Chapter 1: What insights does David Southwell share about leadership in biopharma?
to the extent that you're relatively humble and transparent, it helps.
That's the voice of David Southwell, CEO of Volastra Therapeutics, headquartered in New York. Listen in to hear insights from David about leadership in biopharma and how Volastra is working to discover and develop oncology therapeutics targeting chromosomal instability, a vulnerability of cancers. I'm John Simboli. You're listening to BioBoss. Welcome to BioBoss, David.
As you gained executive experience, did you find yourself at any point thinking, you know, I'm really, this is a natural fit for me. I'm really cut out to be a CEO. Or is it a more organic kind of thing that just sort of happens?
Well, I think to some extent, I just have a very low tolerance for boredom. And the one thing about biotech is you're never bored. You come into a company with most businesses you're trying to control the risks and your main risk is a competitor. And you come in and you figure out what your advantage is against the competitor and you maintain that advantage.
And then you just kind of keep going and build the company.
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Chapter 2: How does David Southwell define success and risk in biotech?
In biotech, you deal with uncontrollable risks, whether you're a scientist or a business person. You know, preclinical data, unfortunately, more often than not, do not translate into good clinical data. And you can get tripped up by the business side of things.
Often, we're a very science-oriented industry, and sometimes people get too deep into the science and that they realize that they've developed the perfect solution to a very small problem or the perfect solution to a problem that someone else has solved a few years ago and you just didn't notice it.
So I think that the situational awareness component of this industry is something that really needs to be kept in mind. You know, you can have a really good scientific idea, but you've just got to keep an eye on the market. And cell therapy is an example. is, I mean, it's really helped an awful lot of patients, but ultimately the question is, will the payers pay for it?
And will the payers pay for it? And how many, once you start slicing and dicing your patients for people that have the particular antigen that you're going after or the particular HLA, how big is the market really? And then how many of those patients are covered by insurers that will pay for it? And then of course, now you're dealing with international reimbursement.
Chapter 3: What challenges do biotech CEOs face in decision-making?
And I'm also on the board of PTC Therapeutics, which I've been on the board of for 20 years, and they've got many drugs on the market internationally. And over there, the reimbursement is often driven by one government. So you have one customer, and that customer can pull down a pretty attractive price. But then again, that creates the problem of most favoured nation status. So
If you have a drug and you've negotiated a price that works really well, given the volume that you have in a particular European country, if all of a sudden you have to charge that price in the US, it could drive you out of business. So there are so many different variables, but I think any biotech CEO who honestly says that they sleep well at night is probably naive.
I've asked a variation on where you are right now on several of the BioBoss discussions along the lines of, well, in a framework in an industry where there are so many things that are not under one's control as CEO, how do you reach decisions? How do you just keep from being paralyzed by the lack of information or the lack of certainty?
I've had CEOs say to me, well, I just had to learn that I could always go back and fix it. I've had other ones say, oh, no, the secret is to see around the corner and to anticipate the problems, have lots of options set up. And I know there's no simple answer to that. But how do you keep going when you don't know what you don't know?
Well, I think you just try to control the controllables. You hope that you're working with people who feel the same way, most notably boards. If you're a CEO, you ultimately report to the board and you need to be transparent about the risks. If you're taking a major risk on something, maybe you're launching a new therapeutic and you need to price it.
you know, if you launch it and you price it, it's very difficult to significantly raise the price. If you price it too low, it's very difficult to raise the price. If you price it too high, you can certainly lower the price.
And that creates an unfortunate incentive with a lot of companies to start out with a very high price, which is, which is just, it's unfortunate for the world that we live in. But there are, There are things that you can change and there are things that you can't. Pricing a drug is something where if you make a mistake, you can adjust for it.
But if you devote your, if you start with a wide funnel of discovery assets that you're developing and you make the wrong decision on which one to take into the clinic, you're stuck because once you get a lead drug into the clinic, even if you've got a really interesting set of things behind it.
When you come to raise money, investors have a habit, which is a very natural habit, but CEOs would probably call it a nasty habit of focusing only on your lead asset. So, you know, as an example, at Velastro, we have our lead asset is a small molecule drug that works in a wide variety of cancers. with a particular mechanism called KIF-18A inhibition.
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Chapter 4: How does Volastra Therapeutics target chromosomal instability in cancer?
And there are companies very interested in licensing those, but anytime we go and talk to investors, they only care about our lead asset. So that is of course what we spend most of our time working on. So there are things that you can change. If your lead asset goes south, you can twist it around, but it takes years.
And a perfect example of that from a long time ago is Forest Labs, who, of course, as we all know, developed Celexa and Lexapro. But before that, they had a drug called terodoline that didn't work out at all. And Howard Solomon managed to weather the storm of going through that to develop these antidepressants that became the top selling SSRIs in the world.
