TheChek News Flow

Budget committee stalls government plans to speed up defence procurement

German lawmakers are rebelling against government plans to award hundreds of millions of euros in weapons contracts without public tenders, hampering efforts to speed up arms procurement.

Members of the Bundestag’s budget committee told the Financial Times they will not accept plans for the military procurement agency to award a contract to the Munich-based electronics group Rohde & Schwarz to develop a mobile reconnaissance system without competition.

“Taxpayers are spending a lot of money on defence capabilities. They have the right to know that procurement offices are really buying the best products at the best price,” said committee member Andreas Mattfeldt, who is from the ruling Christian Democrats.

The committee, which must scrutinise and approve government-funded defence projects worth more than €25mn, has asked officials not to submit the so-called MAUS project in its current form. MPs say it is likely to be worth several hundred million euros. 

“This will be submitted to the committee at some point, when it has been put out to tender, but not as a direct award,” Mattfeldt said.

The dispute over the project comes after the newspaper Welt am Sonntag reported last weekend that the government planned to hand a €390mn contract to the German arms giant Rheinmetall to develop a prototype laser system to be used by the navy against drones and missiles without a call for tenders.

The decision to commission Rheinmetall reportedly came despite the fact that Australian company Electro Optic Systems, which also has a subsidiary in Germany, is already manufacturing a similar product that has been acquired by some Nato member states.

Social Democrat committee member Andreas Schwarz, whose party is the junior partner in the coalition led by chancellor Friedrich Merz, said that direct contracts could be used for certain off-the-shelf military products. 

But he added that the development of a new system in a field with multiple possible contenders should be decided by an open process. “A direct award to a single provider without competition cannot be the solution,” he said.

Mattfeldt and Schwarz were backed by Sebastian Schäfer, from the opposition Green party, who said the vast amounts of money due to be spent in the years ahead made it “all the more important to strictly adhere to open tendering procedures and competition”.

Europe’s largest economy plans to dramatically increase military spending in the years ahead in response to Russia’s war in Ukraine and declining US interest in European security.

Merz, who took the radical step of allowing unlimited borrowing to fund the armed forces after winning parliamentary elections in February, has promised to make the German armed forces the “strongest conventional army in Europe” after years of neglect.

To fund that effort, the country’s defence budget is set to reach €162bn by 2029, when support for Ukraine is included — a 70 per cent increase on this year.

But parliament could be one of the brakes on the efforts to spend the vast sums, both due to bottlenecks caused by the record number of submissions that it will be asked to consider and due to tensions over some of the decisions.

The German defence ministry declined to comment on specific procurement projects. But it said that the possibility of using direct awards was one of several measures in a new procurement acceleration law recently approved by the cabinet. 

The bill, it said, was intended “to help ensure that equipment and materials reach the troops more quickly in the future” and increase the operational readiness of the armed forces. 

Direct awarding, it said, was especially intended to be used when procuring “interoperable systems jointly with our partners”.

Rohde & Schwarz and Rheinmetall declined to comment.

Ryan Walsh is representing stock pickers and bond traders in multimillion-dollar contract negotiations

Top hedge-fund recruits are getting hounded with job offers that would pay them like Hollywood stars or pro athletes. So why don’t they also have agents representing them?

That’s the idea Ryan Walsh had about a year ago when he launched a talent agency dedicated to stock pickers, bond traders and other investment professionals that he believes is the first of its kind. A former portfolio manager at firms including Citadel and Millennium Management, Walsh is now parlaying his own experience to help clients navigate a manic marketplace for hedge-fund jobs.

“I’m looking to be the Scott Boras of the hedge-fund world,” said Walsh, referring to the baseball superagent who negotiated record-breaking contracts for major-league sluggers like Juan Soto and Bryce Harper. Hanging on the wall of his office is a work of art featuring Ari Gold, the fictional agent from the TV series “Entourage.”

Elite hedge funds are flush with more capital than ever, especially multimanager funds that parcel out tens of billions of dollars across hundreds of semiautonomous teams. Their need to hire enough people to deploy that money profitably has prompted bidding wars for proven performers and high-profile poachings.

Walsh, 43, said he has helped 12 clients land jobs as portfolio managers in deals worth a combined $180 million since launching his firm, Laurel Lake Advisors. Citadel and Millennium are among the firms that he says have hired his clients, which include analysts who moved into roles overseeing their own portfolio of investments and portfolio managers willing to switch teams when the right offers came along.

In exchange, clients pay Laurel Lake a single-digit percentage of their overall contract value as a commission, excluding what the clients get to hire their teams. Laurel Lake’s rate can go higher if the deal size exceeds certain hurdles. Its fee also includes the cost of a law firm it works with that reviews clients’ employment agreements.

Walsh started the firm as a one-man shop and recently hired another agent, a former hedge-fund recruiter based in Europe, to help.

Depending on the hedge fund, many or all of the commercial terms of a portfolio manager’s contract are negotiable. For example, one of Laurel Lake’s clients received an offer that included a seven-figure upfront payment that was lower than he sought. Walsh and his client countered with what he called a “market-leading” cut of all investment profits for the five-year life of the contract.

“The job he’s doing, my sense is it requires a certain sense of chutzpah and commercial sense,” said Cliff Sosin, who runs the hedge-fund firm CAS Investment Partners and has been friends with Walsh since they went to the same private high school together in New Haven, Conn. “You have to be willing to call these firms and say ‘F you, this guy is worth more.’”

Compared with, say, outfielders, portfolio managers have to evaluate job offers with more complex structures. There’s the amount they’d need to cover deferred and forgone pay at their current employer and the budget needed to staff a team of analysts.

There’s the cut of investment gains portfolio managers generate that they get to keep, usually around 20%, and the accelerated payouts they can get on early profits. There’s also the length of the contract itself, usually around three years but sometimes longer.

The two sides also need to agree on whether new hires would get any slack to weather a slump. Portfolio managers are often pushed out mid-contract if losses reach a predetermined level.

Walsh saw a need for an agent after peers of his were getting offers worth $50 million and relying on friends to opine on whether they were good deals. Portfolio managers who have been in the same job for years might not know what the going rate is for someone with a given specialty and track record, or which funds have specific needs or have agreed to certain terms with new recruits recently. Walsh hustles to get and share that intelligence.

“You shouldn’t negotiate a life-changing contract by yourself,” he said.

Like hedge-fund headhunters, Walsh constantly cold calls and messages prospects to find out who might want to make a move. The main difference is that traditional recruiting firms get paid by the hedge funds themselves and sometimes agree not to poach employees of key clients.

The business is dependent on the scale and proliferation of multimanager hedge funds and could dry up if funds suffer a run of poor performance or redemptions.

Laurel Lake is named after the Connecticut body of water that Walsh lives alongside with his wife and two daughters.

Walsh started his hedge-fund career at Millennium in 2006 as an analyst focused on energy stocks. He bounced around in the following 18 years to other funds including Senator Investment Group, Citadel and LMR Partners, as well as a second tour of duty at Millennium. A plugged-in extrovert, Walsh tracked the ups and downs and comings and goings of his peers almost as closely as the energy companies he covered, former colleagues said.

The largest pay packages for star portfolio managers can exceed $100 million over several years. Walsh never received one that big when he worked in hedge funds, and Laurel Lake hasn’t negotiated one of that size. It’s an open question as to whether traders in that tier will see a need to hire an agent since they are already well-known and can often name their price.

As a portfolio manager, Walsh was glued to his computer screen or meeting with companies from a few hours before the market opened straight through until the close. Now that he works on behalf of portfolio managers who keep that schedule, he starts taking calls as early as 5 a.m. and finishes as late as 10 p.m.

