David Southwell:
0:01
To the extent that you're relatively humble and transparent, it helps.
John Simboli:
0:11
That's the voice of David Southwell, CEO of Volastra Therapeutics, headquartered in New York. Listen in to hear insights from David about leadership in biopharma and how Volastra is working to discover and develop oncology therapeutics targeting chromosomal instability, a vulnerability of cancers. I'm John Simboli. You're listening to BioBoss. Welcome to BioBoss, David. As you gained executive experience, did you find yourself at any point thinking, you know, I'm really, this a natural fit for me. I'm really cut out to be a CEO, or is it a more organic kind of thing? It just sort of happens.
David Southwell:
0:55
Well, I think to some extent, I just have a very low tolerance for boredom, and the one thing about biotech is you're never bored. You come into a company, with most businesses you're trying to control the risks, and your main risk is a competitor. And you come in and you figure out what your advantage is against the competitor, and you maintain that advantage, and then you just kind of keep going and build the company. In biotech, you deal with uncontrollable risks, whether you're a scientist or a business person. You know, preclinical data, unfortunately, more often than not, do not translate into good clinical data, and you can get tripped up by the business side of things. Often we're a very science oriented industry, and sometimes people get too deep into the science in that they realize that they've developed the perfect solution to a very small problem, or the perfect solution to a problem that someone else has solved a few years ago, and you just didn't notice it. So I think the the situational awareness component of this industry is something that really needs to be kept in mind. You know, you can have a really good scientific idea, but you've just got to keep an eye on the market and cell therapy, as an example, is I mean it's a it's really helped an awful lot of patients. But ultimately, the question is, will the payers pay for it? And will the payers pay for it? And how many? Once you start slicing and dicing your patients for people that have the particular antigen that you're going after or the particular HLA, how big is the market really, and then how many of those patients are covered by insurers that will pay for it, and then of course now you're dealing with international reimbursement, and I'm on also on the board of PTC Therapeutics, which I've been on the board of 20 years, and and they've got many drugs on the market internationally, and over there the reimbursement is often driven by one government. So you have one customer, and that customer can pull down a pretty attractive price, but then again, that creates the problem of most favored nation status. So, if you have a drug and you've negotiated a price that works really well, given the volume that you have in a particular European country, if all of a sudden you have to charge that price in the U.S. it could drive you out of business. So, there are so many different variables that I think any biotech CEO who honestly says that they sleep well at night is probably naive.
John Simboli:
3:51
I've asked a variation on where you are right now on several of the BioBoss discussions along lines of well, you know, in a framework in an industry where so little is there are so many things that are not under one's control as CEO. How do you reach decisions? How do you just keep from being paralyzed by the lack of information or the lack of certainty? I've had CEOs say to me, "Well, I just had to learn that I could always go back and fix it. I've had other ones say,"Oh no, the secret is to see around the corner and to anticipate problems. Have lots of options set up, and I know there's no simple answer to that. But how do you keep going when you don't know what you don't know?
