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Invest Like the Best with Patrick O'Shaughnessy
Dinakar Singh - A Father’s Call To Action - [Invest Like the Best, EP.427]
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- [00:01]
Patrick O'Shaughnessy
Something I speak about frequently on Invest like the Best is the idea of life's work. A more fun way to think about it is that I'm looking for Maniacs on a Mission. This is the basis for our investment firm Positive Sum, and it's the reason why I am so enthusiastic about our presenting sponsor, Ramp. Not only are the founders Karim and Eric Life's work level founders certainly maniacs on a mission, they have created a product that is effectively an unlock for founders and finance team to do more of their life's work. By streamlining financial operations, saving everyone their most precious resource time, Ramp has built a command and control system for corporate cards and expense management. You can issue cards, manage approvals, make vendor payments of all kinds, and even automate closing your books all in one place. Speaking from my own experience using Ramp for my business, the product is wildly intuitive, simplistic and makes life so much easier that you'll feel bad for any company who hasn't yet made the switch. The Ramp team is relentless and the product continues to evolve to save you time that you would never have dreamed of getting back. To me, There is nothing more interesting than technologies that reduce friction for other entrepreneurs to be able to build the thing that they want to so much attention has gone to cloud computing, APIs and other ways of making life easy for founders. What Ramp has done and is doing is build yet another set of tools in this category. To get started, go to ramp.com cards issued by Celtic bank and Sutton bank member FDIC. Terms and conditions apply. Ridgeline gets me so excited because every investment professional knows the core challenge that they solve. You love the core work of investing, but operational complexities eat up valuable time and energy. That's where Ridgeline comes in. Ridgeline is an all in one operating system designed specifically for investment managers, and their momentum has been Incredible. With about $350 billion now committed to the platform and a 60% increase in customers since just October, firms are flocking to Ridgeline for good reason. They've been leading the investment management, tech industry and AI for over a year, with 100% of their users opting into their AI capabilities, putting them light years ahead of other vendors thanks to their single source of data, and they recently released the industry's first AI agents, digital coworkers that can operate independently. Their customers are already using this highly innovative technology and calling it mind blowing. You don't have to put up with the juggling multiple legacy systems and spending endless quarter ends compiling reports. Ridgeline has created a comprehensive cloud platform that handles everything in real time, from trading and portfolio management to compliance and client reporting. It's worth reaching out to Ridgeline to see what the experience can be like with a single platform. Visit ridgelineapps.com to schedule a demo. As an investor, staying ahead of the game means having the right tools, and I want to share one that's become indispensable in my team's own research AlphaSense it's the market intelligence platform trusted by 75% of the world's top hedge funds and 85% of the S&P100 to make smarter, faster investments decisions. What sets AlphaSense apart is not just its AI driven access to over 400 million premium sources like company filings, broker research, news and trade journals, but also its unmatched private market insights. With their recent acquisition of Teagus, AlphaSense now holds the world's premier library of over 150,000 proprietary expert transcripts from 24,000 public and private companies. Here's the kicker, 75% of all private market expert transcripts are on AlphaSense and 50% of VC firms on the MIDAS list conduct their expert calls through through the platform. That's the kind of insight that helps you uncover opportunities, navigate complexity and make high conviction decisions with speed and confidence, ready to see what they can do for your Investment Research? Visit AlphaSense.com invest to get started. Trust me, it's a tool you won't want to work without. Hello and welcome everyone. I'm Patrick o' Shaughnessy and this is Invest like the Best. This show is an open ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money. If you enjoy these conversations and want to go deeper, check out Colossus Review, our quarterly publication with in depth profiles of the people shaping business and investing. You can find Colossus Review along with all of our podcasts@joincolasis.com.
- [04:06]
Alan Waxman
Patrick O' Shaughnessy is the CEO of Positive Sum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum may maintain positions in the securities discussed in this podcast. To learn more, visit Psum vc.
- [04:35]
Patrick O'Shaughnessy
My guest today is Alan Waxman. Alan is the co founder and CEO of 6th street, one of the most unique investment firms with a go anywhere, do anything mandate across asset classes, geographies and time horizons. He describes his journey from Goldman Sachs's Special Situations Group and the frameworks he brought with him to lay the foundation for 6th Street. Alan details their famous investments like Spotify and Airbnb during challenging periods, their innovative sports partnerships with Real Madrid and FC Barcelona, and their $30 billion Tao vehicle that allows them to write billion dollar checks while keeping individual fund sizes matched to opportunities. We discuss hiring people without egos, enabling a true multi strategy approach and six freights fakes the Tiger philosophy. Please enjoy this great conversation with Alex Waxman. So Dinakar, I'm so excited to tell you your entire story. It's one of the most unique, moving and incredible stories I've encountered in investing and I guess in life more generally. I was thinking about how to ask about it to kick us off and maybe the appropriate way is just to ask you why you named your firm TPG Axon.
