Ep. 356 - Arrowhead’s arc. Plus: AI in biotech venture, Synnovation, MFN

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<v Jeff Cranmer>After 20 years of platform building and resets, Arrowhead is making a bid to become a large cap biotech.

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<v Jeff Cranmer>And Synnovation shareholders are reaping a windfall from a$2 billion deal with Novartis.

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<v Jeff Cranmer>We'll discuss both topics on the BioCentury This Week podcast.

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<v Jeff Cranmer>Plus we take a look at where AI is integrating into the biotech venture funnel.

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<v Jeff Cranmer>And bring you the latest on MFN and the search for a new CBER director at FDA.

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<v Jeff Cranmer>I'm Jeff Cranmer, host of the BioCentury This Week podcast, and joining me today are my colleagues.

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<v Simone Fishburn>Simone Fishburn, Editor in Chief.

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<v Stephen Hansen>Stephen Hansen, Director of Biopharma Intelligence.

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<v Lindsay Martin>Lindsey Martin Biopharma Analyst.

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<v Steve Usdin>and Steve Usdin, Washington Editor.

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<v Jeff Cranmer>All right, Lindsay.

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<v Jeff Cranmer>Welcome to the pod.

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<v Jeff Cranmer>It's good to have you making your debut.

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<v Lindsay Martin>Thanks, Jeff.

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<v Lindsay Martin>Excited to be here.

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<v Jeff Cranmer>Excellent.

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<v Jeff Cranmer>Well, we'll get to your bit.

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<v Jeff Cranmer>Lindsay had a very nice story on AI and venture.

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<v Jeff Cranmer>We'll talk about that in the second segment.

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<v Jeff Cranmer>But first, uh, Bio€quity Europe, our longest running conference now in its 26 year.

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<v Jeff Cranmer>The meeting always sells out, so you'll wanna get a move on.

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<v Jeff Cranmer>It's coming up in May.

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<v Jeff Cranmer>And for the first time we're going to Prague, so you'll want to make sure you sign up before prices increase April 1st.

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<v Jeff Cranmer>Simone, you'll be there.

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<v Jeff Cranmer>I know you're bringing Steven along.

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<v Simone Fishburn>I'm super excited.

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<v Simone Fishburn>I do want to say for anybody who's sitting around waiting.

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<v Simone Fishburn>Do not sit around and wait.

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<v Simone Fishburn>Register now because we do sell out and in particular presenting companies, so what we hear year after year is that companies go, they get a really good range of investors attending.

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<v Simone Fishburn>European investors, some US investors, really high quality ones.

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<v Simone Fishburn>It's a very, very focused meeting, not a trade show at all.

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<v Simone Fishburn>So that is the reason actually we, keep the numbers quite small.

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<v Simone Fishburn>And then there's a lot of networking events.

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<v Simone Fishburn>So as a presenting company, you get certain benefits, but.

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<v Simone Fishburn>In addition to the room where you present, there are networking opportunities and you know, Jeff, it's always on that bus to hear or like that little facial over there or whatever it is that Brian has cooked up.

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<v Simone Fishburn>And, uh, we have an extra, extra exciting thing this year in that our colleague Steve Usdin is gonna be there.

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<v Simone Fishburn>He is joining us at Bio€quity.

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<v Simone Fishburn>I think that's been a little while.

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<v Simone Fishburn>And he's gonna be interviewing, uh, Richard Pazdur, I believe.

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<v Simone Fishburn>and a very compelling session that's gonna be so many reasons to go, uh, not to, to see DC Steve Usdin in the flesh.

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<v Steve Usdin>Well, I don't know about me, but, but Rick Pazdur is gonna have interesting things to say and I think, you know, he's particularly charged up and interested in Central Europe.

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<v Steve Usdin>He's spent a lot of time, helping companies and government in Poland, with their oncology regulatory system.

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<v Steve Usdin>And, he's got a lot of enthusiasm for this.

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<v Steve Usdin>And I think that's the thing that really interests me about this meeting in particular, is this idea of kind of expanding our reach and our knowledge, and helping to make connections in Central Europe because I think that's one of the kind of untapped regions of innovation, of clinical innovation, of research, and that's gonna be really interesting.

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<v Simone Fishburn>And a last point, because you said that crucial word clinical, Steve, a big theme of the conference is the speed to the clinic, and we will be doing some data analysis on that in our scene setter, and that's a really hot topic.

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<v Simone Fishburn>So that's a thread that's gonna run through, and I am sure you're gonna be talking with Dr.

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<v Simone Fishburn>Pazdur about that as well, Steve.

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<v Jeff Cranmer>Excellent.

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<v Jeff Cranmer>Well, uh, what are we looking for for presenting companies, private European companies, we are looking for you, early stage, new to the stage.

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<v Jeff Cranmer>Investors always love getting to hear the new voices out there, seed, series A, series B, drop me a line.

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<v Jeff Cranmer>You can find me on LinkedIn.

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<v Jeff Cranmer>You can find me, at my BioCentury, or go to bioequityeurope.com and you can click on the link there.

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<v Jeff Cranmer>Uh, we've just wrapped.

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<v Simone Fishburn>Jo Josh always, Josh always says that, people who present presenting companies have a much higher hit rate for getting partnering meetings as well.

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<v Simone Fishburn>This is a rumor that I hear, but I bet it's true.

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<v Jeff Cranmer>That is true.

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<v Jeff Cranmer>And I'm hearing a lot of rumors about delicious, uh, Czech beer.

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<v Jeff Cranmer>perhaps, uh, those aren't even rumors.

