Where's the Promise of Biotech? Featuring Peter Kolchinsky

Greg Dowling (00:07): Welcome to the FEG Insight Bridge. This is Greg Dowling, head of research and CIO at FEG. This show spans global markets and institutional investments through conversations with some of the world's leading investment, economic and philanthropic minds to provide insight on how institutional investors can survive and even thrive in the world of markets and finance. In June of 2020, during the midst of the COVID-19 pandemic, our next guest, Peter Kolchinsky of RA Capital, was part of an FEG podcast called "The Promise and Hope of Biotech." They successfully predicted the release and relief from a COVID vaccine. There was, however, also a lot of investment hope and optimism for new medical breakthroughs, potentially ushering in the golden age of biotech investing. Instead, it has been one of the worst periods for biotech. So what happened to that promise? Peter will explain exactly what happened, hear about a new hope and optimism for the industry, learn about new trends and also get an update on the current regulatory environment. Peter, welcome to the FEG Insight Bridge.

Peter Kolchinsky (01:21): Thanks for having me.

Greg Dowling (01:21): Before we get too far into the main topic, let's have you reintroduce RA Capital.

Peter Kolchinsky (01:28) RA Capital is a firm that's been around for about over 20 years, really, historically focused on the life sciences, a lot of biotech drug development. Myself, I'm a scientist by training, and most of my colleagues are as well. We have some clinicians as well so a whole lot of advanced degrees. We're deep into all the science of diseases and how to solve them. And at this point, we've got over 100 portfolio companies working on all kinds of new technologies, devices, diagnostics, drugs, as I mentioned, some healthcare services, and we've evolved to invest in science really in whatever form. It can be a public company. It can be a private company. We can form companies from scratch. We've grown to be one of the larger firms in our sector.

Greg Dowling (02:12): And how did this all start? So how did you get into the investing side of the business?

Peter Kolchinsky (02:18) A bit of an accident, really. I thought that coming out of grad school, I'm a virologist by training, that I would learn about the business of biotech and maybe help invent a technology, someday be CEO of my own biotech company, That was what I kind of aspired to when I was a kid. And I say kid now. Anybody in their 20s is a kid to me, so I was a kid then. I applied for a job at Vertex Pharmaceuticals, emailed a gentleman by the name of Richard Aldrich, who was the chief business officer there. And he emailed me back and said, "I'm not the guy to talk to anymore. I just left." I was curious what he was going to do next because he was a very experienced and well-regarded individual in the world of biotech. And he was going to strike out on his own, do some consulting, some private investing, maybe help form some companies. He ended up giving me a job offer to basically be his science sidekick. So he's a business guy. I was the kid with PhD. And it was the coolest offer. Had I joined Vertex, I would have maybe been in a meeting with him once a month and pitch something and sweat through my clothes. And now I got to share an office with him and ask him whatever questions and learn about biotech in all these different ways, some consulting, some private investing, as I mentioned. And so we started working together in May of 2001. And by the end of the year, he narrowed my job down to, you know what, let's not do this consulting thing. It's not going to move the needle for me. And let's not do private investing because it's going to bankrupt me. Biotech, he described at the time as a great way to make a small fortune if you start with a large one. And he focused me on an account where he had some money, about $4 million of cash and some biotech stocks. He's like, why don't you figure out what I should be trading in here? And in the meantime, since I know you want to nerd out elbow-deep on science and new company formation, I'll keep a lookout for companies where I can get involved as a founder, and I'll pull you in on those projects as I see them. And so really, that was the beginning of 2002 when my job morphed into essentially being a hedge fund manager, though I didn't know it at the time. I was just a kid picking stocks for my boss, right? And over the next couple years, I was a little bit good and a lot lucky and more than tripled his money. And I got the bug. Suddenly, I didn't want to be a biotech CEO. It's like, hmm, maybe I want to be a fund manager. And Rich was like, "You're doing great. I got friends and family that want to invest. Why don't you turn this into a fund?" I had a friend, Raj, who was also interested in biotech stocks, and we would chat stocks sometimes. And he reached out to me and to Rich and was like, "I'm thinking of going to business school so I can learn to do what you do." And I was like, "I didn't go to business school, so maybe that would make you better. But if you're game to learn on the job, why don't you come join me? I need to institutionalize this. I need more bandwidth, and we can learn together." And so Raj joined me as my analyst, I guess, middle of 2004. But over the subsequent years, you know, he really became my partner, my co-portfolio manager. And I would say that the beginning of RE Capital was really in 2004, when Raj joined me, and we built the firm together ever since then.

