Good For You with Laura Deming (The Longevity Fund), Arvind Gupta (SOSV), Nina Kjellson (Canaan Partners) | Disrupt SF (Day 3)
7:56PM Sep 10, 2018
How on earth do venture capitalists and investors make decisions about investing in biotech? It's, um, it's, frankly, a black box to me. I can't understand that kind of standard at all. So how on earth do you make investments in that space? Well, we're going to unpack that subject with Nina kjellson from Canaan partners, Laura Deming from the longevity fund and Arvind Gupta, from sosv. And to wrangle this whole discussion we'll have Sarah Buhr from TechCrunch. Round of applause. Please, everybody, come on.
Alright, let's talk about money going into science. So I actually want to kick it off with, you know, we hear a lot about some of the wild, crazy things coming out of Silicon Valley and around the world in the world of biotech. But I want to hear from each of you what you've seen that is sort of blowing your mind right now, because I think a lot of the time we talked about, you know, we've got like, the meat and and petri dishes and we hear all this stuff. What are you seeing? That's real right now?
You want to go kick us off? Oh, gosh,
I think hibernation biology is the most fascinating topic in longevity science. And in general right now. Okay. Yeah.
So I want
to get into that later. By the way. Yeah.
So I think one of the things that we're seeing it, we're really focusing on two major major areas, planetary health and human health as big categories. And so from the human health side, we're seeing new ways of treating disease, so that actually getting to cure. So immunotherapy as amino modulation as a general modality is remarkable and amazing. Looking at the microbiome as a modality is also really amazing.
But really on the planetary health side, the ability to create entirely new industries is, is really remarkable. And that happened about three years ago, when you talk about meat and petri dishes, and what is now called cell based meat. And so thinking about how entire industries like the food supply chain, you're basically changing
everything like you're you're making, you're talking about making it so that we're not we're no longer having this like this cattle in cages moving it towards, you know, building something in a lab instead is what you're talking about an entire it's
about like taking, changing the factory. So I think the general trend that we're seeing they're so exciting is moving away from treating symptoms, whether it's symptoms in humans, or symptoms in the planet, like, okay, we'll put a bandaid like, let's reduce the carbon in the atmosphere by doing carbon credits. Well, let's get to the root of it, which is the actual agriculture and change the factory from a cow for protein to the factory of say, stem cells and growing those out in bio reactors, the actual end product is the same, but you treat the root condition,
you know, what are you excited about. So,
I've been in this industry since 1999. And I feel like this is an unbelievable Golden Age right now. And I thought that in 1999, there's sort of the sequencing of the genome, the early cell therapy, their first gene therapy efforts all ago therapies one by one failed, including catastrophic failures with human debts. And today, we've got three gene therapies approved. We've got two car t therapies for cellular therapy, we've got the first RNA interference drug approved, and we've got hundreds literally hundreds of gene therapy and cell therapy clinical trials that are doing root cause disease cure, as well as really harnessing the human immune system to treat disease. And I think it's because the tools all the learnings of those decades, but also the tools that we have at our disposal today in synthetic biology and in a gene editing are making the science translate in a way that we just couldn't have believed. I spoke
to two CRISPR scientists yesterday to Scott, founders of CRISPR startups. And they were saying that, you know, it's just around the corner when we're going to be able to walk into a drugstore, they'll look at our genetic information and you have some kind of CRISPR therapy right there to take care of whatever
ails I'm super nervous about is just around the corner, we're going to walk this is the matronly. I've been in this business too long, and I'm a little grouchy about the walk into the drugstore and buy these off the shelf in the very near term timeline. But I think it's unbelievable that we have the first clinical trials with CRISPR gene edited
human cells. I think it's
phenomenal. Yeah, you mentioned you're nervous, what can each of you told me? Like? How do you separate when you're looking at investments? What How do you separate the hype from what's real?
One thing is people I think, you know, there's a, there's an incredible underpinning, and the talent and leadership and the experience was really exciting to me about an end to be talking about biotech at TechCrunch is such a privilege. And I think it's a sign that the convergence is at an all time high. But I think the the critical piece is really combining the incredible audacity of new innovators, scientists that are coming straight from the laboratory with new inventions with really seasoned veteran dragon technology developers that understand translation understand all the preclinical models, clinical execution, especially regulatory and what it really takes to bring a product from a really great concept into patients and then onto onto market. And so for me, a lot of the sorting of the hype from reality is do we have not just as people to say, you know, do you bet on horses, or jockeys, and I really think it's important to be betting on on both. And I think this life sciences, hugely a jockey jockey and leadership
business, we're any of you were any
of you skeptical of fairness is offering when it what came up? Were you like, that sounds interesting, or we did your tweak or Scott,
let's go. Yeah.
