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The R&D challenge: 4 top drug hunters talk best practices in building a biotech today

Last week I invited 4 deeply experienced biopharma execs to gather for an hour to discuss what they’ve learned over the years about developing drugs….

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Last week I invited 4 deeply experienced biopharma execs to gather for an hour to discuss what they’ve learned over the years about developing drugs. What were the key lessons that they’ve taken into new endeavors? And what did they shed along the way? Tectonic CEO Alise Reicin, an experienced Merck vet who had a senior role in developing Keytruda, joined GV exec David Schenkein, who founded Agios, along with Kite founder and current Allogene chair Arie Belldegrun and former Gilead CSO, now Kronos founder, Norbert Bischofberger. It was a great conversation, which you can follow along here. The transcript has been edited for style and brevity. John Carroll

John Carroll: I’d like to introduce the panel right now and it’s a really great group of people. We have Alise Reicin, who’s the CEO of Tectonic, a startup looking at GPCRs. Also, someone with a considerable background in the industry who worked at Merck, had a big role to play in Keytruda. We’re also joined by Norbert Bischofberger, the CEO of Kronos, another startup and another individual who’s had quite a history in drug development as CSO of Gilead and had been there from, I think about 50 staffers all the way up through thousands, and is working at a significantly smaller company and has got a lot of enthusiasm for it. We’re also joined by David Schenkein of GV. David had started Agios after he had been at Genentech and also has a lot of that big-company experience in the background. And Arie Belldegrun. Arie, I almost don’t know how to define what you do anymore. Arie ran Kite, made a landmark advance in cell therapies and is working on it again, chairman of Allogene and going off-the-shelf right now, but also you’ve got just a variety of different irons in the fire and all over the place in different things, doing a lot of startups, working at Vida. So, I wanted to get everybody started in on this conversation.

We (recently) published a special report that I do from time to time, taking a look at the top 15 budgets in R&D. It was $124 billion in 2022. That’s up $22 billion over a three-year period. Significant amount of money going into that. You wonder about an environment where there are 50 some odd new drugs a year now that are being approved. And I wanted to get this group together to talk about one basic thing: What have you learned along the way in these different experiences you’ve had that have instructed you, that allow you to mentor other people or build your own teams? And the first question would be, How do you make the adjustment from a large company organization into a dramatically smaller one? And what are the best practices that you want to take with you? And what do you want to leave behind? Alise, you want to get started?

Alise Reicin

Alise Reicin: So, I’m newer to this than David and Norbert. I’ll mention a couple of things. First one is, objectivity and decision making. It’s absolutely critical in large pharma, and it’s absolutely critical in small biotech as well. And it seems so easy and so obvious, and it’s so hard to do. Biases and people get attached to programs and when you’re with a small company, you get nervous about stopping any program, potentially. Especially, a lead program, and so it’s really trying to keep everybody objective about what the data [are]. So that’s one of the key ones.

Another one is what my mentor, Barry Gertz, used to say, which is, ‘It’s all about the dose, dummy.’ Take the time you need to figure out the right dose and the right schedule. Too many drugs fail late because you don’t have the right dose and you don’t have the right schedule.” And the last one, and I think it’s again, large pharma, small pharma, early kill. Really try and do the critical experiments so that whatever resources you have, you’re devoting to the best programs.

David Schenkein

David Schenkein: I could not agree more. When I left Genentech to be with four people around the table at the beginning of Agios, I think the three or four things that I brought with me from my time at Genentech, in addition to the ones Alise mentioned already, is this concept of go slow to go fast, get it right, and to incentivize people to get an answer. And that comes back to the point that she had made, which I think is the most critical thing, which is decision making. Make sure you understand who’s making decisions, it’s not consensus. You have people who are empowered to make decisions.

And the other thing I took away was focusing, particularly as the company grows and you have more than one program, on prioritizing programs based on the probability of success and impact to patients, keep that at the center. For me, those were the critical things I took from Genentech when we were getting Agios started. Norbert?

Norbert Bischofberger: Yeah. I found the transition from big company to small company easy and refreshing. I found myself in my previous life, I was a lot involved in corporate things in organizational stuff. And I felt like I’m getting further and further away from the science. Now having joined a small company, there aren’t that many people here. I liken the large company to a super tanker and a small company to a speed boat. So, if you have to change directions, it’s going to be very quick and easy and you don’t have to convince the whole organization that it’s the right thing to do. The only thing I miss a little bit is the amount of resources we had in the bigger company. You could rely on so many people. We had 1,400 people in CMC. The pills always showed up. They were always in a bottle. You don’t have to worry about who was going to do it, who was going to make them. And also in terms of money, you need to have a lot more resources. And one thing we greatly benefited from, it used to be in the old days, the endpoint in HIV was at 48 weeks. We were the first ones to do a study where the endpoint was at three years. Of course, it cost more money, but it was an incredible barrier for the competition to follow us. We had three-year controlled, blinded data that was hugely beneficial.

Arie Belldegrun: Yeah, well, I’m the only one here in the group that spent too many years in academia and I’m still in the academic world as a professor at UCLA. I never could cut my umbilical chord from the academia. I invested too much in that. So, I did not spend time in pharma, but I recruited over the years, many from pharma, including Norbert. And it’s always interesting to see two groups, those who stay with the mentality of the pharma, even though they’re in a nimble, small biotech company and they think big spending, big everything, think big. And those who adjust to understand this is a different world, but there are so many more advantages to the biotech world and to the startup. I love the startup companies. Most drugs come from biotechnology and that’s essentially the innovation hub for everything.

The molecules come either from the universities, from the NIH, from small companies, that’s where the excitement is coming. So, though there are some that are making the transition and we see here representative, the great ones, but other ones I can tell you that we have just decided that they don’t fit into the world of entrepreneurship. Entrepreneurship is focus, focus, and focus. Working nonstop on one project or two projects, but the entire company is focused on it. And the best advantage, the best story I had is when we started Allogene.

