How Is AI Changing Drug Discovery and What Does It Mean for Investors?

AI is reshaping drug discovery by improving efficiency in the earliest and most failure-prone stages of development, with implications for both biotech innovators and large pharmaceutical companies.

Drug discovery has traditionally been slow, expensive, and uncertain. Artificial intelligence is now being deployed to improve how potential drugs are identified, designed, and evaluated long before clinical trials begin. As the Economist recently highlighted in the article An AI revolution in drugmaking is under way, this shift is already altering the economics of research and development across healthcare.

What Problems Is AI Solving in Drug Development?

AI helps address inefficiencies in early-stage drug discovery, where most failures occur and costs are hardest to control.

Historically, companies have relied on trial-and-error approaches that require screening vast numbers of compounds with low success rates. AI tools are now being used to narrow the field earlier and more intelligently.

Key ways AI is being applied in drug development include:

• Identifying biological targets using large-scale genomic and proteomic data
• Designing molecules digitally rather than relying solely on lab-based experimentation
• Predicting safety or efficacy issues before candidates enter costly trial phases

By improving decision-making earlier in the process, AI may help reduce wasted R&D spending while increasing the number of viable drug candidates.

Where Is AI Adoption Happening Across Healthcare?

AI is being adopted across both biotech and pharmaceutical companies, but in different ways.

Segment	How AI Is Used	Investment Implication
Biotechnology	AI-driven platforms for novel target discovery and early-stage innovation	Exposure to potential breakthroughs and licensing opportunities
Pharmaceuticals	AI applied across large pipelines to improve R&D efficiency and pipeline durability	Support for long-term revenue stability and capital discipline

Smaller biotech firms often lead innovation, while large pharma companies benefit from scale, data depth, and diversified pipelines.

Does AI Reduce Risk in Drug Discovery?

AI does not eliminate risk, but it may improve the odds of bringing a drug to market.

Drug development remains complex, highly regulated, and uncertain. However, even modest improvements in hit rates or development timelines can be meaningful in an industry where returns depend on a small number of successful drugs.

For investors, the key takeaway is not faster blockbuster creation, but better capital efficiency over time.

Why Is AI-Driven Healthcare Innovation Especially Important Now?

AI adoption in the healthcare space coincides with a major wave of pharmaceutical patent expirations.

Large, liquid pharma companies have the scale, clinical expertise, and global reach to participate meaningfully in the next generation of therapeutic innovation, including the expansion of peptide-based medicines. AI assisted drug discovery may also help these firms refresh pipelines more efficiently at a time when the industry is preparing for notable patent expirations.

Patent Expiration Risk for Total Worldwide Drug RX Revenues 2025-2030

If AI improves efficiency in the critical “0 to 1” phase, it may help established pharma companies refresh pipelines more consistently and respond more effectively to patent turnover.

How Is the AI-Enabled Healthcare Market Expected to Grow?

The market for AI-enabled drug discovery is expected to grow rapidly over the next decade as adoption expands across research, development, and clinical applications.

According to industry estimates, spending on AI tools in drug discovery is projected to accelerate meaningfully through 2032 as pharmaceutical and biotech companies increasingly embed AI into core R&D workflows. This growth reflects rising confidence that AI can improve productivity in early-stage research, where costs are high and failure rates are steep.

Forecasted Market Growth for Global AI Drug Discovery (2023-2032)

This growth underscores why AI is increasingly viewed as a structural shift rather than a niche tool within healthcare R&D.

How Can Investors Access These AI-Driven Healthcare Trends?

Investors can gain targeted exposure through biotech and pharmaceutical ETFs designed to capture different parts of the innovation cycle.

