Please join me in welcoming our stat-readout-loud podcast host, Elaine Chen, National Biotech reporter, Allison D'Angeles, Biotech Startups and Venture Capital reporter, and Adam Feuerstein, Senior Writer for Biotech. Welcome to the stage, guys. [music] Welcome to this week's episode of the Read Out Loud, a weekly biotech podcast from stat. I'm Allison D'Angeles. I'm Adam Feuerstein. And I'm Elaine Chen. It is Tuesday, January 13th, and we are coming to you from the JP Morgan Health Care Conference in San Francisco. We are recording this episode in front of a live audience at the conference. Hey, audience, come on, we'll make some noise. Yes, yes. Very nice, very nice. We will have two guests here with us. First, we'll talk with Novo Norris, new CEO, Mike DuStar, about his vision for the company as it faces growing competition in the obesity market. Then we're going to have Bob Nelson, co-founder and managing director of Arch Venture Partners. We'll hear his thoughts on everything going on in DC, China's Ascent in Biomedical Innovation, and the use of AI in drug development. But first, a word from our sponsor. I'm Jesse McCorders, Stepper and Studio Editor, and today I'm joined by Ken Keller, chairman of the board, president and CEO at Daichi San Quil, U.S., and head of the global oncology business at Daichi San Quil. How do you see the standard of care for cancer evolving in the next five years, thanks to antibody drug conjugates? A Daichi San Quil or focus has always been an advancing science in ways that meaningfully change the lives of patients. We're taking the next step in treating patients by moving our ADCs into earlier lines of therapy, including the curative intent settings of early breast cancer and treating more tumor types. Because of our game-changing work, ADCs may become a potential replacement for chemotherapy in any setting where chemotherapy is currently used. Our scientists are also exploring new payload technology and antibody designs. This exciting progress is what drives us to continue innovating to transform standards of care and bring more hope to patients with cancer. How can people learn more? Visit daichisan Quil.us to learn more about our science. Okay, so Adam, Elaine, let's talk a little bit about JP Morgan, and I actually want to ask you guys about the thing that seems like it's missing from JP Morgan this year. We kicked off the conference without a big M&A announcement. What do you guys make of that? You know, I feel like we're obsessing a little bit about M&A, and I wrote this in a recent column. So I think it's okay that we haven't had a lot of M&A deals. I think that there are certainly M&A deals on the horizon that will be announced. And so, everyone should just chill out. It was very strange getting a text message from Adam in the last couple of days telling me to chill. That's not normally your MO. I know, that's not usually my MO, but it's my new persona. My JPM persona is now the very chill, relaxed persona. That's what I'm trying to be. I wonder if it's also maybe just a reflection of the weighting importance of the JPM conference, where maybe there's not as much urgency or companies don't feel the need to have to announce big news at the conference. It's just, you know, Allison, you were talking about you were surprised because on the flight here, it was actually not a full flight. Yeah. Yeah, I took the Boston to San Francisco route, a route that normally on a Saturday or Sunday before JP Morgan jammed packed. Like, I'm fighting, elbowing people to get my bag and the overhead bin. And that was not the case this year. There were empty seats and I heard from at least two or three other people that their Boston to San Francisco route also had empty seats. Which really struck me and struck them too as a sign of like, okay, yeah, maybe we're having a little bit of tempering of expectations. If you want to relax, experience traveling to San Francisco for JPM, fly on Friday, which is what I did. You did and you were also Adam, once again, out here chilling, sending photos of the food that he's eating. This is Adam, once again, this is my ongoing beef with you. Is it you sending delicious food photos that I can't enjoy? So our first guest today is Mike Dustar, the CEO of Novo Nordisk. A few years ago, Novo transformed the obesity treatment landscape with its blockbuster GLP-1 drug Wagovi. But over the past year, the company has been losing market share to Eli Lilly. And it's facing questions about its pipeline and commercial strategy. Mike was named CEO just five months ago, tasked with the responsibility of making Novo more competitive in the obesity market that it created. One key catalyst that he has going for him is Novo's recent launch of the Wagovi pill, the first oral GLP-1 obesity drug on the market. And so Mike joins us today to discuss his vision and his strategy for the company moving forward. Everybody, please help me welcome Mike onto the stage. [Applause] You can adjust that, Mike, make yourself nice and comfortable there. This is a nice room. So Mike, how's it going? This is your first JPM as the CEO. I don't know if you've been to other JPMs. It's my first JPM. Your first JPM? Mike, this is my 22nd JPM. I've got you beat. So how has the experience been so far? It's been really good. It's crowded. I thought it would be, but it's also been incredibly rich in terms of the dialogues we have had with the media, with our partners, with our peers. So I'm having a good time. So Mike, you've had an interesting path at Novo. You joined the company over 30 years ago. You started off as an office clerk in Austria. Obviously you've climbed through the ranks and now you are the CEO of the company. So I wonder how has that career path shaped your approach as the CEO in sort of this strategic direction you want to take the company? It's a good question. I don't know how long time you have, but when I came to the company, I came as a 21-year-old who just needed some pocket money. That was the only thing I cared about that summer, making some photo copies. Some years into it, when you really start to realize what our industry does, and specifically maybe what my company does, you create a bit of a sense of purpose that what we do matters, and especially in our business within Novo Nordes, there is not a single person here that is not aware of someone who's either suffering from diabetes or obesity. And when you are also the largest within your own field, you actually see people that are using your product. There is a bit of a good feel about that, that because of what you do, they are having a normal life and they're having a better life. And that, of course, I have carried that through my career. Obviously, when you sit at the top in my current position, even more so you feel responsible, but I would not lie to tell you that even when I was a lower-level office clerk or working in a department, I really felt like I'm making an impact as part of it, and that's what the company does. The company really does a good job trying to say it doesn't matter what fancy title you have or you don't have. We're all here for a purpose, and we share that responsibility, and I feel that from a very young age. Mike, can