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. We're LifeScienceConnect and we're

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here to help . Biotech

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is making a comeback . That's

0:43

the word from San Francisco during JP Morgan

0:45

Week . Anyway , I'm Matt Pillar

0:47

. This is the business of biotech , and I was there

0:49

to hear it firsthand at

0:51

what's inarguably the most target-rich

0:54

environment in the world . For a guy who

0:56

likes talking to biotech leaders

0:58

, I took full advantage . I

1:00

racked up well over a dozen interviews with founders

1:03

and CEOs and CBOs

1:05

and CFOs , many of whom will feed

1:07

our podcast lineup for weeks to come

1:09

. These execs 201

1:12

brought facts , names and numbers to back

1:14

up their increasingly rosy

1:16

market sentiments . Easing inflation

1:19

, the promise of favorable interest rates

1:21

and December's flurry of M&A

1:23

activity are just a few pieces of key evidence

1:25

pointing to biotech's return

1:27

. And speaking of returns , you

1:29

know who else is making one Everybody's

1:32

favorite biotech CFO

1:34

, Allan Shaw . He was at the top of my

1:36

list to catch up with in San Francisco

1:38

and I'm thrilled that he made the time to make

1:40

it happen . Let's give it a listen . So

1:42

Allan Shaw has been far

1:45

too long since he been on the show and

1:47

I'm thrilled that we get to do this one

1:49

face to face . So welcome

1:51

back .

1:54

And it's great to be back , always

1:56

great doing the show with you and

1:59

, even better , doing it in person . Yeah , first

2:01

time we were not going through a screen .

2:03

I know it , I know it for sure . I'm

2:05

thinking I need to start taking trips out to New

2:07

York to record with you , so we can do it in person , we can do

2:09

it on the beach , we can do all our fishing right

2:11

.

2:12

I think with technology we can really do it almost anywhere

2:14

we can .

2:15

Yeah , so it's great to see you here . It's great

2:17

to see you here in San Franc

2:19

for JPM . When did you get ?

2:21

into town . I rolled in on Sunday

2:23

morning and I went immediately to a

2:25

brunch reception .

2:27

Yeah right , hit the ground running . So

2:29

we've been . I came in on Monday

2:32

, but you've been going back

2:34

to back , I'm sure , since you got here . What's the

2:37

prevailing sentiment that you're picking up right

2:39

now ?

2:40

You know , I think first of all , just touching on what you said

2:42

, jp Morgan has been and continues

2:44

to be an endurance sport . You

2:47

know , you really almost have to treat yourself like an athlete

2:49

to get it through the week and take care

2:51

of yourself and remember the hydrate

2:54

. Yeah , you know . With that said

2:56

, you know the sentiment has been interesting

2:59

and , I'd say , really consistent across

3:01

the board . You know , I'd say people are

3:03

generally cautiously optimistic . You

3:06

know , I would say that everyone

3:08

would generally agree that the wind isn't in our

3:10

face as it has been , but

3:12

it's not necessarily to our back

3:14

either . There's certainly

3:16

reasons to

3:18

be encouraged , you know , I think

3:21

a lot of people have pointed to , you

3:23

know , there's certainly the rally at the end of the year that

3:25

turned the XBI , which was almost

3:27

like 30% down , to break over

3:29

as a positive , which was certainly

3:32

encouraging . You know

3:34

, with that said , I haven't found anyone who's kind

3:36

of stood up and wave their hands saying I was the one

3:38

doing all the buying . You know , I think there was a

3:40

lot of short covering . So there's still

3:42

, you know , but people

3:44

are definitely warming up . There's evidence

3:46

that there's more

3:49

and more buy side engagement . As

3:51

one banker put it to me the

3:53

other day , there the buy

3:55

side aperture is getting

3:57

a little bit wider . You know , before

4:00

people wouldn't even read your emails

4:02

. Now they are reading the emails , so

4:05

that's encouraging . And certainly the fact

4:07

that there was over $30 billion of

4:09

M&A in recent weeks has

4:12

given people reason to

4:14

be excited , particularly

4:17

since it does suggest that it certainly

4:19

reinforces the thesis that

4:21

big farmer has some real pipeline issues

4:24

that they're really going to have to solve these issues

4:26

, given that their patent clips . They're about three

4:28

, four , five years out . So

4:31

there's obviously some aggressive buy

4:33

side actions , I think that's

4:35

, and that money gets

4:37

recycled , typically back into the market

4:40

. So that should again

4:42

be a positive indicator and people have continued

4:44

to look at that as a catalyst

4:47

for the market to come back . I've

4:49

heard some anecdotal information

4:52

that they're expecting almost 30 IPOs

4:54

this year . You

4:57

know , I think that's all going to be conditional on

4:59

the success of the first couple that go

5:01

out . You know some of the test

5:04

IPOs and if they trade well

5:06

, I think you know how you're going to see people

5:08

pushing the IPOs out until they break

5:10

it again .

5:11

So I was going to ask is 30 , do you think you know

5:14

if a forecast of 30 is feasible

5:16

? Is that a healthy number ? Because

5:18

that constant , like it's just a regurgitation

5:21

of the same conversation about how

5:23

you know , how we were overpopulated with IPOs

5:26

and that contributed to the mess .

5:28

I think it is a healthy if we get there

5:31

. I'm not sure if we excuse

5:33

me , get there , particularly in an election year , I

5:36

certainly . I think the other side of the coin why

5:38

people are cautious , why people don't think we're necessarily

5:41

out of the woods but are feeling better

5:43

is , you know , is well

5:45

, there is a prospect of interest rate cuts

5:48

and Sped certainly

5:50

went out there in November and actually

5:52

indicated there'd be a couple this year and

5:55

that really , I think in many respects triggered

5:58

the short coverage that we saw in the XBI

6:00

and I think it's a question of

6:02

whether or not they materialize . You know

6:04

we have low inflations , getting

6:06

lower . It's not at the target levels

6:08

yet and employment seems to be pretty

6:11

good . You know people are calling a soft landing

6:13

, so I'm not sure if you need interest

6:15

rates to stimulate the economy . Economy seems

6:17

to be working pretty well and when you look at

6:19

interest rates on a historical level , we're

6:22

right in the middle of a fairway . I'm not sure what all

6:24

necessarily the noise is , other than people

6:26

have been spoiled by free money for

6:28

over a decade and I think they want

6:30

their toys back .