The VanEck Biotech ETF (BBH) offers access to the innovation side of AI-driven drug development:

• Focuses on leading biotechnology companies
• Provides exposure to firms at the forefront of drug discovery and innovation
• Includes companies actively using AI-enabled research platforms

The VanEck Pharmaceutical ETF (PPH) is designed to capture established global drugmakers with scale, diversified revenue streams, and proven commercialization capabilities:

• Highly liquid companies: Tracks the largest most liquid pharmaceutical companies
• Industry leaders: Favors established industry leaders with meaningful scale
• Global scope: Provides exposure to U.S. and international equities for global industry representation

The Bottom Line: Why AI Matters for Healthcare Investors

AI is not transforming drug discovery overnight, but it is steadily reshaping how innovation is pursued.

By improving efficiency at the earliest stages of development, AI may help:

• Increase the productivity of R&D spending
• Support pipeline replenishment amid patent expirations
• Strengthen the long-term outlook for both biotech innovators and pharmaceutical leaders

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Human norovirus (HuNoV) is a leading cause of acute viral gastroenteritis worldwide, causing symptoms ranging from discomfort to severe outcomes in young children, the elderly, and people who are immunocompromised. While its spread is common, effective treatment and preventative strategies are lacking due to the difficulty in cultivating the virus in laboratory settings.

Researchers at Baylor College of Medicine, led by Mary Estes, PhD, worked with intestinal organoids, specifically human intestinal enteroids (HIEs), to identify why the growth of norovirus in culture stops and to determine methods to maintain growth.

Typically, norovirus samples are collected from infected individuals via stool samples. Obtaining samples for research, and eventually for scale-up, is a challenge as resources are limited and inconsistent. Growing norovirus in the lab would address this limitation for both norovirus research and therapy development.

“Looking to overcome this obstacle, we studied several versions of HIEs to understand why norovirus growth usually stops,” said co-author Sue Crawford, PhD, assistant professor of molecular virology and microbiology at Baylor.

The research was published in Science Advances in a paper titled, “Overcoming host restrictions to enable continuous passaging of GII.3 human norovirus in human intestinal enteroids.”

“In 2016, a previous breakthrough occurred when scientists in our lab and collaborators successfully grew HuNoV in HIEs, or ‘mini-guts’—miniature, lab-grown versions of the human gut,” said first author Gurpreet Kaur, a graduate student in the Estes lab.

“While this system allowed researchers to infect cells and study the virus, it still had a major shortcoming—the virus would not grow through repeated rounds, the way scientists can grow many other microorganisms,” Kaur continued, “After just a few rounds, norovirus replication would stop, making it impossible to build up long-lasting viral stocks.”

Previous work on HIEs suggested that serial growth of the virus is hindered by host-limiting mechanisms that are still undetermined. The team conducted RNA sequencing experiments in multiple infected HIE lines to evaluate intestinal epithelial responses to HuNoV infection.

“Using RNA sequencing, a method that measures gene activity, we discovered that infected HIEs produced high levels of chemokines, molecules that help the body mount an immune response. Three chemokines stood out: CXCL10, CXCL11, and CCL5,” said Crawford.

The team followed up this discovery by investigating whether blocking the chemokine signals would improve replication in the HIEs. “We tested a drug called TAK 779, originally developed to block chemokine effects,” said Kaur. “When TAK 779 was added to the HIE cultures, norovirus replication increased dramatically—virus spread throughout the cells in the cultures, and we achieved replication for 10 to 15 consecutive passages.”

This breakthrough opens the door to more effective study of norovirus. Crawford was optimistic in this outcome, stating, “TAK 779 allowed us to generate consistent batches of infectious virus from lab cultures instead of human stool—something we and other researchers have been seeking for decades.”

As useful as this finding is, the team also found that TAK 779 is not a ubiquitous solution, as not all HuNoV strains responded positively. “We observed that TAK 779 did not enhance replication of GII.4 strains, the most common cause of human outbreaks,” said Estes.

While TAK 779 targets chemokine response in many strains, enhancing replication of strain GII.3, and the growth of strains GII.17 and GI.1, other strains, including GII.4, showed no effect. GII.4 noroviruses don’t normally trigger chemokine secretion, thus there is no response to block with TAK 779, suggesting another mechanism that is limiting growth of these strains in lab settings.

