Summary

On the latest episode of The Bioverge Podcast, D.A. Wallach sits down with Neil Littman to discuss his journey from recording artist to venture capitalist, his co-founding of Time BioVentures with Timothy Wright, and his vision for transforming biotechnology and healthcare with technology.

We were thrilled to welcome D.A. to the show and couldn't agree more with Time BioVenture's perspective:

"We believe the life sciences revolution is the venture capital opportunity of our lifetimes."

Listen on SoundCloud: https://lnkd.in/gTzEVQui

Listen on Spotify: https://lnkd.in/gpccK7Hp

Listen on iTunes: https://lnkd.in/gaWwjPUb

Listen on Youtube: https://youtu.be/LUM62QQPBU0

Transcript

00:29
Danny Levine (producer)
Neil, we've got DA wallach on the show today. People may know DA from the world of music, but for listeners not familiar with him, who is he?

00:38
Neil Littman (host)
DA is a venture capitalist these days? As you said, Danny, he is a musician and acclaimed recording artist. I would tend to describe DA as a polymath. He has wide ranging interest, his deep expertise across industries as an undergrad at Harvard, his ban, Chester French was signed by Pharrell Williams and he's toured with the likes of Lady Gaga, Weezer and Blink 182. In 2011, though, DA stopped touring in order to focus on his other passion, which is investing. He has since built a parallel career as a venture capitalist, backing technology companies like Spotify and SpaceX among others. In 2015, DA has since been focusing on investing in biotech and healthcare. He's invested in companies such as Beam Therapeutics, Doctor on Demand, Norlink and many others. Most recently, DA launched a new 100 million dollar venture fund called Time Bio Ventures where he is a GP.

01:39
Neil Littman (host)
I am incredibly excited to talk to DA today about his professional journey, which is unique to say the least, and what he's doing today with Time Bio Ventures.

01:51
Danny Levine (producer)
Where does Time Bio Ventures fit into the world of venture investing?

01:56
Neil Littman (host)
Yeah, well, it's a new fund so they have a number of portfolio companies already. I mentioned Nora Link being one of them. Cling Therapeutics is another one that I think they've been developing in house. I am really interested to hear DA's investment thesis for the fund. I'm curious to hear if they are going to invest in more traditional biotechnology companies, if they're going to be investing in more what has become known as tech bio. If there are specific industry verticals, they focus on if it's therapeutics or diagnostics or all of the above. They say on their website that they tend to have a contrarian investment strategy. I'm interested to talk to DA about what that strategy is.

02:39
Danny Levine (producer)
In a relatively short amount of time, his stature as an investor has really risen. What makes him such a compelling figure?

02:48
Neil Littman (host)
Well, I think DA is incredibly thoughtful. He is a very curious person by nature and so I think he has been able to get up to speed on healthcare and biotech incredibly fast, not having a background in the area. I think his intellectual rigor that he brings to the space has made him pretty formidable and has allowed him to raise this new fund along with Tim Wright who is an industry veteran. It seems like they have a pretty complementary skill set. I think DHS is an incredibly thoughtful person and is just incredibly curious and I think those are attributes that make for a great investor.

03:31
Danny Levine (producer)
What are you hoping to hear from him today?

03:33
Neil Littman (host)
Yeah, well, I'm hoping to learn about his personal career journey, starting from his days as a musician that transitioned to being an investor first in tech and then why he decided to make the move into healthcare and biotech. That's not often something you see, and it's even rare, obviously, to see a musician make the leap into the VC world. I'm really just curious about his personal journey, and then I'm really hoping to hear more about Time Bio Ventures, what their investment thesis is, the types of companies and entrepreneurs they're looking to back and invest in, and also what Dae's vision is for the future. Both short term, let's call it three to five years, and then over the long term, are there major advances that he's particularly excited about?

04:17
Danny Levine (producer)
If you're all set?

04:18
Neil Littman (host)
I'm all set. Danny let's do it. DA, a big thanks for joining us. I have been looking forward to this conversation for a while, so I am incredibly excited to welcome you to the show today.

04:31
D.A. Wallach (guest)
Oh, thanks. Nice to be here.

04:33
Neil Littman (host)
We are going to talk about your career path, which is a truly fascinating one, to say the least, your evolution as a healthcare investor and your vision at your new fund, Time Bio Ventures, for the transformation of the healthcare industry. Before we start, though, DA, I've got to say we've featured many people on the show who we consider to be rock stars, but you are the first bona fide rock star we've had on the show.

04:58
D.A. Wallach (guest)
Well, that might overstate it but I'll take it.

