Biotech Beat NVIDIA in 2025. Can It Do It Again?
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What is the main topic discussed in this episode?
Is biotech getting unfairly ignored? You're listening to Motley Fool Money.
Welcome, Fools. I'm your host, Tim Beyers. With me are two of my longtime Rule Breakers teammates, Carl Thiel and Tom King. Thanks for being here, guys. Yeah, it's great to be here. Good to be here. We're going to preview some biotech earnings. We're also going to check in on one that reported this morning. We're going to paint a picture of an industry that probably deserves a little bit more love, a little bit more attention. Get your coffee ready because it's biotech time. Let's talk about biotech approvals, Karl, and what's going on at the FDA. It does seem as though things are a little bit, let's call it turbulent.
Let me just paint a little quick background here, which is that 2025 was an absolutely tremendous year for the industry. I don't know if many people realize this, but biotech as a whole, the XBI, for instance, outperformed Nvidia in 2025. It was a very strong year after a very, very long bleak period. I do think there's actually a lot of enthusiasm continuing into 2026. But I don't know what it is about me, Tim. I got to throw cold water on stuff. I just want to sound, there's a few alarm bells or a few flags out there that I think are interesting and that people need to be aware of. And one of them is the sort of continuing chaos, I guess, that we're seeing at FDA, for want of a better word.
It does seem as though there was a warning from a former senior executive here. I think this man's name is Richard Pasdor, who is the former longtime head of the oncology division. I've often heard you talk about the JPMorgan conference, Carl, and how important it is to the biotech industry. Sounds like he had some spicy things to say at that conference.
Yeah, he did. This is just a couple of weeks ago in mid-January. He wasn't just the head of oncology, he is one of five people who headed up CDER, the main drug approval division. Extremely senior position at FDA. One of five people who did that during 2025 because there was so much turnover in the role. And, you know, one of the things that he told the big pharma people at the conference was that he was worried that the firewall of between political appointees and drug reviewers has been breached is was was his quote. And that the pharma industry is continuing to underestimate the damage that's already been done now. You know, you can certainly dismiss that as the thoughts of a long serving bureaucrat who doesn't like the changes that he's seen at the industry.
But, you know, what he called chaos and whether that's the results of just turnover or politics or anything else going on, it does seem to describe some of the, you know, seemingly contra contradictory approaches that we're we've been seeing to regulation recently.
I mean, what's interesting here, and especially when you say that, it makes me wonder that some of the companies we would look at for the biotech side of the scorecard and Rule Breakers that are dependent upon the FDA for fast approvals of promising drugs that are in clinical trials. Then suddenly, there's maybe some extra risk here. When he's talking about that, is he talking about longer approval cycles? Is he talking about inconsistent approvals? What's the risk here for companies that we follow?
We can think about it as just trying to read the tea leaves on how the agency is going to is going to regard various submissions. Right. And I think one area. So so I think you have these two different sort of themes going. And one is that that under Martin Kari, the current commissioner of FDA, he has been very, very forward looking about how he wants to speed approvals, how he wants to make this easier for industry. That's something that industry is super enthusiastic about. There's been talk about doing less animal testing.
What are the current challenges at the FDA affecting drug approvals?
There's been talking about having easier standards for rare diseases, where you can basically get on the market with a single study, as long as you have some confirmatory evidence, which would make that faster and easier.
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