Investing In Early-Stage Oncology With Yosemite's Dan McHugh

On this week's episode of the Business of Biotech, Dan McHugh, head of the investment team at Yosemite, explains the San Francisco VC group's approach to investing in early-stage cancer therapeutics and funding academic research through unrestricted grants. Founded by Reed Jobs, son of Steve Jobs and Laurene Powell Jobs, Yosemite invests across drug modalities and supporting technologies in the oncology space. Dan talks about his path from bioengineering to biotech venture capital, meeting Reed Jobs on Stanford's fencing team, his CEO turn at Tune Therapeutics, and the current fundraising environment for innovative science.   

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Transcript

Dan’s Stanford Path To VC

Ben Comer 0:04

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 Dan McHugh, head of the investment team at Yosemite, a San Francisco-based VC firm founded by Reed Jobs, the son of Steve Jobs and Laurene Powell Jobs. Yosemite is focused on early stage developers of cancer therapeutics, and I'm excited to chat with Dan about Yosemite's investment model, the kinds of companies and drug modalities he's focused on right now, his stint as CEO at Tune Therapeutics, and what it taught him about biotech investing. And I'll get his thoughts on a biotech's company location as a factor for investment consideration. Dan, thanks so much for being here. Yeah, really appreciated that. Great to be here. As we do on the business of biotech, I wanted to start off uh with your background, Dan. You earned uh a bachelor's engineer or a bachelor's degree, pardon me, in bioengineering and a master's degree in management science and engineering, both from Stanford. Uh, and I saw that you were an athlete. Uh, what sport did you play? Uh I was on the fencing team at Stanford. Oh, nice. Okay. Well, did your experiences at at Stanford uh lead you into the field of venture capital and life sciences investing, or did that come later?

Dan McHugh 1:24

You know, it weirdly, actually a little bit earlier. Um, you know, I uh I since uh it was really in high school that I first got exposed to an academic lab research through an internship at Boston University, and uh, you know, really enjoyed it and had always been really interested at that interface of business and the life sciences. And uh, you know, it's something that I continued through with my undergrad at Stanford by studying bioengineering and then uh doing the master's and uh kind of more the mathematical finance side, really always wanted to combine the the two efforts. But uh, but but certainly something that was just reinforced while at my time at Stanford is uh you know the space that I wanted to be in return.

Ben Comer 2:01

Yeah. And so uh even in high school then, did was it was it investing in particular that you know that you wanted to get into, but you recognized at that point, you know, that you needed uh the science background to to really be good in the biotech space or or or was it not that clear-cut at that point?

Dan McHugh 2:18

Yeah, it's a good question. I mean, I knew I wanted to be at the interface of translating really exciting new technologies within bio to people. And um, I've got to credit probably Jay Keisling for some of that. Not that I know him personally, but he uh, you know, spent some time giving a talk at Boston University, which is where my high school was, uh, around some of his work on uh synthetic manufacturing of Artemisinin, the anti-malarial. And uh, you know, at the time I was just in there sitting in on the lecture and kind of really blown away by where the field of bio was at the moment, the potential to kind of take that engineering thinking, modify biology, and have such a potentially massive impact on patient outcomes and uh, you know, commercial success of a drug by really radically reducing the cost to produce something. That's that's as needed as an anti-malarial drug. So that was really what sparked my interest, I think, on both the technology side and that translational ability. Um, you know, I mentioned working in a lab as well, which uh I certainly enjoyed and uh did it throughout my my time at Stanford too, but realized pretty quickly through that experience that I think I was just uh had too um was too interested in too many different areas of technology to know that I uh to go just fully deep in a single one long-term for my career. So that sort of scattered thinking and wanting to dive in deep into many different uh areas of exciting innovation within biotechnology kind of drew me toward investing as a good model to be able to do that, where you get to engage with researchers who are working on pioneering, you know, cures to different types of diseases or different approaches for making drugs cheaper, um, while being able to engage with them from that kind of business translational lens. Uh so you know, I'm not uh saying that in high school I 100% knew I wanted to be on the investing side with it, but I kind of felt like a good uh a good way of getting exposure to that technology and innovation, but but without um, you know, being the world expert in a particular one. And it's uh getting a broader sorter to a lot of what's going on.

Ben Comer 4:20

Yeah. Were you connected into like the spin-out scene at at Stanford and in biotech? I mean, did you know people who were, you know, making discoveries in the lab and trying to translate those out into a company?

Dan McHugh 4:33

You know, frankly, not too much, honestly. I um although there is some uh a funny kind of connection too with that Jake Keisling story where one of his uh former students, Christina Smolke, was my advisor there. And, you know, since that time, she's actually uh spun out her own company, uh Antia, that I think has been kind of fairly successful in that same sort of uh synthetic biology space. So definitely is exposed to an environment where I think researchers are thinking very proactively around how they can translate their technologies into into startups that have the potential to scale and reach patients. Um, but not not something where I have a lot of experience in terms of actually working at those startups throughout my time there.

Bain To Emerson Via Reed Jobs

Ben Comer 5:12

Yeah, yeah. Um you graduated from Stanford and then I think went to Bain and Company for a couple of years and then joined the Emerson Collective, uh, which was founded uh and still is led by Lorene Powell Jobs to work on health investments, uh, and you were promoted uh to greater roles of responsibility uh over a seven-year period. Um, how did you make that uh, I guess, connection or transition from Bain and company to Emerson? How'd you get exposed to them? Sure.

