Angel Invest Boston is sponsored by Peter Fasse, top life science patent attorney.
Kristen Overly works as management consultant and is a leader at MIT Life Science Angels. Kristen and I discussed various aspects of the funding of life science startups. She, like me, is intrigued by the opportunities in what Jeff Behrens called the scrappy biotechs in his doctoral thesis.
Click here for full episode transcript.
Highlights include:
Sal Daher Introduces Kristen Overly of MIT Life Science Angels & Back Bay Advisors
“…MITLifeSciAngels.com. And we look for companies that have some sort of affiliation with MIT, whether that's a founder or a board member or maybe a scientific founder or maybe the technology came out of MIT.”
“Who's invited to the [MIT Life Science Angels] meetings as potential investors?”
“…. I remember it was kind of in the beginning times of Rubius Therapeutics because that was a similar-ish platform play to Remora.”
“I suspect he had a hard time raising money, not having had a Ph.D. He's a brilliant guy, he could have done it but in the life sciences, it's almost like joining a holy priesthood or something. You have to have your Ph.D.”
“… the increase in the number of SPACs recently. I think it just shows how different the life sciences industry is from the tech.”
“…you just have to believe in the people, sign a blank cheque and hope that they can do their jobs right.”
“But still the [SPAC] model is untested…. Acquisitions are hard. Most acquisitions fail…”
“So basically 97% of the funding go to either life science companies that are created by the venture capital firms themselves or companies that have some kind of a star player, right?”
“…when I was at MIT, I found myself frustrated because there were so many amazing technologies just kind of stuck in a lab.”
“The number of scrappy biotechs is about to skyrocket.”
“And there's a lot of not great AI technologies. People are just taking the open-source code and applying it and calling it a product and starting a company and getting money.”
An Intro to Radio Pharmaceuticals
“…my senior year, I got a really bad concussion, freak accident.”
“Yeah, it was the hardest decision I had ever had to make in my life to take the year off at school. I mean, I was on this set path since I was born.”
I'm passionate about is that only about two percent of all VC funds overall go to female founded companies.
Transcript of “Life Science Financing”
GUEST: Management Consultant Kristen Overly
Sal Daher Introduces Kristen Overly of MIT Life Science Angels & Back Bay Advisors
Saleh Daher: Welcome to Angel Invest Boston conversations with Boston's most interesting founders and angels. Today we have a very special guest. She's probably the youngest guest we've ever had on the podcast. Her name is Kristen Overly and she is a young consultant. But she's had a lot of experience with startups because she was making the trains run on time with MIT Life Science Angels. Anyway, say hi to Kristen Overly.
Kristen Overly: Hi, Saleh, great to be on the podcast.
Saleh Daher: It's great to have you on. So Kristen is a brilliant graduate of MIT. And she's someone who is... even in MIT she really stood out which let me tell you is a hard thing to do. When I was at MIT I had a hard time just sort of keeping up, I was huffing and puffing all along. And Kristen had time to be involved with MIT Angels to run that. She's now a consultant in the Life Sciences and Life Science Practice at Back Bay Advisors. And we'll get a little bit into that. We're going to talk about life science funding and we're going to talk about MIT Life Science Angels, which she worked a lot with Patrick Rivelli, who's been on the podcast. So maybe we can start talking right now about your experience with MIT Life Science Angles.
Kristen Overly: Sure. So I got involved with the group my sophomore year of college. So whatever year that was now 2017 maybe.
Saleh Daher: It's another year long ago… you did different things then.
Kristen Overly: So different. I could see you all in person. It was a very transformative experience for me in terms of figuring out what I wanted to do in the life sciences and how I wanted to interact with the field itself. I had a really great mentor, Sam Wong, who's now out at BDF Partners in San Francisco. And he was the original kind of crusader for the MIT Angel group. And he introduced it to me and got me involved. And so I collaborated with Patrick Rivelli and James Weis over at Nest.Bio. And it was great. It is a group of about 250 or so investors. We have had some really successful pitch events about four per year. I think our most successful story is probably Skyhawk Therapeutics, which recently just had a big deal with Merck with a value over, I think, 600 million dollars.
Saleh Daher: Let's go into Skyhawk a little bit later on. I'll make a note of that. Great, yeah?
Kristen Overly: Yeah.
Saleh Daher: Kristen, why don't you tell us a little bit about how MIT Angels works, who goes there, what goes on? That could be a service to people who are thinking of pitching there. It also could be a service to people who might want to participate.
“…MITLifeSciAngels.com. And we look for companies that have some sort of affiliation with MIT, whether that's a founder or a board member or maybe a scientific founder or maybe the technology came out of MIT.”
Kristen Overly: Sure. So, you have a website, MITLifeSciAngels.com. And we look for companies that have some sort of affiliation with MIT, whether that's a founder or a board member or maybe a scientific founder or maybe the technology came out of MIT. There's kind of a variety of paths to be able to present at the MIT Life Science Angel pitch events. So we get about probably 40 to 50 applications per quarter and we have one event per quarter with only four companies who present. So the team will review the applications based on a number of metrics and choose four. And we collaborate with a lot of different large pharmaceutical companies in Kendall Square in the Cambridge area overall. We've had events over at Bayer, Pfizer, Novartis, all really great partners with us.
