Peter Mantas on the Coiled Spring of Biotech: FDA Shakeups, uniQure's Breakthrough, and AI Drug Discovery

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Speaker B: Welcome everybody to a new episode of this week in Intelligent Investing. We have a great one ahead. We're going to be talking biotech and uh, we're recording this on May 12th and it's a big day for biotech and specifically for some of the topics and companies Peter Mantis, our guest, has been talking about. Also here on, on this program is my co host, Elliot Turner. And uh, let me just welcome Peter Mantis to the show. He is general partner and Chief Investment Officer@Logos LP&CO Creator of the Back of the Napkin Bios podcast and substack. With a unique, uh, background spanning corporate law, international technology and interdisciplinary value investing, Peter brings a wealth of expertise in capital markets, emerging technologies, and in particular life sciences. That's an area that he's been, uh, very deep on for many years and I think it'll be the focus of our discussion today. So Peter, maybe we can start with the timely topics uh, today if you want to enlighten us. And then later on we'll get a bit deeper into how you came into biotech biosciences as more of a generalist. So why don't you fill us in on what the news is that investors should care about.

Speaker C: Yeah, thanks for having me guys. Today's a pretty big day because Marty Macri is officially gone from the White House administration. Ironically, I think it's the day before he's supposed to testify in front of Congress. I think he's supposed to testify tomorrow. He's been a polarizing figure along with the entire fda. This FDA in Trump's second term is very unusual. It's very, it's a very different FDA than his first term. So having him removed is, is, is quite bullish for the gene therapy companies, the cell therapy companies, gene editing companies, anything which is rare disease, uh, expensive drugs that can provide life changing therapies. So uh, it's good news overall for American science, I think, and for those

Speaker B: who may not be as familiar with why this is significant. I mean Usually when people like that resign, ah, someone fills their seat who is pretty much the same. But what's so significant about this uh, resignation in particular?

Speaker C: Well, if the FDA has um, for some, for some odd reason it's been ill infiltrated with the Maha movement. With a number of members of the FDA tied to Arnold Ventures, which is a well known anti rare disease, anti high cost drug thera, you know, kind of philosophy, you could argue it's almost borderline eugenics. And Arnold Ventures is the same organization that funded Hillary Clinton to go after Martin Shkreli. But Shkreli does not like this guy at all and I don't blame him. But Macri Prasad Sarsma and Tracy Beth Hoig I think is how you pronounce her last name. They're all effectively Arnold Venture plants. So to have Prasad leave is a fantastic news for the cber, which, which heads biologic drugs and gene therapy. Next to go is Macri, who's the head of the snake. Eventually you'll have the rest cleaned out. So you have a uh, changing of the guard at the FDA and you have an opportunity for not only Trump to do the right thing, but any new FDA figurehead or CBER figurehead or cedar figurehead to almost provide legacy status. I mean this is a chance to approve one of the biggest gene therapies in the world. This is the chance to approve one of the biggest cell therapies in the world. This is your chance to approve some gene editing platforms that are coming to market soon. So it's, it's a very interesting time for the fda, especially for an administration that is so focused on, you know, staying behind China and making sure that they don't get out innovated by the Chinese.

Speaker D: Yeah. Why don't you help us understand a little bit what Was the Trump 1.0 FDA like? What are the biggest differences here and what gives you confidence that it won't be more of the same from whoever's picked next?

Speaker C: Yeah, I mean Trump 1.0 is a little more, I would call it, I don't say Reagan esque, but a little bit more pro industry. I think what happened here was you had the Maha movement, this is my theory anyway. You had the Maha movement sort of take its own life form. And I think when you go too far right, eventually you get bit too far left kind of comes full circle. And because of the anti vaccine sort of Maha movement, you had a window opportunity for this philosophical narrative that Arnold Ventures plays in to sort of get in there and influence. And I think that Kind of blindsided the administration. I think it blindsided large donors of the administration like for example, Mary Madison. Mary Madison's in a very significant rare disease advocate funds a lot of Rick Scott that's almost polar opposite to the Prasad Macri Arnold Ventures philosophy. So the 1.0 is a bit different than the 2.0 and just from that perspective being a bit more pro industry. And I think the 2.0, because you're coming, it's a post Covid FDA. It's a post Covid Trump term. I think they might have been scarred from what happened with vaccines back then and the populace, the voter base was, you know, had a certain view on that and it allowed for that opening to happen. And uh, now I think that, that that rot is being removed and I think you have a shot here of an FDA that and go back, come back to its senses. And ironically enough, like I said, an Arnold Ventures philosophy is, you know, that's a Democratic philosophy. But they didn't infiltrate Peter Marx and they didn't infiltrate the Biden administration. So it is a pretty extreme philosophy that, you know, has in some way aligns with the Maha movement and now that's being removed. So I think it'll have a little bit more sensible approach going forward. Now the reason why I think that you won't see, you know, there's the fear that what if the replacement's worse? I don't see that happening. There's too much political backlash from um, the electorate, from major donors, from um, congressmen, from the base. The amount of advocacy and patient groups and well funded organizations that I see that want to burn Prasad and Macri, uh, quite frankly, I think the reputation's finished. They'll be lucky to get any job, quite frankly, outside of academia. So I think that to have someone come in to repeat those mistakes would just be like nail in the coffin. I think it's just too politically risky and I don't think Trump cares that much about it. Right. I personally think Trump might have been lied to. Right. Yeah, yeah. We're approving a gene therapy a week which was not the case. Uh, so yeah, I think it'll be a little different this time.

