January 6, 2025 • 54 mins
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Dr. Tal Zaks is back, along with Advancing RNA's Anna Rose Welch, for part 2 of "Story Time With Tal." On this week's episode, we turn from his time navigating medical affairs as CMO at Moderna during the COVID 19 pandemic to learn about his latest venture, an mRNA startup called Exsilio Therapeutics. We cover the foundational aspects of the company's start, from the science it's developing, who's been recruited to the team, and how Exsilio charted its way to an $82 million Series A co-led by Novartis Venture Fund and Delos Capital, with participation from OrbiMed, Insight Partners, J.P. Morgan Life Sciences Private Capital, CRISPR Therapeutics, Innovation Endeavors, Invus, Arc Ventures, and Deep Insight.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Matt Pillar (00:04):
Welcome back to the Business of Biotech, where last
week, we left you dangling offof a cliff on the edge of your
seat with a to-be-continuedconversation with current Exilio
CEO and OrbitMed partner andpast Moderna CMO, dr Tal Zaks.
I'm Matt Piller and I'm AnnaRose Welch Dr Tal Zaks, I'm Matt
(00:26):
Piller and I'm Anna Rose Welch.
And when you last heard from us, we were testing Dr Zaks on his
philosophy that it's not unmetmedical need but instead
curiosity that drives innovationand biotech, and more
specifically in the mRNA space.
And on that note, if you'retuning in today but you haven't
listened yet to last week'sepisode, stop what you're doing
right now.
Listen to last week's episode.
(00:46):
Dive right into that one first,lest you find yourself confused
even more so than you usuallyare trying to following along
with one of my rambling-.
Anna Rose Welch (00:58):
Stop speaking for yourself, man Intriguous.
Matt Pillar (01:01):
Well, anna-rose, we definitely want to give them
more context of you as well,before they listen to this.
Anna Rose Welch (01:07):
Uh, this part too just an interloper creep on
in here and there so let's jumpright back into the
interrogation.
Matt Pillar (01:16):
Um tell I was.
I was gonna ask you this iswhere we were going.
The last time we spoke, I wasgonna ask you uh, in this
industry, where we see so oftenthat money and, to some extent,
regulatory favor reward thosewho chase unmet needs and big
bonus of those unmet needs arein big market opportunities how
(01:38):
do you go about convincingpeople?
Instead, per your commentary,the last time we spoke, to fund
and back curiosity?
Tal Zaks, M.D., Ph.D. (01:49):
Well, matt and Anna Rose, first of all
, thank you for having me backin the program.
It's wonderful to be with youagain and I look forward to the
conversation.
I think the answer is you haveto paint a path to value for
people.
We don't fund curiosity for thesake of curiosity.
That's an academic pursuit andthe basic sciences that is
(02:12):
something that we all contributeto as citizens.
That's a public health.
The NIH is notable in the USfor doing that.
I think, when it comes to areturn on investment and sort of
the commercial economic spherein which I live, what you have
to do is create a vision wherebyyou will.
(02:34):
If that curiosity pans out, youask yourself the what if?
Question, what can you do withit that's of value, and show the
path that people can actuallysign up to, say, yeah, we can
get it.
We realize it's risky, werealize you don't know anything,
everything.
But if you can do this, here'swhat it looks like at the end
(02:57):
and the end game is of concretevalue to patients out there in
the world, and I think that'swhat garners the investment.
We're fortunate switching gearsjust for a second, because you
asked on regulatory.
The US is very unique and I'mvery proud of our regulatory
(03:18):
system.
Not many people realize this.
When you go to FDA and you say,hey, I think this works, they
basically tell you, show me thedata and I will do my own
analyses.
When you go to, you know,outside the US, usually people
(03:39):
don't have the same depth to dotheir own analysis.
So they ask me OK, prove it.
And then they ask you questionstrying to poke holes at it.
Prove it, and then they ask youquestions trying to poke holes
at it.
But the FDA is unique in thedepth of the competencies that
they have and I think all of usas consumers should be really
proud of it, especially in theUS, and it's one of the reasons
that most of the rest of theworld looks to the US FDA for
approvals and as a basis formaking judgment.
(04:02):
And as a basis for makingjudgment, going back to sort of
the curiosity angle, whensomebody comes to me with an
idea, back in the day when wewere starting this with mRNA,
the critical question was notwill it work?
Can you make mRNA translate aprotein in the human body?
The critical question was if itcould work, what would you do
(04:27):
with it?
That would be of value, and Ithink that's where a lot of our
energy went in the early daysand that's where a lot of
investor sentiments came in backthen.
The company is famous forhaving raised successive rounds
that were unprecedented at thetime because of the potential
value that we saw in it,switching gears today, when we
(04:49):
look at investments, we look atthings that are cutting edge
usually and the question isalways okay, what is the
medicine at the end of therainbow and is there a credible
path to get there within thefinancing that you're trying to
raise?
The company I'm leading now,exilio, started with an idea
that is based in curiosity.
It basically looks at one ofthese elements in our genome,
(05:13):
these genes that can go fromplace to place in the genome.
Think of them as really earlyprimordial viruses.
If our concept of a virus is apiece of genetic material that
goes to infect somebody else,another genome, well, these
primordial viruses, or parts ofviruses, are sort of we call
(05:34):
them jumping genes.
At a certain stage theyactually evolved to try to jump
within our own DNA and becauseof that they have unique ability
of where they can go and whatthey can do.
But also evolution hasconstrained their ability to
jump, otherwise our genomeswould be, you know, junk and we
wouldn't be here Again for fulldisclosure.
You are now speaking withsomebody who believes in
(05:55):
evolution.
When the company was started,the question was well, if these
indeed occur and if you map ourgenome and we can do that now we
have been doing it for severalyears almost half of our genome
is remnants of various kinds ofthese genes trying to jump about
, then it's pretty clear thatsome of them still have that
(06:19):
ability to jump a little bit,but evolution has constrained
that, otherwise they'd wipe usout.
Can we find one of thoseelements and now, using modern
tools of engineering, actuallymake them better and start to
use them as a platform forfixing genes, for inserting a
gene where somebody is born withan error, where they don't have
the gene for that?
That's a frequent cause of raregenetic diseases, and that was
(06:43):
the idea.
And I became excited becausethe team that came together
actually was marrying twoavenues of research.
One of them is mRNA, lipidnanoparticle.
We spoke about that at length.
The other one was gene therapy,and we're now living.
You know, we've been, we alreadyhave some gene therapies
(07:07):
approved and we've been usingreally cumbersome ways of
getting these foreign genes orthese fixing genes, if you will
into our genome using what arecalled the viral vectors, so
bits and bobs of viruses thatare really hard to make and have
a whole host of challengesassociated with them.
And when you can do that, youcan only do that once, because
(07:29):
the immune system thenimmediately recognizes that you
can never give that gene again.
So you got to get it right onthe first shot, and the whole
gene therapy industry hasevolved to this mantra of a
one-time dose right, once anddone.
Well, it turns out that onceand done is actually a bug, it's
not a feature.
We can't do it more than once,even if we needed to.
(07:51):
And what this team that formedXilio actually came up with?
The notion that if we could getthis to work, if we could
leverage what's already innature but improve upon it, we
can then use mRNA and lipidnanoparticle technology to
deliver it.
And the beauty is that mRNA andLNP technology is not
immunogenic.
(08:12):
You can give it with repeatdosing.
And so now I don't have to beonce and done, I can actually
repeat dose and get to the exactgene level I need to get a
therapeutic benefit andpotentially even a cure.
That's what got me excited, andso this is early stage.
The team is super curious.
They're engineering there, youknow, they've got these
(08:32):
structures up using machinelearning, ai, all the usual
buzzwords but the critical pieceis at the end of it.
You can paint a path toactually curing somebody of
their disease, and that's whereyou get rewarded.
Anna Rose Welch (08:47):
I think that's a really good point and that's
something too that I've startedto hear more of in the mRNA
space in particular.
Right in a redosable space,we're following in the footsteps
of treatments that have beensort of alluring, I think, in
terms of that one and donenotion, right commercially,
partially, because they are soexpensive, right.
(09:09):
But at the end of the day, Ithink that one of the value
propositions that hasn't reallybeen seized upon yet by the mRNA
space is that ability to redoseand that can really, I think,
open up the space to a wholehost of advantages, both
especially with patients too,that are probably more familiar
with that level of treatmentright, chronic treatments in the
(09:30):
biologic space, for example,it's a risk versus benefit
profile right that they're morefamiliar with per se than one
and done.
But you know, I'm reallycurious too in terms of you know
, as you're looking at all ofthis curiosity in the space and
in the mRNA world, how thefunding journey has been.
(09:52):
Have you had to sort ofreiterate this story of overcome
that sort of allure of theone-and-done treatment in the
gene therapy space as you'reworking in the mRNA world,
treatment right in the genetherapy space, as you're working
in the mRNA world, and what areyou finding is being more
rewarded in terms of curiosityin the mRNA space today?
Tal Zaks, M.D., Ph.D. (10:14):
Well, I think that there's been a
fundamental shift in funders,investors' willingness to
entertain the conversation basedon the success of Moderna
Pfizer BioNTech, because whatthat success has demonstrated is
that it is doable to give ahuman being mRNA and an LNP and
(10:36):
go make a protein that will havea therapeutic benefit and you
can do it at scale and it issafe.
And so a lot of things thatwould have probably taken us,
you know, a decade or two to getto were actually accelerated to
the benefit of this technologyby the utilization of these
vaccines.
I think, where you see theconversation today, many
(11:00):
companies and many investors arelooking to invest in sort of
next gen.
Okay, what can we do with thistechnology?
And, of course, the space thatI'm in and there are competing
companies like CRISPR, beam, etcetera, that are also trying
similar approaches, trying toget away from traditional viral
(11:25):
vectors for gene therapy butactually leverage what the
capabilities that have beendemonstrated mRNA and LNP can do
and bring them into the genetherapy world.
It's going to take some timebut between know the new
technologies that are emerging,I'm very optimistic that we will
(11:47):
see new medicines come aboutthat leverage sort of both, both
streams coming togetherrecognize that actually progress
is not really the Archimedes inthe bathtub moment of aha, but
(12:14):
it's more like people takingthings that have matured to a
certain point from differentfields and bringing them
together, and that's where youget sort of true innovation.
You know, one example for methat I'm super always happy to
discuss and proud of is thejourney of the cancer vaccines.
I started my career as a postdocworking on that eons ago when I
joined Moderna.
I sort of realized that betweenwhat we now understood about
(12:37):
cancer and what the immunesystem recognizes, between our
ability to do sequencing that wenever had before of every
person's tumor our ability to dosequencing that we never had
before of every person's tumorand our ability now to use mRNA
technology to create a veryparticular type of vaccine that
stimulates just the right partof the immune system to go after
cancer, we should be able toput together a personalized
cancer vaccine, and we did.
(12:58):
We started it back towards theend of 2015 when I was at
Moderna, and the results of arandomized controlled trial have
recently shown that it lookslike that that personalized
vaccine can actually preventrecurrence of melanoma almost
half the time if given in theright setting.
