Picking Biotech Winners Beyond The Hype Cycle With Andera Partners' Olivier Litzka

0:03Olivier Litzka: Welcome back to the Business of Biotech. I'm your host, Ben Comer, Chief Editor at Life Science Leader, and today I'm speaking with Olivier Litzka, partner at Andara Partners, a private equity and venture capital firm managing over$6 billion in investment funds. Olivier is a partner in Endera's life science division, and I'm excited to have him on the show to talk about how early stage and growth stage biotech companies can attract capital, build resilient businesses and navigate a market shaped by hype cycles, policy changes, AI and China. We'll also talk about the work Endera Partners is doing to improve the venture capital ecosystem for biotech in Europe as part of the European Life Sciences Coalition.

0:48Olivier Litzka: Olivier, thank you so much for being here today. My pleasure. Thank you for inviting me, Ben. Absolutely. I'm happy to have you on. I want to start off with your background, Olivier. You earned a Ph.D. and worked as a research scientist in molecular biology before doing some management consulting. I'm curious what you liked and maybe what you didn't like so much about conducting research. yeah that's uh i have to go back way back so so that's long time ago but i liked uh the in research i liked obviously the the progress the curiosity the moving forward and discovering and finding some new stuff and then uh drawing conclusions and this is something which i i like i still like today actually and what i was missing was a little bit the practical aspect of all that so yeah application okay that's exactly so i went to consulting for the business side without doing maybe a phd as an exotic type of guy to the consulting piece but it was a great opportunity because before then joining the venture capital scene in the 2000 years do you think your research experience provided you with any skills that you use now as an investor?

2:13Olivier Litzka: I mean, does it help you evaluate companies having done some work on the research side? Yeah, I think it helps to continue to be curious, to be scientifically interested. I think that this analytical Practical progressing in looking into something deeper, deeper, deeper and broader helps. But it needs to keep room for all the other aspects of a biotech business, obviously, which is not the research, which is not the science, even if it's at the core of what these people do and what we all do. But there is a lot of people aspects. There is a lot of IP. There is a business plan. I mean, there's a plethora of stuff to look at, but the initial appetite for something new is something which drives you forward and keeps you up, actually, also when it becomes sometimes more difficult.

3:16Olivier Litzka: Yeah, and I would imagine those new and novel ideas help to kind of pull in those other constituent parks or catalyze them, right? If it's something really exciting, something brand new and innovative that's never been tried. I mean, is it easier, you know, for those other pieces to come together? Or maybe it's more difficult. I don't know. well innovation is finding something completely new but it's also innovating something which is sort of known and then you go for something which is best in class this odd differentiation between new class versus best in class i mean innovation can be found at different in different levels at different stages.

4:01But it is clear that without this innovative part, it is not a good idea to get started because it will be a marathon, if not a triathlon or something more in most cases. So getting through the triathlon, you need to have a really good basis at the beginning.

4:19Olivier Litzka: Right, right. For Olivier, for listeners that may not be as familiar with Andera Partners, Can you describe the firm's role in European and global life sciences investing? I mean, is there a specific sweet spot that Andera Partners is working in within the industry? Well, I mean, we have become a leading player in the life science environment for investing in biotech and medical technology, by the way. Okay. For the last 25 years, now we are one of the big ones, sort of Champions League. You know, there are 10, 12 funds like us in this space with whom we obviously also cooperate. And we are, I think, identified also the US as a very good partner to partner with.

5:13We do this for 25 years. We invest from the seventh funds, which we are in the midst of raising. We had the first closing, continued to raise and have already done investments. The last fund number six was 450 million euro size. The next one will be 20, 30 percent larger than that. We invest in Europe and the U.S. So I think we are both sides of the pond with different strategies in the different geographies, of course.

5:42Olivier Litzka: okay so do you are you investing exclusively in europe and the u.s or do you ever go out outside of those europe's obviously more than one market but um do you do you go outside of europe in the u.s yeah we have sometimes technologies out of israel we have we look more and more with also with a chinese colleague which you look into chinese technologies of course but the bulk or Canada, of course, but the bulk is Europe, U.S. for the time. What about the types of companies that you're looking for right now, Olivier? I guess just in your current role as, you know, thinking about the work that you do at Endera Partners, what kind of companies are you looking for, you know, or, you know, what tends to catch your eye initially?

