VIDEO TRANSCRIPT

Elena Putilina: Hello, everybody. Happy New Year. Happy Twinning episode number 50, which is happy season two. We have all kinds of good news today, and we have an amazing guest, Paul Jaminet of Angiex, which is a biotech company that is focused on curing cancer in a better, more efficient, more targeted way. So we are very honored to be starting our Season two with a very proverbial, Hey we're listening to a subject of cure and cancer with.

This is like almost as good to go into the moon. So here you go, Paul. This is my very special introduction. And what's on your mind?

Paul Jaminet: You mentioned, the Angiex is a making a novel approach to cancer therapy. And we have a lead drug, which is in phase one clinical trials right now.

We've just started dosing at doses we believe will be efficacious. I actually expect to get the results of the first scan in a few hours. We're on the the verge of demonstrating advocacy and so this is the biggest value inflection point in the life of the company.

Where we prove our novel approach to treating cancer, which no one else in the world is pursuing, actually works and can help a great many patients. So a very exciting moment.

Elena: Can I ask you a question, Paul? You just said that nobody in the world is pursuing. Why?

Paul: That's a great question. And it's a little bit mysterious. But I can tell you We make antibody drug conjugates and our antibodies are targeted to a particular protein called TM4SF1. And in the drug development industry, those are called targets. And antibody drug conjugates are a complex drug. They have two targets. So you have the antibody binds to one target, and that picks which cells in the body you deliver a drug to. And then we have a conjugated drug payload, and that has its own target and the payload provides the efficacy for the drug.

In our case, the antibody target is very special. It's an almost unknown protein. The first antibody against it was raised in the early 1980s, but so about 40 years ago, but there's still only 167 papers in PubMed that reference the protein. And most of those are from, they're just general microchip assays, surveying the whole genome and saying, oh, this gene is highly, it's upregulated in cancer.

And so very small number of scientists have ever looked at it and done any science. Our scientific founders have done the great bulk of all of the academic work. There was one drug made against it tested clinically in the 1990s funded by Bristol Myers Squibb, who developed the antibody but they didn't know anything about the protein that the antibody bound to so I think they found out in the clinic that it was expressed on the vasculature but all they knew was the tumor cells also expressed it.

And they took it to the clinic, prospectively. And anyhow, so there's been, that one episode of drug development, and there's been, a few academics who have done a little bit of work but basically it's never never caught the eye of, even a dozen scientists in the world at any one time.

Eric Sigel: Paul, I have a question for you. So given that, so obviously in the title of the episode speaks to this, how long the process is, as you've, as we put it in the title long, it's a long time before revenue comes in and on top of that, you're going after, I mean, obviously novelty is important because you're like, okay, we're doing something different.

This is why you invest in us. But it sounds like this was even more novel than the usual novelty. How did that all come about? How were you able to get the VCs over the finish line on that?

Paul: We generally haven't. Most of them are still sitting on the sidelines waiting for us to prove that this approach works.

Yeah it, it is very challenging because people, generally don't want to be the first person to go into a new role. You know, they want to see other people at least dipping their toes in first. And and it's hard to get them to the level of confidence they need to make an investment.

And so we've basically, you know, we've raised 68 million to date in the life of the company. And about half of that has come from a group of investors around Peter Thiel. And half of them have been, I would call them my friends and family, but they're mostly people who got to know me and my prior businesses.

I have been a serial entrepreneur. This is my, my fourth company. And the one before this was a natural health business with a health retreat. And so a lot of our investors have been people who attended our health retreats.

And so I think uh, You know, as one of our investors said to me, I'm not betting on the horse, I'm betting on the jockey. And it's more I have confidence in you and you think this was important enough to throw away your career, start a new career and uh, you know, bet everything yourself on this. And and that's enough for me to join.

Jeff Sigel: So you mentioned that you were doing other things in your past businesses.

So how has that switch been from you know, sort of non biotech, world into the biotech world? Has that been, tell us a little bit about that.

Paul: Yeah. So it's definitely very different. The first business I started was a tech business during the internet boom. And, so I would say we followed more or less the classic tech entrepreneurial strategy that was articulated by Geoffrey Moore and others that uh, you know, you're trying to get rapidly to revenue. And you start out finding pilot customers who, may be enthusiasts who are willing to invest some time because they want to be on the cutting edge and see what's new and maybe you let them use it for free, alpha, beta, pilot test customers. And, you get some experience and you just keep gradually bootstrapping yourself and you start getting a little bit of revenue and you move from the most eager early innovators to to find that special niche of people who want to be on the cutting edge.

