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[Colin Miller]

Hello. I'm Colin Miller, CEO at The Bracken Group, and this is Fractals, Life Science Conversations. Bracken is the professional services firm for life sciences and digital health organizations. Our intelligence ecosystem fulfills consulting, regulatory, marketing, and analytics needs with an integrated and strategic approach.

 

Today, we're discussing the crucial ins and outs of biotech venture capital. So, I'm delighted to have Doctor Lorenzo Pellegrini to join us on the program today. Lorenzo is a managing partner of the Hatch Bio Fund, where he oversees the firm's investing and operating activities. Lorenzo's got 30 years of experience in life sciences, and he's a distinguished scientist, investor, and entrepreneur. He's deeply committed to turning scientific discoveries into transformative products that improve patient lives. Before joining the Hatch Bio Fund, Lorenzo founded or co-founded 6 biotech companies, including Palladio Biosciences, where he served as its first CEO, raised $20,000,000 in venture capital and advanced a lead drug through Phase 2 studies.

 

Lorenzo was also a partner at Care Capital, where he led investments in several successful companies, including Elevation Pharmaceuticals, Anacor Pharmaceuticals, Minerva Neurosciences, and Agile Therapeutics. But Lorenzo's accomplishments extend beyond these. He holds a Laureate in Chemistry, Summa Cum Laude, a PhD in Biochemistry, an MBA with Honors, and has published research in leading journals like Nature, Cell, and Neuron, and is an inventor of 2 patent families. So, with that as a backdrop, welcome, Lorenzo, and thank you for joining me today.

 

[Lorenzo Pellegrini]

Thank you, Colin. Thank you for the great introduction. It's a pleasure to be here.

 

[Colin Miller]

It's wonderful to have you. And with that career, you know, spanned 30 years in life sciences with roles in science, investing, entrepreneurship. What initially drew you to this field, and how has your perspective evolved over the years?

 

[Lorenzo Pellegrini]

You get sucked into this field little by little. Right? And maybe as a high school student, you fall in love with chemistry. And then as you, you know, you study chemistry, then you become into maybe the protein biochemistry or maybe the inner workings of a cell. And, and all of a sudden, you realize that this is really, you know, a great field where you have the ability to study how biological system work and understand and, and eventually interfere, manipulate, and, you know, manage them.

 

So that's, that's really fascinating. And, it's, it's something that happens over time. And in the beginning, when you start in the field, you have, know, this great ambition of trying to do so much. Right? But, you know, eventually, you have to focus on one particular area.

 

And in my case, you know, I became a neurobiologist when I was a postdoctoral fellow at Yale University studying the cell biology of neurons. And so, you try to do that, and, you're surrounded by incredibly smart people. You're doing all this work. But eventually, at some point, many of us realize that the impact of our work is actually limited. Right?

 

You become an expert in a, you know, fairly esoteric, scientific problem or…or scientific area. And you, along with the other 20 experts in the world, you know, compete for publications and for bringing the field forward. It's all very important. It's all, you know, incredibly important work. But at some point you find yourself, you know, at 10 PM in this laboratory in some, you know, exotic geographic location wondering—looking outside and wondering, you know, is this really what I want to do?

 

And isn't there something better that I can be doing with, you know, with the skills that I picked up over—over time? And, you know, you go out and and—and seek for greater impact in this world. Around, the year 2000 or so when the first biotech bubble happened in the in the genomics field, and you may all remember, you know, those years where crazy years where evaluations were went through the roof and all these genomic companies like Human Genome and Celergenomics and, QuroGen, you know, they were having this massive success and these enormous valuations. And it appeared that the right place to continue to have impact and do research in a certain way was the private sector. So that's when I decided to go get my MBA and recycle myself into the business side of things.

 

At which point when I graduated from—from Wharton, I was virtually unemployable because who needs, you know, somebody who is a scientist, you know, very—very good at designing experiments and maybe analyzing critical data and with a little bit of sprinkling of business education on top. And so, you know, nobody came to Wharton. None—none of the sponsors, none of the employers came to Wharton recruiting for that particular kind of kind of person. Right? The big pharmas recruit from business schools in the marketing and finance department, you know, not necessarily for somebody who can have some strategic contribution to the r and d field, and it would, you know, would be too early for—for someone like that.

