Ask Me Anything (AMA) Session took place Thursday, July 20th!

We're thrilled to share that Bioverge hosted an Ask Me Anything (AMA) session, where we be dove into the depths of biotech and healthcare venture capital.

During the AMA session, our CEO Neil Littman addressed queries regarding Bioverge, biotech and venture capital. This was the perfect platform to engage in fruitful conversation about industry trends and learn more information about Bioverge.

To listen to a recording of the event - Click here!

Transcript

00:28
Neil Littman (Speaker)
Hey, Reni, can you hear me? 

01:19
Reni Achkar (Host)
Hey. 

01:19
Neil Littman (Speaker)
Hello, Reni, can you hear me? 

01:21
Reni Achkar (Host)
Yep. 

01:21
Neil Littman (Speaker)
Yeah, I can hear you. 

01:22
Reni Achkar (Host)
Well, can you hear me okay? 

01:23
Neil Littman (Speaker)
Yep, you're coming through just fine. 

01:25
Reni Achkar (Host)
Cool. Shall we give it a few minutes before we start just to give others a chance to join? 

01:29
Neil Littman (Speaker)
Yeah, don't we do that. We're still a minute early. 

01:31
Reni Achkar (Host)
Amazing. 

02:14
Neil Littman (Speaker)
Hey everyone, thanks for joining. We're just giving folks another minute or two to trickle in. All right, Reni, what do you think? Should we go ahead and get started? 

03:46
Reni Achkar (Host)
Yeah, yeah, sure. All right, Reni, what do you think? Session is being recorded as well, so we can share it further down the line as well. Neil, if you want to just take this opportunity to do a quick introduction to yourself as well as Bioverge and then we can get things started with the AMA session. 

04:04
Neil Littman (Speaker)
Yeah, sure, happy to. So hi everyone. This is Neil Littman. I am the founder and CEO of Bioverge. As most of you know, Bioverge is a fintech investment platform focused on democratizing access to enable more individual investors the ability and access to invest in early stage healthcare companies. This is Neil Littman. We have a portfolio of 37 companies that we've built over this time frame. We have four exits under our belt. We have raised about eight and a half million dollars of assets under management or AUM. During that time frame, we've closed 61 deals. So those are individual SPVs or special purpose vehicles. We give our investors, who are accredited investors or registered investment advisors, family offices, et cetera, the ability to invest through our platform in a few different ways. One is on a deal by deal basis and so folks can come to Biorege and build their own portfolio within the space. 

05:09
Neil Littman (Speaker)
The other way investors can invest with us are through our multi company SPVs, what we call access funds. We've closed four of those to date and those are akin to a mini VC fund where we build a portfolio of 15 to 20 companies within each access fund. So it gives our investors basically diversified exposure through a single investment as opposed to having to build their own portfolio. We have a lot of investors that do both that will invest in our access fund as well as invest individual deals that resonate with them for a particular reason. And then our third product offering are our thematic funds, which are a version of our access funds that are focused around specific technology types or diseases. For example, we launched our first thematic fund in conjunction with a corporate partner around the digital health and digital therapeutics vertical. In terms of our product roadmap, we're gearing up to launch a longevity focused fund. 

06:04
Neil Littman (Speaker)
I'd love to do oncology and Neuro fund in the future. And so that's part of our product roadmap as we think about scaling our business. The other thing that I'll just briefly mention is part of our model is getting into top quality deals. And so we've invested ahead of or alongside a lot of the big VC firms in Silicon Valley and beyond. So Andreessen Horowitz, Kosla, Sequoia, Lux Capital, et cetera. So really what we offer on our platform is the ability for individuals to invest in deals they would otherwise never get access to on their own. And so we are conducting a great CF offering, which we'll get into here, but that's sort of the brief overview on Bioverge and happy to get into some more details about my background, although a lot of that is also on the Bioverge offering page on Republic for folks to read about. 

06:55
Reni Achkar (Host)
Cool, thank you for that. And I guess we can start things off by diving a bit deeper into crowdfunding. Essentially, what is crowdfunding and why are we taking the approach with crowdfunding? 

07:10
Neil Littman (Speaker)
Yeah, Ronnie, so that's a great question. I'll just preface this. So we had a number of questions come through from the audience ahead of time. So we're going to go through a list of questions for anyone listening today. Certainly encourage you to raise your hand, ask a question. We want to make this interactive, but the Why crowdfunding question is something that we get all the time for folks who are listening. I'm sure you know what crowdfunding is, but it gives basically retail investors the ability to invest in startups. And so our mission at Bioverge has always been to democratize access to the healthcare venture capital asset class, really for two primary reasons. One is very simply financial long term wealth creation and portfolio diversification for individual investors, just like what institutional investors have been doing for decades. So that's the financial side of things. The second reason why we believe in crowdfunding and why we're doing crowdfunding is health impacts us all. 

08:11
Neil Littman (Speaker)
The notion and the difference between a healthy individual and a patient is fluid, right? So we believe we should all have the opportunity to invest in companies and technologies that may impact our own health or that of our family, friends and loved ones. We have a fundamental belief at Biverge about this idea of taking ownership over your own health. And so why shouldn't we all be able to vote with our investment dollars about the type of innovation we want to collectively see in terms of why we're crowdfunding? Specifically, our platform at the moment is limited to accredited investors for a variety of compliance and regulatory reasons. However, we believe that we should all have the opportunity to support the types of innovations that we're investing in and supporting at Bioverds. So for us, this meant opening up our cap table to enable anyone to support our mission and indirectly support the companies that we're investing in, right? 