I ask you're also, so this is not only your first JP Morgan, you are the first CEO at Novo Nordes, because it's not Danish, correct? Yeah, I'm actually the sixth CEO, which is odd for a company that has 103 years of history. So, in 103 years, we only have had, I'm number six, but yes, the other five were Danish. Okay, so tell us a little bit about the culture. What do you make of the environment? I mean, a company that's only had six CEOs over 100-year history, most of which have been Danish. Do you find that culture in the company fitting for kind of a 21st century pharmaceutical company? Is there anything you feel like you need to change? Well, I'm biased here. First, I like the culture. Otherwise, I think there's something wrong with me having stayed there for 33 years. But I also think that the company has been quite successful. There are a lot of companies that maybe have 100-year history, but they've gone down and down and down, and there's today a fraction of what they used to be. Novo Nordes, despite all of its ups and downs, still is one of the largest European, I would say, one of the largest global companies. And that is in light of the culture it has as well. And by the way, novo got to this size without mergers and acquisitions. It's all been organic growth, which is quite unusual, I would say, also when you look at our industry. Like any culture, there are pluses and the minuses, and you have to figure out how you want to read the book. One of the things that Scandinavians, and they specifically are famous for, are their consensus-driven organizations, their inclusivity. On a plus side, you could say, long before diversity and inclusion, D&I became popular, it was in our culture. I came in as a copyboy, and they judged me and treated me equal to anyone else, regardless of my younger age, my status, or what have you. So that's really good. That's part of the culture. On the other hand, you could say consensus means that you include everyone, and you speak to everyone, and you make sure that everyone is heard. If you need to make a decision, and there are 20 people around with 20 different opinions, and you have to not just listen, but adhere to everyone's thought and try to consolidate everyone's thought into a decision, that culture sometimes becomes slower, then in dictatorship, when one person says, "We're going to do it this way." So, being aware of that, and trying to make sure that you don't compromise speed when it's not uncompromisable, it's very, very important. Well, on that point, Mike, I want to follow up because we've reported at STAT that there have been some people with the NOAA in order to get that felt over the last several years that the company's R&D operations have become a little bit too cautious. They've focused on internal projects and maybe not looked beyond at the rest of the pharmaceutical industry, and that things were opportunities were missed as a result. Do you think that was the case? What do you do from here on out? I think, again, it depends who you ask and how you look at it. Over the last five years, we've done more than 100 different BD transactions. Most people don't know that, including, by the way, many of our own internal employees. So, from that perspective, I think many of the things we have done, we looked out and bought some parts of it somewhere else, and very proud, obviously, in our normal value chain, manufacturing, what have you? We do a lot of partnerships to get where we are. On the other hand, the fact that I've been in the company 33 years, and I've never been to JP Morgan, as an executive. I've been an executive for 12 years or so. I've never been here. I think my previous boss, the previous CEO of the company, in his eight years as a CEO, was only here once, speaks volumes to what you mentioned for the other side of the story. That you come here in every single company, small or big, is here presented, explaining who they are and welcoming. A dialogue, yet Nova was a bit less present, would be something that I would like to actually amend and improve. And that's why, also this year, I've brought my whole entire executive management team here, just to see and feel that there is a lot happening, and this not invented syndrome, that sometimes it does exist in many companies, and certainly it has in our company as well, should go away. And yesterday, we had a reception where we had invited many of the partners and number of companies that want to be partnering with us. Over there, it really was phenomenal to see how much more we can do with the ambition that we have, treating two billion people that is above and beyond what we can do on our own. The problem is simply too big for us to be naive and think we can solve it on our own. We'll stick to the topic of M&A for a second, but obviously at the end of the year, there was this really interesting slight bidding war over Metsera, the obesity drug developer between Nova Nordisk and Pfizer, eventually Pfizer won, paying around $10 billion for the company. I wonder, my first question for you on that is, I wonder if your pursuit of Metsera was really kind of a ploy to get Pfizer to overpay for the obesity asset? I don't think actually there was a bidding war, maybe from one element, you could say there was one. If you would read the proxy, then you see there was a reference to Player One. Nova Nordisk was Player One. We were there from the very beginning, and then we were joined first by another company and eventually by Pfizer. If you continue reading the proxy, you see that our first bid was $10 billion, and 16 bid later, our last bid was $10 billion. That's quite unusual, and I think something that gets lost in translation. We looked at the data, we understand this stuff, and we knew that to us, this is worth $10 billion. So instead of playing games and getting all the bankers involved, and we went with our last bid first, we said we would like to buy this stuff for $10 billion. And got some interest, eventually Pfizer came in, they wanted to buy it for $7 billion, we thought that's not fair. So we repeated our bid, that is $10 billion, and eventually they, I think, took the whole thing for $10.1, I think it was or something. And that's fine, we knew to us, this is not worth $1 more than $10 billion from the very beginning. So you say you are disciplined in the approach that you tell me? Yeah, and you have to be. I think basically a bad deal is worse than no deal. We were not there just to make a deal. We were there to bring a couple of assets in at the cost we thought it's worth it to us. And it's worth more for Pfizer, and I'm very happy for them, and I think this is how it panned out. But I was very vocal and public about this, if you would like to take this asset, God be with you, just pay the right price for it. And eventually they did, so I'm incredibly thankful that they listened to me. Moving forward on the BD front, on the M&A front for Nova Nordisk, I mean, obviously it's too simplistic to say, "Oh, you were willing to spend $10 billion on it, Sarah, so therefore you have $10 billion to spend on somebody else." But I wonder how are you thinking about the kind of assets, the kind of companies that you may