05:02
Neil Littman (host)
I do want to start with your musical career, but I actually want to share a quick story. Not sure if you remember, but it's a quick story from how we first met, because to me, it provides great insight to what I would call your intellectual dynamic, range and curiosity. Were at a conference in San Diego. This was probably six to eight years ago at this point, and you were a speaker on a panel, along with a few other biotech healthcare VCs and some longtime healthcare industry veterans, people with 20 to 30 years of experience. I was in the audience and truth be told, didn't recognize your name from your musical career, which probably says a whole lot more about me than you. My wife likes to make fun of me because I typically find myself stuck somewhere between Metallic and the Grateful Dead most of the time.

05:52
Neil Littman (host)
Anyway, before the panel kicked off, I thought, what in the world is a musician doing on this panel? I figured it may have been a publicity thing for the conference, but I got to say, I was dead wrong. You were by far the best person on that panel. You had the most thoughtful answers and asked the best questions. I was blown away with how knowledgeable you were. It was really incredible.

06:15
D.A. Wallach (guest)
Well, you are far too generous.

06:18
Neil Littman (host)
Well, I've got to say, just to put a nice bow in the story. I got home from the conference and so I, of course, had to go download your newest album, The Time Machine, and loved it. It actually became my go to for probably like six months. I still have a bunch of your songs on a couple of playlists that I listen to regularly. So anyway, just want to share that.

06:37
D.A. Wallach (guest)
Thank you, Neil. I should come on your podcast every day. It's a good start to the day.

06:42
Neil Littman (host)
I really appreciate you being here. So, DA, let's jump into things so people may know you as the lead singer of the band. Chester French, as a senior at Harvard, pharrell Williams signed you to his label. You entered the music industry at a time of enormous change because of pretty disruptive technology at that time. How did you view what was happening to the music industry from the artist's point of view?

07:08
D.A. Wallach (guest)
Well, at the time I had one agenda, which was to try and make our band as successful as we could be. I think we took the industry as it was, which was, as you point out, in considerable transition at that moment. I don't know that we felt one way or another about that. It was just what we had to navigate. To put a little context around it, we graduated from college in 2007. That's when we signed this record deal. The industry that were joining professionally, I mean, really as our first job, so to speak, was a shadow of its former self, about maybe 15, 20% of the size it had been in the mid 90s as measured by total revenues. There was a lot of fear among artists, a lot of uncertainty about, what the future would be for musicians. I think were very lucky to have a pretty easy on Ramp in that we started by getting this big record deal.

08:23
D.A. Wallach (guest)
In that respect, were coddled by having a major label behind us and meaningfully sized budgets to work with. We didn't bear the brunt of it, but we certainly experienced that it was a rapidly transforming business model and we tried to come up with creative ways to navigate that.

08:47
Neil Littman (host)
Of course, at that time there were things like Napster. Right. I think that the big transition was really the advent of itunes. You really got to see close up that the impact transformational technology had on the music business. You were, I believe, the first artist in residence at Spotify, where you're also an early investor. Did this experience give you any insight into harnessing technology to change an industry?

09:14
D.A. Wallach (guest)
Well, it did. I think if you try to abstract what happened into a kind of theoretical framing, the major forces at play there were unbundling. Specifically, the album format was dissolved into a model where people could, with the download model, like through itunes, buy individual songs instead of needing to buy an album. Ultimately streaming, people have the ability to listen to songs instead of buying songs or buying an album. So that was one thing. Along with that, another force was this disintermediation of retailers. The record store as it had existed for a long time, became irrelevant and was replaced by digital retailers or digital platforms like itunes and then Spotify. The benefit of all this was largely to the music fan, to the listener, because it went from a world where you had to spend $18 to buy an album that maybe only had one song you really wanted on it and you had to go to the record store to get that.

10:36
D.A. Wallach (guest)
Instead we got a world now today where you can pull out your phone and listen to any piece of recorded music ever, whenever you want, and you don't need to think about paying for it. Ala Carte it's just a much better experience in so many ways for the consumer. I think that taught me that albeit capitalism is our system, the way it works is really that ultimately consumers get what they want. I don't know, consumerism is probably not the right term because that word is already taken. There is some broader lesson there that I think as time goes on, end users in different industries ultimately should get a better experience, lower cost, more convenience in our economy.

11:30
Neil Littman (host)
Yeah, and I'm curious how you've taken some of those lessons and have applied it to your current focus, which is investing. In 2011 you stopped touring to focus full time on investing. Your early investments focused on technology. I'm curious about some of the parallels between what you learned early in your music career and those changing industries and if that applied to your technology investing. So maybe we can start there. I want to talk as you began to focus on technology, to biotech and healthcare. I'd love just to understand your framework when you began your investing career full time.

