited efficacy and side effects. Unlike oHCM, there are no surgical options for nHCM. So, there is unmet medical need for safe and more effective treatments for nHCM that increase functional capacity, reduce symptoms, and improve quality-of-life (QoL).

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2.1 ACACIA Overview & Design

ACACIA-HCM Trial Design

ACACIA-HCM is a Phase III randomized (1:1), placebo-controlled clinical trial investigating aficamten in nHCM (Figure 1). It has a dual primary endpoint: change in KCCQ Clinical Summary Score (or KCCQ-CSS)^[7] and peak VO₂ to Week 36. There is a 6-week titration period to adjust doses of aficamten (5-20 mg). Unlike obstructive HCM, in nonobstructive there is a lack of an elevated left ventricular outflow tract (LVOT) gradient to guide dosing, meaning clinicians must rely primarily on LVEF monitoring to manage the cardiac myosin inhibitor (CMI).

ACACIA completed enrollment in late 1Q25 (excluding Japan), and is set to read-out in 2Q26, according to CYTK’s guidance. Given that ACACIA has a 36-week endpoint, we’re expecting topline data in ~April. Management noted that the topline ACACIA disclosure is likely to be ‘high-level’ to not jeopardize data presentation at a potential medical congress later in the year. So, we’re expecting them to report which of the primary endpoints was met (or missed), p-values, and high-level comments on the secondary endpoints and safety. ACACIA is considered a success if at least one of the endpoints hits statistical significance.

Figure 1. Trial design of ACACIA:

Source: CYTK presentation

Primary Endpoints & Powering

ACACIA originally was designed to enroll 420 patients with a primary endpoint of KCCQ-CSS, with exercise capacity (peak VO₂) as a secondary endpoint. On CYTK’s Q1 2025 earnings call, management announced a change to dual primary endpoints of KCCQ-CSS and peak VO₂ to align with feedback from ex-U.S. regulators. The trial size was increased to 516 patients to maintain 90% power to show a KCCQ-CSS change of 5 points (standard deviation, or SD 15) and peak VO₂ of 1.0 (SD 3.0) compared to placebo. The alpha is split to 0.025 for each endpoint, which contrasts with ODYSSEY. ACACIA assumes a 10% discontinuation rate.

Our ACACIA Expectations

Before we dive into our discussion, the following table summarizes where we expect the results from aficamten to land in ACACIA, for reasons we will go into detail in Sections (2.2.1) and (2.2.2). We expect:

• KCCQ-CSS change of +4.0 placebo-adjusted difference (standard deviation of 15), based on:

  • +10.0 for aficamten vs. baseline, in-line with previous aficamten experience

  • +6.0 for placebo vs. baseline, less than what was observed in ODYSSEY (+10.0)

• Peak VO₂ change of +0.65 placebo-adjusted difference of (standard deviation of 3.0), based on:

  • +0.7 for aficamten vs. baseline, higher than mavacamten in ODYSSEY (+0.47) but lower than the +1.0 change that ACACIA was powered to show

    • +0.05 for placebo vs. baseline, same effect from ODYSSEY trial

Table 3. Our expectations on KCCQ-CSS and peak VO₂ outcomes in ACACIA:

*Estimated n per arm. Assumes 10% discontinuation rate

Numbers in parentheses are standard deviation assumptions

Source: Based on Lucent Ion LLC assumptions

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2.2 Why ACACIA Can Win

We Review Key Design Differences That Could Make the Difference for Aficamten

History of Cardiac Myosin Inhibitors in Nonobstructive HCM:

• BMY’s Mavacamten Failed in the Phase III ODYSSEY-HCM Trial on the Dual Primary Endpoints in nHCM: Cardiac myosin inhibitors (CMI) provided hope for nHCM. ODYSSEY-HCM was a Phase III randomized (1:1), placebo-controlled clinical trial evaluating Camzyos (mavacamten) in nHCM. But in April 2025, BMY announced that mavacamten did not meet the dual primary endpoints in KCCQ-CSS (placebo-adjusted change +2.7 points; p=0.06) and peak VO₂ (placebo-adjusted change +0.47; p=0.07).^[8] Despite not hitting statistical significance, mavacamten showed some favorable trends in the primary and secondary efficacy endpoints (data summary in Table 4).

• CYTK’s Aficamten Showed Promise in nHCM in Early Clinical Trials: CYTK’s aficamten has a few distinct advantages over mavacamten: 1) it has a shallower dose-response relationship,^[9] 2) a plasma half-life that allows for personalized dose adjustments every 2 weeks, and 3) fewer drug-drug interactions. Aficamten has demonstrated promising early data in nHCM in REDWOOD-HCM Cohort 4 (n=40) and the open-label extension study FOREST-HCM (n=34) that showed improvements in KCCQ-CSS (quality-of-life endpoint), a strong percentage of patients improving NYHA functional class by at least 1 class, and a favorable safety profile.

