Episode 142: Bob Nelsen on the pandemic's next phase, plus Biden's biopharma plans & a CES preview

Welcome to this week's episode of The Readout Loud, a weekly biotech podcast from STAT. I'm Meg Tirrell.

I'm Adam Feuerstein. And I'm Damian Garde.

It's Thursday, January 7th, and here's what we're going to talk about this week.

First, STAT Washington correspondent Lev Facher joins us to break down the implications of a Democratic-controlled Senate and the aftermath of pro-Trump rioting at the Capitol.

Then our colleague Erin Brodwin calls in to talk about CES, the massive tech conference taking place next week, and what it portends for that sector's embrace of health care.

Finally, we talk with biotech venture capitalist and one of the few people who saw the pandemic with clarity months before everyone else, Bob Nelsen, about what he's thinking about now.

But first, a word from our sponsor. Hi, I'm Angus Macaulay, the Chief Revenue Officer of STAT. There have been tremendous leaps forward in recent years in digital health, but there's still a long way to go. I'm here with Chris Benko, the CEO of Konexa, a software company dedicated to making clinical research more agile, safer, and friendlier for the people who participate. Chris, what are some of the obstacles preventing expanded use of digital biomarkers in clinical trials?

Thanks, Angus. Utilizing wearables and sensors for vaccine and drug trials involves more than just selecting cutting-edge digital tools. You need to make sure that new digital biomarkers are collecting valid, reliable, and compliant data. At Konexa, we are focused on building tools that will provide the most meaningful patient data. For more information, visit KonexaHealth.com. That's K-O-N-E-X-A Health.com.

When Damian, Meg, and I got together on Wednesday morning to plan this week's episode, the big story out of Washington, D.C., at least on our minds, was the Democrats taking control of the U.S. Senate following Tuesday's runoff election in Georgia.

The twin victories by Georgia Democratic challengers Raphael Warnock and Jon Ossoff over the Republican incumbents will have significant ripple effects on the way President-elect Joe Biden pursues his health care policy agenda and in turn on the biopharma industry.

But of course, that news was quickly overshadowed by the events in Washington this week when pro-Trump rioters stormed the Capitol in an attempt to prevent Congress from certifying the results of November's presidential election.

So for all things Washington, we turn to our colleagues there, Lev Facher and Nick Florko. Lev joins us today. Lev, welcome. Hi, everybody.

So first, can you help us think about how to make sense of what happened this week in the context of what's to come? President-elect Joe Biden takes office January 20th. Does this movement have any impact on sort of his policies, his ability to implement those policies? I mean, how do you think about this from a journalist covering Washington and a movement that does not seem like it will simmer down just because there is a change in the administration?

Right. And of course, yesterday was not a health care story. And as you watch people smash windows and push past Capitol Police on their way into the halls of the House and Senate, health policy is not the first thought that comes to mind. But also, as I watched yesterday, one thought that really stuck with me was the fact that I think there's been a very optimistic attitude about what might happen when Joe Biden takes office in a few weeks, specifically in terms of the country's pandemic response. But I just couldn't get past the fact that there's such a large segment of this country that is not going to view Joe Biden as a legitimate president, even though, of course, he was legitimately elected in every way.

And that really is just going to be a very fundamental obstacle in terms of public health messaging, in terms of implementing things as simple as, you know, mask mandates in federal buildings. There really is not going to be the kind of 100% or maybe even 80% buy-in you'd think is needed to really right the ship in terms of how we've responded as a country to COVID. So, you know, it's a bleak thought to start a new year, but it's also just the reality that this kind of mass transformation where America suddenly is this scientifically oriented, public-health-savvy country with full public buy-in, it's not what we're going to see. And it's going to be a challenge specifically with the pandemic response and in many other respects too, I'm sure.

So as Meg mentioned, because of those results in Georgia, Democrats now control the Senate, but with the thinnest possible majority. What does that mean for the prospects of health policy and pandemic response that the Biden administration might want to effect moving forward?

I would say it completely changes the landscape before Tuesday's elections in Georgia. The thinking was that the Senate would be controlled by Republicans, the House by Democrats, and that Mitch McConnell, the Senate majority leader, would not really be willing to pursue much aggressive legislation at all on issues like drug pricing, of course not. substantial changes to the Affordable Care Act. But now that Democrats have full control of Congress, it completely opens up the array of possibilities in terms of what can be achieved legislatively. And that's a much more powerful vehicle for getting things done, moving a bill through Congress than just leaving the Biden administration alone on an island to regulate using its own limited power.

