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Life Science Connect and we're here to help . Mission-driven

0:40

venture capital has quickly become an

0:42

innovative financial incubation

0:45

arena for biotech startups . And multiple

0:47

indications , but perhaps none

0:49

as bustling as cognitive disorders

0:52

. More than 55 million

0:54

people globally are afflicted with dementia

0:56

and that figure is expected to nearly

0:59

double over the next 20 years and

1:01

continue to at least double every 20

1:03

years thereafter the

1:06

next 20 years , and continue to at least double every 20 years thereafter . It's

1:08

a huge unmet medical need and the biotech industry is responding . Many projections

1:11

for the dementia therapeutics market soar

1:13

past $30 billion by 2030

1:15

. Dementia-specific

1:18

venture firms , with their deep understanding

1:20

of the science and markets , are proving a key

1:22

player in this landscape . I'm Matt Pillar . This is the Business of Biotech , and my

1:24

guest on today's show is a venture veteran . Understanding of the science and markets

1:26

are proving a key player in this landscape . I'm

1:29

Matt Pillar . This is the Business of Biotech , and my guest on today's show is a venture veteran who

1:31

, for the past several years , has been fully committed to the mission-driven

1:34

venture model in a space that's ripe

1:36

for biotech innovation . Dr

1:39

Jonathan Behr made his foray into

1:41

venture philanthropy as the first managing

1:43

director of the JDRF T1D

1:46

Fund . Astute listeners might recall

1:48

that Katie Elliott , the current managing

1:50

director at the JDRF T1D

1:52

Fund was my guest on episode

1:55

80 of the podcast , but

1:57

in 2019 , john became a partner

1:59

at the Dementia Discovery Fund

2:01

, the world's largest family of

2:03

specialized venture capital funds that

2:06

invest exclusively in companies developing

2:08

or enabling novel therapeutics

2:11

for dementia . John's venture

2:13

creation chops are solid . He

2:15

was previously a principal at Pure

2:17

Tech Ventures and vice president of

2:19

New Ventures for Enlight Biosciences

2:22

, and he's co-founded and served

2:24

on the boards of dozens of biotechs

2:27

. But John's not just another

2:29

VC in a nice jacket , with

2:31

an MIT PhD in biological

2:34

engineering to his credit . He's

2:36

advantaged by a pretty comprehensive

2:38

understanding of what's going on in the lab

2:40

, and I'm thrilled for the opportunity

2:43

to talk with him today . John

2:45

, welcome to the show . Thank you for the opportunity to talk with him today . John , welcome to the show

2:47

.

2:47

Thank you , my pleasure to speak with you today

2:49

.

2:50

The pleasure is all mine and I

2:52

want to get started with a little background

2:54

on John . As I mentioned , you've got some

2:57

pretty solid science chops

2:59

and I want to kind of

3:01

start there before we get into the DBS

3:04

story . You have a PhD

3:06

in biological engineering from MIT and

3:08

I want to kind of start there before we get into

3:10

the DBS story . You have a PhD in biological engineering from MIT . But if I look at

3:12

your sort of career trajectory , research seems like it was

3:15

sort of a brief stop on

3:17

that trajectory . So I'm curious about

3:19

the genesis of your interest in

3:21

the business side of biotech

3:24

.

3:24

Yeah , no , happy to explain , and

3:27

I think once you add together undergrad and graduate

3:29

research , the stuff certainly didn't feel so brief

3:31

. But

3:34

I think my entree

3:36

into venture capital was certainly serendipitous

3:39

, but I think I was always interested in translation

3:42

. So I had originally actually enrolled in

3:44

undergrad as a physics major , realized

3:47

nobody had discovered anything

3:49

really new in decades , if

3:51

not centuries , right in physics

3:53

and that the cutting edge of science a

3:56

lot of it was biotechnology , and

3:58

so got really excited about the

4:00

field and the space and the ability to opportunity

4:03

to learn new things , the feel

4:05

in the space and the ability to opportunity to learn new things . Enrolled at MIT

4:07

and the biological engineering PhD program , because

4:10

of the broader ecosystem

4:12

that I would be exposed to and the

4:14

knowledge that MIT

4:16

was an entrepreneurial institution . The

4:18

faculty members I was working with were

4:20

translationally minded and

4:23

there'd be an opportunity to have an impact beyond basic

4:25

research , and so I was

4:27

thinking about what my next steps would be and I had

4:29

the opportunity to consult to a

4:31

venture firm , consult to Pure Tech , on

4:33

due diligence for

4:35

various new projects while I was finishing

4:37

my PhD and really began

4:41

to understand the opportunity that presented to

4:44

have a portfolio of

4:46

projects and potential

4:49

investments and new companies that

4:51

I could be involved in . That

4:54

would be both intellectually exciting

4:56

because of the diversity , but also an opportunity

4:58

to have a broader

5:01

impact than if I had spent

5:04

my career focused on one individual

5:06

you know more academic

5:08

project . So so it was really exciting to me

5:10

from that perspective and transitioned

5:14

immediately when I you know , after I defended

5:16

my , my thesis , into a , into

5:18

a venture and venture creation career .

5:22

What did you have to do , from a learning

5:24

standpoint , at that point in your career

5:26

to embrace the venture

5:29

side of the business ?

5:32

So it's certainly very

5:34

different than just being a scientist , and I

5:37

had this self-awareness

5:39

to know that I was interested

5:41

in other translational paths

5:44

, and so while I was at MIT , I

5:51

did coursework at the Sloan School of Business and participated

5:53

in activities

5:56

outside the classroom that were business-related , and

5:58

I think when we're interviewing potential

6:01

new hires , the first real

6:04

questions we ask are around

6:06

the person's vocabulary

6:08

and commitment to

6:10

translation . We want to know if somebody is

6:12

running towards company creation , running

6:14

towards venture capital , running towards translation

6:17

, or whether they're running away from the bench . And

6:20

so having for

6:22

me personally , having understood

6:24

for some time that I was interested in

6:27

other paths and taking

6:30

the time to learn the fundamentals

6:33

right of corporate

6:35

finance or entrepreneurship

6:37

or the business or

6:39

law behind biotechnology , was

6:42

really important so that I had that foundation

6:45

to learn more quickly once I

6:47

got into the business

6:49

side . Full-time and venture is

6:51

, as I mentioned . I think really it's a

6:53

portfolio business , right , you

6:57

need to learn quickly and

7:00

gain knowledge in many different spaces

7:03

, right , and you're never going to be the world's

7:05

expert in any individual thing , but you need to be

7:07

able to work with the world's

7:09

experts in those spaces to not

7:12

only identify the best investments but then also

7:14

to be a good board

7:16

member and a good investor and to

7:18

be able to add

7:20

value and help guide those companies to

7:23

be successful add value and

7:25

help guide those companies to be successful

7:28

.