Speaker D: Yeah. I think one of the cynical takes on this all is that the only reason this crew has lasted as long as it has, and I'm um, lumping RFK into that crew, is there's upcoming midterms and the RFK voter base has been considered a critical piece of the Trump electoral coalition, which has been a little different than Trump 1.0 and prior Republican administration. So there's a degree to which you can't, you can't chop the head off before you get the tail and take their votes.

Speaker C: Yeah, I think that's right.

Speaker D: And you've had a front row seat to one of the foremost controversies that seems to have been part of the undoing of Makary. So maybe want to tell that story

Speaker C: a little bit about unicure specifically. Exactly right.

Speaker D: I had a feeling I didn't have to say which one.

Speaker C: Yeah. So just as a background, Unicure is a gene therapy that uses an AAV virus to deliver an MRNA silencing tool to effectively silence mutant protein, uh, production for Huntington's disease. So it's about the closest thing that we've come up to a cure for Huntington's disease as we've had. And by cure it's really, it's such a difficult genetic problem that the standard is are you getting, are you not getting worse? That's really the standard. So it's as close to becoming a game changing therapy for those group of people as possible. And they've released very good, very Strong data on 2 year, 3 year data, 4 years coming up this year. And they've aligned previously under the Peter Marks FDA for an exhilarated approval. And the Peter Marks FDA had a very, I think reasonable approach which is, look, this is a area that we're not too familiar with. It is a devastating disease, arguably the top three most devastating diseases in humanity. Right. So mice and monkeys don't get this, really just humans. And you tell us what, what needs to happen here. I mean bring in the experts, tell us how we can get this over the line to save people. That alignment was then rug pulled under the current fda and that alignment, not only was rug pulled pre, you can get a sense it was getting, it was going to happen pre the three year data, but it happened after the three year data, which was a home run data. I mean you had 75% reduction in symptoms. You had back to back negative NFL readings which are biomarkers for neurodegenerative diseases. I mean this thing is like, wow, this thing is working and theoretically it's probably um, gonna get better as time goes on. So what happened was they said we didn't, we don't align with that old version. We're gonna set up a type A meeting and type A meeting happens and they rug pulled them again. So you had a double rug pull by the FDA for against unicure saying they need to go do a phase three trial, which for the population group and for the patients is unethical. And the reason why it's unethical is because this is a, uh, this is delivered directly into the brain. It is. Requires minimally invasive brain surgery. But that's not necessarily the unethical part. Or I mean, part of it is you're putting people under anesthesia for, you know, the placebo. But that's not really the most unethical piece. The unethical piece is this is a disease that, where time is of the essence. And so if you deliver someone a placebo in a certain cohort and then they. Time goes on and they get worse, they no longer qualify for the drug. That's the problem. That's what's truly unethical about it. So you're effectively walking people off the cliff in the, in the sake of science, knowing full well they're going to die. Because the moment they pass that threshold, even if the drug gets approved, they cannot take it. So, and, and this is the, the very reason why an exhilarated approval framework exists, which is, let us, let us, let us approve this, but let us approve it in a very contained way. So you can only dose a few thousand people. You might have to, you know, do another trial, but it won't be a full phase three trial. We'll restrict the label, restrict the marketing, and if anything happens, we'll pull it off the market. That was the whole, that's the whole reason for an AA when it was invented in 1992, is to allow the government to control drugs as they're proving out more scientific efficacy, but allow people to have access to it who really need it. And under this administration or this fda, they're not even following proper procedure. They're not even following what the exhilarated approval mechanism is meant to do. They. I don't even think there has been an exhilarated approval for any other drug. So that's what's odd about this administration is not only are you seeing a, uh, complete disregard for scientific curiosity and diseases like Huntington's, which are very difficult and require specialist expertise, but there's a complete disregard for the procedural administrative framework that exists under the FDA and under law.

