Good afternoon everyone, thank you so much for joining us. It brings me great pleasure to be moderating this discussion today with some pioneers in the biotechnology industry and some of the most sophisticated investors in life sciences. Just to briefly introduce our panel, we have Robert Nelson, who's the co-founder and managing director of Arch Venture Partners; we have Christian Angermayer, who is the founder of Apeiron Investment Group; we have Dr. Nina Tandon, who is CEO and co-founder of Epibone; we have Dr. Mad Al Razzuki, who's an operating partner at Deerfield Management Company; and finally we have Rohan Puri, who's co-founder and general partner at Valhalla Ventures. Thank you all so much for joining us to discuss and answer the question: where is the next unicorn in biotechnology? I think everyone on this stage is more interested in discussing what are the platforms and technology that are going to drive the next generation of billion dollar valuations. So Bob, I'd love to start with you. You have throughout your career with Arch established over 150 companies, including 47 early stage investments that are valued over a billion dollars. In 2024 alone, we've witnessed the creation of 39 new biotech unicorns. Do you think that there's true and real innovation underlying a lot of those billion dollar valuations, and if so, what do you think are the platforms and technologies driving those?
Yeah, I think there is reality amongst the hype. Even when you look at AI meets biotech, there's a lot of hype, but we know it's going to be the future. So when you think about the revolution in data driving medicine, driving AI application to medicine, that will be a whole new category of real companies. When you think about the revolution in cell therapy, I think in the next 20, maybe 12 months, you'll see some data in cell therapy that will reignite the space: some people curing tumors, some people curing type 1 diabetes. And I think the revolution in the brain, in drugs for mental health, is accelerating. And then the gene editing revolution, even though we're at a bottom right now, you'll start seeing many rare diseases really cured. So I think what's going to happen, and what is happening, is the advent of the curative stage of biotech. In the last 20 years, it's been a palliative stage, and that will drive real value. But I do think we're at a local minimum right now where you have GLP-1s and everybody wants to talk about that, and then everybody wants to ignore the rest of the world.
Does that resonate with you, Mad, in terms of the way that Deerfield looks at making bets in the next generation of healthcare companies? How do you distinguish hype from reality and innovation beyond curing disease, which Bob rightly pointed towards, but creating lucrative, lasting business models in the space?
Yeah, I think it's very important. You look at innovation: there's innovation on the science side, there's innovation on the access side in terms of improving quality of healthcare services, and you also have innovation in terms of how we reimburse or pay for healthcare. There's a tremendous movement in the US and around the world to value-based care. That's actually nothing new to this region: if we go back 7,000 years to the time of Hammurabi, physicians were paid to keep their patients healthy, not to treat patients who are sick. At Deerfield specifically, we invested a lot in setting up relationships with 30 of the top academic medical centers in the US and we're adding more around the world. We can actually bypass the technology transfer office of these universities and cut the time to market from typically four years to around 18 to 24 months. We've set up teams within Deerfield of hardcore PhD scientists to support on therapeutic development, healthcare services, and medtech. We have our own medtech accelerator; we can develop a quick MVP. We do a lot of the actual research in-house in New York together with partners. So for us, it's really about being on the ground floor of innovation. I want to echo the comments that Bob did on cell therapy. We're investors in a cell therapy company together, Jaguar Gene Therapy, which is doing tremendous things. But the financial part of the innovation, reimbursing these companies, is going to be the challenge. Out of the 38 gene and cell therapy companies approved by the FDA, eight have been pulled off the market by the companies because reimbursement hasn't been there. These are drugs that cost half a million to $2 million per patient. There is a very strong correlation that these proteins have to be developed by these genes, otherwise the government or the payers won't pay. So again, it's pay for performance, but that's the world we live in today.
Christian, you're not one to shy away from hype, I think you very much embrace it, but you're very good at detecting the signal in the hype. You've founded and established a number of unicorns. You've also looked at the other side of the journey in terms of public markets with taking a life sciences company public. Do you see a disconnect between the way biotech companies are valued in private markets and what seemingly looks like decreased investor enthusiasm once they hit the public markets?
Yeah, before I answer that, I want to say one more thing because Bob said it really well and it's so important. I think what is changing is biotech for the last 20 years was incredibly low-ambition. We always told our colleagues, 'Oh, don't say we try to cure something, we try to make it a little bit better.' It was always those incremental steps instead of saying, 'Look, at the end you don't want to just do palliative treatment for cancer, you want to cure it.' There are still so many things in our society that we suffer from—cancer, whatever—and I think now we're going into a time where science is there. Although biotech in terms of valuation is at a low point, the ambition is coming back. People are saying, 'No, if I focus on disease X, I really want to cure it, not just make it a little bit better so people live a little bit longer.' What we are very focused on is you can take that one step further: beyond the cure, why should we just wait till people get sick? Why not prevent things much better? For example, take cancer: it would be much better if we never got cancer, because once you have it, it's pretty shitty even if you can cure it. But even on top of that, why don't we use biotech to allow ourselves to really upgrade us? You mentioned mental health. I'm always very frustrated: we invest a lot in mental health, I started some mental health companies myself, but again we're always intervening when people already have depression. I would say, if I asked in this room, statistically 15% of you have a mental health issue—depression, anxiety, maybe not dramatic—but we don't talk about it. If I turned the question around and said, 'Who of you every day truly feels happy?' a lot of you would say, 'I don't know, I have stressful days.' What I want to say is we can always add more happiness. By the way, who of you doesn't want to be a little bit smarter? Why do we accept that the intelligence we're born with is the one we have to deal with? Because there will be drugs that uplevel our intelligence. Why I'm saying that is we have one group of drugs that changed the game: these GLP-1 drugs like Ozempic. Most people taking them are not clinically obese—I'm taking it, and nobody would say I'm clinically obese—but I'm taking them because they're outsourced discipline and they make me feel better. So I think we are entering a time where we are much more daring, really using biotech to cure things and then to even upgrade humans. To your question: capital markets suck at the moment, no you can't phrase it nicer. It's really awful. Biotech was hit the hardest from the macro trends, interest rates, whatever, which is a huge distortion because you have private companies with a valuation, and many high-quality listed companies are trading at cash so they don't have an enterprise valuation. It's going to change, but I think actually positively: at the moment, listed biotech stocks—the good ones—are maybe the biggest investment opportunity because they haven't recovered while tech stocks, crypto, all the other interest rate sensitive stuff has recovered. But biotech will follow, so it's a temporary distortion we have to live with.