Greg Dowling (05:18): I love it, circle of life, and I also like your comment, a little good and very lucky. That always helps. So for the longtime listeners of our podcast may remember that you were on in June of 2020 during the midst of the COVID-19 pandemic, and we had a great panel. And you guys, along with another individual successfully kind of predicted that we would have a vaccine pretty soon, and it would provide the relief that we are all looking for. We're all looking to get out of our houses, right, and get off of Zoom and back into the real world. So that happened and not only amongst the podcast, but everywhere, there was this great hope and optimism for biotech investing that all of a sudden, we'd have all these major medical breakthroughs. So, Peter, what happened? And maybe they've happened. We don't know about it. Maybe it was overhyped. What happened?

Peter Kolchinsky (06:10): It did happen. We have gotten some great breakthroughs over the last 5 years. But I think the enthusiasm for biotech that COVID sparked, it was fleeting. And I've been a biotech optimist my whole life. I love this field. I love what's possible. I can see what's possible. And it struck me that someday, more people will appreciate how powerful these technologies are and how valuable they are. And COVID seemed to get the public's attention. Everybody was talking about biotech. When you now look at what we had accomplished over the prior 20 years, or, I guess, 18, at least the beginning of my career as an investor in 2002 through 2020. the idea that all of that, coupled with now the public appreciating biotech, that, that would result in even more success. That wasn't crazy. Looking back, I do feel a little bit silly thinking that somehow the public would be permanently changed by this. In truth, the public has a very short memory. It forgets lots of things. It quickly forgot about biotech as soon as the pandemic was over. A lot of companies raised a lot of money at that time, valuations in retrospect, to get ahead of themselves. And so there was a correction, but then the correction really extended for a lot longer than I've ever experienced in my career, and it's been humbling. I'll tell you. And what you come to appreciate is that when there's a downturn, people will look for evidence of why that downturn is rational and should remain down everywhere. They'll find it. They'll confirm all their worst thoughts about the sector. And they keep asking, well, when will biotech start working? The thing is, is that biotech, which is still down like 40 percent from the end of 2020, depending on which index you look at, it's not broken. It's just reset to a lower value. And there's plenty of stuff in biotech that's working. And so one can be a successful investor in biotech, even if the sector is flat. If you look back, you could say that the sector has been flat for a decade. Then again, my first decade as an investor from 2002 to 2011, it was flat. It was volatile but flat. And yet we generated a huge return. If you generally focus on the above-average companies and don't let your performance get weighed down by the below-average companies, you'll outperform. And if you happen to focus maybe on the top quartile companies, you'll do even better. And if you do some rigorous analysis, that's possible. So now couple that with building companies from scratch, having a better sense of competitive landscapes and what it is that pharma is likely to want to fill the gaps in its pipelines. And it's possible to outperform by quite a fair bit. That doesn't change the fact that people still index to the indices. And so they -- Well, biotech is broken. Meanwhile, I would say, take a look at how well the good fund managers are doing, right? And realize that's the opportunity for you unless you really want to invest merely in an index. The real opportunity for any institutional investor or high-net-worth individual is looking at the way that people generate alpha with their hands like elbow-deep in the sector.

Greg Dowling (09:22): We would recommend for a lot of people that in very efficient parts of the market, large cap US, that they consider at least a portion of it to be indexed, right? It's really hard to beat the markets. We don't recommend that for people that want to be in biotech. These are not great indexes, right? And so this is definitely to your point, a place where active management should provide the excess returns over any index or anything that you use.