want to pursue in future transactions? Yeah, and I think the answer to that is, we take it back to the patience. We never put a bit limit before we went into the Matsura deal. We put the limit after we saw the data and calculated what it does compared to what we have, time wise and so on and so forth, where we said, "It's worth that much." We could have actually, on a different deal, something that was worth more, go twice, three times, four times more. If you look at our, basically, leverage and our balance sheet, you could see that we could go very high, much higher than most of our other peers, due to our financial strength. So, from my perspective, it's almost wrong to say I'm going to do a five, if you have the money, to say I'm going to do $5 billion deals or $10 billion or $20 billion. You have to say, "What do you want to achieve? What do you want to do?" We would like to treat as many people suffering from diabetes, obesity or overweight as possible so we can expand on the current leadership we have within these two areas. Our strategy is rather simple. Do a couple of things, but do it world-class, be the best in the world at it. So, in that context, then we say, so how many people are out there? There are about two billion people that are suffering from these three different conditions, and then you basically say, "Okay, well, this cannot be a single disease. Obesity, everyone calls Obesity. Obesity, but in reality there's multiple different versions of it out there, with multiple different wishes and needs of individuals for treatment. I need to be at every corner of that." Is there a company out there like Metsera that you would be interested in buying? In a cardiometabolic, some company in obesity weight loss? I mean, is that the priority for Nova Nordic? Yeah, we just bought another asset from a company called Akiro. We actually bought the company Akiro, and they're selling a product for fatty liver. 80% of those patients are obese. We paid $5 billion for it. Same time, by the way, we were bidding for Metsera's exact same period. And this is for late-stage mash, F4. We have somagletite that is basically helpful in F2 and F3, and we felt like we have nothing for patients with F4 mash. And those patients often have to get a liver transplant. Brothers and sisters, F4 are for people who don't understand. It's patients with more severe loss of your liver, scarred, basically liver, and their only solution is transplant. This product, if it proves to fulfill its promise, is able to almost reverse. The condition and avoid you getting a transplant. Huge on MedNeed, very much aligned with our strategy, so we went and purchased them. Are there more out there? Absolutely. We are here with my whole team to explore some of that. There are some early asset things that are happening. There are some later asset things that the trick Adam is to figure out, is it substantially better or earlier than what we can do ourselves? Because we also, in all humbleness, tell the world within these two areas, are able to do quite a bit on our own. So if we can actually bring something decent on our own, we're not going to buy a duplicate of it elsewhere. So it's not any deal, but it's the right deal. So I want to pivot to commercial strategy because you're a commercial guy. Specifically on this emerging direct to consumer market, this market where patients use cash to buy drugs directly from the pharmaceutical companies, you were slower to the DTC market than Lily, but now it seems like you're really leaning in. I've been hearing your talks here at the conference. You're talking about DTC a lot. It seems like perhaps focusing even more on DTC than traditional insurance channels. Why are you focusing so much on DTC? What are the metrics that led you to this? Are you seeing more growth of prescriptions in DTC than in traditional insurance? Yeah, so if you allow me to first maybe make a correction. With all my subjectiveness, I would not say we were slower than Lily. I would say we were cursed as a leader in an area where we were first. When you go somewhere, if you go to a dark tunnel on your own and when I really say dark tunnel, this obesity was a dark tunnel. When we went into obesity 30 years ago, people made fun of my company saying that this is not a disease. This is not a condition for serious pharmaceutical to enter in. And maybe more importantly, there's no money in it. There is no money in this. That's why they were all late. No, but nor does saw the patients. We did also not see the money. It's not that we were visionary and knew what's going to happen. We basically saw the people because obesity is a very visible disease. We also knew that it's a leading cause of type 2 diabetes, what we do. And if you truly want to help prevent future diabetics, then you got to get involved in obesity. That's why we went there. Then when you go into this dark tunnel on your own without anyone else, you'll start falling into certain puddles, left, right, and center. If the guy behind you following you has any feelings and sense and and savviness and Lily does, then they just try to avoid the puddles that you fell in. So they went back and forth. And one of those elements was, of course, they went earlier on us with let's say the cash channels and what have you because they noticed that there's something being segmented there. Our job is to make sure we don't repeat the same mistakes twice. Right. What are you seeing? Like, are you seeing now that the scripts in the DTC channel are growing faster than in the insurance? Absolutely. I think not just us, Lily also says that. Right. So if you take a look at the latest data from my TV or from last year, you clearly see that the insured channels growth are subpar compared to the e-health and the cash channel growth of for both companies. We also notice now and we are trying to exercise this with our VGoV pill launch. That no matter how well that growth is, the comparator should not be the insured channel growth rates, but it should be the potential of what's possible. And that's why, in addition to our own NovokareFarmacy.com, which is the path for people to buy our VGoV pill, we also have started doing massive partnerships with live MD, with Ro, with Weight Watchers, with Amazon Pharmacy the other day, because many of these patients, they don't know my site, they know their site, and we need to meet the patients where they are rather than where we want them to be, if you really want to go fast in a broad way. What percentage of your scripts now comes from DTC? So we have, as of end of last published data, I had about 10% was coming from the cash channels. I think if you look at the latest data from little, that was about 30% so they've done better than us. And we use that as a benchmark to say we can do better. So kind of the flip side of this DTC model is that it actually ends up putting more costs onto the individual patient, because they're paying out of pocket for these drugs. You said this yesterday at an event, yesterday morning, that as healthcare costs become more burdensome for health systems, one solution is patients taking on more costs themselves. But doesn't this go against the argument that NOVO