David Southwell:
4:31
Well, I think you just try to control the controllables. You hope that you're working with people who feel the same way. Most notably, boards. If you're a CEO, you ultimately report to the board, and you know you need to be transparent about the risks. If you're taking a major risk on something, maybe you're launching a new therapeutic, and you need to price it. You know if you launch it and you price it; it's very difficult to significantly raise the price. If you price it too low, it's very difficult to raise the price. If you price it too high, you can certainly lower the price, and that creates an unfortunate incentive with a lot of companies to start out with a very high price, which is just unfortunate for the world that we live in. But there are things that you can change, and there are things that you can't. Pricing a drug is something where if you make a mistake, you can adjust for it. But if you devote your if you start with a wide funnel of discovery assets that you're developing, and you make the wrong decision on which one to take into the clinic, you're stuck. Because once you get a lead drug into the clinic, even if you've got a really interesting set of things behind it, when you come to raise money, investors have a ahabit which is a very natural habit, but CEOs would probably call it a nasty habit of focusing only on your lead asset. So, you know, as an example at Velastro, we have our lead asset is small molecule drug that works in a wide variety of cancers with a particular mechanism called KIF-18A inhibition, but we also have some discovery assets that also work in the wider field of chromosomal instability, and there are companies very interested in licensing those. But any time we go and talk to investors, they only care about our lead asset. So that is, of course, what we spend most of our time working on. So there are things that you can change. If your lead asset goes south, you can twist it around, but it takes years. And a perfect example of that from a long time ago is Forest Labs, who, of course, as we all know, developed Celexa and Lexapro. But before that, they had a drug called terodiline that didn't work out at all. And Howard Solomon managed to weather the storm of going through that to develop these antidepressants that became the top-selling SSRIs in the world. If you make a mistake and you have to do a pivot, you have to explain that first to your board, and then you have to explain it to your investors. Often the board, but most certainly investors, are a perfect canary in a coal mine. And oftentimes the investors have been saying for quite a while that they think you're crazy to be doing this particular thing, whatever it is, and you've been saying no, no, no, you're wrong, I'm right, I'm doing the right thing, and then all of a sudden you realize they were right all along, and you know what are you going to do now? And I think the the solution to that, to the extent that there is one is transparency. Is to say to investors, look, there's a difficult decision that I'm facing in terms of let's just
use an example:
8:10
which drug we push into the clinic when we have three seemingly equal opportunities in late stage preclinical in vivo clinical preclinical trials, and you you sort of talk people through it and say I'm making this decision and this is why I'm making it, and if it turns out to be the wrong decision, you can say you know you remember we talked about this and it turns out I made the wrong decision for a number of reasons, and some of those, some of what happened are things that I really could not have foreseen back then, but some of them are things that you know really I should have looked at and I didn't, and I think to the extent that you're relatively humble and transparent, it helps. And I mean, I was talking about Sepracor, when I joined. the stock was 3. It went down to 1.5, probably as a result of my joining, and then five years later, it had gone on a split-adjusted basis from 1.5 to 140, and then two years later, it had gone from 140 to 6, and then it went from 6 to 60. And what I realized is, when it's 140, it's awfully tempting to be arrogant. You know, you walk into a conference room, and the room is full. There's several hundred people in the room. They, you have fund managers thanking you for for making them so much money. In fact, they should be shorting your stock like crazy, and it's awfully tempting to be arrogant. And then, when things go badly, it's awfully tempting to be depressed. And to my mind, the challenge is staying in the middle. You can't be arrogant when things are going well, and you can't be depressed when things are going badly. You may make the wrong decisions, but a lot of the stuff that happens in this industry is really not necessarily foreseeable. Science happens, and there's a reason that the FDA makes us start with chemistry or basic biology and take it through into animals, and then take it into you know healthy humans, and then take it into sick humans. It's a pretty brutal drop off in success rates as you move through that development cycle. The problem with blaming other people in this industry, as a CEO, is you're blaming someone that either is on your board, or and in which case you should have convinced them to do what you wanted, or you're blaming someone who works for you, and that is absolutely not fair because they work for you. And it's up to you to apply a filter to what the people that work for you are trying to do. And so it's very hard to blame mistakes on anyone other than yourself, unless there's some absolutely extrinsic, you know, market event. It's really tough to not blame yourself, but it's always it's difficult to blame yourself because you could get fired. Hey, you know, at some point one has to have self-confidence and say, if the worst comes to the worst, I'll do something else.
John Simboli:
11:34
When you were a younger person, or maybe even a young person, and trying to anticipate where your life might go. Do you have any recall of those years as to any hints that you would end up being an entrepreneur, an executive, a CEO? I mean, was there some kind of pattern that someone could look and say, "Oh yeah, I know, I know what David's going to end up doing?