The work is being shifted to a new organization, called DAWG, to accelerate plans to buy thousands of drones

An ambitious Pentagon plan to field thousands of cutting-edge drones to prepare for a potential conflict with China has fallen short of its goal, and the military has struggled to figure out how to use some of the systems in the field, according to people familiar with the matter.

The effort, launched two years ago as a way to quickly buy low-cost autonomous weapons to counter China’s growing military capabilities, is now being shifted to a new organization over concerns it isn’t moving fast enough, the people said.

The move reflects frustrations over setbacks in the program known as Replicator, a signature effort of the Biden administration’s Pentagon that aimed to deliver thousands of air-, land-, and sea-based AI systems by August 2025. Then-Deputy Defense Secretary Kathleen Hicks announced the program in 2023 with the promise of technology that would be “small, smart, cheap.”

While Hicks requested $1 billion over two years for Replicator, some lawmakers have called for billions of dollars more in spending, arguing the total needs to be far higher to ensure success.

Some Replicator systems have been unreliable, or were so expensive or slow to be manufactured they couldn’t be bought in the quantity needed, according to people familiar with the matter. The Pentagon has also struggled to find software that can successfully control large numbers of drones, made by different companies, working in coordination to find and potentially strike a target—a key to making the Replicator vision work.

The Pentagon leadership has shifted the Replicator work to a new division under Special Operations Command known as the Defense Autonomous Warfare Group, or DAWG, in the hopes of accelerating the program and focusing on the most appropriate weapons.

Those involved in Replicator offer different reasons for the delays, but say the effort has largely been a success. Some point to the military services, who pushed to buy systems that weren’t ready to be fielded, while others say the setbacks were just a normal part of any ambitious attempt to fast-track technology.

In an email, Hicks said Replicator was on track for success when she departed the Pentagon in late January, and had jump-started the process of buying autonomous systems for the military.

The purpose of Replicator is to prepare for a potential conflict with China in the Pacific. Beijing has rapidly expanded its arsenal of ships, aircraft and high-tech weapons in recent years, and U.S. officials believe Beijing may be ready to seize Taiwan—a key U.S. trading partner—as early as 2027.

A conflict over the island would bring technological and logistical challenges, requiring ocean vessels and aerial drones to cross long stretches and work autonomously, even if radio and GPS communications are jammed. The drones would allow the U.S. to spread out the battlefield, confuse the enemy, overwhelm defenses and attack targets without significant loss of life or expensive equipment, defense officials say.

DAWG now has less than two years to deliver the drones the Pentagon says it needs, according to the people familiar with the matter. The tight timeline reflects the urgency with which officials believe the U.S. must be prepared to fight a war in the Pacific.

Replicator is now being overseen by the vice commander of Special Operations Command, Lt. Gen. Frank Donovan, a defense official said. In August, as he was taking over the program, Donovan attended part of an event in California that was supposed to showcase some of the whiz-bang technology Replicator had acquired—but also highlighted that the systems weren’t ready for prime time, according to people who participated in the exercise.

An unmanned boat made by BlackSea Technologies experienced a rudder failure and drifted away. The launch of an aerial drone made by Anduril Industries, a venture-backed defense company, was delayed due to a potential problem with the launch tubes. And the software running on several boats misidentified or failed to identify objects as expected, the people said.

“There were very, very good things that happened from Replicator,” said Anduril’s founder Palmer Luckey. “Could it have been done better? Could it have been more clear about what exactly they were doing? Yes, of course. But big picture, I don’t think it was that bad.”

A spokeswoman for the Silicon Valley-based Defense Innovation Unit, which ran the Replicator program until August, didn’t respond to requests for comment. Some of the participants said that the exercise was a success, and that risk-taking and mishaps are a feature, not a bug.

Last month, the Defense Innovation Unit’s director, Doug Beck, a former combat veteran and Apple executive who was appointed during the Biden administration, resigned.

While the Defense Innovation Unit helped get commercial technologies into the military, it had to grapple with many of the same bureaucratic problems that have long existed in the Defense Department, according to people familiar with the organization. Uniformed officers who lacked technical expertise held sway over which drones would be bought in large numbers, the people said, and some platforms required extensive work to make them operate autonomously.

Of the dozen or so autonomous systems acquired for Replicator, three were unfinished or existed only as a concept at the time they were selected, according to people with knowledge of the matter. Among Replicator’s shortcomings, officials said, is that the Defense Innovation Unit was directed to buy drones that had older technology, and it didn’t rigorously test platforms and software before acquiring them, other people familiar with the matter said.

One such misstep was the purchase of hundreds of BlackSea’s unmanned boats, known as the GARC, or Global Autonomous Reconnaissance Craft, according to people familiar with the matter. The boats aren’t designed for complex, long-range missions in the Pacific, and Navy officers pushed for them without a clear understanding of their technical limitations, the people said. The military repeatedly changed software stacks and added complications, leading to mounting costs and unnecessary setbacks, they said.

The Navy didn’t respond to requests for comment.

One of the largest Replicator acquisitions was of the Switchblade 600 drone, which had struggled to perform in Ukraine. An analysis from an Army intelligence center suggested that Switchblade would be vulnerable in conditions where communications were jammed—a feature of modern conflicts, people familiar with the matter said.

AeroVironment, which produces the Switchblade, said it has made extensive improvements to the drone based on years of work in Ukraine, so it can now perform much better against electronic warfare. But the Army declined to buy the newer models for Replicator because it would have caused delays, the people said.

The Switchblade costs around $100,000—an order of magnitude more than the small drones the Ukrainians and Russians are using. AeroVironment said its aircraft’s capabilities far exceed that of the typical cheap drone used in Ukraine, and can take out huge air defense or missile launching systems, justifying the price tag.

Integrating the technology also proved challenging. During an exercise last year in the Pacific called Project Kahuna, drones from different manufacturers connected by Anduril’s software struggled at times to coordinate and perform tasks when out of sight from the operator, said people familiar with the exercise.

But those involved in the effort say Replicator, which was always intended to be transferred to the military, still notched significant achievements in two short years: It helped buy, test and advance new drone systems, pushed advancements in autonomous technology and shaved years off the traditional weapons-buying process. That approach is now being used for other Pentagon efforts, they say.

“We wanted to fill gaps and create a more competitive marketplace. Let’s scale what’s scalable, and then let’s find other technology that might be promising,” said Aditi Kumar, former principal deputy director of the innovation unit. “I think the transition to [Special Operations Command] is natural at this point.”

President Donald Trump’s disruptions to the global status quo have been the best stimulus for international stocks in a long time, say Matt Burdett and Lei “Rocky” Wang, co-managers of the $4.3 billion Thornburg International Equity fund.

“He didn’t realize it. But all of the challenges to the global order created this incentive for greater self-sufficiency [among other countries], as opposed to depending on the U.S.,” Burdett says.

So far, the self-sufficiency drive is playing out most clearly in Europe, Burdett says, particularly in Germany, which enacted a significant fiscal stimulus package in the spring. Burdett expects this spending will trickle down to local businesses, driving higher earnings and revenue over the long term.

“It’s very different backdrop, which should allow for more persistent earnings and a much better earnings growth gap versus the U.S.,” Burdett says.

About 50% of International Equity’s holdings are in the developed European countries, and the strength there has helped Burdett and Wang outperform in the Morningstar foreign-blend category and the benchmark MSCI ACWI ex-U.S. index.

