IL-2 Program Profits with Bonum's Drs. John Mulligan and Neela Patel

On this week's episode of the Business of Biotech, we welcome two extraordinary guests - Dr. Neela Patel, a molecular biologist-turned-Chief Business Officer, and Dr. John Mulligan, an academic-turned-founder of newly-formed Bonum Therapeutics. Together, Neela and John will pull back the curtain on Bonum's transition from its predecessor, Good Therapeutics, which was fueled by a high-profile asset sale to Roche. The asset, a PD-1-regulated IL-2 program, was a product of a platform that the new Bonum retains, and its sale to Roche was orchestrated by Dr. Patel. You've seen the terms of the deal in the news, but on this episode, you'll get the inside scoop on how the deal was done, how it set Bonum up for future paltform-driven succes, and how these two leaders retained its IP and its people through a fast, unique, and disruptive acquisition. 

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Transcript

Matthew Pillar: 0:00

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Matthew Pillar: 0:39

Good Therapeutics made a splash last fall when Roche snapped the company up for its PD-1 IL-2 program. The $250 million plus milestones deal, and large part orchestrated by CBO Dr Neela Patel, was a nice one for good, but in a way it left CEO Dr John Mulligan in a bit of a quandary. What should he do now? What should he do with what remained of good's technical assets? It's intellectual property and, perhaps most importantly, it's incredibly talented people? I'm Matt Pillar. This is the Business of Biotech, and while everyone saw the deal play out, on today's episode of the podcast we're getting the untold inside stories of both the Good Therapeutics acquisition and the subsequent rebirth of its heart and soul into Bonum Therapeutics. Here to share those stories with us are none other than doctors Neela Patel and John Mulligan. Neela and John, welcome to the show.

Dr. Neela Patel: 1:33

Thanks for having us Glad to be here.

Matthew Pillar: 1:36

I'm honored. I'm honored to have you guys here and I want to get to know we're going to do some backstory stuff before we get into the acquisition and the subsequent rebirth of the company as Bonum and how all that played out. But first I want to get to know you too, a little bit. Neela, your background is intriguing to me. You had this PhD in molecular biology. You took that seemingly directly into a career in the biopharma industry, doing research at Roche. Was that your intent back then when you were working through that PhD? Did you want to come into industry right away, or was it an opportunity that moved you away from academia? What was your intent.

Dr. John Mulligan: 2:16

Actually it was my intention and I was not necessarily exactly as my classmates were. Many of them wanted to stay in academia. The backstory for me is that I did a summer internship at a very young Genentech when it was an unrenovated warehouse. That got me really excited about a career in drug discovery. I felt like it was something where I could help people and that it would be intellectually challenging. I looked around at the folks who were working there and realized I wanted to work on the strategic side, help make decisions about the kind of programs we would pursue, the way we pursued them. I realized I needed to get a PhD in order to do that. I knew all along that that was my goal.

Matthew Pillar: 3:06

Yeah, that's interesting. I'm going to ask you some questions, I think, later on, about the transition into the business side of it as Chief Business Officer. John, I want to learn about your transition into industry as well. You had a pretty established position in academia. You moved from research right into founding Blue Heron and then on to serial biotech entrepreneurship. I'll ask you some questions about that later as well. But what was your intention? What was the allure to biotech?

Dr. Neela Patel: 3:36

Yeah. So I as an undergrad and grad student worked for faculty members going through tenure. That kind of turned me off the whole idea of academia. In my postdoc I was on Davis I. He and David Busstine were setting up one of the early human genome centers and offered me a position there helping set that up. So I spent three years doing that and the contrast between a program like that, where we were trying to bring together a whole bunch of different disciplines to solve a problem, and being in a sort of narrow academic department really pushed me in the direction of industry. So the next job that I took was at Darwin Molecular as a director of genomics there, really given the mission to try to apply genetics and the new you know, the new nascent sequencing technology to drug discovery, and so that and what I loved about that company was the multidisciplinary aspect of having chemists and software developers and geneticists and biologists, immunologists all working together to try to solve an interesting problem.

Dr. Neela Patel: 4:57

But that company we didn't have a clue. We had a whole great scientific team and we did some really interesting stuff but really no clue as to how to operate as business, what our real business model was. Now the model was basically become a pharmaceutical company, but with no like idea of steps in between. And so well, that's what got me into starting my first company was really the thinking. You know, I had moved from an academic environment into a company and just started thinking a lot about the business models like how do you make the science work well and still make it sense make sense as a business? I mean, we had a fantastic board. It was Lee Hood and George Rathman and Bill Gates and Paul Allen. You couldn't have picked a better, you know a better set of business leaders. Yet somehow as a company we couldn't come together as a business.

Matthew Pillar: 5:57

Yeah, that had to provide a lot of learning experience for you. You know the stumbles scraping your knees along the way. I'm thinking about it like in terms of Neela's transition. She experienced, had a taste of industry first and then decided, boy, the PhD would really help me get sink my claws into this space. You came in from academia and you know to your point the establishing of the business aspect was a bit challenging. What was like in terms of that challenge? What was key to, I guess, wrapping your mind around, you know, coming out of this narrow you know very pointed focus in academia and research? What did you find most challenging, like the best learning experience around? Okay, you know, here's what I'm going to need to apply to make a business case.

Dr. Neela Patel: 6:45

I think you can apply the same kind of problem-solving skills that you need. I was a geneticist by training, and the core of that as an intellectual discipline is figuring out what the problem is and then figuring out a good way to solve it. And so it's the same. I mean all the same intellectual tools applied to business, the same kind of creativity coming up, you know, seeing what's actually there and seeing how you can make something work. And then, as with science, there's a long period of struggle and you know takes wherever you. If you're doing anything on the cutting edge of science, most of what you do is wrong, and learning how to sort of deal with that is part of being a good scientist. And that also applies well in the world of business where you're going to. You know you make mistakes and then you correct.

Matthew Pillar: 7:38

Yeah, what's more consequential being wrong in science or being wrong in business?

