0:00

The Business of Biotech is produced by

0:02

Life Science Connect and its community

0:04

of learning , solving and sourcing

0:06

resources for biopharma decision

0:08

makers . If you're working on biologics

0:11

process development and manufacturing challenges

0:13

, you need to swing by bioprocessonlinecom

0:16

. If you're trying to stay ahead of the cell

0:18

or gene therapy curve , visit cellandgenecom

0:21

. When it's time to map out your clinical

0:24

course , let ClinicalLeadercom help

0:26

, and if optimizing outsourcing

0:29

decisions is what you're after , check out

0:31

OutsourcePharmacom . We're

0:33

Life Science Connect and we're here to help . Venture

0:40

philanthropy has remained one of the few bright

0:42

spots in an otherwise gloomy

0:44

biotech funding scene . Couple

0:47

that with rising unmet medical needs

0:49

in neurodegeneration and

0:51

the recent regulatory activity in

0:53

the Alzheimer's therapeutic space and

0:56

you've got a situation where the Alzheimer's

0:58

Drug Discovery Foundation's stock and

1:00

relevance are steadily rising

1:02

. The ADDF is

1:04

a venture philanthropy fund founded by

1:06

the Lauder family , as in Estee

1:09

, and supported generously by

1:11

the likes of Bill Gates , jeff Bezos

1:13

and the Dolby and Schwab families

1:15

. Its mission is to accelerate

1:18

the discovery of drugs to prevent , treat

1:20

and cure Alzheimer's disease , and

1:22

it does that by investing in biotechs

1:24

developing Alzheimer's therapeutics , much

1:27

like a venture capitalist would , then

1:29

directing its proceeds back into the fund

1:31

. I'm Matt Pillar . This is

1:33

the Business of Biotech and the opportunity

1:35

to sit down with ADDF Chief

1:37

Financial Officer and Head of Mission-Related

1:40

Investments , Karen Harris , in San Francisco

1:42

, was one I didn't take lightly . Her

1:45

perspective on Alzheimer's therapeutic

1:47

progress , the market , what's fundable

1:49

and why is one of a kind . Let's

1:52

give it a listen . I

1:54

want to start with the foundation . I want to

1:56

get an understanding of the mission

1:58

and the venture philanthropy model

2:01

. So typically my

2:03

interviews are with biotech CEOs

2:05

, the companies that are more than

2:07

likely interested in partnering

2:09

with you . I've only had a couple

2:11

of venture philanthropy leaders

2:14

on the show in the past , so

2:16

it's fascinating to me , though

2:18

I love the concept .

2:21

So tell me about that . No

2:23

, it's great to be here . There

2:25

are a handful of venture philanthropies , but

2:27

we're definitely a pretty unique

2:29

animal . So the mission of the

2:32

Alzheimer's Drug Discovery Foundation

2:34

is to accelerate the development

2:37

of drugs to prevent

2:39

, treat and hopefully eventually

2:41

cure Alzheimer's disease . And

2:44

when we started

2:46

, we were set up as a

2:48

venture philanthropy by our founders

2:50

, which were Ronald and Leonard

2:53

Lauder , and then Dr Howard Fillett

2:55

, who's still there as our co-founder and chief

2:57

science officer . And they set us up

2:59

as a venture philanthropy , which means

3:01

instead of giving grants

3:03

to academia and to

3:05

biotechs , we actually

3:08

invest in them . So we

3:10

invest in biotechs the same way

3:12

a VC would invest in a biotech

3:15

we buy preferred stock or we

3:17

buy convertible debt or royalty

3:19

arrangements sometimes , and with

3:21

academia we have royalty arrangements

3:23

and what happens is the money that we get

3:25

back from returns goes

3:28

right back into the mission . But

3:30

I think donors seem to really like the

3:32

model and like to know that

3:34

their money is being used

3:37

efficiently and that we are getting some return

3:39

. And then that gets plowed right back

3:41

into ADDL .

3:43

Yeah , direct . I mean the

3:45

donors have to like the fact that there's a direct influence

3:47

on the real work , right

3:49

, yeah , yeah , no , absolutely .

3:51

And it gives us the opportunities to work with

3:53

biotechs , because it's kind

3:56

of awkward if you're a non-profit to

3:58

be handing money to biotech companies . So

4:01

I think this venture philanthropy model

4:03

where we invest in the biotechs , is

4:07

just a better way to go about

4:09

it for that type of thing .

4:11

Yeah , yeah . So and you're the

4:13

chief financial officer there . Tell

4:15

me about that role . Like what does the CFOs

4:17

sort of illustrate , what the CFO's

4:19

role ? Is in venture philanthropy .