There is still hope from the team as Estes points out that her lab is “currently optimizing our HIE culture conditions to enable efficient passaging of additional HuNoV strains, including GII.4.”

While there is still much work to be done to develop continuous cultivation of norovirus strains, this work has opened the door to the possibility of developing stable viral stocks happening sooner rather than later. With stable stocks of norovirus, improved access can speed timelines for the development of vaccines, antivirals, and other therapies to aid in the treatment of norovirus.

A new study has uncovered new genetic rules that determine how CD8 “killer” T cells choose between becoming long-lasting, protective immune cells or slipping into exhausted, dysfunctional states. Turning off just two of these genes allowed exhausted T cells to regain their tumor-killing capacity.

The paper published in Nature titled, “Atlas-guided discovery of transcription factors for T-cell programming,” establishes a predictive framework to reprogram T cells to sustain immune memory while preserving their ability to fight cancer and infections, offering broad implications for cancer immunotherapy and infectious disease research.

The multi-institutional study was led by researchers at the Salk Institute for Biological Studies, UNC Lineberger Comprehensive Cancer Center, and UC San Diego.

CD8 T cells play a central role in the immune system by identifying and attacking virus-infected cells and cancer cells. However, during chronic infections or within tumors, these cells can gradually lose their killing capacity and enter T-cell exhaustion.

The authors created a detailed genetic atlas of various CD8 T-cell states, capturing how these immune cells change across a spectrum from highly protective to deeply dysfunctional. The atlas distinguishes between protective and exhausted CD8 T-cell states based on the genetic level.

“Our long-term goal is to make immune therapies work better by creating clear ‘recipes’ for designing T cells,” said Susan Kaech, PhD, a professor at the Salk Institute and co-corresponding author of the study. “To do that, we first needed to identify which molecular ingredients are uniquely active in one T-cell state but not others. By building a comprehensive atlas of CD8 T-cell states, we were able to pinpoint the key factors that define protective versus dysfunctional programs—information that is essential for precisely engineering effective immune responses.”

The researchers analyzed nine distinct CD8 T-cell states and identified specific transcription factors that act like molecular switches, steering T cells toward either long-term function or exhaustion.

Two transcription factors, ZSCAN20 and JDP2, had not previously been linked to T-cell exhaustion. Disabling these transcription factors caused exhausted T cells to regain their ability to kill tumors without losing their capacity for long-term immune memory.

“We flipped specific genetic switches in the T cells to see if we could restore their tumor-killing function without damaging their ability to provide long-term immune protection,” said H. Kay Chung, PhD, assistant professor at UNC Lineberger and another co-corresponding author. “We found that it was indeed possible to separate these two outcomes.”

The study challenges the long-standing belief that immune exhaustion is an unavoidable consequence of prolonged immune activity.

This genetic atlas of T-cell states can guide the development of supercharged T cells for use in cellular therapies such as adoptive cell transfer (ACT) and CAR T-cell therapy.

“Once we had this map, we could start giving T cells much clearer instructions—helping them keep the traits that allow them to fight cancer or infection over the long term, while avoiding the pathways that cause them to burn out,” said Kaech. “By separating these two programs, we can begin to design immune cells that are both durable and effective in cancer and chronic infection.”

The researchers say the findings should be especially relevant for treating solid tumors, where separating protective immune responses from exhaustion is critical for effective therapy.

“Because genes work together in complex regulatory networks that are difficult to decipher, powerful computational tools are essential to pinpoint which regulators drive specific cell states,” said Wei Wang, PhD, professor at UC San Diego and co-corresponding author. “This study shows that we can begin to precisely manipulate immune cell fates and unlock new possibilities for enhancing immune therapies.”

With Biogen’s multiple sclerosis portfolio facing more generic pressure than ever, the company is eyeing a busy late-stage pipeline and hunting for deals to build its return to growth.

Biogen is not growing right now, but the company has established a “bridge to growth,” with an emphasis on a slew of Phase 3 readouts to come in the next few years and a careful hunt for acquisitions.