Dr. Neela Patel: 7:46

If you're playing it right, it's you're going to be. I mean, you have to plan to be wrong some of the time, and so that's the whole strategy is to be able to succeed without being right all the time. That's like the core of how to make either of them work.

Matthew Pillar: 7:59

Yeah, yeah, yeah, that's interesting, neela. You another interesting inflection point in your career. After you, you know, earn that PhD, establish yourself in industry, you spent time at places like Genentech and Abbott Abbott, seattle Genomics, just to name a few and then at some point you joined Good, which was at the time a much smaller company, and you know we see this quite frequently, but I'm always interested in the intention there. You know sort of what motivates that move away from big bio as we know it to a startup.

Dr. John Mulligan: 8:33

Absolutely. And I would say that in the first half of my career I worked in on the R&D side, you know, in a lab, then leading a lab, then leading a small group and then leading, you know, research in a small biotech company. So I had a good feel for what it took to get to move a drug forward or identify from discovery all the way through IND filing. And then when I went to business development, you know I had been looking for a startup to join where I could have a really significant impact on the company, and I looked around at a few companies and they just didn't seem suitable for me. So when I joined BD on the buy side, I realized that I would have this great opportunity to look at hundreds and hundreds of companies, which I did I mean on average, maybe 400 to 500 a year, and it took me 12 years to find a startup that met my criteria.

Dr. John Mulligan: 9:34

Wow, yeah, I wanted a company that had a platform, so it would not just be a single product company, you know, heads Up or Tails Up and that's it. I wanted one where the platform had some proof of concept that the thing actually was working. Team was incredibly important to me because I'm at a point in my life where I want to enjoy my work life and I want to enjoy my colleagues, and I wanted a board that I could work with, because we've all seen that boards can have an incredibly big influence positive and negative on outcomes at a company. So I felt like good therapeutics checked every box. It was like winning the lottery for me. I was really thrilled to join and I couldn't be happier with my business.

Matthew Pillar: 10:22

You're not just saying that because John's on the call with us.

Dr. John Mulligan: 10:25

No, I'm really not. You can ask my parents. They're like you sound so happy in this job.

Dr. Neela Patel: 10:31

John CJN was evaluating. We were talking about a deal, with CJN talking and Neela was on the other side of that discussion and we did wait until CJN rejected us before we made it. You know the actual job offer.

Matthew Pillar: 10:46

John, tell me about that job offer. You know it's interesting. I have a lot of conversations with the leaders of biotechs around selection of talent and you know sometimes obviously there are many varying opinions. When you see someone like Neela, who's got a pretty strong research background good science background has transitioned into, you know, more interest in the business development side, what's like? What are the pros and cons there? Like what's appealing about her background and putting her in a business development position versus you know what might be a potential red flag.

Dr. Neela Patel: 11:25

Yeah. So there's a couple of aspects of that, and one is our goals in organizations is to be completely science-driven and to not have any other nothing getting the way of making decisions that are based on results, which seems kind of obvious but isn't always true. I know I was given that luxury and so I wanted everybody in management to really be a scientist, to be somebody who really understood. So that's a critical aspect of it. Another part is just I want a company where and I think we built the company where we can have trust and transparency, where you know the people who work with and benefit their jobs, you can trust them to do their jobs, you can focus on your job and there's a free flow of communication. So there was a real need to pick people who could fit in in an environment like that, and it's easier to find, like a pure research person who's doing that. Finding Not everybody I'll just put this kindly not everybody in business development is a really nice and straightforward person, and so picking somebody in sales and business development, one of the characteristics is being able to sell and to convince people of things, and so finding people who are really genuine, who are really good at their jobs. It's a challenge, and I think that we had.

Dr. Neela Patel: 12:56

I remember Neal. I remember the company had worked with her in the past and so we knew going in that she was going to be a great choice and we had a great project for her to work on. That's the other piece in terms of recruiting people is to have some motivating people. It's really straightforward if there's something really interesting for them to do, and so the way that we threw the company was to add on functions when they really needed them, and so Neal was one of the first hires after we got the results that led to the acquisition by Roche the really cool, super interesting animal data. So we could show her that data and, as a scientist, she could evaluate it and say, yes, this is something that yeah.

Dr. John Mulligan: 13:46

Let's say, on the Recreate East side. It was extremely attractive to me for that philosophy of we are science-based, we're fact-based and we're not going to go out there with an incomplete data set to try to get somebody interested. We're going to show them what we have, all of it, and that's what it is, and so, for me, the selling piece of it is not selling something that is not a full picture or not honest with the other party, at which point it becomes a very easy job in terms of being sincere about, being excited about the science and being able to show it in a way that's real.

Matthew Pillar: 14:35

Yeah, yeah, and I totally appreciate that. I mean, I think it's refreshing. Actually, I appreciate it because it is real, although not necessarily the standard in BD. Right and biotech BD can be a flash in the pan kind of pretty tough business. What about the deal-making part of it? Like, once you've gotten past the acceptance of the science and the technology and you're very transparent, you're real, you're a scientist yourself, you understand what you're telling these folks, you get to the point where, all right, let's start wheeling and dealing, let's start making some deals. Where did you learn that, neela? Like where does that come from?

Dr. John Mulligan: 15:16

You know I learned that on both sides of the table because throughout the second part of my research career I was doing I was sitting on the evaluation side for deals and looking at them from a very just, pure technical point of view. Partnering with a BD person and helping give them input like this would be this valuable to us, but not more than that. So I was more in advising, but not at the negotiating table. And then at Siegen, I was clearly the one negotiating on behalf of Siegen in a bi role.

Dr. John Mulligan: 15:56

But you know, negotiation it almost doesn't matter what side of the table you're on. You need to figure out what the key needs of both parties are and if there's a way to get those met. And if there's, you try to get to that as soon as you can, because sometimes it's just a walk away Look, this is our need, is this financially? And the other side says I cannot do that, it's actually impossible. Okay, we get it, we respect and accept that. Let's move on. So I feel like the fundamentals of negotiating understanding the other party's needs, understanding yours, looking for creative solutions, something that John mentioned before being really creative. How can we make this pie bigger? How can we make this happen and have everybody come out with what they wanted.