12:04
D.A. Wallach (guest)
Yeah, when I began my investing career full time, it was as an untrained investor. I benefit and suffer from being self taught in that I never came up through jobs at other investment firms. I was never trained in the business in a typical way. Initially based on Spotify success, I very naively just thought, wow, this was really fun and not easy. It was as simple as finding a company that I thought had a product people were going to go crazy over and recognizing the appeal of that product myself, and then having the conviction to say, okay, let's bet that other people are going to feel the same way about it that I do. Originally that was how I approached things, I just went looking for other companies, other products that I personally really resonated with, and that took me into some really unusual and interesting businesses.

13:16
D.A. Wallach (guest)
I was a seed investor in an early cryptocurrency company called Ripple that's become a major player in that industry. I invested in SpaceX quite early, and a company called, at the time, Memphis Meets, now called Upside Foods, that's in the lab, grown meat space. Those are all very different businesses and very different industries. What they had in common was that when I found out about them, I thought what they were doing was really remarkable, appealed to me personally just as a consumer or observer, and I jumped in. I think over time, I've learned much more about what drives successful venture capital investing, and it's changed my perspective. At the beginning, it was really that simple.

14:13
Neil Littman (host)
I want to put a pin in that. We'll come back to how your perspective has changed. I want to talk about your transition, which I believe began in 2015, where you really started to almost exclusively focus on healthcare and biotech. Can you talk about what interests you in healthcare and biotech and why that transition?

14:31
D.A. Wallach (guest)
Yeah, sure. The first investment I made in the healthcare industry was in a company called Doctor on Demand that a friend of mine named Adam was starting. I knew nothing about the healthcare business, but I did know Adam very well, and I thought he was a fantastic entrepreneur. What drew him into starting a healthcare company was that he'd built other businesses in different industries and they'd been successful, but he felt like he didn't have this fulfillment that would come from impacting people in a deeper way. I think Adam's migration into health care similar to mine. It was this sense that some other types of businesses were economically very interesting, but frivolous in a way relative to what's done in health care. It's just the healthcare industry helps people, touches people at these incredibly vulnerable and important moments in our lives. Building businesses in the industry is just inherently substantive.

15:49
D.A. Wallach (guest)
As I started to learn more about the industry, I was frankly shocked at how technologically outdated it appeared. That drew me in because I thought, wow, as a venture investor, what more do you want than a massive set of markets where technology has not delivered to industry or to consumers what it should? Just the gap between the status quo and what with existing technology seemed possible struck me as enormous.

16:31
Neil Littman (host)
Yeah, and I couldn't agree more. Obviously, health care investing in general could be, and I don't particularly like this term, but could be considered impact investing. Right. It's impacting all of our health at the end of the day, although I don't particularly like to use that terminology per se, but DA, I've heard you describe publicly. I believe it was on the Patrick O'Shaughnessy podcast a few years back. A very personal story you had in terms of using some cutting edge biotech when you were starting a family. Do you mind sharing that story?

17:05
D.A. Wallach (guest)
Yeah, sure. My sadly now late wife Liz had a genetic mutation in a gene called Mlh, one that predisposed her to a number of different cancers. This is a similar mutation to the mutation Angelina Jolie was widely publicized for having in BRCA. We found out that Liz had this mutation and were thinking about starting a family, we decided to use in vitro fertilization IVF because it would allow us to genetically screen embryos and ensure that the child we would have would be free of the mutation that Liz carried, which, in theory, would be present in about 50% of her eggs. We did that, and our daughter, who's now two and a half, does not have the mutation that Liz did. It was an incredible personal experience with preventive medicine, I'd say the ultimate type of preventive medicine, where through this technology were able to ensure that this disease was eradicated in our family.

18:32
Neil Littman (host)
It's really kind of an amazing illustration of what we have available today. NDA, I want to say very sorry to hear about your wife's passing.

18:41
D.A. Wallach (guest)
Thank you.

18:44
Neil Littman (host)
We could go down for the CRISPR rabbit hole because I know you're an investor in Beam Therapeutics and they're doing some genetic engineering and some gene therapy type approaches. There's a whole ethical framework about designer babies and things like that, which we're not there yet, but you could envision that future. Before we get into some of that stuff, though, without having a scientific background yourself, how have you gotten yourself comfortable investing in healthcare and biotechnology in particular?

