April 7, 2025 • 46 mins
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Today we're talking life sciences investment trends and risks with David Sans, an investment banker with an academic background in chemical engineering and molecular modeling, and a professional background that began in Big Pharma and shifted to investing over 15 years ago. Our conversation covers patent cliff implications, hot therapeutic areas and delivery mechanisms, geopolitical risks, alternative funding strategies, and private equity's move upstream to pre-clinical and pre-revenue biotech.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Ben Comer (00:04):
Welcome back to the Business of Biotech.
I'm your host, Ben Comer, andI'm pleased to bring you a
conversation today with DavidSans, an experienced life
science investment banker whoknows the space from the inside
out, having worked earlier inhis career at companies
including Novartis, Pfizer andImClone, among others.
Now David is leading healthcareand life sciences investing at
(00:28):
D Boral Capital, formerly knownas EF Hutton.
On today's show, we'll learnabout David's somewhat unusual
career path, what he's excitedabout in the context of life
sciences investing in 2025,context of life sciences
investing in 2025, uniquefunding strategies for drug
developers and what I'll call adynamic policy environment in
(00:51):
the US and what that could meanfor the sector.
Welcome to the show, David.
David Sans (00:55):
Thank you, Ben.
It's an honor to be with youand thank you for your audience
at Business of Biotech.
Ben Comer (01:01):
We're really pleased to speak with you today, David.
Your academic backgroundincludes a master's degree in
chemical engineering, a PhD inmolecular modeling, as well as
an MBA.
Professionally, unlike plentyof other leaders in the life
sciences, you moved from acareer in big pharma into, with
(01:22):
a few stops in between, the lifesciences, banking and financial
industry.
That's in comparison to thereverse trajectory, which is
former investors becomingbiotech leaders.
What can you tell us, David,about your career development
and the reasons behind the paththat you've chosen?
David Sans (01:41):
Yes, thank you, Ben.
So, growing up in Basel,Switzerland, I was very
fortunate to have a scholarshipwith Novartis and I consider
basically having a long careerin pharma.
I was brought to the US as ascientist of national interest
and things change rapidly.
When I came to the US, Istarted to see or expose to the
(02:07):
startup community and I thoughtit was very interesting to see
how universities and differentresearchers were developing so
many drugs.
And it was a very interestingtime for me when I transitioned
from big pharma to buy thecompany called ImClone Systems.
The company did very well, wasacquired by Lilly in 2008 for
(02:32):
$6.5 billion, and after that Igot this bug not going into
finance first, spend a few yearsof learning the ropes, learning
about the industry, learningthe Wall Street type of industry
and I learned very quickly thatI really enjoyed helping CEOs.
(02:57):
That being on the side of WallStreet was very, very
interesting dealing withinvestors and trying to find
diamonds in a rough and gettingalways ahead of on top of the
new research and the new wavesof technologies.
And then I thought that Iquickly saw that I had some
(03:21):
value to provide to customers,both to CEOs of small biotech
companies, but also to investors.
So I do enjoy a lot workingwith the research department of
Wall Street, learning for thenew trends, looking at M&A
(03:44):
activity in pharma, and what Isaw is that in 2010, and this is
something that we can continuetalking about there was what we
call the patent cliff, thepatent expiration that was
valued at that time of $30billion.
So if you think about 2010, wehad products like Lipitor a
(04:09):
lower cholesterol, a loweringAsian that was going off patent
and this was a blockbuster.
Altogether, there were about 60to 70 drugs that went off
patent in 2010, with a totalvaluation of market sales of
about $30 billion.
Fast forward then in 2025, andwe always measure this in five
(04:31):
years, batting cleave of thenext five years and then the
batting cleave of the next fiveyears.
So when we look at 2025 until2030, we have 190 drugs going
off patent, with a total gapwhere we call, basically, the
(05:09):
pharma industry is going to loserevenues.
You're going to lose $300billion in revenue.
What that brings, what thatmeans to us, is a lot of
opportunities for M&A, a lot ofopportunities for investors,
exit for CEOs by the companiesto be acquired by Big Pharma,
and providing the continuity tolaunch drugs into the market.
(05:30):
So in summary, Ben, what I thinkthat it's an extraordinary time
today to be in banking isbecause we see this massive
opportunity within the next 5,10, 15 years of new technologies
.
We saw the weight-loweringagents that have been very
(05:51):
successful, so we see newtechnology.
So just to wrap it up to yourquestion, I started in the bench
as a chemist developing one ofthe first kinase inhibitors and
I went into finance and Irealized that this is a very
fast-moving environment wherescience is unlimited.
(06:13):
You can find science every dayof the week and I thought that
being in finance probablyleverages a lot of my skills and
I can help a lot more people.
Ben Comer (06:26):
So your turn into finance coincided then with that
2010 patent cliff, which Iremember covering as a
journalist.
Everyone was talking about itat the time and it's amazing to
think how much larger the comingpatent cliff is.
I'm glad you, I'm happy youmade that point, but you know,
given your previous experienceas a bench scientist, how did
(06:46):
you, how did you make thatdecision to to try your hand in
in finance?
You know, I think, what was akind of new field for you at
that time.
David Sans (06:56):
It was a new field.
I I went to back to school atnight, so I will work until four
or 5 PM, run into theuniversity, get the financial
studies completed and then Itook all the exams, all the SEC
required exams.
I think that once you go intothe PhD, getting another degree
(07:20):
and continuing your education isnot that difficult, but
definitely it was an effort.
I mean you have to spend a lotmore time in the school, a lot
more time in learning new skillsand developing your skills for
a completely different industry.
Also, what I thought to mepersonally, what was more
(07:42):
difficult is moving from aresearch type of mentality to a
financial services mentality.
It requires a completelydifferent skill set.
When you are working with CEOsand investors and funds, you are
a service provider.
You are not leading a science.
You are not.
(08:03):
You basically have.
It's a different mindset.
I mean you have to generateopportunities every day, you
have to think aboutopportunities every day and you
need to make a lot of calls andyou need to be very active,
which is the opposite in termsof science.
Think about the scientificprocess is very quiet.
You need to preserve work on alot of patents.
The process is very quiet.
(08:24):
You need to preserve work on alot of patents.
You need to be very, verycareful about what things you
disclose or things you don'tdisclose, and it's very long
term.
It's very binaric it works orit doesn't work.
The financial industry, interms of services, is very, very
different.
You have to be on the phoneevery day.
You have to initiateconversations every day, you
(08:47):
need to initiate ideas and youneed to basically call.
You need to have a lot ofvelocity Every day.
There are about 10, 20 stocksthat move very quickly and you
need to build on that velocity.
So, which is a very differentskill set.
It's a very different way ofthinking about your day-to-day
job and it requires basicallymuch longer hours and more
(09:10):
diverse.
You need to basically thinkabout quite a few things at the
same time a couple of otherquestions just about your
background.
Ben Comer (09:27):
first, david One is that, in addition to working in
big pharma and biotech, you alsoworked for a time on the Cancer
Moonshot Initiative, which is alarge public-private
partnership aimed at improvingoutcomes in cancer, reducing
cancer deaths.
Would you mind just telling usa little bit about your
experience with that program?
David Sans (09:44):
Yes, this started in 2016.
I have become very good friendswith Patrick Soon-Shiong.
He's a high-net-worthindividual with a lot of success
with Immunity Bio and othercompanies, so it was at that
time that he wanted to basicallybe on the private side of the
(10:07):
Cancer Moonshot.
Obviously, the program hasevolved very, very differently
from 2016 to what started in2023 with funding new programs,
(10:36):
so I thought it was a greatopportunity.
He asked me to join at thattime the committee, the Cancer
Moonshot Committee.
It was the sweet kind of momentof the cancer moonshot where
everything was possible.
Everybody was very excited tostart and then it took years
(10:57):
before the policy, I imagine in2016,.