4:22

Well , I feel

4:24

like I have two jobs . So I'm the CFO

4:26

and then I'm the head of mission-related

4:28

investing , and as the CFO

4:31

, it's really my job to make sure that

4:33

the donor's money gets

4:36

placed as efficiently

4:38

and

4:40

as well as possible into

4:43

these Alzheimer's companies

4:45

in order to accelerate a cure

4:47

.

4:49

No pressure there .

4:50

Yeah , we're so lucky in

4:52

that the Lauder family , at the end

4:54

of 2022 , gave us a

4:56

$200 million gift

4:58

to cover our operating expenses

5:00

for the next 15

5:02

to 20 years expenses

5:08

for the next 15 to 20 years . So I take that very seriously to really steward their

5:10

money to make sure it lasts for our operating costs as long as

5:12

possible . But it's a great position for

5:14

a CFO to be in so that I don't

5:16

have to worry about my operating costs

5:19

and all the donors'

5:21

money that gets donated to us

5:23

goes straight to the science , not

5:25

to our operating costs . So this

5:27

fact that all your money goes to research

5:30

. I think is a very attractive

5:32

thing .

5:33

Yeah , that is fantastic .

5:35

So that's the CFO job the

5:37

head of mission-related investing

5:39

is . Since we do invest in biotechs

5:42

, we have to structure the investments

5:44

and negotiate the deals

5:46

with the biotech companies , and

5:49

so I do all of the

5:51

structuring and the negotiations

5:53

of those deals . And

5:56

the reason that works so

5:58

well is I have an investment banking background

6:00

and so I'm able to use a lot

6:02

of that for structuring

6:05

these deals . When I was starting

6:07

out in investment banking , I worked

6:10

on a lot of biotech IPOs and

6:12

so a lot of that knowledge is

6:14

very helpful when dealing with these biotech

6:17

companies , and it's such a treat to

6:19

work with these companies . They are

6:22

just so dedicated and

6:24

they just don't give up . It's been hard

6:26

to raise money this year , and

6:29

I'm I'm really just

6:31

always super impressed by

6:33

their commitment yeah , yeah

6:36

, particularly .

6:36

I mean you know I've interviewed hundreds

6:38

of them , biotech execs , and you

6:41

know , uh , the commitment and

6:43

the altruism , it's all on full display it

6:45

seems like that's even ratcheted up a notch

6:47

in the alzheimer's space , because so many people are

6:49

, you know , have been affected by it and have

6:51

personal experience yeah , I

6:53

think that's true .

6:54

I think almost anybody

6:57

you talk to has

6:59

a mother-in-law or

7:01

a sister or an aunt or somebody

7:04

who's been touched by Alzheimer's and

7:06

I think the fact that you know , for 20

7:08

to 30 years there was no drug

7:10

approved and now we have

7:12

two that were , one

7:15

that has been approved by the FDA and

7:17

another from Eli Lilly

7:19

that's about to be and

7:21

so it's a really exciting time in the

7:23

Alzheimer's field right now , and so it's

7:25

a really exciting time in the Alzheimer's

7:27

field right now ?

7:33

Sure is . Yeah , you mentioned that prior to ADDF you were

7:35

in investment banking and I'm curious about that . I looked at your background

7:37

for the interview and it's intriguing to me

7:39

. You were in pretty big

7:41

name investment banking after you earned your

7:44

Columbia undergrad in economics

7:46

and your Stanford MBA in finance

7:49

. When I look at your career at

7:51

least on paper , on LinkedIn right , the latter

7:53

half of it seems like it's very focused

7:55

on endeavors that are far

7:58

from you know getting rich and making rich

8:00

people richer , yes . Tell

8:02

me about that . I look at Mount Sinai Adolescent Health

8:04

Center , east Harlem Tutorial Program and now the ADDF Tell me about that . I went to Mount Sinai Adolescent Health Center , east Harlem

8:06

Tutorial Program and now the ADDF Tell

8:08

me about that . Yeah .

8:09

So I left

8:12

UBS in 2012

8:14

to join a

8:16

hedge fund and after

8:19

a while several

8:21

months I really came to the conclusion

8:24

that the world did not need this other

8:26

hedge fund , that we have enough hedge

8:28

funds , and I didn't really feel that we

8:31

were going to be so much better than

8:33

anybody else , and my dad

8:35

had done a lot of non-profit work after

8:37

he retired and so

8:39

I investigated

8:41

. I took some courses at

8:44

NYU New York University in

8:46

philanthropy and I

8:48

liked it , so I decided I would try

8:51

it out , and I think that

8:53

I really felt

8:55

that I wanted to do mission related work

8:57

at that point , and I

9:00

first went into development

9:02

, and I don't really know why

9:05

I did that . I think I did that because I liked the

9:07

classes , which

9:09

is a very silly way to

9:11

pick anything , and

9:14

I worked at the Mount Sinai Adolescent

9:16

Health Center eventually as their director

9:19

of development and I

9:22

. It was very interesting

9:24

, I liked it , but I missed finance

9:26

and so then I moved to

9:28

the East Harlem Tutorial Program , which

9:30

is charter schools in

9:32

East Harlem , and

9:34

was the CFO there and

9:37

then ultimately got recruited to

9:39

ADVF . But I'm very happy

9:41

to have worked at these social services

9:44

organizations for

9:46

several years .