6:33

Yeah , that's a good way to put it

6:36

.

6:38

I would also say , you know , in terms of the M&A , the

6:41

other side you know where they're . While

6:43

people are highly encouraged by what's what's

6:45

going on , you

6:47

know the FTC continually seems to

6:49

get in the way of things . You know they had blocked

6:51

the Amgen Horizon trade

6:54

for a long time and

6:56

it really seemed to be misguided . You know

6:58

they had issues about the PBMs

7:01

and drug pricing and how they

7:03

products get bundled and rather

7:05

than getting in the way of M&A , which is part of

7:07

the natural life cycle of the industry

7:09

, they should have been going after the PBMs

7:12

if they didn't like the way that was working . So

7:14

you know , it seemed to me really misguided

7:18

in terms of how they were approaching it . And then they

7:20

, you know they finished the year deciding

7:22

to pick another battle that made no sense , which

7:24

caused Santa Fe to

7:26

, or Sanofi to back away

7:29

from a licensing deal of all things . So

7:31

you know they've got to kind of get their

7:34

policy on order and I'm not sure in

7:36

the , in the , with the election coming up

7:38

, this is the year to expect significant

7:40

rational behavior for these folks .

7:42

Yeah you , you mentioned , you know

7:44

, the impact of the election year . Explain

7:46

that for me , like , what is

7:48

what ? What sort of an impact should

7:50

we expect or might we expect ? Now

7:54

, fair , enough .

7:55

if people can recall back to the

7:58

, it was like the

8:00

20s 17

8:04

, when , during the

8:06

election , that Hillary ran against Trump

8:08

. I think I forget what every year it was now , but

8:11

if you recall that

8:13

, biotech was having a pretty good run

8:16

until Hillary hit the Twitter

8:18

with

8:21

negative pharmaceutical sentiment

8:24

in terms of policy and other things

8:26

, and it really put a chill in

8:28

the sector and we really traded off

8:30

for the second

8:32

half of 2015

8:36

, going into 2016 . I

8:39

know that we will . I tried to . I did launch

8:41

an IPO during that period of time and I'll

8:43

never forget that the front page of the Wall

8:45

Street Journal that they were seeking for approval

8:47

was IPO market closed . His

8:49

son asked me why are you laughing ? I said you don't understand

8:52

the damn about that happened . This is the

8:54

narrative .

8:56

But we got it done , but it's that political

8:59

rhetoric .

9:00

It's the platitudes of the tweets . Former

9:04

biotech seems to be the politician's

9:07

favorite whipping boy , which

9:10

is kind of ironic when you think about the

9:12

contribution and impact on it . The

9:16

humanity that the industry has provided , arguably

9:18

, is more profound than what all

9:20

before an aid that we send and all

9:22

the military stuff that we send . But

9:26

nonetheless , and the negative sentiment

9:29

that we get , we do bring

9:31

it on when we keep it at increasing

9:33

prices on products that have been around for years

9:36

, annually or semi-annually by

9:38

three , four percent , which

9:40

is just choking the bear in the eye Right

9:42

.

9:43

Yeah , it was only yesterday

9:45

. It was only yesterday , at the end of the day , on

9:47

that sentiment , the fact

9:49

that biotech and pharma

9:52

are on par in

9:55

the public preview with tobacco

9:57

and oil and gas . It's

10:00

so interesting to me During COVID

10:02

. When COVID happened , it was like there was this spike

10:05

in sentiment , a positive

10:07

spike , and then very quickly that evaporated

10:09

.

10:10

How do you ?

10:10

that's a general question , but what are your thoughts on how an

10:12

industry sustains

10:15

at least a semi-positive public

10:18

perception ?

10:22

It's certainly easier said than done . I

10:26

think we need to be seen

10:28

more as advocates

10:30

for the

10:32

patient population , as opposed

10:35

to people that seem to be taking advantage

10:37

of the patient population , just

10:41

raising prices and then it's

10:43

all part of the rebate cycle and how you

10:45

get yourself positioned . The

10:48

patients are losing in that situation

10:50

. The PBMs and the

10:52

industry are bringing it on themselves

10:54

. I think as we

10:56

start to look at patient engagement

10:59

, holistic solutions , I

11:02

could see the industry being helpful

11:04

in that level

11:06

of engagement . I think there's

11:08

efforts now to cut out the middleman

11:11

. I think the cutting out the middleman , like the

11:13

PBMs and going direct , is

11:15

going to allow us

11:17

to reallocate things the right

11:19

way , as opposed to paying the middleman for very

11:21

little value at the end of the day

11:24

, other than it's been the way we conduct business

11:26

, like night follows day , I

11:29

would say , if you take a step

11:31

back , a much more holistic

11:33

look . The healthcare

11:35

spend in the United States is

11:38

highest in the world , yet

11:41

our outcomes and

11:45

mortality rates are some

11:47

of the lowest ones . So

11:50

effectively , we're paying

11:52

more for less . I

11:54

think we should be advocates for

11:57

trying to make the appropriate changes in the

11:59

system , because what we got right now is

12:01

the sustainable . It's really broken

12:03

. I

12:06

think that's going to result in us taking

12:08

much more of a risk-based approach

12:11

to the products that we sell

12:13

and , as some of these other products , become

12:15

almost like services . When you're looking at gene

12:17

editing and you're looking at

12:19

cell therapy , you're providing services

12:22

, you're providing solutions now and you're providing

12:24

outcomes . I think that'll

12:26

be helpful in changing the narrative , I

12:31

think , probably highlighting

12:33

and figuring out how we can educate people

12:35

on the contributions , the

12:39

lives that we're saving and

12:43

the impact on people . There's

12:45

a lot of beautiful stories out there . They

12:47

don't seem to be out

12:50

there . People aren't really aware of that , so

12:52

we probably need a new publicist . But I think action

12:55

speak louder than words .

