AI, China, And Biotech Investing With SR One's Simeon George, M.D.

0:03Welcome back to the Business of Biotech. I'm your host Ben Comer, Chief Editor at Life Science Leader and today I'm speaking with Dr. Simeon George, CEO and co-founder at SR1 Capital Management, a biotech VC firm spun out of GSK in 2020. We'll hear from Simeon about the firm's approach and the kinds of biotech companies SR1 targets for investment and we'll discuss two important issues impacting the biotech startup and drug development landscape, AI and China, and what both could mean for the future of medicine. Simeon, thank you so much for joining me. I appreciate it.

0:40Simeon George, M.D.: Yeah, Ben, thanks for this opportunity. And hopefully, thanks for what's going to be an interesting conversation for you and your listeners. Yeah, well, I'm glad to have you on the show. And as we do here on the business of biotech, I wanted to start off with a little bit of your background, Simeon. And I'm curious, I believe you did a dual MBA MD program at UPenn. Is that correct? That's correct. Yes, that's right. I'm wondering how that shaped your professional trajectory. I mean, did you plan to get into venture capital and investing when you started out in that dual program or did your focus change as you went through it?

1:22Simeon George, M.D.: Yeah, no, I mean, honestly, I didn't have a clear sense of what I wanted to do. I was just always deeply interested in science, medicine. Like I grew up in a physician household. Both my wife and I went to undergrad and then medical school together at Penn. And so there's a personal connection there. And then the MBA was really a way to kind of express my growing interest in, frankly, the emerging field of biotechnology and startups and creating something from nothing and working with really incredible founders and entrepreneurs. And that, you know, that was expressed while I was in school. So I had time during my six years to spend time working in a startup.

2:02Simeon George, M.D.: I worked in consulting. I worked in banking. I worked in venture. So really, the dual degree was a way to really explore and figure out sort of which direction of travel I wanted to go in. And then the clinical training, of course, underpins everything that I do in my life. And it's, you know, my reason to be, if you will. It's like it's what gets me out of bed. It's coming up with new products that are going to have hopefully massive patient impact. Yeah. And banking and consulting. I think that was at Goldman and Bain, respectively. Were there were there things that you learned from those experiences that you think maybe, you know, that you've brought forward or that have helped you as an investor, Simeon?

2:40Simeon George, M.D.: Yeah. I mean, again, I didn't spend a ton of time there. So again, it gave me some of the basic frameworks to break down problems, to communicate, to be able to assess and come up with ways to test hypotheses. And again, work with incredibly smart people, thinking about the lens of capital allocation and raising capital. And again, on the consulting side, thinking about I worked on one really interesting project where we're essentially working with the private equity arm. We were looking at one of the large pharma players and essentially doing a recap or a leveraged buyout of that company. And so I got to look at sort of the pipeline and assess, as you think about the synergies, where would you double down?

3:24Simeon George, M.D.: Where would you deprioritize? Got to spend time with the leadership team of that pharma company as we were evaluating that. And then the global financial crisis basically took place and ultimately made that deal, I think, something that was never likely to happen. Yeah. Wow. OK. Yeah. Were you involved in some of the, you know, like the the Zoom meetings, you know, where there was a number of transactions, obviously, that took place during COVID. And I've heard from other executives about just the difference of the experience between going around and, you know, doing your due diligence in person versus versus doing it on Zoom.

3:59But you navigated that. I guess you did some of that, right? Right.

4:02Simeon George, M.D.: For sure. I mean, nothing beats in person, right? But yeah, for sure. Whichever way you could, I guess, get to the right stakeholders, have those conversations. You know, I think certainly what I learned in both, you know, client facing roles such as consulting or banking, you need to turn up with your best thoughts prepared and a way to communicate and sort of take all of the diligence, synthesize it and try and win hearts and minds. And so, again, like I have to do that day in, day out now. So there's a lot that I take from those experiences. And the last point, which, again, I think is important to note is like the power of networks.

4:38Simeon George, M.D.: You know, so some of the folks that I work closely with right now are friends and colleagues that I establish relationships with during my time at Bain or in the Penn MDMBA network. Again, it's a network that now spans, I think, 50 plus years. And so there are stakeholders involved at every part of the ecosystem of health care. And I feel fortunate to be able to access those people with a level of trust and engagement that comes from having that affiliation. Right. SR1 spun out. It was the venture arm, I believe, of GSK spun out in 2020. Can you tell me a little about maybe the reasons for that?

5:16Of course, you know, there are a number of big pharma companies that have venture arms. And so I'm just curious about why, you know, GSK's approach to spinning SR1 out into an independent entity.

