Latest / The BioHub - by Avetix / Episode 175 - Joe Jimenez - Co-Founder & Managing Director at Aditum Bio

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Episode 175 - Joe Jimenez - Co-Founder & Managing Director at Aditum Bio · The BioHub - by Avetix

0:06
So welcome back to another episode of the Bio Hub.
0:08
Today, we're very excited to welcome on Joe Jimenez, who's
0:11
the Co founder and Managing Director of Aditan Bio, a
0:15
biotech investment firm focused on launching and building next
0:18
generation life sciences companies developing
0:21
breakthroughs breakthrough therapies across areas including
0:24
immunology, oncology and genetic medicines.
0:28
Prior to Aditan Bio, Joseph's as CEO of Novartis from 2010 to
0:32
2018, leading one of the world's largest pharma companies for a
0:36
period of transformation and innovation, including the
0:39
company's expansion into selling gene therapy.
0:42
In today's episode, we'll discuss Joe's career, including
0:45
his time at Novartis and now at Aditum.
0:48
Joe's bought on the role that China's playing in an in
0:51
innovation today and how Aditum operates and how they identify
0:56
assets. So look, Joe, it's an absolute
0:58
pleasure to have you on. How are things?
1:01
They're very good. They're very busy.
1:02
Thanks for thanks for inviting me, Thomas.
1:05
Yeah. Look, it's, it's an absolute
1:07
pleasure to to have you on. So let's just start off with a
1:11
little bit about your journey through the field.
1:13
So you obviously spent a decade leading Novartis through a
1:17
period of major change and now you've transitioned into the
1:19
venture capital world. Can you just talk us through
1:22
your journey through the field, which I'm really fascinated by
1:24
and and ultimately how you got to where you are today?
1:28
Sure. You know, I took a very
1:30
unconventional career path. So I, I started my career
1:35
actually in the Consumer Packaged Goods industry.
1:37
I was growing up on the West Coast and wanted to become a
1:42
general manager. So I looked around at the the
1:44
type of companies that were churning out good general
1:47
managers. And at that time the CPG
1:51
companies were known for great training grounds in general
1:54
management. So I went to work for the Clorox
1:56
company in brand management and work my way up.
2:00
I was recruited by a couple of other CPG companies and was
2:05
asked to run the European division of one of them.
2:08
So I moved my family to London for a number of years and while
2:12
I was there, AstraZeneca asked me to sit on the board, their
2:18
board of directors, and they were looking for an American who
2:21
knew marketing because the US was the only country in the
2:26
world where you can do direct to consumer marketing in
2:30
pharmaceuticals. And so they were looking for
2:32
board representation there. And I fell in love with pharma.
2:36
The the thought of watching AstraZeneca develop potentially
2:41
disease transforming drugs and how different that was than my
2:46
background. I, I said I have to be in this
2:48
industry. So I looked for a way to get
2:52
into pharma and and healthcare in general and thought that the
2:57
best way to do that would be to bridge my experience in Consumer
3:02
Packaged Goods marketing into healthcare.
3:05
And so I did it through the consumer division of Novartis.
3:10
In the consumer division, many of the over the counter drugs
3:14
brands are marketed all over the world.
3:16
And so they asked me to run the $6 billion consumer business.
3:21
So I moved my family to Basel, Switzerland and I was having a
3:25
blast running this pretty big consumer business.
3:29
And then the board came to me and asked if I would run the
3:33
pharmaceutical division. And I thought it was way too
3:36
soon. And I fell out of my chair and I
3:38
said, look, I'm not a physician and I'm not a scientist.
3:42
And the board said we have a lot of physicians and a lot of
3:45
scientists. What we need is somebody who can
3:47
step back and look at how the industry is changing from a
3:52
payer standpoint, from an FDA standpoint.
3:55
Physicians no longer want to see mirrored sales forces.
3:58
So everything's changing in this industry and we need somebody
4:01
from the outside to kind of look in and help us.
4:04
So I said, look, I'm up for it. So I took over as head of the
4:08
division of pharma at Novartis, which shocked a lot of people.
4:14
But the interesting thing was about 80% of what I did was very
4:19
similar to really any industry. You know, you have a sales
4:23
forecast, you're, you're monitoring execution, you're
4:27
working on your supply chain. The 20% that was different was
4:32
the science. And So what I did when I first
4:34
became the division head is I found a great, a great scientist
4:39
who would come into my office between 6:00 AM and 8:00 AM and
4:43
he trained me on our, our mechanisms for each of our
4:47
drugs. How did they work?
