Bringing The Human Element Full Circle Thru Adaptive Ski Coaching

Posted February 8th, 2018 in Corporate Culture, Patients, Rare Diseases, The Human Element | Leave a comment

My experience as an adaptive ski coach has been nothing short of life-changing. I don’t say that with hyperbole. By bringing together my passion for the mountains with my profession as an investor in biomedical therapies, adaptive coaching completes the circle for me – by focusing on the most important of life’s elements: the human element.

Last year was my first year as a volunteer coach with a wonderful organization at Loon Mountain and Bretton Woods called New England Disabled Sports, which provides over 3000 lessons to student-athletes with disabilities of all types. Exactly a year ago, after reflecting on the start of my inaugural season, I shared six important themes that resonated with me – and continue to do so – around helping conquer the mountains by embracing a can-do attitude, changing one’s context to unleash new strengths, sharing the thrill of the slopes, fostering greater confidence in life, and encouraging a greater degree of independence.

We’re more than halfway through this winter season and I continue to be inspired about the human element at the center of the circle connecting my personal and professional interests; here are five short vignettes about my coaching experience this year that illustrate this connection.

Talking dystrophin. One of NEDS’ most committed athletes is a great kid named JB with Duchenne muscular dystrophy (DMD), who comes nearly every weekend. In addition to being a great skier in a “mountain man” sit-ski, he’s wonderfully inquisitive, so when we’re not ripping down the slopes he’s asking cool questions about science on the chairlift or at lunch. For example, he asked me multiple versions of “what’s the temperature of Neptune?” when it was frigidly arctic at Loon Mountain over the holidays. Last weekend, at lunch, he asked me “do you know what dystrophin is?”, highlighting the protein responsible for DMD. His mom and I then proceeded to explain how the 79 exons (protein coding regions) in dystrophin link together using salt and pepper packets as illustrative “exons” on the table, and what happens when there’s a change making the salt or pepper not work properly. Skipping over that packet (exon) might be helpful. I also learned from his mother that he’s got an 18-exon deletion, so we talked about the state of gene therapy and such – reflecting on Sarepta, Solid, and Exonics, all companies in the space. We then got right back to talking about what JB loves – which is skiing – and how we broke his record a few weekends prior by skiing 20 runs in a single day.  JB rocks!

Skiing and “oncolytic viruses” are both cool. I’ve had the pleasure of coaching Colleen both last year, as a senior in high school, and this year as a freshman in college. Colleen was born with spina bifida and uses a wheelchair to get around, but is trying to become an independent skier in a bi-unique on the snow. Colleen is a wonderful, positive, and super smart young woman. A few weekends ago, while heading up on the “magic carpet” to keep working on her turns, I asked about how college was going and found out she was thinking of changing her major from liberal arts to pre-medicine. Inquiring why, she told me it was because she loved her immunology course (as an immunologist, I was thrilled!).  What was the coolest thing she learned about in immunology?  As we were sitting on the side of the slope, Colleen said “oncolytic viruses” because they can kill cancer cells and drive a powerful immune response. It’s not every day that someone mentions an esoteric therapeutic approach like oncolytic viruses on the side of a ski slope. It is indeed a very small world: we are early investors in a startup called Replimune, an oncolytic virus company, which is led by the team that discovered the only approved therapy in the space (T-vec at BioVex/Amgen). Get ready world, the next generation of very savvy clinician-skiers is on its way.

Polio didn’t stop him then, and won’t now. Despite being 62-years old, Steve was a “never-ever” at the mountain last weekend – meaning he’d never been on ski’s before. He had been stricken by polio as a child and his left leg was affected. Steve did what many with polio did: he went on and lived his life to the fullest. He became (and is) a very successful lawyer, and has kept himself in great shape with swimming and other activities. But he’d never skied before. When he showed up at NEDS, we fitted him with a helmet, googles, and a new bi-ski that he could learn in, and took him up to the bunny slope. His progress was phenomenal: by end of his second day, he was skiing without our assistance down the slopes, initiating his own turns with his outriggers and using turn shape to control his speed. His learning curve was truly impressive. As I went home, I wondered how many more men and women in their 60s today were affected by polio decades ago and would like to ski – but never have. It’s unlikely I will ever coach another “never ever” student disabled by poliovirus because of the massive impact of medical innovation. In the 1950s, 15K new cases of polio paralysis were occurring each year; with the launch of the vaccine in 1961, by the late 70s there were zero new cases in the US. Steve didn’t let polio or age stop him from learning a new sport; I hope to see him out there on the slopes again soon.