5:28Simeon George, M.D.: Yeah, I mean, probably helpful for the audience just to understand the initial architecture of SR1. I mean, it was set up as one of the oldest corporate venture arms back in the 1980s. And it was set up when biotech was just emerging as a new field. And it was set up with a true financial remit. So there was never a intention around business development or a funnel into R &D or business development. And the name itself is a giveaway, right? The name was not GSK Ventures. It was set up as an independent entity that could source independently, select independently, manage independently. And so when I joined again, like now close to 20 years ago, that remit essentially meant that I was working at a venture capital firm that had an LP of one and that LP was GSK.

6:13Simeon George, M.D.: And over the 35-year history of SR1 as part of GSK, the fund did incredibly well from a financial return standpoint. And it frankly got to the point, as sometimes happens within organizations, where there was clearly a focus and intent for myself and my colleagues to frankly control our destiny to take the business to the next level. We had been very successful and we were ready to back ourselves. And for GSK, it was a purely, I'd say, a capital allocation decision. There were new CEO, new R &D heads that were looking at their business and a financial focused organization that wasn't helping to build a pipeline didn't necessarily make the most sense on a go forward basis in that same structure.

6:57Simeon George, M.D.: but there was strong support for SR1 to continue to flourish and do this as an independent organization. And so GSK has been and continues to be one of our strongest stakeholders, LPs, that has supported us over the last six years across multiple funds now. So we're incredibly grateful for that support. But at the same time, we've been able to broaden out our LP base and create, I think, a really compelling platform that allows us to do what we did really well at GSK, but now do it, take it to the next level in terms of the team we've built, the capabilities we've added, obviously the now distributed set of LPs that we have as part of our LP base.

7:37We mentioned COVID and I'm just looking, you know, at the date SR1 spinning out in 2020. Was that, you know, a difficult first couple of years once you became independent or, you know, you, I guess, had your fund at that point. It wasn't, you didn't maybe run into some of the same problems post-COVID that, you know, a lot of biotechs did, the kind of biotech winter that we're, you know, only now just recovering from. But I was just curious, you know, if it was difficult in those early days, you know, with the market trending down after COVID and you guys, you know, just becoming independent or no?

8:13Simeon George, M.D.: No, I mean, it was obviously, it's just a weird time, right? Everything that was happening there. So that year, I mean, to give you some sense, You know, Ben, we got GSK's board to approve the spin out in mid-March of 2020, right when the world went into lockdown. And so, you know, I spent six months basically fundraising on Zoom, you know, traveling wherever I could travel to be able to talk to LPs. So it was a strange dynamic around which we were able to spin out and raise capital. But it was also equally, you know, we were fortunate that that was, as you know, a year and a couple of years where there was so much interest in what was happening in biotech, not least the vaccines that came, you know, from Moderna, from BioNTech, etc.

8:56Simeon George, M.D.: And so we took advantage of that window to be able to create that first fund. That first one was a 500 million vehicle. You know, we now manage over$2 billion across multiple funds, but we had that foundation again, GSK support, plus a handful of really compelling LPs that we were able to compel to join us on that journey. And so we had the war chest, if you will, to be able to deploy capital, provide revert reserves for our next set of companies that we invested in. And, you know, relatively quickly on the back of that, we raised our second venture fund. And so to your point, like there was, you know, we've lived through a biotech winter, I guess it's been called.

9:35Simeon George, M.D.: And we had capital that we could then preciously deploy and back ourselves in a way that, you know, has allowed us to continue to have quite a bit of success over the last few years. Is there a specific niche or a segment of the life sciences industry that SR1 maybe focused on initially post spin out? I mean, is that investment focus stayed the same? Has it evolved over the last six years? How would you talk about that, what you're kind of focused on? Yeah. I mean, listen, first principles, I mean, we always have to kind of continue to evolve and adapt to what's happening in our ecosystem, right?

10:15Simeon George, M.D.: I know we're going to get into China and AI, but, you know, the world is a very dynamic place, right? So the way that we're investing, the way that we spend time strategizing, first and foremost, We believe in sort of a proactive approach to how we think about generating ideas, product theses, et cetera. We leverage the strong pharma connectivity. Of course, we've come out of One Pharma. And now we have, I would say, really strong connectivity with senior stakeholders across the board. Like right before this meeting, I was on a Zoom with two heads of R &D of Big Pharma, right? Which is just like an amazing access point to be able to talk to individuals and triangulate with them on where the unmet need is, what products would make the most sense, et cetera.

10:57Simeon George, M.D.: And so we have, as I said earlier, like we've basically taken what we were very good at within GSK and we've taken it to the next level now in terms of how we've built that level of network access and our ability to invest has broadened. You know, while we were part of GSK, we focused, you know, mostly on early stage seed, company formation, series A, series B. Over the last few years, we've built the capability. We've added individuals on my team, including Jake Nunn, who come from the late stage private and public investment arena. And so we think of ourselves as end-to-end investors. And really what that means is we have a view of the world, a prepared mind.