It was until 2023 that theprogram was funded.
It was only until 2023 that theprogram was funded.
Now, in 2025, it's very clearwith the new administration has
already stated that they want todefund the Cancer Moonshot
Initiative.
So I think that for the mostpart, if you think about the
amount of time, that too it wasa lot of involvement in terms of
(11:20):
policy and it had resulted onlyin about two or three years of
activity.
Okay.
Ben Comer (11:27):
Um, just one follow up.
I want to ask you on thisprogram, given that you know
federal from the top kind ofprogram to address disease, can
(12:01):
they be effective?
Are they sort of at the whim ofchanging administrations which
make them less effective?
You know what's your kind oftakeaway from.
David Sans (12:09):
You know your participation in that effort
your kind of takeaway from youknow your participation in that
effort.
I think that in retrospective,in hindsight, this was an idea
in 2016 that basically was bornout of this situation, if you
think about GBM or glioblastoma.
But still today it's a verydifficult patient population.
(12:34):
Once you have a tumor in thebrain, you develop seizures, you
develop a swelling on the brain.
It's a very complicated diseaseand every patient is different.
Every tumor, every solid tumor,has different epitopes and it's
difficult.
It's one of the most difficultcancers to treat and still today
(12:56):
there is still a smallincrement.
I mean, you can extend lifeweeks, maybe months, but there
has been very little in terms ofreal impact on treating this
disease.
So this initiative startedreally for the most difficult
treat tumors.
For the tumors that pharma doesnot want to get involved.
(13:19):
If you think about they're very.
I cannot name one single bigpharma company that has a GBM
program.
Roche used to have someprograms but were basically
reduced and almost eliminated.
So the Cancer Moonshot at thattime had the direction for the
(13:51):
cancer moonshot to create morefunding for places where pharma,
after NIH, has done theinvestments.
Pharma doesn't want to continuebecause it may have very little
commercial value.
Fast forward 150 million.
It's still a small amount.
I would say that the result ofthe impact has been not that big
(14:15):
.
But one of the things thatresolved that came out of this
program has been all these openlabels, open access type of
clinical trials where there arebig consortia, there are big
groups that are coming togetherand say guys, let's put together
(14:35):
a protocol where we can trydifferent drugs for different
patients, not just one trial perone drug.
So I think that inretrospective there has been a
lot of value out of all thiseffort.
The outcomes have been probablylower than what we expected
eight years ago, but definitely,I think there's no, there has
(14:59):
not been a waste of.
It has not been a waste ofefforts and results.
I think there is still a verylong way to go and we have made
tremendous progress withclinical trial programs that
didn't exist before.
Ben Comer (15:17):
Yeah, yeah, thank you for that.
I have one more question aboutyour background, and then we'll
bring it up to 2025.
I gave an abbreviated list ofyour various credentials just a
few minutes ago but failed tomention your FAARM designation,
which I was not familiar withthat designation prior to
(15:40):
meeting you, David, and I'mhoping you could take just a
couple of minutes to explainwhat that is to others who may
not be familiar with thatacronym.
David Sans (15:49):
Yes, there is a whole discipline of cell
therapies that we what we callthe regenerative medicine.
This is a discipline that wasvery hot Basically a few years
ago.
I took all the exams in 2016 tohave this board certification
(16:09):
and the idea is that we havedone cell therapy for many years
.
If you think about bone marrowtransplantation, that is a type
of cell therapy.
You take cells from one person,from a donor, and you give
these cells to a patient.
So the cell therapy space isnot new.
Has been around for many, manyyears.
(16:30):
Space is not new.
Has been around for many, manyyears.
We believe that as weunderstand more the pathology of
the disease and we understandmore how to characterize cells,
there is a whole space of celltherapies that is still not yet
fully developed that we can findthese type of opportunities.
(16:55):
There is basically thisvertical of specialty in
medicine called regenerativemedicine that is still growing.
It's still being defined.
The FDA has been going after alot of these clinics that do
cell therapy without thecontrols and without
understanding, and I thought,from the pathology background, I
(17:19):
thought it was a veryinteresting discipline, that it
needed more studies and did moreefforts, and I'm happy that I
had this window opportunity whenI was at Mount Sinai Icon
School of Medicine to have thisopportunity to have this board
certification Fast forward.
I still think there is a lotthat we can do with cell
therapies.
(17:40):
A lot of funds, a lot ofcompanies have failed in terms
of developing cell therapies,but we still see the benefits of
CAR T cells 98% completeresponse.
We see a huge amount of benefitfrom CAR T cells.
There's also a lot of cytokinerelease storms, a lot of
(18:02):
toxicities that are derived frommanipulating these cells, and
there is a limit on how much wecan manipulate these cells.
I remember in 2016, 2017, wewere doing a lot of
manipulations to cells that nowwe realize it's too much.
There is a limit of the type ofmanipulation that we can do to
(18:23):
cells before these cells becomeexhausted.
One of the things that we knownow is that when we manipulate
these cells, they can do a lotof things that we want.
Now is that when we manipulatethese cells, they can do a lot
of things that we want them todo, but these cells become less
viable and this aspect of theability of the cell is something
that was not fully understoodin 2010, 2016.
(18:45):
Now we realize this is a bigfactor and we still have too
long of a period of time, whatwe call the vein-to-vein timing.
It is still too long, but ithas created a whole industry of
CAR T-cells as the mostsuccessful aspect class of cell
(19:05):
therapies.
Ben Comer (19:07):
Excellent, thank you for explaining that, and I think
F-A-A-R-M stands for theFellowship in Anti-Aging,
regenerative and FunctionalMedicine, and that's a program
affiliated with the AmericanAcademy of Anti-Aging Medicine.
We're sure to hear more aboutthat field.
I think in some of these newmodalities, it's two steps back
(19:28):
and one forward, steps back andone forward, but it's a number
of companies are working on it,so I'm excited to see what
happens there.
All right, we're going to moveinto your current role now,
David, and into 2025.
You're, as I mentioned, head ofhealthcare and life sciences
investment banking at Deep WorldCapital.
What are you excited about thisyear?
(19:51):
What kinds of biotech companiesor therapeutic areas are you
tracking right now, and why?
David Sans (19:59):
Yes, I think that 2025, as we can see will be a
time with a lot of fluctuations,a lot of stock variability.
We see the variability indexgoing up tremendously.
I think that there will be alot of opportunities for a small
(20:24):
cap.
I think that for the next two,three years, we'll see a lot of
M&A.
We have seen a big geographicdislocation in China.
China has more than 3,000biotech companies and more and
more we see M&A involved withsome of the assets that are
being developed in China thatwant to find a place, a home,
(20:49):
here in the US, with USinvestors, us patients, clinical
trials developed here in the US.
So we're going to see a lot ofthese opportunities.
There are a lot of therapeuticareas that are coming up that
are very interesting.
In weight loss, we see theGLP-1s and also other targets
(21:09):
that help the regeneration ofthe muscle tissue.
When we lose weight, we haveseen with Ozempic that we also
lose muscle tissue and it's veryhard to recover.
So it's definitely a problemthat many companies and many
(21:31):
different companies are comingup with new mechanism of action
that preserve muscle tissuewhile you can lose fat but not
the muscle tissue.
So we see a lot of interest inthis aspect.
Fast forward with the successof Lipitor.
With the success of Lipitor wesaw a lot of patients with a
(21:56):
benefit in that therapeuticclass.
Now, when we look at 2035, Ithink that we're going to see a
society that will benefit fromthese therapies, where you can
manage your muscle tissue better.
The more muscle tissue we have,the better and longer we live.
I mean it's remarkable thedifference that you see in
(22:25):
mortality between two sets ofpopulation.
If you exercise every day andyou have a muscle tissue
well-developed, you have a500-time lower probability of
death at age 80 and 90.