Speaker B: And it sounds like this is a US issue and that in the UK and elsewhere, unicure was gaining traction or is gaining traction, and that has that also been part of the equation of kind of putting pressure on the fda?

Speaker C: Uh, it's not a good look, oddly enough, when they got rug pulled the second time after the Type A Meeting two days later, the UK said, oh, by the way, we'll approve you guys. It was effectively sponsored or uh, you ah, say endorsed by the UK government. Part of that reason is the UK is a very high Huntington's disease population. A large concentration of people live there. It is also this epicenter of HD research. University College London is known as the preeminent hospital for HD research. They're the ones, I think, who discovered the gene. The leading HD researchers in ED Wild, Sarah Tabrizi, who were involved with the Unicure trial, are out there. Unicure did their trials under NHS guidance and approval. Meaning NHS is like, use our hospitals, use our nurses, use our, use what you need to make sure that you can get this done. So the UK is very, very open and knows what the drug does. And I mean Sarah Tabrizi herself was in shock when she saw the three year data. I mean she was just in, in glee that, oh my God, I think we, we found something here. So the UK has been very, very open and if the UK is open, the EU will eventually be open and Australia is very open. And it kind of leads to a domino effect. And that creates an immense amount of political pressure on the us because if you're supposed to be the gold standard of leading the scientific revolution and you don't want to be left behind by China, I mean you can't even be, you can't even catch up with the uk, can't even catch up with the eu. So it puts a lot of pressure on the American government, American policy, to approve, uh, a therapy that effectively works. And it's not like they don't have the tools to follow the uk, the EU or Australia. It's just having the right people in place and the right administration to see through.

Speaker B: And Uniqure shares have been very responsive to news, good and bad. No wonder. But how do you think about, um, valuing a company like that? How do you, in this specific case, how should we think about what this is worth?

Speaker C: It's like, I would say it's similar to a weighted coin flip. Well, maybe a highly weighted coin flip. You're just taking a probability estimate of every single jurisdiction and their populace and the supply and demand of people who can qualify for the therapy and then have a price differentiator to it, price, uh, anchor to it. So in the US there's 30,000 people who have HD, maybe another a hundred thousand who are pre symptomatic who initially might have the threshold that qualify for the therapy. You know, that's going to cost $3 million. That's your effective TAM. In the UK there's about 8,000 people that have the disease, about 15,000 that are pre symptomatic might cost around $2 million, maybe 2.5. EU is bigger than the US it's 40,000 people, maybe 150,000. Pretty symptomatic. The Australia's got a large population as well. I think it's 7,000. Japan's got 8,000 people who qualify for the drug. So if you do the math, if you just do these TAM numbers for effectively a monopoly at 2 to 3 million dollars, talking large revenue numbers, discount it however you want. You want to discount dilution, you want to discount, you know, hey, we may not be able to serve everybody. You want discount time, go. You get a share price that is well into the triple digits. From here on a share float, that's 61 million shares. So it can certainly be torquey. But the other piece too is AMT130 is a rides the same rails as their, uh, hemophilia drug. So manufacturing don't need much of an application there. It's riding the same rails. They've seen that before. The Australia's seen that before. Their epilepsy drug rides the same rails. So it's, it's more validating of their platform. And platform companies typically get a higher multiple on their valuation just because your R and D productivity is far higher. If, uh, you're riding the same rails of manufacturing and you know, FDA applications become far easier, you're cutting time off every single therapy that goes through the channel, every subsequent therapy becomes more valuable. So the AMT260 drug, which is their epilepsy drug, has a market of uh, I think five to ten times larger than hd. It's the same exact technology, same exact procedure, uses the same manufacturing rails and has data coming out as well. So if you factor all that together, you have a fairly valuable company here. And it wasn't too long ago where the company right after the Type A was trading below cash, around like 8 to $9 of cash. Uh, you had a few other platform drugs like in Fabry's disease, it can get pretty violent. But this AMT131 is the big, I call it the big Kahuna. Because if you don't approve this for this biology or this mechanism, for this mechanism, for this group of people, then it becomes hard to prove other things.

Speaker D: So maybe talk a little bit about what you'd look for from here in order to gain conviction that yes, this change at the FDA is what I've been looking for. And there's going to be a path forward.

