John Simboli
Today I'm speaking with Bob Cobuzzi, CEO of Diffusion Pharmaceuticals, headquartered in Charlottesville, Virginia. Welcome to BioBoss, Bob.
Bob Cobuzzi
Thanks, John, I really appreciate your time today.
John Simboli
What led to your role as CEO of Diffusion Pharmaceuticals?
Bob Cobuzzi
I've been in the industry for about 26 years, at this point, entered after I finished my postdoctoral fellowship, I was at a Cancer Institute in upstate New York, and decided I wanted to work in pharma. It was a time when grant funding was particularly low for R01 grants for the NIH. But more importantly, I was really intrigued by how research was done in industry. I think there's, perceptively, a bit of a misunderstanding that exists in the sense that the rigor with which industrial research is done is I think, at a level of excellence that just can't be replicated with the availability of funding in a public source location. So for me, that was particularly intriguing. I went through my career, and I"m, obviously, still working. So I don't want to make it sound like there was an endpoint there. But I had joined the board, because one of the people that I had worked with, in a past life, had been on the board of Diffusion. So I joined the board of Diffusion in January of 2020. During the year, obviously, the pandemic started, the world changed, a whole lot of things became rather different. The two people who had founded the company, the founding CEO and the founding Chief Scientific Officer from whom the technology came, from his laboratory at the University of Virginia, both chose to retire last year. And so as a consequence, with some discussions that went on with other members of the board, I took over as CEO in September of last year. So, I'm pretty new with this, still a year in, but you know, hopefully, we'll get a chance to talk about today, a lot of changes have taken place during that time,
John Simboli
When this opportunity presented itself, it sounds like it was clear that the path at that point was probably fairly clearly laid out because of your position on the board and understanding the technology and understanding the people. But I'm curious, did it cross your mind at all--"I have this interesting idea. I can take this to a big pharma where the organization is set up, the infrastructure is built." Did that go through your checklist at all?
Bob Cobuzzi
Yes, it's always part of the consideration. I had worked in corporate development, headed up, actually, corporate development for a fairly decent midsize pharma company for quite some time. So one of the first things you always consider is, is there a buyer for this? I think it's something that everybody has to think about. When they're spending the amount of capital that's being spent to run a company. It just requires almost continuous fundraising in most instances. But for this company, it was interesting, I think there had been some conversations over a period of time. As I said, I joined in January 2020, the pandemic hit in March, a study that had been going at that point was an on-ambulance stroke study. And it actually came to a stop, it wasn't possible to continue to recruit patients on to an ambulance-based study, where a lot of those patients were intended to be brought on in Los Angeles. And obviously, the whole of the ambulance network that existed within the city and the county itself had to be repurposed to deal with COVID patients.
Bob Cobuzzi
Like careers, there are no linear tracks in drug development, you start somewhere. And I think you follow the data. You have a hypothesis, you test your hypothesis, but ultimately, you're following the data. And so before, anytime, before I took over, there was a decision taken to pursue COVID. So the drug itself works by enhancing oxygenation. And it does it through a fairly specific and, arguably, somewhat non-traditional mechanism. It enhances the way water molecules interact with each other. And water constitutes about 90% of what is blood plasma, and probably about 50% of the overall volume of blood itself. And so as a consequence, by changing the way the hydrogen bonds and the water molecules interact with each other, you can actually improve the ability of oxygen to diffuse down the gradient from high concentration to low concentration, and thereby improve the probability that it's going to be able to enter the tissues. And so with that in mind, there was some thought, geez, you know, one of the things, particularly early on, and I still won't say that people completely understand COVID, just based upon what everybody's reading on a daily basis. But there was an appreciation that part of the disease itself was an effect on the lungs. And so as a consequence, was there a possibility or if not a probability then an effect could be seen in COVID patients and so a very small study was started, and it was actually initiated--the first patient the day after I started as CEO. All the planning had taken place up until that time, and I had no operational involvement until then, but the study got started. And we just finished it this past February. So we got some interesting results from that. But it wasn't a controlled clinical trial. It took a long time to recruit, all those things that when you're looking at a novel situation, which is what the pandemic presented, trying to enroll patients in a hospital in a foreign country, you can't travel there. I mean, we could just go on and on. It all sounds like excuses. But in reality, they were very legitimate challenges that were run into. But nonetheless, the study got done, we got the data.