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<v Jeff Cranmer>That's just delicious.

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<v Jeff Cranmer>Um.

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<v Steve Usdin>I can, I can confirm.

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<v Steve Usdin>I can confirm.

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<v Jeff Cranmer>Excellent.

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<v Jeff Cranmer>Excellent.

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<v Jeff Cranmer>Um, well, Stephen, uh, will be right there to confirm with you, uh, as well as looking for his next story.

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<v Jeff Cranmer>So don't miss out on connecting with all of the BioCentury crew at the meeting.

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<v Jeff Cranmer>We're we're just back from Korea, and we've talked a lot about Korea lately.

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<v Jeff Cranmer>I, I just wanted to drop in that, um, we have a deep dive deck, that we release to participants at the meeting, it's available on BioCentury.com, uh, along with a, perspective on the state of Korean biotech by Simone.

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<v Jeff Cranmer>So look out for those.

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<v Jeff Cranmer>All right, let's dig into it.

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<v Jeff Cranmer>Stephen Arrowhead.

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<v Jeff Cranmer>it's been a long road.

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<v Jeff Cranmer>Really long.

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<v Jeff Cranmer>I feel like they've been through, um, several incarnations and here we are.

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<v Jeff Cranmer>They really feel like they've got some momentum.

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<v Jeff Cranmer>You did a deep dive.

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<v Jeff Cranmer>We released it last week.

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<v Jeff Cranmer>What did you learn?

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<v Stephen Hansen>Yeah.

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<v Stephen Hansen>Thanks Jeff.

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<v Stephen Hansen>no, you're right.

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<v Stephen Hansen>And I find that, I think this is one of the stories I do find, aspects of these stories I find I find really interesting is just about the history of these companies and how they evolved to get to where they are.

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<v Stephen Hansen>I'll try and keep the history bit to a, to a minimum here, but, just to give you an example, so in in Arrowhead's case, they launched in 2003 and they were a nanotech company.

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<v Stephen Hansen>And this meant that they were essentially like an umbrella organization that was funding research at various US universities into all sorts of bits, like really small optical sensors or tiny little batteries that, you know, I don't know, maybe that you would use for like a, a mouse sized EV or something like that.

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<v Stephen Hansen>Um, but they were basically, they were doing all this, funding, all this research in really disparate industries and they did it for about four years.

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<v Stephen Hansen>Nothing really was making too much progress.

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<v Stephen Hansen>But they had, as one of these sort of funding projects, they had brought in some IP from Caltech and it was looking at RNAi.

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<v Stephen Hansen>And when the current, Chairman, President and CEO Christopher Anzalone, was asked whether he would join the company in 2007, he took a look at these companies at these subsidiaries and was like,  I don't know why you've, why you've built the company this way, but it doesn't make any sense.

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<v Stephen Hansen>Um, he was like, but I will come in on one condition if we focus this company on the RNAi stuff and just basically get rid of everything else.

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<v Stephen Hansen>And so,  they agreed and, and that's kind of where, where they went.

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<v Stephen Hansen>Now, it wasn't straight up from there.

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<v Stephen Hansen>The platform they had was, didn't really work that great.

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<v Stephen Hansen>It was working with naked siRNA and if, if people called, you know, the late 2000, late 2000's, early 2010's, companies were still trying to figure out how do you deliver siRNA, in a way that delivers efficacy and does it in a, in a safe way.

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<v Stephen Hansen>And there was still a lot to be worked out there.

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<v Stephen Hansen>But it was interesting that this kind of then got them started on the road towards, uh, the company they are now.

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<v Stephen Hansen>Now along the way, they acquired some assets from Roche, from Novartis.

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<v Stephen Hansen>Again, this was a period where pharma had really no belief in RNAi as a therapeutic modality.

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<v Stephen Hansen>Uh, so they, I think for them, you know, he said they, they got them on the cheap.

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<v Stephen Hansen>but even, even then, you know, that still wasn't sort of getting Arrowhead to where it needed to be.

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<v Stephen Hansen>They had IV delivered siRNAs that still were having potential, you know, were still kind of wrangling with the safety.

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<v Stephen Hansen>Dosing wasn't really optimized, so it was kind of still sort of suboptimal from where they wanted to be.

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<v Stephen Hansen>And so kind of the big turning point came in 2016 when they actually had a, um, a safety signal pop up in a non-human primate study.

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<v Stephen Hansen>They hadn't seen anything in the clinic, they had three programs in the clinic.

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<v Stephen Hansen>They hadn't seen any problems there, but it came up in this preclinical study and the company had to make a decision.

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<v Stephen Hansen>Do we, spend time, spend money trying to figure out whether this is a real signal or not, or do we try to move on to something that we think could be better?

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<v Stephen Hansen>And know, I think it was a tough call to make, but you know, in the end, I think it proved to be the right call.

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<v Stephen Hansen>Basically, they scrapped their entire, they were in Phase IIB at the time.

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<v Stephen Hansen>They scrapped all their clinical programs and shifted to what they call the TRiM platform, which is a subcutaneously delivered sort of new, more simplified, basically more modern version of siRNA.

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<v Stephen Hansen>So they went from being a Phase IIB to being a preclinical company, which obviously investors killed them for.

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<v Stephen Hansen>But in the end, I think that proved to be the right one because now the pipeline that they have today is really built entirely around this, this TRiM platform.

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<v Simone Fishburn>Stephen, thanks.

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<v Simone Fishburn>That's a, a very good context for how they got to where they are.

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<v Simone Fishburn>Now we have pegged Arrowhead as a company to watch,

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<v Stephen Hansen>Yep.

