VeraMorph has a new way to deliver insoluble drugs by mouth. Founder Doug Godfrin, PhD elucidates the promise of accessing the 85% of drugs that are not soluble. Does VeraMorph pass Sal Daher’s screen for angel-scale biotech? Listen and find out.
Highlights:
Sal Daher, CFA Introduces Doug Godfrin, PhD, Founder of VeraMorph
A New Way to Deliver Drugs Orally
How VeraMorph Gets Around the Solubility Problem
VeraMorph’s Approach Is Janus-like: Shelf Stable but Available Where Needed
The Decade of Biotech & VeraMorph
AltrixBio: Gastric Bypass Surgery in a Pill
Sal Daher’s Biotech Screen: Strong Patents
“VeraMorph actually owns the patents outright for this platform technology.”
“We've really taken a totally different perspective with this class of material by focusing on immediate release via oral delivery...”
Sal Daher’s Biotech Screen: Capable Academic Founder
Sal Daher’s Biotech Screen: Is it Angel-Scale?
US$1 Million Will Get VeraMorph to Production for Pre-Clinical Trials
“...chances of reaching that next set of milestones is 90% or above.”
Doug Godfrin Is Collaborating with Colin Minchom, PhD, a Veteran of Drug Development
US$ 2 to 3 million More Will Take VeraMorph to Clinical Stage, Doug Predicts
Sal and Doug Look at the Odds of Getting to Clinical Stage
Sal Daher’s Biotech Screen: Do Strategics Care?
Sal Daher’s Biotech Screen: Platform Technology?
Sponsors Purdue University and Peter Fasse Are Founder-Friendly
The Upside of Failure in Biotech
This guy calls me up, "Saleh, let's get together at Darwin's in Cambridge. I want to talk to you about a new company."
Doug Godfrin’s Parting Thoughts
ANGEL INVEST BOSTON IS SPONSORED BY:
Transcript of “VeraMorph”
Guest: Founder Doug Godfrin, PhD
Sal Daher: This podcast is brought to you by Purdue University entrepreneurship and by Peter Fasse, patent attorney at Fish & Richardson.
Sal Daher, CFA Introduces Doug Godfrin, PhD, Founder of VeraMorph
Welcome to the Angel Invest Boston Podcast, conversations with Boston's most interesting angels and founders. I am Sal Daher, an angel who is very interested in the fascinating early-stage biotech companies that are going to make the next decade the Decade of Biotech. Today, we are privileged to have with us Doug Godfrin, PhD. Say hi, Doug.
Doug Godfrin: Hi, Sal. Thanks for having me.
Sal Daher: Doug, tell us about your startup and what problem it's solving.
Doug Godfrin: Sure. The name of the company is VeraMorph, which in and of itself stands for a very pure form of matter. The problem that we're trying to solve is the fact that many small molecule pharmaceutical drugs suffer from poor solubility starting from the very first day of their discovery and translating all the way through clinical development and onto the market. They struggle to overcome this by requiring novel technologies, drug delivery technologies. Many of them really only are applicable within a very small range of medicinal chemistry space.
A New Way to Deliver Drugs Orally
What we've done at VeraMorph is designed essentially a novel oral drug delivery technology that is essentially universally compatible with drugs across the spectrum. This is for all disease areas and all types of patients. The goal is to leverage the unique capabilities of this technology to dramatically expand and accelerate the number of drugs being successfully brought to market.
Sal Daher: The technology of VeraMorph is going to add value to existing therapies, existing pharmaceuticals that may be hard to deliver in sufficient doses to the sites of interest?
Doug Godfrin: Yes. This is going to be applied to both currently available therapeutics, primarily those that are actually only available by a parental delivery route, by an injection or an infusion. That simply can't be delivered orally because of this solubility issue, and as a result, dramatically enhance the overall experience, if you will, by the patient, both in terms of quality of life and in terms of treating the illness that they suffer from. In addition to that, there is obviously opportunities for infusing value into drug development candidates in the preclinical and clinical phase of development.
Sal Daher: Let's get a little bit into the solubility problem. Solubility means dissolving in a fluid that carries the drug to the target site. Stuff that's gets injected or gets infused into people's circulatory system, somehow, it's suspended or is dissolved in some fluid that can carry it. How are they getting around it now?
Doug Godfrin: Typically, regardless of the route of delivery--
Sal Daher: People know what an injection is. What is an infusion?