So it's these strands that allcome together.
(13:19):
For Xilio, it is theunderstanding of sequencing
evolutions, these jumping genesand what you can do with modern
protein engineering tools, andthen what you can bring from
mRNA and lipid nanoparticle.
And you know, everybody talksabout AI and machine learning as
the next enabler, and we'restarting to see how that's
accelerating our ability to dodiscovery in almost every place.
(13:43):
You look as well.
So it's these pulling ondifferent strands where
curiosity has given us new toolsand how you put them together
to actually create new medicines.
That's what's fundable.
Anna Rose Welch (13:56):
Have you found that you know, from an education
standpoint, when you're talkingto investors and working with
the investor community, thatthere has been any sort of
education that's been needed tosort of help ease that
transition from we know whatmRNA LNPs can do in a
vaccination context?
Right to now, here we areexploring therapeutic cancer
(14:19):
vaccines.
We're looking into proteinreplacement, gene editing, with
mRNA and LNPs predominantly.
Have you found right that thatnarrative, that education, that
awareness, is needed in certainareas more so than others, or
are people pretty up to speed?
Tal Zaks, M.D., Ph.D. (14:40):
I think there's been a dramatic shift in
terms of people understandingof the basic technology.
Now, that being said, andinvestors, by and large,
especially the biotech ones whoare in this space, they're a
pretty savvy bunch, yeah.
But education is, you know, youcan never do too much of it.
(15:02):
And the fascinating thing aboutit for me at least, and it goes
back to my root as a physicianyou know, the biggest challenge
every physician has, and the onethat we most often fail at, is
our ability or the need we haveto explain similar
pathophysiology processes ofwhat the disease is to different
(15:24):
people in different language,coming at us from a different
viewpoint.
And everybody has theexperiment of going to a
physician and not understanding,well, what is it that they are
actually saying?
And, trust me, the physicianunderstood what they were saying
, but the problem is they didn'tfigure out how to relate it to
the patient.
And it's on us to learn how toexplain things in different
language and and it.
(15:45):
You know it's true in in, inpharma as well, you have people
with different expertises.
You have the engineering folks,the research folks, the
clinical folks, even the financefolks, and they all kind of
have their own language and andand the fascinating thing is it
turns out, it's actually inbredinto how we and into our culture
(16:07):
.
When I was a medical student, Iread a fascinating book.
There's a Canadian philosophercalled John Ralston Soule and he
wrote a book called Voltaire'sBastard, and the subtitle is the
Tyranny of Reason in WesternCivilization, and basically he
sort of claims that you know,reason doesn't lead you
necessarily to morally correctchoices, which is fair, and one
(16:31):
of the subplots there thatcaught my attention is this
notion that ever since theMiddle Ages, when we started to
specialize, every specialtystarted to sort of enshroud
their knowledge in their ownlanguage, and that was a barrier
to other people, because yourpower was your knowledge and so
you wouldn't share it exceptwith you know, the cognoscente
(16:53):
of your trade.
And so you started to speak inlingo that nobody else could
perceive.
And boy do we still have it.
By the way, physicians are theabsolute worst offenders to this
, and I'll give you a simpleexample.
A patient can come to theoffice and their platelet counts
are low.
I have no idea why, but becausethey're low they will have a
certain type of skin rash, andthe patient sits there and the
(17:16):
next thing you do is you tellthem well, sir, you've got
idiopathic thrombocytopenia,purpura.
Well, I just told them thatyou've got a low platelet, skin
rash, for reasons that I don'tknow, except I said it in Latin
Idiopathic, I don't know.
Purpura, skin rash,thrombocytopenia.
Your platelets are low, right,and so every profession sort of
(17:38):
has that, and the fun for me hasbeen to sort of try to decipher
what the other guys actuallymean when they use that and
that's within pharma.
But when you're speaking aboutwhat it is you do.
You know, my PhD mentor, thelate Shraga Segal, pulled me
aside once and said Tom, if youcan't explain what you're doing
to somebody in kindergarten, youdon't really understand what it
(17:59):
is you're doing.
And so I think on all of usit's incumbent those of us who
are fortunate enough to be doingthe cool stuff that we are, you
know we have to be able totranslate that to everybody to a
language that everybody canunderstand, otherwise what we do
will be for none.
And that's, frankly where youguys come in as well, and I'm so
(18:21):
happy to be here, because forme it's an opportunity to share
with you, and with you, with therest of the public, what's so
cool about the stuff that we do.
Matt Pillar (18:29):
Yeah, it is cool and we appreciate it too, and
I'm realizing that you've,throughout the course of the
conversation, parts one and nowthat we're, you know 20 minutes
into part two.
You've alluded to Exilio andthe curiosity of the people
there, and we haven't gotten tohow Exilio came together.
So I want to hear the originstory.
Tal Zaks, M.D., Ph.D. (18:49):
So it started with a really smart
investor within, orgamed RoyAmarillo, who was a principal in
our office, and he thought thatyou know, he was trained as a
geneticist and he realized thatthere was an opportunity here to
kind of pull these two strandstogether.
And the strand that says I cando something with a moron and
(19:13):
looping down a particle and Ican insert a whole gene doing
gene therapy based on theseprimordial elements if I can
engineer them better.
And so he went and talked tosome academics who were working
in the space and he managed toget a few to kind of talk to him
and start to kick the idea backand forth.
And then they hired a fewpeople.
Ordinary Venture firm backedhim in this idea and gave them
(19:37):
some initial seed funding to gohire some folks.
And we initially hired somebodywho does this bioinformatics
thing where they go and look atgenomes of various species.
The interesting thing aboutthese elements is that they
evolve in different species butbecause they're limited to a
species and they don't jumpbetween species, then they will
look very different if they'rein a fish or in a bird or in a
(20:00):
mammal or in a human being, butif they exist in areas that are
conserved in our genome.
Then you can actually take anelement from a butterfly or from
a fish and you can actually putthem in our genome and it's
going to work, because thelanding pad of the sequences are
actually the same.
And so he started to put thesefolks together, hired some very
(20:23):
creative and talented team,started up a lab and started to
explore can I find thesesequences, can I improve upon
them?
And I was about 18 months intoor, yeah, about 18 months after
the company was formed.
I was visiting the area areaand they said you know, you're a
partner, why don't you come andhear the pitch?
(20:46):
And I'm thinking to myself well, this is great, right, I can
just go around.
Why don't I hear the pitch?
And then we'll go out for lunch, I'll make some new friends,
I'll say my curiosity and that'dbe the end of it, because 99%
of the pitches I hear, you know,most of the time I don't even
get lunch, but at least I get mycuriosity.
Anna Rose Welch (21:00):
It's always the food that brings someone to the
table.
Tal Zaks, M.D., Ph.D. (21:03):
Right and so, and so we sit down and they
start to tell me about thisstory and I'm like, you know,
this evolution angle reallyspoke to me, and I'll tell you
why in a minute.
It goes back again to Moderna.
But I'm thinking to myself thisis, this is really a neat idea,
because you're taking somethingthat you find in evolution, you
(21:26):
figure out what is it that youcan tweak about it to actually
make it better and get it to alevel of potency that you can
now use it as a therapeutic.
Okay, tell me more.
And then they keep going and anhour turns into two.
At a certain point Part of it Isaid you know, forget lunch,
we're not going to get to therestaurant, let's just keep
talking.
They get the scientific founderon the phone and by hour three
(21:46):
I was hooked because I realizedthey'd actually reduced it a
practice.
They had some initial data toshow that they can indeed do
this.
They can find such an element,they can improve it to the point
that I could see a path to amedicine.
And they tell me don't worry,just give me funding for another
year and I'll keep improving it.
And I'm thinking to myself yeah, you can.
You know you can go keepimproving it, but can we please
make a medicine out of this?
This is, this is good enough,let's get started down the road
and making medicines.
And so they all looked at me andsaid, yeah, okay, what do we do
(22:10):
?
These are, you know, a bunch ofearly research guys, and.
And so I basically joined andtook it upon myself to raise
more money and start to buildthe what we call development, so
to take the research andtranslate it into what could be
development candidates, so thatwe can see a path to making
medicines.
And we're now well into thatjourney.
(22:35):
We still need to hire, stillneed to build a team, still need
to find a CEO that's betterthan me.
We'll get there.
But in the meantime, thecompanies continue to make
progress.
Like they said when I joinedthem, they indeed have continued
to improve on that potency,while in the meantime, we've
hired a couple of people who canstart to do the experiments and
animals to start to show whatthis thing can actually look
(22:57):
like.
Matt Pillar (22:57):
Yeah, take me through the thought process at
that point.
Like you know, you've come offan incredible experience at
Moderna.
You know you're doing.
You have this really uniqueperch at OrbitMed where you've
got the lay of the land andaccess to all sorts of companies
mRNA and otherwise right, youwould more than likely be
(23:21):
anointed the leader of any mRNAcompany that chose to have you
given your experience and yetyou choose.
Maybe you answer the questionand sort of your.
You know your description ofhow things came together and
you're intrigued by thecuriosity.
And you're intrigued by thecuriosity, but why, like, take
me through the thought process,like, why join this company and
(23:46):
choose to lead it?
That is starting so early stage, you know?
So, when you could probablystep into a super cushy position
with a company that's farcloser to you know, commercial
viability and perhaps putting aproduct on the market.
Just take me, I'm just curiousto get inside your brain, like
when you're making this decision.
Tal Zaks, M.D., Ph.D. (24:12):
Yeah, look, I have an answer to that.
But whatever that answer is, Ican tell you my wife was not
convinced, so I'll give itanother shot.
You know I'm super proud andfeel fortunate to have joined
Orbimed and that they acceptedme as an investing partner For
me.
You know, at this stage in lifeto kind of learn by doing, you
(24:34):
know, with full immersion in aplace and a team that has this
phenomenal track record ofsuccess success of successful
investment in life sciencescompanies, I take it as a
privilege.
I'm not that long into thetenure here, I don't know.
(24:55):
I don't think any leadership ofany company is a cushy position,
no matter what stage thecompany.
I think being an operator isalways challenging, and
especially being a CEO.
This wasn't, if you will, achoice that I did because I
thought, uh-huh, the next thingin my career, I need to go tick
(25:15):
that box.
As I alluded to in our previousconversation.
I'm sort of done with a boxticking part of my life and now
it's about OK, where can I addvalue by virtue of what I know?
I think what happened, honestly,is that I just saw an
opportunity to translate what Ithought was a fascinating bit in
science and to push it alongoutside of the research slash
(25:40):
curiosity domain into the let'sput it on a path to making
medicines domain, the path thatis fundable, the path that
should align with a return oninvestment.
And I felt that I was sort ofuniquely qualified, given my
experiences, to go help thiscompany in that next leg of its
(26:02):
journey.
And you know, with thatexperience and the privilege of
having done what I've done andthe luck to have been able to do
what I've done, I feel comes acertain responsibility to
actually make good on that.
So if you see something likethis and you think okay, you
(26:27):
think you believe you've gotsome experiences that are
relevant, uniquely relevant hereand you can help this group of
folks in this bit of science togo on the next leg of journey
towards making medicine, well,that also carries an obligation
to do that and I sort of feltcompelled.