Peter Kolchinsky (09:48): I would agree. We see it in our own work all the time. It doesn't mean that we're not going to get dragged down by the tide going out. There were periods where it was vicious. Those are also the moments when you've got really rich opportunities. We've now persevered through so many cycles in biotech, so many ups and downs. You see that you can withstand the downturns. You get paid down the road. You get paid on the recovery. You've got great companies that were started by others, had a lot of money poured into them. Maybe a clinical trial went a little wrong, and those companies are just flushed. Their valuations are like below cash, but you learn from that, and you can rescue success out of the jaws of failure then generate a huge return. So you've got to stay in the game and not give up simply because you happen to be on the downstroke of the roller coaster.

Greg Dowling (10:35): Getting back to those COVID times, you're right in your comment about a lot of companies took advantage of the window and IPO-ed, and maybe they shouldn't have. And so there are probably some companies out there that, yeah, they trade below their cash value. But there's cash burn, right? Because you're constantly trying to get through your trials, and you may not be cash-flow-positive. And so has a lot of that washed out? Or is that still an issue?

Peter Kolchinsky (11:00): We do this analysis. We write a lot, by the way. So anybody who's interested in learning about biotech can go to our website, rapport.racap.com. You'll see tons of -- It's our blog, our journal. There are these pieces called "Semper Maior," "Always Better," that we put out where we debuted this analysis where we actually look not at all biotech companies by count. If you did that, yeah, it would be pretty depressing. If you hold all the CEOs of this sector, you'd find that the number of CEOs that are running microcaps, companies below cash, is just this gigantic block of CEOs, and it's really depressing. But if you actually look at only the companies that at least one specialist owns, and then you market cap weight them, right, because that's where people have their money, what you realize is this sector is really driven by a subset of much more successful companies, companies that have positive enterprise value. They're actually well-capitalized. They're executing to plan. And so if you adjusted the volume of what you're hearing coming out of this sector based on whether these companies are in specialist portfolios and based on their market caps, it's a much more confident sound. You're hearing people inspired by the data that they're generating. We're seeing constant progress. Sure, companies fail. That happens normally. But all of a sudden, all that noise of all these companies that are trading below cash just goes away. All those companies, and there's over 100 of them, winked out of existence. It would barely move any of the healthcare indices and barely impact, if at all, the portfolios of any specialist. They've already been flushed. Now, there's a few gems in there. So we may resurrect some of these companies with a pipe. So they're opportunities for us, but they're not liabilities for us. And so we urge a different way of looking at the sector that ignores the count and really does a market cap weighting, and it gives you a much better sense of how much healthier the sector actually is.

Greg Dowling (13:01): You made the comment about the sector specialists so your peers. As the tide has gone out, are you then fighting against other specialists? Or are you just kind of trying to best position your portfolio when the tide comes back in? Is it more helpful? Or does it make it harder that only the really specialized players are left?

Peter Kolchinsky (13:20): You can look at the 13F holdings, right, for companies, who owns them. And it is not just specialists. There's tons of other money out there. When generalists so-called flee the sector, it's just a slight reduction in their exposure. They're very much there. We're not waiting around for generalists to decide that they love phase-one companies. Maybe they'll never love phase-one companies. That's okay, just take that into account, recognize that you have to capitalize each one of your companies well enough to get to a data set that will blow people's minds. And if at that point generalists don't find it compelling or if, say, specialists don't have enough money to flood in and like prop that company up, well, you've still got the pharmas. The pharmas are sitting on $800 billion of purchasing power right now. It would take, I think I just did this calculation, 2.6 years of the free cash flow of the top 20 biopharmas to acquire every single development-stage public biotech company that has a valuation under $10 billion for 100 percent premium.

Greg Dowling (14:28): Why hasn't that happened yet?