6:34So maybe one step back, I would like to just explain how we approach things. Because if it's too stereotyped, then maybe founders or CEOs listening to us might not really understand where we are coming from. So we try under one roof, in one fund. we aim to invest somehow in earlier stage companies, in more advanced companies, and in later stage companies. 20 % is really very early and initial, maybe company creation, 20%. Then 50 % will be sort of a mix of Series B and companies which have already a nice preclinical proof of concept, maybe already Phase 1. And then there is the more advanced, which is about 30 % of our fund, which can be a company which is already listed in Europe and transfers to NASDAQ, or it's a late-stage medtech device company who is going into commercialization.

7:41So under one roof, no different fund, we try to tackle these different type of companies.

7:50Olivier Litzka: Okay. And it is all sorts of indications. We don't want to be overexposed in one or the other, especially not the ones which are currently in the hype phase. We will select some of those areas as well, but we'll not overexpose ourselves to that. And as I said, biotech and medtech. Biotech two-thirds, medtech one-third. So within this scope, you can put a lot of diversity, right? And if we have done our 20 % early, we will probably not do another early stage investment anymore. And this will be confusing for people who think, why are they doing early stage? Why did they stop? So we didn't stop, but we need to balance it.

8:44Why? As every VC, we are part of a food chain. Our money doesn't fall from the sky. We need also to do this job, which every biotech CEO has to do. We need to fundraise. We need to go to institutional investors, explain our strategy. And these guys are interested in life science when they join, but they're also interested in seeing returns. And they don't want to wait 10 years until they see the first returns. So we can afford to do some earlier stage stuff, which will take longer in their development. And while we also have later stage companies in the portfolio, which might go into an IPO or trade sale after three, four years already.

9:28If you manage that well, we are in business with these people and we have done the means to invest in biotech and nettake companies. I see.

9:39Olivier Litzka: So that's a quite large scope. You're essentially indication agnostic. You're following your investing in companies across the entire life cycle from preclinical all the way up to to commercial. But you're balancing your portfolio. So, you know, you went through the percentages. I appreciate that. I wonder where I have a couple of questions I want to ask you about the earliest stage companies, preclinical companies and kind of what you're looking for there. But is there an example of something that maybe in the later stages, a company that's either commercial already or is very soon to be on the market or, you know, a more mid-stage company with a phase two or maybe going into a pivotal phase three study that you look for?

10:28Olivier Litzka: You know, that you say this is a you know, this is an Endera company. This is someone we want to invest in and in the middle or kind of later stages of company development. I mean, it's a little bit easier for me to talk about what we did in this spectrum. You can take, for example, Abivax, this French company, which was on Euronext and was there for quite some time, which is a company which is in the immunological space for ulcerative colitis. sorry yeah and um it it has it had interesting data it had interesting data and then there was also a change on the helm of the company interesting data and someone came in who we knew for many years we which we like very much and with who we have done business ceo called mark de garry dale and he joined this company and then there was the plan to to transfer the company to the US and to run a phase three trial.

11:40So we supported that heavily. It became listed on NASDAQ and then it generated outstanding data. Now, generating outstanding data is possible when you, especially in this indication, when you run a really fantastic trial, super controlled, avoiding mistakes. And that's what they did. And they came out with outstanding data and a small company, which was worth a couple of hundred million on Euronext, became a multi-billion dollar company now on Nasdaq. so here this this bet on good data which will be confirmed in a phase three came out positive right and financing then once on nasdaq and with good data is obviously a machinery which works well right the management was extremely potent and really really good in doing the right things and it worked out well for us and for the company.

12:48And there is a potential for a really game-changing drug soon on the market. So that's an example on one side. And actually it went public and we were able to sell parts of our shares, not everything. We are still shareholder. We like the company and the team. But it helped relatively early on in the life of the fund to generate liquidity, which we sent back to our investors. And they appreciate that, obviously, a lot. Because, you know, they want to see coming back and then they will be confident for the next fund. That's the game we are in. I think it's very important that CEOs, founders look behind the VC.