Doug Godfrin: An intravenous infusion is the classic picture of somebody in a hospital room with a little bag hanging from a hook.
Sal Daher: Like a drip.
Doug Godfrin: Exactly.
Sal Daher: It's like a slow-motion injection.
Doug Godfrin: Exactly.
Sal Daher: It's an injection over time, and then an intravenous is a large amount of fluid in one time.
Doug Godfrin: Yes.
Sal Daher: Is it like a colloid suspension? How do they get around the insolubility problem now?
Doug Godfrin: There's a few different techniques. Occasionally, it's a colloidal suspension, which in and of itself has its limitations, because when something is suspended, that's quite different from being dissolved. Because being a particulate doesn't necessarily mean that your body is able to utilize it. You think of like, a prevalent example now is a virus. A virus is a nanoparticle for all intents and purposes, and your body can't necessarily incorporate that into its operating functions. It gets disrupted by it.
Instead, these molecules are designed to act as individual molecules. Until it achieves that state in bodily fluids, your body can't use it. That's a temporary transportation vehicle, if you will, to get that material to the site of action. Alternatively, other carriers are something called a micelle, like a surfactant, self-assembled-- it's essentially a particle of sorts, but it's not cohesively bound. It's a bunch of molecules aggregated together.
Sal Daher: Basically, they're binding it to something else. That is a carrier. Do they use liposomes or things like that, like lipid nanoparticles?
Doug Godfrin: Yes. Lipid nanoparticles are a very popular version. Those are actually widely used for oral delivery, particularly for fatty compounds, very oily substances. In terms of an infusion or an injection, it's typically this type of an aggregate. Some association with a more soluble compound, or alternatively, in the form of, say, a subcutaneous or intramuscular injection, where the active ingredient is injected into either a muscle or a fat tissue. Sometimes a particularly oily compound is literally just incorporated into fatty acids, lipids. Then your body naturally metabolizes them the way it would any other triglyceride or a fatty material, which is, as you can understand if you've ever tried to lose weight, a very slow process.
[laughter]
Sal Daher: Yes.
Doug Godfrin: There's an inherent limitation there to rely on your body's natural mechanisms of transporting fatty materials and exactly why there are limitations to what current delivery systems can achieve.
How VeraMorph Gets Around the Solubility Problem
Sal Daher: How does VeraMorph get around the solubility problem?
Doug Godfrin: It's a great question. Our technology is something that's known as a hydrogel. It's a type of soft gel, cross-linked polymer. What's unique about our version is it's designed to remain chemically stable under storage conditions, and then it transforms when delivered orally. The environment of the gastrointestinal tract causes this transformation from that stable environment that helps prolong the shelf life of that compound between manufacturing and administration. Then immediately upon oral ingestion, transforms into a very effective polymeric material that is this type of self-assembling material that we were just talking about.
One that achieves this very delicate balance of maximizing how much of the drug is present in its individual molecular state, that version that your body can use, and basically creating reservoirs, additional material that's available for absorption throughout the entire GI tract. That's essentially the function that the technology utilizes to maximize your body or a patient's body absorbing a maximum amount of that therapeutic.
Sal Daher: This is very interesting.
Doug Godfrin: What sets it apart is the processes that current technologies use to transform that active ingredient into a more soluble state rely on existing materials that are designed with only a single purpose in mind. They're either materials that help to stabilize that compound on the shelf, or it's designed to help improve the solubility in your body. None can achieve both. Getting both of those types of materials which are required for an effective drug product to work well with each other is incredibly challenging. That is the essence of a formulation scientist’s job.
We've overcome that by essentially creating material that has almost like a Janus property, if you know the mythological figure with two faces. It transforms from one to another exactly when each gets to utilize its performance metric of choice.
VeraMorph’s Approach Is Janus-like: Shelf Stable but Available Where Needed
Sal Daher: This is very cool.
Doug Godfrin: I agree.
[laughter]
Sal Daher: It reminds me of, I interviewed a founder. His first company was Smart Cells. They were creating insulin that responded to the level of glucose in the blood. When glucose was low, the insulin remained contained in its delivery vehicle. When the glucose was high, it became available.
Doug Godfrin: Very cool. I think responsive or adaptive materials are definitely going to be one of the most impactful innovations in the next decade, if you will, when it comes to, especially drug delivery. I think even with cell therapies in delivering cells or other materials that require protection from your body's own immune system, protecting itself from what it thinks is an invader, or even materials that can regenerate; so ways of healing wounds.