Peter Kolchinsky (14:29): Oh, it is. It's absolutely happening. We've got the -- 2025 is shaping up to be one of the strongest M and A years on record. 2023 was probably the strongest year ever for the sector. The sense people have that M and A is depressed is merely a temporary low in 2024. But M and A doesn't abide by some 12-month period. If you just smooth it out over a 24-month period, you'll see M and A has been steady and strong for a very long time.

Greg Dowling (14:56): You're absolutely right. This year has been a very good year thus far. But, gosh, I've been hearing that argument for years and years and years. And it's been steady, but it hasn't been this tidal wave of activity when things were dirt cheap. Is it a different administration? Is it just that their pipelines are now empty? Why has pharma all of a sudden in the last couple of years started to make some bigger purchases?

Peter Kolchinsky (15:19): In our letters, we got a lot of data on this, I would make the case to you that our sector has been growing over -- Actually, you can consider our sector to be as old as I am. I'm 49. Genentech was founded in the year that I was born. I think that was the first biotech company.

Greg Dowling (15:36): That was the big one, yep.

Peter Kolchinsky (15:37): Forty-nine years old, and you're pretty useless before you're 10. You're just learning a few basic things. What memories do you even have before you're 10? Hopefully you were loved by your parents, that kind of thing, right? And then you learn a few things as a teenager. Your 20s, you're maturing. Your 30s, you're really growing into your professional peak. Your 40s, hopefully, you're in your prime, right? And that's where biotech is, I would argue it's in its prime, we've got tons of learnings from tons of technologies. We needed a much broader tool set. We've got RNAI and ex vivo gene therapy, we're now doing in vivo CAR T therapy. The number of tools, it's like we've got this giant Home Depot that you can walk into for any project and pull the right tool off the shelf. We've really compounded our learnings over this period of time. And pharma has grown with biotech. It's grown with the healthcare sector. Novel medicines have comprised 8 percent of healthcare spending basically for the last, I don't know, 60 years, even before biotech. As the healthcare sector is grown, 8 percent is more and more money. So cash flows keep growing. And the idea that the absolute dollar value of M and A would be higher in the last few years than in all past years, that's just rational. That's just a growing sector. And so it will continue to grow. I think if you look out 10, 20 years, you will likely find that healthcare spending has grown with the US and global economy, and novel medicines will probably still be 8 percent. That means pharma will be bigger and richer. But pharma is constantly battling its products going generic. Apple and Google and all these other technologies, they might be able to milk their competitive advantage for God knows how long. Google would have kept milking it if not for AI, right, disrupting it. Whereas the drug industry knows that when its patents expire, it's over. No one has to invent a better drug in order to take you down. Your drug just has to go off patent, and then tons of generic companies get to make copies. And those copies work great. People are still taking statins because human biology does not change. We're constantly having to compete with all the great drugs we've invented in the past. And pharma is constantly trying to innovate, innovate, innovate. And they have farmed that out to small, nimble, creative companies for decades. It's not a mistake. Pharma hasn't said, God, I really hate these biotech companies. They're all so much smarter and faster than us. They basically said, hey, let's make sure that we cultivate this garden of seedlings, and we'll do some partnerships here and there. We'll set up some venture firms. They talk to investment firms like us, and they know full well that it is better to keep these things on the outside of their own giant bureaucracies and only bring them in-house when there's kind of a clear line of sight to what needs to be done to launch the drug and turn it into a blockbuster. We're all in this thriving ecosystem. If you judge it by indices, sure, it looks like it's got good years and bad years. But the truth is, the underlying science of it is thriving. These pharma companies, as they grow, they have to replace more and more lost revenue. The bigger last year's blockbusters are, the bigger this year's drugs have to be to replace all that lost revenue. This is the underlying first principle that I think investors sometimes overlook when they over-index to what do generalists think of biotech.

Greg Dowling (19:08): I love the comment about the biotech Home Depot. That is very descriptive. I love it. I wanted to kind of hear what you're interested in and where you're kind of focused at. And I thought before we did that, I'd maybe let you explain to listeners what TechAtlas is and sort of how you kind of find some different areas to maybe fill in the blanks.