13:33I just had another discussion on the preparation of a panel. It's a theme I'm very, very passionate about. We need to know, every one of us needs to know where we sit in the food chain and understand the needs and the desires and the requests and the challenges of the other party or the other side of the table. VCs are not the guys running around with money. They are the guys having money if they have achieved something well with their fund and being able to recurring fundraising.

14:06Olivier Litzka: Right. Well, thank you so much for that example. I think that really helps illustrate what you're saying. You saw this phase two data. You were familiar with the indication. You looked at the trial design and were reasonably confident that they would be able to replicate it in phase three. And you were right. So that's the example. Yeah. And the people. And the people. To do that, right? Very professional people. I want to ask you about the earlier stage companies that you're investing in. I know there will be interest among Business of Biotech listeners, in particular on that sector. How do you balance scientific novelty, Olivier, with practical development risk, you know, IP strength, eventual commercial potential uh are there other factors people i i suspect you're going to say people is one of those other factors but uh how do you balance that how do you think about it when it's the a really maybe just a really good idea well you cannot a really earlier stage company and i would i would give you an example on the other side which turned out well for us i I mean, there are also examples which didn't turn out well for us, right?

15:26And no problem to say that. And, you know, some early stage companies, you just need to sometimes go for it and test it. And then you do it, obviously, not with a huge amount of money. You do it with a syndicate. And there will be a team which is partially experienced, partially non-experienced. The science needs to be replicated in another model, in another animal model. and you know you don't know yet but if it would be successful then it will be very important for developing nets in it then can happen that the redoing of the experiments doesn't work in a new animal animal model and or the people turn out to really not be experienced or, you know, enough.

16:21And then these are things which you can then help to adapt and to improve. But if the underlying science doesn't work out, then it can also be over rather early. So we need always to think how we can cut the losses early when a scientific rationale does not deliver what it should deliver.

16:50Olivier Litzka: And it's not a black and white and immediately turning it around or pulling the plug. That's not the point. You can still try something here and there, but if there is no way forward, then that is how we balance the risk. if this was your question about how you balance the risk, right? In other situations, I give you an example, Trupulis, a unique company in the ADC space. Sorry, what's the name of that company? Trupulis, a Munich-based company in the ADC space, and now everybody will think, yeah, of course, ADCs, etc. But, you know, it was five, six years ago, 2022, I think, my colleague entered with an investment into this company not everything was clear but it was a very good team they hadn't accumulated tons of experiences at other companies yet but they were extremely smart and they were in particularly extremely smart that they had built a very broad network already so they had talked to many people included a lot of feedback from outside, had hired very talented and also experienced people later.

18:18They were open for discussion, for an exchange. So the programs at that time were, there was even a clinical program, but we were not so excited about this clinical program. So there was a discussion, should we go back into preclinical? And that's what we did. and the other one was partnered. And then we entered and it was not even clinical in the clinic, right? So, and this company worked out extremely well. They raised enormous amount of money. They had really good science. It was a linker technology, right, for ADCs. And this technology is very versatile and they showed it. And then they generated very appealing initial clinical data.

19:06and to cut a longer story short this company could have gone public, they had already the American investor which had joined at the last round, had really a lot of money in the bank and they could have gone public but they then got acquired by Gilead for this technology and for the program keeping the site here in Munich where I'm sitting in the office by the way so they they succeeded very well and us with them as well this was an earlier stage company but in five years they sort of got us to an accident right so that was an exceptional example in ADCs five years ago not so clear where it goes but in 2026 when they got acquired it was really an asset pharma companies were extremely interested to add

20:03Olivier Litzka: so that's so right and yeah i didn't talk about the one but i mentioned that we have some from time to time where where the early technology doesn't work out listen our job as i understand it is interacting with companies and the people helping where we can providing the money with others yes but helping where we can that the company fails for the good reasons if it has to fail right and avoid failing for the bad reasons failing for the bad reasons that's not having the right people not having the right clinical trial resign design um uh overlooking regulatory obstacles um uh not not ever thinking about maybe you know market access reimbursement what will be the pricing how big is the medical need really avoiding to be too focused on the technology and then someone else with another technology will have the better data and then you might be the best in your technology but nobody cares because with the other technology they address the clinical problem and we still do some mistakes of course overlooking something sometimes it can be repaired sometimes not but that's actually When the interaction between a board and the team is working very well, then the danger zones and the potential mistakes are identified, the risks are identified, discussed, and you try to deal with them.