11:37Simeon George, M.D.: We think about products and what the opportunity set is. And then we look at where is the right entry point from company creation all the way through late stage, private or public, to be able to deploy capital and generate a return for our investors. Okay, so all the way through late stage into commercial, into commercial companies as well? I don't know if we've invested in a, at the time of investment, a commercial company, but we've certainly invested in companies that have essentially a data set that they're going to go to the FDA with, or a data set that we're funding to that phase three. So probably Viridermics is the best recent example where we led the series C.

12:15Simeon George, M.D.: This is a company developing an oral minoxidil, a high-dose minoxidil for hair loss. We funded the company. They had about 100 subjects worth of data, and we funded the company through phase three readouts. And, you know, the company has had an incredible year this year. Phase threes have hit. The phase two in women has also shown ability to regrow hair, safe profile. And the company, you know, has, I think it's been the best performing IPO of any IPO that's happened this year. And so that is an example of late stage, some level of de-risking. Obviously, there's still additional development, regulatory uncertainty, but that's what we're underwriting towards.

12:55Can you tell me a little bit more, I guess, about the specifics? And you've mentioned that, you know, you have a broad lens for, you know, the biotech landscape, but are there specific things you look at just in terms of, I don't know, company location, drug modality. You just talked about clinical stage, but therapeutic area. How do you think about, you know, prioritizing companies and the criteria that you're using?

13:25Simeon George, M.D.: It's loose, but fixed, maybe is what I would say. So I run my investment team. You know, we have people that really I give them the ability to go out and express themselves in terms of what gets the most excited, you know, have a prepared mind, where are the areas that they think about from neuroscience to cancer to autoimmune. And we really sit around the same table, whether it's looking at an early stage company build all the way through late stage. And we talk about those ideas. But we're not pragmatic or dogmatic when it comes to how we think about entry points, modalities. Again, we're looking for compelling founders, entrepreneurs that we believe truly are world-class in terms of the capabilities needed at that point in time to continue to advance the program.

14:11Simeon George, M.D.: We are product-focused. We'll invest in platforms. CRISPR is probably the best example of that. But the platform has to be focused around a medicine in a particular unmet need that we believe is going to create significant value if we can hit that target product profile. But beyond that, there's many degrees and ways that we express ourselves And again, it can be what I described with viridermics, which you could say is low science, but I would argue is technically very challenging to be able to create that profile of molecule. And again, the unmet need is significant, as we all know. all the way through something like Arcelix, where I'm a co-founder of this company.

14:54Simeon George, M.D.: We started it from a blank sheet of paper. And again, there you've got potentially a curative treatment for multiple myeloma right now. When you've seen the data that's been generated and the impact it's having in patients that have failed multiple lines of treatment, and ultimately you've seen what Gilead has paid for half of the product rights this year, you can see the transformative potential of that molecule. So we can go from cutting edge advanced modalities, autologous CAR-T, all the way through an oral minoxidil for hair loss. Like that is probably as end-to-end as you can imagine. Yeah, I wanted to ask you about Arcelex.

15:32Rami Elgendor has been a guest on the business of biotech. Obviously, you know, the acquisition by Gilead in April for$7.8 billion. dollars. I wanted to ask, I guess, did what role maybe SR1 played in that transaction, if any, and if you had any insight into how that deal came together?

15:55Simeon George, M.D.: Yeah. I mean, again, first principle is like we're co-founder of the company, right? So there's a role here from start of this journey that I think is one of the most impactful things that I've ever done in my career. My colleague, Joe Carroll, served on the board after I transitioned off that board. Rami, close friend of ours, we recruited into the company to take on when we had an early data set that looked interesting, but at a time when, you know, frankly, the bloom had come off the rose when it comes to autologous treatments. And so, you know, we were able to really back ourselves and continue to invest in the company through those private rounds into the IPO.

16:38Simeon George, M.D.: And frankly, there weren't that many interested parties looking to invest in that sort of a company. The introduction to Gilead Kite came through our network, through the connectivity that I have with that organization. So that led to the partnership, of course, that we first did. And then ultimately, again, without saying too much, the process that we ran earlier this year with Kite Gilead. Obviously, there were relationships there with the team at Gilead that helped, again, I'd say facilitate the dialogue and ultimately get to hopefully what is a great outcome for Gilead, for our cell X, and most importantly for the patients with multiple myeloma who hopefully will have access to this medicine in the coming months.

17:21So you mentioned it's important to, you may invest in a platform, but you want to see, You know, I think what you were saying is a kind of a candidate with a dedicated indication maybe before SR1 would come in. Is that is was that the case, you know, like with our Selecs when the when SR1 came in or when you were co-founding the company? Was that did you already have the asset? And or, you know, are you is is SR1 willing to invest in something that is essentially at the idea stage? I'm just trying to understand, you know, where, what, what level a company might have to reach before, you know, they might look beyond, you know, SR1's spreadsheet.