12:58

I was thinking about our conversation before we started

13:00

recording . Obviously

13:03

, I want to spend some time talking about your perception of the

13:06

markets in the industry , but with

13:09

the headwind allegedly

13:11

going away to your point maybe

13:13

not at our back quite yet I

13:15

was wondering what are you and I going to commiserate

13:18

about if things get better ? You're

13:22

giving me plenty of fodder for that .

13:27

I don't think everybody's a winner or loser . I

13:29

don't think this is necessarily you're

13:33

flicking a switch and things

13:35

are going to go back to the roaring 2020s

13:38

. I

13:41

don't necessarily anticipate that

13:43

. I think people are going to be a lot more discerning . I

13:46

think we still have a lot of companies

13:48

that are walking zombies out there , and

13:51

there's going to have to be a come

13:54

to Jesus moment for them in terms of whether

13:56

or not they'll be able to continue to execute

13:58

. I think people

14:00

have to still , I guess , take their medicine , and

14:03

those who take their medicine , who skinny

14:05

down and focus

14:08

on what they need to focus on , will

14:11

get to the other end . I

14:13

think this is a time to be a bit scrappy

14:15

. So , as things

14:17

change , I think it's not going to go back . I

14:20

don't anticipate it going back to where it was

14:22

. So it's going to be a lot more emphasis on

14:25

management teams . We

14:29

chatted during good times too . I remember talking

14:31

about the boy bands of biotech

14:34

as we were marching , putting management

14:36

teams around newly

14:38

formed companies and pushing them out the door . So

14:41

I think it's going to get back to more fundamentals

14:44

. I think people are going to put more fundamental

14:46

emphasis on the quality of the management team

14:48

. I think we've seen

14:50

and I've said this before and I'll emphasize

14:52

it again that , given the

14:54

choice between a superior

14:57

asset and a mid-link management

15:00

team , or a mid-link asset

15:04

and a superior management team

15:06

, I would always take the later because

15:09

they'll know how to extract value . As

15:12

a friend of mine we were talking about this on breakfast

15:14

today he says you know these assets don't

15:16

develop by themselves , right , and

15:19

you need to be able to navigate the

15:21

my

15:23

rate of different aspects

15:25

. You know you need to navigate

15:27

the science and the proof of concept

15:29

. You need to be able to navigate the manufacturing

15:32

. You need to manage the accrual rates

15:35

of clinical trials . You know

15:37

, I've observed a fundamental

15:39

difference in the way people execute on these

15:41

things and I've seen them generate

15:43

good results and I've seen them not generate as

15:46

good results . So I think

15:48

it's going to really put more of an emphasis on

15:50

execution and

15:53

I think for good science , for good teams

15:56

, if you can execute

15:58

, there'll be an opportunity there and

16:01

, as we've said before , in God

16:03

, we trust in data belief and

16:05

it's just going to be really in back the basics .

16:07

Yeah , do you see

16:09

, like , if you think about the

16:12

overpopulation of biotechs

16:15

, pre-bubble popping

16:17

or whatever you want to call it you

16:20

talk a lot about you know jockeys

16:22

and executing on management . Do

16:25

you see , like , the pool of talent

16:27

as being

16:29

in a healthy place right now , or an improved

16:32

place right now , given that so many

16:34

execs and founders have been battle

16:37

tested , or

16:39

what's your take on that Like , do you think it's

16:41

a good field to jockeys right now ?