4:49
How did they interrupt the disease, our disease states, who
4:52
the competitors were. And I did that for about 6
4:55
months. And it was a way for me to learn
4:59
the, the, the science without, you know, I'll never be a
5:02
scientist, but it was an, it enabled me to really speak to
5:05
our research and development organization in a way that
5:09
demonstrated that I understood the mechanisms, the new
5:12
technologies that were starting to emerge.
5:14
And it, and it was a blast. I, I had a, a great time the
5:18
first year. I was facing a very large patent
5:22
expiration on two of our drugs. It was going to come up in about
5:25
3 years. And so I knew I had to double
5:28
down on research and development, but I didn't have
5:30
the funds to do that. So I saw that this division had
5:35
about $10 billion of indirect spend that had never been
5:38
aggressively managed because you know, at the time pharma was
5:41
very high margin and didn't everything was focused on
5:44
growth, not on cost. And so I, I pulled in one of my
5:48
CPG experts in supply chain because CPG operates on very low
5:53
margins and had him reverse auction this $10 billion of
5:58
direct indirect spend and we were able to pull out about $2
6:02
billion that year. And so I invested a billion of
6:06
it in research and development, blowing out some of the phase
6:10
three studies that were were evident for our most promising
6:17
new launches, but that were unfunded.
6:19
So we were able to fund a lot of the phase three studies that we
6:22
weren't able to prior and that helped me get through that
6:25
period of of patent expirations. But the other billion I just
6:29
dropped to the bottom line. So the, and beat my profit plan
6:32
by about a billion dollars and the board said, OK, lucky first
6:37
year and raise my target the second year and I beat that by
6:41
about 800 million. And so then they said, all
6:44
right, now you get to be CEO and I ran the company for eight
6:49
years building the pipeline. We changed the portfolio quite a
6:54
bit. We, we doubled down on research
6:56
and development. And after I did that for about 8
7:00
years in my final year, I, I had three really good potential
7:06
successors. And so we, I told the board,
7:08
look, I'm, I'm still relatively young.
7:10
I want to go off and do something else.
7:12
And after eight years as CEO and we put those three through a
7:18
very aggressive succession planning process and, and
7:22
Vasnarasiman was named. And then I stepped down and I
7:26
knew when I wanted to, what I wanted to do after Novartis was
7:30
something that was my own. I'd always been kind of a hired
7:34
gun for public companies and wanted to start something
7:38
myself. And, and that's where Dietum Bio
7:41
came in. So I, I, I talked to Mark
7:44
Fishman. Mark was my head of research at
7:46
the time. He had retired from Novartis a
7:48
couple years before me. And I said, look, I really want
7:51
to focus this thing around translational medicine because
7:56
that's really it. You know, if you think about the
7:58
10 year cycle that it takes to discover and to launch a drug,
8:04
there's a three-year period in the middle of that 10 years
8:07
where you really know if you have a drug or not.
8:10
And that's after research. But when you move into phase one
8:14
and phase two, even if it's just a small proof of concept study
8:18
of, you know, 20 to 50 people, that's when you know there's
8:22
that you've got a drug. So we organized the venture firm
8:25
around that time period and we've been doing that for about
8:29
5 years. Well, amazing.
8:32
I feel like I could have listened to you all day then
8:34
just talking about your your stories.
8:36
Yeah, yeah. So, yeah, you just mentioned
8:41
then. So after Novartis, you mentioned
8:43
that you wanted to do something of your own.
8:45
So that's when you then decided to set up a decent bio in in
8:48
2019. Just talk us through like what
8:51
was what was the not so obvious insight you had about biotech
8:55
company formation that maybe other VCs weren't fully
8:58
appreciate it appreciated at the time and what gave you the
9:02
conviction in terms of the models starting with a single
9:05
asset and building outwards would be a more capital
9:08
efficient and repeatable model in comparison to maybe what some
9:11
of the the other venture capitals will do.
9:14
Yeah, it's a good question. One of the insights that I had
9:18
when I was looking at the sector is that there were many more
9:21
drugs being discovered than could possibly be developed.
9:25
Because as you know, development is the big expensive process by
9:30
which you prove to the regulatory authorities that your
9:33
drug should be marketed. And so the thought that there is
9:39
an opportunity for an incubator, maybe a late stage incubator
9:44
that could take some of those drugs that were that were not
9:48
being developed for whatever reason and we could prove that
9:53
there was some kind of an efficacy signal there.
9:56
So that's why we basically organized around that.