Peter Kolchinsky (19:29): Yeah, sure. For our first 10 years as a firm, I would say that the way that we did diligence on companies and evaluate a deal flow is probably pretty standard. You know, we would meet with companies. We would take notes. We would try to pick good stocks. And we had a small team. You could just talk to a member of the team and share knowledge and share notes. But as biotech grew by 2011, 2012, it was starting to get a little bit overwhelming keeping track of all the different companies that were working on besting each other at solving a particular problem. You started to feel like if you just started to try to read a report about companies that are working on lung cancer or multiple sclerosis or diabetes or heart failure, by the time you got done with the report, you'd forgotten how it started. Somehow reading 100 page reports was no longer a good way to transmit knowledge. So we developed a graphical approach to mapping out entire competitive landscapes, mind mapping, basically. The purpose of this was to make sure that we could literally all stay on the same page. And we have some high-resolution examples of these maps. During COVID, for example, we put out our maps almost in real time. It's a rare case where we shared our intellectual property with the world, given the great need to end the pandemic. But otherwise, this stuff is confidential. But we do have some high-resolution old maps like Parkinson's and hepatitis C. And what these maps let you do is clarify your thinking to ultimately say, all right, there are 100 companies working on lung cancer, but they really fall into several themes. There's immuno-oncology, and even immuno-oncology is broken out into things that rev up the T cells, things that take the foot off the brakes of T cells. Those are complementary approaches. There are direct growth inhibitors. Those work typically for cancers where immuno-oncology won't work as well. Right? And you start to realize that not all companies are competing with each other. Just because two companies are working on lung cancer doesn't mean you have to pick the better company. You can invest in both. They're complementary. They can both win at their respective segments of lung cancer. And so when you have a clear understanding of a complex landscape, you can be much more decisive. And it's really critical in a fast-paced sector like biotech that every member of your team be as decisive as possible when they're meeting with that company because whoever it is that spots that a company is actually great and begins the courtship process of leading that investment, of getting that allocation and their financing, that's the firm that wins. And so by essentially re-diligencing hundreds, thousands of companies now in our sector and having a thesis on all of them and, frankly, being able to show companies when they walk in our office, here's our landscape of your subsector. Here's how we view you. Sometimes the companies will say, oh, that's not really how we see ourselves. They'll correct our thinking exactly at the point of misunderstanding. Well, that might take somebody else three meetings to get to that point where suddenly they realize, oh, wait, I've been looking at you wrong. Whereas here we're jumping into meeting number three right from the beginning. Or other times they'll look at the map and be like, damn, I didn't know that about my competition. This is amazing. And they'll really lean in as they want to get to know you. And later when you offer them a term sheet, it can mean a lot for a company to know that after that much diligence, you chose them, right? And so essentially TechAtlas is a discipline for staying on top of a very complex landscape. It's our internal think tank.

Greg Dowling (23:03): Let's use TechAtlas, and let's use that lens and maybe give us an example of one where you recently built out that you have interest, or maybe there was a gap that you helped stand up a company. How have you used it more recently?