9:47

Yeah , I can imagine that's fulfilling

9:49

, Much more fulfilling than running

9:51

a hedge fund . The

9:54

ADDF recruitment . How did that come to pass ?

9:57

You know it was COVID and

9:59

I just got a call from a recruiter

10:01

and I think I had met

10:03

her once before and

10:05

she just how she just called

10:08

and I had interviews completely

10:10

online and I

10:12

think it was a year before I met

10:14

the CEO in person because it was like

10:16

smack in the middle of the really

10:18

bad COVID . But

10:21

I thought this would be super interesting

10:23

and it was

10:25

different . But the whole investment

10:28

part of it- was really interesting to me

10:30

.

10:30

For sure , yeah , kind of brought you back to that

10:32

world that

10:34

you had been in .

10:35

Yeah , it's kind of the perfect job because

10:38

I get to really match

10:40

the investment banking skills

10:42

as well as the CFO

10:45

skills , so I really can't think

10:47

of a more perfect job for me .

10:49

Yeah , that's great , so I

10:52

want to talk a little bit more about

10:54

ADDF and what it's supporting . As

10:57

you know , the bulk of our audience are biotech

10:59

execs and CEOs , many of whom founders

11:02

, many of whom worked in the Alzheimer's space . You

11:04

guys support the events of both diagnostics

11:06

and therapeutics .

11:20

Yeah , we're involved in diagnost

11:22

that are

11:24

developing drugs based on the biology

11:27

of aging , so drugs that will

11:29

treat the underlying diseases

11:31

of aging , with the idea

11:33

that if we can treat that , then

11:35

we can ultimately

11:38

reduce Alzheimer's , because Alzheimer's

11:40

ultimately is a disease of aging

11:43

. And we

11:45

decided about 10 years

11:47

ago not to focus on

11:49

amyloid which is what these new

11:51

drugs are because pharma

11:54

was focusing on amyloid and pouring

11:56

tons of money into it . So we wanted to

11:58

invest where we thought that our money

12:01

would be more useful in

12:03

novel ideas and , as it

12:05

turns out , where the science has moved

12:07

now is towards the biology

12:09

of aging , because these

12:11

amyloid drugs are

12:14

, you know , shown they

12:16

reduce amyloid , but I still

12:18

think the jury's out as to

12:20

how effective . You know , maybe they'll slow

12:22

cognitive decline by

12:25

30% , but that's

12:27

not enough , and we think that a

12:29

lot of these other ideas are

12:31

going to come to fruition and ultimately

12:34

it's going to be a combination therapy

12:37

or precision medicine

12:39

that is going to cure Alzheimer's

12:41

. Much in the way of the cancer space does

12:44

it with their immunotherapy

12:46

. So , um , so

12:48

we really take in uh , they

12:50

, my CEO likes to say

12:52

shots on goal , and we've

12:54

taken a lot of shots on goal . And

12:56

our um co-founder

12:59

and chief science officer is an absolute

13:02

. We call

13:04

him the truffle hound because

13:06

he just seems to be able to seek

13:08

out the most interesting biotech

13:10

companies , and we've

13:13

done quite well with some of them

13:15

. We invested

13:18

early on in a

13:20

program that was licensed by

13:22

Amavid or by Avid

13:24

Pharmaceuticals , and then the company

13:27

was bought by Eli Lilly and

13:29

it was the first PET scan to

13:31

actually be able to identify

13:33

amyloid , because before that

13:36

there was no way to really tell

13:38

if you had Alzheimer's except

13:40

for either a cognitive

13:42

interview , which doesn't you know

13:44

, that's not very scientific or

13:47

else an autopsy after death . So

13:49

that was one of the things that

13:51

we invested in early

13:54

on , as well as blood tests

13:56

for the

13:58

diagnosis , for

14:04

the diagnosis , and I think now , with these anti-amyloid drugs , there's going to be a need to figure out

