San Diego Tech News Weekly – September 24, 2021

Happy Friday everyone. Another week in Gloria San Diego. I'm Neil Bloom with Fresh Brew Tech and Interlock Capital. Every Friday, Jonah Peake and I joined together 12:30pm Pacific on Clubhouse to record this to bring you the hottest five takes of the week in San Diego Tech. I'm an entrepreneur, investor, community builder. This is Jonah.

What's up everybody? Happy to be here. I love San Diego Tech. Just playing with startup San Diego with Neil and a couple of other investing avenues. But I just love San Diego Tech. I just love watching these companies get huge. And that's what we're looking to do. Talk about the big ones, the ones that get past the startup phase that are just monsters at this point. And then anything around the area that we think is interesting.

Well, we got something interesting today, that's for sure. IPO alert. We got Q Health went public this morning. Congrats, Q. They listed at $16 share 2.4 billion and they're already up 27% closing. Well, we're not closed yet. Still got half an hour if you want to get some Shares. They're up 27% almost at 3 billion now. Market cap. I used Robinhood's new pre IPO feature and I got some shares at 16. So I guess I'm up 27% too. Let's go. But some other big players who I'm sure are up way bigger. Section 32 local VC who are investing in both healthcare tech and digital health. They invested at the Series B a few years ago. Way before even Covid helped this company. And some big names. We got some whales in this. Marc Benioff, anyone heard of him? He invested at that round as well. And Q's been around and this is typical of unicorns. They've been around 10 plus years working on at home digital diagnostic tests. So they were, you know, how to detect if you got flu and other things. Well, right when Covid hit, they started working on an at home COVID test. And man, they've been booming ever since they signed a $500 million deal with the Department of Defense and just been rocket ship since. So congrats Q. San Diego now public company. I guess we can't call them a unicorn anymore, huh? Jonah, they're public. It's not.

There's a public company. Yeah, I don't know. They lost the. Yeah. Damn, that's lame.

That's okay, Natalie added to our IPO list. Cause that's another great, great win for San Diego. And I would consider them not a pure biotech. Right? This is a Tech and biotech combined. Yeah, we love being able to count that in the tech column for us, for sure.

Well, hey, not. Not the only IPO you want to go into the next one. And you said, you know, somewhere around for 10, 10 plus years.

This is a newer one. Yeah. Tyra. Tyra Biosciences, Carlsbad Biotech. This is a more pure biotech. They're doing drug discovery for tumors and especially for patients who aren't responding to current therapies. They're going public, raising $200 million in the race to attack cancer or cure cancer. Either way, however you want to look at it, they're selling 12 and a half million shares at $16. We'll see where that really ends up on IPO day. Symbols, Tyra. T Y R A. And like you mentioned, pretty new 2018. And I think this is a trend with the hot IPO market, especially biotechs like Race to Public, because, you know, you got to sit and be public for a few years anyway until. Until you actually have your breakthroughs. So they Race to it. They're going public. Another one. Natalie, we got a chat. What are we at where there's 15 or 16 IPOs, San Diego companies on the year, we're like 2 or 3X. Where we're usually at on a year so far already. So. Yeah. You want to tell us a little bit more about Tyra?

Yeah, no, I do. And Jason, I hope I do this justice. I wish we could call you up the way the recording we can't, but. Yeah, so what's. What's really cool about what they're doing is it's a bit more of a targeting approach. You know, typically, like traditional chemo just kills everything. And then with it, you know, cancer cells, so normal cells and cancer cells, so pretty. Pretty invasive. What they're trying to do is.

Go.

Specifically in a targeting method. But what's crazy that I learned today is as tumors mutate, some of the key proteins change, which makes the drugs less effective over time. And so that is essentially what they're going after, is these tumors that are resistant to standard therapy. So pretty nasty stuff, but they're able to kind of attack that. And they have their sort of leading therapy, I guess, called Tyra 300, which is going after bladder cancer. Cancer. But, you know, once they are able to build this out, they can go after a number of other things. Bile duct, lung, thyroid, liver. And, Neil, our favorite metric, operating at a pretty big loss, you know, 9.3 million. But, you know, that's typically Research costs and everything that really goes into it. So pretty, pretty important stuff they're going after. And that's, that's a pretty huge market for San Diego too.