10:00
But we also wanted to do it in a more efficient way than biotech
10:05
had been operating. So the way that we set up the
10:10
company was we have an investment team that's
10:12
relatively small that determines which drugs were going to end
10:16
license. And then we have a service
10:18
company team that is full time drug developers, every function,
10:24
regulatory CMC, non clinical pharmacology, clinical
10:28
operations, quality assurance, everything that you need to run
10:33
a clinical trial. And so we're really focused on
10:38
company formation. And that was the insight was
10:42
around the fact that, that if we identified a drug that we wanted
10:47
to go after, let's say, you know, we have a, a set of
10:50
physician scientists within the company and we'll identify a
10:54
target, a target indication combination that we think is
10:58
interesting. And this is based on review of
11:00
scientific papers. It's based on review of what the
11:04
pharma companies are, are patenting.
11:09
It's it's based on a lot of things and, and just the
11:12
intuition of our physician scientists.
11:15
So once we agree on a target, then we'll go look anywhere in
11:20
the world where that drug exists that is preclinical but but
11:25
close to entering the clinic. So we look in Asia and Europe,
11:30
in North America and then we'll approach that company and we'll
11:33
say, well, we would like to pull this drug out of your, either
11:38
your pipeline or what we do is we'll form a company around it.
11:44
We'll give you royalties, milestones.
11:47
You don't have an equity in the company and you don't have to
11:50
put any capital in. So it's a super efficient way
11:54
for us. Our team, we don't, when we form
11:57
that company, we don't hire ACEO usually or a full management
12:01
team. We operate them almost as
12:05
programs with a chief medical officer that goes in and a
12:10
program head, but then we share resources across our entire
12:15
development group and everyone in the development group might
12:18
work on three or four programs. So we our burn rate for each one
12:25
of these companies is extremely low and it's a super efficient
12:29
way to get the 1st in human signal that we need.
12:34
How did you find the transition from being a pharmacy to them
12:37
going into the venture world, I imagine, I mean it's a very
12:40
different skill set and a very different type of of job that
12:44
you run in how how did you find that transition in the earlier
12:48
days? It actually was not as difficult
12:51
as I thought it was going to be. You know, Novartis at the time
12:55
had 120,000 employees. There were multiple layers of of
13:00
people. I was quite distanced from the
13:03
actual program teams. You know, I would see them every
13:06
month at the Innovation management board, but I wouldn't
13:10
operate with them. That job is a different job.
13:13
You're managing the board, you're managing shareholders and
13:17
you're managing the execution of the company.
13:19
Starting this company, I was doing everything including, you
13:23
know, signing a lease, which I didn't even know how to do at
13:26
Novartis because we had people that did that.
13:28
But also working with Mark Fishman and our team of
13:34
physician scientists developing that are developing protocol and
13:39
execution of the clinical trial. I have learned so much about how
13:43
to work with great scientists to develop great protocols and
13:50
execute trials in ways that I never really got exposed to at
13:54
Novartis because of the number of layers that were between me
13:57
and the actual work that was getting done.
14:00
Amazing. And it's just just talk us
14:02
through, you mentioned it a little bit then, but just in
14:04
terms of like how a detail map the identifies an asset from the
14:08
initial scientific diligence through to to licensing.
14:12
My guess is that it'd probably be similar to how any of the
14:14
biotech would would do it. Maybe I'm wrong, but what are
14:17
the specific criterias that must be met before you decide it's
14:21
worth building a company around as well?
14:24
I think I mentioned in my introduction, immunology,
14:26
oncology, genetic medicines have been a focus for you guys.
14:29
But you know, what are the specific criterias you look at
14:32
for it to for it to be worth our to build a company around?
14:35
Yeah, our scientific group, we meet weekly in an investment
14:39
committee meeting where we talk through the interests that the
14:43
scientists have and the physicians have in a particular
14:47
mechanism slash indication combination where we're going to
14:52
take. And a lot of times it's not
14:53
novel targets that we're looking at, we're looking at existing
14:56
targets, but either novel modalities or or even novel
15:01
indications where we're going to take this drug.
15:03
And it's based on the literature and and based on the intuition
15:08
of our scientists. But there is a clear criteria.
15:10
The first is that we have to believe that this mechanism is
15:14
going to impact the disease. So we can't guess, we there has
15:19
to be either genetic evidence or there has to be proof in prior
15:23
clinical trials that this mechanism can hit the disease.
15:26
The second thing is we have to be able to identify a
15:31
homogeneous patient population where we can go in and study
15:36
this drug in a way that will give us a definitive answer as
15:40
to whether or not I have there's a signal.
15:43
I have seen so many clinical trials fail because of the
15:47
heterogeneity of a patient population in a clinical trial.