So you will see, probably inthe next generation of therapies
, how we paid a lot moreattention to the musculoskeletal
tissue and how to helpindividuals stay longer and feed
(22:49):
rather than just reducing fat.
So I think that from thataspect, I think we're going to
see tremendous benefits.
Cardiovascular system and cancerare still the number one and
two causes of death.
There is a lot of newtechnologies that we're going to
(23:09):
see in cancer.
The biggest opportunity that Isee in cancer is probably the
T-cell engagers.
Nobody saw 10 years ago T-cellengagers were very difficult to
manage.
Nobody saw that.
Basically, if you titrate, ifyou use T-cell engagers in a
small amount at the beginningand then you increase the dose.
(23:29):
After a week or two your bodyhas greater tolerance and this
is what happens when you designthese clinical trials.
It was brilliant by a clinicianthat saw the benefit of T-cell
engagers.
Every T-cell engager wasfailing, but they didn't realize
that if you dose it in a smallamount you can lower the
(23:49):
toxicity.
So we can see now a huge uptakeon T-cell engagers.
I think there is still room forcell therapies.
I'm a big evangelist and Ibelieve that there is more that
we can do with cell therapies.
And I think that the biggestname now is the biospecific
(24:12):
monoclonal antibodies.
They have a biospecific type offunctionality.
I come from the world ofmonoclonal antibodies and we saw
already in the beginning of2000, the biospecific was
something that the FDA wasalready pushing at that time.
Now it's becoming more and morea standard time Now it's
(24:35):
becoming more and more astandard.
And last but not least, theantibody drug conjugate is
another class that has beenphenomenal.
I mean you can target tumorswith a payload of toxic agents
to kill only the cancer cellsand preserve healthy cells.
So that is something that I'm abig believer, that
radiotherapeutics will becomevery, very interesting Novartis,
(24:58):
for instance, is veryinterested in radiotherapeutics
and that the conjugation ofmonoclonal antibodies with
radiotherapeutic agents, withisotopes, will become more
interesting.
As of now, isotopes andradiotherapeutics have only
worked with peptides because youwanted this quick release of
the radiotherapeutic of theisotopes.
(25:20):
You wanted to basically haveactivity in a very short period
of time and then release it.
Now we can see how this may bechanging with monoclonal
antibodies and an isotope thatcan target only the cells that
you want and alpha particlesthat we can control better.
Alpha particles is the nextstep in radiotherapeutics and
(25:44):
the combination with monoclonalantibodies that can recognize
only cancer cells it makes itfor a game changer.
They can recognize only cancercells.
It makes it for a game changer.
So, as you can see, ben, thereare so many that I feel very
fortunate to be in the place offinancing and looking at all
(26:05):
different landscape oftechnologies that are truly
remarkable, and the sciencekeeps expanding.
That's what I like aboutscience.
As I told you from thebeginning, science is unlimited.
You can always find science todo many different aspects and it
provides for a lot of differentinvestment opportunities that
will be very, very successful.
Ben Comer (26:27):
Yeah, and I think we could spend the rest of the show
talking about any one of thosetherapeutic areas or modalities.
You really hit the nail on thehead with that on some of the
ones that I've been watching andthat are generating a lot of
excitement.
I want to try to connect twothreads from your just previous
(26:49):
comment, your just previouscomment one on the patent cliff
and the need for companies tobring new molecules in, you know
, under their development, intotheir development engines.
And then two, what you weresaying about China.
Yeah, political shifts happenduring a change of
(27:09):
administration always creates adegree of uncertainty.
Given the impact of policychanges on investment activity
and global economicrelationships, what can you say
about the kind of current andshort-term future state of
biotech investing in the contextof China?
(27:31):
And I guess what I'm asking is,given this need to refill
pipelines and given the amountof companies you referenced in
China?
And then, thirdly, on top ofthat, the political landscape.
China has become something of awatchword politically in the US
.
A watchword politically in theUS.
(27:52):
You know what risks and whatopportunities exist for pharma
companies that want to work withChinese companies.
David Sans (28:02):
It's a very difficult question and we still
don't know.
I mean, obviously, what we doknow is that the amount of
tariffs will increase, obviously, what we do know is that the
amount of tariffs will increase.
What we do know is that allthese CDMOs that were very
(28:38):
successful in China I mean Istill chemical engineers in
China to have much better.
They were much better preparedthan chemical engineers in
Europe and it made economicsense at that time to send a lot
of the manufacturing to Chinaand a lot of pharma companies
develop manufacturing in ChinaFast forward.
(29:01):
This has created a problem ofthe US becoming less competitive
, europe becoming lesscompetitive and now kind of
rehoming, repurposing some ofthe processes to go back to the
US.
I think it will be verydifficult.
We're talking about 20 years ofoutsourcing these technologies
(29:28):
to China.
I don't think that anybodybenefits from this disruption.
You saw now Wishi in China hadto divest all the CDMO the
clinical manufacturing businessand you see a lot of US
companies not being able to usethese CDMOs in China anymore.
(29:49):
So I think it's a massivedislocation in terms of
corporate development.
It makes things more difficultbecause, again, we have spent 20
years transferring technologyto China for the benefit of
production, the benefit ofpatients, for the benefit of
creating more efficiencies.
(30:09):
And now it's the opposite, andthis is a major change.
It's a big disruption.
We will have to go step by step.
I mean, obviously things willget more expensive, and that's.
I mean obviously it doesn'tfavor, it's not favorable for
(30:30):
the US to have all theseexpertise to be outsourced.
And now it's a reset, it's acalibration of 20 years, of a
trend to utilize economies ofscale globally and now
retrenching to nationalize andto basically bring technologies
(30:50):
back to the US and also forEuropean markets it's the same
situation.
Ben Comer (31:02):
They have to rethink the whole business model to
reinvest in technologies back inEurope.
What about just in terms ofpure M&A of Chinese companies?
David Sans (31:13):
Do you see any real risk or opportunity there?
Yes, I mean, that's what we seenow.
These 3,000 biotech companiesin China have very limited
access to funding right now.
This has happened in Korea.
This is happening now in China.
It has happened already beforein Japan.
These biotech companies hadeasier access to capital than
(31:35):
now.
Now these biotech companiescannot raise funds anymore.
So it is the natural process forthese companies to seek
licensing and to seek foracquisitions here in the US and
Europe.
So it's not secret that bigcompetitors of mine are setting
(31:59):
up shop in China for the purposeof getting first hands on these
assets.
There are tons of assetsavailable in China that can be
(32:30):
developed in the US, can bedeveloped in Europe, and there
will be a problems that weencounter with a lot of clinical
trials done in China is thatthey don't have the same
protocols.
They don't have the samestandards of data quality.
There were a lot of concerns,even with audit financials done
(32:51):
in China.
They did not come out to be thesame quality or the same
standards as you would expectfrom US companies.
Ben Comer (32:59):
Right and kind of keeping on this line of funding
and not specific to China.
But in a previous conversation,david, you said you know
science is unlimited.
You know there is a and youreferenced some of the most
promising areas and areas thatpeople are very excited about
(33:20):
drug developers, patients,investors but the limiting
factor, as I recall, was scienceis unlimited.
People and money are not.
So how can scientificallypromising young companies in
2025 keep themselves capitalizedin this environment where
(33:40):
there's so many things to chasebut an unlimited amount of
people and resources available?
What options kind of good, badand ugly do they have to choose
from?
David Sans (33:53):
Yes, you're right, the limiting rate factor is
funding and people.
These are the two limitingresources.
In the history of humanity, wehave had this situation many
times before, many times before.
Remember 2002, we hadlimitations of funding, very
(34:14):
expensive money.
2008, we had a big recession.
So I think, as of now, therehave been a lot of changes in
the financial industry.
There will be some difficulties, there will be a limitation of
funding, so a lot of companieswill need to make hard decisions
and a lot of programs will needto be put on the shelf, and
(34:38):
this has happened all the time.