Bob Cobuzzi
The first thing you always do when you come in and take stock and say, What do I have? What do I need? Where are we? And you know, in many respects, a new CEO coming on board is, it's a terrible term to use, but I think it actually, for those who are familiar with it, would exemplify the situation. It's like a merger, or an acquisition, you come into the circumstances, and you just literally step back and say, What do I have organizationally? Where are we going from a strategic standpoint? Is everything in line with what I believed to be the case before?. And what I see, now that I've taken over, because obviously, if you're sitting on the board, you've got one view, you parachute in periodically. But when you're in the seat of the CEO, you're living with it day-to-day. So I came in, brought a new leadership team on, but for the CFO, Chief Financial Officer, who was there, great guy, so very helpful in making the transition. The person who had been the CEO, he stayed on the board, so he was the chairman for another year. He's recently retired from that. But there are mechanisms in place to learn what needed to be done and get the transition put in. But we made substantial changes to the company from an organizational standpoint. We've also made a lot of changes to the strategy. And I think the genesis of your question is, where are we with regard to the drug? And did we "miss the beat" as we're going forward? Simply put, we decided to take a sidestep. We looked at the data, we said, hey, there are a few key pieces missing here. The Chief Medical Officer, who was new, came on, myself, other people we spoke to, and we said, we'd really like to get some more objective response data. And most importantly, we'd want to get it in the form of dose-response data and have a better characterization of the dose for the drug. There had been a single ascending dose study done once upon a time in normal, healthy volunteers, which is quite traditional. But some of the other components of it were just bypassed simply on an economic basis, not an unusual situation for a small company. And so the decision was taken just to move on to some of these broader, we'll call them clinical outcome type studies, where it's a bit of a gambit, I think, under any circumstance, despite I think, what some people believe, one never knows the answer to these questions before you go into the studies. But nonetheless, you try to accumulate as much data as you can, with an eye towards obviously, money and time. There's a finite amount of both, and the clock is always ticking on your intellectual property. That's the time piece. And money is always tight. So you have to make critical decisions on what's good enough. But these, I think, were the right decisions to take. We're doing a set of three studies now looking at different aspects of the oxygenation pathway of the body, trying to get these data and the dose-response information that comes with it before we can feel we're comfortable enough to go forward and do the next set of outcome studies.
John Simboli
What was the process like for you to go from understanding the company as a board member, to realizing the time was right for you to lead the company? Is that an easy conversation with oneself? Is that a difficult one?
Bob Cobuzzi
It is a very difficult conversation, I think both with yourself and, frankly, the other members of the board. You have, in many respects, a sense of familiarity that's been built with people. But it's in the form of the collaboration that you've had until that point in time, which I think boards by the basis of what their remit is, are not superficial. But in comparison to what it is working in an operational world, it certainly isn't to that degree of detail that you would get when you're having to deal with the day-to-day decisions. And in trying to look at that there's always the sensitivity that says, alright, what am I looking for as a person? If I was to start this with the greenfield, the blank slate. choose what you want? How would I want the company to look? And in this particular case, the company had been around for a while. The company was started in 2001. So you have to reflect on it and ask yourself the question, you know, where is it in its lifecycle? Is there's still an opportunity to make a difference, or are you just setting yourself up for, you know, perhaps a bit of frustration in the process. And so there are all the iterations of that go through your head, as you're contemplating what the opportunity looks like. From my standpoint, as I talked to the other board members, as I talked to people I knew, it's an interesting opportunity. Diffusion itself, the underlying technology on which the company was based, is incredibly interesting and very unique. And there's not always a lot of those types of opportunities, just don't come along all the time. And so when something like that shows up, you really have to pause. I mean, I'm a scientist, first and foremost. And so from a scientific standpoint, you pause, you look at it and say, Wow, this is quite interesting. Do I think I can do something? All the nerves start to go up, and you become, obviously, a little bit uncomfortable, self-doubt, all the other emotions that any normal human being runs through come into play. But you know, in the end, I think nothing ventured is the adage that comes in and you say, you know, let's give this a chance. Can I put a plan together? Can I get the right team that I'm comfortable with? And you know, just on that piece alone, I always look back and I've been through a lot of situations with CEO changes, mergers, it's hard to work in this industry and not get exposed to that. And I'd seen it a lot. And depending on where you are in the organization at the time, it always causes a lot of water-cooler chatter around, you know, oh, boy, here we go again, everybody's bringing in all their friends. For the record, I didn't bring any of my friends into the situation. They were all new people that I hadn't met. But I had, in my mind an image of what a team looks like to be functional. I think one of the questions that I've seen is, what makes someone successful? And perhaps we'll talk about that later on. But all these thoughts go through your head? And you say, do we have the people now? Do we need to get people? You're going through just a whole series of algorithmic decisions to get to, is it the right thing to do? And in the end, it really all comes down to, there's enough there to believe, let's take a risk.