Allogene was at the hands of Pfizer for five years. We could see great technology still, but it was developed in the pace of Pfizer and Pfizer realized it itself that that’s the case. And therefore, we just took the technology deal and created a startup out of Allogene, and everything changed. Everything changed. The pace, the product, the focus. And so I think that there’s no replacement for a small biotech company.

John Carroll: Well, that does raise the question of team building. David, I was having a conversation with Sek Kathiresan at Verge one time, just a few months ago. And he was saying that you had talked about that and had convinced him that his first and most immediate pressing job was to bring in the right team. And, I think everybody’s got this right, because no matter what size company you’re working on, whatever team you’ve got working on the project is going to be absolutely critical. And there’s a lot going on right now with hiring in this Great Resignation era. And I’m curious how you motivate people and how you bring in the right kind of a team.

David Schenkein: I’ve always been taught and it’s been my experience, it’s the people on the bus that are absolutely critical in the environment, whatever term you want to use, culture, environment, work ethic, whatever term you like. I think, particularly in small companies, that is one of the key advantages. Because it’s small enough that you can create an environment that incentivizes people to all row the boat in the same way towards an end goal. And so, I think, and Alise mentioned it before, whether it’s rewarding, killing a program early, because people feel my goal is to get a good scientific answer. Do you build a culture where you allow high performing jerks to exist or do you not? All the components of what I think is a critical culture. And I still think now as we’re building companies in my current role, a lot of people still are joining companies for the right reason, which is, “I am motivated and excited by what we’re trying to do here, for the patient, the underlying science that underpins that company and the work environment and culture.”

We know that right now, at least in Boston and San Francisco, the most recent numbers I’ve seen is the voluntary attrition rate in the biotech sector is over 20%. It’s really hard to build a company when a quarter of your workforce is looking for a new job. So, it really is critically important that you create a vision for those employees and they are motivated to be there because it’s a great place to work. They have a great manager and they are excited about where the company’s going.

Norbert Bischofberger

Norbert Bischofberger: Yeah. I want to echo that there has been an incredible fight for talent. I mean, because of the many startup companies that were formed, 266 between 2019, 2020 and 2021. It’s incredible. But I have to say, we have not had problems, really attracting very experienced people. And it started with our board, with other important people. I was an attraction. And then with each one you subsequently hire, we had a person from Celgene, from … The team is really incredible. And that’s why, and David, it’s exactly what you said, a vision. We are here to make a difference. This would be great for the patient. That’s what in the end motivates people.

Arie Belldegrun: I don’t know, Norbert. This is Palo Alto. In the South Bay with Allogene, we are with David. I see exactly what David is seeing. I mean, this is the Great Resignation, is a great resignation. It’s a new terminology that didn’t exist before Covid.

Alise Reicin: I probably don’t have any magic to add beside what David and Norbert said, although David, you might not remember, I still remember where I was and when I had a conversation with you very early in my tenure, when you talked to me about culture and how important culture was. And I wasn’t sure I quite got it at that point. I think a year later, I definitely get it. I spent a lot of time thinking about culture and in trying to take learnings from three separate organizations where the cultures were vastly different among this way, and really trying to synthesize the best of those three in what I’m creating here.

Time will tell if we’re able to do it, but I can tell you, our resignation rate has been less than 5%. Now that may be because we’re still early. It may be harder, and I might not be able to say that three years from now, but we spend a lot of time thinking it. And I think that ends up being more important than how much we’re paying people and how many stock options we’re giving them. We’ve got to be competitive there. And you’ve got to think about being competitive with other benefits that you give employees, but that is the base case. And then it’s what you do on top of that.

David Schenkein: I couldn’t agree more and I do think it’s one of the challenges we face across the industry now, because when the three of us and Arie as well got to start a company and, we’ve given the keys to the building, that means we can take the experiences from our previous organizations like you said. What things did we like? What things didn’t we like? And create what we think is the right environment for this organization. I think the challenge we face and Arie mentioned it before, and Norbert as well with the number of companies that are being formed, we’re short on C-suite talent that have the experience set to be able to create that culture. And that’s something we’ve got to look out for.

Arie Belldegrun: That’s exactly why my question was, when we talk about the Great Resignation, are we talking about C-suite resignations or we are talking about the manufacturing people, the lab technician? Everybody’s important, but in my personal experience, the C-suite are highly committed, highly engaged. And I have not experienced on any of the companies that I’m working, this type of resignation. And the problem is that these C-suite people need to create the culture under them.

The CEO needs to create the culture of a C-suite and the rest, and then obviously give direction. But, every one of the C-suite has responsibility, as if he was the CEO of his organization in maintaining his people. It’s become more important than anything else. The other point is many of the C-suites that we work with, we rotate with them and we go from company to company and we come together and that’s different than in high tech. In the high tech, I see a lot of guys, they are great, they are not moving to the next company. But in our industry, we find so many people that we worked with at Kite, now they’re working Allogene and after that they’re moving to Kronos, they’re moving with me, and us. So, again, this is culture. If they trust and you create a culture, they would love to have fun and go to work with you again.

Norbert Bischofberger: David, do you happen to know that 22% turnover that you mentioned, did they look at by grade, where it’s mostly happening?

David Schenkein: Yeah, I’m sure they do. I don’t have that breakdown, but I would agree. It’s probably, my bet would be most of that is director level and below, but there’s a lot of, again, because so many companies that have started and I think it’s fabulous to be able to give people opportunities. But when we’re doing CSO searches now, we’re seeing candidates who are directors at their company now, and want to go from director to CSO. But I don’t have the exact breakdown, but the attrition rate has been rising. There’s no question about it.

John Carroll: Okay. So, let’s talk about manufacturing. There have been some issues related to manufacturing in the general industry over the last couple of years during the pandemic. I mean, there have been issues and problems with turnover and so on. I think that everybody’s had to deal with that. And you all have had an opportunity to choose, to answer the question: Do you build or do you rent yourselves? And sometimes that’s a very expensive build answer. Arie, you’re just opening up a big factory down there, a big plant down in Pennsylvania. So, why build?

