Biotech investor Bob Nelsen on AstraZeneca and his plan to revolutionize pharma

Hi, I'm Dan Premack, and welcome to Axios Recap, presented by Facebook. Today is Monday, November 23rd. Snapchat's TikTok clone is up, gold prices are down, and we're focused on how America could be better prepared for another pandemic. Earlier today, AstraZeneca and the University of Oxford reported promising phase three clinical trial data for their COVID-19 vaccine, following up on promising news earlier this month from both Pfizer and Moderna. All three vaccines could, at least in theory, be available to some people by the end of this year. Now, conventional wisdom is that all three companies have moved at breathtaking speed within the broader context of vaccine development and manufacturing, which often takes years.

And the same goes for a lot of the therapeutics developers like Regeneron, which just got FDA Emergency Use Authorization for the monoclonal antibody treatment that had been given to President Trump. But there's also a different argument, one that says these processes only seem fast because for decades there's been relatively little innovation in pharma manufacturing. At least that's the feeling of Bob Nelsen, one of the country's most successful biotech venture capitalists. That's why Nelsen spent the last several months quietly working to launch a new company called Resilience, which formally launched today with over $800 million in funding from companies like Google and a board of directors that includes luminaries like former FDA Commissioner Scott Gottlieb.

The basic idea is to revolutionize drug manufacturing within the United States to better prepare us for whatever disease or public health crisis lies ahead. In 15 seconds, we talk to Bob Nelsen about the current vaccine race and his vision for Resilience. But first, this. We're joined now by Bob Nelsen of ARCH Venture Partners. Bob, let's start a little bit before. Months ago, you in a lot of ways seemed to anticipate a lot of what was going to come down the pike with COVID-19 in terms of how pharma would respond and how manufacturing might work. Are you surprised by any of the developments we've seen on the vaccine side over the last couple of weeks? Or did you expect that it would be the mRNA ones that would come out fairly successfully?

I actually think the mRNA ones came out better so far from what data we've seen. I think with all these vaccines, you know, the top-line data tends to be the best data you ever see. So I think it will be really important to see how this rolls out in different populations and also what the real-world experience is with these vaccines, because right now they're being tested in an era of masks and social distancing. So people might not be getting the same viral dose that they'll get in the real world. But yes, I would say I was pleased and surprised at the data.

Any thoughts on the AstraZeneca news this morning? Not an mRNA one, but obviously the most recent vaccine news.

I think, again, it's like early, like it's very small numbers on these things. So it's very hard to tell, you know, you're going to see different vaccines. And I think ultimately some of these vaccines may even be combined. So you don't know anything about the longevity of the immune response. So you might rather have a maybe a mix of these vaccines where you might take an mRNA vaccine at the beginning and then boost with, you know, a different kind of a vaccine in the next phase. And that's just what we don't know yet.

From the vaccine development process, but also the therapeutic development process for COVID therapeutics so far, what within that back in February, March, April caused you to say, you know what, there needs to be a better way, which leads you today to launching Resilience?

Everything about it, even though I think the private industry response and government response was actually quite good and somewhat coordinated, more than you think. And I think, especially on the therapeutic side, I would say that the diagnostic response has been kind of a shitshow all across the board, including promises made by private companies and a bunch of things. But on the therapeutic side, it was just moving too slowly. And even though we're all congratulating ourselves for getting therapeutics in a year, it's too slow, right? I mean, in a better, technologically more advanced world, with better technologies, we should be able to do this a hell of a lot faster. And we should be prepared in advance for the types of different things that might be thrown our way—might not be a coronavirus, it might not be even a virus, it could be some other thing.

So that's why we need to kind of reimagine not just the infrastructure piece of this, but people forget about the people part. You can build a bunch of vaccine plants, and there's probably only five or 10 people in the world that know how to run big vaccine plants. So you need to cultivate the human capital aspect of this in advance, kind of like a Special Forces group that is always doing some cool thing and training, hopefully on real-world problems. And then when something happens, you have that resilience in-country.

I mean, that sounds like something normally a government would be in charge of, right? Isn't that a little bit kind of what BARDA was designed to do? BARDA is designed to catalyze, not to do.

And governments historically can't create these resilient systems that are constantly exercised, right? So the government's not in the business of making all these biologics. They actually predicted the pandemic, and they made an antibody plant for it and threw a tarp on it. And it turns out, you know, it's using older technology, and, you know, it's not scalable. And I think the government did a great job, especially within the Pentagon. They knew these things were coming. They thought about them. They prepared for them. But where the private sector can amplify that is by having people and systems that are going all the time, solving other problems so they can be redeployed very, very quickly.

And it's very hard for governments to do that, except in a military situation.

Let me ask a couple of business questions. And some of these come candidly from some of your peers kind of in the biotech venture capital world. And one of them is this question of scale. Typically, buyers are price sensitive. You need scale to be able to get to low prices. You guys launched Resilience without scale. How, therefore, do you become price competitive?