7:30

Yeah , that's an interesting perspective running toward venture or running away from the bench

7:32

and this is a total aside but I'm curious about your perspective on I've

7:35

had numbers of conversations with former

7:37

research experts who

7:39

work their way into various aspects

7:42

of the biotech business . If

7:44

someone is seeking

7:46

to run away from the bench , many of these conversations

7:49

kind of start there right , like I just

7:51

couldn't see myself spending another

7:53

week , month , year in

7:56

the lab . What are some

7:58

of the other alternatives that you might suggest

8:00

to folks who maybe aren't

8:03

running towards venture but feel the

8:05

need to run away from the batch ?

8:08

That's a really good question and I think

8:12

it's certainly

8:14

career stage dependent , right . I

8:16

think if you are very

8:19

early career , I

8:21

certainly think consulting

8:23

is still a good opportunity to

8:25

learn about biotechnology

8:28

more broadly , the business of biotech

8:30

and pharma . I

8:33

think most people don't even

8:35

understand what career opportunities

8:38

are out there if they've come through

8:40

an academic trajectory

8:43

right . Nobody's applying

8:46

to college when they're 16

8:48

, 17 , saying I want to be a venture capitalist , right

8:50

. Unless you happen to have somebody in the family you probably don't

8:53

even know that job exists , right ? I mean , you're

8:55

just a few years past saying I want to be a fireman . So

8:57

you know , I think consulting is certainly

8:59

an opportunity , but I think really practical

9:02

experience broadly and just

9:04

understanding what's out there is really important

9:07

. I think many universities

9:09

have very good biotechnology clubs , right

9:11

, or other

9:14

sort of extracurricular venues where

9:16

you can get exposure to what other jobs exist

9:18

, whether it be corporate

9:20

strategy or business

9:22

development or search and evaluation or venture

9:25

capital or , you know , public stock

9:27

analysis

9:29

or management consulting , right ? You

9:31

know there's so many jobs that it's

9:33

hard to understand unless you've had some

9:36

practical exposures . So I

9:38

think any practical exposure is really helpful

9:40

if you can do that , you know , as an intern or through

9:44

some other avenue .

9:46

Yeah , the other thing excuse

9:49

me about your history

9:51

so far that

9:53

strikes me is just how willingly

9:55

you've embraced so many different

9:57

modalities and therapeutic

9:59

areas . Areas

10:07

, for instance , you worked on imaging and ultrasound technologies . You worked on

10:09

small molecules , large molecules . I'll drop another name Vedantas

10:11

Bernat-Ollier has been a multiple

10:14

time guest on the show . You

10:16

were a co-founder

10:18

of Vedanta Biosciences

10:21

that Bernat heads up . You

10:23

mentioned earlier Lisa Deschamps at Aviano

10:26

Biosciences . This is another

10:28

one of your startups

10:31

. What do you think at this stage in your career

10:34

as a venture capitalist

10:36

, what do you consider the advantage

10:39

of that breadth of experience that

10:42

you've embraced ? Like

10:44

I said , as opposed to being

10:46

a specialist Because I've talked to plenty of people who are specialists

10:49

too they plug into a specific indication or

10:51

a specific therapeutic area and stay

10:53

there for a long , long time .

10:57

I think that's an excellent question and in

11:00

some ways the questions boil down

11:02

to what

11:04

does it take to make a good

11:06

investment ? Right , and

11:08

I think I am a specialist

11:10

. Right , just not in any of those

11:13

specific categories that you mentioned

11:15

. Right , I'm not a specialist by modality , or , you

11:17

know , I have at times been

11:19

a specialist in different therapeutic areas

11:22

, right , or different areas of science specialist

11:26

in different therapeutic areas , right , or different areas of science . Um , and , and I

11:28

think you know , most venture investors will rattle

11:30

off very similar criteria

11:32

of what they look for in a good company . Um

11:34

, one is certainly a

11:36

management team that you can believe in and

11:39

a solid development plan . Uh

11:41

, and I think that

11:43

takes repetition right and there's

11:45

some pattern recognition . And

11:48

it's not just the deals you do , it's the deals you see

11:50

and that you don't do , having

11:52

the longevity in a role to see

11:54

which of those succeed and fail and why . It's

11:57

also working with other really great people in

12:00

various roles that you can learn from . So

12:02

I do think I benefited to a certain extent

12:04

from having had the opportunity to

12:07

move between various

12:09

managers and

12:11

roles where I could learn from different people and learn

12:14

different experiences . But

12:17

at this point , certainly for SV

12:20

and for the Dementia Discovery Fund , I

12:22

do think that I have some specialization

12:24

in early stage investing right

12:27

Company creation , company building

12:29

, seed stage investing , series

12:31

A , investing younger , smaller

12:33

companies that still need to build

12:37

capabilities , build data packages

12:39

and have very different problems or

12:42

challenges , I should say , than companies

12:44

that at later stages of development have

12:47

specialty in several therapeutic areas but

12:49

, more importantly , perhaps behind that certain

12:51

areas of biology , certain mechanisms , some

12:54

of which overlap between type

12:56

1 diabetes and dementia , for example , but

13:15

at the end of the day I think , reflecting on the podcast you did with Katie or even the

13:17

podcast you did with ADDF I think many venture investors right what we look for is we're looking for problems to solve right . We're looking for ways you can make impact , because that's how you get rewarded

13:19

. At BDF , we

13:21

believe that the financial

13:24

returns correlate with impact , so

13:26

we're seeking to make impact first , and

13:30

so I

13:32

do think that being

13:35

able to identify those types of problems

13:37

and opportunities is

13:39

also something that is an important

13:42

skill when you're doing early

13:44

stage investing .

