The Booming Business of Chinese Peptides

25:05There are TikTok influencer niches telling you how to mix the bacteriostatic water with the powdered stuff in the vials and how to inject it if you've never done it before. As for the policy environment, I think it's hard to predict. Last year, RFK Jr., the Secretary of Health and Human Services, said that he would end the Biden administration's war on peptides. He sort of has embraced these, take your health into your own hands, like experimental therapeutics. At the same time, there hasn't actually been action so far this year by the Health and Human Services Administration to bring peptides into a more legal zone.

25:38So while RFK has signaled that he will, there hasn't been policy action yet. I did reach out to the HHS and the FDA for comment, and they said that they cannot predict future regulation, but that they are actively revising the list of bulk peptides that are allowed for compounding and compounding pharmacies. So sort of classic, we don't know, maybe looking at it language, but folks in the peptide community are really hoping to see a more, at least laissez-faire regulatory stance where they're not going to be shutting down these peptide suppliers. Jasmine Sun, that was absolutely amazing. You were truly the perfect guest to talk about the intersection of peptides and San Francisco culture.

26:16So thank you so much for coming on All Pods. Thanks so much for having me. Better get ready for my peptide rave. That's right. Have fun.

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29:23Do that with the all new Adobe Acrobat Studio. Learn more at adobe.com slash do that with Acrobat. So Joe, Jasmine did a great job of introducing us to the peptide space about which we don't really know anything, but I think we need to talk to someone who's actually in the business. Yeah. This is one of those stories where it's obviously a cultural story, but it's also a supply chain, regulation, marketing standpoint, which is like, where are they coming from? How are they getting them? And for me, it's like, how do people have any confidence like what they're literally injecting into their bodies?

30:00Right. Where is this coming from? So I have the perfect second guest. We're going to be speaking with Zach David. He is the managing partner of Persec Technologies, which runs Peptide Partners, which is a supplier of peptides. So Zach, how did you get into this space? Because you've had an interesting career path. Right. I got into this space basically solving the problem for myself. A few years ago, my health was very poor. And I started working with a specialist in the wellness the longevity community and functional medicine. And I noticed the peptide therapies that she was prescribing were highly effective, but also extremely expensive.

30:44So then I started doing a little supply chain sleuthing of my own and found a much better solution to that. And the question that she asked was, do you think it would be legal for me to do that for my patients? And the answer is, of course, no, but that set off a 14-month investigation on how to bring that into the legal market, which is what we're eventually working on. Why don't you tell us just sort of the basics of what you do? What is the service your business provides? So very similar to what I went through, a lot of these peptide therapies are either multi-year or lifelong, and they exist, and people are going to Chinese peptides to find cheaper solutions.

31:33And so we started pushing for independent testing, for endotoxin screening, for heavy metals testing, which the incumbents in the industry were not doing at all at the time. And now pretty much everybody is. So I have so many questions already, but how do you actually go about finding a supplier for a particular peptide? Because I imagine, you know, you're dealing with people who are all the way over in China, there's probably a lot of different companies to choose from and not that much information out there about them. How do you even begin to go about doing this? There's a good mix of how to find them.

32:12A lot advertise on, say, TikTok or they'll find you on WhatsApp. They will hunt down your website and then introduce themselves as suppliers. And so we go through a long vetting process. By some estimates, there are 10 major manufacturers. And there are a handful that manufacture in-house. And then there's something called lyophilization, which is kind of like the finishing step that puts it in the bottles. We basically, we're just constantly talking to new potential suppliers and we'll give them a try. We'll send everything out for testing. And the labs that we use are based in the U.S. that follow USP standards and FDA guidelines, which is a little bit different than some of the more popular testing labs that are overseas.

32:58Okay. Talk us through the step-by-step. Okay. You find a supplier based in China. You like them, whatever, et cetera. Where does it arrive when it gets to the U.S.? Does it go to the lab first? Does it go to you? And if it goes to you, what percentage of vials or what percentage of whatever is actually checked such that you can say, okay, this is a good batch? Right. So we randomly sample from, say, we order a thousand vials, we'll randomly sample between three and five. And if the variance in the quality is very tight, then we consider that a good batch. We famously throw out batches we don't consider up to our standards.

33:37And sometimes we'll post pictures of us dumping it in the trash on Twitter, which gets us a little cachet, but it's not fun to dump money in the garbage, but sometimes you have to do it. Can I just ask about the sequence of the chain in particular, because it is a peptide, What is the type of storage that it has to be involved in from the container on the ship to the dock? Is it a temperature type thing? How do you ensure that sort of quality doesn't degrade during the shipping process? Yeah, it's a great question. You know, if you were shipping very large amounts, you would want a cold chain supply the entire route.