Matthew Pillar: 16:46

Yeah, neela, I had a couple episodes ago, a couple episodes prior to the airing of this episode I had excuse me Newhad Hussini, who's the VP of business development at Regeneron, on the show and he's responsible for quite a few of Regeneron's big deals and the entire episode was focused on his introspective look at his art and science of deal making. It was great, and I asked him this question. I wanna ask you the same question he gave me. I'm not gonna tell you how he answered. He gave me a really good response, but I'm gonna ask you the same question I asked him Cause I'm in a motive person.

Matthew Pillar: 17:21

Last, my kids they'll tell you, like you know, mom's, like super level headed and cool dad, you never know where his hands are gonna go when he's talking. How do you, like you know, sometimes you get into a deal, opportunity and you become invested in it. You become, you know, professionally, perhaps emotionally, invested in the opportunity right, like you throw your heart and soul into it. When things aren't going right, or when things aren't going like the way you anticipated they would go, how do you maintain emotional checks and balances?

Dr. John Mulligan: 17:52

I think for me, you're right.

Dr. John Mulligan: 17:55

You can't you cannot really do a big deal without putting your heart into it.

Dr. John Mulligan: 18:01

But you have to keep a little bit of distance as well, not only for your sanity, but also to be effective at the negotiating table, because the minute that you flip into the motive, I have to get this done or it destroys who I am or my career or whatever. You've lost all your power at the negotiating table. You can't operate the way you need to. So you know, for me, I've been very lucky to have John and a supportive board as thought partners, so we're always working on what is our alternative to getting this deal done. Let's make sure we have a path forward without the deal, in which case, when you're at the table, yes, you're sincere, you wanna do it, you're passionate, but you're not do or die about it, and that distance is really valuable. That's not to say that there weren't days that I would leave the negotiating table and just need to go for a nice walk and see something beautiful or cook a nice dinner, or go to ceramics and make something with my hands to get out the frustration.

Matthew Pillar: 19:15

But the other I asked New had that follow-up question. I said we actually talked about his decompression exercises. I totally get that.

Dr. John Mulligan: 19:25

Yeah, and John, you Can I just start.

Matthew Pillar: 19:27

Yeah.

Dr. John Mulligan: 19:28

I think about emotive. I think there's something in business development and actually in general, in interactions in the professional or even private sphere. You need to recognize your emotions and learn to work with them, because there were times when I just was so angry and I thought I'm just gonna blow my top and I was like, no, just take a calm, take it easy, set that emotion aside. And there were other times when I was like, ooh, expressing my frustration or a negative emotion, but calmly, like, hey, we feel pretty angry about the fact that you countered with this. That's not working for us. Sometimes the other side needs to know where you are emotionally, not just numbers on paper, but needs to know that they've actually hit your limit or oh, things are going great. We really appreciate how hard you're working with us to get this done. So I think, using it and using it and modulating in a way that makes sense.

Matthew Pillar: 20:36

Yeah, self-awareness and knowing your audience. Yeah, yeah, John, you've done this a few times. You've sold companies to Origin Rosh, obviously, Eli Lilly so you've got a bit of a track record for building attractive biotechs. Can you share some thoughts on common threads among those, perhaps hallmarks of some of these companies that you've built, whether or not for acquisition companies that you've built that have been acquired? Yeah, the silver, you know, just a couple silver bullets, that's all.

Dr. Neela Patel: 21:13

Well, I'm not sure that the path I've taken is really applicable for it. I mean, I can tell you what the hallmarks are, but I'm not sure it's. I would advise anybody else to do that or this. But but if you look at my the pattern of things that I've done, they've all started with an idea and everything we've done has been invented internally. So we've never licensed anything in.

Dr. Neela Patel: 21:37

I've tried to focus on just sort of the obvious point of focusing on problems where there's a big impact. You know it's just as hard to solve a small problem as it is to solve a really big problem. You know there are technical there's like an axis of technical complexity and value of the problem and there's very few things in the very valuable low technical complexity area but there's lots of things in the low value high technical complexity quadrant and so you want to kind of pick where both they're hard so that it's worth doing and there's real value there. And the other thing for me is every time I've done something new it's been something really new. So I did a synthetic. You know, my first company was a drug discovery company based around sequencing and combinatorial chemistry. The next thing I did was a synthetic biopsy. It's a biology company where we were trying to automate the moving data from the computer into the lab DNA. Then I did a diabetes company and now we're in immunolinkology, and so each time for me it's like learning a whole new field, and so it's like you can bring new insights into a field, but to have any impact you also have to bring in people like Diane Hollenbaugh or CSO or Neela or CBO who are, who really have knowledge in the field. So this is a combination of invention and new perspectives and expertise.

Dr. Neela Patel: 23:17

Yeah, and I think the other thing that I've learned in all touch on this in a number of places, I think in this discussion is that planning ahead with the knowledge that you know no plan survives contact with the enemy. But just with the example of a good discussion, a good Roche discussion, we had alternatives. We were able to do that negotiation because I lined up a financing that was structured to support that we were actively pursuing taking molecule into the clinic ourselves. We had the financing and the expertise in place to do that, which gave us, gave Neela, the opportunity to walk away from the table, which you have to have.

Matthew Pillar: 24:08

That optionality? Yeah, yeah, yeah. So what was? Let's get into that good therapeutics acquisition deal? You know, I didn't know how to phrase it Like. I think I called it a sell-in pivot, for I don't know if you'd characterize it that way. Yeah, but leading into it, what was? What sort of drove? The acquisition opportunity with Roche.

Dr. John Mulligan: 24:36

Well, I can't speak to Roche's internal decision making, obviously, but I can comment that they had their own PD-1 IL-2 program that was in the clinic and so they already had established preclinical models and they knew what their clinical data looked like. It wasn't published at that point, but that was in their shop, so they were extremely well positioned to be able to evaluate our molecule versus theirs and to be able to recognize the value. In fact, they spent about a year under MTA evaluating the molecule prior to us signing the deal. I'll also just comment a bit on the acquisition structure, which we can come back to. But that structure of acquisition really allowed Roche, on day one, to have full control over the program.