 

Right? So, I was lucky because I was rescued by this venture capital firm based in Princeton, New Jersey called Care Capital, which really provided my professional education really. So,everything I know about the business I learned while being at Care Capital. And I was lucky because I…I had the opportunity to stay there for 12 years working on some really, really interesting projects surrounded by phenomenal people who taught me everything I needed to know about—about the business. So that was really, you know, my—my formative years.

 

And I think, you know, as you look back to your career and you think about how you were and the decisions you made, you know, you always tend to think, okay, there was so much I didn't know. I was… I was an idiot in some respects. Right? And then, as you continue and you progress, then you pick up more skills. And I think the other really critical evolution or experience for me was when I turned to the operational side of things.

 

Starting this company, Palladio Biosciences, and running it for a few years and then staying on to see it, acquired by a larger company. And then that company, went public on—on Nasdaq, and I played an instrumental role in all of that. So, you know, you could see how, you know, you—you get a very good perspective, a very good understanding of every single phase of how you create value in biotech and drug development and then eventually monetize your investments and so on. So that was, that was that was a great, great, great experience for me. In fact, that would be my recommendation for all for, you know, for this nascent, for the young class of venture capitalists to try and get some operational experience, to really experience how it feels to be, you know, walking into a room full of investors, trying to convince them to invest in your company and all the skills and—and the nuances.

 

And, so that's really, really important. Because beyond the technical knowledge of knowing the various modules that compose an IND and, how you write an investigator's brochure and so on. So that you will you may pick up also on the operational side, and that's helpful. But the operational experience allows you to connect with the entrepreneurs in a different way, in an emotional way, you know, develop some kind of empathy in ways that is, you know, would otherwise not be possible. And so now I'm finally back in VC, and I feel my educational years are finally over, and I'm ready to take on, you know, this role in with all the challenges that are associated with it. So it's been, it's been a very interesting very interesting period to be in biotech.

 

[Colin Miller]

It really has, isn't it? The way the life sciences has changed from, you know, the early days when you and I are probably involved and, you know, we—we knew that the DNA was a double helix, but we'd never sequenced it to now having complete sequences and things that, just where the—the computing power is just so different. I mean, just I can't even begin to start that one. Yeah.

 

[Lorenzo Pellegrini]

Yeah. We—we are doing science fiction right now. Right? So, in my office, I have, I hung up 2 posters, and one shows the top 40 drugs by sales in the US in 2006. And when you look at this, you know, it shows all the chemical structure.

 

And you look at this poster, and, it's primarily small molecules. In fact, it's 95% small molecules. And you have some household names there, like, you know, Avandia, Lipitor, Ambien, and so on. Right? All these very famous compounds that are now all generics, and they built the pharmaceutical companies in the powerhouses that they are right now.

 

And my second poster is exactly the same thing. So the top 40, drugs by US sales in 2021. So just 15 years later. And there are very few small molecules in there. It's just biologics, you know, obviously, Humira and, this 2021 was a COVID year.

 

So the—the lead, you know, the top selling drug was the Pfizer vaccine, for—for COVID. Right? Combinati. But, but it's really remarkable how in 15 years the entire landscape has completely changed. And if you project that 15 years forward, my prediction is that there won't be any small molecules, you know, maybe a couple or—or something like that.

 

But, it's—it's really remarkable that we are operating in this industry that needs to completely overhaul its product base, its product roster every—every 10 years, every 15 years, every 20 years. Right? You only have that product for a certain time, and then, you know, it's up to you to innovate and move on and—and have something else. Imagine if you were to apply that to, say, I don't know, the car industry. Right?

 

BMW, you're being told, you know, okay, the Model 3, you can no longer make it because now you have a whole bunch of companies. And to some extent, yeah, they are making, you know, model 3 imitates series 3 BMW imitate imitations out there. Right? But—but it's so acute in, in the pharmaceutical world that, it's it really is what drives, you know, this this drive, this eternal thirst for innovation is what drives the whole thing, and it's—it's just beautiful. It's a beautiful industry to be in.

 

[Colin Miller]

Yeah. I…I agree. I obviously enjoyed my career in the, the pharma industry, and, watching the changes, the, it's, quite remarkable. I have to agree with you. And, I hadn't appreciated the posters and the, the work that you have up on your wall. It's a it's a good characterization.