Again, my goal, neither for theshort run nor the long run,
frankly, is necessarily to bethe CEO of this company.
(26:48):
But this company right now, inthis bit of science, has the
potential to translate intomedicine and I'm in a position,
I think, to contribute tosupport doing that.
So I'm obligated.
Matt Pillar (27:02):
Yeah, speaking of your contributions to that, and
you told us a story on part oneof Storytime about.
You told us a story.
Anna Rose Welch (27:11):
Tall's tall tales.
Matt Pillar (27:12):
Yeah, that was it.
That was the one you told us astory about the balance between
IP protection and gettingpublished to attract capital.
And the story was the one whereyou told us about the journal
Nature Review juxtaposingModerna at the time with
Theranos, using the two in thesame sentence.
And so that story being on therecord, I want to push you a
(27:35):
little bit more on that storyand maybe extract what that
experience, because here Xeliois in a position where there is
no stated pipeline but there isIP.
So, coming off of thatexperience and, I'm sure, other
experiences like it, how is itinforming what you're doing now
in terms of your management ofan early stage company that has
(27:57):
IP but doesn't have a quote,unquote publishable pipeline?
Tal Zaks, M.D., Ph.D. (28:04):
Well, I think that, to go back to, if
you will, that story and I don'tknow if we shared it with the
public, but it goes back to theimportance of aligning doing
good in the world, being ethicaland getting a return on
investment, and so, for me,where thou must publish is when
(28:29):
you're in clinical trials, andeven though technically in phase
one and healthy volunteers, youdon't need to, my personal
philosophy is you have topublish everything you do in
mankind, full stop.
You have to publish it in peerreview journals, and if you
agree with that logic, thenactually, it also means you have
(28:52):
to publish the preclinicalbasis for any clinical
experiment, so if I want totreat another human being with a
medicine, then the sciencebehind that, why that is
credible needs to be publishedin a peer-reviewed journal.
That's my personal belief.
It's not written.
I don't think in any regulation, and you can get regulatory
(29:12):
approval without publishing yourpapers, but I think it's
incumbent upon you to have thatsort of public scrutiny and what
it is you're doing.
Earlier than that, though, youhave to contend with the
competitive nature of ourbusiness and wanting to actually
give your investors a return ontheir investment, which means
(29:35):
you, if you're ahead of thecompetition, then you can't
enable them and so you publish,really when you need to be
credible.
And the question is well, okay,why do you need to be credible?
And you need to be crediblebecause you want to attract
talent, you want to attractcapital.
Well, if you can do that in aconfidential manner which as a
(29:58):
private company you can you canattract capital as a private
company.
Then you don't necessarily needto publish and you can hire
people.
If you have them sign CDAs andyou show them data and
confidence.
That's common, and so you don'tactually need that public sort
of imprint that what you do isactually holds up Now.
(30:20):
Imprint that what you doactually holds up Now.
That being said, it does meanthat investors and potential
employees who need to join youneed to do their due diligence.
They can't rely on proxies inthe public domain to say, yeah,
some two peers, who shall remainanonymous, have vetted this,
even though we know often thatdoesn't necessarily replicate.
(30:40):
I think this ecosystem isstringent enough and the good
venture capital firms, the onesthat are known, have a
reputation and they're alsocareful to vet their investments
and not put their money behindthings that are nonsense.
I think where Exilio is today,there is no immediate need to
(31:03):
publish and probably a hindranceto publish when Exilio will be.
Hopefully, tomorrow we willstart to have a need to publish
to justify the clinicalexperiment that we're about to
undertake, and at that point weabsolutely will.
Matt Pillar (31:18):
Yeah, tomorrow we're going to take that
literally right Tomorrow.
Anna Rose Welch (31:21):
Tomorrow.
They're poised guys.
This is getting serious.
That actually ties reallybeautifully into my question.
You know so you had mentionedthat from a career trajectory
standpoint, at some point youhope that there will be someone
else to sort of take over rightthe leadership of of Exilio.
But you know, in the meantime,as you are about to embark into
(31:42):
the clinic tomorrow, you knowthere's a lot of challenges, I'm
sure, ahead of you.
Where are you looking that youthink you're going to be
spending most of your time inthe next year right in terms of
leading this company?
What are you expecting to bechallenged by the most, and
keeping in mind too that this isa nascent scientific space, as
(32:05):
we're moving mRNA into thetherapeutic world?
Tal Zaks, M.D., Ph.D. (32:11):
Well, first of all, let me correct two
assumptions, just for clarity,since we're on the record here.
It's not going to be tomorrowthat we're in the clinic.
And I have, while I hope to findsomebody better than me as a
CEO.
This is an open-endedcommitment on my side.
I'll be here as long as ittakes to get the best out of
this platform.
The challenges, you know.
(32:36):
I think they're sort of inthree buckets.
The first is, as any youngcompany, our science is nascent
and we need to continue thebalance between exploring our
curiosity and doing the stuffthat will get us the actual
product, if you will.
(32:56):
Because any time you hit sortof a roadblock when something
doesn't work as expected andevery young company has those
then it takes a bunch of curious, smart people to start to poke
around the edges and figure out,well, how do we get around this
right?
And so there's always thatbalance, and getting that
balance right is alwayschallenging.
If this were to follow a logicalstep of progression oh, to
(33:20):
solve that you do this itwouldn't be what it is.
You know it.
Actually it takes me back.
My late father was amathematician and I never fully
understood everything he did,but I understood enough to know
(33:40):
that for every you know, thegreatest mathematicians are
known not necessarily by theanswers they gave, but by the
questions they posed, and sothey were able to pose a
question.
How do you prove this?
I think this is right.
Can anybody prove it?
And you know, the better themathematician, the longer it
took for somebody to actuallyanswer that question.
(34:02):
And if you think about it, evenin mathematics which is the
epitome of logical thinking,proving something new, writing a
new paper actually takes somesort of associative thinking
that comes out of left field.
Because if it were just alogical progression, it wouldn't
be tough to do.
Because if it were just alogical progression, it wouldn't
be tough to do.
(34:22):
I think the corollary in ourspace and I'm taking you back to
the challenges that we face itis making sure that we get the
balance right within the companyas we navigate our way forward
from this nascent science andtechnology into actual products
that we think can work forpeople.
There's a lot of work for usahead on that.
The second challenge is findingthe right people.
There's a lot of work for usahead on that.
(34:43):
The second challenge is findingthe right people.
This is a team sport and everytime I'm in a meeting, if I'm
the one giving the answer to thequestion, I know that I've got
a problem.
We're not in a good place ifI'm the one giving the questions
(35:03):
, giving the answers.
My answers may be okay.
Most of the time they won't be.
The problem is I won't know ifthey are or not right.
So building up the team withthe right level of experience
and the right competencies totake this company forward is
absolutely my number onechallenge these days as we
(35:24):
continue to grow the team andmake progress.
And the final one, which kind ofgoes back to the investment
thesis.
You know, balancing the booksin the sense that balancing the
spend on a monthly basis versuswhat you have in the bank,
versus what is actually creatingvalue that you can show
(35:47):
investors.
You're one step further downthe path.
No, I'm still not in thatclinical experiment that I
promised Anna Rose.
I'll be tomorrow, but I'm onestep closer to it.
Therefore, the value isincreased.
Therefore, it's time foranother funding round.
How do you manage that with?
The is increased.
Therefore, it's time foranother funding round.
How do you manage that?
With the actual burn, if youwill?
Your financing strategy isabsolutely critical for success
(36:11):
and that's part of the equationhere.
Matt Pillar (36:14):
Yeah, well, to the extent that you can.
You know I hate saying unpack,let's unpack that Common word.
Anna Rose Welch (36:17):
Yeah, that's cliche, I find myself using it
all the time, but I'm going tosay it.
Let's unpack that.
It's a common word.
Yeah, that's cliche.
We use it a lot.
I find myself using it all thetime, but I'm going to say it.
Matt Pillar (36:25):
Let's unpack that a little bit.
How do you think about returnon investment?
It's an interesting perspectivethat you have because, as an
investor, in your role atOrbimed, you're the man holding
expectations and as the CEO atExilioio, you're the man
managing expectations.
Walk us, you know, take us downthat tightrope.
Anna Rose Welch (36:48):
Do you get into fights with yourself?
Tal Zaks, M.D., Ph.D. (36:52):
Well, the biggest arguments are always
between the right side of thebrain and the left side of the
brain.
If only they would talk to eachother more, they'd figure it all
out right, pretty much.
I think that, to answer itseriously, the world of biotech
investing has changed in thelast few years.
With the macroeconomic changesthat we face, you realize that
(37:18):
people who invest in us caninvest anywhere.
They don't need to invest withus.
So we're competing for thoseinvestment dollars with tech,
with biotech, with otherinvestment opportunities at some
level with treasuries.
When interest rates go up, thena long-term investment suddenly
(37:41):
becomes less palatable.
When you live in a zerointerest rate world, then
somebody's got a hundred bucksand they need to figure out what
to do with it.
Well, if nobody gives them anyinterest on it, then they can
sit on a hundred bucks and in 10years that hundred bucks will
be a hundred bucks.
And if they come to me and Isay, look, I'm going to, I'm
(38:03):
going to make you three timesthat money, but it's going to
take me 10 years, then they saygreat, because now I can make
100 into 300.
And it's OK because timedoesn't cost me.
But if we're in a world of 5%interest rates, then in 10 years
that $100 is already $200 if Ido nothing else with it but buy
treasuries.
So our hurdle rate what we callthe level that we need to
justify as a return on theinvestment has suddenly become
(38:26):
challenging, and that's had aneffect on a lot of very early
stage kind of platform biotechs,and so managing the time to
value creation is critical,while managing how much
investment you absolutely needand don't get more money than
you absolutely need to get tothe next step.
(38:46):
And that's a little bitdifferent than what it used to
be.
It used to be that well, assoon as you can get money, go
get money.
Now you're going to have tojustify a higher valuation for
getting more money, and that'sbecoming more and more
challenging.
And so you've seen the effectsin the ecosystem, and I think
one of the jobs I have is tothread that needle, is to make
(39:08):
sure that the capital that theinvestors have given me is
deployed wisely, deployedefficiently and meeting the
milestones required todemonstrate progress on that
path to making the medicine.
I'm not sure how you can impactit more, except to say that you
(39:29):
watch very carefully what it isyou're spending money on.
You try to give people somefreedom, but I'll give you a
concrete example.
At Exilio, we've made thedecision to outsource the
messenger RNA and lipidnanoparticle for the animal work
that we need, because wethought it would be more capital
efficient.
I've very much constrained thesize of the team because you
(39:53):
know, as we move things furtheralong, the guys who are doing
the early discovery well, youknow, guess what?
They want to keep doing earlydiscovery and at a certain point
I have to say, yeah, no, youknow, if you keep doing what you
were doing yesterday and I needto do new stuff, that means I
need to go hire more people.
Well, we're actually going toconstrain the size of the
organization until we get to,sort of, our next milestone.