“Who's invited to the [MIT Life Science Angels] meetings as potential investors?”
Saleh Daher: And who are the people who participate as potential investors? Who's invited to the meetings as potential investors?
Kristen Overly: Sure. So certainly, accredited angel investors. These people range from physicians, surgeons, they're late to the meetings because they just came out of surgery or they've been seeing patients all day.
Saleh Daher: Do they have to be MIT affiliated?
Kristen Overly: We call it, I guess, MIT friends and family. So they do have to be MIT affiliated but some of them bring a friend or a business partner, and those people keep coming maybe with or without. And we create that relationship that way. And so others are, we have patent lawyers, we have seasoned business guys or girls who want to do their own thing later in life. We have people like you who are seasoned angel investors and do that quite often. So it's kind of a whole mix of people.
Saleh Daher: Excellent. And so basically, they listen to the four pitches and there's a Q&A afterwards. Is that how it works?
Kristen Overly: Yes. So each company gets about 20 minutes or so and that will include a presentation as well as an individual Q&A with the company and the greater audience. And then at the end of the four pitches, we kind of close the doors to the companies and have an angels only discussion, so everybody can kind of hear each other's opinions on the companies, which was really insightful for me as a growing budding life science entrepreneur, consultant, et cetera. Because I got to hear all the different nuances of products from therapeutics to medical devices and different regulatory mechanisms and people's different experience. Meeting the people was one of the biggest draws for me, and it's led to a lot of great connections.
Saleh Daher: Excellent. So, Kristen, I understand that one of the shining jewels of MIT Life Science Angels is their role in Skyhawk. So can you tell us a little bit about Skyhawk?
Kristen Overly: Sure. So their main platform is something called the SkyStar or the Skyhawk's small molecule therapeutics for alternative splicing and RNA, quite the mouthful. But basically it takes variety of computational models, kinetic models, searches and assays for chemical targets in oncology. So they take these libraries and they test them in patient cells and look for drug candidates. So they filed their IND and they are pursuing lead selection right now for their first target. So they're still working on getting to the clinic, but it's very promising.
Saleh Daher: What was the deal that they got? I understand they got acquired.
Kristen Overly: They didn't actually get acquired; it was just a partnership.
Saleh Daher: Oh, so they are a partnership, a licensing agreement?
Kristen Overly: Mm-hmm (affirmative).
Saleh Daher: What's the size of it? They're usually is a 500 million, 250 million.
Kristen Overly: Skyhawk is eligible to receive up to about 600 million dollars per program target. And they're pursuing four disease areas in neuro-degeneration, oncology, autoimmunity and metabolic diseases.
Saleh Daher: That's a great thing. Reminds me of SQZ, the first validation that SQZ had. And now they've had an IPO that's been quite successful.
Kristen Overly: Yeah, it's really exciting.
Saleh Daher: I mean, these collaborations are really interesting. I've had David Glazer on. He was the lawyer who advised SQZ on their negotiations with Roche on their deal initially 500 million and then eventually 1.3 billion.
Kristen Overly: Wow, nice.
Saleh Daher: These deals are interesting, because what it's about is if you are meeting milestones, how much money the strategic player will provide into the deal in order to get what they want? Which is to develop a new technology that's going to make them many X times the amount of money they're putting in. So that sticker price, the sticker amount that you see is basically if every single milestone is met, that's how much money they will receive with this. But well, if this is a licensing agreement, it's probably a little bit different. Instead of a collaboration to develop.
Kristen Overly: Yeah, it's more or less a commercialization agreement.
Saleh Daher: Commercialization agreement, okay.
Kristen Overly: There's a potential, I think, for an option later down the line.
Saleh Daher: Okay, great validation for a young startup. I saw in your resume that you spent some time on Remora as a-
Kristen Overly: Yes, I did.
Saleh Daher: Talk to me about that experience and what Oliver's doing now and so forth.
Kristen Overly: Yeah. So I worked with Oliver for a semester my sophomore year.
Saleh Daher: Let's set it up, who is Oliver?
Kristen Overly: Oliver Dodd. He got his bachelor's at MIT and I believe Course 20 Biological Engineering. And he started this company with the idea of kind of platelet-based therapeutics. So a platform for drug delivery. And I met him through a class at MIT, actually, that was over our independent activities period, in January.
Saleh Daher: IAP [Independent Activity Period, MIT’s January term], yes.
Kristen Overly: IAP, yes.
Saleh Daher: You were so conscientious. I confess that every IAP that I spent at MIT I spent it skiing.
Kristen Overly: Really, sounds amazing.
Saleh Daher: Sorry, that was terrible. No, you had a much better spent youth than mine.
Kristen Overly: Well, my freshman year I was still on the rowing team on the Women's Openweight League rowing team, and so I was required to be on campus training. And so I had to find something kind of cool and fun and explore. I decided to explore career opportunities rather than taking the chocolate making class. Yeah, I met him through that class and it was about life sciences. And they had somebody new, a guest speaker come in every week. They had somebody from Flagship. I think Nathan Stebbins was there as well as a couple of those-
Saleh Daher: Flagship Pioneering.
Kristen Overly: Flagship Pioneering.