David Southwell:
11:57
The main thing,I grew up in England in the 60s and 70s, and England in the 1970s was a pretty grim place. Margaret Thatcher got elected in 1979, and you know back then, if you made more than 20,000 pounds a year, your unearned income was taxed at 98% I mean, it was a grim place, but my mother was American, so I had two passports. And as soon as I got out of school in England, I realized that I wanted to kind of control my own life as opposed to doing what English schoolboys do and go and work in the city or whatever. And so I went to Texas and got a job in the oil industry for my gap year, and I wound up going to Rice because the oil industry was booming in the early '80s. So I didn't want to go home, and I wanted to be able to control my life. And so I went to Rice, and then I wound up going to Wall Street, and I really enjoyed Wall Street. I was in the M&A group at Lehman Brothers, and it was just a rollicking time to be in that. And there were people who are now very senior. I mean, the founder of Blackstone was a managing director when I was there, as well as his number two, and really working with very intelligent people. But at the end of the day, I was doing deals for people who were often making, you know, A, making a lot of money, but they were very proud of the companies that they built, and they were proud of the deals that they were doing, and I was stepping in, making it happen, and stepping away. So I just kind of every time I wanted to be the client, and I Ithought sort of this is sort of what you have to do. So I think the main theme from being a kid was I wanted to gain control of my own life and biotech, you know, Wall Street is a way to do that. Biotech is also a way to do it because there are lots of different ways to skin a cat, as it were, in a biotech company. And you know, two different CEOs in a company will operate them in very different ways. So you better be right, or you better be operating it in a way that will keep your employees, keep a culture of a company, and kind of keep the plates spinning. I think everyone does that in a different way, and that's what I
like about this business:
14:36
is that to some extent I can be myself.
John Simboli:
14:40
If I were to speak your teammates, people who report to you, people who know you well, maybe even members of the board, and ask, well what's David's management approach? What do you think they would say?
David Southwell:
14:54
Well, I know what I hope they would say. It's you know one never sees the bullet that hits one, and so you know, I think you would really have to ask them, and I think it would be it would be the height of arrogance for me to tell you what other people think of me. But what I try to do is to be highly collaborative. I like to hire the best people, work with So it becomes a zero sum game, and the challenge at that point the best people, and listen to them, and really talk through major decisions with everybody. And oftentimes, the people that work for you, or even that are on your board, would have a different approach than you want to have, and often they have opposing approaches. is to say, "Look, I can't do what both of you want, or I can't do what all of you want. I have to make a decision, and this is what I'm deciding to do. And it's not personal. I'm not doing this because I don't like the person whose advice I'm not taking. It's just that at this particular point, I think that I need to take this other person's advice. So it's a bit of a challenge to say no to somebody, but keep them really devoted to the cause. And we're very mission focused. When there's a situation that isn't working out with someone, I always feel as though I'm sending them to a better place by moving them out of the organization that I'm in, and I genuinely feel that way. And I say that to them. And there are many people that I've let go that I'm now very good friends with.
John Simboli:
16:35
When people ask who is Volastra, how do you like to answer that?
David Southwell:
16:40
We have a brand new mechanism for treating cancer with a once-a-day pill or a series of once-a-day pills, depending on the dose. And what we're doing is we're countering a syndrome called chromosomal instability, which exists in about 80% of cancers, where in cancer cells, as cells divide, the chromosomes are unstable, whereas in normal cells they're
John Simboli:
17:03
Do people ever say, very orderly and stable. There's a particular target within chromosomal instability, when you remove it in a normal cell, it doesn't affect the the cell division. If you remove it in a cancer cell, it disrupts the cancer cell and causes it to die.