The four-star fund is in the top 22% of its peers on a one-year basis, up 19%, versus 16.2% for the category and 19% for the index. Its 10-year annualized return is in the top 25% of peers, at 8.4%. Morningstar calls the 1.28% annual fee above-average. It has a 4.5% load that is waved at platforms such as Schwab.

Trump’s declarations, such as April’s Liberation Day tariff announcement, have caused volatile trading. That environment is tailor-made for Burdett and Wang’s bottom-up investing philosophy.

The duo uses market dislocations to find companies whose share prices are withering under a negative but temporary perception. When Burdett and Wang find an unappreciated opportunity, they review the business model’s durability and investigate if the management team is skilled enough to execute its strategy.

Using that framework, International Equity found bargains this spring in pharmaceuticals, when companies were pressured by White House comments about drug pricing. The fund topped up its holdings in British drugmaker AstraZeneca, Burdett says, lifting the drugmaker to a now-No. 4 holding.

Burdett and Wang conclude that even in a worst-case scenario, where the U.S. would only pay as much for a drug as the lowest price paid by a comparable economically advanced country, AstraZeneca had a resilient-enough balance sheet to endure the most draconian pricing.

They also added Danish drugmaker Novo Nordisk to the portfolio in May. The stock remains under pressure, but they believe Novo Nordisk is a “very good” metabolic science company that has produced value over time. The company just announced layoffs and a greater focus on diabetes and obesity, which the duo welcomes. New CEO Mike Doustdar is “willing to move quickly and make tough decisions,” Burdett says.

International Equity is a core fund, balancing growth and value, and the duo likes to shop in the quieter parts of the market. That helps to bring stability to the portfolio when the rest of the market is volatile. “Matt and I say boring is beautiful,” Wang says.

Seeking undervalued names helps them participate in rallies while also limiting downside. Morningstar says the fund’s risk-adjusted return versus peers shows that it takes an average amount of risk with an above-average return.

The managers find some of this stability in utilities and industrials, two sectors they are persistently overweight versus peers and the index. The fund’s higher utilities stake stood out as a stronger performer in 2024 and continues to underpin returns.

Burdett and Wang say the utilities sector remains attractive for several reasons: The companies have monopolies in the markets, are free from tariffs since they don’t export, and will benefit from the energy transition to renewable energy, which is happening faster in Europe. They estimate that European utilities trade at about a 40% discount to U.S. utilities.

One favorite: Spanish utility Endesa. It produces power, distributes it through its networks, and sells it to customers. The recent blackouts in Spain speak to the need for more investment, Wang says.

Industrial names are prevalent in International Equity, but Wang says the sector requires caution. “Industrials, in my opinion, are a tale of two cities,” Wang says.

Hitachi, the fund’s No. 2 holding, and Schneider Electric, No. 9, have been stalwarts of the portfolio for several years. The fund is maintaining its position in those two for now, but isn’t buying. Instead, International Equity is building positions in Canadian Pacific Kansas City, the No. 10 holding, Wang says.

The fund has owned the railroad since 2016, but the stock has been pressured because of the struggle between the U.S. and Canada. Trade between the two countries will continue to flow, perhaps at different tariff levels, as there is a need for goods carried by rail, Wang says. The fund buys on down days. “We still love this position for long-term consideration,” he says.

A recent trip to Asia inspired confidence in Wang that China’s economy is stabilizing, partially driven by stimulus, and partially by investment in artificial intelligence. Even with tariff tiffs between the U.S. and China, Wang sees promise. That trip inspired their purchase of Alibaba Group Holding in July, and Wang pointed to its recent earnings as a sign the company is improving.

Looking toward the end of the year, Burdett and Wang believe that idiosyncratic opportunities will continue to show up, since international company valuations remain cheap versus the U.S. They’re keeping 6% of the portfolio in cash as dry powder to snap up bargains. Cheaper valuations, less concentration, and diversification make international markets more attractive than the U.S.

“Those benefits have never been so appealing,” Wang says.

Key Points

Tesla CEO Elon Musk’s $1 billion purchase of company stock caused a stir earlier this week, but he wasn’t the only executive making moves.

Tom Zhu, Tesla’s senior vice president of automotive, sold 20,000 shares on Sept. 11. The transactions were disclosed in a Form 4 filed with the U.S. Securities and Exchange Commission on Sept. 12.

At an average price of $363.76 each, Zhu sold around $7.3 million worth of stock. Following the transactions, he indirectly owned 47,599.75 shares through Magical Blake Global Limited, an entity registered in the British Virgin Islands.

The SEC filing noted that Zhu is “the sole beneficial owner” of the entity. His holdings were valued at a total $19.8 million based on Thursday’s closing price. Shares have gained 15% since the sale on Sept. 11.

The securities included in the latest sale were a mix of stock awarded as compensation as well as shares that Zhu purchased with cash as far back as 2021, according to a separate SEC filing.

Tesla didn’t respond to a request for comment regarding the transaction.

Zhu served as the vice president of Tesla’s Greater China division before stepping into his current role in 2023. He oversaw the construction and groundbreaking of Tesla’s factory in Shanghai.

Zhu’s latest transactions were overshadowed by news of Musk’s purchase of 2.6 million shares on Sept. 12. It was the first time Musk bought shares on the open market since February 2020. The transaction appeared to reflect Musk’s confidence in Tesla’s artificial intelligence strategy, which includes its burgeoning robotics business.

• A Strategy executive sold $3.6 million in company stock on September 18, just before Bitcoin’s price and crypto-linked stocks fell.
• Strategy stock dropped 7.4% over four sessions following the Federal Reserve’s interest-rate decision on September 18.
• Strategy acquired 850 Bitcoins for $99.7 million between September 15 and September 21, increasing its total holdings to 639,835.

Strategy’s executive vice president and general counsel made a series of transactions culminating in the sale of $3.6 million worth of company stock days before the price of Bitcoin tumbled and took cryptocurrency-linked stocks down with it.

On Sept. 18, Shao Wei-Ming exercised an employee stock option to buy 10,000 shares of common stock at a price of $40.46. The same day, Ming sold 10,000 shares in multiple transactions at an average of $355.79 each.

Following the transactions, Ming owned 12,726 class A common shares, valued at $4.1 million based on Wednesday’s closing price. He owned an additional 19,027 shares of perpetual preferred stock, which have no maturity date, meaning they will offer fixed dividend payments for as long as Strategy continues to operate.

The form noted there were 129,100 remaining shares subject to the option underlying the exercised shares, with vesting dates through Feb. 17, 2026.

The price of Bitcoin sank in the aftermath of the Federal Reserve’s interest-rate decision on Sept. 18. Through Wednesday’s close, Strategy has fallen for four consecutive sessions, losing 7.4% over that period. It was down another 5.5% in Thursday trading.

Movements in stock usually parallel fluctuations in the price of Bitcoin, which is down 1.8% at $111,373 over the past 24 hours at the time of publication.

Strategy is widely seen as a leveraged investment vehicle that offers investors exposure to the crypto. The company calls itself a “Bitcoin treasury company,” and decided to rebrand to Strategy from MicroStrategy earlier this year, complete with a new logo featuring the Bitcoin symbol.

Strategy buys Bitcoin nearly every week. In the period from Sept. 15 to Sept. 21, the company snapped up 850 digital tokens for $99.7 million, bringing its total holdings to 639,835 Bitcoins.

Our panelists sized up the risks and opportunities as public policy shifts. Many stocks in the sector are cheaper than they have been in a long while.

ll roads now lead to Washington, D.C., for the U.S. healthcare sector and investors in healthcare stocks. From hospitals and health insurers to pharma and biotech companies, the sector has been disrupted by the Trump administration, which has slashed spending for research, altered vaccine protocols, backed legislation to cut Medicaid spending, and much more. Late Thursday, President Donald Trump stoked further turmoil, threatening to impose a 100% tariff on imported pharmaceuticals beginning on Oct. 1 unless the companies that make them are currently building plants in the U.S.