Dan McHugh 5:44

Um, you know, as I mentioned, I was really interested in that early stage biotech investing, even while I was at Bain. And I I think Bain was a really amazing opportunity and uh had a lot of exposure primarily through their uh private equity and uh and biotech practices. So it was great kind of on both sides there to get to work with uh, you know, investors and asset alligators on how they look at uh different investment opportunities, although not necessarily in the space I was interested in. And then also work with some leading biotech and pharma companies in terms of how they think about translating some of those innovative science into commercially successful drugs with uh with successful launches. And I think it was a great training ground with respect to that, but I knew my heart was always in the early innovation space. And that's just not something that you get as much exposure to in that context. So was talking with a number of different early stage FiFEP investment groups about what my next uh career move would be. And uh really uh my uh relationship with Reed, I think, is what certainly drove my uh learning hamerson collective as opposed to another organization. You know, Reed and I actually met originally on the fencing team that you mentioned. Uh oh, really? Um but really subsequent to that, you know, worked in uh a uh cancer research lab together as well. And um, you know, had had known obviously that he'd been really passionate about oncology. He had recently joined uh his family's family office to really start out on a how to think about using capital to uh to advance the mission of reduction in canto work tower. Right. And I think starting with that as an objective, there's obviously a lot of different directions that you can take it. But Reed really started on the academic philanthropy side and giving grants to researchers working on exciting uh projects within the canto phase. And Emerson Collective as a whole had, you know, does a mix of variety of different activities, push forward missions in a couple of different areas. Um, but those include academic grant writing uh and grant writing to other organizations, but but also investment work as well. So uh when he had been doing the grants for about a year or so, uh, saw that there was really an opportunity here to also build out a venture strategy within the oncology space to help supplement and accelerate that work that uh he was doing in the academic philanthropy side. So uh, you know, he knew I was talking with some other biotech venture groups, uh, asked me to come join him in helping build out a for-profit strategy as well to supplement the grant work that the organization was already doing in cancer. And, you know, for the better part of a decade, that's kind of what we built together there at the family office.

Ben Comer 8:19

Yeah, and I should mention this, even though I think probably everyone uh listening knows this, but uh Steve Jobs Reed's father uh died of pancreatic cancer, which I suspect is the reason behind his at least initial focus on oncology as a therapeutic area that that he wanted to help support and develop. Uh that's probably obvious, but I assume that's correct, right, Dan?

Dan McHugh 8:41

Yeah, no, that's absolutely correct. I mean, and and that's definitely his story to tell, not mine, but um, but that's for sure the original motivating factor. And I think from the beginning, though, it's important to point out that it was never just a pancreatic-oriented strategy. I think Reed saw that you know, cancer is a complex issue and there's interrelated components of different types of tissue of origin. And um, you know, so from the beginning, it really was a an all-cancer type of strategy, and we continue that today, but uh certainly it was at Steve Steed's uh diagnosis and cancer journey that uh inspired the desire to work in space for all.

Ben Comer 9:15

Yeah. Well, what what about like investment strategy and the kinds of tools or technology or or drug RD that you wanted to support? Were you and Reed kind of of a like mind on on those issues? Were there things that kind of he was focused on or and you're focused on and you came together? Can you give me a sense of of that? Yeah, super interesting.

Dan McHugh 9:36

I mean, uh it was definitely risky kind of taking the leave to join Emerson in some sense because you've been, you know, friends with someone for a while, but working with them is obviously a very different context. So yeah, I would say have to be super grateful for the fact on on how well our progressional relationship has gone over the past decade and really certainly enjoyed working very closely with Reed. There's never really been kind of an overarching tension on types of technology or types of areas of focus uh that you know he was on one side or I was the other. I think overall fairly well aligned. Um obviously we have a very kind of uh Socratic debated culture too. So um there's disagreements that happen all the time internally, and we uh have open debates around what the different focuses should be. You know, how um how narrow our scope should be, for example? You know, are we interested in supporting companies working on the device side uh where we may have less experience or uh expertise? How how far adjacent to cancer is okay to still kind of stay on mission and build out a concentrated strategy while still getting exposure to potentially exciting opportunities that are kind of on the edge of oncology? Um, so some of those sorts of questions are things that we debated frequently and still continue to do here at Yosemite, but um, but I would say overall zooming out definitely very well aligned with each other in terms of the strategic objectives for the organization.

Ben Comer 10:55

Yeah, okay. And you you started with Yosemite, you came over from Emerson Collective in 2023, is that correct? Yeah, that's correct. And how many, uh, how many, I guess, total investors are there within the Yosemite group uh at this point?

Dan McHugh 11:09

That's a good question that I should know the actual answer to off the top of my head here. But you know, we're uh an organization of a little over a dozen uh people total, and that's a mix of folks on the investment side and the operation side. So to give you a sense on kind of the the scale of the organization, but we uh, as you mentioned, spun out from Emerson Collective, which I think is pretty important to the story here. You know, it's a a strategy that since 2016 we've really been building within family office context. And, you know, of course, it's very much not just me and Reed doing that. It's with the whole team of folks that have been supporting that effort. And it's that entire team that was focused on ontology at Emerson that spun out here to Yosemite. So it's the same team, same strategy. Um, a couple of different, you know, well, obviously different name and uh different sources of capital and a few other differences, but but really we operate much more in the same way than we do differently. Um and the yeah, the rest of the investment team has been really critical in getting us where we are and the future direction as well.

Ben Comer 12:09

Great. I I want to get back into Yosemite's areas of focus and and kind of general investment strategy, but before I do, um you became, I think Tune Therapeutics was a company that Yosemite invested in. You became interim CEO of that company, Tune Therapeutics, uh, in 2024. Um, can you talk a little bit about the situation at Tune during your uh during your tenure as as CEO? What the, you know, what the circumstances were that brought you into the the leadership role there in 2024.