“To really return to growth, I think there’s two things that really need to happen. One is we do need to start seeing the positive Phase 3 results come out and the launch of products,” CEO Chris Viehbacher said on the company’s fourth quarter earnings call on Friday. “The other of course, is [business development], and we continue to look for potential acquisition opportunities.”

On the first point, Biogen is currently running 10 Phase III trials, which could one day turn into approved products. Viehbacher in particular pointed to litifilimab, which is due for mid- and late-stage readouts in two types of lupus this year. The first, a Phase 2 test for cutaneous lupus erythematosus, is expected around the end of the first quarter and the second, the late-phase systemic lupus erythematosus trial, will arrive in the fourth quarter. That product could launch in 2028, the CEO predicted.

On business development, Biogen is conducting a careful search for companies in the $5 billion to $6 billion range in the post-Phase 3 results stage—a goal that has not changed in recent quarters.

“The reality is that it’s hard to find things that actually generate value for our shareholders,” Viehbacher explained. “There are certainly companies out there, but we haven’t found one that we can acquire for a price that we think makes sense for our shareholders. But we continue to look. We are looking every day out there in the marketplace.”

So, for now, the existing late-stage pipeline is Biogen’s future.

“We have some pretty high conviction in our late-stage pipeline. Now, nothing is ever given in research and development, as we all know,” Viehbacher said. “But you know, 10 Phase 3 programs, that’s a real achievement from over the past year.”

At the end of 2024, the company only had litifilimab in that advanced a stage. Since then, they have added zorevunersen for Dravet syndrome, with a Phase III read out expected in mid-year 2027, and felzartamab for antibody-mediated rejection, which will also offer late-stage data in mid-2027.

“I think we’ve been able to really, again, create that bridge to growth. We’re generating cash, we’re generating profits, and we’re investing significantly in our growth brands,” Viehbacher said.

Under Pressure

The decline of growth comes as Biogen’s multiple sclerosis portfolio faces generic pressure around the world. This segment showed some “resilience,” according to CFO Robin Kramer, with $9.9 billion in revenue generated in 2025—a 2% increase over the year prior.

Generic erosion began for Tecfidera in 2025, and in 2026 the product will face the full weight of that pressure in Europe. A biosimilar of Tysabri entered the market at the end of the year as well, Viehbacher noted. The CEO is confident that Biogen can maintain the brand for a little while longer despite this new entrant.

“There’s a limited number of physicians who are very strong believers in the importance of Tysabri so that’s what we’re going to rely on,” Viehbacher said.

The growth products, including Alzheimer’s disease therapy Leqembi and post-partum depression drug Zurzuvae, did bring in $3.3 billion for 2025, a 19% increase over the previous year. This helped offset the declining MS portfolio.

Leqembi, which has been a slow and steady launch for Biogen, showed some strength in the fourth quarter with sales of $134 million, a 54% increase year-over-year.

One of the assets shelved by Eli Lilly is a gene therapy for dementia, which it obtained in its $1.04-billion acquisition of Prevail Therapeutics in late 2020.

As it works to expand its GLP-1 portfolio into a pipeline-in-a-product franchise, Eli Lilly is cleaning up its clinical pipeline, discontinuing three assets—including one dementia gene therapy.

That asset, LY3884963, came to the company from Prevail Therapeutics, which Lilly swallowed for $1.04 billion in December 2020. LY3884963 was still in the pharma’s pipeline as of its Q3 earnings report in October 2025 but had been removed from a similar presentation Wednesday.

Before being discontinued, Lilly was running a Phase 1/2 study for LY3884963 in patients with frontotemporal dementia who harbor mutations to the progranulin gene, a key player in neuron survival. A listing for this trial in a federal database indicates the study is still “recruiting” and has not yet been terminated. The study’s completion date is set for April 30, 2031.