34:14However, the lyophilization process keeps things shelf stable for quite a long time. And recent studies have shown that it doesn't degrade as fast as people initially thought. So when we use commercial grade freezers, as soon as we get it in, and then we'll, you know, we'll label the vials and then we'll randomly sample. Tell us more about the manufacturers in China, because I'm having a sort of hard time wrapping my head around who they actually are. So I take it most of them are not big pharma offshoots. They're sort of independent manufacturers. But how are these companies actually, I guess, coming into being?

34:55Yeah. So there's an interesting mix of what are the gray market manufacturers and, well, let's call it the lit market manufacturers. There are a handful of$10 to$15 billion publicly traded companies in China that do contract manufacturing, but they only sell to FDA supply, like FDA registered companies with supply chains. the major gray market labs, they only sell to other companies within China who then finish it with the lyophilization and then sell directly to the consumers. And what's the actual material that makes up a peptide? When we're talking about peptides, what are the building blocks of a particular, I get a vial in the mail, what is it exactly?

35:41So the FDA definition is that it's an amino acid chain of 40 or less. That definition was added to the Federal Register in 2020. And it is no surprise that things like semaglutide, otherwise known as Ozempic, Lunjaro, otherwise known as Terzepatide, and the next generation that everyone is currently using called Reditrutide, all happen to be exactly 39 in length. So I think there was some clever lobbying, but also things less than 50 tend to be very stable, unlike larger proteins, which tend to fold it on themselves. And the manufacturing process called solid phase peptide synthesis is almost a solved problem.

36:24But how do we actually make amino acids? That is a good question. I would have to follow up with you on that. Some are naturally derived and some are synthetic. the resurgence in peptides from its original heyday is partially due to synthetic amino acids. Just talk to us about law and regulation. What is the stance of these things? I actually still don't totally understand. Are they legal to be sold? I don't know what this term gray market means, et cetera. Just walk to us about how the government, whether we're talking criminal authorities or just FDA type authorities, think about these things right now.

37:00so the guidance is very it was very careful there has to be a lot of disclaimers about not for human use on anything sold for research purposes doctors can prescribe them for example there's one called sermorelin where it was abandoned by the manufacturer for economic reasons not for safety reasons in around 2008 but you can get it from compounding pharmacies in the united States. And so doctors will, it was formally FDA approved. However, things from compounding pharmacies do not undergo the same safety standards, but doctors will still prescribe stuff like that. The FDA, I think, let's also put this, when it's for research use only, and you're legitimately selling for research use, it does not fall under their eges.

37:51So a lot of people are conducting peptide research in the comfort of their own homes. Yes. As I'm sure, you know, most oddlats listeners are aware, the market for micropipettes is growing 8 % year over year, projected through 30-30. So I do believe that a lot of people have the home labs. Yeah. Wait, micropipettes? What are we? Yes. Little pipettes. What is that? Oh, that's like a little thing to extract some liquid? Is that what we're talking about? Yeah. So this is our proxy for peptide consumption is the booming market for micropipettes. It's the booming market for micropipettes. I'll take it.

38:26So that's a little it's a little tongue in cheek, but no, no, no. But this is useful. It's like, OK, like if we see this thing rising, then intuitively this is what they're using for. So in your marketing, what do you have to say such as that you don't run afoul of people in D.C. or wherever? We have strict terms and conditions for research use only labeled on the boxes, labeled on the vials, labeled on the website. We do not even use the term dosing. We only talk about sample sizes and just we are very, very, very pro research. But there is a big movement of people who self-organize in Telegram and Discord communities who are experimenting on themselves.

39:08Longtime Internet friend of the podcast, Burb, Chairman Burb. Oh, yes. I saw she had a Chinese peptide rave in San Francisco this week. Yes, yes. Are you there, Zach? Yes, we sponsored it. It was nice. We had a great time. She's a very, very, very good friend of mine. I'm guessing that's the same one Jasmine went to, probably. I assume. Unless they're... I'm going to say for a Cisco. Could there be two Chinese peptide raves in Wien Weekend? It did not surprise me at the slightest. So, Zach, how do you actually decide which peptides to stock? Is it whichever ones are getting the most buzz on TikTok?

39:41Do the manufacturers approach you with new things that they're making and then you test them out? That's a... Yeah, that's a very good question because the formularies change a lot. Although between the manufacturers and the suppliers, they do have very, very similar formularies. The ones who deal with the controlled substances and anabolics, we tend to stay away from. But the ones that we stock, we look for good safety profiles in humans. Unfortunately, for almost all of these, there are not a lot of good randomized control trials, but a lot of them have good safety studies in humans. but so certain things like there's a popular one called AOD 9604 which has not had a successful human trial ever and so we just decided not to stock that for ethical reasons.