14:06

who has Alzheimer's in an easier way than the

14:08

PET scan , and I think a lot of blood tests

14:10

are being developed now , some

14:12

already marketed . So , that's really

14:14

. That's diagnostics as well

14:17

, and that's the diagnostics part of the business

14:19

. And there we have

14:22

a hundred million dollars that

14:24

was given , donated

14:27

to us from the Gates from

14:30

Bill Gates and other philanthropists

14:32

, leonard Lauder and

14:34

we are using that money

14:37

to try to accelerate

14:39

the

14:41

detection and diagnosis of Alzheimer's

14:44

, with the thought that the earlier you

14:46

can detect it , the better

14:48

off you're going to be and the

14:50

more probable that you could get a treatment

14:52

that would work . We

14:55

have invested in therapeutics this

14:57

year $34 million

14:59

. We'll invest $45 million next

15:01

year . And then

15:03

we have the diagnostic accelerator

15:05

money to invest . But our biomarker

15:08

team and our therapeutics

15:11

team talk all the time

15:13

and are completely sort

15:15

of married at the hip because

15:18

the two really go together .

15:19

Yeah , yeah , is , is , is

15:22

the ? Is the truffle hunting more difficult

15:24

on the therapeutic side than it is on

15:26

the diagnostic side ?

15:28

Um , yeah

15:30

, you know it's different and

15:33

I think therapeutics take a lot longer

15:36

to come to market , so you have to wait longer

15:38

. Um , but I think the returns are

15:40

ultimately better in the end

15:42

. So I think if

15:45

somebody comes up with the therapeutic

15:47

for Alzheimer's that really works

15:49

, that's going to make a lot

15:51

more money than the diagnostic test

15:53

that told you that a person

15:56

would have Alzheimer's . But

15:58

I do think that it's quicker to market

16:00

the diagnostic tools and it's

16:02

absolutely essential If you think about

16:05

it . Like , imagine if

16:07

we didn't have a way to tell

16:09

whether you have high blood pressure .

16:11

Right .

16:11

And and with it really helps

16:14

in the clinical trials , because they

16:16

used to do clinical trials and

16:18

a quarter of the people

16:21

wouldn't even have alzheimer's because there

16:23

was no way to really know , you just guess

16:25

. So , um , it's very important

16:28

when you're doing the clinical trials

16:30

and also when you're measuring the

16:32

endpoint to see if your therapy is effective

16:34

, to have a good biomarker

16:36

to be able to actually know

16:39

whether your drug is doing

16:41

the appropriate work .

16:42

Sure , and as those drugs become more

16:44

precision , presumably

16:46

the diagnostic tools

16:48

are going to be key because precision

16:51

drugs and

16:53

their correlation to stage of diagnosis

16:56

. They've got to work hand in hand .

16:58

Absolutely , absolutely . They've

17:05

got to work hand in hand , absolutely , and that

17:07

is why the Diagnostics Accelerator is trying to find novel biomarkers

17:09

. So there might be a biomarker

17:11

for inflammation , for vascular

17:14

disease , because these

17:17

things are other aspects

17:19

of Alzheimer's that people

17:22

have and will ultimately need to be

17:24

measured .

17:26

So , speaking of the therapeutic focus

17:28

, do you have any favorite

17:30

horses in the race in terms of modalities

17:33

?

17:34

Yes . So , as I said , we invest

17:37

in companies that are focused on the biology

17:39

of aging and , in terms of the

17:41

stage that we're interested

17:44

in , it's typically now the IND

17:46

enabling stage or proof

17:48

of concept , phase

17:50

one , proof of concept trials

17:53

and then early phase two , because

17:55

that's where our money is going to

17:57

be the most meaningful . You

17:59

know , then later , for the phase

18:01

three trials , they're going to need

18:04

hundreds of millions of dollars

18:06

and we can't . We don't have

18:08

that money , so we're trying to invest

18:10

in ideas that ultimately can

18:12

raise future money from

18:15

the VCs and from pharma

18:17

and be

18:19

able to continue

18:22

on after , after our donations

18:24

done .

18:24

But we do give a lot of follow-on donations

18:27

as well when

18:29

you first uh survey opportunities

18:32

uh or entertain opportunities

18:34

other well , you know , let me let me stop there

18:36

and and focus there for a minute , like are

18:39

you typically hunting , or are

18:41

you typically being courted , or

18:43

is it a combination of the two ?