Dr. John Mulligan: 25:32

And we often see deals where the small biotech wants to do co-development, wants to be at the table, wants to have a JRC and so on, and that you know that can really slow things down. And I'm not saying there aren't places and times when co-development is the right thing to do, but in this circumstance it was both our goal to sell the asset outright that gave an early return to our investors, and it was Roche's goal to be able to take that program forward in the way that they thought was best for the molecule. So both the deal structure as well as their experience with PD-1 IL-2, I think were key factors.

Matthew Pillar: 26:15

I'm going to ask a follow-up to that that I invite both of you to comment on. And that's just around the general. So this was November of last year that the deal was finalized. Is that correct? November 22, Ish.

Dr. Neela Patel: 26:29

That's in the financing, the post-money financing. So the deal was done in September 26. That was the actual closed date.

Matthew Pillar: 26:36

Okay, yeah, and even for the past several years IL-2 has been a space that's gotten some. It's been banged up. There have been a lot of losers in that space. A lot of companies have been, we'll say they've struggled their way through. Was there any concern going into the deal or was that part of the motivating factor? The space has suffered some bumps and bruises.

Dr. Neela Patel: 27:08

I think that's actually central to a lot of the dynamic of this, which is that we did. Obviously we were talking to other buyers, potential buyers, before we had this discussion. What Roche had that nobody else had was the ability to run our molecule through their mouse models, right next to the molecule they already had in the clinic, and so they had human clinical data on our positive control, or the molecule that we used as a positive control and that let them see the value of an IL-2 product in a way that nobody else could.

Dr. John Mulligan: 27:43

I will just say that, while there is a graveyard of second generation IL-2s out there, Many of them not yet done. Right the clinical data with IL-2 itself. It's compelling. Yes, it's extremely toxic. People have to be in the ICU to receive it so that nothing goes wrong. I think that there is clear clinical evidence that IL-2, if it could be safely administered, could make a difference to the trajectory of patients' disease. I think that that right. I mean, John, do you yeah, IL-2 alone.

Dr. Neela Patel: 28:26

Monotherapy with IL-2, you've no longer use is for long-term outcomes is not a whole lot worse than checkpoint, which is a huge drug. It's like low double digits, high single digit for durable responses. So that's a real drug. It's just not quite good enough and it's way way too toxic. And so I wanted to get back a little bit to the structure of the deal. I guess we'll come back to the pivot. I mean we did part of the structure and part of the when we were doing the Series A for good part of the pitch was we're going to sell at least the first programmer to as an individual asset and get a return to investors Because one of the kind of I think it's pretty broadly recognized now that in the past platform companies have had a real sort of structural problem, which is that you get together, describe people, scientists, you solve some really cool new problem, you developed a tool that will give you a new drug.

Dr. Neela Patel: 29:41

As soon as you get your first new drug, 90 percent of the value of the company is that new drug. There's a really strong incentive to put all of your investment. That just drags it's like a black hole that drags all of the resources of the company forward, to the detriment. It takes a whole different set of people to do that than it takes to do to adult that first drug. What I wanted to do in setting up the structure was to keep the value of all the work that we've done to get to that point. We had planned this structure, the spin, right from the start. It was the goal of the company was to stay together as a team and be able to spin out these individual programs.

Matthew Pillar: 30:30

You knew that prior to even sitting down having conversations with Roche John, you it was part of how we selected.

Dr. Neela Patel: 30:38

That was something that the investors bought into before they made their investment a series A investors.

Matthew Pillar: 30:48

When you enter into the conversation with Roche with that mindset, knowing that you want to keep this team, you want to keep this platform, you want to maintain that IP and those assets and move forward as a new entity, does it take anything away from you in the negotiation? From your company? Does it give you, I guess, remove any leverage or look less attractive to the buying company?

Dr. Neela Patel: 31:12

If you look historically, people paid the same amount for a single asset as they will for, I mean, that's the monetary way of expressing that, which is, we could have sold the whole company for basically the same price, because that's what the value is. The value is that first program.

Matthew Pillar: 31:29

Yeah.

Dr. John Mulligan: 31:30

And, interestingly, roche's perspective when we explained how we wanted to manage the transaction, they actually were quite happy.

Dr. John Mulligan: 31:41

They didn't have to deal with lease obligations, employees and associated benefits, equipment, reagents, other agreements to which we were party would take care of all of that for them.

Dr. John Mulligan: 31:54

I will say there was a lot of paperwork and a very long punch list that we worked through, but at the end of the day they were happy. They wanted the intellectual property related to PD-1, il-2, and they needed a license to our core platform technology to be able to practice that. And we were able to cleave that off very cleanly by leaving that in good therapeutics and taking all the employees, leases, all those other things I just mentioned, and moving those over to Bonum. And it gave us, it gave Bonum a really quick start. We didn't look like a typical series A company, because on day one of our funding we had a fully operational company with people coming to work who had all the equipment, they had programs to work on and we were just off the racing blocks rapidly. So for us it was advantageous as well. There was never a point where Roche expressed a desire to have any of those things that we had.

Dr. Neela Patel: 33:05

It really wasn't on the table when we went in and that didn't seem to be a problem. I think, yeah, as I mean you know I said I think they saw it at least as neutral, maybe as an advantage.

Matthew Pillar: 33:14

Yeah, I mean, let's say that there was no acquisition. Let's say that good therapeutics just decided, for whatever strategic reasons, it was going to rebrand itself and maybe shift a little bit in terms of its pipeline strategy and portfolio strategy. That, in and of itself, is in a trivial task, like when you're managing your way through a significant acquisition and simultaneously, you know crafting, albeit you know recognizing that you've got the staff, you've got the infrastructure, you've got the people still creating a new company. Essentially, it's a lot to have on your plate all at once. So, john, like tell me a little bit about that when you were preparing for you know, okay, post acquisition, here we are, here's Bonham, what went in? How do you manage your way through that simultaneous activity?

