Keeping An Early-Stage Cell Therapy Biotech In The Black With IN8bio's William Ho

On this week's episode of the Business of Biotech, William Ho, CEO of IN8bio, explains why gamma delta T cells may have an edge against cancer, including solid tumors like glioblastoma. He also offers up a candid and step-by-step look at what it takes to finance an early clinical-stage cell therapy company through a punishing IPO market and a long cash crunch. 

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Transcript

Welcome And What IN8bio Builds

Ben Comer 0:03

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 William Ho, co-founder and CEO at IN8bio, formerly known as Incysus Therapeutics, a clinical stage company developing allogenic and autologous gamma delta T cell therapies for blood cancers and solid tumors. As the first company to advance genetically modified gamma delta T cells into clinical trials, IN8bio has had to navigate a distinctly challenging fundraising environment. And I'm excited to chat with William about what makes gamma delta T cell therapies unique and why solid tumors are such a formidable target for cell therapies. And also how he's managed to keep the company afloat despite serious headwinds. IN8 bio went public in 2021 and then refiled in 2022 in what turned out to be in a historically difficult period for biotech IPOs. And we'll talk about what happens when a company starts to run out of money, how William handled staff layoffs and restructuring while preserving core programs, lessons he learned from the rebuild, and current investor sentiment and novel cell therapies. Thank you so much for being here, William.

William Ho 1:20

Hey Ben, thanks for having me. Great to be here. Um I'll just correct. We actually originally on our IPO, we actually priced the IPO in 2021. So we we published we we priced it in the at the end of July 2021 and went public.

Ben Comer 1:35

Okay, you went public in 21 and then re-listed in 2022.

William Ho 1:38

Is that so we we originally filed for an S1 to go public in 2020? Um it didn't work out. I'm happy to talk about that process. And we ended up actually completing the IPO in in July, late July of 2021.

Ben Comer 1:54

Oh, okay. So it was 2021. Okay, yeah. And we'll we'll definitely we'll definitely talk through that. I think it'll be interesting uh to listeners. Um before we do though, I want to ask uh a little bit about your background as we do here on the business of biotech.

From Biochemist To Wall Street

Ben Comer 2:09

Um you started out, I think, as a financial analyst and equity research analyst. Uh you then moved into venture capital uh and then ran a healthcare-focused investment fund called uh Aleph Point Capital. What lessons, William, did you learn uh on Wall Street uh about how to launch and run a biotech company?

William Ho 2:32

Uh you know, it's a little surprising to me. You know, a lot of people think, oh, you were on Wall Street, and what do you know about running a biotech company? Um my background actually goes a little bit further. Um I actually started as a biochemist by training early in my years, worked in a in a laboratory, and then eventually got an MBA and started my biotech career at Cowan in their healthcare investment banking group. Um unfortunately, that was 2001. Um 9-11 happened, and then in 2002, I was laid off and went to one of the genomics era companies called CuraGen, where I ran their operational financial analysis. It was later in 2003 that I moved back to Wall Street onto the equity research side.

Ben Comer 3:18

Oh, you're saying 2003? Wait, 2000, not 2023. No, 2003.

William Ho 3:26

Three, right, okay. 2003. Got it. So 23 years ago, I actually started my career in biotech at Cowan in 01. So I think throughout that, the lucky thing has been that I've seen multiple up and down cycles. Um, I've also had, you know, uh numerous mistakes in my career and investment mistakes where I've tried to learn from other people's mistakes. I think one of the things that my team always says is I have this remarkable memory for what other people have done and has not worked or failed in the past. That probably comes in handy. It it does come in handy. And I think, you know, in our in our careers, um, you know, there was a when I was in business school, there was a a book called A Random Walk Down Wall Street. And I think in our own career, sometimes things happen to us that aren't necessarily in our power, but it's only in the rear view mirror that you can actually see how those experiences shaped your career and shaped your experiences and taught you how to deal with some of the challenges that we have on a day-to-day basis on a day-to-day basis.

Ben Comer 4:35

Yeah, absolutely. Well, tell me about the circumstances that led you to co-found uh, I guess, Incysus Therapeutics at the time, now in a bio uh with Dr. Lawrence Lamb back in I think 2016. Is that correct?

William Ho 4:50

Yeah. Um, so I actually never intended to be neither a CEO nor an entrepreneur. I actually had no desire to go run a company. Uh I spent 17 years of my career on various aspects of Wall Street. In 2010, I was recruited to New Leaf Venture Partners, at that point, one of the leading healthcare VC funds, in order to launch their public effort. Um, so I ran the portfolio from 2010 to 2014.

Ben Comer 5:18

Oh, so that was that was public specifically, public companies.

William Ho 5:21

It was actually public, and because of public, also late stage private. So we were actually one of the first to start doing so-called crossovers. So I think today everyone says you have to do a crossover round. Um, I think the the story behind how uh how we started doing crossovers is is I don't think many people actually know it, but we started doing crossovers in about 2010.

Crossover Rounds And IPO Access

Ben Comer 5:46

Would you mind for you know, for listeners out there who may not know exactly what a crossover means, could you uh explain that, you know, in a brief way?

