Latest / Making Medicine / Making Medicine ft. Daphne Zohar. Biotech Flywheels, Policy Risks, and the Future of Innovation

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Making Medicine ft. Daphne Zohar. Biotech Flywheels, Policy Risks, and the Future of Innovation · Making Medicine

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  Speaker 1: At Making Medicine. We're reporting on the headlines, not making
• 0:03
  Speaker 1: medical recommendations. For personal health questions, always consult a doctor.
• 0:08
  Speaker 1: Nothing in this episode constitutes investment, financial, or legal advice,
• 0:12
  Speaker 1: and please consult your own advisors before making decisions. Hello everyone,
• 0:24
  Speaker 1: and welcome back to the Making Medicine Podcast or Science
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  Speaker 1: Policy and Innovation Meet. As always, I'm your host, John Stanford.
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  Speaker 1: Today we have founder and CEO of Seaport Therapeutics, Daphney Zohar,
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  Speaker 1: joining us to share her take on what's happening in
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  Speaker 1: the biotech ecosystem.
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  Speaker 2: Prior to Seaport, she of course.
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  Speaker 1: Founded PureTech Health, where she helped co found companies like
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  Speaker 1: Karuna Therapeutics. Her leadership drove a pipeline of nearly thirty
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  Speaker 1: new medicines and had a clinical success rate six times
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  Speaker 1: the industry average. Clearly, she's doing something right, and that's
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  Speaker 1: why she's been recognized by about every outlet imaginable as
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  Speaker 1: a leader in the biotech space. She sits on the
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  Speaker 1: executive committee for Bio and co hosts her own biotech
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  Speaker 1: industry podcast, The Biotech Hangout, which I'm sure many of
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  Speaker 1: you have been on. It's lots to cover and it's
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  Speaker 1: a great episode. So let's get into the show. Daphne,
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  Speaker 1: thanks for being on the show.
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  Speaker 3: Thanks so much for having me.
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  Speaker 1: Well, before we dive into all the things that you
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  Speaker 1: are seeing in the ecosystem, one of the most often
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  Speaker 1: questions we get from listeners is how did and so
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  Speaker 1: and so get there? How do you get to the
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  Speaker 1: top of stats status list, which, of course you're at,
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  Speaker 1: And so I'm curious, even before Seaport and PureTech, what
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  Speaker 1: was your path to get into biotech?
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  Speaker 2: Why are you where you are today?
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  Speaker 3: So the idea that I had in starting PureTech was
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  Speaker 3: to create almost like an institutional version of an entrepreneur,
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  Speaker 3: So just like a VC is an institutional version of
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  Speaker 3: an angel investment or you could think of it that way.
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  Speaker 3: So that was the idea of having a a process,
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  Speaker 3: rigorous process where different people are doing different things in
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  Speaker 3: order to start a company create a new program. And
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  Speaker 3: that was actually the first of the hub and spoke
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  Speaker 3: model biotechs. So we were kind of a hybrid between
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  Speaker 3: venture creation and biotech biopharma, and we're the first. Now
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  Speaker 3: there's a number of these types of entities that are
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  Speaker 3: for example like Bridge Bio, roy Vance and Teza and
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  Speaker 3: many others. And I think the advantage of the hub
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  Speaker 3: and spoke model is that you have one hub a
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  Speaker 3: group of individuals that can move their time and resources
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  Speaker 3: between different programs. So it's been a very successful model
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  Speaker 3: from an r D perspective, but a little bit less
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  Speaker 3: so from an investor perspective because it's less well understood
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  Speaker 3: by investors.
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  Speaker 1: In part of your incredible bio telling people who is
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  Speaker 1: going to be on the show, you know, one of
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  Speaker 1: the things we highlighted is your clinical success outcomes. You're
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  Speaker 1: not one or two standard deviations away, you are six
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  Speaker 1: x what would be expected. Do you attribute that to
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  Speaker 1: this hub and spoke mentality or is that something different.
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  Speaker 3: I think it's a little bit of that because there's
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  Speaker 3: a rigor and by the way, that doesn't have to
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  Speaker 3: be limited to hub and spoke. At Seaport, we have
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  Speaker 3: the same approach, which is that you are aligned with everybody,
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  Speaker 3: all the stakeholholders are aligned that if something is not
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  Speaker 3: working well, you shut it down if you need to so,
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  Speaker 3: and you can do that if you have, for example,
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  Speaker 3: a platform and multiple programs like we have at Seaport.
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  Speaker 3: But I think the second part of what was striving
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  Speaker 3: the success in the clinic is this idea that there's
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  Speaker 3: often failure when you go from pre clinical to clinical
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  Speaker 3: proof of concept. And one of the things that we
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  Speaker 3: did well at pure Tech and now at Seaport is
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  Speaker 3: we started with signals of human efficacy. In the case
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  Speaker 3: of Seaport, we're identifying new medicines that had previously shown
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  Speaker 3: clinical validation but were held back by an issue that
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  Speaker 3: we can now solve with our GLYFT platform, so we
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  Speaker 3: don't have the same translational risk in terms of human
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  Speaker 3: proof of concept. There's other risks, of course, but we
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  Speaker 3: take that out of the equation and that helps to
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  Speaker 3: improve clinical success rate. There's also, I mean, I think
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  Speaker 3: a factor of experience and execution, design and execution of studies,
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  Speaker 3: and I think that's a big part of what we're
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  Speaker 3: doing at Seaport as well.
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  Speaker 2: Well.