All roads now lead to Washington, D.C., for the U.S. healthcare sector and investors in healthcare stocks. From hospitals and health insurers to pharma and biotech companies, the sector has been disrupted by the Trump administration, which has slashed spending for research, altered vaccine protocols, backed legislation to cut Medicaid spending, and much more. Late Thursday, President Donald Trump stoked further turmoil, threatening to impose a 100% tariff on imported pharmaceuticals beginning on Oct. 1 unless the companies that make them are currently building plants in the U.S.

Given the resultant uncertainty, it is no surprise investors have shunned healthcare stocks, notwithstanding miraculous medical advances and the ever-growing demand for care.

It is also no surprise that the recent changes in healthcare policy and personnel dominated much of the discussion at Barron’s 2025 Healthcare Roundtable, held Sept. 12 on Zoom. While our four panelists specialize in analyzing different segments of the market, all are focused on the myriad ways that Trump and Health and Human Services Secretary Robert F. Kennedy Jr. are altering the healthcare landscape and the road map for the companies they cover.

This year’s panelists include Jared Holz, healthcare equity strategist at Mizuho; Chris Meekins, managing director of Washington healthcare policy research at Raymond James Financial; Salveen Richter, a managing director at Goldman Sachs covering the U.S. biotechnology sector in global investment research; and David Risinger, senior managing director and senior research analyst at Leerink.

If there is any upside for investors in the industry’s upheaval, it is that many healthcare stocks are cheaper today than they have been in a long while. Many pharma and biotech pipelines may be undervalued, just as the shares of many health insurers and medical device makers may be closer to a bottom than any discernible top.

Our panelists highlight 16 such bargains, along with their big-picture views, in the edited transcript that follows.

Barron’s: Healthcare stocks are underperforming the broader stock market again this year. The Health Care Select Sector SPDR

XLV

+1.02%

exchange-traded fund, or XLV, is down 2.5%, compared with a gain of 12% for the S&P 500

SPX

+0.59%

. It was the same story in 2023 and 2024: Healthcare stocks have been laggards for a long time. Is there any hope for a return to outperformance? Jared, what is your view?

Jared Holz: The primary reason for this relative underperformance is the complexity of the sector. It seems far easier to make money elsewhere in the market. Does it get better from here? That depends, in part, on the performance of other sectors—and a little breathing room with respect to healthcare policy would help. So much of the policy discourse has taken the incremental investor away from the healthcare sector. But until the tech sector feels pressure over a consistent period of time, I just can’t see healthcare outperforming.

Chris, you’re the policy specialist here. What do you see?

Chris Meekins: Anytime an election leaves one party in control of government, it creates additional unsettledness for healthcare. Usually in such periods, an investor can “hide out” in managed-care stocks, but the managed-care industry has its own issues with previous policies and the hangover from bad rate updates to Medicare Advantage plans.

We have reached the phase where most of the policy risk is behind us in the healthcare sector. It doesn’t mean good times are coming. It just means we know what to expect in terms of negatives, such as looming cuts in Medicaid funding and the year-end expiration of the Affordable Care Act’s expanded subsidies [that lower the cost of insurance purchased on the ACA Marketplace]. Once investors understand what is coming, they can price in the negatives and get back to analyzing company fundamentals.

Let’s get Salveen’s take on the outlook for biotech.

Salveen Richter: Policy has been an overarching dynamic that has played into generalist investors’ lack of interest in healthcare. Compounding that, some popular investment themes have unwound. The obesity trade worked for a long time, but lately has been disappointing. Once-popular stocks such as UnitedHealth Group have struggled. Investors see better prospects in other sectors, such as tech.

Biotech has always attracted more specialists than other healthcare stocks, but investors need clarity on policy. On the Food and Drug Administration side, we’re getting there. On drug pricing, there are two aspects. First, we are still waiting for a determination on Section 232. [The Trump administration launched an investigation under this section of the Trade Expansion Act of 1962 into whether U.S. dependence on drug and pharma-ingredient imports poses a national security threat. The latest tariff announcement may relate to the findings.] Recall that potential pharmaceutical tariffs are an important part of the administration’s ongoing negotiations with the industry on investing in the U.S., and also drug pricing.

Second, and more important, we are waiting to see developments around Most Favored Nation [MFN] pricing and Inflation Reduction Act Medicare negotiations.

Apart from all that, we have seen negative earnings revisions for the healthcare sector broadly through 2025, but they have largely stabilized for large-cap biotech and trended higher post-second-quarter earnings.

We expect investors to position in the biotech sector with the following factors in mind: earnings revisions; policy, particularly on the drug-pricing front; interest rates, where we could see a move toward SMID-cap [small- and mid-cap] biotech after a relatively difficult period; and M&A [mergers and acquisitions], while recognizing that innovation is the key underlying driver of this group.

David, how would you describe the outlook?

David Risinger: The other speakers have understated the negative impact of Washington’s approach to the biotech industry. The government has been extremely supportive of the technology sector. On the other hand, it has pursued actions to take U.S. drug prices down and disrupt innovation in the medical field, with cuts in funding to universities, the National Institutes of Health, and such. Generalist investors probably struggle to know where Washington’s actions will shake out with respect to the biopharmaceutical industry.

Hopefully, the administration will become more constructive toward U.S. biopharma. We hope it will appreciate that biopharma is a crown jewel for the country in generating lifesaving medicines and vaccines, and innovation and jobs. We don’t know when the tide will turn, but when it does, it could draw more generalists into the sector.

Robert F. Kennedy Jr., secretary of Health and Human Services, has disrupted the government agencies that interact with the healthcare sector. We are seeing layoffs, resignations of senior officials, and cancellations of grants and contracts. Chris, you recently wrote that Kennedy isn’t going anywhere, at least before next year’s midterm election. What does that mean for the sector?

Meekins: Our point was that this is a political relationship: President Trump rewarded Kennedy for backing him and helping him win the 2024 election. Kennedy will stay as long as the benefit of having his supporters back Republicans in the midterms outweighs the cost of alienating swing voters. If Republicans lose control of the House of Representatives in 2026, Kennedy probably won’t be in that job anymore.

My investor base as a healthcare policy analyst typically was 60/40 specialists to generalists. Now it is probably 85% specialists, 15% generalists. There is drama everywhere in healthcare right now. Much of what is happening in healthcare investing is a healthcare specialist/hedge fund knife fight.

That sounds nasty. Speaking of drama, Salveen, you cover Sarepta Therapeutics, which had some wild weeks this summer due to an FDA policy reversal. The company’s gene therapy for treatment of Duchenne muscular dystrophy had a safety issue. The FDA requested that the company suspend distribution, then reversed that position for certain patients. Extrapolating from that experience, what is the impact on other companies you cover?

Richter: It is harder to predict the FDA’s positions than in the past. There have been many leadership changes, and there are talent holes. Also, there have been internal policy changes regarding how the FDA looks at specific disease areas and how they communicate across divisions. Some areas of healthcare reflect this turmoil, although in other areas, investors are less concerned.

In gene therapy, people are trying to understand the benefits of surrogate versus functional endpoints, and whether surrogate endpoints are considered beneficial enough to allow for approval. [Surrogate endpoints are indirect measures thought to predict clinical benefit; functional endpoints measure patient benefits directly.] So, there is some volatility there.

