Bethencourt, DuRoss, Kelley, Kulkarni & Simon: Sitting on a Can of Miracles


  • Samarth Kulkarni

    Samarth Kulkarni

  • Amy DuRoss

    Amy DuRoss

  • Gregory C. Simon

    Gregory C. Simon

  • Nancy J. Kelley

    Nancy J. Kelley

  • From left, Samarth Kulkarni, Ryan Bethencourt, Amy DuRoss, Gregory C. Simon, and Nancy J. Kelley

    From left, Samarth Kulkarni, Ryan Bethencourt, Amy DuRoss, Gregory C. Simon, and Nancy J. Kelley

  • Ryan Bethencourt

    Ryan Bethencourt

  • From left, Amy DuRoss, Gregory C. Simon, and Nancy J. Kelley

    From left, Amy DuRoss, Gregory C. Simon, and Nancy J. Kelley

  • From left, Samarth Kulkarni and Ryan Bethencourt

    From left, Samarth Kulkarni and Ryan Bethencourt


Ryan Bethencourt
Program Director and Venture Partner, Indie.Bio

Amy DuRoss
Executive Director, New Business Creation, GE Ventures

Nancy J. Kelley
President and CEO, Nancy J. Kelley & Associates

Gregory C. Simon
Chief Executive Officer, Poliwogg


Samarth Kulkarni
Partner, McKinsey & Company

Kulkarni: Welcome to our panel, here. As I said, I’m Sam Kulkarni, I’m a partner at McKinsey, and when David and his team said we’re going to do a panel discussion on sitting on a can of miracles, it took me exactly five seconds to say yes. I’m like, we are living in a world of unprecedented innovation—yes, I want to talk about sitting on a can of miracles. And then, I was already excited, but then I got doubly excited when I heard who the panelists were going to be, and so I’m very happy to welcome our esteemed panel, here, and I will briefly introduce them, and they will do most of the talking, but I will make sure that they don’t get into a fight, because I see some debates coming about what the miracles really are.

So I’ll start on my left, here—Ryan Bethencourt, as you can tell from his movie, he’s the quintessential entrepreneur and disruptor in the healthcare space. At a very young age, he has started a number of organization. He was a CO and CEO at a biotech companies, but he’s also started Berkeley BioLabs and Indie.Bio, which are new concepts for funding miracles, if you will, or new ideas in the healthcare/biotechnology space. And Ryan’s hoping to really disrupt the space, in terms of how we come up with innovation.

Then we have Amy. Amy DuRoss is a venture capitalist at GE Ventures, and they have a very sizable funded at GE, healthy, you know, healthy imagination, investing in many different, unique, new technology concepts. And Amy has a very unique viewpoint, you know, she was at Navigenics, as one of the, you know, early on in the whole space of genetics and disruption, she was the primary co-author of the stem cell initiative in 2004, that led to a $3 billion dollar funding in the space, to really encourage innovation in the space. And as I was doing my diligence, and Amy—someone said, she’s probably the only English major who sounds like a double-PhD. So we’ll hear from Amy.

So then we have Greg. Greg Simon is the CEO of Poliwogg, which is a completely new paradigm in healthcare investing, which is—I won’t adjust this to it, and I’ll have Greg talk about how you actually get people like us investing in private companies’ innovation in the future of healthcare, if you will. And Greg’s worn so many different hats, I wonder where you keep them all. He was Chief Domestic Policy Advisor for Al Gore. You were the founding President of Faster Cures, you were at Pfizer, as Senior Vice President of Patient Engagement, and now at Poliwogg.

DuRoss: He was a band leader, too, early on. He was going to be a musician.

Kulkarni: Oh, well lucky for us, he made a good choice, coming to healthcare. And when I did my diligence on Greg, somebody said, “He should have named his company Poliwonka, because he’s making a lot of things happen.”

And last, not least, we have Nancy Kelley. Nancy is Senior Executive and lawyer—one of the best lawyers in the healthcare space—you have your own firm, that you tackle a number of different issues across, you know, regenerative medicine, stem cells, personalized medicine. Very intrigued by—you know, Nancy literally founded the New York Genome Center, raised $110 million to do it, which is a sizable investment into this genomic center. Before that, you were at Alexandria Real Estate, for those keeping track, on of the best-performing stocks of this year, riding on the biotech wave. She was also Whitehouse Fellow and Truman Scholar, and when I did my diligence it said, “Don’t try to make fun of Nancy, because she’s going to get back at you. You won’t have a comeback.” So I’ll stop there.

So, the topic is sitting on a can of miracles, and I think it came from last year’s discussion, where one of the panelists said, “Look, we’re in an era of unprecedented innovation, we really are sitting on a can of miracles.” And so what I’m going to try to get from the panelists what they see are the miracles out there. Is it real this time? And then we’ll get into what you need to actually nurture these miracles. And finally, if we get time, we’ll have some advice for entrepreneurs out there, from the panelists.