David Southwell:
17:29
I am fortunate to work with the leading researcher in chromosomal instability, who was the founder of our company, and he came out of Sloan Kettering. And there are several companies that are working on the same mechanism as our lead drug. We happen to be the furthest along. And when the company got going, the the first company that actually started working with KIF-18A inhibition started working with this target was Amgen, and we ended up in-licensing their drug very early on. So we've had the ability to test our own independently developed compound against Amgen's, and we owned Amgen's, so we have no reason to prefer ours over theirs. It turns out, and you know, Amgen is a stockholder. We we we know them well. It turns out that our compound has better efficacy and a better side effect profile than the Amgen one. So we still do work with the Amgen one, but we're primarily developing our own. And you know, when I was working in cell therapy, I always was under the impression that small molecule drugs would never be that effective in treating cancer, and that is not the case. One of the things that we've recently discovered is a biomarker that predicts patients that. are going to respond to our drug, and the biomarker exists in well over 50% of the patients. So we can take we can do a pan cancer study, and we we actually used sub-therapeutic doses for some of these. But you do a pan cancer study that has an ORR rate that is not that good of say 14% You then apply the biomarker to it, and you get that up to 37.5 percent, which is much more interesting. So we are developing. You know, we started with a monotherapy. We then have found a biomarker for it, and we're working very hard with that, with the objective of doing a pan-cancer pivotal trial with it. The other great thing about chromosomal instability is many of the standards of care promote, they create chromosomal instability. So, for example, taxanes, which are part of the first line therapy of many cancers, including lung cancers, only have about a 10 to 15 percent response rate. In other words the tumor goes down by more than 30% in only 10 or 15% of cases. What we've found preclinically is that if you take a cell line that doesn't work with our drug, so it's not particularly chromosomally unstable, you give our drug, nothing happens at all. You give a taxane, it has a And ADCs and taxanes have a safety profile that is not that good. ADCs can have vision loss and some other things, and what little bit of an effect, but if you give both of them, you have if you could lower the dose of taxanes or lower the dose of an ADC, and by adding our drug, which has a relatively much a synergistic effect, and it effectively flatlines the tumor. cleaner safety profile, you could just create a better therapeutic index for the patient, So we really have two So we really have two approaches. One is a different approaches. One is a monotherapy approach, and the other is a combination approach. We're starting combination biomarker-directed monotherapy approach, which would be used in studies in March. We're starting it with taxanes, but our plan is to really roll that out. So we'll be doing monotherapy third-line therapy in a lot of different cancers, and our plan studies, pan cancer, and we'll be doing combination studies to get us from third line therapy into first line therapy. Really is to do a pan-cancer study of that. And secondly, a hard to displace first line therapy, as you can imagine. If combination strategy where you would combine it with taxanes or you're an oncologist, someone comes along and says, "Oh, we've got this great new drug. You know, we think you should use it ADCs. We've also been testing our drug against the toxic in first line therapy. The oncologist is going to say,"Look, I've been using you know carboplatin and taxanes for warheads of many of the leading ADCs. decades, and I've got very sick patients that are coming in., there's no way you're going to replace that. But if we can offer them something they can add to it that's going to perhaps enable them to lower the dose or is going to increase the response rate of it, then they're much more open to that. So that's kind of where we're going, and we're very busy with that. The two discovery assets we have are also chromosomally, they also target chromosomely unstable cancers, but it's a different target than KIF-18A. We're really the leaders in research into chromosomal instability, and financing-wise, our goal is to do some licensing deals on the early preclinical assets and use that to fund, you know, the main event, which is our KIF-18A drug. Unlike my previous company were not really an immunotherapy company, so one of the things that's interesting about our drug is it leaves normal cells alone, and we leave T cells alone. So immunotherapy for cancer almost universally involves T cells, CD4 and CD8 T cells, and you don't want to mess with those because that that is the body's natural immune response to to a foreign invader, otherwise known as a tumor. And there are different approaches to doing it. One is to overcome the checkpoints, you know, PD-1, PD-L1 inhibitors, for example. The difficulty with T cells is that oftentimes the T cells inside a tumor are exhausted, and which is why the response rate on some of the checkpoint inhibitors is not as much as you might like. So there's a whole different way of dealing with immunotherapy. We're really different. We're a totally different mechanism of action that applies in hot tumors. You know, hot tumors being ones that are very prone to immunotherapy, cold tumors, and others. And there are some tumors that are not particularly chromosomally unstable, colon cancer being an example, but 80% of tumors are chromosomally unstable, so that creates a huge market for us. And the question from a business perspective is, where do we go? And we started in ovarian cancer, platinum resistant ovarian cancer, and our approach there is to sort of go after that, but now that we've discovered a biomarker, the goal is to look at, we've also figured out the prevalence of that biomarker. In other words, how many other cancers is it expressed in?