Twins share a lot more than just DNA.  Lucy is an adorable 5-year-old with spastic quadriplegia cerebral palsy. She also has a twin sister. Like many sibling relationships, these two sisters are super close and will certainly stay that way. Beyond being genetically identical twins, one of the things that brings them together is their early love of skiing, which their parents have dutifully fostered, so they can have an “amazing ski experience in the mountains” for the rest of their lives. We took Lucy out in an EZ-Rider sit-ski, wrapped in a blanket, to enjoy the slopes, while her parents taught her sister elsewhere on the mountain. Lucy loves motion: she loved going down the slopes, cooing most of the way, but really didn’t like stopping. To keep her happy, we gently rocked her sit-ski side-to-side on the chairlift just to comfort her. She wanted to stay in motion, and we did our best to oblige. As if we needed a reminder, life is far more enigmatic, fascinating, and fulfilling than just what’s coded in your DNA.

Up close and personal with Prader Willi Syndrome (PWS). In early January, I had the wonderful opportunity to ski with Betsy, a young woman with PWS, a genetic disorder that leads to hyperphagia (uncontrolled desire to eat) and obesity. Her parents have done a great job in helping Betsy manage her caloric intake and weight, and made sure to remind us not to mention food or lunch while skiing together. The opportunity to ski with Betsy really brought it all together for me: after nearly a dozen years on the board of Zafgen, a biotech company working on new therapies for PWS, I’d never spent significant one-on-one time with an individual living with this condition. Although she’s a regular skier with NEDS, she was sensitive about having unfamiliar coaches assist her around the mountain, giving me a chance to see her sensitivity and anxiousness, common features of PWS. We had to chat with her, with some Kleenex, in the NEDS building for a bit before she trusted us to be on her coaching team for the day. But once we got out on the slopes, we clicked. She truly loved to have us help her ski fast down the slopes. She also wanted a coach to hold her arm on the chairlift, which was wonderful to do, and gave her a sense of safety/security on the chairlift. She was so polite (tons of “thank you very much, Bruce, it’s a pleasure to ski with you…”). We ripped a bunch of great trails on the mountain together. To top off an awesome day, she ended the session asking me if I’d please coach her tomorrow… which was the start of the annual JPM healthcare investor conference in San Francisco. I almost cancelled my business trip.

Hopefully these short descriptions convey the human element that is so powerful with adaptive skiing: tailoring the experience in the mountains to the individual’s needs and desires, and allowing them to engage in enjoying the mountains to the best of their abilities.

In the biopharma industry, we talk about “patient-centricity” as a core cultural value all the time. Frankly, I’d argue it’s one of the most overused and under-appreciated phrases in our business. Fundamentally, patient-centricity is all about putting the human element first. It’s about living it. It’s not a 9-to-5 job. Living and breathing with purpose is the essence of a great and inspiring organizational culture. Finding ways of marrying your personal passions with your professions can unlock this positivity.

Take Luke Timmerman, the eponymous biotech writer.  He’s climbing Mt Everest to raise over $300K for cancer research at the Fred Hutch. Luke loves climbing and the outdoors, and he wants to impact cancer – so he’s combined them this year.

Or take Chuck Wilson and his team at Unum Therapeutics, a startup focused on next generation T-cell therapy for cancer. To connect more meaningfully with the patients like those they aim to serve, he and several other scientists from the Unum team decided to become hospice volunteers – working directly to support patients through the last stages of their terminal disease – bringing together compassion, empathy, and understanding of the human element into what they and others do every day in biotech.

The world is full of mountains, both literal and figurative; it’s no wonder they are the subject of so many metaphors. Climbing to reach the highs of the summit. Seeking out ways to help others get there, too. When I work with the great people at NEDS to help our students carve up the slopes, I’m reminded of this John Muir quote: “You are not in the mountains, the mountains are in you.”  So true.  The mountains are inside of us, central to the human element, and those are the mountains we are conquering together.

It’s a privilege to be a part of the NEDS adaptive program; thank you for having me!


Postscript requestNew England Disabled Sports (NEDS) is a 501(c)(3) not-for-profit organization, providing adaptive sports instruction to students of all ages and abilities. It is through the generous donations of individuals, corporations and foundations that so many student-athletes living with disabilities are able to enjoy the mountains.  Please consider a donation through the website or through the link here.



Two CARTs, Two Charts: Dissecting Returns From T-Cell Therapy M&A

Posted January 23rd, 2018 in Exits IPOs M&As, VC-backed Biotech Returns | Leave a comment

Yesterday Celgene finalized its acquisition of Juno Therapeutics for $9B, only a few short months after Gilead bought Kite Pharma for $11.9B.

With only a few hundred patients ever treated with their therapies, $20B represents a lot of promise in both their lead products and the space itself.  Both biotech firms, along with Novartis, have pioneered the field of chimeric antigen receptor T-cell therapy, or CART, and have built the leading platforms in the space. And while many may reflect on their differences, the reality is they are quite similar: lead programs targeting CD19 in ALL/NHL, robust pipeline/platforms, strong cell manufacturing capabilities, stellar teams, and large cash balances ($700-900M at time of acquisition).