So Ryan, let me start with you. You guys have, through Indie.Bio, funded 12 companies in the last year? Can you talk about what you see as miracles out there?

Bethencourt: Yes, so I can talk about some of the miracles that some of the companies have already started to build. So there is one company that is actually removing the need for cotton or fields of agricultural crops to make biotech cells. They actually made the first thread last week—so they made out of a vat, they brewed their own biotextiles out of a vat.

Kulkarni: The new silk road.

Bethencourt: Yes, the new silk road, exactly. Making vat-brewed egg whites, so replacing the kind of inhumane, factory farm aspect, and making egg whites that are identical to normal egg whites, in a vat. All the way through to machine vision and robotics, to accelerate kind of the biotech space, something a little more classical. Probiotic therapeutics, that are genetically modified, so protein factories for the developing worlds, where getting the therapeutics is actually really hard, because they’re proteins and they have to be chilled, and it’s really hard to do that last-mile delivery, or the last 100-mile delivery.

And pretty much a full range, so pretty much everything in the space, starting off at the kind of technical hurdles that we’re facing, and how we scale up to some of the higher-level issues like these.

Kulkarni: And these are entrepreneurs who are not with 25 years of experience. These are entrepreneurs who are starting companies with small innovation funding.

Bethencourt: Yes, we’re very mission-driven, so when people apply to Indie.Bio, they come with a mission, usually a passion. Many of them are young entrepreneurs, but not all of them. Some are actually university professors, some a bio-hackers, some are post-docs who have been stuck in the lab, trying to get out and do something different. And they all have ideas and visions, and with stagnant government financing, many VCs shying away from taking early risk, we’re one of the few actually funding, you know, the first money into, essentially, and idea.

Kulkarni: Yes, speaking of VCs who are not shying away, Amy, can you talk about some of the investments you guys have made, and what you see as really cutting-edge and novel?

DuRoss: Sure, absolutely. So in addition to being a corporate VC with, essentially later, usually later-stage, kind of follow-on approach to the market, we also have a separate group that just focuses on starting new businesses, so wholly independent of GE. GE is usually an investor. Always there is a strategic reason to GE for starting a company. So we just launched our first company, Evidation Health, which is a digital health validation engine that was just launched at South by Southwest, so we see ourselves more as enabling the next generation of miracles. We think there will be some miracles on the digital technology front.

We’re also spending a lot of time in cell and gene therapies, tissue engineering, the whole regenerative medicine space, which is near and dear to many of our hearts here on the panel. We think that this field, in general, particularly cell and gene therapy, is ripe for industrialization. When you think about how you optimize manufacturing processes, this is mass customization, these autonomous therapies are individual cells then reinjected back into the body. So we think there’s a lot of opportunity for optimizing the manufacturing of that process and how we take our learnings from jet engine production and apply it across all of the manufacturing components, from the actual patient engagement all the way at the front end of a therapy, all the way down through to dose administration and monitoring for toxicity, and in playing all the sort of Internet of Things technologies, if you will, and the Six Sigma that we have as a company, that sort of competency. So we’re really interested in funding both the point solutions around these technologies, and some of the therapeutics as well, as well as the sort of underlying manufacturing pieces, so.

Kulkarni: That’s interesting. You think of GE, you think of airplane engines, you think of, you know, big appliances, and here you are at the cellular level, thinking about regenerative medicine, but it’s very interesting.

So Greg, you have a vantage perspective, as you created your fund, to look at all these different technologies out there, and I think you’ve picked, you called it a regenerative medicine fund that you’ve created. Can you talk about what you’re seeing, you know, in terms of innovation, and why you picked this particular area to be the fund you create?

Simon: Well, Poliwogg’s mission is to turn health from a cost to an asset. Insurance is a lousy way to pay for your health. Eventually people need to own the factors of production in health, so they can make money from investing in the future of health, which they then use to pay for their own health cost. So in order to do that, you have to verticalize the health sector. Unlike energy and agriculture, which have been verticalized forever, in health, it’s either big-cap pharma or small-cap biotech, but that’s not how people think about their health. They have Alzheimer’s, or they have a kid with autism, or they have a sister with MS, and yet when they go to invest, that’s not how the market is organized.

So as an example, when BioGen last week reported interesting results on a drug that may not even be approved for the next seven years in Alzheimer’s, their volume of traded shares went from 1 million to 10 million, and their market cap went up $10 billion dollars. Did all those people invest in BioGen? No. They invested in Alzheimer’s. Why? They don’t know how else to invest in Alzheimer’s. So we’re creating a series of public venture funds, because we think it’s important to democratize access to health investing. It’s not just for the rich. That’s how you build wealth, not just by paying people more, but letting them invest, and we’re creating a series of vertical funds. The first one’s in regenerative medicines and stem cells, the second one’s in neurodegenerative diseases—we’ll do them in cardio and metabolic disease and infectious disease, different kinds of cancer—because that’s what people want to invest in.