And eventually your customers help you evolve your technology. Till it...

Eric Sigel: Were you a product-based company or services?

Paul: Yeah. So that first company, it was basically a peer-to-peer networking information, serving the financial industry where we. Everybody could own their own information and decide who to allow access to it.

And so we would connect the financial industry and, mostly Wall Street banks with their buy-side financial industry partners and give people control over their information and how they shared it electronically.

And but the big difference is that you can get to revenue and it's a, and it's a race to revenue. And you have a, a way to bootstrap yourself where you can deliver a little bit of value, a little bit of revenue, and that persuades the investors to give you a little bit of funding. And then you can make a little more value, get a little more revenue. But the revenue really makes it a lot easier to build a company.

And it also gives you that, direct feedback on how you're doing, which investors need because, investors prefer to put in a little bit, see some positive validation and then put in more. And so people rarely put in everything they can at the first moment.

And in biotech it's radically different. So if it takes 15 years from the start of work to approval and revenue, and it costs 300 million dollars to do all that development and get it to approval. Then your investors need to have a lot of faith because, there's a long road ahead. And you need to keep finding new investors because no one investor has 300 million that they're ready to put on one bet.

And have to generate positive feedback and accomplishments, which allow you to continue fundraising. And you have to be able to get through that 15 years without ever running out of money. And so that can be a challenge.

Eric: It's been particularly challenging in the last couple of years, I know. My company, I tried to get funding for, and that did not work in the biotech space. Has there been anything that you've noticed? The last couple of years, have you just had enough kind of to keep you going and stem the tide? Or have you found the last, I'd say year and a half, two years to be particularly tough times for investment in biotech, at least.

Paul: Yeah, it has been difficult. So the the funds have generally they've had difficulty raising capital themselves. And so they tended to hoard what cash they have had and use it to support their existing portfolio companies. And and on the exit side, there haven't been a lot of exits.

And so they haven't had cash coming in from their old investments. They haven't had new fees coming in, and they've been very cautious about making a new investments especially when it's a, totally... A lot of investors in this space like to ride the wave, surf the wave, they want to see, oh, there's a wave going into shore and it's gonna, it's gonna hit soon and all I have to do is sit up with my surfboard on that and I'll be on shore in a minute or two.

Whereas if you're doing something totally novel, they really don't know how long it might take what kind of obstacles might creep up. And there's also the issue that, if they're the only one who believes in it, then to get to an exit, let's say you want to sell to a pharma company, typically the pharma companies will buy what's hot and, they don't want to be left out of a competitive space.

So in order to get to an exit, you'll need to build up, all of that sense of hotness. So you not only have to make your own product but you have to get a lot of people excited about it. And so for most investors, that seems like too difficult, or too risky a bet to make.

And so they all say, Come back to me when you have clinical data. If the drug is working. If I know the drug is working, then then it's an easy bet."

Elena: To get to proof of concept, so to speak, or clinical data is many years, very costly and need money to begin with. So if it takes a clinical to get a believer, what does it take to get a clinical?

Paul: Yeah, that's the challenge. And I think I, I couldn't, have done it unless I had a sizable pool of people who trusted me. And yeah when times were good like in 2021, we've been able to raise from large investors, but in difficult times like this funding winter that you mentioned in the last few years, I really had to go to my personal network and

Eric: go to the people who knew and trusted me and and persuade them. Paul, ADCs antibody drug conjugates are relatively more recent compared to small molecules and even antibody drugs. Does that complicate this in addition? So you're going after a relatively novel target, or you're going after a very novel target and you're going after it in a relatively novel modality.

Like how is that just compounding the the complexity or is it helping you to expand the hype or, how do you think?

Paul: So I would say, overall it's been neutral for us with our company. So when we started the company in 2015 there was a very negative atmosphere around ADCs.

So only two had been approved. The approval rate was viewed as the lowest of any drug modality. The manufacturing was seen as very expensive and risky, a lot of CMC risks. You've got a small molecule, you've got a large molecule, you've got conjugation, and, a lot of companies had failed.