Arie Belldegrun

Arie Belldegrun: I think that we need to differentiate between manufacturing and cell and gene therapy manufacturing. Essentially, it’s different. It’s not a manufacturer for pills or inhalers or something like that. When we are talking about cell manufacturing, yes, in 2014 I have built, or we have built, the first ever manufacturing plant for cell therapy in El Segundo in Los Angeles. At that time, no one knew exactly how and what a requirement to build a CAR T manufacturing. I wouldn’t say that the blind led the blind, but I would say the bar was much lower than it is today as far as regulatory. Anybody who read, a few weeks ago, the white paper that came on cell therapy by the FDA cannot not be impressed of how much knowledge the FDA has now and how they elevated the bar and the release criteria and everything that they’re requesting to get and to start a registration study.

That means that there are now over 600 cell therapy companies. Can everybody afford building that cell therapy? Can everyone go to the one CRO  and stand in line and wait for him? If a larger company that has greater supply, obviously they will get the first run. We personally decided to build our own manufacturing. Why? Because I know that at Kite when Gilead or, Norbert Bischofberger, was on the other side of the table for me fighting with me and didn’t agree that we will have so many products approved over the next five years. He says, “No, this is not, maybe one, maybe two.” We are four, going five. So, when he was going there, we had a manufacturing plan. So, it is a one stop shop. And I know that it was very hard for Gilead to go and work with the CRO to the manufacturing and with everybody else.

So, what we gave them is the basic science, the clinical, the translational, the manufacturing. That was the model. We did the same analogy. We just completed in the Bay Area, a $100 million cost of 120,000 square feet manufacturing. One of the largest in the Allogene. It’s already operation. And we will be able to produce there, 20,000 therapies a year. This is amazing. I mean, this is a big number. How many of the 600 can do it? I don’t know. So this, I just give you the extent of what it is, but there are other opportunities that I’m sure that David can talk about some of those who are trying to help the industry.

David Schenkein: Sure. Yeah. I mean, we’re going through an evolution. I mean, obviously nobody who is creating a startup using small molecules creates their own facility. There’s tremendous capacity, and they do a great job. When I was at Genentech and we were building our own manufacturing facilities to keep up with demand for Herceptin, Avastin and Rituximab. But now, if you have a startup making monoclonal antibodies, you’re not building your own facility. Cell and gene therapy has been … the manufacturing is more complex. It’s been largely bespoke. And I think there has not really been a CDMO environment that’s been able to, as Arie said, potentially handle not only the demand in terms of the amount, but the bespoke nature of each product.

That’s going to change. It’s going to change just like it did for monoclonal antibodies, but we’re just not there yet. We’re involved in a company called Resilience, which is trying to do this and take it to the next step. They’re early on. And it’s going to take some time, but I do think we will get to a point, because it just probably doesn’t make sense going forward for every single small startup doing cell and gene therapy to create their own manufacturing facility. There is an advantage to scale, and once we get there, I think that will help a lot, our industry.

Arie Belldegrun: Alise, you were at Celgene at that time when we were competing Kite versus Juno, and you had your own manufacturing. What was the philosophy then at Celgene?

Alise Reicin: So, we didn’t have our own manufacturing when we first brought it over from Juno. We started to create our own manufacturing. So, we were dependent on CDMOs for some of it. And I can tell you, I’ve never spent more time talking about manufacturing in governance than we did with cell therapy. It was very problematic. Every step along the way, the amount of oversight that was needed by our team was enormous. And I think the feeling was if we had control, it would’ve been much easier. It was always, are we going to make the timelines for the filing? Are we not going to make the timelines? And there was the desire to have more control. So, I think historically what, Arie, for the innovators, you had to do it yourself. It was better if you had that control. I think you also created value for the companies. I’m on the board of Homology Medicines who really created top notch manufacturing and gene therapy, and they just sold that to a CDMO. And so they were able to really get value for the company based on that.

Arie Belldegrun: Atara did exactly the same.

Alise Reicin: And, so there’s been value. I think part of the problem going forward is not only the cost, there’s not enough people that know how to do it. And so that’s, you want to talk about the fight for talent in cell therapy and gene therapy, that’s where there’s an enormous fight for talent. And so, you’re going to have to have the resilience is being created to increase the number of people that know how to do it. But I think the next five years are going to be still a difficult time, because we’re still in that transition mode and should there be 600 cell therapy companies? I mean.

Norbert Bischofberger: So, at Gilead, I want to add to what David said, at Gilead, we had about 28 commercial products, almost all of those with one or two exceptions were small molecules. And some of them were made at 150 metric ton scale. And they were all, for the most part, 90% outsourced. I mean, it would be crazy to do your own, either API or product manufacturing of a small molecule. Capacity is available in the industry, they’re doing a great job. The only thing you need is a good QA function internally. Don’t ignore that. Not all manufacturers are alike, you have to be able to distinguish the ones that can pass an FDA inspection. And at Kronos Bio, by the word, we’re focused on small molecules, again, we’re not doing biologics or cell therapy.

John Carroll: It would seem that one of the most common problems I’ve seen in biotech companies, when it gets down to an actual approval of a drug, is the CMC side of things. That seems to be one area, even though you see cautionary tale after cautionary tale, after cautionary tale, but then it’s like, no, you’re rejected now. You haven’t got your CMC thing worked out. The companies aren’t seemingly, or maybe I’m wrong, but it would seem a lot of companies typically don’t really get the message that you’ve got to understand what the process is and control it. It seems like in a lot of cases, they think, “Well, we’ll get an approval and then we can work out manufacturing.” But you’ve got to really work at manufacturing during the development process. Don’t you?

Alise Reicin: So, John, I’m going to go back to the initial question, which was one of the takeaways in going from large pharma into small. I spent most of my time in large pharma on the clinical development side and learned pretty quickly, you can’t just hand off a study to a CRO. You have to — tremendous, tremendous, more than you ever think is necessary — oversight. And what I’ve learned is the same applies to discovery CROs and CDMOs, it’s all along the way. It’s the same lesson.