So you know, that their nose was outside of my field of view at that time, right. So it was as much as a news item for me as for everyone else. But it was the biggest thing about their analysis, the data was just never shown. And, you know, FDA was being skirted. And that was an active act of fraud from what john kerry Ruiz has reported on. And so I think, you know, again, no one up here would invest in companies where you didn't see underlying data first. And again, it goes back to people, so people data as well as for us at Indy bio, the how big of a problem are you trying to solve. And I think like that we see biology is a technology and that can be applied to world size problems. Like I said, planetary health and human health either cures or ways of reinventing industries, rather than selling assets into industries. And I think like that, that's a big thing for us. So on the healthcare side, you're seeing it with like Oscar, right? Rather than trying to sell an asset into an insurance company, well, let's just disrupt that whole industry in the first place. So that's what we're looking for. And then the types of people that can drive that all the way through execution, and the types of people that will take the coaching and the network and bring them in, because those types of companies take huge amounts of, of talent, people and energy to to actually make happen, you know, canon
has been investing and diagnostics for 25 years, and been looking for the holy grail of multi analyze, multiplex really low patient blood sample volume, being able to get rapid readouts. And today it all in a box that could be at point of care and a home and a doctor's office or in a drugstore or grocery store is an absolute Holy Grail. But because we have some combined I think, 75 years of experience in med tech and diagnostics, investing, we understand how hard the chemistry and the immunology is. And so when that opportunity was presented to Canaan without data and some systematic explanations of what's different this time, it was not something that we were going to take a serious look at. I think it was an audacious plan. And I think I think we should not give up on that idea. Because we had a public catastrophic
fraud. It's dissolving this weekend,
but holding this week, and there are other companies with that same value proposition. Their slide deck looks a lot like the fair no slide deck looked, but they've got data and they've got a credible regulatory plan. And I think that's a huge differentiator. Laura, I
want to switch gears a little bit you you're looking at biotech bit in the realm of longevity. And yeah, something I think that's very fascinating is you're so young, and yet you're looking at longevity. So I want to know why you jumped in, specifically into longevity at such a young age 2424.
Yeah, yeah. So I grew up in New Zealand. Um, I was in love with science since I was a kid. And when I was 12, I emailed a biologist here and asked, hey, I'm 11 years old, you know, I love aging science. Can I come work in your lab? And, oh, there's a couple steps. That's true. But she eventually she wrote back and said, Yes. And I was like, wow, I live in New Zealand, like, this is crazy
how we get to California and figure all this out. And I think one thing that we really care about at our fund is just allowing more people of all stripes and color to kind of like, come into biology and start companies and, and not the ages are focused on the younger spectrum. I think also, you know, for example, my mom was in her kind of, like, later stage of life and thinking about like, medical school. And that's amazing, right? Like, how can people of all ages kind of come in and start companies that they're fascinated by? But I think that's something that we were really interested at the moment is just kind of, you know, independent of age or kind of background, how can you How can we push the science forward a bit more, that was the thing,
one of the things that I love about what Laura is doing is in framing longevity, there is a Peter Pan syndrome alive and well in Silicon Valley with all sorts of strategies to think about, how do we have young would, you know, by 90s, but I think the study of longevity and cellular aging phenomenon and the physiology is also going to underpin a lot of our understanding of human disease. So I think there's a complementarity to not just Long live witness. But what does that mean for for vitality and health? Yeah, it's actually for Oh,
sorry, I was just about to say, for me, it's a great indication of shifting from the genetics mindset, everything is a gene, there's a genetic route and there's a genetic solution to metabolic
route and metabolic solution, I think those two to get together will reshape health care,
not just what you're born exactly it is
it's how how that cells actually metabolize and things and those two things coming together is actually a holistic type of man
and the behaviors that dictate what that can detect some of those exposures that all to that, that's
right process. Yeah, I also use I think there is highly program at Blue Cross species, right? There's some speeches that do not age like, you watch them across their life, and their mortality rate goes down with time. So it's like, That's amazing, like, tortoises are just, like, getting healthier with age, like, how can we learn from them, their species that kill themselves after they reproduce. And so it's like, they have a program switch and past certain age, they're just like, down like, occupy, sit on their eggs, and their mouth goes away. And so if you switch that gene off, that they're still they live a lot longer, but like, you know, they're just they're programmed to age is this question of a are we programmed to age menopause occurs, you know, at a very specific time points o'clock, and you get way worse and a very specific from a health perspective, like immediately if you're if you're a female. And so like there, there's just all these questions of, you know, maybe we maybe we're not programmed age, but there are certainly indications that we are on some level and how can we affect those genes? How can we kind of change this programs,
so it's not just that parenthood ages s prematurely.