09:05
Neil Littman (Speaker)
So by investing in Bioverge, you're enabling us to scale our platform, which should translate into bringing more investment dollars into the companies that we're investing in through the platform. I'll just make one additional comment. Private equity groups are increasingly targeting individual investors as the next frontier of growth. There was a recent report from Bain Company that I shared in one of our company updates that specifically identified individual investors as the next horizon for growth. I won't get into some of the details there, but there's a tremendous opportunity for platforms like us that cater to individuals, whether those folks are going through our SPVs and are investing in our deals or going through us. As a platform through our crowdfunding, offering it's all in service of the same goal of targeting individuals and opening up the world of alternative assets which should, in turn, create value for us and our shareholders through this reg CF raise. 

10:04
Neil Littman (Speaker)
So that's kind of a mouthful. So let me leave it there and just ask if you have any additional questions on that point. Reni. 

10:12
Reni Achkar (Host)
Yeah, thanks for that and I guess we'll keep going with the questions that we've been sent over so far in terms of more so on the Republic campaign side of things right now. So question we got through was what are investors in the Republic campaign investing in? Reni. 

10:34
Neil Littman (Speaker)
Yeah, another great question. So I want to be very clear about the language that I use around this point. So investors in our Republic campaign are investing in a company, it's a Delaware C Corp, which is an operating company, and we are a startup ourselves. So we are not a registered fund or an investment advisor. And so as you think about considering an investment in Bioverge, you should think about us like any other startup, and you should assess our ability to grow and scale our fintech business as a platform. And think about the potential that we have for a liquidity event ourselves that would be through an IPO or by getting acquired by a larger player in the space, just like any other startup. Secondarily though, we have a very unique business model in that we invest in other startups, right? And so we put together SPVs for which we generate management fees and carried interest just like any VC fund. 

11:30
Neil Littman (Speaker)
So all those sources of revenue flow up to our fintech platform and that's how we sort of build value and accrue value in the parent company. And so as we think about building Bioverge, there's this other opportunity for us to pay out dividends to our shareholders when our portfolio companies have liquidity events. So we're getting on average 15% to 20% carry. And so when a portfolio company has a liquidity event, we get carry. We have committed to distributing 10% of that carry out to buyover shareholders. Once our dividend pool hits a certain threshold, which we sort of set at 250K, we don't want to do much less than that because it doesn't make sense for distributing tiny checks and the cost of doing so just doesn't make sense. But that's the other really unique, I think, value proposition that most other startups don't have is this ability to pay out dividends. 

12:26
Neil Littman (Speaker)
And we can do that because of our business model of investing in other startup companies. So, just to summarize, for folks that are investing in bioverse through Republic, you're investing in a startup, right. With the host of us getting acquired at some point in the future or going public just like any other startup. However, along the way, you're buying into our existing portfolio again, of which we already have 37 companies. All of those companies may have liquidity events themselves, and we're able to pay out dividends as those companies mature and get acquired or go public. Besides the fact that we're continuing to make new investments all the time, so that number of 37 is continually growing. So there's a real opportunity not just for a buyer's liquidity event, but for liquidity Events within our portfolio to generate value for our shareholders. The other question Reni, that comes up is since people are investing in a crowd safe, they're not actual shareholders and so typically would not be entitled to receive dividends. 

13:26
Neil Littman (Speaker)
We amended our crowdsafe to give us the ability to pay out dividends to crowdsafe holders before there's a conversion event. So I just wanted to note that fact as well. 

13:38
Reni Achkar (Host)
The other question Reni, that comes up is since people are investing in a crowd safe, they're not actual shareholders and so typically would not be entitled to receive dividends. Okay, cool, thanks. So it'd be interesting to hear more about the revenue model that you've implemented and how that looks like. 

13:47
Neil Littman (Speaker)
Yeah, so I sort of alluded to this before, but our fee structure is largely based on a tip, another call, my phone, where we charge management fees and carried interest on all of our deals. So as our deal sizes and volume scale, so too will our management fees and the amount of capital that we have carry on. And if we're doing our jobs right, that carry will produce meaningful exit proceeds for us and our shareholders in the future. So on the management fee side, we charge management fees on, so that's basically 6%. We charge in management fees for the deal by Deal SPVs. That's a 2% management fee across a three year period of time for our access and thematic funds, that management fee is 16% in total. So it's a 2% fee over a six year period of time. We have also and continue to explore other sources of revenue, other sources that we're exploring in terms of recurring revenue sources. 

15:05
Neil Littman (Speaker)
So there's a variety of different things that we can do as a platform that you couldn't do as a typical venture fund. 

15:12
Reni Achkar (Host)
All right. Okay, cool. Thanks for clarifying that point. And then more on if you could explain the potential dividend distributions. 

15:23
Neil Littman (Speaker)
Yeah, so I mentioned this before, so I'll just kind of touch on this again. So as we outlined in the offering page, we've committed to paying out 10% of the carry proceeds we receive to our shareholders, which include crowdsafe holders in our Republic campaign. Once the dividend pool hits an aggregate of 250K. Again, if we pay much before that, the individual checks would likely be too small to make the logistics and costs worthwhile. So, again, what people are buying into in the Republic campaign is our existing portfolio, plus obviously all the new investments that we're going to be making over the next several years and into the future. 

16:04
Reni Achkar (Host)
All right, okay, thanks for that. And with sourcing deal flow, how does it look on that front? 