18:45

um , it's a combination of both . So

18:47

we are always

18:49

looking for areas of our

18:51

portfolio of investments where

18:54

maybe we're lacking , like oh

18:56

, maybe you know , here's an idea

18:58

where we don't have any

19:00

drugs being tested for

19:02

this in our portfolio , like , maybe it's

19:04

gene therapy , so we

19:06

would be actively

19:09

looking . But also

19:11

we have several RFPs that

19:13

we do and we have a lot

19:15

of incoming requests . You can imagine

19:18

, in this down market , all

19:21

the demand and what I would say about

19:24

our model is

19:26

, while we do want the returns

19:28

that VCs get , we don't have limited

19:30

partners and we

19:32

focus the most important

19:35

thing for us as a science and

19:37

we hope to make a good return , but

19:40

we're not

19:42

so much focused

19:44

on the returns as we are on the science

19:47

. And so in this difficult

19:49

market , we've been able to fund

19:51

companies that have trouble finding money

19:53

anywhere else , that

19:56

our scientific

19:59

diligence is so admired

20:01

at ADDF that often

20:03

we are like the stamp of approval

20:06

that enables these companies to get

20:08

future funding . And a lot of the time

20:10

people will say , well

20:13

, can we sign your contract early , because

20:15

the next venture partner

20:17

won't come in until you've

20:19

actually signed . So we see a lot

20:22

of that . Yeah , that's interesting .

20:25

What does the scientific validation component

20:27

look like ? You have like a board . Yeah

20:29

, so we have .

20:31

I'm going to get the number wrong , but I think

20:33

it's like we have like 19

20:35

PhD scientists

20:38

on board and so the first investigation

20:41

is an internal one and

20:43

then if we like an idea

20:45

and we think it will fit well

20:48

in our portfolio , then we have

20:51

outside reviewers review it . These

20:53

are prominent people in the Alzheimer's field

20:56

and then after that

20:58

it goes to our scientific

21:01

investment committee , who you

21:04

know , study the idea and vote to approve

21:06

or not to approve . So that that is

21:09

our scientific method . And

21:11

you know , obviously over

21:13

the years we've developed such an expertise

21:15

in Alzheimer's specifically

21:18

that you know

21:20

I think a lot of the vcs really

21:22

admired that knowledge yeah

21:24

, um

21:26

, as far as scientific analysis of potential

21:29

partners goes , have you noticed

21:31

any trends or do you have any preferences

21:34

in terms of you mentioned gene therapy ?

21:35

for instance like you know , is

21:38

small mall more attractive

21:40

than a biologic , more attractive

21:42

than a gene therapy , like any

21:44

trends there , or are you pretty agnostic ?

21:47

Um , I think we are pretty

21:49

agnostic in sort of this . We

21:51

think they're going to be a lot of targets and

21:55

we like to have a

21:57

good range of things

21:59

. A couple of companies

22:01

, for example , like we

22:04

invest in Luxio

22:06

Therapeutics , which happens to have just

22:09

presented at the JP

22:11

Morgan Conference , and they're

22:14

a genetic medicine company

22:16

, a clinical stage genetic medicine

22:19

. So that's one company

22:21

that we invested in early in 2014

22:23

, where we

22:26

actually invested when

22:28

that , when the idea was at Weill Cornell

22:30

university , and then

22:32

it it somehow got

22:35

into . It became a company Lexio

22:37

or Alexio bought it .

22:39

I don't know how .

22:40

And then it it

22:44

just went public . So we made another investment

22:46

in 2020 and now it's gone public

22:48

. So

23:07

that's , that's one company

23:09

and you know it's

23:12

very rewarding . Toibrin , which is supposed

23:14

to be bad for

23:16

neurons and cognitive

23:19

declines , and now

23:21

again in 2023

23:25

, and they are doing their

23:28

Series A right now and

23:30

are trying to fund the Phase

23:32

2 study .

23:33

Yeah , that's great . You

23:36

talked a little bit about how ADDS

23:39

support is seen as a stand-up , a sought-after

23:42

sort of stand-up of approval . Stamp

23:48

of approval . Um , do you look for ? You might have touched on this , but I'm curious about

23:50

how it's maybe changed in the recent you know the recent , uh , financial

23:53

climate . Do you , do you look for

23:55

companies that have , like you know , your

23:57

? Your reputation is often determined

24:00

by the company you keep right , do you look for ? Companies

24:02

that have um specific

24:04

business development , support from specific

24:07

firms or even pharma

24:09

companies .

24:11

Um well , we we typically

24:13

would invest before the pharma companies

24:15

would come in , and we're really trying to

24:17

get these companies ready for pharma

24:20

. So no . I wouldn't say

24:22

so much . I wouldn't say

24:24

so much , I wouldn't really

24:26

say that so much . I think we're

24:28

investing 100%

24:30

based on what we think

24:32

is the validity of the science .

24:35

Yeah , all right , once you

24:37

validate the science and

24:39

strike up a partnership , is it

24:42

pretty ? Maybe not monetarily

24:44

, but is it pretty cookie cutter . Like , is it pretty automated

24:47

?