has been making that the DTC model actually expands access for patients? If you, on my honest opinion, I think, now this is a forward looking statement, so take it with a pinch of salt. I think if you go 10 years from now, not just in US, but probably globally, you'll see that cash channels will play a bigger role than we have seen today. And let me try to explain why, and then you can tell me if you disagree. We have a situation where medicine costs are getting more and more and more to develop a drug. As a result, when pharma companies bringing their newest latest drugs into the market, they're more and more expensive. So the cost of medicine is higher than 10 years ago. On the other hand, the healthcare systems, and that could be the insurance system here in the US, or a public social system somewhere in Europe or elsewhere, they are getting closer and closer to bankruptcy without exaggerating, because of the aging population, predominantly, and less money going into the system. So this imbalance will, at one point or the other, can break, unless someone else starts to sharing the cost. So that could go either through higher and higher copay, more and more restrictions, which you start to see in this market. You have various different mechanisms to control that cost, but you also see it in Europe and elsewhere, where products are not reimbursed and companies launch it and then try to see whoever wants to pick it up. I do see that this is going to increase because of that. Now, I'm still a big fan of insurance and feel like your tax money has to pay back somehow, and it's not to belittle that, but I do think it. Farmer companies that master both of these channels and not put all their bets, hedge it on one side or the other, are the one that will end up competing best. So what's interesting about that is you have the cash channel, you have the insurance channel. I've been hearing that large employers are actually increasingly dropping coverage of GLP1 drugs, and part of what is motivating them to do that may actually be because of the growth of the DTC programs. They're saying, look, employees, we don't have to cover GLP1 drugs anymore because you have this alternative to turn to. So counterintuitively, the DTC program may be leading to less limited access through insurance channels. So what are your thoughts about that dynamic? Does that concern you? No, I think what probably will end up happening is that you'll see the farmer company. So I think farmer companies will of course continue having good dialogues with the insurers, through the PBMs and what have you, where they will try to convince the other side to ease up on some of the restrictions. If you take Vigovia as an example, 55 million patients are insured in this country out of the 100 million, but affectionately, literally single, low single digit millions are able to get the product through the insurance with the copy. I think our job as a farmer company is to convince the insurers to do better than that. So we will do that. On the other hand, of course, open up your cash channels at reasonable prices, like I just explained through the eHealth channels is the other extreme that we need to develop. And then there's this middle ground, which I think you're touching upon, the possibility of going to large employers, those who have many employees and say, "How about we make a package deal for your employees?" Where then, if you are, let's assume your Amazon with so many employees, you will basically then buy a package from your CVS or United Health or wherever you're insuring your employees that excludes some medications and therefore a lower cost. But then you have your special deal with company A and company B through some sort of evouchers and coupons and got those what to go and pick up if you're suffering from this or that condition. And I do think all those three channels probably need to coexist together to manage the costs. I mean, ultimately for employers, their costs are determined on the net prices. So we've seen you drop the DTC prices pretty quickly. Why not do that on the net prices and lower the financial strain for insurers and employers and why not try to compete on lower. To drop the list prices, really? List and net prices, ultimately. So we have, of course, now gone when we are dealing with, let's say, our noble care pharmacy or when you find our products in the E-Health channels, reduce the price dramatically. But I mean for employers, why not compete on lower net prices? Yeah, so it's part of the dialogues and the discussions. I think historically, in this market, when you talked about the list and the net, someone was benefiting in the middle and there were obstacles to doing so. What matters for us as a pharmaceutical end point company is the break. You bring home price for what is worth. At the end of it, what matters to me is what goes into our bank account after all of the discounts and what have you. So I have all the incentives to make the prices as low as possible for the patients with the access that, of course, comes with that. But I'm not the only player in the game, so you really need to have a good dialogue to make sure no one else is losing in a big way in that dialogue. Hey, Mike, I have a bit of a random question. Do you like games? I do like games. Well, it depends. No, no, it's a tricky question. It depends. Well, we wanted to end this interview. I know that was kind of an abrupt transition, but we wanted to end this interview with a game. It was technically Adam's idea, but somehow I was tasked with becoming the game show host. So, do you know Swedish at all? Do I know what? Swedish? Swedish? Do I speak Swedish? Yeah, we're all on level playing. This will be great, because our, it's a level playing field because the game we're playing is, is it an IKEA furniture or is it a drug name? So, I have a list of. Do you have any IKEA furniture in your house? Sorry. I do have some, yeah, yeah. You see, everyone has IKEA. Yeah, yeah, I do have some, but I don't remember their names. They do have these strange names. They do. What do you have a hard time pronouncing them? They do. The same with drug names. So, I have a list of words. I'm going to go through them one by one. It's also going to show up on the big screen, so for the audience, you can follow along. I'm going to show you the word, and then I'll count down and you tell me, is it IKEA or is it a drug? Here we go. So, first one, I don't know if that's a drug. That's a drug. I think that's also a drug. Adams. You sure sound like a IKEA bookshelf or something? So, it is IKEA. It's IKEA plastic flowers. Okay, next one. You'll do a bit of the next time. Mike, here we go. Next one. Soft drug. Soft drug. I think that's a trick question. So, I would basically think it's a so far. No, I would say drug again. I also think drug again. You and I are united in this. I'm going to say drug name. It is a drug. It's to treat a disease that leads to excessive underarm sweating, which we're all doing up here. Next one. Vox. That sounds like a drug again. Not that I don't like IKEA furniture, but it's a Vox NAN. I feel like I should mix it up, so I'm going to go IKEA furniture. I want to go IKEA furniture