There will be a lot ofrecalibration of priorities, and
this also keeps the systemhealthy in terms of looking for
the best assets, assets that canperform, and recalibrating the
areas of research and areas offunding.
So I don't think it's differentthan we have seen in the past.
(35:00):
We have seen this type ofgeographic dislocations before
and it will be a good year.
I mean, 2025 is a year that hasbeen characterized as a year
with a lot of opportunities goodyear for M&A.
Ben Comer (35:34):
But thinking about smaller companies who you know
maybe need to get a trialrecruited, need to kick off a
phase two trial, need to maybepay someone to manufacture a
larger amount of product for alarger clinical trial.
You know what new options ormaybe existing options are out
there that you would mayberecommend or recommend against.
David Sans (35:55):
Yes, I think that a lot of companies wanted to
recalibrate, trim the fat, lookfor a lot of collaborations and
try to find new ways ofdeveloping, especially
manufacturing.
A lot of the manufacturing isrelocated to the US.
(36:17):
The US needs to catch up with20 years of globalization and
sending manufacturing to othercountries.
There is still goodrelationship with India.
India, especially the area ofHyderabad, would be one of the
big winners and I think that alot of pharma companies still
(36:38):
have other places.
China is not the only place andthere are other places where
even pharma companies havehistorically developed to
precisely have always two orthree different sides of
manufacturing that are notcorrelated.
If something happens in China,you need to have another
facility in India.
(36:58):
So definitely there's no doubtin my mind that there are many
other places that business willcontinue.
Development of manufacturingwill be also done in other parts
of the world that are morefriendly to democracy and more
respectful to the IP patentprotection laws.
(37:20):
So there will be pieces willcontinue.
Definitely there is adisruption now because of
geopolitical situations withChina.
This will continue with thisadministration for the time
being and we will have tocontinue with more CDMOs
relocated here in the US andEurope and others in other
(37:44):
geographic areas like Mexico andIndia.
Ben Comer (37:47):
Thinking about small biotechs in particular in the
very early stages of researchand development.
What do you anticipate in termsof the public market situation,
and are there any kind ofalternative investment tools
that could be useful?
You know we've spoken aboutmicro IPOs in a previous
(38:10):
conversation.
David Sans (38:12):
You know we've spoken about micro IPOs in a
previous conversation.
Yes, I think that the micro IPOspace is a space that I
personally am very strong aboutit.
I still think that there is alot of opportunities for
companies to go public on asmall amount of offerings
(38:32):
anywhere from 10 to 15 millionmillion offerings and are
manageable.
And what we have seen and Ithink we had this conversation
before a big increase oftransactions with private equity
funds.
I think that one of the biggestdifferences, one of the areas
that are growing faster, arethese transactions with private
equity funds, with royalty funds.
We have seen an increase onwhat we call the synthetic
(38:56):
royalties.
These are royalties beforethese are licensed with another
commercial entity.
So there are like three or fourpockets of financing that are
definitely different from 10years, 20 years ago, that are
growing.
Different from 10 years, 20years ago that are growing.
You did not see private equityfunds involved in preclinical,
pre-revenue transaction and nowthere is something that is
(39:19):
coming more and more.
This concept of the syntheticroyalty almost didn't exist 20
years ago and now you can see atleast 10% of all transactions
are royalty involvedinvolvedroyalty piece way before it goes
commercial.
So definitely there are morestructures that we see of
(39:40):
interest.
We see a lot of structurefinancing with warrants that
when the stock goes up and youhave good data, all of a sudden
you can realize a very goodtransaction with the warrants
you already have.
If you have $8 million now inwarrants and your stock goes up
(40:01):
because you have good data on aphase two trial, it's a
fantastic day because you canmonetize this data.
The company can waste money,investors may do well and
definitely I'm a big believerthat there is a room for this
type of transaction.
When I talk to CEOs, they don'tlike warrants for all the good
(40:22):
reasons, but at the same time itprovides a structure financing
that when things go well and ifyou believe you're a strong
believer on that legal trial tobe successful, then you can have
a very successful situationwith rising the stock or the
price of the stock and allowingto monetize all these warrants.
(40:45):
So I think that we will see toyour point.
We'll see more structured dealswith different instruments.
Warrants are not going to goaway.
We'll see a lot of transactionswith this kind of warrants and
it's a space that is rapidlymoving.
I think within the next 24months the price of money will
(41:12):
get more expensive.
The rule need to have morestructured deals in place.
Ben Comer (41:17):
Can you give us a read at all on the private
equity investment strategy?
And I guess what I'm thinkingabout is is there a kind of herd
mentality where private equityis attracted to a certain size
and even a therapeutic area, oris it sort of all over the map
at this point?
David Sans (41:34):
Yes, I mean in private equity.
You see a lot of transactionsthat a lot of companies can
raise two, three, $400 millionin series A, b and C and this is
happening every day.
I mean, we just saw anartificial intelligence company
led by Arch Ventures in Chicago.
They raised $1 billion.
So you see transactions nowthat I never saw before on the
(41:59):
private equity space and VCprivate equity space that are
very deep pockets.
They can deploy tons and tonsof funding.
A lot of transactions now thatI didn't anticipate 10 years ago
are actually private placementsSeries A, series B, Series C
(42:19):
that you can deploy easily $100to $100 million.
Ben Comer (42:25):
And as someone who likes to work with CEOs, likes
to advise CEOs and this may bean impossible question to answer
because the facts in any givencase will differ from one to the
next but are there things thatwould advise a CEO who is kind
of, you know, as a verypromising early stage
(42:47):
development candidate needs tomove into, say, a phase two
trial?
Are there any particularinstruments that you would
really caution on or just do anextra degree of due diligence on
before recommending that as anoption to a CEO or not?
David Sans (43:06):
I think that every time I talk to CEOs, I try to
bring a perspective in terms ofthe competitive landscape.
I always spend time with theCEOs to give them a landscape,
leave them compatibles.
I think that it's veryimportant for CEOs to understand
where they are, understand whatis the landscape and have a
(43:29):
reality check on theircompatibles, on the valuations,
and I think that this will bemore and more the case that we
will need to look at thecompatibles.
We need to look at thevaluation and for companies to
have a reality check in terms ofwhere to continue investing and
(43:52):
when to give up, when tobasically not abandon an asset
but to have the courage not tocontinue with a certain asset or
certain type of therapeuticareas.
Your question was mostly aboutwhat type of structures to avoid
.
I think that an early stage,you want to avoid any type of
(44:17):
debt.
In other words, debt most ofthe times becomes an espial
death.
No-transcript.
Ben Comer (45:00):
Excellent, David.
It's been a real pleasurespeaking with you.
Are there any final thoughtsthat you would like to share
that perhaps you think areimportant for our listeners to
think about and that maybe Ihaven't asked you about?
David Sans (45:08):
Yes, I think that, moving forward, I think that
what we're going to see is morecollaboration among different
banks.
I think that we see in thefinancial industry where we
collaborate and you see more andmore transactions where you
have two or three, four, evenfive banks involved.
So I think that moving forward,we are going to see more and
(45:30):
more of these collaborative typeof efforts, more than sharp
elbows to basically hold on toyour own transaction.
I think that we all benefitfrom working together.
The more collaborative we are,the more we can do well for our
(45:50):
clients, for investors.
We can do more transactions.
So I look forward to 2025 to domore collaborative type of
transactions and to meet as manynew technologies as we can.
Ben Comer (46:06):
That's David Sands, head of Healthcare and Life
Sciences Investment Banking at DBoral Capital.
I'm Ben Comer and you've justlistened to the Business of
Biotech.
Sands, head of healthcare andlife sciences investment banking
at D Boral Capital.
I'm Ben Comer and you've justlistened to the Business of
Biotech.
