Luca Issi: Hello, everybody, and welcome to another episode of Pathfinders from RBC Capital Markets, where we'll explore the most exciting new frontiers for companies and investors in biopharma. I'm Luca Issi, senior biotech analyst at RBC Capital Market, and it is my pleasure to be here with Arjun Goyal, co-founder and managing director of Vida Venture, one of the most dynamic VC firms in biopharma.
Luca Issi: In this episode, we will discuss Arjun's journey to founding Vida Venture, his passion for investing in true innovation, and his perspective on the latest trend in VC. Arjun, welcome and thank you for being here with us.
Arjun Goyal: Thank you, Luca, and firstly let me say it's great to be here
Luca Issi: Before we dive into the specifics of Vida and some of the exciting investments that you have made recently, it will be great if you can give us an overview of your background, as well as your journey from academia to your current role at Vida.
Arjun Goyal Sure. So my own journey started in Australia as a medical student. I'm a fifth generation immigrant from a medical family so medicine was in the blood, to be honest, and I, after high school, went to the University of Melbourne to do my medical training.
Arjun Goyal: That program was unique, because it was the only research-orientated medical degree in Australia. By that, I mean every student had to do a year of research, lab research as part of their undergraduate program. I did that in the UK, at Oxford, with the now famous Adrian Hill, who's developed the COVID-19 vaccine. His lab was pretty unique in that it integrated labwork with clinical research in West Africa. That was a formative experience.
Arjun Goyal: So I came back to my medical studies very interested in being a physician scientist, working on clinical research and developing new therapies. That's really been a guiding light in my career from that stage.
Arjun Goyal: I would say being in the UK and areas like Oxford and Cambridge, I was exposed to the entrepreneurial climate there and balancing research with startups. I did start a company, a biotech company, as a PhD student raised some seed capital both from Cambridge and Oxford, naively thought I could be a biotech entrepreneur and combine that with my PhD studies. I soon found out that was impossible.
Arjun Goyal: So I dropped out of my PhD, disappointed my parents, disappointed my mentors, and started this journey about 10, 12 years ago into biotech. I came over to the US, got an MBA at Harvard Business School and met my partner and co-founder of Vida Ventures, Stefan Vitorovic. Then I transitioned into venture and got my first real job in industry as an associate at 5AM Ventures before working with Stefan to put together Vida Ventures.
Luca Issi: That's terrific. Very impressive intersection between research, practicing medicine as well as the entrepreneurial spirit. You mentioned Vida. Can you maybe talk high level, what is the big picture mission of the fund here?
Arjun Goyal: So really, there are three things that energize us at Vida. First and foremost, it's working with entrepreneurs, scientists, and investors to develop the next generation of impactful curative medicines. That's core to our thesis. Many of us at Vida come from backgrounds as physicians, or scientists and are passionate about new modalities that are appearing, and the ability to offer cures in a subset of diseases.
Arjun Goyal: So that's first and foremost how we define ourselves. The second is we like to work with entrepreneurs to put companies together. So unlike, I would say ... I don't want to use the word traditional, but there was an era of venture capital where VCs were fairly heavy-handed in terms of how they built companies and how they retained control. We want to liberate our entrepreneurs and scientists to develop these companies, be creative about how they put pipelines together, how they access private and public capital, and we see ourselves really as thought partners to the entrepreneur and to the scientist.
Arjun Goyal: So that's the spirit that we take to our investment roles at Vida. The third thing is, we see this as an incredible time in the industry. We see a maturation of industry with capital inflows, with innovation that is happening globally and is so rich and bountiful. The industry's maturing from a cottage industry based in Boston and San Francisco into a real industry which is global. So, it's the globalization of not just firm R and D, but how medicines are developed that excites us,
Luca: That's very helpful, Arjun. Can you walk us through the investment strategy here? And most importantly, what's the real secret to kind of find transformative technologies in pockets of science where others only see risk? How do you balance that? How are you thinking about it?
