Ilya Ilyin - CEO at General Biophysics

Welcome to another CEO Wisdom pod. We have Ilya Ilyin with us today. He's a CEO at General Biophysics. He's partner also at Gen5 Group in Wayland, Massachusetts. Uh, General Biophysics is an interesting company which, uh, Ilya is gonna tell us about. It's all about, uh, gas and technical stuff and potentially a good breakthrough that could help people. So Ilya, welcome to podcast. Tell us a bit more about yourself and what you're building.

Thank you, Charles. So my background is in bioengineering. I'm originally from Russia, moved to US 20 years ago, and I've been working in innovation consultancy all my life, but in 2008 started to be involved in Xenon. So we came across the interesting technology, how to preserve biological tissues, try to store shrimp and crayfish. I'll talk about it later. And we moved this technology all the way to the therapeutic therapeutic applications where we're working now on treating Alzheimer's disease and opioid use disorder and other neurological diseases. So it's been a journey to develop the company from scratch and to do the scientific entrepreneurship with leading academic institutions in the US.

So what was the aha moment when you discovered you could freeze up shrimps and crayfish and revive them 24 hours later?

Definitely, it was a "ha" moment because originally when we put the, let's say, lobster in the tank and pressurized it with xenon gas, which is very expensive but it's also noble gas, and cooled it down, we saw some flakes of snow and ice and this poor lobster actually fell asleep completely. So we froze it and then we brought it back to life when we released the pressure and brought the temperature back like in 24 hours later. And we managed to get that lobster to crawl. And we thought, oh, now we probably can freeze humans. Definitely we would be able to store seafood. But for the seafood, this technology was ridiculously expensive because xenon is the most expensive noble gas you can find. We started to do some work with biomedical applications specifically where you can think the what the best value would be other than the transfusion components from the blood. And we worked on the platelet preservation for a long time. We developed the system for preserving platelets at cold temperature so they wouldn't get activated and can be transfused normally. And then another aha moment happened when we thought that, okay, we're in a logistical technology, how we can apply it for the therapeutic applications where the value is. And maybe the mechanisms and the biology that we discovered in terms of the biophysical mechanisms, how gas position itself in the biological cells, can help people to manage their diseases where we have these issues of the activation of the immune system. So this is where we found the partners at Harvard, started working on Alzheimer's disease models, and figure out that yes, we have an effect and we can modulate human microglia in the brain. Which is one of the mechanisms of Alzheimer's.

My first obvious question as a scientist, why would you choose one of the most expensive gases to try to build something if that means that even if you discover something, it's not going to scale and be commercially viable?

Oh, usually it works the other way around. If you see the effect, then you're trying to kind of see how you can make it commercially viable.— and this is exactly what happens. So, yes, xenon is expensive gas, but it's also not metabolized. That means that if you efficiently administer it, you can take it back and administer to another person. And this is exactly what our system is developed for. So, the one thing is that it's a closed circuit. So, it's administering gas to the person, and then we can collect that gas back from that person, and then we need to bring it to our facility for recovery. So, we can generate the new batch of clean gas and use it again with the next patient. Only this way you can make it efficient economically, but also feasible. Because if you look at the effects, and it's a multi-target drug, there are a lot of people in the world who would need this. And it looks like we wouldn't have enough xenon in the Earth's atmosphere until we go, you know, elsewhere, maybe to Mars or whatever. And because of that, we need to recycle it, we need to reuse it. And our technology allows to do that. So that became really feasible. You can solve technical problems. It's much more difficult to solve biological problems.

I love how you potentially solve it, but it looks like rocket science. How do you recuperate in a gas that just went through a human being?

So, yeah, that, that depends, right? Some human beings can walk out with a bunch of gas. We try not to allow that. So what we would like to do is to have this period after the therapeutic treatment where people just breathe pure oxygen and they exhale the xenon that got into their body. Because again, the xenon is not metabolized, it gets in and out, and that's the beauty of this drug. So you do not have something that would create side effects because it's in a body for a longer time. So we're doing that, and then you can strip the other gases out. So you can absorb selectively CO2, you can absorb oxygen. We just put it through the special absorbent that absorbs preferably xenon, something else as well. But again, we have a ppm levels of xenon in the atmosphere, so it's very expensive to extract it. In our mixture, after we're doing that, we have a percentage level. So it's much easier to extract and enrich that mixture, and this is what we are doing.