15:51
So that's kind of the second thing that we must be able to
15:54
identify. And then the third thing that we
15:59
that is a requirement is we have to be able to design A proof of
16:04
concept clinical trial that will give us that definitive answer
16:10
as to whether or not there is an efficacy signal here.
16:14
While that sounds self-evident, it's more difficult than it, it
16:18
sounds in terms of being able to really design a trial in a way
16:25
that will give us an answer during our whole period.
16:29
Our whole period is generally 3 years for each one of our drugs.
16:32
So you won't see us do a five year trial, you know, in an
16:38
outcomes trial for example. So defining that that trial that
16:43
is a definitive answer is kind of the third thing.
16:47
And then we just go out and we we look for it and we negotiate
16:51
for it. Amazing.
16:52
That's that's, yeah, pretty unique.
16:55
There's not many companies that I know that that have that model
16:58
at all. No, it's, you know, we saw that
17:02
there was an area here particularly focused on
17:07
translational medicine. So many venture firms do company
17:10
formation and many of them operate in translational
17:13
medicine, but nobody focuses only on that except us.
17:18
And so you'll see a lot of VCs that are in earlier stage drugs
17:23
creating new companies, but they might be two or three years away
17:28
from the clinic or they might be a platform.
17:31
So we generally don't, this is a pure asset play for the most
17:35
part where we're acquiring assets where we have a thesis
17:40
and then we go prove that thesis or not.
17:44
The other thing that I think is unique about our model is, yeah,
17:47
I've, I've seen so much capital destroyed in this sector in
17:51
biotech, but also in big pharma. And it's because there are
17:55
incentives for program teams to keep their programs alive even
18:01
if the first trial is not successful.
18:04
So there, there'll be a retrospective analysis.
18:06
That said, it looks like there's a signal in, you know, this age
18:09
group or this particular sector. Why don't we do a prospective
18:14
trial, another trial, spend another $50,000,000, and we'll
18:18
test out that thesis. And then you've, you know, spent
18:21
another 50 and then another 50. And it just goes on and on.
18:26
And we don't do that. We have a thesis, we will test
18:30
that thesis and then we will shoot the drug if it doesn't
18:34
deliver the the efficacy signal that we want.
18:39
And then we use the next that capital that was reserved for
18:42
that drug to go out and get another drug.
18:45
And the way we're able to accomplish this is that we
18:47
incent our people in a very different way than than most.
18:51
So for example, a regulatory head might get .3% of fully
18:57
diluted shares in biotech. We would give them that same
19:01
market rate, but on every drug that they work on.
19:05
So maybe they're working on three drugs at ADIDOM and this
19:08
is a way for them not to be incented to keep that one drug
19:12
alive. But they have options in
19:15
multiple companies and that enables them to not only not
19:21
want to keep it alive, it it shouldn't be kept alive, but
19:24
also to take that capital and apply it to another drug so that
19:27
we can go out and get another drug.
19:29
And they could get options in that model.
19:31
So it's a, a bit of a, a, A twist on the way that that
19:37
management teams are incented in a way that we think will will
19:41
generate more capital efficiency than is historical in this
19:46
sector. Yeah, that's yeah, a really
19:50
interesting way of doing it. But for sure I would imagine you
19:53
get better outcomes all around. So yeah, how do you weigh the
19:57
trade off? Like when you when you in
19:59
licence a drug, you build a company around it.
20:02
How do you sort of balance, you know, wanting to maybe sell the
20:06
company early on and gaining value that way versus maybe
20:09
taking on additional risk and capital to build a fully
20:13
independent biotech company? Like what point do you see a
20:15
company right for acquisition versus, you know, carrying on?
20:19
And and doing it yourself. Yeah, that's a good, that's a
20:22
good question. We have sold companies outright
20:24
and we have financed to them after we get one or even
20:32
sometimes preclinical data that shows that there's a positive
20:36
outcome. So typically we don't syndicate
20:39
financing when we first formed the company.
20:42
This is all Adena money. And then at the end of the first
20:47
round of what we're willing to commit to each drug, we'll then
20:51
either sell it off or we will syndicate financing then and a
20:56
lot of factors come into play. The first is dilution that we're
21:01
going to see. So for example, are we able to
21:04
sell to a pharma company now or even by taking dilution and
21:10
taking additional capital, will we be able to generate
21:17
additional data that will more than offset the dilution that
21:21
we're going to see? So that's the first and primary
21:25
decision point that we have, which is what is a dilution look
21:29
like and what are the potential outcomes so that our investors
21:32
at Adidum Bio will be able to get the the greatest overall
21:37
return for the capital that is invested.