John Simboli:
24:52
When people, when knowledgeable folks like institutional investors hear you talk about the company, what do they understand correctly from your viewpoint? You know, accurately. What is the misunderstanding? Is there acommon misunderstanding? Then how do you get it back on track?
David Southwell:
25:11
Well, I think what we're doing is relatively straightforward get a particular point across, straightforward. It's straightforward to explain. We have a pill that treats cancer, and you know, I think they understand that. I think they're very excited about the biomarker approach. I find that in in the particular case of Volastra, they kind of understand it. When you're in cell therapy, it's much more difficult because it's very complicated. They ask you about manufacturing. You know, are you going to be able to it was something that completely changed the game for this and I think with us it's translating the combination data into human data. manufacture it? What's it going to cost to manufacture it at company. So you know, that's a challenge. Luckily, it was good news. I mean, I've also had situations where you know you're heading out to J.P. Morgan, and all of a sudden you've got a patient that's got a problem, or you've got a clinical trial that has failed, and you're like,"Whoa, do I just like get off the plane, or what do I do?"
John Simboli:
27:53
Is there anything in particular that you are eager to investigate that you'd like to talk about? I mean, I guess we're all talking about AI, but
David Southwell:
28:02
I think what's fascinating is what nobody talks about, or people don't tend to talk about in this business, which is the business element of what we're doing. At the end of the day, biotech companies tend to be science experiments that spend investors' money and then hope that they're going to get taken out by a pharma company, or maybe they turn profitable. And the real question is, from a business perspective, other than the science, what is it that we all need to be thinking about that is going to bite us that we're not seeing? What is going back to the beginning of the conversation? What is the bullet that's going to hit us? And it may not be a science bullet. It may not be something that we think is a big issue. And starting off in a company, it's often about the science. But as you grow, it becomes more about the business. And we are a business, and pharma companies trade on a multiple of earnings, so they don't want to do a lot of early stage research. They want to buy a product with low risk and market it using their extensive sales force. We're developing drugs. How do you kind of blend those two? And we did that a little bit at Sepracor because we had products on the market, but it's a very very difficult challenge to go from being a science company to being a commercial company. It requires a completely different set of skills, and it would be really interesting to talk to more people that have done it. You know, I'm thinking of John Maragonori as the you know perfect example of that at Alnylam, but also Alexion. I mean, same thing. There aren't that many people that have done it.
John Simboli:
29:41
Thanks for speaking with me today, David.
David Southwell:
29:43
I really appreciate it. This was a very enjoyable conversation.
John Simboli:
29:48
Speaking with David Southwell about leadership in biopharma was notable for his plain language and appreciation of both challenges and opportunities. As David said, with a good-natured chuckle,"Any biotech who honestly says they sleep well at night is probably naive." My guess is that part of David's eyes-wide-open view comes from his experience in capital markets. He's seen firsthand how challenging it can be to marry scientific innovation with business acumen, in a setting where uncertainty is the coin of the realm. In David's words, science happens. David said the best way to deal with uncertainty is to be transparent about the risks. He added, to the extent that you're relatively humble and transparent, it helps. While transparency is a big help, successful leadership requires making good decisions. In David's words, "You better be right. You better be operating in a way that will keep your employees and keep a culture, and keep the plates spinning. I'm John Simboli. You're listening to BioBoss. BioBoss is brought to you by Wyant Simboli, a strategic branding firm focused on helping life sciences companies advance. We partner with companies to define their story, structure their brand, and inspire their audience. Visit wyantsimboli.com for more information.
