00:00welcome to the a 16z podcast today we're
00:03having another of our hallway style
00:04conversations these episodes are based
00:06on a videos that are also available on
00:08our youtube channel youtube.com slash c
00:10/a 16z videos what's the path to success
00:13in the world of healthcare startups bio
00:16team general partners Jorge Conde and
00:18Vijay Pandey discuss how founders need
00:20to adjust their plans for bringing a new
00:21drug process etc to market and how go to
00:24market models and players involved may
00:27differ depending on the product be it a
00:28molecule process or platform hey we got
00:31VG Pandey and Jorge Conde here at
00:33General Partner said and recent
00:34horizon-- the bio fund so we got
00:36lightning around today so you know we're
00:38seeing all these forces of biology
00:40coming to computer science and computer
00:41science coming into biology you know
00:42what Sal Al and abet well I think I mean
00:45this is as we all know health care is a
00:46very complicated landscape so let's just
00:49take it a very high level and then we
00:50can sort of dive in and go through
00:51there's sort of the various players here
00:53so if you're developing anything in the
00:56health care space and let's just focus
00:57on human health care for a second to put
00:59a scope on this generally speaking if
01:02you're gonna develop a technology or a
01:04tool you're going to develop something
01:07it's going to enable the drug or a
01:09therapy or you're gonna enable something
01:11that's going to enable the diagnostic to
01:12help you know detect disease at a very
01:14high level it's tools therapies and
01:16diagnostics so let's assume that you're
01:17playing in that space generally and your
01:20theme quite generally the therapy could
01:22be many different types of therapies I
01:24guess we'll see that's right no you know
01:26a chemical it could be a protein it
01:29could use metal it could be a gene it
01:30could be an app yeah in many many
01:32different things but generally for the
01:34most part if you're gonna do anything
01:35that's going into humans or going to
01:37affect how humans either streeted and
01:40managed you're gonna have to go through
01:42a very a fairly straightforward process
01:44in terms of chronology but it's very
01:47complex underneath yeah so you've got a
01:49a discover something that's relevant for
01:50human health and that's sort of the Rd
01:53piece if you're developing a therapy or
01:56then you got to convince the people that
01:58matter and this case the regulatory
01:59agencies to allow you to put this or use
02:02this in humans but um then you got to
02:04figure out how to get it paid for and
02:06then you got to figure out how to
02:07educate the healthcare system that this
02:09is valuable for patients and then you
02:10got to figure out how to get patients to
02:13right so and you know it's not easy and
02:16you know the joke we have this is not
02:17b2b this is not be to see it's much more
02:19complicated you're not and so you know
02:21when you sort of dig into that well who
02:23are the various players there so some of
02:24them are pretty straightforward you have
02:25the regulatory agencies so if you want
02:27to develop something on the therapeutic
02:29side you're gonna have to do human
02:30clinical trials right if you want to
02:32develop a diagnostic it's a slightly
02:33different path right if you want it to
02:35make a diagnostic that is quite
02:37literally you know a box to test
02:40something you got to go to the FDA
02:42cleared yeah so now that's different if
02:45you wanted to develop something that
02:46could be tested in the lab fortunately
02:48the FDA has made it such that you could
02:50do something called the laboratory drive
02:52test in a CLIA lab and CLIA just means
02:55that you've passed sort of the basic
02:57processes that ensure that your your lab
02:59runs a good process and that data is
03:01reproducible etc etc so if you're gonna
03:03do that that's a less less risky
03:06proposal right you develop you set up
03:07your own lab and you can run tests and
03:09as long as your your processes are
03:11robust the regulatory noisy and
03:13diagnostic startups take this led clear
03:16approach and it seems to be very natural
03:17to begin I think that the thing is a
03:18natural sort of a initial approach it's
03:20lower risk and lets you get to the
03:21market much much more quickly on the
03:23therapeutic side I think it's much
03:24harder right you do have to go through
03:26the traditional phase 1 2 3 clinical
03:28trials and before that you have to prove
03:29that it works and in tests and both you