William Ho 5:54

Yeah, so a crossover is essentially the last final private round before a company goes public. Um you know, prior to 2010-ish, nobody would would do a crossover round. It wasn't required. You would do a series C, Series D, Series E, and then you would go into an IPO process. Today, companies before they go public do a so-called crossover. And it's called crossover because you have participation from both venture funds that can now invest in pro publics, as well as historical public funds that now can cross over and invest on the public side. And so it's kind of a top-off route. And you know, I'll I'll I'll I'll go into the story. So it wasn't common prior to 2010. Um, I I joined New Leaf at that New Leaf is a um it was a startup venture fund started in the early aughts. It was actually spun out of what was known as the Sprout Group. Um Sprout Group was the venture arm of DLJ um for those old school or or Donaldson left and degenerate. And Sprout was started in 1969. Um when the tech bubble blew up in 2001, uh Sprout was considered comprised of both the tech side and the healthcare side. The tech side imploded, and so the healthcare team spun out to form New Leaf venture partners.

Ben Comer 7:27

I didn't know that. That's really interesting.

William Ho 7:29

So I joined was recruited to New Leaf to launch the public effort. So Philippe Chambon, the the founder and and one of the leading partners there, um, asked me to join him to try to invest in in public funds. And so we you know, he they tracked my performance. We took that performance to the LP. The LPs allocated funds about 50 million early up front for us to invest in publics. Um, it allowed us to evergreen those those funds so that we can reinvest the funds, whereas most uh venture funds can't. Um and then so I ran that portfolio from 2010 to 2014. Um, so the the story behind the the venture fund or the the crossovers was as a venture fund, uh there's a lot of investments that you can make that you would make depending on the vintage, which is the year in which your venture fund was launched. And there are investments because of the vintage of the fund, if you're getting late in the years of the fund, that don't make sense as a private investment because they'll take too long, or your fund doesn't necessarily have the reserves. But we came out and said, Oh, there's some investments that we diligenced that didn't make sense from a fund standpoint, but were still good assets, but would be great as a public company uh uh investment. And so we actually went out, I built the relationships and trading capabilities across all of the banks on Wall Street, and there was companies that we would we had done diligence on privately that we wanted to fund, and they said uh and we said we want to invest in those. And so we'd go in and we'd say, we want, I don't know, we want a three million or a five million allocation in this IPO. And at that point in time, in in about 2010, you know, the the big funds were the big traders were T Row Price, Fidelity, um, Cap Cap World, Cap Group, and then the hedge funds like PQA and Sigma, SAC, etc. And so we put this order in for 5 million and we'd get an allocation of like $50,000. And the reason is because the banks use IPO allocations to pay back some of their best clients. And so we can't get any of these allocations. We tried a few times and could get no allocation. And then we sit sat there and said, Why can't we get an allocation? We realized, but hey, we're still a venture fund, we can still invest privately. And so we said, you know, if the banks don't want to give us an allocation, fuck it, we'll do it ourselves. And so we went to these companies and said, Hey, we diligenced you in the past. Um, we'd like to help you get out public. We want to invest in you privately, but we want to be part of the the IPO allocate uh allocation. Interesting. We we'll put five million in you uh privately, and then you can use our name, or or maybe ten million, you could use our name and say that X percentage of your IPO book is filled on the S1, and then we get our IPO allocation.

Ben Comer 10:52

Okay.

William Ho 10:53

And then and that way we could actually name our own allocation. And so we were on a number of deals early on. Um, many of the companies got bought like Agios and eventually Bluebird and others, but uh that's how we started doing uh so-called crossovers. There was probably only one or two other funds at the time who were doing such investments. Um, and then by the time I left New Leaf in 2014, a crossover round instead of maybe a 60 to 75 million pre was like 325 million pre with 40 participants. And so that's how we started.

Ben Comer 11:38

Interesting. Well, yeah, that uh that for for listeners out there who are you know thinking about crossovers, so you you maybe you have some thanks to give to uh to Ruleum for helping us set that up. That's really cool. So, all right, so you you finish up at New Leaf. It's 2014. How did uh how did you uh get together, I guess, with uh with Dr. Lawrence Lamb and what led to the foundation of what is now in a bio?

