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    Investor Perspective: Life Science Manufacturing & Supply Chain with Biospring's Michelle Dipp

    By ZAGENO Team - 15 minutes read


    Michelle it's nice to have you on the podcast. Thank you very much for joining us. 

    Thank you, Greg. I'm delighted to be here. 


    Could you please give our audience a bit of background.  You have a very interesting professional journey that I'd love them to know more about.

    Sure. Happy to do that. So I'm from El Paso, Texas. El Paso is way West on the border of Mexico. That's where I was born and raised. 

    And then I went over to England for school. So I went to Oxford and studied medicine there. And then I also did a PhD there. And a postdoc there. And my PhD was in hypoxic, pulmonary hypertension. Ultimately I ended up leaving medicine and I started my investment career back in 2005 at a place called the Wellcome Trust. They're like the Gates foundation of the UK. 

    And after the Wellcome Trust, I joined one of our portfolio companies. It was based in Boston at the time called Sirtris and Sirtris was acquired by GlaxoSmithKline. And ultimately I ran the business development group within GlaxoSmithKline and then GSK became the cornerstone LP in a fund that I started with two other partners, Rich Aldrich and Christoph Westphal.  The name of that fund is Longwood, also a Boston-based fund. That was a life sciences investment firm. They're on their fifth fund now and doing incredibly well. 

    I left Longwood back in 2017 to start the life sciences sector at General Atlantic, where I made several gross stage investments and investments in life sciences technology.

    And then last year I started a fund called Biospring with Jennifer Lum, also a Boston native. Biospring is focused on growth stage investing. We invest in services, tools, and software in the life sciences technology space. And we invest in companies that are post-product market fit, who have about $10 million of revenue or more so really happy to be here with you today.


    Thank you. And I'm so glad that you brought up your roots...El Paso. I didn't tell you this in our prep sessions, but a good friend and a former colleague  writes for El Paso Inc com . And I went and did my research and know there's a great piece they wrote about you back in 2017, where they reference you as El Paso's biotech wunderkind. 

    Thank you!

    I think everyone would love for their hometown paper to  have  such a response to them. And it seems like such a wonderful place  to come from. And it's great that you continue to reference that as home base. 

    Thanks, Greg.

    Yeah, I'm really proud of that. El Paso is a really special place. It's incredibly diverse. I think most people recognize. The fact that we're a border city, most people don't realize that we also have one of the largest army bases called Fort bliss. And  it's a very special place to grow up and I'm incredibly proud of it.


    Fantastic. So, you are in that Dr. / business leader club, And it causes me to ask some questions because as you may know our CEO is himself in the same club and has a particular aperture into the way the business of science operates. I'm just curious, are you more business or more medicine or do you find yourself somewhere in the middle? 

    Oh boy, it's a great question. I think I probably find myself somewhere more in the middle. I really trained as a doctor, but I haven't been a doctor for a very long time. And as I mentioned, I've been on the investing side since 2005. It's been awhile.

    But having said that, I think those of us who go into medicine or who study science find that they've done that because they have a real passion, both for patients and also a passion for science. So, I think that certainly has an influence on your career and those of us who are in the life sciences, even if we are on the business side of it, I think we still get pretty excited by what's going on in science and medicine.

    I'd have to imagine that even though it's been a long time, since you consider yourself a person of science in the science world, there's some elasticity to that where you can channel that part of your expertise. And so I do wonder what does that memory of science as a doctor enable you to do that you would otherwise not be able to do in the world of investment?

    In the world of investing, especially where we invest in - life sciences tools - it's really important to understand some of the scientific details.

    In the world of investing, especially where we invest in - life sciences tools - it's really important to understand some of the scientific details.

    So, you are probably aware that thanks to companies like Illumina. The cost of sequencing has come down tremendously. And thanks to cloud computing, we can use things like the human genome and genomic analysis to make a diagnosis, for example of cancer. Or we can use software and AI to make diagnoses in terms of pathology. In fact, I was an investor in a company in the Boston area called Path AI.

    And so you really need to have a good understanding as a scientist. And as a doctor of exactly the areas that those companies are trying to tackle and a good understanding of whether or not the technology actually addresses the problem.

    So, when it comes down to product market fit, I think having a background in science and medicine is particularly useful, it allows you to understand what is the market, and then also does the product actually solve the problem that it's addressing.


    And I imagine if you're engaging with founders, some of whom are themselves doctors, they're maybe preparing in a different way to talk with you about their ideas. I am curious how you source your investments and when you are engaged with people of science who are seeking your input and your support. How does your medical background change the depth of the conversation you can have with companies you're considering supporting?

    It's a great question.