A spokesperson for Lilly confirmed the discontinuation of LY3884963 in frontotemporal dementia to Fierce Biotech. The move, the spokesperson added, was “due to a lack of compelling efficacy in the studied patient population. The decision was not due to any safety concern.” Lilly will share related data at an upcoming medical congress.

Aside from LY3884963 Lilly has also scrapped the CD19 antibody LY3541860, for which the pharma had run two Phase 2 studies. The first looked at its potential in treating relapsing multiple sclerosis and has a primary completion date of August 2027, while the second focused on active rheumatoid arthritis and should have delivered preliminary data last November.

Lilly has also dropped 225Ac-PSMA-62, an actinium-225-based radioligand therapy that targets the PSMA protein. The pharma had been running a Phase 1 study for the asset to test its therapeutic value in hormone-sensitive and metastatic castration-resistant prostate cancer.

As in the case of the dementia gene therapy, the decision to scrap both the antibody and the radioconjugate was due efficacy, which the spokesperson told Fierce failed to meet the pharma’s bar for progression. Safety did not factor into the discontinuation.

Lilly’s clinical clean-up comes as it seeks to transform its GLP-1 franchise, anchored by its tirzaptide brands Mounjaro and Zepbound, into a pipeline-in-a-product. Phase 3b data released last month showed that tirzepatide, when combined with the autoimmune drug Taltz, led to a 50% improvement in psoriatic arthritis versus Taltz alone.

In an investor call on Wednesday, Chief Scientific and Product Officer Dan Skovronsky said this outcome sheds “further light on how incretins may have a positive effect on other diseases independent from weight loss.” Lilly is also testing tirzepatide with the interleukin blocker Omvoh in Phase 3b trials of Crohn’s disease and ulcerative colitis, Skovronsky added.

After a series of deaths in patients taking Sarepta Therapeutics’ gene therapies, doubt has crept into investor sentiments around the long-time Wall Street darling, and patients may soon begin looking elsewhere.

Even before the spate of deaths linked to Sarepta’s gene therapies last year, families of patients with Duchenne muscular dystrophy who had received Elevidys were frustrated. Sarepta’s flagship product, Elevidys is the only approved gene therapy for the rare degenerative disease, but the one-time treatment costs $3.2 million and recent data drops have left the DMD community and investors wanting.

“You don’t think you can do a little more effort and give us a little bit more, a little bit more information?” Catherine Collins, a parent of then 18-year-old Dylan, criticized at a patient advocacy conference in 2024. “We’re going to turn on you. We’re the people who give you the millions of dollars, but you’re not giving us anything back, which is facts, data and science. You’re just taking money.”

Then came the year that was 2025, when two Elevidys-linked deaths in the spring started a downward spiral for Sarepta’s stock. Over the summer, news broke of a third death, linked to an investigational gene therapy for limb-girdle muscular dystrophy that uses the same AAV vector as Elevidys. All told, the company’s share price plummeted 80% from the beginning of the year, reaching its lowest point in nearly a decade.

If company executives had hoped a recent 2025 earnings call and new three-year data for Elevidys could right the ship, they will be disappointed. While William Blair called the data an “incremental positive for Sarepta,” but “we do not think the data will significantly impact Elevidys prescribing and uptake behavior in the near term.”

Still, Sarepta is fiercely defending the therapy. Louise Rodino-Klapac, president of research and development and technical operations at Sarepta, defended the gene therapy in an interview with BioSpace. “The data speaks for itself,” she said. “We’re seeing an over four-point difference on NSAA [North Star Ambulatory Assessment]. This effect has grown over time, and I think that’s what’s really important.”

But the stock has dropped another 12% since the announcement last week, and experts who spoke with BioSpace were unconvinced by Sarepta’s case.

After looking at the three-year data, Mitchell Kapoor, senior analyst at H.C. Wainwright, put it bluntly: “I don’t know if [Elevidys] works,” he told BioSpace in an interview.

Now, three years after Elevidys was approved as the first gene therapy for DMD, Sarepta is facing potential competitors. Closest to market is REGENXBIO, which revealed last month a plan to file for approval in mid-2026 for the gene therapy RGX-202. If such options do reach the market, DMD patients and their families may well look beyond Elevidys for treatment.