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<v Simone Fishburn>believe it was one of our super 17

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<v Stephen Hansen>I believe

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<v Simone Fishburn>back in 2023 when we did Back to School, which means we think they're potential tier jumper.

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<v Simone Fishburn>Talk about their market cap now, why we think this company is worth watching.

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<v Simone Fishburn>And, you know, and, and why investors are getting excited about it.

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<v Stephen Hansen>Right.

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<v Stephen Hansen>So.

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<v Stephen Hansen>So where they've gotten now, their market cap right now is just shy of $8 billion.

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<v Stephen Hansen>So they're a good size already.

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<v Stephen Hansen>But the reason I think investors are really excited about them is because they are literally in the first quarter of their first commercial launch.

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<v Stephen Hansen>Their drug was first approved in November of last year.

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<v Stephen Hansen>The drug is Redemplo (plozasiran) it was first approved for a very rare setting, so FCS.

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<v Stephen Hansen>Where there's, you know, thought to be maybe a couple thousand patients, um, maybe a little bit more.

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<v Stephen Hansen>But the real, I think, exciting thing and the real opportunity here is, so this is a drug that targets APOC3.

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<v Stephen Hansen>So it's really, it's targeted at reducing triglycerides.

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<v Stephen Hansen>and the big opportunity is in the severe hypertriglyceridemia markets.

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<v Stephen Hansen>That is where they're already in Phase III and they have data reading out in the third quarter.

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<v Stephen Hansen>And that is not a small market that is potentially 3 million patients.

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<v Stephen Hansen>And so while the FCS opportunity is sort of the way into the market, I think what people are really looking at is, can you expand this into a broader and broader patient population, with  triglycerides demia?

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<v Stephen Hansen>And that then that really gets, you know, talking about a multi-billion dollar opportunity for this drug.

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<v Stephen Hansen>And, there's another drug on the market already for FCS, it's Ionis' Tryngolza which also targets a APOC3.

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<v Stephen Hansen>But when you look at the data comparison, at least in FCS population, Arrowhead looks like it has better efficacy, there isn't any platelet reduction sort of issue.

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<v Stephen Hansen>They have three month dosing, so quarterly dosing.

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<v Stephen Hansen>Versus one month dosing.

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<v Stephen Hansen>So on the, on the surface, it looks like they have a pretty positive profile for this drug.

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<v Stephen Hansen>And so I would expect to see a pretty good launch here.

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<v Stephen Hansen>And then if you can start expanding that out that looks even better.

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<v Simone Fishburn>A couple of things there.

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<v Simone Fishburn>First of all,  people don't know how many takes It took Steven to get the name of the drug.

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<v Stephen Hansen>Or I, I think, I think it was just just four.

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<v Simone Fishburn>given that he went straight to FCS without calling it Familial Chylomicronemia Syndrome,

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<v Stephen Hansen>I, wasn't gonna touch

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<v Simone Fishburn>it wasn't gonna even, even do that.

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<v Stephen Hansen>I was, that.

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<v Stephen Hansen>was, that was good.

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<v Stephen Hansen>That was almost my hidradenitis suppurativa

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<v Simone Fishburn>talk, uh, yeah, well, you know, helps with the accent, you know, we can say anything.

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<v Simone Fishburn>Um, but what I, what I wanted to say is, um, I think it's very interesting, and we're seeing this in a few places now.

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<v Simone Fishburn>First of all, obviously you've got this smaller indication with the, with the prospect of a bigger indication.

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<v Simone Fishburn>In this case, it's not gonna be first in class.

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<v Simone Fishburn>You are speaking to a best in class strategy.

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<v Simone Fishburn>I would imagine that there's room in that market for both.

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<v Simone Fishburn>And what I wanted to highlight here is that in this field, which is effectively cardiovascular, I mean it's still these, you know, we talk about a lot about other diseases, but cardiovascular is still a massive, you know, a massive killer and it's still huge.

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<v Simone Fishburn>There's probably room for both and there's still tremendous innovation, in fact, maybe even renewed innovation going in this place enabled perhaps by, genomics and causal biology.

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<v Simone Fishburn>And so it seems to me that arrowhead, despite its long journey is actually riding the crest of the wave of those technology forces coming together.

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<v Simone Fishburn>Just its delivery plus the genomics.

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<v Simone Fishburn>Is that, is that a fair statement?

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<v Stephen Hansen>I think, I think, I think that's right.

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<v Stephen Hansen>And um, I mean, you know, they're clearly cardiometabolic is kind of their primary focus I think initially.

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<v Stephen Hansen>I think what's really interesting is then what comes after this.

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<v Stephen Hansen>So Redemplo is kind of like this first step for them into, the commercial phase, which in and of itself, you know, I mean, if we look at, just take their, you know, competitor Alnylam as a comparison, right?

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<v Stephen Hansen>I mean, Alnylam went from being a five to$10 billion company to being a. 40 plus.

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<v Stephen Hansen>you know, just a couple months ago they were a $50 billion company and all of that was built on one single TTR franchise.

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<v Stephen Hansen>So you had one successful franchise and that got them there.

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<v Stephen Hansen>And what you have with siRNA right, is you have lots and lots of opportunities to build these sorts of franchises potentially.

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<v Stephen Hansen>And so what I think is really sort of fascinating about Arrowhead is you have Redemplo as that kind of first step, but then they have.

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<v Stephen Hansen>A couple other cardio focus programs that are gonna be coming behind that.

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<v Stephen Hansen>They have several obesity programs that kind of fit into a similar sort of space there for them targeting INHBE and ALK7.