Yeah, and Lev, what is next for drug pricing specifically? What's the likelihood that something substantive is passed into law?

I would actually almost say that a drug pricing bill, a major drug pricing bill, is almost low-hanging fruit for Democrats. The real question is what form a bill takes as opposed to whether one will pass. Of course, House Democrats had H.R. 3, the Lower Drug Prices Now Act, which was this very aggressive, very sweeping bill that, you know, would have imposed an international price cap. This very, very aggressive Medicare drug price negotiation scheme would have limited price increases to a degree, limited launch prices. I don't know that we'll see legislation quite that aggressive, but it's likely we'll also see a bill come into law that, in my opinion, will be more aggressive than a bipartisan bill that we saw stagnate in the Senate throughout the last two years.

And that bill was much more modest. You know, there were caps on price increases indexed to annual inflation. There was a cap on out-of-pocket prescription drug spending for Medicare beneficiaries. So I think it's likely that we'll see something somewhere between those bills come into law, be signed by President Biden. Yeah. But it's just unclear which side of the spectrum it'll fall on: closer to the very aggressive Nancy Pelosi version or the comparatively modest Senate version.

So there's been talk of Biden issuing executive orders during the first days of his presidency to bolster the Affordable Care Act or to revoke actions taken by the Trump administration. Is that more or less likely now that Biden faces less opposition in Congress?

We will doubtless see plenty of executive orders on day one in Biden's first weeks in office. But the fact that Democrats now control the Senate and the House, I actually think takes a lot of pressure off the Biden administration to pursue health policy reforms via executive orders and regulations only, alone. Actually changing the laws that govern these federal programs is a much more powerful tool for effecting change than a president issuing regulations and moving them through the rulemaking process. And there's no better example of that than the Trump administration, which has intermittently tried to move these really aggressive drug pricing regulations that are—they've been sued, they've, they've stagnated.

They've faced opposition even from a lot of Republican groups in D.C. So the ability to pass bills through Congress is really what Democrats have wanted if they were going to be able to pass aggressive health policy reforms. I think that doesn't take anything off the table for the Biden administration, but it might mean that there's less urgency there to go the executive action and regulatory route off the bat, just because they'll want to see what Congress is capable of.

So, as we mentioned, the Democratic majority in the Senate is razor-thin. So who will be the chamber's most influential lawmakers?

It's worth noting, yes, the Democrats control the Senate, but that's because the vice president controls the Senate. The vice president is the president of the Senate itself. Of course, that will be Kamala Harris, currently a senator from California, a Democrat. But it's a 50-50 Senate. Democrats are not just going to have an easy time passing whatever legislation they want. There will be resistance from Republicans. There are moderate or more conservative Democrats who are not going to be on board with, you know, sweeping policy proposals in the health care realm, maybe a Medicare public option, option. So there are people in the middle, I think, who will be quite influential. One example is Joe Manchin, the Democrat from West Virginia, seen as the most conservative Democrat and, incidentally, the father of Mylan CEO Heather Bresch.

On the Republican side, recently reelected Susan Collins from Maine, Mitt Romney from Utah—people who have shown willingness to work with Democrats on legislation but are, of course, by no measure Democratic progressives. And the former ranking members on health care committees on the Democratic side are going to be very important. They're likely to chair these committees now. So look to Ron Wyden as the leader of the Senate Finance Committee and Patty Murray chairing the Senate Health Committee, which oversees a lot of health care issues and agencies. Those are going to be people really at the center of health policy fights in the coming year or two.

So there's been talk that former FDA Commissioner David Kessler could return to that job under a President Biden. And I think that led to a lot of surprise among people who knew him, as he's known, among the many clichés, as hard-charging and lacking certain niceties. Do you think Kessler's return is more or less plausible now that Democrats control the Senate?