Arjun Goyal: That's a question we ask ourselves every day. The term that I've used internally is that risk in biotech is like beauty. It's in the eye of the beholder. So where many people see risks, we see is opportunity. The reason why we see opportunity is threefold. Firstly, our background is as physician scientists. We've published papers; we've interpreted research; we've taken medicines through development regulatory processes. We know the rules of the game. That gives us comfort that once we pair with the right team and the right entrepreneur, we can put in research plans to de-risk science.
Arjun Goyal: The second thing is that we focus a lot on three to four pockets here at Vida. So it's certainly on selling gene therapy as a modality, certainly on oncology and rare diseases, but particularly oncology as a therapeutic area space. So we know those areas intimately, as researchers, as entrepreneurs, and frankly as investors.
Arjun Goyal: The thing is that we're blessed to work with syndicate partners who are equally, if not more, savvy about these spaces. So we're always looking at how we can leverage their insights, their talents, and their capital.
Luca: Maybe let's dive into some specifics here in some of the therapeutic areas that you have portfolio companies in. You mentioned your focus in oncology. When you think about cell therapies in oncology today, what do you think are the current limitations of cell therapies in oncology, and how are some of your portfolio companies addressing some of these limitations today?
Arjun Goyal: So I would say that there are two fundamental limitations in cell therapy and in oncology. The first is around accessibility and manufacturing. First generation therapies have been autologous and that's fine. if you're at a comprehensive cancer center or a top tier academic medical center. But if you're in the middle of America or Canada, those treatments are a lot more difficult to access. so one of the fundamental challenges, or opportunities rather, that we have as investors this trend from autologous to allogeneic therapies, that are batch processes, or can be stored in a fridge or a refrigerator and given to patients irrespective of their immune status. That's a first.
Arjun Goyal: The second is that cell therapies have shown tremendous clinical benefit in blood, in tumors of the hematological system, so blood cancers basically. We have, dare I say it, cases and data to suggest that they can almost potentially be curative in those settings. But if you look at the total opportunity set when it comes to oncology, about 10% of all tumors are blood based or liquid tumors, 90% of solid tumors, lung cancer, colon cancer, head and neck cancer, these type of tumors, they've still been insensitive to immunotherapy. So the second opportunity is to figure out how we can use cell therapy in solid tumors. Those are the two key opportunities.
Arjun Goyal: The promise is that we can, as liquid tumors have shown, is that we can approach treating these patients with curative intent from a physician's perspective. And that's a paradigm shift and game changing. So if I was to go through our portfolio and think about the companies we've put together to take advantage of those opportunities, I would say the first is a company called Allogene, which is a spin-out of the allogeneic cell therapy assets from Pfizer to go after both liquid and solid tumors with this allogeneic saline process.
Arjun Goyal: That company was spun out from Pfizer about two and a half years ago, taken public about 18 months ago, and is now a company about $6 billion with two programs about to go into the clinic. It's shown impressive data in its lead program for CD19, and has announced that it will go into the clinic with its BCMA program for myeloma. It also has several solid tumor targets, in particular CD70 for renal cell carcinoma, that it's going to take into the clinic. We really do see that as a vanguard of the next generation of cell therapy treatments in cancer.
Arjun Goyal: We have a number of players now with cell therapy focused on solid tumors. Companies like [Miagene 00:25:08] and [CAC 00:09:08], and also A2 Bio, and fundamentally the focus here is using different types of cell therapy formats. So T-cell receptor therapy, tumor, or tumor infiltrating lymphocyte therapy, to go after targets that are expressed on the surface of solid tumors at a moment in time, and selectively target those [inaudible 00:25:44] antigens, tumor antigens, with either TCRs or TILs.
I would say those approaches are still what we would term first-generation from our perspective. We're trying to show that we can actually go after these targets selectively, that we can get a strong clinical response, that shows proof of concept in the solid tumor setting. We think there's tremendous opportunity with these new modalities
Luca: Very helpful, and a great overview of some of your portfolio companies in cell therapies pivoting to target therapies, there are some perceptions out there that maybe old school medicinal chemistry, where it's small molecule, is maybe dead. Can you talk about that, and articulate a little bit about the rationale around your investments in and Kronos?
Arjun Goyal: So what we would say is that we do believe that thesis that old school chemistry to targets is, I wouldn't say it's dead. I would say that was a first-generation approach where you had non-selective chemistry going after validated targets. The new generation is really leveraging new tools, new insights, many of which are computational, to get to an end point where what they're really going after is emerging allele specific resistant mutations, which are a much smaller patient population, the so-called undruggable targets. So these are targets that we know to be relevant to cancer, like P53, K-Rise, various transcription factors. It's just that we've never had the tools or the capabilities to go after them selectively. And now we have that toolkit, whether it's degraders as a chemistry modality, whether it's using various computational techniques, bioinformatics, AI, data sciences, whether it's protein motion visualization, we can go after targets that have been difficult to drug to date.
Arjun Goyal: And so the tremendous interest you've seen and whether it's our portfolio companies like Peloton, going after HIP2 alpha selectively, or a Kronos, which is going off to various transcription factors, selectively Kinate, which is going after those specific resistant mutants. These are problems that we've recognized clinically for years, but we've never been able to target selectively. And now we can with the new toolkit we have in play, as well as quite frankly, next generation or genomic sequencing of tumors that are able to highlight these particular genotypes within biopsies that we weren't able to do 10 years ago or 15 years ago now we're able to pair the right medicine for the right patient, classically what we term precision medicine. That's a paradigm shift in the way that cancer is being treated.
Luca: That's very helpful. And hopefully, we'll open up a new era for medicinal chemistry, where we can really drug the undruggable and go after transcription factors and other targets that historically has been challenging.
Pivoting to the oligonucleotide space. We have, at this point, multiple drugs approved by the FDA in the siRNA space. Obviously, the technology today is limited to target genes, primarily deliver with a Gal-Mac approach. However, the holy grail for this whole technology is to really try to drive tropism to tissue beyond liver. Can you talk about how you think about that, and try to address the limitations of current siRNA?
Arjun Goyal: It's a good question, Luca. I would say that, taking a step back, we've seen tremendous advances in fields like gene therapy, gene editing, to go after targets that are genetically validated. And as a result, you have a heap of companies out there, which are gene therapy companies. What has always struck us as interesting is that, when it comes to ASOs, siRNA, you don't have as many companies And that strikes us as interesting. What we've been particularly looking for is data that shows you can deliver these formats beyond the liver, where the tropism has been exquisite.
In the case of Dyne, data showed that their antibody-conjugated oligonucleotide was able to get the adequate biodistribution in muscles. And that's pretty unique because there are many neuromuscular diseases where biodistribution and uptake, and delivery, is a challenge, not just with siRNA or ASOs, but also with gene therapy. And we thought that Dyne approach, which is to use an antibody as a delivery vehicle to get into the muscle, conjugated with ASOs or the oligo, was clever, differentiated. And showed there was a reason to believe they could get the adequate distribution required to get a therapeutic effect in the preclinical models. so that's what got us excited on Dyne. it's really one of the next frontiers in this space
Luca: You mentioned gene therapy a few times, maybe before we dive into some of your investments, would love to get your take on some of the macro trends that we're seeing in that space. We've seen how manufacturing continues to be a key area of focus.And also, we've seen the FDA, maybe being directionally more stringent. Is that changing your philosophy, in terms of investing in gene therapy?
Arjun Goyal: What I would say is that any sort of technology trend follows a pretty predictable cycle. Firstly, there's the promise of the technology in academia. Then there's the key clinical breakthrough Then you have industry swarming into the clinic which is what we've seen with AveXis and [Ordentos 00:06:23]. As this happens, fundamentally, the processes are industrialized, and the kinks in the armor become apparent. And we're at the stage where the kinks in the armor are becoming apparent from a manufacturing perspective, from frankly, a clinical data perspective as well.
Arjun Goyal: The promise of gene therapy is still there, and we're very bullish on the space. It's just that these things take a bit longer to get to prime time. We have two investments, Homology Medicines and Asklepios Bio. Our thesis about the space, is that whilst there is an overhang, given the CRL from FDA on BioMarin's hem program, the requirement potentially to run a longer study, to show durability of response, and potentially in the future, to run studies against an active or historical standard of care as opposed to a single arm study. Those points are important considerations from a trial design perspective.
Arjun Goyal: The other point is also around manufacturing, reality is that the first generation of programs are expensive to manufacture. The dosing required is high. And with that comes the issue of transaminitis or liver tox, which we've with these therapies across the board. What I would say is that now, we're understanding the real issues with gene therapy across the board. But we also have the toolkit to figure that out. So you're already seeing the next generation of companies that can address this. And that's where you're seeing deals getting done for new gene therapy formats that will be safer, less toxic, and potentially easier to manufacture than the first generation that's where the space is moving to. I think this field is just in its infancy. And that's what excites us.
Luca: I would love to step back and conclude with some bigger picture questions here. Obviously, it has been a record-breaking year for IPO. What are your thoughts on companies flipping public sooner rather later versus a few years back? And maybe more broadly, how you're thinking about exit?
Arjun Goyal: I would say that the industry has certainly benefited from a very open public market here in the U.S. that is increasingly receptive to innovation. And so early stage, preclinical companies that are focused on changing science, whether it's in gene therapy, oligos, cell therapy, immuno-oncology, we've seen a lot of receptivity around those stories.
Arjun Goyal: No question, biotech has its ups and downs, and even over the last several years, there's been volatility around broader macro trends like drug pricing, like politics. But fundamentally, if you looked at some of these broad-based biotech indices of the last several years, they've been impressive performance. I would also say that fund influence into the industry have been increasing. And we have seen the maturation of this industry where generous investors have to take note of because some of the broader U.S. indices have a large chunk of them which is biotech. Whether it's a mid cap indices or a small cap indices. I would say anywhere from four to 500, is the number I've heard, biotech IPOs since 2012. So we expect that that will still continue over the next several years. We do expect that there's going to be volatility, but the window will be open for very good stories, where you have the confluence of strong science, strong management, and very strong investors.
Arjun Goyal: In terms of exits, I'd say Vida is actually... we're actually a very M&A driven firm. We do think that pharma M&A is the lifeblood of this industry. Pharma continues to access innovation through M&A. We don't believe that will stop. Increasingly, their early stage pipeline is coming from venture-backed biotech companies. Increasingly, new FDA-approved medicines, and particularly areas like cell therapy and gene therapy, they're coming from venture-backed biotech companies as well. So that trend will continue.
Arjun Goyal: We still think M&A is here to stay and is frankly the exit avenue that we aspire to. And the great thing about an IPO is that it allows these companies to ultimately access a lower cost of capital for their pipeline development. And that's our interest in getting these companies public.
Luca: Last question. And I recognize this is a very, very open-ended question, but curious of your thoughts here. When you look at biotech, when you look at the latest breakthroughs that are coming down the pike, what do you think would be the biggest breakthrough in biotech for the next decade?
Arjun Goyal: Good question, Luca. I really think, broadly speaking, it's gene editing as a tool to enable- a generation of therapies that can potentially cure diseases like sickle cell disease, hemophilia, that's really what excites me the most. The way I would frame it is, whilst both the tool and the modality of gene editing is exciting, from a clinical perspective, I really do think we're in a new era of curative therapies. We have a suite of technologies that can fundamentally address the root cause of genetic diseases. And we're going to see some outstanding clinical results through that in the coming decade.
Luca: Terrific. That's a great point to end on. Again, thank you so much, Arjun, for your insights today. This was a very insightful conversation. What else does 2020 have in store for Biopharma? We'll keep in track right here on Pathfinders. Thank you all for joining, and we hope you'll stay tuned for future episodes. If there are any areas that we discussed today that you'd like more information, please don't hesitate to contact us directly for more in-depth discussion, or visit our website for further insights. Thanks again.
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