Gm! Wishing yāall happy holidays (before powerful AI kills literally everyone). š
[Welcome to Issue Number 46 ofĀ The House Brazeryen, where we break down the latestĀ #startup, #biotech, and #ScientistCEO-related news for you fortnightly, in roughly 5 minutes. Brought to you byĀ Brazen CapitalĀ andĀ brainsurgerydropout.]
Was this forwarded to you? Mash this subscribe button, homie.
Ode to the Scientist-CEO: CROs (pt. 1)
by W. Shawn Carbonell, MD, PhD ā In the famous Crunchbase article from last year I summarized generally why I believe scientist-CEOs should be founding and leading startups (rather than non-technical serial entrepreneurs and krusty pharma veterans). This is the first in a series of posts where Iāll dig into this deeperā¦ drawing on my personal experience and with a focus on building startups from zero. LFG.
Virtual biotechnology
Big infrastructure transformed tech startups (e.g., AWS), allowing SaaS companies to operate leanly and virtually. Rather than needing to raise a couple million to build out custom infrastructure (e.g., servers), engineers today can get started with just a credit card, a laptop, and wifi.
Similarly, noob biomedical startups have benefited from contract research organizations (CROs) and the availability of turnkey laboratory incubators with month-to-month leases to operate much leaner (and alsoāin some casesāvirtually). Thus, viable biotech companies can be founded for five- to six-figures, possibly less.
[For instance, my biotech startup was bootstrapped initially through my second postdoc (unbeknownst to them), subsequently by cashing out my meager retirement from said postdoc (around $10K lol), and then by raising a low six-figure friends and family round.]
Outsource the work, not the science
The key thing to remember when outsourcing in biotech: garbage in, garbage out.
Each project requires strong scientific leadership from the startup. You should look at CROs as merely scaling your scientific program by outsourcing the laboratory labor. YOU are still responsible for ensuring delivery of usable results. YOU are PI.
Unlike academia, however, the CRO scientists have very little stake in your project or results. In fact, if they screw up or misunderstand aspects critical to an ongoing study itās often a good thing for themā¦ you likely have to buy more studies and they make more money.
So, my best advice is to be as hands on as possible and try to observe studies, outputs, and results in person, with your own eyes.
Doing so, saved my company.
The CRO tech that nearly killed my startup
Safety was the largest concern in the development of my therapeutic. The dogma was you could not target our molecule of interest (i.e., beta1 integrin) without massive toxicities. So, one of the most critical studiesāonce we had a pilot batch of drug substanceāwas a go/no-go pilot toxicity study.
Our viability as a company depended on it.
Thereforeāas a proper scientist-CEOāI drove two hours each way to the CRO several times in order to observe each part of the studies. The initial infusions went off without a hitch and no clinical toxicities were observed acutely. Triumphant, I headed back to San Francisco. By the time I got back to my lab, however, I had an email from the study director: after awaking from anesthesia, one of the animals was found to be bleeding from the rectum.
The next several days of waiting were agonizing. Thankfully, the animal was clinically normal and gaining weight, both good signs. But, if the bleeding was drug-related we were finished.
On the day of the necropsy, I made sure the veterinary pathologist ran the entire bowel of that animal. It was a long day of necropies and they were going to try to skip that. Near the rectum, they found a perfectly round perforation (hole) with signs of normal healing.
At that moment my initial suspicions were verified: on the day of the infusion, the technician perforated the bowel with the rectal temperature probe. When I mentioned this, the entire atmosphere in the room changed and the CRO personnel went into silent mode.
I went: āuh ohā¦ā
BRAZEN BREAKDOWN
I suppose it isnāt surprising employees of a CRO would circle the wagons around one of their own. But mistakes happen and how people handle the aftermath is critical. Do they immediately investigate and try to make it right or do they ignore your emails and stop picking up the phone?
In this case, the CRO technician and study director would rather cover their own asses and potentially destroy my drug program than admit they fucked up. And thatās fucked up.
Luckily, two years laterāin the definitive tox studies that I flew 3,000 miles each way to observe in person several timesānot one animal after infusion of my drug had bright red blood oozing from a mysterious hole in their rectum the exact diameter of a rectal temp probe! š¤Ŗ
As we all know, my drug did finally make it to clinical trials. But it was only possible because seven years earlier I saw everything with my own scientist-CEO eyes.