Well, the first thing I would say is that everyone should go read my colleague Nick Florko's fantastic profile of Kessler from just before the new year. The lacking in niceties, as you say, Damien, is a theme. It's really a fun read, but you also learn a lot about him. And I think he's likely to play some role in the Biden administration. It's just a question of what specifically — in terms of Kessler's chances, I don't know that Senate composition materially changes anything. But I think if Republicans had controlled the Senate, he would have faced a very, very uphill climb to confirmation. I don't know that that makes him more likely to be nominated now, but it just preserves the possibility, I would say.

Lev, thanks for joining us.

Thank you for having me.

The old prediction that software is eating the world has long since become a truism, and perhaps nowhere is that more clearly on display than at the annual Consumer Electronics Show, better known as CES, which is held each January in Las Vegas.

In recent years, the conference has doubled as a showcase for software's gradual attempt to further sink its teeth into healthcare. Erin Brodwin, who reports on health tech for STAT, will be covering next week's virtual incarnation of CES, and she joins us now to talk about it.

Erin, welcome back to the podcast. Hi, everybody.

So CES had traditionally been a launching pad for apps and gadgets focused on productivity or entertainment. How did healthcare creep into the proceedings?

So back in 2010, crazy to think it was already 11 years ago, CES held its very first kind of healthcare-focused event. They called it a Digital Health Summit back then, and they continued to call it that for quite a few years. And in recent years, they've rebranded it a little bit. So it's now called kind of a digital health track. But CES definitely has a much bigger healthcare-focused or, I should say, health- and wellness-focused presence than it did before 2010.

So, Erin, what kind of health-related technologies get featured at CES? Is this predominantly stuff like fitness trackers, or is the show more of a staging ground for digital therapeutics?

It is definitely, decidedly still focused on things like fitness trackers, sleep gadgets, wellness-minded devices, those sorts of things. When I went in person last year, which seems like more than a decade ago now, I remember being surrounded by a sea of kind of wellness-focused things. Our very own Megan Thielking wrote a great story about how she was basically surrounded by devices that told her everything that was wrong with her, wellness-wise. So I would say it's definitely not a staging ground for digital therapeutics. That said, we did see some interesting healthcare debuts from new players last year. Retail giants like Best Buy, Walmart took up a lot of the digital health track. And they mainly talked about their emerging work in basically adding devices to

to people's homes and building out health centers. So Best Buy focused on putting trackers in seniors' homes — so like refrigerators and beds to kind of see how they're doing. Walmart, conversely, talked about their big kind of healthcare presence debut in the form of, you know, using their existing retail footprint to kind of add health centers and pharmacies and things like that.

You know, just thinking about trackers and this focus on wellness, I wonder if — is there anything about the pandemic that might have changed what kinds of products are on display or just how people are thinking about digital health and health monitoring? Because there's just so much of we're doing things at home now because of the pandemic. Do you think there's going to be kind of a focus at CES on how healthcare is sort of changing in that way at all?

Yeah, that's a really good question and interesting one. I mean, I think it'll be really interesting to see how the whole conference plays out being digital for the first time. And I do think that COVID has certainly turned a big focus onto wearables and health trackers. I mean, we've seen, for example, companies like Fitbit and Google looking into using temperature and heart rate variability as a means of kind of detecting COVID early. And so I do think that this time around, we could see some new technologies or at least a new focus on technologies for either COVID detection or detecting illnesses. So I'll definitely keep my eyes peeled for that.

So sort of on that same topic, what other sort of health tech news should we be looking out for next week's virtual conference?

So one thing that's happening that is new this year is the conference is dedicating a pretty sizable chunk of its agenda to addressing inequality. On January 12th, there is an event, for example, with I think it's Annie Jean-Baptiste is her name. She's the head of product inclusion at Google. And then with Kimberly Sterling, who's a senior director of health economics at ResMed, which is a medical device company. So that should be really interesting. And it's on gender and racial bias in AI specifically. And then the next day, there's a conversation, I believe, on how tech can reduce health disparities online with some dual-founder CEOs. And I think that'll be a really interesting one to check out too.

And then of course, during CES, STAT will be hosting our very own special live chat, and that's on January 12th. So you should definitely check that out too.

So this may be only tangentially related. But speaking of disrupting healthcare, this week brought the news that was courtesy of a nice scoop, I think from CNBC, that Haven, a closely watched healthcare venture from Amazon, JPMorgan, and Berkshire Hathaway, would be winding down their operations. Can you tell us some of what you learned? Because you've also covered this, Erin, you know, what you learned about how things came unglued there?