I think even some startups coming out of, say like Jeff Karp's lab at Harvard Medical School, is already working on this. Super strong adhesives during surgery for rapid wound healing. They're effectively responsive materials. I think that that's going to be a huge-- very exciting from both a research and scientific perspective, but also from a market perspective, because there's huge social benefits there.
The Decade of Biotech & VeraMorph
Sal Daher: Listeners should know that when I talk about the Decade of Biotech, Doug and I were talking before about software eating the world the last 10 years, it's all the stuff that's been happening. Amazing stuff is going to be happening in the next 10 years in biotech, and it's going to be brought to you by people like Doug Godfrin here, an academic founder who will walk through walls to get his startup to the next step. I'm on the board of one such company. I'm involved with a bunch of them. One of them, for example, Jeff Karp is a co-founder. Should be coming back on Nancy Briefs of AltrixBio-
Doug Godfrin: I'll be listening. [chuckles]
AltrixBio: Gastric Bypass Surgery in a Pill
Sal Daher: -repurposing sucralfate to simulate gastric bypass surgery by coating the proximal gut and reducing access to food.
Doug Godfrin: Very cool.
Sal Daher’s Biotech Screen: Strong Patents
Sal Daher: There's a drug delivery play there as well and all that stuff. Anyway, getting back to the technology of VeraMorph, can you tell me a little bit-- explain to me the intellectual property that exists here, and from whom you have the licensing and what is it that it protects?
“VeraMorph actually owns the patents outright for this platform technology.”
Doug Godfrin: VeraMorph actually owns the patents outright for this platform technology. So far, we have two patents. One covering the platform itself, which is basically this concept of a responsive hydrogel delivery vehicle that enhances solubility. Then another that covers several specific formulations combining our platform with existing generic compounds to improve or enable, for the first time, oral delivery of those therapeutics. What's interesting is, this is such a novel material that we're developing, that the patents cover both the composition of matter as well as the method of manufacturing.
It's an all-encompassing novel approach to designing a dosage form, if you will, that is actually one of the key areas of evaluation and development that we're actively engaged in. In the sense that it's so novel, the real trick is in identifying what existing equipment is available that's compatible with our novel approach to minimize that hurdle, if you will, to get this to market as quickly as possible.
Sal Daher: Now, are there any technologies that you see that could be used as a blocking technology to yours that would constrict your freedom to operate? Have you thought about that?
Doug Godfrin: Yes, certainly. I think the biggest challenge we have from a freedom-to-operate perspective is actually more so from the incredibly vast existing literature on hydrogel materials. These things have been around for decades. Bob Langer and Nicholas Peppas down in Texas have been two of the leading researchers in this space for some 30 years. What's really different, though, is they leverage these types of materials for sustained release, or depots like injections to have prolonged release profiles.
“We've really taken a totally different perspective with this class of material by focusing on immediate release via oral delivery...”
We've really taken a totally different perspective with this class of material by focusing on immediate release via oral delivery, and really finding that unique mechanism that's required to design these types of materials to achieve that, which we don't believe anybody's ever done before. There have been some people who have focused on individual aspects of these things, like the types of chemical functional groups that are responsive, or the chemistries that are biocompatible, but nobody's really packaged it the way that we have.
We think that there really is a pretty vast area of intellectual property space that we have carved out for ourself, that as long as we pick the right approach to manufacturing this, we can avoid issues with competitive blocking, if you will, for our ability to bring this to market.
Sal Daher’s Biotech Screen: Capable Academic Founder
Sal Daher: Very good. Now, have you thought about the milestones where you can show progress, and how much money would it take to get to them? I'm an angel investor, and my screen is, number one, a founder who walks through walls. I think I should check that one. Listeners should know that Doug has been implacable in chasing me. First connect, it wasn't a cold call. He came via a connection with Amanda Drobnis, who is the founder of Hillside Biosciences, a very interesting company in which I'm an investor. She is also a very dogged person. Her sense is she's a rider. She rides horses, so she's very on top of things. She doesn't take guff.
Sal Daher’s Biotech Screen: Is it Angel-Scale?
She put Doug on to me, and Doug has been very diligent in connecting. I think we have a founder who does his stuff. Number two, strong intellectual property. We've talked about that. Number three, very important, is it angel-scale? Can it be funded by angels? This is what we're getting into right now. There's a method to my madness here. Tell me how much money is necessary to get to the nearest. We didn't start going to Mars. We started by first going to lower earth orbit, then full orbit and eventually to the moon. What's your low earth orbit target?