40:33Okay so we know that in theory well we know more than in theory that the most famous peptides can curb your appetite and therefore facilitate weight loss. Tracy had a little thing of a spray that ostensibly helped autists make better eye contact, which is, of course, a valuable skill if you want to live in human civilization. What are some of the other popular, what are the other things that people are consuming peptides? Are there any that might surprise us? So there is a class called growth hormone releasing peptides or growth hormone stimulating peptides. They have very short half-lives rather than like HGH replacement therapy, like human growth hormone replacement therapy, which will eventually cause your body to naturally stop producing its own.

41:18This class works with your pituitary to make like an impulse and release some growth hormone rather than replace it. So that's a very popular class. So that would be good for like weightlifters or bodybuilders or anyone who just wants more strength or that we're talking about. And yeah, and it's also been increasingly prescribed by physicians for improved sleep as well. Could use that. Why don't we manufacture peptides in the U.S.? How is it that China seems to dominate this particular market? That is a great question as well. I believe it's the input materials and the labor and expertise required to engineer it.

41:59What happens is a lot of the raw materials are produced in China. And then over here, they're finished in facilities like doing the lyophilization and purification steps by compounding pharmacies. Okay, everyone who uses these, they have to inject them. Is it all needles and vials? Mostly at this time. However, we've seen an increasing amount of oral formulations. The problem is because these are small molecules, the digestive system breaks them down very quickly. So creating reliable oral formulations for peptide therapies has been historically very difficult.

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45:34Start fast, grow strategically, and scale at your pace with a modular toolkit you can flexibly deploy. Discover how at MasterCard.com slash commercial acceptance. How do you reduce costs in this space? Is it buying in bulk from a particular supplier or, I don't know, finding cheaper manufacturers of vials and the ionization process? Ionization process? Liophilization. Liophilization. There we go. It's just a fancy word for freeze drying. Okay. All right. The freeze drying process then. That's easier. Yeah. So it is buying in larger and larger quantities. One of our manufacturing partners over there, they created a novel method of being able to produce large quantities of raw materials.

46:24And the next step in our company's evolution is going to be buying a manufacturing facility and starting to do that finishing step here and slowly over time, bring this above board and fully FDA compliant. Am I stupid for not using peptides? I work in a very competitive industry. I have a very demanding schedule. I have two children. I'm 45. And so I'm at the second half of the curve where my body is getting a little deteriorating and getting a little bit closer to death each day. Like, am I stupid for like not tasting the fruits of advanced science? That is a question between you and your physician.

47:04Okay. That is a very smart answer. Do you feel that it is an important element of your ability to thrive and compete, your research into peptides? I do. I like them a lot. I've noticed a lot of good changes, especially my health and my energy over the years. But I also do work closely with a physician in order to care of one. Can I ask you a little bit about marketing? How do people discover your company? How do people serve? So let's see. Word of mouth has been great. Several influencers have written about the cost effectiveness of our product. And then there's a website called Finric, which has started to offer this wonderful service where people can send in files from anyone that they buy from off any of these research use only sites.

47:59I think they've covered over 140 companies now. And we've started to take number one slots on their site just left and right. So I think we're doing something a little bit better than everyone else. So people crowdsourcing a lot of the research and reviews. And also, I guess you hold peptide raves, right? That's a marketing thing. That was once. It might happen again. You know, I'm not much of a dancer, but I did field some questions. Something that sort of works a little bit like human growth hormone, I get it's very appealing, weight loss, again, concentrate. Are there any surprising peptides?

48:37What's the most unexpected thing that a peptide might, in research, suggest could benefit someone? I don't know if I should say this out loud. Yeah, that means you definitely should say it out loud. Yeah, okay. Well, there is one peptide that goes under the name PT-141. It's brand name. It's actually an FDA approved one. It's called Vilesi and it is meant for low sex drive. It's very completely legitimate. Nothing wrong with saying that out loud. For men and women? It's meant for women, but according to people who have told me, it works for men as well. Many people are saying, what's the cost?

49:19What's the customs process actually like for this? Because I imagine, I mean, customs is a pain at the best of times. And I imagine for something like this, it's potentially even more complicated. And then also, have you been impacted by tariffs at all? yeah it was really fun to see the first time a ups driver asked for cash on delivery since like 1998 you know remember cash on delivery that was when they when tariffs first came back and no one really knew no one had the infrastructure to charge in advance now they'll now they'll let you know hey you're gonna owe 30 here 60 here uh it's like an online payment portal too right it's yeah it's not but originally there wasn't originally there wasn't the driver showed up and wanted to check yeah it was crazy i'm reading about this pt141 so unlike viagra which famously opens up blood flow pathways this one its method of action is actually to increase the underlying sexual excitement itself, which is sort of different.

