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Where we share our weekly news debriefs and discussions with industry experts. These are lo-fi recordings aimed at giving our readers more opportunities to engage with our analysis and a view into some of the conversations that shape it.
Kevin: Brian, uh, welcome.
Hey guys to Health Tech Nerds.
How you doing?
Bryan: Thanks.
I was, I was getting, getting ready
to argue about site of service
and what Mass General Brigham's
Medicare rate reimbursement is.
Kevin: You wanna try it?
It,
Bryan: nah, it doesn't matter.
Like, like you, I look, the access
thing is totally true and, uh, there are
absolutely organizations, maybe fewer in
Massachusetts given the oligopoly, but,
uh, who get paid, uh, less as a multiple
of Medicare than Mass General Brigham.
Right.
Kevin: For sure.
Bryan: So, you know, yes, there
is that You want more access.
There, there, there is.
The, the, there.
What Warren didn't say was you, you put
'em, you put 'em under the high 10, right?
Kevin: Yes.
Bryan: Yeah.
Kevin: Anyway, um, uh, so
topic of the day for our
Bryan: conversation
Kevin: you posted on LinkedIn about the
acquisition of it, it is called Lon.
Is that, am I pronouncing it right?
Uh, by Eli Lil, it's, it's a
Bryan: sanctuary somewhere.
Kevin: Yeah.
That's how
Bryan: we
Kevin: came up with the
Bryan: name.
It was like a third name.
Kevin: I love it.
Uh, three 8.25
billion in cash up front with earn
out, get up to $7 billion, which
looks like it's one of Lily's.
Bigger acquisitions over time.
I was looking at at least the
last couple years and Yep.
Um, so really meaningful move
for Lilly Venrock seed investor
involved in um, building out the
business, going back to 2020.
Uh, really interesting in vivo CAR T
therapy platform, which sounds like
it's having some positive impact in
patients today and multiple myeloma.
Yep.
Would be curious to hear your
original investment thesis
in the business around CAR T.
We hear a lot in the community around
cell and gene therapies, CAR T this
coming wave of innovation in the space.
And so curious to hear how you
thought of original thesis, um,
how it played out over the years.
Bryan: Sure, sure.
So the original thesis, um, which
actually your people in the background
should be able to find, 'cause we
posted the investment memo, right?
Yep.
Um, we
Kevin: shared it in a link on Great.
It's on your LinkedIn post,
which we shared a link to here.
Bryan: Awesome.
Terrific.
Um, so the thesis was new
therapeutic modalities.
Get exciting for, 'cause they
do something really interesting.
Okay.
In cell therapy, in autologous
ex vivo cell therapy in multiple
myeloma, like they were basically
curing late stage people.
Like the efficacy was awesome, okay?
And just about everything else
about that therapy sucked, right?
It, it, you, you, you have to, you,
you gotta wait six or seven weeks
in order to get the therapy, right?
'cause they have to pull the blood
outta the patient, process it and then
stuff something back in the patient.
In j and J'S trial for the leading one, I
think 16, 17% of the patients died after
blood draw, pre getting treatment, right?
So when you think about actual real
costs to that sort of a processing
timeframe, like that was there.
Okay?
That's number one.
Number two.
Side effects.
They have to do these in
academic medical centers.
You can't do 'em out in
the community hospitals.
So it's, it's restrained, right?
Uh, as to where you can get it.
And then the third would be cogs, right?
Like the, I think when j and j
launched victi, which we will do
two or $3 billion this year, right?
I think they were maybe a
zero margin, maybe 20% margin.
Okay.
This is like, and everybody gets
on pharma or some rightfully some
wrongfully for like 80, 90% gross
margin business, et cetera, et cetera.
This is a place where a pharma company
went out there and was basically making
little to no money on the product, right?
So, uh, and you know, to put those
cogs in dollar terms, I think it was
something like $220,000 cost of goods.
Okay?
So the, the thesis for us was, wow,
there this stuff out of a combination
of MIT and France, CNRS in France.
That was showing enormous specificity of
gene therapy and could you take all that
stuff that j and j was doing super well,
and there's some other folks in, in the
space too, and remove the autologous and
the ex vivo part of it, see what happens.