US$1 Million Will Get VeraMorph to Production for Pre-Clinical Trials
Doug Godfrin: That's a great question. The first milestones for us, I think like I've been touching upon in the last few comments, is in the manufacturing side of things. Everything we've been doing to date is all lab scale, non-GLP. Getting into a point where we can manufacture hundreds of grams at a GLP scale within a facility and with a manufacturing--
Sal Daher: Would you decode for our listeners GLP?
Doug Godfrin: Got you. This is good lab practice. That is what's critical for completing the pivotal animal studies, both in terms of safety and efficacy, before submitting an investigational new drug or an IND application to the FDA, which is the hoop you have to jump through before you can get into clinical trials.
Sal Daher: If I can just mention, for listeners who are not biotech investors, this stuff is accessible. With a little bit of digging, you can get to it. There's massive opportunities in biotech because people are scared away by the complexity. The few who remain have opportunities to invest in really interesting things. Please continue, Doug. You have to get a GLP compound that you can produce so you can go on to preclinical trials, to animal trials on the delivery of insoluble compounds more effectively than is currently done.
Doug Godfrin: Correct. Then, in parallel with developing this GLP manufacturing process, we'll be carrying out the initial phase of studies that don't require GLP material yet but still are really important for identifying what that effective or therapeutic dose of our new oral formulation will be, as well as just getting a solid foundation of toxicology. A safety metric around our platform as a whole, because this is a brand-new polymer material that's never been used before. We're starting from ground zero, really, which is the biggest barrier for us in terms of reducing risk from an investor's perspective.
As soon as you hear medical regulatory barriers, a lot of people head for the hills. In this case, it really is important that we do set up sequential regulatory milestones because the overall costs can be prohibitive or daunting if you look at it as a big picture. If you look at it in a gated sort of sequence, it's very manageable. We're talking about this first set of studies over the next eight to 12 months, on the order of a million dollars to get to that manufacturing process. Then once we've achieved, it will likely take two to three additional million dollars to get to that IND.
Sal Daher: IND, investigational new drug, which is just the beginning.
“...chances of reaching that next set of milestones is 90% or above.”
Doug Godfrin: Right. I think the chances of reaching that next set of milestones is 90% or above. For all intents and purposes, we've designed the chemistry of our hydrogel to mimic many already widely used materials, obviously, in a slightly different format than those existing materials, but from a raw chemistry perspective, they're nearly identical to things that are already proven to be safe. Getting that toxicology, that safety data we have very high expectations for. From a manufacturing side of things, we've already been producing these things in the lab for the last two years.
Doug Godfrin Is Collaborating with Colin Minchom, PhD, a Veteran of Drug Development
There's many, many hours of work that have gone into optimizing a process on a small scale with the understanding that we need to scale this up in the future. We've already started incorporating those expectations into our current designs, just on a smaller scale. My partner, Colin Minchom, has been in the pharmaceutical industry for over 30 years on the chemistry manufacturing controls of major pharma companies, as well as contract manufacturers in the pharma space.
He's really been doing the due diligence in identifying what those operating units, if you will, that will facilitate a rapid scale up while maintaining all of those key performance metrics we've been developing over the last two years. We have very high expectations, and really, at this point, it's just a matter of getting to work with our strategic manufacturing partner, who we've already identified.
Sal Daher: Now, we're talking to a chemical engineer. Someone who's familiar with this problem. This is not someone who majored in philosophy but in chemical engineering, which is exactly what you're doing, is chemical engineering. We get to GLP. A GLP process for manufacturing the compounds that you need for preclinical trials. Now, your partner, is he your co-founder?
Doug Godfrin: He wasn't there at the beginning. He's a part-time contributor to the executive team, so I'd call him an executive team leader.
Sal Daher: He's compensated on equity, is that the approach?
Doug Godfrin: Yes.
Sal Daher: Your collaborator is giving you some input. Has he given you any input as to when pharma might come in and start taking an interest? When this is de-risked enough that they would look at this? How many more steps do you need to take before pharma might start using their muzzle to roll you over and see if you're edible?
Doug Godfrin: It's a good question. Interestingly, we've actually been able to establish our first feasibility study with an industry partner. This is a top 20 global oncology company, who I'm unable to disclose. They had a clinical Phase I candidate that was having solubility issues and the formulation they'd been using was deemed commercially inviable.