I think we're going to reinvent the next generation of technologies that will be ultimately much, much cheaper. And we're dealing with 50-year-old manufacturing technologies in some of these biologics that haven't changed in a long time. And we're also going to deal with just bringing really good human capital to a place where it's good. And the great manufacturers, the big pharmas, are pretty good at this, but it falls off pretty quickly. And so we're going to hopefully attract a new generation of talent into this space. And hopefully we'll be better at just plain old manufacturing and next-gen manufacturing.

Do you view Resilience more as a manufacturing company or more as a pharma company? As you know, there's a very big difference in price, or at least how those things get valued.

We're not going to sell drugs, but we will definitely be interested in the innovation side of manufacturing. And to some degree, when you think about complex biologics, the product is the process, right? There is no divorcing a cell from the process that you engineer or make it, or a gene therapy, or even a viral vector. Ultimately, all of these things are very, very process-linked. And it used to be you could just contract out, you know, an API. It's just a molecule here. 'You make this for me.' Now, when you're thinking about processes, you can wash a beaker in the wrong reagent and end up killing a bunch of people. So it's really important to systematize the very, very disparate, one-off nature of cell therapy, gene therapy, and viral vectors, which exist today.

Well, no, manufacturing is interesting. I mean, it seems to be the manufacturing process more than the development process, which is the reason that Pfizer and Moderna's vaccines have to be kept at such different temperatures. From a storage perspective, two final questions for you. One, Resilience launches today with over $800 million in funding. Is this, as you say, for the next situation, whether it be a virus or something else, as opposed to for COVID-19? In other words, are you too late in the game to have a major role in this particular public health crisis?

Yeah, we were never intending to kind of impact COVID-19, but we have been approached by some people that have some issues that we might be able to help them solve because we actually do have facilities today. We haven't announced what they are, but we've purchased some companies and facilities. And the $800 million was really an exercise in cutting people back. So we had a lot more interest in the company from long-term investors. And what we wanted to try to do is raise the minimum amount we could to get great people in. But we have access to a lot more capital and anticipate in 2021 pulling down significantly more to expand. And so it's possible we could impact the COVID situation. And also it kind of depends how long it lasts.

My own view is it's going to be around for a long time. But, in quotes, 'out of the woods' in the spring, you know, we'll see the light at the end of the tunnel, and there'll be a lot less people dying because of the new therapeutics and vaccines.

The fact that you're launching Resilience today, the fact that you felt the need to create it, does that reflect that the biotech, biopharma industry you've been investing in for decades, has it dropped the ball on innovation in the past few decades?

Well, I think everybody's dropped the ball on manufacturing innovation. And that's why I don't like this concept of kind of reshoring. I like the concept of reimagining the way that you make things, not just in biotech, but across a range of industries. We need to use our innate, amazing innovation advantage and apply it to these problems, kind of like we have in semiconductors and other areas. But we just need to train the guns on biologics manufacturing. We need to think about some basic industries as well in terms of rethinking manufacturing, the way that things are made. And I think actually if we do that, it'll be a revolution.

Bob Nelsen of ARCH Venture Partners and now of Resilience as well. Thank you so much for joining us.

Thank you.

Welcome back. As we mentioned at the top of the show, AstraZeneca and the University of Oxford this morning announced that their COVID-19 vaccine was shown to be 70.4% effective in interim results from its phase three clinical trials. Now, that doesn't sound quite as impressive as the Pfizer or Moderna numbers, but it can be partially explained by the fact that AstraZeneca's data is actually the result of two different dosing regimens during its trials. one that was just 62% effective with patients getting two full doses one month apart, but 90% effective when trial participants got a half dose followed by a full dose. So we wanted to ask Axios Healthcare Editor Sam Baker why the AstraZeneca vaccine matters beyond its efficacy numbers.

This will probably be the vaccine for the developing world, which is a really important problem to solve. AstraZeneca and Oxford, which developed it, are members of an alliance called COVAX, where they've committed to send doses around the world. It is the cheapest of the three so far, and it also does not have to be stored at those super-cold temperatures that the other two do. It can be stored just at the temperature of a normal fridge. So when we look past the United States trying to arrest this global pandemic, this is a big step forward in that.

Today we're also watching Snapchat, which launched Spotlight, its version of TikTok, which is kind of ironic, given that Snap CEO Evan Spiegel has routinely ripped Facebook and Instagram for copying Snapchat's product. And finally today, we are looking forward to the stampede of unicorn IPOs, with companies like Airbnb and DoorDash expected to begin pitching investors next week. One of those upcoming issuers is Roblox, a social gaming platform for kids and tweens that reports 31.1 million daily active users over the first nine months of lockdown 2020, which works out to over 22 billion engaged hours. So we want to ask our resident Roblox expert, my 10-year-old daughter, why Roblox is so much fun to play.

Roblox is really fun to play because there are so many different games, and if you don't like one, you can just play with a different one. You can also play with your friends. You can video chat them and play with them. You can play on private servers, so you can play with only people you invited.

And we're done. Big thanks for listening. And to my producers, Tim Shivers and Naomi Shavin, have a great National Cashew Day, and we'll be back tomorrow with another Axios Re:Cap.