- [05:40]
Alan Waxman
The axon is the nerve that connects your brain to your muscle and it happens to be the core part of what degenerates in spinal muscular atrophy, which is the disease my daughter's diagnosed with. And so from my perspective, an important factor in starting the firm and leaving Goldman at that time was that on one end, while I loved investing, I also just resolved that there was a glimmer of hope to save my daughter and other kids who had her condition. But that glimmer of hope was not going to last very long and time was not our friend. And so I needed to go as quickly as possible to drive success as quickly as possible. Obviously for its own sake, but more importantly, honestly so that I could go and throw a variable fortune into the research we needed to do to make sure we did it as fast as possible in time to save her. Because she was diagnosed in 2001. I had just come back from Hong Kong literally a month or two months before I'd become global head of the group. While there I was in Hong Kong for four years setting up the Asian business and becoming global head. At that time came back, we were on top of the world. Our group was extraordinarily profitable even during difficult years of the firm came back and A month later 911 happens and a month later our daughter was diagnosed with SMA spinal muscle atrophy. And she's a year and a half that time we'd been sort of shifting back and forth, Hong Kong and New York, and as your first child it's ironic because you actually don't know what is normal in terms of development. And so we thought she was developing normally, but we were at a party and One of our friends mother was a very good pediatrician and said, look, you ought to go and have her checked out because just go have her checked out. And that started the saga, getting test after test after test and eventually, literally a month after 9, 11, sitting in my office watching the smoldering ruin of the World Trade center, which was right in front of my window and getting this all from the doctor basically saying that she has SMA for a bunch of reasons. It was a shock. Well actually technically he called my wife, 30 seconds, sorry, she has SMA. Gotta go. Click. And she called me in tears. We called him back and it was maybe 60 seconds this time. But at that time no one knew much about this disease. The gene for it was just discovered a few years before and until then people thought it was just a variant of muscular dystrophy or some other muscle disease. So in sma you're missing a key gene that makes a key protein. That protein is like a fertilizer for muscles and nerves and like fertilizer with plants. Without it they wither and die. All of us have a backup gene because it's such a critical protein. Our body has some redundancy. Some people have one, some people have two or three. That backup gene doesn't work very well. It makes a protein that falls apart because it's got a defect in it. But to have some. And so depending on how many backup genes you have and how little or more than little protein you have, you might die within a few weeks or you might die within 10, 15 years. Our daughter was in the middle and so the diagnosis at the time is that she'd probably live to be in her mid teens or so, but getting weaker and suffering along the way. So my parents had been scientists as it happened, probably a source of my deranged thinking in life. But after school in India, I'd go hang out their lab and do mouse dissections when I was six years old. It's a typical after school activity. But I mean I grew up in the science world and so had enough scientific knowledge to be dangerous. And so as you stared at this, I mean it seems super intriguing to me. I mean in the first few months it was just dosation. When you're told there's no treatment, there's no cure. It's just a question of when and with how much pain you're mentally clobbered. We first started just giving somebody to some Bruce. And as I started digging into the research it became clear that, huh, there isn't as much known about this as actually one would think, given the gene was just found. For example, why did that neurologist diagnosed or hang up in 60 seconds? Honestly, because he didn't know anything about this. When he went to medical school, there was no spinal vessel atrophy because no one knew that it was a separate disease, let alone one that actually affected 20,000 kids. So technically, actually, at that time, the most common genetic killer of kids, which is a pretty incredible thing when you think about it, intrigue starts setting in. And so at first, my wife and I started giving money to some causes. There are a few groups that were involved, and so we gave them a bit of money. As we dug in more, we then started talking to scientist friends, Columbia, et cetera, and got more intrigued that there was a chance here, because there's some really good work had been done. And in your body, if you're missing a gene and it's completely gone, replacing it when it's totally gone missing, I mean, true gene therapy is still really, really hard to do. On the other hand, here you had this backup gene that was defective, but having a backup factory in place that you could try and crank up and fix to make a bit better is a wholly easier challenge than having to replace something that simply went missing in the first place. And so that struck me as being pretty interesting. There was some work being done. You could create mice that had sma, which is also a pretty big, powerful factor. You had an intriguing thing to tackle. You had some tools that actually were pretty nifty tools in these cell models and mouse models, so you could test things in them that had to see whether they had an impact or not. And this is a little nitty gritty, but for a lot of drugs, one of the biggest problems is what they call the therapeutic window, Meaning with almost anything in your body, too much or too little is pretty bad for you. And I joke with people that take water as an example. Water has a very wide therapeutic window, but by the way, if you drink enough of it, you'll actually get kidney damage and die. And most other things are much, much