    Sometimes when we're looking at a specific company in an area, I'll give you an example... we're very bullish on the synthetic biology space. When a company knows that we have a technical background, they know that they can skip the explanation of what synthetic biology is and maybe a certain area of chemistry and we can just get right into the details. 

    So yes, I do think it is a little bit of a different conversation. If you do have a  technical background in science or medicine because they can assume that you understand what they're talking about when they use certain terms. So, that's certainly a huge advantage, especially in the sub sectors in which we invest.

    And then when it comes down to the diligence of some of these technologies, as in the life sciences, oftentimes it's critical to understand the intellectual property that a particular company has on a specific product. And oftentimes we're looking at intellectual property that's related to chemistry.

    So again, just to go back to the synthetic biology example, that is a space that goes back for me as far as 2010 when Ginkgo was spinning out of MIT.  They were the first group that I met that was in the synthetic biology space and I became completely enamored by the concept that you could manufacture something in cells that could replace a traditional manufacturing process. And it was faster and better and cheaper and also more sustainable. 

    So, it became really Interesting to see what other companies in this space were doing. And, I ended up meeting about 32 companies in the space and really digging in deep on the intellectual property, which really came down to who owns what chemistry.

    And so again, having a technical background really helped quite a bit as it relates to that.  

    To your sourcing question at Biospring, we have a pretty unique way of sourcing. I think a lot of people assume that we get introduced to companies through banks, or we receive an email, but actually we tend to know our companies for several years before investing in them.

    I think a lot of people assume that we get introduced to companies through banks, or we receive an email, but actually we tend to know our companies for several years before investing in them.

    So Jennifer and I tend to take a particular view on a theme. So we take a big step back and say, okay, what's happening in life sciences and technology at a macro level. And then within that, how do we think about different themes that we're interested in? And then how do we get to know the multiple companies within that theme? And then bet on the one company that we think will be a winner in this space. 

    We knew Gingko, believe it or not for seven years before I led an investment in them. Path AI, Jennifer and I knew as they were just spinning out of Harvard and MIT and I invested in them four years after knowing them.

    So we tend to know companies for a very long time and management teams for a long time before we make an investment. So our way of sourcing is a little bit different. It's getting to know the CEOs and the entrepreneurs at the very early stages, even when they're still at their academic institutions.


    It sounds like for Biospring, it's a matter of relationships.

    That's exactly right. We firmly believe in that and we've built what we think is a strong advisory board of people who are certainly a diverse group to help us and make sure we span all different areas within science and technology.


    That's fascinating. Now, as you pointed out in the introduction, you are an alumna of Brasenose College, one of the constituent colleges of the University of Oxford.  I was able to listen to a Q&A that they recently organized about COVID-19 and life science, during which you spoke about macro trends, like automation to improve efficiencies.

    The importance of automation certainly makes sense, but I'm wondering in your opinion, do you feel it's too late for companies that are not yet on board? 

    So the quick answer is no, I don't think it's too late.

    My belief is life sciences has been one of the slowest sectors to really adapt to technology.  So if you go to a cell and gene therapy contract manufacturer, or if you go to a biologics contract manufacturer, or even many of the generics manufacturers, you'll see that there's a lot of robots involved;  it's very heavily automated.

    It's certainly not too late for companies, but on the other hand, I think they will be absolutely forced to automate.  And if COVID has taught us nothing else certainly in the life sciences world, where we recognize that automation allows you to go through a period like a pandemic and not have as much in interruption as you would otherwise.


    Does it surprise you that innovation that takes place in scientific discovery has not been matched by automation in these labs? Does it ever surprise you that you see this dichotomy? 

    Yeah, it's absolutely fascinating. And you're right, the pace of innovation that we've seen, just specific to COVID, to be able to develop both medicines as it relates to antibodies, as well as vaccines is just staggering. I think many of us, even those of us who were in the life sciences industry, are in complete awe of the innovation that we're witnessing pretty much on a daily basis.

    And I agree with you. We have been a little bit behind in terms of use of automation, use of software AI ML that can certainly make our industry more efficient. And that's where we think we're headed, we have to rely on software and other technologies to become more efficient. It's a no brainer.


    Now pick up a paper, watch the news. You're bound to come across a story about the supply chain as it relates to well between the lab and the patient. That's where all the attention seems to be because it's a kitchen table issue, but I want to go a little bit deeper than that with you. 

    You touched on manufacturing and supply chain. So it causes me to ask you. What are the trends there, as it relates to supply chain from manufacturer or distributor to the research scientist in the lab themselves? What trends do you see there and why?

    When we were kicking off our fund, last summer, one of the things that we did is ask ourselves what's changed. And obviously we were in the middle of a global pandemic, and basically we spoke with CEOs of pharma companies and also heads of R&D of pharma companies, as well as CEOs of contract research organizations who do a lot of the outsourced work for pharma companies. We heard  two, new pieces of information.