Okay, so I sit down with a mask and there's this gas tank next to me, right? Like you activate it with your technology, it releases a precise dose of xenon, which is not lethal at any dose or what?

Just— Yeah, so it's a noble gas, but you need to be careful giving it with oxygen, right? Right? So we need to have sufficient oxygen not to create hypoxia in the patient, and patient wouldn't have anything to breathe. So with our treatment, and this is one of our discoveries, that we can deal with the subanesthetic xenon concentration. Xenon been known to create anesthesia in the high concentration environment, but in our case, it's much lower concentration, and people actually do not get sedated. So they inhal normally, and we can administer this with fully automatic inhalation machines that we developed. So this is on our website. We're trying to validate it, and we're moving it through the clinical trials where the system doesn't require potential anesthesiologists to do this thing because it's fully intelligent and automated.

Okay, and just to come back to the demo, right, like I'm the patient, I sit down, How much breaths do I have to take until the Xenon is fully into me?

There are different schools of thoughts, like, oh, how much you need to do that, and if time is actually a factor. So based on our research, we would say that the average session would take about 20 minutes of treatment with the Xenon, and we would add 5 minutes in the beginning just to breathe pure oxygen, and then 5 minutes at the end so we can recover our precious Xenon and collect it.

Okay, and just for context for the audience which might be utterly confused, this is, uh, for Alzheimer's, right? So I'm an Alzheimer's patient, I sit down for 5 minutes, I inhale it, I exhale it back in the machine. The same system, the same mask would collect the xenon, which is super sci-fi, right? Have you ever heard of like any other technologies that recuperate the gas, or are you like the first one building this?

Yeah, I think for this application we one of the first, so we, uh, internationally the first one who does it and recover it. So this is definitely— we're kind of the pioneers. There are other systems probably available here and there. There are people try to do that. I'm aware of the system in Russia, but now it's not internationally available. And here we are building this fully logistical kind of vertically integrated business. So we would be able to collect it and bring it back and then supply the xenon gas to the customers. So that's kind of the business proposition here to make this whole closed and be able to do that in a real way. For the full disclosure, so we're clinical stage company, meaning that we are in a clinical trial. So the people cannot come and treat Alzheimer's to us or to the doctors. It's just participation in a clinical trial. That we announce from time to time. And it's, uh, again, uh, it's a multi-target drug, and we explore in other indications like opioid use disorder, one of the things that we hope initiate the clinical trial next year.

Super interesting. Uh, starting with Alzheimer's, right? Like, what makes you think that your treatment can be better than other treatment? And if you could explain the other treatments, right? There's pharma, I think there targeting, uh, thiol protein, um, and it's like trying to slow down the oxidization that they cause, right? Can you talk about the competing solution and why do you think yours could be potentially better to treat Alzheimer's?

So, uh, there are probably, uh, three, uh, elephants or legs of the stool or whatever you call it for the Alzheimer's disease, uh, known so far. One is amyloid accumulation. So that's a protein in the brain that creates this amyloid plaques, and everybody heard about it. There is a tau protein, that's another mechanism, and tau tangles that create it in neurons. And the last one, neuroinflammation, because when tau and amyloid accumulated, we need to clean them up somehow, or they accumulated because their natural system in the brain cannot clean them up efficiently. So there is a cell which is called microglia, which is a macrophages in the brain which does this cleaning. And now the new area of research is focused on this microglial modulation or activation or doing something with that so it would be more efficient in cleaning up the brain and leaving kind of neurons which are good still intact. So it's always this balancing act with inflammation. So It could be good and could be bad. So with our technology, and this is our discovery, that with xenon inhalation we can make these microglial cells of the special intermediate phenotype. They are active enough to clean the bad stuff, but they are not super active or hyperactive in order to create the massive inflammation in the brain. And that's kind of the beauty of the solution. We would be able to— and we demonstrate that in animal models— that we clean up the amyloid, we have a positive impact on the tau entangles. And that's a sequence of the microglial state that we put in them.