(40:13):
So I need you to do less ofthat and go over here and help
your buddies who are kind oftrying to move the ball down the
field.
Matt Pillar (40:22):
Yeah, have you does .
Accelio have a CFO yet Um, haveyou does.
Tal Zaks, M.D., Ph.D. (40:27):
Accelio have a CFO, yet, uh, we have uh
a CFO who's actually a venturepartner with Orbi Med Still and
is a consultant to us as acompany.
So, um, uh, I think uh ourentire C-suite is uh pretty much
consultants at this point,which again allows me to uh, me
to keep the cash burn lower.
Matt Pillar (40:47):
Yeah, yeah, fractional leadership approach,
so to speak, right.
Tal Zaks, M.D., Ph.D. (40:52):
Well, yeah, I mean, if 80% of my time
is fractional, then yes, younailed it.
Matt Pillar (41:00):
It's an obtuse fraction.
Anna Rose Welch (41:04):
Well, this might seem a little bit like a
non sequitur of a question toask, but I actually think it's
really essential because I thinkearlier on you were you were
saying that without greaterunderstanding of mrna medicines,
of any medicine in general,right, and being able to speak
that same language that yourpatients need to understand,
that physicians need tounderstand all of the work that
(41:24):
you're doing at Auxilio and thatthe entire industry is doing
today to bring mRNA therapeuticsto market is going to be for
naught, right, if people don'tunderstand what they're doing.
So you know, kind of leapingfrom that commercial return of
investment concept into theworld of commercializing an mRNA
therapeutic right.
(41:45):
You've emphasized theimportance of that.
Education and publications areone way to do that.
But we've also seen a couple ofthings happen in the past
couple of weeks.
We saw Moderna just released, Ithink, kind of the first of its
kind right a free course onmRNA medicines to start
educating the public about whatthese products are and what mRNA
(42:06):
can do.
Matt Pillar (42:07):
Maybe you should have done that three years ago.
Just one idea.
Anna Rose Welch (42:10):
Might have been a little good.
You know better around the timeof the vaccine, but here we are
right and we are still workingahead with that.
But you know, as someone that'snow heading up a company in the
mRNA therapeutic space, how doyou think we should, as an
industry and individualcompanies, company leaders, be
educating the public today aboutwhat these medicines are and,
(42:34):
even more importantly, what theyare not, what they do versus
what they do not do?
Tal Zaks, M.D., Ph.D. (42:42):
Yeah, I honestly wish I had a good
answer, so I thought the answerwas me talking to you guys.
You're telling me it's not.
Matt Pillar (42:49):
Well, it's part of the answer for sure.
I mean, you know part of theanswer for sure.
Let's put it this way my momdoesn't listen to this podcast.
Tal Zaks, M.D., Ph.D. (42:58):
And she's one of the ones who needs some
education.
Matt Pillar (43:00):
That's true.
Tal Zaks, M.D., Ph.D. (43:02):
So I'll raise you one.
My mom does listen to thispodcast and listens to everyone
I do.
Matt Pillar (43:08):
So there you go.
She's going to be so proud whenshe hears you made two parts of
the business of biotechback-to-back episodes.
Tal Zaks, M.D., Ph.D. (43:13):
But look, I think that it's incumbent
upon all of us to use whatevervenue and resource we have in
order to do that.
I give Stefan Moderna a lot ofcredit for what they've done.
I think Stefan's been avisionary from the get-go in
educating the public andspeaking about it in terms that
are easy to understand, inmaking sure that Moderna
(43:37):
invested in those resources and,frankly, if you look at the
history of Moderna starting witheducating the Moderna workforce
about everything that they'redoing and I have a lot of
admiration for his leadership inthose regards I think that
(43:59):
there's not a one size fit allhere.
You know, I've tried to do itin whatever academic
opportunities I've had.
When I think one of the one ofthe things that scare people
when it comes to nucleic acidtechnology, mrna, dna, gene
therapy is, you know, are wemessing with creation?
(44:21):
That's sort of a slippery slope, because everything you do
around us is not as found bynature.
I think what's important toexplain to people is why we
(44:43):
believe what we're doing is safeand why do we think it's got a
benefit to people.
And that's why we who are atthe forefront of developing
novel medicines feel we have amoral imperative to develop
novel treatments that are safeand effective.
This is probably particularlyrelevant for gene therapy.
(45:03):
This is probably particularlyrelevant for gene therapy and I
can tell you, for many yearswhen I was at Moderna, you know,
I looked at a lot of theapproaches and I was on record
as saying, you know, as amedical oncologist, some of
those things scare me.
And mRNA the beauty of mRNA asopposed to gene therapy is that
(45:23):
mRNA is very transient, does notintegrate with the genome, you
know the effects are gone in aday or two at least as far as
protein production, and there'sno longstanding effect.
And I have to tell you, acceliois the first company that I'm
sort of personally investingboth time and capital, and the
(45:47):
primary reason for me to getinvolved here personally, beyond
the curiosity and the path tomedicine, is the sense that
there's a potential fordifferentiating safety.
The specific elements that thefolks described and discovered
and are engineering are elementsthat live within our genome in
(46:09):
places that are very safe.
We have hundreds of repeatelements and they're nowhere
near any cancer-causing gene andso if our elements can really
live specifically only in thoseplaces, then I'm much more
comfortable as a medicaloncologist that I can go and put
a new gene in one of thoseplaces and it'll be fine.
And so far the specificity,that exquisite ability to only
(46:34):
be there, is maintained.
And what got me confident isnot sort of because we
engineered it to be that way,but because when the team
started looking at theseelements, they looked at nature
across the tree of life and theycould only find them in that
very specific area that's notclose to any cancer-causing gene
(46:54):
.
And that gave me the confidencethat these elements are indeed
within a safe harbor locationand therefore, if we go make a
gene medicine based on this, itshould indeed be safe.
Now, you know, we have to provethat and we're developing the
tools to prove it, and the onusof proof is, of course, on us.
(47:14):
But if that holds true, then Ifeel very comfortable, as a
medical oncologist to say that Ibelieve this should be both
efficacious and safe to developfor patients.
It's the same framework that theFDA uses.
It has to do with safety andefficacy, right, and the bar is
(47:37):
probably different, if you'reWell for sure.
It's different if you'retalking about a cancer patient
or you're talking about ahealthy person trying to get
vaccinated against an infectiousdisease that they might not
even get, and I think one of thethings I've enjoyed most and
learned most was the starkdifference between the two and
(47:59):
how it makes you think aboutmedicine as a whole.
You know it's interesting, andpeople much smarter than me have
spoken about this.
The medicine, as I practiced it, as I learned it is treatment
of sick people.
Few people are as sick ascancer patients with late-stage
(48:22):
disease, and so my goal is totake a person who's sick and
cure them right, make thembetter.
Okay, my vision for thatpatient is actually their past.
The best I can hope for them isthat they will be a few days
(48:44):
before when they didn't havecancer.
We, as physicians, don't try totake healthy people or people
who are clinically well andthink about how do we make them
healthier, how do we make thembetter?
That is something that we leavefor.
You know that's an engineeringmindset of continuous
improvement.
Physicians, we don't thinkabout it.
(49:05):
I'm a medical oncologist.
I'm a serious physician.
I treat with serious illness.
I don't make healthy peoplehealthier.
I mean, if you come to myoffice and you're healthy, well,
get out of my office.
What am I going to do for you,right?
The people who make healthypeople healthier.
Oh, we leave that to the yogainstructionist and the
nutritionist.
And you know Well, really, thenutritionist, and you know well,
(49:31):
really, yeah, I mean, what didI do?
I developed a vaccine that tookhealthy people and made them
healthier, yeah, when you thinkabout it right.
And so it kind of made me stepback and think about what is it
that we're trying to do asphysicians?
And I think that concept ofbenefit risk has to be put in
the context of your health andwhat the benefit is that you
(49:53):
anticipate getting.
Matt Pillar (49:54):
Yeah, yeah, wow, that's it.
I know, yeah, you just openedup my mind is.
I see, I see it's the righttime.
It's all part three coming.
Anna Rose Welch (50:04):
There are like fireworks going off in my brain
right now.
I have no words.
I'm going to have a great timewith Tal apart three coming.
Matt Pillar (50:08):
There are like fireworks going off in my brain
right now I have no words.
I'm going to, I'm going to, youknow, we'll do that, we'll do
down the road.
We'll do that, but I'm going tolet you off the hook, Dr Zox,
because you've given us so muchof your time already.
But I don't want to let you offthe hook without giving you an
opportunity to share with us alittle bit about what is next on
the immediate horizon, besidesfinding a new CEO to replace you
(50:31):
when you're ready when you'reready, when your contributions
are to the future yourcontributions are waning.
No, but seriously, what are,what are sort of the next?
I guess inflection points forExilio.
Tal Zaks, M.D., Ph.D. (50:47):
I guess inflection points for Xilio.
I think for Xilio it's todevelop the technology to the
point where we can start to showthe utility in preclinical
models of disease.
That is sort of the nextimmediate milestone for us.
For me it's to build a companyand to continue my journey at
OrbiMed, I think, as a field andwe didn't touch on this
(51:12):
watching new technologies startto abut and make inroads into
our industry.
Ai is the buzzword thateverybody's using.
There's several stories I canshare on where that stands today
.
That's been a fascinating thingfor me to watch and learn and
start to be part of and, as Isaid, we're using some of those
tools already at Exelio.
(51:32):
But we're just in a veryfortunate moment of time from a
translating science intomedicine perspective, given all
the progress that's happeningand accelerating in the world of
science, and I'm just superjazzed to be able to be part of
translating all that intoactually people feeling better
(51:52):
and living longer.
Matt Pillar (51:53):
Yeah, yeah, I the.
The AI angle is one, I think,for another fodder for another
day.
It is fascinating to me and I'msuper interested in your
perspective on that.
Given, given your perspective,right Coming, you know you're,
you're, you're right, you're aphysician, you're a scientist.
A lot of folks in yourcommunity are skeptical.
(52:14):
I think the most in-depth andconvincing conversations I've
had with companies that areplaying with AI have come from
AI companies who just happen tobe working in our industry or
perhaps developing a, you know,demonstrable pipeline based on
that technology.
But when I talk to the hardcorefolks, you know it's like
there's all sorts of skepticism.
So I would like to open up thatconversation with you sometime,
(52:37):
but again, we need to wrapthings up here today.
Tal Zaks, M.D., Ph.D. (52:41):
So you know where to find me, Matt.
Matt Pillar (52:43):
I know where to find you.
We've found.
We've found you a few timesalready yeah, so ominous.
Super thankful that you'vegiven us the time, though.
Thank you, and I want to thankyour mom too.
She did a bang up job.
I know she's listening.
Anna Rose Welch (52:56):
Yes, thank you.
Matt Pillar (52:57):
I know she's listening.
So, mrs Zacks, you did afantastic job.
Wonderful young, wonderfulyoung man.
Thank you for listening.
Thank you for listening.
So that's Xyliotherapeutics CEOand chair of the board of
directors, dr Tal Zaks.
I'm Matt Piller.
Anna Rose Welch (53:15):
I'm Anna Rose Walsh.