Peter Kolchinsky (23:16): A good example of TechAtlas, which we asked the TechAtlas team to help do this routinely, is when you have a portfolio company that invents a new kind of tool, let's say the ability to edit RNA in vivo so not a permanent genetic modification but to correct the transcript that's made off of the gene. It would be like you meeting some inventor that's like, I've invented a socket wrench. And imagine if that person said, I've invented a socket wrench, and I plan on selling it to NASA for use on the space station. Look at that, it's like, really? Is that the best use of this tool? Because there's so many applications of socket wrenches. If you rubberize it, you can sell it to electricians. If you make it sort of grippy, you can sell it to car mechanics. Bicycle repair guys probably need tons of them. There's lots of them out there, and you probably don't have to make it out of high-grade titanium that won't create any metal shavings the way that you would for NASA. Why don't you save NASA for your tenth client? And so when you can do anything with your technology, you got to figure out what you should do. Of anything that you can do, what should you do? It's the hardest question to answer for really any kind of technology company. The tech sector has this. You've got to find product market fit. And so when one of our companies has a technology like we can edit mRNA, that's where the hard work begins of, okay, so of all the diseases where you could apply yourself, let's take a look at the competitive landscapes and figure out where is there a gap such that even if all the other companies that are currently trying to solve that disease, even if they're all successful at what they're trying to do, there will still be a need for your technology. Because if you can do that, you're not threatened by the possible success of all the other companies that are ahead of you. You can take your time and figure out how to reduce your good idea to practice, and there'll still be an unmet need for your drug. And companies get that wrong all the time. They go for a crowded landscape where later on, someone else succeeds and shuts the door to their slightly different, maybe slightly better but not better by enough technology. We would love to create an AI, by the way, that does this automatically, some kind of algorithm does it automatically, and we found that we can't. After years and years of trying to systematize it, this question, which is at the heart of all innovation and getting the most value from your discovery, just requires smart people brute forcing a problem, considering all these landscapes and assimilating all the nuances. We've got a cool technology for making oral biologics right now. And our team is considering, yes, but of all the things we could do, what should we do? And so maybe if we keep this up for another 5, 10 years, we'll have enough training data that some AI will be able to do it well, in which case one of the core functions of TechAtlas will have been AI-ed. That may be one of the hardest problems there is to crack. The day AI can do that well is the day that I think it's solved the hardest problem on earth.

Greg Dowling (26:15): Well, I'm glad AI will not replace you the next year or two. That makes me happy, Peter.

Peter Kolchinsky (26:19): Look, if it does, then all of our TechAtlas associates by that point will have ascended to company builders because I'm pretty sure that AI at that point will not substitute for the actual people that are elbow-deep in these companies doing the work analysis AI is welcome to do.

Greg Dowling (26:36): I wanted to ask a little bit about the impact of the Trump administration and Robert F. Kennedy on just health policy, FDA approvals. What's going on? Has it been better, worse, just different?

Peter Kolchinsky (26:50): Look, it was chaotic, certainly. In fact, you'll see in our letter tomorrow that we put this little line on our performance charts where we show you the election. Here's the election. And you see biotech had been on the ascent, recovering from its downturn and then just turns right around and starts going down. This administration has created a lot of challenges and a lot of uncertainty. But when you shake up stuff as destructive as that can be, sometimes there's also an opportunity for the pieces to fall into a better place. It's been a lot of work for leaders in our ecosystem. And I've been working with a lot of them to try to inform the current administration on here are the harms, please consider doing things differently, don't defund or don't eliminate certain roles at the FDA, et cetera.That seems to be improving, seems to be stabilizing. We continue to study every single decision the FDA makes to try to better predict what this FDA is going to be like going forward. They do seem to be focused on, how can we be more efficient than in the past? I think RFK's views on vaccines are extremely problematic. He's not really driven by science, and that can be frustrating. Honestly, vaccines kind of will defend themselves. Vaccines are this fascinating type of technology where when you decide to stop using them, disease reminds you why it was a good idea to keep using them. And while it would be tragic to see children dying of measles, the reality is, if this administration successfully talks a lot of people out of using vaccines, then measles will remind everybody why they should go back to using vaccines. I would worry more about the possible impact of bad policy on discouraging investment in the development of new medicines because it's very hard to miss something that doesn't exist yet. Vaccines people may use less of, then they'll go back to using them again. But you'll never know what kind of drugs you could have had for Parkinson's or Alzheimer's or whatever if you end up passing price controls or doing something that discourages investment in new medicines. So I've been really attentive to that. So far, this administration seems to be staying away from anything that I would consider long-term harmful to continued R and D. The past administration, frankly, with its efforts to impose price controls on novel medicines posed a bit of a challenge. And we were able to, I think, ultimately inspire defenders of innovation within Congress to fight off the worst policies. And we got policy that is on the whole pretty good, lowered out-of-pocket costs for people, which is critical to solving affordability. It imposed price controls 13 years after a biologic launches, which is about how long drugs normally get patent protection for before they go generic. The average was about 14. So 13 is close enough. And then the one flawed element of that policy was that they imposed price controls on small molecules merely 9 years after they launch. That was passed in 2022. Here we are in 2025, you already have a bill before Congress, the EPIC bill, that proposes to fix that so-called pill penalty by changing 9 to 13 so that small molecules and pills get 13 years, just like biologics do. And so in the grand scheme of things, if it takes them another few years to come around to fixing the pill penalty, it'll be a blip in the whole history of drug development. It kind of shows you that all of us in biotech, we can't just sit back and take the policy that emerges from Washington. We have to stand up. We got to teach what we know. We got to shine a light on everything from the patent system to market-based pricing to manufacturing. Everything that goes into our work, we've got to teach it and inspire the public to love what we do so that they don't vote to dismantle it. And I think our industry has been waking up to it, doing a better and better job. When I look over the next 10 years, I think that odds are we will see less of these kinds of threats over time. But they've created noise. That noise compounded with a tariff panic created a real discontinuity in April. It was insane. Thankfully it has largely been resolved.