Also, some drugs in late stages of development or under regulatory review are now being debated because of FDA leadership changes, with the incorporation of a new benefit/risk framework. And, the FDA recently issued several complete response letters, or CRLs, for example, rejecting drug applications based on manufacturing/CMC [chemistry, manufacturing, and controls] issues as opposed to clinical reasons, likely partly due to the recent turnover and staffing at the agency. Wall Street is still trying to determine how to position around these factors and how these dynamics will evolve.

There was a lot of concern across the biopharma industry when Dr. Peter Marks, head of the FDA’s Center for Biologics Evaluation and Research, was effectively forced out earlier this year. His replacement, Dr. Vinay Prasad, later resigned, but then returned. David, what do these developments mean for the pharma companies you cover?

Risinger: We hope that the FDA stabilizes and that it takes more action to lower regulatory requirements and speed novel treatments to patients. We also hope the FDA pivots to a more constructive stance toward vaccines. There is significant medical-industry support for the use of vaccines.

In June, Kennedy fired all 17 members of the Advisory Committee on Immunization Practices, which makes vaccine recommendations to the Centers for Disease Control and Prevention. He replaced them with eight new members, some of whom have raised questions about vaccine safety. Pharma companies will continue to sell vaccines successfully, but the changes could raise questions about the adoption and utilization of vaccines in the U.S. On the margin, that could make it more difficult for investors to forecast sales for the major vaccine companies.

The One Big Beautiful Bill Act, signed in July, is projected to reduce Medicaid spending by $900 billion over the next 10 years. It is expected to increase the number of uninsured people by 10 million, mostly through the imposition of new work requirements. Chris, what sort of impact will these cuts have on insurance companies, hospitals, and other companies in the healthcare sector?

Meekins: Those numbers are probably high, but we know there will be a material cut. Also, it is important to remember that in D.C., a cut is a decrease to an increase in spending. A decade from now, we are going to be spending more money on Medicaid than we do today.

So, what is the impact? When it comes to hospitals, Medicaid used to have the lowest reimbursement rate out there. Hospitals would lose money on Medicaid patients. But with state-directed payment programs, payments to hospitals have exploded upward, from less than $20 billion to more than $110 billion.

Insurers involved in the Medicaid space are going to see budget pressures. They will try to put pressure on providers, and that will be felt down the line. Hospitals probably won’t see continued increases in reimbursement rates, as they did in the past several years, which means they will need to find other ways to make money. When you couple Medicaid cutbacks with the potential expiration of Affordable Care Act expanded subsidies, especially in states such as Texas and Florida, publicly traded hospital companies will face challenges to continued growth.

I am shocked that investors aren’t paying closer attention. Most publicly traded hospital stocks and some ancillary stocks are trading near year-to-date highs. Yet the industry faces the risk of negative changes. These providers will have a lot to prove to keep the numbers going the way they have gone for the past couple of years.

How do you explain investors’ complacency?

Holz: There are too many concurrent risks in healthcare. This will probably become a bigger issue when it is too late.

Meekins: I agree. On the positive side, hospitals are getting much better at using artificial intelligence to maximize the use of medical codes and improve revenue-management cycles, and ensure their doctors are prescribing everything that can be justified to improve reimbursement. But the hospitals are simultaneously fighting insurers’ use of AI to examine claims and prior authorizations.

We have touched on drug pricing, but let’s go further. President Trump favors pegging some U.S. drug prices to the generally lower prices paid by other wealthy “Most Favored” nations. Details of the proposal have shifted, but this seems a priority for the administration. Pharma companies seem to be pushing direct-to-consumer sales as a response of sorts. David, what do the administration’s pricing efforts mean for biopharma companies, and how should investors weigh the risk?

Risinger: At a high level, MFN represents a significant threat to reduce U.S. drug pricing to levels dictated by countries with socialist healthcare systems. Although U.S. officials may use tariff and trade negotiations as leverage to drive up the prices that other countries pay for drugs to create room for companies to reduce U.S. prices, it remains to be seen if the Trump administration will succeed in boosting what ex-U.S. countries pay.

We believe members of Congress understand that the U.S. biopharmaceutical industry is a tremendous asset to the country, as evidenced by the fact that the House of Representatives resisted a Trump administration proposal in May 2025 to apply Most Favored Nation pricing to Medicaid drug prices. That was a sign that certain Republicans want to see the U.S. biopharma industry continue to lead the world in innovation to prevent, treat, and cure disease.

Meekins: The Trump administration can’t legally ban direct-to-consumer drug ads, but it is trying to make it more difficult for companies to advertise. Companies are engaging in delicate government-affairs activity to navigate the situation. There is going to be hesitation to file lawsuits against the administration and engage in a public-relations war. Pharma companies are worried about all the levers the government can pull.

Richter: In July the government sent letters to 17 pharmaceutical companies outlining steps to take to bring drug prices in line with those of other developed nations. It is interesting that the industry hasn’t responded with a unified message. However, that is likely partly because there is not yet a formal policy, likely due to ongoing discussions with the administration ahead of implementation.

Holz: The industry might retaliate in a more proactive way with a different presidential figure, but no political party seems pro the drug industry. It doesn’t matter who the president is, or who is running the agencies. There is constant pressure on the biopharma industry coming from Washington.

Obesity treatments were an exciting development in healthcare—and on Wall Street—two years ago, and even last year. Now the enthusiasm has waned, along with the valuations of companies such as Novo Nordisk and Eli Lilly. The business has become increasingly complicated, the threat posed by compounded GLP-1 drugs persists, and some highly anticipated follow-on drugs have disappointed. Sales projections are starting to fall. Jared, were investors too optimistic about this market, and if so, how should they reframe their thinking?

Holz: The analyst base covering the stocks on Wall Street was appropriately excited. Few facets of pharma have been as compelling as obesity treatments over the past decade, so you can see why investor euphoria was high.

There are still reasons to think this is a $100 billion industry. This is just the second full year in which both Novo and Lilly have had approved drugs for obesity, and the category is posting sales at an annualized rate north of $30 billion. That excludes the compounders, which are probably another 10% to 20% of the market. Yes, the optimism has abated from peak levels, but optimism is still warranted. This will be the largest category in biopharma for the foreseeable future.

I would caution, however, that this is a consumer market, not a healthcare market, and I am not sure what the best way is to look at that in terms of the stocks and valuations. The majority of people taking these drugs will likely do so episodically, rather than for therapeutic use.

Risinger: I agree with Jared that this will remain a huge market. Novo faced significant sales shortfalls this year due to competitive pressures from Eli Lilly’s Mounjaro and Zepbound, plus ongoing compounding of semaglutide. In addition, GLP-1 market growth is increasingly being driven by the cash pay market. U.S. employers have hesitated to add commercial insurance coverage for anti-obesity medicines in 2025 due to drug spending concerns, and most ex-U.S. countries don’t cover GLP-1s for the treatment of obesity.

Still, the growth potential remains tremendous. We just launched coverage of Metsera, a biotech company that we think offers differentiated potential in the field of obesity treatments.

How important are weight-loss pills?

Risinger: They are a big deal. Many consumers are hesitant to pursue the use of injectable products for cosmetic reasons. But pills are easy to take, and we expect demand to be off the charts for Lilly’s orforglipron. [The company will file for its use as an obesity treatment in the coming months.] It has the advantage of being a small molecule that can be manufactured at tremendous scale. That said, there are tolerability issues with small molecules if patients miss more than a few days of pills. Metsera’s oral peptide, which is entering human testing, may be more effective and more tolerable. Early clinical trial data for three Metsera drug candidates—monthly injectable GLP-1, monthly injectable amylin, and daily oral GLP-1—should be generated in coming months.