13:51

Yeah , I mentioned that you got your start . I'm assuming Was that your first foray into venture philanthropy

13:53

from 2016 to 2019 , I think when you

13:55

were at JDRF T1D Fund

13:57

.

13:59

Oh , it was my first foray into

14:02

venture philanthropy , but I use

14:04

that term more narrowly than

14:06

perhaps you do . So for

14:08

me , venture philanthropy implies

14:12

a charitable

14:16

purpose above other

14:19

purposes . Jdrf

14:21

and the T1D fund are

14:24

explicitly a not-for-profit . Adds

14:26

is a not-for-profit and the the models

14:28

there are to recycle

14:31

capital uh towards the

14:33

mission . I think an

14:35

important differentiator between that and the dementia

14:37

scary fund is the dementia scary fund is actually

14:39

a for-profit venture fund that's structured quite

14:42

similarly to any other um

14:44

non

14:47

uhprofit venture fund . That's structured quite similarly

14:49

to any other non-strategic venture fund . But the DDF was created for impact

14:52

and many of

14:54

our limited partners are focused on

14:56

impact , and so we have

14:59

two sets of criteria that

15:01

we need to satisfy . We need to satisfy

15:03

our impact criteria , but

15:06

then we also need to satisfy the financial

15:08

return criteria and we return

15:10

capital back to our limited partners

15:12

, who can choose to reinvest

15:15

in the DDF or reinvest in other mission-related

15:17

activities , or they can choose to reinvest

15:19

that capital elsewhere . So

15:21

we don't call ourselves

15:24

a venture philanthropy fund per

15:26

se . So

15:28

if you ask the question you asked me a little differently

15:30

, was the JDRF T1D fund my first exposure

15:33

to venture philanthropy ? I'd say yes , but it wasn't

15:35

my first exposure to

15:37

strategic investing or

15:39

impact focused investing . So

15:42

really , even going back to PureTech , you mentioned

15:44

Enlight . Biosciences is one of my experiences

15:47

. Enlight was an affiliated investment vehicle , an investment

15:49

vehicle created by PureTech , where all

15:51

the limited partners were pharmaceutical companies , so

15:54

Mark Pfizer , lilly , johnson Johnson

15:57

, abbott , astrazeneca , I

15:59

believe , were all limited partner equivalents

16:01

at that time , and the

16:03

mandate there was to invest in enabling

16:06

technologies that could support

16:08

drug discovery and development for

16:12

any or all of those limited partners who

16:14

wanted to enjoy

16:17

the benefits of the technologies that were developed by

16:19

that vehicle .

16:22

So my entire career .

16:23

I've been looking at more

16:25

narrowly focused investment theses and mandates

16:27

, where you're trying to accomplish a goal and solve

16:30

a specific problem or set of problems

16:32

, as opposed to

16:34

having the entire universe to

16:37

focus on .

16:39

Yeah , was Enlite focused on

16:41

a specific indication or a specific

16:44

sort of grouping of indications , or

16:46

was that more broad ?

16:47

So Enlite was really focused on technology spaces

16:49

, so enabling tools

16:52

and technologies . So new discovery

16:54

platforms , chemistry

16:56

platforms , drug delivery platforms

16:58

so worked on a

17:01

drug delivery company called

17:03

Intrega , which was trying to deliver

17:06

macromolecules and biologics orally

17:08

, which is a really exciting

17:10

company . Then

17:13

I moved to Partners Healthcare Innovation , which

17:16

is now Mass General Brigham Innovation neuroscience

17:21

on different clinical

17:25

groups in the hospitals that were generating

17:27

innovation in neuroscience and creating

17:30

companies there and focusing

17:32

on licensing and business development around

17:34

higher value opportunities . So again , a

17:36

constrained opportunity

17:40

set where we were looking to maximize

17:42

impact and benefit and then move to the T1D

17:44

fund and then SV in 2019

17:48

.

17:48

Okay , so what was it that

17:50

brought you to DDF ?

17:54

I think , first and foremost always

17:56

an interest in the problem . So I

17:59

think many or most people have

18:02

a personal connection to a

18:04

dementia and for the Dementia Discovery . Fund

18:06

. That means for us

18:08

NEH-related neurodegenerative

18:11

disease with cognitive symptom domains , so

18:13

that includes Alzheimer's and PSP . That

18:16

includes Lewy body dementia and

18:18

Parkinson's disease . That includes frontotemporal

18:21

dementia and ALS . It

18:23

includes Huntington's disease dementia , so it is

18:25

broader than Alzheimer's disease , although we do

18:27

have a focus on Alzheimer's

18:29

disease . So

18:32

it started with an interest in that problem and then a recognition

18:34

that DDF was the first

18:37

largest and

18:39

leading fund family focused

18:41

on dementia and largest by capital

18:43

committed . As

18:45

I've been interested in my entire career and impact

18:48

and translation and making

18:50

a difference , I didn't think there was another

18:53

opportunity like it , just given

18:55

the scale and scope and potential of DDS

18:57

. And then , finally

18:59

, I was

19:02

really excited to join SVA as a management company

19:04

. I was really excited to join SVA as a management

19:06

company . So SVA is a management company with a 30

19:08

year history to celebrate

19:10

his 30th anniversary last summer . It's

19:12

five fun families and a really

19:15

excellent group of people

19:17

to work with and learn from and tackle

19:19

this problem . So many reasons

19:22

to join DDF .

19:23

Yeah , yeah , yeah . I want

19:25

to get a sense for how

19:28

DDF has evolved in your

19:30

time there . So can you sort of give

19:33

us I don't know paint a picture

19:35

of what you walked into and maybe juxtapose

19:38

that with the DDF of

19:40

today ? Not that I necessarily want to

19:42

set you up to give yourself all sorts of credit

19:44

for growth of today , not that I necessarily want to set you up

19:46

to give yourself all sorts of credits for growth . I'm just curious about sort of

19:48

where we've been and where we are now .