If you make a mistake and you have to do a pivot, you have to explain that first to your board and then you have to explain it to your investors. And if you have been telling, if you're often the board, but most certainly investors are a perfect canary in a coal mine. And oftentimes the investors have been saying for quite a while,
that they think you're crazy to be doing this particular thing, whatever it is. And you've been saying, no, no, no, you're wrong. I'm right. I'm doing the right thing. And then all of a sudden you realize they were right all along. And, you know, what are you going to do now? And I think the solution to that, to the extent that there is one, is transparency, is to say to
investors, look, there's a difficult decision that I'm facing in terms of, let's just use an example, which drug we push into the clinic when we have three seemingly equal opportunities in late stage preclinical, in vivo clinical, preclinical trials. And you sort of talk people through it and say, I'm making this decision and this is why I'm making it.
And if it turns out to be the wrong decision, you can say, you know, you remember we talked about this and it turns out I made the wrong decision for a number of reasons. And some of those, some of what happened are things that I really could not have foreseen back then. But some of them are things that, you know, really I should have looked at and I didn't.
And I think to the extent that you're relatively humble and transparent, it helps. I mean, I was talking about Sepricor. When I joined, the stock was three. It went down to one and a half, probably as a result of my joining. And then five years later, it had gone on a split adjusted basis from one and a half to 140.
And then two years later, it had gone from 140 to six, and then it went from six to 60.
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Chapter 5: What is the significance of biomarkers in cancer treatment?
And what I realized is when it's 140, it's awfully tempting to be arrogant. You know, you walk into a conference room And the room is full and several hundred people in the room. You have fund managers thanking you for making them so much money. In fact, they should be shorting your stock like crazy. And it's awfully tempting to be arrogant.
And then when things go badly, it's awfully tempting to be depressed. And to my mind, the challenge is staying in the middle. You can't be arrogant when things are going well, and you can't be depressed when things are going badly. You may make the wrong decisions, but a lot of the stuff that happens in this industry is really not necessarily foreseeable.
Science happens, and there's a reason that the FDA makes us start with chemistry or basic biology and take it through into animals and then take it into, you know, healthy humans and then take it into sick humans, that it's a pretty brutal drop off in success rates as you move through that development cycle.
The problem with blaming other people in this industry as a CEO is you're blaming someone that either is on your board or and in which case you should have convinced them to do what you wanted. or you're blaming someone who works for you. And that is absolutely not fair because they work for you. And it's up to you to apply a filter to what the people that work for you are trying to do.
So it's very hard to blame mistakes on anyone other than yourself, unless there's some absolutely extrinsic market event. It's really tough to not blame yourself, but it's always, it's difficult to blame yourself because you could get fired. Hey, you know, at some point one has to have self-confidence and say, if the worst comes to the worst, I'll do something else.
When you were a younger person or maybe even a young person and trying to anticipate where your life might go, do you have any recall of those years as to any hints that you would end up being an entrepreneur, an executive, a CEO? I mean, was there some kind of pattern that someone could look and say, oh, yeah, I know what David's going to end up doing?
The main thing, I grew up in England in the 60s and 70s. And England in the 1970s was a pretty grim place. Margaret Thatcher got elected in 1979. And back then, if you made more than Ā£20,000 a year, your unearned income was taxed at 98%. I mean, it was a grim place. But my mother was American, so I had two passports.
And as soon as I got out of school in England, I realized that I wanted to kind of control my own life as opposed to doing what English schoolboys do and go and work in the city or whatever. And so I went to Texas and got a job in the oil industry for my gap year.
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Chapter 6: How does David Southwell's experience shape his management style?
And I wound up going to Rice because the oil industry was booming in the early 80s. So I didn't want to go home and I wanted to be able to control my life. And so I went to Rice and then I wound up going to Wall Street And I really enjoyed Wall Street. I thought the, I was in the M&A group at Lehman Brothers and it was, it was just a, a, a rollicking time to be in that.
And there were people who are now very senior, being the founder of Blackstone was a managing director when I was there as well as his number two. And really working with very intelligent people, but at the end of the day,
I was doing deals for people who are often making, you know, a making a lot of money, but they were very proud of the companies that they built and they were proud of the deals that they were doing. And I was stepping in, making it happen and stepping away. So I just kind of every every time I wanted to be the client and I thought sort of this is sort of what you have to do.
So I think the main theme
from being a kid was i wanted to gain control of my own life and biotech you know wall street is a way to do that biotech is also a way to do it because there are lots of different ways to skin a cat as it were in a biotech company and you know two different ceos in a company will operate them in very different ways so you better be right or you better be operating it in a way that will
keep your employees keep a culture of a company and kind of keep the plates spinning i think everyone does that in a different way and that's what i like about this business is that to some extent i can be myself if i were to speak with you know your teammates people who report to you uh people who know you well maybe even members of the board and ask what what's what's david's management approach what do you think they would say
Well, I know what I hope they would say. It's, you know, one never sees the bullet that hits one. And so, you know, I think you would really have to ask them. And I think it would be the height of arrogance for me to tell you what other people think of me. But what I try to do is to be highly collaborative. I like to
hire the best people, work with the best people and listen to them and really talk through major decisions with everybody. And oftentimes the people that work for you, or even they're on your board, would have a different approach than you want to have. And often they have opposing approaches. So it becomes a zero sum game. And the challenge at that point is to say, look, I can't do what
both of you want, or I can't do what all of you want, I have to make a decision. And this is what I'm deciding to do. And it's not personal. It's not that I'm not doing this because I don't like the person whose advice I'm not taking. It's just that at this particular point, I think that I need to take this other person's advice.
