Episode 101: Biotech Strategy and Creative Fundraising for Rare Disease Drug Development

From PyGow to ALS, we cover the gamut in this episode of BIO from the Bayou. You're listening to BIO from the Bayou, empowering biotech leaders with the tools, assets, and expertise to improve healthcare outcomes.

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Serving the entire Gulf South, but recorded in the heart of New Orleans. Welcome back to BIO from the Bayou. I'm your host, Dr. Elaine Hamm, the executive in residence at Tulane School of Medicine, and to Today's guest with me is Dr. Vikas Sharma. He is the Chief Business Officer at CureAlis, a leader in the development of therapies for ALS, as well as other severe diseases. Welcome to the show, Vikas.

Thank you for having me. I'm glad to be here, Elaine.

Well, I—

Nice to talk to you.

We know each other way, way back. And before we get into all the serious science questions, I wanna know if your story of how we met is the same as the story that I have in my head of how we met. Do you remember? Like, we've known each other for, I mean, longer than I've been married, for sure.

That's true. That's true. Yeah.

You might be my long— like, my longest relationship, honestly. We go back to tech transfer days, and I have in my head how we met. Do you remember how we met?

Oh, I have multiple things in my head, you know, the way things that I like to remember and things I like to forget. So, you know, depends.

Oh, that was a very judicious answer. I feel like you're skirting the question because you don't remember. I remember us meeting. at a conference at, I mean, obviously in your Metamune days.

Yes, it was autumn conference.

It was autumn. Yes. Do you remember what the location of this autumn conference?

It was by a water body that I remember.

No, actually, no, it was Vegas. Do you remember?

Oh, yes, yes, yes. We even went to that Japanese restaurant for dinner once.

Yep. Yep. And then you, me, and Jason Adair. So your old friend Jason, shout out to him. We went And that's how I learned how to play craps and probably my favorite game, Pai Gow.

Oh, Pai Gow! You taught me how to play Pai Gow poker.

Yes, exactly.

Oh, yes.

Yeah. We ended up in the Excalibur playing Pai Gow pretty late in the evening.

Late at night. Yes.

Yeah.

Yeah. And I won. I won. I never won. I never win.

I think Jason was feeding us cash so that we would stay out later. But Pai Gow is probably my favorite. It's my favorite way to lose money in Vegas. I think it's the slowest way too. I mean, besides not gambling. Well, I mean, also socially you can sit around and not worry about thinking.

I mean, that's what you don't wanna do at 1:00 AM.

Drinking a White Russian, which is all I wanna drink when I play Pai Gow. I never drink White Russians, but when it comes to Pai Gow, that's my drink. Anyway, oh my gosh, we probably need to talk about science. Yeah.

Important stuff.

Yeah.

Yeah.

You know, that's why people tune in, not for our gambling advice. Vikas, let's talk a little bit about what you're working on at Kuralis. And I know ALS, but what else do you have going on that's gotten you excited these days?

Yeah. So, the reason I work at Kuralis and I'm excited about is neurodegeneration, the neuroscience, the attention it's getting. And, it's because of the genetic insights that's been generated in the past decade or so. The reason why most of the people were not going after it because you didn't know what the genetic drivers of the disease were. Unless you know what drives the disease, what are you going to go after, right?

Right.

That's number one. Number 2 is disease models, right? These diseases don't happen in lower species. So, you can't really create a mouse model to test your hypothesis. So, these all changed when people started making cell models, right? Stem cell models. And, this was actually one of the founders of Cure ALS, his name is Kevin, again, at Harvard, was the first person in the world to create motor neurons from patient-derived iPSCs.

Wow.

And, what it changed was the way you study these diseases because now you have a model system of actual human neurons where you can test your target, test your hypothesis. And, that was what was lacking, 2 things. And, it's almost like self-feeding because if you don't have the right models, you can't really— Figure out the why. Exactly. So, once that happens, then it gives a basis, then you're all excited because it's easier to make a therapy if you know what you're trying to correct. The third thing I think is very important is our knowledge of how diseases are caused itself. Most of the time, we think about some kind of defect. And lately, it's more like genetic mutations and other things. What happens in humans as we learn more and more is not just you could be normal, there's no mutation, but over as you live because of environmental reason, genetic predisposition, there may be RNA processing issues, right, that could come from—

Yeah.