Find us and subscribe anywhereyou listen to podcasts and be
sure to check out new weeklyvideo casts of these
conversations every Monday underthe listen and watch tab at
lifescienceleadercom.
(46:26):
We'll see you next week andthank you for listening.
Welcome back to the Business of Biotech.
I'm your host, Ben Comer, andI'm pleased to bring you a
conversation today with DavidSans, an experienced life
science investment banker whoknows the space from the inside
out, having worked earlier inhis career at companies
including Novartis, Pfizer andImClone, among others.
Now David is leading healthcareand life sciences investing at
(00:28):
D Boral Capital, formerly knownas EF Hutton.
On today's show, we'll learnabout David's somewhat unusual
career path, what he's excitedabout in the context of life
sciences investing in 2025,context of life sciences
investing in 2025, uniquefunding strategies for drug
developers and what I'll call adynamic policy environment in
(00:51):
the US and what that could meanfor the sector.
Welcome to the show, David.
David Sans (00:55):
Thank you, Ben.
It's an honor to be with youand thank you for your audience
at Business of Biotech.
Ben Comer (01:01):
We're really pleased to speak with you today, David.
Your academic backgroundincludes a master's degree in
chemical engineering, a PhD inmolecular modeling, as well as
an MBA.
Professionally, unlike plentyof other leaders in the life
sciences, you moved from acareer in big pharma into, with
(01:22):
a few stops in between, the lifesciences, banking and financial
industry.
That's in comparison to thereverse trajectory, which is
former investors becomingbiotech leaders.
What can you tell us, David,about your career development
and the reasons behind the paththat you've chosen?
David Sans (01:41):
Yes, thank you, Ben.
So, growing up in Basel,Switzerland, I was very
fortunate to have a scholarshipwith Novartis and I consider
basically having a long careerin pharma.
I was brought to the US as ascientist of national interest
and things change rapidly.
When I came to the US, Istarted to see or expose to the
(02:07):
startup community and I thoughtit was very interesting to see
how universities and differentresearchers were developing so
many drugs.
And it was a very interestingtime for me when I transitioned
from big pharma to buy thecompany called ImClone Systems.
The company did very well, wasacquired by Lilly in 2008 for
(02:32):
$6.5 billion, and after that Igot this bug not going into
finance first, spend a few yearsof learning the ropes, learning
about the industry, learningthe Wall Street type of industry
and I learned very quickly thatI really enjoyed helping CEOs.
(02:57):
That being on the side of WallStreet was very, very
interesting dealing withinvestors and trying to find
diamonds in a rough and gettingalways ahead of on top of the
new research and the new wavesof technologies.
And then I thought that Iquickly saw that I had some
(03:21):
value to provide to customers,both to CEOs of small biotech
companies, but also to investors.
So I do enjoy a lot workingwith the research department of
Wall Street, learning for thenew trends, looking at M&A
(03:44):
activity in pharma, and what Isaw is that in 2010, and this is
something that we can continuetalking about there was what we
call the patent cliff, thepatent expiration that was
valued at that time of $30billion.
So if you think about 2010, wehad products like Lipitor a
(04:09):
lower cholesterol, a loweringAsian that was going off patent
and this was a blockbuster.
Altogether, there were about 60to 70 drugs that went off
patent in 2010, with a totalvaluation of market sales of
about $30 billion.
Fast forward then in 2025, andwe always measure this in five
(04:31):
years, batting cleave of thenext five years and then the
batting cleave of the next fiveyears.
So when we look at 2025 until2030, we have 190 drugs going
off patent, with a total gapwhere we call, basically, the
(05:09):
pharma industry is going to loserevenues.
You're going to lose $300billion in revenue.
What that brings, what thatmeans to us, is a lot of
opportunities for M&A, a lot ofopportunities for investors,
exit for CEOs by the companiesto be acquired by Big Pharma,
and providing the continuity tolaunch drugs into the market.
(05:30):
So in summary, Ben, what I thinkthat it's an extraordinary time
today to be in banking isbecause we see this massive
opportunity within the next 5,10, 15 years of new technologies
.
We saw the weight-loweringagents that have been very
(05:51):
successful, so we see newtechnology.
So just to wrap it up to yourquestion, I started in the bench
as a chemist developing one ofthe first kinase inhibitors and
I went into finance and Irealized that this is a very
fast-moving environment wherescience is unlimited.
(06:13):
You can find science every dayof the week and I thought that
being in finance probablyleverages a lot of my skills and
I can help a lot more people.
Ben Comer (06:26):
So your turn into finance coincided then with that
2010 patent cliff, which Iremember covering as a
journalist.
Everyone was talking about itat the time and it's amazing to
think how much larger the comingpatent cliff is.
I'm glad you, I'm happy youmade that point, but you know,
given your previous experienceas a bench scientist, how did
(06:46):
you, how did you make thatdecision to to try your hand in
in finance?
You know, I think, what was akind of new field for you at
that time.
David Sans (06:56):
It was a new field.
I I went to back to school atnight, so I will work until four
or 5 PM, run into theuniversity, get the financial
studies completed and then Itook all the exams, all the SEC
required exams.
I think that once you go intothe PhD, getting another degree
(07:20):
and continuing your education isnot that difficult, but
definitely it was an effort.
I mean you have to spend a lotmore time in the school, a lot
more time in learning new skillsand developing your skills for
a completely different industry.
Also, what I thought to mepersonally, what was more
(07:42):
difficult is moving from aresearch type of mentality to a
financial services mentality.
It requires a completelydifferent skill set.
When you are working with CEOsand investors and funds, you are
a service provider.
You are not leading a science.
You are not.
(08:03):
You basically have.
It's a different mindset.
I mean you have to generateopportunities every day, you
have to think aboutopportunities every day and you
need to make a lot of calls andyou need to be very active,
which is the opposite in termsof science.
Think about the scientificprocess is very quiet.
You need to preserve work on alot of patents.
The process is very quiet.
(08:24):
You need to preserve work on alot of patents.
You need to be very, verycareful about what things you
disclose or things you don'tdisclose, and it's very long
term.
It's very binaric it works orit doesn't work.
The financial industry, interms of services, is very, very
different.
You have to be on the phoneevery day.
You have to initiateconversations every day, you
(08:47):
need to initiate ideas and youneed to basically call.
You need to have a lot ofvelocity Every day.
There are about 10, 20 stocksthat move very quickly and you
need to build on that velocity.
So, which is a very differentskill set.
It's a very different way ofthinking about your day-to-day
job and it requires basicallymuch longer hours and more
(09:10):
diverse.
You need to basically thinkabout quite a few things at the
same time a couple of otherquestions just about your
background.
Ben Comer (09:27):
first, david One is that, in addition to working in
big pharma and biotech, you alsoworked for a time on the Cancer
Moonshot Initiative, which is alarge public-private
partnership aimed at improvingoutcomes in cancer, reducing
cancer deaths.
Would you mind just telling usa little bit about your
experience with that program?
David Sans (09:44):
Yes, this started in 2016.
I have become very good friendswith Patrick Soon-Shiong.
He's a high-net-worthindividual with a lot of success
with Immunity Bio and othercompanies, so it was at that
time that he wanted to basicallybe on the private side of the
(10:07):
Cancer Moonshot.
Obviously, the program hasevolved very, very differently
from 2016 to what started in2023 with funding new programs,
(10:36):
so I thought it was a greatopportunity.
He asked me to join at thattime the committee, the Cancer
Moonshot Committee.
It was the sweet kind of momentof the cancer moonshot where
everything was possible.
Everybody was very excited tostart and then it took years
(10:57):
before the policy, I imagine in2016,.
It was until 2023 that theprogram was funded.
It was only until 2023 that theprogram was funded.
Now, in 2025, it's very clearwith the new administration has
already stated that they want todefund the Cancer Moonshot
Initiative.