The Blizzard Lunch That Started It

William Ho 12:04

So that was purely by accident, as I said. So I never intended to start a company. I had started uh a venture, uh not a venture fund, I started an investment fund called Aleph Point Capital. I was raised able to raise a little bit of money. Um in that particular structure, I was able to do full capital formation or company formation. I can do publics and privates. Um and quite honestly, I wasn't being very successful in raising capital. Uh, the the whole foundation of the fund at the time was I I had someone I was partnered with who was uh a PhD in math, um, a pretty obscure area of math. And in 2014, when we launched, we were scraping websites and unstructured data sets and using algorithms to look for patterns uh for trading. And we could scrape social media, we could look for chat rooms and whatnot and find patterns and map them all out. And people would say, What are you talking about? You can't use computers and algorithms to trade. There's there's no alpha in that. Well, well, you know, a decade later, uh, obviously that was wrong, right? Today we know that it was completely wrong. But in 2014, I couldn't raise substantial amounts of money uh to on that investment thesis. Um, one of the things that we were able to do was I built an algorithm that was able to map out and visualize the landscape of uh biotech companies. We could map out everything from indication, company, mechanism of action, phase, et cetera. And I found that there was a huge hole in that almost nobody was trying to figure out how do you develop cell therapies for solid tumors, right? That summer, I had done a lot of diligence the prior year on kite and Juno. Summer of 2014, kite and Juno came a public focused solely on CD19 CARTs. Those two companies were sold from combined value of about $21 billion. And I was trying to figure out how do you go after solid tumors? Because it's a market that's nine times bigger.

Ben Comer 14:20

Yeah.

William Ho 14:21

And so I was by 2014, I was interested in induced pluripotent stem cells or IPSCs. Yamanaka had recently won the Nobel Prize in Medicine. Um, you know, at Ash of 2014, I was determined to learn everything I could about IPSCs. So I go to Ash, and there's only four posters. Three of them were from FATE Therapeutics, who I had a great relationship with Scott Wolchko, the CEO at the time. I was an early investor. Um, and then the the last was a transplanter from the University of Alabama, Birmingham, who had a poster on IPSC-derived CD34 cells for black phon anemia. Um his name was Fred Goldman. And Fred and I spent an hour talking about IPSCs and his poster and his work. And he said, you know, if you want IPSC-derived T cells, I got a guy who can make them. And so we swapped cards and I went home and didn't think much about it. Ironically, uh, about a month later, I think it was something like January 21st, 2015, I get a phone call. Um, it's a blizzard in New York City. The city shut down for the first time in 110 years. The subways are shut down. And I get a call from Alabama, and I just decide to answer it. And it's Fred, and he goes, Hey, remember me? That guy I told you about, he's in New York City, his flight got canceled, the city shut down. Would you like to meet him?

Ben Comer 15:49

Oh, wow.

William Ho 15:50

I said, sure, I'm not doing anything. So I literally walk a mile through a blizzard to take Dr. Lamb out for lunch. We sit for three hours at a restaurant called the Lexington Brass, just the two of us, uh, over lunch and talking about immunology and these gamma delta T cells that I had never heard about and his work. And so we leave, I walk home, I start pulling papers and I start calling him, I start emailing him. We're talking every single week. And basically, after about three months of research, I have a stack of papers like this on my desk. And I'm like, holy shit, I think this works. What are you doing with it? And he goes, I don't know, it's my research. I was like, why don't we license it? We'll start a company, we'll get it into people and put it into the clinic. And so that's when we actually started the company.

Ben Comer 16:41

Well, that okay, that answers my question then about your uh your Birmingham, Alabama location. That's where Dr. Lamb is based.

William Ho 16:48

Yes.

Ben Comer 16:49

Got it.

William Ho 16:50

He was a professor of medicine at UAB in 2019. He resigned his tenure and joined us full-time as our chief scientific officer.

Why Gamma Delta T Cells Matter

Ben Comer 16:59

So let's tell me a little bit more about these gamma delta T cell therapies. Uh, how are they distinct from other cell therapies? Why do you like them, I guess, compared with you know, CAR T now, you know, in vivo CAR T is a hot therapeutic uh, you know, drug modality. But uh what what is it about gamma delta T cells after you know you got on the other side of all the research that you did uh that that was so compelling?

William Ho 17:25

Yeah, uh you know, I once got into an argument. I was presenting at a conference, and there was some guy in the in the crowd who got into an argument or what should we say a debate. He was like, Gamma Delta T cells can't be important. You know, the alpha beta T cells are the most populous cells in the body. And so the gamma delta T cells, which comprise only about one to five percent of the total lymphocyte or the total white blood cell population in our body, can't be important because they're so few in numbers. And then, you know, I think early on when CAR T started, people focused on alpha beta T cells mostly because they're plentiful. If I was to take a blood draw and isolate your white blood cells or your lymphocytes, the white the alpha beta T cells, the traditional C D3, C D4, C D eight cells, would comprise about 60 to 70 percent of the total white blood cell population. Okay, gamma deltas only comprise about one to five, and in some cases they're even lower. And so people just think they're not, they're this minority subset of white blood cells that aren't that uh important. The gamma deltas actually bridge between the innate or the early immune response and the adaptive or memory immune response. And so they have properties across both. They are a first responder just like the natural killer or NK cells, in that they can kill directly. The alpha beta T cells or the memory T cells, they actually can't kill unless they're told by other members of the immune response what to kill. They have to be presented antigen or primed, otherwise, they don't kill at all. Whereas the gamma deltas can kill directly, but they also have memory. You know, a few years back, uh Carl June and the team at the University of Pennsylvania published a paper. They looked at some of the first CAR T patients that they had treated with the CD19 CAR Ts 10 years after treatment. Those patients who were still um in remission, they found about half of the CAR T cells, the T cells were actually uh gamma delta T cells. So gamma deltas can actually have memory. People often ask, well, why are the gamma delta T cells so important then? And so to simplify it, we we use this you know euphemism. Um, you know, we think about the uh white blood cells in our bodies as our soldiers, right? We've used the war on cancer since the late 60s. And so we think of the gamma delta T cells um as our our soldiers. And when we think about the entirety of the battlefield and all the different components of the battlefield, we think the reason why the gamma delta T cells are important and why they're strong is they're like the JTAC, right? They're the Air Force officer that is embedded with the special forces, elite frontline soldier, but he's also or she's also the person with the radio. He's the person who can identify on the front line the positions of the enemy versus friendly forces, the person who can call in any part of your armamentarium, whether it's the air force or the artillery or or whatnot. And that's the power of the gamma delta T cells, right? If you think about an immune response, the the immune response isn't a single instrument making music. The full immune response is like a symphony, and it requires the brass to come in with the strings that comes in with the percussion, and when they come in, and the gamma delta T cell is the one cell that can communicate with all of it and bring them in.