Matt Pillar (53:16):
And you just listened to the Business Biotech
.
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(53:36):
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In the meantime, we'll see younext week and thanks for
listening.
Welcome back to the Business of Biotech, where last
week, we left you dangling offof a cliff on the edge of your
seat with a to-be-continuedconversation with current Exilio
CEO and OrbitMed partner andpast Moderna CMO, dr Tal Zaks.
I'm Matt Piller and I'm AnnaRose Welch Dr Tal Zaks, I'm Matt
(00:26):
Piller and I'm Anna Rose Welch.
And when you last heard from us, we were testing Dr Zaks on his
philosophy that it's not unmetmedical need but instead
curiosity that drives innovationand biotech, and more
specifically in the mRNA space.
And on that note, if you'retuning in today but you haven't
listened yet to last week'sepisode, stop what you're doing
right now.
Listen to last week's episode.
(00:46):
Dive right into that one first,lest you find yourself confused
even more so than you usuallyare trying to following along
with one of my rambling-.
Anna Rose Welch (00:58):
Stop speaking for yourself, man Intriguous.
Matt Pillar (01:01):
Well, anna-rose, we definitely want to give them
more context of you as well,before they listen to this.
Anna Rose Welch (01:07):
Uh, this part too just an interloper creep on
in here and there so let's jumpright back into the
interrogation.
Matt Pillar (01:16):
Um tell I was.
I was gonna ask you this iswhere we were going.
The last time we spoke, I wasgonna ask you uh, in this
industry, where we see so oftenthat money and, to some extent,
regulatory favor reward thosewho chase unmet needs and big
bonus of those unmet needs arein big market opportunities how
(01:38):
do you go about convincingpeople?
Instead, per your commentary,the last time we spoke, to fund
and back curiosity?
Tal Zaks, M.D., Ph.D. (01:49):
Well, matt and Anna Rose, first of all
, thank you for having me backin the program.
It's wonderful to be with youagain and I look forward to the
conversation.
I think the answer is you haveto paint a path to value for
people.
We don't fund curiosity for thesake of curiosity.
That's an academic pursuit andthe basic sciences that is
(02:12):
something that we all contributeto as citizens.
That's a public health.
The NIH is notable in the USfor doing that.
I think, when it comes to areturn on investment and sort of
the commercial economic spherein which I live, what you have
to do is create a vision wherebyyou will.
(02:34):
If that curiosity pans out, youask yourself the what if?
Question, what can you do withit that's of value, and show the
path that people can actuallysign up to, say, yeah, we can
get it.
We realize it's risky, werealize you don't know anything,
everything.
But if you can do this, here'swhat it looks like at the end
(02:57):
and the end game is of concretevalue to patients out there in
the world, and I think that'swhat garners the investment.
We're fortunate switching gearsjust for a second, because you
asked on regulatory.
The US is very unique and I'mvery proud of our regulatory
(03:18):
system.
Not many people realize this.
When you go to FDA and you say,hey, I think this works, they
basically tell you, show me thedata and I will do my own
analyses.
When you go to, you know,outside the US, usually people
(03:39):
don't have the same depth to dotheir own analysis.
So they ask me OK, prove it.
And then they ask you questionstrying to poke holes at it.
Prove it, and then they ask youquestions trying to poke holes
at it.
But the FDA is unique in thedepth of the competencies that
they have and I think all of usas consumers should be really
proud of it, especially in theUS, and it's one of the reasons
that most of the rest of theworld looks to the US FDA for
approvals and as a basis formaking judgment.
(04:02):
And as a basis for makingjudgment, going back to sort of
the curiosity angle, whensomebody comes to me with an
idea, back in the day when wewere starting this with mRNA,
the critical question was notwill it work?
Can you make mRNA translate aprotein in the human body?
The critical question was if itcould work, what would you do
(04:27):
with it?
That would be of value, and Ithink that's where a lot of our
energy went in the early daysand that's where a lot of
investor sentiments came in backthen.
The company is famous forhaving raised successive rounds
that were unprecedented at thetime because of the potential
value that we saw in it,switching gears today, when we
(04:49):
look at investments, we look atthings that are cutting edge
usually and the question isalways okay, what is the
medicine at the end of therainbow and is there a credible
path to get there within thefinancing that you're trying to
raise?
The company I'm leading now,exilio, started with an idea
that is based in curiosity.
It basically looks at one ofthese elements in our genome,
(05:13):
these genes that can go fromplace to place in the genome.
Think of them as really earlyprimordial viruses.
If our concept of a virus is apiece of genetic material that
goes to infect somebody else,another genome, well, these
primordial viruses, or parts ofviruses, are sort of we call
(05:34):
them jumping genes.
At a certain stage theyactually evolved to try to jump
within our own DNA and becauseof that they have unique ability
of where they can go and whatthey can do.
But also evolution hasconstrained their ability to
jump, otherwise our genomeswould be, you know, junk and we
wouldn't be here Again for fulldisclosure.
You are now speaking withsomebody who believes in
(05:55):
evolution.
When the company was started,the question was well, if these
indeed occur and if you map ourgenome and we can do that now we
have been doing it for severalyears almost half of our genome
is remnants of various kinds ofthese genes trying to jump about
, then it's pretty clear thatsome of them still have that
(06:19):
ability to jump a little bit,but evolution has constrained
that, otherwise they'd wipe usout.
Can we find one of thoseelements and now, using modern
tools of engineering, actuallymake them better and start to
use them as a platform forfixing genes, for inserting a
gene where somebody is born withan error, where they don't have
the gene for that?
That's a frequent cause of raregenetic diseases, and that was
(06:43):
the idea.
And I became excited becausethe team that came together
actually was marrying twoavenues of research.
One of them is mRNA, lipidnanoparticle.
We spoke about that at length.
The other one was gene therapy,and we're now living.
You know, we've been, we alreadyhave some gene therapies
(07:07):
approved and we've been usingreally cumbersome ways of
getting these foreign genes orthese fixing genes, if you will
into our genome using what arecalled the viral vectors, so
bits and bobs of viruses thatare really hard to make and have
a whole host of challengesassociated with them.
And when you can do that, youcan only do that once, because
(07:29):
the immune system thenimmediately recognizes that you
can never give that gene again.
So you got to get it right onthe first shot, and the whole
gene therapy industry hasevolved to this mantra of a
one-time dose right, once anddone.
Well, it turns out that onceand done is actually a bug, it's
not a feature.
We can't do it more than once,even if we needed to.
(07:51):
And what this team that formedXilio actually came up with?
The notion that if we could getthis to work, if we could
leverage what's already innature but improve upon it, we
can then use mRNA and lipidnanoparticle technology to
deliver it.
And the beauty is that mRNA andLNP technology is not
immunogenic.
(08:12):
You can give it with repeatdosing.
And so now I don't have to beonce and done, I can actually
repeat dose and get to the exactgene level I need to get a
therapeutic benefit andpotentially even a cure.
That's what got me excited, andso this is early stage.
The team is super curious.
They're engineering there, youknow, they've got these
(08:32):
structures up using machinelearning, ai, all the usual
buzzwords but the critical pieceis at the end of it.
You can paint a path toactually curing somebody of
their disease, and that's whereyou get rewarded.
Anna Rose Welch (08:47):
I think that's a really good point and that's
something too that I've startedto hear more of in the mRNA
space in particular.
Right in a redosable space,we're following in the footsteps
of treatments that have beensort of alluring, I think, in
terms of that one and donenotion, right commercially,
partially, because they are soexpensive, right.
(09:09):
But at the end of the day, Ithink that one of the value
propositions that hasn't reallybeen seized upon yet by the mRNA
space is that ability to redoseand that can really, I think,
open up the space to a wholehost of advantages, both
especially with patients too,that are probably more familiar
with that level of treatmentright, chronic treatments in the
(09:30):
biologic space, for example,it's a risk versus benefit
profile right that they're morefamiliar with per se than one
and done.
But you know, I'm reallycurious too in terms of you know
, as you're looking at all ofthis curiosity in the space and
in the mRNA world, how thefunding journey has been.
(09:52):
Have you had to sort ofreiterate this story of overcome
that sort of allure of theone-and-done treatment in the
gene therapy space as you'reworking in the mRNA world,
treatment right in the genetherapy space, as you're working
in the mRNA world, and what areyou finding is being more
rewarded in terms of curiosityin the mRNA space today?
Tal Zaks, M.D., Ph.D. (10:14):
Well, I think that there's been a
fundamental shift in funders,investors' willingness to
entertain the conversation basedon the success of Moderna
Pfizer BioNTech, because whatthat success has demonstrated is
that it is doable to give ahuman being mRNA and an LNP and
(10:36):
go make a protein that will havea therapeutic benefit and you
can do it at scale and it issafe.
And so a lot of things thatwould have probably taken us,
you know, a decade or two to getto were actually accelerated to
the benefit of this technologyby the utilization of these
vaccines.
I think, where you see theconversation today, many
(11:00):
companies and many investors arelooking to invest in sort of
next gen.
Okay, what can we do with thistechnology?
And, of course, the space thatI'm in and there are competing
companies like CRISPR, beam, etcetera, that are also trying
similar approaches, trying toget away from traditional viral
(11:25):
vectors for gene therapy butactually leverage what the
capabilities that have beendemonstrated mRNA and LNP can do
and bring them into the genetherapy world.
It's going to take some timebut between know the new
technologies that are emerging,I'm very optimistic that we will
(11:47):
see new medicines come aboutthat leverage sort of both, both
streams coming togetherrecognize that actually progress
is not really the Archimedes inthe bathtub moment of aha, but
(12:14):
it's more like people takingthings that have matured to a
certain point from differentfields and bringing them
together, and that's where youget sort of true innovation.
You know, one example for methat I'm super always happy to
discuss and proud of is thejourney of the cancer vaccines.
I started my career as a postdocworking on that eons ago when I
joined Moderna.
I sort of realized that betweenwhat we now understood about
(12:37):
cancer and what the immunesystem recognizes, between our
ability to do sequencing that wenever had before of every
person's tumor our ability to dosequencing that we never had
before of every person's tumorand our ability now to use mRNA
technology to create a veryparticular type of vaccine that
stimulates just the right partof the immune system to go after
cancer, we should be able toput together a personalized
cancer vaccine, and we did.
(12:58):
We started it back towards theend of 2015 when I was at
Moderna, and the results of arandomized controlled trial have
recently shown that it lookslike that that personalized
vaccine can actually preventrecurrence of melanoma almost
half the time if given in theright setting.
So it's these strands that allcome together.
(13:19):
For Xilio, it is theunderstanding of sequencing
evolutions, these jumping genesand what you can do with modern
protein engineering tools, andthen what you can bring from
mRNA and lipid nanoparticle.
And you know, everybody talksabout AI and machine learning as
the next enabler, and we'restarting to see how that's
accelerating our ability to dodiscovery in almost every place.
(13:43):
You look as well.
So it's these pulling ondifferent strands where
curiosity has given us new toolsand how you put them together
to actually create new medicines.
That's what's fundable.