Tyra 300 is cool, but I want to hear when Tyra 3000 comes out because obviously that will level up, that's for sure. So congrats Tyra. Another win here in San Diego. Our third story is related to this company. We've got an opinion piece out in the Times of San Diego by Representative Scott Peters, obviously one of our biggest advocates about San Diego in D.C. and he wrote a piece about how to keep lowering drug costs today but also keep incentivizing the development of new cures. So there's a lot of talk at the federal level about drug prices. They're different. The prices are different for the same drug in Europe versus United States and they're talking about caps. How do we one, yes, we want to keep prices low so that people can actually find cures. But then how does that also incentivize companies to actually make money or have at least a carrot dangled in front of them that hey, you're going to be able to make money and monetize these great discoveries. So an interesting piece about that. It's part of the Build Back Better act which is currently being debated. Big piece of legislation that's being talked about, multi trillion dollar piece of legislation which obviously covers a huge wide range of areas. It covers infrastructure, covers energy, air pollution, public health, wireless connectivity and drug prices. All of these have a direct effect on San Diego industries on top of many other things going on around the United States. And so you know, they're working through this, figuring out the size and scope. And one of those pieces is the cap on we mentioned drugs which includes insulin, including allowing Medicare to negotiate better pricing, include also closing the patent loopholes abused by manufacturers and help with accessing generics. Right. We've got this 25 year piece of when IPO can be maintained and then boom, the generic market comes in and changes drug prices drastically. So hard to know if the capping will have an impact investment will impact investment and innovation in the space. But obviously Scott Peters has a vested interest to make sure that our burgeoning biotech scene is incentivized to keep discovering, that's for sure.

Yeah, he's kind of on both sides of this in a sense of he wants to cap certain in pricing. I mean there's elderly populations that really struggle from high drug prices. Insulin for example, it's one of the most expensive of options in Canada, it's much cheaper in Europe and around the world, but the US just stays relatively high. So it's kind of hard to know if you cap certain pricing. As he was worried about is that going to impact investment? And some few stats that we pulled that were pretty interesting. 95% of drug ideas don't make it to market. And each drug that does make it costs around $1 billion. So if you're not able to actually recoup someone's cost or even profit from this, maybe the incentive changes. And in some ways, and I'm not an expert here, we see this a little bit with the flu vaccine where we need it, we need it out there, but drug companies aren't making all that much money on it. It's not really something that they are really financially incentivized to do to make. But you know, it's an important, it's important to have. So it's a bit complex. It'll be interesting to see how this passes. But I gotta be honest, it's kind of interesting that it all rolls into one major bill which I don't know if that's good or bad. I don't know. What do you think, Neil?

Yeah, it's hard to tell. I mean if it's only 5% of actual drugs that make it a market, um, I don't know, it's kind of interesting. I think we should be, I mean at least we're having the conversation, that's for sure. And people are raising their voices and making sure that we have representation. And I hope some of our entrepreneurs stand up and join the conversation as well. So it's all good. Related to this story is our next story. You know, so infrastructure is part of the build back, better piece. Federal government's putting a ton of money out there to build infrastructure that should help jobs, but it should also help on energy independence and having a stake at the changing climate change. And San Diego absolutely is a place where we're merging those ideas. Spend on infrastructure. We want energy independence, especially being in a drought right now and then putting new technology to work as well. So clean tech is a big piece here in San Diego too. And so there's a proposal to do a new hydro energy project at the San Vicente dam. So take a billion and a half to build. But they're looking for partners to help on this and I really hope they're looking to local partners because where they at? Where are you at? Partners? You want to help build a new dam so we can have our Own energy. We lost our nuclear power plant in San Diego. Right. We got to find new ways to find cheap energy. Besides, solar is a great one. But this is going to be a new pump energy storage facility out in Lakeside in the Cuyamaca mountains. Love running out there. It's an RFP out. So you know, if you build, build hydroelectric dams here, I'm looking at a few of you. I know you do. I know you do it yourself, Al. I know you can build a dam, you build everything else. Great. Submit your answer to the RFP so we can add some flexibility to the grid. It's plain and simple. It's what it's all about. Right? Water's pumped up to the reservoir, it's held until power demand increases. Then we let the water out and boom, you get a release of, of energy that you can capture and put onto the grid.