Saleh Daher: The big life science VC fund. That is very, very happy right now with what's happening with Moderna.
Kristen Overly: Very happy, very excited. So I saw this-
Saleh Daher: We're speaking at a time when Moderna shares have recently hit 170 or something. It's just completely crazy exuberance over the company.
Kristen Overly: Yep, Bob Langer's a happy man.
Saleh Daher: Please continue.
“…. I remember it was kind of in the beginning times of Rubius Therapeutics because that was a similar-ish platform play to Remora.”
Kristen Overly: So, yeah, this was a life science class. A guest speaker from industry came in every week and it was really great to just get that exposure. I remember it was kind of in the beginning times of Rubius Therapeutics because that was a similar-ish platform play to Remora. And yeah, we worked... I did some business development activities with Oliver. We did a lot of competitive landscape analysis of the various drug delivery platforms and nano-particles, RNA delivery mechanisms. That was my first foray into the space of business and life sciences.
Saleh Daher: What was the outcome of Remora?
Kristen Overly: Unfortunately, it stopped. But Oliver is now over at Harvard getting his Ph.D.
“I suspect he had a hard time raising money, not having had a Ph.D. He's a brilliant guy, he could have done it but in the life sciences, it's almost like joining a holy priesthood or something. You have to have your Ph.D.”
Saleh Daher: Yeah, I suspect he had a hard time raising money, not having had a Ph.D. He's a brilliant guy. He could have done it but in the life sciences, it's almost like joining a holy priesthood or something. You have to have your Ph.D.
Kristen Overly: And that's definitely something I noticed with the angel group.
Saleh Daher: Yeah, before people take you seriously. And I think it was kind of reinforced with the Theranos experience. Who's the most prominent non-PhD founder in the life sciences?
Kristen Overly: Well, she wears a black turtle neck.
Saleh Daher: She wore a black turtle neck and didn't have a Ph.D. She dropped out of undergrad and so it's become a lot harder. But which it really doesn't make sense because someone like Oliver, he can read all the papers, he can look for all the technology. But anyway, so I'm sure we'll be seeing him back at that space again when he finishes his Ph.D. at Harvard.
“… the increase in the number of SPACs recently. I think it just shows how different the life sciences industry is from the tech.”
Kristen Overly: Definitely. And just to follow up on that, I mean, I think it's a testament to how much people matter in biotech, on the founding teams and the board of directors, the increase in the number of SPACs recently. I think it just shows how different the life sciences industry is from the tech.
Saleh Daher: Let's unpack for the audience who may not be biotech financing specialists. What's a SPAC? Why are SPACs happening? What do you think of them and so forth, please?
Kristen Overly: Sure. So a SPAC is a special purpose acquisition vehicle.
Saleh Daher: Company or vehicle, whatever.
Kristen Overly: Yeah, vehicle, company, whatever you want to call it, it's special.
Saleh Daher: It's put up with just the purpose of buying life science companies. Not specified at the time they go in.
“…you just have to believe in the people, sign a blank cheque and hope that they can do their jobs right.”
Kristen Overly: Right. It's kind of you just have to believe in the people, sign a blank cheque and hope that they can do their jobs right. And a lot of them are venture capital firms who are looking to get more into this building company phase rather than just investing, which has been definitely a shift. As your guest, Jeff, also noticed.
Saleh Daher: We'll get into Jeff's doctoral thesis on that. So, this is part of that whole trend on the part of these big venture capital firms to, instead of investing in basically crowdsourcing startups, which is what we used to do before. I mean, it was somebody has an idea and then they would invest in it. These guys are no, no, no, no, we're going to create bespoke founded entities. It's going to be created what Jeff calls 50 million dollar babies. They're sort of slated for 50 million dollars Series A if they kind of do everything half right.
And they create their own with the idea that they're going to do very challenging things, they're going to do moonshots and get stratospheric results. Because the last fund that I have results from, with talking about Flagship Pioneering, I mean, they had a nine X return on their fund. Tremendous and so forth. So they think that, oh, jeez, we can do this stuff ourselves. So we're going to create the startup or we're going to take a lot of money. And right now, biotech is so hot that people are just willing to throw money at things. So if somebody sort of half knows what they're doing, they can just raise money with the idea that we're going to go out there and buy a promising technology. And we're going to really make something with it.
Kristen Overly: Yeah. Last summer, I interned at JP Morgan, San Francisco on their health care equity capital markets team. So all I did was IPOs and follow on financings and SPACs never came up. There's a little talk of SPACs, but it was nowhere on the radar a year and a half ago in biotech. It's such a difference and such a change in mindset for sure.
“But still the [SPAC] model is untested…. Acquisitions are hard. Most acquisitions fail…”
Saleh Daher: To me, it's a little less crazy than one of those... these coin offerings ICOs. Those are totally insane, I mean, the idea you're going to build a company within a year and all that stuff, I mean, this is insane. These guys, at least the people doing it, sort of have experience. But still the model is untested. It is a very different thing for you to be evaluating startups and a bunch of them and seeing how they're doing and then invest in them. It's a very different discipline from basically going out and acquiring companies or building them from scratch. Acquisitions are hard. Most acquisitions fail or starting companies from scratch, also putting together teams that aren't already working, you can't observe them working. That's taking on a lot of risk.