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  Speaker 1: I know you're saying that there's a little lag still
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  Speaker 1: in the investment community around understanding, but de risking is
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  Speaker 1: certainly something they will understand. It's certainly like I love
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  Speaker 1: that sort of concept of human signals as early on
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  Speaker 1: as possible, because that is where the science takes a
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  Speaker 1: detour for folks not familiar. So obviously pure Tech enormous success,
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  Speaker 1: particularly with Karuna and then Seaport. What problem are you
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  Speaker 1: do you feel like you're trying to solve because from
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  Speaker 1: a successful entrepreneur standpoint, building pure Tech could have been enough.
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  Speaker 1: It's been enormously successful and impactful. You know what did
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  Speaker 1: you see about Seaport that makes it feel like it's
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  Speaker 1: kept you hungry to take the leadership home there?
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  Speaker 3: Right? So at pure Tech we were applying this model,
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  Speaker 3: this hub's spoke model. Seaport we don't have the Hubbins
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  Speaker 3: poke model, but we're basically a traditional biotech with the platform,
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  Speaker 3: technology and multiple programs. The most advanced is in a
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  Speaker 3: phase to the study. So in terms of the problem
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  Speaker 3: that we're trying to solve at Seaport and why I
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  Speaker 3: wanted to join Seaport, take a step back and go
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  Speaker 3: back to the founding of Karuna, which I did together
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  Speaker 3: with colle exit pure Tech and Dif Paul, who's my
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  Speaker 3: co founder, one of my co founders at Seaport. We
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  Speaker 3: had very similar strategy in many ways at Karuna. So
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  Speaker 3: the idea was to start with a molecule that had
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  Speaker 3: previously shown efficacy. In that case, it was zenomalon in
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  Speaker 3: the hands of Eli Lilly, but it had issues. It
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  Speaker 3: had GI related aes, which caused it to not be developed.
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  Speaker 3: At Pure Tech, we came up with this idea of
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  Speaker 3: what's now called Cobenfi or car XT, to couple zenomalon
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  Speaker 3: with a muscron receptor antagonist that doesn't cross the blood
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  Speaker 3: brain barrier, and that therefore the idea is that you
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  Speaker 3: wouldn't have the side effects in the periphery, but you'd
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  Speaker 3: get the efficacy in the brain. So that was an idea.
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  Speaker 3: But at Seaport we have a very similar strategy. We're
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  Speaker 3: taking drugs that previously shown efficacy. But we have here
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  Speaker 3: something I think we didn't have at Corona, which is
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  Speaker 3: the glyph platform, and that actually is uniquely positioned to
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  Speaker 3: solve some of the issues that have held back potentially
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  Speaker 3: really important psychiatric medicines. So the glyph platform, what it
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  Speaker 3: does is it traffics drugs through the lymphatic system, and
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  Speaker 3: what that enables is the avoidance of first past tabolism.
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  Speaker 3: So you can take drugs that had previously only been
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  Speaker 3: administered via IV and administer them orally. You can address
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  Speaker 3: side effects like liver related as and other side effects,
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  Speaker 3: and you also create novel composition of matter IP anytime
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  Speaker 3: you glyph a molecule, which is something we didn't have
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  Speaker 3: at Karuna. Actually, we had one hundred investors that passed
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  Speaker 3: on Karuna and the biggest reason was that there wasn't
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  Speaker 3: composition of matter IP. So those are some differences, some similarities,
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  Speaker 3: and you ask what the issue is, like, what are
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  Speaker 3: we trying to solve. What we're trying to do is
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  Speaker 3: address two of the biggest areas of on need in
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  Speaker 3: chronic conditions, which are depression and anxiety, and these are
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  Speaker 3: really among the most disabling of all neuropsychiatric conditions. There's
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  Speaker 3: hundreds of millions of people affected. The drugs that we
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  Speaker 3: have have issues, they have modest efficacy, a third of
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  Speaker 3: patients don't respond, they take weeks to work. But even
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  Speaker 3: with that, if you look at the drugs that were
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  Speaker 3: a proof for depression, many of them, if not all
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  Speaker 3: of them, have been successful commercially successful in terms of
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  Speaker 3: reaching patients because the needs are so great. Now, coming
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  Speaker 3: back to myself, what made me want to do this?
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  Speaker 3: While we had developed the glyph platform at pure Tech,
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  Speaker 3: so we had actually licensed that in Fromnash University, we
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  Speaker 3: were working on it for about five years and I
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  Speaker 3: saw that it was working, so we were applying you know,
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  Speaker 3: we have we had a number of different technology platforms
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  Speaker 3: that we were advancing and this one kept working, and
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  Speaker 3: so that was one piece of it. We were applying
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  Speaker 3: it to different molecules moving forward. And then the second
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  Speaker 3: piece of it was that I have family members who
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  Speaker 3: are affected depression and anxiety. I have a sixteen year
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  Speaker 3: old with depression, my mother has anxiety. So I'm very
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  Speaker 3: motivated to find ways to help not just my family,
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  Speaker 3: but I think there's hardly any families that aren't affected
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  Speaker 3: by depression and anxiety. So the idea that you could
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  Speaker 3: actually make an impact broadly, and we know these drugs.
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  Speaker 3: There's some really great drugs that work but haven't been advanced,
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  Speaker 3: and so that was really the thinking behind it. And
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  Speaker 3: then the third piece of it was working with colleagues
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  Speaker 3: that I've worked with before, like Steve Paul and then
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  Speaker 3: Bob Nelson at Arch was our first investor at Karuna,
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  Speaker 3: so that was also a big draw.