Dr. Neela Patel: 34:10

That's a big question, I know. Yeah, so it spun Bonham off about a year, a little over a year, year and a half before, and so we've been thinking about it all along. And when the actual you know, signing the deal occurred, everybody was laid off on Monday evening and hired back on Tuesday morning. So one of you working there.

Dr. Neela Patel: 34:33

It's just it was completely seamless. And so I think the way that we dealt with the transition was it wasn't a big pivot or a transition that we had been planning all along to have many programs running. This is the one that leaked to the fore. It wasn't even the lead program until we got that bit of data. It was kind of second in line. We got this really compelling mouse data at the end of you know Q1 of 21. And it kind of led to this you know Q3 of 22 acquisition, and so it's been a very intentional.

Dr. Neela Patel: 35:15

Even though we're a small company, we've always had a lot of programs running in parallel, and that really has to do with risk mitigation and making sure that we have it's. The key to being able to make the right scientific decisions is to be able to do it without fear, and so we had enough programs going so that we can always look at this and say, well, this one is, this is down, prioritized, or maybe even we're not going to work on this one anymore because we've got a bunch of other stuff that's just as interesting and just exciting going on, and so I think it's really hard to make good decisions if you know your house depends on it or you know your, your living depends on it. You have to have an environment where those decisions are as free as possible from the really hard economic consequences, and so so we've the way to survive. A transition like that is to make it or to make it effective.

Dr. Neela Patel: 36:17

Yes, it was a really big change because we shifted from 100% focus, or, you know, 80% focus on PV1 isle to working on all of our other programs Once we'd moved all of the data over to Roche. But in another way, it was just another part of the cycle where we're preparing to go through that again. Now we've chosen a program where we're going to choose a lead, a candidate, in Q1 or Q2 of next year. We're shifting resources into that program. We've even done another spin out to to have to house that program and to give us the option of selling it and saying you know we're going to be able to do that. We know that early stage biopharmas need support.

Matthew Pillar: 37:04

Producing and scaling a biologic molecule is not easy. Companies with new or evolving programs need assistance every step of the way. Join us each week as we discuss all things emerging biotech, including regulatory financing and more. The pod is brought to you in collaboration with CITIVA, a global provider of technologies and services that advance and accelerate the development, manufacturing and development of therapeutics, from idea to injection. Check out their resources at CITIVAcom backslash emerging biotech. That's CYTIVAcom backslash emerging biotech. Tell me a little bit about that you mentioned. You know we laid everyone off on Monday and brought them back in on Tuesday. That's great. Yeah, 26 team members, is that correct? Yeah, 26 team members, is that correct, yeah?

Dr. Neela Patel: 37:59

I believe that's what we were at that point 31 now.

Matthew Pillar: 38:03

Yeah, and you didn't lose anyone. Was there any concern with that transition? It's disruptive regardless. I mean, as smooth as it can possibly be, it's still going to be a little bit disruptive. Was there any concern? I think?

Dr. Neela Patel: 38:17

there was a lot of celebration. We all, you know, we had a structure where everybody who worked for the company participated in that, you know, in the celebration and in some of the economic returns from it. So it's a strategy that's good for the employees too, and one of the things that we tried to do as a whole management team right from the start is be really transparent with people, and so I want, to the extent possible you know, of course there's stuff that's secret when we're doing a negotiation but everybody knew this was going on and everybody kind of knew, as the ups and downs and you know the probability that it was going to succeed, what's this week's probability of success? And so I think that also helps keep stability is just that people aren't. They don't have to worry that there's something going on that they don't know about.

Dr. John Mulligan: 39:12

Yeah, and when we laid off on Monday and, you know, came to work at Bonamon Tuesday. It wasn't as if they heard that news on Friday, Like sure yeah. You know it was, it was an ongoing conversation, as John said, so I think that made it, that really did make it seamless.

Matthew Pillar: 39:31

Kind of makes it fun to be laid off right, right, exactly, and people were given both letters.

Dr. John Mulligan: 39:36

We have a week, right, so yeah, and we had you know we we had a big celebration for it and there was a lot of joy and people were excited that something that they had poured so much time and energy into would now continue to move forward and get to patients. I mean, that's all, all of us. That's why we do this work, yeah, To help patients. And you know, I think it was clear that Roche would be an excellent party to do that in a way that would set the program and patients up for for the best possible outcome.

Dr. Neela Patel: 40:12

That was a good part of why we were so excited about doing this is, as Nova says, that we really think Roche was the best partner for this. You know, they they've got all the long history in aisle two. They're not somebody who's going to give up on it. They did. They put three different aisle two immunosidicines into the clinic over the course of six to eight or two years. They've been in it for the last 10 years. They've got, you know, they've got a history of interest in it, and so we were really. You know, a lot of the return from this is going to be on milestones, and so we really wanted to make sure that both it had the best chance of getting into the clinic as fast as possible and that they were. They weren't going to just, you know, change their mind two years from now and move on to something else. Yeah, and so they struck this as an organization that really had a sense of, you know, a dedication to making this work.

Matthew Pillar: 41:08

And they remain invested in, in Bonham therapeutics, which is where I kind of want to take the conversation for a minute now, because we haven't even discussed the fact that when Bonham came came to be, it came to be with a $93 million series A last fall, which is not, again not inconsequential in this current funding landscape. Tell me a little bit, mula. Did that fall under your auspices as well?

Dr. John Mulligan: 41:36

No, that was in John's court and we made it. We made a very mindful decision about that, because John had to start those discussions and negotiations while we were in the process of cleaning up and closing. You know all the all the little bits and pieces that needed to be done for the Roche deal and also, just based on his depth of experience, it's something that made the most sense for him to lead on.

Matthew Pillar: 42:03

Yeah. So, john, tell me about that experience A lot, yeah, a lot going on, and now you're raising money too.