16:44

You know , I think we were stressed . I

16:48

mean , I may be stressed in terms

16:50

of how we were populating

16:52

these seats . You

16:55

know , if somebody told me when I was

16:57

younger , if you can't jump over the bar , you'll lower

16:59

it . And I think the bars

17:01

were lowered in many cases and I think

17:03

that also speaks to some of the things

17:05

we've spoken about in past episodes about

17:08

the productivity . There was a lot more

17:10

clinical failures and

17:12

I think people were doing things because they

17:14

could and the flow of money

17:16

wasn't restrictive . So you were

17:19

my partner . I'm worried

17:21

about getting invalidated , I'll just do it all . And

17:25

I think that the inexperience

17:27

of people thinking that you know a high tide was going

17:29

to keep all the boats high , you know people

17:31

got caught up . So I actually see this

17:33

as a period where companies

17:35

who have the wherewithal this is an

17:37

opportunity for them to upgrade

17:39

their management teams

17:41

in their organization , because

17:46

I think there's still a bit

17:48

of a mismatch . I think you still got

17:50

a ridiculous

17:52

number of companies out there that are underwater

17:55

and

17:59

, as I understand it , additionally , there's at least

18:01

130 companies that are trying to go public

18:03

. So , even if the 30 of those that

18:05

we talked about get out , what

18:08

about the other folks and , as I think

18:10

you touched on before , someone touched on that

18:12

, now they're making reverse mergers a little bit more restrictive

18:14

as well . Well , you know , I

18:16

don't think it'll be a big issue

18:21

, but it's just not helpful . And

18:24

you know , I think the reverse mergers was one

18:26

way to kind of help clean up the

18:28

system . You know , the way I saw it

18:30

is you can do 30 IPOs

18:32

but if you got over 100 , 150

18:34

companies that are broken , you know you

18:36

should be able to match those up with the companies

18:39

who want to go public and

18:41

try to take a little pressure out of the system . But

18:44

what I've also heard is , because

18:46

of this new discerning environment

18:49

, that there's a number of companies

18:51

that have been funded by the fundamental

18:54

specialist VCs who

18:56

are the . Those investors are not reupping

18:58

and they're going to let them kind of just

19:00

hit the wall or or or take a very

19:02

soft landing . So

19:06

I think that speaks to the fact that , while

19:08

that the bar needs to get raised

19:10

, whether it's management

19:12

teams , whether it's the science or the companies , I

19:15

think investors have lost a lot of money over

19:17

the last several years and

19:20

I think they're certainly very focused on on

19:22

self preservation and

19:25

on that and on that . Speaking about the financing

19:27

environment , I think a lot of the deals

19:29

that have been getting done , a lot of these data pipes

19:31

, speaks to that . You

19:33

know a lot of companies are given a lot

19:36

of upside . Usually the play would be

19:38

you to announce the data and do a deal and

19:40

the stock would re-rate itself Because

19:44

of the market dynamics . People

19:49

are now entering into these data pipes . Where

19:51

you bring the investors over the wall , you

19:53

they get to keep the tires . See

19:55

everything before anyone else . You

19:58

negotiate a deal . The deal

20:00

is going to not necessarily provide

20:02

the same level of valuation re-rating

20:04

, but you've now got the money

20:06

to do what else you need to do . You've

20:09

got some validating investors

20:11

in your cap table and

20:13

that seems to be the business

20:16

right now . I think , as

20:18

a subject to watch as we cautiously

20:20

approach optimistically the new year , is

20:23

to see whether or not those deals will be as prevalent

20:25

or whether or not people can get back to do

20:28

and follow on offerings without having to

20:30

transact that way .

20:31

Yeah , yeah , that's right . I'm

20:34

going to ask you a question about that . Like the

20:37

deal structure and starting with a

20:40

more scrupulous , I guess , investor

20:42

base right , more discerning , as we've been saying , and

20:46

then the way that deals have been structured as

20:48

investors

20:51

have become more disearning when

20:54

cycles like this happen . What sticks

20:57

, what carries on Tronch

20:59

deals , for instance One . I want

21:02

to get your perspective on

21:05

what's been difficult

21:07

in terms of the way the deals are being done now

21:09

, but I'm also curious about as cycles

21:11

like this happen , do terms

21:14

that happen in down cycles tend

21:16

to carry on , or do they go away

21:18

when things get better again ?

21:20

Yeah , I think in a nutshell it's

21:22

really a math supply and demand . When

21:25

you have a lack of supply

21:30

, it's really a buyer's

21:32

mark and they can drive the terms . And

21:34

I think looking at flow of funds will

21:36

be really important . The return of the M&A dollars

21:39

, fun flow

21:41

, will dictate the

21:43

demand side of the equation

21:46

and that keeps people honest . When

21:48

you do any sort of marketing deal , you want demand

21:51

. If you can drive demand , you can drive the terms

21:53

. If you don't have demand , the

21:55

terms will be driven to you . So

21:58

I think the terms right now

22:00

are , again , I think , more in the

22:03

side of the

22:05

investor , but

22:09

it's , I would say , there

22:11

. But nothing's guaranteed in life . So

22:13

that's the risk . So

22:15

what I've been seeing on these

22:17

deals is that you generally

22:20

get funded to an initial

22:22

inflection point and then

22:24

you'll put warrants on it that'll

22:26

be tied to a success event

22:28

. So once you have the data , the

22:30

warrant can be exercised

22:33

and the data should drive appreciation

22:35

, which will cause that . So what

22:38

people are doing ? Rather than writing a check for

22:40

, say , $60 million , and this is going

22:42

to get you through all your clinical trials , they

22:45

might write you a check For 20

22:47

, that gets you to a study . If

22:49

that study is good will

22:52

the warrant can exercise . You can take it to the

22:54

next level . So if you execute

22:57

, your trials are funded . You

23:00

don't execute , you're going to have other

23:02

problems as well . So

23:05

that's the way that people are tranching

23:07

it and it makes intuitive sense , but

23:09

it kind of keeps people on a short

23:11

leash .

23:12

Yeah , I want to get

23:14

back to . We talked about some of the , I guess

23:16

, overarching global indicators

23:19

like inflation and interest rates

23:21

. What other indicators

23:24

are you seeing that point ? Either way , like

23:27

we'll start with positive

23:29

indicators what indicators have

23:32

we discussed that you think are pointing

23:34

towards improvement

23:37

?

23:38

You know , I guess I would build off of the things

23:40

that we've discussed . You know that the

23:42

cut in interest rates is

23:45

certainly good

23:47

. I think the question is , is that a headache

23:50

or not ? So you

23:52

know Jamie Dimon , for instance

23:54

, when he was speaking at the conference , you know he

23:56

declared that he didn't believe

23:58

in the soft landing . He saw too many

24:01

inflationary issues

24:04

out there that will keep

24:06

the fed rates higher for longer

24:08

. And then there's other people

24:11

saying we're an election year . You

24:13

know they're going to cut the rates whether they need

24:15

it or not , which is certainly

24:17

disappointing from an idealistic perspective

24:19

of the feds independence . But

24:22

so I think the

24:24

macro is going to be really important . Interest

24:26

rates are going to have a profound impact . I

24:29

think the M&A activities are

24:31

important and if the FTC continues

24:33

to do what it does , it's going to be a Debbie downer

24:36

, but I think that dynamic

24:40

is helpful . I think there was an

24:42

M&A deal recently that should

24:44

give investors some encouragement to perhaps

24:46

take a little bit more risk , and

24:49

that's important about taking

24:51

risk and that really correlates to the interest rates . The

24:53

higher the rates , the less risk

24:56

. So , for instance

24:58

, the Hakun transaction the other day

25:00

that went off for $23

25:02

a share . The company

25:04

was hurting only as recently

25:06

as maybe three months ago and

25:08

they did a recapitalization at about $5

25:11

a share . So those investors

25:13

that invested at five , you know

25:15

they got a fourfold return in three

25:17

months . So I think

25:19

you know positive returns

25:24

on transactions like that are going

25:26

to cause people to take a more serious

25:28

look at other opportunities

25:30

. Because when

25:32

you're throwing the baby out with the bathwater , you

25:34

know , you know there's opportunities

25:37

to really create value relatively easily

25:39

. So

25:42

really , flow of funds , interest

25:44

rates , m&a , from

25:47

my vantage point those are really the most fundamental

25:50

. That's what I'm looking at . That's

25:52

going to drive other investors

25:55

back into the space . I think

25:57

there is generally more

26:00

sentiment that the biotech sector

26:02

is kind of hit . People

26:05

calling it below has been hit . Still

26:08

think it's a bit of a stock picker's club . But

26:12

generally the sentiment is good and

26:14

I hope it becomes more self-fulfilling as

26:16

the year goes on .