24:55

Yeah . So once the science is validated , then it comes to the . We negotiate the deal

24:57

and then it comes to our investment committee . So we do have an investment

24:59

committee that has to approve the terms of

25:01

the deal and they're really the ones

25:04

who want to see that we're getting

25:06

quote venture like returns

25:08

, and that we're . We've actually structured

25:10

and negotiated a good deal

25:13

and it's

25:15

actually not cookie

25:17

cutter because ADDF , we

25:19

don't invest directly

25:22

. Well , we do , we buy preferred

25:24

stock , but that's that

25:26

money that we give a company has to go

25:28

to a specific project with the

25:30

budget and a work plan , and so

25:32

we're in very close touch , helping

25:34

the companies design the

25:37

projects and design the clinical

25:39

trials , and we help them with IP

25:41

and with business plans . So

25:44

we're having a very close relationship

25:46

even before we approve the

25:48

proposal and then , once it's approved

25:51

and once they start working , doing

25:54

the work , we stay in touch

25:56

with them very closely to see

25:58

how it's going and how we can set them

26:00

up for success , and

26:02

even after

26:05

. We've done a lot of follow-on deals this

26:07

year and we

26:09

tend to like to do that and

26:11

to really help our companies prosper

26:14

.

26:14

That's cool . What is the sort of the I

26:17

don't know day-to-day , not necessarily

26:20

day-to-day , but that sort of relationship management

26:22

aspect ? Are there like customer

26:24

relationship managers at ADDF that work with these

26:26

folks ? We're a nonprofit .

26:31

No , it's really the science teams

26:33

that work with them . I work with them if there

26:35

are any finance related issues

26:37

or anything related

26:40

to the structure of the deal . Do

26:42

they need an extension on their convertible ? No

26:44

, you know those kind of things , but the

26:46

scientists are really working with them

26:49

on

26:51

a day-to-day basis . So , with

26:53

regards to how the project is going

26:55

, yeah , the

26:57

venture philanthropy model in

27:00

general .

27:05

how has the recent economic headwinds

27:08

impacted the venture

27:10

philanthropists in general ? Has

27:13

it been a are you fairly insulated

27:16

, or is it impacted ?

27:18

Well , what I would say is it's

27:20

actually made the venture philanthropy

27:22

model that much more important . And

27:25

we do a lot of what I call bridge financing

27:27

, which is , you know this

27:29

say you have a company and they

27:31

needed to raise their series A

27:34

by January , or else they're

27:36

going to run out of money and can't complete

27:38

the next trial . And

27:40

here it's happened quite

27:42

a number of times in this

27:44

market where you know the

27:47

companies are unable to complete

27:49

the Series A on time , they just can't

27:51

get the investors . And so we

27:53

provide bridge financing , which is

27:56

usually in the form of a convertible note

27:58

, which is debt that's going to convert into

28:00

equity and basically

28:02

bridge them over , to tie

28:04

them over to when they're able to

28:06

finally close their preferred round

28:08

. And we've done a lot of that this

28:10

year , and we just need

28:13

to be careful that the company

28:15

does have enough cash to

28:17

continue on and finish our project

28:20

and ultimately will

28:22

have results that will draw

28:24

in the money of venture

28:27

capital and of pharma

28:29

potentially , or they could

28:31

go to the public markets . But I

28:33

think that ADDF's stamp

28:35

of approval and this

28:37

bridge financing , it's

28:40

something we can do because , once

28:42

again , we don't need the venture

28:45

return . We

28:48

really want the science to progress

28:50

.

28:51

Is bridge financing a risky

28:53

proposition ?

28:56

It is a risky proposition because

28:58

you don't know if the

29:01

series A or B or

29:03

C is actually going to get done . So

29:05

yes , it's definitely a risky proposition

29:08

and ADDF can take that risk

29:10

when others don't want to

29:12

, and I think that ADDF

29:15

, by taking that risk , helps venture

29:18

firms feel comfortable about

29:20

investing . But it is definitely

29:23

a risk and the investment committee is

29:25

very careful

29:28

about making sure that that company

29:31

has a plan to

29:33

be able to stay

29:35

in business and continue and

29:37

finish our project . So usually

29:40

what we like to see is that there's some

29:42

inflection point coming up where

29:44

they're going to be results announced and

29:47

therefore they can draw in

29:49

additional capital okay

29:52

, um , what is your

29:54

uh general

29:56

sense for ?

29:58

uh , you know , obviously , in this environment

30:00

, karen , like everyone's sunshine

30:03

and roses , it's jp mor

30:05

. You know everyone's everyone's happy

30:07

, but I'm

30:10

picking up on some genuine sentiment

30:13

that things are improving . You

30:15

know what's your , what's

30:18

your take .