John Simboli
As a CEO, what have you learned about your own management style that works for you? That is you?
Bob Cobuzzi
I'm, by nature, a very reflective person, probably part of it comes from being a scientist. I always look and say, What can I learn from that situation? What did I do? Was there something I could have done better? I've seen a litany of different management styles over the years, everything from very directive to . . . never passive, I don't think anyone survives long as a leader if they're truly a passive individual, but I think engaging or collaborative might be a better way of framing it. And I tend, I would say more towards the latter. Not because I'm looking for points or anything like that, but more because I do you believe, you know, to my whole commentary about what it's like trying to make a decision to take a job, I do believe that there's a lot of information you get from other people. And you know, leadership teams, teams, exist for a reason. I don't think any one person is in a position to know everything, none of us is omniscient. And on top of that, the world's changing. There are so many different things. And there are so many different ways of you know, moving around a question and looking at it through the different facets that exist, that it really helps to have a team of people.
Bob Cobuzzi
I'm a real believer that everybody needs a thought partner, I happen to think I need a lot of thought partners. And I need a lot of smart people with good senses of humor, who can put up with the almost continuum of questions that I put forth, just trying to understand the situation and make the decisions. So from my standpoint, I think it works really well to have a team of people who are comfortable, a team of people who can debate, a team of people who are themselves very domain-experienced, and are fully charged and working in their swim lane, we could call it, but at the same time, they're willing to reach a hand across the lane and help somebody else who needs it. I think it takes a unique character to be able to do something like that and not become so absorbed in what is in front of them and what is their responsibility or their goals as their laid out. But I think that's where real success does come from because it's that collaborative spirit. It's the crucible that we all live in on a daily basis that really helps us become more thoughtful, reflective and hopefully efficient in the process, not just caught up in endless amounts of debate and discussion about things. You do have to have some discipline to move past that and move forward.
Bob Cobuzzi
I like working. I like being involved. I like the discussion. I like the decision-making. I do want people to be able to take the reins and run. I want to be able to get information without having to chase it down. And that comes to this whole concept of open collaboration and having people feel comfortable enough that they're willing to share. Even if you're CEO, you still have your responsibilities on a daily basis. It's not a matter of sitting on a throne with a scepter and just pointing at people and saying, This is what you have to do. It's never that easy, particularly in a small company, we don't have the luxury of numbers, we have a need for each of us to carry a measure of water ourselves to move things forward. I myself have my skills that I bring in, everybody else has theirs. I think where it's working well is we've got a team of people with complementary skills. So each of us can, as I mentioned in the previous question, look at the question through a different facet, come up with a different series of answers, pull them together, usually quite quickly, and come up with a path forward. I think that, for me, does work very, very well. But I do want to listen to people, I don't want to always be the person who has to make the decision, I will make a decision, I'm not afraid to make a decision. But I think there's a sense of disconnect that comes when people aren't tasked, themselves, with being responsible for decision making, I do think you really want to try and drive that down. Because the tendency is for people to become rather complacent. You could say, even victimized, in some instances. And you certainly don't want to create that atmosphere, because then you're not getting the best out of people. You really want them as part of their feeling involved it to actually make them involved, you know, give them the responsibility to make the decision, I think that's an absolutely critical thing to do. And I try and do it. It's always easier said than done. But it's what you strive for on a day-to-day basis, as long as the decisions can be made quickly, and you can move forward.