Greg Dowling (30:54): We're revisiting the hope and promise of biotech from our podcast that we did 5 years ago. I want you to now look out 5 years in the future. Give us some things that you're optimistic that biotech will help to solve, treat or cure.

Peter Kolchinsky (31:12): I am really excited about what biotech is going to do for autoimmune disorders particularly driven by B cells. So diseases like lupus that have previously been practically untouchable where whatever drugs we launched only helped a little bit, we're now seeing what look like functional cures by pressing control-alt-delete on your immune system and getting it to reboot from its basic stem cells. And the game is now to figure out how to develop a commercially viable, well-tolerated approach to that. We've got a number of investments across multiple types of technologies all aimed at this problem. Not just lupus, but there's dozens of diseases, myositis, scleroderma. And one of them, Capstan, was just acquired for $2 billion by AbbVie right on the heels of getting a few patients or really a few healthy volunteers' worth of data. And we've got more such technologies. It's exciting from an investment standpoint, certainly. It's exciting from a scientific standpoint. This is some basic immunology that we're tapping into from my grad school days. But it's really exciting for the world to contemplate autoimmune diseases being knocked back and well-managed. I'm really excited about the field of blood-based cancer screening and early detection. I'm on the board of a company called Freenome. And there's a few other companies doing this as well. And the field is generating data at a pretty rapid pace. And so imagine what the world looks like when, let's say, 40 or 45 years old, you're getting an annual blood test that is capable of detecting whether you have an early-stage cancer and where in your body it might be. Coupled out with imaging technology, go in there and before it's metastatic, you just remove it with surgery, maybe use some of the existing drugs we've got like checkpoint inhibitors to rev up your immune system and clean up any stray cells that may be there. You're really talking about rolling back cancer to maybe pushing it out to the point where simple aging and frailty will kill you before cancer does. Certain cancers are more amenable to this than others. Brain cancer, I see absolutely nothing on the horizon for that, and that's depressing. Thankfully, it's rare. But as you solve the problems that you can solve, all the other things become more common. I'm really excited about all that we're going to learn about Alzheimer's and other neurodegenerative disorders in the next few years as certain experiments play out. I think the fact that we've got a couple of drugs on the market for Alzheimer's, absolutely game-changing. Early in my career, I would have guessed we'd still be grappling with Alzheimer's by 2050, and yet we're seeing cracks in the disease. What if you could detect the earliest signs that somebody's risk for Alzheimer's is increasing? Kind of like seeing your LDL going up, right? Higher cholesterol means you're at greater risk of heart attacks down the road and strokes, and you take a statin for it to lower your LDL. What if that's how we came to use these medicines? If they were easier to take, subcutaneous injections instead of IV infusions, and you took them much earlier, would they be much more effective? Don't wait for your first heart attack to start taking a statin in order to prevent your second heart attack. Start taking the statin well before you have your first heart attack. And so there are studies that have been started up that will teach us that. Those studies will take probably another 5 years to play out, but that's nothing in the grand scheme of things. So I could keep going. There's some really cool things I'm personally excited about.