18:03Simeon George, M.D.: Yeah, I mean, again, it is situational. In the case of our cell eggs, again, it goes back to the Penn connection, right? So, you know, I went to medical school during the time that, you know, Carl June was obviously doing his pioneering work in the autologous CAR-T field and followed it pretty closely after graduating. And, you know, we all saw that data in CD19, and it was unlike any other data set we have seen for these hematologic malignancies. And so fascinated by that area and, you know, strong, close personal connection with Ali Bebahani, also a classmate of mine from Penn Med and from Wharton, who was at NEA.

18:42Simeon George, M.D.: And so together, the two of us started this company with David Hilbert, who was the scientific founder. So at the time that we started it, we basically had the D-domain, essentially the underlying technology. And our thesis was we can use that technology to be able to develop a unique way of engineering these cells that could allow us to potentially, from a safety or efficacy standpoint, essentially create a molecule that could be best in class for these targets that we were looking at. And for BCMA, again, it was a way, again, to go after a slightly different target as well as disease area relative to CD19, which was obviously the leader in the CAR-T field.

19:25Simeon George, M.D.: And so that was, again, like the initial underpinning was a platform technology. But the use cases where we were thinking about from day one, we had a pretty clear sense of where we were going. And then, you know, as you should do, you follow the science and the data, and it just got more and more compelling around that first program. Yeah. I want to get to AI in China in just a minute. But before I do, I have maybe two more things I just want to ask about SR1's model. And one is on founders and company leaders. Are there any, I guess, characteristics that you look for or that are a kind of must have for a founder or company leader that is working at a place that SR1 might be interested in investing in?

20:09Simeon George, M.D.: I mean, again, so this will be situational, right? Depending on stage of company, sort of what the needs are of the business. I mean, probably the one that's top of mind right now for me is Dr. Zhen Li, who's the CEO and founder of 8RX, which is a company that just listed on NASDAQ a couple of weeks ago. And, you know, we've been an investor in this company for the last five years. And I mean, she's like within the first meeting that I had with her, you could just tell like There's probably no one on this planet that understands RNA medicines, specifically siRNA, in the way that she does. And what she had demonstrated across large pharma, as well as Arrowhead, was really second to none in terms of how she had built a pipeline from that understanding.

20:56Simeon George, M.D.: And so, again, when I've described her, I've described her as an N of one founder. There's a delimit of just world class. Like there is no one you'd rather bet on to develop a technology and turn it into a product than someone like that. And from there, obviously, as the company evolves and matures, you need to think about how that individual can recruit talent around them that can make up for areas that are not in their expertise, that are complementary to what they might be able to do. Rami is a great example, right? I mean, someone who is, you've interviewed him, so you understand just the power of his leadership, his communication style, his ability to build a team that is both diverse, but just incredibly capable across different dimensions.

21:42Simeon George, M.D.: And to bet on talent, right? Maybe talent that necessarily hasn't been proven in those roles before. And then ultimately to be able to execute. So what both Jen and someone like Rami shares, an ability to do things that just seem impossible, like just like would not be possible in most individuals' leadership capacity, right? So this is truly an outlier business. And I think probably we kid ourselves if we think that every company and every founder and entrepreneur is going to succeed. Like these are one in a thousand sort of individuals, and that's what we look for. And it'll be situationally, you know, you have to know the jockey for the course, for the horse that you're on.

22:19Simeon George, M.D.: But there has to be an element of like world class leadership that is demonstrated. And we need to feel that as we're making the investment. What about on the other side? So you're you you you see a company you maybe you don't have a close relationship or don't know the founder or CEO personally. You're doing your due diligence. You know, what are what are some red flags that will, you know, move you along, you know, to the next potential target? it? I mean, listen, there's, you know, oftentimes they're just, most of the times we say no, right? As you know, like we see hundreds of opportunities, we're going to invest in a handful.

22:59Simeon George, M.D.: And so it's not necessarily the case that there are going to be red flags. I mean, obvious red flags are going to be, there isn't the level of transparency or trust that you're building with the founder or entrepreneur. So how they're communicating with you, how they're answering your questions or voiding, giving you straight answers. We all have blind spots, but are they aware of their blind spots? How are they thinking about mitigating those blind spots, if you will? I think those are things that, you know, can cause us to take pause. And again, like we're, I guess we're just compelled by really interesting products that we believe fill, you know, important unmet need, right?

23:40Simeon George, M.D.: So differentiation, how you think about that molecule sitting alongside what the current treatments are, what's coming in the pipeline of large and mid-cap and smaller companies. So that understanding is really important to us. Yeah, I'd say those are the things that we focus on. Let's talk about AI in China. SR1 has his publisher report, The New Economics of Drug Development, focused on these two issues as the kind of key structural forces reshaping how drugs get made. On AI, the report talks about three different areas where it's making a substantial impact, target selection, molecule design, and clinical testing.