Dr. Neela Patel: 42:10

Well, it was kind of a. It was a multi-year process because when we got the PD-1 IL-2 data, we started the data in 2021. That was the basis for this acquisition. That was a trigger for us to shift from being purely science to adding a bunch of functions that we'd need to take that forward First Nila business development and then David Bienvenu to build a protein sciences team and expanding other aspects of the team. So we needed more money and we planned to take PD-1 IL-2 into phase one ourselves. That's been our plan from the start is to that we're doing these really transformative medicines and that they do most valuable when it's been shown to working people. So I was in the midst of doing a series B based on that data and in parallel we'd initiated these discussions with Roche and we had a good consortium of crossover investors really top level crossover investors who wanted, when we were in the midst of discussing, like a $90 million $109 series B that would let us take PD-1 IL-2 into phase one and Nila and I at some point came to the conclusion that there was a deal to be made with Roche. So we presented this to the board. No-transcript. It was a deal that would make sense for the current investors with our post money at that point. But it wouldn't have made sense if we brought in $100 million. If we had brought in $100 million we would have had a $150 million post, a $250 million deal or it wouldn't make any sense. It was $150 million this year and we give you back $200 million next year. That's not venture kind of a deal.

Dr. Neela Patel: 44:14

What our board decided to do was to do a bridging series B. We did an internal round that gave us was in two tranches. There was a $10 million first tranche and the goal there was just to play out Can we do the deal? Then the backup was another $20 million. If the deal we decided that we as a board decided not to do the deal, that $20 million would have given us the time to take the program forward and relaunch the series B, the new outside investor consortium. We got the deal done with about $100,000 left in the bank Did a small bridging round, a bridge loan, to get the finances in place.

Dr. Neela Patel: 45:06

It was the same group of investors who they got their money back and they put a little bit a portion of that back in. We brought in Vivo one new top-level, larger VC funds that can be a transition to the anchor of a big series B. We have that in place. It has been a little bit unusual in the sense that our very committed board and even during a time of really hard biotech downturn that did potentially have a bit of an impact on the deal. We still got a fantastic deal but it was really good for everybody and a good return for the investors. They were eager to support those strategies, put the money back in and we added Vivo, putting it together. Even it wasn't. It just was sort of weird because our situation, because of the particular circumstances, was really different than the rest of the industry.

Matthew Pillar: 46:18

Because of that difference I'm curious about, like I mean, niel has mentioned several times that you've got a very supportive board and transparent and has the company's back. Because that deal and what you're doing is. I just had a conversation with a friend of mine who's a biotech exec recently, who's doing some different things. He talked about the investment community and sort of the de facto standard of biotech. These days, whenever things are risky, it doesn't look different, different can be dangerous. If you don't look proven or the same, that can be considered as dangerous. Was there any, I guess, contention at the board level as the deal came to pass?

Dr. Neela Patel: 47:08

Not really. As the deal came to pass, all of that discussion happened for the series A. We were just doing what we said we were going to do. It was contentious. The idea of doing a spin out wasn't coming. There were investors who really didn't like that idea of trying to do an individual asset sale. I feel very fortunate to have found a group of investors who were willing to take it. We had very little data. It was two people working in the lab for a couple of years, myself and Jen Nakata. We had some toy demo models. When that funding came through, they put in $22 million to support really developing a whole new class of medicines. It's easy to say, but these really are different. They're therapeutics that actually sense their environment and change their activity. It's something that nobody's done before. We had a working model. We believed it was doable, but it took real vision on the part of the investors to be willing to do that. It was an investor favorable deal in terms of the economic terms, but well deserved.

Matthew Pillar: 48:37

I realize that I'm abusing your time and I know I'm bouncing around a little bit, but I certainly want to give you an opportunity to get into a little bit about what Bonham is focused on now. What Bonham's doing next, I don't know to the extent that you can share on that, what does the pipeline look like at this point?

Dr. Neela Patel: 49:03

I can tell you a little bit about the science and then Neil will tell you about how we're planning our strategy for this. From the scientific point of view, our lead program is a lag three regulated IL-2. It's a conceptually somewhat similar to the PD-1 IL-2. It's a way of delivering this potent cytokine to the cells, the T cells that are actually able to attack the TINA. We also have programs in interferonalpha, which is another pleiotropic, incredibly potent, effective cytokine that's limited by toxicity. It's probably even less popular in patients than IL-2 is A number of different programs there. We're working on IL-12. Incredibly potent it's. Interferonalpha and IL-2 are approved. Il-12 has never been approved because it's so systemically toxic. We're also addressing the TGF-beta axis with cell targeted TGF-beta inhibitors and starting to explore areas outside of that, autoimmune in particular.

Dr. Neela Patel: 50:19

The theme is trying to find places where we're getting really good at making these regulated molecules. At this point we want to grow as a company. We'll be taking IL-3, il-2 into phase one. We feel that that's really important for a drug discovery company. Having that within the organization, the ability and the knowledge about early human trials, is a really important stimulus for our ability to make really good drugs and so much more valuable at that stage. We'll be growing as an organization and continuing on the theme of having a lot of programs running in parallel. If we want to put something in the clinical development each year, it's the one that racist have had, based on both the technical aspects the science and on interest from potential partners.

Matthew Pillar: 51:25

Thank you.

Dr. John Mulligan: 51:27

Yeah, neil, I go, yeah, go ahead meeting our BD strategy as well, because you know our internal portfolio programs, as John has mentioned, are ones that we intend ultimately to partner. We're not going to, in the near term, be an organization that conducts pivotal phase 3 trials and we're certainly not building a sales force, but we do see a great deal of value in our platform for Making new molecules, and so we've got the set that we're doing, but obviously, with the number of people, there's only a certain number of programs that we can undertake and we would like to be able to broaden the reach of our Platform technology working with partners. So the second prong of our BD strategy is really around collaborations. Where the partner comes to us with a problem that they want to solve you know, a protein that they want to regulate and what they want to regulate it with we would make bespoke molecules for them and then they would be the ones to take those programs forward, and those are going, those discussions are ongoing and they would let us expand.

Dr. John Mulligan: 52:37

John mentioned that we're now, you know, in auto immune disease. That's sort of the nearest, nearest Switch to taking immunocon molecules and now playing them out in the auto immune space. But we see that there's potential for application in many other diseases, in metabolic disease, potentially in pain, in in fibrosis. So we see that potential. It's just that it would not make sense, for we want to have a broad portfolio, but to start to add all those various therapy areas would not be a wise decision on our part.