There’s plenty of commentary of these acquisitions elsehere, including why they are good for both the acquiree and the acquired, and what they mean for advancing CART to more patients and the biotech industry as a whole. Hopefully these deals will catalyze a renewed enthusiasm for M&A that was lacking in most of 2017.

But instead of adding further to that dialogue, I’d like to share a short post on the investor returns from these two fantastic outcomes.

Both of these deals led to massive returns to private and public investors alike. They both are in the top 2% of venture capital outcomes. Early investors (like David Bonderman of TPG and Alta Partners in Kite Pharma, and ARCH in Juno) made huge multiples and enormous absolute returns.

To get into the details, here’s two charts that capture the share price changes over time, derived from their SEC findings, as best as I could dissect (so apologies now if I’ve got some of these wrong).

Kite Pharma ($KITE) raised convertible seed rounds in 2011, which converted at a 15% discount in the spring of 2013 into their Series A – which was (inclusive of the seed notes) a total of $35M at $1.85/share.  A pre-IPO mezz round of $50M was raised as a convertible into the IPO price, coming in at a 10% discount to the $17.00/share IPO in 2014 (i.e., a 8.3x into the mezz round, and a 9.2x into the IPO).  So Kite technically raised $85M as a private company (though mezz was only a few months pre-IPO). After their $128M IPO financing in 2014, Kite raised $830M in a series of follow-on public financings at steady price increases, and was acquired by Gilead ($GILD) in August for $180/share or $11B in value. In total, Kite raised $1.0B in equity capital over its lifetime.

Juno Therapeutics ($JUNO) raised a large $180M Series A in 2013 at $4.00/share, following in 2014 by a $130M Series B round at $10.92/share (or a 2.7x step-up). Over two years, Juno raised $314M as a private company. In Dec 2014, Juno went public, raising $264M, at $24/share, or a 6x from the Series A. Juno then struck a deal with Celgene ($CELG), where the latter purchased 9% of the company for $93/share, raising $850M in equity financing.  Juno’s public follow-on financing only 5 months ago raised a additional $250M. Celgene’s 2018 acquisition of Juno valued the business ~$11B, or $9B net of the cash on the balance sheet and the equity it already owned. In total, inclusive of the 2015 strategic investment from Celgene, Juno raised $1.7B in equity capital over its lifetime.

Here’s a table that captures the relative return multiples.

The Kite seed round, which priced at $1.58, delivered a 114x return into the acquisition.  By my math, David Bonderman’s investment of $4M in the seed and Series A returned over $420M, a 108x return. That’s real money, and a fantastic return – and a material event even for a TPG founder. Alta Partners (assuming they held to the acquisition) would have converted their $15M investment in the seed/A/mezz into more than $500M.

Although the multiples are different, Juno also delivered massive returns. Arch Ventures, as a Juno founder, got common stock for its role in pulling the story together.  From what I can glean from the SEC filings, because of that founding stock position (roughly 10% of the firms total equity position in Juno), the weighted average price for Arch was $3.90/share – delivering a very solid 22x return on $45M invested. That’s a $1B win for Arch.  Wow. Congrats to Bob Nelsen.

Couple final reflections.

While both deals are huge wins, the comparative math on Kite’s multiples suggests it was a more “capital efficient” story. They raised less in the Series A, drove a big step-up into the mezz round, and then raised the vast majority of their equity capital in the public markets at very robust prices.

At the time of Juno’s Series A of $180M, many pundits wondered how Kite was going to compete with it: Juno had a war chest that was ~5x bigger than Kite’s at the end of 2013. Kite was widely regarded by the media as “second fiddle” to Juno’s lead position, all the way through their early days as public companies (e.g., Juno had a 2x valuation premium over Kite for some time in 2015).  In hindsight, it’s clear that Kite did just fine – getting to market with Yescarta more than 12-18 months faster than Juno’s CD19 program, and securing a nearly $12B acquisition from Gilead. Importantly, Kite’s more capital efficient approach didn’t imply not powering up the story – they just did it with lower cost-of-capital equity from the public markets. In a world where the public markets are open and accommodating, capital efficiency is often ignored, but scaling with disciplined equity capital raises preserves attractive strategic optionality when markets get tougher or things take longer.

It’s also clear that public investors did quite well in these deals – unlike some outcomes, both private and public investors can only be happy with these deals. Kite’s IPO investors made over a whopping 10x, and Juno’s nearly a 3.6x (in 3 years, so still a very strong public market return). Even the follow-on financing participants made handsome returns: both Kite’s and Juno’s follow-on financings about 4-6 months prior to acquisition delivered a 2x return in a short period. What’s clear is that participating at any point only these price curves was a positive for investors. Obviously that doesn’t always happen, but great to see when it does.

A final takeaway is that there is “no one size fits all” for how to build business models that can work in biotech these days, even to get to similar product and patient outcomes. While Kite and Juno have remarkably similar products, similar platforms, and similar overall acquisition valuations, the stories were built quite differently when it comes to financing their growth.