16:13
Neil Littman (Speaker)
Yeah, great question. This is actually one of my favorite questions that we get, sort of take you back to the beginning. So our initial sources of deal flow came from myself and my co founder Rick, who was most recently at Stanford, and their tech transfer office and the office of their CFO. I think most of you know my background from investment banking to spending a bunch of years at the California Institute for Regenerative Medicine and working at Notable Labs, which was an oncology startup. So we had great connections within the early stage healthcare ecosystem. So initially our deal flow was largely personal relationships and personal referrals. And that's kind of what got us off the ground. Obviously over the last several years. It's grown tremendously since then. So my number one favorite source of deal flow today are referrals from our portfolio of companies. So, again, we have 37 companies in our portfolio. 

17:06
Neil Littman (Speaker)
We get great referrals from the CEOs of those companies all the time about companies that they're working with. And so we invest in the leading edge, right? And I think the companies that are working with our portfolio companies are kind of on the leading edge of the leading edge. And so that's a great source. And my favorite source of deal flow, and that is proprietary to Bioverge, right. No one else has the portfolio that we do. So I kind of think about that as our internal momentum machine. Our other sources of deal flow come from co investors. So investors that we've done deals with in the past consistently refer us deals, other investors maybe, that we haven't invested with before. We get deal flow from different angel groups around the country that have a healthcare focus. We have relationships with strategics or with incubators and accelerators or with tech transfer offices. 

17:54
Neil Littman (Speaker)
So today we're getting deal flow from literally all over the place. So deal flow has never been a problem for us. We get lots of high quality deal flow. We've been very successful in getting allocations to super competitive deals. And so I think we've been really fortunate to be able to carve out allocations in some of these competitive deals. And I think a lot of that relates to the value that we bring to our portfolio through what we call the Birch Network. And we can get into that a little more, but that's basically how we provide value to our you know, it's one thing to get the deal flow, it's another thing to secure an allocation in those deals. And I think we've been pretty successful in doing both of those. 

18:37
Reni Achkar (Host)
All right, cool. So I guess that's one aspect of bringing in high quality deal flows. But with more on the investor side now, how do you plan to scale your investor base? 

18:50
Neil Littman (Speaker)
Yeah, that's a great follow up question, Reni, because I think maybe I was a little naive when I started Bioverge, where I just focused on getting us and our investors into the best deals. Investors would sort of come, right? It's that age old adage, build it and they will come. Yeah, that's a great follow up question, Reni, because I think maybe I was a little naive when I started Bioverge, where I just focused on getting us and our investors into the best deals. And I think it's a little naive there. So we've put a lot of effort into scaling our investor base. And so there's really two ways that we have been scaling. Number one is growing our base of individual accredited investors who write checks in the range of 5000 to call it $250,000. 

19:30
Reni Achkar (Host)
Right. 

19:31
Neil Littman (Speaker)
Five K is the minimum check size for doing deals through our platform. There are roughly 13.6 million accredited investors in the US. And that's a large number. So we're breaking this group down into bite sized components and targeting very specific demographics with highly targeted messaging to introduce bioverts to folks that could invest with us. For example, we've had an ongoing legion for physicians, but not just physicians. We do it broken down by subspecialties. So, for example, we target neurologists or neurosurgeons when we're targeting them. We have a very specific message that we target them with around our portfolio, companies that are targeting neurodegenerative diseases because those will resonate with neurologists. We target cardiovascular surgeons or cardiologists, and we highlight other companies in our portfolio that are targeting cardiovascular disease when we're going after that group, for example. So we have, I think, a nice hook where we're going after these different sub verticals of folks within the accredited universe. 

20:34
Neil Littman (Speaker)
And of course, we're going after people that identify as angel investors, et cetera. So that is sort of one initiative. The second area that we're targeting to really build our investor base are groups or individuals that can write much larger checks in the 250K plus range. So think of family offices or registered investment advisors who manage capital on behalf of multiple high net worth individuals. So that second bucket is akin to an enterprise level sale. So that has much longer lead times, has much longer sales cycle. So that's sort of an ongoing endeavor that we're doing. We're doing all that. I think, to really scale some of what we're doing there. We probably need to make a key hire to ensure we have the proper coverage of all the relevant conferences and healthcare conferences, investment conferences. We're producing the right content to establish us, and in particular me, as a thought leader in the space. 

21:27
Neil Littman (Speaker)
But those are sort of our two big initiatives that we've been doing and will continue to do to scale our investor base. 

21:34
Reni Achkar (Host)
All right. Okay, cool. Thanks for that. That's really a lot of insight there. Now more so on, I suppose, the competition side. Who is bioverges competition? 

21:47
Neil Littman (Speaker)
Yeah, another good question. So I'll sort of break this down into, again, sort of two buckets. The first are platforms that cater only to accredited investors. So those platforms would include Angelist Alumni Ventures Group, for example. The second are platforms that enable everyone accredited and non accredited investors to invest in private companies such as Republic or Start Engine or Netcapital. The vast majority of our competition in both of these groups are generalist platforms. So a key differentiating factor for us is our deep healthcare domain expertise and knowledge. As reni, as you know, as probably a lot of people on this call know, healthcare is a very unique animal. It has its own complicated regulatory and reimbursement complexities, among other things, right. Science is inherently not intuitive. As Reni, as you know, as probably a lot of people on this call know, healthcare is a very unique animal. 

22:42
Neil Littman (Speaker)
It's not looking at month over month user growth metrics or revenue growth when you're trying to evaluate the merits of a scientific based investment. And so the generalist platforms, taking nothing away from Republic or others, we don't feel serves the needs of investors quite as well as we do within the healthcare vertical. So, as we continue to build our healthcare centric network, what we call the biverge network, is really the key to us owning the market. It enables us to provide the most value added support to companies in our portfolio, which in turn ensures we get into the best deals, which will in turn attract more investors. So that's the flywheel that we operate under. So, to my knowledge, no other platforms, accredited only or generalist platforms, are building strategic relationships with corporate partners within the healthcare world or with hospital systems or disease foundations. 