This is super cool. It's kind of like, you know, in a simple way, it's like a battery. You know, we don't think about it, we kind of think of like, oh, just pump some water up a hill. But really, I mean, think of it as a rechargeable battery. And, and you know what was even, even cooler is we do typically have like a surplus of solar generated during the day, middle of the day. And we all know when it's just beating down on San Diego. So when there is a surplus, why don't we just sort of use that to sort of air quotes here, charge our hydroelectric battery, pump that water up the hill and then, and then hold it there until, you know, the sun goes down. And now we're all back home flipping on Netflix, AC and kind of whatever else, charging our cars, things that you know, we need a little excess power for. So super, super cool. Not really new technology. But I love that we were able to build something like this in our, in our ecosystem here for you know, like you said, power independence.

Yeah. I mean California has put a goal of being 100% renewable by 2045. So this is one of those pieces options. At least there's options on the table. It's going to be able to power 135,000 households. So 500 megawatts of long duration storage. Why is that? That doesn't feel like a lot. 135,000. I mean, I'm sure it is, but just doesn't feel like a lot. Man. Maybe we should re look at this nuclear option. But yeah, like we've got, this is not like you said, not necessarily new technology and we've got Already a bunch of these all around the world. Like Lake Hodges has got a version of this tenth of the size. So let's go, let's go scale it up. So, all right, who's all in to go build a new hydroelectric dam?

I mean, you know what's funny though? If you look at the. I was doing some math and you're not supposed to do math in public, but if this hits like 5, 10%, you know, that seems pretty legit.

That's true.

I think it also depends on like where their power is currently coming from. I mean, are we burning, you know, tires out there? Probably not. But like if we're burning some, you know, oil or something. Oil and gas. And maybe this is replacing it. Yeah, maybe it makes sense. I don't know. Cool concept though.

You're right. You are right. Let's talk about our last story here. San Diego supercomputers expands formally enters production. I know you love that name, expands.

So cool.

This San Diego supercomputer center, first of all is like a legend. I mean, it's one of the first supercomputers ever. And it continues to be not just a UCSD powerhouse, but to the region. It is plugged. It has chugged some huge data, which I think we're in. National Science Foundation's funded this. In a sense, it's allowing for 2x its performance, which is their older model.

Yeah, Comet, cool name. They keep knocking out of the park with names twice as fast.

They're computing without boundaries. So this is increasing the capacity and performance for thousands of users of batch oriented and science gateway computing. So they got CPUs, GPUs, data centric architecture focusing on a wide range of scientific workloads, like experimental facilities, edge computing, public clouds. I don't see them mining crypto. But we should be asking them how can they mine crypto?

Because could you imagine.

So, yeah, they're reducing the times to discovery. This is literally powering the biotech world here in San Diego. You can literally just order jobs of compute. And so in December. Wait, take us through this.

So I got through this and I'm not the, the smartest person around the computer hard drive here. So I was like, I need to find an example that I understand a little bit better. So basically what they were able to do with this supercomputer is they were actually able to. So I'll rewind a little bit. There was a really cool solar eclipse that was only visible in like Chile, Argentina and other parts of the world. But we, you know, we Obviously couldn't see that we're not there. So they actually use this supercomputer to take this two minute solar eclipse and actually simulate it at an extremely detailed level. But what they're doing with this simulation is actually looking at something called a solar corona, which you can only see during an eclipse. And that's basically solar winds pitching off of the sun. And it's super cool to kind of just understand how and what solar winds are and just how do you even visualize that? But you can't just fly down to Argentina and throw on your cardboard glasses and take a look at this. So having a supercomputer like Expanse, being able to visualize something like this is so unbelievably cool. I'm glad that we have it in San Diego.