19:18
D.A. Wallach (guest)
Sure, healthcare is again, it's such a huge industry and there are so many subsectors within it, but it does function as an integrated system in some sense. You can distinguish between the pharmaceutical industry and the healthcare delivery system and the medical device industry and the pharmacy supply chain. And that makes sense to some degree. I think investors benefit from, or policymakers as well, benefit from viewing it as this whole integrated system. My ambition has been to try and build an understanding of the whole thing. That, I think, involves navigating a lot of complexity, both on the scientific front, which is required to understand the actual products that are used in medical practice, but also just as much in understanding the system itself. Because we've created a lot of manmade problems in healthcare and the way that we deliver medicine, the way that we pay for medicine, is extravagantly complex.

20:38
D.A. Wallach (guest)
I've just put a lot of time and energy into reading, talking to smart people, talking to folks who are on the front lines of health care to really try and understand the mechanics of care delivery and our payment system and stuff like that. Over time, it's like a patchwork quilt that you just progressively fill in the blanks on. That said, I feel like you never stop learning in health care because it's so big and it's so complex. On the scientific front, biology is endless. Even if you were to understand everything that people know today, which would be an impossible task in a lifetime, what we don't know is much more than what we do. So we're always learning. I think that's one thing that I find so fun about investing in this area is that there's always new learning to do.

21:41
Neil Littman (host)
Yeah, I couldn't agree more. I think the pace of innovation within healthcare and biotech is unprecedented, I think. We're moving faster now than we ever had in the past. I want to pull one of those threads DA in terms of talking to smart people and meeting the right folks and just always learning. Obviously, one of those folks is Tim Wright, your co founder and partner at Time Bio Ventures. Let's transition and talk about what you're doing at Time Bio Ventures. You recently announced the close of your first fund at $100 million. Big congratulations, by the way, on launching that. How did you connect with Tim Wright?

22:22
D.A. Wallach (guest)
Yeah, Tim and I met through a mutual friend of ours, again named Jim Schaefer, who maybe you've encountered. Jim and Tim had been colleagues at Caliber, which is a biotech spin out of Scripps Research. I had gotten to know Jim years ago. Turns out we're both from the same little town in Wisconsin. I was thinking a few years ago that I really wanted to find a partner to start a firm with, and Jim had the foresight to suggest him. Just turned out that Tim was at a moment in his career where he'd been thinking about getting into venture capital, and were just a great fit.

23:10
Neil Littman (host)
Let's talk about then, your thesis at Time Bio Ventures. I believe on your website you state that you believe the life sciences revolution is the venture capital opportunity of our lifetimes. Can you describe why that is?

23:28
D.A. Wallach (guest)
Sure. Well, I think you've got a combination of enormous problems in health care that really demands solutions. Those range from very prosaic problems like how do we do pre approvals in a more efficient way, up to societal problems like how do we avoid healthcare costs bankrupting our country, to scientific problems like the unmet needs in so many of the diseases that today remain without decisive treatments. You start with this huge landscape of problems that are really big problems that need solving and that society will spend a lot of wealth to solve if it can. Basically, big market is the first one, and then you pair that up with what I think appears to be a genuine technology revolution that's taking place in molecular biology. The counterpart to that is what has happened in software and computing, which again to my earlier points, has not really benefited the healthcare industry's efficiency in the way that it has many other sectors.

25:02
D.A. Wallach (guest)
You've got to sort of simplify it. These three great attributes which take a note of technology that's already happened in computing that has the potential to drive huge efficiencies and improvements in the quality of our healthcare system. This wave, that's the first one. The second is this wave of new breakthroughs in molecular biology that promises over the next decade or two to produce solutions to a lot of big problems in biology and medicine. And then third, this enormous need. You put those all together, it's hard for me to imagine that huge companies aren't going to be started during the rest of my career. As I say, if you were investing in computing over the past 30 years, what would have been the ultimate strategy? Well, you would have wanted to invest in Google and Facebook and Amazon and Apple and Oracle and all these great enormous household names.

26:18
D.A. Wallach (guest)
My bet is we're going to see companies like that built in the health care economy. Our mission as a firm is to try and be there when they're started and try to be a part of those.

26:34
Neil Littman (host)
There's a number of threads that I want to double click on, but let's start at the 30,000 foot vantage point. Are there, are there specific industry verticals that you focus on or maybe set another way? Are there areas within healthcare that maybe you stay away from?