John Simboli
The ability to give direction to the company and to make tough decisions is obviously an essential element of being a leader; that's a given. There are times though, that the other thing is in play, it's top of mind, I'm thinking about a CEO, I spoke with it for BioBoss who said, "Some days I feel like I'm sitting in a building with faulty plumbing, I think he said, and things are falling down, I'm at the bottom and looking to see what thing I need to catch". He said, "I don't like that; I'd much rather be doing the strategic planning." But that's also part of being in a small organization, right? There are times you have to just fix something,
Bob Cobuzzi
You spend the day, in fairness, oscillating between sea level and 70,000 feet, There's no way around it, you have to; you have to be facile, you have to have a good enough understanding of the business, that, you know, if you take the analogy, you were giving that if the pipe's starting to fall out, you at least not only know that you have to go catch it, but you know, if not yourself what to do with it, who to bring it to to get it fixed. And I think with that is, it's hard, particularly in a small company, not to have the understanding level of how things need to be done, what needs to be done, to actually provide that level of guidance. And I'm not always right, I'm the first person to admit that. I mean, sometimes I'll have an idea. And my preference is always, sounds bad, but like any scientific experiment, to just put a thought out there. And if it's the wrong thought, so be it. You know, it's my thought, it's not me as a person. I just want the feedback on that, that allows us to take the good decision to then move forward. But, yes, there are those days when you look around and go Oh, boy, I wish this was better. I wish that was better. I wish this wasn't coming down. I wish you know, we were back at day zero, we could start over. I wish we were already . . . I wish, I wish I wish. You can wish your life away, you have to work with what's in front of you. And I think that's the piece where reality, if not your own mind, has to snap you back once in a while and make sure that you stay on task and focused.
John Simboli
Can you remember when you were eight or nine or 10, whatever is the right age for that memory, when you were thinking, Oh, this is what I want to be when I grow up, realizing that it was probably what you thought your parents wanted you to do, because that's how it is for most of us? But can you remember that? Does that have anything to do with where you are in your life at this point?
Bob Cobuzzi
It's a funny question in the sense that you think back to a timeframe, and in that case, I'm dating myself, but it would have been in the early 70s. And it was at that point in time Jacques Cousteau was on TV. And I was absolutely fascinated by what Jacques Cousteau was doing. And here are these people that are living this life out on a boat, traipsing around the ocean. They're scuba diving for a living. I wasn't aware enough yet that you know, maybe running into a shark probably wasn't the best thing to do. But nonetheless, it was incredibly exciting. And part of it was the science that went with it. It wasn't just guys and ladies who were diving, it was people who were actually trying to understand something. They were going around, they were looking at the oceans, they were looking at the animals. They were looking at the other creatures in the sea and they were looking at the ecosystem and how it existed. And I think they were able to take that and personalize it for so many of us who grew up at that time. It's funny I've had this conversation with others and had similar thoughts that it just, it met a lot of those things that were of interest to me at that point. And I think a lot of that's carried forward over time. I'm obviously not a marine biologist, I'm sitting here talking with you about a pharmaceutical company. But I think, the scientific process, this curiosity that comes about understanding nature and how things work, whether it's the ecosystem or systems biology.
John Simboli
When you're making a presentation, which slots to they like to put you into, in which ones do you have to say, No, that's not it, actually?