• ACACIA Has Design Differences with ODYSSEY That Could Make the Difference Between Success & Failure: We don’t know if ODYSSEY failed because: 1) mavacamten has no clinical effect in nHCM, or 2) the clinical effects of cardiac myosin inhibitors are smaller in nHCM (vs. oHCM) and the trial was not powered adequately to demonstrate statistical significance, given its small effect size & high discontinuation rate. ACACIA has trial design differences that could make the difference.

Our thesis is two-fold:

1. ACACIA will have a distribution of patients at higher therapeutic doses of aficamten which could lead to stronger clinical benefit than observed from mavacamten, and

2. ACACIA is well-powered to show statistical significance from even moderate benefits in KCCQ-CSS and/or peak VO₂.

Key Design Differences with ODYSSEY

Key design differences between ODYSSEY-HCM (mavacamten) and ACACIA-HCM (aficamten) are summarized in Table 4, along with key efficacy data between ODYSSEY-HCM, REDWOOD Cohort 4 and FOREST-HCM for high-level comparison. Enrollment criteria of ODYSSEY and ACACIA are similar for nHCM. There are subtle differences – but overall, we wouldn’t expect the differences to make a meaningful impact on the clinical outcome.

Table 4. Comparison of key results between mavacamten and aficamten trials:

*Estimated n per arm. Assumes 10% discontinuation rate

**Reported as proportional reduction rather than geometric mean change

Source: ODYSSEY: Desai, M. Y. et al. N. Engl. J. Med. 2025, 393, 10, 961-972 (Protocol).

ACACIA: Masri, A. et al. Heart Failure Society of America (HFSA) Annual Scientific Meeting, 2023, and CYTK earnings calls

REDWOOD Cohort 4: Masri, A. et al. Journal of Cardiac Failure, 2024, 30, 1439-1448.

FOREST-HCM: Masri, A. et al. Journal of Cardiac Failure, 2025, 00, 1-5.

Note: Cross-trial comparisons should be made with caution.

Numbers in parentheses are standard deviation [assumptions].

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Stay tuned for Part 2 which will detail our two-part thesis! For the full & consolidated CYTK report (including Appendix), please message us and we will do our best to accommodate. Thank you for your understanding.

^[1] Our long position consists of CYTK shares and July 65/85 CYTK call spread(s). As of 3/20 date, our cost basis for our CYTK shares (~4% weight) is $68.74.

^[2] See Risk section and Disclaimer

^[3] Our PT includes no pipeline value

^[4] CYTK corporate presentation

^[5] Review article on HCM: Braundwald, E. N Engl J Med. 2025, 393, 10, 1004-1015.

^[6] Youtube video: How Aficamten Works in Obstructive Hypertrophic Cardiomyopathy (HCM) by Pharmacological Insights, 2026.

^[7] KCCQ-CSS is a validated, patient-reported, 23-item tool measuring heart-failure symptoms and physical limitations.

^[8] More details were shared in the NEJM publication in September 2025.

^[9] I.e. small reductions in LVEF as the dose is increased, indicating a wide therapeutic window.

Risks

Risks include: clinical, data, commercial, regulatory, competitive, and financing risks.

Disclaimer

The information provided by Lucent Ion LLC (“the Company”) is for educational and informational purposes only. It should not be considered financial, investment, or trading advice. All opinions expressed are personal views and are not guarantees of future performance. Investing involves risk, including the potential loss of capital, and past results do not indicate future returns.

Before making any investment decisions, you should conduct your own research or seek guidance from a licensed financial advisor. Neither the Company nor I are responsible for any financial outcomes resulting from actions taken based on the information provided.

By engaging with this content, you acknowledge and agree that you are solely responsible for your own investment choices.

Disclosures

As of the date of this publication, Lucent Ion LLC and/or its principals have beneficial positions in the following companies:

• Cytokinetics (CYTK): long

• All other companies mentioned in this report: none

The Company does not receive direct compensation from the companies listed above for this research. Our views are our own, based on publicly available information, and are provided for informational purposes only.

As a matter of policy:

• We do not trade in securities within 24 hours before or 48 hours after publishing research on those securities

• We may buy or sell securities mentioned in our research at any time after this cooling-off period, without notice

• Trading decisions are made independently of our publications

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We’re working hard on sharing our next deep dive (new company!), which we hope to publish next week.

The Big Picture (TL;DR)

• Krystal Biotech (KRYS):

  • Vyjuvek international launch in DEB continues to advance well; rest-of-world (ROW) Vyjuvek sales opportunity could be higher than U.S.