23:34
Neil Littman (Speaker)
We're doing all those things because we have an exclusive focus on healthcare. So I'll just comment. We're not reinventing the playbook here. We've seen this playbook work in other industry verticals. Cadre has done this in the commercial real estate market. I think they're a unicorn. Masterworks has done this in the art space. I think they're a unicorn. Right? So we're sort of taking a page from the industry specific company and doing that in healthcare. And lest we forget, health touches us all. So we really think the opportunity ahead of us is massive. 

24:12
Reni Achkar (Host)
All right, okay, well, my next question is this. So you're in a quite fast paced industry. It's very competitive. So what keeps you up at night? 

24:24
Neil Littman (Speaker)
Yeah, I always love that question, too. Ready? Well, my kids keep me up at night, that's for sure. I've got two young kids. But in all seriousness, I think the thing that keeps me up at night the most is probably ensuring that we have the capabilities to build an A plus team. I think that's our single biggest challenge. And the thing that keeps me up the most right. And it's not simply about getting the right people on the bus. It's about getting the right people on the bus in the right seat. So we have a pretty small team at this point, and we need to ensure that our team continues to grow because we need to be able to take our ideas and our vision and execute against those ideas. We need to be able to learn very quickly what's working, what's not working to iterate, and to adapt to continue growing, to compete in this highly competitive market. 

25:24
Neil Littman (Speaker)
So we've made some mistakes before, for sure. Like we probably should have made an earlier hire or two around some key areas. But we're super focused on running a cost efficient operation and we have operated with very limited fixed costs over the years. So I think for me, just thinking about building out the team, what are the roles, what are the right people to fill? Those roles, I think, are really critical. And I guess just to go one level deeper, some of the things that roles that we need to fill is someone focused on investor relations. That's a big priority for us as our investor base grows. We want to make sure that we're nurturing and building meaningful relationships with our investors and are being responsive to their inquiries. We're available to answer questions. All of those things are really important. We want to have someone really help me focus on growth, marketing and managing our lead gen funnel. 

26:17
Neil Littman (Speaker)
We have someone now who's sort of, I guess what you would call a deal analyst who helps on diligence and putting together deal memos. So I think that there's not a huge team that we need right now, but there's a few key folks that I think could support a lot of what we're doing. And so, as I think about our big challenge and what keeps me up at night is making sure we have the right team in place. 

26:36
Reni Achkar (Host)
All right. And not really a follow up, but more so on the investment side. So with the industry being so fast paced and more investors joining, is there a reason why now investing? Now is a good time. And why should we invest now? 

26:57
Neil Littman (Speaker)
Why should we invest now? Yeah, there's a number of reasons. Let me start with why folks should be investing in this asset class and this space, particularly healthcare venture capital. Now at a very high level, healthcare venture capital, biotech firms have gotten crushed in valuation over the last twelve to 18 months. So even before the broader economy and the tech market tanked, biotech had a pretty significant sell off in the public markets that translated to the private markets as well. So from an investor standpoint, or from folks who are thinking about investing in Bioverge, we are seeing really high quality companies at much more attractive valuations than what we've seen at any time in the recent past, certainly over the last five plus years. And so now if you think about deploying capital into the asset class, vintages from this year, next year should likely be pretty good because you're getting in at very attractive valuations compared to historical valuations. 

28:04
Neil Littman (Speaker)
So that's why now for the asset class and why now for what we're doing as a business model? I think there's a couple of other reasons we can get into in terms of why now. And let me just give you two. Number one, as I mentioned in my opener, we firmly believe in driving the innovation we want to see happen in healthcare. There's a great book that I read. Chasing my cure by Dr. David Feigenbaum. He was a guest one of my podcasts as well, so I encourage folks to listen to that. But in his book, he talks about this general naive perspective about how healthcare and medicine in particular advance, which is what he calls the Santa Claus of view of medicine. Most people believe there's an army of elves, or in this case researchers and doctors who are working together in some sort of coordinated fashion to find new treatments and cures for the diseases that we all suffer from. 

28:57
Neil Littman (Speaker)
And that is simply not true, right? Through my own experience, I've come to understand there needs to be a way for all of us to invest in the future of our own health and be proactive about the treatments that we want to see developed. We can't simply be reactionary and hope that someone else will develop the treatments and cures for us. So just from a strictly like health perspective, it's imperative that we as a society get to vote and drive innovation forward while having the chance to participate in the financial upside if and when these treatments work. So that's number one, just from the health perspective. Number two, from more sort of the financial economic perspective, I mentioned this also in my opener, but I'll go into a little more detail. There are massive tailwinds in the retail investing market with more and more individuals wanting to allocate a portion of their portfolios to alternative assets and in particular VC style investing like what we offer at Byrege, just like what a lot of folks on this call are doing through Republic, right? 

29:59
Neil Littman (Speaker)
And so there's this great report by Bain Capital. Again, I shared this one of our updates that states that individual investors, I'm going to quote here, individual investors hold about 50% of the estimated $275,000,000,000,000 of global assets under management, yet they represent just 16% of the assets under management held by alternative investment funds. So think funds like biovers. So as more retail and individual investors want to allocate assets, that 16% is going to grow. So we're riding these massive tailwinds within the sort of broader economy and the broader financial ecosystem. And so I think that one two punch of us focus on healthcare is something that everyone can relate to. Plus the tailwinds that we're seeing in sort of the macroeconomic picture, I think is a really powerful reason to invest right now. I guess the one other thing that I'll just mention is this is our second crowdfunding offering. 