Ben Comer 21:21

Got it. Okay. Well, that's a great analogy. That that helps me understand it a little better because I I didn't know coming into this interview, I didn't know much about these types of cells uh

Picking GBM And Allo Versus Auto

Ben Comer 21:31

either. And I'm curious about how you selected uh the initial indications and you know whether to use an allogenaic or an autologous uh process for administration. I mean, is that like preclinical trial and error, or or how do you how do you make those decisions?

William Ho 21:49

Look, you know, I think we in our cell therapy, we have three programs today. We have uh a cell therapy, autologous and glioblastoma, so frontline brain tumor. We have An allogenetic program, what we call Deltex Allo, in leukemia patients. And then we have a preclinical program with gamma delta T cell-based T cell engagers that can go after both autoimmune disease and oncology today. Our first programs were in leukemia and in glioblastoma. Look, we raised money in December. And the first question everybody asked me was, How'd you do it? How'd you raise money? The second question everybody asked me was, Why in the hell did you go into GBM? Right? And and uh do I want to go after the hardest tumor ever? Right? And and I think tumors and and college indications, they're impossible until they're not, right? Like RevMed recently after ASCO. Prostate cancer for years was considered impossible until now you had a dramatic step change. If you look at the progression of patients that were treated with multiple myeloma in 2005, um, it was essentially a death sentence. Today the curve's essentially flat. And so it wasn't that we were going after uh a difficult tumor, it was we were trying to understand the biology and to understand how to target it, right? One of my goals was how do you get to an off-the-shelf cell therapy for solid tumors? And so the first question we were trying to answer is how do you get to off-the-shelf? Right? So, biology um with allogenetic cells, you have two sides. On one side, when you give aloe cells, you have the risk of graft versus host disease, where the infusion that you give attacks your body. Um Gamma Delta T cells don't initiate or drive GVHD. And so we weren't worried about that. Um, the other side that you're worried about is actually the inverse, which is host versus graft, where your own body will then attack the graph that you infuse to wipe it out. Right. Anytime all of our cells are marked with a marker called human leukocyte antigen or HLA, it's essentially a marker for me. And and one of the key functions of your own NK cells is to recognize what's not me and kill it. And so when I lympho-deplete a patient, even if I am prepping them for stem cell transplantation, once I put the graft of hematopodic stem cells into people, or I put a graft of uh immune cells, even after lymphodepletion, after about 15 to 20 days, the NK cells start coming back. When the NK cells start coming back, the first thing they look at is invaders, not me, and they wipe them out. And so what we were trying to do early on was to look what are the immune organs that are considered privileged, that I don't have NK cells that's going to wipe out my graft. And so the obvious answers at the time were the brain, the eye, and the testes. Right? And so we were looking at those three indications. Um the, you know, very recently we had uh David Reardon, the head of neurooncology at Dana Farber, present at our RD day. And as he said, uh, you know, the top three issues of failures in glioblastoma is delivery, delivery, delivery. And the fourth is heterogeneity. Well, by going into the brain, the challenge of the brain, it's essentially a separate box outside of the rest of your body. Um, but 95% of glioblastoma patients in the frontline setting get a surgical resection. I can bypass the rest of the body and go directly to the brain. Um, you know, one of the things I learned when I was on the buy side was if your soldiers aren't on the battlefield you think they're on, you're kind of screwed.

Ben Comer 26:01

Right.

William Ho 26:01

So we know our soldiers are where we want them to be because we put them there. Right. One of the things I learned on the buy side, and one of the advantages of having been on both the sell side and buy side in my 17-year career on Wall Street is if someone has a successful career in pharma or biotech, they've maybe seen three or four products come through. Right. Yeah. When you're on the buy side or the sell side, you're betting all the time. I've seen hundreds, if not thousands. I've made plenty of mistakes. And I have a memory where I can tell my team, uh, I wouldn't do that because so-and-so did that in 2008, and that didn't work out so well.

Ben Comer 26:42

That's a valuable uh repository of information, yeah.