Eli Lilly had gotten into ADCs and I'm told they they spent a hundred million dollars trying to manufacture ADCs and couldn't get the CMC problem solved. Lots of companies that kind of dipped their toe in it and then backed out. Pfizer had a strategy of being the world leader in ADCs at one point, but then in 2015, they decided to get out of ADCs entirely.

And that actually...

Eric: Sounds like the pharmaceutical industry.

Paul: Yeah. And then they, so they decided strategically to get back into it a year ago or so, and they bought SeaGen Seattle Genetics for $42 billion. Costly, moves in and out of spaces.

But getting to your question. Yeah. So at the time the company was founded, there was a lot of negativity around ADCs. And so it was hard to get funding on that basis for an ADC company from a venture firm or from pharma companies were reluctant to invest. But that didn't really harm us because we weren't spending a lot of money then.

We didn't need to to answer every objection and and then later on at, a critical moment in 2021 when we needed to raise the money to fund the IND enabling development. Some expensive work. We needed to raise about $30 million.

In that period, the number of approved ADCs went very quickly from two to 12. . And several of them were blockbuster drugs. And all of a sudden the industry got excited about ADCs and invested in ADCs. So we've had a good fortune at a number of points where the sentiment changed, at times we needed we needed money, the industry sentiment and the funding environment were favorable and enabled us to do it.

And the times when the sentiment was unfavorable, we were able to keep ourselves going with my friends and family.

Jeff: So I have a question, but there may be a little background noise here, so I apologize, but I'm interested in hearing from you, Paul, what is the role of I don't know, I'll call it business development, marketing, sales, et cetera.

As you are, in a revenue delayed situation, like we're talking about, what is the role of of, those traditional things that are used to drive revenue, but they really can't drive revenue right now.

Paul: Yeah. So relationship building is very important, but the relationships you need to build are fairly intimate ones. People are putting a significant commitment, either in terms of money or, time and engagement needed to understand what you're doing.

And they're often sophisticated or wealthy people who have a lot of claims on their time. So it's a little different than a lot of consumer industries or even business to business marketing, where, you know, in some ways it's easier because your counterparty in a typical business deal it's his job to scout out, the potential partners.

And so it is a duty to do some diligence on you and take your, hear your sales pitch. So it's it's an environment. You do need, there are some things that transfer from more traditional marketing. So when you're fundraising, you do need to think of a pipeline approach where you're opening relationships, getting people to think about you, building relationships so that you can at least talk to them and go back to them and maintain the relationship. And you have to be able to understand you know what their decision point would be and who would be the decision maker and get a some vision into how you would bring them to close. And then you know, be able to close at the right moment and with the right pitch.

So a lot of that general business, marketing, sales, relationship-building stuff does carry over but it is different. And and often, you do need quite long term relationships. So you better you better maintain your credibility and you better deliver on your promises and not have people lose faith in you.

Because, there's always ups and downs when you're building a company and and that can be external things. Like changes in market sentiment. It can be just, we're now in the clinic, just the flow of clinical data. Toxicity comes in at one point, efficacy comes in at another point, it's it can feel like a rollercoaster of valuation, and so it's hard to value companies at this early stage of drug development. And you're you have to assume there will be patients where a drug will work and patients where it won't work. And you're searching for them and and you're going to find both kinds and how the drug appears to an observer, if they don't really understand the science and how that works, it can easily put people off.

And and when you're, working with relatively short runway, if you don't have deep pocketed backers who are willing to carry you through all those ups and downs, then, that rollercoaster ride of appearances can put you at extra risk as a company.

Jeff: Absolutely. I'm going to actually jump in because ChatGPT likes to ask questions at about this point in every show. Let's see what craziness, ChatGPT came up with.

I always ask people, would you like absurd first or thought-provoking first?

Paul: Let's try absurd.

Jeff: Okay, let's see. Again, this is what ChatGPT came up with. I take no credit for this. This is a really bad one. It says, have you ever had a moment in the lab where you thought, we might be accidentally creating a supervillain here?

Paul: Oh, a supervillain. No, I've never I actually, I was a scientist before I became an entrepreneur. So I was originally a physicist, astrophysicist. But I never had an opportunity to create a supervillain. I don't know how I would go about it.

Eric: Usually it's an accident and then some, they fall into a vat of something and then it turns them.