  • Full trial design details for KB801 in NK and KB803 in ocular DEB will be shared once enrollment for the registrational trials is complete. KRYS to share path forward for KB407 in CF and CORAL-3 study details

  • Abeona (ABEO) highlights operational momentum for Zevaskyn, an autologous gene therapy for RDEB and potential Vyjuvek competitor

• Guardant Health (GH):

  • SHIELD launch in CRC screening continuing momentum; Quest Diagnostics collaboration should add upside

  • Roche’s giredestrant, fails Phase III trial (perservERA) for 1L breast cancer, casting doubt on the oral SERD class for 1L, including AZN’s camizestrant.

    • To us, this strengthens the case for using Guardant360 as a monitoring tool during 1L treatment, where it was shown in SERENA-6 that switching to camizestrant upon a positive ESR1m test to have benefit

  • FDA Adcom meeting discussing SERENA-6 and use of Guardant360 as a monitoring companion diagnostic to camizestrant is scheduled for April 30

  • We’ve been buyers on GH weakness; increased position by 15%

• uniQure (QURE):

  • FDA reiterated its recommendation to conduct a full Phase III randomized, double-blind, sham surgery-controlled clinical trial to submit AMT-130 for Huntington’s disease - a major setback

  • Following a turbulent week & controversy, it was announced that Vinay Prasad, Director of CBER at FDA, will be leaving the FDA at end of April

  • We’ve exited our (speculative) QURE position, until we have greater regulatory visibility

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Krystal Biotech (KRYS):

• Vyjuvek international launch going well; management notes rest-of-world sales could exceed US: The international launch for Vyjuvek in dystrophic epidermolysis bullosa (DEB) continues to progress well, with Germany and France “exceeding expectations.” Management noted that rest-of-world (ROW) sales could be higher than U.S, given that the number of identified patients in Germany, France, and Japan alone is greater than in US. Pricing is still in negotiations in Germany, but could be finalized in 3Q. KRYS has favorable pricing in Japan, which should portend a favorable outlook for the EU.

• Full trial design details for KB801 in NK and KB803 in ocular DEB to be shared later this year: KRYS announced that once they have completed enrollment of their registrational studies for KB801 in neurotrophic keratitis (NK) and KB803 in ocular DEB (1H26 for KB803), they will release details of the study designs and statistical analysis plans. We look forward to seeing the study designs, as it will help us to understand what the trials are designed to show and KRYS’ expectations are for clinical benefit. Data for both are expected by ~YE 2026. We think KB801 for NK will be a key value driver for KRYS.

• KB407 path forward in cystic fibrosis to be detailed soon: Management’s excitement for KB407 if cystic fibrosis (CF) was palpable at the Cowen conference. Management expects conversations with the FDA should complete shortly and they will announce path forward soon and CORAL-3 repeat dosing study details.

• ABEO highlights operational momentum on their Zevaskyn launch in RDEB: Abeona Therapeutics (ABEO) shared key advances on their launch of Zevaskyn, an autologous gene therapy for severe wounds in RDEB, and potential Vyjuvek competitor. To summarize, ABEO began launch activities in 4Q25 after release assay optimization, and treated their first patient in December. Manufacturing resumed in late January with additional biopsies collected, another patient treated, and more in process. Patient flow into treatment is increasing as Qualified Treatment Centers gain experience. Major U.S. commercial insurers have issued coverage policies, and Centers for Medicare & Medicaid Services assigned a permanent J-code, which should streamline reimbursement. ABEO will detail their 4Q/FY 2025 results on 3/17 before-market open.

We maintain our long position in KRYS.

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Guardant Health (GH)

• SHIELD launch in CRC screening is continuing strong; Quest collaboration should add upside: The SHIELD launch in CRC screening, the largest driver of our $150 PT for GH (see our thesis here), continues to progress well. GH recently announced the collaboration with Quest Diagnostics, which could fuel faster growth beyond current guidance & expectations. GH also launched their direct-to-consumer (DTC) campaign, and will continue to add sales reps - both of which should be additional drivers of growth.

• Roche’s made surprise announcement that their oral SERD did not succeed in the Phase III perservERA breast cancer trial: Roche announced that their oral SERD, giredestrant, showed no statistical improvement in the primary endpoint of progression-free survival (PFS) when compared to Ibrance + letrozole as 1L treatment in the Phase III breast cancer trial (perservERA) (but a numerical improvement was noted). This was a surprising result, casting doubt on the oral SERD class in breast cancer overall in 1L (currently, oral SERDs are 2L), which includes AZN’s camizestrant. To us, this strengthens the case for using Guardant360 as a monitoring tool during 1L treatment, where it was demonstrated in SERENA-6 that switching to camizestrant upon a positive ESR1m test to have clinical benefit, instead of using the oral SERD upfront (see thesis here).