William Ho 26:46

Right. And so when I look at an indication, you know, to quote, quote someone, you know, there are known unknowns and unknown unknowns. Get my theory. Rumsfeld, I believe, yeah. Yeah, get rid of as many unknowns, whether they're known or unknown as possible. So if trafficking and delivery is an unknown that I'm not sure, get rid of that variable. I know there's invariably landmines in front of my path. How do I get rid of as many of those landmines as absolutely possible before I test my hypothesis? Right? Did my product not work because it didn't deliver or because my mechanism and premise is false? And so you have to know the difference. And so we went into the brain. You know, very early on, I was actually on Al Nylum's IPO, right? It was actually considered somewhat of a crappy IPO. It was only about $30 million in 2004. If those who can remember, Al Nylum started with our SIRNAs, they actually went into the eye because local delivery, you know, no in-room response. They were hopeful that single-stranded RNAs would not get broken down in the eye. Unfortunately, they did, right? It didn't work for wet AMD and macular degeneration. And so they had to extend the half-life of the sirna. They wrapped it into a lipid nanoparticle. And when they injected it, where do all LMPs go? They went to the liver, right? And so the liver they they concentrated there, and that's where all the chiralomicrons are packaged, where all liver synthesis or fatty acid synthesis goes. And so it worked in the liver. And so very similarly, we could bypass the trafficking questions, we can bypass the blood-brain barrier, and gamma-delta T cells can naturally affect the heterogeneity or target the heterogeneity of a solid tumor. And that's why we went to the brain. You know, we've had a lot of success in liquid cancers, and the brain is actually somewhat halfway, it's kind of squishy solid, right? Because there's a lot of things, you know, you look at some of the other solid tumors like breast cancer or ovarian cancer or pancreatic cancer. You know, when I was on the buy-side, one of the things I learned is figure out what kills the patient and how do I ameliorate that, then the patient will live longer. Some of these tumors grow dense fibrotic tissue around them. So they're actually impenetrable by immune cells. You know, I learned that pancreatic cancers, um, the cancer has dense vasculature feeding the tumor, but because the tumors are growing so fast, you're actually squeezing the vessels. Um, and when you squeeze the vessels, it's like putting your thumb on the on the garden hose in the summertime. And so I actually have high pressure fluid going from the middle of the tumor outwards, physically pushing T cells away. Well, if the T cells can't get into the tumor, there's nothing I can do. And so we're trying to figure out what are all the different variables, what are the things we have to address, and ended up in the brain. Got it.

Ben Comer 30:05

Okay.

William Ho 30:05

And and to your uh just one more follow-up, you know, to you, you asked, how'd you go aloe in this indication? We actually originally went to the FDA and said, hey, can we do allogenic gene-modified frontline glioblastoma? And the agency said, no, that's too much. Why don't we go aloe in leukemia patients, auto in in uh uh autogene modified in the solid tumors? And that's how we broke it apart.

Ben Comer 30:31

Got it. Okay.

Racing The IPO Window In 2020-2021

Ben Comer 30:33

I want to uh I want to turn the conversation over to funding, which is something that I think a lot of the listeners of Business of Biotech are focused on. And maybe we could start with uh William, you talking me through the innate bio IPO process. We touched on it right at the beginning of the conversation, but um can could you just kind of take us take us through uh what happened there with you know the understanding that in hindsight, 2023, 2024, very difficult years for biotech IPO performance, perhaps even especially in early stage cell therapy development. Um so yeah, you know, you you had you were up against it, uh, but what you know, tell me about that initial IPO process and and how you came out on the other end.