Anna Rose Welch (13:56):
Have you found that you know, from an education
standpoint, when you're talkingto investors and working with
the investor community, thatthere has been any sort of
education that's been needed tosort of help ease that
transition from we know whatmRNA LNPs can do in a
vaccination context?
Right to now, here we areexploring therapeutic cancer
(14:19):
vaccines.
We're looking into proteinreplacement, gene editing, with
mRNA and LNPs predominantly.
Have you found right that thatnarrative, that education, that
awareness, is needed in certainareas more so than others, or
are people pretty up to speed?
Tal Zaks, M.D., Ph.D. (14:40):
I think there's been a dramatic shift in
terms of people understandingof the basic technology.
Now, that being said, andinvestors, by and large,
especially the biotech ones whoare in this space, they're a
pretty savvy bunch, yeah.
But education is, you know, youcan never do too much of it.
(15:02):
And the fascinating thing aboutit for me at least, and it goes
back to my root as a physicianyou know, the biggest challenge
every physician has, and the onethat we most often fail at, is
our ability or the need we haveto explain similar
pathophysiology processes ofwhat the disease is to different
(15:24):
people in different language,coming at us from a different
viewpoint.
And everybody has theexperiment of going to a
physician and not understanding,well, what is it that they are
actually saying?
And, trust me, the physicianunderstood what they were saying
, but the problem is they didn'tfigure out how to relate it to
the patient.
And it's on us to learn how toexplain things in different
language and and it.
(15:45):
You know it's true in in, inpharma as well, you have people
with different expertises.
You have the engineering folks,the research folks, the
clinical folks, even the financefolks, and they all kind of
have their own language and andand the fascinating thing is it
turns out, it's actually inbredinto how we and into our culture
(16:07):
.
When I was a medical student, Iread a fascinating book.
There's a Canadian philosophercalled John Ralston Soule and he
wrote a book called Voltaire'sBastard, and the subtitle is the
Tyranny of Reason in WesternCivilization, and basically he
sort of claims that you know,reason doesn't lead you
necessarily to morally correctchoices, which is fair, and one
(16:31):
of the subplots there thatcaught my attention is this
notion that ever since theMiddle Ages, when we started to
specialize, every specialtystarted to sort of enshroud
their knowledge in their ownlanguage, and that was a barrier
to other people, because yourpower was your knowledge and so
you wouldn't share it exceptwith you know, the cognoscente
(16:53):
of your trade.
And so you started to speak inlingo that nobody else could
perceive.
And boy do we still have it.
By the way, physicians are theabsolute worst offenders to this
, and I'll give you a simpleexample.
A patient can come to theoffice and their platelet counts
are low.
I have no idea why, but becausethey're low they will have a
certain type of skin rash, andthe patient sits there and the
(17:16):
next thing you do is you tellthem well, sir, you've got
idiopathic thrombocytopenia,purpura.
Well, I just told them thatyou've got a low platelet, skin
rash, for reasons that I don'tknow, except I said it in Latin
Idiopathic, I don't know.
Purpura, skin rash,thrombocytopenia.
Your platelets are low, right,and so every profession sort of
(17:38):
has that, and the fun for me hasbeen to sort of try to decipher
what the other guys actuallymean when they use that and
that's within pharma.
But when you're speaking aboutwhat it is you do.
You know, my PhD mentor, thelate Shraga Segal, pulled me
aside once and said Tom, if youcan't explain what you're doing
to somebody in kindergarten, youdon't really understand what it
(17:59):
is you're doing.
And so I think on all of usit's incumbent those of us who
are fortunate enough to be doingthe cool stuff that we are, you
know we have to be able totranslate that to everybody to a
language that everybody canunderstand, otherwise what we do
will be for none.
And that's, frankly where youguys come in as well, and I'm so
(18:21):
happy to be here, because forme it's an opportunity to share
with you, and with you, with therest of the public, what's so
cool about the stuff that we do.
Matt Pillar (18:29):
Yeah, it is cool and we appreciate it too, and
I'm realizing that you've,throughout the course of the
conversation, parts one and nowthat we're, you know 20 minutes
into part two.
You've alluded to Exilio andthe curiosity of the people
there, and we haven't gotten tohow Exilio came together.
So I want to hear the originstory.
Tal Zaks, M.D., Ph.D. (18:49):
So it started with a really smart
investor within, orgamed RoyAmarillo, who was a principal in
our office, and he thought thatyou know, he was trained as a
geneticist and he realized thatthere was an opportunity here to
kind of pull these two strandstogether.
And the strand that says I cando something with a moron and
(19:13):
looping down a particle and Ican insert a whole gene doing
gene therapy based on theseprimordial elements if I can
engineer them better.
And so he went and talked tosome academics who were working
in the space and he managed toget a few to kind of talk to him
and start to kick the idea backand forth.
And then they hired a fewpeople.
Ordinary Venture firm backedhim in this idea and gave them
(19:37):
some initial seed funding to gohire some folks.
And we initially hired somebodywho does this bioinformatics
thing where they go and look atgenomes of various species.
The interesting thing aboutthese elements is that they
evolve in different species butbecause they're limited to a
species and they don't jumpbetween species, then they will
look very different if they'rein a fish or in a bird or in a
(20:00):
mammal or in a human being, butif they exist in areas that are
conserved in our genome.
Then you can actually take anelement from a butterfly or from
a fish and you can actually putthem in our genome and it's
going to work, because thelanding pad of the sequences are
actually the same.
And so he started to put thesefolks together, hired some very
(20:23):
creative and talented team,started up a lab and started to
explore can I find thesesequences, can I improve upon
them?
And I was about 18 months intoor, yeah, about 18 months after
the company was formed.
I was visiting the area areaand they said you know, you're a
partner, why don't you come andhear the pitch?
(20:46):
And I'm thinking to myself well, this is great, right, I can
just go around.
Why don't I hear the pitch?
And then we'll go out for lunch, I'll make some new friends,
I'll say my curiosity and that'dbe the end of it, because 99%
of the pitches I hear, you know,most of the time I don't even
get lunch, but at least I get mycuriosity.
Anna Rose Welch (21:00):
It's always the food that brings someone to the
table.
Tal Zaks, M.D., Ph.D. (21:03):
Right and so, and so we sit down and they
start to tell me about thisstory and I'm like, you know,
this evolution angle reallyspoke to me, and I'll tell you
why in a minute.
It goes back again to Moderna.
But I'm thinking to myself thisis, this is really a neat idea,
because you're taking somethingthat you find in evolution, you
(21:26):
figure out what is it that youcan tweak about it to actually
make it better and get it to alevel of potency that you can
now use it as a therapeutic.
Okay, tell me more.
And then they keep going and anhour turns into two.
At a certain point Part of it Isaid you know, forget lunch,
we're not going to get to therestaurant, let's just keep
talking.
They get the scientific founderon the phone and by hour three
(21:46):
I was hooked because I realizedthey'd actually reduced it a
practice.
They had some initial data toshow that they can indeed do
this.
They can find such an element,they can improve it to the point
that I could see a path to amedicine.
And they tell me don't worry,just give me funding for another
year and I'll keep improving it.
And I'm thinking to myself yeah, you can.
You know you can go keepimproving it, but can we please
make a medicine out of this?
This is, this is good enough,let's get started down the road
and making medicines.
And so they all looked at me andsaid, yeah, okay, what do we do
(22:10):
?
These are, you know, a bunch ofearly research guys, and.
And so I basically joined andtook it upon myself to raise
more money and start to buildthe what we call development, so
to take the research andtranslate it into what could be
development candidates, so thatwe can see a path to making
medicines.
And we're now well into thatjourney.
(22:35):
We still need to hire, stillneed to build a team, still need
to find a CEO that's betterthan me.
We'll get there.
But in the meantime, thecompanies continue to make
progress.
Like they said when I joinedthem, they indeed have continued
to improve on that potency,while in the meantime, we've
hired a couple of people who canstart to do the experiments and
animals to start to show whatthis thing can actually look
(22:57):
like.
Matt Pillar (22:57):
Yeah, take me through the thought process at
that point.
Like you know, you've come offan incredible experience at
Moderna.
You know you're doing.
You have this really uniqueperch at OrbitMed where you've
got the lay of the land andaccess to all sorts of companies
mRNA and otherwise right, youwould more than likely be
(23:21):
anointed the leader of any mRNAcompany that chose to have you
given your experience and yetyou choose.
Maybe you answer the questionand sort of your.
You know your description ofhow things came together and
you're intrigued by thecuriosity.
And you're intrigued by thecuriosity, but why, like, take
me through the thought process,like, why join this company and
(23:46):
choose to lead it?
That is starting so early stage, you know?
So, when you could probablystep into a super cushy position
with a company that's farcloser to you know, commercial
viability and perhaps putting aproduct on the market.
Just take me, I'm just curiousto get inside your brain, like
when you're making this decision.
Tal Zaks, M.D., Ph.D. (24:12):
Yeah, look, I have an answer to that.
But whatever that answer is, Ican tell you my wife was not
convinced, so I'll give itanother shot.
You know I'm super proud andfeel fortunate to have joined
Orbimed and that they acceptedme as an investing partner For
me.
You know, at this stage in lifeto kind of learn by doing, you
(24:34):
know, with full immersion in aplace and a team that has this
phenomenal track record ofsuccess success of successful
investment in life sciencescompanies, I take it as a
privilege.
I'm not that long into thetenure here, I don't know.
(24:55):
I don't think any leadership ofany company is a cushy position,
no matter what stage thecompany.
I think being an operator isalways challenging, and
especially being a CEO.
This wasn't, if you will, achoice that I did because I
thought, uh-huh, the next thingin my career, I need to go tick
(25:15):
that box.
As I alluded to in our previousconversation.
I'm sort of done with a boxticking part of my life and now
it's about OK, where can I addvalue by virtue of what I know?
I think what happened, honestly,is that I just saw an
opportunity to translate what Ithought was a fascinating bit in
science and to push it alongoutside of the research slash
(25:40):
curiosity domain into the let'sput it on a path to making
medicines domain, the path thatis fundable, the path that
should align with a return oninvestment.
And I felt that I was sort ofuniquely qualified, given my
experiences, to go help thiscompany in that next leg of its
(26:02):
journey.
And you know, with thatexperience and the privilege of
having done what I've done andthe luck to have been able to do
what I've done, I feel comes acertain responsibility to
actually make good on that.
So if you see something likethis and you think okay, you
(26:27):
think you believe you've gotsome experiences that are
relevant, uniquely relevant hereand you can help this group of
folks in this bit of science togo on the next leg of journey
towards making medicine, well,that also carries an obligation
to do that and I sort of feltcompelled.
Again, my goal, neither for theshort run nor the long run,
frankly, is necessarily to bethe CEO of this company.
(26:48):
But this company right now, inthis bit of science, has the
potential to translate intomedicine and I'm in a position,
I think, to contribute tosupport doing that.
So I'm obligated.
Matt Pillar (27:02):
Yeah, speaking of your contributions to that, and
you told us a story on part oneof Storytime about.
You told us a story.
Anna Rose Welch (27:11):
Tall's tall tales.
Matt Pillar (27:12):
Yeah, that was it.