David Schenkein: And I think that’s one of the responsibilities I remember very early on at Agios when we were getting ready to go into the clinic and we saw our first few responses and we said, “Okay, I think we have a drug.” I remember very early on our board, pushing to make sure that we hire high quality CMC head really early and make sure that manufacturing never becomes on the critical path. And so I think it’s the responsibility of boards, particularly with first time CEOs, new teams to make sure they understand that they can’t let CMC become critical path. And to make sure they put high quality people and processes in there. And couldn’t agree more with Norbert, which is to make sure you have a good QA/QC department.

Norbert Bischofberger: Overall, in my 27 years at Gilead, I remember we only had one single CRL, complete response letter, because of CMC issues. And the other thing, we had one very limited recall because of some glass particles that were in the IV infusion. So, great track record.

Arie Belldegrun: So, going back to the original question again: pharma vs startup. Pharma is the best school for drug development. It will not help. You cannot go to a startup that you have an innovation and you are developing your baby, your innovation, and then stuck, as John said, with the CMC and all of that, because you don’t have experience or about the clinical trials, because you think you did in academia, clinical trials, this is exactly the same that you will do in the industry. You can see that those who were in the large pharma, who came from a world that they understood, the limitations, the problem, what can go wrong, how did we kill drugs, bring experience to these startups. So, one of the advices is surround yourself with good people, but good people that have experience in the industry. That’s what I did essentially when taking David Chang that came after years at Amgen. And I could see the school that he went through, straight from UCLA, 10 years at Amgen, and then moving into drug development. So, this is something that one needs to remember.

John Carroll: Okay, well. Let’s talk about deal-making right now, because I think a lot of companies are in a situation where they’re looking for some short term opportunities to raise some cash. And obviously in terms of up fronts, if you do a good deal, this is an opportunity you could do it. Question is, if you’re at a smaller company, whether you should do a deal or whether you should retain the entire drug yourself and take that and hold that until, the very end at least? So, do you do a deal now or do you not do a deal? And what are the critical elements of deciding that? What drives that decision that makes you go one way or the other? Alise?

Alise Reicin: Just not a one size fits all. I think, and the answer to that ends up being very specific to the company and to the drug. If you’re a small company and your drug is ultimately going to need a 60,000-patient outcome study, it just might not be the way for a small company to do it alone. On the other hand, when you do a partnership, you give up some of your oversight of the drug. So, it depends what type of partnership, when, and the type of company. I mean, the way we’re building our company, where it’s not a single molecule company, and I hope we’ll have multiple molecules. I see a future where hopefully we take some of them along, those that we think make sense for us to do and others that we do partnerships and for the ones that we do partnerships, I think about doing them at various times in the life cycle, depending on the specific drug. I don’t know, Norbert, how you think about it?

Norbert Bischofberger: Yeah. Similarly, and I also think, a partnership, so it depends on what partnership it is. For instance, I think it doesn’t make much sense for a small startup company like ours to do Asia. That’s out of the question. And even Europe is a big question. Europe is a complicated marketplace. The way we used to do it at Gilead early on for the first strike, we kept the US and Canada, outlicensed everything else to another company. Then we kept Europe, US and Canada. And finally, we went into Asia, but that was not done until very, very late. So, that we’re currently thinking about, with this drug, that with the Phase III program that we have, should we do Europe ourselves?

David Schenkein: Yeah. I think you’re both highlighting the question I always ask when I get a call from a CEO about, should we do a partnership? I always ask him the question, ask yourself, “Are you doing the partnership because you need a capability, running a trial in Europe, 60,000 patient trial, Asia? Or you are doing it for capital?” And just to be really clear. And the thing that always bothers me is when people use the term non-dilutive capital, because giving away your products is probably more dilutive than equity.

So, I’m not a big fan of the term non-dilutive. And so I think, as Alise said, every situation’s a little bit different, but I think you need to really ask the question, are you doing it because it’s a capital constrained environment? I mean, when I was starting Agios, we did a big deal with Celgene, but that was in 2009, there was no capital out there. And, we knew we needed a lot of capital and so we turned to pharma for a source of capital. We may be in that environment now again. So, I think a lot depends on that, but let’s get rid of the term non-dilutive.

Norbert Bischofberger: Yeah. We should get rid of it because there is no such thing as non-dilutive capital.

David Schenkein: Yeah.

John Carroll: So, Arie, you’ve always retained control. That always seemed to be the big thing for you. You tend to focus in on a drug, a product and control of that product does always seem to be top of mind with you. Is that right?

Arie Belldegrun: That was the general direction that I went. Don’t give away. There’s no non-dilutive money, as we said. So, keep it to yourself. However, I think that times have changed and we need to change with it. I think that you will see today that the pharma would not like to do mega deals, but a string of pearls, I would say, or at least, let’s date before we get married. Let’s do some partnerships. So, the pharma will push to get into a deal. And that sometimes can be helpful. Clearly, bringing today some additional funding. Nobody knows how long this market will continue. Just reminding in 2001, it took at least five years till the market started coming back by retail. The question is how long the retail, the first one will go out of the retail.

When are they coming back? That takes time. So, you have to prepare for the loan. Yes, right now you would say that I have extended my runway from ’22 to ’23 or ’24, but what’s happening in ’25? So, I think that if you think ahead, looks to me now that pharma deals make more sense in somebody specifically when you have a platform. If I have 15 or 17 different products, I got products, but potential products. I will not be developing all of them, at least keep the lead. And that’s obviously that keep the first couple, but then license the other one. So, you have to adjust and be opportunistic. Ideally, obviously develop it all the way to a bank.

John Carroll: Okay. Norbert also raised an interesting point about US versus world and how you deal with that, because I think it’s been a big issue in the United States. And sometimes it’s something that people tend to talk around rather than grapple with directly, because I think a lot of people like to talk a good international game, but don’t really intend to do that at all. Mostly because they don’t understand the European and Asian markets and how to get through that. But, there is a significant amount of discussion about that. And Arie, you’ve thought a lot and you got to China early on. I mean, you got over there as a company executive and thought about that. So, what are your opinions on that? Is that at least something that you should start to educate yourself about, if you don’t know about it?