Epigenetic Editing Explained Simply

Dan McHugh 12:41

Yeah, sure. And uh Ben, you're gonna have to cut me off a little bit here because I I'm obsessed with Tune as a company and can go on forever about epi editing, Tune, and and really the both the origin uh and more importantly, I think the future trajectory for the company here. It's a fascinating science for sure. Yeah. It is so cool. Um and and I really think still deeply underappreciated in terms of the potential for epi editing in a therapeutically translatable context. Um, you know, I uh certainly a lot of learnings came from me jumping in back in 2024 as uh the interim CEO for the company for a year. Um, it was a really exciting time to jump in uh for the company. You know, we were uh approaching our first filing to go into the clinic for uh, you know, first step there for a brand new modality. So um for uh jumping in there was not something that I anticipated needing to do, honestly. I won't go into kind of the details of the leadership transition with the company at that time, but you know, we needed someone to step in for a period while we found the right long-term CEO for the organization. And uh I'm just super grateful that I was able to be there at that particular time for that company. Um, and really only doable because of the exceptional leadership team that the company has. You know, I came in and frankly had no idea what I was doing. Um, the team has a really, really strong set of leaders inside of the organization that uh helped teach me about while I was there. And I certainly view investment opportunities, other companies ever invested in and portfolio support really differently than they had before taking that operational role. Um, but happy to, if you're okay with it, like if you uh talk for a second on the technology itself and why we're excited about it, because you know, the the company has a special place for us at uh Yosemite in that it really is the first company that we were deeply involved in the actual operational decubation of. Um so it's it's one that we started this project back in probably like 2018, uh, of looking at at the editing and its applications within the ontology space.

Ben Comer 14:43

And that's epigenetic editing that you're referencing, right?

Why Hepatitis B Matters For Cancer

Dan McHugh 14:46

Yes, absolutely. And uh maybe I'll just start start with that. Thanks for the clarification there. But the whole notion of epigenetic editing is that you're able to harness a lot of the technology that's been developed in the gene editing states. Um, but instead of actually changing the underlying sequence of the genome, you are just modifying chemical markers on the genome that change the three-dimensional structure and therefore also the uh um the ability to translate those genes into proteins. Um, so the you know, the the way I explain it to folks that maybe are a little bit less deep on uh the field of epigenetics is if you get sequenced, you have your same AECNG in every cell in your body. And your liver cell versus your skin cell versus your neuron all operate obviously quite differently. They operate differently because of different methylation markers or histone acetylation markers that change the three-dimensional conformation of the DNA within that cell that uh affects whether or not a particular gene is turned on or off. So what we do at Tune and the other companies as well that have sprung up in this epigenetic editing space is you localize to a gene in the same way that we do for genome editing. Uh, but instead of actually cutting the DNA, you just change that chemical marker so that if a gene is unschooled and turned on, you can basically compact the chromatin and switch off that uh that particular gene. Or you can you know turn on the extraction of a particular gene as well. And we think that this has a wide range of applications. And frankly, that was one of the struggles for this company when we're getting it off the ground is how do you really prioritize and focus appropriately as an organization that's you know trying to build on a true platform and be a pioneer in that space, but also recognizes the need for nearish term of readouts to uh you know change the cost of capital for the organization to fully uh realize the potential of the technology. Um, so we got it up and running, incorporated the company back in January of 2020, brought in the initial founding scientists, um, you know, introduced uh Charles Gersbach at Duncan, uh, you know, scientific founder and really joined as uh the interim chief scientific officer for the company in the early days as well, and deeply operationally involved. Uh brought him together with Steve Walter Nob at Berkeley, who's also really a pioneer in the space of uh epigenetic editing, to start this company that now has you know evolved from an early stage kind of platform-built, high science company to one that, you know, we're now in a clinic with uh drug for hepatitis B that we're all incredibly excited about and have a series of follow-on assets as well that that we think have really high potential. Um, and you know, you may say, like we're you know, if somebody's a cancer-oriented organization talking about a viral drug for a company that's obviously deeply important to us. But I I think it's important to highlight for uh any of us here who may be less familiar with the hepatitis B space that hepatitis B is the largest driver for the cancer globally. Um, a million people die every year uh from hepatitis B in through fibrosis and through HDB. Oh, interesting. I did not realize that. Yeah. Yeah, the scale of the disease is frankly just mind-boggling. Um, you know, extremely underdiagnosed globally, but very, very conservatively. We're talking about well over a quarter billion people who have chronic hep B. Um, so it it there's a deep unmet need there, um, both from a you know massive commercial opportunity domestically and globally, but but also a huge need to uh prevent patients progressing to HTC, uh, which obviously can be a very devastating disease. So um we're really excited about where the company is right now. I'm not gonna talk about the data. The company will be presenting some of the early planning full soon, which we're incredibly excited about. But uh, you know, I was very fortunate at the end of my tenure there as an ARM CEO to be able to bring a uh John McCutchinson to lead the company full-time now. So uh for those who don't know, he was a um chief scientific officer at Gilead. It was really uh an incredibly respected hepatologist that's obviously been deeply involved in the cure direction for hepatitis C and spent a lot of time on hepatitis B as well. Um so I think kind of the uh devotee confidence of him and deciding to jump it full-time and thinking that we really have the potential for functional cure for hepatitis, it's uh is very encouraging. And uh him alongside uh Akira, who's the co-founder of the company, the um president and CFO, COO, uh done a great job uh since I walked about a year ago, continuing progressive clinical development for the company in the digital.

What The CEO Seat Teaches

Ben Comer 19:16

Yeah, epigenetic editing, I I think of the science is super interesting, as I already mentioned. We had um uh Amber Saltzman from Epic Bio on um last year, also you know, similarly working in uh epigenetic editing. And that was kind of my first uh exposure to that area of development. Um, but super interesting. You you came into tune therapeutics, I think you said Dan, and needed to prep uh an IND, uh the filing of an IND, is that right? Yeah, so uh CTA technically because we we did the hung, but yes, so yeah. So what was that like? I you know, what would what did you find most surprising about the CEO role? Like maybe that you didn't expect. You know, uh you uh I'm sure were were very busy from the second you know you stepped through the door, but was there was something that you you know weren't prepared for or didn't expect about the leadership role at a biotech company? Honestly, there was a lot.