That was the one you told us astory about the balance between
IP protection and gettingpublished to attract capital.
And the story was the one whereyou told us about the journal
Nature Review juxtaposingModerna at the time with
Theranos, using the two in thesame sentence.
And so that story being on therecord, I want to push you a
(27:35):
little bit more on that storyand maybe extract what that
experience, because here Xeliois in a position where there is
no stated pipeline but there isIP.
So, coming off of thatexperience and, I'm sure, other
experiences like it, how is itinforming what you're doing now
in terms of your management ofan early stage company that has
(27:57):
IP but doesn't have a quote,unquote publishable pipeline?
Tal Zaks, M.D., Ph.D. (28:04):
Well, I think that, to go back to, if
you will, that story and I don'tknow if we shared it with the
public, but it goes back to theimportance of aligning doing
good in the world, being ethicaland getting a return on
investment, and so, for me,where thou must publish is when
(28:29):
you're in clinical trials, andeven though technically in phase
one and healthy volunteers, youdon't need to, my personal
philosophy is you have topublish everything you do in
mankind, full stop.
You have to publish it in peerreview journals, and if you
agree with that logic, thenactually, it also means you have
(28:52):
to publish the preclinicalbasis for any clinical
experiment, so if I want totreat another human being with a
medicine, then the sciencebehind that, why that is
credible needs to be publishedin a peer-reviewed journal.
That's my personal belief.
It's not written.
I don't think in any regulation, and you can get regulatory
(29:12):
approval without publishing yourpapers, but I think it's
incumbent upon you to have thatsort of public scrutiny and what
it is you're doing.
Earlier than that, though, youhave to contend with the
competitive nature of ourbusiness and wanting to actually
give your investors a return ontheir investment, which means
(29:35):
you, if you're ahead of thecompetition, then you can't
enable them and so you publish,really when you need to be
credible.
And the question is well, okay,why do you need to be credible?
And you need to be crediblebecause you want to attract
talent, you want to attractcapital.
Well, if you can do that in aconfidential manner which as a
(29:58):
private company you can you canattract capital as a private
company.
Then you don't necessarily needto publish and you can hire
people.
If you have them sign CDAs andyou show them data and
confidence.
That's common, and so you don'tactually need that public sort
of imprint that what you do isactually holds up Now.
(30:20):
Imprint that what you doactually holds up Now.
That being said, it does meanthat investors and potential
employees who need to join youneed to do their due diligence.
They can't rely on proxies inthe public domain to say, yeah,
some two peers, who shall remainanonymous, have vetted this,
even though we know often thatdoesn't necessarily replicate.
(30:40):
I think this ecosystem isstringent enough and the good
venture capital firms, the onesthat are known, have a
reputation and they're alsocareful to vet their investments
and not put their money behindthings that are nonsense.
I think where Exilio is today,there is no immediate need to
(31:03):
publish and probably a hindranceto publish when Exilio will be.
Hopefully, tomorrow we willstart to have a need to publish
to justify the clinicalexperiment that we're about to
undertake, and at that point weabsolutely will.
Matt Pillar (31:18):
Yeah, tomorrow we're going to take that
literally right Tomorrow.
Anna Rose Welch (31:21):
Tomorrow.
They're poised guys.
This is getting serious.
That actually ties reallybeautifully into my question.
You know so you had mentionedthat from a career trajectory
standpoint, at some point youhope that there will be someone
else to sort of take over rightthe leadership of of Exilio.
But you know, in the meantime,as you are about to embark into
(31:42):
the clinic tomorrow, you knowthere's a lot of challenges, I'm
sure, ahead of you.
Where are you looking that youthink you're going to be
spending most of your time inthe next year right in terms of
leading this company?
What are you expecting to bechallenged by the most, and
keeping in mind too that this isa nascent scientific space, as
(32:05):
we're moving mRNA into thetherapeutic world?
Tal Zaks, M.D., Ph.D. (32:11):
Well, first of all, let me correct two
assumptions, just for clarity,since we're on the record here.
It's not going to be tomorrowthat we're in the clinic.
And I have, while I hope to findsomebody better than me as a
CEO.
This is an open-endedcommitment on my side.
I'll be here as long as ittakes to get the best out of
this platform.
The challenges, you know.
(32:36):
I think they're sort of inthree buckets.
The first is, as any youngcompany, our science is nascent
and we need to continue thebalance between exploring our
curiosity and doing the stuffthat will get us the actual
product, if you will.
(32:56):
Because any time you hit sortof a roadblock when something
doesn't work as expected andevery young company has those
then it takes a bunch of curious, smart people to start to poke
around the edges and figure out,well, how do we get around this
right?
And so there's always thatbalance, and getting that
balance right is alwayschallenging.
If this were to follow a logicalstep of progression oh, to
(33:20):
solve that you do this itwouldn't be what it is.
You know it.
Actually it takes me back.
My late father was amathematician and I never fully
understood everything he did,but I understood enough to know
(33:40):
that for every you know, thegreatest mathematicians are
known not necessarily by theanswers they gave, but by the
questions they posed, and sothey were able to pose a
question.
How do you prove this?
I think this is right.
Can anybody prove it?
And you know, the better themathematician, the longer it
took for somebody to actuallyanswer that question.
(34:02):
And if you think about it, evenin mathematics which is the
epitome of logical thinking,proving something new, writing a
new paper actually takes somesort of associative thinking
that comes out of left field.
Because if it were just alogical progression, it wouldn't
be tough to do.
Because if it were just alogical progression, it wouldn't
be tough to do.
(34:22):
I think the corollary in ourspace and I'm taking you back to
the challenges that we face itis making sure that we get the
balance right within the companyas we navigate our way forward
from this nascent science andtechnology into actual products
that we think can work forpeople.
There's a lot of work for usahead on that.
The second challenge is findingthe right people.
There's a lot of work for usahead on that.
(34:43):
The second challenge is findingthe right people.
This is a team sport and everytime I'm in a meeting, if I'm
the one giving the answer to thequestion, I know that I've got
a problem.
We're not in a good place ifI'm the one giving the questions
(35:03):
, giving the answers.
My answers may be okay.
Most of the time they won't be.
The problem is I won't know ifthey are or not right.
So building up the team withthe right level of experience
and the right competencies totake this company forward is
absolutely my number onechallenge these days as we
(35:24):
continue to grow the team andmake progress.
And the final one, which kind ofgoes back to the investment
thesis.
You know, balancing the booksin the sense that balancing the
spend on a monthly basis versuswhat you have in the bank,
versus what is actually creatingvalue that you can show
(35:47):
investors.
You're one step further downthe path.
No, I'm still not in thatclinical experiment that I
promised Anna Rose.
I'll be tomorrow, but I'm onestep closer to it.
Therefore, the value isincreased.
Therefore, it's time foranother funding round.
How do you manage that with?
The is increased.
Therefore, it's time foranother funding round.
How do you manage that?
With the actual burn, if youwill?
Your financing strategy isabsolutely critical for success
(36:11):
and that's part of the equationhere.
Matt Pillar (36:14):
Yeah, well, to the extent that you can.
You know I hate saying unpack,let's unpack that Common word.
Anna Rose Welch (36:17):
Yeah, that's cliche, I find myself using it
all the time, but I'm going tosay it.
Let's unpack that.
It's a common word.
Yeah, that's cliche.
We use it a lot.
I find myself using it all thetime, but I'm going to say it.
Matt Pillar (36:25):
Let's unpack that a little bit.
How do you think about returnon investment?
It's an interesting perspectivethat you have because, as an
investor, in your role atOrbimed, you're the man holding
expectations and as the CEO atExilioio, you're the man
managing expectations.
Walk us, you know, take us downthat tightrope.
Anna Rose Welch (36:48):
Do you get into fights with yourself?
Tal Zaks, M.D., Ph.D. (36:52):
Well, the biggest arguments are always
between the right side of thebrain and the left side of the
brain.
If only they would talk to eachother more, they'd figure it all
out right, pretty much.
I think that, to answer itseriously, the world of biotech
investing has changed in thelast few years.
With the macroeconomic changesthat we face, you realize that
(37:18):
people who invest in us caninvest anywhere.
They don't need to invest withus.
So we're competing for thoseinvestment dollars with tech,
with biotech, with otherinvestment opportunities at some
level with treasuries.
When interest rates go up, thena long-term investment suddenly
(37:41):
becomes less palatable.
When you live in a zerointerest rate world, then
somebody's got a hundred bucksand they need to figure out what
to do with it.
Well, if nobody gives them anyinterest on it, then they can
sit on a hundred bucks and in 10years that hundred bucks will
be a hundred bucks.
And if they come to me and Isay, look, I'm going to, I'm
(38:03):
going to make you three timesthat money, but it's going to
take me 10 years, then they saygreat, because now I can make
100 into 300.
And it's OK because timedoesn't cost me.
But if we're in a world of 5%interest rates, then in 10 years
that $100 is already $200 if Ido nothing else with it but buy
treasuries.
So our hurdle rate what we callthe level that we need to
justify as a return on theinvestment has suddenly become
(38:26):
challenging, and that's had aneffect on a lot of very early
stage kind of platform biotechs,and so managing the time to
value creation is critical,while managing how much
investment you absolutely needand don't get more money than
you absolutely need to get tothe next step.
(38:46):
And that's a little bitdifferent than what it used to
be.
It used to be that well, assoon as you can get money, go
get money.
Now you're going to have tojustify a higher valuation for
getting more money, and that'sbecoming more and more
challenging.
And so you've seen the effectsin the ecosystem, and I think
one of the jobs I have is tothread that needle, is to make
(39:08):
sure that the capital that theinvestors have given me is
deployed wisely, deployedefficiently and meeting the
milestones required todemonstrate progress on that
path to making the medicine.
I'm not sure how you can impactit more, except to say that you
(39:29):
watch very carefully what it isyou're spending money on.
You try to give people somefreedom, but I'll give you a
concrete example.
At Exilio, we've made thedecision to outsource the
messenger RNA and lipidnanoparticle for the animal work
that we need, because wethought it would be more capital
efficient.
I've very much constrained thesize of the team because you
(39:53):
know, as we move things furtheralong, the guys who are doing
the early discovery well, youknow, guess what?
They want to keep doing earlydiscovery and at a certain point
I have to say, yeah, no, youknow, if you keep doing what you
were doing yesterday and I needto do new stuff, that means I
need to go hire more people.
Well, we're actually going toconstrain the size of the
organization until we get to,sort of, our next milestone.
(40:13):
So I need you to do less ofthat and go over here and help
your buddies who are kind oftrying to move the ball down the
field.
Matt Pillar (40:22):
Yeah, have you does .
Accelio have a CFO yet Um, haveyou does.
Tal Zaks, M.D., Ph.D. (40:27):
Accelio have a CFO, yet, uh, we have uh
a CFO who's actually a venturepartner with Orbi Med Still and
is a consultant to us as acompany.
So, um, uh, I think uh ourentire C-suite is uh pretty much
consultants at this point,which again allows me to uh, me
to keep the cash burn lower.
Matt Pillar (40:47):
Yeah, yeah, fractional leadership approach,
so to speak, right.