Matthew Pillar: 53:16

Yeah, what's your mindset now, Neela, as you, as you look forward? I mean, I know that there are many, many moving parts and many, I guess, inflection points between now and the next deal, you know. So I'm not asking you to look at your crystal ball, but do you, do you feel like, with every deal that's done, like you've had deal-making experience with prior, prior companies? Just just, you know, orchestrated this great deal with Roche. Do you feel like every deal it's done? Like Does your mind start mapping out more scenarios, like early on, like you mapping out the next deal scenario right now? Or does that sort of play, you know, is it hit y'all at once? I guess it's a very vague question, but I'm trying to get a pick, a sense of your mindset right, like yeah, and and and I I do, but it's not an isolation.

Dr. John Mulligan: 54:09

You know these discussions are With the core senior leadership team, because each of us brings highly valuable insights to the table and we we do. We talk about oh, it looks like we have a line of sight for this program to get to a clinical candidate. When do we think potential partners would be interested in this? What would be the value, inflection points for them? How does that match with our expectations for financial return? And then, okay, we start to play that piece out.

Dr. John Mulligan: 54:46

We know one foundational piece that we've always had in mind is that early engagement with potential partners is highly valuable, because you start to you here. If you listen, you will learn what data they want to see what's important to them and it's. I'm not saying that we're going to change our whole strategy, but if you hear from three pharma partners hey, I'd really like to see this model then maybe we take that under consideration and include it in our plan. So we're doing, we're doing our very best and with the Roche deal, you know, as part of our history, we we're getting the conversations that we want With pharma partners and getting that early feedback and and taking that into account as we map out Potential deals. I mean there you know, we all agree, understand and agree that it's it's simply potential. There's no Certainty about it, but it does help us to plan and to think through what we need. We need to do that next.

Matthew Pillar: 55:50

Yeah, what do you, what do you find yourself like? What's occupying your time? Now? It's a, you know, I mean, like this is a very it's a naive question, but like I'm curious, like you know you, you spent, you know you rolled up your sleeves and I'm sure spent months and months and months doing very, very hard work in In terms of diligence and deal-making and negotiations and so on and so forth, structuring and execution. Do you I guess maybe I'm answering in part my own question like, do, like, are you, are you working on execution Right right now, or are you like what? What is a deal-maker spend their time doing when there's not necessarily something on the table to be dealt?

Matthew Pillar: 56:29

I guess is the question I mean what you're saying was like I've been on vacation for a couple months.

Dr. John Mulligan: 56:36

The deal to deals to be made don't come out of nowhere, right.

Dr. John Mulligan: 56:41

There's a lot of groundwork that needs to be laid ahead of time to make that happen, and so you know I've spent a lot of my time over the past year working out both the strategy and opening those doors with potential, either partners for our portfolio programs or collaboration partners. And you know, as, as with the science, you, you undertake a lot of experiments and some of them just don't work out, and you can't know a priority that they're not going to work out. I mean, yes, if you think it's a silly experiment to do or you think that person, that group is never going to be a legitimate partner, you don't invest your time in it. But there's many, many conversations that just need to be taken away from you, many, many conversations that just need to be had in order to find out who's serious, where it's going to wear your values aligned, where you align financially, where you align scientifically. So I would say that you know the past year has been laying the groundwork, groundwork for, for what's going to come next, for us.

Dr. John Mulligan: 57:50

You find yourself on the road, a lot doing like a lot of networking and you know, we did the entire first deal without ever sitting down with them in person.

Dr. Neela Patel: 58:01

Wow, that's not a single in person meeting yeah yeah, and so it's like the Standard way of doing business ever since COVID.

Matthew Pillar: 58:09

Right, you've adopted the COVID, the COVID methodology.

Dr. John Mulligan: 58:12

Exactly exactly. So I am the one, the one big conference that I did attend. I came back with COVID. So Perfect, yeah, necessarily super excited about that.

Dr. John Mulligan: 58:22

I you know if, if it makes sense, of course, we'll meet in person, but I think everyone has adapted to what is the key information that you need and being able to see people's body language on zoom. I think we've adapted to this way and it allows everyone to work faster. You don't have to wait for schedules to align and you know I can't be away for five days in a row to travel Halfway around the world. No, I'm gonna be on the phone with you tomorrow. Yeah, we're gonna hammer this out and get it done, and so in some ways, it's accelerated our ability to get things done, and Part of that laying the foundation is building that relationship. Do I think it would be more efficient to build relationships by sitting down over a cup of coffee with someone? Probably, but we substitute that with okay, I'm gonna get to know you in advance, over time and I'll put the time and effort into it, and I'm finding that our partners are happy to do that too.

Matthew Pillar: 59:23

Yeah, so is it a safe assumption that I won't be able to buy you a cup of coffee at JPMorgan in a month and a half or so?

Dr. John Mulligan: 59:30

That's probably a safe bet.

Matthew Pillar: 59:31

Okay, john, you either. I won't be able to buy you a cup of coffee. There you go, although.

Dr. Neela Patel: 59:35

Neila is in the Bay Area, so there's some opportunity. You might have a non-JPM Coincident coffee.

Matthew Pillar: 59:41

You probably wouldn't have to twist my arm too hard to get me out of the Market district there for the financial district for an hour or so. Sounds good during that week. Neila, it strikes me that you know, I don't know what's more rare In biotech a fee, a woman in the science side of biotech? You know, like do doing science. I'm actually, I think I do. I think, just anecdotally, I think a woman in the business development side of Biotech is more rare than you know, sort of the traditional STEM Approach. Would you agree with that? Like, do you do?

Dr. John Mulligan: 1:00:23

changing. I do think it's changing, but yes, I think when I started my career that was absolutely the case, absolutely the case, and and and that even then women were rare in the in the more senior roles. But that that is changing, yeah, I think. You know, when I started, I was often the only in the room, you know, only woman in the room, presenting to a room full of men and Would you know me just clarify when you started.

Matthew Pillar: 1:00:50

When you say when you started, when you started in in business development, no, when I started in the science side, started my career all together and I would say that I was extremely fortunate.