too. Okay, it is IKEA. Yes. It's a bathroom set. Okay, next one. X-Torp. Oh, I know this one. If you know it, then it's a draw. I'm not going to say. Should we go on the count of three? Ready? One, two, three. IKEA. Is it IKEA? Oh, it's totally IKEA. You have it. It's a sofa. It's a sofa. I think I have the sofa actually. Okay. Am I in my den? Ectorally. I just heard somebody from the audience. This is actually harder than I thought it was. I went through, I put a lot of work into this. I tested it on a lot of work. Anyone in the audience? What is it? Drug. It is a drug for a cue attack of a disease that causes painful swelling. Okay, last one. So, girl, yeah, that I shouldn't know, right? What is that one, Mike? That's a girl's hormone we make. Exactly, exactly. Wow. You didn't get that one right. That would be really embarrassing. That would be really bad. Amazing. Okay, so you've passed the test. I don't know if I've passed it, but I survived the test. You guessed your company's drug, so that's what really matters. That's the only one that matters. That's the one that matters. Well, Mike, thank you so much for joining us here on the podcast. I wish we could continue this conversation, but enjoy the rest of your first chapter. Thank you so much. Let's have a big round of applause for Mike. Thank you so much. That went as smooth as I thought it was. We didn't rehearse the game, so it was a little bit, uh, yeah. No, to paint the picture. How was that like two weeks ago? No, it was over the Christmas holidays that Adam Tech soon was like, we should talk about IKEA, like IKEA names with him. I didn't get to talk to Mike about Lego. I wanted to ask him if he had any Lego, but maybe I'll get him on the next next time we have him. Okay. Well, I think we've got to change topics here, Adam. Why don't you introduce our next guest? All right. Bob Nelson is a mainstay of biotech venture capital. Look at any number of headlines from last year and you'll likely find a connection back to him or his firm Arch Venture Partners. Arch Venture Partners is one of the largest single investors in drug companies, starting ventures like Metsera, Zyra Therapeutics, Juno Therapeutics, and Alto Slabs. And to paraphrase Clark Gable, his team frankly doesn't give a damn what pharma companies want to buy. They start companies based on what's frustrating them on health care or keeping them up at night. Bob joins us to discuss everything that's happening down in DC, China, artificial intelligence, and perhaps tell us what his firm plans to do with the billion dollars it earned from the contested Metsera Bio last year. Let's welcome Bob on stage. Get yourself settled in comfortable with the mic. Very comfy. Are you comfy? Yeah. The chairs are a little deep. Do you feel like these chairs are all right? Do you like these chairs? We're going to bring them home with us. Okay, here we go. So Bob, how are you? Peachy Keane. Let's just start with like, I don't know how many JPMs have you attended Bob? I have no idea a lot, but it's a lot. Not as many as my partner Steve Gillis who is on his 39th. Wow. But give us a sense of what is JPM? What is it for you? I mean, is this just for you to reconnect with all the friends, business partners, or are you here to do business? I think early in my career is about transactions and trying to get stuff done. And I think now it's all about relationships. I'm really not interested in doing deals at all. You're really not interested in doing deals at all. Interesting. Well, okay. I'm going to push you on that one, Bob. I don't quite believe you. But first, I do have to ask out of my own curiosity, we were talking offline about your routine. You're kind of, you know, you're known in the industry for kind of being an early proponent of, you know, different supplements that might help you live longer. And you were telling us that you think that you actually turned Brian Johnson on to met Foreman. I think it was. Did you ever get a clear answer on that? I haven't talked to him about it, but I remember like, yeah, visiting him when he was more in attack and telling him about all this crazy anti-aging stuff I was doing, but I think he's taken it. So is Brian Johnson going to live longer than you, Bob? Do what do you think? You think probably? Yeah, because we were discussing, I mean, have you really settled on like, do you think that it's helping? Do you think that these things are really working? I think they're, you know, better than nothing. I mean, think of it as like, it's a temporary solution to live long enough until you can get epigenetically reprogrammed. So it's kind of like, you know, if you have pancreatic cancer, the revmed drug is about surviving long enough to get something better. Okay. I want to start off with talking about, you know, something that you said last year's conference that you said throwing up rocks and stirring it up is net good for industry. And last year's conference happened, you know, just a few weeks before the inauguration. We really had a very little idea of what was to come. How do you feel about how this first year of the second Trump presidency has played out the changes that have been made at HHS, at FDA, at the different agencies that are industry in Raxwick? I think it's a mixed bag, right? And there are some things we realize this is like the classic looking back at the Biden administration, the Obama administration. So some part of me is like, oh my god, I can't believe we were that asleep, maybe literally. And some things are like, we're breaking down institutions that, you know, took a long time to build. So it's, they're good things and bad things. I think right now, things are starting to move in a very positive direction on the regulatory front with the FDA finally getting that they have to do big, big things fast to compete with China and the rest of the world. So you saw the, a couple days ago, the gene therapy and self-derbary regulations. I think there's going to be a lot more coming. And I think that is, it has to happen. And, and they still have a lot of issues from a kind of administrative organizational perspective that is independent of that that they have to deal with. And I think CMS also needs to get a lot more aggressive in terms of pushing our ability to recruit into clinical trials, be reimbursed, go into rural areas that may happen. But those are the things I kind of worry about in the, in the short term, especially in relations to China. When it comes to China and, you know, some of the actions that the FDA can kind of take, I wonder, how do you feel about the agency's guidance that two confirmatory trials, two later stage trials traditionally phase two and phase three are not necessarily needed anymore. I was talking to somebody yesterday who was really voicing, you know, a lack of clarity about that and how much that's going to be useful for her companies and her portfolio. Like, how many, like, outside of oncology, how much uptake of that that's, there's really going to be. In general, I've always been a proponent of getting more drugs approved and letting the physician and patients decide how much risk they want to take. So, I don't think it's the job of the government