24:25Of those three areas, which do you think is currently underutilizing AI technology? Or in other words, where could the biggest leaps occur in the short term?

24:38Simeon George, M.D.: Yeah, I mean, listen, we have a very specific view and thesis here, which is to focus on early development and how do you use AI to really improve the ability to positively predict what is going to happen in late stage development by the decisions you're making in early development. And how do you essentially train and learn from early development by the reps that you're doing with the molecules as they're going through that system? And so we believe that is where there's the most dynamic ability to impact which patients, how to enrich which markers. Again, how do you essentially model what's going to happen to late stage development?

25:16Simeon George, M.D.: Because as you know, those studies are generally speaking, smaller number of patients, shorter duration, less cost. And so you get the most bang for your buck before you go into late stage where again, the time and the number of patients and the cost obviously goes up dramatically. The report references companies that have made deep investments in AI enabled data platforms and knowledge graphs built with great technical skill, but that ultimately struggle to turn these tools into products that that patients need and buyers will pay for. How should companies think about building a hybrid approach, I guess, that optimizes both the artificial and natural human intelligence?

26:02Simeon George, M.D.: Yeah, I mean, so, you know, again, I referenced this call that I was just on with these two heads of R &D, and we were waxing lyrical about this point. And the reality is, I think you have to start from first principles. You know, hopefully it's pretty clear in this call. We focus on the product. We focus on patient impact. So you have to start with what is the problem you're solving and then what are all the ways you're going to leverage China, AI, whatever it is. These are tools to ultimately get to what matters, right? And so when you have that sort of truth-seeking, true north approach, what it means is you should probably start with a team that deeply understands drug development.

26:39Simeon George, M.D.: Again, like that's where we believe most value is captured. And then alongside that team that is, again, development-focused, product-oriented, you then need to build the capabilities, the artificial or technological capabilities that can allow those stakeholders to ultimately do their jobs to the best of their abilities, leveraging those capabilities, right? So there needs to be synergy, but the piece that is critical is getting that development expertise and insights and product orientation into organizations sooner rather than later. And where we have, you know, I'd say been challenged or maybe we've spent too much time and cost associated with it is where we focus too much on the platform, the technology.

27:23Simeon George, M.D.: And then, you know, before we went after the problems that ultimately are going to drive patient impact and value. Yeah. So the person who is that like a chief technology officer typically? And I guess it might be different in a small biotech versus big pharma. But what is the you know, who is in that role? And maybe it varies, but who is in that role? typically that's actually not only selecting which tech, which kind of AI program, software, algorithms to you agents to use, but then also balancing, you know, the investment and use of that AI with the human workforce and implementing it. Yeah.

28:02Simeon George, M.D.: And again, like, let's acknowledge, Ben, these are rapidly evolving. Yeah, it's like the answer might change tomorrow, right? Yeah, right. So again, where we sit today, what are we, October 6th, 2026? Again, our belief is you need to start with someone that really understands development. So again, like a CMO, someone with that medical orientation that is surrounding themselves with, you can call it a CTO, you know, like people that are truly going to be probably AI native in a way that can allow you to decide what needs to be built in-house that is truly proprietary to the company. and what are the capabilities you can work with sort of off the shelf, whether it's the model, whether it's the partners that are out there that are obviously making inroads into our business.

28:47Simeon George, M.D.: And it's going to be a little bit of trial and error, but that's our thesis. You start with the core development capability, and then you add technology around it. And there should be enough crosstalk that is allowing both sides to benefit from the language that the other is speaking. Okay. All right. And just the core development capability is that I assume that's probably different for a big pharma company that has, you know, a vast pipeline and numerous clinical development programs versus a biotech that maybe has a single, you know, lead program or maybe, you know, one or two or three candidates.

29:26And I don't know if it's even possible to describe it this way, but is there kind of like a table stakes entry level, you know, capability with AI for for that that latter example for the startup biotech? Or is it going to vary depending on, you know, the drug modality or the therapeutic area or what have you?

29:47Simeon George, M.D.: Yeah, I mean, it's a great question. I mean, it is in my mind, it's like turning the traditional R &D model on its head. What I mean by that is right now, for all intents and purposes, we're sort of living in an analog world when it comes to what the TPP looks like that either a large company or a small company is working on. Like we have the TPP. Each group, each company has different functions that's working on basic research, preclinical, IND enabling, PK, PD, CMC. They're all sort of working towards that static TPP. What we're, I think, envisioning is a world where you basically have a dynamic live target product profile that is taking inputs across the spectrum.

30:29Simeon George, M.D.: It doesn't just sit in the silos. And it is reacting to data that is both internally generated on the molecule itself and the properties of that molecule. So it's adapting and adjusting as you move in real time. But it's also taking into account what is happening from a commercial or a competitive standpoint, because each of these fields, diseases is living in an environment where new data sets are dropping almost every day. And then you take into account what's happening in China. So if you're working on an analog TPP that was written even three months ago for, you know, pick your favorite disease, I guarantee you something has changed over the last three months.