And I should note it was CNBC, but it was my colleague Hugh Son. It wasn't me.

Yeah, that was such a great scoop. That was a case of, you know, you see the headline and you're like, oh, wish I got that story. I think this was kind of a case, and I'm sure I'm not the first person to say this, but this was kind of a case of, you know, big idea and no real plan to get there. The closest analogy I can kind of think of is, you know how, and this might sound a little bit pedantic, but I think it's still fitting. You know how when you're a kid and everyone asks what you want to be and you say, you know, I want to be an astronaut or whatever it is, but then you might not, you know, plan to take all the steps necessary to get there. So say you don't, you know, take math and science classes, or you don't pick a college with a good math and science presence, that sort of thing.

I also think Haven, unfortunately, made a fairly bad choice in terms of a CEO. Atul Gawande, as we all know, is a visionary writer. But one thing he is not is an operator. And we really started to see the wheels at Haven start to come off, I think, around May 2020 when Gawande stepped down. After he stepped down, between May and December, we just saw Haven start to hemorrhage staff. I mean, high-level employees started just leaving in droves. And so I think when the news came this week that Haven was actually shutting down and will wind down at the end of February, I don't think a ton of people were really surprised. I do think a lot of folks were holding out hope because these are three just really high-powered names, they've got a ton of power, they've got a ton of money.

And people were really thinking, you know, maybe this will be something that'll create change on a long-term, a long-term scale, maybe we just wait five years or so. But that clearly isn't happening. And after a three-year run with no real results, you know, we're kind of seeing the end of this chapter.

Erin, thanks for joining us.

Yeah, sure thing.

Just less than a year ago on January 20th, 2020, our country was wrapped in the impeachment proceedings against President Trump. And, you know, you had to turn to page A6 of The New York Times to find mention of a deadly, mysterious virus that had been reported in two new Chinese cities and in South Korea.

But Bob Nelsen was tweeting about its confirmed human-to-human transmission, calling it very scary before most of the world was paying much attention. Nelsen is co-founder and managing partner of ARCH Venture Partners. He's one of biotech's most successful venture capitalists, and he's somebody we wanted to check in with almost a year after his prescient tweet.

Bob, welcome. Hi. We're going to spend most of our interview talking about the pandemic. But Bob, we want to start with the events of this week. Just share with us what your take is on them and really what they mean for the country going forward.

I kind of think we're at a cathartic moment. I spent the evening watching all of the speeches and thinking about the positive aspects of our democracy. And I think in a way, as painful as this was to watch, it did clarify the fact that we don't want to be a mob-rule, fascist, demagogue state. And even for the more conservative people on the aisle, I think they stared into the abyss of fascism and mob rule and saw what it was like as the most sacred democratic place in the country was desecrated. And so I really do think that just listening to the bipartisan consensus about the strengths of the country last night gives me hope, actually, that we can kind of move on from this chapter. And there's a lot of anger in the country that needs to be addressed on both sides of the aisle.

But I do feel like the institutions will hold.

So, Bob, you know, shifting to the pandemic, how would you sum up where we are right now? And, you know, what do you think the year ahead looks like for us here in the U.S.?

I think it's mostly, you know, good in the long run and pretty scary in the short run, as you know. And I've been saying the next couple of months are going to be really terrible and are right now. And you're kind of seeing the result of, you know, to some degree, behavioral things with masks and social distancing. And as the vaccines come in, you'll begin to see death rates going down. And I think several new treatments that are on the horizon will also bring death rates down when you do get the virus and you do get sick. So I think all of those things are very good. The one scary thing on the horizon is this South Africa variant and the fact that because of behavioral challenges and slow vaccine rollouts, the virus is kind of percolating in lots and lots and lots of immunocompromised people.

And that's pretty scary. And the South Africa variant is pretty scary. And we'll just have to see how the South Africa variant works against the current set of vaccines and therapeutics.

So to that very point, it seemed like we were finally turning a corner with two vaccines showing 95% efficacy roughly, and the virus then threw us for another loop. Two variants have emerged that cause a lot of concern. The South Africa variant that you mentioned, but also one in the U.K. that appears more transmissible. So with the U.K. one first, how worried are you about that?