Which maybe we should talk about a Jeff Behrens, which is the reason that we sort of connected to get on this podcast in the first place is that you pinged me about... you listened to Jeff Behrens’ interview and you were curious about just to read the dissertation. Which I sent over to you. So maybe we can sort of recapitulate for the listeners who haven't listened to Jeff Behrens. There two interviews and they touch on this whole problem of life science funding and how the reality is that life science funding is massively skewed towards a few highly privileged life science startups and the other 97% are out in the darkness, in the cold darkness struggling to get funding. So please, your thoughts on that?
Kristen Overly: Yeah, no, I was really surprised at the numbers. I mean, as you said, 97% fell into the category of either venture capital founded, star academic player, star founder, serial entrepreneur or corporate spin out.
Saleh Daher: Bob Langer.
Kristen Overly: Bob Langer, yeah.
Saleh Daher: Somebody from the Bob Langer lab like SQZ. But the funniest thing is by luck, I led the angel round into SQZ.
Kristen Overly: Wow, that's awesome.
Saleh Daher: And it was quite a coincidence because I'd been invested in another transfection company before that and because of my brother-in-law who's Peter Fasse. You've met Peter, right?
Kristen Overly: Yeah, Peter, yeah.
Saleh Daher: I mean, he's the guru of micro-fluidics and a bunch of other things. I mean, he's very, very... works very intensely in this and he writes checks in the area and he kind of got me connected with another company that's in the transfection space that's still kicking and so forth. And then he also told me hey geez it looks like the SQZ guys look like they're raising money and all that stuff and they're thinking about raising money. I called Agustín at the time, who was president, I said, hey, I hear you guys are raising money and I basically put the round together for him, the angel round. After that, they raised their Series A with Polaris., when Polaris still did these kinds of things. They're doing less of that.
“So basically 97% of the funding go to either life science companies that are created by the venture capital firms themselves or companies that have some kind of a star player, right?”
So basically 97% of the funding go to either life science companies that are created by the venture capital firms themselves or companies that have some kind of a star player, right? Or are backed by a strategic player or somebody like that.
Kristen Overly: Yeah. So that leaves the three percent of these, as he says, scrappy biotechs. I love that word, that's awesome.
Saleh Daher: Three percent of the money and not three percent by number or three percent by merit or anything like that. It's just when we hear about a SPAC and all the excitement of life sciences and everything, it is highly skewed. It's a sort of law of nature. It's like the one percent, 99%. 97% of the funding going to a small subset of the whole space and the rest of the space gets three percent of the funding.
Kristen Overly: Yeah. And that was really surprising. I mean, I obviously am aware of the trends in the space and I understand that Flagship is spinning out all the is and everything. But I didn't realize that the dollar amount was so small from VCs to these scrappy biotechs.
“…when I was at MIT, I found myself frustrated because there were so many amazing technologies just kind of stuck in a lab.”
I mean, there's so many, not to go on a complete tangent, but when I was at MIT, I found myself frustrated because there were so many amazing technologies just kind of stuck in a lab. Or maybe some of these angel-invested companies that just couldn't quite get off the ground because they couldn't get that certificate of venture capital or the right people behind the technology. And one of my goals and why I'm so driven to the early more startup space is because I'm really passionate about working on getting technologies out of academia and to patients into a place where they can actually do good faster.
“The number of scrappy biotechs is about to skyrocket.”
Saleh Daher: Right. That is an obsession of mine as well, Kristen, because there's a problem to be solved here. I think there's an opportunity to make money for investors and there's a tremendous, tremendous imperfection for humanity. And you know what? The number of scrappy biotechs is about to skyrocket. We're recording in a week when DeepMind just won the contest of folding of proteins. They did very well. What did they get a 90 or something or was it a 70 out of 100? But they did very well. Head and shoulders above all the other competitors. This is just one little data point. There are a lot of technologies. We're also talking right now, today, the UK approved the Pfizer BioNTech vaccine.
Everybody's talking about it being an mRNA vaccine, a messenger RNA vaccine, which is a wonderful thing. But it's also, it uses these lipid nanoparticles that are engineered, the little bits of fat that carry mRNA fragments where they need to go, to interact with the immune system. And that is a very important aspect of it. And that's one of the technologies that's become highly developed. And so the mRNA technology, the liposome technology, and there are a bunch of other technologies. They're relating to transfection, relating to cell capture, relating to all these other things.
You're much more familiar than I am since you've studied that. I mean, my vision is very... my keyhole, it's kind of tied to the company's investing in it. But you have a much broader vision because of your work as a consultant. I expect, and you probably agree with me that there's going to be an explosion of really interesting life science companies. And the question is, how do we get these people funded? How do we get these companies funded?
“And there's a lot of not great AI technologies. People are just taking the open-source code and applying it and calling it a product and starting a company and getting money.”
Kristen Overly: I think there will be a lot of interesting biotechs. But I also am wary that because of the surplus of money going into these companies, that some of the technologies may not be as validated as they should be for the valuations that they're garnering. So, I was listening to a webinar earlier with End Points about advances and AI and clinical trials. And there's a lot of not great AI technologies. People are just taking the open source code and applying it and calling it a product and starting a company and getting money. So I mean, you can do that but yeah, so investors definitely need to kind of be aware of that.