Speaker C: Well, I mean I think the current replacement diamantis is a good start. He is a, he's a hunting buddy, I think of Trump Jr. He's a lawyer whose previous experience was to help food companies comply with the fda. So he knows he has a commercial mindset already. So we'll have to see who the. I don't think he's going to be permanent so we'll have to see who they appoint. It is positive that he's coming from HHS and not the internal fda. So you don't have that Arnold Ventures influence I don't think anyway, especially someone coming from that commercial background helping companies get over the line with the fda. So you want to see who you will choose to replace uh, become FDA head. He might still help in selecting the CBER head. I think the CBER decision will be important. So I get the sense that there is elements there that Trump is aware of the issue and needs to clean house. I think it was Congressman Rutherford. I forgot the other guy's name. Anyway, they're very close with Susie Wiles and they sent a letter saying hey this is ridiculous. They need to prove AMT130 and part of that was through the patient advocates who really pushed for this to get this over the line. So I'd be very surprised if the next group of people coming in are going to be as bad as Macarene Prasad. So having them removed was a, is a big benefit to the company and uh, not just to Unicure, but anybody in that rare disease gene therapy space who's had difficulty not aligning with the fda mainly because now it's, it's been aware by Susie Wiles who's going through her own health issues. It's you know, congressmen are fully aware. MAGA congressmen are fully aware. People like Senator Johnson are fully aware, Ted Cruz fully aware who's the guy who appointed RFK or you know, uh, confirm them. So I there, there's inclination that it's we might make it over the line but be okay, talk a little more

Speaker D: about some of these knock on effects because I know there's a tools company you follow that also is directly involved in the uni unicure therapy and also how this may have impacted the entire biotech landscape, what it's meant for the sector at large, what it's meant for the tools companies that service the sector and how much what has looked like a really bad Time in biotech may be the consequence of a bubble that popped post 2021 versus the chaos wrought by a very volatile regulatory regime.

Speaker C: Yeah, people might disagree, but I think it's brought on compression across the entire sector from small companies to large. The uh, most obvious example is Clearpoint Narrow which delivers the Uniq drug to the brain. They're a drug delivery platform. Companies like that typically, you know, their valuation is based on the duration and durability of their biologics business. So it's similar to bioprocessing. If you're going to grow, you know, 10 to 15% a year because there is a stable amount of drugs coming through your pipeline and you're in that downstream delivery mechanism, you know, as close as you are to the, to the human body or in the, the cleaning of drugs, the, the filtration of drugs. It's so the same thing. You are tired of the supply chain of manufacturing therapeutics and the delivery of therapeutics. You get a certain multiple in that because the thought is that well, this is a durable part of the market, this is a dural part of the ecosystem. Aging is secular, there's going to be therapies coming out. These things should command double digit enterprise value of sales. But if you have drugs like Unicure, which work biologically and should have been approved under exhilarated approval, then companies like Clearpoint as an example, well, their entire book of biologics customers gets compressed. And you shouldn't value it as a bioprocessing or biologics business. You should value it as a m, as a faster growing Medtronic. Right. So Instead of that 12 to 15 times enterprise value to sales, you now have five times sales. If you get something like Unicure approved again, a drug that has shown patients getting better, which has shown back to back negative NFL readings, the biomarker in neurodegeneration. Yeah, I mean Clearpoint was designed, was created, was made for Unicure. You're going right into the striatum of the brain. Like no pill, no iv, no injection can get there. Not that we know of anyway. Maybe a nano robot like 30 years. But uh, that has a whole pile of issues. So the multiples will get compressed, but it won't just get compressed for Clearpoint. It'll get compressed for companies like Unicure which sells a lot of filtration and a lot of, you know, garbage bags and chromatography columns for gene therapy and cell therapy. And if you have a blockbuster multi, multi, multi billion dollar therapy like AMT 1:30 which biologically works and doesn't get over the line. Yeah, well then maybe Repligen's end market aren't as durable as we thought. Maybe Sativa's end market does carry some regulatory risk which impacts the timing of their cash flows. And you know that, that creates a problem and usually those are the, the second piece as well is those kinds of drugs that are, that are effectively blockbusters. They fuel the biotech funding ecosystem, they fuel the VCs, they start igniting R and D diagnostics, you start igniting sort of the early stage discovery upstream part of the business. And that's when you know, eventually companies like Danaher and Thermo, which become our end to end the entire, you know, they need, they need everything in biotech to be working. Right. They need the early stage diagnostics, R and D, the tools, the bioprocessing, the. They need everything working. Drugs like this like game T130 are the fuse that can ignite winds necessary to ignite the biotech sector even further. And I think that's what a lot of sector specialists or people who are generalists who might be in healthcare are missing in that space which is you need these wins, you need a gold medal winner at the end of the race. It may not be the fastest time but you need a winner so that people can get confidence in the sector so that you know, the multiples become accurate from, from companies who are used to be compounders or biotech, biotech funds to continue to fund the uh, the drugs that, that they want to focus on to compete against China. All these things get impacted if we don't have blockbuster drugs getting approved. And also just for your population, I mean you have people who, you know, this disease impacts people in their prime working age years. So you get it at 30 and by 40 you're in a wheelchair. So you are being removed from the tax base. Right. If you're, like I said, if you're uh, an executive at Nike, make 300k a year or any S&P 500 company and you get Huntington's, you can't work anymore and then your wife has to take care of you. So you go from upper middle class to like lower middle class in a generation. So it becomes very anchoring to the tax base. It's not good for the populace, it's not good for the health insurance companies. Health insurance companies wants people working so they can continue to pay more health premiums. So it impacts I think not only the VC biotech ecosystem and as well as the tools companies and life science companies, but impacts the healthcare system, insurance companies, impacts everybody, affects your population. So it's a pretty full scale, it's a pretty full scale approach and impact to healthcare. If we don't get a lot of these drugs, uh, uh, across the line.