26:17

Yeah , what

26:19

are you ? Election cycle being

26:21

sort of a wild card . You mentioned

26:24

its influence potentially

26:26

negative . What else are you concerned about

26:29

?

26:29

Drug pricing . I think the drug pricing

26:32

discussions are going to just

26:35

it's the postage child for all the rhetoric

26:37

and I think that drives

26:39

a lot of the headwinds . We

26:43

shouldn't be public enemy number one , as

26:46

we said earlier . It's unfortunate for that , for

26:48

all the good that we do . But

26:52

we're easy targets when

26:55

you look at our financial statements . The profitability

26:58

of these companies are some of the most

27:00

profitable in the world . So as

27:03

long as those conditions prevail

27:05

, I think we remain an easy target

27:07

and I think we just kind of brace ourselves

27:10

for that . It's noise . Most of

27:12

this is just noise . So

27:15

for people who

27:18

understand that it's more noise than

27:20

anything it's really political theater I

27:22

think they'd actually represent a good opportunity

27:25

because , as the fundamentals are improving

27:28

, it's actually represents a really good entry

27:30

point and I think people are starting to realize that there's

27:32

an improvement in that . I guess a

27:34

subtle metric that I would use

27:36

to track the progress is

27:39

. Talking to investor

27:41

relations firms , One of the questions

27:44

I've been asking people is the robust

27:46

nature of their meetings . Are they getting

27:48

a lot of meetings for their clients in

27:50

terms of small caps , large caps

27:52

and

27:55

I'd say it varies Small

27:57

caps are not feeling as much love , and

28:00

that's going to make it harder . So

28:03

I'd say valuation re-rating will be something

28:05

to look at too whether or not people

28:07

recognize if a hall of punds

28:09

trading at five and it trades at 23,

28:11

. What other arbitrage

28:13

opportunities are there ? Yeah ?

28:15

Yeah , what

28:18

about scientific and technical

28:20

advances ? There's

28:22

been a lot of conversations about

28:24

all the great science and

28:26

great programs that have been shelved for

28:28

lack of resources . As things

28:30

come back

28:34

, does that like a revisiting

28:36

of some of the new science and technology

28:39

in this space ? Does that contribute to ?

28:42

Totally . The different therapeutic

28:44

areas and modalities are kind of like

28:47

platform shoes that go in and out of fashion

28:49

. Today's fashion

28:51

is kind of almost back to the future

28:54

. Between radiopharma and ADCs

28:56

we got back to chemo therapy

28:58

and radiation , so

29:01

in a new form , I

29:03

would say . With the recent acquisitions

29:05

of Saraval and Corona , cns

29:07

is an area that

29:10

people are starting to really pay renewed

29:12

focus . Certainly , bms

29:14

is certainly getting very aggressive there as

29:16

a real focus area . Glp

29:21

the whole obesity market has captivated

29:24

the industry last year

29:26

and they will continue to dominate . A lot

29:28

of noise , there's certainly

29:30

a lot of people emulating

29:33

mad and looking at oral formulations

29:36

and there's different

29:38

approaches . I almost cynically

29:41

look at that whole hype

29:43

and build that . The old GLP trade

29:45

is kind of almost like similar to

29:47

Tripp buying or selling Tesla In

29:51

a new market . There's going to be other electric

29:54

car vehicles too . But

29:57

I think in terms of GLP , I think what will be

29:59

interesting too is because there's incredible side

30:01

effects that people haven't taken into

30:03

account . When you lose

30:06

that weight , you're all so losing muscle

30:08

mass and then generally when you

30:10

rebound and you put the weight back , you're

30:12

only putting back fat .

30:14

And you lose bone density too . I understand

30:17

yeah .

30:19

So I think that's still got to work its way through

30:21

. I think there's better mousetraps to be had

30:23

. I thought one anecdote that

30:27

somebody put out there was he'd think it's

30:29

going to become a vacation drug . People are going to

30:31

take it a couple of months before they go away . A

30:35

vanity drug ? Yeah , absolutely

30:37

. And a question , if you know

30:39

so . I think some of the expectations

30:42

may be a little bit long on that

30:44

. I just don't think

30:47

the durations and the penetration is

30:49

going to necessarily last , but

30:52

it'll be interesting to see how durable that

30:54

is . I think a lot of buzz that

30:56

people are looking at is AI Everybody

30:58

wants to talk to me about AI ?

31:00

Oh , everywhere , everybody .

31:02

Yeah , I was listening

31:04

to a panel always out here . I said , you know , if you

31:06

and everyone's talking about it , I better get started on

31:08

this quick . And

31:10

I thought one of the interesting observations

31:12

I got on the panels

31:14

that I listened to is that

31:16

, you know , since so much of the data is in the public

31:18

domain , one of the issues that

31:20

we have that seems to be getting not glossed

31:24

over , it's quietly not being addressed is

31:26

the fact that you think negative data

31:28

is not so pervasive

31:31

in the public domain . People don't generally

31:33

publish the negative data as much as they publish

31:35

their positive data . So you

31:38

know . So the algorithms and the data that we're

31:40

basing a lot of these things on are

31:42

we are biased to being positive

31:44

and we're not learning from

31:46

the lessons from our failures , which is probably

31:49

even more important . So

31:51

you know , the people on the panel acknowledge

31:54

that that's a real issue and

31:57

I don't know if

31:59

there's necessarily a great solution yet . How

32:02

are you going to get people to collaborate and

32:04

share all of that , and how inclusive

32:06

is it is and is it

32:09

representational ? So

32:11

that , to me , suggests that , while

32:13

we're making great advances , there's still a few

32:15

more things to sort out , but it's

32:17

definitely going to be impactful . And

32:21

the other thing that I think came out of what I was

32:23

hearing was that you know , well

32:25

, it's the buzz . A lot of people

32:27

have been doing a lot of machine learning and a

32:29

lot of in terms of

32:31

discovery efforts for over a decade . So

32:33

you know , it's not necessarily new , it's just

32:36

again . You know , maybe it's 2.0

32:38

or 3.0 of what we're doing

32:40

and we're getting better in terms of

32:42

data management , but it's really seems

32:44

to be like data management . Once you have data management

32:46

, I think that will unlock , but right now

32:49

the emphasis are data .