With sales falling and no clear answers for encroaching competition, Sarepta could have more tough times ahead. And with a frustrated patient base and a tarnished brand, the biotech wouldn’t even make an attractive buyout option for a Big Pharma, according to Courtney Rice, principal at Acadia Strategy Partners.

“It’s like buying asbestos, or talc,” she told BioSpace. “I don’t think they’re built to last. It’s a story that’s gone on too long. Their best days are behind them.”

Through the Floor

Sarepta shared preliminary fourth-quarter 2025 earnings last month, beating consensus estimates with $369.6 million in total sales for the quarter. However, Elevidys missed its quarterly sales goals, bringing in about $10 million less than the $120.5 million consensus. The company attributed that miss to a severe flu season at the end of the year and to rescheduling six patient infusions from the fourth quarter into 2026.

Sarepta also confirmed an expected full-year 2026 sales floor of $500 million for Elevidys. But according to Kapoor, there are signs that the company isn’t going to hit that in the year ahead, with Elevidys sales dropping precipitously over the course of 2025.

Calling that sales floor a “stress-test scenario,” Kapoor said Sarepta is currently “below that on a run-rate basis.” If the therapy’s sales don’t pick up, Elevidys will miss the target by a considerable margin.

That could further dent Sarepta’s reputation on Wall Street, Kapoor said. “The Street has always been really optimistic about Sarepta,” he noted, but the company’s commercial pipeline is “neither projected to grow or even hold steady. They really need something to freshen up the story.”

On the Jan. 12 earnings call, Sarepta committed to more aggressive sales efforts in an attempt to reverse the trend. This includes hiring more sales representatives, running a promotional campaign and “pursuing initiatives with the patient community with the intention of increasing thoughtful and accurate communication,” William Blair analysts wrote after the call.

Only time will tell if those efforts will work, especially with REGENXBIO nipping at Sarepta’s heels. During an earnings call in August 2024, Sarepta CEO Doug Ingram said that “with no near-term gene therapy competition” the company expected to keep treating DMD patients for the remainder of the decade. But last month, Ingram referred to “other programs that are exciting in the gene therapy world” for DMD, seemingly admitting that those other competitors have arrived.

“They backtracked that narrative” about having complete control of the DMD market, Kapoor said.

In response to some of the criticism aimed Sarepta’s way, Rodino-Klapac held firm. “For Sarepta . . . they get unfairly scrutinized when they are the pathfinders and the pioneers in this space.”

Nevertheless, DMD patients and their families may soon face difficult decisions, as Elevidys uses the same vector as up-and-coming therapies, REGENXBIO’s RGX-202 and Solid Biosciences’ SGT-003.

“You can only AAV once,” Rice explained, so “if you pick Sarepta’s treatment you’re potentially passing up alternatives.”

REGENXBIO intends to file a biologics license application for accelerated approval for RGX-202 this year, while Solid last year reported Phase 1/2 data showing that SGT-003 improved muscle health and resilience.

If such options do reach the market, Rice expects the DMD community to move away from Sarepta’s gene therapy. “There’s resentment there; parents are hungry for an alternative,” she told BioSpace. “They’ve been held captive by [Elevidys] being the only thing on the market.”

After a series of deaths in patients taking Sarepta Therapeutics’ gene therapies, doubt has crept into investor sentiments around the long-time Wall Street darling, and patients may soon begin looking elsewhere.

Even before the spate of deaths linked to Sarepta’s gene therapies last year, families of patients with Duchenne muscular dystrophy who had received the company’s Elevidys were frustrated with the company. Sarepta’s flagship product, Elevidys is the only approved option for the rare degenerative disease, but the one-time treatment costs $3.2 million and Sarepta’s data drops have left the DMD community and investors wanting.

