Dr. Jeremy Levin: Biotech in the Balance

That's great. Thanks, Robert. It's a real pleasure to do this with you.

Ovid Therapeutics is a company that was founded to tackle diseases of the brain that others wouldn't tackle, and we deal with the side of the brain diseases which are generated by hyperexcitability. These are things that people know about, in epilepsy, autism, schizophrenia, the things that really, when your brain is excited and you've got a high level of activity, you can't control your body. And so, that's what we've been spending time on, and we've got some great programs in that. It's early, but with a bit of luck we're going to be able to bring brand new medicines into a world which needs them very badly.

It's a very important word. It was first used roughly in the 1970s. And what it means is that unlike for years and years and years, the pharmaceutical companies had developed a way of finding chemicals that you gave to somebody to change a disease. We saw this. It's like aspirin. It's like Tylenol. You basically have a chemical, you take it and it changes the disease, but you're not 100% sure about at the time what it does or how it works. Biotechnology is very different. Biotechnology is developed in 1973 where for the first time we started to unpack all the pieces of the human cell. And that's terribly important. You were looking at genes, you were looking at proteins, you were looking at what was on the surface of the cell. And biotechnology began to unpack that and say, 'Well, wait a second. You've got these incredible molecules inside the cell and on its surface that we should understand and let us take them and turn them into a medicine.'

And that's a very technical approach. For a little while it was a bit of a dream, and then something rather magical happened actually in San Francisco where one scientist turned to what was venture capital, somebody who had never before spent money at all in trying to figure this out and said, 'Look, I might be able to make a medicine by thinking through what are the pieces of a cell and what I should be tackling.' And the venture capitalist said, 'That's crazy, but I'm willing to put money onto it.' And from that moment in 1973, it took a little while, but by 1976 one of the major companies, one of the best medical companies ever, actually called Genentech, was born. And from there, we gave birth to what today is an industry which is largely unseen. And you're right, Robin, it is really very much unseen. It's an industry of over a thousand different companies. All are overwhelmingly spending money to find new medicines. They don't make profits, the vast majority. They sell their stock to raise capital to try and find a new medicine. They're full of researchers. And it transpires that the United States, because of that event in 1973, is today the single largest if not the leader, overwhelmingly the most productive in the world of finding new medicines. And these medicines are extraordinary. They're the ones that knocked back and can cure cancer. They're the ones that have knocked back and killed and really taken out of the picture hepatitis C. They developed extraordinary capabilities, and it's only begun. Now we're in the phase of where we are beginning to use the very cells of the human body as treatments. We're able to transport genes into human cells. A whole exciting panoply of innovations. So from that little starting point in 1973 to where we are today is a remarkable evolution and a fundamentally American evolution, something that couldn't have happened anywhere else in the world. And I think it's something that we in America should be proud of, but as you say, the person in the street has probably never heard of them. Although I venture to guess that they've taken a medicine that was developed in that industry because 70% of all new medicines today, every single one of them, in cancer, in diabetes, everywhere, was developed in a small, tiny little biotech company and eventually transported to patients through the giant pharmaceutical companies.

In the early days, it was very much a difference between understanding the biology of the cell that made a huge difference. To be perfectly honest, in many cases, the pharmaceutical companies who early on in their life cycle, which they really just tried out chemicals and if there was an effect, they developed them. They didn't quite know often how they worked. That's not strictly true for things like antibiotics, but it is true for many of the others. They were empiric. In other words, they saw what the drug did and they built on it having made sure that it was safe. That's different in biotech. You unpack the cell, you figure out what's going on inside it and you become much more precise in what you do. Over the years, things have changed. At the beginning, the large pharmaceutical companies completely dismissed this area as being a waste of time. Remarkable, actually, because as I say today, 70% of all of their medicines come from it. That's a long time ago, 1973 to now. And what's happened during that period of time is slowly, slowly, members of the pharmaceutical companies have joined the biotech community and vice versa. But, the engine, the fundamental engine of innovation resides in those 1,000-plus companies, the really small guys. The other side to the equation is the partner, which is the large pharmaceutical company. And they really, they're engines of selling, distributing, and manufacturing. They're less in the business of being highly innovative. They don't necessarily find new medicines, they sell new medicines. That's what they basically do, and they're very good at doing that. Except that, as you and I know, often people are very concerned about the pricing of the drugs they get.

You know, the great thing about competition is that if one company ever were to do that, their competitors would like nothing better than to lay their hands on a competitive drug and get it into the market. It's not as if these large companies are conspiring to keep things off. What they often do, and that is very much the case, is that if one company has a drug that they believe in, and then something looks slightly better, they probably won't touch it. They won't do an agreement with a biotech company. Sometimes that is really a mistake, a big mistake. For example, there is a company called Lundbeck who had a marvelous drug which was treating epilepsy. But the thing that they did was that it causes side effects. That epilepsy was epilepsy in children. And they simply used it, sold it, and it caused side effects in children, but because it was so effective, they kept on selling it. Well, along came an opportunity to develop a brand new drug without those side effects. By the time they looked at it, they decided, nope, they were making money on the other drug. They weren't going to develop it. So, they did nothing until one day the patents on their drug expired, and their drug, which was a billion-dollar drug at that time, fell to nearly nothing because nobody needed to buy it at the prices that they were charging. At the same time, and here's where Ovid came in, Ovid decided, no, we need a better drug in that area. And that's exactly why we picked it up, and we've developed a brand new one, and hopefully it will be successful. It's called 329. And if it is successful, then it will validate the process of doing a new drug, even though it might look a little bit like the old drug, but it's much better, has much better side effect profile. So, you are correct. There are two ways that companies don't pick up a drug. One is they just don't have the vision to go on to something better, but then you always have either a small company like an Ovid or another competitor company who will immediately jump on this and say, 'Well, that's fine for you, but we're going to do it.'

You know, it's a very important point you make, but I think that the vast majority of people in this industry, in the thousand-plus companies in the biotech industry, start off with a premise. They have a covenant with a patient. That means that they will never develop a drug that could cause harm if they possibly can avoid it. And they most certainly can avoid it by the proper testing. Sometimes unavoidable things happen because the human body is so complex. So, what we do is we first of all organize incredibly expensive clinical trials to ensure safety and we do the very best things we can to do that. Following that, our next step is to of course know that there are people who could have a side effect and they may sue. So, you have to get liability insurance to cover you. I wish that weren't the case, but mistakes happen. What you don't want to do is you want to make sure that you've done everything that could possibly be negligent. You want to do something that is incredibly thorough. So, you do have to take insurance. That's an obligation, but it's not something that you would be doing other than protecting your shareholders and yourselves from a suit that often comes and many of these suits are quite frivolous to be perfectly honest. Not all, I want to be clear, not all, but many are.