narrower. And so there are many drugs that actually might work, but we just don't know exactly what the precise amount is and where. Where to get it. And as a result, they end up having toxicity problems or undershoot, et cetera. With sma, the difference between some of these kids with multiple backups versus not and somebody who is a carrier versus having a disease or someone like you presumably doesn't have it all, there's such a Massive wide range of this protein in the body. That's pretty clear that you almost can't have too much. There's no real worry about that. And that really was a pretty treating thing from developing a drug as well. And so again, not to get too much in the weeds, but read into these things and it really seemed like there was at least something to be tried here. As it happened, there was an interesting coincidence, which is that NIH at that time, for the first time ever, the world is very different today. But rare disease was not something people focused on. Back then, no one cared. There had been one rare disease drug really ever. And companies were focused on big things at that time. Statin, diabetes, drugs, oncology. No one wanted to work and look at rare disease. NIH was also funding all these big diseases, but they actually came up with a novel program at that time to have the first ever grants awarded for translational research. And so they actually picked SMA because it's this cool, nifty new disease and said, we think this is the best target. We'd like to have a small program where we can actually go and provide some grants to work not just on basic science, but work on actual drug discovery again. Today this seems completely obvious. Back then, that was a really novel thing. Unfortunately, there were a bunch of changes. The head of NIH stepped down and the head of ninds, the Neurological Institute, stepped down. And so you had acting directors in both places. And I would joke to people that when you have acting directors, that means there is no action on stuff. And so nothing was really happening. So there's pitiful grant money from NIH for this disease, even though other diseases of similar size and a lot less potential probability success were getting tons of funding. Because I mean, there is just a latency bias and things. If you think about this, if you're a student in medical school and a disease is well known, you might want to focus on it afterwards. So you're doing more research. If a disease no one's ever heard of until recently, there aren't many people working on it. So there aren't people apply for grants. And when you apply for grants, there aren't many people who understand it to know whether it's a good grant or not. And so there's a lot of stuff that just takes a long time for the cycle to work. And as you stared at this and said, look, there's a chance here, but we might be waiting a couple decades or so for this to work, by that time she's going to be gone it occurred to me, and I tell people this now, the second worst thing that can happen to a parent is to see their child suffer and die. The single worst thing, though, is to see your child suffer and die, only to find out that you could have done something about it, but it wasn't done in time. And so once we got the idea in our head that there's a glimmer of hope here, it really almost deranges you, if you will, because then any second you're spending doing anything that isn't max speed is a wasted moment. And so that led to just, we're going to take a shot of this. I'm not going to go and take a shot only to find out we went slowly. So this has to be max Turbo. Pull out all the stops, let's go for it. Part of that was money. It struck me that all these things take time. You could fund some scientists, get some basic research, and then go to the next one and the next one, the next one. And that will eventually work, but it'll take forever. It struck me that we need to do things in parallel processing, not zero processing. If there are five interesting ideas, let's do all five at the same time and see which ones work. Not do one at a time and go abcdefg. So basically what we drew up was a pretty aggressive vision. Early on, it was giving money to people like Columbia, et cetera. And we did set up Motor Neuron Institute there with someone who wanted to fund ALS as well. And they're quite similar diseases in terms of some of the impact. But it occurred to us that academia, while very important, was never going to go and develop a drug. And so we really had to create a virtual company. So the thought then was hire some scientists, get some amazing advisors together to really help be our brain trust, and then sit down every so often with ever and say, what do we need to do to go and move this ball down the field? And then go and do it. Whether we pay someone at a company or we give a grant or whatever, but give money, get it done, move on every front at the same time, and then keep coming back and saying, okay, what do we learn? What did we learn? Let's go on to the next thing. Now all that takes a lot of money. My father would joke that for a straight hour, Kid, I developed the world's most expensive drug habits. I was a partner, Goldman. And look, at some point, I would have left anyway. In reality, at some point, if you love investing, you want to go and just do it in its own pure form. But it certainly occurred to me at that point that given all this, it was time to get going. One, because of course, I'm passionate about investing and I wanted to build a great firm. But second, because the value of doing that right now and the dollars that could come from it right now could save my dollar in a way that if I waited five years or three years or two years, it wouldn't. The Axon name. Rounding back to the long answer, the very short question was really just there to remind me of what the mission was. And so it was always amusing because people would sort of wonder and I'd explain, well, you know, the Axon is the connects muscles and nerves and brain and so connecting thought to action. And they thought that was a cool analogy from a just general perspective. Every now and then you get a scientist or a