26:52
D.A. Wallach (guest)
We at a high level, I think, don't try to think of the industry in a vertical paradigm. Part of the reason for that is that we think this is a moment of convergence where the silos between types of companies are breaking down and being blurred. We think that the Facebook of healthcare, the Google of healthcare, if those companies are started today, it's likely that they won't fit neatly into one of those boxes. You can imagine those kinds of hypothetical new companies doing things that involve healthcare information, but also that incorporate therapeutic development or diagnostics. We look at the research tool space a lot, which itself is kind of inherently diagnostics, but then also instrumental to therapeutics development. The point I want to make is we think that it's helpful to take a vertical agnostic mindset in the healthcare investing today as we look for what might be these huge new companies.

28:30
D.A. Wallach (guest)
Does that make sense?

28:31
Neil Littman (host)
It makes total sense. I want to ask about this idea of the convergence of technology with bio or with health. That's a major theme these days within the industry. There's become even new nomenclature for this type of company, which I'm sure you've heard right, tech bio instead of biotech is a tech bio. That the archetype that you're looking for? Does that term even mean anything to you? I'd be curious if you can think about how a tech bio company, some of the companies you're describing might be different than a traditional biotech company.

29:07
D.A. Wallach (guest)
Sure. Well I think that term reflects the east coast, west coast divide or the tech versus biotech VC cultures basically that has been used by folks who are coming out of a tech investing background like me who are increasingly investing in biotech. Their story is that computing is now fundamentally changing the way that biotech works. I'm maybe a little skeptical of that thesis in that while we do see big opportunities for computers in drug discovery and diagnostics and some of these other areas, that's kind of table stakes and I don't think that is lost on pure play biotech investors. We define ourselves much less on this continuum of tech bio versus biotech and I'd say are much more rooted in health care. We think of ourselves as healthcare investors because the market we're trying to address is the healthcare industry. The way we're trying to address it is by finding companies that we think are going to transform the way medicine works.

30:32
D.A. Wallach (guest)
We're impartial when it comes to how much computers are involved in those companies. We certainly are conversant in computing and machine learning and machine vision and any of these other technologies that are on the rise. At the end of the day, all that matters to us is whether companies have a really creative and promising way of addressing a huge problem in medicine and that's kind of the bedrock of our strategy.

31:07
Neil Littman (host)
Yeah, I like that, DA. I mean I think that's a really great framing of it. Let's talk about some of the things that you do look for specifically in companies. One of the things that you say you look for is this idea of an iconoclastic founder. I think a lot of investors would probably describe what they look for in terms of technology or a strong management team. What do you mean specifically by an iconic classic founder?

31:31
D.A. Wallach (guest)
Sure. I'll go back to my claim that what we're looking for are people who might build the next Google or Facebook and those are very unusual entrepreneurs. They're few and far between. What they tend to have in common is that they're not in it for the money, they're in it for some other idiosyncratic personal motivation. What is true of anyone who builds a business of that scale is that chances are along the way they have to turn down opportunities to sell the business many times at what would be great outcomes for them personally or for their investors. So they're swinging for the fences. They're not just trying to get on base. And that's what we're looking for. We will back people who are doing things that are less crazy but sensible and have huge potential benefit to patients. What really gets us excited every morning is hoping that we're going to meet that next Larry Page or Mark Zuckerberg.

32:37
Neil Littman (host)
Yeah, definitely a different mental framework, I think that some of those folks operate under. So I think that's really exciting. Let's talk your book for a minute. Walk me through a few of your investments, explain what led to making those investments. I'll let you pick one or two to kick things off.

33:02
D.A. Wallach (guest)
Sure. One we're very excited about is a company we just backed called Phantom Neuro. What they're doing is developing an implantable electrode array that can go in the amputation stump of amputees. Think of a war veteran who's lost their arm from the elbow down, for example. These patients today have at their disposal prosthetics that are relatively limited, don't allow you to have anywhere like the control that a biological hand gives you. What Phantom Neuro aspires to do is develop this implantable electrode that can be surgically, very simple outpatient procedure, surgically implanted in that patient's arm and thereby detect the nerve signals that would normally control their forearm and hand. Through this, we believe it will be possible to give amputees lifelike control of prosthetic limbs and next generation prosthetic limbs. We think that's really a very promising area. It fits into this broader theme of Socalled bioelectronic medicine that we're very excited about.

34:29
D.A. Wallach (guest)
We're also investors in Neurolink, which is Elon Musk's brain Computer interface company. They're doing something that is arguably riskier, more ambitious, but also has huge potential, which is implanting sensors directly in the brains of patients to enable them to output information with their mind directly and control things like a wheelchair or type and communicate. That's one area we're very excited about. We have another company that is our pride and joy because we've been building it internally. That's called kling biotherapeutics. Cling is antibody and antibody derived drug development company. The premise of its approach is to take patients, either cancer patients or infectious disease patients who have had remarkable outcomes. Think of cancer patients who have received treatment and then been cured and beat the odds. What we do is we take those patients and screen their immune repertoires for B cells that they have naturally produced that may have been instrumental to their cure.