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Chapter 7: What are the future plans for Volastra's drug development?
devoted to the cause. And we're very mission focused. When there's a situation that isn't working out with someone, I always feel as though I'm sending them to a better place by moving them out of the organization that I'm in. And I genuinely feel that way. And I say that to them. And there are many people that I've let go that I'm now very good friends with.
When people ask who is Velastro, how do you like to answer that?
We have a brand new mechanism for treating cancer with a once a day pill or a series of once a day pills, depending on the dose. And what we're doing is we're countering a a syndrome called chromosomal instability, which exists in about 80% of cancers, where in cancer cells, as cells divide, the chromosomes are unstable, whereas in normal cells, they're very orderly and stable.
There's a particular target within chromosomal instability. When you remove it in a normal cell, it doesn't affect the cell division. If you remove it in a cancer cell, it disrupts the cancer cell and causes it to die.
Do people ever say, gee, that sounds too good to be true? Why didn't someone else do that?
I am fortunate to work with the leading researcher in chromosomal instability, who was the founder of our company, and he came out of Sloan Kettering. And there are several companies that are working on the same mechanism as our lead drug. We happen to be the furthest along. And when the company got going, the first company that actually started working with
Kif-18a inhibition started working with this target was Amgen. And we ended up in licensing their drug very early on. So we've had the ability to test our own independently developed compound against Amgen's and we owned Amgen's. So we have no reason to prefer ours over theirs. It turns out, and Amgen's a stockholder, we know them well.
It turns out that our compound has better efficacy and a better side effect profile than the Amgen one. So we still do work with the Amgen one, but we're primarily developing our own. And you know, when I was working in cell therapy, I always was under the impression that small molecule drugs would never be that effective in treating cancer. And that is not the case.
One of the things that we've recently discovered is a biomarker that predicts patients that are gonna be, that are gonna respond to our drug.
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Chapter 8: How does David view the intersection of science and business in biotech?
And the biomarker exists in well over 50% of the patients. So we can take, we can do a pan-cancer study and we actually used sub-therapeutic doses for some of these, You do a pan-cancer study that has an ORR rate that is not that good of, say, 14%. You then apply the biomarker to it and you get that up to 37.5%, which is much more interesting.
So we are developing, you know, we started with a monotherapy. We then have found a biomarker for it and we're working very hard with that. with the objective of doing a pan-cancer pivotal trial with it. The other great thing about chromosomal instability is many of the standards of care promote, they create chromosomal instability.
So, for example, taxanes, which are part of the first-line therapy of many cancers, including lung cancers, only have about a 10% to 15% response rate. In other words, the The tumor goes down by more than 30% in only 10 or 15% of cases.
What we've found preclinically is that if you take a cell line that doesn't work with our drugs, so it's not particularly chromosomally unstable, you give our drug, nothing happens at all. You give a taxane, it has a little bit of an effect. But if you give both of them, you have a synergistic effect and it effectively flatlines the tumor. So we really have two approaches.
One is a biomarker directed monotherapy approach, which would be used in third line therapy in a lot of different cancers. And our plan is to do a pan cancer study of that. And secondly, a combination strategy. where you would combine it with taxanes or ADCs. We've also been testing our drug against the toxic warheads of many of the leading ADCs.
And ADCs and taxanes have a safety profile that is not that good. ADCs can have vision loss and some other things. And what if you can lower the dose of taxanes or lower the dose of an ADC and by adding our drug, which has a relatively much cleaner safety profile, you could just create a better therapeutic index for the patient. And that's, so we really have two different approaches.
One is a monotherapy approach and the other is a combination approach. We're starting combination studies in March and our plan is to We're starting it with taxis, but our plan is to really roll that out. So we'll be doing monotherapy studies, pan cancer, and we'll be doing combination studies to get us from third line therapy into first line therapy. Really hard to displace first line therapy.
As you can imagine, if you're an oncologist, someone comes along and says, oh, we've got this great new drug. You know, we think you should use it in first line therapy. The oncologist is going to say, look, I've been using, you know, carboplatin and taxanes for decades, and I've got very sick patients that are coming in. There's no way you're going to replace that.
But if we can offer them something they can add to it that's going to perhaps enable them to lower the dose or is going to increase the response rate of it, then they're much more open to that. So that's kind of where we're going, and we're very busy with that.
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