Dan McHugh 20:10

So I I'm not sure we can get fully into all of it, but it it was a um it was a great experience. And I think uh it's gonna sound so dumb, honestly, but like the people matter so so much. And I I know that that's just inherently obvious to everyone. And you know, talking about great leadership at startups making a big difference is just you know, it's not at some meat insight here on my end, but I think it becomes a lot more real when joining the organization and are dealing with it from a day-to-day basis. And you can see, well, okay, these are people that need to come in all hours of the night, weekend, et cetera, for months on end as we're you know finalizing the process to get approaching this filing. And uh to have the type of both team members who are able and willing to do that, and then also the leadership at the organization to be able to motivate that and provide like a good example to be able to get people to do what really is an incredibly challenging feat, right? Of uh first time effort for a new modality getting into patients is a uh it is a pretty tall order. So, from my perspective, watching the team operate, you know, and by the way, I take zero credit for this too. When I say leadership, I'm talking about leadership within the existing organization that's motivating their team. I mean, we had four months of folks on this team within the organization and it's scheduled down to the half hour about what they may be doing. And I think it's not something that you can just do that with break science. That company has break signs, right? And you can't do that with just here's a very exciting drug that we think has potential to be a functional cure for hep fee. I mean that's motivational as well, but it uh it really comes down to the individuals on the team and the leadership within that team to be able to harness that talent.

Ben Comer 21:54

Yeah, and I I assume that a lot of that comes down to building personal relationships between uh teams. Members. And I don't know if you were coming in as kind of a brand new face, or you know, maybe the leadership team, C suite, already kind of knew you when you were coming in. But I'm just curious about what you might say, Dan, about you know, quickly needing to build those kinds of relationships and trust, you know, amongst C-suite and other members of the of the Tune team. You know, how did you approach that? Yeah, absolutely.

Dan McHugh 22:24

And like I I think uh I'm very grateful that the situation happened for me at Tune and not a different company. I'll start with that in that this is a company that from the very beginning, like I said, we we really were critical in getting the company off the ground. We we incorporated the entity while at Emerson Collective. I I interviewed all of the initial scientists that were brought into the company. So they'd known me from the beginning, and I think came with a little bit of trust and credibility through that potentially. Um the management team is of course one that you know I've worked incredibly closely with for years as well. So there was definitely, at least at that uh level, a um a relationship that I had already had that said, you know, I came in and the company was a lot bigger than when we were first hiring those initial scientists right at the beginning. So a lot of people that I had to, you know, get to know, uh, build relationships with and understand the organization a lot more deeply than I did at the more superficial kind of board meeting type of level that I've been engaging with the company at for the previous couple of years. Um, I think it it comes down to like as dumb as it sounds, a lot of like coffee chats and things like that. But basically just making sure that you are uh being there for folks to be able to when people have you know concerns or new ideas, that that there's a sense of kind of availability and openness on your end with that. And then also proactively scheduling time with folks and not just folks at the C-suite or EVP level, but but people who are like doing the job on a day-to-day basis. And uh it really helps you will build the relationships, but also understand your organization at a much deeper level. Um, so it was something that I did very intentionally from the beginning and just frankly with the the help of the team as well to identify, you know, who should I be talking to here and uh what what sort of you know is it made more sense for me to to invest more deep with my time.

Ben Comer 24:07

Yeah. Yeah. What about um perspective on the other side for that you could take back to Yosemite? Was there anything that you learned through your experiences as CEO at Tune that that made you think differently about what a company might need or even what companies you might want to invest in? Absolutely.

Dan McHugh 24:27

Um the first one I would say is that there's a uh additional level of empathy for sure on my end around this. Uh, you know, this is a company that I think the technology is phenomenal. I think that the program is phenomenal, the team is phenomenal. So I can say, like very honestly, when I'm out there fundraising for the company, that I really do think that you should put your money into this. And despite all of those things, I mean, while I was there in additional, in addition to the CTA file, and uh we, you know, uh we ended up uh raising a very substantial Series B for the company. Um so ended up being successful and we're incredibly proud of the new investors that we brought in. But frankly, that was a lot harder than I thought it would be, just given the quality of the company. So part of this uh is definitely an empathy for the CEOs that we invest in when they're out there fundraising and making sure that you know we uh we're being as helpful as we can be and have a sense of understanding for uh how challenging some of those efforts can be. Um, I would say that there's more tactical uh things on the diligence and portfolio support side that I certainly look at slightly differently uh after that experience, you know, getting in a little bit deeper operationally has helped me identify some areas that we now look into more for companies as we're diligencing them because uh Frank then realized how transformational it was that tuned out like a really exceptional X component of the company and making sure that we're really practicing that when we're looking at a different company, make sure they're all set by is there anything more specific you might say about that just in terms of looking at operations?

Ben Comer 25:54

I mean, is it is it like early manufacturing process development or frankly, yes. I would go with that.

Dan McHugh 26:00

Like manufacturing process development is just it's so critical. I mean, you know it for sure, but like you really know it when you're dealing with the uh the day-to-day of it. And I just personally spend more time there now with companies for sure.

Grants That Later Become Companies

Ben Comer 26:12

Yeah, yeah, right. Um, I want to get back to to your Yosemite here. Uh, but one of the before I do, one of the things that's I think unique about Emerson Collective, and and this carries through to Yosemite as well, is that both organizations, I think, provide unrestricted grants to scientists in the very earliest stages of research projects. Can you describe maybe the strategy uh or the philosophy or just the thinking behind that kind of support for uh essentially new scientific discovery? Absolutely.