31:02
Neil Littman (Speaker)
We did our first one through Net Capital. That was successful. We're doing this one through Republic. We're having great success here as well. There's not necessarily I don't have a crystal ball, but we may not do another crowdfunding offering in our future. So this may be the last time for individual retail investors to invest and support what we're doing. 

31:23
Reni Achkar (Host)
All right, let's now look at the bigger picture, more so on the whole process of the industry and what you guys do. So the first question I have here is what specific criteria do you consider when evaluating any biotech startups for investments? 

31:44
Neil Littman (Speaker)
Yeah, good question. So there are a number of criteria that we look at. So obviously, we're looking at the strength of the founding team. We're looking for what we typically call founder market fit. So does the founder or founding team have the proper skill set and set of experiences to build the company that they are trying to build? And for us particularly, what we're looking at is the scientific fit. Do they have the scientific experience? Have they worked at larger companies? Have they worked in the right labs? What was it about their PhD thesis that led them to this AHA moment to build something and develop something that hasn't been done before? So there needs to be the founder market fit, where the founder or founding team has the right set of expertise and experiences to support the scientific rationale the company is pursuing. So that is like number one. 

32:42
Neil Littman (Speaker)
Number two is, does the data that they have generated support their scientific rationale? What studies have they done to demonstrate that there is data supporting what they believe to be true is actually true? And so that could be it's oftentimes in vitro, that's test tube data. It's often early animal model data. It could be animal model efficacy data in a relevant disease model. Right. So we're typically often investing long before a therapy or drug is in human clinical trials. So we're looking at all the preclinical data set. How does that support the scientific rationale? And then, of course, we're looking at their financials. We're looking at the strength of the syndicate of investors. So we're not in the position to lead deals for the most part. So we're typically helping to fill out existing rounds of financing. And so who is the lead investor in this round? 

33:40
Neil Littman (Speaker)
What are the terms? What is the valuation? Do we feel like it's an attractive valuation compared to the exit potential of the company? Does the syndicate have deep pockets to continue supporting the company as they grow and as they scale, if they hit their milestones? What is. The next set of killer experiments that they need to do to create value, right? It's oftentimes that next set of experiments, so oftentimes it could be in vivo. So animal model efficacy data in animal model that recapitulates a human disease. So if they can do that's usually a big trigger point to then catalyze a series A investment, right? So are they looking at the right animal models? Are they raising enough capital to get to that outcome in this round of financing? And then, of course, we're looking at the strengths of their IP. We're looking at the market, all those different things. 

34:33
Neil Littman (Speaker)
And I'll just mention, obviously, we don't only invest in drugs. I would say therapeutic biotech platforms is roughly 60% of our portfolio. But we're doing quite a bit in digital health and digital therapeutics. Many of those are revenue generating opportunities. We're doing a little bit in medtech, a little bit in diagnostics as well. So there's a lot of different things that we look at. The other point, Reni, that I'll mention is we don't necessarily have all this expertise in house at Bioverge. So we leverage the input of subject matter experts and others to help us evaluate a lot of the science, and we pull them into our diligence process on an ad hoc basis to help us evaluate the data or the scientific rationale and the strength of it or whatever questions we may have. So I think we've learned a lot over the years about how best to do that. 

35:20
Neil Littman (Speaker)
The other point, Reni, that I'll mention is we don't necessarily have all this expertise in house at Bioverge. 

35:31
Reni Achkar (Host)
All right. Okay. And I think these two keywords are quite important in the space impact and scalability. You did sort of touch base on this, but if you could go a bit deeper into how do you assess the potential market impact and scalability of a biotech company, product or technology? 

35:52
Neil Littman (Speaker)
Yeah, good question. I mean, for us, it's all about the patient, right? So we have a very patient centric view of the world. And so how will the technology, whether it's a drug or if it's software that's trying to modify behavior, et cetera, how will that impact the patient or the individual? So, very simply, that's what we look at. Is it going to move the needle? How much is it going to move the needle? By definition, investing in healthcare is impact investing, but we're looking at, okay, is this drug going to be a MeToo drug? Right? Is this the 10th type of drug for this indication, or is this a first in class and best in class drug? Meaning, would this be potentially the first drug approved in this indication, in which case it would have a much larger impact? And so those are all sort of things that we're looking at. 

36:40
Neil Littman (Speaker)
I think our view is if there is a positive impact on the patient, whether that's through a drug or through the improvement of care delivery, those businesses are necessarily going to create value. And so that's what we're looking at. Oftentimes for drugs, there's a built in market, right? We know how many people suffer from a given disease. We know what the standard of care is. We know how well we don't know. But oftentimes when you're developing a drug, you put together what's called a target product profile, which means how will that drug fit into the standard of care? So we know how it will be likely adopted by clinicians. So we have a pretty good estimate of the market, which I think is often very different from the tech world, where it's a little more of a black box. Right. The biggest risk that we take, at least on the drug side, is, will the drug actually work? 

37:31
Neil Littman (Speaker)
And particularly, will it translate from animals to humans? Right? We've cured countless mice of cancer, but the drugs don't necessarily translate to humans. So what we're looking for is really companies that have an edge in better predicting how something is going to translate from animals into human clinical trials, right? If you can increase the probability of successfully translating therapies from preclinical studies to the clinic, that creates massive value. So that's really what we're focused on. And if we can do that creates huge impact, and that really, I think, impacts the patient at the end of the day. But again, we're also looking at digital therapeutics and digital health, where the software is akin to a pill, right. So a drug obviously has some sort of chemical modification on your underlying biology and chemistry. A software application is trying to modulate someone's behavior to lead to better health outcomes. 