 

[Lorenzo Pellegrini]

Here's another great example. Right? We never really paid too much attention to peptides. You know, over the past 10, 20, 15 years, peptides were confined in this niche category. Like, you had Forteo. You had a couple of others, but they weren't really successful. Companies may come to you. Okay. We have a peptide to do this.

 

And now, okay, maybe we would tell them, you know, interesting mechanism, actually an interesting…interesting target, but can you make a small molecule? Can you make a monoclonal? Peptides were just goofy drugs. And look at them now. Right?

 

You know, like Novo and, and Lilly are the biggest companies by market cap because of these peptides that they have.

 

[Colin Miller]

Very interesting. Also very hard to predict how things will turn out. Isn't it? Yeah.

 

But that that prediction is a is a tough one. I mean and so then in which case, predicting the future, how do you go about it from an investment thesis view? Because you've got to look at investing in something that's—that's gonna be in the future, but you've got to take a snapshot of a look today that's only got a small amount of information about where you're going and what you're heading. How do you do it? You will find plenty of people that claim that they can do it, but the reality is that nobody really can.

 

[Lorenzo Pellegrini]

So you have, you know, scores of people that are involved in this in the in this industry. Right? And that's their primary job, figuring out where—where are things going. And so you can make certain educated guesses, but nobody can really say, you know, with—with certainty, obviously, this is where this is where we're going. I think, it's a combination of many things.

 

Right? You have to keep an eye on—on new technologies, understanding that new technologies always take much longer than people expect to establish themselves. Look at monoclonals. Right? We've it took 20 years before monoclonals really became mainstream.

 

And the same thing will happen to gene therapy, and the same thing will happen to cell therapy. So people have to be a little patient and, understand that things will take longer. For the longest time, the only antisense drug that was approved was this, you know, topical eye formulation of an antisense drug for HIV complication that nobody even used because and—and that's all we had. And now, you know, Alnylam has made a massive business out of them. They finally came here.

 

You know, they're —hey're here now. So, the—the predictions always need to be formulated within a 5 to 10, perhaps even 20 year time scale, which makes it even—even more difficult. Sometimes, though, you see things happen like the IRA. Right? This legislation that has, new legislations, legislation in the US that has, negatively impacted the—the development of small molecules.

 

And so even though the pharma companies are reluctant to say so publicly, we are seeing a continuous movement away from small molecules to biologics. Biologics are very advantageous for a number of reasons, right, including the fact that they don't necessarily go generic with the same pace as the small molecules do. And so the companies have a better ability of, of retaining the value that they create over time. So, you know, Humira by AbbVie will continue to be a blockbuster product for the next 5 or 10 years. It's just not going to go away.

 

And so this is not lost obviously on companies. So, there was a general trend toward the development of biologic, the preference—preference over, you know, biologics over small molecules, but this legislation has definitely accelerated that. So, when things like this happen, it kind of makes it easy for us to make predictions about the future. There will continue to be a role for small molecules going forward. We know how to make them and develop them really, really well, but, but less so going forward.

 

Say, if a company comes to me and they have a—a small molecule for a certain target, an antagonist, or a monoclonal for that same target, presumably it's an extracellular, you know, plasma protein, I would always pick the monoclonal over the small molecule. Small molecule may have no future.

 

[Colin Miller]

Interesting. You heard it here first. It goes back to I think another question that we could talk about which is, the definition of success for a venture capitalist.

 

[Lorenzo Pellegrini]

Right? Yes.

 

[Colin Miller]

What how do you define success?

 

[Lorenzo Pellegrini]

I think it's really 2 things. You can take you can take, you can take a broader view which is to say well you know we are in the business of investing in companies developing medicines and so success is if we are successful in developing the medicines.

 

If our medicines are approved, if the medicines that we invest in, are approved and used by patients that would definitely be, you know, a success. And—and yeah that's one side of the argument. But the alternative is success is purely financial success. And this may not benefit society as much in terms of producing medicines. But—but unfortunately, this view prevails.

 

And so take a field like cell therapy. Right? Cell therapy became incredibly popular within the investment community. And so we funded 100 of cell therapy companies, most of which are now failing or will go bankrupt, unfortunately. But some of the investors that invested in these companies made a boatload of money invested in these companies because they were able to take them public and, you know, and exit the investment at massive valuations.

 

And, all of this is beneficial to the investors, to the limited partners that invested in those investors, etcetera, etcetera. But it didn't really lead to any therapy. Any so the patients are still waiting. You like to think that we should represent more than just a quick flip. Right?