One statistic that shows you how under-invested people are in health—there are $14 trillion dollars invested in mutual funds and exchange-traded funds in America. Of that number, only $180 billion is invested in health. There is more invested in gold. Now that is one of the problems about the can of miracles, is that if we’ve gotten all these miracles with the paltry amount of money we’ve invested so far, imagine what we could do if we actually let the public start investing in the things they care about, instead of just the VC community, which even if it’s perfect, is only $8 billion dollars, investing in the $3 trillion dollar economy of health.

So we picked regenerative medicine and stem cells for the reason that Jeanne Loring said this morning: we’ve been waiting for this for 10 years. Amy’s been incredibly involved in that. And it is now, the dam has burst, and it is happening, and we want people who care about it to be able to invest in it directly.

Kulkarni: Yes, and you know what, when we spoke on the phone, and what he said struck me, which is, the ice bucket challenge, when that happened you saw a spike in investment in ALS, right?

Simon: Right, people focused on the $200 million of donated money. What they didn’t look at, was that all the companies who said they were working on ALS, their stock went up that week. People don’t just want to be donors and spectators, they want to be investors. My father was scared to death of the market. I had a broker and I bought mutual funds. My son is trading options online. The millennials don’t just want to invest through a broker and own a stock, they want to own a company, and that’s what they should have the chance to do.

Kulkarni: Yes. So Nancy, you’ve put large amounts of monies to work in the New York area, in creating these, you know, the infrastructure, I guess, to enable future innovation. Can you talk about the personalized medicine, the Genome Center, what your vision is, and what—you also do a lot of synthetic biology, you’re involved in that field—what are the innovations you’re seeing coming out of it?

Kelley: Yes, so, with the New York Genome Center, I mean really the vision was to bring 11 of the largest academic and medical institutions in the world together. Collectively, they have about 30 million patients going through their doors every year, and by sequencing those patients, and being able to merge that data and then search it to look for variations and patterns, it should lead to the development of new drugs and diagnostics. But even more fundamentally important, New York is the most ethnically diverse population in the world, or it has it, and there are no reference genomes for most of those ethnic population groups, and so by working in the New York area with the people who live in that city, there is the possibility of creating genomic medical approaches that are tailored to ethnic populations, and that it really important because it will allow genomic medicine to come to underserved people for the first time.

Kulkarni: And how does this fit with the President’s initiative around the million people sequenced, and something bigger than what you’re trying to do? Or does that all fit in together?

Kelley: It all fits in together. I mean, at the national level, the precision medicine initiative is really all about obtaining people’s unique genetic blueprints so that you can understand what diseases they’re susceptible to getting. And then once they get them, what medications are going to be effective at treating them, and getting them healthy again? And that’s what precision medicine means, and it’s what the President’s initiative is all about, and it’s what we’re trying to do in New York City.

Kulkarni: Great. So let me, so let’s come back to whether this is real. So, again, as I was doing my diligence for this panel, I spoke to someone who has been doing biotech for 50 years now, who said, you know, “Last time someone said, ‘sitting on a can of miracles,’ there was a person who called me about investing in an East Mongolian goldmine this morning, said the same thing.” And we’ve seen this movie play over several times. You know—and Amy, you saw this Navigenics in 2000, you guys saw this from the policy perspective. Ryan, you’re so young, I don’t know if you saw it, but—

Bethencourt: Yes, I’ve actually seen it repeated—well, the genomics, I did see that. I actually saw the kind of hype and crash.

Kulkarni: Yes, so is it real? Is it real this time, and why?

Simon: Well, if you—every morning, I get about 10 articles, it’s a bubble, it’s not a bubble. It is not a bubble, for several good reasons. Number one, if you look at the biotech and NASDAQ ramp-up now, compared to what it was in ’99 and 2000, it is nowhere near as steep as it was in the NASDAQ for the dotcom era. In the dotcom era, people were measuring success by eyeballs. In the biotech bubble, we’re measuring success by people who are being cured. The hepatitis C drug, the immunotherapies in leukemia, in stomach cancer and lunch cancer—so there’s no comparing somebody’s page views versus people getting cured.

The other thing about biotech is that products are not substitutable. If you have a pet food dotcom, and there were 60 of them in the dotcom bust, they’re all substitutable for each other. If you have the new hep C drug, it is not easily substituted by anything else. So biotech, unlike tech-tech, is not a question of somebody else’s garage has a better app six months from now. We know, because it’s all public, what the pipelines are at the FDA, and when there are a whole series of drugs and products in development for certain diseases, when those hit, they are valuable, regardless of what else is going on.

And just like oil used to be a problem when the cost went up, and now it’s a problem when the cost goes down—have you wondered why that is? It’s because oil used to just be a cost, and now it’s an asset. When health becomes an asset, the money we spend on health going up will not be a problem, because everybody will be owning the factors of production and the products that are curing them, rather than just thinking of themselves as insurance victims, and it will make a huge difference. This is not at all like the dotcom bubble, which I definitely went through.