19:57

I think that the DDF story is a great one because it's also

19:59

a story that demonstrates a lot of progress and optimism , and so we'll start

20:02

well before I joined and then contrast that with

20:04

today . So ddf was originally

20:06

conceived and then created all the way back in 2015

20:09

, and it came

20:12

out of a g8 meeting focused

20:14

on the dementia health crisis , and

20:17

this really is a global health crisis . It's been

20:19

recognized as such by the who

20:21

and by the cdc because of the demographic

20:25

changes , the otherwise healthy aging population

20:28

and the fact that we don't have disease-modifying drugs

20:30

. So you have this rapidly

20:33

increasing number of people who

20:35

suffer from dementias , and it's obviously

20:38

a

20:41

human tragedy , but also a huge

20:43

burden on the healthcare system . And

20:47

so there was actually a Harvard

20:49

Business Review case study written on the formation

20:51

of DDF , but fundamentally , this

20:54

need was recognized . There was

20:56

a belief that this

20:58

was an area that was underinvested

21:01

historically by not

21:03

just venture capitalists but also by pharmaceutical

21:05

companies , and that all the capital that was in

21:08

the system was being focused on a few

21:10

narrow approaches

21:12

to try to solve the Alzheimer's

21:14

disease and other dementia problems . And

21:17

so DDF was created

21:19

as a fund , and a first amount of capital was

21:21

committed by strategic limited partners

21:24

before a manager was even selected

21:26

to manage the fund , and then

21:28

there was a solicitation

21:31

process and SV was chosen . So

21:34

, really , dds started as an idea

21:36

, a concept , a tool to solve a problem

21:38

. Sv then tripled the size of the fund . There was

21:40

a final close in 2018, . Sv then tripled the size of the fund . There

21:43

was a final close in 2018 and then had to continue

21:45

to build a bespoke investment team

21:47

, continue

21:49

to develop and refine the investment strategy

21:51

, build a portfolio of companies that were

21:53

exciting and then begin to return capital to

21:55

investors . And so that puts us where we are today

21:58

, where we're investing out of our second

22:00

fund . We've had successful exits

22:02

. We have a team of

22:04

incredible world-class investors

22:07

scientist investors

22:09

, venture partners who

22:11

bring experience from former

22:15

heads of R&D or neuroscience

22:17

R&D at major pharma companies to

22:19

entrepreneurs and

22:22

other

22:24

experts , and we

22:27

think we have the momentum and

22:29

the foundation that continue to

22:31

move forward and invest

22:34

in companies that are developing transformational medicines for

22:37

dementia and Alzheimer's

22:42

disease and and and the other medical

22:45

needs that I already referenced , while

22:47

returning capital to our investors to

22:49

continue to redeploy .

22:51

Yeah , give

22:54

me some color on how the refinement

22:56

exercise has shaped the

22:59

investment strategy at DDF

23:01

. I could ask specifics

23:03

, but I'll start with the high-level question

23:05

what are you looking for ?

23:06

Yeah , Well

23:09

, our strategy is science

23:11

first . So where we always

23:13

start is looking for therapeutic

23:17

hypotheses that we believe

23:19

will be transformational if we

23:22

can execute , enabling

23:36

data set , the ability to replicate

23:38

the work , the ability to drug

23:40

the target , and

23:44

then again layering on the other criteria that all venture

23:46

capitalists should be looking for , which are more

23:48

related to execution Can you actually deliver the solution based

23:50

on that science ? But fundamentally , we're science

23:52

first . We think that if we can develop

23:55

a drug , it will have an

23:58

investment return . I

24:00

think , in addition to the science , we're

24:03

building on the

24:06

expertise of a specialty fund

24:08

. So the advantage of being focused is

24:10

that we can build

24:13

relationships , internal

24:15

expertise , expertise

24:18

, knowledge bases that are specifically

24:21

relevant so that we can not only find the

24:24

best opportunities but also actively manage

24:26

them to give them the highest likelihood of success

24:28

, success

24:37

. So , starting with the science , deploying this specific expertise that we can

24:39

develop as a specialty fund . I think a third pillar of our

24:41

strategy is precision medicine , and that's

24:44

something that has been important across

24:46

all of the SV managed life science

24:48

funds , not just the dementia fund . So

24:51

we need to be able to find the right patients and

24:54

demonstrate the effects

24:56

of drugs more quickly than

24:58

waiting for symptomatic endpoints

25:00

, and that's something that I think the field

25:03

learned from other areas but

25:05

is even more important in CNS

25:08

disorders , where historically

25:10

, many failures were based on the fact that the wrong

25:12

patients were being treated and you couldn't

25:14

get an early read on efficacy . So

25:17

I think precision medicine is specifically

25:20

important for investing

25:22

in dementia . And then

25:24

the last two aspects

25:26

, I think , of our strategy that are important

25:29

are company creation and early investment

25:31

. Important

25:35

are company creation and early investment . That's important as an impact investor because it's

25:37

the most direct evidence of additionality

25:40

. If not for

25:42

the SV team , the DDF

25:44

team , these companies would not exist , these approaches

25:46

would not exist . It also ensures that

25:49

we have really quality deal flow

25:51

and opportunities to deploy capital , because

25:53

we're creating them ourselves and we have the

25:56

proprietary economics

25:58

and control that comes along

26:00

with creating those companies ourselves . And

26:03

then , finally , diversification . So

26:06

that word , I think , might

26:08

be surprising if we're talking about a specialty fund

26:10

, but we think it's even more important when you're talking

26:12

about a specialty fund . So

26:14

we intentionally think about how

26:16

we can diversify across the

26:18

portfolio , invest in multiple mechanisms

26:21

, invest in multiple dementias , invest in multiple

26:23

modalities , but

26:25

also how we can have each company be internally

26:27

diversified so that those

26:29

companies don't sink or swim

26:32

on a single event or

26:34

, more importantly , on a single event that might be out of their

26:37

control in the macroeconomic

26:39

or macro scientific environment .

26:41

Yeah , I

26:43

want to get back to the scientific

26:46

foundation and get a sense for

26:48

how DDF

26:50

assesses the science

26:52

behind the companies that it gets

26:54

behind . I mean , as I mentioned , I mean you've got

26:56

some pretty good experience academically

26:59

and in research there , but

27:01

what does the actual mechanism look like

27:04

when it comes time to assess a

27:06

potential company's scientific

27:08

foundation ?