Saleh Daher: I think what we need, I think we need to have a combination of recruitment of experts to focus on that. I find in the life sciences, it's a little bit like driving in the fog. You can't see very far. If you stray a little bit from your specialty, you're kind of flying blind because it's so complex and so difficult. I think it's important to have the attitude of kind of assembling a due diligence team quickly, putting it together and getting some feedback and seeing if it works. And then the really important thing is the human factor. Are the founders up to it? I think a guy like Oliver Dodd who's got... the guy has a lot of spunk. He'll be back and he'll, eventually I'll probably invest in him. He works very hard, he's very diligent and so forth. And so the combination of a really good team, it's better to be a team, attract a couple of people to go into the folly together and then to attract a bunch of angels who will not be the way that angels are.
And this is Jeff, in my interview with him. Jeff kind of pointed in this direction. Angels tend to be... they write 25,000 and 50,000 dollar cheques to a whole bunch of companies because you kind of have to diversify and then a few of them are on boards and so forth. But I think for life science investing, angels need to slow down the pace of cheque writing, increase the check size, think about staging the investments based on milestones by the startup. And to understand that, and Jeff makes this very clear, in the conversation, this is Jeff Behrens, “What You Think You Know of Life Science [Funding] Is Wrong”? Funding is wrong. That's trying to encapsulate his findings.
And you basically have to slow down and to think in terms of many funding rounds that this startup is going to need five, 10 million dollars. How is this group of angels going to provide that? How are they going to connect them with the capital to do that? Though no VCs are going to come in until this thing is really hot, at which point you don't need the VCs. Okay, you're going to be talking to strategics and then it's a whole another ballgame because the strategics have resources that the VCs could never provide in terms of connection to the market and all that stuff. Yeah, that for me is a big question. That's the thing that I'm grappling with all the time. Do you have any thoughts on that?
Kristen Overly: I mean, I think the most interesting thing that I read from his work was that the median Series A round for these scrappy biotechs, was only about eight million dollars. Whereas for the other 97%, you were seeing medians of 40 million. And I think that all feeds in to this success rate because, like Jeff said, a lot of founders don't get enough money when they need it and they don't take that check because maybe they don't want to get their shares diluted or whatever reason it may be. But I think the money and the VC and the angel investor and the success rate all kind of feed into each other. And I don't know if it's as linear.
Saleh Daher: The whole point is that you do an early funding round. And then if it's very successful, your subsequent rounds are at valuations which don't dilute the founder very much because you want the founder to still own a percentage of the company. And it's public knowledge that Armon Sharei, I think, still has six percent of SQZ. I think it was in the S-1, very important to have the founding CEO still own a chunk of the company. Now, listeners are going to be saying, wait a second, if scrappy biotechs don't get Series A, the VCs don't want to invest them, how come you're talking about Series As for them?
Well, they do get Series A, but they get Series A by herding cats. They are small VC funds. They're not getting money from the big players like 3rd Rock and so forth. They're getting money from people like Good Growth Capital, is a great group here in Boston. But their cheque size is very limited. They can't write five million dollar checks. They can't write 10 million dollar cheques. And so you get someone like that in, then you get a bunch of other people. So in the end, they end up, if they have to raise 10 million dollars for the series A, 250 $500,000, we need a lot of cats in that herd come in. When you manage to get nine cats out of the 10 that you need, the third cat you got leaves, runs out. Now, you've got to bring somebody else back in and so I saw this.
Kristen Overly: When one cat doesn't want to be the biggest cat.
Saleh Daher: Exactly, there's always a thing. Oh, I don't want to be the lead cat.
Kristen Overly: I don't want to be the lead.
Saleh Daher: I don't want to be the last cat.
Kristen Overly: Exactly, noted.
Saleh Daher: You and I know someone; we don't want her to... She was at MIT Angels and we don't want to give details of this. Because I haven't asked her about this, but you and I know someone who is exactly in that situation. And she managed to do it. It took her a year and a half, I think, to pull that through. So scrappy biotechs do manage to get VC funding, but it's a really tough slog. So the question is, how can... This for me is, I'm thinking about the podcast. I'm thinking about the work that I do as an investor. How can I shed a light on these companies, these scrappy biotechs? I have a bunch of them. One thing that I'm thinking of doing is actually just setting up a website and sort of a portion of the podcast that I'll just call them scrappy bios. I think I'm going to call it scrappy.bio.
Kristen Overly: I like that, that's good.
Saleh Daher: And people can go and look at them and maybe they can update people on the website and kind of create their own content there, I don't know. I mean, I have to think about ways to do it. But one scrappy biotech that I've invested in is a company called QSM Therapeutics that's been on the podcast. The founder's been on. They're using these quorum sensing molecules. Quorum sensing molecules are molecules that bacteria use to find out how many of them there are in a certain place because bacteria behave differently. You know from biology.
Kristen Overly: More or less, yeah. An idea.
Saleh Daher: Behavior changes depending on how many of them there are in there. There are a lot of them, they behave one way if they're few and they find out how many there are around with these QSMs. Well, they're using QSMs to test for pseudomonas in dog ear infections or cat ear infections.