Greg Dowling (34:35): You've got me excited. You're returning the promise and hope of biotech, which is kind of what we were hoping to do. I did want to ask you a couple of quick lightning-round questions. We're almost out of time. I wanted to ask, and to your point about just being better-informed. We all need to be about our health care and also on just the policies of health care. Five years ago when we did the last podcast, everybody was reading "Code Breaker," right? It was kind of the book of the year. Is there any books out there that we should be reading now on biotech or health care? Any book recommendations?

Peter Kolchinsky (35:06): Eric Topol's book "Super Agers" is a really terrific survey of a science-based approach to thinking about the use of existing technologies for the field of longevity. Reading that book, I kind of had the sense of, wow, this is decades in the making, us getting to the point where we can take various technologies from these shelves of the Home Depot we built and start to put them together in a way that will really alter our sense of our own longevity and health span. I think as you read that book, I hope it provides a kind of holistic inspiration for the totality of ongoing innovation. You can look up a website, radence.com, R-A-D-E-N-C-E dot com. It's an RA capital company. We don't name them all with an RA at the beginning, but this one we're particularly proud of, so we did. And we're providing health care services through Radence. They have the ability to prescribe medicines and all that. You can think of it as kind of a health span clinic. It's a virtual concierge service. And it is kind of the embodiment of that book, "Super Agers," where we have studied every on science, every legitimate application of every known technology. And we're tracking even some of the ones in development to figure out how do we maximally prevent every single disease that we can possibly prevent. So when I talk about early detection of Alzheimer's, that's not a theory. That's something you can do now. Cancer screening and prevention, that's possible to do now. People talk about whole-body MRI. There's not one whole-body MRI. There's a hundred different ways you can do MRI, the first-generation services that you've heard about kind of giving you this one-size-fits-all approach. But as you really drill into which of your tissues does it make sense to really focus the MRI on during the 1 hour that you're spending in the machine, you'll realize that there's a logic to it and especially as you combine it with blood-based cancer screening, and you're really trying to augment the other types of screening technologies that are there. It takes some thought to really wield all these tools to achieve what we think is the optimal outcome.

Greg Dowling (37:17): So read the book, go to the website and then maybe we'll close with what is one fun fact on Peter? Nothing on the medical side. What is one thing that is interesting people don't know?

Peter Kolchinsky (37:29): I've had a breakthrough in my kiteboarding. So I've been trying kiteboarding over the years here and there when I could. This year, finally this summer, I figured out how to jump. Not very high, but I can jump out of the water a bit. So that's the latest fun fact.

Greg Dowling (37:45): So if you see someone off the east coast of Boston doing a little kite work there, and they're jumping, it could be Peter.

Peter Kolchinsky (37:52): Very, very tiny chance that it's me, yeah.

Greg Dowling (37:54): Probably a small jump, probably a small jump.

Peter Kolchinsky (37:56): Small jump, I got lots to live for.

Greg Dowling (37:58): Thank you very much. As I said, you kind of re-instilled our hope in biotech from an investment and also from just the advancements of new medical technology, so Peter, thank you so much for your time.

Peter Kolchinsky (38:10): My pleasure. Thanks a lot, Greg.

Greg Dowling (38:13) If you are interested in more information on FEG, check out our website at www.feg.com. And don't forget to subscribe to our communications so you don't miss the next episode. Please keep in mind that this information is intended to be general education that needs to be framed within the unique risk and return objectives of each client. Therefore nobody should consider these to be FEG recommendations. This podcast was prepared by FEG. Neither the information or any opinion expressed in this podcast constitutes an offer or an invitation to make an offer to buy or sell any securities. The views and opinions expressed by guest speakers are solely their own and do not necessarily represent the views or opinions of their firm or of FEG.