Speaker B: Peter, can we talk about the impact of an adoption of AI in biotech? I believe you wrote about uh, Clearpoint Neuro being a winner due to its delivery mechanism into the brain. That that as you say is also used for delivering the unicure drug. And I'm wondering whether that's analogous to a company like Sartorius that's also more in the picks and shovels of um, biotech. Do you believe those are the types of companies that will be the biggest beneficiaries as we get more candidates hopefully into the pipeline?

Speaker C: Yeah, I think, I think companies, I uh, call them the compounder sleeve. Like what are the most durable, secular, highest quality companies that can compound on the backs of you know, focusing on science, getting through, uh, drugs getting through. It's your Sartorius Replatos West. Those are the kinds of companies that in a biotech bull market perform fairly well. The last ones to move are uh, like I said are Danaher and Thermal because they're end to end. They're like your shopping mall for pharma. So you need research and you need diagnostics. Any bioprocessing, any biotech, all on fire, all at the same time. Which usually doesn't happen unless you have policy and low rates at the same time. But the first step is getting some of these blockbusters over the line like a unicure like AMT130 and like some other cell therapies that are focused on cancers or other indications with large tams like ALS or Alzheimer's. These are big problems that companies are spending billions of dollars on to solve. And to throw a hiccup in their uh, in their way for quite frankly dubious reasons is not good for anyone. It's not good for the ecosystem and it's not good for American health. So yeah, if you get some of these over the line it certainly does help not just those drug companies and those small companies like Clearpoint Narrow but eventually bleeds up to the replicins and the, and like the twist biosciences of the world and the uh, the Stevenados. I mean, you know, like I said, like do you know how much repl filters you're going to need if MT130 gets approved and they're in year five of serving? I don't know, 2,000, 3,000, 4,000 patients. It's a lot, a lot of cleaning. It's a lot of AEV5s. So it's, it's certainly beneficial for that ecosystem. As these drugs get approved over time,

Speaker B: do you think we're going to see an explosion in drug candidates? Uh, how bullish are you on AI actually being effective in discovering drugs and curing a lot of diseases that haven't been, uh, cured in the past. Do you think this is realistic? And what kind of timeline do you have in mind?

Speaker C: I mean, if you want my hot take, I'll give you a hot take. My hot take is I think you're going to see the biggest biotech bubble that we've ever seen. I think you're going to see it's going to make 2021 look like child's play. And I think the big reason for that is obviously you need winners in the space like AMT130s of the world becoming poster children. Every, every bubble has a poster child. From Sarepta to Gilead to Regeneron, these are all just products of bubbles that eventually became platform companies and compounded and reinvested their cash flows to expand their platforms. That's all it is. And I think that AI, it's the only sector where it's a true secular tailwind. Right? And if you look at from discovery or uh, even supplementing discovery, supplementing clinical trials, certain things may not be completely replaced, but it's definitely an exhilarator of knowledge. Right. What does AI do? AI just brings the cost of knowledge to zero. And if you're bringing the cost of knowledge to zero, the number one beneficial beneficiary or areas where the cost of knowledge is in input, which is in biotech. And if that's the case, then yeah, you're gonna see a lot more drugs that will skip a lot of stages in preclinical and go to phase one. So it, it will jam up the pipeline for early stage clinical companies. But that will require money because you have to go through the regulatory hurdles and money will only flow where it's respected and it's only respected if there's approvals. So you know, AI is sort of this coiled spring. But in order for the fuse to be lit, like I said, you need some of these drugs approved because you can have as much AI as you want. Uh, it's a regulated industry that's government controlled that uh, creates many monopolies so that AI cannot get around that. So yeah, I think AI is Certainly a tailwind in the whole space and will cut down time to discovery. But at the end of the day there's only so much you can do with that because again, it's a regulated industry. You still gotta go through reimbursement, you still gotta face insurance companies the same way, still gotta be tested on humans. So I don't see that changing from AI anytime soon.