Um, and what you, what you are and will
end up seeing is dramatically reduced
cost of goods, good efficacy, no six week
processing time, et cetera, et cetera.
And thus far, again, small number
of patients and you're gonna
have long tail safety risk always
right on these sorts of things.
When you have 20 patients, not
200,000 patients that have been
tested, you've got great efficacy.
So that was the thesis, was
this works in one format.
Can we basically go from whatever,
you know, uh, an LP record to A DVD.
Martin: One of the things that was
really caught our attention in your
LinkedIn post was describing the
journey of LON as a rollercoaster.
Can you talk a little bit about the
challenges that hit along the way
and what it was like riding Yeah.
Riding shotgun for that.
Bryan: Um, yeah, and look, I gotta, I, I
gotta give huge props to the team, right?
Um, 'cause you don't, like in
the, in the healthcare IT space,
you see it a little bit less.
But, um, but in biotech, there
is definitely, like lots of
these people are scientists.
They're, you know, more scientists
than entrepreneurs, right?
They, lots of them come out of big
pharma jobs, et cetera, et cetera, like.
Taking real risk and living on the
edge is not something biotech does a
lot, which is why for, you know, the
last 15 years people have been like, we
raised the $150 million series A, right?
Like I've, I've gone looking for CEOs for
companies and they're like, well, do you
have $300 million on your balance sheet?
I'm like, no.
Why would I do that?
That's like, you're killing me, right?
So I gotta give the team huge
props for being stressfully
focused, right in the face of
nearly running outta money a bunch.
But what happened was we put in a
little seed round in 2020, um, and
then as you guys might have seen in
2022, like the world changed a little
bit from a financing perspective, um,
and even more so in biotech, right?
And so biotech went into a deep freeze
from a financing perspective and cell
and gene therapy, preclinical companies.
We're like, you know, liquid, nitrogen,
temperature, uh, and uh, and so like,
it's not that, I mean, we did fail to
fundraise for a bunch of time, couple
years, but like, I think we failed
to even get people interested really.
Right.
They were just like, like,
you, like, what are you doing?
Oh, well, we're a preclinical
cell therapy biotech company.
Like, I, I got like, I gotta
go have my nails done, right?
Like, I got something else to,
something else to do with my time today.
Um, and the, and happily it turned out to
be true, like the teams North Star was,
let's get clinical data, however we can
get there and that will unlock it, or our
clinical data will suck and we'll be done.
Right.
Um.
They did a great job at that.
The things that carried us through were,
we had some pharma companies who saw
the benefit, the potential benefit of,
of the platform that we just described.
Um, and while we were doing it in
Multiple Myeloma, which was the lead
program that Lily bought us for, um,
there, there was some other stuff.
And so we got money from Astellas
first and then j and j to help
fund the operations of the
business without giving up the lead
program, which was super important.
Um, yeah.
And then summer of 25, we started
to get clinical data and then
they presented a late breaker
abstract at Ash November of 25.
And then people were like,
oh, wow, this might work.
And then of course, lots of
investors called, but we didn't
actually need the money anymore.
Kevin: Brian, in Healthcare IT services
world, where we typically play.
You know, we got a lot of payer
provider leaders who don't think
a ton about pharma listening.
Um, uh, to HTN, one of the things that
I hear in this world is, you know, what
VBC was to the last decade, specialty
pharma cell and gene therapy innovation
is going to be to the next decade.
Huge wave of innovation
coming, prepare for it.
I, I'd be curious from where you sit in
the landscape, if you would agree with
that thesis, disagree with it, and if you
were leader at payer provider listening
to this, like, what would you be, what
would you be thinking about when you see
news like this of, you know, new CAR T
therapy getting bought for substantial
amount of money coming to market?
Bryan: So I think that.
On the one hand you have had lots of,
uh, fear, maybe it's, you know, the,
the payer version of Doom scrolling
about the potential costs of all these
cell and gene therapies coming through.
Right?
Um, and you've got the various sickle
cell ones that were priced at two to
two and a half million dollars a crack.
Um, and basically have sold what,
like, you know, a half a dozen of them.
Like, so like the commercial
launches have been terrible.
Okay.
On this, um, you did have, uh,
a couple of, uh, pediatric ones.
Novartis bought, uh, bought AveXis, um,
and stuff like that, that were a little
lower priced and in peds were fine.