 

Where our definition of success should be developing drugs that bring hope and bring cures and bring treatment for people who don't have many options. Right? But—but you can actually play these general trends that we talked about, you know, cell therapy and gene therapy in such a way that you will make a whole bunch of money if you're careful, if you know what you're doing, without really creating a durable, you know, benefit to society.

 

[Colin Miller]

It is an interesting dichotomy, isn't it? The, the successful society versus the financial gains and the motivation for the 2 different parties there. So your—your point is very well made, but I wonder if it's, it gets further cloudy because if you don't get financial success, you don't have the money to invest in future, compounds or future assets. Therefore, do you have to look at investing in multiple financial successes and knowing that the relative percentage of health success or, community success is limited, but you've got more targets because you're financially successful.

 

[Lorenzo Pellegrini]

I wish that there was some recognition of that. But I think what's happening, certainly with certain investors is that the greed prevails. Like, they don't care about and I don't want to sound too negative, but sometimes you can tell that when—when these bubble when the biotech bubbles happen, right, that people are rushing to take advantage of that, because they've learned that that's how you make money in biotech in biotech in Biotech BC.

 

Like, the—the entire Biotech BC community has learned to recognize when these bubbles take place and take advantage of them. Without these bubbles, there would be no VC biotech VC industry because we simply wouldn't be making money. It, you know, wouldn't justify its—its existence. And so whether people do it because they feel, okay, you know, I'm gonna make some money here on this project that may not ever work. Because by doing so, I can then have more money to fund the real ethical project—I don't wanna say ethical. You know, the project that may have may have a better chance of succeeding or not. That's—that's just lost. You know? When whenever these it's just a stampede out there.

 

Whenever these biotech bubbles happen, everybody's rushing out trying to push their companies out, you know, regardless. You know? This is what we have, and let's—let's see how we can take advantage of it.

 

[Colin Miller]

No. I I I see that, and I think I was trying to, suggest that if you went for the programs that had the most health care success or, you know, the success for community, for humanity, you would have relatively few that you could invest in because the return on the financial return on investment will be limited.

 

If it's limited, you have less chance of investing in other assets that have high potential gains for humanity. Whereas and so, therefore, you're—you're and—and you're gonna fail on some of those anyway just by the nature of the way medicine research medical research goes. Therefore, is the longer term benefit, the VC approach, because although most of them are a rush for my best financial return on investment, 1 or 2 of those compounds, albeit a smaller percentage, will actually return the health care benefit that we're after.

 

[Lorenzo Pellegrini]

Yeah. I don't, I don't disagree. Look, eventually, you know, people look at their portfolio and they try to figure out how to maximize returns based on what they have. And it's fairly rare that people invest in companies with clear doubts about the probability of success for the particular technology. So people don't necessarily do financial engineering just, you know, invest in companies just because they want to get a quick exit and make money that way. There's always a consideration in the back. Okay.

 

But, you know, if things go wrong, can this product have a chance to succeed? So, you know, at least we have that control in, in our field, in our industry. I guess speaking for myself, we I would never invest in a company where I don't feel that they have a chance for long term success independently of what happens, you know, 2 years from now or maybe 1 year from now with the with the IPO bubble. Right? If you if you feel that the compound doesn't make sense, the programs don't—don't make sense, they have no chance to succeed, then you just don't invest.

 

There's no amount of potential exit that people can wave in front of your nose that would convince you that, you know, bad programs would become, you know, would—would be a good investment.

 

[Colin Miller]

Do you think that's also partly because of the opportunity you have with the with the not only the the deep scientific background you have as now as well as the financial to be able to really evaluate those properly. And you're also probably looking at the earlier stage rather than some of these bigger investments where you may not have that combination of insight when you're doing the due diligence.

 

[Lorenzo Pellegrini]

No. I don't I don't get that sense because the scientific the scientific expertise you're talking about is now widely available.

 

Right? You know, all VCs have it. There was a time when I started where, you know, it wasn't as widespread. You know, certainly when you look at, the initial investors in the field like healthcare ventures, domain associates and so on, those are the ones that I'm familiar with, they didn't necessarily have scientists on their rosters or drug developers. They were making investments based on, you know, common sense and looking at management and, you know, it was it was a it was a different approach.