So I think that for the mostpart, if you think about the
amount of time, that too it wasa lot of involvement in terms of
(11:20):
policy and it had resulted onlyin about two or three years of
activity.
Okay.
Ben Comer (11:27):
Um, just one follow up.
I want to ask you on thisprogram, given that you know
federal from the top kind ofprogram to address disease, can
(12:01):
they be effective?
Are they sort of at the whim ofchanging administrations which
make them less effective?
You know what's your kind oftakeaway from.
David Sans (12:09):
You know your participation in that effort
your kind of takeaway from youknow your participation in that
effort.
I think that in retrospective,in hindsight, this was an idea
in 2016 that basically was bornout of this situation, if you
think about GBM or glioblastoma.
But still today it's a verydifficult patient population.
(12:34):
Once you have a tumor in thebrain, you develop seizures, you
develop a swelling on the brain.
It's a very complicated diseaseand every patient is different.
Every tumor, every solid tumor,has different epitopes and it's
difficult.
It's one of the most difficultcancers to treat and still today
(12:56):
there is still a smallincrement.
I mean, you can extend lifeweeks, maybe months, but there
has been very little in terms ofreal impact on treating this
disease.
So this initiative startedreally for the most difficult
treat tumors.
For the tumors that pharma doesnot want to get involved.
(13:19):
If you think about they're very.
I cannot name one single bigpharma company that has a GBM
program.
Roche used to have someprograms but were basically
reduced and almost eliminated.
So the Cancer Moonshot at thattime had the direction for the
(13:51):
cancer moonshot to create morefunding for places where pharma,
after NIH, has done theinvestments.
Pharma doesn't want to continuebecause it may have very little
commercial value.
Fast forward 150 million.
It's still a small amount.
I would say that the result ofthe impact has been not that big
(14:15):
.
But one of the things thatresolved that came out of this
program has been all these openlabels, open access type of
clinical trials where there arebig consortia, there are big
groups that are coming togetherand say guys, let's put together
(14:35):
a protocol where we can trydifferent drugs for different
patients, not just one trial perone drug.
So I think that inretrospective there has been a
lot of value out of all thiseffort.
The outcomes have been probablylower than what we expected
eight years ago, but definitely,I think there's no, there has
(14:59):
not been a waste of.
It has not been a waste ofefforts and results.
I think there is still a verylong way to go and we have made
tremendous progress withclinical trial programs that
didn't exist before.
Ben Comer (15:17):
Yeah, yeah, thank you for that.
I have one more question aboutyour background, and then we'll
bring it up to 2025.
I gave an abbreviated list ofyour various credentials just a
few minutes ago but failed tomention your FAARM designation,
which I was not familiar withthat designation prior to
(15:40):
meeting you, David, and I'mhoping you could take just a
couple of minutes to explainwhat that is to others who may
not be familiar with thatacronym.
David Sans (15:49):
Yes, there is a whole discipline of cell
therapies that we what we callthe regenerative medicine.
This is a discipline that wasvery hot Basically a few years
ago.
I took all the exams in 2016 tohave this board certification
(16:09):
and the idea is that we havedone cell therapy for many years
.
If you think about bone marrowtransplantation, that is a type
of cell therapy.
You take cells from one person,from a donor, and you give
these cells to a patient.
So the cell therapy space isnot new.
Has been around for many, manyyears.
(16:30):
Space is not new.
Has been around for many, manyyears.
We believe that as weunderstand more the pathology of
the disease and we understandmore how to characterize cells,
there is a whole space of celltherapies that is still not yet
fully developed that we can findthese type of opportunities.
(16:55):
There is basically thisvertical of specialty in
medicine called regenerativemedicine that is still growing.
It's still being defined.
The FDA has been going after alot of these clinics that do
cell therapy without thecontrols and without
understanding, and I thought,from the pathology background, I
(17:19):
thought it was a veryinteresting discipline, that it
needed more studies and did moreefforts, and I'm happy that I
had this window opportunity whenI was at Mount Sinai Icon
School of Medicine to have thisopportunity to have this board
certification Fast forward.
I still think there is a lotthat we can do with cell
therapies.
(17:40):
A lot of funds, a lot ofcompanies have failed in terms
of developing cell therapies,but we still see the benefits of
CAR T cells 98% completeresponse.
We see a huge amount of benefitfrom CAR T cells.
There's also a lot of cytokinerelease storms, a lot of
(18:02):
toxicities that are derived frommanipulating these cells, and
there is a limit on how much wecan manipulate these cells.
I remember in 2016, 2017, wewere doing a lot of
manipulations to cells that nowwe realize it's too much.
There is a limit of the type ofmanipulation that we can do to
(18:23):
cells before these cells becomeexhausted.
One of the things that we knownow is that when we manipulate
these cells, they can do a lotof things that we want.
Now is that when we manipulatethese cells, they can do a lot
of things that we want them todo, but these cells become less
viable and this aspect of theability of the cell is something
that was not fully understoodin 2010, 2016.
(18:45):
Now we realize this is a bigfactor and we still have too
long of a period of time, whatwe call the vein-to-vein timing.
It is still too long, but ithas created a whole industry of
CAR T-cells as the mostsuccessful aspect class of cell
(19:05):
therapies.
Ben Comer (19:07):
Excellent, thank you for explaining that, and I think
F-A-A-R-M stands for theFellowship in Anti-Aging,
regenerative and FunctionalMedicine, and that's a program
affiliated with the AmericanAcademy of Anti-Aging Medicine.
We're sure to hear more aboutthat field.
I think in some of these newmodalities, it's two steps back
(19:28):
and one forward, steps back andone forward, but it's a number
of companies are working on it,so I'm excited to see what
happens there.
All right, we're going to moveinto your current role now,
David, and into 2025.
You're, as I mentioned, head ofhealthcare and life sciences
investment banking at Deep WorldCapital.
What are you excited about thisyear?
(19:51):
What kinds of biotech companiesor therapeutic areas are you
tracking right now, and why?
David Sans (19:59):
Yes, I think that 2025, as we can see will be a
time with a lot of fluctuations,a lot of stock variability.
We see the variability indexgoing up tremendously.
I think that there will be alot of opportunities for a small
(20:24):
cap.
I think that for the next two,three years, we'll see a lot of
M&A.
We have seen a big geographicdislocation in China.
China has more than 3,000biotech companies and more and
more we see M&A involved withsome of the assets that are
being developed in China thatwant to find a place, a home,
(20:49):
here in the US, with USinvestors, us patients, clinical
trials developed here in the US.
So we're going to see a lot ofthese opportunities.
There are a lot of therapeuticareas that are coming up that
are very interesting.
In weight loss, we see theGLP-1s and also other targets
(21:09):
that help the regeneration ofthe muscle tissue.
When we lose weight, we haveseen with Ozempic that we also
lose muscle tissue and it's veryhard to recover.
So it's definitely a problemthat many companies and many
(21:31):
different companies are comingup with new mechanism of action
that preserve muscle tissuewhile you can lose fat but not
the muscle tissue.
So we see a lot of interest inthis aspect.
Fast forward with the successof Lipitor.
With the success of Lipitor wesaw a lot of patients with a
(21:56):
benefit in that therapeuticclass.
Now, when we look at 2035, Ithink that we're going to see a
society that will benefit fromthese therapies, where you can
manage your muscle tissue better.
The more muscle tissue we have,the better and longer we live.
I mean it's remarkable thedifference that you see in
(22:25):
mortality between two sets ofpopulation.
If you exercise every day andyou have a muscle tissue
well-developed, you have a500-time lower probability of
death at age 80 and 90.
So you will see, probably inthe next generation of therapies
, how we paid a lot moreattention to the musculoskeletal
tissue and how to helpindividuals stay longer and feed
(22:49):
rather than just reducing fat.
So I think that from thataspect, I think we're going to
see tremendous benefits.