21:40
The next is just the probability of success.
21:43
So for example, if there's a pharma company that wants to
21:47
acquire the drug and there's significant risk that when we
21:51
move into the next phase, we could see something that would
21:56
make that drug worth less than what it is.
22:00
We, we take that risk into account, even though the price
22:03
might not be what we wanted, we might take that price because
22:09
there's significant risk going into the next phase and we want
22:11
to, we want to kind of maximize our return at that at that
22:14
point. So there are multiple things
22:16
that come into play, but if you just stay focused on driving the
22:21
development of a drug, making decisions based on the safety
22:25
and the efficacy of a drug and you continue to develop it.
22:30
We will be happy to continue to syndicate financing and push
22:35
this drug all the way to a phase three study rather than sell it
22:40
if we believe that this drug will generate additional data
22:44
that will create additional value for our investors.
22:47
And as you, like look back at your career, you've obviously
22:50
been at the highest level in big pharma for your career.
22:53
You're now in venture capital. Just talk us through, like, what
22:56
are the most fundamental differences in how, I guess
22:58
decisions get made, especially under uncertainty and time
23:02
pressure? But just generally, like just
23:03
talk us through, yeah, how you found being in those two
23:06
different environments, but yeah, how you make decisions in
23:09
in those two environments. As well.
23:10
Yeah, it's super. It's super interesting.
23:13
You know, my time at Novartis, you know, everybody thinks that
23:16
pharma companies are big and slow and they have committees
23:20
and they do and they are, but it's for a reason.
23:24
Those companies, you know, large pharma spends somewhere between
23:29
5:00 and $7 billion a year on drug development.
23:33
And most of that cost is people, it's fixed cost, it's not
23:37
program cost. There are a significant amount
23:39
of program cost. But really when you dissect it,
23:42
a lot of it is just the physician scientist, the Clinops
23:45
folks, the everybody that you have in your development
23:48
organization. Which means the opportunity cost
23:52
of making a mistake is very high.
23:55
If you go out and you want to in license a drug or you want to
23:58
advance a drug in the clinic in your through your own pipeline,
24:02
you want to make sure that you will have a drug that will be a
24:07
success. And that's why pharma companies
24:11
will wait until a biotech proves out in the clinic with clinical
24:17
data that there's an efficacy signal before they acquire the
24:21
drug. They don't care that they're
24:23
paying three, sometimes five times what they would be paying
24:26
if they went and acquired that drug preclinically.
24:30
So it's almost like the cost of the drug is irrelevant in terms
24:34
of when they acquire it. And that's because the
24:38
opportunity cost of making a mistake and putting something in
24:41
that big machine that's not going to work and churning up 18
24:46
months worth of their time is massive.
24:49
So that's kind of what, what, what has built all of these,
24:54
this committee structure and making sure because they're
24:57
trying to avoid a mistake, right?
24:59
You're trying to avoid a mistake.
25:00
It's the total opposite in venture and in and in biotech,
25:04
right? This is Money that is given to
25:08
us by investors that is risk capital and they want a big
25:11
return for that. Therefore, we're making
25:14
decisions with imperfect information.
25:18
We, this is a lot of where the, the gut instinct of the
25:23
physician scientists on your team are very important because
25:28
there's not a lot of data sometimes and you have to make a
25:31
call on whether you're going to fund a particular trial or not,
25:36
and that's going to be imperfect information.
25:39
Yet that's really what the model is.
25:41
The model is to take risks that pharma wouldn't and and that's
25:47
kind of so the two the ecosystem works where you've got biotech
25:50
and venture that is funding programs that will probably
25:56
wouldn't get funded in pharma. And then once they prove out,
26:00
then pharma is able to take them into their big machines.
26:04
They're becoming more and more kind of late stage development
26:07
and commercialization engines as biotech continues to continues
26:12
to grow and to innovate. So it's super interesting in
26:15
terms of kind of how these two, these two sectors operate
26:20
together, but it's based on the structure and based on the
26:24
capital that they have. You've obviously been on the
26:27
table of Novartis where you're typically you're buying
26:30
companies, you, you know exactly what pharma is looking for when
26:34
you, you, you're purchasing companies.
26:36
How does that sort of insider understanding of being on that
26:39
side of the table at Novartis evaluate acquisitions?
26:43
Let me just start that bit again.
26:45
That didn't make sense. Yeah, you've, you've obviously
26:49
been on the side of the table at Novartis where you're you're
26:51
constantly buying companies that are that are emerging.