Splicing issue or modulation issues. And, that can create diseases. Now, these things were not known some time back, right? These are all newer science. This is really high science. Now, once you know how these happens, then you can find ways to correct. In our case, TDP-43 pathology, for example, is one of the hallmarks of disease, neurodegenerative disease, ALS being one of them.

Right.

The sporadic side, There's FTD, which is frontotemporal dementia. There's Alzheimer's. And, we are going after a protein called STATMIN2, which is the most sensitive protein, which is misspliced in majority of the patients. And, what we do is with an ASO, we, in a sophisticated manner, correct the splicing and restore the protein back. Now, in layman terms, you can think about as protein restoration.

Hmm.

Right. You're replacing a protein that is missing in 90% of the patients. So, your immediate thought would be that it should have it function back, right? Right, right, right. Like just like protein replacement therapies. That's just one of the targets. Obviously, we are dealing with diseases that are multiple etiology, complex diseases. But, that'll all come, right? In the next 5 to 10 years, we see as there's a lot more work going on by different groups, And different therapies coming. So we see what 20 years ago oncology was.

Yeah.

The knowledge of oncology propelled because of genetic insights that were generated in oncology. Now, people don't treat cancer. People treat the tumor because you do the genetic profiling of the tumor and then you treat different combinations. So the clinicians will have choices, right? Okay, this person doesn't have this, doesn't have this. So let's combine these 2 together to get the maximum value. Because right now, our goal is to at least offer better quality of life or extend life. Whether you can— it's very difficult to bring something back which is dead. For example, in degenerative diseases like ALS or Alzheimer's, there are neurons that are dead, there are neurons that are dying, and then there are neurons that are alive. So, the dead ones, you can't do anything about, but the neurons that are still in the process, you can still At least arrest them from where they are. And, just to give you an example, 2 of these kind of therapies that has been very successful, one is Spinraza for spinal muscular atrophy. And, it's a $22 billion drug that's sold and it's helping kids because it does exactly the same thing. It restores SMA protein back.

Yep.

Then, in the ALS side, tofersen is a drug that was approved A couple of years ago for SOD1 familial. That's a familial case, only 2% of ALS patients.

Right.

But what they found out by— it's a genetic target. And by correcting SOD1 mutation, they were able to at least arrest the disease. But these genetic targets, the advantages and the disadvantage. The advantage is that when you get a correction, there is an effect, but it takes time to see it.

Especially in neuro, for sure.

Exactly. For example, initial look was only 6 months, right? But, you don't see that in 6 months, but you wait 9 months to a year and you see. And now, 2 years later when the patients have been on the drug, 40% of the patients are regaining function back.

Yeah.

Now, that's super exciting because there is plasticity in the system and new innovations happen. So, all these things are so exciting, right? People thought that these are all graveyards, nobody's is successful in these disease areas. But examples like this, practical examples that are helping patients, is really creating that excitement that patients are looking for, that investors are looking for. And that's what we live for, basically.

Well, that's what I think is so interesting about neuro in general, is that it will take time to see the effects. And from an investment standpoint, I think that there's been a lot of hesitancy to really heavily invest in neuro because You're not going to get that readout in a month that you might see from a tumour reduction or, you know, an infectious disease where you can measure antibody response and do they, does the infection go away? With neuro, it's a while for those outputs to, you know, to see those endpoints come out. And that's such a challenge when you're raising money, especially as you probably well know, of raising money in neuro, is that you have, it's a timeline that you have to set expectations for. How do you navigate that?

Yeah. So, great question. And a few things. I mean, people have more confidence in genetic targets because it's easy to see what happens.

True.

What we go with is a set of biomarkers, and that's how our precision approach is, right?

Yeah.

We don't rely on qualitative aspects. We rely on biochemical aspects, which is we develop biomarkers for target engagement, mechanism of action, And efficacy. Because we know that you have to see, first and foremost, you have to see that you are actually replacing or getting that protein back. Then, you have to see the PD side of it, right? That actually that protein does the function, what it's doing. Now, the long-term effect is the efficacy, which you start seeing. You have to look at different things. You cannot look at the totality. For example, in ALS, it's ALS FSR score, which is—

Right.