Paul: Yeah. You may need some spiders or

Eric: Spiders. Yeah. Usually some genetically modified spiders and whatever. Yeah.

Jeff: All right. So here's the other, I don't know, this one's probably not thought provoking, but I'll ask it anyways, is how many cups of coffee per breakthrough does your team average and do you measure that in milliliters or gallons?

Paul: I won't speak for my team cause I don't monitor their coffee consumption, but I'll speak for myself. So when I started the company, I was a tea drinker. I had never drunk coffee, but I decided there's evidence that coffee drinking is good for your health. So I decided I'll take up coffee drinking. And I found I liked it.

And at one point in the company, I was I was drinking like six cups of coffee per day and I found it started affecting my cognition a little, and so then I decided I'd switch to decaf. And now what I do is I drink I, I just limit I'm back to caffeinated coffee, but I limit it, limit myself to two cups a day,

Eric: You'll have to start mixing the decaf with the caff, and then you can have the six cups again with the

Paul: I could, but I think, the two cups takes me a little bit through the day, and then I switch to tea, and then to herbal teas in the afternoon, so

Eric: Jeff asked, part of Jeff's question, was about your team. So I want to go back to something you said at the beginning of the episode about, about investors, investing in the team and, or who rather than the what, and I'm just curious, particularly since you moved from something that wasn't biotech into this biotech pharma realm.

How did you go about putting together a team in this space for these people that you knew from other contexts? Or did just get really good recruiters? How'd you do that?

Paul: I, yeah, that's a good question. So the so the way the company started, our science was actually discovered by my wife. So she was a biomedical scientist in the Harvard area. First at Children's Hospital, then at Beth Israel in Boston.

And so she discovered the science in which the company is based. And and I've been following along with her work. So I have 20 years of indirect experience with the biology of it. And, so she essentially discovered a biology that would permit the making of a drug that could potentially save a million lives a year.

And so me being an entrepreneur and it being obvious to me that if this just stayed in academia, nothing would ever come of it. And it needed a company and nobody else was going to create a company. So it really needed me to create a company.

But I told my wife, I can only do it if I have your help. So you have to leave your Harvard career and become a, a biotech startup employee. And she was willing to do that. And so that was my first and most important recruit. And and we also brought a technician from her lab. And so those were our first three employees.

And then I had to get a chemist. So she covered the biology and a lot of protein work. But we didn't have a chemist, and I was fortunately able to started attending antibody drug conjugate meetings and I met this chemist who led a workshop at a conference called World ADC.

His name was Ed Ha, and I was very impressed with him. What I was impressed with was that he loved science, and he had joined Genentech in 1999 as they were creating their ADC group. And so he was one of the first chemists in ADCs and he had seen a large part of the industry and he loves science.

So I stayed after the workshop and, cornered him and talked to him for 15 minutes. And and he was smart enough to recognize that, when I described our biology, that it was a very special biology that would, would enable making a great antibody-drug conjugate.

And it took about six months for us to bring him over. He was working in California at the time and he liked California, but but we did hire him and and he was extremely valuable to us. And then a lot of other, our other key people were consultants.

So one of the great things about this industry is there's a very large pool of senior consultants. A lot of people who have great experience at very high levels in the industry who after age 50 or age 55 or something, they still want to be engaged, but they want to have a little more freedom.

And the failure rate for drugs is so high that people people don't expect drugs to succeed. So actually they like being able to sample a lot of different drug programs simultaneously. And so you can get extremely talented people as part-time consultants in this industry. And when I discovered the quality of people we could get on a part-time basis I've relied heavily on people like that to carry us through this.

Elena: And also, Paul, you were talking a lot about building relationships and the importance of relationships in conducting business at an early stage, right? Which relationships have carried you farther at this point? Science slash academia? Or finance? Or you have to have this very balanced approach and do they influence each other? How does that work?

Paul: Yeah academic relationships, I'd say we, we still don't have very strong relationships. We have a very good relationship with Beth Israel Deaconess. That was where our scientific founders came from and we licensed IP from them. And that's a little more with their technology ventures office than with their scientists.

And we haven't done a lot of academic collaborations. We've been very focused on our drug making. The problem with academic timelines is they're too slow in many respects. They're grant based. It takes a long time to get a grant. And it's just it doesn't really work at the right pace, and it also tends to divert you into things that the funding agencies want you to do, or the paper reviewers want to see, instead of the things that are really essential. So we haven't done much with academics.