“You don’t think you can do a little more effort and give us a little bit more, a little bit more information?” Catherine Collins, a parent of then 18-year-old Dylan, criticized at a patient advocacy conference in 2024. “We’re going to turn on you. We’re the people who give you the millions of dollars, but you’re not giving us anything back, which is facts, data and science. You’re just taking money.”

Then came the year that was 2025, when two Elevidys-linked deaths in the spring started a downward spiral for Sarepta’s stock. Over the summer, news broke of a third death, linked to an investigational gene therapy for limb-girdle muscular dystrophy that uses the same AAV vector as Elevidys. All told, the share price plummeted by 80% from where it had started the year, reaching its lowest point in nearly a decade.

If company executives had hoped that its recent 2025 earnings call and new three-year data for Elevidysright the ship, they will be disappointed. Louise Rodino-Klapac, president of research and development and technical operations at Sarepta, defended the gene therapy in an interview with BioSpace. “The data speaks for itself,” she said. “We’re seeing an over four-point difference on NSAA. This effect has grown over time, and I think that’s what’s really important.”

But the stock has dropped another 12% since the announcement last week, and experts who spoke with BioSpace were unconvinced by Sarepta’s case.

After looking at the three-year data, Mitchell Kapoor, senior analyst at H.C. Wainwright, put it bluntly: “I don’t know if [Elevidys] works,” he told BioSpace in an interview.

Now, three years after Elevidys was approved as the first gene therapy for DMD, Sarepta is facing potential competitors. Closest to market is REGENXBIO, which said last month that it is planning a regulatory filing in mid-2026 for its gene therapy RGX-202. If such options do reach the market, DMD patients and their families may well look beyond Elevidys for treatment.

With sales falling and no clear answers for encroaching competition, Sarepta could have more tough times ahead. And with a frustrated patient base and a tarnished brand, the biotech wouldn’t even make an attractive buyout option for a Big Pharma, according to Courtney Rice, principal at Acadia Strategy Partners.

“It’s like buying asbestos, or talc,” she told BioSpace. As for Sarepta’s future, she said, “I don’t think they’re built to last. It’s a story that’s gone on too long. Their best days are behind them.”

Through the Floor

Sarepta shared preliminary fourth-quarter 2025 earnings last month, beating consensus estimates with $369.6 million in total sales for the quarter. However, Elevidys missed its quarterly sales goals, bringing in about $10 million less than the $120.5 million consensus. The company attributed that miss to a severe flu season at the end of the year and to rescheduling six patient infusions from the fourth quarter into 2026.

Sarepta also confirmed that it anticipates a full-year 2026 sales floor of $500 million for Elevidys. But according to Kapoor, there are signs that the company isn’t going to hit that in the year ahead, with Elevidys sales dropping precipitously over the course of 2025.

Calling that sales floor a “stress-test scenario,” Kapoor said Sarepta is currently “below that on a run-rate basis.” If the drug’s sales don’t pick up, Elevidys will miss the target by a considerable margin.

That could further dent Sarepta’s reputation on Wall Street, Kapoor said. “The Street has always been really optimistic about Sarepta,” he noted, but the company’s commercial pipeline is “neither projected to grow or even hold steady. They really need something to freshen up the story.”

On its Jan. 12 earnings call, Sarepta committed to more aggressive sales efforts in an attempt to reverse the trend. This includes hiring more sales representatives, running a promotional campaign and “pursuing initiatives with the patient community with the intention of increasing thoughtful and accurate communication,” William Blair analysts wrote after the call.

Only time will tell if those efforts will work, especially with REGENXBIO nipping at Sarepta’s heels. During an earnings call in August 2024, Sarepta CEO Doug Ingram said that “with no near-term gene therapy competition” the company expected to keep treating DMD patients for the remainder of the decade. But last month, Ingram referred to “other programs that are exciting in the gene therapy world” for DMD, seemingly admitting that those other competitors have arrived.

“They backtracked that narrative” about having complete control of the DMD market, Kapoor said.