Cardiovascular system and cancerare still the number one and
two causes of death.
There is a lot of newtechnologies that we're going to
(23:09):
see in cancer.
The biggest opportunity that Isee in cancer is probably the
T-cell engagers.
Nobody saw 10 years ago T-cellengagers were very difficult to
manage.
Nobody saw that.
Basically, if you titrate, ifyou use T-cell engagers in a
small amount at the beginningand then you increase the dose.
(23:29):
After a week or two your bodyhas greater tolerance and this
is what happens when you designthese clinical trials.
It was brilliant by a clinicianthat saw the benefit of T-cell
engagers.
Every T-cell engager wasfailing, but they didn't realize
that if you dose it in a smallamount you can lower the
(23:49):
toxicity.
So we can see now a huge uptakeon T-cell engagers.
I think there is still room forcell therapies.
I'm a big evangelist and Ibelieve that there is more that
we can do with cell therapies.
And I think that the biggestname now is the biospecific
(24:12):
monoclonal antibodies.
They have a biospecific type offunctionality.
I come from the world ofmonoclonal antibodies and we saw
already in the beginning of2000, the biospecific was
something that the FDA wasalready pushing at that time.
Now it's becoming more and morea standard time Now it's
(24:35):
becoming more and more astandard.
And last but not least, theantibody drug conjugate is
another class that has beenphenomenal.
I mean you can target tumorswith a payload of toxic agents
to kill only the cancer cellsand preserve healthy cells.
So that is something that I'm abig believer, that
radiotherapeutics will becomevery, very interesting Novartis,
(24:58):
for instance, is veryinterested in radiotherapeutics
and that the conjugation ofmonoclonal antibodies with
radiotherapeutic agents, withisotopes, will become more
interesting.
As of now, isotopes andradiotherapeutics have only
worked with peptides because youwanted this quick release of
the radiotherapeutic of theisotopes.
(25:20):
You wanted to basically haveactivity in a very short period
of time and then release it.
Now we can see how this may bechanging with monoclonal
antibodies and an isotope thatcan target only the cells that
you want and alpha particlesthat we can control better.
Alpha particles is the nextstep in radiotherapeutics and
(25:44):
the combination with monoclonalantibodies that can recognize
only cancer cells it makes itfor a game changer.
They can recognize only cancercells.
It makes it for a game changer.
So, as you can see, ben, thereare so many that I feel very
fortunate to be in the place offinancing and looking at all
(26:05):
different landscape oftechnologies that are truly
remarkable, and the sciencekeeps expanding.
That's what I like aboutscience.
As I told you from thebeginning, science is unlimited.
You can always find science todo many different aspects and it
provides for a lot of differentinvestment opportunities that
will be very, very successful.
Ben Comer (26:27):
Yeah, and I think we could spend the rest of the show
talking about any one of thosetherapeutic areas or modalities.
You really hit the nail on thehead with that on some of the
ones that I've been watching andthat are generating a lot of
excitement.
I want to try to connect twothreads from your just previous
(26:49):
comment, your just previouscomment one on the patent cliff
and the need for companies tobring new molecules in, you know
, under their development, intotheir development engines.
And then two, what you weresaying about China.
Yeah, political shifts happenduring a change of
(27:09):
administration always creates adegree of uncertainty.
Given the impact of policychanges on investment activity
and global economicrelationships, what can you say
about the kind of current andshort-term future state of
biotech investing in the contextof China?
(27:31):
And I guess what I'm asking is,given this need to refill
pipelines and given the amountof companies you referenced in
China?
And then, thirdly, on top ofthat, the political landscape.
China has become something of awatchword politically in the US
.
A watchword politically in theUS.
(27:52):
You know what risks and whatopportunities exist for pharma
companies that want to work withChinese companies.
David Sans (28:02):
It's a very difficult question and we still
don't know.
I mean, obviously, what we doknow is that the amount of
tariffs will increase, obviously, what we do know is that the
amount of tariffs will increase.
What we do know is that allthese CDMOs that were very
(28:38):
successful in China I mean Istill chemical engineers in
China to have much better.
They were much better preparedthan chemical engineers in
Europe and it made economicsense at that time to send a lot
of the manufacturing to Chinaand a lot of pharma companies
develop manufacturing in ChinaFast forward.
(29:01):
This has created a problem ofthe US becoming less competitive
, europe becoming lesscompetitive and now kind of
rehoming, repurposing some ofthe processes to go back to the
US.
I think it will be verydifficult.
We're talking about 20 years ofoutsourcing these technologies
(29:28):
to China.
I don't think that anybodybenefits from this disruption.
You saw now Wishi in China hadto divest all the CDMO the
clinical manufacturing businessand you see a lot of US
companies not being able to usethese CDMOs in China anymore.
(29:49):
So I think it's a massivedislocation in terms of
corporate development.
It makes things more difficultbecause, again, we have spent 20
years transferring technologyto China for the benefit of
production, the benefit ofpatients, for the benefit of
creating more efficiencies.
(30:09):
And now it's the opposite, andthis is a major change.
It's a big disruption.
We will have to go step by step.
I mean, obviously things willget more expensive, and that's.
I mean obviously it doesn'tfavor, it's not favorable for
(30:30):
the US to have all theseexpertise to be outsourced.
And now it's a reset, it's acalibration of 20 years, of a
trend to utilize economies ofscale globally and now
retrenching to nationalize andto basically bring technologies
(30:50):
back to the US and also forEuropean markets it's the same
situation.
Ben Comer (31:02):
They have to rethink the whole business model to
reinvest in technologies back inEurope.
What about just in terms ofpure M&A of Chinese companies?
David Sans (31:13):
Do you see any real risk or opportunity there?
Yes, I mean, that's what we seenow.
These 3,000 biotech companiesin China have very limited
access to funding right now.
This has happened in Korea.
This is happening now in China.
It has happened already beforein Japan.
These biotech companies hadeasier access to capital than
(31:35):
now.
Now these biotech companiescannot raise funds anymore.
So it is the natural process forthese companies to seek
licensing and to seek foracquisitions here in the US and
Europe.
So it's not secret that bigcompetitors of mine are setting
(31:59):
up shop in China for the purposeof getting first hands on these
assets.
There are tons of assetsavailable in China that can be
(32:30):
developed in the US, can bedeveloped in Europe, and there
will be a problems that weencounter with a lot of clinical
trials done in China is thatthey don't have the same
protocols.
They don't have the samestandards of data quality.
There were a lot of concerns,even with audit financials done
(32:51):
in China.
They did not come out to be thesame quality or the same
standards as you would expectfrom US companies.
Ben Comer (32:59):
Right and kind of keeping on this line of funding
and not specific to China.
But in a previous conversation,david, you said you know
science is unlimited.
You know there is a and youreferenced some of the most
promising areas and areas thatpeople are very excited about
(33:20):
drug developers, patients,investors but the limiting
factor, as I recall, was scienceis unlimited.
People and money are not.
So how can scientificallypromising young companies in
2025 keep themselves capitalizedin this environment where
(33:40):
there's so many things to chasebut an unlimited amount of
people and resources available?
What options kind of good, badand ugly do they have to choose
from?
David Sans (33:53):
Yes, you're right, the limiting rate factor is
funding and people.
These are the two limitingresources.
In the history of humanity, wehave had this situation many
times before, many times before.
Remember 2002, we hadlimitations of funding, very
(34:14):
expensive money.
2008, we had a big recession.
So I think, as of now, therehave been a lot of changes in
the financial industry.
There will be some difficulties, there will be a limitation of
funding, so a lot of companieswill need to make hard decisions
and a lot of programs will needto be put on the shelf, and
(34:38):
this has happened all the time.
There will be a lot ofrecalibration of priorities, and
this also keeps the systemhealthy in terms of looking for
the best assets, assets that canperform, and recalibrating the
areas of research and areas offunding.