The business relationships we've needed fortunately, I would say the people in the industry, they recognize how transformative our technology can be. It's a very exciting technology. And on that basis, they're, really interested in us.

So we haven't had that much trouble getting people interested in wanting to follow what we're doing. But I would say, the most critical relationships in the sense of where I've spent the bulk of my time are investor relationships.

And then on the technical side, you do have to... there's a lot of challenges in manufacturing and quality assessment and analytical assays for a drug, especially antibody-drug conjugates have a lot of quality assays that they need — a more extensive array of assays than other drugs. And then all of the clinical issues all the, you know, all the differences among types of cancers in locations, different locations, and comorbid conditions that people can have and how do those interact with the drug. And, charting a path that's going to be the most efficient path to figuring out the best way to treat and bring the most value to cancer patients.

That's definitely it's a fascinating scientific problem. It's one we've had to do mostly ourselves. But fortunately we're, I would say we have world-class scientists as a founding team. And so we've been able to do a good job of it.

Eric: This is a fantastic story. Paul we have hit the 30 minute mark and then some at this point. So we are we're going to have to wrap up soon.

But before we go, we always have everyone go around and give one thing they want to leave our audience with. I always joke that it's a hazing ritual to make our guests go first. So you don't have any time to think about the one thing you want to say.

And then I always get, I always go last, so I get the most time to think about it.

I'll let you give one thing to leave our audience with.

Paul: All right. I would say, we've talked about the importance of relationships and I would say, don't, if you think a relationship is key, don't hesitate to win it over through.

You know, like, stores have lost leader promotions -- they'll put something on sale and they'll lose money on that in order to get you into the store. And then they'll you know, sell more things later.

And so for example, on our investor side one of the reasons Peter Thiel came in at the seed stage is we did give him a great deal. And but that relationship was very valuable to us.

So you do have to be forward looking. You can't give away more than you have to give. So you can't give 200 percent of your equity away to get investors in, but but definitely you need to uh... the most important thing is to build a successful business. And so you need to chart out what are the key relationships and how am I going to make this a good deal for everybody who has to build this business.

Jeff: Thank you, Paul. And this has been a terrific conversation. I will go next, but before I jump in, what is the best place if people want to reach you connect with you, what's the best place to do that?

Paul: Yeah if you go to the contact page on our website, Angiex. com, there's a variety of ways to contact us.

Just a general contact email, info@angiex.com. There's a form there. We also give our investor relations email, invest@angiex.com. And our clinical trial team, if you're a patient wants to consider participating in our clinical trial, you can write to trials@angiex.com.

Jeff: Awesome. I'm going to build on what I think we've been talking about a lot towards the end of this conversation for my one thing, which is: I keep coming across this basic idea that fundamentally all business is built around trust.

And so as you tell the story about where your funding came from and how that all works and so forth. Then the end of the day, it's, do people know you, do they trust you? Do they believe in you? And so back to the point I think you were making and Elena was making is that building the relationships is in some ways is the whole, that's the whole thing, right?

You're trying to, you're trying to build relationships so you can gain that trust and so forth. I with that, I'll pass it over to Elena.

Elena: Thank you. So mine was slightly different and that is how much perseverance and ingenuity and push it takes to get a business off the ground, even if the business is as needed as what you're doing, Paul, right?

For all the talk, the, you know, curing cancer is still remains, an aspiration, right? In many cases, so it's needed and the work is needed. And that's fascinating to me that you actually have to, clear so many hurdles. This is the world we live in.

We live and learn and wish you, great success in clearing the hurdles and hopefully the results are so amazing and convincing right off the bat that, all the money you need jumps in to help you bring it to market.

Eric: Thank you. Yeah. I'm gonna play off of this whole balance, that you've described, I think throughout this of it's now, it's not just going out to the big investment firms.

It's also making those relationships on a personal level. And I also was really, I'm really intrigued that you were able to capitalize on that balance in order to take a really novel target in a relatively maybe slightly more risky, a little bit more risky, space of antibody drug conjugates, et cetera, and make it work to the extent, that you're at that position you're at now, which is fantastic.

And we are, we'll be eagerly watching Angiex to see how you're doing.

And thank you so much for joining us for the episode.

Paul: Thank you.