Kulkarni: Well, Amy, let me ask you this, since you were so close to the stem cell regeneration. I think in 2000 or 2001, with Geron, we saw videos of mice—or this morning, I don’t know if people saw the video of mice whose spines were crushed, and then they were running around—I don’t know who showed the video, but we saw that 10 years ago, right, and then what happened? It did not work. So why is this time do we have better understanding?

DuRoss: There was essentially a Valley of Death in the funding—it gets back to the funding. That became an issue. Geron lost its funding. They have now actually recouped some of the funds, and there is a version of that trail is moving forward, albeit slowly, more slowly than it should have, from its initiation, but I think it’s largely a funding challenge. I mean, we at GE, we’re so focused on the enabling technologies, we’re not a therapeutic company, but you see just even within the genomic revolution that the actual advances in the technology are in excess of Moore’s Law.

And so we have just continued to accumulate these masses of data, and so now we’re actually able to mine that data more carefully, it’s jut that, you know, we haven’t had the funding on the discovery side, and sort of the continuity of funding hasn’t always been there in the last decade. You know, NIH budgets have shrunk, we don’t have other instruments until, you know, Polliwogg and others have come along to really try to democratize the funding and smooth out the lumps. I mean, I think that’s really the underlying problem, as far as I can see.

Kulkarni: So it’s the funding, and now there’s better funding, so we’re seeing this real uptake. But is there something in the science? Is there something that’s changed? Nancy, do you…?

Kelley: Yes, I was going to say that I think in addition to that, that we’re seeing the return of a huge investment in a technological foundation for understanding the way that life unfolds, that, you know, we hadn’t seen before. We didn’t have the benefit. So it started in 2003, with the sequencing of the first human genome, and then since then, as the speed and cost of not only sequencing, but synthesizing, DNA has come down, you’ve seen not only, you know, the opening for precision medicine to enter the marketplace, but also synthetic biology. You know, a whole new area of science with applications that are far beyond the healthcare boundaries.

Kulkarni: Yes, Ryan do you agree?

Bethencourt: Yes, I totally agree. I mean, this is the biology of everything now, right? Steering away from—and we’ve heard from some earlier panelists and some earlier talks—we’re steering away from just biomedical applications of biotech, to everything. So as an example, one of the companies we’ve invested in, Arcturus BioCloud. They will enable consumers to get bio-bricks, and kind of like iGEM.

Kulkarni: Sorry, what are bio-bricks?

Bethencourt: So bio-bricks are pieces of DNA that code for a particular protein or an enzyme, it does something, right? So kind of like Legos, but for biology, you can start putting them together, right? And you can actually do this in the cloud, cloud-based science, right? And you can actually start making things. So they’ve already started their—the beta testing, right? So this is real, like, this is real, like, right now. You know, right? And so these are the types of things that we’re going to start to see.

We’re using, Pembient is using synthetic rhino horn to combat poaching, right? So we’re looking at, like, how do we look at the world as it is, and how do we change it for the better? How do we feed people? How do we provide clean water or new bio-materials? And then eventually, like, how do we heal them?

Kulkarni: Yes, Yes. So Ryan, you’re trying to create this—you called the Valley of Death, and how you get across it—there’s the early funding, because people have ideas, whether you want to grow a plant that’s glowing or something else, that we heard in the previous panel, and it’s the early one to two million dollar funding. But let me challenge, which is—what Greg’s saying is, we’re not talking millions of dollars here, we’re talking, you know—there’s only $180 billion dollars, whereas it should be a trillion dollars or two trillion dollars in this market. How is your bottom-up way of trying to get across this chasm, if you will, mini-chasms? How is that going to solve the problem?

Bethencourt: Because we’re no longer stuck in the box of biomedical innovation, right? So it’s—so biomedical innovation has a box, and there are certain VCs that are typically risk-averse, and they cut checks, and their check sizes are five to twenty million dollars. If you can’t get to five, you can’t get to that point where they’ll invest, typically a phase IB, II—II, typically. In clinical testing, you’re not going to get funded, right? And usually you’re low-risk, right? Usually your drug that’s been proven, you know how the mechanism works, and then it’s easy for a big firm to cut a check—and there are a bunch of them in Silicon Valley that cut big checks, they have billion-dollar funds, usually billion-dollar-plus funds.

We’re doing other things. We’re actually going direct to consumer, we’re selling to consumers. We’re innovating in spaces where other people don’t, so we’re bringing the tools of molecular biology into spaces that typically wouldn’t use them.

Kulkarni: I don’t know if you have too much competition in rhino horns, but it does sound like you found some niches.

Bethencourt: Yes, and it’s controversial, right? It’s controversial, but what if it works, right? Then could we use that model in other areas too, right? I’m a vegan, right? Why isn’t there in vitro meat? And these are questions that we can answer with biology.

Kulkarni: Yes. So, Amy, your take, from a VC perspective on this?

