ICYMI: What NIH Cuts Mean for Health Sector Entrepreneurs

House Republicans are taking a middle-of-the road approach to funding the federal health department by making deeper cuts than their Senate counterparts but granting only some of President Donald Trump’s wishes. House appropriators unveiled their version of the appropriations bill for the Health and Human Services Department on Monday, which provides the department $108 billion in discretionary funding, cutting $7 billion—or 6%—from the previous year.
Quang X. Pham, Founder, Chairman and CEO of publicly traded Cadrenal Therapeutics, discusses how such budget cuts impact his company's ability to conduct pre-clinical research on new drugs and get them through the government approval process in a timely manner. Quang speaks with Tim Stenovec and Carol Massar on Bloomberg Businessweek Daily.

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to Bloomberg
BusinessWeek with Carol Masser and Tim Stenoveek on Bloomberg Radio. Well,
the drumbeat of news out when it comes to health
policy in the US continues. House Republicans are taking a
middle of the road approach to funding the federal Health

(00:23):
Department by making deeper cuts than their Senate counterparts, but
granted only some of President Trump's wishes. Also, the Trump
administration tapping a deputy of HHS Secretary Robert F. Kennedy Junior,
as the acting director of the Centers for Disease Control
and Prevention after moving to House the agency's current head

(00:43):
in a clash over vaccine policy. Kwan fam is back
with us. Kwan as founder, chairman, and CEO of the
microcap biopharmaceutical company Kadrinal Therapeutics A trades under the ticker CVKD.
It's got a market cap of around twenty five million
dollars shoes down about thirteen percent so far this year. Kwan,
good to have you back, joins us from Florida once again.

(01:05):
I want to just start by getting understanding of the
relationship that your company has with Washington d C. Obviously,
it's a small company, so it's not like you necessarily
have lobbyists on the ground in Washington or do you
to get an understanding and actually lobby what's happening in Washington?
Are you able to have lobbyists?

Speaker 2 (01:23):
Well, Carol and Tim, nice to be with you again,
and then you are correct. We're a small company. We
don't have lobbyists on the grounding and watching DC.

Speaker 3 (01:31):
But we and.

Speaker 2 (01:32):
Florida are very proud that we have a number of
Flaridians in the Washington area, you know, as part of
the administration. But as far as what is being talked
around the Beltway, it doesn't really affect us. You know,
we're a small public company, late stage drug development company
focusing on developing.

Speaker 3 (01:49):
A new blood dinner.

Speaker 2 (01:51):
I think what it does affect is the reduction in
the NIH funding the National Institute of Health for a
pre clinical stage company. Companies are very early that are
depending upon government grants and mostly at research the top
research universities that feed into the biotech ecosystem will affect
those early stag pre clinical research. And just to give

(02:14):
you a summary, I think the FDA approves about last
year about forty five new drugs the year before about
thirty seven. And these are drugs that are approved out
of about two hundred thousand compounds that entered the pre
clinical stage of research over a period of ten or
fifteen years ago. So we're talking about a very highly

(02:35):
capital intensive and long drawn out research development process for drugs.

Speaker 4 (02:41):
What do you think of Secretary Kennedy and potentially the
impact healthcare and all the companies that certainly play into
the phase into that space, including a company like yourself.

Speaker 2 (02:56):
Well, first of all, I respect the political process. This
country elected a president and he appoints individuals an important posts.
As far as we are concerned at DA level, staffing
is what affects us in many drug development companies, and
that means the amount of time in the regulations that
the FDA is required to respond to companies like Kadrino

(03:18):
Therapeutics that puts in for different programs, different drug designations.

Speaker 3 (03:23):
For example, we have two orphan.

Speaker 2 (03:26):
Drug designations for our drug, or lead canate to carfin
and every time we need to communicate with the FDA,
there are a certain amount of days business days. So
when there's a reduction in staff in the FDA, that
delays our timeline, which then delays the development timeline, which
then takes more capital. And then we need to communicate

(03:46):
that to our investors and our shareholders, and that affects
not just us, but the entire industry.

Speaker 4 (03:51):
Are you seeing more delays in this administration versus last?
I mean, give us a little context, if you will.

Speaker 2 (03:58):
I think, going into January, I think just the transition
of the heads of the FDA and different departments, and
the FDA did communicate to us that there would be
a little bit of a delay, But so far the
delays have been minimal.

Speaker 1 (04:13):
Cheryl asked about comparing to the other, to the previous administration.
I want to think big picture here and try to
get an understanding of the early stage challenges that you mentioned.
When we think about some of the therapies that have
come into effect in recent years, some stuff that has
been life saving, to what extent do these therapies do,

(04:33):
these treatments, do these medications to what extent do they
start or begin with research that is funded by and
at some certain point the US government, whether directly or
indirectly through grants to colleges and universities.

Speaker 2 (04:48):
Yeah, I'm very familiar with the early stage concepts, having
you work before with the university and looking at early
stage drugs a number of years ago.

Speaker 3 (04:58):
So I Kuldrino Therapeutics.

Speaker 2 (05:00):
Our lead to carfin is phase three ready, So we're
a late stage company. Let's go back to our conversation
just a little bit while ago. What you're seeing now
is if there's a lack of funding at the NIH
at leading universities that work on compounds, such as the
University of Florida, Stanford UCLA, you're not going to see

(05:20):
the effects of the lack of funding now for a
number of years to come. As I said earlier, the
drugs that were approved the last two years, there were
less than eighty drugs that entered the clinic, less than
ninety drugs that entered the pre clinical research portion of
the process, out of about one hundred and eighty thousand compounds.
So we're not going to see the effects of the

(05:42):
early stage research now do the lack of funding for
more than a decade, which is longer than anything else that's.

Speaker 3 (05:50):
Out there in the business world.

Speaker 2 (05:52):
It's a very lengthy, highly regulated, capital intensive but it
was we all say in the industry, the patients all right,
buying the excuses of delays in bureaucracy, in policies or funding.
The patients need these drugs today, and I think the
Orphan Drug Act that was passed in nineteen eighty three

(06:14):
was a long went a long way in incentivizing and
protecting companies such as ours to look at therapies that
will help less than two hundred thousand Americans. Now, the
big one that we're following now, it's Hr. Nine forty six,
the Orphan Cures Act, which gives protection potentially to an
orphan desilated drug in two or more indications, which is

(06:36):
what our drug does to carfin.

Speaker 4 (06:38):
Hey, Cowdin before you go, and just because you know,
if you you know, in researching and reading in for
for this story, you know a lot of the stories
that popped up was about some selling that you were doing.
You know, when we see insider selling, certainly by a CEO,
it catches our attention. And there's certainly I think you
said about five thousand shares or so in late August,

(06:59):
what do we need to know? Why were you selling?

Speaker 2 (07:02):
Well, it's all part of a plan, and that's you know,
part of the regulators allowed insiders and founders to share
it and it's it's been planned for a while and
it's a it's a practice that allows public company insiders
to sell according to plan which is put in place
months ago. I've been working on this drug for a
number of years, over eight years, and so I said,

(07:24):
we fully disclose it according to the one.

Speaker 4 (07:28):
All right, We're gonna leave it on that note. Listen,
so appreciate it and your honesty and directness. Kwan, Thank
you so much for being with us. Quan Fom of
course joining us there, founder, chairman and CEO com Funal
Therapeutics joining us from Florida,