Bob Cobuzzi
We have a drug that is more—and you hear people say this type of thing all the time— that's more of a platform, it's changing oxygenation. So oxygen, it's, you know, the fuel for life, it's vital, it's everywhere. You need to have it, you can't live without it. It's not just unique to oncology or to cardiovascular medicine, or unique to this or that or something else. There are obvious constraints that exist with regard to what's the formulation of your drug, the routes of administration that are available, there's a number of parameters that can affect where it gets used. But the danger is that you can get pigeonholed as being just this kind of company. Even to signing up for conferences, there's no category when you pull the drop-down box that says, hey, we're a hypoxia company, because it just doesn't exist. It's a consequence of other conditions, sometimes, but it's the basis by which TSC works. And it runs afoul of that natural need to categorize that we all have, that natural need to put things in, as you said, in our context, where I think people can more readily understand it. And what I find, in contrast, and what my colleagues, leadership team, people in the company as they talk with folks, is you need a lot of words sometimes to explain things, because it isn't so naturally reduced down to oncology company. So that people, Oh, got it, I have a general sense of what you're doing, move on to the next part of the conversation. Instead, you find yourself stuck at this point for a while. And there's still some head shaking, there's still some curiosity. But the people where the light bulb does go on, suddenly say, Wow, that's really neat! Here are all these things you could do with this! And then they become super engaged and the ideas just keep getting barraged you at 1000 miles per hour. And then you sort of are able, under those circumstances, to say, you get it. Right? So there's a filtration process that one has to work through to be able to choose correctly and look at the risk profile in each indication and where the commercial profile is going to look good. All the things that one normally does for drug development purposes.
John Simboli
How would you describe the mechanism of action?
Bob Cobuzzi
Mechanistically, it works by changing the way water molecules hydrogen bond with each other. So H2O, two hydrogens and oxygen is what water is. The hydrogen bonds are a fairly weak bond, keep the water molecules in association with each other. If you really reduce the temperature, you bring the molecules closer together, you form a solid, there's a more stringent matrix that begins to form. Whereas in a gaseous state, steam, you've got water molecules that are Brownian in nature, they're moving all over the place, bumping into each other randomly. And those hydrogen bonds are loosely holding them together, you still have steam, it just doesn't all dissipate into the environment. Obviously, if it got hot enough, they would.
Bob Cobuzzi
But what we're doing is we're changing the way that they work together, that these hydrogen bonds form, that you almost can form a lattice structure. You improve the matrix within the liquid, the water component of the plasma. And so as a consequence, oxygen is able to move. And I think one of the things that's very important to note is, oxygen is moved passively through the system. There are myriad papers that have been published over the years that look at the Bohr Effect, how does oxygen get displaced by changes in pH at the point where it leaves the red blood cell or it leaves the hemoglobin where it's bound, jumps off into the blood. I always have this crazy image in my head of a bus, or a train that's traveling around through the bloodstream. And there's a stop on there where a signal comes out. And there's enough carbonic acid that's in the system, this is that Bohr Effect that I mentioned, and it signals Hey, you know, we're going to give you a proton if you give us some oxygen. And that's ultimately what happens, the oxygen leaves and it passively diffuses down this gradient. So at that point, then you've got more oxygen that enters the blood, higher concentration there. The tissue itself, if it's hypoxic, and hypoxia is, by definition, a low oxygen state in the tissue. So it's going to enter passively, in an attempt to establish equilibrium, it's going to enter into that tissue. And that's where it ultimately makes its way into the cells, and in turn into the mitochondria where it fuels the process by which ATPs are manufactured, and that's what fuels our life in general. So it's a fuel as much as anything else that's being taken it. But what we're doing is we're just facilitating that process of how the drug gets from red blood cell through the vascular wall into the tissue that needs it. And it is a physical process. It's not changing a receptor. It's not changing an enzyme. It's not an antibody. It's managing how the water molecules interact with each other and form a more cohesive matrix through which the oxygen can pass.