Kristen Overly: Interesting.
Saleh Daher: And so, there's a big differentiator, if it has pseudomonas or not and it is a device that's looks like a little electronic device. And they put a little sample of dog ear goop on the thing and it brings back pseudomonas, no pseudomonas and within a minute. This is the kind of stuff where they could do tests for urinary tract infections in human beings. And have a test back in a minute. But of course, to develop anything for human beings, it's very expensive. So they're going the veterinary route first. I love a company I invested and they're getting ready to get their product into the market, to the hands of veterinarians this year. So not an MIT Angels company because the founder Ed Goluch is a professor at Northeastern. And that's the beauty of Boston, you've got so many great places. You've got MIT, you've got Northeastern, BU, Harvard.
Kristen Overly: Yeah, it's a phenomenal ecosystem.
Saleh Daher: Yeah, it is. Well, anyway, let's talk about your consulting practice.
Kristen Overly: Sure. So I'm an analyst at Back Bay Life Science Advisors over in Copley Square, right across from the Trinity Church slash Boston Public Library area. And I interned there two years ago as well, it's a great boutique firm. Work with all sorts of clients from three people biotechs, venture backs, all the way up to Big Pharma, doing all sorts of projects like tumor prioritizations. I'm working with a couple of radio-pharmaceutical companies right now and working on their corporate strategy.
Saleh Daher: Let's unpack that, tumor prioritization. What does that mean?
Kristen Overly: Basically, a client will give us their molecule. They'll tell us all about it. We'll analyze the science. We'll also analyze the market need, the commercial opportunity and kind of put that all together using both a lot of very technical knowledge, as well as big picture and financial knowledge. We also have an investment banking arm at our firm. So we have a lot of craft SPAC there as well.
Saleh Daher: So that will be a molecule that might be a candidate for an oncology drug for treating cancers.
Kristen Overly: Correct.
Saleh Daher: So, then they say, well, here's this molecule. Where do you think it might be optimally useful?
Kristen Overly: Yeah.
Saleh Daher: Because a lot of these molecules can be used in many different places. I mean, there lots of therapies that are repurposed to great success. And some to slightly less success as it would seem with Remdesivir – from Gilead.
Kristen Overly: Yes, exactly.
Saleh Daher: ... which has been trying for a little bit equivocal. But anyway so you do that, tell me about the financing arm.
Kristen Overly: Yeah, so we have a consulting arm as well as an investment banking arm and there's a lot of cross talk there in collaboration. We do M&A deals, licensing deals on the investment banking side and then on the consulting side, we do a lot of strategic consulting. We work with a lot of rare disease companies, Big Pharma, across all sorts of therapeutic areas and technologies.
Saleh Daher: M&A being mergers and acquisitions, buying companies, selling companies and so forth. Great, those are interesting projects they've been working on. You mentioned something with radio-pharmaceuticals. What are those?
An Intro to Radio Pharmaceuticals
Kristen Overly: Sure. So there's been kind of a heightened interest in these things called radio-pharmaceuticals. Novartis, which is a very large pharmaceutical company, has been pretty active in the space, just having two major acquisitions in the past couple of years. One of them being Advanced Accelerator Applications and the other being Endocyte. Basically, it's a molecule that has a radio isotope tracer that it can be visible on a scan, a PET scan, as well as a targeted antibody to find and target a cancer cell, for example.
Saleh Daher: That's Endocyte, yeah.
Kristen Overly: Yeah. So there's this interesting idea of a theranostic. So therapy and diagnostic where you can use this molecule that has a tracer, a radioisotope tracer on it to be able to visualize on a scan the tumors while also directly targeting this radiation therapy to the right place in the body. And you can get a much higher level of radio isotope delivered to the tumor and hopefully kill more cancer cells. So it's a really interesting concept. And Novartis has certainly taking note as well as Versant Bio has also done some investments there.
Saleh Daher: You've been working in this area as well.
Kristen Overly: Yes. I've had a couple of clients in the past few months and have been pretty in the weeds.
Saleh Daher: And you mentioned that maybe you wanted to touch on the Chinese pharmaceutical market. What are your thoughts there?
Kristen Overly: Sure. So I'm working on this blog post actually for my firm, but I've taken Chinese for 10 or 12 years. I started in sixth grade and took it through college. And I've always just been interested in cross-border financing and the life sciences industry, especially recently, there's been a lot more money coming into the US from China, life science startups. But I recently discovered this place called Hainan in Southern China. They have a really interesting setup.
So, it's the largest special economic zone in China. And they have this initiative in China overall called Healthy China 2030. And they're setting up all sorts of initiatives across the country in order to get more innovative drugs to Chinese patients at lower costs. And so Hainan has this special program where pharmaceutical companies or medical device companies, can apply and have their device for therapeutic, basically approved within a day for use in this zone. And you're able to collect real world evidence and package that for an application to the Chinese FDA, the NMDA. And so it's a really interesting way. Allergan actually was the first product in mainland China to get approved based on real world evidence collected in Hainan earlier this year. So it's a potentially new way to enter the Chinese market.
Saleh Daher: How does the safety of intellectual property play in that?