27:11

I think we have many tools in our toolbox

27:13

to do that . So certainly the first

27:15

is the full-time team and

27:17

the full-time investment team . As I mentioned , we're made

27:20

up of scientist investors . So each

27:23

of the partners focused on

27:25

DDF and each of the non-partner

27:28

investment team members have a PhD

27:30

, so we

27:32

can make a first triage

27:35

of opportunities and

27:37

select those that we think are worth investing

27:39

. More human resources to continue

27:41

to evaluate , and beyond

27:43

that , we have many other tools

27:45

. So I mentioned the venture partners and advisors . So

27:47

, internal to DDF , we signed

27:50

a group of venture partners

27:52

and advisors , scientific advisors who

27:55

we think represent not

27:57

only world-class expertise

27:59

but a breadth of expertise . So

28:01

I mentioned some of the expertise . But , for

28:04

example , tetsu Maruyama , who's a venture partner

28:06

for DDF , was

28:08

the former executive director

28:10

of the ADDI , also

28:13

former head of drug discovery at Takeda . We

28:16

have Jim Summers , who is the former vice

28:18

president and head of global neuroscience research

28:20

at Appy . We have

28:22

Wynn Hughes , who is former VP and head

28:24

of CNS growth strategy at IQVIA

28:26

. Or Tim Harris , who

28:28

is the former EVP and

28:32

RD at BioPherative or SVP

28:34

at Precision Medicine at Biogen , and these are just

28:36

some of the venture partners that we call on

28:38

and who play a role in all of our

28:40

deal teams and all of our company creation efforts

28:43

. And then , outside

28:46

of the , we're in the next sort of concentric

28:48

circle of expertise

28:50

that we can draw upon in the next stage in our

28:52

process . We have the

28:54

expertise we can draw upon from our various partners

28:56

, and so those partners include our limited

28:59

partners , and we have a standing scientific advisory

29:01

board that includes

29:03

representatives from many of our strategic

29:05

limited partners but also

29:07

our non-limited partners , so our foundation partners

29:10

. So we work very closely with many

29:12

of the foundations in the space , whether

29:14

they be research foundations or patient

29:16

advocacy foundations , like

29:18

the Alzheimer's Drug Discovery Foundation

29:21

, adds or Art

29:23

Incidents UK , or Michael J Fox or

29:26

Alzheimer's Research UK , target , als

29:28

, just to name a few .

29:30

Yeah , yeah

29:32

, company creation

29:34

comes with I'm assuming

29:36

it comes with a set of risks

29:39

and challenges that perhaps investing

29:41

in a clinical stage company that has some data

29:44

to show for itself doesn't

29:46

right . What

29:48

do you consider the most challenging

29:51

and or risky aspect

29:54

of company creation ? I

29:57

don't want to answer for you , but the first thing that pops

30:00

into my head is staffing

30:03

talent . Right , you've got a translatable

30:06

idea , but maybe you don't have

30:08

the infrastructure from a human resources perspective

30:10

right off the bat to

30:13

make that move . So

30:16

that would be one . But you tell me what

30:18

is the riskiest or

30:20

most challenging aspect

30:22

of that model ?

30:24

Well , the unsatisfying answer is it depends

30:26

. But I think that in

30:29

reality there's

30:31

multiple failure modes and you

30:33

can't get any of them wrong . So

30:36

no pressure . I

30:39

think some To be controversial

30:41

. I think certainly you'll

30:44

hear venture capitalists at panels saying

30:46

management is the most important

30:48

and the most critical , because a good management

30:50

team can pivot away

30:53

from a failing technology or hypothesis

30:55

to a new opportunity

30:57

, right and potentially be successful

31:00

, and I think there's validity to that . I also

31:02

think what you said is you can't

31:04

succeed without good

31:06

talent , whether that be academic founders

31:08

, entrepreneurs or people you bring to the

31:10

table and part of our company creation model , our

31:18

venture partners . Every company that we've created or built as part of DDF has had a venture

31:20

partner , a DDF venture partner affiliated with that company

31:22

creation or build effort , either as a founder

31:25

or as an initial member

31:27

of the management team . So

31:30

we do bring expertise

31:32

to bear when we're doing a company build . So

31:35

I do agree with that . But

31:39

you do need to have again , especially for

31:41

a science first fund , you do need to have a solid scientific

31:44

hypothesis to build upon and

31:46

that could turn out again to fail

31:48

later and you might be able to pivot . But we're

31:51

not going to launch a company unless

31:53

we

31:55

can find both . We

31:57

do have our own processes

32:00

for building companies . We do

32:02

, for example , have meetings that

32:04

SV calls prepared minds meetings , which are

32:06

analogous to scientific advisory

32:09

board meetings before you've even started the company

32:11

, where we bring in potential

32:13

founders , potential co-founders , advisors

32:16

and brainstorm around

32:18

key opportunities and issues in

32:20

advance , often , of creating a company

32:23

. So

32:25

sometimes the people can

32:28

come first . But I think

32:30

all of these challenges are important and I wouldn't

32:32

say one is harder than the others .

32:35

Yeah , you mentioned

32:37

precision medicine a

32:39

little bit earlier and , that being a focus

32:41

of SV , do

32:44

you hold any other sort

32:47

of modality biases

32:49

or say you know favorites

32:51

in terms of modalities ? This is a

32:54

space where you know we've seen what we'll

32:56

get into this here in a minute , which we've seen a

32:58

little bit of tumult , for lack of a better word

33:00

. Uh , in terms of approvals even

33:03

, yeah , yeah

33:05

, give it , given the way that that's shaping up , that

33:08

has as ddf sort of ascribed

33:10

to any specific modalities

33:13

or mechanisms .

33:18

We want diversification

33:20

. We also want to choose

33:22

the right tool to

33:24

solve the right problem . So

33:27

we're very open-minded and

33:29

have invested in many different modalities

33:31

. So within our portfolio we have

33:33

small molecules , we have

33:35

antibodies , we have

33:38

antisensory

33:40

nucleotides , we have a gene

33:42

therapy company . We don't yet

33:44

have a cell therapy company within the DDF

33:47

portfolio . There certainly have been cell therapy companies

33:49

within the broader SV biotech portfolio . At

33:54

the same time , I think patients

33:57

have preferences , right , and

33:59

certain indications and certain

34:01

unmet

34:03

medical needs have best fits

34:06

. So in

34:08

many or most cases , you know

34:10

, patients prefer to take a tablet and

34:12

an injection right , and

34:16

the industry would prefer

34:18

a scalable small

34:21

molecule manufacturing

34:23

to a cell therapy

34:25

manufacturing . So I do think that

34:27

there's certain

34:29

types of modalities that are an

34:32

easier sell . But

34:39

at the same time , where

34:41

we're starting with is that I might need the right solution and then

34:43

the right tool to enable that solution

34:45

.