Dan McHugh 26:45

And I I really do think this is what makes our model most unique as to Sanity. Um, of course, we're cancer focused too, and that that's a unique element. And there are a couple of other funds that we work with free companies who who have that type of single therapeutic area focus, and I think that's a critical differentiator for us. But but really it's the grant work that we do that uh makes us a very different looking organization from others. And it's as simple as this notion of, you know, it's the same people and technologies that are involved on both ends of the spectrum here. And uh to have the impact that we want to have on a reduction in cancer mortality, I think it's uh having an organization that has the flexibility built into it to be able to engage with the best science and support that and push it forward, no matter what stage that's at, I think is a really, really critical component to building the best cancer accelerant organization out there. Um and, you know, it's something that really I think stems from Emerson Collective and is not something that we could have done had the organization not been born with an actual popular issue. Like uh, you know, Emerson is a super interesting organization that uh part of the strategy around it overall outside of just the cancer work is a tool agnostic use of capital to push forward missions, right? Where capital can be used in a philanthropic context, a for profit context, a political context, other sorts of ways to hold the right levers to actually advance. And in the mission of cancer and light sciences in general, let's say, right? But um I think that that relationship in particular between the academic philanthropy and the for-profit venture investing is particularly tied together, right? And we realized very early on that some of the grantees that we were supporting, whether it be that the technology that we've been supporting with that grant, ended up with very exciting data or something else in their lab that was maybe a little bit more advanced to add exciting data. Those same researchers were, of course, you know, that they got into this not to have a nature publication. They got into this field to actually make a difference in patients' lives. And I think that they, as well as us in the field, sees that in order to do that, you know, you need to have a structure that's able to bring different sources of capital as the technology uh progresses forward and reaches clinical stage and then eventually merchandise safe for an asset. Um, so being there as a potential partner to work with those folks as they've had those great ideas that were maybe more ready for the next non-brand stage, having that organization that was also able to potentially start up a company around it, or if there's a company already, invest in that company to help accelerate it was really important. Um, so I I'm super pleased to say that like the that strategy has really borne out for us. A lot of our best investments in terms of financial performance have really come from some work that is originally out of grants that we had given to researchers, and then the companies that have subsequently come out from the technology that that was the risk on we had a few side.

Ben Comer 29:39

Oh, interesting. Okay. So some of those unrestricted scientific grants, you know, years later maybe turned into actual companies that you would come back and invest in. That and that really is the int here.

Dan McHugh 29:50

And it it's not that every grant that we get is to a project where we say, well, if that works, you know, this is like a venture investable company that we're gonna get behind. Um, I think that support for you know earlier stage things or things that like may not be ready for that type of stage as a next step. Yeah, and a lot of those fail, right? Yeah. It tons fail. Some of them, you know, venture investing may not actually be the right next step for that, even if it doesn't fail. Um, like maybe it's de-risking for some larger federal grant that they're able to bring more dollars to you know continue to advance the science here that will eventually get to the point on therapeutic translation. But it's um, you know, something that we we think having those relationships with the researchers, the institutions where where this innovation really is happening in this field uh is super critical for our strategy on the side.

Fund Size Checks And Focus Areas

Ben Comer 30:35

Got it. Um let's talk about Yosemite and the work you're you're doing there. Um, can you give us a sense, Dan, uh how much funding you have in in total, first off, and then if there's a kind of typical amount that Yosemite might invest in an early stage biotech as an example?

Dan McHugh 30:55

Yeah, for sure. Um, so you know, we are the the answer to the first question is a little bit tricky in that we spun out of a family office. So we continue to manage those investments that we made while at Emerson Collective. Okay. Also have separately raised money for funds uh as Yosati. Um so total assets under management are north of a billion dollars, but that's probably about as comfortable as I am getting into the details around it. Um and uh the you know, in it it the the typical check size for uh a first-time investment into a company in Fairies, but I would say five to fifteen million or so is probably where the vast majority of our checks fall into. Uh sometimes for earlier builds where it really does just require a credible piece of de-risking uh science, you know, we can go down meaningfully lower than that too, uh by uh, but it's yeah, five to fifteen is probably fair.

Ben Comer 31:48

Okay, great. And can you give me a sense? I I know Yosemite is is focused broadly on oncology, but can you give me a sense of the universe of companies that that might fit the criteria for investment? And I don't know if it's if you look at you know stages uh versus preclinical or or any sort of criteria that you can share um that you know is something you consider when you're when you're making these investment decisions.

Dan McHugh 32:15

Yeah, absolutely. Um I would say the first and foremost one is that our our guiding objective as an organization is a reduction in cancer mortality. So everything comes back to that in some form. Um about a quarter of the fund, we uh deploying the digital health states. So this is you know, really kind of the uh post-approval side of how you actually get care to patients, um, pretty broadly defined. So there's a lot of subcategories within that that we've been involved with, but it is a really important part of our strategy and goes back, I think, to that notion of we want to see the full spectrum within cancer from that idea first time that the professor has an idea in the academic setting, all the way to how do we actually get this rubber diagnostic to a patient. Um because we're so narrowly focused on oncology, I think that that lets us engage more broadly across the spectrum than other others might. Um that said, you know, majority of the capital goes toward therapeutics investing, some undiagnostics and tools as well, but uh mostly early stage therapeutics. And we are open to and invest in all across all different modalities, uh, you know, whether that be cell therapies, biologics, small molecules, um, and importantly also all tissue of origin. You know, as I mentioned at the beginning, we don't have a like TDAC-specific focus or or anything like that. Of course, we work with great philanthropic uh organizations that are more uh focused on particular disease areas within the oncology context. But uh for us, we're we're open to any any type of cancer patient, um, you know, as fits squarely within our scope. Um regarding stage and development, you know, we are from a therapeutic lens, uh primarily pre-IND or early clinical. Um, we'll go pretty early, frankly, like well pre-DC sometimes, which uh does feel like a rare uh space in the biotech venture to at the moment. But I'd say if you look at our portfolio, we probably have a bent toward more first and class type of therapies uh than other folks in in our space. And you know, that's probably a little bit more risk-on than others, but we think that the opportunity there uh just with where science is right now for both of these sectors is massive. And chain's a great example of that, right? With a novel modality type of bet. Not that everything that we're investing in is truly a novel modality, but I'd say we are um yeah, higher, higher on the innovation at risk side and maybe screw a little bit furlier than others. But we'll also invest in fairly clinical uh programs as well.