to protect us from all risk. So, we actually had Rick Pazder on stage last night, the veteran regulator at the FDA who abruptly left at the end of last year. He said that the extent of damage at the FDA hasn't been fully realized by the biofarmer industry. He said that people aren't concerned enough about what's happening at the FDA. What are your thoughts? Do you think people in the industry are talking about what's happening at the FDA and concerned enough? I think that, you know, they clearly have had, like, organizational I would call it even nonpartisan, like, classic organizational errors, you know, and they need to fix them. One way to fix them is to bring in one or two people who are very trusted by the organization. You know, I think that was a shot that didn't work, but there are other people out there that can probably help, and that's what they should do is reach out to somebody who understands the organization, understands the hill, and can kind of help them really get stability. You know, when it comes to the FDA, I think, you know, you mentioned earlier to the more flexibility that they are now going to apply to sort of cell and gene therapy manufacturing. And I know there's been a lot of call within the industry that, you know, a lot of stuff that is kind of in the weeds when it comes to drug development or cell and gene therapy development that just sort of are burdensome for companies, you know, assay development, and all the kind of things that like other countries China or Australia like don't, you know, they don't have the same requirements, which is why a lot of companies go over there to start early stage trials. I mean, do you see the FDA sort of kind of getting that message and sort of trying to eliminate some of those barriers to, you know, really for early stage development. I think so. I think we have to. I think they have better systems. We should go to the Australian model. I don't think it's any of the bullshit that our FDA does makes us safer. So we should adopt the Australian model. We should have a universal IRB. We should push out the decision making. We should give physicians more control and patience, and it's obvious, right? It's China and Australia. If Australia had lots and lots and lots of people, they would be kicking our ass just like China is, right? But they just don't have the number of companies and people, but it's been obvious for years. This is not a new thing, Australia. We've been going to Australia to get stuff done because the FDA is intransigent for a long time, or Spain, or wherever, but China just has picked up on it recently. China used to be slow. There are other places in the world that also may pick up on this, like in the Gulf, and others. So regulatory innovation is an axis of competition, and we're losing. One of the criticisms that you get to hear about the FDA today, and it came up at our event last night with Rick Pouser, was that politics are intruding on the regulation of drugs, and the way that reviews are done and the decisions that are made on whether or not to approve or not approve a drug. Does that concern you at all? Yeah, I think if it's purely political influence on approval, it's not a good precedent for the organization, although I think government regulation is inherently a political process, but the actual specific decisions, if it's a systematic process of interference, that can be bad. If it's every once in a while, the agency screws up and needs to be lacked by the person that's running it, that may be okay, actually, especially if it airs on the side of patients. One thing that came up last night was the commissioners voucher program, and how just the fact that something that's being run out of the commissioners office, which is given granted to companies, accelerated approvals may be reviews of one to two months. Obviously, that sounds like that's something that you might be in favor of, because it's streamlined to clinical reviews, but at the same time, it's political. How do you feel about? I'm very much in favor of it, and I think the issue is just the transparency of the process, why are these things versus other things, and I think we're all going to go. But in general, it's not a bad thing to have more things go fast, even if they're crappy. So I think maybe they should have 200 of those, and then everything goes fast. Another way to say is how come we're not acting like we were in the pandemic all the time? We know we can go faster. Why aren't we going faster? Why do we go back to this old, shitty, slow system? In Australia, you can get approval to go into humans in five days. Why do we wait 90 days or 180 days? It has absolutely nothing to do with safety. There's no evidence that it doesn't have to do with safety. Therefore, we should err on speed, because lots of people have disease and are dying. My frustration in general with biotech, with pharma, with regulatory apparatus is I've been doing much seven AI lately, and it just reminds me that this is a sleepy business that goes too slow. I have a lot of phone calls all over the Christmas break with all my AI companies, not very many with the biotech companies. But if you think about it, the moral imperative of the amount of people dying of stuff in our business is greater than the moral imperative almost anywhere, so possibly in Iran today or somewhere else. But we need to have a sense of urgency. Okay, Bob, since you're bringing up artificial intelligence, I want to talk a little bit about, some of the things that you've been doing in that area lately. I think right before the holidays, we also got wind of a new venture that you've gotten the works that you're working with a couple of others, Vic Vajaj and Jeff Bezos on Project Prometheus. What are you doing there? What holes do you think that Project Prometheus ideally is going to be filling between what some of your other companies are doing, companies like Zara, companies like in Citro that are also working in artificial intelligence? I think that one is kind of secret. Bob, there's no secret talking about it. But you tweeted about it. I think that one's not healthcare and it's more, but it's similar to a biotech company. It's basically an approach to think about how do you deal with the physical world using AI? I think eventually that will impact biotech because the more you understand physics and the way things work, you can kind of bottom up be able to understand kind of science in general. And that's going to change radically the way that we do science. I think that's actually a really good thing, gives the US continued competitive advantage, or at least we're not going to lose. That's why I get interested in areas like that. I do think in general that people in biotech, I would say they're over-estimating the impact of AI in the very short term, like six months, 12 months, underestimating the impact of AI in the long term because it can potentially eliminate whole swaths of pharma. But it's the hardest place to do AI of all places. So in the pace that AGI is happening and what's happening with Claude, where you're seeing these increases in capability of orders of magnitude over months. So I know people that were playing around with