32:51

Are you hearing anything about the impact

32:53

that AI and ML might have

32:55

moving forward , like beyond discovery

32:58

and design ? That's where , like the use

33:00

cases are right now , you know , accelerated

33:02

discovery , aiding in

33:04

molecular design , but

33:08

when I think , like in terms of a biotech

33:10

moving , you

33:13

get into translational and you start moving towards

33:15

the clinic , that's when things start to get a little muddy . But

33:17

what AI and machine learning might contribute to

33:19

, what effectively is

33:21

the most daunting . You know

33:24

the do or die moment , right , the

33:26

clinical trials . Are you hearing anything

33:28

on that ?

33:30

You know there's . I guess I haven't paid

33:32

as much attention to it yet , but

33:35

my instinct is that it should be able

33:37

to positively impact patient accruals

33:39

. You know access to you know

33:41

medical records you should . If you're running

33:43

an AML

33:46

study , you know you should be able to identify

33:48

everybody who is AML . Yeah

33:50

, you know you should be able to figure out better

33:52

ways to recruit patients . I

33:55

certainly think that you know

33:57

, in terms of some of the administrative aspects

34:00

of clinical trials

34:02

, it could probably improve efficiency , remove

34:04

some of the human bottlenecks associated

34:08

with it . You know , as you're processing

34:10

amendments and the protocols

34:12

, that can make things much more efficient

34:14

. Again

34:17

, I think you need the broader

34:20

infrastructure to make that work

34:22

, but I think it can have a

34:24

profound impact . We'll

34:27

away into the medical services side . You

34:29

know doctor's assistance , you know . I think

34:31

that's an area where you can probably free

34:34

things up . Yeah , you know , you

34:36

just talk to R2D2 and get your script .

34:37

Sure , yeah , no

34:40

, I mean , I think it's an important conversation . I

34:42

was talking to a guy recently about

34:44

AI and ML and he was positing

34:46

that we don't , you know , we're not in

34:49

a molecular drought Like

34:52

we . There's plenty to work with

34:54

where AI and ML

34:56

have had an impact . Now it's

34:59

time to figure out how to address the real issues

35:01

. So I think it's an important conversation

35:03

to have and an important technology to watch

35:05

, is it ?

35:06

Oh , absolutely . It can also

35:08

really help in terms of helping

35:11

us define what is the economic value

35:13

of drugs . Right , you

35:16

know that to me is the fundamental

35:19

assessment is , you

35:21

know , hospitalization costs

35:23

, the costs of treating them , retreating

35:25

them , periods of time of how long you

35:27

can avoid being re-hospitalized . You

35:30

know , I think a lot of these real . We can

35:32

really take advantage of some real world data

35:34

and quantify it to better understand

35:36

what the value of the drugs are , how they should

35:38

be priced and

35:41

structure of it , whether it should be risk sharing

35:44

and how much money goes back into

35:46

the system . You know , right now people don't

35:48

see this as system savings . They're

35:50

saving money for their P&L or their P&L . So

35:52

there's not a holistic approach . But I think

35:54

with better information it can make steer

35:57

, more informed decisions and getting

35:59

policymakers to get to the right places

36:02

.

36:02

Yeah , yeah , what

36:05

haven't I asked you that I should have what

36:08

? Haven't we hit on here .

36:10

Let me think .

36:18

No , yeah , we can . I can stitch this back together

36:20

. We've

36:22

been bumping around so I don't want to beat any ponies

36:25

that are already dead . Um , I think I saw the sample fell off the

36:27

last� .

36:28

Any other questions ? We

36:32

probably talk about the conference

36:35

as compared to other years

36:37

. Yeah , yeah , and

36:39

we can talk about the conference itself . There's

36:41

a lot of people talking about it being moved

36:43

.

36:46

How many years have you attended

36:48

this conference ?

36:51

I've been coming here well

36:53

over a decade and

36:56

I made my first trip in 2023

37:01

. And

37:05

then I came back about 10 years later , 2003.

37:09

, 2003. , 2003 . And then

37:11

I came back about 10 years later , and

37:14

this is 12 , 13 years .

37:15

Yeah , yeah Well

37:18

, and then there was that hiatus right During COVID

37:20

. I

37:22

don't have a point of reference , because last

37:25

year was my first JPM , last year was the first time I

37:28

came , so I didn't have a point

37:30

of reference like what the conference looked like Prior

37:33

to COVID or you know , in the heydays . What's

37:35

your assessment Like

37:37

, if you take into account what you're

37:39

seeing here today this year ?