So I don't think it's differentthan we have seen in the past.
(35:00):
We have seen this type ofgeographic dislocations before
and it will be a good year.
I mean, 2025 is a year that hasbeen characterized as a year
with a lot of opportunities goodyear for M&A.
Ben Comer (35:34):
But thinking about smaller companies who you know
maybe need to get a trialrecruited, need to kick off a
phase two trial, need to maybepay someone to manufacture a
larger amount of product for alarger clinical trial.
You know what new options ormaybe existing options are out
there that you would mayberecommend or recommend against.
David Sans (35:55):
Yes, I think that a lot of companies wanted to
recalibrate, trim the fat, lookfor a lot of collaborations and
try to find new ways ofdeveloping, especially
manufacturing.
A lot of the manufacturing isrelocated to the US.
(36:17):
The US needs to catch up with20 years of globalization and
sending manufacturing to othercountries.
There is still goodrelationship with India.
India, especially the area ofHyderabad, would be one of the
big winners and I think that alot of pharma companies still
(36:38):
have other places.
China is not the only place andthere are other places where
even pharma companies havehistorically developed to
precisely have always two orthree different sides of
manufacturing that are notcorrelated.
If something happens in China,you need to have another
facility in India.
(36:58):
So definitely there's no doubtin my mind that there are many
other places that business willcontinue.
Development of manufacturingwill be also done in other parts
of the world that are morefriendly to democracy and more
respectful to the IP patentprotection laws.
(37:20):
So there will be pieces willcontinue.
Definitely there is adisruption now because of
geopolitical situations withChina.
This will continue with thisadministration for the time
being and we will have tocontinue with more CDMOs
relocated here in the US andEurope and others in other
(37:44):
geographic areas like Mexico andIndia.
Ben Comer (37:47):
Thinking about small biotechs in particular in the
very early stages of researchand development.
What do you anticipate in termsof the public market situation,
and are there any kind ofalternative investment tools
that could be useful?
You know we've spoken aboutmicro IPOs in a previous
(38:10):
conversation.
David Sans (38:12):
You know we've spoken about micro IPOs in a
previous conversation.
Yes, I think that the micro IPOspace is a space that I
personally am very strong aboutit.
I still think that there is alot of opportunities for
companies to go public on asmall amount of offerings
(38:32):
anywhere from 10 to 15 millionmillion offerings and are
manageable.
And what we have seen and Ithink we had this conversation
before a big increase oftransactions with private equity
funds.
I think that one of the biggestdifferences, one of the areas
that are growing faster, arethese transactions with private
equity funds, with royalty funds.
We have seen an increase onwhat we call the synthetic
(38:56):
royalties.
These are royalties beforethese are licensed with another
commercial entity.
So there are like three or fourpockets of financing that are
definitely different from 10years, 20 years ago, that are
growing.
Different from 10 years, 20years ago that are growing.
You did not see private equityfunds involved in preclinical,
pre-revenue transaction and nowthere is something that is
(39:19):
coming more and more.
This concept of the syntheticroyalty almost didn't exist 20
years ago and now you can see atleast 10% of all transactions
are royalty involvedinvolvedroyalty piece way before it goes
commercial.
So definitely there are morestructures that we see of
(39:40):
interest.
We see a lot of structurefinancing with warrants that
when the stock goes up and youhave good data, all of a sudden
you can realize a very goodtransaction with the warrants
you already have.
If you have $8 million now inwarrants and your stock goes up
(40:01):
because you have good data on aphase two trial, it's a
fantastic day because you canmonetize this data.
The company can waste money,investors may do well and
definitely I'm a big believerthat there is a room for this
type of transaction.
When I talk to CEOs, they don'tlike warrants for all the good
(40:22):
reasons, but at the same time itprovides a structure financing
that when things go well and ifyou believe you're a strong
believer on that legal trial tobe successful, then you can have
a very successful situationwith rising the stock or the
price of the stock and allowingto monetize all these warrants.
(40:45):
So I think that we will see toyour point.
We'll see more structured dealswith different instruments.
Warrants are not going to goaway.
We'll see a lot of transactionswith this kind of warrants and
it's a space that is rapidlymoving.
I think within the next 24months the price of money will
(41:12):
get more expensive.
The rule need to have morestructured deals in place.
Ben Comer (41:17):
Can you give us a read at all on the private
equity investment strategy?
And I guess what I'm thinkingabout is is there a kind of herd
mentality where private equityis attracted to a certain size
and even a therapeutic area, oris it sort of all over the map
at this point?
David Sans (41:34):
Yes, I mean in private equity.
You see a lot of transactionsthat a lot of companies can
raise two, three, $400 millionin series A, b and C and this is
happening every day.
I mean, we just saw anartificial intelligence company
led by Arch Ventures in Chicago.
They raised $1 billion.
So you see transactions nowthat I never saw before on the
(41:59):
private equity space and VCprivate equity space that are
very deep pockets.
They can deploy tons and tonsof funding.
A lot of transactions now thatI didn't anticipate 10 years ago
are actually private placementsSeries A, series B, Series C
(42:19):
that you can deploy easily $100to $100 million.
Ben Comer (42:25):
And as someone who likes to work with CEOs, likes
to advise CEOs and this may bean impossible question to answer
because the facts in any givencase will differ from one to the
next but are there things thatwould advise a CEO who is kind
of, you know, as a verypromising early stage
(42:47):
development candidate needs tomove into, say, a phase two
trial?
Are there any particularinstruments that you would
really caution on or just do anextra degree of due diligence on
before recommending that as anoption to a CEO or not?
David Sans (43:06):
I think that every time I talk to CEOs, I try to
bring a perspective in terms ofthe competitive landscape.
I always spend time with theCEOs to give them a landscape,
leave them compatibles.
I think that it's veryimportant for CEOs to understand
where they are, understand whatis the landscape and have a
(43:29):
reality check on theircompatibles, on the valuations,
and I think that this will bemore and more the case that we
will need to look at thecompatibles.
We need to look at thevaluation and for companies to
have a reality check in terms ofwhere to continue investing and
(43:52):
when to give up, when tobasically not abandon an asset
but to have the courage not tocontinue with a certain asset or
certain type of therapeuticareas.
Your question was mostly aboutwhat type of structures to avoid
.
I think that an early stage,you want to avoid any type of
(44:17):
debt.
In other words, debt most ofthe times becomes an espial
death.
No-transcript.
Ben Comer (45:00):
Excellent, David.
It's been a real pleasurespeaking with you.
Are there any final thoughtsthat you would like to share
that perhaps you think areimportant for our listeners to
think about and that maybe Ihaven't asked you about?
David Sans (45:08):
Yes, I think that, moving forward, I think that
what we're going to see is morecollaboration among different
banks.
I think that we see in thefinancial industry where we
collaborate and you see more andmore transactions where you
have two or three, four, evenfive banks involved.
So I think that moving forward,we are going to see more and
(45:30):
more of these collaborative typeof efforts, more than sharp
elbows to basically hold on toyour own transaction.
I think that we all benefitfrom working together.
The more collaborative we are,the more we can do well for our
(45:50):
clients, for investors.
We can do more transactions.
So I look forward to 2025 to domore collaborative type of
transactions and to meet as manynew technologies as we can.
Ben Comer (46:06):
That's David Sands, head of Healthcare and Life
Sciences Investment Banking at DBoral Capital.
I'm Ben Comer and you've justlistened to the Business of
Biotech.
Sands, head of healthcare andlife sciences investment banking
at D Boral Capital.
I'm Ben Comer and you've justlistened to the Business of
Biotech.
Find us and subscribe anywhereyou listen to podcasts and be
sure to check out new weeklyvideo casts of these
conversations every Monday underthe listen and watch tab at
lifescienceleadercom.
(46:26):
We'll see you next week andthank you for listening.
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