38:34
Neil Littman (Speaker)
One of my big pet peeves and I don't want to go off on a tangent, but I will for a second. One of my big pet peeves is that we largely exist in a world that operates a sick care system, meaning that we often go to the doctor or diagnosed when we already have a disease or condition, and oftentimes it's too late. So we need to move from the sick care system that we have in the US. To a more preventative based health care system. And so a lot of our thesis around digital health and digital therapeutics is exactly that. It's personalized, preventative based healthcare to prevent someone from ever coming down with that disease. And so that's a lot of our thesis around what we're looking for digital health and digital therapeutics, that's the focus of our digital transformation fund as well. And so I think those actually fit very nicely with the drug portion of our portfolio. 

39:28
Neil Littman (Speaker)
So it's kind of a nice one two punch. 

39:32
Reni Achkar (Host)
All right. Okay. And is there any specific trends or area of innovation that you see as being the most promising in the biotech industry at the moment. 

39:46
Neil Littman (Speaker)
There's a lot we could probably spend a whole nother call on that, so I'll just touch on a few of them. Everyone, I'm sure, has heard of CRISPR before, right? So we have a number of companies in our portfolio that are developing CRISPR based therapeutics. So this idea of very precisely editing the human genome is incredibly powerful. I think most people have probably heard me tell the Ebbie story before about how she was cured of a previously incurable genetic disease. Those types of therapies are novel. They sound like science fiction, but they're science fact, and they're happening today. And so with the advent of things like CRISPR, we're going to be able to address a much larger number of monogenic diseases. Those are diseases that have a single gene defect, like Skid, which is what Evie was cured of. There's only a very small number that are being addressed today, but there's over 10,000 monogenic diseases, and so there's a huge opportunity there. 

40:45
Neil Littman (Speaker)
Along those lines, we're incredibly bullish on the field of regenerative medicine. So that's not just gene therapy, but also cellular based therapy. So things like induced pluriponent stem cells. Or we've got a company at Portfolio Hepatics that has developed adipose derived stem cells for the treatment of liver failure. So I think cell therapies are not quite where gene therapies are today, but they're sort of on the upswing, and we're seeing a lot more clinical data showing and demonstrating the power of cell therapy. So we're really incredibly bullish on that. Of course, I've got to mention artificial intelligence, right? I mean, we've got a whole portfolio of companies that are using AI or ML to try to improve the drug discovery or drug development process. That's one bucket that I think we're just beginning to scratch the surface of. We're now, after a decade, finally seeing the first AI derived drugs enter the clinic. 

41:42
Neil Littman (Speaker)
So that's really exciting. We just saw Nvideia make a I think it was a $50 million equity investment in Recursion Pharmaceuticals. Recursion is not in our portfolio. They're a publicly traded biotech company, one of the earliest tech biocompies, but Nvidia is the GPU chipmaker that underlies all the AI stuff. They're investing in this very small biotech company. What does that say? Well, that says the future of AI and Biotech is, to me, really bright. So that's clearly an area as well. I also think there's a huge opportunity in the digital therapeutics and digital health stuff I referenced before. There's been a lot of challenges of adoption in that field. There's a lot of companies that we see them sort of get piloted to death, right? So they have an interesting pilot with a healthcare provider, but it never amounts to a full blown contract. And so the companies never really generate revenue. 

42:35
Neil Littman (Speaker)
They can't secure reimbursement. So there's a lot of issues there, but I think there's a lot of companies working to crack that code. So I think there's a lot of potential there as well. So I could spend another hour talking about this stuff, but those are a couple that I'm particularly excited about. 

42:49
Reni Achkar (Host)
Yeah, no, that makes sense. And going back to the due diligence and the research you do into the companies you potentially invest in, even though you've got that whole process in place, are there any challenges that you commonly encounter when assessing the scientific and technological feasibility of the startup's product or idea? 

43:13
Neil Littman (Speaker)
Are there any challenges? Yeah, I mean, there's always challenges, right? I mean, the biggest challenge is just ensuring that the data supports the scientific rationale and that we can believe the data enough to warrant an investment to help them catalyze that next milestone or that next set of killer experiments. And it's not always 100% clear, right. Data is open to interpretation. These companies are run lean and mean, and so they don't always have all of the experiments that you would want to see to make a fully informed investment decision. Right. And so oftentimes we're operating in an area where we don't have 100% information, and that's true for investing in any startup, I guess I would add. But I think the biggest challenge for us is making sure that we understand, we validate the science and we see a clear path forward in terms of generating value and the next set of milestones and killer experiments that can catalyze the next round of investment. 

44:13
Neil Littman (Speaker)
It's really impossible to predict whether how preclinical data will translate to human clinical trials. That's why we're always looking for companies that have an edge in doing so, whether it's through artificial intelligence and machine learning, whether it's through preclinical models like organoids or induced pluripone stem cells or whatever it may be that's of particular interest to us because that, in our mind, derisks the investment. But, yeah, I'd say that's probably the biggest challenge right now is a very tough financing environment. So one of the things we're looking for is there a strong syndicate in place, right? Is there a strong lead investor? Are we joining a group of investors that if data is positive, they will be there to support the company going forward? Right. So that's certainly a point of diligence now more than it has been in the past. 

45:02
Reni Achkar (Host)
Okay. All right. Yeah, makes sense. 