DuRoss: Yes, I think not so much in the sort of regenerative medicine space, but certainly on the digital technology side, some of these valuations are so stratospheric that, you know, typically corporate VCs play later, and it’s just—the returns analysis are just very difficult, when you think about going in—we just saw a company that came in the other day, they have a great service, a very disrupting service, they’re disintermediating pairs, all the things we love. But you know, their valuation is $800 million dollars on $3 million in revenue, you know? And they said it with a straight face, and they said that another hedge fund gave them an over-billion dollar valuation and they rejected it. So you know, this is the kind of—you see this really on a weekly basis in our shop, so it’s very hard. You’re either going to play very early, and to your point, you’re going to do sort of dribs and drabs of funding at very high risk, or you’re going to go in on the B, C, you know, even D stage, and it’s very difficult to make a returns analysis work out.

So you know, I think we’re all waiting for the crash. It’s going to come. And the pundits tell us, you know, when then think, depending on whom they are, and I think that’s—I think we need a correction, because it does make it very difficult, in the absence of many other instruments or approaches to funding, it makes it difficult as a venture funder to find that sweet spot, where your status, especially as a corporate VC, where you have these other kind of constraints from the street, that you can really make an analysis work.

Kulkarni: But Greg, you don’t think there’s going to be a crash. You think this is real, right?

Simon: Well, I think the biotech is real. Digital health does not always go together. A lot of things are digital, but have nothing to do with health. I’m sorry. Wearing your Fitbit at Dunkin’ Donuts is not a digital health product, you know? So what I’m—my plea to the Valley is stop trying to make us live 200 years, and help us live at home until we die. Think about it. Would you rather live 200 years, or would you rather just be able to spend the last days of your life at home, instead of in a facility or a nursing home, and all the things that the boomers have seen their parents do, which we refuse to want to do.

And so to do that, to stay at home, we’re going to have to invest in things that make the quality of life better. And for that there is no bubble, because the boomers are the most selfish generation in history—we’re turning 65, 10,000 a day for the next 18 years, and the millennials are turning 35 10,000 a day for the next 18 years, which is going to create an enormous bull market, because they’re coming into the equity-buying age. And the point being is, if you’re in the investment business, and you’re looking at the demise of energy, and you’re looking at the demise of the EU and Greece and all of that, where are you better going to invest in here, and what sector is more interesting and more exciting than health?

So I think the digital health thing has gotten a lot of hype, and Bruce Booth at Atlas Venture has written a tremendous series of blogs, one of which pointed out that in the digital space, there’s tons of money for the beginning of a lot of companies, but there’s not a lot of money for the end-stage buy-out. In biotech, there’s a ton of money—we call it pharma—for the buy-out, but there’s not been a growing piece of capital for the start-up. Why? Because we don’t have the capital market tools to allow the average investor to invest in a diversified portfolio of early-stage companies. So a year ago, Poliwogg started an index to measure 75 companies with a drug in a stage 2 or 3 trial, under $5 billion market cap, with two years of cash. It became an ETF—and exchange traded fund—on New Year’s Eve. It’s up 20% this year, it’s added $5 million of assets every week, with no marketing, no sales, and no PR. Why? Because retail investors—many of them couldn’t even buy it through their bank until it hit $25 million—wanted to invest in small companies, and all the other ETFs are just another way to buy Pfizer. All the other ETFs are dominated by the top ten big pharma companies.

So you give people an opportunity to invest in the future, they will take it. But what Poliwogg, you know, JP Morgan—who would you expect to do this? It should have been JP Morgan, but it’s Poliwogg. Sooner or later, it will be JP Morgan’s idea.

Bethencourt: Yes, Yes. It’s really important not to forget though, that we’re not talking about just the US, right? I mean, we’re talking about seven billion people on this planet, most of whom don’t have enough food. Like, most of whom, GMO technologies are really important. That’s how they eat, right? In India, like, they celebrate the original genetic modification pioneers, right? Whether it’s traits or other things, so it’s like, there’s a huge global market. There may be 300 million in the US, maybe another 500, 600 million in Western Europe—that’s not even a majority.

Kulkarni: It’s interesting you bring that up, Ryan, because there was a panel earlier this morning on food and beverage that I think—was it Jim who mentioned, which is, you know, you do the Tesla model, where you try to solve the problems of the US and it’ll flow down, but if you try to create a completely different solution, it may not always be adopted. And that’s a different—good point, but it’s a different debate to have.

Bethencourt: We don’t view it that way. And we view it like, if you can’t—if the financial markets won’t work, right, you find a way. Many of us are bio-hackers, right? We’ll find a way to do it, and we’ll make the technology available, right? Whether it’s open source, or whether we’ll just sell it for pennies, right? Maybe those pennies matter.