21:52You see what I mean?

21:53Olivier Litzka: Yeah. The thing is hitting the problems really hard and going after them and trying to solve them. And no sugarcoating, really, you know, taking the two, three items in each board meeting and really concentrating on improving those. That is a good cooperation. Yeah, well, it seems like, you know, a good use of Andara Partners expertise as well, if you're willing to help companies make that pivot. We all know scientific experiments don't always succeed. They fail. That's why they're that's why they're experiments. And so what you're saying is that, you know, and we've seen many, if not most early stage bio companies have to pivot at some point.

22:43Olivier Litzka: Something doesn't go exactly the way that they expect it to go in the clinic. What you're saying, though, is you're willing to advise, help those companies and to the extent possible, move them in a productive direction. Is that what you're saying? No, that's how we really try to see our job. And then one is it. Yeah, go ahead. It's middle trust and reputation on both sides. Right. And this is my observation. If there is an openness for this exchange, it will be good for the benefit of the company. And keep the convinced about that. You've talked about how you think about portfolio balancing in terms of early stage, more risky investments versus later stage, perhaps de-risked or less risky investments.

23:37Olivier Litzka: But how do you think about balancing portfolio across geography or therapeutic areas that the same kind of calculus there? You're willing to take some big risks in exchange for some lesser risks. I guess, how do you define that in terms of modality or geography? Okay, we spoke about already the early, mid, late stage, right? That's the balance. The geography, as I mentioned, two-thirds of our investments are in Europe, where we can be a bit closer to the companies. And a lot of people also invest in earlier stage things out of university, you know, which is more rare when we invest in the U.S.

24:23Although sometimes we are with the startup CEO. If you know this person extremely well, then we can do this startup. We have done one or two in the med tech area where it was really from day one. But as a general theme, we will be a bit more later stage when we invest in the U.S. And in Europe, it's really everywhere. It's basically everywhere in Europe that we can find outstanding opportunity. We see something like 1 ,500 opportunities a year and many European countries. And, you know, we have investments, obviously, in Germany, France, Benelux, Switzerland, UK, but also one or two in Italy, in Spain.

25:11I mean, there is great science in Europe, and there is returning entrepreneurs with their second or third company, sometimes mixed with younger scientific champions. and so we have an extremely good ground of innovation in europe and it's up to us to help them then to build the appropriate syndicate smaller ones don't need a huge syndicate but if it advances clinical studies it's our job to build strong and large syndicates have the financial means be able to you know to achieve your milestones and that's on geography and in terms of modalities we're really very open for yeah it is yeah i mean and and indications as well yeah good now um we look in cardiometabolic and we have done one or two investments but we have also not done 10 immune oncology investments when in the 2020s everybody was thinking immune oncology is the thing right?

26:37Suddenly there were I don't know how many thousand companies and how many clinical programs which all went into somehow a combination trend. I mean when you saw this number, the sheer number this is not sustainable.

26:54Olivier Litzka: Yeah, I Got to the point where Peter Marks at the FDA said, no more me-tos. And now, how will this be in cardiometabolic? But there is a lot of medical need there. There are different ways how to address the problem. So it's an exciting area, but you need to be careful, right? And we don't want to be overexposed. So we have stuff in areas where we also have several ADCs, but very different ADC companies for different reasons, quite unique. So we are in these areas which have a lot of attention at the moment. Otherwise, it would not be smart. But you have also areas where you think, you know, isn't that an area where there are enough medications?