William Ho 31:21

Yeah, uh, you know, for 23-24 was a disaster for for early stage cell therapy and aloe cell therapy. They all imploded, right? Half of my competition is gone today. Um, the others who've limped through, vast majority of them have moved from oncology indications to autoimmune indications. Look, uh we had done a number of private rounds. Um, I wouldn't recommend anybody uh take the approach that I necessarily took on a startup. Um we bootstrapped it, partially due to ignorance and naivete, right? Having played on the venture side. I think we I tried to avoid a lot of things uh that uh in on the private side, just because I played that game, I sat in the seat and I'd seen everything that you can imagine. Um we never intended to go public in 2021, and then in July, late July of 2020, sorry, 2020, we saw Encarta come out. All of a sudden, a massive IPO, hundreds of millions raised, hundreds of millions in valuation, if not billion in valuation, and we were like, oh my god, the window's wide open, we should go public. And so end of July, we decided to go public. Um, and we made the decision to go public before the election. Um, and so uh most of our team and most of our um service providers, our lawyers and bankers said it's impossible, right? Not enough time. You haven't even orged up yet. How are you going to do this? And so um we decided to go public. One of my board members, who's very wealthy, very successful, said, I'll guide you how to, you know, I'm going to set the tempo. I'm going to teach you how to manage everybody else by managing you, and you're going to manage everybody else. Uh and the lawyer said it's impossible. So uh first day of August of 2020, we decide we're going to go public. I spend the next week looking for banks. We have our first org meeting August 8th. August 8th uh 2020. Um the banks are Barclays, Evercore, Cantor, and Mizuho. We start immediately on drafting sessions. Uh we draft, we have a business section uh ready to go within days. Uh we we do the drafting and we file confidentially by September 10th, 2020. Inside of six weeks, we file confidentially for the S1. That's impressive. On the S1, once you file confidentially, you have two weeks that it's held confidentially, and then I believe you have 30 days in which you have to be public. So we're ready to go public and launch the roadshow mid-October 2020. And we get pushed back by one of the banks who said, nobody's going public before the election, there's too much risk. And we have some big arguments, and it turns out that bank declined because they had four other major IPOs going on the road pricing before the election, all run by other large VC funds. And so we end up with the banks agreeing that if the election goes fine, we'll launch the IPO roadshow on the Thursday after the election. I think the election was Tuesday, and then we'll price the following Thursday. So we we launch everything, the election comes through, everything seems to be fine through the 2020 election. Obviously, Trump won. Um, we launched the roadshow. Going into Friday evening, we had about 85 million in orders, and I don't remember it's 75 or 80 million IPO. And uh Monday morning, Pfizer announces the vaccine news that there's a vaccine. The Dow rips 6%. All of our mutual funds that had placed orders are underwater because they're measured on a relative basis. All the so-called hedge funds are flipped upside down because their long positions just all went down, their their short positions just all went up because everyone was positioned for COVID, and now we have news of a vaccine. That night we lost 45 million in orders. Yikes. We filled the IPO, but there's a 15% overallotment. We're 400,000 short of filling that, and we could not find 400, and the banks would not price it. And so we we don't pull the S1, but we delay and say we'll come back. We postpone the IPO. Over the ensuing weeks, I find a new syndicate. Um, in uh we do new banks, new syndicate. Uh this time the syndicate uh is Cowan, Stiefel, Mizuho, and at uh at the point national. Um national acquired by B. Riley. And numerous drafting sessions were held, which delayed us, and then we did not launch the IPO until March of 2021, the the Roachho process, or not the Roachhow process, but the TTWs uh at the test in the waters meetings. Unfortunately, I believe the end of the uh of February of 2021 was the absolute peak of the XBI. We do weeks of TTWs with the indices just collapsing into the market, and so by June, it's not looking very promising, but I've got 40 million in solid orders of people who trust me and people who have had a long-term relationship. And by the the banks tell us we're not feeling it, you know, it's not going well. We think you should pull the IPO, we'll wait till the fall, and then we'll relaunch. And uh we get to July, and I know that we get to July, and once we get through July, everybody's off for August. And historically, September is the worst month of the year for all for the markets, right? And so I'm not feeling the August September time period, but I know I've got 40 million, but it's not a deal that the banks will price, right? It's not well allocated enough, it's not in diverse hands, it's not, you know, three, four, six X oversubscribe, but I've got 40 million solid. And so they won't do it. And I talked to one of my mentors, who is at that point one of the vice chairmans of the banks, one of the banks on the book, and he said, Look, and I've worked with I had worked at this point with the with him for 20 years, and he said, Look, you play a different role now. He said, Don't worry about me. You are responsible for all of your employees and to your patient. Your only goal is to make sure that you can keep going so that you can test and see if you can benefit patients. And so we sit there and we think, and over a weekend, you know, it's late July, um, we're coming into Friday. I decide we need to make a switch because, you know, once August comes, everyone's shutting down. I call our four biggest investors and say, look, the banks won't price us, but you gave an order. If I switch this uh IPO to just a B. Riley who acquired national, uh, and just to a B Riley uh IPO, will you stick with me? And every single person said yes. And so we debated on the board over the weekend. Monday morning, I called the lead bank and said uh to talk to them. And they said, We just our commitment committee won't price it. I said, then fine, I gotta pull it. So we decided to pull it. I call all the banks, tell them I'm I'm gonna pull the IPO from you. I call B. Riley and say, look, you're last with you know single-digit economics. I'm gonna give you 100% of the IPO. I have it priced. You don't have to do anything. Just keep your mouth shut, stamp it, get us out. Will you do it for 100% of the economics? Hell yeah! Let's go. Right? And so we make that decision. I made the call on Tuesday. Wednesday morning, a new S1 filing comes out with B. Riley as a sole book runner on the cover. Thursday, we launched the IPO. A week later, we stamped it with the same investors.

Ben Comer 40:49

Wow. That's uh that's yeah.

William Ho 40:51

And and we were probably the last IPO when the window slammed shut.

Ben Comer 40:57

Yeah, there was what, like a five or six month period after that? That there was like nothing.

William Ho 41:01

There was nothing.

Ben Comer 41:02

Yeah.

William Ho 41:02

Nothing. Right? And so sometimes things may not be perfect, but you have to roll with the punches and deal with the market environment and and the structural constraints that you're in to make sure you can keep going.

Restructuring And Leadership Under Stress

Ben Comer 41:17

Yeah, and nobody can anticipate some of the external factors that you know that can happen when you're trying to go public. So you you got through the IPO, you got out. Were you like kind of already uh in a financial pit, pinch, like right out of the gate? Or did it did the market downturn like take some time to make an impact on your operations?