31:06Simeon George, M.D.: And if you're not constantly updating, in our view, what the threshold is for what success looks like, you're probably not working in the optimum way. And this is where AI, we believe, has to be able to help connect the dots across these different stakeholders. And it's absolutely going to be easier to do this in a startup, smaller company setting than it is in an organization of 10 or 15 ,000 R &D employees in large pharma. Right. Right. Well, yes. Speaking of new data showing up, you know, every every three months, the speed and cost of new drug development in China is unmatched in the Western world.

31:46The report mentions private conversations that SR1 has had with pharma executives who are discouraged by the fact that Chinese companies can outrun their own in-house R &D shops, at least in some areas. The report also mentions the fact that the old playbook of going it alone in China, sourcing early assets there and running them through developmental or development clinical trials in the West is becoming an increasingly tough road for investors in biotechs. Well, first, let me ask, why? Why is that the case that this old playbook is becoming more difficult? And then what does the new playbook look like?

32:30Simeon George, M.D.: Yeah, I mean, again, this is a rapidly evolving environment that we live in, right? And so again, the answers I'm giving you now reflect where we are today based on geopolitical as well as just the overall framework for how we think about things. But again, first principles, there is no doubt that China is a significant force in the overall global drug discovery and development infrastructure right now. And it's only probably going to continue to increase and improve in terms of how much they're looking to do. And again, we'll probably get into sort of what they've said about five-year planning, what the ambitions are.

33:11Simeon George, M.D.: I think what it means, I mean, again, going back to the first question you asked me, like if I'm a patient or if I'm a physician, I don't care about where the drug was sourced, how it was, right? Like, does this work for me? Does it help me treat, cure, manage my disease, right? So I think for patients, this is an incredible opportunity right now, hopefully to see medicines that are gonna get to them hopefully faster, sooner, and ideally costing less, right? And there is a cost piece to this puzzle that we have to think about through the different stakeholders that we have in mind, right? So maybe getting to your question first, the reality is like everyone has noticed what is happening in China.

33:51Simeon George, M.D.: Pharma companies are doing deals. Investors such as myself are going and picking off assets. The Chinese pharma and biotech companies are recognizing the value that's being ascribed. And so it only makes sense that that playbook has to be updated, right? If there was an arbitrage or spread between sort of the ability to get a deal done versus developing in-house in Cambridge, Mass or Cambridge, UK, that spread is getting thinner by the day, right? So the playbook has to be updated. And I think that makes sense to do so. And what that looks like, I think, you know, from our standpoint, what it means is that capability isn't going away.

34:28Simeon George, M.D.: So we have to find ways to create an aligned structure or incentive to work with partners there. And it probably means exploring joint ventures or other ways to essentially do things creatively that take advantage of the capability that the players in that region have and take advantage of our taste, our connectivity, our ability to think about the global development and ultimately commercialization of the molecules. Yeah, one of the points that I found interesting in the report is this idea of doing discovery work and generating IP in European or U.S. labs, then moving the drug candidate to China for that, you know, faster, cheaper preclinical and early clinical development, the de-risking.

35:11Right. And then are there I guess so is that kind of what you're foreseeing the model kind of shifting to the IP originating in the U.S. and Europe and then doing some of that that early work in China to take advantage of the speed and costs? Is that what you're seeing start to happen?

35:31Simeon George, M.D.: I mean, I don't know if it's shifting from U.S. and Europe to China. I think IP is going to be generated everywhere, including. Sure, yeah. I know. There's no doubt they have an ambition to move towards, you know, from best in class to first in class over the coming years. Yeah, the five-year plan you referenced, right. Exactly, right. So that's going to happen. So I think it's, again, for me, it's how do you move as quickly and efficiently from your starting point of, you know, basic, you know, chemistry or biological substrate to a defining data set that, to your point, de -risks sort of the path forward enough for investors or strategics to say, you know what, we now want to continue to advance into the later stage, more expensive phases of development, right?

36:14Simeon George, M.D.: And so I think it's probably a transnational development framework that we are likely moving towards where there's some element of work that's done, and it can be the origination or it can be the early development that's done cross-border, and that can be China, it can be Australia, it can be UK. You know, implicitly what I'm saying is we are looking for a minimum friction from regulatory agencies globally where the patients are available and accessible and how we think we can ultimately move things smoothly from point A to B to C, etc. Yeah. I mean, the policy environment in this space is ticklish.