We just were connected at the right time, at the right place. They realized that a novel technology like VeraMorph could be a worthwhile pursuit to see if we could overcome the limitations they were experiencing. We worked with them for several months to optimize the formulation and ran a preclinical PK study to generate some data which showed great promise in terms of the capabilities of--
Sal Daher: Let us unpack PK, pharmacokinetics, how the drug behaves in the body or in an organism.
Doug Godfrin: Right, or how the material essentially transports itself through the body.
Sal Daher: Kinetics is movement.
Doug Godfrin: We didn't explore any of the actual physiological impact, the pharmacodynamics, how the body interacts with it. From a PK perspective, how the material moved around, which is critical from a solubility perspective because you want to see how much of it gets into that systemic circulation. Showed that we exceeded 40% absorption after oral delivery, which this material on its own, would have only been absorbed in single digits. We're talking like 5% to 10% up to over 40%, so quite a substantial bump.
We're now at phase where, as it's typical with a partnership arrangement, VeraMorph doesn't necessarily have control over the progress of that opportunity. We're in a holding pattern. This is the expectation in terms of getting things translated. That's just an example of what we've been able to achieve.
Sal Daher: A bit of advice from what I've seen, this is not your first [last] holding pattern.
Doug Godfrin: [laughs] No.
Sal Daher: This is not your first holding pattern with this particular potential collaborator and it was not your first holding patent with other collaborators, because the pace of startups is not the pace of incumbent businesses. They're very different. There're going to be many, many, many of these iterations. The question is, where do you think there will be a point where a strategic player, one of these big players in the business, looks at you and says, "I got to have these guys because they solved a major headache for us. We have a business today that is suffering because we can't get to the next step because our competition is killing us and we need this to help us."
Doug Godfrin: The short answer for that is, I think we will likely get there in roughly one year's time. Bare minimum, getting that GLP manufacturing capacity and generating additional set of data around the safety of our platform and the capability to deliver a poorly soluble compound in repeat dose setting. Rather than just a single dose, make sure that we can consistently achieve improved absorption many, many days in a row. That's something we haven't quite done yet, but is in the near term set of milestones.
Sal Daher: That additional milestone, how much money is that going to take?
Doug Godfrin: That is all wrapped into this $1 million for the next, roughly 12 months. That's the earliest that we think that we'd be able to get a industry partner engaged. What's going to 100% guarantee that there's somebody out there willing to engage with us because of the unique capabilities of our technology from a drug delivery perspective is that next set of milestones. That's in transitioning from the good lab practice, the GLP, into what's known as good manufacturing practice, or GMP. That is the final stage of manufacturing of the highest quality per FDA regulations. That is what would take an additional year after this near-term year, so in no later than two years.
Sal Daher: GMP is required for clinical trials instead of preclinical?
Doug Godfrin: Correct. Even if our technology can absolutely revolutionize a partner's active ingredient to be delivered orally, if we can't quickly allow them or facilitate them to translate that into a clinical trial, it's not very useful for them. The people who are going to engage with us in early stages, the next year or so, are companies with very potential blockbuster status compounds that are early in development, to validate that it can achieve a certain therapeutic efficacy. Otherwise, most partnership opportunities that we'll be able to take advantage of are those translating from preclinical into clinical, and therefore require GMP quality material.
Sal Daher: To get to the GMP, the good manufacturing practices step, how much additional money on top of the first million is that going to take?
US$ 2 to 3 million More Will Take VeraMorph to Clinical Stage, Doug Predicts
Doug Godfrin: On top of the first million, we anticipate it requiring an additional $2 million to $3 million.
Sal Daher: $2 million to $3 million.
Doug Godfrin: Correct. That's $3 million to $4 million for the next two-year total to get to that stage.
Sal Daher: Then you need to add another million because you're going to have to run your business for several years while you go back and forth and back and forth with three or four different strategics. They come back to you with ridiculous deals and you tell them, "What do you mean? I'm not a CRO. I'm not a contract research organization. I'm a startup. I need real money." Then they go back. We're talking $1 plus $3 plus $4 plus $5 million. Ultimately, with $5 million, you are likely to get to the point, if everything works, that a strategic player might pick you up. This begins to look like something that would pass my screen. It's less than $6 million. I like that.
The likelihood of you getting to the GLP milestone is 90% or higher?
Doug Godfrin: Right.
Sal Daher: From GLP to GMP, what's the likelihood there?