35:53
D.A. Wallach (guest)
If we can find those which we have now, in many instances we develop those antibodies as drugs that could be given to other patients. I think it's such a beautiful idea that you could take patients who have been cured, whose own immune system has produced effectively drugs that aided their clearance of a disease and then leverage that for the benefit of other patients. So that's a second one. We're very.

36:27
Neil Littman (host)
Excited about that one's. So cool. Think about just an entire premise of that. I mean, you're accelerating almost the process of natural selection, and you're accelerating that and harnessing that to bring it to more folks, which is just, I think, such an elegant concept. Any other companies that you want to mention otherwise, I want to move on and shift gears.

36:50
D.A. Wallach (guest)
Yeah, let's move on.

36:51
Neil Littman (host)
Okay, let's talk about an essay that you wrote, I believe, about two years ago called The Paradox of Drug Pricing, which is oh, man. Perhaps a somewhat esoteric topic, but it's a really important one, I think, for people to understand, because so much of pricing within the healthcare industry and drug pricing is just totally misunderstood. I'm making a leap here, but I know you're also on the advisory board of no Patient Left Behind, an organization founded by Peter Kolchinsky from RA Capital that talks a lot about drug pricing. I've read a bunch of his stuff. Could you talk about your essay and then your role with no Patient Left Behind? Because I'm assuming there's probably some overlap there.

37:36
D.A. Wallach (guest)
Absolutely. Well, there is a broad public, I'd say demonization of the biotech and pharmaceutical industries, and most of that, in my view, is unwarranted. Of course, all kinds of big companies do bad things from time to time, but I'd say the public and this is reinforced by politicians is delusional in its perception of some kind of predatory pricing model by the pharmaceutical industry. Now, you can forgive people for having this delusion because the way that we pay for medications and the prices of those medications are so difficult to understand. What I tried to do with that essay, which other people have tried to do as well. I'm not the only one who's ever tried to explain this is make it really as simple as possible for people to understand what is driving the prices of drugs and when they go to the pharmacy, what the price that they pay is the product of.

39:04
D.A. Wallach (guest)
It's the product of a very complex supply chain that involves multiple intermediaries. The bottom line is that the price that is often quoted in the media for a given drug tends to be the so called retail price. The retail price of a drug is very different from the, quote, net price, which is the actual cost of that drug, the actual price received by a manufacturer, like a pharma company after you account for the various rebates that are taken out of that price. Whereas you may hear about a drug that costs $2,000 a month, it could, in fact, turn out that the pharmaceutical company is only getting paid $500 or $600, and that is the effective real price of that drug. No Patient Left Behind, as an organization, is trying to create a greater public literacy of how this works, both among the general public and among policymakers.

40:23
D.A. Wallach (guest)
The reason why I think it's really important for literacy around this issue to go up is that unintentionally people trying to fix it can create disincentives that will reduce the amount of innovative drug development that takes place. So, as an example, the Inflation Reduction Act that was passed this year has an unfortunate component that allows the government to negotiate the prices of small molecules after nine years, whereas that only takes place after at least 13 years for biologics. What this means, practically, is that every investor, every pharma company is now revising their financial models and as a result, will ultimately invest less in developing small molecule drugs because it is now going to be less economically rewarding to do so. For folks who want cures to diseases like Alzheimer's that are probably going to require small molecules, we can shoot ourselves in the foot as a society by taking these ham handed regulatory actions.

42:00
D.A. Wallach (guest)
I think it's super important for anyone who cares about curing diseases to try to approach this stuff with the nuance that it demands.

42:11
Neil Littman (host)
Yeah, I couldn't agree more. I mean, the IRA was, I think, really frustrating, but it's very nuanced. Right. A lot of people just don't understand. I think the nuances that go into drug pricing and health care in this country is just really different because it's not the patient that's typically paying for the medication, right? It's insurance. As consumers were removed from this price transparency that we have in pretty much all other markets. It really is amorphous from the consumer standpoint. As you point out, it is nuanced. It is hard to understand, but it's really important that groups like no Patient Left Behind have this advocacy approach to educate more people. Because, as you said, the IRA, I think, was well intended, but does have, and likely will have a dramatic impact on innovation in terms of R and D around small molecules, which ultimately impacts patients.