A set of criteria that you measure. But, you can take one thing like lung capacity or fine motor movement or voice, and you can take one of those and see whether it's trending in the right direction or it's stabilizing. And so, those things, early signs you can measure, and that gives you the confidence that you're going in the right direction.

Yeah. That's the challenge right there. So, we're developing a drug for MS, which we still, I mean, it's not a genetic disease per se. I mean, there's lots of things that figure into it, but how do you think neurodegenerative diseases, things like dementia, which there's lots of things that fall under dementia, and MS as well, of how do, if there's not this genetic, clear genetic linkage, how do you, how do companies navigate that? Asking for a friend. It's me. It's me. I want to know. Free business advice on the podcast.

But you have to then compare it to other people doing similar things, right? Which is the— I mean, there are endpoints that are set by agencies that are set by the industry, right? But you almost have to find your own exploratory endpoint sort of that can give the confidence. Because what you're trying to offer to investors and people taking the risk is like, how can I give you an early read on something, right?

Yep.

And build that confidence. It's stepwise, right? So, if you just say that at the end, this is what I'm going to show, then it may not fly because then you don't come back. But, if I show stepwise— so, I don't know exactly all the exploratory endpoints or the biomarkers that you can look at.

Yeah.

But, there are, I'm pretty sure for every disease, you can find things that can give you some idea whether you're going in the right direction. And also, I would say never should rely on one particular thing. So, that's what our Definitely. Strategy has been that we, it's a totality of the data. So if you match everything, right, which is I'm doing this, I'm doing this, I'm doing this, everything is lying in place. So I am going to get this. And that builds the confidence. So, and that's how we have been approaching it. You know, with investors, we have been pretty successful. We have raised over $150 million in investor money and then $50+ in license as well. So investors do, you know, get convinced with the genetic target, with things that we are measuring, right? Even a target engagement, you know, gives a lot of confidence.

Well, that one thing is that with $100— how much? $150 million? Is that what you said? Yes.

Yeah.

You should be buying my dinners. Why am I chipping in when we go out for dinner? Second of all, let's pivot over to the investor side. Funding is challenging. It always is challenging, right? I think this year feels particularly challenging for a number of different reasons. In your experience, where are the funding challenges right now? Where is it thriving? What's going well? And then what's challenging about it besides the usual stuff?

Yeah, so what I would say, I'm in the middle of these funding rounds right now, so I can tell you this, right? There's no shortage of money. The problem is, is more rounded, the investment, which is more money's going towards less Yeah. And because investors have become more risk-averse, right? They're trying to, and the valuation is not a problem. For example, post-POC, they know there's a higher valuation, right? But they're willing to put that money because they know they have a higher probability of success. And so you can see in the last, just if you just Google last year of investments in biotech, I mean, there have been hefty rounds, all triple digit, Hundreds rounds. And so that 2 years ago, 3 years ago would have gone to— if it went to 13 companies, it would've gone to 30 companies basically.

Yeah.

And so that's what we are dealing with right now, which is investors' appetite for lower risk profiles, right? Genetic, higher probability of success. Genetic targets do offer a higher probability of success going after things that are already proven and you can do it better. So best-in-class status, right? Also gives you a better, lower risk profile. And that's what the investors are gravitating towards more. That's one aspect. Second, I think is also that there are a lot more companies than there were a few years ago.

Definitely.

So even if you look at the data 10 years ago, there's number of companies have doubled in the US and Europe alone in biotech. Now, when you're double in numbers, you're competing for everything. Investors, science, talent, everything basically. And so, that also creates a challenge for our industry as such. We're trying to get to that balance, right? But, it is there, but the science still has to progress. The most challenging has been the earlier side, right?

Yeah.

The earlier science because it's too early. And, being creative there is the key because obviously, we have to, as entrepreneurs, we have to advance these science, find means, Always. It's not 2021, '22 anymore that a preclinical company could go public and raise $200 million, right? Those days are over. So, we have to get creative. And, we can talk about—

I want to talk about creative. Let's talk about creative.