William Ho 41:39

I think it took time to make an impact on our operations. I mean, let's face reality, you know, pre-2021 to 2023, if you're a biotech that held four years of cash on your balance sheet, most of your investors would be yelling at you. They'd be like, what are you doing? That's not a good use of capital. I can allocate it somewhere else to make returns. So nobody held that kind of cash on their balance sheet previously. Um, and this was by far the longest downturn in biotech since at least the early 1990s.

Ben Comer 42:15

Yeah.

William Ho 42:15

And so there had never been, I mean, since the early 1990s, I lived through the rest of the downturns, right? So through 2001, 2002, you know, 2008 through 2010, 2015, 2016. We never had a window that long where it was that hard to raise capital. And we did eventually we did, you know, what hit us was all the failures, right? There was one year we came out of ASCO, we we were happy, we had an oral presentation, things were going well. And then within weeks, you know, three of our competitors announced pretty shitty data and crashed all of the ALO cell therapy and gamma delta T cell markets. And so you're impacted not just by your own execution, but uh, you know, others. It's you know, I really learned the meaning of rising tides floats all boats, right? And so that hurt a lot. We ended up doing a big restructuring in 2024. You know, as I said earlier, you never know what colors, what it's how experienced colors your response is until in the rearview mirror. Um, in 2002, 2003 at Curagen, I was responsible for the planning that laid off 50% of the headcount. We we laid off 250 roughly. Um, myself and and another gentleman, Fred Aslan, did all the planning for that. And it was that experience that you know taught me what to do, right? Um, you know, when you we did a layoff, we saw some companies do it was like just like we did in the Early aughts, death by a thousand cuts, right? When we laid off, we took one big chunk, took 60% of our employees out based on our cash burn and where we need to get to on milestones in order to survive, versus continuously cutting staff and chasing.

Ben Comer 44:18

What would you say are the most important leadership aspects at a time like that? You know, when you're facing this existential risk, you're having to lay off a substantial over half of your employees' employee morale, I'm sure, is is pretty low even before the layoffs start start coming. What can you say about, and now you know you've had some experience in doing this, but what would you say about that? Like how you manage it and you know what's important.

William Ho 44:45

Look, I I think you have to be one, truthful to your employees, two, decisive in your actions, right? And then get people refocused on the goal, right? I I've gone through numerous layoffs throughout throughout my career, none of it by choice, right? And it's colored my career, whether it was 9-11, the financial crisis, and other things, right? Things happen, you know, the 9-11, the biotech bubble, then the financial crisis, it continuously happened. You know, when layoffs do happen, you it's like if someone has gangrene, you don't just cut a little bit, you cut a margin, right? To make sure it doesn't spread, right? Like you might have to amputate the arm, right, to get ahead of it. Um, otherwise, what ends up happening is, and I've seen people, people will do layoffs because they don't like, naturally don't like doing layoffs, and they feel bad about it, and then they say, We'll never do this again. And eight months later, well, here we are again. Then the employees say, Well, you lied to me. And when that happens continuously, look, we know what happens in layoffs. Everybody talks, everybody's afraid, everybody's hiding underneath the the table, hoping it's not them. But then what happens is productivity declines, and then you miss the milestone you need it to hit to hit the next financing capability, yeah, right? So you need to cut enough with a little bit of a margin so that you can get to that milestone, and you need to drive your team to back to work so that you can hit that milestone. Because invariably what happens is everyone's upset, timelines get extended beyond your planning and budgeting, and then you don't hit it. And and we had seen, you know, we had some partnership discussions with some companies that had lots of cash through the downturn, and we could see it, and we said, look, we can you know do something and help you because you have a problem with your pipeline, and they just went all the way down and closed.

Ben Comer 46:50

Man, yeah. Yeah, that's uh that that must have been tough. You're still here though. We're we're talking to you uh right now, William. You're you're progressing these candidates. So you you were able to it turn it around. I mean, you you have uh I'm assuming now you have uh you know a runway, a development runway. You're in, you know, in a you're not just treading water at this point, like you you have uh enough capital to to continue with you know to at least reach your next milestones, correct?

New Financing And T Cell Engagers

William Ho 47:20

Uh absolutely. We did a financing last December. Look, we we brought uh a tremendous financing, a great group of investors. Um it was led by Coastlands Capital, Matt Perry, um, who was president of BVF for 25 years. His his team led it. Um if you look at the 13 filings, we had participation from all of our existing and new investors. It included Alieska 683, Franklin Templeton, the mutual fund, uh Stone Pine, uh Dolores, and others. And so we're quite happy with that. Uh and much of the focus has been on our T cell engager platform. Look, I think, as you mentioned earlier, cell therapy has gone through a lot of stress, right? The interest in cell therapy has uh waned a lot, particularly more recently with in vivo car T. And so, how do we keep ahead of that? You know, there are some structural issues with um with cell therapy, such as CMC and manufacturing, that we don't think are fully true, but still the perception drives people's truths, right? So uh we created internally a T-cell engager. Much of the financing was to drive that through animal models. Um, we have uh additional milestones this year that will trigger additional tranche of cash that will get us further along through uh IND. And so we have runway right now with great investors backing us to continue to execute.