26:55
How does that sort of insider understanding influence the way
26:58
that you design and position Aditam built companies from day
27:03
one? Like how do you then go and
27:05
position yourself to be then acquired by by pharma?
27:08
Yeah. It's very interesting.
27:10
When we're doing our diligence on, let's say we've agreed on a
27:14
target and disease indication and we're looking at, you know
27:18
drugs that we could potentially in license and there might be
27:20
three of them in different companies.
27:23
When we're doing our diligence on those drugs, we will have a
27:28
very large part of that diligence be who are the likely
27:31
buyers of this drug in the pharma universe and what
27:35
evidence do they need to see in a clinical trial for them to
27:40
transact. And part of it is my knowledge
27:43
by sitting on the other side knowing that.
27:45
But a lot of times we'll go to those companies and we'll ask
27:49
them in in kind of a anonymous way, not anonymous, but we won't
27:55
identify the target, but we will talk specifically about a
27:58
particular disease state and a mechanism in that disease state
28:02
and what would be required to transact in their view.
28:07
And then we'll decide if that's going to be possible, like are
28:10
we going to be able to build that definitive trial that will
28:14
tell us that there's an efficacy signal in a way that will
28:17
transact? And if the answer is we like the
28:19
mechanism, we like the disease, we think we can do a trial, but
28:23
we don't think pharma is going to transact, then we pass on it
28:27
because remember, our job here is we're working for investors
28:31
that want exposure to biotech and we want to bring these
28:35
medicines to patients. But the fastest way to get those
28:39
medicines to patients is to put it in the hands of these big
28:42
pharma companies once we once they're able to take it into
28:45
phase three and commercialization.
28:48
So we spend a lot of time thinking about this.
28:51
And my experience and Mark's experience on the other side, I
28:54
think gives us a leg up. But we don't rely just on that.
28:58
We'll, we'll just go and ask them.
29:00
Yeah, I think, yeah. Another topic that's I guess has
29:05
been on everyone's lips for the past couple of years is, is
29:08
China. I guess over the past few years
29:11
we've seen a growing number of high quality biotech assets
29:14
emerging from China. You see the typical model where
29:17
companies will in licence drugs from China and then build a
29:20
company around it and might have a big sort of funding round that
29:23
goes with that. If you look at it from Aditum's
29:26
perspective, how has all of the stuff coming out of China
29:29
shifted the way that you guys may be source opportunities and
29:33
look at at assets? Yeah, what's happening in China
29:36
is unbelievable. Five years ago, Chinese biotech
29:41
was known for, you know, cheap generics.
29:45
It was, it was not innovative, it was not super high quality.
29:49
But if you look at what's what's happened in a very short period
29:52
of time, you're seeing incredible progress on both the
29:59
quality and the quantity of new drugs that are coming out of
30:05
China. And part of it is the Chinese
30:08
government's desire 20 years ago to build a Pharmaceutical
30:13
industry. They were incenting companies,
30:17
multinational companies, to build research institutes in
30:21
China, of which Novartis was one, that built a Research
30:25
Institute in Shanghai. And at that time we hired many
30:30
physician scientists that were Chinese nationals that are now
30:33
part of the whole biotech scene in China.
30:36
So there's a whole new wave of high quality, really good drugs,
30:41
really innovative drugs coming out of China.
30:44
What's happening is they are moving faster than US biotech.
30:49
In terms of target selection to Indi mean literally we we are
30:56
seeing target to Ind take 2 to 2 1/2 years in China versus five
31:02
years where it is, you know kind of the traditional timeline.
31:05
So basically half the time and basically half the cost.
31:10
So when that happens, that creates a huge opportunity for
31:15
companies like Adidum or actually anybody in the sector
31:20
to identify new drugs that that can come from China that are
31:25
that we could build companies around.
31:27
So we do source in China. We have some very specific
31:32
elements of how we protect against potential risks
31:36
associated with taking a, a Chinese molecule.
31:39
But but it's become a a quite productive sourcing ground for
31:47
us partly also because we're known in China because of Mark
31:50
and i's my time that we spent at Novartis with a a very large
31:55
Chinese presence. Well, what do you think the
31:59
biggest differences are in terms of how you see innovation is
32:02
developed and executed in China versus in the US and Europe
32:05
particularly you mentioned it then particularly in terms of
32:07
speed, cost and clinical strategy.
32:09
And then if you compare the West to to China, do you think, you
32:13
know, the two can work together? Do you think they'll largely
32:15
stay as competitive? Do you think there's a lot that
32:17
the West can take from the Chinese and vice versa?