• On SERENA-6, an FDA Adcom meeting is scheduled for Apr 30: An FDA advisory committee meeting with the Oncologic Drugs Advisory Committee (ODAC) to discuss SERENA-6 has been scheduled for April 30. An Adcom meeting is commonly arranged for novel paradigms when the FDA wishes to consult experts in a field for guidance on an upcoming FDA approval decision. SERENA-6 is not without controversy, but we believe there is a case for benefit to patients using Guardant360 as a monitoring tool for emergent ESR1 mutations and switching to camizestrant.

• FDA approval of camizestrant could kick off a new monitoring paradigm for Guardant360: Assuming a positive outcome for the Adcom meeting, we expect camizestrant approval in H1 2026. While this use-case for Guardant360 is a more incremental driver in our PT, we still see it as important validation of monitoring through blood tests to guide treatment decisions before radiographic scans. GH expects testing ~3-4x per year, which would kick off a new monitoring paradigm for Guardant360 (vs. single-time point testing for treatment decision making). This is also not part of the current 2026 guidance - and could bring upside, if approved.

• We have been buyers of GH on recent weakness: GH is a high-growth name that is not yet profitable (to be cashflow breakeven by YE 2027), so it is susceptible to large market swings due to exogenous market events, including the war in Iran. We’ve been buyers of GH on recent weakness, increasing our position by ~15% (~7% weight). We may continue to add if it drifts lower, absent of any fundamental change to the GH thesis. Although we are not technical analysts, the relative strength indicator (RSI) does seem to indicate an oversold condition. Our long-term PT for GH remains $150.

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uniQure (QURE)

• Never a dull moment for QURE: To recap a wild week, QURE announced that the FDA reiterated its recommendation to conduct a full Phase III randomized, double-blind, sham surgery-controlled clinical trial to submit AMT-130 for approval in Huntington’s disease, sending QURE shares down ~35-40% (see our thoughts here). At the center of the controversy appeared to be Vinay Prasad, Director of CBER at FDA, who seemed to vehemently disagree that AMT-130 had shown any clinical benefit (a “failed” therapy).

  • Prasad seemed to anchor on their 12-month data, which showed separation between AMT-130 and natural history in disease progression but conflicts with their previous randomized, placebo-controlled trial which showed no benefit at 12 months.

  • A full Phase III randomized, sham surgery-controlled trial would mean patients enrolling into the trial would risk undergoing a 10-12 hour surgical procedure only to receive placebo - which is highly unethical, in our view (say what you want about only being “nicks in the scalp” - it wouldn’t be a truly blinded trial then, in which case, what’s the point?)

  • After much controversy through the week, it was announced late Friday that Vinay Prasad would be leaving the FDA at the end of April, sending QURE shares +50% in after-market trading. Hope is back on the table for regulatory flexibility as QURE requests a Type B meeting in 2Q26.

• We have exited our QURE position (speculative) until we have greater regulatory visibility: As much as we view the AMT-130 data as promising, we have no real edge in predicting regulatory outcomes of this nature. A company profile such as QURE doesn’t fit well with the companies we like to invest in as core positions, so we have exited this speculative trade. Our own view is that the FDA should let them move forward and arrange for an Adcom meeting with experts in the Huntington’s disease field, and let them weigh in on AMT-130’s clinical profile. QURE can still run a confirmatory Phase III trial in the background. The 4-year data could also be informative, especially if it continues to separate from natural history. We will continue to monitor the regulatory situation, and it may make sense to own one day, even in size (if approved).

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Risks

Risks for KRYS include: commercial, data, regulatory, manufacturing, and competitive risks.

Risks for GH include: test performance, data, regulatory, guideline, agency, payer, commercial, and competitive risks.

Disclaimer

The information provided by Lucent Ion LLC (“the Company”) is for educational and informational purposes only. It should not be considered financial, investment, or trading advice. All opinions expressed are personal views and are not guarantees of future performance. Investing involves risk, including the potential loss of capital, and past results do not indicate future returns.

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Disclosures

As of the date of this publication, Lucent Ion LLC and/or its principals have beneficial positions in the following companies:

• Krystal Biotech (KRYS): long

• Guardant Health (GH): long

• All other companies mentioned in this report: none

The Company does not receive direct compensation from the companies listed above for this research. Our views are our own, based on publicly available information, and are provided for informational purposes only.

As a matter of policy:

• We do not trade in securities within 24 hours before or 48 hours after publishing research on those securities

• We may buy or sell securities mentioned in our research at any time after this cooling-off period, without notice

• Trading decisions are made independently of our publications

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