37:44

The conference is about . You know , I like the kid that when

37:46

I come to JPMorgan I'm

37:49

coming to hang out with 40,000 of my closest

37:51

friends . Yeah , I'm not sure if we got the 40,000

37:53

. This year the head count

37:56

number seems to be a bit lighter . I

37:58

thought last year we had a little bit of pent up demand , given

38:01

the hiatus we had due to COVID . I

38:04

think people wanted to get out and about and

38:07

I didn't find it to be lighter than

38:09

prior years , but

38:12

it still felt like there was a little bit more intensity . This

38:14

year it seemed to

38:16

be less , less flow of people . I

38:19

can tell you that when I was at the JPMorgan conference

38:21

the the same Francis

38:23

, other than when Jamie Diamond

38:26

was talking it was very easy to move around

38:28

in the building . That

38:30

was the only time I'd look fire would be a problem

38:32

. Yeah , I

38:34

would say , talking to the folks who run

38:36

the biotech showcase , they

38:38

indicated that the

38:41

numbers was light , slight , lighter than

38:43

prior years . But you know , when

38:45

I heard from JPMorgan that they cut

38:47

their invitations down by about 20%

38:49

, those guys were doing much better

38:52

. You know , I would say their numbers were almost flat , which

38:55

which suggests that

38:57

you know , there's still demand

38:59

. People are still coming . You know

39:01

, I would say that there is generally

39:04

a distinction between the companies that present

39:06

at the JPMorgan conference

39:08

versus biotech showcase

39:11

. I think the biotech showcase

39:13

does something that's really great it provides

39:15

access to for companies , to investors

39:17

that would otherwise not have access

39:19

to investors . So you know

39:22

, it shows that there's still

39:24

you know you'd

39:26

have to drill into it deeper , but

39:28

I would say , on a high level it sounds like

39:30

there's a lot of companies that are trying to still engage

39:32

with investors and that's outpacing

39:34

maybe the headcount decline that we've seen

39:36

here at the conference .

39:37

Yeah , you know it's

39:40

like a cottage industry right , like there's

39:42

a , there's a village of events , of

39:44

receptions , of meetings

39:46

, of venues . Has that grown

39:49

in your , in your , you know

39:51

, in your JPM tenure ? Have you seen sort

39:53

of that , the outward

39:56

growth and all these

39:58

different events , or has it been

40:00

like that from the start ? You know

40:02

it's .

40:05

I would say that it's it's definitely been

40:07

that way for a long time . Yeah

40:09

, I would say that you know we got into

40:11

that , but I would say the 2020

40:14

conference excuse

40:16

me was really the inflection

40:18

point , and you know it

40:21

was just nuts . The number of different receptions

40:24

, the number of different events , the number of different people

40:26

. I found that I could walk down

40:28

any street and I felt like my life would

40:30

pass me by , the different people that you run

40:32

into and at that point they were

40:34

charging me for everything . I expected someone to come

40:37

up to me on the sidewalk to start charging me for standing

40:39

there . I

40:42

would say that this year there's been little

40:44

less interaction like that , but

40:46

you still , if you stand in place near the St Francis

40:49

, you're going to see a lot of people

40:51

in a short period of time . I

40:53

think that the service providers

40:56

see this as a real

40:58

opportunity for them to kind of try to

41:00

build their book of business . Yeah , I

41:03

would say that that

41:06

it's what I like about JP Morgan

41:09

is . It's a great

41:11

. It's a very efficient way to

41:14

be able to reconnect with a lot

41:16

of people in a very short period of time

41:18

as well as also expand your

41:20

circle of friends as well . So

41:22

I've found it over the years to be a great

41:24

place for doing business

41:27

, whether it's your own personal business

41:29

development , whether or not you're

41:31

looking to raise money and

41:33

connect to investors or

41:35

you're trying to do strategic transactions

41:37

. But because the nature of the interaction

41:40

is so superficial , I mean it's

41:42

really like speed dating . You

41:44

know it's really . Jp Morgan is really all about

41:46

the follow up , and the success of your

41:49

year , the success of your time here , is really

41:51

about the follow up in terms of you

41:53

know it's great you've renewed relationships , but then

41:55

you want to continue to build on them and

41:57

stay relevant . What the beauty is

41:59

, too , is that you could see somebody that you haven't

42:01

seen in a half a decade . Yeah , and

42:03

it's like yesterday , and

42:06

I think it's a reminder that everybody that

42:08

you know sometimes you think it's been too long who's

42:10

going to remember me ? People remember

42:12

, and I encourage everybody to reach out to

42:14

people and stay and stay

42:17

in touch . It's a cold , harsh world that we live

42:19

in , and being able to expand those circle

42:21

of friends makes a warmer place .

42:23

Yeah , do you

42:25

see , like the significance of

42:27

the what goes on at the Western

42:29

Saint Francis , like the JP Morgan

42:31

kind of nucleus ? Do you see it's significance

42:33

? Um , I

42:36

don't see dwindling but is . I've

42:38

had many conversations with biotech

42:40

execs this week who haven't set

42:42

foot in the western st

42:44

Francis and maybe aren't even here

42:46

for the you know any of the other ancillary

42:48

events . They're here for meetings that

42:50

they've set up . You know they're doing things on

42:52

the periphery . So

42:56

does that significance kind of kind of wane at all

42:58

? Or is there still a great mighty weight

43:00

to to

43:02

sort of ground zero there ?

43:04

You know it's a fantastic question

43:07

and certainly you're going to get a lot

43:09

of different perspectives on it . You know

43:11

from my two cents . You

43:14

know it's a , it's a , it's a . Jp

43:17

Morgan has become Norman Glacier

43:19

for the world's largest healthcare

43:21

conference in San Francisco

43:23

. But , with that said , it's anchored

43:26

by the JP Morgan conference . Yeah

43:28

, you know , and there's been a lot of people

43:31

talking about their just staying for

43:33

the city of San Francisco and

43:35

would love to bring it to a place where you were

43:37

in jammed with a poke in the eye

43:39

, for all costs , we didn't have to

43:41

deal with a lot of the other social

43:43

issues that are prevalent here . Yeah

43:46

, but I don't think that's going to work . I

43:48

mean , I think it would be great , you know , if you

43:50

brought this to say , to say , orlando

43:52

, if you brought this to the West Vegas . But

43:56

with that said , I think

43:58

you're actually going to be then marginalizing

44:01

or commoditizing the JP Morgan

44:03

conference if you did that , because you've

44:05

got , I think , having

44:07

in the same Francis . They control

44:10

the narrative . There's been a lot of history there . This

44:12

goes back to hq back in the 90s

44:14

, and

44:17

then you know people still refer to it as the but

44:20

so there's a lot of history there and I think you

44:23

know for them to be able to continue to control

44:25

the narrative as they do around the event

44:27

. You know Jamie diamonds claiming that

44:29

he's responsible for all the people that come to San

44:31

Francisco . I

44:34

think they're going to keep it here because I think it

44:36

allows them to , like I said , control

44:38

the narrative of the events their event , even

44:42

if it doesn't have no inclusion .

