The Venture Model Broke. Where Biotech Money Goes Now | Ex-Teva CEO Jeremy Levin & Sara Jane Demy

I don't have very little to add beyond that other than simply to say that it's a disgrace. We ask people to put their lives on the line. We send them into battle. And then we don't feed and care for them? This is what the Russians do. This is what an undemocratic nation would do. It treats its soldiers as disposable instead of the extraordinary heroes they are. Many of us are military families. Many of us have served. And it is simply disgraceful that whatever administration is in power should not look after them in the way that's appropriate. I'll go one step further. This is the way to defeat an army. An army, as we learned over many, many years, is effectively an instrument of the government of the nation. But it depends on training, depends on supplies, and it also fundamentally depends on the health and well-being of the soldiers. You don't have that, you'll have more deaths and more disability and loss of morale than anything else.

Well, it's a tough question. Wars have always polluted the environment, always. It doesn't matter whether the First World War, the Second World War, or for that matter the various wars that have gone around the world. And this debacle in Iran, instead of delivering a knockout blow, has empowered a government to suppress its people. And I suspect more people will die at their hand than we can even begin to imagine. And as we watch the pollution, that's one thing. We saw this in Iraq. We saw many soldiers harmed from that. This is not a biotic issue. This is actually far more substantive. And from my perspective, we should look very carefully at either defeating or moving away very quickly because in the absence of that, this pollution will go on. The supply chain issues are critical. Remember that the Straits of Hormuz are not just a passageway for oil. They're a passageway for naphtha, for the basics of plastics, for the basics of fertilizer, for many different things. You can divert some of that, but not all of that through pipelines to the east and to the west. But with regard to the plastics and the formulations thereof, there is no question. There's also a roll-on effect, and that is food. You need to plant food with fertilizer. As you increase the price of fertilizer, so the yields go down, and in fact, fertilizers become something of a luxury that some farmers just won't take. So, the end result is you're not just putting pharmaceutical supply lines at risk, which is a small but important part. You're putting food security at risk. And an ill-conceived notion of what victory is and can be and should be is one which we really need to deal with because once we deal with that, we'll understand what we're trying to accomplish.

Sir, it's above my pay grade. I wasn't in the room when the consideration was made. However, the American military, if given the command, could easily deal a complete knockout blow to the nation should they wish to do that. But remember, Clausewitz always said, 'War is an extension of politics.' So, I don't know the politics behind this. I don't care to know it. I do know one thing, that the direction is completely favorable for the Iranians right now. There is no doubt they will emerge a more vicious, more centralized, and more in control regime than they did in the past. Whatever went into the thinking about whether one could or couldn't defeat them, this is no victory for America. To the contrary. And if the reports are true today that Iran is getting access to a toll booth-like approach on Hormuz, then not only have they not lost, they've gained immensely. And to my mind, it doesn't matter whether you're left, right, center, partisan, for America and the world, that is super bad news. It means that you have a fascist, racist, bigoted, misogynist, and utterly violent and anti-American regime in control of what is effectively the largest single choke point in energy in this world.

Let's step back because each one of these is, in my opinion, tactical. The question here is not is China a force in biotech. The question is when will it become the dominant force. And it's occurring for several very clear reasons that I hear repeatedly from people in the industry. But let me start by saying there's no clear direct link with what goes on in Iran. In the minds of those, or at least the way they are articulated, the demonstration of this administration's approach to the biotech world is similar to the approach in Iran. There doesn't appear to be a strategy. China has a profoundly clear strategy. It has been articulated for 25 years. There are five steps ranging from the first where they learned how to manufacture chemicals through all the way through the third where they learned to replicate biologics. And now into the fourth where they determined to become the great innovators with new innovative drugs. And they've constructed their industry underneath this with that intent. It means the way they deal with capital, the way that they send people, the way that they educate people, their clinical trials approach, their approach with their FDA equivalent. Across the board, this was a knit-together strategy where they had said at the outset that they wish to become the predominant provider of novel medicines by 2035. Okay? The counterpoint is the United States. We've seen very extraordinary disruption at all levels of the engine of innovation in this country. Whether you start by politicizing where grants go, the Office of Budget Management determining what research should be done, whether you then move on to dismissing the whole Science Foundation board, whether you then move on to cutting costs at the engine of innovation, which has been around since 1947, or when you then, as we saw last year and now having to be remediated in remarkable way, the complete disruption, demoralization of the FDA by firing 20% without even considering what they do and then losing 90% of the leadership. These weren't thought-through strategies. You then come to a situation now where the leadership in the administration is doubting, undermining the science, the very core of science in vaccines, in chronic treatments, approving things like peptides. These are demonstrations on our side how a lack of strategy will lead to fundamental harm for our industry versus what's going on in China where they've said, 'We're going to be the leader.' So, from my perspective, while we can talk about around the edges of this, the real fundamental question is, how does the United States build on what it still has, the great engine of innovation, the extraordinary capital markets, the willingness of people to take risks in a way that is remarkable, and still a base of strong, willing entrepreneurs who want to dive in and serve the American people by getting the best medicines? That's a long answer to, I think, two different questions than you originated on, but I think they are the core questions. I'll go one step further. And that is right now these choices need to be made. And they need to be made now. And if they're not made, innovation won't stop. It absolutely won't. It'll simply migrate. And capital will follow it. So whether they're faster in their clinical trials, whether they are more rapid in finding a new molecule, it doesn't matter. Uncertainty in the American market, uncertainty in the innovation engine that we have will drive the giant pharmaceutical companies to certainty.

The damage being done now can be repaired. Like it will be repaired. However, what emerges is that we will not keep our continuity and growth. And so, others aren't standing still. They're not waiting for us. When we emerge from this miasma, this tremendously poorly thought through approach to this industry, we will find that we will not be the world dominant and perhaps we shouldn't be. But we will be facing competition that we have never faced before. Number two, long-term, one of the great harms that will have been done to America will be the concept that we're no longer seen as the place to go for innovation. Great scientists won't be thinking, 'Gee, I've got to get to America to go do this.' That's what's going to happen. The trust that was core in America has been eroded in the minds of many. If Albert Einstein had suddenly been told, 'You know what? You could go into a camp or be expelled.' I don't think he would have come here. Third item. The failure to fund innovation. Investors require a degree of certainty. They're going to go where they know there's a result, where they know that the whole process that underlies getting this done with. So, the big bets, the big bets on genuine innovation are definitely going to be done and are being done in other parts of the world. There are a handful of brave, extraordinary, thoughtful, innovative venture capitalists and funds who still in the United States believe in that long view and still will do it, but they can't soak up the immense wave of investment. So, I think Laurie, to your point, there's a trust issue, there's a competitive issue which is going, we're going to emerge from this, we're just going to be in a different world entirely. And lastly, the funding of pure innovation today is not going to happen here in the scale that it did happen in the past. But, this is normal investor reaction. And I suspect we will suffer from this because we won't invest in the next Alnylam who went after RNA as a therapeutic, somebody else will.