Doug Godfrin: I think if we've successfully established the milestones for the first year, if that 90% plus analysis of the next 12 months is accurate, that will really do a substantial level of de-risking for that subsequent set of studies. With GLP in place, to get to GMP, you're just implementing or incorporating additional levels of quality control. You're not necessarily doing any innovation. You're just establishing infrastructure, if you will, to ensure that that production process is reproducible and meets very strict quality standards.
The real area of potential risk is from the safety perspective, because the next step in terms of safety is doing what's known as a chronic toxicity study. That's where you expose a patient for one to six months. Over that duration, any number of things can happen. From a statistical perspective, you try and control for any external variations, but there are anomalies that can influence those results. From a risk perspective, from the safety side of things, I'd say it drops from maybe that 90% number down to maybe an 80% number.
Again, having already done the initial multi-dose toxicity from that first million-dollar phase, that really reduces the risk for those follow-up studies by making any modifications deemed necessary to maximize the chances of success.
Sal and Doug Look at the Odds of Getting to Clinical Stage
Sal Daher: 90% times 70% at worst, 63% chance of getting through the GMP stage to the point where you're talking to strategic players. In my book, that's higher than 50%.
Doug Godfrin: [laughs] I like that math. [laughs]
Sal Daher: [chuckles] Do I have it right? [laughs]
Doug Godfrin: [laughs] I think that's right. Yes. I think that sounds like what's been going through my head for the last year or so.
Sal Daher’s Biotech Screen: Do Strategics Care?
Sal Daher: All right. Okay. You said four. I say five because you always need more money. I think your probability estimates are probably reasonable. $5 million, that gives you almost two out of three chance of getting the brass ring, which is something that strategics will be interested in to start with that discussion. You passed that screen.
Doug Godfrin: [laughs]
Sal Daher’s Biotech Screen: Platform Technology?
Sal Daher: All right. Let's look at the other screen. Are strategics interested? I think you've answered that already from the start. You're going at an area which is addressing an existing problem with strategics. That one, I think we checked that off. Now, the last part of my screen is, is it a platform?
Doug Godfrin: Yes. From day one, this has been a platform play, in the sense that this is an incredibly versatile material that we, honestly, have too many options at our disposal for how to design this material. In fact, we've explicitly made the decision to focus in on a single chemical composition of this platform to reduce the total regulatory burden for proving safety because each new individual chemical composition is a new material. You'd have to go through this. You'd have to iterate this process. This is a platform through and through with an immense amount of opportunity for expanding into a diverse portfolio of products and partnerships.
Sal Daher: Doug, you have passed all my screens. Now, I still have to do some due diligence because I have to check up on the IP a little bit and all this stuff. You've got me really intrigued.
Doug Godfrin: It's good to hear.
Sal Daher: I got to look more closely at your company. I got to go back and look at the pitch deck a little more closely.
Doug Godfrin: Sure thing.
Sal Daher: Now, our listeners may be wondering, what are the bad raps that early-stage biotech gets? It's so capital intensive. They're going to have to spend tens of millions of dollars getting FDA approval for this process, blah, blah, blah, blah. Now, what I've seen in my early-stage biotechs is that, yes, an early-stage biotech has to talk to FDA, people who are familiar with the FDA process. They have to align themselves along that. You have to be out of your mind to imagine that a little angel-funded biotech company is going to be carrying something through FDA approval.
What that means is that, yes, you have to have an understanding of the regulatory path that's going to be followed and the different paths. There are many different paths to take. All your decisions have to be informed by that. In the end, it's going to be the strategic that's going to take you to FDA approval, that's going to take this process to FDA approval. If you don't have a deal with a strategic, it's no deal. People should understand that it is implicit. Question here is, is this interesting enough to a strategic they will pick it up and take it through FDA approval?
Strategic players have all the advantages in the world over an early-stage startup to get something through FDA approval. During a situation of taking something to the FDA, having two years before being a real startup, is unheard of. It's really extremely rare, because people like Pfizer, Pfizer was nowhere. Pfizer's technology to this day is behind Moderna's. What does Pfizer have? Pfizer has understanding of the market, have understanding of the regulatory process. They don't have to hire a consultant today. Their management knows this stuff.