 

But certainly now that the field has become so scientific science driven with some of these modern technologies, you have seen more and more VCs and investors in general even on the public side that hire the PhD scientists that are helpful in making these decisions. But the reality is, I think the key question is always, and I think this is one of the things that I've learned to do, I think, a little bit better, in my in my career, you know, throughout my career is, to move away from what the management team is selling, what the management team is saying their program, their product, their technology can do. And, I completely disregard that and go actually to look at what the data say that the technology can do. Because the management team will always try to sell you on this potential bright future, But you always have to, you know, don't buy that at all. Just, you know, go back to what the actual data what, you know, what is the background?

 

What—what is this body of existing evidence tell us about what the technology can actually do in the future? And, you know, presumably you have to be optimistic and figure out, you know, what has to work well, what—what kind of pitfalls you have to avoid. That was definitely one of the things that, perhaps in the beginning of my career, you know, you tend to always believe what the management team tells you. And then you bring a deal to your senior partner and say, oh, wow. You know, look.

 

These guys can cure cancer or something. Or they can cure IPF, idiopathic pulmonary fibrosis. But then, you know, you look at the data. Okay. Well, really?

 

Okay. They say they can do it, but can they redo it? Can this technology really deliver the—the outcome? So and so perhaps they're having some scientific inclination helps. But I can tell you, Colin, science is secondary.

 

You'll be surprised about this. But the main determinant of a good investment, the main parameter that you always look at first is the people. 80% of an investment decision is a management team. The next question is not the science. The next question is commercial.

 

What space are they moving into? You know, if you take their target product profile as they formulate it. So let's assume we believe them for now. What are they gonna say on the market? It's the user experience. Right? This is this concept that people use in in in the app world, in the tech world. Right? The user experience. What how does this product make the user experience better?

 

The user being the patient, the user being the physician. How does that improve that? And, and then third is the science. Because the science is important because it's a foundation of everything. Right?

 

And—and the science may sell the company at some point. Because at some point, you're gonna have to get the interest get, you know, ahead of pharma R&D interested in that particular science. And that tends to help things. But science alone does not constitute an investment. This is something that is really difficult to explain sometimes to early stage companies, the kind of companies that I deal with.

 

Because, you know, typically the founder or the CEO are very involved. You know, they…they tend to come from the lab and, and they think that the science alone will—will carry the day, but that's never the case. The science is good for writing grants and to get the company started. But—but then you rely on other things, you know, management team, the quality of the management team, and then the commercial potential. And so when you look at, some of the investments that, I made in the past that turned out to be successful, all of these components were there.

 

Right? We invested in Elevation Pharmaceuticals, Akia Capital. It turned out to be a 5 x. It was an acquisition by, Synovion. So that's the ideal scenario. They only had one product. They had other ideas in the pipeline and the product was really simple, conceptually. So the science there was fairly limited. But they had a they had a great management team. It wasn't it was a I don't know. Maybe 8 to 10 people, not more than that, but they all fit in perfectly within that particular role. And—and so they delivered on on all—all dimensions. So that was, that was really good to watch.

 

The other company that we invested in called Anacor, which was then eventually acquired by Pfizer for a few $1,000,000,000, That company had great science and great chemistry. They were based on boron chemistry, and that was a new area of chemistry that hadn't been explored at that point.

 

And it had certain advantages over what people were doing before. Eventually, it wasn't necessarily the platform that led to the acquisition. It was the products that were they were able to generate with the platform, which is a common theme in, in big pharma acquisitions. But there too, you know, they had great management team. Like, you went to visit the company, and then you—you talk to the people and you walked away feeling, oh, wow.

 

You know, this is just they—they are great. They are on top of their game. They know what they're doing, and they have so much to work with. There's so much potential here that you almost feel, you know, you must feel like you have to invest. And, and all of their investment rounds were very, very competitive as you may imagine.

 

So but then again, there were there was another company called Agile Therapeutics, and they were developing another, you know, relatively simple conceptually product of a contraceptive patch. Right? And they had again great management team and there eventually the commercial opportunity didn't materialize. So, so again, you know, this is why companies sometimes are not successful because, you know, just the—the commercial side of things done doesn't work out very well.

 

[Colin Miller]

No. I can, I can appreciate that? And—and the commercial part of it, of course, is much more futures based than it is factual. You know the science and the management team on day 1 when you're making the investment normally, and the commercial part is somewhat in the future, and you can only expect you can obviously make a best estimation.