27:46For example, hypertension. Hypertension. So we invested five years ago in a company, a U.S. company, with nice phase 1b data in refractory hypertension with a new mode of action, aldosterone synthase inhibitor. The company is called Mineralis. And I mean, hypertension. Can you imagine? Why should you? There's enough drugs there. Yes, but there's 20 % of refractory patients. One out of five patients are not treated properly. Still not good drugs. And aldosterone synthase inhibition is a pathway which adds something new. And this drug is exceptional. Long story short, it became public. It got a big financing, then went public, and now has conducted a phase two and phase three trial with outstanding data.

28:45So, you see, even in times where this and this is very fashionable and pharma is super interested in this and that, we look also right and left and find companies which bring innovation in areas where you think it's all done. We had examples in epilepsy, same thing, refractory epilepsy. uh yeah so these are examples of areas which are maybe i don't want to say it's overlooked but at least we don't we look at them even if they are not completely in the in the current fashion

29:24Olivier Litzka: does that make sense it does there's uh there's a still plenty of unmet need out there and you the the harder you look for it the more you see of it you're right yeah and as i said we also do medtech it's not uh the topic of uh the the day here and this in this in this discussion this is of biotech podcast but uh we do a lot of medtech and medtech also addresses you know when the biochemistry and your body cannot really address the problem anymore if your heart valve is worn down right it's over you will not do it with a drug you need a replacement so this is where MedTech comes in, and it can be very exciting as well.

30:06So this is how we approach the life sciences as a complete picture.

30:13Olivier Litzka: What about size of investment or quantity of investment? I think I saw on the website 15 million to 60 million. I don't know if that's accurate, but is there a kind of typical amount that you would invest initially in a company and then as a follow-on round? Or do you have a lot of leeway to kind of change those amounts as it's suitable? That's exactly what you say. You know, if talking about Abivax, this company wanted to run a phase three try, you know, you need to come with significant means. This is a$20 million,$25 million,$30 million ticket. And then if it's an early stage, new technology, then with two, three others together, we might put in two or three million.

31:05That's it first to start with. And then comes the Series B or if maybe it's sometimes it's even the seed, then can we go into Series A? So we go progressively with the amount of money, you know.

31:18Olivier Litzka: Okay. can very much be adapted to the needs of the company and the stage of the sites. And then what about investment model? And I'm thinking of things like tranche investing towards specific milestones or catalysts. And I guess I'm asking you this in the context of preclinical, really early stage businesses. Is there a kind of Andara partners model or practice that you tend to follow in terms of, I guess, the terms of the investment? Or is that kind of different depending on company as well?

32:02So, I mean, there is no specific recipe in that sense, but I think it's quite rationale. now that, for example, you go into something which is seemingly proven, but you need to take several milestones, then, of course, it's good to tranche, and it's good not to be alone. If your company has delays, run into issues, you want to continue, it's better not to be alone, and maybe your two or three syndicate partner, they're all milestones, and you restructure the milestone, you try it again and again, and then hopefully it works. So, yes. Then in clinical stage, late stage company, there are some who always want to tranch in small pieces.

32:49And this is where we would say, listen, there's a large trial to be done. Where's the purpose of tranching? No purpose. There's no rationale to go for tranching if there is no interim readout or anything. I mean, you need to run the trial and get the data. No need for tranching. It's really company by company. We have an example in a company here in Municode Syro, which is again in immunology. And it's a new pathway. It's a new target in known pathways. So what did we do? We were very happy to be in a syndicate of five investors with a 50 or 60 million financing round in tranches. So you are several investors.

33:48You can go very far if needed, including phase two, but you tranches. And if you see something coming up, you see an issue, well, then you can restructure the amount of money and the people will sit together and find a constructive solution. That's a good position to be in, right?

34:07Olivier Litzka: Yeah, absolutely. I want to be sitting there and you're alone and, you know, what to do. A lot of the investors I've had on the show previously, Olivier, have talked about the importance of focus as a business grows. You mentioned to me previously that companies get derailed and can move laterally as opposed to kind of locking in and staying on course. What are some of the derailment factors that you see happen in companies? Or I could put it another way, how can companies keep the train on the tracks as they grow? Well, I think we tackled a little bit of that in the discussion already, but it's really about putting a plan together, aligning people on a plan and executing well on this plan.