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<v Stephen Hansen>ALK7's interesting because that one is one of their first cases in which they've shown that they can deliver outside of the liver that's targeted adipose tissue, and they showed very good mRNA knocked down in adipose cells in their first Phase I clinical trial earlier this year.

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<v Stephen Hansen>and they're planning to do lots more of that.

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<v Stephen Hansen>So they're really targeting as one area of their growth future going forward is, can we get siRNA, let's go beyond the liver.

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<v Stephen Hansen>So can we go to the adipose cells?

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<v Stephen Hansen>Can we go to the brain?

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<v Stephen Hansen>Can we go to the lung?

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<v Stephen Hansen>Can we go to, uh, muscle?

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<v Stephen Hansen>So there's lots of different areas that they think is gonna be potential differentiator for them going forward.

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<v Stephen Hansen>And then the other one I wanted to talk about was, so they have a dimer that's now entered the clinic.

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<v Stephen Hansen>It targets, uh, PCSK9 and APOC3.

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<v Stephen Hansen>And that's  as far as I'm aware, it's the first instance of a, what's essentially a bispecific siRNA entering the clinic.

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<v Stephen Hansen>And that's also something that, Chris Anzalone said is gonna be a big part of their future pipeline, we will be looking at dimers for other indications.

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<v Stephen Hansen>He mentioned that there will probably be several dimers coming in obesity for them because he said the, the two that they have in obesity aren't can be the last.

00:15:32.664 --> 00:15:36.567
<v Stephen Hansen>And so I think it'll be really fascinating to see, you know, how they go.

00:15:36.567 --> 00:15:44.176
<v Stephen Hansen>About picking which targets to do combinations with, but just to see, you know, what, what sort of efficacy you can get sort of using that kind of construct.

00:15:44.176 --> 00:15:45.144
<v Stephen Hansen>So, um.

00:15:45.144 --> 00:15:50.115
<v Simone Fishburn>I, I have to give credit to, I guess, the CEO and the management team for this strategy.

00:15:50.182 --> 00:15:53.485
<v Simone Fishburn>Really seems to be a very good strategy.

00:15:53.719 --> 00:16:08.067
<v Simone Fishburn>You really have to be able to demonstrate executional capabilities so people will have confidence, 'cause what they've got is a mix of new technology, a little bit of target innovation, a very clear strategy from going from one product to the next.

00:16:08.634 --> 00:16:15.673
<v Simone Fishburn>And if they can demonstrate executionally that they can deliver on clinical trials and data investors are gonna go along for the ride.

00:16:15.673 --> 00:16:23.414
<v Simone Fishburn>And so really, you know, the, I, I don't know all the downsides, but there seems to be a lot of, uh, interesting and well thought out strategy in the company.

00:16:24.015 --> 00:16:25.650
<v Simone Fishburn>So the wait might've been worth it for them.

00:16:25.650 --> 00:16:26.018
<v Simone Fishburn>You know,

00:16:27.052 --> 00:16:27.285
<v Stephen Hansen>I think.

00:16:27.285 --> 00:16:33.024
<v Stephen Hansen>that, I think this is one of those blooming success stories where it's been a long winding road, but it looks like they're getting

00:16:33.292 --> 00:16:33.625
<v Simone Fishburn>story.

00:16:33.625 --> 00:16:34.460
<v Simone Fishburn>We love those.

00:16:34.460 --> 00:16:35.126
<v Simone Fishburn>We love those on.

00:16:36.327 --> 00:16:36.995
<v Stephen Hansen>That's right, exactly

00:16:37.162 --> 00:16:37.462
<v Jeff Cranmer>All right.

00:16:37.495 --> 00:16:39.530
<v Jeff Cranmer>And uh, they are sitting.

00:16:39.530 --> 00:16:42.634
<v Jeff Cranmer>Now at, uh, 8 billion in market cap,

00:16:42.768 --> 00:16:43.634
<v Simone Fishburn>Not too shabby.

00:16:44.168 --> 00:16:44.903
<v Jeff Cranmer>not too shabby.

00:16:44.903 --> 00:16:46.971
<v Jeff Cranmer>We'll, we'll see where they, get to.

00:16:47.005 --> 00:16:49.207
<v Jeff Cranmer>Okay maybe quickly, Stephen.

00:16:49.274 --> 00:17:02.388
<v Jeff Cranmer>Uh, Novartis spent 2 billion to buy an early stage oncology asset from Synnovation, and that's gonna generate a return for the VC-backed company shareholders, of course.

00:17:02.955 --> 00:17:10.596
<v Jeff Cranmer>meanwhile, the startups team of drug hunters will continue to advance, the company's early stage pipeline.

00:17:10.929 --> 00:17:13.965
<v Jeff Cranmer>kind of an interesting structure to the deal here.

00:17:14.266 --> 00:17:15.267
<v Jeff Cranmer>what thoughts do you have?

00:17:15.768 --> 00:17:16.035
<v Stephen Hansen>Yeah.

00:17:16.067 --> 00:17:17.169
<v Stephen Hansen>No, you're right Jeff.

00:17:17.169 --> 00:17:33.484
<v Stephen Hansen>I mean, it's, it's it very much, you know, when we saw this deal very harken back to kind of the, the Nimbus like kind of structure where you have this overhead of drug hunters who look for things and you develop them and then you get to the point to where you can then kind of hive it off for a profit that goes back to your investors.

00:17:33.484 --> 00:17:37.623
<v Stephen Hansen>And just think is a very interesting sort of way to, uh, to structure a company.