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  Speaker 1: Well. I think that the personal connection is something that
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  Speaker 1: comes through on probably every conversation we have with a
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  Speaker 1: CEO or a founder, is the personal opportunity for impact
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  Speaker 1: and so, you know, I think we're all glad that
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  Speaker 1: you're staying in in after so much success that you know,
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  Speaker 1: it'll be great to see what Seaport brings next. But
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  Speaker 1: Seaport's not even enough. You're also on the exec board
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  Speaker 1: at Bio and you do Biotech Hangout. Curious what drove
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  Speaker 1: you to advocacy and what drove you to start Biotech
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  Speaker 1: Hangout and how has that ability to communicate with so
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  Speaker 1: many people played a role in your work.
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  Speaker 3: Yeah, So in terms of advocacy, I've been involved with
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  Speaker 3: Bio and it's a great organization. I'm also involved with
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  Speaker 3: No Patient Left Behind group, you know well, And I
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  Speaker 3: think that the idea of having the small biotech voice
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  Speaker 3: as part of these general policy discussions is very important
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  Speaker 3: because there's misperceptions. People don't know that we're you know,
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  Speaker 3: we're scrappy entrepreneurs where it's very hard to raise money
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  Speaker 3: for the translation of academic innovation what's called the Valley
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  Speaker 3: of Death, and there's a tremendous need to think about
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  Speaker 3: policies that helped to feed the ecosystem so that we
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  Speaker 3: have the ability to raise money and develop new medicines.
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  Speaker 3: So we had come back to some of the policy stuff.
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  Speaker 3: Theres of Biotech Hangout, it was the pandemic and it
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  Speaker 3: was right after JP Morgan. I think there was this
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  Speaker 3: thing called Clubhouse which came into was very popular and
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  Speaker 3: now is out. But Chris Garabedian, Brad luan Car got
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  Speaker 3: on right after JP Morgan and it was like a
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  Speaker 3: virtual JP Morgan. They started talking. Hundreds of people joined
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  Speaker 3: and that was the start of Biotech Hangout. I joined.
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  Speaker 3: I think it was like the second or third week
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  Speaker 3: I joined the audience. Chris saw me, brought me up,
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  Speaker 3: and then after that I became kind of a regular
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  Speaker 3: co host and after a while we decided to move
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  Speaker 3: it to Biotech, to Spaces, to Twitter, but we're also
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  Speaker 3: we stream on podcasts and Spotify, and I think really
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  Speaker 3: what's unique about Hangout is it's a community of people
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  Speaker 3: we you know, kind of put together a list of
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  Speaker 3: the top ten stories. We send an email around. There's
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  Speaker 3: no scripting really, there's you know, it's completely live. Each
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  Speaker 3: week we have different co hosts and it's almost like
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  Speaker 3: the water cooler discussion and we've got analysts, investors, CEO,
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  Speaker 3: so it's what the insiders are saying about the latest news,
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  Speaker 3: and I think it's somewhat unique. We do invite journalists
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  Speaker 3: on a lot, so you know, we we're not trying
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  Speaker 3: to compete with journalists. It's just like a different venue.
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  Speaker 1: I mean, it's such a put on, like your high
• 12:43
  Speaker 1: school history had. It's a primary source, and that's one
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  Speaker 1: of the things I like. I love endpoints, I love
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  Speaker 1: stat and it's great. But as a listener, if I
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  Speaker 1: want to know what's really happening in the biotech space,
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  Speaker 1: that's all I kind of have to go to to
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  Speaker 1: hear it straight from people who are living it, not
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  Speaker 1: the reporting on the people who are living it. So
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  Speaker 1: I just think it's it's been incredibly helpful to us
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  Speaker 1: doing our work because if you think about what incubates
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  Speaker 1: trying to do, we're trying to translate that for policymakers
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  Speaker 1: and address some of those misconceptions.
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  Speaker 2: And so it's it's great.
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  Speaker 1: I ended up downloading Clubhouse and was like, I don't
• 13:21
  Speaker 1: know what this app is, but I know there's one
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  Speaker 1: conversation I want to hear on it, and so it's
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  Speaker 1: it's been a huge success.
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  Speaker 2: So congratulations, Yeah, thank you.
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  Speaker 3: And I have to say it's a community, so you know,
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  Speaker 3: we have analysts like Josh Shimmer and your own Werber,
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  Speaker 3: and you know Paul Matees, and I Don't'm not going
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  Speaker 3: to even name all the analysts, investors and others. And
• 13:45
  Speaker 3: I actually have gotten busy and so I'm on every
• 13:49
  Speaker 3: like three or four weeks. But it just kind of
• 13:52
  Speaker 3: runs itself an end. I should say Shannon and Danielle
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  Speaker 3: on my team pretty much. They do all the heavy lifting.
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  Speaker 1: So there's always a great team behind everyone. And making medicine,
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  Speaker 1: we certainly have that as well. I want to pivot
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  Speaker 1: a little bit to the ecosystem. I guess one last
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  Speaker 1: question about you and your companies. You know, we've had
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  Speaker 1: a lot of conversation about Massachusetts, had a lot of
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  Speaker 1: conversations about clusters. I was just in Japan for a
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  Speaker 1: week where they're trying to build these clusters. Could Seaport
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  Speaker 1: be seaport? Could pure tech be pure tech outside of Boston?