35:02And that's, you know, and then comes obviously the nice saying, everybody has a plan until you get punched in the face. Clinical results can punch you in the face, right? But as I said a little bit before, let's try to avoid being derailed for bad reasons.

35:26Olivier Litzka: Yeah, what are some of the, yeah, let's talk about, clinical can definitely punch you in the face. What are some of those other flying fists that companies might encounter? A syndicate where investors have so high pressures that they don't want to pay out the second tranche, although the milestone is basically reached or it's fundamentally reached. You need to have a coherence. The rare it can be that the government isn't good. Now I have talked about an issue in a VC syndicate, but there are also issues on the management side. Sometimes they just don't talk about the re-problems. It's about sugarcoating the situation.

36:13You know, that can derail a company heavily if suddenly something comes up and there's a huge surprise factor of something which we didn't know. CDMOs you use CDMOs and they can't deliver in time not capable and then I mean if you advance and you go into a listed company poor communication to the market and things like that can also derail a company for bad reasons so So putting a good board together and a good management team and a good communication atmosphere, honesty, addressing the issues. I mentioned this before, but I repeat myself because I think it's so relevant.

37:11Olivier Litzka: Fears repeating, yeah. Talking about the real stuff, right? And then addressing it. And hand-waving is always a problem, right? it will be okay it will be okay that's that's dangerous yeah it might not be okay scientific failure will happen because the biology is um is always very often more complicated than you think we will talk about ai i'm sure but uh if ai would solve everything you know we didn't need we wouldn't need clinical trials we do need clinical who tries. Why? Because the biochemistry and the biology is more complicated than we think, because it's only based on the current knowledge, and this is not perfect.

38:04Olivier Litzka: Right. Right. Yeah, we will definitely get to AI. I have a question I want to ask you about that. But before we do, I mentioned in the introduction that Andera Partners joined the European Life Sciences Coalition, which was a group that I was not familiar with. So in case some others on the call are not familiar with the European Life Sciences Coalition, Olivier, can you tell us a little bit about it, what the purpose is, what problems it's trying to solve? Yeah, so it's actually a coalition of the major VCs in Europe growing. growing as we speak, months by months, more people joining and some law firms and some biotech organizations.

38:55And the idea of it is to basically address, hopefully, those things which inhibits European innovation to be successful in the market, especially as a differentiation to China and the U.S. I mean we have incredible innovation here we have fantastic science we have also the people and we have mostly the financing but not at the level where it's needed and we have a set of policies which are right to be there but they are too complicated and take too long and then third we don't have still we don't have a Nasdaq like public market so I repeat The things we would like to address and communicate more and explain more and be more transparent about and requests for changes is policy on the EU level and on national level to make things more practical, easier and faster without, you know, reducing the quality which these regulations are for, of course.

40:19no regulation without any sense, but it needs to be practical. So we want to make them practical again. Second, we would like to make sure that more institutional investors get interested into the life science sector. Institutional investors investing into VC funds so that VC funds have the means to support the companies. There is an imbalance between the US and Europe with pension funds and insurance companies investing in the venture capital and life science. We would like to improve them. For that, we need to communicate more, explain more, be more transparent, and also then require cultural changes to say, this is an interesting and important sector and we want to be part of it.

41:12Right. Third, we would like to make sure that is something for the midterm, that a Nasdaq similar market evolves and becomes stronger and potent. because I'm part of those who say and said that a European company with good signs, good people can sooner or later go on Nasdaq to refinance and move further. That's true. But on Nasdaq, there is 80, 90 % of the money which is invested in Nasdaq is US money. And that means that the wealth generation is then happening in the US. I mean, it's fair. It's a fantastic place to get financed, get analyzed, get followed, get challenged, but also get rewarded.

42:12But if it all happens in the US, the wealth generation will happen in the US. And that cannot be the interest of European innovation on the long run. cannot be there to go. So these three points we try to address with this coalition, and we will make sure that we talk about it at many occasions.