I'm still not sure how you got the insight from crayfish to, like, preserving or cleaning out brains. What's the missing out link that had you go like, oh, aha, this can actually, yeah, clean out the plaques in the brain? Like, what was the missing piece in between? What made you think that xenon gas could actually do this? Did you check the previous research? What was the insight?

So this is a great question because it comes to the core of what I've been doing all my life with innovation consultancy. You can take the different lens of how you consider the world, not in terms of objects and subjects and, you know, acting to each other, but in terms of functions. And when, as soon as you look at the functions, you can generalize a lot. So here with this specific example, if you look what happened with the human platelets, with the xenon, we make them numb to external stimuli, to the stress of cold, for example. And they're not reactive, they are not activating as a response of that. And that allows us to store them longer. When you take this principle or this function of making cells numb to external stimuli and bring it to the therapeutic areas, you look at where cells are activated in the disease.. And one of this activation in the brain is actually activated microglia. So there was this hypothesis appeared, or can I use a xenon gas in order to make this microglia numb to external activation? And this is how we came up with this theory, and then it was confirmed in animal models.

I'm still not sure how that relates to plaque elimination.

Oh, that's because— yeah, because the microglia eliminates plaques. Right? So the one thing is that the microglia, if it's not activated at all, it doesn't eliminate plaques. But when there are a lot of plaques and microglia become hyperactivated, it starts eating everything beyond these plaques, the neurons that can still exist, that can provide the memory function, etc. And we started with fighting that hyperactivated microglia. There are things that we can shift it and actually make it efficient in eliminating plaques, is a secondary one. We started with the hyperactivated microglia and neuroinflammation mechanism of Alzheimer's in some of the patients.

Okay, but what makes you think that it can constantly— like, does one treatment will fix the full problem, or is it constant treatment? Would it need to be shut down constantly? Would I need to inhale that gas once every week? Like, how would that work?

Yeah, so also good question because it's coming into this understanding of the PK/PD of the drugs. And specifically here, we established with animal models that we can give this inhalation for about maybe from 20 to 40 minutes and doing it just once a week. So this way we would be able to bring the patient in and subject the patient to the inhalation of xenon once a week, and that would be the treatment. How many times we need to do that, that's something to establish, still to establish. So we thought that it would be probably between maybe 8 and 12 sessions, and after that we have some tail of the effect where people do not subject themselves to this inhalation and still maintain their memory function. Then they come back maybe like half a year or a year later, but that would be speculation on my part. We do not know at this point. What's important also is that it can be used as a combinational therapy. So we can use this as a combination therapy with the drugs which are currently approved in order to reduce amyloid plaques, for example, and also address this neuroinflammatory mechanism. So the next time it would start accumulating, it would be cleared up by the functional microglia.

Now the gas itself, my brain cannot compute how you are not losing gas anytime someone inhales it.

We might lose it a little bit, but when people breathe through the mask, we seal it well, and then the person and the machine create so-called breathing circuit, meaning that we have a machine and all these pipes which are obviously completely sealed, but also we have patient's lung. And we see that we can recapture majority of the gas that patient inhale, which penetrates into the brain because the gas then released back through the lungs to the atmosphere when we reduce the concentration and start giving the pure oxygen. If a person has a different tissue composition or let's say overweight, we can expect that this process would take longer, but still we would be able to recover majority of the gas that we administer.

An overweight person, isn't that like way harder to treat because they're constantly stimulating overactivation through their diet and their lack of physical activity?

No, it's more like the physical mechanism. So xenon as a gas physically very well dissolved in lipids, and that's a reason why it actually gets from the blood to the brain., and we can build up the concentration there. It has no issues penetrating the blood-brain barrier, which is great comparing with antibody treatment where you need to have some kind of vehicle in order to get in there. But because of that, it also would be absorbed in the fat tissue, and you can imagine if there is a significant amount of fat tissue, that significant amount of xenon is there. And it takes time to penetrate and then to get back.

Okay. Why not harvest xenon gas? Isn't there a way to make xenon gas super cheap?