Speaker D: Yeah, that's one of those really interesting points. You said that part about don't have to be tested on humans. And you, we go back to the FDA portion of this conversation and you look at what Prasad and Makary had said coming in and ah, there were these like really promising programs to get rid of human testing in the earliest clinical stages. Going in silico. Oh, uh, sorry, not human animal testing. Skipping the animal testing and going in silico, getting to humans faster and a voucher program that would create accelerated, accelerated pathways for some of these new therapies. And you know, there's reason for a little bit of enthusiasm. And then as time uh, went on, you see chaos compounding and like statements that are like very clear where the FDA went backward on them, you start punishing capital that moved on those early promises. And I think it's interesting you look at the AI people, right, the leading minds of AI. Dario Amadei, Jensen Huang Demis Hassabis all have said that biotech is the most obvious place where this will have a profound impact. Yeah, maybe talk a little bit more like I've been having this theory that like between CRISPR Genomics and AI, you could finally break Earms law. For those listening, Eroom's Law is literally Moore's Law spelled backwards. It was coined by a Bernstein analyst in 2015. It's this notion that for incremental innovation, biotech gets proportionately more expensive to find the next drug or therapy. The opposite of Moore's Law. Right. That's why it's Moore's Law spelled backwards. So do you think we could break EOM's law or do you think it's a construct of the regulatory, uh, edifice? And, and it's going to be hard to break even with these innovations.

Speaker C: It'll be hard to break. I mean you could have, you could use AI all you want to help discover any platform drug possible. But if the government's going to force you to do a randomized controlled trial for patient population that doesn't need it or can't access it or it's unethical to do so, you're burning, you're lighting money on fire. So at the end of the day it's a highly regulated industry that has guardrails for good or for, I mean the guardrails are necessary and by the way I'm not anti phase three trial, I just want to put that out there. But it is a regulated industry that is serves to ensure the safety of their population of humans. And because you're dealing with safety and deaths and you cannot afford to make a mistake, those regulations are going to continue and it's going to cost more and more and more every year to bring a drug to market. And that, that's good and bad. I mean like that's part of the moat here. That's why these companies get many monopolies over a period of time. I think the AI right now is useful for pre discovery, early, early early stage preclinical to preclinical kind of work where you might not need to test fully on a rat model. Maybe you supplement it with AI maybe you are doing a clinical trial on 10 patients but with AI maybe you only need to do seven. You know it's something like that I think is possible. I don't think you'll fully replace the clinical trial model with AI models. I think it's too dangerous and I think for certain diseases there might be more stringent, more stringent regulations. Like because you brought something very quick to phase one, we want to make sure that it's really good and really strong. So your phase two might be we, we demand a 300 patient phase two, 250 patient phase two. You know, maybe even though you do qualify for an aa, we're still going to ask you to do a randomized control trial. Just because this population is not really, there is a standard of care, they're not really dying that you know, it's not totally devastating to the population. And because you came to clinic really quick, you know, still we're going to actually do a uh, small phase three. I, I don't think net net it's going to do much other than accelerate the early stage pre discovery stuff.

Speaker D: So then is there enough capacity in the system from the top with capital all the way down through the actual companies that run the clinical trials for biotechs to get more molecules into the clinic and push things through and kind of achieve what you'd need for that bubble bigger than 2021 to take shape?

Speaker C: I think, I think you can get more molecules in the clinic for sure. The question is how fast can those molecules go through the clinic is the question That I don't know. And that's really a policy driven question and a question for the regulators. Right. If you had a Peter Marks level, FDA probably go relatively fast, faster. The previous FDA with Macaren Prasad. Yeah, no chance. I, um, think we've had the fewest Biologics approvals since 2018. And do we have more biologics in the queue today than we did in 2018? Yeah, we did. So, you know, at the end of the day, as much as AI is a tailwind, it is subject to the output, is subject to government regulation. And if our regulators and policymakers don't address that problem, then AI, all it does is just create a queue. That's my opinion anyway.

Speaker D: So, yeah, AI creates a cue. How do you think it has its most profound impact? Is it on, like with genomics, we could identify the right targets. Is it on molecule design? Is it on patient population selection? There's so many different angles. Is it all of the be all of the above? Like, how do you think about when, where, how it starts leading to progress here?

Speaker C: I think it starts with molecule design, genomics, eventually patient populate, patient population selection. I think it eventually gets to all that. Yeah, I think, yeah, that's, that's my answer. I think it eventually gets there. I think right now it's probably most useful for discovering new drugs. Molecule design, genomics analysis. I think it's a tailwind for the gene editing gene therapy companies. You know, you can test out, uh, which AAV is best to deliver. XYZ therapy, you know, will this gene editing platform slice and dice the RNA/DNA needed to make X, Y, Z, A, B, C changes? I think that's where it's useful right now. But again, those are all preclinical, those are before being tested on humans. So at the end of the day, you still face today the problems that any drug company faces, which is I gotta go through phase one and I gotta go through phase two. I might get an rmat, I might get a breakthrough designation, I might get an orphan designation. But again, that's all government. So, uh, I don't think you're gonna see. I think the only way you break your room's law is changes in regulation, not technological disruption.