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  Speaker 3: Yeah, I mean, I think that there's a community here
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  Speaker 3: that is really unique, and it's a community that builds
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  Speaker 3: on the academic institutions here in Boston, the research and
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  Speaker 3: teaching hospitals where there's a lot of innovation, and then
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  Speaker 3: you have major pharmaceutical companies here. So there's that piece
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  Speaker 3: of it. There's CEOs and entrepreneurs that have already done
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  Speaker 3: this sort of translational work and broad drugs, and that
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  Speaker 3: brought new medicines forward, patients raise capital, capital turns back
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  Speaker 3: to their shareholders. So there's this whole ecosystem. And I
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  Speaker 3: think that I've seen places like for example, in the UK,
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  Speaker 3: where you've got really great science and you've got pieces
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  Speaker 3: of the ecosystem, but there you have an issue with
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  Speaker 3: the investment landscape for the later stage companies. And so
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  Speaker 3: what ends up happening in places like that is you
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  Speaker 3: get a lot of great innovation and then the companies,
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  Speaker 3: once again to a certain stage, they end up moving
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  Speaker 3: to the US, whether it be the Nasdaq or kind
• 15:35
  Speaker 3: of physically moving to the US. So that's I think
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  Speaker 3: you need the whole ecosystem. It is possible to recreate
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  Speaker 3: that ecosystem. I don't know if we would be the
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  Speaker 3: same company. I know I wouldn't have been able to
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  Speaker 3: build my network in the same way because when I
• 15:50
  Speaker 3: started peer tech, I didn't know anybody in this industry,
• 15:53
  Speaker 3: and it was like you meet one person, you meet
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  Speaker 3: another person, you just kind of build your network over years,
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  Speaker 3: but it's it's easier to do when you're seeing people
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  Speaker 3: in person.
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  Speaker 1: Well, that should be a great reminder of everyone starts somewhere,
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  Speaker 1: and so we definitely have a set of entrepreneurs early
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  Speaker 1: early stage, maybe even commercializing professors or things like that.
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  Speaker 1: There was a point when Daphne didn't know anybody and
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  Speaker 1: was going out building building a network around Kendall Square
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  Speaker 1: at coffee shop. So that's that's a bright spot for
• 16:26
  Speaker 1: people to remember.
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  Speaker 3: Oh, I mean, I can tell you raising our first
• 16:30
  Speaker 3: one hundred thousand dollars was so much harder than raising
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  Speaker 3: like three hundred and twenty five million at Seaport. I mean,
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  Speaker 3: it was so hard, and I think that people can
• 16:42
  Speaker 3: get discouraged, and there is a tendency, there's kind of
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  Speaker 3: a virtuous cycle. Once you've shown that you can do it,
• 16:48
  Speaker 3: then everybody wants to invest and back you. But up
• 16:53
  Speaker 3: until that time, it's really hard. So it's it's something
• 16:58
  Speaker 3: that you can either apprentice, like you can join a
• 17:01
  Speaker 3: venture firm, or you can join a company you can
• 17:03
  Speaker 3: learn from people and kind of build your network that way,
• 17:08
  Speaker 3: or you can prove yourself and that's harder. It takes
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  Speaker 3: many years to it's yeah, it's a hard industry to
• 17:16
  Speaker 3: break into.
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  Speaker 1: Well, on that concept of the link between capital and
• 17:24
  Speaker 1: proven people and exits, I saw you had posted recently
• 17:28
  Speaker 1: on the Mets Sarah News. I really liked your take
• 17:30
  Speaker 1: on this that, besides the drama between the acquiring companies,
• 17:37
  Speaker 1: that the acquisition was a particular success for the people
• 17:41
  Speaker 1: who had invest in it because it would recycle the
• 17:44
  Speaker 1: funds that were in there, and it gives a much
• 17:46
  Speaker 1: needed sort of liquidity moment to some really key partners
• 17:50
  Speaker 1: that we've profiled. Walk us through that why is it
• 17:53
  Speaker 1: so important not for Pfizer and mets Erah, but what
• 17:57
  Speaker 1: this means for biotechs who are out there looking for capital.
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  Speaker 3: Right, So we talked a little bit about this kind
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  Speaker 3: of value of death, and the idea is that there's
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  Speaker 3: a lot of innovations that don't make it across this
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  Speaker 3: value of death, and the value of death is the
• 18:13
  Speaker 3: space between academic innovation and the point of time where
• 18:18
  Speaker 3: investors are actively supporting programs, and that's usually posts some
• 18:23
  Speaker 3: kind of proof of concept. So what ends up happening
• 18:28
  Speaker 3: is investors back entrepreneurs that are developing new medicines, usually
• 18:35
  Speaker 3: after they've proven or they've answered key questions. So there's
• 18:38
  Speaker 3: a little bit of a chicken and egg situation in
• 18:41
  Speaker 3: terms of the earlier stage of drug development. People say, oh,
• 18:45
  Speaker 3: you know, come back to us after you've done the
• 18:46
  Speaker 3: following three ex experiments. A lot of for example, pharma
• 18:50
  Speaker 3: companies will say that they'll be right there. They'll know
• 18:53
  Speaker 3: that there's some exciting work happening, and they'll say get
• 18:56
  Speaker 3: back to us when you've done those experiments. Or there's
• 18:58
  Speaker 3: a lot of vcs that say, you know, we're only
• 19:01
  Speaker 3: backing things post proof of concept. So what happens when
• 19:06
  Speaker 3: you get M and A transactions that pay off the
• 19:09
  Speaker 3: ecosystem that backed these many early ideas is that you
• 19:14
  Speaker 3: can then they can then reinvest, redeploy. And the list
• 19:18
  Speaker 3: of investors that I shared there were investors like Arch
• 19:22
  Speaker 3: for example, one of our investors, Great, very innovative, they've
• 19:28
  Speaker 3: done a lot for early stage innovation, but also later
• 19:32
  Speaker 3: stage invest investors like Fidelity, and when they do really
• 19:38
  Speaker 3: well and own you fourteen percent or close to fifteen
• 19:42
  Speaker 3: percent of a company that sold for nine billion dollars.