Yes, so that's coming to the level where it comes from. It's a noble gas, it cannot be synthesized chemically. And it's separated from the atmosphere air. So after air is stripped of these components like oxygen, nitrogen, CO2, then we get the residual, which is argon and all other gases in the mixture, which called rare gases. So xenon is the last one in terms of its concentration in the separation process. It's the rarest possible. And we cannot substitute it with the cheaper gas because This is where this atomic mass plays a role. So it's a huge atom, it's very heavy, and when it's positioned itself into the cellular membrane, it starts to impact how this membrane transfers a signal, transfers the different proteins in and out of the cells, and also how it's expressed— the different receptors on the surface of the biological cell. It's actually interesting because this cellular membrane, it looks like the ocean with ice pieces in it, or icebergs. And this icebergs called lipid rafts. So when we add xenon in it, we got much less and more distributed icebergs in the ocean. So we kind of start melting them and increase the fluidity of the extracellular membrane. So this is what happens on the physical level. And then there are all these biological mechanisms, biochemistry and signaling cascades that we explore in our research.

But coming back to harvesting it, right, if I would want to harvest it, how would I do it?

So with harvesting, it's this cryogenic separation process. It's going into the big column with the high pressures and cooling down the mixture. And because the melting point for the different or evaporation points for the different gases is different, we can separate it down the road. This is how it's done in industry. And because it's a last gas, so it takes time and a lot of cycles in order to generate pure xenon with a high purity that we require.

And you couldn't optimize that process like Elon style, right? Like, just like he cracked recycling rocket, you couldn't bring the cost down to like super cheap if you would over-engineer the problem?

We can make it cheaper, or if there is a big need in the xenon, more people would build these facilities, or we would build this facility that would recycle xenon, and that's in the plans. But it wouldn't be more available because it's just limited amount in the atmosphere. What we're trying to do is actually build this market from scratch for xenon. Gas. Before, it was used for the headlamps and cars, but then now we have LEDs. So the current biggest use of xenon, I believe, uh, the propulsion for the satellites, which is very cool application, and it requires a lot of xenon, but it's still very limited. What we're trying to do is we position it for the biological treatment, then it's putting together the new market for the gas, and then it can become cheaper.

Wouldn't that be one of the things we could harvest better in space and bring back to Earth?

That's an open question, a good one. I don't know because it's a lot of factors coming in, in terms of the temperature and pressures that can be achieved, but also currently with the payload that we can ship to the orbit, it's always the most expensive factor. We actually tried to do some research with shipping out blood samples to space in a space program. We didn't get through because our containers were too big for the payload that can be put on a rocket at that time.

This company, General Biophysics, are you betting all your tokens on that one?

We are betting all our tokens on xenon gas applications, but we're as a platform treatment technology, as I mentioned, we have a different indication that we can pursue. So it's like one drug but a lot of potential diseases that we can treat. We looked at the Alzheimer's disease, neurodegeneration such as ALS, Parkinson's, and others. And we're also working with opioid use disorder and pain treatment. There are some other things also in the scope because it's a multi-target drug. And the core target that's very interesting is the GSK-3 beta, which is a in my mind, very similar to the GLP-1. GLP-1 at the center of the technology— or sorry, the energy conversion— but GSK-3 beta is at the center of the immune response. And if we can effectively engage this target, then sky is the limit in terms of the indications and the diseases that we can treat.

So for you, this is a safe bet, right? Like, if one fails, you can Troy and Nadir, are you raising capital? What's the business model here?

Yes, so we originally, we looked at raising capital for opioid use disorder and clinical trials, and the reasoning for that was that it might be just two phases of the clinical trials that would be required in order to get to the market. It's emergency, it's potentially fast-track, etc. In terms of the regulatory approval. And it's just faster way to get to the market with a very kind of well-controlled clinical trial. As soon as we are at the market, we would be able to allow the off-label use and explore additional applications. But for some reason, and maybe that's related to the stigma associated with opioid use disorder and addiction, we couldn't get enough traction into that. And we are now pivoting toward the different applications. Let's say if we are talking about neurodegeneration or pain treatment. So we are raising the Series A in order to accelerate these trials. But on a side note, we've been funded by the US government through the NIH and military grants, and this is how we at this point plan to fund this opioid use disorder clinical trials that we hopefully will initiate beginning of the next year.