Digital Health Bets In Oncology

Ben Comer 34:40

Okay. And I just wanted to follow up on the digital. You said I think about a quarter of your investments focused on on digital, digital tools um uh after a drug is approved. Can you give an example or maybe a technology uh that that you're excited about just uh to kind of illustrate what that space is and maybe like what a digital tool could do for a cancer uh a cancer patient?

Dan McHugh 35:04

Yeah, absolutely. And you know, the way that we're structured at Yosemite is we we have a a team of dedicated folks who really just focus on this as a sector because it it while they're all critical to the cancer patient journey, therapex diagnostics and kind of the the care side of cancer, um, it they're quite different in terms of the uh everything from sourcing the opportunities to the types of diligence and investment and post-investment support that those companies need. So we all operate as a single feat, but we do have folks that are very specifically focused on the digital uh aspect of the strategy. Um, you know, they they range from early seed opportunities to slightly later venture ones. I think you know, turquoise health, uh, for example, is a uh one that we did out of the Assembly Fund, um, where it's all about pricing transparency, right? And it's actually not cancer specific, but uh financial toxicity of uh for cancer patients is such a you know massive issue uh for everyone. And it's not just uh, you know, it it's something where, you know, we love partnering with organizations like Turquoise, where they're not necessarily a cancer-thirched organization, but they're so critical to the way that cancer patients are treated that or they're solving a critical problem in that space, uh, that we feel like we can get involved with them at first financially, but then also help them as they think about building out their strategy, whether that be oncology-specific work or working with the types of life sciences organizations that we work with on the other therapeutic side of the uh house. Um we uh in addition to Trick War, as I'd say it, one example on like much earlier side when we got involved with them is a company called Atrophos, um, where this one is you know actually spun out from some academic rank work that we've been supporting at Stanford, uh, but which is rarer on the digital health side, to be clear, if that's something that we're really excited about as well. Um so I I think you know, companies like them that are able to use data to inform better, uh, you know, better decisions, right, on uh whether it be of uh how a patient is treated or um what sort of drugs are being developed in what setting. Other companies have been involved with around kind of hand-built file matching and optimization. So it it's it's that kind of slide on like how do you um how do you get care to the right pay, the right care to the right patients for rapidly is you know one of the overarching keys of our efforts last days.

Hot Modalities And Where Value Is

Ben Comer 37:31

Yeah, okay, thanks for that. Um, you mentioned just a minute ago that uh that you guys are are agnostic when it comes to drug modality. We talked a little bit about um epigenetic editing with with tune therapeutics. There are a number of hot modalities uh in oncology right now. In vivo Car T seems to be having a kind of moment. There's of course, you know, bi-specifics being approved, ADCs, protein degraders, oligonucleotides, radio pharmaceuticals, uh, and on and on it goes. Um you're agnostic, but are are there any that you would name as and maybe these are recent companies you've invested in, or are there any particular that you know that you're you know kind of excited about or watching carefully right now that you would mention?

Dan McHugh 38:18

I mean, honestly, so many that you mentioned there, right? Which is why it's a bit hard to fully answer. But I uh I think that we're in a really privileged spot here of having come just after what feels like a Cambrian explosion of different approaches to create medicines, right? I mean, these aren't slight tweaks to uh a type of drug that you're talking about here. It's a you know, the first time that an engineered cell was approved as a drug was really not that long ago. Right. And sure ADCs have been around for a while in some form, but like the the real traction in terms of clinical responses that we've been seeing, commercial success, like that's all fairly recent as well there and on the radio pharmacide. Um, induced proximity, right? I mean, you mentioned targeted protein degradation, which is huge and has so much potential, even just within that. But but also think about all the things that you can do with this notion of having a small molecule, either like bifunctional or that can bring together two proteins and induce a novel PPI. Like that's a you you can do a hell of a lot with that as well. Um, so I I I think what I'm most excited about on being at this early stage therapeutics investment world right now is that we're at this point where there's a wide set of different approaches that now has you know it's not just an idea on paper. We've got real clinical proof of concept or or beyond that, uh depending on modality, uh, to show that these things actually work. And so now our problem is figuring out what settings should they be working in, where there's a real opportunity to invest and kind of accelerate the development, whether we have a particular target or cancer type that that makes a lot of sense for that modality. Um, or solving some of the pieces that make the modality a little bit more challenging to really scale and have the patient impact and partial success that we'd like to see. And I'd say I'd put kills in that category, for example, um, where incredibly exciting data around that, where we don't have any investments in the space currently, but that's certainly one that we're watching in terms of folks who have the potential to scale the type of clinical responses that we're seeing to more and more patients, uh, despite the uh challenging manufacturing uh components of uh the TEL therapy. Um so I I know that's a very broad answer, and you're looking for more specific modalities on this, but I'd say each of those individually, we've got our own kind of thesis in terms of where the investable opportunity is right now, and whether that be you know a particular target, uh a new uh kind of tweak to the modality as a whole that that makes the profile meaningfully different or uh or something else. But we're we're invested across the board. I mean, we literally are doing uh one in the radio farm space right now that we're incredibly excited about. We've invested in a number of ADC companies with uh really exciting programs that we're anxiously awaiting more clinical data readouts from, but but uh still uh that they are incredibly promising um to all sorts of work that, you know, and sometimes the the approaches aren't necessarily ready for our for-profit investing, right? Uh, which is why I think this flexible model of philanthropy and investment is so critical for us. What we like to say is that we'll, you know, it support the best science where it is with the tool that makes sense for it. So, one example in this space, you know, we've been supporting work around the microbiome for an awfully long time, and we've made zero investments over the last microbiome. And I think that it has uh become increasingly clear with the evidence uh that that's been produced in part by some of our grantees, but others as well, that uh it really matters somewhat unsurprisingly. So, like real massive differences in response to tech coin and hitters depending on various populations of uh you know bacteria that you have in multiple different settings that this has been shown. Um, so you know, that's a space where we we felt like really important science has potential to have real impact on patient outcomes, but is one that we have not yet found that kind of for-profit program and lens that we think this is a real translatable therapeutic opportunity with bachelor dollars. Um, so we've been supporting a kiln property today. Uh not to say that that won't check. You know, there are a lot of areas like that that we continue to actively monitor and figure out like where where does it transition from eating rats to now we write for investments?