It is super cool. And late breaking news. The director of the supercomputer center, Ilke Altintas is joining us on October 4th at Cloud Night to talk about practical applications of edge computing. So if you want to hear more about this, come to Freshproof Tech's Cloud Night and hear from the pro herself, Chief Data Science Officer at the San Diego Supercomputer Center. You can find out more about Expanse. We will. It's in the docket for sure. Last bit of info here. We got a new corporate vc. Intuit Ventures. Welcome to the game. They're joining a little popular crew of corporate venture arms. Qualcomm, Resmed, Sony and Dexcom all have venture arms. Intuit by the way, is not headquartered in San Diego but they have like a 3,000 person presence here, including when they purchased TurboTax back in the 90s, based, pretty much based, still based in San Diego as is their mint product as well. And they're on a tear right now. So Intuit just purchased credit, sorry Mailchimp for $12 billion and then they, which is like one of the biggest bootstrapped purchases around. And they also purchased Credit karma recently and mint.com a few years ago. And now they're getting into the venture game, doing some late stage checks, obviously investing in E Comm, fintech, enablement like AI, artificial intelligence, machine learning, virtual and digital, and even defying crypto. So Sesha, that project you want Intuit will fund. And so yeah, obviously they're hoping this is related to their own innovation. So they're investing in things that can accelerate what Intuit's doing. I kind of see this as a version of like buy, invest to acquire. Right. You kind of think of though if you look at some other models like Qualcomm Ventures, 99% of the companies they invest in has nothing to do with their own tech. So they're just investing for cap, for the returns. But Intuit, I think, is going to be doing stuff closer to industries that they either know they can help in or accelerate their own products. So yeah, it's not only about the money, but it's also having this massive sandbox to test and play in. What are some of the rounds and some of the other stuff that they're doing here? Jonah?

Yeah, this is super cool. I remember Rory at Evonexis, I was talking about big companies using stuff like this is sort of off book R and D. So when you get really big, it's kind of hard to be innovative. You know, you have a lot of red tape and your teams are kind of filled with layers. But what you can do is, you know, either invest and support startups, you can kind of give them a little bit of access to your infrastructure in a sense and say, hey, look at this customer base. Like maybe you can kind of work with us to sort of try to improve what they're doing. But they are coming in, they have really no cap. I think it just depends. They said they're investing until someone says, hey, no, don't, don't invest anymore. But really looking a little bit later, you know, B and C rounds. So they want to see some traction, they want to see the startups growing and sort of finding their way and then, then they're coming in. But they're not afraid to lead around either. So you know, maybe, maybe they, they overlap your customer base, small medium sized businesses and you know, maybe they might be a good fit for if you're getting to that later stage.

Yeah, and definitely some of our portfolio companies at Interlock Capital, these would be a great later stage funnel partner to send them our deals to do the next round. So intuitive welcome and we look forward to partnering with you. And that's our show for the week. Thanks everyone. It's been pretty busy week. A lot of good news. Next week is newsletter week for Fresh Brew Tech. So look for the newsletter in your inbox talking about new latest events coming up, who's hiring, who got acquired, all the favorite, favorite news around that freshbrewtech.com is the place to find that plus the recording of this. If you are grabbing it or want to grab previous week's tech news, find us there and hopefully we'll see you all at Startup Month too. Coming up October 1st through 29th. A lot of stuff coming up.

Yeah, Cloud Night up there. Updates on the site as well.

Yes, you can find info about Cloud Night to talk the latest in cloud and Edge Computing on October 4th too. So look forward to seeing you all there. And thanks again for tuning in. Happy Friday.

Hell yeah. We'll see you at Startup Month next month.

Wow.

Phrase that. Really, really.

Well, cheers everyone. Take care. See ya.