    One - a lot of the manufacturing was being moved back to the U S and to the UK. Pharma spends increasing amounts of money on R&D, year  year. And the way that pharma aims to become more efficient is by outsourcing a lot of that spend.

    And then of course, turning to technology or software for some of that. And  the outsourcing is typically things like manufacturing of drugs, and a lot of that manufacturing has taken place in places outside of the U S, the UK and Europe. And so pharma has basically said we have to essentially bring manufacturing closer.

    Same for supply chain. If you talk to pretty much any pharma company or any CRO they'll say to you that they need to be able to control their supply chain. And they've specifically been affected by COVID. So COVID has slowed down their ability to make sure that they have the raw materials that they need to be able to produce the antibody, produce the cell therapy, et cetera.

    So, it's very clear that we've seen at least in the last year a big shift in terms of both manufacturing and supply chain. And some of the solutions that we're seeing are obvious things like having more sites in places like the US and the UK on the manufacturing side, and then on the supply chain side, having much more transparency between the supplier and the customer and offering transparency, both in terms of amounts and dates that supplies can be provided is one thing. But one of the things that you'll hear a lot from the customers is they see a real challenge with that last mile. And you'll hear that whether you're talking about supplies for manufacturing of drugs or a company like Amazon, and that's where technology can really help.

    So, implementing software that can improve efficiencies so that the actual day-to-day transport of supplies is streamlined. And I think that we are only just now starting to see those solutions pop up in the life sciences. And we think that's absolutely going to be a trend that continues even beyond the pandemic.

    ...implementing software that can improve efficiencies so that the actual day-to-day transport of supplies is streamlined. And I think that we are only just now starting to see those solutions pop up in the life sciences. And we think that's absolutely going to be a trend that continues even beyond the pandemic.

    Such  excellent points you make, here. And there are other diseases out there, cystic fibrosis and other things that are having to take a back seat to demands elsewhere. And so your points are extraordinarily well-made, in that regard.

    As I was looking at your background I noticed some similarities  with a guest we spoke with last year. His name is Richard Wooster. He's the chief scientific officer at a biotech in Lexington, Massachusetts called Translate Bio. Like you , his career intersected with GlaxoSmithKline and the Wellcome Trust Sanger Institute.

    And when we talked with him about that period of his professional journey, he described an advantage and a disadvantage of a large organization like GSK being what he called institutional memory. That is to say that these types of companies will sometimes hold internally this intellectual property, which they can refer to when the time suits.

    So when you were at GSK, 2009, I believe, you led its center of excellence for external drug discovery, which you have since educated me as essentially being a long name for a business development and mergers and acquisitions. But the thrust of it from my understanding is to effectively exploit R&D assets in order to ramp up productivity.

    But going back to that point , do you agree that institutional memory gives bigger organizations an advantage or does the agility or the nimbleness of a smaller company level the playing field? 

    Yeah, it's a great question.

    And I think some of it depends on the stage of a therapeutic. When I was at GSK, it was just an extraordinary time. We were under the leadership of Andrew Witty, who is the CEO and Moncef Slaoui, who is the chairman of R&D. 

    GSK was, in my view, one of the most forward-thinking pharma companies around.  We were one of the first to say, let's look outside for our pipeline.  Of course we can discover and develop drugs. And we had an internal R&D organization, but I had the privilege of leading the team who looked outside for some of those assets to our companies. So we would, either partner or acquire companies who had therapeutics at different stages.

    There's absolutely a benefit to a large company who, because they're a large company, do things in a certain way and they have systems and processes in place. If you are looking to understand all of the data on one particular drug, it's pretty easy to go figure out, okay, here's the tox data, here's the safety data, et cetera. And because that drug has then developed, within pharma, you have a huge amount of data. It's all been done, perfectly. And the data quality is very high. However, this concept that institutional memory within a big company usually means here's how the big company does it and you must continue to do it that way. 

    That can be a real advantage in some ways, especially for things like large, phase three trials and commercial launch of a drug. That's something I think that most of us would say that's what pharma really does a great job of - those later stage trials and commercial launch.

    When it comes to earlier stage -  things like discovery and the early stage development that requires as you were saying, the need to be nimble and to be creative, sometimes having that institutional memory could in fact create a bias if you decide, okay, this is how we do something and you're working to discover a new target, for example, that might actually be a little bit more challenging within a larger company. And so sometimes we find that the smaller companies are the ones who are better able to make those discoveries and do that earlier stage development because they have the permission to be perhaps a little bit more creative.