34:45

Yeah , yeah , okay . So you've got , you

34:47

know , a promising prospect

34:49

with good science , and maybe you know

34:52

a good scientific founder who's willing

34:54

to move the needle

34:57

. And you decide

34:59

to invest , you decide to go

35:01

into creation mode . What does that

35:03

look like in practice ? Are there

35:05

guardrails around what's provided

35:08

and when and how ? Give

35:10

us a sense for how the actual investment

35:13

vehicle works .

35:15

So you mean what's provided in terms of capital

35:17

or resources ? Maybe you could

35:19

refine the question .

35:21

Well , I was thinking capital when

35:23

I asked the question . But if there's more to the

35:25

story , fill in the blank

35:27

.

35:29

Yeah , so when we think

35:31

about company creation , there's multiple stages

35:33

, right . So there is a discovery stage

35:35

where we try to again identify

35:38

that problem and solution mix . There's

35:42

the investment stage , right , where we build the thesis

35:44

and we bring in the management team and we

35:46

put in the capital . And

36:16

then there's that building and growth stage where we're actively managing these investments , we're syndicating

36:18

them , bringing in additional capital , helping the into some set of cookie cutter criteria

36:20

. But what we're looking for is an opportunity to create value quickly . As

36:22

you mentioned . Certainly company creation is

36:24

riskier

36:27

than investing in later stage opportunities , certainly

36:30

takes a lot more time and effort than evaluating

36:32

an existing company for a potential

36:34

investment , and so we need to

36:37

ensure that that

36:39

additional risk and effort is balanced

36:42

by the reward on both the

36:44

impact side as well as the investment side . So

36:47

we need that opportunity to say we

36:49

can build value . Here are some explicit

36:51

milestones , whether

36:53

they be technology development , drug

36:57

R&D milestones , but here are some specific

36:59

milestones that we can hit with our initial

37:01

investment and efforts that

37:03

are going to validate the investment thesis attract

37:05

that additional capital and attract that additional capital

37:08

at a valuation that reflects

37:10

the contributions

37:12

of that founding team and their founding capital

37:14

.

37:17

Do you typically find commonly find

37:20

the company in hunt

37:22

mode , or are you sifting through

37:24

RFPs on a daily

37:26

basis and picking and choosing

37:29

what's the acquisition approach

37:31

?

37:37

and choosing what's the acquisition

37:39

approach . I think we have multiple sources of new

37:41

deals and I think when I'm talking to entrepreneurs or

37:44

executives at early

37:46

stage companies , certainly

37:48

we get unsolicited inbound

37:51

opportunities . We

37:56

don't put out calls for proposal , right , but we do get unsolicited opportunities At

37:58

the other end of the spectrum . You use the

38:00

word hunt . I mean there's

38:02

company creation efforts

38:04

that we undertake because we've recognized

38:07

an opportunity or need , right

38:09

, and I mentioned those prepared minds as a mechanism

38:11

. But we'll do landscaping analyses where we

38:13

say here's an area of emerging science that we

38:15

see overlapping with commercial

38:18

white space , an unmet

38:20

medical need , and let's

38:23

expend

38:26

our energies to try to see if there's something here

38:28

and a solution

38:30

to create . So we have those two ends of the

38:32

spectrum . And then

38:34

everything in between , right From

38:36

the sort of referred opportunities

38:39

, right that come from trusted partners , you

38:42

know , to companies that are in the process

38:45

of being built right Already by

38:47

an entrepreneur that we're

38:50

introduced to or maybe we've already known where

38:52

we can add additional value and

38:55

so we're willing to lean in and

38:57

share risk and invest early or

38:59

invest alone and

39:01

put in that sweat equity ourselves as

39:03

well for those opportunities

39:05

that we think are really exciting and

39:07

, again , that could be transformational

39:09

, and I don't use that word

39:11

lightly .

39:22

The white space is broad right now . There's a lot of white space right in this family . Cognitive

39:24

disorders are , as we ascertained , a giant unmet medical need and even where

39:26

we've seen approvals , we've

39:28

seen lackluster results

39:31

, lackluster embrace . Like

39:34

I said , it's been sort of a roller coaster ride in

39:36

recent years . So

39:39

I'm curious about how sort of

39:42

that roller coaster ride affects

39:44

day-to-day at DDF

39:46

. How is that ? You know recent approvals

39:48

, failures , public and patient perceptions

39:51

? How do those inform

39:54

what DDF is doing and where it goes

39:56

next ?

40:02

So I think

40:06

that these sort of macro

40:08

events are critical

40:12

when you're looking at the medium to long-term

40:14

trajectory of the

40:17

field . So

40:26

when ddf was first created in 2015 , you know there hadn't ever

40:29

been a disease modifying drug approved for alzheimer's disease . Even the symptomatic