00:17:37.955 --> 00:17:40.893
<v Stephen Hansen>And it looks very much like what Synnovation is doing, doing here.

00:17:40.893 --> 00:17:52.371
<v Stephen Hansen>And this is, you know, this is specifically in the PI3 kinase space where, you know, historically there's been lots of issues around side effects for some of the early programs in this class.

00:17:52.371 --> 00:18:08.252
<v Stephen Hansen>But, you know, more recently, uh, like last year we saw Lilly buy a molecule from Scorpion, for two and a half billion dollars that is taking a similar approach and that you're looking to, you know, go after the mutant sort of version of a PI3K to try and reduce some of the side effect profiles.

00:18:08.252 --> 00:18:08.519
<v Stephen Hansen>So.

00:18:08.953 --> 00:18:13.057
<v Stephen Hansen>Um, interesting play here and obviously a great, great deal for Synnovation's investors for sure.

00:18:13.759 --> 00:18:14.058
<v Jeff Cranmer>Yeah.

00:18:14.058 --> 00:18:23.167
<v Jeff Cranmer>So, uh, Third Rock led the company's, I think $102 million series A round in 2024.

00:18:23.535 --> 00:18:26.238
<v Jeff Cranmer>Third Rock, was joined in the syndicate.

00:18:26.672 --> 00:18:27.806
<v Jeff Cranmer>by NextTech.

00:18:28.073 --> 00:18:32.810
<v Jeff Cranmer>Lilly Asia Ventures, Sirona Capital, and Cormorant.

00:18:33.144 --> 00:18:40.318
<v Jeff Cranmer>And the CEO Yao, uh, is telling us that Synnovation  is likely to raise money again.

00:18:40.719 --> 00:18:44.189
<v Jeff Cranmer>So, uh, another one will be keeping our eye on.

00:18:44.189 --> 00:18:50.828
<v Jeff Cranmer>All right, let's take a quick break and we will get to a little discussion on AI.

00:18:51.163 --> 00:18:56.401
<v Voice Talent>BioCentury This Week is brought to you by the 26th Bio€quity Europe in Prague, Czech Republic.

00:18:58.202 --> 00:19:03.275
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00:19:03.674 --> 00:19:04.776
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00:19:07.378 --> 00:19:09.181
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00:19:09.681 --> 00:19:18.923
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00:19:19.458 --> 00:19:20.726
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00:19:21.359 --> 00:19:23.428
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00:19:26.964 --> 00:19:28.567
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00:19:29.201 --> 00:19:43.615
<v Voice Talent>In its 26th edition, Bio€quity Europe travels to central and Eastern Europe for the first time — to explore emerging opportunities in the region and debate how European biotech can accelerate to compete — and lead — in today's world.

00:19:44.148 --> 00:19:49.755
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00:19:50.321 --> 00:19:54.226
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00:19:54.960 --> 00:19:56.561
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00:19:58.763 --> 00:19:59.765
<v Jeff Cranmer>Okay.

00:20:00.164 --> 00:20:07.338
<v Jeff Cranmer>Lindsay, you, worked on a story, recently, on AI and venture firms.

00:20:07.372 --> 00:20:10.275
<v Jeff Cranmer>Uh, why was now the time to write this story for you?

00:20:11.242 --> 00:20:11.876
<v Lindsay Martin>That's right, Jeff.

00:20:11.876 --> 00:20:22.186
<v Lindsay Martin>Yeah, I think, the sentiment has largely shifted so that firms now are really trusting and adopting the use of AI into their workflows.

00:20:22.520 --> 00:20:25.223
<v Lindsay Martin>So a year and a half ago, the trust was not really there.

00:20:25.624 --> 00:20:29.661
<v Lindsay Martin>And now AI is being used across the entire venture funnel.

00:20:29.928 --> 00:20:37.836
<v Lindsay Martin>And so now we're looking at, you know, where is it being used and what are the use cases that are really most important for biotech venture.

00:20:38.604 --> 00:20:39.837
<v Simone Fishburn>I mean, I think that's right.

00:20:39.837 --> 00:20:45.344
<v Simone Fishburn>I think that globally actually, adoption of AI has  gone up.

00:20:45.376 --> 00:20:54.819
<v Simone Fishburn>Uh, we've obviously been watching it for a while up by a century, so, you know, I'm gonna imagine that for VCs, they're sort of going along with that general drift.

00:20:54.853 --> 00:21:04.195
<v Simone Fishburn>And I think it's more, I think people are still a little bit cautious about it, Lindsay, but maybe they know how to manage the risks a little bit better in terms of what are the, um.

00:21:04.596 --> 00:21:06.397
<v Simone Fishburn>What are the data that they put in?

00:21:06.464 --> 00:21:18.009
<v Simone Fishburn>And you know, I'm just gonna say that we know that AI has really arrived when our colleague Steve Usdin is creating graphics on the fly of, uh, all kinds of interesting things with cartoons.

00:21:18.676 --> 00:21:33.759
<v Steve Usdin>So besides the cartoons, so, so here's my question, and I think it's, it is something you alluded to in the story, which is, I, is AI in venture is it leading to companies, to firms making better decisions or different decisions than they would've without it or simply getting to where they would've any way quicker?

00:21:34.226 --> 00:21:34.660
<v Lindsay Martin>Right.

00:21:34.660 --> 00:21:36.193
<v Lindsay Martin>I think that's a great question, Steve.

00:21:36.327 --> 00:21:41.900
<v Lindsay Martin>So it really depends to what extent the firm is integrating the use of AI.