    I do think that there are pluses and minuses and that on the early stage side of things, smaller is a little bit more helpful and lack of institutional memory can actually be a benefit. And then on the later stage side, the institutional memory can be an advantage.


    It's great to hear your perspective on that.  I want to stay with pharmas for a moment... what kind of efficiencies do you think they're seeking today and why?

    So, pharma in 2019 spent $180 billion on R&D. If you look back the historical Kager of that R&D spend is 7-8%. If you project it forward and these are numbers that are without the COVID-19 vaccine, the projections were that pharma R&D spend would grow at a 3-4%. Kager. That is to say that we spend a lot of money each year on R&D. 

    I think that some of the greatest efficiencies that pharma is looking for is within their R&D budget. There's no question that they're looking for efficiencies across the board, whether it's commercial or other parts of pharma but it's pretty clear that for most pharma, the R&D spend is a very large percentage of their spend. And so then within R&D pharma for a long time has looked to, how can we become more efficient? How do we streamline R&D? And it really comes down to two things.

    Number one is time.

    ...time is so critical in pharma because you basically have a patent life. And so every day that goes by is a day that you're taking against your patent life.

    And as time is so critical in pharma because you basically have a patent life. And so every day that goes by is a day that you're taking against your patent life. You're also spending money. But the second thing aside from time is how do we become more efficient? So for X dollars that are spent each year how do we get Y number of drugs in exchange for that X dollars? And you'll see all kinds of numbers batted around, sometimes it's as high as, Oh my gosh. It costs you something like $8-10 billion over 10 years for a drug to be discovered. And that number varies by the way, dramatically, depending on the type of drug that you're talking about, but the reality of it is, R&D takes a lot of time and R&D is very expensive.

    So some of the obvious things that pharma is doing is outsourcing.  They outsource certain types of experiments, they outsource clinical trials, they outsource manufacturing, and then they're turning to technology and all of that is to become more efficient. So you've seen a lot of really exciting companies that have popped up saying we can use software and AI to make better predictions on new drug targets, or we can use software and AI to make predictions on toxicology and safety.

    So that's where we think the industry is headed in terms of creating efficiencies within pharma. 


    So you have, you've laid out some very interesting perspectives on automation and modernization within the pharmas seeking to be more efficient. What impact has that had on the COVID-19 pandemic?

    So as it relates to some of the pharma efficiencies and their effects on COVID, we can really think about it in two different ways. One is the antibodies and then the second of course is the vaccine.

    And when you take a step back, the big discovery was the ability to basically have the code for the virus and our ability to not only sequence the virus, but sequence all the various different mutants. So, the fact that it is cheap and so easy to sequence now has made a huge difference in our ability to treat COVID. So I'd say that basic science is the first thing.

    And then as it relates to antibody production, you've probably seen several of the larger companies. Who have been able to very quickly ramp up their antibody manufacturing. And that's simply because they're able to test antibodies very quickly as to whether or not they can help with the symptoms of COVID.

    And then if you turn to the vaccine side of things, again, same thing, I guess it depends on whether or not we're talking about some of the RNA vaccines, of course, versus some of the other types of vaccines. But again, we know a lot more about the basic science so that we can make better predictions on whether or not a certain approach will be efficacious and then turning towards a production we're much better able to have a view on how quickly it will take to ramp up the actual manufacturing.


    That's very interesting.  This whole conversation's been quite far reaching. We've covered the geography of West Texas, we've discussed, locating manufacturing closer to the scientist,  institutional memory pros and cons which is also fascinating.

    I just have a final question as I like to ask in our podcasts. And that is Michelle, what makes you optimistic? 

    So I'll give you one professional, one personal. 

    2021, I think is just going to be an extraordinary year for our industry. The fact that we even have a single vaccine against COVID is just phenomenal. I think it's a terrific example of how the life sciences industry has worked together. Not only do we have one vaccine, we have multiple vaccines. And so that really gives me a lot of optimism. 

    The fact that we even have a single vaccine against COVID is just phenomenal. I think it's a terrific example of how the life sciences industry has worked together. Not only do we have one vaccine, we have multiple vaccines. And so that really gives me a lot of optimism. 

    And I'm particularly optimistic about the fact that we have a vaccine against COVID because I'm getting married this year. So that's my personal reason to be optimistic. So, I think, 2021 it's going to be a great year for many of us.  


    Let me be the first from ZAGENO anyway,  to congratulate you on that news. That is optimistic and I'm very pleased for you.

    I'm very grateful for your time today. As I said, we really have covered a lot of interesting topics. Thank you again for agreeing to speak with our community, to share your expertise and hope maybe you'll come back again and give us your insights on how 2021 turned out and what's next for Biospring.

    Thanks, Greg. I look forward to it. 

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