Arie Belldegrun: It’s a bit tricky. It’s not time to go in details, but I would say the world is flat now. When you see technology that comes from China and J&J takes it and develops it for multiple myeloma in a cell therapy, you’re saying, “Yes, the world is really getting there and you cannot look at US versus Europe or versus anything.” And wherever there’s technology, you should go after it. When you look at companies like BeiGene, these are becoming power plays. And I came back, I started going to China when we did the partnership in 2014. Again, Chinese FDA had very little experience with cell therapy. A year later, they already lectured to us that that piece of the puzzle there in the CMC doesn’t fit what in China. We cannot do it here and there.

And you were shocked how quickly the learning curve in the regulatory authorities in China. Now you can see that our product is already approved in China, has been sold. So, you cannot ignore China and at Allogene, we have done a deal with Hillhouse and we have a 50-50 partnership with them. So, I think, case-by-case, it’s hard to say, things have changed recently. The geopolitical change, the war has changed. So, a lot of things have changed. And on the other hand, whatever you can do in the United States, you are much safer.

David Schenkein: I mean, to build on what Norbert mentioned before, at least in my personal experience for small organizations to build a commercial organization outside the US is really tough. It may make sense if you have a huge product that’s going to have a very rapid launch and you want to completely control it. But for most products, I think for small organizations to build their own commercial organization outside the US is just really tough. And you just need to look at it really carefully.

Alise Reicin: And you need the whole regulatory organization to go along with that.

David Schenkein: Yeah.

Arie Belldegrun: Having said that, I agree. But having said that, Gilead built the big manufacturing plant in Amsterdam, and they’re producing all their CAR-T, Novartis has gone and done it by itself, BMS has done it on its own. So, they all will do it. Although, in an earlier stage of the company, clearly you need a partner.

Norbert Bischofberger: But, one last comment about Europe versus to US. So, the approval process is relatively similar, but that’s not the challenge to get it approved. You get it approved in 27 countries of European Union plus Iceland plus Norway. But then you have to, with each individual country, negotiate reimbursement.

David Schenkein: And you need boots on the ground to do that.

John Carroll: Well, one of the other changes that I’ve noted over the two years of the boom during the pandemic was that a lot of companies who had spoken about how they intended to take their drug all the way through to an approval and market it themselves — and that marketing would be really easy because it was a niche product, and they’d only have to deal with 40 or 50 salespeople — that those people actually did get to the point where they had enough money, where they could take the drug all the way through their approval, and they got an approval. And then they ran right into a stone wall once they started to try to sell it.

It does not seem that the people who develop drugs are necessarily the right people to market them. And it’s a particular kind of a skill and knowledge that most drug developers, most biotech companies, simply don’t have. And they tend to talk themselves into a good game right up until they have to do quarterly reports about how much drug they’ve sold. And it’s usually not that great. So, then they run into it. So, Alise, I mean, when you are just starting out, I mean, how do you think about that? I mean, how do you think about the practical realities of marketing?

Alise Reicin: Is that to me?

John Carroll: Yeah.

Alise Reicin: I mean, I can, naively, maybe we’ll see how I feel when we get closer to it. I’m several years out from having to worry about marketing a drug, but one way to think about it is, especially if it’s in a larger market is, at the end of phase two or at the end of phase three, that’s when you partner and you do either a co-developed, co-market and you sort of use that partnership to build your marketing organization and forward. That’s the way I would think about it.

David Schenkein: And that’s exactly what we did that, and one anecdote, but that’s exactly what we did at Agios. So, our first product, we had co-promotion with Celgene in the United States and allowed us to build a commercial organization. And basically it was our training wheels. And then our second product, which we had the US by ourselves, we could take our training wheels off. We knew how to build, we built the commercial organization that, and we had learned a lot from Celgene and we were able to successfully commercialize the second product.

Arie Belldegrun: The large companies, their lead expertise is commercial. I’ve personally experienced that, when we had developed a small company, Cougar Biotechnology, when we had a pill, not a cell therapy, a pill, which was abiraterone or Zytiga. And it was almost to the end of the Phase III, which we were so proud of doing it in 32 countries and was great. And all we were is about 70 employees.

And to your point, Alise, at some point you realize that, okay, so the Phase III will be done. And then what? And the best thing that happened to us is J&J came in and took over the company. And I could see within weeks, weeks, how another influx of 150 employees come in, start working already on finalizing this study and working on registration, putting a team of marketing team. And I don’t think that we need to explain everybody that those who are starting companies, not necessarily are the best in the marketing of their product. We have seen now, not only in biotech, anybody who’s seen, they watch the series on TV of WeWork or in Uber, will tell you exactly the same. These are the guys who are excellent in what they’ve done in the beginning. Time to move on.

John Carroll: So, I’m going to get to some of the questions here first. We’re getting down to about the last 10 minutes and we’ve got a lot of different questions and I’d like to get through a few of them. And the first one, David, is directed straight at you. And I was going to ask the same question myself: Should we let high performing jerks be part of the culture?

David Schenkein: So, I have a very strong bias here. It doesn’t mean everybody should have the same approach. I took a very strong bias that I don’t think you can build a really terrific culture in an organization if you allow jerks in the building. And the hardest people to let go are the high performing jerks. But I made it really clear when we were starting Agios that that was going to be one of our core tenets of the culture is that no matter how brilliant you were, no matter how great you were, if you were a jerk, you’re not going to work here. And again, everyone has to make their own decisions. But, I think it’s really hard to challenge employees to take risk, to really think creatively if there are jerks around the building who are going to knock them down every time they take a risk. So, my bias is you can’t build a great culture if you allow them in the building.

John Carroll: Have we got any other remarks about that? I would say, that this is a more critical issue now than ever before. That the culture, the environment that we’re all operating in is one where we should be very sensitive about how we build these cultures. And I have several questions here that I’d like to put out to everybody related to building culture. And it would seem that no jerks would seem to be one of the key things, but what are the other elements that you use in terms of what are the other considerations and how has that changed as it relates to building culture? How do you go about doing that? Norbert?