30:19

Yeah , I think that it has been extremely

30:21

difficult . It's been a very

30:24

bad market . The public markets have

30:26

been terrible . The IPO markets are

30:28

pretty closed up

30:30

until maybe the fourth quarter

30:32

of this year and

30:34

it's really hard to

30:36

get venture investors to invest

30:38

now because they weren't able

30:40

to take their companies public , so

30:43

they're having to put money into

30:45

their existing companies rather than new

30:47

companies . So , as a new company , to get

30:49

a lead investor is

30:51

really really hard right now . I

30:54

think things are looking

30:57

up . There's been an

30:59

uptick in the biotech index

31:01

in the last few weeks

31:04

really , with a lot of mergers

31:06

that have been announced , and what's

31:08

interesting for us is we've

31:11

seen two mergers , one

31:13

from Merck

31:16

of Carraway Therapeutics and

31:18

one from AbbVie of a company called

31:20

Cereval both CNS companies

31:22

and those are among the most risky

31:25

, and so that leads me to believe

31:27

that somehow the

31:30

valuations are low enough that the

31:32

market is going to turn . So we've seen

31:34

a lot of M&A . There's been a lot of M&A

31:36

announced at JP Morgan and

31:38

interest rates are projected to come

31:40

down , and I think if

31:42

that happens , then it'll

31:46

be a big help to these biotechs

31:48

and ultimately people will start investing

31:51

again . I mean the valuations . I

31:53

would say that the boom years of

31:55

20 and 21 were maybe a little

31:58

over-exuberant and

32:00

the valuations were too high

32:02

and a lot of companies were able to go

32:04

public that shouldn't be public companies

32:06

that are now trading at a

32:08

dollar a share . So I

32:11

think that there's that overhang in the

32:13

market . But I do think we've seen

32:15

two IPOs of CNS

32:17

related companies . One

32:20

is Lexio , another is Nomura

32:22

Therapeutics , and there

32:25

again , you know they're both trading now above

32:27

issue price . So that leads me to believe

32:30

that the market is going

32:32

to get better . I think it's going to take a little

32:34

while , but I think by the end of 2024

32:37

and 2025

32:39

, things are going to be better .

32:41

And how does that like ?

32:42

how do you ?

32:43

envision that hopeful

32:45

improvement impacting ADDF

32:48

. What does that do for you ?

32:51

Well , one thing

32:53

that does for us is to

32:55

help us

32:58

get returns . So

33:00

basically we call them mission-related

33:02

returns . So if the public

33:04

markets turn and a

33:07

lot of our companies can do initial public

33:09

offerings , we typically , once

33:11

an investment becomes liquid , we

33:13

sell . We make sure we

33:15

sell in a way that we won't hurt the

33:17

stock price of the company , so very

33:20

slowly over time . But you know

33:22

, we believe that once we

33:24

gain liquidity we should sell and

33:26

then make investments in other

33:28

science . And

33:30

so you

33:32

know , I think that we'll

33:35

get a lot . We will see a lot

33:37

of M&A , where

33:40

we will get returns , or we will

33:42

see IPOs where we're

33:44

going to get returns . So

33:46

we're hoping for that that money

33:49

gets plowed right back into the

33:51

science . And also with

33:53

the new , with the new drug

33:56

approvals for

33:58

Alzheimer's , we're seeing an increased

34:01

interest in just CNS

34:03

related work

34:05

and we're I've

34:07

seen from the VCs an interest

34:10

to get educated

34:12

on the neurodegenerative

34:14

disease and we call them neurocurious

34:16

VCs and

34:18

I think you know a lot

34:20

of VCs wouldn't invest in the

34:23

neuro world because it was too

34:25

risky and I think maybe they're going

34:27

to start coming , coming in now .

34:29

Yeah , well , I mean the , the , I

34:31

guess , association with anti-aging

34:34

. But the anti-aging space I mean that

34:36

that's a , that's a hot space

34:38

right now and I can see , you know

34:40

, the , the VC appetite in

34:42

that space and crazy saying it has things to turn

34:45

around too . So it's . It's a good corollary

34:47

right yes .

34:48

The anti that space and criticizing as things turn around

34:50

too . So it's a good corollary , right ? Yes , the anti aging space is really interesting

34:53

and I was hoping to hear more about it at jp morgan . Uh , we didn't

34:55

, but I think you

34:57

know everybody seems dollars

35:00

a year in anti-aging and

35:25

we are trying to get some of the sovereign

35:27

wealth money to go towards

35:29

alzheimer's , which is

35:31

a disease of aging . So , um

35:33

, we , we are trying

35:35

to get some of that money into

35:38

alzheimer's .