• 19:46
  Speaker 3: The next generation of companies that are trying to do
• 19:50
  Speaker 3: their next clinical proof of concept, they have multiple investors
• 19:55
  Speaker 3: that are interested in backing because they want to back
• 19:58
  Speaker 3: the next Mets Sarah or the next blueprint or the
• 20:02
  Speaker 3: next You know, there's many different companies that have had
• 20:07
  Speaker 3: successful exits this year. It feels like it's opening up.
• 20:09
  Speaker 3: IPOs still haven't happened, so you know, there's a few
• 20:13
  Speaker 3: dipeal markets not fully open, but you do see M
• 20:17
  Speaker 3: and A transactions follow ons are healthy, So there are
• 20:22
  Speaker 3: positive signals.
• 20:23
  Speaker 1: You know, and I think those positive signals are critically
• 20:27
  Speaker 1: important because of some of the policy uncertainty, gloom, frankly
• 20:33
  Speaker 1: bad policy over the last few years, as we would
• 20:37
  Speaker 1: see as it relates to price controls. You mentioned China,
• 20:40
  Speaker 1: so let's stay there for a moment. How do you
• 20:45
  Speaker 1: successful biotech executive. You're as central to this ecosystem as anyone.
• 20:53
  Speaker 1: How do you see China intersecting with this industry?
• 20:57
  Speaker 3: I think there's learning, right, so we can learn, and
• 21:01
  Speaker 3: we should learn, and we should emulate the things that
• 21:04
  Speaker 3: they're doing well. And that has to do with the speed,
• 21:08
  Speaker 3: speed to get into the clinics, speed to run clinical studies,
• 21:13
  Speaker 3: and you know, many many resources that the government in
• 21:19
  Speaker 3: China has invested in those capabilities, and I hear, for example,
• 21:24
  Speaker 3: Mcaray and others talking about emulating that here in the US,
• 21:28
  Speaker 3: so here positive signals. I don't know how quickly we'll
• 21:34
  Speaker 3: be able to translate those, but I know that, for example,
• 21:37
  Speaker 3: we will do early phase one studies, early proof of
• 21:41
  Speaker 3: concept studies, often in Australia because it's quicker, and then
• 21:45
  Speaker 3: we'll file an I and D later. So you know,
• 21:47
  Speaker 3: there's there's definitely learnings from places like Australia, like trend.
• 21:52
  Speaker 3: I think there's a whole other piece of China which
• 21:55
  Speaker 3: is very concerning, and that has to do with the
• 21:58
  Speaker 3: You know, you could say to be charitable, you could
• 22:01
  Speaker 3: say me too fast follower, and if you wanted to
• 22:06
  Speaker 3: be a little bit more aggressive, you could say ip
• 22:09
  Speaker 3: theft right, So what happens when a company that is
• 22:13
  Speaker 3: innovating goes and publishes in nature or science, files a
• 22:18
  Speaker 3: patent and then you know that there's a group of
• 22:23
  Speaker 3: companies in China that quickly take what you just published
• 22:27
  Speaker 3: and move ahead of you. And then I think the
• 22:30
  Speaker 3: other piece of it is what happens when large pharmaceutical
• 22:33
  Speaker 3: companies start doing big deals with those companies, and that's
• 22:36
  Speaker 3: when you start getting concerns so what could we do
• 22:39
  Speaker 3: from a policy perspective, I think there's two pieces of it.
• 22:43
  Speaker 3: The carrot where whenever I bring up the carrot, everybody supportive.
• 22:46
  Speaker 3: When I bring up the stick, there's a little bit
• 22:49
  Speaker 3: less support. So I'll bring up both and you know,
• 22:52
  Speaker 3: I'd be fine with just the carrot. But how do
• 22:55
  Speaker 3: you make it more attractive for large pharmaceutical companies to
• 22:58
  Speaker 3: do deals with you by attacks? And I think there's
• 23:02
  Speaker 3: a number of things you could do, like tax incentives.
• 23:05
  Speaker 3: You know, I've tried to advocate for making net operating
• 23:10
  Speaker 3: losses nls survive major dilute of financings and M and
• 23:14
  Speaker 3: A transactions, because like if you could actually if a
• 23:17
  Speaker 3: big pharma company could access your NLS and you have
• 23:19
  Speaker 3: three hundred million of costs or you know, whatever it is,
• 23:24
  Speaker 3: by the time the big pharma company is buying the
• 23:26
  Speaker 3: smaller biotech, that's like, you know, obviously going to make
• 23:30
  Speaker 3: the acquisition more attractive. Similar to what you see with
• 23:34
  Speaker 3: the vouchers, right, So the pediatric vouchers and the rare
• 23:38
  Speaker 3: disease these vouchers which are transferred and they actually have value.
• 23:41
  Speaker 3: So I think that there's a number of things from
• 23:45
  Speaker 3: a policy perspective that we could do, and those could
• 23:47
  Speaker 3: be tied to innovator status US you know, domiciled companies
• 23:53
  Speaker 3: that have been advancing innovations from the US and things
• 23:57
  Speaker 3: like that. The other thing that you could think of
• 24:00
  Speaker 3: about is the stick approaches, and that is to tie
• 24:03
  Speaker 3: regulatory status reimbursement even FTC related M and A decisions
• 24:09
  Speaker 3: to being the innovator and not having any IP theft involved.
• 24:17
  Speaker 3: So that's more complicated, it's more controversial.