Claude code in December who said it's like five times better at the end of December than it was at the beginning of December and it's accelerating faster. So all the rest of society is going to change in some ways faster than biotech and pharma because we need more data. But once we get more data, there's going to be some moment where we're going to go holy shit like this model just invented some biology, right? Bob, I want to jump back really quickly to something that you were saying about people over-estimating what artificial intelligence is going to be able to do like in the next six, 12 years. I want to dig into that further, sorry six, 12 months, correct. And I want to dump into that a little bit further because I keep on hearing this narrative that like you know when we're talking about China and we're talking about all the things that you know China is doing better than this on the clinical trial side or on you know just like the early stage kind of going from like idea to molecule pre-clinical development side. There are a lot of powers that be that kind of say, well this is this is the time the US's moves in AI will help us catch up. It's going to help us you know not seed too much ground to China. Is that asking too much of AI right now? No, I think it's they're going to do it too. They are doing it too, right? So it's not clear we're going to win that either. I think it's we have to do it, right? We and what we don't know is how fast it's really going to affect everything but it's better to be early than than late, right? And Jason Kelly's been talking about hey what we really need to do is automate everything and that's how to compete and there's some truth to that, right? We need to use our technological capabilities to be able to compete with other folks who have cheaper or more human capital. But right now there's no way we're going to go out and hire 20,000 chemists to compete with WUSHI AppTech like that's not happening. Could you make continuous API manufacturing or some other major manufacturing breakthroughs? Yes, we could potentially do things like that and use our technological capabilities to enhance our competitive advantage and frankly we should do that. So on the competition from China, how concerned, if at all, are you about protecting US IP from Chinese companies? We are hearing that a lot of startups are taking different approaches to patent filings, for example. Well, I've heard of venture firms that are keeping their companies stealth, you know, quiet for longer, not talking about them because they're concerned about, you know, Chinese entities kind of hearing what they're working on and swooping in to make their own. Yeah, people are doing that. I think it's a smart thing to do because, you know, I think the idea that, you know, most pharma companies deeply care about biotech versus deeply care about pharma is, you know, fairly clear, right? And there are a few patriotic, more patriotic CEOs, I've put Dave Ricks in that category. We actually, you know, care about US competitive advantage, not all of them do, and they'll be happy to go to China, and even if the long-term consequence to the US biotech industry is negative, which it is. But it's a market that you understand why people do that, if they don't do it, then some European companies are going to do it, right? So I don't blame China for being competitive. I blame the US for not stepping up and competing, right? So I do, however, I think we should enforce our IP, I think of the, you know, 25 of the 25 big deals so far in China, almost everyone, the original idea came from the US, right? That's going to change over time. I think China's innovation will get better and better and better, and they will compete with us on the R side, and I would put all countries not just China in this category, you know, people have been maybe not paying for IP that's invented by universities and biotech companies for a long time, including Pharma. So, you know, I think Pharma has been really good at imitating what happens in US biotech, just like China might be doing it now, right? So this is a new thing, and whether it's European Pharma or US Pharma, I think figuring out how to get paid for invention and, you know, the innovative moments are really important, and I think we've been a little bit relaxed, and there's, you know, there may be ways to do that, you could even tariff IP if you wanted. Do you think that we should? I don't know, I think that we should think about it. It's hard because, you know, when you have an inventive step and you file a patent and then somebody just changes the one thing, you know, the problem is the court case is going to take, you know, I don't know, five or ten years, right? So, and all of the Pharma, any big company knows that what you do to the small companies is just wait about. They just make it so expensive that eventually they settled because even if you ripped it off, like, it's not going to be adjudicated forever. And so, again, our regulatory system, our legal system isn't fast enough to be able to prevent the kind of decimation that Pharma just going to China can do for the US industry and capital markets. So, it is a thing. I don't think it's, I don't know anybody in China that thought this is going to happen, right? So, I think they're all going like, well, this is weird, you know, we might win. And if we change our regulatory paradigm fast and figure out ways to pressure folks on just kind of the meat two thing with a single amino acid change, then I think we'll do okay. And then the AI is just a complete wild card. Either side could win. Are we doing enough to protect the AI industry here? No. I think we could do a lot more at the national level to create data and make data available. So, it's all about kind of getting more data. And in this case, you can't just train on the internet, right? You need many times to create the data. And that's the problem is that it's expensive to create data. So, those are exactly the kind of things that there is a public interest in creating more data. And that's kind of where we should be doing things like whether it's human genome project or human data project or something, right? We need things that incentivize large data creation that we can train models on. Bob, can I ask, I feel like your tone in this conversation, you've laid out a lot of ways in which it kind of feels like the biotech industry as we've known it. For several years in the United States, might be over or, you know, will certainly fall by the wayside. How do you feel about the future of US biotech? Are you, does it excite you? Does it, you know, depress you? I'm mostly positive, but I do think it's a challenging environment. At the same time, there's a lot of good things happening that are fueling a lot of money in Pharma, which is going into biotech through acquisition. So, it kind of depends on how strong the M&A pull is to inject money in. We can start a lot of companies if we sell a lot of companies for 10 or 20 billion, right? And so, it's unclear. But if you look at something, in other words, if Pharma's are very, very successful, even if they're very, very successful by ripping off US biotech, it's good