43:10
Neil Littman (host)
At the end of the day. And that is truly unfortunate.

43:13
D.A. Wallach (guest)
That's exactly right. What I really like about what Peter has done with this NPLB group is put together a group of people who represent different stakeholders in the healthcare innovation system. Venture capitalists, people from biotech patients with rare diseases who really benefit from drugs that have, on the surface, very high price tags. He's bringing through this group into the conversation, I think, a lot of diverse perspectives that are aligned around enhancing innovation and not just advocating for a particular industrial stakeholder.

44:02
Neil Littman (host)
Yeah, no, I think that's incredibly powerful. Let's pick up on that last thread of innovation. DA, as you think about healthcare today, how do you see the potential for technology and innovation to change it over the next three to five years? If were to put on our Star Trek suits and how do you think about innovation, let's say, over the next 50 to 100 years?

44:25
D.A. Wallach (guest)
Sure. Well, none of this is going to be new to you because I basically think the prevailing narratives in the industry are correct, and those are preventative medicine. Or preventive medicine is going to be increasingly the paradigm. Personalized medicine is going to increasingly be the paradigm. Maybe one theme that I believe will play out here that is a little heterodox is disintermediation. I think if we go back to the conversation about the record industry and the end of record stores, to me, the organizational model at the core of the American healthcare system remains the hospital. My hope is that the hospital as the central player in our healthcare system is going to be challenged in the next 20 years. You see the beginnings of that with so called directtoconsumer providers like the Telemedicine Services. That's, in fact, when I said my first investment was Doctor on Demand, that was the first thing I did, was back at Telemedicine Company eight years ago.

45:45
D.A. Wallach (guest)
And that still is just getting started. If you imagine by analogy to the record business or the film business, that drugs and medical devices and diagnostics are the CDs, they're the music of the healthcare industry, what does it look like if the record store goes away? What would it mean for medical innovations to be much more directly distributed to patients? I think the answer to that question will involve a lot of new types of care delivery businesses. I think it will transform the distribution model of the pharmaceutical industry and diagnostics industries, and I think that's kind of the big vector to keep an eye on over the next couple of decades.

46:47
Neil Littman (host)
Yeah, it's a fun thought experiment to imagine. We could probably talk for another week about some of these topics. I do want to be cognizant of your time. I have just one final question for you, which I've got to ask. Do you plan on recording any new albums in the near future?

47:06
D.A. Wallach (guest)
Well, building a new investment firm is an all consuming endeavor, so for the time being, we're just focused on trying to make our firm punch above its weight and do a great job for our investors and for the entrepreneurs we're backing. Once we feel like we're on a steady state, maybe I'll take a couple of weeks and make some music. I never get tired of writing songs, so it's always in the back of my head.

47:37
Neil Littman (host)
Yeah. We certainly wish you the best of luck with the new firm. DA, what is the best way for people to keep up with what you're up to?

47:46
D.A. Wallach (guest)
Absolutely. I'm on Twitter. DA Wallach is my handle. We try to keep our website for the firm pretty regularly updated with our new investments or blog pieces or stuff like that. And that website is timebioventures.com. People can follow me on Twitter, go to timebioventures.com. We're pretty easy to get a hold of. We've got a contact form right there. Anyone who's listening, who's got a great company or an idea for a great company, or wants to otherwise collaborate with us, we would love to hear from DA.

48:25
Neil Littman (host)
With that, I would like to say a huge thank you for your time today and for joining me on the show.

48:30
D.A. Wallach (guest)
Neil, thank you so much.

48:34
Danny Levine (producer)
Well, Neil, what did you think?

48:36
Neil Littman (host)
I thought that was a really wonderful and wide ranging conversation with DA. You've heard us start with his musical career, what was happening generally in the industry with itunes coming along and how that disrupted the traditional sale of records and CDs at that time and people could buy songs. Ala Carte I think DA seems to have taken some of those experiences and applied that to his investing philosophy. You heard him say initially when he started investing, he invested in products that he, as a consumer, were really excited about. And I love that approach. Right. I think that's a great way to start investing. It was really interesting to hear how he has moved over to healthcare and biotech. You heard him say health is obviously something that affects all of us, right? So, although we may not like the term impact investing, there's really no greater impact that we can have than investing in the healthcare ecosystem and innovation.

49:39
Neil Littman (host)
It sounds like DA came to that conclusion. He's now exclusively focused on this sector because it does touch us all. It can have a major impact. Obviously there's major financial returns that can be had by investing in the right entrepreneurs and the right companies and the right technologies within the sector. You heard him mention it's one of those things where it's easy to sleep at night because you feel like you're investing in things can make a real difference in people's lives.