This is why Pfizer was able to go out to BioNTech and create a partnership with them to come up with an mRNA vaccine at around the same time as Moderna, who invented the mRNA vaccine. These guys were doing mRNA when nobody was doing it. They were in the wilderness with this stuff. The reality is that, one of the things that pharma does really, really well, is play with the big players. They're heavyweights. They understand that space. They don't understand this early-stage phase. They leave it to other people to do this. This is why people like Doug are doing this.
This is a golden opportunity for angels to look at a company like VeraMorph and to say, "This is angel scale. This is not scary. I can understand this. It's gone through the screen. I want to roll up my sleeves and I want to help these guys."
Doug Godfrin: I couldn't agree more. It is one of the easiest industries to come up with a justification for taking a risk and making an investment because the difference that it makes at the end of the day, even though a decent percentage of them are unsuccessful, the ones that do become successful impact hundreds of thousands to millions of people in a very meaningful way.
When it can get to be funded and supported from an angel investor, I think it makes it that much more of an interesting story because these are real people. These are individuals who have connections with those who have suffered unfortunate outcomes with disease who want to have a direct impact. You're not sending this off to a foundation where you don't know where your money goes. You're having an individual influence over the success of a transformational product that could save someone's life, save many people's lives.
I have a familial connection with disease myself. I have a couple of aunts who suffer from cancer, one of whom who's still going through chemotherapy, one who recently passed away, and several cousins who have cystic fibrosis and have benefited from the tremendous products that come out of Vertex. That was definitely one of the motivating factors for me getting into the space as a chemical engineer. Rather than going to a refinery and developing more efficient processes to transform crude oil into gasoline, et cetera, use materials in a much more meaningful, impactful way from a health perspective.
Sal Daher: Actually, there's a little quick story I want to share in terms of a startup that failed and then something else beautiful happened after that. I just want to mention that this podcast is sponsored by Purdue University entrepreneurship. Purdue is a very entrepreneur-friendly university. They have a lot of startups. I'm on the board of a Purdue company that is commercializing technology developed at the labs of Purdue.
Sponsors Purdue University and Peter Fasse Are Founder-Friendly
I had no connection to Purdue until I invested in this company, Savran Technologies. I got to learn about how founder-friendly, how inventor-friendly Purdue is. They are really striving to be the university of entrepreneurship startup USA. They're kind enough to sponsor this podcast. I'm very grateful to them. Another sponsor that I have is Peter Fasse, patent attorney at Fish & Richardson, who is the top in patent law. Peter Fasse is a patent attorney, who, in the case of Savran, he got me invested in Savran.
He helped put together the angel round the first and second and third angel round. He participated in that. He's that a patent attorney who goes the extra distance for his clients. I cannot recommend them highly enough. If you are a researcher or if you're an investor who's looking for interesting startups to invest in, take a look at Purdue. I do. I highly recommend that.
The Upside of Failure in Biotech
Anyway, Doug, I wanted to tell you a story. We talked about the risk of failure. I invested in a life science company. They were testing newborns for conditions that could be addressed. The little blood blot in a paper and they were able to test that. Ultimately, they failed. It couldn't do enough volume and they got acquired. In a life science company, the worst that could have happened with the money that you lost. I lost like $25,000 on that company that I invested.
Let me tell you, the CEO took over. He invested a lot of his own money to keep the company from-- It was just magnificent people. Very, very impressive people. They did their best, but it just wasn't commercially viable. It got sold to a lab, and the technology still exists somewhere. It's probably helping newborns. There are conditions where when a baby is born, if they can identify it right away, they can prevent the baby from becoming deaf because they detect the deafness.
This guy calls me up, "Saleh, let's get together at Darwin's in Cambridge. I want to talk to you about a new company."
There's a certain period where kids learn to listen, to hear stuff. If they're not able to learn by a certain age to hear sounds, to understand sounds, they never learn. You could avoid that. Then one of the founders went on to found another company four months after they buried this company. This guy calls me up, "Saleh, let's get together at Darwin's in Cambridge. I want to talk to you about a new company."
This founder is Gabor Bethlendy. He's been on this podcast. His company is Meenta. They are off to the races now, who knows? By the end of this year-- I don't know. I don't want to talk out of turn. They are killing it in a completely different space. Totally different space, but life science related. I should have known he's a runner. He's a marathoner. He doesn't give up. Doesn't give up. When you invest in the life sciences, it's like, heads, you lose, and maybe some kid won't go deaf. Even though you lost your money, it gets used by one of the big labs and so forth and they're able to screen out something. Or tails, and you get a big payout. Who knows?"
Doug Godfrin: That's a win-win to me.