32:19
Like just talk us through that as well.
32:21
Yeah. No, look, I think that the two,
32:24
the Chinese and Western biotechs have to be able to work
32:28
together. And for example, the the speed
32:32
and the low cost that China is now producing is a threat to
32:36
Western biotechs. That's clear.
32:39
You've seen many pharma companies bypass Western
32:41
biotechs and go directly to China, but I don't think that's
32:45
bad. And I also don't think the
32:46
answer is to prevent, you know, prevent that from happening
32:50
because all that does is it just means that we're not going to
32:54
improve our biotech processes or costs or timing in the West.
32:58
So the Chinese companies are making Western biotechs leaner,
33:03
faster, better. And so I do believe that there
33:09
is place in the ecosystem for both and that by leveraging
33:13
both, we're going to get the best of both.
33:17
For example, you're not seeing a lot of novel targets come out of
33:20
China. You're seeing existing targets
33:22
with new modalities or best in class with existing targets and
33:28
existing modalities. And so, you know, the novel
33:32
targets are still coming from the West.
33:34
I, I don't think that's going to be the, the case 10 years from
33:37
now, but I do think that the two working together is really the
33:42
answer. So speed and low cost coming
33:46
from China, but but advanced innovation coming from the West
33:53
and also getting the Western biotechs to rethink the way that
33:57
they spend capital, right? If you think about a biotech
34:00
company right now, that management team is incented to
34:03
raise as much capital as they can because if something doesn't
34:07
go the right way, they're going to, they need cushion and it's
34:11
led to a level of capital destruction.
34:14
I think in biotech that that needs to be rethought and I
34:20
think the Chinese are are forcing that.
34:23
They're going to force more efficient models in the West and
34:27
they're going to, you know, they're, they're going to be
34:31
part of the infrastructure whether, you know, folks in the
34:34
West want it or not. Yeah, super interesting.
34:38
I'd love to hear just like your thoughts on just the market in
34:42
general, where the industry's going.
34:43
It's obviously been a super difficult time over the past two
34:47
or three years post COVID. Just like where, where do you,
34:51
you've obviously got a really good perspective on this as
34:52
well. Like what?
34:53
What are your thoughts on the market where the industry's
34:56
heading over over the next few years as well?
34:59
Yeah. If you look at the bear market
35:00
that we've just been through, nobody expected that.
35:03
Nobody expected to go through four years of horrible market
35:09
conditions where it was very hard to raise capital.
35:12
And you know, a couple of things happened during that bear
35:15
market. The 1st is that everybody
35:19
started to preserve capital. So the ability to raise was was
35:24
uncertain. So everybody cut their burn
35:27
rates and they were they became more efficient because of that
35:31
bear market. But I also think that more
35:35
efficient models emerged out of that bear market.
35:39
If you look at our model of super efficient ways to form
35:46
these companies, share services across you know two or three
35:50
programs and not necessarily have ACEO from the very
35:54
beginning that we can we can manage them as programs.
35:58
That's a very different model and it's super efficient.
36:02
That partly came out of the fact that you know there's a bear
36:05
market and it's difficult, but I do think if you look at last
36:09
year, the market was up 35%. So the XBI, which is the big
36:14
biotech index in the US up 35%, but off of incredibly low, low
36:20
base. I, I do believe that as long as
36:22
the innovation continues in biotech, you're going to see
36:27
increases in the market over the next few years, maybe not 35%
36:31
every year, but you're going to see us recover and retest the
36:36
highs that we saw in 21. And I think, I think as long as
36:41
innovation is happening and if you look around us and you look
36:44
at what's happening with T cell engagers with, with new, new
36:48
technologies that are addressing disease like never before, it's
36:53
here. And so you're, you're, you've
36:54
already seen a record increase in the number of acquisitions
36:58
that have occurred at a billion dollars or more in the first
37:01
half of the year. I think it's 19 and the first
37:04
half of 26, which which just is a bit of a feeding frenzy.
37:09
So I'm super bullish on the sector and what's going to
37:14
happen over the next five years as long as innovation continues,
37:19
you know, at the record pace that it that it is currently
37:21
being delivered. Yeah.
37:24
With, with the market turning, did that like how did that
37:27
affect the way that you guys operate as well?
37:29
It sounds like you've always been fairly efficient, capital
37:32
efficient at Aditi and but yeah, what were the biggest lessons
37:35
that you guys have learned for Aditi and with with just how the
37:39
market has been as well? Well, the interesting thing is
37:42
we operate as a bit as a hedge. So when it's a really bad
37:46
market, that means our hunting grounds are really productive.