Tal Zaks, M.D., Ph.D. (40:52):
Well, yeah, I mean, if 80% of my time
is fractional, then yes, younailed it.
Matt Pillar (41:00):
It's an obtuse fraction.
Anna Rose Welch (41:04):
Well, this might seem a little bit like a
non sequitur of a question toask, but I actually think it's
really essential because I thinkearlier on you were you were
saying that without greaterunderstanding of mrna medicines,
of any medicine in general,right, and being able to speak
that same language that yourpatients need to understand,
that physicians need tounderstand all of the work that
(41:24):
you're doing at Auxilio and thatthe entire industry is doing
today to bring mRNA therapeuticsto market is going to be for
naught, right, if people don'tunderstand what they're doing.
So you know, kind of leapingfrom that commercial return of
investment concept into theworld of commercializing an mRNA
therapeutic right.
(41:45):
You've emphasized theimportance of that.
Education and publications areone way to do that.
But we've also seen a couple ofthings happen in the past
couple of weeks.
We saw Moderna just released, Ithink, kind of the first of its
kind right a free course onmRNA medicines to start
educating the public about whatthese products are and what mRNA
(42:06):
can do.
Matt Pillar (42:07):
Maybe you should have done that three years ago.
Just one idea.
Anna Rose Welch (42:10):
Might have been a little good.
You know better around the timeof the vaccine, but here we are
right and we are still workingahead with that.
But you know, as someone that'snow heading up a company in the
mRNA therapeutic space, how doyou think we should, as an
industry and individualcompanies, company leaders, be
educating the public today aboutwhat these medicines are and,
(42:34):
even more importantly, what theyare not, what they do versus
what they do not do?
Tal Zaks, M.D., Ph.D. (42:42):
Yeah, I honestly wish I had a good
answer, so I thought the answerwas me talking to you guys.
You're telling me it's not.
Matt Pillar (42:49):
Well, it's part of the answer for sure.
I mean, you know part of theanswer for sure.
Let's put it this way my momdoesn't listen to this podcast.
Tal Zaks, M.D., Ph.D. (42:58):
And she's one of the ones who needs some
education.
Matt Pillar (43:00):
That's true.
Tal Zaks, M.D., Ph.D. (43:02):
So I'll raise you one.
My mom does listen to thispodcast and listens to everyone
I do.
Matt Pillar (43:08):
So there you go.
She's going to be so proud whenshe hears you made two parts of
the business of biotechback-to-back episodes.
Tal Zaks, M.D., Ph.D. (43:13):
But look, I think that it's incumbent
upon all of us to use whatevervenue and resource we have in
order to do that.
I give Stefan Moderna a lot ofcredit for what they've done.
I think Stefan's been avisionary from the get-go in
educating the public andspeaking about it in terms that
are easy to understand, inmaking sure that Moderna
(43:37):
invested in those resources and,frankly, if you look at the
history of Moderna starting witheducating the Moderna workforce
about everything that they'redoing and I have a lot of
admiration for his leadership inthose regards I think that
(43:59):
there's not a one size fit allhere.
You know, I've tried to do itin whatever academic
opportunities I've had.
When I think one of the one ofthe things that scare people
when it comes to nucleic acidtechnology, mrna, dna, gene
therapy is, you know, are wemessing with creation?
(44:21):
That's sort of a slippery slope, because everything you do
around us is not as found bynature.
I think what's important toexplain to people is why we
(44:43):
believe what we're doing is safeand why do we think it's got a
benefit to people.
And that's why we who are atthe forefront of developing
novel medicines feel we have amoral imperative to develop
novel treatments that are safeand effective.
This is probably particularlyrelevant for gene therapy.
(45:03):
This is probably particularlyrelevant for gene therapy and I
can tell you, for many yearswhen I was at Moderna, you know,
I looked at a lot of theapproaches and I was on record
as saying, you know, as amedical oncologist, some of
those things scare me.
And mRNA the beauty of mRNA asopposed to gene therapy is that
(45:23):
mRNA is very transient, does notintegrate with the genome, you
know the effects are gone in aday or two at least as far as
protein production, and there'sno longstanding effect.
And I have to tell you, acceliois the first company that I'm
sort of personally investingboth time and capital, and the
(45:47):
primary reason for me to getinvolved here personally, beyond
the curiosity and the path tomedicine, is the sense that
there's a potential fordifferentiating safety.
The specific elements that thefolks described and discovered
and are engineering are elementsthat live within our genome in
(46:09):
places that are very safe.
We have hundreds of repeatelements and they're nowhere
near any cancer-causing gene andso if our elements can really
live specifically only in thoseplaces, then I'm much more
comfortable as a medicaloncologist that I can go and put
a new gene in one of thoseplaces and it'll be fine.
And so far the specificity,that exquisite ability to only
(46:34):
be there, is maintained.
And what got me confident isnot sort of because we
engineered it to be that way,but because when the team
started looking at theseelements, they looked at nature
across the tree of life and theycould only find them in that
very specific area that's notclose to any cancer-causing gene
(46:54):
.
And that gave me the confidencethat these elements are indeed
within a safe harbor locationand therefore, if we go make a
gene medicine based on this, itshould indeed be safe.
Now, you know, we have to provethat and we're developing the
tools to prove it, and the onusof proof is, of course, on us.
(47:14):
But if that holds true, then Ifeel very comfortable, as a
medical oncologist to say that Ibelieve this should be both
efficacious and safe to developfor patients.
It's the same framework that theFDA uses.
It has to do with safety andefficacy, right, and the bar is
(47:37):
probably different, if you'reWell for sure.
It's different if you'retalking about a cancer patient
or you're talking about ahealthy person trying to get
vaccinated against an infectiousdisease that they might not
even get, and I think one of thethings I've enjoyed most and
learned most was the starkdifference between the two and
(47:59):
how it makes you think aboutmedicine as a whole.
You know it's interesting, andpeople much smarter than me have
spoken about this.
The medicine, as I practiced it, as I learned it is treatment
of sick people.
Few people are as sick ascancer patients with late-stage
(48:22):
disease, and so my goal is totake a person who's sick and
cure them right, make thembetter.
Okay, my vision for thatpatient is actually their past.
The best I can hope for them isthat they will be a few days
(48:44):
before when they didn't havecancer.
We, as physicians, don't try totake healthy people or people
who are clinically well andthink about how do we make them
healthier, how do we make thembetter?
That is something that we leavefor.
You know that's an engineeringmindset of continuous
improvement.
Physicians, we don't thinkabout it.
(49:05):
I'm a medical oncologist.
I'm a serious physician.
I treat with serious illness.
I don't make healthy peoplehealthier.
I mean, if you come to myoffice and you're healthy, well,
get out of my office.
What am I going to do for you,right?
The people who make healthypeople healthier.
Oh, we leave that to the yogainstructionist and the
nutritionist.
And you know Well, really, thenutritionist, and you know well,
(49:31):
really, yeah, I mean, what didI do?
I developed a vaccine that tookhealthy people and made them
healthier, yeah, when you thinkabout it right.
And so it kind of made me stepback and think about what is it
that we're trying to do asphysicians?
And I think that concept ofbenefit risk has to be put in
the context of your health andwhat the benefit is that you
(49:53):
anticipate getting.
Matt Pillar (49:54):
Yeah, yeah, wow, that's it.
I know, yeah, you just openedup my mind is.
I see, I see it's the righttime.
It's all part three coming.
Anna Rose Welch (50:04):
There are like fireworks going off in my brain
right now.
I have no words.
I'm going to have a great timewith Tal apart three coming.
Matt Pillar (50:08):
There are like fireworks going off in my brain
right now I have no words.
I'm going to, I'm going to, youknow, we'll do that, we'll do
down the road.
We'll do that, but I'm going tolet you off the hook, Dr Zox,
because you've given us so muchof your time already.
But I don't want to let you offthe hook without giving you an
opportunity to share with us alittle bit about what is next on
the immediate horizon, besidesfinding a new CEO to replace you
(50:31):
when you're ready when you'reready, when your contributions
are to the future yourcontributions are waning.
No, but seriously, what are,what are sort of the next?
I guess inflection points forExilio.
Tal Zaks, M.D., Ph.D. (50:47):
I guess inflection points for Xilio.
I think for Xilio it's todevelop the technology to the
point where we can start to showthe utility in preclinical
models of disease.
That is sort of the nextimmediate milestone for us.
For me it's to build a companyand to continue my journey at
OrbiMed, I think, as a field andwe didn't touch on this
(51:12):
watching new technologies startto abut and make inroads into
our industry.
Ai is the buzzword thateverybody's using.
There's several stories I canshare on where that stands today
.
That's been a fascinating thingfor me to watch and learn and
start to be part of and, as Isaid, we're using some of those
tools already at Exelio.
(51:32):
But we're just in a veryfortunate moment of time from a
translating science intomedicine perspective, given all
the progress that's happeningand accelerating in the world of
science, and I'm just superjazzed to be able to be part of
translating all that intoactually people feeling better
(51:52):
and living longer.
Matt Pillar (51:53):
Yeah, yeah, I the.
The AI angle is one, I think,for another fodder for another
day.
It is fascinating to me and I'msuper interested in your
perspective on that.
Given, given your perspective,right Coming, you know you're,
you're, you're right, you're aphysician, you're a scientist.
A lot of folks in yourcommunity are skeptical.
(52:14):
I think the most in-depth andconvincing conversations I've
had with companies that areplaying with AI have come from
AI companies who just happen tobe working in our industry or
perhaps developing a, you know,demonstrable pipeline based on
that technology.
But when I talk to the hardcorefolks, you know it's like
there's all sorts of skepticism.
So I would like to open up thatconversation with you sometime,
(52:37):
but again, we need to wrapthings up here today.
Tal Zaks, M.D., Ph.D. (52:41):
So you know where to find me, Matt.
Matt Pillar (52:43):
I know where to find you.
We've found.
We've found you a few timesalready yeah, so ominous.
Super thankful that you'vegiven us the time, though.
Thank you, and I want to thankyour mom too.
She did a bang up job.
I know she's listening.
Anna Rose Welch (52:56):
Yes, thank you.
Matt Pillar (52:57):
I know she's listening.
So, mrs Zacks, you did afantastic job.
Wonderful young, wonderfulyoung man.
Thank you for listening.
Thank you for listening.
So that's Xyliotherapeutics CEOand chair of the board of
directors, dr Tal Zaks.
I'm Matt Piller.
Anna Rose Welch (53:15):
I'm Anna Rose Walsh.
Matt Pillar (53:16):
And you just listened to the Business Biotech
.
We're produced by Life ScienceConnect in support of a deep
community of learning, solvingand sourcing solutions for
biotech and life sciencesleaders.
If you haven't seen it yet, gocheck out our video cast page
under the listen and watch tabat bioprocessonlinecom.
There you'll find this andhundreds of other videos of our
interviews with biotech builders.
(53:36):
And while you're at it,subscribe to the Business of
Biotech newsletter atbioprocessonlinecom.
Backslash B-O-B.
Go visit Anna Rose at AdvancingRNA as well.
In the meantime, we'll see younext week and thanks for
listening.
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