Salveen, do you see room for other drugmakers to challenge Lilly and Novo?

Richter: Improvements in tolerability and delivery are key, and you could always see greater efficacy for more severe patients. Wall Street is essentially ascribing the majority of future GLP-1/obesity market share to a duopoly—Lilly and Novo, notwithstanding competition. We ascribe $3 billion of revenue to Amgen’s GLP-1 drug, MariTide, in Phase 3 clinical trials, which we view as potentially differentiated. While the drug is subject to debate given the tolerability profile observed to date, in the context of the broader competitive landscape, the Phase 3 outcome will be key. We are also waiting to see whether there is a biosimilar introduced for diabetes treatment later in the decade.

U.S. drug companies are increasingly looking to China for innovation. Recently there has been a string of licensing deals of Chinese drugs and biotech assets for a new class of cancer drugs, weight-loss pills, and other medications. There are also reports that the Trump administration is weighing an executive order to restrict the licensing of Chinese drugs and mandate review by a federal national security committee. David, how important is access to Chinese biotechnology for U.S. pharma companies?

Risinger: It has been reported that the pharma industry is lobbying to continue to have access to Chinese innovation. Large U.S. pharma companies want to enhance their internally developed pipelines with external drug candidates to improve their long-term growth prospects. Chinese biotechs have increasingly outlicensed novel drugs to global biopharmaceutical companies for development and commercialization outside of China. Certain U.S. companies, such as Merck and Pfizer, recently announced deals with Chinese biotech companies to bring new medicines to patients in the U.S. and abroad.

Salveen, will the U.S. biotech ecosystem wither as pharma companies do deals with Chinese companies? What is the threat, or opportunity, for biotechs here?

Richter: I’ll make a couple of points. One, when we saw large biopharma companies going to China to acquire assets or partner with Chinese companies, some U.S. biotechs lost the M&A premium in their stocks. The investor supposition was they likely wouldn’t become acquisition targets.

There is also concern among investors in some biotech companies that there will be fast followers from China focused on similar targets. A lot of the innovation coming from China is in the form of fast followers rather than novel technologies aimed at new therapeutic targets. I expect true innovation in the U.S. will continue to be rewarded.

The U.S. system will adapt. U.S. companies are learning to be careful not to disclose their targets too early. They are putting a lot of intellectual-property protection around their assets. There will be an evolution, but we have to include China in the pie.

Holz: China’s becoming a major player in biotech has complicated an already tricky segment of the market. The market has been inundated in the past decade with not only public but private biotech companies. That is one reason why the sector has been disappointing from an investment perspective. Now you have to figure out what is happening in another, often opaque region. Which companies or therapeutic classes may be superseded by Chinese assets?

I agree with Salveen about the erosion of potential M&A premiums in biotech. And while most Chinese assets aren’t novel, Chinese companies’ ability to accelerate development timelines is something we have to be honest about. If they can create products less expensively and more efficiently, this trend will continue.

As for Trump’s possible executive order, it will be less relevant if pharma remains acquisitive. Once Chinese assets are within the confines of U.S. or European-domiciled companies, the conversation gets a little easier.

Chris, what do you make of the apparent debate within the administration about restrictions on Chinese biotech deals?

Meekins: We talked earlier about the fact that both political parties are critical of high drug prices, and that pharma doesn’t have a lot of friends. Both parties are also concerned about what is happening in the Chinese biotech space. I wrote some three-plus years ago that a growing healthcare theme in the next five to seven years would be biotech as a national security issue. Maybe that view was influenced by my time working at the Department of Health and Human Services in biodefense.

But there is no question that there is concern in this administration about what is happening with China, whether it is control of key raw materials, manufacturers’ reliance on China, control of intellectual property, or other things. This is going to be a growing theme.

We have established that healthcare is an unloved sector on Wall Street and elsewhere. That suggests there are bargains among healthcare stocks. Salveen, which companies and stocks look most attractive to you?

Richter: I have two large-caps and two SMID-caps to recommend. As an emerging large-cap, Alnylam Pharmaceuticals has performed well on the back of its launch of Amvuttra to treat a cardiovascular disease called ATTR-cardiomyopathy, and as it transitions to profitability. We think the stock still has legs. ATTR cardiomyopathy is a large commercial opportunity, and Alnylam has the first-in-class treatment.

The company has a second lever via its platform technology known as RNAi, which enables it to address multiple disease areas. We will see a lot of that pipeline read out [test results will become available] in the coming years, including Phase 3 data for a next-generation TTR drug under development for both polyneuropathy and cardiomyopathy. If it works, it would be administered biannually versus quarterly, and result in the removal of a 30% royalty on Amvuttra that Alnylam is paying to Sanofi.

Also, Alnylam has limited exposure to the drug-pricing dynamics we have been discussing. The Inflation Reduction Act exempted orphan drugs from Medicare price negotiation, and the One Big Beautiful Bill Act expanded that exemption under certain conditions. Orphan drugs can now be approved for multiple rare diseases and still be exempt from these negotiations.

Alnylam’s stock price has nearly doubled this year, to a recent $450. How much more upside do you see?

Richter: If we look just at TTR, the company is valued at around $365 a share. There is about $100 a share of value in the pipeline at current levels. So the upside from here comes down to TTR revenue growth and the pipeline.

What is your other large-cap recommendation?

Richter: Vertex Pharmaceuticals looks interesting after a pullback in its shares. We expect the company’s launch of Alyftrek in cystic fibrosis will do well over time. Pain is another growth driver, although it is debated. Vertex hasn’t yet achieved broad reimbursement for Journavx, its acute pain medication, and we anticipate a more meaningful revenue contribution later this year after the third major pharmacy benefit manager comes online.

We think the market is overlooking the buildout of a third vertical in kidney and autoimmune disease. Vertex acquired Alpine Immune Sciences last year and will have initial Phase 3 data in the first half of 2026 from povetacicept, a dual APRIL/BAFF inhibitor [reducing the production of autoantibodies] in IgA nephropathy. This is a $20 billion market opportunity. Vertex’s treatment is potentially best-in-class, with a once-a-month auto-injector treatment.

Among smaller stocks, I want to highlight Denali Therapeutics ahead of its potential first drug approval for Hunter syndrome by Jan. 5. It leverages the company’s technology platform, designed to transport molecules across the blood-brain barrier. While Hunter syndrome represents a relatively small commercial opportunity, Denali has a clinical and preclinical pipeline of assets leveraging this technology, including for Sanfilippo syndrome—where the FDA has granted an accelerated approval path—Fabry disease, Parkinson’s disease, and Alzheimer’s disease, among others. Denali plans to bring one to two candidates to clinical development each year.

And your last name?

Richter: Enliven Therapeutics is a small, targeted oncology company with a lead asset to treat the blood cancer CML [chronic myeloid leukemia]. This is a more than $9 billion U.S.-branded [drug] market with limited recent drug entries outside of Novartis’ Scemblix, which launched in the front-line setting [as a first-line treatment] last year. We believe Enliven’s drug, entering Phase 3 development, is well positioned to follow Scemblix in earlier lines given its strong data. We also see M&A optionality for this name.

David, what do you like?

Risinger: We don’t see significant mispricings among large-caps, but I am particularly enthusiastic about four SMID-cap companies. Shares of one of them, Centessa Pharmaceuticals, ran up recently.