 

[Lorenzo Pellegrini]

Yes.

 

[Colin Miller]

So, just—just going back to the people side of it, what's your feeling around when in early start ups, and I'm talking about sort of A-round, maybe even to B-round, when you look at a management team, does it concern you that companies have fractional support, or do you expect to have full time, management team that you're gonna invest in from the get go?

 

It doesn't concern me at all. In fact, the fractional support is the way to go for most companies because they get access to high quality expertise that they wouldn't normally have access to if they were to hire the particular person. Right? If they were to bring in somebody full time. And so, you know, they get the best of both worlds.

 

They—they get to minimize their payroll expense while at the same time accessing high quality expertise that otherwise they wouldn't be able to access. So that's definitely it. I think it's the only way to to move forward with with the company. Right? Because let's be realistic here.

 

If all you have is $5,000,000 in the bank, which is a great success. Right? We started Palladio with $5,000,000 in the bank. But chances are, you know, the rock star chief medical officer is not gonna want to join you if that's all you have. And so or, you know, a rock star VP of CMC or head of regulatory.

 

And—and maybe you don't even need them. Right? So, there's definitely a role for that. But as as the company matures and then you raise more money, then it makes sense to bring in people full time when when—when the need also materializes. Right?

 

When you need to have somebody who's worked for 1 year on this program, on their lead program, knows the program inside out, you put them in front of the FDA for a meeting. So that's—that's how you know that you're gonna need people full time. But before then, it's premature.

 

[Colin Miller]

Yeah. It's…it's an interesting discussion. That's why I was fascinated to have your take on it because you see it. You have to make that investment, and I've heard both sides. I really appreciate the insight, you know, from—from Bracken's perspective. Obviously, we—we offer a fractional C-suite, so, that's—that's why I was always intrigued.

 

[Lorenzo Pellegrini]

Yeah. But, Colin, there's, there's a trend that I'm sure you're you have seen something that is taking place right now, and that is the triple digit series a round. And we see it on and on now. Every in fact, it seems easier on the surface to raise $100,000,000 than 10 these days. And so and—and we can talk about why that is. I think it—it has nothing to do with it being a good investment strategy.

 

It has 100… 100 percent to do with the fact that venture capital investors raised a boatload of money during the COVID bubble, the recent bubble that we had. And—and so now you have a whole bunch of money chasing a few deals on, out there. And as you know, venture capital money comes with an expiration, you know. You raise a fund, you have 5 years to invest it. And, after the 5th year, you can no longer make new investments.

 

You can whatever money you have left, you can use to support the existing investments you made, but you can no longer no longer make new investments. And so this strategy now, as an outside observer, I guess, because I don't participate in any of that, seems more—more tailored toward being able to say we put all this capital to work to try to get it out of the door. But, you know, the reality is if you have a $150,000,000 series a, the company doesn't get $150,000,000. They get whatever it is in the first tranche. Right?

 

But it changes the way that you would run the company. A company that should raise 20 now raises 150. And so now they have if they meet all the milestones, they have their financial future assured. Right? They know where the money is gonna come from.

 

So in that particular situation, maybe they're no longer gonna work with, you know, fractional expertise. They want to build the organization because, hey, we just raised 150. And so, yeah, we're gonna hire 100 people. And then when the market turns sour, they're gonna lay off 60% of them. We've seen it.

 

It was so upsetting, Colin, to watch, you know, the—the popping of this COVID bubble. And you had preclinical oncology companies that were announcing that they were laying off 30% of their workforce, and you—you feel for them. Right? But then you read the press release, and the 30% was 140 people were—were affected. What—what was this company doing with 400 employees?

 

And that's because, you know, it's…it's really a head scratch. It's mind boggling how even though we've had these cycles forever, you know, the boom and bust cycles, the management teams, maybe they're inexperienced, but they still behave like they don't exist. Like it's different now. It's not different now. Things are gonna come crashing.

 

What are you gonna do? Right? Every time you hire somebody, it's a responsibility toward that person, especially in this field where, you know, the—the motivating employees should be so easy. Right? Because we are we are making miracles.

 

We are we are developing miracles. And—and that's not lost on anybody. And then you have to let them go because your hiring strategy was a complete failure. You didn't understand that at some point the financing world would, you know, the financing funding environment would—would change so dramatically. It's really upsetting.