50:06
Danny Levine (producer)
How analogous do you think the technological transformation of the music industry is to the technological transformation of the life sciences or health care?

50:16
Neil Littman (host)
Yeah, it's a good question, Danny. I'm certainly not an expert in what happened in the music industry. I think there are probably some parallels. I think we often hear what happened in the tech industry in terms of the explosion of the tools and infrastructure that enabled more tech startups to grow fast to iterate on their business models. That all happened in the early two thousands. That type of infrastructure has now been and is being developed within the biotech and healthcare sector, where there's a lot more infrastructure that companies now can leverage. It's now faster and cheaper than ever before to start a healthcare and biotech company. There's a lot of parallels to what happened in the tech explosion in the early 2000s. There's probably some other parallels you could draw in terms of what happened to the music business, but that's a little outside of my purview, so I'll leave that to others to think about.

51:17
Danny Levine (producer)
We've seen this incredible expansion of transformational technology in the life sciences, and scientific advances come with that. As DA noted, though, we haven't really seen a pay off in terms of efficiencies as we have in other industries. Why? There a reason to believe that's going to change?

51:39
Neil Littman (host)
Yeah, that's another really good question, Danny. I think there's an adoption curve, obviously. I mean, there are a lot of really game changing technologies that have been developed. And specifically thinking about cellar gene therapies. Right Car TS were the first wave of these. Now we have gene therapies that are targeting rare genetic mutations that are curative in nature. These therapies tend to be very complex to manufacture and therefore have very high prices. Now those are also either targeting oncology or they're targeting monogenic diseases. And so they're very specific use cases. If you think about expanding the types of diseases and indications that those could be applied to, I think that's where we really see what could be possible with these types of novel therapies. Now we need to figure out the manufacturing and supply chain and bring the cost down. There's a lot of work to do on the technology side, not to just be able to edit a single nuclear tide, but to be able to maybe make multiple edits for a particular disease that's not a monogenic disease, but there's multiple mutations that are the underlying driver.

52:48
Neil Littman (host)
So we're not quite there yet. I think as we move in that direction, we're going to start seeing some of this technology have a much larger impact on a greater percentage of the population.

52:58
Danny Levine (producer)
Dan Time Bio Ventures have a big vision to invest in transformational technologies. How challenging is this to do as an early stage investor? Or do you think it's easier to do it as such?

53:13
Neil Littman (host)
Yeah, I would not say any of this is easy. Right. I think where the rubber meets the road is there's lots of innovative big ideas out there. The key is pairing the innovative big idea with the right entrepreneur or the right management team to be able to execute on that vision. There's this idea of founder market fit, so there's a lot of directions that could take. You heard us talk about this idea of the iconic classic founder that Time is looking to invest in. Right? That's obviously one class of pretty rare entrepreneur, but there's a ton of founders that you heard J talk about maybe don't quite meet that far, but a lot of people supplement their skills or the gaps in their skills with a team around them that could build hugely valuable businesses that can make a huge impact. So, yeah, it's really hard to identify this stuff.

54:10
Neil Littman (host)
I mean, there's a lot of really promising technology. The key is how do you execute on that vision and what are the steps to prove out the viability of that technology? That stuff in the biotech world can be very costly. You need to think about what are those killer experiments you can do early on to determine if your thesis and your hypothesis works or doesn't work, because you'd rather kill it early and move on than drag it out.

54:36
Danny Levine (producer)
Well, until next time.

54:38
Neil Littman (host)
All right. Thank you, Danny.

54:42
Speaker 1
Thanks for listening. The Bioverge podcast is a product of Bioverging, an investment platform that funds visionary entrepreneurs with the aim of transforming healthcare. Bio Verge provides access and enables everyone to invest in highly vetted healthcare startups on the cutting edge of innovation, from family offices and registered investment advisors to accredited and non accredited individuals. To learn more, go to bioverge.com. This Podcast is produced for Bio Verge by The Levine Media Group Music for this podcast is provided courtesy of the Joan Levine Collect. All opinions expressed in this podcast by participants are solely their opinions do not reflect the opinion of Bioverge, Inc. Or its affiliates. The participants opinions are based upon information they consider reliable. Neil Bioverge.com, its affiliates, warrant its completeness or accuracy and it should not be relied on itself. Nothing contained in accompanying this podcast shall be construed as an offer to sell, a solicitation of an offer to buy, or recommendation to purchase any security by Bioberg, its portfolio companies, or any third party.

55:56
Speaker 1
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