Investor Sentiment And In Vivo CAR-T Risks

Ben Comer 48:49

How would you describe, I guess, investor sentiment writ large in the cell therapy space? And is it is it different by different types of cell therapy, like that, you know, I mentioned earlier in vivo car T there's uh some excitement around that, you know. Uh recently you can where does the field stand?

William Ho 49:09

I I think for Car T and cell therapy in general, can I use the word shitty? Sure. It's it's still pretty shitty. Um I think there's been a lot more interest in in vivo car T, especially if it's if it's possible. Um, I don't think in vivo car T is going to be exactly the panacea that people think it is, in that, yes, there have been deals, preclinical deals for two billion dollars. But if you look at the the early CAR T, you have high OR, high CR rates, but some for example AstraZeneca's first data, you know, of the five patients treated, mostly in Asia, right, 100% got CRS. You know, I think 60%, three out of five were um grade three, and one out of five died. That's pretty bad. So, you know, uh I uh a few weeks ago I was having a conversation with my wife. She does uh licensing and everybody's coming to her for in vivo car T. And what we she's been at uh a particular institution for about a decade, except for an eight-month period that she went to uh a big VC backed gene therapy company that failed. Um, and you know, she said, everybody wants in vivo car T. She's like, nobody wants gene therapy, but many of the gene therapies are single protein mutations, and you're trying to deliver locally for the muscle or whatever to produce the protein, but nobody wants them because AAV and uh lipid nanoparticles LMPs resulted in patient deaths, right? And then she says, but everybody wants to now do essentially a gene therapy for multi-protein complex that's to go systemically throughout the body and penetrate only a single cell, and that's supposed to be easier, yeah.

Ben Comer 51:05

Right, right.

William Ho 51:06

It's a much bigger construct than the original protein that we're trying to generate for for many of these, you know, single gene point gene mutations. It's much more complex, right? Much of the if you're using AAB, much of the early cytokine release syndrome, what I've read recently is it's biphasing. The first the first phase is due to the body's innate attack of the viruses that you're using to insert the genes, and then the second is is after the the product, whether it's C D3, C D eight, C D4 T cells, or some other protein that generates immunogenicity. And so it's not as easy as people think. You know, if I don't use AAV, I'm going still going to use a lipid nanoparticle and it's all going to go into the liver. So you know, T cells aren't usually produced in the liver, right? They're produced in the thymus and other organs. What's going to happen when I have a high concentration of LMPs into the into the liver? And what happens if I transduce a CAR T with a promoter into a stem cell? Well, that's called the leukemia, right? And so there's a lot of questions still.

External Watchlist China And Data Trust

Ben Comer 52:20

We're uh we're getting to the end of our time, William. It's been a pleasure speaking with you. I do I did want to ask though, you know, we've we've talked about financial markets and the kind of the current landscape for cell therapy, it's shitty, I think, is what we uh what we called it. Uh, but aside from that, uh, are there any other external issues that you're tracking in terms of cell therapy? I don't know if it's regulatory issues, market access issues. Is there anything that you know externally beyond your control that that you're kind of watching for in this space?

William Ho 52:52

So yeah, of course. There's there's always things that we're watching. Look, I think, don't get me too wrong, I think cell therapy for some of these indications is an excellent modality. And it's just the sentiment that's out there. I do think there will be absolutely cell therapies that are highly positive, like our glioblastoma program, where we've doubled PFS.

Ben Comer 53:11

Induced poliplotin stem cells too are like getting into late stages.

William Ho 53:16

You know, I I still like IPSCs and some of the stuff that Fate and others are doing. Um, I think one of the things that we're keeping an eye on, like everybody, is what's happening with China and how do we deal with those. You know, us as a company to date, we've avoided work in China. Um, we have concerns about IP, we have concerns about how US regulators and US federal agencies will respond to China generated data and IP, um, as well as well as how that IP is used. But it's uh I'll say, you know, it it's something that it's hard to compete with the speed and the price. You know, someone recently told me that they started um an animal model with uh non-human primates, you know. I think Cinelegus monkeys, it was something like 800,000 for 18 of them. It's remarkably cheap. Right? So how if we if we operate in the US and under US timelines and pricing, what what's the path forward? I don't know, but we're keeping an eye on

Final Thoughts And Where To Follow

William Ho 54:22

that.

Ben Comer 54:22

Uh well, um, I think we're gonna have to leave it there. Uh, I really appreciate you coming on the show, William, and uh and sharing your experiences. And uh, and best of luck to you at N8 Bio. We'll be watching.

William Ho 54:34

Thank you. Thanks for having me.

Ben Comer 54:36

Sure. Uh, we've been speaking with William Ho, co-founder and CEO at N8 Bio. 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 lifescience leader.com. We'll see you next week, and thanks as always for listening.