Exits IPOs And Proof Of Concept

Ben Comer 42:31

Yeah, that's a really interesting one. The mic drugs targeting the microbiome. It's one that I I've been interested in a number of years. And you're right, I think there was initial real excitement about it, you know, several years ago. And then there was a kind of realization about how complicated the microbiome is and how difficult it is, you know, to target effectively uh with drugs. But I I agree with you. I think that one will be incredibly important the more that, you know, the more that it's it's figured out and kind of harnessed. Um that's great, though. Thank you, uh, Dan. I I wanted to ask too about, you know, in terms of uh, you know, investment model, what kind of exit does Yosemite typically pursue? I mean, do you will you stay with a company all the way to an IPO? You know, if in this case, if the the more IPO market improves, um, or do you look to sell the companies to uh to larger biopharma organizations at a certain clinical stage or or bring them to to regulatory approval or to commercial uh revenue? Do you purchase royalties? How do you how do you think about uh exits at Yosemite? Totally.

Dan McHugh 43:41

It it's a great question. And I'm gonna have a kind of crappy answer here and say it's dependent. Um, but look, I uh just to uh address the IPO comment. I mean, I think we as many in the space uh do view IPOs as a financing event within the biotech uh world as opposed to a true exit. When we're in Invested in the company, we're we're underwriting it frequently to usually the clinical pre-cook concept. I would say it's kind of the most likely inflection point, at which point we would either transact with pharma or IPO and potentially exposition if the company was already public. And uh, you know, the uh the the um we end up in the situation that uh the thesis has been laid out and uh it's our our time to kind of transition to that capital to other earlier opportunities.

Ben Comer 44:27

Okay, so you guys aren't funding a lot of like late stage clinical programs.

Dan McHugh 44:31

We don't. No, exactly. We're we're really pretty early uh in this, but I would say it it varies, right? We've had a portfolio now that's matured over the last decade. Many of those companies have gone public or or been acquired. And there are also examples of folks who are you know approaching their Pivotal trial with an ICORP commercialization after that as well. And uh for the right situation, those are opportunities that we're supported up too. So it is a case-by-case situation depending on the company. Um, and when we're invested uh at the beginning, you know, we want to see that company through that journey. Uh and yeah, that that's uh that's the strategy anyway.

Ben Comer 45:04

Okay, got it. Um, you we've talked about you know finding the science where wherever it is and across modalities. I I've had a few conversations on the podcast recently about companies headquartered in maybe what I'll call second-tier U.S. hubs for life sciences, places beyond uh Boston, San Diego, the San Francisco Bay Area, for example, places like South Florida, uh Houston, Texas, uh North Carolina's research triangle. Um, I know that Yosemite invests in companies outside of the major hubs, uh 1063 Therapeutics, for example. I know that it is uh is one of your investment companies. They're based in Durham, North Carolina. What would you say about the advantage or disadvantage, Dan, for companies that are headquartered, you know, outside of the major US hubs like like Boston?

Dan McHugh 45:58

Yeah, I I think it's a great question. And it depends a little bit on the strategy of the company, and not strategy in the context of like which patient population are you gonna go after with your clinical development plan, but but more strategy in terms of what the organization is that the leadership is trying to build. And is this at what sort of scale are they trying to scale up to? How much of this is distributed versus really everyone's gonna be there in the building every day? Um, and you know, I think companies have been built with different flavors of those strategies and been successful with you know very different approaches to that.

Ben Comer 46:33

And yes, Yosemite is it doesn't care if if it, you know, everybody's in the office together every day versus completely virtual.

Dan McHugh 46:41

No, what we care about is that the management team has thought carefully about that and has a kind of strong thesis in what they're building and that we agree with that. But but I think we invest in companies that are kind of across that whole spectrum. Um, what I'd say is in the you know non-boston markets, um there there are trade-offs for sure, right? On and like both good and bad elements uh being uh you know outside of one of the major hubs. I'd say all the ones that you've listed have real and a biotech ecosystem within them. And many of those are growing biotech ecosystems. Um, but the fact of the matter is that there are just much larger numbers of people with the kind of appropriate backgrounds for many of the roles that you're going to be trying to fill at your therapeutics company that's typically sitting, you know, in a place that's commutable to Kendall Square than they are in you know, Houston or South Florida or RTP. Um that said, there's that comes with the trade-off on the Boston side of the it can be quite competitive for the best individuals within that space. Uh, you know, they are frequently poached from other competitive organizations. Uh it's a uh, you know, there's amazing opportunity there potentially to find like the best people in the world, but some of the best people in the world aren't there or really to move to other locations too. And when uh I I've I found at least through the experience with some of our companies that have been doing searches for you know leadership and uh and other uh members of the organization within those kind of second-tier geographies. I mean, I feel bad even saying that, but I just think about the scales. Yeah, right. I know, me too. Um, the but uh the the fact is like if you got a great company, great opportunity there, you can find the best person, right, who is uh willing the best person within that environment to be able to join. And it's a little bit stickier once you get them as well. You know, we realize here's my uh, you know, I I want to be here, of course, because of the company and because of my role at the company, but but also there's you know, it's one of the only most exciting opportunities here at FitMI still set within this environment. Whereas, you know, in Boston, they're probably getting bombarded every other week by uh folks who are trying to pull them to a different organization. So trade-offs in both, um, I think the pool is smaller for the talent that you're searching for. Uh and say having uh if you do want to really build it out as a uh full for like uh in person uh concentrated within a single site that is not a uh that is not Boston or the Bay Area, um, it it can be harder and you just have to be willing to sell order to get people to move there as well, because chances are you can find a lot of the people that you need within that ecosystem, but but it's not gonna be everyone. So uh you just need to be open-minded around that and make a strategic decision on saying, hey, we're we're okay if our head of BD is coming from a different geography and is on Zoom more frequently than person, or we feel confident in our ability to be able to recruit solid members.