44:44

Well , good deal . Anything else you wanted to cover

44:46

?

44:50

I guess the only thing I would add is that you know , after

44:52

having been

44:55

in the , you know , in a what

44:57

it seemed to be a war or a firefight

44:59

or a storm for a couple

45:02

of years , I think it's

45:04

really , really encouraging to

45:06

see that there's now positive

45:09

, cautious optimism

45:11

out there to look forward to

45:13

. I don't think it's ready , we're ready

45:15

to bang the drums yet , but I

45:18

am encouraged . But I think there's a lot of things

45:20

that we as an industry have to navigate and

45:23

but I think it's back to fundamentals , yeah

45:25

yeah , I mean , we don't want , we don't want the drums to bang

45:27

too hard , right . I think they were banging

45:29

too loud before . I think we got to learn from

45:31

what happened and but I think

45:33

there's great . I mean , at the

45:35

conference I was looking at the next wave

45:37

of companies in the private sector and

45:40

some of the science that's coming out , that's

45:43

around the corner , is really really , really interesting

45:45

. It's really really , really responsive and , and

45:49

I think the other thing is , the industry

45:51

is pivoted a little bit . You know , there

45:53

seems to be much more of an emphasis

45:55

on on an evolution

45:57

, more to chronic disease , heart

46:00

disease , and I think

46:02

that's really really important because when you've

46:04

looked at all the ponderance of

46:06

what's been approved over the last decade

46:08

, it's very concentrated and often disease

46:10

. It's very concentrated in

46:13

oncology and

46:16

it's and I've written things in the past

46:18

that said that . You know , you know there was a lot

46:20

of economic reasons for why that

46:22

capital allocation was occurring

46:24

, but it's nice to see

46:26

, given the broad populations

46:28

, that these large modalities or

46:31

indications are now being addressed

46:33

and I think that that's going to really make a positive

46:35

impact . But it also speaks

46:37

to the fact that people looking for bigger markets

46:39

to invest in now that seems

46:41

to be the issue and I think that speaks to the farmer

46:44

pipeline and

46:46

it . You know , and I say the risk on

46:49

all of that , when people are investing in later

46:51

stage products or

46:53

larger indications , like that is

46:56

the hot pot now is how do

46:58

you continue innovation ? And

47:01

right now the emphasis on data is so

47:03

important and it's kind of a chicken

47:06

and the egg . How do you start something without the

47:08

data ? And so one of

47:10

the questions I have going into the air

47:12

is you know how well will we

47:14

proceed in the near term

47:16

with funding innovation , given

47:18

that we kind of head full back so much as an

47:20

industry ? I think the good

47:22

news is Goldman Sachs just opened

47:24

up their first fund , I think a $600

47:27

million fund . There's been a number of other continued

47:30

VC financings . I think Orbi

47:32

Meadow opened up a couple of funds . So

47:35

you know that's posed well , the innovation

47:37

. But the innovation

47:39

is going to be driven from the specialists

47:41

. I think it's going to be hard for people who

47:43

are trying to do it outside of the specialist funds

47:45

, just given the way they're dynamics

47:47

. And I point to you know Peter Kaczynski

47:49

wrote another piece and talking about

47:52

you know his view that you

47:54

know the haves and have nots and any

47:56

if you look at the success of those funds and

47:59

it certainly

48:01

costs some spirited discussion among

48:04

folks . That was certainly provocative , to say the least

48:06

.

48:08

Real quick . We talked about a number of indications and

48:10

markets . You know we talked about obesity

48:12

. We talked about , you know , oncology . We

48:16

talked about CNS . I'm

48:18

curious , related to CNS

48:20

, what your take is on the anti-aging

48:22

space .

48:25

You know , I think this

48:27

, as we see the demographic shifting , it's certainly

48:29

been an area of focus . You

48:32

know I've always found it very hard to describe

48:34

what is anti-aging . You know , I

48:36

mean it's very subjective

48:38

you can attribute a lot of products

48:40

already in the market that could be arguably anti-aging

48:44

. I think it's a great market opportunity

48:46

because you know you go back to vanity and

48:48

I think longevity is an extension

48:51

of all of that . I

48:54

think . You know , I

48:56

think kind of almost feeds into what we're

48:58

talking about before about patient

49:01

engagement , because I think you know , if

49:03

you're talking about anti-aging you've got to do a number of

49:05

different things . I don't think there's a single bullet

49:07

. You know , I know a whole bunch of people

49:09

, particularly billionaires over 60 , that like

49:11

to take metformin , because

49:13

that's , there's been a lot of aging and life

49:15

analysis on metformin . But

49:18

I do think you know , if you exercise

49:20

, you eat right and

49:22

you know , and

49:24

there is work being done there

49:27

. I think it's a bit early , you know

49:29

, I'm not sure if it's something I would personally get involved

49:31

with , but again , if there's an articulate

49:33

plan , if there's really endpoints

49:36

that you can look at , and you

49:39

know , I think it's an interesting area

49:41

and I think a lot of people are chasing it .

49:43

Yeah , yeah , very good . Well , I appreciate

49:46

your time . Allan , it's been a

49:48

pleasure . Here's to

49:50

24 . Here's

49:52

to having you back on the show more often

49:54

. We got off of our cadence so

49:56

we got to get that back on the cycle . We'll

49:58

be in touch on that to get the next one scheduled . But I

50:00

really appreciate always getting your

50:02

insight . So does our audience . So thank

50:04

you .

50:06

My pleasure . It's always great to hang with

50:08

you and

50:10

I love doing the program with you . And

50:12

to be continued .

50:14

I'm Matt Pillar and you just listened to the business

50:16

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50:18

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50:20

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backslashbob . If

50:43

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50:45

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50:48

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