Norbert Bischofberger: Well, I think culture emanates from the top, that has to start with the CEO and then it has to start with the C-level folks. And you just have to be very, very selective in who those people are. As David said, absolutely jerks at no place, certainly not in this organization. But, as I said, we’ve done, I think a really great job at hiring those people. And then it trickles down to the other folks. I think, the culture, you have to be sensitive to what people say. We often do employee surveys, anonymous of course, “What do you think works? What do you think that doesn’t work?” And that then we gauge, that’s got to be a thermometer. “What are we doing right? And where can we improve?” That we’re spending a fair amount of time on that.

David Schenkein: I also think it’s really important, again, this is my bias, that you have to be intentional about what you’re trying to build, because if you just let it happen on its own, everybody comes to the organization from different organizations that had different approaches. And so, I think you have to be really intentional and say, “These are the things that are really important to building the culture we have here.” And you want people to add on to that, because you don’t want everybody to look the same and act the same, you want that cognitive diversity. But I think it’s important to be intentional and not let entropy take over in which case you’ll lose it.

Alise Reicin: And I agree with David. I mean, that was one of the first things I did was actually put into words, sort of what I wanted our culture to look like. And then as I hired my leadership team, we took a crack at it again in an orthogonal way. And then compared that to what I’d already put in writing and then sort of reintroduced it again and we’ll continue through surveys and other things to hold ourselves up to it. And there are other values. I’ve talked about objectivity, transparency, agility and another one that I talk a lot about is a learning culture. Mistakes are going to happen. That’s okay, as long as you learn from the mistakes. And I can tell you just this morning we had something happen and a junior person spoke up and said, “That was my decision. I made a mistake and this is what I learned from it.” And I was like, that is so great. That’s what we’re trying to get at here.

Arie Belldegrun: Okay. So, what you are showing here that that’s a little bit of the art, rather than the science, we can educate somebody. And it’s exactly like medicine, how you talk to the patient, it’s an art rather than the science. You can teach them how and what, but at the end of the day, before you’re choosing a CEO, think twice, if he’s a good candidate, if he has the confidence to surround himself with a C-suite, which will be the leaders in the company. I could tell you that at least at Kite, we started with five people, we ended up with 780 people. Two employees, director and above, left in the company till we sold it to Gilead. Two employees out of 780. Yes, it was before Covid, before when we all had fun working there. But I think there is a art in selection as CEO and C-suite executive is key to success of a company.

John Carroll: Okay. So, let’s also pick up another point that I’m seeing several different questions about. It relates to some of the earlier remarks about quick kill, go slow, then fast. How do you make these sorts of decisions? And here’s the question. To David’s point going slow then fast is the realistic approach in drug development, along with early kills. But how do we reconcile this in a market environment where investors expect Phase I to be the new Phase III and have limited patients, RECIST criteria, not the only way to pick a good drug, surrogate markers, metabolic imaging, DNA, etc. Also, provide good signals. Early kill, sure, but on what grounds? It’s a tough choice, isn’t it? Alise?

Alise Reicin: So many thoughts. I think I mentioned this to you, John, when we met before. Jessica Chutter from Morgan Stanley had a slide that I saw a few weeks ago on what she called ‘late stage’. And, that’s not just Phase IIb, it’s a whole variety of things, but it was late stage failures. And the success rate for the last year was around 47%. And in the last quarter, it was 28% and that’s just horrendous. I think we can all agree about that. And if you want to do efficiencies, the best thing you can do is increase your probability of success. And I don’t think anybody’s done a root cause analysis on it, but I did wonder how many of these failures are because of this pressure to go fast and to cut. And, I think it’s something that you’ve got to think about. And the other thing that’s actually a comment that Jessica said, I heard her speak, I did a panel with her in front of CMOs was, you’ve got to train investors on what you can get out of a Phase I.

David Schenkein: Absolutely.

Alise Reicin: Especially the generalist investors who think of Phase I is going to tell you whether a drug is going to get approved and you better train them about what you can and cannot get out of a Phase I study. And sometimes John, yes, you should kill a drug based on a biomarker. You’ve got to know when, and it depends on what the biomarker is and how you’re certain the variability of the biomarker. You’ve got to design the study so that when you get the biomarker data, you’re sure you can actually execute a decision based on it. But again, like everything else, it’s very molecule and program dependent.

David Schenkein: I could not agree more. I have tremendous respect for the investment community, but you can’t try and develop drugs based on what Wall Street wants, because they don’t typically really understand what it takes to bring a drug all the way through. And so I think the other trend that’s happened though in the past four or five years, which I don’t personally think is great, is more and more companies are going out there. And their first presentation to the outside world is on three patients or two patients. It’s like, I told investors early on, “We’re going to come out to a major medical meeting when we have enough patients to tell a story that we can understand where we are with this drug development program.” And so it’ll be great to see the industry move away from the pressure of getting out to a meeting and presenting on two patients and saying, “We know what’s going on.” Because I just don’t think that’s the right way to go.

Arie Belldegrun: Part of the explanation here is what happened in the last several years when earlier and earlier companies are going ideal, and they are pushed. Yes, you can teach, invest your investors about phase one, but the analysts will not listen to you. So, if you are a phase one publicly traded company, you can educate whatever what will appeal there on the report is something completely different. Look, we see here what we can identify. So, this is part of, I don’t know, maturity of our industry, that now with so many companies going early, we need to adjust and to recalibrate.

John Carroll: So, let’s get to one more question real quickly, and we’re going to have to keep the answers here pretty short, because we’re getting down to it. But I’ve had a number of questions about the board of directors and its role in building a company and where it goes. Particularly now, I mean, when a company starts to struggle, what’s the role of the board? How do you organize that? What do you look to a board for? Arie, you’re on more boards and David, a bunch of boards. So, let’s get your opinions first.

