Alex Gosch (MS/MBA ‘24) shares key learnings from industry leaders during SIP week.
Alex Gosch, Contributor
Like many HBS students, I had the fortune to take part in a Short Intensive Program (SIP) filled with interesting insights, intently engaged classmates, and in-person celebrity visits. Yep, I know what you’re thinking, and you’re right.
It’s the Investing in the Life Sciences SIP.
Oh, you thought I meant Kim Kardashian? Nope, I’m talkin’ real celebrities like heads of research at large pharmaceutical companies, disease foundation founders, startup biotech CEOs, public and private investors, world-renowned medical writers, and so many more.
Trust me, you could feel the ‘fan girl’ energy in the room. It was palpable.
We were also graced with the presence of many members of the Wyss Institute for Biologically Inspired Engineering to bring a new flavor of technical expertise to the classroom. Today, I’m going to enshrine 13 of my learnings that came out of this magnificent experience to share with you all. In the spirit of our Chatham House rule, no attributions will be made in this article, but I hope you find this insightful.
To help you decide where to stop reading, I’ve organized the key points into ‘For Everyone’, ‘For the Scientifically Curious’ and ‘For the True Nerds’:
FOR EVERYONE:
The greatest hindrance to the ambition of HBS students is a lack of patience. This is one I didn’t want to hear and hit the hardest. Maybe it’s just me, but I have dreams of changing the world today (or at most, in the first two years after I graduate). But, planning for the long-term is much, much more likely to bear fruit in our impact in the world than optimizing for today, whether that be title, compensation, or another attractive metric. If we truly want to maximize our impact on the world, that often requires patient, diligent effort over many years.
Investing successfully requires an edge and the ability to act rationally in irrational markets. In the life sciences, this edge is especially critical. This edge can come from improved access to specific geographies, personal deep technical expertise, or strong relationships with world experts across multiple technologies. Market irrationalities are investment opportunities when you keep your head on straight.
We need more ‘Tarzan leaps’ in the pursuit of knowledge. Consider the world of known knowledge as characterized into ‘trunks’ which represent novel areas of knowledge. Often, research as a whole has focused on building ‘branches’ on known ‘trunks’ of knowledge. But bigger change comes as we take ‘Tarzan leaps’ to new ‘trunks’ of knowledge.
People actually do the sort of financial analysis we did in the FIN1 final. We went through the full model evaluating Dicerna as a business opportunity. It was more detailed than anything even Your Section’s Favorite PE BroTM with all of the Excel shortcuts in the world could build in our 4 hour final. I’m grateful they abbreviated it for us.
FOR THE SCIENTIFICALLY CURIOUS:
Patients are the reason. We have the privilege of working in a business in which you can dream of curing patients of disease. There are hopes for a cure, as we have seen in HCV with Solvaldi, or one-time gene therapies for debilitating neurological diseases like SMA with Zolgensma. What a lucky thing, to be able to go to work and try to alleviate pain in the world rather than selling fancy Spandex… 🙂
If you had $100M to spend to improve cancer research, how would you do it? What a thorny concept to grapple with — we were presented with a case of how to allocate scarce resources across the multitude of opportunities for advancing research. Would it be better to focus your funding into a traditional VC in which your returns could multiple and thus multiply the impact of your original investment? Or allocate it to opportunities too early for VCs to enable research that may otherwise not have progressed? $100M sounds like a lot, but in the world of drug development where a single clinical trial in cardiac disease can cost in the hundreds of millions, it can only go so far.
When testing lots and lots of people for cancer, it’s critical to compare the costs & benefits of new diagnostic technologies. With new technologies that enable low-cost screening for multiple cancers at one time (e.g., liquid biopsy), what are the implications of a false positive test? How do we account for the emotional toll of telling someone they have cancer when in fact they do not? And do we have the therapies necessary today to treat the cancer at the stage in which it is detected?
New regulations like the Inflation Reduction Act (IRA) have real implications on where capital is invested. The IRA has many components, but of particular interest is a stipulation enabling a longer window without pricing pressure for biologics (antibodies) and small molecules. Because the IRA has incentivized investment in biologics, some investors will not invest in small molecules. This may not seem like a big deal, but trust me, it is. Small molecules ‘go generic’ more easily because their manufacturing processes are easier to replicate by outside firms. This reduces overall spend on new drugs and expands their access to countries that cannot afford high drug prices. Biologics don’t become generic easily, making it harder to scale these medicines and eventually reduce their price.
Why healthcare / biotech is the best place to invest today:
Aging demographics leading to increasing unmet need
Innovation is at all-time high across the industry e.g., sequencing advances (Eroom’s law with the cost of sequencing being cut in half every two years), new therapeutic modalities (CAR-T, gene therapy, mRNA therapy) and many more.
Regulatory environment is supportive in the face of a strong need in a way that hasn’t been seen before e.g., FDA approved COVID vaccines in 6 weeks
Don’t take press releases at face value. Whenever reading a company publication, look between the lines and below the surface to determine the company incentives and what the team is really thinking. This is especially critical in high-pressure environments, e.g., when they are receiving pressure from an activist investor.
FOR THE TRUE NERDS:
Who should you get on your Scientific Advisory Board—someone with strong ‘Slide Value’ or someone with actual technical expertise? Like most questions presented at HBS, there isn’t an easy answer to this one. It requires a balance of pulling in people who have deep technical understanding of the science you are pursuing and also finding others with successful track records to provide the external validation investors are looking for.
To differentiate yourself in the age of machine learning, you need proprietary data. So many companies are diving head-first into “AI/Machine Learning/Neural Network/Data Science” that it can be hard to pick apart who is really making a difference in the space vs. riding the ‘hype train’. Companies who can generate or access proprietary data will have a strong advantage in building out algorithms capable of generating new medicines.
New types of therapies show a lot of promise, but require herculean work to manufacture. Manufacturing for cell and gene therapies is extremely complex; these processes can involve taking a patients’ cells, transporting them to a research facility, using multiple biological tools to modify their genome, then treating the patient with their newly modified cells. Compared to more traditional small molecule development where manufacturing is a more straightforward chemical process, these advanced therapies need much more rigor and cost to make them.
If you made it to the end, congratulations! You’ve officially graduated from the ‘Summary Short Intensive Program’ (SSIP). Come find me (Aldrich 007, Section F, @Alex Gosch on Slack) and I’ll buy you something from the vending machine as a reward for your dedication.