Dr. John Mulligan: 1:01:02

I did seek out and I was fortunate to find both bosses who supported me and to build relationships with senior folks who advocated for me. So you know, I guess the thing for me is I want the path to be easier and better for for women who follow. So I do Mentor younger women coming along or people who reach out to me, and I consider that part of my professional obligation. I honestly consider it part of a professional obligation of men and women, not just women To do that kind of work, because everyone benefits when we plug in to the best talent. It's beneficial for the individuals, but it's also highly beneficial for the companies. You know companies, it's now we have data to say that Companies where there are diverse backgrounds Represented in the most senior leadership levels, they outperform their peers. It's it's it's now established and so it's good for everybody. I think.

Matthew Pillar: 1:02:04

Neil, you mentioned something that I want to follow up with you on and that's around sort of the opportunity to, to create a better, more clear, maybe more direct path for the women who follow behind you, and I've had plenty of conversations about this with women, about tech, where you know, if, if press To me, quite frankly, if pressed on, or when I've pressed them on, like what does that mentorship look like? Like how do you kind of codify that and make it? Make it daily practice, like it's? It's one thing to say it right, like we should all be lifting each other up and creating opportunity for one another. It's another thing to come into work, you know, every day, every week, every month, every quarter, every year, and and exercise those muscles. So just give me some, not not to, you know, not to put you on the spot, but give me some thoughts around like how do you flex those muscles in a way where you feel like you're actually contributing to the cause?

Dr. John Mulligan: 1:02:54

I think that the first thing is to be open to it and to make it clear that you're open, because Women have approached me and said, hey, I heard you say that you were willing and interested. Would you be willing to be a mentor to me? And what that means is a commitment to meet regularly To listen and hear about what they're doing in their career, what they want to do, and Help them map out the steps that it will take to get to the next place. Whether that is, hey, you know you really should consider getting Certified in project management because you you'd be able to open that door. Or, oh, I see you really want to go into this field. I know somebody there. I'm happy to make a Introduction for you. So it's it's always customized, but I think that getting to know the person and understanding where they're trying to go and seeing how you can use your network or your knowledge or your experience To help them get there is is really core.

Matthew Pillar: 1:05:33

All right. Like I said, I've been abusive of your time. You guys have been very generous with it and I appreciate that. I know I've been steering the ship around in circles, we've covered a lot of water, but I'll just give you each an opportunity to share, like what you're most excited about next, like what sort of imminent, an imminent opportunity or thing happening at Bonham that you're most excited about. Neela, you go first.

Dr. John Mulligan: 1:05:56

I'm super excited about the fact that we are well positioned to take one of our programs into preclinical development and have a line of sight to get that into the clinic. But I'm equally excited by the fact that we are not going to leave our other programs behind. There's some other mechanisms that we're working on that I think are really compelling and will really make a difference for patients.

Matthew Pillar: 1:06:22

So yeah, and you're fortunate to be. I'll just make a side note there you're fortunate to be in a financial position, at least from the outside looking in, that affords you the opportunity to not let go of some of those follow on opportunities, which it's a great place to be. So congratulations to you both for the work you've put into finding yourself in that position yeah. John, what are you most fired up about?

Dr. Neela Patel: 1:06:48

Well, I have to say it's the same thing for what Neela is saying. I've never worked on preclinical development or development. I've always done early stage, really early stage programs. So I'm really excited to be working with a team helping to build a team that's going to do that and watch that process and build it into our company and I think we've got just I'm just I can't tell you how excited I am about the set of programs we are working on. We've got some really cool drives with really interesting potential.

Dr. Neela Patel: 1:07:21

Thanks for you taking these super potent, very broadly active molecules and deliver them with just like surgical precision to a single cell type and get some whole new bit of biology out of that. And that's. I think that's incredibly exciting. And the challenge is growing the team to be able to take advantage of these things. I mean, we've grown more slowly than a lot of companies and we've been have at our stage where you know we've had first had funding, serious venture funding in 2018. We're five years into it at this point and we're 30 people. We've been tried to grow, prioritize, being really effective and hiring the right team and using resources wisely. I think you've got a lot done with a small group, but being able to expand that. I think that our challenge, and what interests me, is figuring out how to grow, how to double the size of the company and still get twice as much time, not get, you know, 25% more or 25% less time.

Matthew Pillar: 1:08:30

Yeah, continuing to learn those business lessons you mentioned from the outside of the conversation, right, yeah, yeah, I've got to ask you, dr, dr Mulligan, real quick before I let you go. So I've had you on the phone for like an hour and 20 minutes now and you haven't stopped walking since we started talking. Do you walk all day long? All calls, all meetings, all day long?

Dr. Neela Patel: 1:08:50

Pretty much. Yeah, I have an under desk treadmill and a standing desk and I don't get out a lot, so yeah.

Matthew Pillar: 1:08:59

I'm going to do it. There's some good advice right there.

Dr. Neela Patel: 1:09:03

Yeah.

Matthew Pillar: 1:09:04

Dr Patel, dr Mulligan, I appreciate the chance to talk with you. I think it's been a very insightful conversation. I look forward to paying attention to what Bonum is doing and I hope to have you back on the show, you know, later on, maybe when we get a little bit further down the road in the clinic, to talk about some of the ongoing plans there.

Dr. John Mulligan: 1:09:23

We look forward to it. Thanks so much for your time.

Matthew Pillar: 1:09:25

Yeah, thank you. Thank you. Thank you, Bonum Therapeutics Chief Business Officer, Dr Neela Patel, and CEO, Dr John Mulligan. I'm Matt Pillar. This is the Business of Biotech. We're produced by Bioprocess Online and Life Science Connect with support from CYTIVA, which demonstrates its commitment to new and emerging biopharma companies at CYTIVA. com/ emerging biotech. If you like listening to conversations with biotech leaders like Neela and John, subscribe to the Business of Biotech podcast, sign up for our newsletter at bioprocessonline. com com/ and always be sure to leave us a review. Let us know how we're doing, and thanks for listening.