We expect Centessa to be a leader in the field of narcolepsy. A new class of drugs, orexin agonists, has generated transformational efficacy in keeping patients awake. Centessa has data suggesting that its drug candidates can offer best-in-class potential. Its first-generation candidate, ORX750, is aimed at treating three types of severe narcolepsy—type I, type II, and idiopathic hypersomnia. With its next-gen candidate, ORX142, management plans to pursue indications in neurological and neurodegenerative disorder patients to help them with wakefulness and cognition. A preclinical candidate, ORX489, is in development for the treatment of neuropsychiatric disorders.

The stock has gained around 40% this month. What ignited the rally?

Risinger: Centessa shares traded up significantly this month due to competitors’ disclosure of orexin agonist candidate data at the World Sleep Congress in early September that further validated the efficacy and safety of this new class of wakefulness drugs. In addition, after observing Alkermes’ and Takeda Pharmaceutical’s orexin agonist results, Centessa’s CEO reiterated his expectation that ORX750 has best-in-orexin-class potential.

Next, I mentioned Metsera. Wall Street underappreciates the company’s monthly injectable GLP-1, monthly injectable amylin, daily oral peptide, and peptide-manufacturing scale advantages relative to the competition. Metsera’s monthly GLP-1 requires less than one-tenth of the annual API [active pharmaceutical ingredient] of Lilly’s tirzepatide, and its daily oral peptide requires less than one-fifth of the API of Novo’s 25 milligram oral semaglutide.

[Editor’s note: Pfizer announced on Sept. 22 that it would buy Metsera for up to $7.3 billion, including milestone payments. Metsera rose more than 50% on the news. In light of the deal, Barron’s asked Risinger for another stock pick. He wrote the following in a follow-up email: We are bullish on XOMA Royalty, a biopharma royalty company that is creatively driving shareholder value by acquiring capital and drug royalty rights.

XOMA has a large legacy portfolio, and our investment thesis is that the company’s growth outlook, new product catalysts, and future operating leverage are underappreciated by the market. The next potential major stock catalyst is top-line results for Rezolute’s RZ358 in congenital hyperinsulinism, likely by the end of 2025. XOMA holds high-single-digit to midteens royalty rights on RZ358, which management believes could become its largest royalty stream if RZ358 generates compelling results.]

What else excites you?

Risinger: Roivant Sciences has a portfolio of assets that we believe is undervalued. We hope positive Phase 3 trial results for brepocitinib, for treatment of a rare skin disease called dermatomyositis, will set the stage for Roivant to return to generating revenue starting with a launch in early 2027. Roivant also has several other assets, including more than $4 billion in net cash on its balance sheet, a 57% stake in Immunovant, additional pipeline candidates, and pending royalty claims on Covid vaccines sold by Moderna and Pfizer. [Editor’s note: Roivant posted positive Phase 3 results on Sept. 17, after this Roundtable was held. Following the positive trial results, Risinger reiterated his Outperform rating on the stock and raised his price target from $18 to $22. The stock recently traded around $15.]

Lastly, I’ll touch on a smaller-cap company, Oruka Therapeutics, which is developing ultralong-acting candidates for psoriasis and related skin diseases. The stock has significant upside potential. Its two key drugs are ORKA-001, an injectable IL-23 [Interleukin-23] treatment designed to offer advantages over AbbVie’s Skyrizi, and ORKA-002, an IL-17 AF with potential advantages over UCB’s Bimzelx. In the base case, ORKA-001 will demonstrate similar efficacy to Skyrizi, and less-frequent dosing than Skyrizi’s quarterly maintenance injections. In the bull case, ORKA-001 will demonstrate better efficacy than Skyrizi and have annual maintenance dosing. We anticipate compelling ORKA-001 Phase 2a results in 2026.

Jared, let’s hear from you.

Holz: My first recommendation is Teva Pharmaceutical Industries, which I have pitched in the past. The stock continues to suffer from a lack of definition around the business. Half the business is generic drugs, and the other half is branded biotechs.

The thesis is simple. Over the next three to five years, there is going to be a continued acceleration of the biotech aspect of this company. That should give it a higher multiple than seven times forward earnings. The stock is basically trading like a distressed equity when the risk factors are similar to other large-cap pharma companies—namely, loss of patent protection, drug pricing issues, and such. Most of the risks seem priced in.

One of Teva’s largest branded drugs, Austedo, is a VMAT2 inhibitor used to treat involuntary movements, like Neurocrine Biosciences’ Ingrezza. They will be in the next wave of drugs impacted by the Inflation Reduction Act’s Medicare price negotiations. Even so, Teva will have stable or growing earnings over the next few years. You don’t need a pie-in-the-sky sort of thesis to get 30% or 40% upside in the next year.

Why does Teva still get such a low multiple? Are investors focused on some of the strategic errors made under prior management?

Holz: There may be some investor PTSD around the stock that isn’t deserved. But it also trades in an odd space that doesn’t fit with the rest of the industry.

My next name is Edwards Lifesciences. The panel hasn’t really touched on medical devices, Edwards’ specialty. This is a cardiovascular company with roughly 10% top-line growth. Edwards is the preeminent player in TAVR [transcatheter aortic valve replacement]. It is moving into other areas of cardiovascular disease, such as mitral valve replacement and tricuspid valve replacement. Both areas are just starting to find their footing as new revenue-generating assets for the company. As the Street moves away from focusing on TAVR, a business that has decreased as patients have gotten treated over the past decade, and into mitral and tricuspid, there will be a growthier aspect to this business that hasn’t been apparent over the past couple of years. The stock is out of favor and hasn’t moved much over the past couple of years.

My third idea is NewAmsterdam Pharma. The company has $3 billion in market value and could generate annual revenue well in excess of $3 billion. You aren’t paying up for that revenue.

What does NewAmsterdam do?

Holz: The company has a drug that treats elevated LDL cholesterol. The data to date has been excellent. We are awaiting results on cardiovascular outcomes, which would support broader use and drive significant uptake. The Street is mixed on whether or not the drug will show sufficient benefit in this regard but I think the trial results will be good enough. This is an oral small molecule that patients can use in addition to statins, or in place of statins for those not on statins already.

Then there is NewAmsterdam’s drug pipeline, which doesn’t get talked about too often. The company is exploring the use of its drug for early-onset Alzheimer’s, which could be interesting as we move into 2026. I expect a lot more interest in Alzheimer’s treatments in general next year. NewAmsterdam has an asset in Phase 2 testing that isn’t reflected in the company’s valuation. The company could be a takeover candidate, but a deal isn’t necessary to get an increase in the valuation.

Why will there be more interest in Alzheimer’s next year?

Holz: We will start getting data later this year from a Novo Nordisk trial evaluating whether semaglutide can slow cognitive decline. Also, Eli Lilly’s Trailblazer-Alz 3 trial [testing donanemab in preclinical Alzheimer’s patients] is going to read out. There will be more subcutaneous use of Biogen’s Leqembi over time. This has been an impaired therapeutic category for years, but is starting to turn.

My fourth idea is Vaxcyte, which is starting to get interesting, although it isn’t for everybody. This was a $12 billion [market cap] company a year ago. Now the market cap is down to $4 billion. Vaxcyte had a few missteps with its pneumococcal-disease vaccine in the pediatric population, the larger segment of the market. It is retooling that trial as we speak.

RFK Jr. is probably responsible for a third to half of the demise in this stock. If his status changes, it may go up 30% on that news alone. Therapeutically, the company continues to advance its pneumococcal vaccine in children. The data in trials involving adults has been great. That is a $1 billion to $2 billion market. Given the market cap, you are paying a fair price.

Chris, you aren’t a stockpicker, but are there any stocks that your Raymond James colleagues recommend that you would care to highlight?