I do want to switch gears. So what we're talking about here is there's technologies and everything, right. That's why we talk about biotech on TechCrunch. That's why I write about biotech because there's, it's not just, you know, therapies developed in some drug lab and, you know, Pfizer or Glaxo Smith client, it's, you know, it's an everything. Now, we were talking about CRISPR and programming. So we're talking about growing meat in a lab, we're talking about all these things that were a technology is involved. So how do you differentiate between, you know, you know, drug discovery and, and investing and drug discovery versus everything else is, I think that actually, you know, I'm going to reverse this question. I think the problem here is, is the nomenclature in biotech, drug discovery and biotech to point out that's happened in the last couple of years? How do you differentiate between that?
So if you don't mind
for free, you biotech historically has always meant healthcare and drugs, most specifically, because it was so expensive. And yes, because it was so expensive to fund that you needed market sizes that would support that. So, you know, the first check is $30 million, how are you going to possibly say, Oh, well, I think we can make, you know, egg whites without the chicken, it'll only cost us $30 million to find out and if see if people will buy it. And so what's happened is, you know, as you know, saying the tools have gotten cheaper, faster to do by biology. And so what we've seen is, if you could take the cap x out, you could start to experiment with different areas to invest in where biology is truly a technology new look for solutions, like in the food supply chain and apply it there. And you could lower the risk of trying that out. And you can start taking a portfolio approach to start solving these huge problems. That that's been the interesting shift I've seen in in the biotech two point O world versus the straight up drug discovery, preclinical to clinical asset development that we've seen before,
here's what I think is interesting is, you know, as you're talking about the the price being lower to invest in and get to, from like Point A to Point B to actually have some results. Something interesting has been going on the last couple of years is that the investment in biotech has gone up, especially in seed and series A. So if we're lowering
the cost, why
is there more money being poured in to get from point A to point B, what's going on, I think it's really important
to differentiate that there may be some cost efficiencies and time efficiencies because of the sort of the genetic and synthetic bio toolkits that are available to us and informatics technologies as well. I think there's a huge amount advantage to using machine learning to accelerate the mining of big data sets, looking for new targets or, or targeting disease associations. But make no mistake, the cost of developing drugs has not gone down. And the timelines in some senses have shortened where we're able to use a genetically find disease to more quickly find the right patient to enroll into a trial. And because we're also addressing some diseases that have fatal consequence. And we're now offering curative opportunity, we may accelerate the time to go from our first sign of clinical efficacy to approval. We've seen that certainly with the Comerica art antigen receptor T cells, for example, they went sort of two years from proof of concept to to approval, but writ large, the cost of doing drug development in the clinic is higher, not lower. I think the reason we're seeing this enormous influx of capital and we're looking at, you know, 20 billion in the last two years of money coming into life science venture capital, 30 billion going out to investments in these companies, 3 billion into series a biotech just year to date. So the tremendous amount of investment I think, is twofold. One, we're literally curing disease. So the enthusiasm for the science of technology and the human potential is unlike anything we've seen before. And then second, these incredible technology insights are allowing us to build companies that are pipeline, their platform drug discovery, that are looking in numerous shots on goal and because there's availability of capital, we're not just doing project finance, to take the single first candidate into the clinic, and to move that forward. But we're using a combination of venture dollars from traditional sources, from public crossover investors, from China, from strategic corporate funds to be able to do multiple shots on goal to build pipelines, which I think is really exciting that we don't have to sacrifice the are and the discovery the moment that we get into the clinic. And I think that's a really exciting part of of the environment right now. It's scary, because in my view, that can't last forever. And if we have some really significant disappointments in the public markets, if we have some catastrophic results from some of these products, in terms of safety events or failures in the clinic, there's no question in my mind that the music at least slows down in terms of the capital inflows. But I think fundamentally, it's the science is blowing people's minds. People want to be a part of that revolution, and we want to do drug discovery platform enrichment really build out those tools in addition to bringing the drugs that are coming off of them forward into the clinic,
or would you agree with that? Or what do you think there?