35:39

Yeah , very good . When you come

35:41

to an investor conference like this

35:43

, you know you're in a unique position cfo

35:45

of venture philanthropy , uh at

35:47

atf .

35:48

What's , what's your ?

35:49

what's your goal , what's your mo here ?

35:51

so I'm very interested

35:53

to see what the public

35:55

companies are doing in the neurodegenerative

35:58

space . So I make sure to

36:00

see those companies . You know to

36:02

see biogen , who is

36:05

introducing one of their al's drug

36:07

, and Lilly to talk about their drug

36:09

. So I'm interested

36:12

in seeing those companies . I'm also very

36:14

interested in understanding what

36:16

they think when they think the market's

36:18

going to return , because

36:20

you know , I

36:22

have ADDF can have an opinion

36:24

, but I'm very interested in the investor's

36:27

opinion as to when the market's going

36:29

to come back . And then I've been meeting

36:31

a lot of the CEOs of

36:33

either companies we already fund

36:35

or companies that

36:37

are in the process of

36:39

applying to get funding

36:42

from us . So I've been meeting with a

36:44

lot of them as well as

36:46

some people on the venture side

36:48

, because one thing we try to

36:50

do for our companies is to

36:52

get additional venture money

36:54

into them . So it's

36:56

very helpful at ADDF to have

36:58

venture connections so

37:01

that we can help our companies raise

37:03

money .

37:04

Yeah , what's the appropriate way

37:06

for a company who's interested in working with

37:08

you to ? What's the channel to

37:11

get the conversation started ?

37:13

So I would say that you

37:15

know we're interested in companies focused

37:18

on the biology of aging at the

37:20

clinical stage

37:22

and if you fit

37:24

that model , reach out to

37:26

our scientists . We

37:30

have several RFPs . So look at our website and

37:32

we really do encourage people

37:34

to start the conversation . We're

37:37

interested in unique

37:39

, innovative science and our

37:42

scientists are always happy to talk

37:44

to you .

37:45

Good , If I were a

37:47

better interviewer . What would I have ? Asked

37:49

you that I didn't About

37:53

ADDF ?

37:56

Let me think about that .

38:00

Well , if you have to think about it , I must have done a pretty good job

38:02

.

38:02

Yeah , you know , I think you did a great job

38:04

and I'm not sure what

38:06

else you could have asked me . But , yeah , I think it's did a great job and

38:08

I I'm not sure , uh , what else you could have asked me . But , um , yeah , I

38:10

think it's been a great discussion and I'm

38:12

very happy for people

38:14

to know more about venture philanthropy

38:17

. And also , you know , I want

38:19

to really help our

38:21

biotech companies who

38:23

are doing research in alzheimer's . It's such

38:25

an important area . And these

38:28

biotech companies are just

38:30

, you know , they never stop

38:32

working , and it's just very impressive

38:34

.

38:35

It is , and the work that you're doing

38:37

is very impressive too . I just recalled that

38:39

, as I said , I don't often have

38:41

venture philanthropists on the

38:43

show , but the last time I did was a couple of years

38:46

ago . I think it was the JDDF

38:48

Katie Alley . Oh , okay . You

38:50

know , Katie had always fascinated conversation

38:52

with her as well . I admire the work

38:54

that folks like you do , yeah

38:56

, and I encourage you to keep

38:59

up that work , and I wish you all the best

39:01

success in 24 .

39:02

Well , thank you so much . I really appreciate

39:04

having this conversation . It's

39:07

very fun .

39:09

Yeah , we'll get back together and do it again . You

39:11

know , maybe the next wave

39:13

of Alzheimer's approval .

39:15

We'll get into the effect . That would

39:17

be very interesting . Break some of that , yeah , and we're

39:19

looking forward to the next approval , so

39:21

absolutely .

39:22

Great , great Well . Karen Harris , pleasure

39:25

to meet you . Thank you for coming on the show . I'm

39:27

Matt Pillar and you just listened to the Business of

39:29

Biotech , the weekly podcast dedicated

39:32

to the builders of biotech . We

39:34

drop a new episode with a new exec every

39:36

Monday morning and I'd like you to join

39:38

our community of subscribers at BioprocessOnline . com

39:42

Apple Podcasts , spotify , google

39:44

Play or anywhere you get your podcasts You

39:52

can also subscribe to our never spammy , always insightful monthly newsletter at bioprocessonline . com/bob

39:55

. If you have feedback or topic

39:58

and guest suggestions , hit me up on LinkedIn

40:00

and let's chat and , as always , thanks

40:02

for listening .