VC CORNER: Looking Back at 2023
byĀ Scott Alpizar, PhDĀ ā After weeks of term sheet negotiation tips, I think itās time to call it a day. Actually, letās call it a year! Weāre (rapidly) approaching 2024, so I thought it would be a good time to look back at 2023. And by āIā, I mean Atlas VenturesāBruce Booth recently shared their 2023 Year in Review. They went deep on the biomedical innovation trends this past year. Letās dive in!
BRAZEN BREAKDOWN
Biomedical Advances. The first section of their update looked back at work being done in different disease areas. Ā The quick summary: obesity is hot, oncology is crowded, and weāre moving broader.
If obesity is āsolvedā, other comorbidities may become less common. How does this impact the market for what youāre building? If youāre in oncology, know that youāre likely competing with 11 other assets for your target. And the rare disease/precision approach is a thing of the past, as the broader Ā reaching opportunities are getting all of the attention.
Iām not saying to pivot based on this, but you should certainly keep up with whatās going on. Itās never too early to start thinking about where you fit!
Research & Development. R&D productivity is driven by three factors: risk, time, and cost. Right now, risk is elevated. Success rates are below the ten-year trend in nearly every disease area. It also still takes ~10 years to get to a drug registration, which has been steady for the last decade. In terms of cost, it still takes an arm, leg, and your first born to get a drug to market.
There are also external āindustry risksā to overlay across these factors. The Inflation Reduction Act, high interest rates, and new patenting limitations will all influence how drugs get to market. Itās certainly tough out there, but understanding the challenges you may face is always beneficial.
The Venture Ecosystem. Biotech performance has underperformed every other sector by a wide margin. I imagine itās partially because of that that we see funds leaving biotech for less risky investments.
Generally, VC is down from its peak, but fairly stable. However, first time financings are down by about 60%. New investors have largely left, though the big funds are still investing in biotech. So if youāre still wondering why itās so hard to raise money, these may be some more specific reasons why. Ā Ā
The presentation (which shares the sources for the information above) finishes with a comparison to the last time we saw similar trendsā2003. The consensus is that things wonāt end up as rough as they did then, but only time will tell. In the meantime, be sure to take this information into consideration as you think about your end goal and build your company in 2024.
š BRAZEN THOUGHTS
āWe have unfortunate access to greatness. We assume that they started far ahead of usā¦ [but] we admire people at their peak. We donāt see the distance traveled.ā āAdam Grant
š BRAZEN SNAX
š¤ Google publishes breakthrough AI paper in Nature. Meanwhileā¦
šŖ We do not know how to make an AI which does not kill literally everyone
š Luxury journal version of the 30 under 30: Natureās 10
š¤¢ The evolutionary basis for morning sickness: protect fetus from toxins?
š¦¾ Insert joke about augmentation with a robotic third arm HERE
š§¬ Ā The three things MISSING from Bryan Johnsonās longevity routine?
š Iceland is burningā¦ the fourth volcanic eruption hits different
āš½ Harvard Business Reviewās guide on how to create your own Year in Review
ā° TikTokCrak:Ā What if you let AI zoom out on your photos? (hello black mirror)
šŖ CARVEOUT
Ray Dalio really doesnāt want you to read the unauthorized book, āThe Fund: Ray Dalio, Bridgewater Associates, and the Unraveling of a Wall Street Legendā. Internet reviewers have called it everything from a ābiased hitpieceā to āA cautionary tale about sycophancyā. My favorite review said āā¦the title of the book should have been: The Dark Triadā (Shawn wrote that review).
šš½ A DOSE OF GRATITUDE
We are grateful for AI for turbo boosting our science review and diligence processes. Particularly, claude.ai where you can upload PDFs and other files and query the contents. Of course, that doesnāt mean Claude wonāt eventually kill literally everyone.
š BRAZEN MEME
āļø FEEDBACK
Leave a comment and letās continue the conversation on X:Ā @brazencapital
The story about the CRO was really amazing. That kind of experience is so valuable.