00:21:41.900 --> 00:21:51.542
<v Lindsay Martin>So in some cases, firms are using AI to not just accelerate the pace of their work, but to identify missing information and potentially unlock.

00:21:51.942 --> 00:21:56.381
<v Lindsay Martin>New, investment opportunities that maybe they wouldn't have otherwise identified.

00:21:56.714 --> 00:22:09.560
<v Lindsay Martin>So in that case it could be augmenting the workflow to identify new things, and then other firms have noted that AI doesn't necessarily change investment decisions, it's just accelerating the process.

00:22:10.127 --> 00:22:18.403
<v Simone Fishburn>Can, can you walk through a couple of the kind of either the agents or the kinds of things they're doing that feed into, you know, those outputs that you just said.

00:22:19.104 --> 00:22:19.538
<v Lindsay Martin>Yeah.

00:22:19.538 --> 00:22:24.409
<v Lindsay Martin>So really AI is being used from both the beginning of the funnel.

00:22:24.409 --> 00:22:34.019
<v Lindsay Martin>So things like competitive landscaping, market mapping down to the very bottom, after the check has been written and things like portfolio support.

00:22:34.419 --> 00:22:41.026
<v Lindsay Martin>So at the beginning, AI is being used for screening of inbound non-confidential pitch decks.

00:22:41.026 --> 00:22:53.538
<v Lindsay Martin>So for example, Sofinnova Partners is really the only firm that we spoke with that is using AI to assess and process their inbound non-confidential pitch decks.

00:22:53.838 --> 00:23:13.157
<v Lindsay Martin>So they're using it to understand what  companies are coming into the funnel, what do those programs look like, and then they can also triage and rank those, programs to help identify what they should prioritize for, future decision making.

00:23:13.625 --> 00:23:21.298
<v Lindsay Martin>And then also identify hidden gems and research partners for the potential companies that they're investing in.

00:23:21.932 --> 00:23:31.009
<v Lindsay Martin>And a second example can be things like, um, using multi-agent systems to deliberate among simulated experts.

00:23:31.041 --> 00:23:31.609
<v Lindsay Martin>So for example.

00:23:32.611 --> 00:23:55.967
<v Lindsay Martin>Deerfield Management, we spoke with Mark Michalski and he told us that Deerfield Management has multi-agent systems that can deliberate, say among a pathologist and an oncologist or a market access professional and an epidemiologist to help identify market pricing or what the population looks like for a disease indication.

00:23:56.334 --> 00:23:57.868
<v Lindsay Martin>Towards the bottom of the funnel.

00:23:58.236 --> 00:24:05.477
<v Lindsay Martin>Um, another example could be identifying discontinued programs for portfolio companies.

00:24:05.844 --> 00:24:22.661
<v Lindsay Martin>So we spoke with David Yang at Lux Capital and he told us that that's an example of how they're using AI to help portfolio companies identify programs that have been discontinued by pharmas or biotechs that could potentially be taken up into, development.

00:24:23.194 --> 00:24:24.429
<v Simone Fishburn>And let's just plug here.

00:24:25.163 --> 00:24:32.770
<v Simone Fishburn>That you don't have to create your own AI because BioCentury's BCIQ database has now just added discontinued products.

00:24:33.104 --> 00:24:34.538
<v Simone Fishburn>So you can use that to find them.

00:24:34.538 --> 00:24:36.407
<v Simone Fishburn>If you don't wanna go build your own whole AI.

00:24:37.008 --> 00:24:37.675
<v Lindsay Martin>That's right.

00:24:37.675 --> 00:24:55.393
<v Lindsay Martin>And it was interesting too because in terms of competitive landscaping and market mapping, some of the firms noted that, you know, they are using AI to help with competitive landscaping, and that really is cutting down on the time that those processes take, right?

00:24:55.393 --> 00:25:04.102
<v Lindsay Martin>These are massive undertakings that maybe once took 600 hours and now can be cut down to a much more manageable, maybe 60 hours.

00:25:04.536 --> 00:25:18.250
<v Lindsay Martin>But one of the limitations that  the firms noted that we spoke with is that it really maybe can't get at the in-depth competitive landscaping and may miss some key insights.

00:25:18.884 --> 00:25:25.690
<v Simone Fishburn>Look, as we talked about at the beginning of the call with presenting companies at Bio€quity Europe, the work only goes so far.

00:25:25.690 --> 00:25:28.192
<v Simone Fishburn>Still meeting people face-to-face is a big part of it.

00:25:28.527 --> 00:25:39.804
<v Simone Fishburn>And I just wanna bridge from there to another face-to-face where our colleague, Selina Koch, did a really great in-depth interview with Najat Khan, who's a CEO of Recursion.

00:25:40.204 --> 00:25:57.021
<v Simone Fishburn>And very interesting take on how AI is being used in biotechs, in drug development, and strongly encourage you to take a listen to that because it's really not only about how Recursion is thinking about it, but more broadly, what are the issues that are playing out.

00:25:57.021 --> 00:25:59.457
<v Simone Fishburn>It's a conversation that we have over time.

00:25:59.958 --> 00:26:09.901
<v Simone Fishburn>As we look at AI and you know, in the same way as you said, we're not where we were a year and a half ago for VCs, nor is that true biotechs are also increasing and getting more sophisticated in the way they're adopting it.

00:26:10.669 --> 00:26:10.969
<v Jeff Cranmer>Yeah.

00:26:10.969 --> 00:26:15.006
<v Jeff Cranmer>And that's on our sister podcast, uh, The BioCentury Show.

00:26:15.373 --> 00:26:19.176
<v Jeff Cranmer>You can, uh, listen to that wherever you, uh, get your podcast.