Kristen Overly: That's I think still a question mark, at least in my research. I think that they are trying to as a whole trying to shift intellectual property back to the potentially foreign party. But there's still a large reliance on local partners when going into China.
Saleh Daher: And now the idea that you're having these things approved in one day, sort of kind of sets my buzzer here about the ethics and experimentation, ethics and so forth. I mean, are these approved for trial on human patients? Is that what they're talking about?
Kristen Overly: So, my impression is that the technologies that are approved within a day or so are approved maybe in the US or in the EU and just aren't approved back in China for a variety of reasons. That's my impression.
Saleh Daher: So, it's basically kind of like an EU approval or if they are already in trials at the US or in Europe, they'll rubber stamp that and get it done quickly so that they can take advantage of more efficiency. So basically, this is kind of like outsourcing the trials to Hainan. Right now, a lot of American companies outsource trials to Australia, which is in terms of cost, a much lower cost. And yet you have everything is reliable, there's no questions of unethical practices or anything like that.
Kristen Overly: Right, no language barrier either which...
Saleh Daher: No language barrier, no prisoner's being forcibly recruited into things. Very interesting. Maybe at this point we could just get a little bit into your life story. I know that you had some personal struggles right before you came to MIT and overcame that. Do you want to talk about that a little bit?
Kristen Overly: Yeah, sure. So I'm originally from Columbus, Ohio, and I went to boarding school out in Andover for high school.
Saleh Daher: In Ohio they don't say Aandovah, it's Andover.
Kristen Overly: Andover, yeah. I know the accent was very new for me. And then I was told I had an accent and I was like, what are you talking about?
Saleh Daher: I remember my brother, he was at a prep school out, not at Phillips but in another prep school in Andover and he was taking driving lessons. It was the auto school used to go to, I used to call him up to set up appointments with my brother. ”Tower Hill Auto School”. I'm giving a plug to the Tower Hill Auto School.
Kristen Overly: I can't even do the accent. I know, it's the pahk the cah in the Hahvahd Yahd. That's all I can do.
Saleh Daher: So, please tell the story.
“…my senior year, I got a really bad concussion, freak accident.”
Kristen Overly: Sure. So my senior year or what should have been my senior year, I got a really bad concussion, freak accident. Somebody just kind of fell on me and I hit my head while watching Forrest Gump. And then I wasn't able to basically read for three weeks, for actually a month or so. I couldn't read words on the page. And I treasure my brain and it's probably my favorite part about me. So I was not willing to take any risks. And I'd heard several stories about people who hadn't taken time for their concussions, taken time off and really recovered. And so I decided to take the year off of school and I'm so glad I did because I was able to start rowing, got good really fast and loved it. And I also got more interested in China.
I lived in China for a month that summer and took a political science course. I was able to get more into the life sciences and then I returned to Andover for my senior year. And so when I came to MIT, which my mom dragged me down to because I was like, I've done Boston, I'm not going to go to school in Boston, no way. And I fell in love with the campus immediately. I was like, how could I not come here? I love life sciences. I want to be a biological engineer. They have a great business school, this is perfect. And luckily, it worked out.
Saleh Daher: I mean, this is the world capital of biotech. This is the place to be if you want to be a life scientist.
Kristen Overly: I was so lucky. And having the opportunities to take classes over at Sloan as well with life science Moguls was just phenomenal and such a great experience for me to just soak it in and learn and hear about what these people are doing with the companies that their CEO of and also teaching a class and also a board member of this company right here in Kendall Square.
Saleh Daher: That's typical MIT. I mean, you're bumping people in the hall there and it's either a freshman or the CEO of some company-
Kristen Overly: Exactly.
Saleh Daher: ... or some VC, or somebody. It's like you never know.
Kristen Overly: You never know, yeah. And so, then I got involved with the MIT biotech group and MIT Angel Investors, and that kind of was... I enjoyed my out of school activities probably more than my in school activities because I-
Saleh Daher: Something which a lot of people at that age, particularly really brilliant people like you don't want to hear is that, if you wait for a year before you go to college, you might actually get out more out of it. And it really is true.
Kristen Overly: It is.
Saleh Daher: My younger daughter took a year off before going to Cornell. I think she benefited from that one year. She just worked as a cashier in a plant store for a whole year. She got a real sense of how other people live. 64% of the population don't have a college education. And she got a sense of what life is like for them, which I think is really valuable, interacting with people. They may not have a college education, but they have a practical MBA on how to deal with recalcitrant clients.
Kristen Overly: Right, that's all I need. I was a waitress for three or four months, and that was a real life lesson at a water park in Columbus, Ohio. That gives you a sense of the clientele.
Saleh Daher: Columbus, Ohio, they call it the water park, here they call it the watah pahk.
Kristen Overly: Water park, exactly.
Saleh Daher: Kristen, speaks very strangely since she's come back from Boston.
Kristen Overly: Yeah, weird.
Saleh Daher: Weird, it's really weird.
Kristen Overly: Wicked, yeah.
Saleh Daher: That's great. So overcoming a challenge like that is very impressive. Somebody just fell on your neck?
Kristen Overly: Yeah.