Speaker D: So let me ask you this. One of the debates I've been intrigued about with crispr and I've been following the Very recently we had the first phase 3 data for an in vivo gene therapy gene edit. And the debate, even before approval, very quickly turned to, okay, well now what, what do the commercial Prospects look like for this drug. Will uh, people want to take a genetic medicine when there are a combination of small and large molecules on the market, though those may be less effective, will people want to take the chance of something that, that changes their genetic substrate? How do you think about something like that in, in approaching the space right now?

Speaker C: I uh, think it depends on the indication. So if the problem uh, is a very difficult problem, which has been a sinkhole of money that doesn't have a standard of care, which is effectively death sentence, I think people are more inclined to try the gene editings of the world or more innovative therapies like cell therapies or gene therapies. So if you have rare diseases, especially for pediatric rare diseases, if you have very humanity changing diseases like Alzheimer's, als, Parkinson's, Huntington's, I think people are more inclined to take those kinds of therapies. If you're talking about something like well I want to lose 10 pounds or hey, I want to lower my blood pressure a little bit, I think gene therapy or you know, gene editing will be a, ah, tougher sell. So I think standard of care, you know, adverse event safety, the, the type of indication that you're in is more the factor as to whether or not you'd be more inclined to take those kinds of, those kinds of platforms. Now that doesn't mean that those substrates or I mean rather those platforms can't solve big problems like if you have a diabetic and there's a gene, gene editing solution that uh, cures diabetes. Yeah, okay, sure, yeah. I mean that's pretty game changing. I think that was, that'd be something that people would be interested in. But again like I, I think for other disease or modalities it becomes harder, a harder sell or having those sort of invasive platforms that really changes a lot of your body.

Speaker D: And then these gene therapies are fundamentally curative where in typical biotech fashion, like biologics, you tend to be on them for life once you start in many cases for some of these, for some of these diseases. But with a uh, gene therapy, you take it once and you no longer have recurring revenue for the duration of the patient's life. You know, do you think our system, our healthcare system could handle pricing? That's pricing to value and giving something NPV positive to the health insurers? Or do you think there's going to be significant pushback at uh, how big the price tags are, how much the biotechs would ask for to justify their investment over time and how small Some of these patient populations are.

Speaker C: Yeah, I think it depends on the disease and the patient population. So Huntington's is a good example. Huntington's, you get it at a fairly young age. You get it 30, let's say it is, it takes away your entire prime working age life and it lasts for 25 years. So for insurer, they're going to pay upwards of 7 million to $9 million per patient for that, for that patient's life. And that money is physical therapists to wheelchair ramps, to a nurse in your home, 24, 7 to hospital bed in house, to, you know, everything on uh, maybe some pills to help with your motor skill, like, but that, that doesn't do anything other than like you don't shake as much. Whereas Unicure's gene therapy is $3 million. You want 3 million one time, that person then goes back to work, starts paying UnitedHealth insurance, be able to provide for a family is a net positive to the tax base on top of being cheaper than the standard of care. Or do you want to keep paying 7 million over 20 years? So I think that's fairly a simple calculation. I think where it gets harder would be you have like a 3 million or 5 million Parkinson's cell therapy where that person might be 80 years old and they maybe have 5 years left, 10 years left. Do you want to pay $5 million for a million 80 year old Parkinson's patients who are retired? They're not paying that much more in health insurance. Their life expectancy isn't very long anyway. So that becomes a bit of a different calculation for rare diseases. Again it just depends. Like a child who's six, if you give them a gene therapy where they, you know, grow, you know, extend their life for 50, 60, 70 years. Yeah, that is a net benefit to the health insurer as well. So I think it just, it just depends on the modality, the disease, the severity and a whole bunch of factors that, that insurance are willing to pay for. I mean uh, I'll go back to Huntington's. Centene has draft guidance already approving AMT130. Like they're ready to go. And Centene is notorious for pushing back on everything. 18, 130 has not been approved yet. And they're like we're ready, we're ready to cover this. Because they did the math and they saw that this is not only a, uh, net benefit to the patients that they cover. Like I said, it costs upwards of $7 million for 25 years or more for that patient versus a one time, $3 million drug. But that person then goes back on the health care system, he goes back to work and starts paying insurance again. So that is a very clear npv. But some others I think you'll see more pushback on, depending, again, depending on the modality, the patient population, the age range, a whole bunch of variables that they're going to have to look at.