45:05
Neil Littman (Speaker)
Hey, Reni, just real quick, I just want to add, if anyone who is listening has a question, I think you can raise your hand or otherwise let us know. If you have any questions, feel free. 

45:16
Reni Achkar (Host)
To join into this conversation. You can request to be a speaker as well. 

45:23
Neil Littman (Speaker)
Okay. Go ahead, Ren. 

45:26
Reni Achkar (Host)
Yeah, so I guess I think what would be interesting to hear as well is maybe some more success stories of any startups that you've previously invested in and if there was any special quality that really made them stand out. 

45:44
Neil Littman (Speaker)
Sure, yeah. There's quite a few. Why don't I tell one of my favorite ones? Because I think this is just a super cool story. So, we first invested in a company by the name of Volumetric in July of 2020. The founder and CEO was a professor of biomedical engineering at Rice University. We met through one of our advisors. Volumetric was, and still is developing technology for 3D bioprinting human tissue and organs, right? I mean, talk about something that sounds like science fiction, right? But they have already produced the world's most complex 3D printed object ever, a human lung scaffold. It's already demonstrated gas exchange in animal models. The technology made the COVID of Science magazine back in, I think it was May of 2019. I won't go into some of the technical details. Scientists at one of their partners, this company, United Therapeutics, is planning to cellularize the 3D printed scaffolds with a patient's own stem cells to create transplantable human lungs that should not require immunosuppression to prevent rejection. 

47:00
Neil Littman (Speaker)
Again, this sort of sounds like science fiction, but this is actually happening now. Now we're not there yet, right? We probably aren't even that close to being there. But what would it mean for humanity if we could engineer mass produce human tissues and organs for transplant? Right? I forget the exact stat reni, but something like 18 people die every day in the US. Waiting for an organ transplant. I think it's 60% of properly donated organs are ultimately wasted because there's a short clock on Viability on the donor organs, or the organs aren't functioning well enough to permit transplant. I forget the exact stat Reni, but something like 18 people die every day in the US. But I want to tell you a really interesting story about this company. Actually, before I do that, I should mention volumetric was acquired in July of 2021. So only twelve months after our initial investment, the company was acquired for up to $400 million. 

48:01
Neil Littman (Speaker)
It was a $45 million upfront payment, plus $355,000,000 of potential milestone payment. So, if all those milestones hit, that gives us and our investors a 26 X return. It was about a three and a half X return for us on the upfront capital alone. And so we can probability adjust the milestones hitting any way we want, but certainly some portion of them will hit. So, the interesting story that I was going to say, though, is the key breakthrough in the company developing the technology was actually around developing novel bio inks to use in the printing process. So bioinks that had been used previously in 3D printing were all carcinogenic. So they could never be applied to the realm of biology for that reason. So Jordan Miller, who's the CEO, who was the CEO of Volumetric, realized, and this was the, AHA, eureka moment, realized that he could use food dye as the substrate to absorb the right wavelengths of light to make the 3D printing process work. 

49:07
Neil Littman (Speaker)
So I'm sort of paraphrasing what Jordan likes to say, but he basically went to the supermarket. He bought a kit of food coloring that people use for baking cakes and frostings and used that in the platform. And lo and behold, that was like the big unblocking moment to catapult the technology forward. And so it's kind of amazing, like where these Eureka moments come from. So that's one of my favorite early stories. 

49:31
Reni Achkar (Host)
Nice. Okay, cool. Well, we're down to our last two questions that have been previously submitted. So first, the second to last one. How do you work with portfolio companies when helping them navigate the regulatory landscape and ensuring that compliance with industry standards is in place? 

49:53
Neil Littman (Speaker)
Yeah, so let me broaden the aperture of that question initially. So when we're working with companies in our portfolio, they view us as any other seed stage venture capital firm. And so we really do our best to provide value added support and resources to our portfolio. So oftentimes that means opening up our Rolodex and making connections with them to folks who can help them navigate or overcome whatever complexities or challenges they happen to face. Or oftentimes it is introducing them to other VCs who can participate in a future financing round or lead a future round of financing if a company, to your question, has specific challenges around the regulatory environment or reimbursement. I don't pretend to be a specialist in those areas. I know enough to be dangerous, but we're going to go find someone in the biwergs network who is an expert in that area and we'll connect them to those people to help them answer those specific questions because those questions are extremely nuanced and it's critical that the companies get that right. 

50:53
Neil Littman (Speaker)
So for us, it's really being able to pick up the phone and get to the right people who can help the company navigate whatever challenges they're facing. Right. In the biotech world, particularly when you're talking about novel therapies like cell and gene, therapies manufacturing is a big issue, right. So we've got lots of folks that can help with the manufacturing and process development and things like that in addition to regulatory reimbursement. So I think that answers your question, but that's really how we, I think, provide support to our portfolio companies. 

51:30
Reni Achkar (Host)
Okay, cool. And finally, in your experience to kind of summarize things, what are the key factors that contribute to the success or failure of a biotech startup? 

51:45
Neil Littman (Speaker)
Well, that's a good question. There's a lot that goes into it. Obviously, it's the quality of the team and it's the quality of the science. I'd say it's not entirely different from the tech world where the science doesn't always work out as predicted. Oftentimes it doesn't work out as predicted. So you need to have a management team that is capable of adapting and evolving. Right. In the tech world, you would call it pivoting to something else based on the scientific data. So there are some scientists, a lot of scientists that are very rigid and sort of have blinders on and there's one way to do things and they often don't make the best entrepreneurs. And so what we're looking at is, does the team have the wherewithal to pursue their mission and be passionate about their mission while still recognizing that it may need to change in some form or some fashion? 