Kulkarni: So getting away from funding for a little bit, and kind of going back to science—Nancy, when we spoke, you said, “Yes, the can of miracles, there’s a lot of things here. There’s synthetic biology, epigenetics, there’s gene editing, there is, you know”—I can’t even say all the things that you mentioned. But let me do a rapid-fire round here for the panel—if you had to invest in one of these technologies, only one, you can only pick one, whether it’s personalized medicine, synthetic biology, regenerative medicine, gene editing—I know they’re all related, but pick one—and then you’ve got to have a bold prediction for what the technology is going to do 10 years from now. Who wants to start? Do you want to start?

Kelley: I would say engineering biology, rather than synthetic biology, because it’s a broader category. And I think that it’s going to introduce solutions to many of the global problems that we’re facing in agriculture, energy, health, environment, etcetera.

Kulkarni: Which explains the valuation of Intrexon and some of the companies like that, right? So engineering biology, okay. Greg?

Simon: I would go with neuroscience, because if we don’t solve the Alzheimer’s problem, every hospital in the country is going to be filled with Alzheimer’s patients in 20 years. We have got—when President Obama proposes—and I’m a Yellow Dog Democrat—when he proposed $60 billion dollars to subsidize community colleges with lousy graduation rates, and $100 million for Alzheimer’s research? Please.

I mean, the biggest threat to the country right now is Alzheimer’s and dementia, and if we don’t throw tons of money at that, we’re not going to solve it. You heard Casey this morning—I get ten articles a day about what people are doing in new trials for Alzheimer’s. We can do it. Most people will argue that we can’t do it, we can do it. But not at $100 million dollars from the government. It has to reach a huge scale. And the brain is the most difficult thing to figure out, on purpose. Your brain is designed not to let people go in there and reprogram it. So if you have a brain problem, it, by definition, is the most difficult problem. That’s what I think is the most exciting stuff.

DuRoss: Are you asking as an investor, or as a sort of—

Kulkarni: No, you could be an entrepreneur, wanted to make a bed, develop something in the space, not just an investor. Could be investor.

DuRoss: Well, it’s really expensive, but I think autologous cell and gene therapy is where it’s at, because it’s just—the data coming out of these phase III, and there are a couple phase IV trials overseas, are just—it’s curative. And I think—

Kulkarni: Yes, and just to explain to the audience, what autologous—

DuRoss: Yes, this is for the, essentially the T-cell therapy—it’s basically you take a person’s own cell and you reprogram it to then go back inside the body, the patient’s own body—there’s no autoimmune rejection—and attack tumors or tumor cells. So it’s pretty amazing, and it’s been in development for 30 years, it’s not a new concept. But we’ve just finally got the point where the technology has really actually supported the thinking around it. So—and we’re curing cancer in these trials. Carl June at the University of Pennsylvania—it’s phenomenal, what the data is telling us. So, that’s why our company is making such an interested investment, and we’re trying to really enable the underlying manufacturing technologies, because right now they’re producing these therapies in tens and twenties, because these are the sizes of the trials, more or less, and how do you get, when you’re sort of ready, get through approval, how do you kind of push go and make sure that you’re taking care of millions of cancer patients out there? So.

Kulkarni: Yes, you know, for those in the audience who have not kept up with the autologous T-cell space, this is mind-boggling, and I saw—went and saw a patient in a clinic, which is, you take a person’s immune system or cells, reengineer it, put it back into the person’s body—or, you know, there’s different ways to do it—the person who has cancer can’t move, and you know, has all sorts of sequelae, all of a sudden gets this fever, it feels like oh my god, this person’s going to die, this sweating fever, 48 hours, then the cancer is eaten up. This is very—you know, this is quite mindboggling when I saw it in real life versus reading it in papers, and I can definitely see how this could be quite earthshaking.

DuRoss: Transformative.

Kulkarni: Yes. Ryan?

Bethencourt: Mine is nuanced. So vascularization, that’s where I would invest, and that’s where I would like to see progress, like, actual vascularization. So what I mean by that—and it’s really important to clarify what I mean by that—is I mean the ability to grow capillaries and blood vessels within tissue, right? And this is actually one of the biggest stumbling blocks for organogenesis, printing, creating new organs—it’s one of the biggest stumbling blocks we have for in vitro meats. It’s like, it’s a really important key that everyone is waiting for, right? I’m sure GE—

DuRoss: Yes, absolutely.

Bethencourt: Similar kind of issue, right? Like, once you can vascularize tissue, then you can start to imagine what you can do with these tissues. Once you can grow tissue, you can grow mammalian tissue, fish, you know, every species of tissue, and you can start to do really unusual things with it, like growing organs, or maybe growing new biomaterials.

DuRoss: I think Nina Tandon is speaking later today.

Bethencourt: Yes, there we go. That’s good—

DuRoss: She gets to tell you more about vascularization, but it is being the sort of missing link when you have phenomenal structures that are being engineered in tissues, tissues from hollow structures, all the way to organoids and full organs, like kidneys, that have been in patients for five years, fully functioning. It’s remarkable what’s possible, but again, if you get to the mass customization problem, again, it’s how do you actually keep these tissues living once they’re ex vivo, before they’re transplanted, and it is a real stumbling block before we can industrialize.