I'm like, there's also fascinating phenomenon that capital has massively increased coming into the field with a number of companies started has stated surprisingly similar to what it was previously. And so one of the things that we're sitting here looking at, it's like, well, biology is obviously like, paying off where all the entrepreneurs, it's like, Where are they? It's quite striking. And so I think like one yeah, that's something we focus on. And I think I think that discrepancy has been interesting for us, because there's just so much capital coming. And there's never been a better time to raise funding. If you go out, you're getting capital for crazy ideas. I'm just like, where the ground is restoring companies, like you're nowhere to be found, like it's
quite striking factor
by far is people we have way more money than we have the talent
to process. Well, it goes here that there's way more money than talent. So if you're thinking about doing something new,
that's the thing we're like, please email us because we just, you're not getting these. Like, if you go and you sit at the MIT lunch rooms, you talk to grad students one after the other, but combined look like all I can't start a company cuz like, it takes 10 models, you know, you can raise 500 K and do certain things in the first year that increase your chance of success and like value, and like it's just an education thing, but it's very striking. Do you have a dozen?
love it. What What do you think? Why do you think there has bend is the word isn't that what do you think? Ivan? What do you think? Why were you? Yeah, ground level? Look at your level there.
Yeah. So I mean, it's
things are moving very quickly. And people's opinions about when they got into science as a post, you know, 10 years prior to being a postdoc and they wanted to be a PhD in the postdoc lips is happening and they can't get a job all this is starting to come to a head and so they're still in the frame of mind of I'm gonna go be a professor and do my research and study a certain area. And I think the pendulum is starting to shift one of our founders said this very, very eloquently where the impact it's like I could write papers for the rest of my life and who's going to read them I can build a company
a PhD to get into this game to buy biotech i think i think that would maybe cause a lot of people to hesitate to get into
it if they seminar paper alone God biologist post by a 15 year old girl, a 15 year old girl she wasn't even like, I mean, it's quite striking, right? He certainly stories but it wasn't me it was somebody else was like there was another 15 year old girl who published in Sunday, kindness love the seminal paper, longevity biology. And it's like people forget that.
So I think I think to be again the Grouch on that panel, I do not think you need to have a PhD to come into life science, I think you have to have a passion for the science and a curiosity and interest in solving problems. And I think that can come through an undergraduate training in the life sciences is the best that has been in a long time. So I think that's, that's not necessarily a barrier. But I do think one of the reasons that we're seeing we're beginning to see a bit more movement from graduate and postdoc into industry is it's no longer seen as sort of the the, the breach of the sacred ivory tower to leave academic as come into industry. But also we as a nation are underfunding science in academic ranks. And really talented people are burning out writing grants, and desperately trying to seek funding to continue to do their science and to find an academic post that's viable and sustainable, especially if you're trying to live in Boston or the Bay Area. So I think the industry is offering an opportunity to do great excitement, you know, exciting science with really good good funding, and an opportunity to see that translate. And I do think that we, we also need to be investing in programs at the undergraduate and graduate levels in computer science and informatics for the life sciences. Historically, people thought, Oh, that's just statistics. And I don't really want to just be a bioinformatics and statistician, but increasingly, we're seeing, you know, genomic Bioinformatics, we're saying AI machine learning applied to clinical data sets, as well as to preclinical and, and research sets. And those programs, Stanford has just launched one that I think is going to get off the ground. So I think we need to build more of those programs and really evangelize them and as an industry partner with them, to show that there's really satisfying work opportunities, the two latest investments that I made, I'm recruiting as many data scientists, as I am biologists. So this is really the modern biotech company, and we just need to get the word out about that. Yeah, and I think
along those lines, right, it's about technical expertise and the drive to see it executed into something that can create human value. I think, you know, so PhD, you know, PhD would just demonstrate that technical expertise and excellence that you could take this dream, take this idea that's super big, and then turn it into reality. That's what investors need to know, to be able to make that investment and to take that risk is okay, not only can you dream big, but you could execute big as well love to hear Laura's
take on this too, just because of the generational difference in the sense that the biotech has historically been an older person skin. Most people come into biotech with one or two degrees and a decade of industry experience. If you look at leadership and biotech, the median age has typically been in the 50s and there's some exceptions to that. But how do you see that potentially changing such that we bring the average
age in mind? We are almost out of time, but I do want to hear your take on that. Yeah, we're interesting.
Um, I I I don't know I could give a good answer to that. And 30 seconds.
want to give you
Well, we do have 30 seconds. So really quick, each of you. I just want to say thank you so much for coming on stage. It's been very fascinating. I want to talk with each of you more and I think you're you have a q amp a or did you already have the q amp a you have a q&a later,
perhaps. Alright, well, we'll figure that out. Anyway,
thank you for having us. Thank you.