• 24:21
  Speaker 2: All ideas come with controversy.
• 24:23
  Speaker 1: I want to go back to the I'm going to
• 24:26
  Speaker 1: say back to you that the NL idea. We've had
• 24:29
  Speaker 1: some folks come on, some sort of China experts and
• 24:32
  Speaker 1: we talk about they're selling similar innovation for sixty seventy
• 24:37
  Speaker 1: cents on the dollar. One of the concepts could be
• 24:42
  Speaker 1: level setting that to US biotech would be allowing the NL,
• 24:45
  Speaker 1: and that's how you could close the gap between a
• 24:49
  Speaker 1: cheaper asset out of China that frankly was built on
• 24:52
  Speaker 1: the back of innovation maybe somewhere else, and the US
• 24:56
  Speaker 1: biotechs would have these recognizable losses that frankly could get
• 25:01
  Speaker 1: it closer to evening out.
• 25:02
  Speaker 2: Is that am I saying that right exactly.
• 25:05
  Speaker 3: So if you're looking at two different companies, ones in China,
• 25:08
  Speaker 3: ones in the US, and the US company has invested
• 25:11
  Speaker 3: a lot in R and D and that is then
• 25:16
  Speaker 3: you could see that in the NLS, and then you
• 25:18
  Speaker 3: can actually access those NLS and use them, you know,
• 25:21
  Speaker 3: to offset profits because you're a large company and you're
• 25:24
  Speaker 3: making profits. The smaller companies actually can't benefit from the
• 25:27
  Speaker 3: NLS often, So it would be a really nice way
• 25:31
  Speaker 3: to reinforce the ecosystem, the M and A, the recirculation
• 25:34
  Speaker 3: of capital, people and other resources back to the early
• 25:39
  Speaker 3: stage so that new medicines can get developed.
• 25:42
  Speaker 1: Well, it's a I mean, it's certainly timely. We don't
• 25:46
  Speaker 1: have a meeting with a policy maker where China doesn't
• 25:48
  Speaker 1: come up. And I think we are beginning to see
• 25:51
  Speaker 1: depending on where you are in the value chain, even
• 25:54
  Speaker 1: just amongst investors, we have some in the investor community
• 25:58
  Speaker 1: that have been making really relationships and plans in China
• 26:02
  Speaker 1: and some folks who have stayed far away. And now
• 26:04
  Speaker 1: that's leading to divergent views around the next step. But
• 26:09
  Speaker 1: I think what's critically clear is this is a conversation
• 26:12
  Speaker 1: we we have to be having and kicking around these
• 26:15
  Speaker 1: ideas controversial or not.
• 26:17
  Speaker 3: For sure, glad that you're doing that. By the way,
• 26:19
  Speaker 3: it's really important.
• 26:21
  Speaker 1: Yeah, it's I think it's it's critically important. It comes
• 26:25
  Speaker 1: up as often as the other topic I want to
• 26:27
  Speaker 1: I want to get your thoughts on of price controls broadly,
• 26:31
  Speaker 1: because we have and of course under President Biden we
• 26:35
  Speaker 1: found ourselves stuck with the IRA, the pill penalty, orphan cures,
• 26:40
  Speaker 1: which has sort of been since addressed in one big
• 26:43
  Speaker 1: beautiful bill instead of going into the weeds of MFN specifically,
• 26:50
  Speaker 1: the concept of a price control as someone who has
• 26:54
  Speaker 1: created a company led to actual medicine creation. If we say, hey, X,
• 27:01
  Speaker 1: Y and Z therapeutic is likely to be price controlled,
• 27:05
  Speaker 1: walk us through from your executive position. If price controls
• 27:09
  Speaker 1: existed tomorrow like they do in the EU, how could
• 27:13
  Speaker 1: that change things at sport right?
• 27:16
  Speaker 3: Well, I mean I would say, first of all, it
• 27:17
  Speaker 3: would change things for patients because in the EU they
• 27:20
  Speaker 3: don't have access to the same medicines that we have,
• 27:23
  Speaker 3: and I think that's going to get even worse with
• 27:25
  Speaker 3: some of the MFN policy. So companies are going to
• 27:30
  Speaker 3: make choices about whether it's worth it to launch in
• 27:32
  Speaker 3: the EU in the past, and I completely agree with
• 27:36
  Speaker 3: the concept behind MFN right, the idea that we want
• 27:40
  Speaker 3: to fix this imbalance the free riding system of rest
• 27:45
  Speaker 3: of the world over the US. One hundred percent agree
• 27:48
  Speaker 3: with that approach. The question is how you do it.