In response to some of the criticism aimed Sarepta’s way, Rodino-Klapac held firm. “For Sarepta . . . they get unfairly scrutinized when they are the pathfinders and the pioneers in this space.”

Nevertheless, DMD patients and their families may soon face difficult decisions, as Elevidys uses the same vector as up-and-coming therapies, RGX-202 and SGT-003.

“You can only AAV once,” Rice explained, so “if you pick Sarepta’s treatment you’re potentially passing up alternatives.”

REGENXBIO intends to file a biologics license application for accelerated approval for RGX-202 this year, while Solid last year reported Phase 1/2 data showing that SGT-003 improved muscle health and resilience.

If such options do make it to market, Rice expects the DMD community to move away from Sarepta’s gene therapy. “There’s resentment there; parents are hungry for an alternative,” she told BioSpace. “They’ve been held captive by [Elevidys] being the only thing on the market.”

In addition to claiming revenue of $19.3 billion for the fourth quarter, Eli Lilly executives offered a glimpse into their strategy to expand their GLP-1 franchise into the immunology and inflammation space, with trials currently underway in asthma, psoriatic arthritis, Crohn’s disease and ulcerative colitis.

As the weight loss juggernaut GLP-1s expand into other therapeutic areas, including cardiovascular and sleep apnea, Eli Lilly is doubling down, seeking to transform its tirzepatide franchise—marketed as Zepbound for weight loss—into a pipeline in a product.

Last month, Lilly reported data from a Phase 3b trial in psoriatic arthritis (PsA), testing a combination of tirzepatide and its autoimmune drug Taltz compared to Taltz alone. The trial met the primary and all key secondary endpoints, with the combo eliciting a 50% improvement in PsA. Notably, tirzepatide plus Taltz showed a relative increase in the proportion of patients who achieved a 50% reduction in their PsA symptoms compared to Taltz alone, and patients taking the combo lost 10% of their body weight at 36 weeks, compared to 0.8% weight loss in the Taltz monotherapy group.

“These results further support existing treatment guidelines for psoriatic arthritis that recommend treatment of comorbid obesity and shed further light on how incretins may have a positive effect on other diseases independent from weight loss,” Dan Skovronsky, chief scientific and product officer at Lilly, said during the company’s fourth quarter and full year earnings presentation on Wednesday.

Elsewhere in its immunology and inflammation pipeline, Lilly is trialing another combination—tirzepatide and Omvoh, an interleukin inhibitor, in Phase 3b studies for Crohn’s disease and ulcerative colitis, Skovronsky said on the call. Outside of tirzepatide, Lilly is testing brenipatide, a GIP/GLP-1 agonist, in a Phase 2 study for asthma, he added.

With the centralized mechanisms that apply to so many of these diseases, I&I is a unique space to target with a single product, Myles Minter, biotech analyst and partner at William Blair, told BioSpace in November 2025. Not to mention the resounding success of AbbVie’s Skyrizi and Rinvoq, which reeled in nearly $26 billion combined in 2025.

During the Q&A period of Lilly’s earnings call, in fact, Guggenheim Securities analyst Seamus Fernandez—who was given extra credit from Skovronsky for his non-obesity-related question—asked why Lilly could not “attack immunology broadly” in the same way it has obesity.

“There is really promising breaking science, including treating immunology diseases earlier, and we’re doing everything in our power to harness this science,” Skovronsky responded, adding his belief that Lilly’s current trials with incretins in immunology are “promising.”

Citibank analyst Geoff Meacham was also given credit for a non-obesity question when he asked Skovronsky how Lilly considers the potential Zepbound combinations in I&I or oncology: Does the drug or the indication drive the decision?

Skovronsky passed this question off to Adrienne Brown, president of Lilly Immunology, who responded that “patients who have both immune diseases and obesity tend to have a higher disease burden. So we’re really excited about the opportunity to find new ways to combat the . . . diseases and potentially unlock better, longer-lasting results for these patients.”

Brown added that Lilly has “broad efforts underway to look at additional combinations” in immunology.