And how big could this get? Uh, you know, like if you're on the right side of the bet and you can help Alzheimer's, just the Alzheimer's market, um, let's say 5 years down the line, right? You've got like a market drug approved, the full mechanism is built. Uh, one, is that timeline good? And what could that look like in terms of sales? Uh, the first year, would it be hundreds of millions and eventually billions? Would you not be the person commercializing it? Would it be a big drug company that would acquire you? What— give me the outlook here.

Yeah, so in each of these indications that we are looking at, and let's pick Alzheimer's and opioid use disorder. Opioid use disorder sounds like the small or potential niche market. It's not. It's not randomly selected as a national emergency. The number of patients is huge. Like 4 million people suffer from that. And the numbers that we can bring in, in terms of the potential revenue, even with 1% of the market access, is in the billions. And because of that, any application that we pick might be very commercially attractive. The thing is that here with a business model, we— combination of the device and the drug, and this is our regulatory approach. And with xenon gas being expensive drug, we are looking at the margins more closely emulating the biomedical device company. But still, because we can capture their gas and decrease their cost for the gas because of the recycling, as well as because our margin model on device side pretty attractive, It's a good value proposition for the investment, and we have these models with the specific numbers that we ran, and we see that, yeah, that makes sense. Another question that you asked is about the exit strategy, and at this point we envision to operate this as an operational company and vertically integrated company where we provide the devices and we can do the recycling of the gas and issue the batch numbers on this gas and sell it as a drug. We can imagine that we would be acquired later on by the companies who play in area of the, let's say, anesthesia, like the companies who producing the anesthetic machines. Or we would be able to do the collaboration and just carve out one side of the application. For example, work with the company who is developing and bringing to market the Alzheimer drug, and we would be the combinational therapy in order to alleviate the side effects and increase efficiency. So all the things are in play, but again, it depends on where we are in the cycle. And at this point, we see that it's feasible within, let's say, uh, 4 years from now to be on the market with a product.. And being on the market with this product is quite commercial success in terms of the revenue that company can bring right away in the first year.

And the cost per treatment, would it be like $5,000 per dose? And I don't know, over 12 weeks, like $60K, would that be the total cost for the government to pay for one patient's therapy?

Oh, that depends a lot on insurance coverage and how it works in the US. As you know, everything is much more expensive here because of the hospital costs as well. And this therapy should be administered in a doctor's office or in a hospital or in a special outpatient facility. So the medical personnel is involved. It's not anesthesiologist in this case, so it could be administered by the nurse or technician. And that's why we're building this inhalation machine, which does the heavy lifting stuff. So, no, the cost for the procedure, because of the cost of the xenon, could be much less than $5,000. The question is like how much people would like to put on this, who actually providing the service, and I cannot talk for them. For the company, it makes sense to sell the machine or provide it for free if there is a significant volume on that. And if you're looking at what the procedure can bring to the company, it's either sales of the gas and the machine, or— and we started already working on that— the collaboration where we formed the JV in a specific region, and we together with the medical facility administer this treatment and recognize revenue from the treatment from the patients.

Got it. The machines, it sounds they would cost a fortune. Would they, would they be built in the US?

Uh, at this point, yes. So built everything in the US, and there are requirements from the NIH and non-dilutive funding that we have, as well as clinical trials that we are doing. Later on, definitely we can look at how this cost can be reduced because It's the same or similar approach as anesthetic machines are built, but also there are several, you know, quality controls, testing, validation, everything that would be required for the medical equipment, and we keep the tight control of that.

Interesting. Last question: why become an entrepreneur and not just be an executive at a big pharma company?

I just would like to, at a certain point, to be in the control of building these innovations and bringing them to the market. You know, in the consulting world, you draw a lot of slides, you build a lot of prototypes, you deliver them to the customer, and the customer, in our case, it was Fortune 500 companies who can decide, do we want to shelf it, it, or we put it on the market, or we significantly change it. And in my mind, it was particularly interesting to see the results. So if you develop something, if you invent something, how to bring that to the market? And this is exactly the journey that I'm going through.

I love it. Ilya, where can people find out more about you?

So, uh, we, uh, have a website which is, uh, uh, generalbiophysics.com. We have a bunch of scientific information, including our publications and some equipment that we are building. And as well as we are on LinkedIn, and we have a company page there, General Biophysics, as well, and myself there, Ilya Ilyin.

So that was Ilya and Charles for another