I think kind of medium worried in the sense that it's, it's more transmissible and we've already shown kind of our weaknesses, uh, in social distancing and masks. So it just means more people are going to get it as it begins to take over from the other variants, um, uh, you know, in the next few months. At the same time, vaccine rates will be going up. So it will have an impact, but it won't, um, I don't think it will be a, kind of transformative thing. I mean, it's bad. More people will get it. But I think that, you know, it's not going to be this kind of transforming event in the pandemic.

There was a discussion this week that Vir's antibody would not be affected by the South African variant's mutations. How are you looking at that?

Vir's approach was always to find antibodies that would be more effective against conserved regions of the virus as the virus changed. And everybody was going around saying, you know, "I think it's a stable virus and very predictable." And the difference between Vir and a lot of these other companies is that they're an infectious disease company and they actually understand the virology and immunology of the way that viruses work and work in populations. And what happens is, when viruses get in lots and lots of people, they behave differently. And, and you can see that as these strains emerge in, in South Africa and in the UK, it's because they've been percolating in humans that are immune-suppressed or have been treated with convalescent serum, so they're kind of

you know, putting pressure on the virus, but not killing the virus, right? And then the virus changes. And so Vir had always predicted that this was going to happen. And the reason we selected the antibody we did was because it was in this SARS patient and it percolated for 10 years in the SARS patient and was, you know, very robust and conserved. And so we felt that that would be, you know, ultimately a better therapeutic. We don't know that yet because the data hasn't read out in Vir's human trials. So that will be interesting to see whether that hypothesis is correct.

So in November, you founded a new company called Resilience that is focused completely on manufacturing with much of that in mind. Can you tell us a little bit about the impetus for that company and what you hope it'll go on to achieve?

Sure. I mean, it definitely arose from frustration. So the pandemic... I think we were all frustrated with the supply chains and just, not just even the problems in the supply chain, but actually understanding what the supply chains were. Where we got lucky is when we started assembling this great group of people who knew how to manufacture things, especially biologics, it became pretty apparent that we could solve some pressing problems in the manufacture of things like viral vectors for vaccines. And then that leads really pretty rapidly into gene therapy and cell therapy and gene editing. And so we didn't realize how much of a need there was there and how dissatisfied people were with the existing system of CDMOs and even their own internal manufacturing.

There's just been an under-focus and under-investment in manufacturing R&D. And we're making some of these things with 50-year-old technology that, you know, can be reinvented. And we can make things a lot better and faster. And really interestingly for gene therapy and cell therapy, way, way, way cheaper. So that's kind of how we ended up in the place we're in right now, which is we're really thinking about going after several of these platforms in a fundamental way, you know, automating, systematizing, digitizing, decentralizing the entire manufacturing chain and biologics.

Our last question for you. There was an article in The Onion recently that, like so many of their takes, was both horrifyingly and hilariously spot on. The headline was, "CDC Unveils List of Twitter Accounts You Can Follow to Piece Together Vaccine Information." So who do you follow for the best COVID information and analysis?

That's interesting. Yeah, The Onion is my favorite news source. So like, as you know, like even after- Wait, Bob? Yes?

I thought STAT is your favorite news source.

And CNBC, assuming.

And CNBC, I'm sorry. I should have said that too.

Okay, The Onion, STAT, and CNBC are my favorite people. But the people that I look to for kind of solid, you know, dispassionate science advice in the pandemic are people like Luciana Borio, Jeremy Farrar, Trevor Bedford, Larry Corey, and then Skip Virgin at Vir. I talk to a lot when I really want to understand the science and the kind of the immunology, which I think people is kind of an underestimated place. So I kind of follow those folks. And there's probably some other ones I'm forgetting.

So if you want to follow Bob on Twitter, and we recommend that you do, his handle is @RTNArch.

Bob, thanks for joining us.

Thank you.

That does it for another episode of The Readout Loud. Thank you to senior producer Hyacinth Empinado for her work on this week's episode.

And thanks also to senior producer Alyssa Ambrose and executive producer Rick Burke.

And as always, we'd love to hear from you. Tell us what you liked about this week's episode, what you didn't like, and who your Twitter go-tos are for all things COVID. You can do all of that by sending us an email at readoutloud@statnews.com.

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See you next week.