00:26:19.176 --> 00:26:21.413
<v Jeff Cranmer>Spotify, Apple, you name it.

00:26:21.712 --> 00:26:23.781
<v Jeff Cranmer>Uh, Lindsay, any final thoughts?

00:26:24.615 --> 00:26:26.851
<v Lindsay Martin>Yeah, I think now is, is really the time.

00:26:26.851 --> 00:26:30.588
<v Lindsay Martin>So the pace of AI is rapidly advancing.

00:26:30.989 --> 00:26:48.138
<v Lindsay Martin>And interestingly, Deerfield's Michalski told us that, you know, even if AI stopped advancing at this very moment, it would take another 12 to 24 months just to catch up to where we are now in terms of AI to create living representations of our world around us.

00:26:48.573 --> 00:26:56.914
<v Lindsay Martin>So I think, you know, the firms that are integrating AI and seizing the moment are really going to be able to utilize that to their advantage.

00:26:57.515 --> 00:26:58.215
<v Jeff Cranmer>Excellent.

00:26:58.682 --> 00:27:05.123
<v Jeff Cranmer>And, uh, Najat told Selina that AI will be judged by the medicines that it makes.

00:27:05.624 --> 00:27:07.157
<v Jeff Cranmer>So let's see what it makes.

00:27:07.925 --> 00:27:20.672
<v Jeff Cranmer>Okay, Steve, uh, there was quite the demonstration at FDA, last week by a group of ultra rare disease, advocates, and no doubt, patience.

00:27:20.739 --> 00:27:22.574
<v Jeff Cranmer>What's the backstory there?

00:27:23.307 --> 00:27:43.094
<v Steve Usdin>yeah, there was a, it, they basically, they had a, what they called a mock funeral in front of FDA, it was patients and family members and advocates, 109 of them who were affected by a very rare disease or actually set of diseases called MPS.

00:27:37.622 --> 00:27:43.094
<v Steve Usdin>And, they're immensely frustrated.

00:27:43.461 --> 00:27:47.932
<v Steve Usdin>By the lack of regulatory progress, by regulatory setbacks at FDA.

00:27:48.232 --> 00:27:59.076
<v Steve Usdin>I've been following MPS and the efforts to move therapies from the lab into the clinic and from the clinic into commercial use for years now.

00:27:59.711 --> 00:28:04.682
<v Steve Usdin>The patients thought two years ago that they had a clear path from.

00:28:05.115 --> 00:28:09.220
<v Steve Usdin>Products that are, in hand now, investigational products to approvals.

00:28:09.453 --> 00:28:16.493
<v Steve Usdin>And that path ran through a biomarker heparan sulfate measured in the cerebral spinal fluid.

00:28:16.894 --> 00:28:20.765
<v Steve Usdin>And it's not working out the way that they, believe that it should.

00:28:21.165 --> 00:28:36.748
<v Steve Usdin>They believe that the products that are, some of them that have been, um, that have received setbacks, some of them that are coming up for approval decisions in the very near future are basically their last hope because they can't wait another 10 years.

00:28:37.281 --> 00:28:43.555
<v Steve Usdin>For new therapies, they don't think that anybody's gonna invest in new therapies if FDA's not approving, therapies based on the biomarkers.

00:28:43.887 --> 00:28:52.630
<v Steve Usdin>And their kids are, progressing rapidly and nothing that's being developed has the potential to reverse progression, they only can slow or stop progression.

00:28:53.064 --> 00:28:59.203
<v Steve Usdin>So they're, they're quite desperate and they're, um, they're, they're quite upset and they brought their case to FDA, they also brought their case to Capitol Hill.

00:29:00.038 --> 00:29:00.337
<v Jeff Cranmer>Okay.

00:29:00.371 --> 00:29:01.472
<v Jeff Cranmer>And, um, well, Steve.

00:29:01.806 --> 00:29:09.012
<v Jeff Cranmer>Um, where are we,  with  Prasad leaving, finding a replacement for CBER director.

00:29:09.247 --> 00:29:18.690
<v Steve Usdin>And this is interesting because they, of course, the, the patient advocates they directed some of their, ire toward, um, Vinay the, current director of CBER.

00:29:19.124 --> 00:29:33.171
<v Steve Usdin>This is really ineresting so when Prasad was picked, when, previous CBER and CDER directors have been picked over the last year, there've been five by the way, CBER directors and five CDER directors over the last year.

00:29:33.505 --> 00:29:35.773
<v Steve Usdin>at FDA, a year and a few months.

00:29:36.574 --> 00:29:41.378
<v Steve Usdin>In all of those cases, there were processes that were handled, in a really opaque manner.

00:29:41.846 --> 00:29:46.651
<v Steve Usdin>It isn't really clear, um, how the decisions were made and how wide the net was cast.

00:29:46.951 --> 00:29:48.952
<v Steve Usdin>It's being done differently now for CBER.

00:29:49.019 --> 00:30:08.972
<v Steve Usdin>I attribute this to, you know, what I've written about, which is the kind of new chain of command, that HHS has set, set up where, Chris Klomp is now the advisor to the counselor to the HHS secretary and seems to be playing an extraordinarily active role in day-to-day decision making at public health agencies.

00:30:09.374 --> 00:30:34.432
<v Steve Usdin>So instead of just kind of picking somebody, FDA has put out a formal solicitation for a new CBER director, they've emphasized in the solicitation that they want somebody who has policy leadership experience who can, testify before Congress, who is capable of cross-agency coordination and of dealing with regulators overseas.