42:37Olivier Litzka: I want to ask one follow up about the exchange building up a viable or even attractive alternative to NASDAQ in Europe. I guess just, you know, how do you go about creating that and And how far off do you think that is from becoming a reality? So 2014, 15, we were all hoping that Euronext could become that place. And Euronext, as you might remember, was an assembly of Euronext Paris, Euronext Brussels, Euronext Amsterdam. It wasn't important which city you listed, but it was a common marketplace called Euronext. It was successful for raising capital, not in the amounts as a Nasdaq today, but still.

43:27But then it was not a place for the companies to grow, to further raise capital. There was not enough analyst coverage. There's not enough public investors, European public investors, to follow these companies, to continue to invest. It was a lot of retail, and that's not the right balance. So there were a lot of deceptions on Euronext, and that's why many Euronext companies now, Abivax, Inventiva, examples from our portfolio, switched to Nasdaq in addition to their listing on Euronext. If this market would be stronger, I don't think we need to reinvent a new one. I think probably Euronext is the right place, but we need to structure it differently.

44:17We need to make it easier for investors to invest and to follow and to support the company. So it's not, I know what you want to say, Ben, it's not something you can change in two years, right? Of course not. But there needs to be an understanding that there is a an opportunity and be a need for such a marketplace. And this is not necessarily established in all the heads of those who are responsible for making sure we get one one day. Right. Right.

44:54Olivier Litzka: We mentioned AI just a minute ago and China. I feel something of an obligation to to bring these two topics up when I have an investor on this show, at least a question or two. But let's let's start with AI. And to a point you just, you know, made a couple of minutes ago, I've seen some articles coming out recently talking about the difference between engineering, AI and engineering and AI in biology. And the difference being that there are so many unknowns and so less of a closed system of rules in biology than there is in other engineering fields. So and there seems to be a little bit of pushback on, you know, maybe what AI might accomplish in the short term in biotech.

45:41Olivier Litzka: However, lots of companies are using it successfully. It's moving forward. My question for you, Olivier, is is AI at this point table stakes for biotech companies that you're investing in? And is there a distinct application of AI that virtually all new biotechs are using at this point? And maybe not.

46:08I think most of the companies now use it at every single development step in one way or another. as in one extent or another extent, heavily or less heavy, depending on the tasks in front of this specific development step, be it compound selection, be it testing, be it preclinical, et cetera. With AI, you can obviously improve already significantly every single step. Sure. then you need to get to testing. And testing for a foreseeable amount of time will be in the lab, in an animal, in a phase one, in a phase two. And you need to find out whether all this knowledge, because AI is based on the knowledge base, which is fed into AI, whether this knowledge base was sufficient and the artificial intelligence which integrates all this knowledge is sufficient to prove true in a model in a human being in a healthy volunteer human being then in a ill deceased a human being and proving whether all the right the great human intelligent thinking and i and i I think the thinking leads to a better outcome.

47:43The proof is still out there. I understand now that pre-selection of patient population has already shown to be very strong through AI. So that ability of successes in phase one so far, as I understand it, could or has increased. We will now see when it moves forward how it is in phase two, phase three. So, in short, the productivity in each process step will be heavily improved.

48:26Sorry. No, go ahead. It will be improved at every single step and every single biotech company needs to tell us now where they apply AI and how they try to stay on the forefront of this development. And we have to try as well, by the way. It's not that easy, right, for us. So we really try hard to stay on top of what's going on there.

48:55Olivier Litzka: Right. Let's turn to China. There's a lot of anxiety on this side of the pond about the U.S. losing its competitive or innovative edge. Do you, Olivier, think that that's a valid or misplaced fear? Does European biotech feel the same way? Has the Western edge already been dulled?

49:22I think it's obviously the same danger for European innovation. whether they feel it as strong I don't know I mean the US are very close to the competitive edge so they have a naturally good instinct for where the danger comes from and if they identified China as a danger for staying competitive I take this very serious I say it also to our biotech European biotech ecosystem to be very careful with what's coming there. I mean, take the ADC space, you know. Incredible degrees of combination of payloads, new payloads, existing payloads with a diversity of linkers and But obviously, by specifics, tree specifics, more specifics, you know, there is an incredible amount of stuff coming over from China because they have a huge machinery of generating innovation there.