Kulkarni: And Ryan, just for the audience, is this like growing, you know, heart tissue? Is this like growing retinal tissue?

Bethencourt: This is growing everything. So, everything from Modern Meadows leather, right, which is dependent on vascularization to grow thicker tissues, all the way through to growing tissues to replace burn victims’ skin cells, through to replacing hearts, and then replacing animals in the food chain.

Kulkarni: So if Poliwogg comes up with an ETF called vascularization…?

Bethencourt: I’m on it, I’m totally investing.

Kulkarni: You’re running it, you’re not investing.

Bethencourt: Okay, I’m running it. That sounds good.

Kulkarni: We’ll open it up to the audience in a second here, but one thing I wanted to cover, since we had all the policy experts here as well—again, rapid-fire, if you had the power to change any policy you could today, to enable innovation, one policy—pick that, and what would you change? Start with you, Ryan.

Bethencourt: I would make all FDA testing voluntary. FDA testing regulations voluntary. And the reason I say that, is I think that we’ve become too risk averse when it comes to testing new therapies, and I think that educated people should be allowed to take risks. I’ve worked with people who have died of ALS—one of my last companies was Halpin Neurosciences, my investor died of ALS. He couldn’t get access to drugs, experimental drugs, and so I’d push for that.

Kulkarni: Yes, another example this morning of someone who went to Tijuana and got stem cell therapy, right, and it worked. Amy, what would you change?

DuRoss: You know, I think the reimbursement problem continues to be such a bugaboo, and if you could actually kind of use health economics and think about cost avoidance, when you’re thinking about what’s the overall kind of—what should the reimbursement rate for some of these really transformative, curative technologies, like autologous cell and gene therapies—I think that’s a fundamental kind of disconnect. You know, we have lots of disconnects in the healthcare system. Our incentivization is all misaligned, there’s a lot of problems. But if you could just think, okay, what are we actually—from the patient’s point of view, how are we helping this patient, both in terms, of course, of first their quality of life and their longevity, but how are we also helping them and everybody who supports their care, including payers and employers, and all the people who are invested—their providers—how to we actually think about the total equation, and what—and then translate back to—

Kulkarni: I’m sure Greg will disagree with that, because that makes it a cost.

DuRoss: [LAUGHTER] Not an asset, right.

Simon: I would eliminate any regulation that uses wealth as a proxy for wisdom—and the good news is, it’s already be done. Congress passed the Jobs Act in 2012, the SEC, scared to death by consumer groups who don’t want people to invest their own money their own way, is telling people that the average investor isn’t smart enough to know how to invest their money, don’t let them. They can buy lottery tickets, $83 billion a year, they can be parents. They can drive. They can buy a gun. But they can’t invest in a start-up company if they’re not wealthy. That needs to get changed, Congress changed it, the SEC has refused to implement the regulations.

Why? I mean, this is nuts. Because the problem is letting people invest in what they care about, not just donate. Donations are great. I ran an organization around the growth of donations, but people want to invest where they donate. They don’t just want to be a spectator.

Kulkarni: Yes, good. Nancy?

Kelley: I think that I would change the way that we fund basic and applied research in the government. You know, I think David said earlier this morning that last year I was here and I gave an alarmist presentation. I actually think it was more cautionary. But the truth of the matter is that we actually don’t have a rational way for the United States government to identify important trends that are occurring in science and then, in an interagency basis, to be able to evaluate and target investment in ways that will advance that sector year over year over year and allow us to measure the return on that. And until that’s done, we are in danger of falling behind, because other countries are applying that methodology.

Kulkarni: Yes, great. Thank you. We’ll open up to the audience. Any questions? Is there—go ahead, is there a microphone? Right in front.

Audience1: So, great panel. I mean, excellent point of views, and a divergence and convergence of them, so thank you so much. You’ve, you know, your comment on vascularization sort of preceded my question. 3D organs, I mean, we know that there’s a huge need in the world, and yes, we lag behind because of what Nancy said—the inability of the government to create programs to identify where the state of the art is, and how can we fit into that economic and market intelligence, right? And public health issues. And so can you go back and talk about why we haven’t looked into this in the past, and promote these 3D organs much more—and what’s your estimate? When are we—

Bethencourt: So we have—and I’ll start off—I know, GE, by the way, GE is a huge proponent of stem cells and eventually a path that goes down to it, which is organogenesis, so 3D-printed organs or grown organs. But we have looked into it—so I was at the X Prize Foundation, I looked deeply into organogenesis.