• 27:51
  Speaker 3: And if you slap a price control, what you're doing
• 27:57
  Speaker 3: is you're limiting the upside. And so coming back to
• 27:59
  Speaker 3: this value of death right, one out of one hundred
• 28:04
  Speaker 3: medicines make it. And it's even like one out of
• 28:07
  Speaker 3: two hundred if you go back to like patented innovations,
• 28:10
  Speaker 3: if you all the way back like things that just
• 28:12
  Speaker 3: are ideas that get patented versus those that actually get
• 28:15
  Speaker 3: spun out or into companies or licensed out, think about
• 28:21
  Speaker 3: one percent or less make it all the way. So
• 28:25
  Speaker 3: if you're an investor, en it takes ten to fifteen
• 28:29
  Speaker 3: years or more to take that new medicine from academia
• 28:35
  Speaker 3: all the way to patients. If you're an investor, there's
• 28:38
  Speaker 3: all this risk involved. And the only reason why you're
• 28:40
  Speaker 3: taking on the risk is because you know that every
• 28:43
  Speaker 3: once in a while you're going to have a payout
• 28:46
  Speaker 3: that's going to be you know, five ten billion dollar payout,
• 28:50
  Speaker 3: which then recycles the cash back. It pays off all
• 28:53
  Speaker 3: the ones that didn't succeed, because there are going to
• 28:56
  Speaker 3: be a number of these that investors back that get
• 28:59
  Speaker 3: shut down. So if you cap the upside, what's going
• 29:03
  Speaker 3: to happen is investors are going to just move their
• 29:05
  Speaker 3: money to other things. I mean, ready, if you look
• 29:08
  Speaker 3: at the XBI over the last five years versus the
• 29:12
  Speaker 3: SMP five hundred, XBI has underperformed, right, So it's true
• 29:19
  Speaker 3: that right now we're in a situation where it's looking
• 29:21
  Speaker 3: like XBI and biotechs are really kind of on a
• 29:24
  Speaker 3: roll and about to be I would say, almost like
• 29:27
  Speaker 3: a safe haven or outperforming. That's what it's looking like.
• 29:30
  Speaker 3: We'll see. But if you do things that make it
• 29:34
  Speaker 3: less attractive, investors will just take their money elsewhere. Entrepreneurs
• 29:38
  Speaker 3: will choose different things to do because what we do
• 29:41
  Speaker 3: is really hard, it's really risky. And as an executive,
• 29:44
  Speaker 3: you asked me, like, what it's like. I've been a
• 29:48
  Speaker 3: leader of a company where we're turning the card. Basically,
• 29:51
  Speaker 3: we're finding out whether the results of a clinical study
• 29:55
  Speaker 3: went well, where whether it met the primary endpoint and
• 29:59
  Speaker 3: was a success or not. And it is a roller
• 30:03
  Speaker 3: coaster for everyone involved, for the entire team, for patients,
• 30:08
  Speaker 3: for leadership, for the investors, and often it doesn't go
• 30:13
  Speaker 3: the way people would hope. So you know, at least
• 30:18
  Speaker 3: you know that on the other side, if you did well,
• 30:20
  Speaker 3: and you did all this stuff for years and years
• 30:23
  Speaker 3: and you made it that there's a payoff. So I
• 30:26
  Speaker 3: think it's any form of price controls damaging. What we
• 30:30
  Speaker 3: can do, though, is look at the middleman so and
• 30:34
  Speaker 3: think about ways that you know, there's there's a whole
• 30:37
  Speaker 3: number of things that we could do. I think the
• 30:40
  Speaker 3: problem is I sort of feel like there's an impasse
• 30:43
  Speaker 3: where the biotech pharma industry doesn't necessarily want to negotiate yet,
• 30:49
  Speaker 3: so like we'll see, but they're waiting to see if
• 30:54
  Speaker 3: they can push back on it, and at some point
• 30:57
  Speaker 3: people will start talking about what's the best way to
• 30:59
  Speaker 3: do it, going to try to address this issue, what's
• 31:02
  Speaker 3: the best way to do it. If it were up
• 31:04
  Speaker 3: to me, I would have done it sooner. But I'm
• 31:06
  Speaker 3: not a lawyer at a big pharm of company, so
• 31:08
  Speaker 3: you know they have all of their considerations.
• 31:11
  Speaker 2: You keep a very busy schedule.
• 31:12
  Speaker 1: You'll probably kick off the year at JP Morgan, anything
• 31:16
  Speaker 1: on your radar, any events that are listeners who are
• 31:19
  Speaker 1: anxiously signing up in rsvping too, Anything on your radar
• 31:23
  Speaker 1: that they should look out for.
• 31:24
  Speaker 3: Yeah, actually I mentioned two things. One is that on
• 31:26
  Speaker 3: Tuesday at seven pm at Persona, we're doing what we
• 31:31
  Speaker 3: call our tweet Up or basically it's a biotech hangout
• 31:35
  Speaker 3: live event, so people can come, they can meet the
• 31:38
  Speaker 3: co hosts. We get a great turnout each year, and
• 31:42
  Speaker 3: we have sponsors that support free drinks for all, So
• 31:46
  Speaker 3: that's a great event and I hope to see you there.
• 31:49
  Speaker 3: And then also Tuesday at four pm, the biotech CEO
• 31:52
  Speaker 3: Sisterhood is doing a group photo and we've asked again
• 31:56
  Speaker 3: this year for people to wear pink, just a little pink.
• 31:58
  Speaker 3: You can wear like a pink tie, wear pink shirt,
• 32:01
  Speaker 3: pink socks. And the idea is that last year on Tuesday,
• 32:06
  Speaker 3: instead of having a sea of black suits, you actually
• 32:09
  Speaker 3: saw a lot of pink. And that is to recognize
• 32:13
  Speaker 3: the leadership of women in our industry who have done
• 32:16
  Speaker 3: really great work over the last few years, including a
• 32:20
  Speaker 3: reading on the m and a side So those are
• 32:23
  Speaker 3: the two things that are on my radar and of
• 32:24
  Speaker 3: course your event.
• 32:25
  Speaker 1: Yeah yeah, and Grace would absolutely kill me if I
• 32:28
  Speaker 1: didn't mention incubates a policy breakfast Monday morning before we
• 32:33
  Speaker 1: let the serious deal making commends. I will say on
• 32:35
  Speaker 1: the sisterhood front, it was a sea of pink last
• 32:40
  Speaker 1: year out out in the square right in front of
• 32:42
  Speaker 1: the Saint Francis. So everyone remember to wear pink on Tuesday.