 

But, anyway so now we're seeing this new trend of the 100 +1000000 dollars series a, series b. And I think those companies will also be tempted to hire a whole bunch of people. And, you know, you have to wonder, how does an exit look like for a company that from the starting block comes out with a $200,000,000 post money or $300,000,000 post money? Remember, we need a 5 x. Right?

 

So how are these companies gonna become $2,000,000,000 companies? You know, it's that's really an open question. I don't I don't see it happen. I don't see it happen because the world hasn't changed. Pharma only has so much capacity to absorb, you know, all these beautiful companies that we're building and the IPO market the same.

 

And so this will be a terrible vintage year for venture capital and biotech VC, you know, this couple of vintage years that we just had. That's my prediction, at least.

 

[Colin Miller]

Thank you. That is a fascinating insight. Yes.

 

Appreciate the, the concept there. And, yeah, I agree with you. The, the companies over hire and then hire and fire. It is a huge disservice to the, the biotech community, long term. And then because you and I come from international backgrounds, how do you look at the—the portfolio, the investment thesis on an international setting? And, you know, how does that balance in the collaborative area of life sciences?

 

 

[Lorenzo Pellegrini]

I don't know that I can speak too much about this. Obviously, our investment strategy is 100% focused on the Greater Philadelphia region. So we don't invest in companies abroad. But when I was at CARE, we invested in companies in Israel, in England.

 

You know, we certainly were looking globally for the best opportunities that we could find. I think geographic proximity really is an advantage when it comes to investing in companies for the obvious reasons. And I also see that we really should develop I don't have a solution for this, but we really should develop an alternative to the US market. See, right now, the US market is the last remaining addressable market for some of these therapies that command a high price or or in general. Right?

 

If the US market was at the same level in terms of reimbursement as Europe is, we probably would cut our industry size by half or more. Right? So it would be very important to see how the Chinese market is going to develop or whether we can change things a little bit in Europe because, you know, right now, the industry's footprint is a little bit on a shaky ground. Right? We are just one bad law away from destroying the biotech industry. That's my my feeling right now.

 

[Colin Miller]

So, my final question is today, if you could speak with yourself at age 25, what advice would you offer?

 

[Lorenzo Pellegrini]

I would tell myself to start a dotcom.

 

[Colin Miller]

Okay.

 

[Lorenzo Pellegrini]

Because that's where the years. Right? Yeah. Start a dotcom. Try to make some money early on in your career, that, you know, when you achieve that, then you approach life with a different perspective. No. That's that.

 

No. That's absolutely I'm being facetious here. I would say, you know, to just slow down a bit, to not be, you know, rushed so much to to get ahead, get things done, but, you know, just take some time to reflect upon things. And, you see, when you're young, when you're that age, you're—you're facing this big void, right, in front of you. And you have some idea about where you wanna go, but not really. And it's both exciting and scary at the same time.

 

And, you know, when I look back now that I'm on the other side, you know, I like, I'm thinking about all the nights that I spent studying or, you know, just working and, you have to wonder, you know, was it really worth it? And maybe I could have studied or worked a little bit less and, spent more time, you know, cultivating relationships or, you know, seeing the world a little bit more even though, you know, I consider myself more international. But there's a lot to a lot to learn when—when you travel, you know, things of that nature.

 

So, you know, don't necessarily rush to don't be afraid to take some time and not rush through all the phases of your life. Getting a PhD, getting your MBA, getting, you know, study this, study that and finish and graduate, take all your exams and then jump to a job or to another job to another job. So just take some time and think about things, you know, what is important for you and especially cultivate relationships because that's what is so important in life.

 

[Colin Miller]

Lorenzo, thank you. What a great spot to, to close on.

 

And, it has been a real pleasure spending some time with you today and, talking through, some of your knowledge. This conversation has been absolutely fascinating. So thank you for joining me today.

 

[Lorenzo Pellegrini]

No. Thank you, Colin, for having me.

 

It's been a pleasure. It was a lot of fun.

 

[Colin Miller]

It was indeed. Thank you.

 

Fractals is brought to you by Bracken, the professional services firm for life science and digital health organizations.

 

Subscribe to Fractals via your preferred podcast platform. Visit us at thebrackengroup.com, or reach out directly on LinkedIn. We'll be delighted to speak with you. I'm Colin Miller, wishing you sound business and good health. Thanks for listening.