40:31

drugs that were in use were really

40:34

, for all kinds of purposes , decades old . You

40:38

know , we look , we did a you know , an internal

40:40

analysis and found

40:43

that , if you're only looking

40:45

at oncology drugs since

40:47

the year 2000 , there

40:49

were well over 500 new

40:51

oncology drugs approved by the FDA . At

40:54

the same time , there had only ever

40:56

been nine Alzheimer's drugs approved and

40:59

the first two disease-modifying drugs

41:01

were just approved in the last several years . So

41:04

you had this landscape

41:09

where there was pessimism

41:13

, perhaps by many , about the

41:15

ability to successfully develop drugs

41:18

for Alzheimer's disease or other dementias . And

41:20

then you have these transformational events like the

41:23

first approval of anti-amyloid

41:26

drugs and Alzheimer's disease-modifying

41:28

drugs . Or

41:30

you ask questions about modalities , the first

41:32

approval of antisensorygamyliotide

41:36

drugs in the CNS right for

41:38

SMA , or the first gene therapies for

41:40

CNS

41:42

diseases , which give

41:44

either

41:46

the pharmaceutical companies or the investors

41:49

or other players in the ecosystem

41:51

confidence that we understand these diseases

41:53

well enough to deliver drugs . We understand clinical development

41:56

well enough to develop drugs and

41:58

that the regulatory agencies have established

42:00

pathways to get these drugs

42:02

approved , sometimes more lenient pathways

42:05

than were expected , as was the case

42:07

with anti-amyloid

42:09

drugs or some of the ALS approvals

42:11

so we

42:13

certainly can

42:15

react to that . At the same time , venture

42:19

is a long life cycle business . Biotechnology

42:22

companies are long life

42:24

cycle businesses . You know it takes many years

42:26

to develop a drug . So we need to balance

42:28

these

42:31

individual events which

42:33

might be catalytic

42:35

for investment interest , the ability to raise follow-up , financing

42:37

, public market interests

42:39

you know , the ability to take a company public or

42:42

not're not going to access that capital . We need to balance

42:44

these macro factors with these

42:47

longer-term considerations

42:50

like what are the patient needs

42:52

, what other

42:54

drugs are in the pipeline , even if

42:56

they're not in late

42:58

stage clinical trials or approved , so

43:01

we can ensure that we're

43:03

creating a longitudinal plan for each of

43:05

these companies , each of these investments that we believe

43:07

can be individually successful . And

43:10

we think there's a lot of room again because the white space

43:12

we talked about for

43:15

many companies to be successful and from an impact

43:17

perspective , we wish every company is going to be successful

43:19

, not just the ones that we're investing in

43:21

as well .

43:22

Yeah , yeah , you contrast

43:25

this CNS disorder space

43:27

with oncology and you referenced you

43:29

know that's the slew of approvals in

43:31

oncology versus the very few in CNS

43:33

disorders and it occurs

43:36

to me that

43:38

where there have been 500 approvals it's

43:41

not hard to extrapolate from that data

43:43

some regulatory strategy

43:45

, because those regulatory pathways you

43:48

could assume that there are some

43:51

well-established trends , right

43:54

, you mentioned that there's been

43:56

progress in the regulatory pathway aspect

43:59

of CNS disorder . I

44:04

guess color

44:06

that in a little bit like where , where do

44:08

you , yeah , where do , where do you see that

44:10

that sort of pathway revealing itself

44:13

? Um , and how how

44:16

might that play into not just EDF strategy

44:19

but but any CNS disorder

44:21

company's regulatory strategy

44:23

?

44:23

Yeah , so I'll

44:26

take those two questions separately . So I

44:29

think the

44:31

generic assumption

44:35

, the generic approval

44:37

pathway at the FDA had always

44:39

been two phase three

44:41

, two successful phase three studies . Right

44:44

, you had to twice

44:46

prove in a clinical

44:49

outcome focused study

44:51

that you could have a meaningful

44:53

benefit with the appropriate safety profile

44:56

. And where

45:00

we have specific examples

45:02

in dementias where drugs

45:05

have gotten approved with very

45:07

different data packages than that

45:09

historical norm . I

45:13

can start the example certainly with aducanumab

45:16

, which was the first anti-amyloid drug

45:18

that was approved . That was really one

45:20

successful phase three drug

45:25

that was approved . That was really one successful phase three . And

45:27

then a second pivotal study that was more questionable , both

45:30

in terms of how it was concluded and

45:32

what the resulting data package was . Or

45:35

going to the Emlex drug that was recently

45:37

withdrawn , where it was an accelerated

45:39

approval based on a single study . And

45:42

so these examples

45:44

were showing that at

45:47

least in the United States , the FDA

45:49

was recognizing the unmet

45:51

medical need , the burden

45:53

on patients , and was willing

45:56

to consider

45:58

alternative beta

46:01

packages right when they were balancing

46:03

the patient

46:05

benefit and the potential risk . And

46:08

I think that has been very encouraging

46:11

for the field because

46:13

the time and cost

46:16

to get a drug to the market

46:18

that works is

46:21

going to be substantially less than it

46:23

would have been if you were assuming the

46:25

original regulatory framework . Now

46:28

the FDA is continually updating their guidances

46:30

. We can't be sure exactly what

46:32

the path is going to be in the future , and it's certainly

46:34

going to be drug

46:36

dependent mechanism dependent disease

46:39

dependent

46:41

was just . These were individually

46:44

very encouraging events , I think , for companies

46:47

and investors in the space , yeah

46:49

, and we hope that many of our companies

46:51

will get to take advantage of accelerated

46:53

pathways , either in the us or abroad , to get

46:56

drugs to patients quicker and

46:59

and accelerate that impact .

47:03

Very good . What

47:09

else sort of informs or influences DDF's strategy that our listeners who might be interested

47:11

in ? You know we've got plenty of folks who

47:13

are coming out of academia with great ideas

47:15

. What should they know about ? What

47:17

influences DDF's strategy

47:20

?