Meekins: I’ll highlight three things from different Raymond James analysts. John Ransom, who covers healthcare services, likes CVS Health. The company has new management and has been one of the few bright spots in managed care this year. But the stock is still selling for only about eight times estimated earnings. John sees a margin-recovery story over the next three years on the insurance side of the business because CVS’ Aetna business has been a laggard. The expected recovery is part of a broader theme we’re seeing in managed care. The Medicare Advantage business has taken it in on the chin in the past two or three years, and is probably turning a corner.

Jayson Bedford, who covers medical devices, likes ICU Medical. The stock’s recent performance doesn’t reflect the fact that underlying business momentum is improving. [ICU shares are down about 23% year to date.] The company, which develops and manufactures medical devices for critical care and infusion therapies, has multiple new product launches and ongoing efforts to optimize its cost structure. It has been hit harder on tariffs than most other names in medtech. Our team sees an opportunity.

Lastly, Andrew Cooper, who covers life sciences tools, likes QuidelOrtho, which sells diagnostic tests and related products. Respiratory-disease season is approaching. The stock sells for just seven times 2025 Ebitda [earnings before interest, taxes, depreciation, and amortization]. He sees a lot of opportunities for growth.

All these names are worth watching as part of the broader themes we see as we head into 2026.

Jared, you mentioned the problems with Medicare Advantage, which leads to a question about UnitedHealth Group, whose Medicare Advantage billing practices have come under federal investigation. The trouble at UnitedHealth has been one of the biggest stories of the year in healthcare investing, due to the magnitude of the selloff in its shares, which were down more than 50% at one point, and the fact that the company’s business touches just about every American in one way or another. New leadership is promising low to moderate earnings growth next year, with better growth thereafter, but the company has lingering issues. Most of you don’t cover the stock, but what can we expect from UnitedHealth now?

Meekins: At the low, around $250, the stock was stupid cheap. Now, at $350, investors are paying a pretty high multiple for a growth recovery story. Stephen Hemsley, the former CEO who was brought back to lead UnitedHealth, seems to be resetting the company and setting manageable expectations. United looks to be in a more favorable position than people had thought, and Medicare Advantage rates are likely to be more favorable in the future. This is a company that has the resources to be effective. The insider buying we saw when the stock hit its lows indicated the team’s confidence in the future.

Jared, what are your thoughts?

Holz: It is an execution story at this point, as the company kind of reinvents itself with a number of difficult-to-predict crosscurrents in the background. Today the stock is trading in line with, or perhaps at a slight premium to, the market multiple. It looks like a value stock because the chart is terrible, but earnings have been reset to such a degree that I am not sure you aren’t getting such a good deal at this price. It is a great trading stock. I am not sure I would want to be in it long term.

Meekins: I want to add that I am not worried about the investigations or policy stuff. Worst case, UnitedHealth will be fined, but the company will be fine.

Before we adjourn, a final question: What will next year’s healthcare roundtable focus on?

Richter: We’ll be heading into the midterm elections, so the policy conversation will continue. Alzheimer’s treatments will be an important theme, as Jared mentioned—especially early-onset Alzheimer’s, as we are seeing subcutaneous formulations enter the market.

Another theme will be a focus on cardiovascular disease. We will be starting the new year with data on medications targeting Lp(a) [lipoprotein(a)]. We also spoke to the themes of obesity, and China innovation from 2025 carrying on into 2026. And hopefully, we will be talking about new innovation cycles.

Meekins: You’re right about the midterms. But a policy person will have less to say on this roundtable a year from now, because broader macroeconomic issues will probably weigh more heavily on the market than regulatory decisions. We will get a lot of clarity on Most Favored Nation pricing, and implementation of the Big Beautiful Bill will be under way. We will have a better idea of what the courts allow, and don’t allow, regarding restrictions on the presidency. At the FDA, we will have an entire year of additional information on approvals. There will be a lot more certainty in healthcare than there is today.

Risinger: Hopefully, we will be talking about a sector that has had a better year. Healthcare took a lot of arrows in 2025. With interest rates coming down, that will benefit SMID-cap biotech. And some of the overhangs, such as drug pricing and the significant FDA uncertainty, will lift. We may look back at 2025 and say it was a bottoming period for healthcare stocks due to the challenges the industry has faced this year.

Jared, we’ll give you the last word.

Holz: As I mentioned, Alzheimer’s categorically is becoming more interesting for investors, whether we’re talking about current or new players in the field. In obesity treatments, we will see who is real and who isn’t in the next 12 months among a host of large-cap pharma and biotech players. Right now it is a two-player market. I expect it will remain predominantly two players, but there could be some assets that wind up surprising to the upside.

We will be talking about the midterms, but we always start talking about the next election cycle two years prior. Lastly, every big-time banker on Wall Street is predicting a massive wave of M&A, not just for healthcare but across the board. Assuming this comes to fruition, what will consolidation look like in healthcare?

Good question. We’ll take it up next year. Thanks, everyone.

This week was a fairly busy one for large financings, with eight of the top 10 exceeding the $100 million mark. Leading the way were two software providers: Judi Health, focused on health benefits software, and Filevine, used for legal practice management.

1. (tied) Judi Health, $400M, health benefits: Judi Health, formerly known as Capital RX, a New York-based provider of software for employers and health plans to manage benefits, announced $400 million in new investment. The financing included a $252 million Series F round along with what the company described as additional investments into its securities, led by Wellington Management and General Catalyst.

1. (tied) Filevine, $400M, legal tech: Salt Lake City-based Filevine, a provider of legal practice management software, announced that it closed on two previously undisclosed rounds totaling $400 million. Insight Partners led the first round and joined Accel and Halo Experience Co. to co-lead the second.

3. Modular, $250M, AI infrastructure: Modular, developer of an enterprise AI inference stack, raised $250 million in a Series C financing led by US Innovative Technology Fund at a $1.6 billion valuation. Founded in 2022, the Palo Alto, California-based company has raised $380 million in known funding to date.

4. AppZen, $180M, fintech: San Jose, California-based AppZen, an agentic AI platform for finance teams, picked up $180 million in Series D funding led by Riverwood Capital. The company said it wants its software to enable CFOs and controllers to replace over 50% of manual work.

5. Distyl AI, $175M, enterprise software: Distyl AI, a developer of AI tools for enterprise customers, scooped up a $175 million funding round backed by Lightspeed Venture Partners, Khosla Ventures, DST Global, Coatue and Dell Technologies Capital. The financing sets a $1.8 billion valuation for the San Francisco-based company.

6. Empower Semiconductor, $140M, AI processors: Empower Semiconductor, a developer of power-efficient AI processors, closed on more than $140 million in Series D financing led by Fidelity. The San Jose, California-based company says its technology can enable energy savings and higher throughput of AI platforms across data centers.

7. Quo, $105M, business communications: San Francisco-based Quo (formerly OpenPhone), raised $105 million in fresh financing led by General Catalyst. The company offers an AI-powered phone system marketed to small businesses.

8. Zerohash, $104M, cryptocurrency: Crypto and stablecoin infrastructure startup Zerohash raised $104 million in a funding round led by Interactive Brokers Group. Founded in 2015, the Chicago-based company has raised $277 million in known funding to date, per Crunchbase data.

9. Inspiren, $100M, healthcare AI: New York-based Inspiren, developer of an AI-powered platform and connected-device system for senior living communities, secured $100 million in a Series B round led by Insight Partners.

10. Thyme Care, $97M, oncology care: Thyme Care, a Nashville, Tennessee-based startup that describes itself as a provider of “value-based care” for oncology patients, picked up $97 million in Series D financing from a long list of venture and strategic backers.