Speaker B: Peter, maybe we can step back. You have a very interesting path in how you came to be so deeply engaged in the biotech space. You started out as a generalist, I believe, uh, law, law degree. Tell us about how you ended up so focused and in the weeds in biotech.

Speaker C: Yeah, it was about 20, 2018 where I had a discussion with my partner. I said, look like we should, you know, it's either commodities or biotech. And I, I, uh, we, I had studied, you know, in my previous life, I sort of did like a rotation and IP and was, was around defending drug companies with patent infringement. I'm not a patent lawyer, but, you know, I got a taste of it and you know, I just started diving super deep into the scientific literature. This is before I sort of transitioned the entire book into that. Yeah, it got deep into the scientific literature, got deep into the legal procedure, the, the, the IP patents. I got deep into understanding how the FDA works from a procedural, administrative perspective. And uh, it just fit my curiosity, fit my, my strengths fairly well. Uh, it fits my analytical skills well. And so since I would say, you know, since 2018, that's really been the big focus for me, has been the life science, biotech sector. AI, I would also say, has certainly advanced knowledge. I mean there's thousands of drug companies, I don't know every single drug company out there. Right. And I'll use AI as like my pocket biotech analyst to be like, hey, this stock is down. Why, what happened? And uh, I'll teach me up on this particular molecule. And this is the result. Didn't hit a response rate whatever. So I think I, I also think AI is actually going to exhilarate generalists maybe starting to look at biotech because there could be good businesses in biotech. Like I said, there's platform companies. If you think of Vertex, Gilead, uh, Regeneron, and AI now makes it you again. You have, you have a biotech analyst in your pocket. So this wasn't the case when I first started, but yeah, it was just sort of. It's the only sector that I can find that kind of meets the academic requirements with the capital markets mindset that makes it Very interesting. And there's not a lot of attention other than select few who can understand how some, some of these things work. So you have a little bit of an edge. You know, you're not, you're not competing against generalists who are in MAG7 or in compound or bro stocks or you know, quality ROIC stocks. You're in uh, I mean you take some of those frameworks and can apply it, but because it is really off the beaten path, uncorrelated, asymmetric. And then you tie the, the academic piece to it and the, you know, the variety of drugs out there and the solutions and problems just became a natural. I just became attracted to it. So.

Speaker B: Fascinating. And tell us a little bit more about your uh, substack back of the napkin bios I believe is, is the name. Uh, what do you focus on there? What's kind of the publishing cadence and what can uh, folks get if they sign up?

Speaker C: Yeah, it was uh, there was a point in May of 2025 I believe it was, where biotech was just in a really bad place. I mean I think the XBI was like maybe 70 bucks, 65 bucks. I just started seeing so much biotech, it's such ridiculous prices. I'm like this is getting out of hand. So I'm going to write a blog or I don't know, call whatever you want, signal based research publication, whatever you want to call it, where I'm just talking about ideas that I think are interesting. At the time it was a lot of bio, I call it Biotech Beta. Like you literally could have thrown dart at some of the major covered ones like Arrowhead, Ionis, cytokinetics, et cetera and do really well but. And now it's a little harder because biotech has run a little bit more than the rest of the group or the, you know, versus life size tools or other areas of healthcare. Now it's a bit more alpha I would say, versus beta. But yeah, I just found it very interesting. It's also a place for me to house my ideas and I actually often go back to my own publication. Say, what did I write about this on this date?

Speaker D: Oh yeah.

Speaker C: Okay. So it allows me to go back and remind myself the original thesis and to keep track of notes that I, that I've published before. So it's a bit of both of uh, note tracking, you uh, know, helping the community where I can talk about ideas that I like and also just coming at a time where I thought valuations were a bit silly and thought it could be helpful to people who are interested in biotech. Great.

Speaker B: Well, I think we'll leave it there. Uh, certainly we'll keep watching what happens next with Unicure, Clearpoint, Neuro and some of the other companies you've talked and written about. Maybe just lastly, for folks that are on X, what's your X username?

Speaker C: Yeah, sure. It's uh, petermantis M A N T A S. It's my name.

Speaker B: Great. Well, I follow you and I know it's a great real time source of what you're thinking and often timely ideas as well. So thank you so much Peter for joining us today. This has been a fascinating conversation and I'm sure as AI ramps up and maybe we get another administration, who knows? There will be a lot to talk about and get updated upon. And also I look forward to having you as a speaker at our upcoming online conference in June, widemote Investing Summit with uh, moi where we'll go deep on a specific idea. Great to speak with you. Thanks also to my co host Elliot and everybody listening. We'll catch up with you next time. Take care. For now,

Speaker C: thank you for listening to this Week in Intelligent Investing, brought to

Speaker D: you exclusively by M Moi Global, the

Speaker C: research driven membership organization. Learn more@moiglobal.com.