47:22

Yeah , I mean again , I think we're trying

47:24

to find the best

47:27

opportunities to impact disease and so

47:30

I think , if you're talking

47:32

about academic scientists

47:34

who are transitioning , certainly

47:38

I think we're looking . I

47:40

personally always ask the question , why

47:42

now ? And that sometimes

47:45

translates to the academics as to

47:47

what's the fundamental new data

47:51

point , understanding

47:53

, insight that

47:55

suggests that this

47:58

new drug target or this new approach is going

48:00

to be

48:02

the approach to solve this problem

48:04

that's been facing us for so

48:06

long and

48:08

to start a

48:11

new company or to make an investment in

48:13

something at a very early stage . I've

48:15

used that word transformational so much I'm probably

48:17

wearing it out , but the

48:21

approach fundamentally needs to be differentiated

48:23

in some way from what came before it , right

48:26

? So we have a company called

48:29

Curalis which is focused on ALS

48:31

. It's developing a small

48:34

molecule but also antisensory nucleotides

48:36

and fundamentally is focused on loss

48:39

of function of TDB43 . And

48:42

they were able to develop some fundamental

48:44

insights around als

48:46

biology by using human

48:49

induced chloropotent stem cells . And

48:52

the insight came from the

48:54

unsurprising realization that biology

48:57

was fundamentally different in human cells than

48:59

in rodent cells , right , or in all

49:01

these pre-clinical models that had been used

49:03

historically to study ALS . And

49:06

we could point at experiments and data and

49:08

say this is the reason why this drug target was

49:10

missed and why we should believe

49:12

in it now and advance

49:15

a new drug . And so I think having

49:17

stories like that , which

49:20

relates these new approaches

49:22

to human biology and

49:24

relates new approaches to fundamental

49:26

new insights , right

49:29

is really helpful in

49:31

establishing

49:33

a case for why . Now , sometimes

49:35

it's not biology , sometimes it's a new tool , right

49:38

, you know , crispr , gene editing is invented

49:40

and all of a sudden there's biology that

49:42

couldn't have been accessed in a translational way

49:44

before , that you could now access . Or again

49:46

, maybe we'd go back to example I used previously

49:48

First antisense oligonucleotides

49:50

approved , and now there's new drug targets

49:52

that you can get at in a lower

49:55

risk way that you couldn't have before . So the insight

49:57

is not always , or the reason the time is now

49:59

is not always , some new biology

50:01

, but we really need to understand

50:04

what's

50:06

creating this novelty and

50:08

this opportunity to make

50:11

a new investor .

50:14

Looking ahead at the landscape , looking

50:16

at what's in front of DDF

50:19

not just DDF , but the entire CNS

50:21

disorder space . What are you maybe

50:24

most excited about that

50:26

you can share publicly ?

50:30

Well , you know , that's a good question . I think we

50:33

have many companies in our portfolio

50:35

that we're excited about , and

50:37

I think we can talk about certain

50:40

themes right . We

50:47

can talk about certain themes right . Certainly , I think that there is a lot of new biology

50:49

that we're understanding with neurodegenerative diseases . That's enabling us to go

50:52

after new targets , and

50:54

they might fit under some broader

50:56

classifications that people have talked about

50:58

in the past , like neuroinflammation

51:01

, but the individual

51:03

approaches are distinct from some

51:07

of the more canonical targets that have been

51:10

in

51:12

the drug development landscape for decades

51:14

, and so we have a company , for example , called

51:16

Arrheni Biosciences that

51:18

is entering the clinic with a new antibody

51:21

to block neuroinflammation . But

51:24

they're not targeting a cell surface

51:27

protein or a cytokine

51:29

. What they're targeting is a cryptic

51:31

epitope of fibrin that is driving

51:34

inflammation . So when there's blood-brain

51:36

barrier disruption in

51:39

these neurodegenerative diseases , no-transcript

51:54

, and

52:05

so by blocking that with an antibody , we can have therapeutic effects in multiple disease models and

52:08

neuroinflammation , as well as in eye disease . So it's a new way to get at a mechanism that we know

52:10

is important , but this is an approach that hasn't been tried before . We

52:12

have another company called Nitrace

52:14

Therapeutics that discovered an entirely

52:16

new class of enzymes . So they

52:19

discovered a class of enzymes that they called

52:21

nitraces , which are analogous

52:23

to kinases , but instead of attaching a phosphate

52:25

group to proteins , they site-specifically attached

52:27

a nitrate group . This is an entire white

52:30

space area of biology that had never

52:32

been studied before . This modification

52:34

had been discovered in the past

52:36

, but it was thought to be just driven by oxidative

52:38

stress at random . So nitrace

52:41

now is a a development candidate and

52:43

it's advancing into the clinic to treat Parkinson's disease

52:45

. But there's a potential for an entire

52:47

pipeline behind it , not just in neurodegenerative disease

52:50

but in other diseases , as the biology behind

52:52

these nitrate enzymes is further understood

52:54

. So I think there's a lot of transformational

52:56

opportunities . I mean , I could spend another hour just

52:58

going through our entire portfolio because we're excited about

53:01

each opportunity , but I

53:04

think and I think going beyond that , just to reflect

53:06

on something that was mentioned in your addf podcast

53:09

, I think I think we're also interested

53:11

in continuing to look at the

53:13

drivers of disease and

53:15

how they relate to age . So

53:18

certainly the largest

53:20

non-genetic risk factor right , uh

53:22

? Or the largest risk factor for sporadic

53:24

alzheimer's disease , for example , is age . So

53:27

you know , we we need to

53:30

continue to understand various

53:32

mechanisms , whether it be mitochondrial biology

53:34

, metabolism or inflammation

53:36

or other age related mechanisms

53:38

that we can continue to to target

53:40

, because they're not just usually relevant for one

53:43

disease , they're relevant for many diseases .

53:47

That increases the opportunity for impact as well . Yeah

53:49

, very good . Well

53:53

, you know , you mentioned that you could talk for another hour , and it occurred to me a few minutes

53:55

ago that I was going to ask you for access

53:57

to some of the founders of your

53:59

portfolio companies to be guests on

54:01

the Business of Biotech . We can continue the conversation

54:03

that way , perhaps , of course . Yeah

54:06

. Yeah , we'll talk about that offline

54:08

, maybe come up with a roster of DDF

54:10

portfolio companies that might be interested in coming

54:12

on the show and sharing their stories

54:15

. But I really

54:17

appreciate the time you spent with us now and

54:19

if you need another hour , we'll do a part two about

54:22

that , yeah .

54:28

Well , if your audience is interested , I'm always happy to

54:30

share more about what we're doing , Because

54:34

again I think I'm at need is unparalleled . That creates the opportunity for impact and returns

54:37

, and we certainly believe that a venture

54:39

model is the right model

54:41

to accomplish both . So maybe

54:44

the part two is in a few years we'll talk about a few more

54:46

drug approvals . That would be very exciting .

54:49

Yeah , it certainly would . When there

54:51

are those approvals , you'll be the first guy I call

54:53

for perspective , so we'll definitely get a part

54:55

two on the books . Great

54:57

, jonathan , thanks for joining me

54:59

. Super insightful conversation . You've been a terrific

55:01

guest and I do look forward to having you back . Thank

55:04

you . So

55:07

that's the Dementia Discovery Fund's Dr

55:09

Jonathan Behr . I'm Matt Pillar and this

55:11

is the Business of Biotech . We're produced by

55:13

Life Science Connect , available to hear anywhere

55:15

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55:18

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55:20

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55:22

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55:25

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55:28

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55:30

meantime . Thanks for listening .