Let's get creative. Optionalities, right? So, what everybody likes, and one of the things that people fail to, or a lot of people may be doing but maybe I'm not aware, But talking to companies earlier, which is larger companies, right? When your target audience is earlier, because what they're looking for, you also, you don't have to necessarily license out or something, right? But you are at least getting, what do I need to do to get to the product?

What's the data package that we, what we need to see for our quote unquote customer?

Exactly. Exactly. And that tells you, because there may be interest in the target. So, you have to first show that there's interest in the target.

Yeah.

And something that you're pursuing. That always excites investors that, hey, I talked to 4 of these pharma, for example.

Definitely. Yeah.

And they all have interest in this target. We just have to run these gamut of things to prove that it works. Then obviously, you're something that you are very familiar with is non-dilutive funding through grants and other things.

Oh, yeah. Oh, that's a crap show right now.

Yeah. But then there are patient disease organizations and other places, right?

Definitely.

Yeah. That are also getting a lot of money. And people generally go towards NIH, SBIRs and stuff, but I can tell you that there are a lot more places that you can get the money from. These organizations, there's a lot of money in Europe, for example, as well in different organizations. And companies have to get creative. For example, if a fund or UK just established like a billion-dollar biotech fund, right? And if it— you can register and have the company in UK, for example, right? And if that's the way you get the funding, because we live in a world where it's global, it doesn't matter where your company is registered and based, right? You can be doing the work all over the world. So, there's 3 things, right? Basically, the non-dilutive, you have the company. If you can get somebody excited that you can say, okay, fine, you may not want a license right now, but can we collaborate, right? If you can get even some FTE support to give somebody a first right of refusal. Oh, that's interesting.

Yeah.

That would maybe one way, because it's not about just getting the cash to use, because the most cash you use is for G&A and people, FTE cost. And, if somebody's willing to give you 3, 4 FTEs to run the experiments, then why not? And then, use that to then go to the investors that, hey, I already have some traction, but I don't want to lose that value. If I put in $5 million, I can get 50 out.

That's really interesting because I've thought, I mean, we all had those conversations with pharma, like what's the data package that they want to see? When would they license it? At what point are they going to pull the triggers? But there's other earlier stages, things that you can engage with them on. Talk a little bit more about that because that's the creative part that I think is really interesting.

And you can see that most of the pharma, big pharma, is going away from early research, right?

Oh yeah.

Yeah. I mean, if you see the news, Takeda shut down their entire early research in the US. You know, and there are examples, a lot of the other examples, right?

Well, everything I hear at BIO is, come back at phase 2, or worse, phase 3. Like, get real. I'm not coming back to you at phase 3.

But, once you— because doing early work is not only just going, taking the risk on the science, but it's also having the infrastructure to do that, FTEs to do that. And, pharmas have found the formula that I'd rather have something that is in the clinic and take it over because that's what I'm good at, right? In clinical trials, developing these drugs, getting them to market.

It's what they know.

Yeah. And so, they are more than willing to now engage with you earlier if you say that you don't have to do anything, I'm going to do it, but you will have the optionality to have it at the time that you want to have it. And sometimes, I have done it in the past where, you know, you can pre-negotiate the timeframe where you need to get out, right? So if you, and in order to, again, it's a chicken and egg. If you create that kind of scenario, then the investors also see an out because then they see that, okay.

End is in sight. Yeah.

Exactly. Because majority of the investors are looking at, right, no matter what they say about good science, developing drugs, helping patients, but they all have LPs who want return on their investment.

They want that money.

Fair enough. So you have to show a clear path, right? That you, that I'm going to use this much amount of money. This is the interest. This is what I can get out. So even if you don't have something nailed down, but if you have a sliver that you have interest already, I think that can garner a lot more interest, right, from seed investors or early Series A investors to put the money in.

I love that creative part because I think that that's what our listeners are needing of how do you engage differently? Because we have to. Non-dilutive funding is complicated right now. Pharma's wanting Later and later stages. So, how do we think different as it relates to how we engage with each other? But, Lin, we probably have time for one last question, and I think this kind of plays on that, like, how do we engage with each other? You manage a lot of different stakeholders across your own staff and your own FTEs, to investors, to board members. How— what's a piece of advice that you could give someone that is struggling with the same thing?