But then those were one-offs.
Now, like the, I'll give, I guess
I'll give you a couple thoughts.
One, I was always very surprised that.
The various chronic biologics
that were priced at five, six,
700,000 bucks a year, right?
Alexion, um, flew under the
radar at pharma companies, right?
Because, you know, in the US part
of the reason the people worry about
these couple million dollar price tags
is the member is resonant at any one,
at any one payer for like two and a
half years or something like that.
And so, so everyone's like, it's like,
why, why preventive care is dad, right?
Like, oh my gosh, I don't wanna,
as a payer, I don't wanna pay
for somebody else's benefit.
Okay?
Um, but even at two and a half years,
those five, six, $700,000 a year,
things were, were adding up to things.
But they were rare diseases.
Like they never, they never pushed
on them for a bunch of years.
I do not understand why
that is true, number one.
Um, number two, um, I think that.
One of the big things that needs to go on
over the course of the next five years,
and I think it will, and I think Colonial
is an example of this is I think you're
gonna have, uh, cell and gene therapies
that cost three, four, 500,000 bucks
a year, not 2 million bucks a year.
Right?
At which point, I think all those
companies that are being formed to finance
cell and gene therapies and super with,
like, they're, there's no, there's no
reason for them to exist and thanks.
Now, the tricky ones, I think will be
when you have the intersection of cell
and gene therapies with big markets pain.
Let's do chronic pain is one, right?
Um, like there's a lot
of people with that.
And even if you dotted 2 million
bucks a year, if you're at 300,000
bucks a year or 4,000 bucks a year,
that gets to be big price tags.
Now, maybe the healthcare economics
compared to what current costs
are, work for that one or not.
Like, we'll see how that works out.
But certainly everything that we are
looking at in the cell and gene therapy
space is, can you see your way towards
a more stable price notion, not the
ones that have been priced super high.
Uh, and again, like let's debate
like why people have fixated on
that given no one's buying them.
Like, yeah, I wanna sell my house
for a hundred million dollars too.
Like it doesn't actually
mean anyone's gonna buy it.
Kevin: You just gotta
find one person, Brian.
Bryan: Yeah.
Right.
And unfortunately sickle cell,
you gotta find a lot of people.
Right.
So it's even harder.
Kevin: Yeah.
Martin: One of the things we've been
thinking about lot lately is with this,
you know, sort of golden age of, of
cell and gene therapy, it feels like
there's, the infrastructure demands are
just like a quite different from the
pharmacy infrastructure that exists today.
I'm curious what you're thinking
about, you know, aside from the
financing and aside from the
discovery, like how getting.
What do we need to get these
drugs in the hands of, of
people that doesn't exist today?
Bryan: Yeah.
I think that's, I think that's gonna be
a decade long journey on really, right.
Um, again, in the, in the current,
uh, cell and gene therapy,
you've got such monitoring that
needs to go on for side effects.
Um, icans, uh, you know, CRS
stuff, they, they're only getting,
they're, they're only getting
done in academic medical centers.
Right.
Then you're gonna have some, like,
you're gonna have some CNS gene therapies
where it's intrathecal delivery.
Right.
So like, it, it, the, the distance
between these things and either
just normal injectables and pills,
that is, you got, you got at
least a decade on that for sure.
Martin: Brian, thank you
so much for coming on.
This was problem.
Super helpful.
We'd love to have you back to
talk about, uh, mass general
CMS and Medicare rates sometime.
Bryan: I thought I thought you were,
I thought you were gonna ask me about,
uh, from your newsletter about Eddie's
comment about decreasing Medicare rates.
Kevin: We can, if you want to.
We were chatting on it earlier.
I figured we we're, we're
Bryan: outta we're outta time.
Kevin: I, um, I, we, we worked
our way through that in a way
that we think makes sense to us.
We'll, we'll see how I would, I
would, I would, I would, I would
Bryan: SI would support your thesis.
Kevin: Yep.
Yeah.
It's, it's a logical one.
It's a big one.
You know, it'd be great if it
comes, if it comes to fruition.
It's, uh, yep.
There's a lot of work between
here and there, which is why
you get good teams doing it.
So fun to see.
Yep.
Bryan: You got
Kevin: it.
Brian.
Appreciate.