36:54To put it one way, there's been various actions that, at least I'm speaking from the US here, the Trump administration has taken a number of actions with regard to China. It's shifting, like we've been talking about, things are changing all the time. But I'm curious, you know, if you think that there's a potential risk, a regulatory risk that the U.S. or Europe could kind of tighten down or, you know, start rejecting or blocking, you know, early stage clinical data from China, for example. Or does that matter? You know, as long as like the later stage trials are conducted in markets where the drugs are going to be commercialized, like Like, is there, I guess what I'm trying to ask is, is there a potential consequence where companies are doing maybe phase one, maybe early phase two work in China coming over and, you know, trying to get started on a phase three and the FDA, you know, you know, questioning the quality of the clinical data coming from China?

37:59Is that a scenario that you think about at all?

38:01Simeon George, M.D.: I mean, again, I think for us, we are now, again, like I describe it as like, again, transnational or like one global development strategy. I'm trying to think about all the pieces on the puzzle board. And how can I start to build my own conviction around a particular drug, the mechanism, the impact, the clinical impact that it's going to have? What are the quickest and most capital efficient ways to do rigorous testing early on to de-risk, right? And so, again, I think it really is situational. In some instances, it's going to make sense probably to stay within the US or Europe or Australia to do that work.

38:37Simeon George, M.D.: In some instances, listen, it'll make sense to move into China. And let's not forget, I'm sure if you're sitting in India or the Middle East, you're looking at what's happening. You're saying like, we can probably over the next 5, 10, 20 years start to develop some level of capability that should allow us to also build up our ecosystem. Yeah, absolutely. Dynamic. But I think China is for sure a global player now. We have to have it as part of our ultimately development strategy in some way, shape or form. But ultimately, you want to have a path to the U.S. and European markets from a commercial standpoint.

39:11Simeon George, M.D.: And you have to think in a very front on way with how are you going to engage with the regulators in those regions that can give them enough confidence that the data set that you're bringing to them is reproducible. It's been QA, QC'd. It represents patients that are going to be similar to the ones in the local demographics. And again, I think the pricing pressure here is worth reflecting on, right? We all want to bring down the cost of drugs. And so if there is a way to do this that allows transnational global development framework, including China, to be part of that, I think from a societal level, that makes sense.

39:49Simeon George, M.D.: And we should be encouraging it as long as there are the appropriate checks and balances along the way. You referenced the fact that SR1 works with Chinese biopharma companies. I wonder if you could describe, maybe give us an example of that or describe an experience you've had with companies that are set up in China, Chinese biotech companies. Yeah. So, I mean, to this date, we've now invested in, I think, eight companies where assets have been sourced from China. The companies that we have invested in are U.S. or European entities. So we have not directly invested in China, but we've developed close relationships with local partners, done deals with them, sourced assets, and then put them into Nucos.

40:35Simeon George, M.D.: And so, you know, examples are like Xenus or Venzo or Winward, most notably, where, again, we've taken clinical stage assets in certain instances and then, again, thought about the global development plan for those products. And as I said, that arbitrage around time and cost to be able to get those deals done has probably narrowed since when we did those deals, even two, three years ago. And so on a go-forward basis, the conversations we're having with local Chinese entities is around, again, more of a aligned structure, a joint venture, which would allow us to essentially not only do one-off deals around specific assets, but potentially do a pipeline of projects with them, right?

41:19Simeon George, M.D.: where there's ownership and skin in the game for them in the entity that we're putting together. We are providing some level of, again, taste, access on where we think pharma is moving. And the local Chinese partners providing the capability, the resources to be able to design the molecules or give us access to the molecules. I wanted to bring up this idea that I heard from Syriac Roading on a recent episode of the business of biotech. And it's on this issue of China and the U.S. competing on innovation. And, you know, he brought up some other things I hadn't thought about, which is, you know, like drug shortages, for example.

41:59You know, if a cancer drug goes into shortage and it's, you know, made by a Chinese biotech company, you know, maybe you're not getting it in Europe or in the U.S. as just as as one consideration. But what I wanted to bring up that he mentioned was just on this broader topic of U.S. and China competition and biotech. He mentioned the idea of a sovereign wealth fund. And it's something that I think the Trump administration has has either tried to enact through an executive order or has proposed in recent times. I haven't looked at the status of that, but my understanding is that ultimately they couldn't figure out, you know, like how to fund it and how to administer it.

42:40I don't think it's it's gone anywhere. But I was just curious about your thoughts on that, Simeon, like a U.S. led sovereign wealth fund for preclinical and early stage biotechs that would focus specifically on the kind of valley of death period where so many companies, you know, with potentially really good science just fail. Do you do you like that idea? Do you think it's a bad one? You know, what would you say to the sovereign wealth fund idea?