for US biotech because they have a lot of money, right? So, they're going to continue to push money our way. And so, I kind of think that healthy Pharma is good for healthy biotech. And so, it's a double-edged sword. I think where it's a little scary is if the capital markets slow down or if the M&A markets slow down. So, Pharma's start just doing China deals and not buying US companies. That's the moment where you really need to worry, because then the money starts trying up. And that's a very slippery slope. Well, I mean, it's kind of like well-taxes in California, and they're like, it's hard to measure the impact, but it starts, you know, it's an insidious thing, and then pretty soon you realize, oh, you lost your edge. We're already seeing pharmaceutical companies do a lot of licensing from China, you know, 2024, 2025. We're pretty big years for that. Are you, like, feeling that in your portfolio? We've seen companies negotiate with our companies are a very long period of time while they're looking for Chinese assets for the same quality. Yeah, yeah. So, it's, you know, none of these things are, like, conspirational, you know, but they have impact. It's the same thing. It's like, when you have these indirect effects, you know, you don't, I don't think the SEIU wanted to force a trillion dollars of wealth out of the state of California, but they found the perfect way to do that, right? And so, once you have these things that begin to impact the infrastructure, sometimes it takes a while for things to circulate through. But generally, I'm optimistic, generally, our relationships sort of the pharma are better than they've ever been, and pharma is more open-minded, actually, than they have been historically, because they know that there are internal R&D is unproductive, right? So, they know they have to partner more and more, and if we can get the regulatory cycles faster, that's good. If we can figure out drugs that can act through different mechanisms to be preventive or curative, it allows you opportunities to potentially disintermediate the pharma model, which I would love to do. I would love to disintermediate the entire medical model, right? Because it's, it's kind of a mess. So, I want to, maybe we'll end on a question, you know, you mentioned Elylili. Obviously, I think it sounds like you admire Dave Ricks and Elylili a lot. We made a big deal about, last year, about them becoming the first trillion-dollar healthcare company, and the folks in the tech world kind of laughed because there's lots of tech companies that are in trillion-dollar valuations. Looking ahead, do you, do you see in the future other healthcare companies achieving that kind of valuation? I can't think of any, you know, I mean, anything. You're not gonna, you don't have one in the portfolio that'll be a trillion-dollar valuation? I think it's more likely Elylili will hit two trillion before the next company hits one trillion. That's in general. How much do you think Project Prometheus is worth? I mean, I think I've read what you put six billion in. I think it's worth a lot, but, you know, those are all kind of, all these numbers that people throw around in private companies, right? They're all like made up, right? They're all option theory fantasies. But, at the same time, I personally believe it'll be one of the most important companies in the world. I hope it's more important than any of the companies we've been talking about. So we'll see. The challenge of figuring out how to reinvent the physical world is a big challenge. The pace of innovation in AI right now is truly, you know, it's really hard to understate it. And it's a little scary, right? The pace of these programs that are writing code, and I always ask people like, when do you get scared, the technical people, and they're like, I get, they get scared when it starts writing code that's outside of what they told it to do. And, you know, that actually might be, that actually is not that far away, probably. So I do think that the rest of the world is going to change faster than the biotech world. Like, this is the hardest place to play with AI. It's got too many multiplicative probabilities, but eventually, there's going to be this moment where it's all going to change in biotech. And the reason you need to invest in in biotech is because those things are unpredictable. But when they happen, there's going to be some kind of ocean moment where, where a model starts inventing stuff because you gave it the right amount of data. And that will be really cool, actually. And that will hugely amazing. So the positive aspects of all this, like the net health of humanity is going to be way better because of AI quickly, like the best doctor, if you know Kosovo talked about this a lot, the best doctor in the world is going to be available to the poorest people provided you can get it there, right? But everybody has a cell phone now. So once the data is available, pushing out health to people, this will be like an amazing thing. And then once the drugs, once it flips and we were able to understand the biology, that will also be an amazing thing. So the net gain for humanity is going to be amazing. And it's the best time to be alive in when you're thinking about health care, right? And we're going to be all, the other thing is really cool is these impacts are so great that you can break the institutions that have been holding you back. And that's, you need something that changes radically to break the, you know, the big bureaucracy, I think. It's about, I think I want to notice that project Prometheus has kind of alien vibe to it, the movie, alien, the movie. So I don't want you to develop something that's going to pop out of my chest, okay? Yeah, hopefully not. I think, I think generally in the space of the physical world, you know, there's lots of things to make better. So I think, I think when you think about the impact of AI over the long term, it will make things much more abundant, much more accessible, much cheaper, better, faster. And that will be really, really good. There will be, you know, if you're a white collar worker, a gen AI kind of thing is probably going to make a big impact on you. I mean, ironically, right, you'd much rather be an electrician or a plumber in the advent of AI than a journalist. I think journalists, journalists may do okay, a financial analyst or whatever. Well, Bob, thank you so much for joining us. I mean, we could keep talking, but unfortunately, we've got to let you go. We got to get back to the conference. Everybody, please help me. Thank you, Bob. Thank you. This is going to be a long episode, jeez. We like to supersize it for JP Morgan. And I don't want to delete a song. All right, here we go. That does it for another episode of The Readout Loud. Thank you to Hyacinth Epinato for producing this week's episode. Our senior producer is Lissa Ambrose. Our executive producer is Rick Burke, and our theme music is by Brian Joel. And we'd love to hear from you. Tell us what you like about this week's episode, what you didn't like, and what's your favorite piece of IKEA furniture? You can do all that by sending us an email at
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