Bob Cobuzzi
Right now, the modalities that we have, there's a mechanical modality of which everyone's familiar with, unfortunately, even more so now in the face of the pandemic, and people being hospitalized—ventilators are just, they're positive pressure devices that literally like a bellows just forces more oxygen into the system so that it crosses the lungs on a pressure gradient. So that passive diffusion that I talked about is aided by a very, very large concentration of oxygen being created in the lungs, and in turn, some percentage, depending on how obstructed the lungs are, gets into the bloodstream, and then it's able to be transited around—so long as there aren't clots, which is another thing that we found in the midst of the learning that's come out of the pandemic about how SARS-CoV2 works, and COVID-19. So people quickly go to, ah, oxygenation! And then you get everything from a speculation that says, gee, so you're not going to need to deliver oxygen. I think that is a bit of a simplification, but it is one of the leaps that people will jump to. We talk about the fact that solid tumors are, by nature, more often than not hypoxic, particularly in their core. So there's an opportunity there and once people start to understand that, they'll say, Oh, my goodness, so this kind of tumor, that kind of tumor, all of them can be treated with that. And the answer is, possibly. So then you start talking about strokes and heart attacks and all the other things. And people start to see a world of opportunities that exist for this where the constraints really are, what studies can we do? How much time do we have? How much money do we have? What's the probability of success? How does it match up the drugs—intravenous, right now, that's the formulation of the drug that we have. So it stopped being given orally at this point in time. So there's, naturally, some selectivity that occurs with regard to the types of indications that you pursue on that basis. But the eyes do light up when people hear about oxygen, because it's something that is familiar and, you know, again, trying to look at what are very few bright sides out of a pandemic situation, it's helped people to understand the importance of oxygen and getting oxygen into the system. So I think from that, comes an even keener awareness of the relevance of oxygen, and maybe its medical significance to them, as an individual.
John Simboli
How does the pipeline at Diffusion represent your strategic vision for the company?
Bob Cobuzzi
The company has been, throughout its history, pretty much a one product or one development candidate company. There's another asset, DFN 529, that's in the pipeline, It gets a bit of time, but you know, small company, small amounts of money—share of voice is usually lent to the lead product. Even if there's a deep pipeline, it's typically to lead products. So there's nothing unusual about that. It's the norm. I think, at some point, though, you do get to a situation where you've answered some critical questions about, is the drug safe? Yes, no, I think we've answered, not completely, obviously, that has to be done in a phase 3 large controlled trial. But we have a pretty good sense that we have a safe drug that we're working with. So the questions that we're working on now are more about efficacy. And I think once we get through some of these, your confidence is is hard to come by because you never quite know everything. You can never ask enough questions to know everything, or at least you can't afford to ask them. So you try and get those questions that give you enough sense that you can believe in what you have in your possession is going to continue to move forward. We're doing that. I think we'll get those answers. That's the objective nature of the oxygenation studies.
Bob Cobuzzi
And once we achieve that, the pipeline to the question that you're asking becomes a front and center question. Because you always want something else. There are no guarantees in this industry. I don't think there's anybody who's worked in the industry for more than a year, or followed it for any period of time, that believes if a drug even makes it to the market, that it's a guarantee to go forward. I think there are numerous examples of commercialization challenges that occur, reimbursement challenges that occur and quite frankly, safety challenges that don't occur until you put it broadly out into the domain that the market represents where you get millions and millions, if not more, exposures, I think there's just always learning that goes on. So you have to have backups, you need to make sure. And at the same time, you have to then put that against, How do you see your company? What's the strategy for your company? Are you truly agnostic? There's a whole series of things that one can go through. Are you building a platform company? Are you repurposing drugs? There are many, many different types of companies out there. That conversation for us is a work in progress right now. That's why I said it's evolving. We're a company that if this drug, and we believe it can be, if it is successful, you don't want to march too far afield because when you do that, you lose that synergy that comes from having the knowledge and experience of developing this drug as a team, and being able to apply it to something similar. I'm a firm believer that trying to stay at least synergistic is advantageous. If you're a very, very large company, obviously, there's a need to diversify a little bit because, you know, both for syndication of risk as well as the cash flows. But I think for a company of our size, it's really helpful to stay focused. And so as we look at what the pipeline opportunities are, for us going forward, and we do look at them, as I said, the focus is on TSC right now, but ultimately trying to bring in something that we perceive as being synergistic to our skills and the needs of the company on a go forward basis.
John Simboli
Bob, thanks for speaking with me today.
Bob Cobuzzi
My pleasure, John, I really appreciate the opportunity to sit and talk with you. The questions were fantastic, and you know, hopefully, I was able to clear away some of the fog that comes for all of us when we have these conversations.