Arie Belldegrun: I always believe that a board is the most important component in the company, because if you have a team that is there to help the CEO and they have the right intention to come to educate, to bring different aspects to the CEO, the company will be more successful. If you are here to be up to the IPO, if you have a board member that is going to be with you, kill the IPO. And after the IPO, he’s leaving, six month lookup, you are leaving. If that’s the reputation, I’m not sure that this is the ideal board members you want.

You want them to lead you, to take you, to help you to those experience. Specifically, if you have on your board, people who have been there, done it, understand what it is, give you the risk. And specifically in answering all the big questions that we ask ourselves together today. You saw how many opinions we have. We did not know, should we license? Should we not license? Should we go to China? Should we not? Who are you expecting to do the C-suite decision? This should be board members who have a vested interest on the long run of the company. And again, you need to know who you are selecting. So, we are very careful by bringing people into our personal boards.

John Carroll: Okay, David?

David Schenkein: I think it’s critical … Yeah, I’ll keep it short. I think it’s critically important to have all types of diversity on our boards, particularly cognitive diversity, but all forms of diversity. And I think the board’s role is to help management by providing the guardrails and strategic direction. I don’t think this is the board’s role to run the company. I mean, that’s why you hired a great management team. And so I think making sure you’re keeping the altitude of the plane at the right level, I think is critically important.

John Carroll: Okay, well, that’ll be the last word on this topic, but it’s a conversation that I think everybody continues and will continue for quite some time. I really appreciate everybody taking some time. It’s been a fascinating conversation. You’ve all been there. You’ve done it. And that’s the best kind of conversation that you can have. So, thanks to everybody on the panel. Thanks to Egnyte for sponsoring this conversation and thanks to the audience for taking the time with us as well. And we hope to see you next time.

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There will soon be one million seats on this popular Amtrak route

“More people are taking the train than ever before,” says Amtrak’s Executive Vice President.

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While the size of the United States makes it hard for it to compete with the inter-city train access available in places like Japan and many European countries, Amtrak trains are a very popular transportation option in certain pockets of the country — so much so that the country’s national railway company is expanding its Northeast Corridor by more than one million seats.

Related: This is what it's like to take a 19-hour train from New York to Chicago

Running from Boston all the way south to Washington, D.C., the route is one of the most popular as it passes through the most densely populated part of the country and serves as a commuter train for those who need to go between East Coast cities such as New York and Philadelphia for business.

Veronika Bondarenko captured this photo of New York’s Moynihan Train Hall. 

Veronika Bondarenko

Amtrak launches new routes, promises travelers ‘additional travel options’

Earlier this month, Amtrak announced that it was adding four additional Northeastern routes to its schedule — two more routes between New York’s Penn Station and Union Station in Washington, D.C. on the weekend, a new early-morning weekday route between New York and Philadelphia’s William H. Gray III 30th Street Station and a weekend route between Philadelphia and Boston’s South Station.

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According to Amtrak, these additions will increase Northeast Corridor’s service by 20% on the weekdays and 10% on the weekends for a total of one million additional seats when counted by how many will ride the corridor over the year.

“More people are taking the train than ever before and we’re proud to offer our customers additional travel options when they ride with us on the Northeast Regional,” Amtrak Executive Vice President and Chief Commercial Officer Eliot Hamlisch said in a statement on the new routes. “The Northeast Regional gets you where you want to go comfortably, conveniently and sustainably as you breeze past traffic on I-95 for a more enjoyable travel experience.”

Here are some of the other Amtrak changes you can expect to see

Amtrak also said that, in the 2023 financial year, the Northeast Corridor had nearly 9.2 million riders — 8% more than it had pre-pandemic and a 29% increase from 2022. The higher demand, particularly during both off-peak hours and the time when many business travelers use to get to work, is pushing Amtrak to invest into this corridor in particular.

To reach more customers, Amtrak has also made several changes to both its routes and pricing system. In the fall of 2023, it introduced a type of new “Night Owl Fare” — if traveling during very late or very early hours, one can go between cities like New York and Philadelphia or Philadelphia and Washington. D.C. for $5 to $15.

As travel on the same routes during peak hours can reach as much as $300, this was a deliberate move to reach those who have the flexibility of time and might have otherwise preferred more affordable methods of transportation such as the bus. After seeing strong uptake, Amtrak added this type of fare to more Boston routes.

The largest distances, such as the ones between Boston and New York or New York and Washington, are available at the lowest rate for $20.

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The next pandemic? It’s already here for Earth’s wildlife

Bird flu is decimating species already threatened by climate change and habitat loss.

I am a conservation biologist who studies emerging infectious diseases. When people ask me what I think the next pandemic will be I often say that we are in the midst of one – it’s just afflicting a great many species more than ours.

I am referring to the highly pathogenic strain of avian influenza H5N1 (HPAI H5N1), otherwise known as bird flu, which has killed millions of birds and unknown numbers of mammals, particularly during the past three years.

This is the strain that emerged in domestic geese in China in 1997 and quickly jumped to humans in south-east Asia with a mortality rate of around 40-50%. My research group encountered the virus when it killed a mammal, an endangered Owston’s palm civet, in a captive breeding programme in Cuc Phuong National Park Vietnam in 2005.

How these animals caught bird flu was never confirmed. Their diet is mainly earthworms, so they had not been infected by eating diseased poultry like many captive tigers in the region.

This discovery prompted us to collate all confirmed reports of fatal infection with bird flu to assess just how broad a threat to wildlife this virus might pose.

This is how a newly discovered virus in Chinese poultry came to threaten so much of the world’s biodiversity.

H5N1 originated on a Chinese poultry farm in 1997. ChameleonsEye/Shutterstock

The first signs

Until December 2005, most confirmed infections had been found in a few zoos and rescue centres in Thailand and Cambodia. Our analysis in 2006 showed that nearly half (48%) of all the different groups of birds (known to taxonomists as “orders”) contained a species in which a fatal infection of bird flu had been reported. These 13 orders comprised 84% of all bird species.

We reasoned 20 years ago that the strains of H5N1 circulating were probably highly pathogenic to all bird orders. We also showed that the list of confirmed infected species included those that were globally threatened and that important habitats, such as Vietnam’s Mekong delta, lay close to reported poultry outbreaks.