Saleh Daher: Oh, that's how life is. I mean, you're ticking along and the most unexpected thing can happen. And you go into a different direction and things change and you're surprised that it changes you, I mean, you become a different person and sometimes for the better.
“Yeah, it was the hardest decision I had ever had to make in my life to take the year off at school. I mean, I was on this set path since I was born.”
Kristen Overly: Yeah, it was the hardest decision I had ever had to make in my life to take the year off at school. I mean, I was on this set path since I was born.
Saleh Daher: Track, yes.
Kristen Overly: It was so foreign to me to deviate from that. But I think because of that experience, I've learned the importance of being adaptable and flexible and just kind of going with the flow.
Saleh Daher: I hear the siren in the background.
Kristen Overly: Yeah, sorry. Do you want me to maybe I can-
Saleh Daher: No, that's okay. A little life intrudes sometimes. Just a reminder, I worked at this building on the Financial District that looked out onto South Boston. And I used to say, if I don't hear a siren out of that that area, the world's going to end. So every morning there was a siren. At some point or another, there was a siren, there was a fire or something going on over there.
Kristen Overly: Well, I'm about three blocks from MGH [Massachusetts General Hospital], so if I don't hear a siren, there's definitely something wrong.
Saleh Daher: Well, Kristen, as we wrap up the interview, let me basically open up the floor to you to have you get across thoughts that you have to potential founders, to angel investors and so forth from your experience. I expect that we'll be hearing a lot more from you in the future.
Kristen Overly: I hope so, yeah.
Saleh Daher: But anyway, so what are your thoughts now? Give me anything that you feel particularly strongly about or a point that you want to get across of just your parting thoughts.
“…I'm passionate about is that only about two percent of all VC funds overall go to female founded companies.”
Kristen Overly: Yeah. I mean, I think something that I'm passionate about is that only about two percent of all VC funds overall go to female founded companies. And I definitely noticed in my angel investor group past that I only saw a handful of female CEOs. But I actually have seen more come out of MIT, which is really exciting. And I'm excited about that. But I think there is this importance in diversity, not just for appearance, right, on a page, but also there's clear correlations with success and a diverse board and a diverse founding team. So I think that's something that's just important to highlight while we're talking about startup companies, especially in the life science space, which has historically been dominated by...
Saleh Daher: Well, I can tell you that in my angel investing career, I would say in the last five years there was a huge upsurge in the number of female founders that I come across. It's one of these things where it's not an easy thing to do. You need a lot of support to be doing it. So, there are examples, that need to be examples, that need to be... it takes time to develop that kind of high-level skill to be a founder. And it's also there's a lot of competition for founder talent.
Kristen Overly: There is.
Saleh Daher: Someone who might be a founder very easily take a consulting job and be very well compensated for it and have a much more predictable life. You're going to find there are a lot of women in consulting, okay, the question is, can you create the conditions to draw them or in executive positions and so forth that draw them into venturing out, to starting? I think of the life sciences, I see... I'm sure you said the more recent experience at MIT Life Science Angels is that there quite a few women founders, young founders coming up.
Kristen Overly: One of my role models is actually my academic advisor at MIT, Angela Koehler, whose company Kronos Bio, just went public a couple of weeks ago. She's one of the scientific founders. She started the technology, which was basically it's a small molecule microarray. So you can test a variety of molecules on a chip and do a variety of assays. And she did that technology for her Ph.D. 20 years ago. And I'm really excited for her.
Saleh Daher: Yeah, Boston is very privileged to have stars, for example, like Daphne Zohar at PureTech Ventures. I mean, at a time when there are very, very few founders, she was there. SQZ Biotech, Amy Schulman was very, very helpful in getting SQZ sort of going through their pivot early on. She's at Polaris. So there's a number of women players, so people like that. And of course, we're talking about people like Jean Hammond and so on that serve as role models, as investors. As people who are helping startups get off the ground. Or the case of Daphne, as a founder of PureTech Ventures, PureTech Health, I should say. I think that there will be a lot more people sort of following those footsteps. But it takes time.
Kristen Overly: It does.
Saleh Daher: I've found that some very impressive women founders, I didn't invest in them because they were women founders. I invested in them because they were impressive. Laura Indolfi of PanTher Therapeutics is just, off the charts, is very bright, presents really well and is the most determined person. Some very impressive examples of founders that have invested and I think there'll be quite a few more. A shout out to Alex Sakatos, Alexandra Sakatos of Ancilia which I invested recently. They're using phages to protect one of the problems that exists in creating therapies microbiome is that the bacteria get attacked by phages. So these are phages that are protective phages or creating bacteria that are resistant to phages.
So, she's working on that space. But yeah, I think you're going to be gratified in 10 years to see how many very impressive women founders have made headway.
Kristen Overly: Yeah, I'm excited.
Saleh Daher: Tremendous. Well, Kristen Overly, I'm very grateful that you made time. A consultants time is worth money, that you made time to chat. And as I said, I'm looking forward to having you on again in the future. Thanks a lot for being on.
Kristen Overly: Thanks, Sal, I appreciate it.
Saleh Daher: Awesome. This is Angel Invest Boston. I'm Saleh Daher.
I'm glad you were able to join us. Our engineer is Raul Rosa. Our theme was composed by John McKusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.