50:29Anyway, it's interesting. I have heard that it works. You've heard that it works. Yep. I don't have any experience with it, but I've heard that it works. Wait, so what does the customs documentation actually look like? When the stuff arrives at a port, what forms are you filling out? They're fun. They're, you know, half in Mandarin, so it's a little difficult. Look, you know, we scan it, chat, GBT, we're fine. Language doesn't matter these days. How long do you think it's going to take, if it happens at all, for these sorts of peptides to become, as you put it, above board in the U.S.? So there's an interesting history there.

51:05So the most popular ones, basically, in September 2023, we call the peptide Armageddon. About 1720 of the most popular ones that were prescribed by doctors in the wellness and longevity community were put on this, what's called the 503A banned list. And they banned the prescribing of or the compounding of certain peptides. And according to my physician, it was not for particularly good scientific reasons, but the explanation that they give is that it can trigger immune responses, adverse immune responses. Last question for me. Has there been any change in D.C. since the changing of the administration in terms of either at the FDA or otherwise?

51:53So I go through all of the enforcement letters that the F.C.O. You can go on the website and you can see every enforcement letter and every warning letter that they send to every single website. And I believe the last one ever sent was December 2024. So there has not been a lot of enforcement. Yeah, that's a pretty big hint. All right, Zach, we're going to leave it there. But thank you so much for coming on All Thoughts. That was super interesting. I'm such a huge fan of yours. Oh, thank you. We're going to use that in the sizzle reel. Thank you so much, Zach.

52:37So, Joe, that was really interesting. So interesting. Fun episode. Obviously, it intersects with a bunch of odd lots themes, primarily competition with China in the biotech space and also supply chain issues and medical regulation. Are we going to see the White House adopt a industrial policy to wean us off of our dependence on China for experimental peptides? Does anyone talk about that? What I was about to say is, actually, we've talked about this before, but you could envision a world where knowledge becomes very commodified because of AI. And so everyone's competitive edge is basically what you look like, how you present yourself and interact with others.

53:20So maybe in that economy, peptides have a lot of value. Absolutely. I could totally say it. I mean, I think, I mean, the way I think about that question is we don't even need to talk about AI in the sense that we are already on this path, right? People have been looks maxing prior to the invention of chatbots. People have felt ever since the, maybe since the iPhone or maybe since Instagram, et cetera. Looks have always mattered, but I think we're at a sort of different point. No, what I'm saying is like this already feels like it's accelerating some of these trends. Absolutely. Looks have always mattered.

53:54People have always been anxious about their weight, et cetera. But it does feel like this pressure is just building where everyone is thinking about these things. Everyone feels very competitive, all of these things. And everyone is open about how competitive they are about these things. It's kind of surprising. Yeah. There was a time when people didn't talk about things like their plastic surgery. Totally. But now it seems very more transparent than it used to be. The other thing I was thinking about just in terms of regulation, I mean, it's notable that it's a gray market, right? As we described.

54:25And ostensibly, everyone is doing peptide research in their basements. And that's kind of a joke, right? But on the other hand, it's not really a joke because what we're doing is kind of outsourcing human trials, I guess, to like citizens who are opting in. They're the ones opting in to test these new treatments. You know, it's interesting. We did that episode with D.A. Wallach And he talked about how we could have a model of sort of market for pharmaceuticals and therapies in which the only thing required to sell something is the safety trial. Right now for any therapy, we do safety and then efficacy.

55:04But it is very you could argue that really the only thing that should be required is a safety trial. And then it's up to the consumer or whatever. You know, I think you could make that argument that then it's up to the doctor and the consumer together to decide, is this worthwhile given the price of what we know about it, etc.? But what it feels like to me is we're sort of entering this era in which regardless of what the formal law states or what regulations state, there is a cultural move towards letting people experiment as they want with things that by and large, it doesn't sound like there's much evidence of particularly harmful, dangerous with a lot of this stuff.

55:43No one has died from peptides that I know. As far as I know, I haven't seen that, et cetera. And so it feels like we're sort of, you know, this is part of the hacker culture. It's like, OK, there's probably not much danger, I suppose, but what it does for you, that's on you to figure out. All right. Thank you, everyone who is experimenting with peptides. You're doing it for the greater good, I'm sure. Shall we leave it there? Let's leave it there. This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway. And I'm Jill Weisenthal. You can follow me at The Stalwart.

56:14Follow our guest Jasmine Sun. She's at Jasmine New Sun. And Zach David, he's at Zach David. Follow our producers, Carmen Rodriguez at Carmen Armand, Dashiell Bennett at Dashbot, and Kale Brooks at Kale Brooks. For more OddLots content, go to Bloomberg.com slash OddLots. We have a daily newsletter and all of our episodes. And you can chat about all of these topics 24-7 in our Discord, discord.gg slash OddLots. And if you enjoy OddLots, if you like it when we talk about the peptide supply chain, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free.

56:51All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

57:33We'll see you next time.

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