Sal Daher: It's a loaded coin. The tails are not that many. It's caveat emptor. The tails are not that many.
Doug Godfrin: Yes, asterisks.
Sal Daher: Yes, asterisks. I just wanted to make that point. Doug Godfrin, PhD, founder of VeraMorph, is there anything else that you want to talk to our audience of angel investors, of founders, of people who are thinking of starting companies? What do you want to communicate to them?
Doug Godfrin’s Parting Thoughts
Doug Godfrin: There's probably two different things that I'd like to share if given an open platform. The first is, with regard to VeraMorph, like you mentioned, it is a very unique life science investment opportunity because we don't plan on-- we will not assume any of the traditional risk of developing a novel therapy. It's inherently a much smaller financial footprint for approval, and because we will diversify the number of products that we can develop with this platform, that risk is spread out even further by being able to identify opportunities that really address major markets in a very unique way that no other technology can accomplish.
The regulatory pathway is much lower barrier to success and it's also shorter because, in transforming, in changing a formulation of an injectable to an oral, you don't have to go through all three phases of clinical development. Even though you and I only focused on the next two years, that $4 million to $5 million range of funding, the subsequent clinical phase is also an accelerated pathway. Not to mention, we have our first reformulation product already in development. We have preclinical studies already underway with that first product candidate.
The expectation is, by the time we get to a phase where a strategic is interested, that product has already been validated in the entirety of the preclinical phase. The remaining work that has to be done to get that to a commercializable state is significantly lower than would be traditionally expected out of a biotech startup. That's just one product. As a platform, you can exit by spinning out and gaining returns for shareholders from that one product, and continue to leverage the platform for many, many opportunities going forward. I think that's really something I wanted to emphasize as significantly beneficial and unique aspect of VeraMorph.
The other thing that I wanted to say, if there are other founders listening to this podcast, is I went a very unique route. Even though I did a postdoc at MIT, where I came up with the initial concept of this technology, which has an immense amount of resources for entrepreneurs, I didn't actually know I wanted to go this route while I was there. I ended up bootstrapping from the ground up on my own to find lab space, validate the technology, go through a series of accelerator programs to learn what it means to be an entrepreneur.
As a scientist, I had no concept of what it meant to start a company. I thought I did because I thought it all had to do with science. Then I struggled through a year and a half of talking with business development leaders at major pharmaceutical companies and realizing I knew nothing.
Sal Daher: Which programs did you do?
Doug Godfrin: I actually went to a program sponsored by the University of Michigan. It was actually something called an SBIR Phase 0. It's an I-Corps-like program. Then I was fortunate to get funding from an incubator in Delaware. I went to the University of Delaware as a grad student to get my PhD. I had some ties there. They had an accelerator program tied with that. Then I also did the MassCONNECT program sponsored by MassBio here in Boston. Taken all together, the series of mentors that I've had coach me just barely got me to what I would consider an acceptable level of entrepreneur, from what started as a through-and-through scientist.
The take-home message I wanted to convey is, if it's technology and science that you're passionate about and you want to bring it to people in a meaningful way, entrepreneurship is a great route to go. You are going to hear no a lot, but push through. It's worth every ounce of frustration and every ounce of struggle to deal with. Even if it's not a "traditional path" to achieve it, there are many people out there like Sal Daher and many others who look kindly upon those of us who want to achieve something and are more than happy to provide support, as long as you're open-minded and very gracious to receive their feedback. Just stick with it and you'll be happy that you did, even though on certain days you'll not want to do it anymore.
[laughter]
Sal Daher: I think that's very well said. I must say, there are other chemical engineers who talk this eloquently, but the one that comes to mind right now is Armon Sharei the founder of SQZ Biotech.
Doug Godfrin: I enjoyed that podcast significantly. I agree, he's a very well-spoken individual.
Sal Daher: One of his gifts is explaining extremely complex things in a way that people can understand, making it accessible to people. I think you're cut of similar cloth. I'm very grateful to you, Doug Godfrin, for coming on the Angel Invest Boston Podcast. Helping us explain this really interesting startup that you are building. Doug Godfrin, PhD, founder of VeraMorph, thanks for being on the Angel Invest Boston Podcast.
Doug Godfrin: Thank you so much, Sal. It was a pleasure being here with you.
Sal Daher: Awesome. I'm Sal Daher.
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I'm glad you were able to join us, our engineer is Raul Rosa, our theme is composed by John McKusick, our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher