3 Things You Didn't Hear Coming Out Of JPM
By Matthew Pillar, Editor, Bioprocess Online
You’ve heard San Francisco was buzzing with cautious optimism last month. You’ve seen the M&A activity that’s buoying spirits and you know inflation and interest rates are stabilizing, if not improving. You may not have considered these three trendlines, offered by a guy who spent his time at JPM doing more listening than anything.
AI Is Having A ‘Pick Me’ Moment
My daughter, who’s a high school junior, recently referred to a kid in one of her classes as a “pick me girl.” I had no idea what she meant by that. Fortunately, she’s patient with her Gen X dad. She explained, and I’m paraphrasing, that a “pick me girl” is one who makes desperate and often embarrassing attempts to be validated.
By that definition, “pick me” biotechs have been ever present at JPM, and biotech investor conferences in general, since they became a thing. The artificial intelligence hype has dramatically exacerbated the jostling.
I’ve interviewed several hundred biotech leaders. A few years ago, none of them were putting their artificial intelligence infrastructures on display for attention.
In San Francisco last month, everyone was scrambling to convey why they had the corner on AI-enabled target discovery, drug discovery, and/or drug design and development. Much of what they conveyed was in fact smoke, mirrors, embellishment, and exaggeration.
There are a handful of biotechs that have invested heavily in AI, demonstrated its promise, and forged AI-derived molecules into the clinic (primarily in antibodies, a space that had sizable head starts in wet labs, clinical, and manufacturing protocols, and thus in data accessibility). There are many more biotechs (by JPM talking points standards, all biotechs) that claim to be applying some semblance of computational biology to their discovery and design efforts and who are thus eager to call themselves AI-enabled.
Thing is, to truly harness the power of big data and AI in a comprehensive way requires a lot of resources – infrastructure, which costs money not traditionally accounted for in biologics development; people, like computational biologists and data scientists, also not traditionally accounted for in biologics development; and effort, really difficult effort, to marry in silico concepts and the people who explore them with in vivo experiments and the people who run them, over and over again in an iterative cycle that requires said people to understand one another’s very different languages. That’s all really hard, and really expensive, and really different, and anyone who tells you they’re really doing it should be quizzed. Take a long look under the hood. Because at JPM, whenever AI was discussed, virtually everyone was clamoring, “pick me!”
Platforms Are A Commodity
Not long ago, biologics development platforms were a novel, if unwieldy, concept. The debate over the value of the platform versus the value of the product rages on (what’s more valuable, the iPhone or the app?). But platform concepts have taken root, matured, and become a favorable model among a great many biotech startups, and for good reason. The theory that a development platform that standardizes, if not automates, fundamental elements of biologics development is a solid one to build on, if for no other reason than the promise (at least, hope) that the standardization they enable and demonstrate with a few iterations under their belt might give regulators fewer boxes to check on the path to IND.
In the target-rich environment JPM provides, I interviewed the leaders of fourteen different biotechs over two and a half days. They all described some semblance of a platform, though among those in the clinic, not all of their candidates were platform-derived.
In the iPhone analogy, I contend that the app (the drug product) still holds the most value in biotech. Biologic drug products are still the primary currency on which the most and biggest deals are made. But, if platform-derived products are the currency, the platforms they’re derived from are the mint.
I like to ask the biotech leaders I interview about their end games. Would you like to take the products you develop all the way to the market? Do you aim to take candidates far enough into the clinic that they generate the data that makes them an attractive and sellable product? Are you hoping to, at some point, cash out on your company, lock, stock, and barrel? Among true platform companies, the questions often earn me a coy response. That’s because biotech leadership and decision making is all about optionality, and platforms offer that in spades. Whatever the goal, which is often unknown until the opportunity to achieve it smacks a biotech in the face, the platform concept feeds pipelines and enables options.
Biotech Markets Are Rebounding, But Biotechs Remain Fickle
On the heels of the JPM hangover, I had a conversation with a young biotech upstart who’s plotting out her career path. Recognizing that I interview biotech CEOs for a living, and that I might have retained a bit of knowledge from those conversations (risky expectation on her part), she had many questions for me. One of them, I had not pondered. She asked, “do you think the COVID pandemic contributed to biotech’s downcycle?”
She explained that she figured it had, given the flocks of biotechs who made fateful decisions to rush the gold that was hurriedly being offered for COVID vaccine and therapeutic development. Many of those companies, she surmised, were caught off guard when COVID fatigue and vaccine hesitancy ensued. She wasn’t sure though, having posited said thoughts to a colleague who decisively eschewed the notion on the grounds of the COVID cash infusion.
It's true, COVID injected a pile of cash into an industry that for the previous decade hadn’t really found money hard to stack. But only for a minute. During that minute, easy money was like an anabolic steroid offered to a bunch of lazy and unscrupulous bodybuilders at virtually no cost. An ‘ooh, shiny’ moment ensued. Mediocre-to-promising candidates were shelved at the hope of a quick buck. For dozens upon dozens of biotechs, that priority shift spelled doom. I told my new upstart friend that her colleague was dead wrong. I watched biotechs who had no business chasing the COVID dollar upend their pipelines in pursuit of it. While it was happening, I didn’t have the foresight to consider the implications.
The great culling we’ve seen in biotech was going to happen whether or not the pandemic did. The industry was over inventoried and bloated with retail investment that supported questionable science, shaky candidates, and unseasoned “jockeys,” as my friend Allan Shaw likes to call biotech leaders. But the vacuum that sucked the air out of so many wavering biotechs in the wake of COVID certainly hastened the demise.
Based on conversations had and overheard at JPM, the new gold rush that knocks biotechs from their moorings may well be weight loss drugs. While it won’t usher in Operation Warp Speed 2.0 or offer any Emergency Use Authorizations, obesity is a serious health issue and there’s unimaginable money being thrown at it. As such, I’m already seeing plenty of shifts in pipeline strategy, particularly in the anti-aging space that was just getting oh-so-close to the respect status it deserves as it shifted toward serious age-related indications. For them, obesity isn’t a far leap, but is it a smart leap?
My advice to them is simple. Beware the desire to chase that greasy dollar, particularly if the indication that’s drawing the money is a click too many outside your ten ring. There are a lot of jobs and a lot of stakeholders on the line. While emergency (or trendy) indications might extend a runway, it’s too often forgotten that good science and good data keep planes in the air. Avoid the vicious cycle, lest you squander this opportunity that appears to be coming back around.
Oh, and if a young biotech upstart asks you for a few minutes of your time, give it willingly.