37:50
When we want to go in license a drug and those biotech companies
37:54
do not have capital or they don't have sources of capital
37:58
that they would have in a bull bear market, then we're able to
38:02
get, we're able to pull out drugs and in license them and
38:06
form companies around them that we would never be able to get in
38:10
a in a bull market. But then when when it becomes
38:14
the, the downside to our model during a bear market is that we
38:18
can't go out and raise series BS as easily either on our
38:21
companies. So when we're forming the
38:24
company, we get a signal and we're raising a series B.
38:27
You know, the last four years have been very difficult to
38:30
raise additional capital. So it's positive on one side but
38:33
difficult on the other. As soon as it turns, then
38:36
raising money is easier. So you can form, you can raise
38:40
money for the biotechs that we have delivered a signal upon
38:44
easier now than it was even two years ago.
38:48
But the in licensing of those drugs is becoming more difficult
38:52
or at least more expensive because there's more
38:55
opportunities for capital to fund those drugs that we may go
39:01
after and we may want to pull out of the biotechs.
39:04
So it's a pretty interesting model that we've built that is
39:09
that works in both a bear market and a bull market, but in
39:12
different ways. And as, as you look ahead with
39:15
Aditi, like what are the next sort of major milestones?
39:18
Is there anything in particular coming up that you guys are are
39:21
particularly excited about across the portfolio that you,
39:25
yeah, I think might be worth sharing?
39:26
I'm I'm sure there's probably quite a bit.
39:28
Yeah. We, we, we do have some first in
39:32
class drugs that we're super excited about.
39:34
We have a Tri specific T cell engager that is about to go into
39:39
a basket study in autoimmune disease.
39:42
This is a BCMA CD19 CD three, we have a an siRNA drug for
39:50
cardiovascular disease. This is a a combination.
39:54
It's a divalent LP little APCS canine srna therapy that will be
40:00
entering the clinic towards the end of of this year.
40:04
And we currently have efficacy trial going on, on a non
40:10
addictive pain drug that looks super exciting.
40:14
So our programs are are in the clinic or approaching the clinic
40:18
super exciting. You know, we, we do expect a
40:23
pretty high attrition because if you think about Phase 2.
40:27
Phase two, you generally have about a 30% success rate.
40:30
So I tell all of my investors expect a 70% failure rate.
40:35
Like we're going to go into phase twos and don't invest in
40:37
my company if you don't expect 70% because you're going to hear
40:42
about that. But the 30% that do work are
40:45
going to carry the fund to a multiple that you'll really
40:49
like. And so that's kind of what the
40:51
model is here. Yeah, super exciting.
40:55
And just to finish off, this is a question that we always finish
40:58
with on on the podcast. And I know I wanted to give you
41:01
a bit of a heads up with it as well, but if you were to sit
41:03
down, have dinner with any free people from past or present, who
41:08
would you go from? Why?
41:09
It can be literally anyone. Doesn't need to be people from
41:12
the industry. It can be anyone you like.
41:14
But yeah, three people. That's a good question.
41:17
The first one is sounds a little corny, but it's Abraham Lincoln.
41:20
I am a, I am a hit study of leadership.
41:24
I study leadership. And I was super impacted by Jim
41:28
Collins and his theory of a level 5 leader.
41:30
Somebody who has a really paradoxical combination of
41:36
humility with relentless will. And if you think about Abraham
41:40
Lincoln, he was described as a guy who would walk into the room
41:42
and you know, he could have been serving the drinks.
41:44
He was just like super humble. Listen to everybody.
41:49
But he also demonstrated relentless will by sending his
41:53
countrymen into battle in a civil war to keep the country
41:56
together. So love to sit down and just
41:59
listen and learn from somebody like that.
42:01
I think he would be the first. The second would be Charles
42:06
Darwin to understand how the theory of evolution, how he
42:11
built out the theory of evolution and the impact that it
42:14
has on biology today. I think that would be a super
42:18
interesting conversation. And then the third is Bruce Lee,
42:24
the martial arts actor, Only because I, I thought he was
42:27
really cool. Yeah, Local 3 terrific answers
42:31
there and thanks to God. Thanks again for coming on and
42:35
helping us out with this. It was just an absolute pleasure
42:37
just to to hear about your story, which is super inspiring.
42:41
And yeah, mainly the progress that you make in Aditam, which
42:44
sounds super exciting. A company I already knew a lot
42:47
about, but but even more so now. So Joe, it was, it was a
42:51
pleasure. Thanks for thanks for coming on.
42:53
Thanks Thomas, It was great to be here.