Mammals known to be susceptible to bird flu during the early 2000s included primates, rodents, pigs and rabbits. Large carnivores such as Bengal tigers and clouded leopards were reported to have been killed, as well as domestic cats.

Our 2006 paper showed the ease with which this virus crossed species barriers and suggested it might one day produce a pandemic-scale threat to global biodiversity.

Unfortunately, our warnings were correct.

A roving sickness

Two decades on, bird flu is killing species from the high Arctic to mainland Antarctica.

In the past couple of years, bird flu has spread rapidly across Europe and infiltrated North and South America, killing millions of poultry and a variety of bird and mammal species. A recent paper found that 26 countries have reported at least 48 mammal species that have died from the virus since 2020, when the latest increase in reported infections started.

Not even the ocean is safe. Since 2020, 13 species of aquatic mammal have succumbed, including American sea lions, porpoises and dolphins, often dying in their thousands in South America. A wide range of scavenging and predatory mammals that live on land are now also confirmed to be susceptible, including mountain lions, lynx, brown, black and polar bears.

The UK alone has lost over 75% of its great skuas and seen a 25% decline in northern gannets. Recent declines in sandwich terns (35%) and common terns (42%) were also largely driven by the virus.

Scientists haven’t managed to completely sequence the virus in all affected species. Research and continuous surveillance could tell us how adaptable it ultimately becomes, and whether it can jump to even more species. We know it can already infect humans – one or more genetic mutations may make it more infectious.

At the crossroads

Between January 1 2003 and December 21 2023, 882 cases of human infection with the H5N1 virus were reported from 23 countries, of which 461 (52%) were fatal.

Of these fatal cases, more than half were in Vietnam, China, Cambodia and Laos. Poultry-to-human infections were first recorded in Cambodia in December 2003. Intermittent cases were reported until 2014, followed by a gap until 2023, yielding 41 deaths from 64 cases. The subtype of H5N1 virus responsible has been detected in poultry in Cambodia since 2014. In the early 2000s, the H5N1 virus circulating had a high human mortality rate, so it is worrying that we are now starting to see people dying after contact with poultry again.

It’s not just H5 subtypes of bird flu that concern humans. The H10N1 virus was originally isolated from wild birds in South Korea, but has also been reported in samples from China and Mongolia.

Recent research found that these particular virus subtypes may be able to jump to humans after they were found to be pathogenic in laboratory mice and ferrets. The first person who was confirmed to be infected with H10N5 died in China on January 27 2024, but this patient was also suffering from seasonal flu (H3N2). They had been exposed to live poultry which also tested positive for H10N5.

Species already threatened with extinction are among those which have died due to bird flu in the past three years. The first deaths from the virus in mainland Antarctica have just been confirmed in skuas, highlighting a looming threat to penguin colonies whose eggs and chicks skuas prey on. Humboldt penguins have already been killed by the virus in Chile.

A colony of king penguins.
Remote penguin colonies are already threatened by climate change. AndreAnita/Shutterstock

How can we stem this tsunami of H5N1 and other avian influenzas? Completely overhaul poultry production on a global scale. Make farms self-sufficient in rearing eggs and chicks instead of exporting them internationally. The trend towards megafarms containing over a million birds must be stopped in its tracks.

To prevent the worst outcomes for this virus, we must revisit its primary source: the incubator of intensive poultry farms.

Diana Bell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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This is the biggest money mistake you’re making during travel

A retail expert talks of some common money mistakes travelers make on their trips.

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Travel is expensive. Despite the explosion of travel demand in the two years since the world opened up from the pandemic, survey after survey shows that financial reasons are the biggest factor keeping some from taking their desired trips.

Airfare, accommodation as well as food and entertainment during the trip have all outpaced inflation over the last four years.

Related: This is why we're still spending an insane amount of money on travel

But while there are multiple tricks and “travel hacks” for finding cheaper plane tickets and accommodation, the biggest financial mistake that leads to blown travel budgets is much smaller and more insidious.

A traveler watches a plane takeoff at an airport gate.

Jeshoots on Unsplash

This is what you should (and shouldn’t) spend your money on while abroad

“When it comes to traveling, it's hard to resist buying items so you can have a piece of that memory at home,” Kristen Gall, a retail expert who heads the financial planning section at points-back platform Rakuten, told Travel + Leisure in an interview. “However, it's important to remember that you don't need every souvenir that catches your eye.”

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According to Gall, souvenirs not only have a tendency to add up in price but also weight which can in turn require one to pay for extra weight or even another suitcase at the airport — over the last two months, airlines like Delta  (DAL) , American Airlines  (AAL)  and JetBlue Airways  (JBLU)  have all followed each other in increasing baggage prices to in some cases as much as $60 for a first bag and $100 for a second one.

While such extras may not seem like a lot compared to the thousands one might have spent on the hotel and ticket, they all have what is sometimes known as a “coffee” or “takeout effect” in which small expenses can lead one to overspend by a large amount.

‘Save up for one special thing rather than a bunch of trinkets…’

“When traveling abroad, I recommend only purchasing items that you can't get back at home, or that are small enough to not impact your luggage weight,” Gall said. “If you’re set on bringing home a souvenir, save up for one special thing, rather than wasting your money on a bunch of trinkets you may not think twice about once you return home.”

Along with the immediate costs, there is also the risk of purchasing things that go to waste when returning home from an international vacation. Alcohol is subject to airlines’ liquid rules while certain types of foods, particularly meat and other animal products, can be confiscated by customs. 

While one incident of losing an expensive bottle of liquor or cheese brought back from a country like France will often make travelers forever careful, those who travel internationally less frequently will often be unaware of specific rules and be forced to part with something they spent money on at the airport.

“It's important to keep in mind that you're going to have to travel back with everything you purchased,” Gall continued. “[…] Be careful when buying food or wine, as it may not make it through customs. Foods like chocolate are typically fine, but items like meat and produce are likely prohibited to come back into the country.

Related: Veteran fund manager picks favorite stocks for 2024

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