52:56
Neil Littman (Speaker)
I'll just give you one example. We have a company in our portfolio now on Clear therapies that was initially developing a treatment for ALS or Lou Gehrig's disease. That's why we invested. We liked the data, we liked the scientific rationale. The team was built from spin out of Harvard. They had great data. I won't go into the details of the hypothesis because we're running out of time, but turns out that the data that they generated didn't support using their approach in ALS patients. Very disappointing. But they had the wherewithal to pivot and say, okay, we've created a delivery vehicle for what was going to be our ALS drug that can be applied to delivering drugs to deep in the brain. And so they're now working with neurosurgeons that are treating brain cancers to help them deliver chemotherapies to brain tumors that are hard to reach. 

53:54
Neil Littman (Speaker)
Well, that was never part of our investment thesis. That was never part of the product roadmap. But they saw another use of their technology. It was getting adoption in the marketplace. And so they had to pivot. And so I think that's really critical because science and any early stage investment is never going to be a straight line. And so for us, it's the combination of do we have the right team to justify the scientific rationale and do all those things, but do they have the wherewithal and self awareness that things may need to change based on the data that they're seeing? 

54:29
Reni Achkar (Host)
Cool. I guess we've got a few minutes here left. Does anyone from the listeners want to jump in, ask Neil any questions they might have or add on to the discussion? Okay. 

54:52
Neil Littman (Speaker)
Not seeing any hands up at the Can Reni. If you want, we can sort of wrap up. I can kind of give a closing. Not seeing any hands up at the Can Reni. 

55:02
Reni Achkar (Host)
No, that was it from the submitted questions. If you want to wrap things up. 

55:07
Neil Littman (Speaker)
From have actually, we have a question. Hold on, let me see if I can invite Justin as a speaker. Hang on. I'm new to this, so let me. 

55:20
Reni Achkar (Host)
See if I can do this. 

55:24
Neil Littman (Speaker)
Okay, Justin, you should be able to speak now. 

55:27
Speaker 3
Hello. 

55:29
Reni Achkar (Host)
Hi. Hey. 

55:31
Speaker 3
My question regards Pro Rota rights for Bioverge. I don't know that much about how biotech rounds go. I know more about how software companies go. So how does the Pro router rights work within your SPV? Because I would imagine these rounds can get quite expensive. Just a little clarification on. Do you do a follow on SPV for the additional rounds or has Bioverge ever been in that position before? 

56:05
Neil Littman (Speaker)
First of all, Justin, great question. The answer is yes, we have been in that position many times. In fact, as I mentioned, we have a portfolio of 37 companies, but we've actually closed 61 deals. So 24 times we've actually followed on our initial investment. And so how it works from sort of a structural standpoint is, yes, we put together a new SPV to exercise our prorata rights in an investment. And so what typically happens in practice is there's some percentage of the initial investors that invested the first time that will want to exercise their pro rider rights and will participate in the second SPV. There's some percentage, and it's usually about half that don't and only want to invest the first time. And so then we'll go out, we'll syndicate that prorata SPV to our membership and allow additional new investors to come into that prorata round. 

57:06
Neil Littman (Speaker)
And so that's typically how we've done it in the past. And that seems to work well. And that's obviously a little different than how a traditional venture fund would operate because we don't have a dedicated pool of capital to draw from. That's been our model and that has seemed to work well for us. 

57:24
Speaker 3
Okay, yeah, I asked that because I don't know if you saw the news today, but the portfolio company, Excision, I believe they just got fast tracked for the FDA. 

57:37
Neil Littman (Speaker)
Yep, I did see that's. Great news. They've been, I think, very exciting. They had great early data in their currently ongoing clinical so for the folks on the call, excision is one of the companies developing sort of a CRISPR based platform. They're targeting viral infectious diseases with their platform, starting with HIV. So, yeah, no, great, Justin. Thanks for pointing that out. 

58:01
Speaker 3
Yeah, thank you. 

58:04
Reni Achkar (Host)
Cheers. And was there anyone else? I think somebody else had their hand up. Just checking in. 

58:12
Neil Littman (Speaker)
I'm just going to give a quick shout out to Caleb. Hi, Caleb, nice to see you. 

58:20
Reni Achkar (Host)
Okay, I guess that brings us to a swift end. Neil, if you want to wrap things up with any closing statements, now's the time. 

58:32
Neil Littman (Speaker)
Yeah, sure. So I guess just in closing, I think the thing to remember about us is we are a fintech platform for early stage healthcare investments. We really offer everyone a chance to invest in companies and companies that are tackling diseases that affect all of us. Plus we give people the chance to generate outsized financial returns. And so obviously, we're conducting the Reg CF raise right now. And again, investors in this Reg CF raise get access to our full portfolio, the ability to receive dividend distributions if and when companies in our portfolio have an exit. And I really would encourage folks on this call to invest in us and support our mission of bringing science fiction to life. That's our goal. That's really why we exist in this world. And so we really are looking to democratize access and enable all of us to invest in the future of our own health. 

59:35
Neil Littman (Speaker)
So with that, Reni, I think we can wrap things up. 

59:39
Reni Achkar (Host)
Cool. Thank you so much for that, Neil. So with that, Reni, I think we can wrap things up. And thank you for everyone else for joining us. 

59:47
Neil Littman (Speaker)
Great. Thanks, everyone. And then this is recorded, so we'll be sure to distribute this as well through one of the updates through Republic. 

59:54
Reni Achkar (Host)
Yep, absolutely. Thank you. Take care, guys. 

59:57
Neil Littman (Speaker)
Okay, thanks, everyone. Bye.