03:32know in cells and then in animals it's a
03:34very long process but then the other
03:36path is that you can develop a tor
03:38technology that you sell into the R&D
03:40industry itself which is a really
03:42interesting go to market path if you
03:43have a very powerful technology because
03:45it allows you to do a lot of things
03:46number one is you can figure out how to
03:48slice and dice this technology to sell
03:50to multiple players on a non aggressive
03:51way right number two that are in the
03:54industry in the US alone is like a
03:55seventy-five billion dollar a year
03:57annual industry I mean there is a lot of
04:00spend that goes into the space and so
04:02that's another path you can take so if
04:03I'm an entrepreneur and bio one of the
04:05first things I would say is do I want to
04:07make my own drugs or diagnostics or do I
04:09wanna empower the industry to make
04:11better drugs and diagnostics those are
04:13two very different go to markets you
04:14know I would think and I think we've
04:16seen it's it's hard to break into that
04:18right I mean because you've got to have
04:19a tool that really changes the game so
04:21much that they will give you some
04:22fraction of that 75 bill I think that's
04:24exactly right and this is where this
04:26of engineering is important because it
04:28allows you to essentially convince
04:31player a to give you value and without
04:34you essentially locking out the ability
04:36to engage player B and C and D because
04:38if something is widely applicable and
04:40transformative usually you can sense you
04:43sell it again it again is there an
04:44example of like a tools company that
04:45became like a huge thing sure I mean
04:47there are many examples I think one of
04:49the classic examples is a company called
04:51Adam ad that essentially gave up with a
04:53better way to design monoclonal
04:56antibodies and so what they were able to
04:58show is by partnering with virtually
05:01every company that is trying to develop
05:03monoclonal antibody some has a drug as a
05:05therapy they could take a small piece
05:08once it proves that it works they get a
05:10big piece of the economics on the back
05:11end and they shown this again and again
05:13and again they're still a private
05:14company and last I heard it valued in
05:16well north of a billion dollars right so
05:18they are a private biotech unicorn that
05:20has become that doing just that yeah and
05:21I guess you know to some degree alumina
05:23is an example as well to the extent that
05:25it's a driving research spend in
05:27addition to other areas in genomics I
05:28think a lumen is a wonderful example
05:30right because they basically took what
05:32was an impossible concept of being able
05:34to sequence you know full genomes at
05:36scale cheaply and reliably and quickly
05:38and made it and not only possible made
05:42themselves sort of necessary to do this
05:45you can't do genomics essentially
05:46without without Illumina so you know
05:48just I think we're we're running out of
05:49time I mean so you know how would you
05:51sort of think of the this whole space
05:53together what how do you conceptualize
05:54it so the way I conceptualize it is it
05:57all comes down to you know you your
05:58go-to-market should be dependent on your
06:01technology right so if you have a
06:03technology that's very broadly
06:04applicable and for example diagnosing
06:06disease the LDT path makes a lot of
06:09sense because you can start to turn out
06:10tests as you sort of develop them if
06:13you've got a platform that allows you to
06:15develop drugs in a way that when Warren
06:17was not possible maybe going becoming
06:19your own drug development company might
06:21be the way to go if you have a platform
06:23that's so broadly applicable it sort of
06:25elucidating disease biology then doing
06:27that the partnership route might be the
06:28way to go because you'll never develop
06:30sort of the deep domain expertise in
06:31every single disease in parallel right
06:33yeah I can imagine it especially for you
06:35know a lot of tech-heavy founder
06:39founders that just under staying there
06:42go to market issues from the very
06:43beginning I think would be very
06:44important and how they define that and
06:45shape the company and shape the product
06:47I think that's exactly right so the way
06:48I would think about this as an
06:49entrepreneur is do I understand what I
06:51need to prove how I'm gonna get it
06:53approved and who's gonna pay for it and
06:55that will help to find your go-to-market
06:57perfect well I think we're out of time
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