50:42yes take it serious um we have just one chance which is to be creative and innovative in a degree which is based on outstanding science and outstanding um uh scientific excellence that's where we can still have an advantage

51:10Olivier Litzka: Well, given what you just described is happening in China with ADCs, with bispecifics, multispecifics, from an Endera partner's point of view, do you see those as opportunities? I mean, is Endera licensing candidates and bringing them into European and U.S. headquartered companies for development? Absolutely. in licensing, company building, cooperating, also licensing out, you know, later being acquired by a Chinese company. We have seen it in the recent years, right? The acquirers are not all American or European. They start to become Chinese acquirers of companies. So, no, it's a huge opportunity as well.

52:06And as I said, we have colleagues, Chinese colleagues in the team, which have very deep knowledge and network there, which we try to use as an effort for existing companies and for creating potentially new ones.

52:30Olivier Litzka: What about lessons to be learned from China for for Europe in the US? I mean, I guess in terms of speed, scale, execution, I mean, the FDA has recently announced a number of pilots, most recently a pilot that hopes to get biotechs to the NDA phase faster. And I think even in some of the press materials, they've talked about China being a direct reason for for trying to do this, helping companies move faster, particularly in the early stages. But are there other lessons or are there things that you're thinking about that could translate into learnings for Europe or the U.S.? Well, I spoke about the European Life Science Coalition and what to do to stay competitive.

53:23And staying competitive means staying fast and innovative and speed is of the essence. So the regulatory barriers, which are not necessary, needs to be simplified. And this is part of, remember, this is one of the three pillars of the European Life Science Coalition. So it addresses exactly that point. And if you see how fast they can be, there is no reason why we are not equally fast if it is not about quality standards. Right? we don't want to lower our quality standards or security, of course, but we need to be more pragmatic. And this is something we can definitely learn. And then we see this pace of development in China.

54:14I think we can learn a lot.

54:19Olivier Litzka: I'm running out of time with you, Olivier. So I'm going to just ask you one final question, which is if you were advising a first-time biotech CEO preparing to raise capital in the current environment, what would you tell them to do before they ever sit down with a potential investor? They can always sit down with the potential investors also early on, right, in order to exchange and to learn. But what I think what some companies do really well, even early, is that they are out there all the time. I mean, they need to be convinced and they need to have an exceptional scientific basis, something really, yeah, an innovation which is worth being developed.

55:08But it can go in so many different ways forward, right? And finding this right path is based on talking with many people who have some little bricks to add to the building. And they talk to many people, scientific advisors, business people who have been successful, you know. Early CEOs, they talk to CEOs who have made it two or three times successfully. so it's building a very large and broad and diversified network and exchanging all the times it's these are the fast learning entrepreneurs and even you know early and new CEOs or management teams they are always out there and exchange and learn like a sponge

56:08Olivier Litzka: you know they take it on and they adapt They refine their pitch, they refine their story, and they refine their processes all the time. They never stop and say, we are perfect. And then they go to see investors and they pitch it in a balanced way. They don't say everything's great. They transpire the understanding that it's not perfect yet, but they have a very strong basis and this is how they want to develop it and there will be gaps and how to address the gaps and this type of communication and exchange is a very powerful tool to get investors excited if it's all about selling, selling, selling the investor on the other side will think well now it will be a huge amount of work to drill and drill and find out what's really true so it's better So it's better to have this type of a debate culture and a strong exchange with the different parties, including the investors you want to see and where you want to, you know, get some financing from.

57:23Olivier Litzka: That is excellent advice and I think a great way to end. Thank you so much for being here, Olivier. I enjoyed speaking with you. Thank you, Ben, for your interest. It was a pleasure. up. We've been speaking with Olivier Litska, partner at Andara Partners. I'm Ben Comer, and you've just listened to the Business of Biotech. Find us and subscribe anywhere you listen to podcasts and 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.

58:09We'll be right back.