• 32:47
  Speaker 1: You would absolutely be foolish to miss out on the
• 32:50
  Speaker 1: tweet up. So thanks for sharing that and we'll look
• 32:53
  Speaker 1: forward to seeing you at JP Morgan. Keeping an eye
• 32:56
  Speaker 1: towards twenty twenty six, FDA has soap opera esque dramas aside.
• 33:03
  Speaker 1: Has the FDA continued to function, in your view in
• 33:08
  Speaker 1: a satisfactory way? And if it, if it doesn't, if
• 33:11
  Speaker 1: it stops, what does that uncertainty at regulatory agencies mean
• 33:15
  Speaker 1: for you?
• 33:16
  Speaker 3: Yeah? So, I think that there's sort of the global
• 33:19
  Speaker 3: uncertainty and how that affects the stock markets, investor sentiment
• 33:24
  Speaker 3: and things like that, which affects the early stage companies
• 33:32
  Speaker 3: and all kinds of uncertainty. But I think the most
• 33:34
  Speaker 3: damaging kind of uncertainty is when FDA gives guidance and
• 33:38
  Speaker 3: then changes the guidance later, because that could be tens
• 33:42
  Speaker 3: of millions or hundreds of millions of dollars spent by
• 33:45
  Speaker 3: a company in the belief that on the other side
• 33:47
  Speaker 3: they have alignment, and that has to do with you know,
• 33:51
  Speaker 3: we've seen a few examples like that, so you know,
• 33:55
  Speaker 3: Replemune is one, for example, and those are very I think,
• 34:00
  Speaker 3: very concerning in terms of functioning of f d A,
• 34:03
  Speaker 3: it's mixed. I'm we've we've had a very productive and
• 34:07
  Speaker 3: active and responsive dialogue with f d A. So but
• 34:12
  Speaker 3: I've heard and actually No Patient left Behind just did
• 34:14
  Speaker 3: a survey that they're going to be I think posting
• 34:17
  Speaker 3: very soon. Where there are mixed signals about different parts
• 34:22
  Speaker 3: of f d A and how they're functioning. There is
• 34:25
  Speaker 3: a loss of talent in some areas. But you know,
• 34:29
  Speaker 3: I think people are happy with Mcarey, They're happy with
• 34:34
  Speaker 3: Richard Pasdor and I you know, I was skeptical about Prasad,
• 34:39
  Speaker 3: but I got a chance to meet him and Mcarey
• 34:42
  Speaker 3: at one of these listening sessions, and you know, I'm
• 34:44
  Speaker 3: hopeful that that group can do good things. Obviously, there's
• 34:49
  Speaker 3: a lot of you know, things like vaccine misinformation and
• 34:52
  Speaker 3: stuff like that that is concerning. So from a smaller,
• 34:57
  Speaker 3: kind of earlier stage company to mid stage company like ours,
• 35:01
  Speaker 3: we're kind of mid stage clinical studies. I think it's
• 35:07
  Speaker 3: something to watch, but it's not you know. I think
• 35:09
  Speaker 3: hopefully there'll be continuity through administrations, just given how long
• 35:14
  Speaker 3: it takes to develop new drugs and less politics.
• 35:18
  Speaker 2: What's something that you're excited for.
• 35:20
  Speaker 3: Well, I think M and A this year has been
• 35:23
  Speaker 3: the strongest since twenty nineteen, so that's very positive that
• 35:27
  Speaker 3: you see money flowing back into the sector. Hearing from
• 35:31
  Speaker 3: bankers and analysts that the sentiment in biotech is turning
• 35:34
  Speaker 3: to risk on. Valuations have recovered for clinical stage companies,
• 35:41
  Speaker 3: not yet for preclinical and I think that this recent
• 35:48
  Speaker 3: appointment at CEDAR has comforted some people. Most interesting is
• 35:53
  Speaker 3: that in the past we talked about M and A,
• 35:55
  Speaker 3: smaller biotechs were not successful at launching drugs commercially. But
• 35:59
  Speaker 3: we're seeing that change, so that actually, I think is
• 36:01
  Speaker 3: really important for the continuity of our industry. But you know,
• 36:04
  Speaker 3: I'm feeling pretty positive about biotech, and you know, obviously
• 36:10
  Speaker 3: very excited and positive about nerse psychiatry and what we're
• 36:14
  Speaker 3: potentially able to do at Seaport.
• 36:16
  Speaker 1: Well, we're very grateful that you took time to be
• 36:19
  Speaker 1: with us. Hopefully we'll be able to have you back
• 36:21
  Speaker 1: on in twenty twenty six to see all the progress
• 36:24
  Speaker 1: that I'm sure you and Seaport will have made, and
• 36:27
  Speaker 1: hopefully certainty and no politics can be the watchword for
• 36:31
  Speaker 1: next year. Daphne, so glad you could join us today.
• 36:34
  Speaker 3: Yeah, thank you so much for having me and thanks
• 36:36
  Speaker 3: for all the work that you're doing.
• 36:38
  Speaker 1: That's all for this week's episode of the Making Medicine Podcast.
• 36:42
  Speaker 1: Thank you again to Daphney Zohar for joining us today.
• 36:45
  Speaker 1: Have a thought or question about today's topics, drop a comment.
• 36:48
  Speaker 1: We'll feature it in next week's episode. Don't forget to
• 36:51
  Speaker 1: subscribe on YouTube and follow us on LinkedIn, x and
• 36:54
  Speaker 1: Instagram using the links in the description. Thanks for listening,
• 36:58
  Speaker 1: and as always, keep in a bit at Booting, Thangooting Thing,
• 37:04
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