There are many researchers right now working on that challenge, globally. The—again, the same stumbling block keeps coming up, like, vascularization, right? So there are other issues, right? Do we really know, the stem cells—when we look at a stem cell, do we really know what that stem cell actually is? How do I identify that? Is that really the fifth type of kidney cell, or not? Right? Identifying is really difficult, so we have to improve in our ability to understand the core, the basic science behind building organs. And it sounds like you had a—

Audience1: Are you talking about a lack of appropriate bio-inks and also scaffolds? I mean, those are two other areas of this—

Bethencourt: All of the above. All of the above, because to me—so even growing on a scaffold, right—so let’s say today, right? There are researchers at Harvard, George Church and others, who have grown hearts, right? They’ve actually revascularized—you basically take a scaffold, you strip it of cells, you revascularize, you put heart cells, human heart cells, and you pump blood through it. What happens? It bleeds. It just goes psssh—the capillaries don’t stand up to the pressure. There’s something that we don’t quite understand, some groups have claimed that they’ve been able to get better and better at it, but we’re still—this is, we don’t know what’s going wrong. Like, we’re trying to fix it. There are very, very smart people that have spent—one researcher over at Yale, Laura, she spent 20 years trying to answer this question. So if we could have more concerted focus and investment in this area, I think that we could do incredible things, and then what happens next, right? Once you can start replacing failing organs, then you start tackling all sorts of diseases, and maybe you will get, you know, to live 120 or 200 years, because you’re not going to die of heart failure, you’re not going to die of kidney failure, right? In the U.S. alone, like, people are dying all the time because they’re on dialysis, and so they’re on a slow train to death.

Kulkarni: That will definitely bankrupt Medicare. Why don’t we do—is there another question from the audience?

DuRoss: I would just say, on the tissue engineering side, the discovery has been so siloed today, at least in this country, there have been some, there’s better collaboration overseas in some pockets, but Tony Atala, who’s down at Wake Forest, for example, has a big initiative that is really kind of federating all of these various academic centers of excellence and starting to share data and best practices and different methodologies around trying to really solve the gaps, particularly around vascularization. But I think, you know, it’s just, it’s a very complex problem, and we’ve sort of got it figured out on the hollow structures, you know, urinary conduits, some of these very early kind of installations, but as you move down the spectrum of complexity and you get to full, you know, organoid or full organ replacement, it’s been done with a kidney—as I’m sure you’re aware—but it’s just so highly complex, we just have, I think, unfortunately a long road to go.

Bethencourt: All these structures are so exquisitely complex—it’s the most complicated machinery on this planet, right? There’s nothing more complicated, like, technology makes the technology AI look simple, right?

Kulkarni: Another question out there?

Audience2: Yes, hi. Greg, your hypothesis that the average person cannot invest in the early stage or in biotech—could you talk more about it? It’s a fascinating hypothesis. You mentioned how there are some roadblocks with the SEC, some obstacles—how could it go forward?

Simon: So, since 1974, you had to have the net worth of $1 million dollars, or an average salary of $200,000 a year, to invest in a private company. Worse, the First Amendment didn’t apply to you—if you were raising money for a private company, you couldn’t—before 2013, when the regulation, this part was done, if I stood on the stage and said that Poliwogg was a private company raising money, and here is its term sheet, I’d go to jail, right? Now I could talk about the seven deadly sins, and I could say awful things about the President, but if I said, “I want you to invest in a private company,” and I didn’t know that you were wealthy, I’d go to jail.

So that has changed, so that I can now advertise a private company as raising money to the world, but only people who have a million dollars in net assets are allowed to invest, even today. So the Jobs Act that passed in 2012 said, we need to let everybody invest, and initially we’ll cap it at a certain percentage of their income, if they’re under $200,000, and you can—a company can only raise a million dollars. Which is a ridiculous limit put on there by the consumer groups.

So, why is that ridiculous? Wealth inequality is about who can invest and who cannot. Since ’74, when only the wealthy could invest in private companies, the wealthy have acquired $35 trillion dollars of wealth, and everybody else has acquired $15 billion dollars of debt, because they couldn’t invest to build wealth. They had to borrow money to get a new car, a better college, or a better house. So now, we need to start letting everybody invest, and the argument that people are too stupid, they can’t afford, etcetera, etcetera, is ridiculous, when you consider that it is the government that promotes lotteries. The government that promotes lotteries, and they never tell you, by the way, your chance of getting anything is a snowball in hell. On the New York subway, it doesn’t say, “Buy the New York lottery ticket: here are the risks.” But when I put out a prospectus, 90% of it is: here’s the risk if you invest.

This is upside-down. This is completely upside-down. People need to be able to put their money where their interests are, and yes, some people will lose their money, but the wealthy have done very, very well by being able to invest in private companies that nobody else could invest in. If you can buy Facebook at $38 at the IPO, why can’t you buy it at a dollar, when it’s an early-stage company. The public ends up giving the wealthy $38 a share for something they paid a buck for, that the public couldn’t buy. This is why the wealthy are wealthy. No—I don’t blame them, you know, but why shouldn’t the public be able to buy Facebook at a dollar?

Kulkarni: So I think we’re out of time, but you know, I want to thank the panelists here. You know, I hope that we’re sitting here next year saying, gosh, the miracles are happening, you know, the funding challenges have been solved, the policy challenge have been solved, but time will tell.

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