Recent Investments And 2026 Priorities

Ben Comer 49:37

Right. Um, can you give an example or two of companies that Yosemite hasn't invested in recently that that maybe you're excited about? That sorry, that we have invested in? Yeah, that you just uh to give a give me a sense of you know who who you've invested in recently, if you if you can, like one or two examples of, and I guess I'm thinking about um therapeutics developers.

Dan McHugh 49:59

Absolutely. Um let me give you kind of two flavors of very different stages, uh, if that that works on your right. Yeah, that sounds good. You know, one one on the later stage that we would uh toward the end of when we would get involved with the company is Solid Therapeutics. Uh, you know, we invested with them last fall uh alongside a series of other great investors that that we uh like working with. And you know, they've got uh two clinical stage ADC programs right now, a really credible uh linker platform that we think is truly best in class, and series of other pipeline programs that we're excited about as well. And importantly, I think a really exceptional management team that uh has recruited uh a series of really exceptional executives as well uh to work with them that they've worked with in the past and we think are on a trajectory for um you know doing great things with these programs and with this platform. Um that's of course on the later stage. You know, I'd say when we made the decision to invest, it wasn't on the back of clinical data, but um, but it was a kind of periphenical company that just started treating hydrospaces. Um and on the earlier side, maybe I'll mention two actually because they have a nice kind of Yosemite story to them in that they both came in part from grants that we had actually given to Academics. So one of these is uh quarry therapy uh out of Fred Cruz's lab at Yale, and one of these is Azalea Therapeutics, which um, you know, worked from uh Jad Redowna and Justin Kemp uh at Berkeley CSF. Uh the uh, you know, for both of these, I uh of course we love that story on we'd seen the technology for a long time because of our engagement with folks and supporting it in that academic setting. So they were areas that we knew that we were interested in. And when the data came out the way that it did, we realized it was uh it had shifted over to that realm of from plant to beat for profit uh investing and was really an investable opportunity for the FOMP to get involved with. Um I'll I'll briefly explain what both of them do uh without going into too much detail. But Cory Therra is within the um that induced proximity molecular glute status. Obviously, Craig has been a real pioneer uh in that area, but uh beyond protein degradation and beyond the amazing work with Riptex, uh, you know, I think Holda's shown recently, uh there's a lot more that you can do with induced proximity. And these are kind of like the next sets of opportunities that we really think bringing together T proteins with a small molecule uh as the opportunity to um to have a rear. Um Azalea, uh, you know, being led by Jenny Hamilton, uh, who came out of uh Jacker's lab, is uh in the in vivo car T space, which you mentioned as well. Um I think this is a space that we've been very excited about as a firm, uh been invested with Emoja for some time on a kind of Lend D-based approach. Um but what Azalea is doing differently than others here is uh delivery of actual R ⁇ Ps uh with kind of template DNA. So you can genetically engineer the T cell itself. And I think uh there's a ton of opportunity for what we do, right? Like going in and being able to not just randomly integrate a car across the genome, but to in a site-specific way integrate the car or do other types of tweaks to that T cell as well. Um and uh, you know, I there was just a major publication that believed came out this week from uh Justin that that's uh worth reading if you're uh listeners that are have been following the work at all. Um, but we're incredibly encouraged by the potential for site-specific integration of the cars in vivo um in uh worse the the oncology setting, certainly opportunities as well in Otter Mean is all of these uh kind of vivo car two uh players have been looking at. But we really think to get like long-term durable responses within uh many cancer indications and approach like the daily this makes a lot of sense.

Ben Comer 53:50

Excellent. Well, I'm uh coming up to the end of my time with you, Dan, but I'll I'll just ask one last question, which is uh what are your top priorities and goals for the rest of 2026?

Dan McHugh 54:02

Oh, let me think about that. Um You know, honestly, it's to uh continue to build out and do what we're doing better. Uh, you know, I think that we have a massive reach with our academic philanthropic network uh to some of the most exciting science that's going on in the cancer space globally. And there's just too much for us to adequately digest and support and be effective kind of company-builded partners and investment partners or continued philanthropy partners with all of those researchers. And it's something that we are obviously are doing and have done for the last decade to some extent. But I think really scaling up and institutionalizing that to be better partners to the researchers that we're supporting and making sure that we are identifying the best, most exciting science and turning that into some of the most exciting oncology companies of the future is uh, you know, something that we have done and want to keep doing. But I think you know, making sure that we're at a spot that we can really scale that more effectively is one of my choices.

Closing And Where To Follow

Ben Comer 55:00

Well, it's been a real pleasure speaking with you, Dan. Thanks for taking the time. I really appreciate it. Yeah, thanks so much, Pat. It was great. We've been speaking with Dan McHugh, head of the investment team at Yosemite. I'm Ben Comer, and you've just listened to the Business of Biotech. Find us and subscribe anywhere you listen to podcasts, and be sure to check out our weekly video cast of these conversations every Monday under the Business of Biotech Tab at life science leader.com. We'll see you next week, and thanks as always for listening.