43:08Simeon George, M.D.: I mean, I like, I think we should be thinking outside the box right now, right? A lot of what we just talked about are new concepts that are taking shape just in the last few years. You know, for me, principally, like the problem in the US is not necessarily lack of access to capital. Like there's capital that's available across every part of the value chain, certainly more than any other place on earth at this point. Yeah, more and more going to China, though. That's true. But at the same time, from my standpoint, you know, what I worry about in the U.S. is, you know, basic research. For example, the NIH, like having cuts there that ultimately will have a union to long-term effect on how we continue to have the most talented scientists that are well-funded and aligned with continue to take basic science innovation that ultimately translates into industry innovation, right, and product innovation.

43:57Simeon George, M.D.: And so for me, the idea of a sovereign wealth fund necessarily isn't necessarily getting to where I think we need to focus our efforts. I think it's making sure we're funding basic research, making sure that, again, there is a way to cut out friction as you think about the regulatory frameworks and the pathways around which we move efficiently molecules forward. So there's clarity of where the end posts are. There's consistency around how we're applying those rules for the molecules and the modalities that we're talking about. there's the right level of talent that is staying engaged in this ecosystem rather than going elsewhere because funding is changing.

44:33Simeon George, M.D.: And so for me, like the sovereign wealth idea, again, it's an interesting idea. But for me, the things that I described are probably more top of mind at this stage. Yeah. Yeah. Well, while we're on kind of out of the box ideas, I'll mention one more and get your thoughts on it, Simeon. And that is the implications of CalShe and Polymarket opening up betting on clinical trial results. And I think it's I'm not sure if it's both, but I think both have made it phase three and later, phase three and like FDA approval. But I'm curious, you know, what you think about that? What are the you know, what are the implications?

45:12What are the potential unintended consequences?

45:16Simeon George, M.D.: Yeah, I mean, candidly, it's not something I think a lot about or spend much time. I would say it's an interesting sort of barometer, I guess, of where, you know, think of it as like a polling based on the sample size and sort of the way people are thinking about aggregating information and forming a certain view. Oh, so like the way a company's message is breaking through, maybe like a narrative about, you know, an asset. Yeah, but candidly, I don't think we should confuse that, the belief system or the way that communication is being. With scientific facts. Ultimately, with clinical evidence and scientific facts, right?

45:56Simeon George, M.D.: So the thing I care about, going back to first principles, like ultimately, these are patients in clinical trials. Like you want to make sure that this does not have an impact in any way, shape, or form on how patients are continuing to enroll and stay in these trials. Like there's some levels of leakage I worry about, whether it's at the investigator level, CRO level. And I'm not sure, candidly, like there are ways for this to be manipulated. Again, you can think about from a trading standpoint, et cetera, that doesn't help ultimately what I care about, which is ultimately moving products to patients and having patient impact.

46:29Simeon George, M.D.: And of course, creating value through the way that we're investing in those companies and things that take away from that. True North for me is not worth necessarily spending a lot of time on. Yeah, well, thank you for fielding that question. I saw that news pop up recently and wanted to ask someone about it. So thank you. Thank you for your thoughts on it. Simeon, we're coming up on the end of our time here, but maybe we could just end with your top priorities for the rest of this year and maybe the first half of next year. You know, what are the issues and trends that you're watching? What are your top priorities?

47:03Simeon George, M.D.: I mean, listen, I think we've had a really robust discussion. There's so many forces right now that are taking shape. And so my priorities are making sure that I'm thinking through with first principles, how do we take what's happening in China, this immense technological advance with AI, how do I make sure that it is getting infused into blueprint of how we think about the business model of biotech, at least the SR1 lens in 2026 and beyond. And so, again, a lot of what we've just talked about are discussions we're having internally. We're expressing those ideas through companies that we're starting or we're investing in.

47:39Simeon George, M.D.: We're trying to stay engaged in what is a rapidly changing ecosystem. But at the same time, there is the blocking and tackling of the day job, right? We're managing a portfolio of 60 companies. I mentioned 8RX as an example. We've had, I think now, four IPOs, two M &A events, hopefully a number of other important events to follow. And most importantly, we have medicines that are sitting with the FDA, including the Arcelix drug, Anetacel, as well as the Mineralis drug for hypertension, which we expect hopefully by the end of this year to have regulatory clarity around. And then it's commercializing medicines that are going to have hopefully massive patient impact, right?

48:17Simeon George, M.D.: Because that's ultimately what we care about. And so those are the things, right? I'm sure next time we speak, there'll be new forces that are taking shape or changing this conversation. But that true north stays the same. Well, I would love to have you back in the future to talk about the new issues that we don't know what they're going to be at Simeon. But thank you so much for taking the time today. I really appreciate it. My pleasure. Thank you. We've been speaking with Dr. Simeon George, CEO and co-founder at SR1 Capital Management. I'm Ben Comer, and you've just listened to The Business of Biotech.

48:51Find us and subscribe anywhere you listen to podcasts, and be sure to check out our weekly video cast of these conversations every Monday under the Business of Biotech tab at lifescienceleader.com. We'll see you next week, and thanks as always for listening.

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