Yeah, and believe me, I was not pretty good at that before, but I had to get some training and coaching myself, right? Because as you are with blinders on trying to execute and develop drugs, but then you have to also deal with investors, board members, and all other aspects. And it's a fine balance between the execution part and what the larger strategic incentives are, right?

Yeah.

Because that's what is— you have to understand as well where they are coming from. Most of the time as executives, you forget. Because you got a whole bunch of money, right?

And you are just like—

You have your mission. Yeah, exactly. You are developing drugs, but you forget, or not forget per se, but sort of it's not on top of your mind, right? Yeah.

You're focused on execution and you're focused.

Exactly. So you always have to have optionalities for investors, right? Which is at any— so BD doesn't stop for any company and shouldn't stop for any company, right? At any given time, till the time investors know that whatever you are doing has a buyer, has somebody interested, even there are conversations, even they are qualitative, right? That always creates, not creates, but the interest stays in that. Also collaborating and working with them. I think that's very important, which is keeping them apprised of things that are happening.

Yeah.

And taking their help. For example, if you need to, and you need to talk to somebody at a large pharma, and you are talking to a junior BD person, but you're not getting a lot of traction, maybe one of your investors or a board member knows somebody who is at a higher place, right?

Yeah.

In the company, and they can, then you can have a meaningful dialogue with that person. And now the board member or the investor feel more engaged. They also know, and they are more Like you telling them versus them being part of the process.

Yeah.

Their interest and their excitement goes up. So it's all taking all these things together. What we, what companies usually forget to do is keep them going with you, right? Collaborating and communicating with them.

You're on the same side of the table. Like instead of being on opposite sides of the table, you're all on the same side and you're facing the one problem and that is curing ALS, and you're not on opposite sides anymore.

Yeah, they need to have confidence in the management, but the management needs to also work with them and use them because then they feel that they are in the know, basically, what's happening on a day-to-day, not the granularity of it. Here's my email, but in a broader sense, right? And I think that if you find that balance between that, I mean, that is a way to healthy relationship between the board The investor and management, and then you can build a successful company, right? Otherwise, otherwise there's confrontation and which you wanna totally avoid.

Totally avoid. Well, and I, it gives me some relief that you said that you went through training because I just felt like you were always naturally good at that kind of thing and that you are quite charming. I mean, that's how I ended up playing Pai Gow at 2:00 AM. But there is training that goes into getting to where you are today, for example. And whether it's board training or investor relationship training, like those are all things that can be, They can be taught.

Training is— I would— coaching is more advanced in that respect. Like, when you already know everything that you need to do, yeah, you need to know how to use it better. I mean, that's what I think the coaching teaches you, but it's a combination of training and coaching. But I think you're absolutely right. It's not something that's taught in schools.

No.

It's when you deal with it, that's the way you learn it. Like, for example, even like you have done a lot of licenses, a licensing negotiation of putting a license in place is not taught in school. When you're in it, that's only when you know what goes on with all that.

You got experiential learning, which is always fun.

But most of the time, we forget to actually sit back and think or talk to somebody else and say, gee, what did I do right? What did I do wrong? How can I do it better?

I love a good executive coach. I actually had an executive coaching session literally before this call. And it's so great to have someone help you step back and evaluate a problem from a strategy perspective. So glad to know I'm not the only one that needs a business therapist every now and then.

One thing I learned is read the room, right? I mean, you have to step back and read the room. You just can't say what— I mean, all of us are like, we want to say what— we are all extroverts and we want to say what we want to say, right? But you also have to hear and listen, right?

You have to look around the craps table and know when to throw the dice, know when to hold them, know when to fold them. And I think that completely brings us full circle To the beginning of our conversation. And of course, Ian will be happy now because we've actually wrapped it up. Well, Vikas, thank you so much for joining me. I really appreciate it. I will still make you pay for dinner despite you doing me a favor, because $150 million?

I'll recover that money on the Python table.

That's right. You would. Thanks so much for talking with us, Vikas. Um, we'll be sure to keep an eye on Kuralis and of course you in the future, and we'll have all of His contact information and any of the informational links posted in our show notes, so make sure you check them out to learn more. Thanks again.

Thank you for having me. Thanks for joining us for Bio from the Bayou, and we hope you'll join us again.

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