00:30:34.731 --> 00:30:39.570
<v Steve Usdin>There's explicit reference to emerging technologies in the solicitation.

00:30:39.770 --> 00:30:42.373
<v Steve Usdin>and all of that actually I think bodes well.

00:30:42.373 --> 00:30:51.115
<v Steve Usdin>It, it remains to be seen who, who they're gonna pick, but they're certainly going to uncover a lot of really interesting and, um, talented people through the process.

00:30:51.382 --> 00:31:03.294
<v Steve Usdin>Um, the question's gonna be whether somebody who's really qualified and who would be good at doing the job would be willing to work under the constraints that they would experience in the current administration.

00:31:03.862 --> 00:31:12.202
<v Steve Usdin>I should also say that, it's also, uncovered some kind of silliness, um, Martin Shkreli, was on X over the weekend saying he fine.

00:31:12.202 --> 00:31:13.238
<v Steve Usdin>He'd be glad to take the job.

00:31:15.440 --> 00:31:15.673
<v Steve Usdin>So,

00:31:16.207 --> 00:31:17.875
<v Jeff Cranmer>Haven't heard that name in a little while Steve.

00:31:17.909 --> 00:31:18.675
<v Steve Usdin>Yeah, yeah.

00:31:18.675 --> 00:31:18.942
<v Steve Usdin>yeah.

00:31:19.376 --> 00:31:22.046
<v Steve Usdin>I guess, I guess he wanted to be, um, relevant again.

00:31:22.747 --> 00:31:29.787
<v Jeff Cranmer>In addition to the turmoil at FDA and the changeover in leadership, another topic we've been watching quite closely here.

00:31:30.087 --> 00:31:36.693
<v Jeff Cranmer>Steve has been watching quite closely here is most favored nation the Trump Administration drug pricing policy.

00:31:36.994 --> 00:31:38.462
<v Jeff Cranmer>Steve, what's the latest?

00:31:38.829 --> 00:31:45.903
<v Steve Usdin>So I, I haven't written about this yet, but there's a lot of activity in Washington that's happening behind closed doors on MFN.

00:31:46.304 --> 00:31:52.009
<v Steve Usdin>The Trump administration's pushing really hard for codification of MFN and industries pushing back.

00:31:52.442 --> 00:31:56.047
<v Steve Usdin>So last week, four large pharmas were invited to the White House.

00:31:56.446 --> 00:32:00.718
<v Steve Usdin>They were shown a 90 page MFN bill and they were asked to endorse it.

00:32:01.251 --> 00:32:07.157
<v Steve Usdin>And even though each of those companies have done so-called MFN deals with the Trump administration, they declined.

00:32:07.724 --> 00:32:11.362
<v Steve Usdin>The Trump administration wants MFN attached to a must pass bill.

00:32:11.930 --> 00:32:15.066
<v Steve Usdin>But the opportunities for doing that are really few and far between.

00:32:15.232 --> 00:32:18.169
<v Steve Usdin>There's talk of a reconciliation bill ahead of the midterms.

00:32:18.635 --> 00:32:23.674
<v Steve Usdin>This is gonna be extremely difficult for Republicans to pull off given their slim majority in the House.

00:32:24.174 --> 00:32:29.681
<v Steve Usdin>There's also talk about attaching MFN to other budget legislation, also really difficult.

00:32:30.414 --> 00:32:32.383
<v Steve Usdin>But that doesn't mean the issue's going away.

00:32:32.750 --> 00:32:37.755
<v Steve Usdin>The industry's gearing up to launch legal attacks on CMS' MFN demonstration models.

00:32:38.122 --> 00:32:42.626
<v Steve Usdin>Lawyers who I've spoken with are quite confident that they'll be able to get an injunction.

00:32:43.060 --> 00:32:46.497
<v Steve Usdin>They're just waiting for the right timing from a legal perspective to file a suit.

00:32:47.164 --> 00:32:50.500
<v Steve Usdin>I would add that lawyers are always confident that they're gonna win their cases.

00:32:50.768 --> 00:32:53.003
<v Steve Usdin>We'll see, when the rubber hits the road on this.

00:32:53.136 --> 00:32:59.810
<v Jeff Cranmer>Well that said, the Trump administration's, uh, record in defending some of its policy has, uh, not been the best.

00:33:00.111 --> 00:33:10.587
<v Steve Usdin>Well, and there, there's, and there's precedent because in the first Trump administration, companies challenged a similar but different MFN rule, and they managed to have it knocked out by the courts.

00:33:10.887 --> 00:33:16.626
<v Steve Usdin>In that case, it was on procedural grounds rather than the more substantive grounds that, um, they would be going after this one.

00:33:17.795 --> 00:33:19.730
<v Jeff Cranmer>All right, well, sounds good.

00:33:19.797 --> 00:33:21.531
<v Jeff Cranmer>Thanks for the update, Steve.

00:33:21.566 --> 00:33:26.003
<v Jeff Cranmer>And that's it for this week's BioCentury This Week podcast.

00:33:26.304 --> 00:33:28.940
<v Jeff Cranmer>We will be back next week.

00:33:29.307 --> 00:33:36.146
<v Jeff Cranmer>And if you like what you're hearing, uh, don't forget to subscribe to this BioCentury podcast.

00:33:36.547 --> 00:33:41.618
<v Jeff Cranmer>Kendall Square Orchestra provides the music for BioCentury This Week.

00:33:41.952 --> 00:33:56.334
<v Jeff Cranmer>KSO connects science and technology professionals and other members of the Greater Boston community to collaborate, innovate, and inspire through music, while supporting causes related to healthcare and education.