former company who would see our logo, which is actually the shape of an Axon, and would get the fact that this was actually about medical research on stuff, which is always kind of cute. It's a bit of an Easter egg that we sort of hid in there. But look, so that was what we did. I mean, functionally then my day job was really there to pay for my night job, if you will. We got teams together. TPG was my partner in starting up Axon. They were really remarkably helpful. Through my relationships and through some of their network, we were able to really go and connect with some of the absolute rock stars in drug development and people that were not just smart scientists, but actually were biotech guys that really understood this stuff. And I think for all of them, what was extraordinary was how much of their time and energy they're going to commit. Obviously we weren't paying anyone, but we would get a dozen and a half of the smartest drug development people in the entire world coming together for a couple weekends a year and just taking time away from their families and their work and just sitting with us and brainstorming about our plan of action. And I think part of it was because it sounds crazy to think about this, but there had not been a single meaningful drug for a neurological disease developed in decades. Crazy, right? So the idea that there was a chance to do something here was really cool because neurology was kind of a graveyard. I think everyone seemed to have this sense of excitement that, okay, there's actually an interesting plan here, maybe it'll work, maybe it won't, and there's someone willing to write the check and fund this. So it's not about going and begging for money. People, I think, were excited about the idea of joining in to go and figure out whether we could actually go and solve disease. One first stop was, look, there were some scientists that have done some work suggesting that some existing drugs could actually modify the disease in mice and things like that. So we basically created all these mouse models and cell models of different types to test different versions. And each has pros and cons and set up facilities to essentially give them away for free. So essentially we said to everyone around the world, guys, send your drug libraries in, your compound libraries in, test them for free. We'll pay for it. You keep the ip. We just want you to know if there's something interesting here on stuff. And again, because no one cared about rare disease, let alone a pediatric one at that time. It took years before any company, even for free, was willing to do that, which is crazy. Finally we got Novartis to bite and they ended up finding a drug that had failed for tox reasons, for anorexia or something back in the 70s that was off the charts. Good. And so suddenly like, oh, this is interesting to give an example of just how different the world is now versus then early on, I'd use relationships to go drag some of our scientists and some of our advisors, et cetera, to go meet with heads of research at different companies and try and pitch them and say, look guys, I know this is a small disease, but there's a chance to do something. It won't cost a whole lot to find out. You don't have to spend 40% on marketing, all that kind of stuff. And so one of my slides show that if you charge 5 to 15,000 a year, you could actually end up with a drug worth hundreds of millions of dollars in profit. And so it wouldn't just be a charity project. You could actually make a little bit of money from it. And the head of one of the largest biotech companies, actually, it'll have to be in the meeting and said, look, Tanner, most expensive drug in the world is Avastin, which was a mycology drug at $50,000 a year. No one's ever going to pay that kind of money for a small rare disease for children. It became a running joke in the end because this person, Al Sandrock, was an incredible advisor helper to us, joined our SAB and really helped us really immensely at the end. The first drug that we helped develop through Culture and Arbor Labs and then a company called Ionis, we then had them partner up with Biogen. So Biogen essentially bought in the drug and became the first to market with an SMA drug. And when they did they charged I think $730,000 a year for it. I think they're one of the top three drugs pulling in I think four or five billion dollars in revenue. And so amazingly today the SMA drug market I think is high, single digit billions. And it's a top three drug for Roche, Novartis and Biogen. But the notion that a pediatric neurology drug would be anything of value back then was a hard sell. And so we basically had to go put in a box with a bow on it and give it to people for free because otherwise they'll never touch it. And that's really what we did. I mean we spent a fortune on models testing everything. It was clear after testing everything that the existing FDA approved drugs. Some would have some impact, but none would be good enough and you'd have toxicity issues. So it didn't work. So we then pursued all three shots on goal that you thought were relevant. Coldstream Harbor Labs had a great scientist that had what's called antisense oligos, the first biologics, essentially the viral vector takes a protein in the body and it was designed to patch that defect in that backup gene and help that backup gene become a fully functioning regular gene, which would be magic. Presto, that became the first drug, the one that Biogen ended up buying in. Second was good old fashioned small molecules, syringes and pills, a bit like Novartis for example had found something that worked. We basically paid a company called PTC Therapeutics lots and lots of money to go and test everything under the sun they can imagine with different screens and ended up finding one that really, really worked. And so we basically just paid to develop that and then actually got Roshan to go and take it from there. That's actually the drug my daughter's on now. In between was gene therapy, which a company called Avexis did and then Novartis bought in for $8 billion. And I guess this is really the first gene therapy drug ever approved here. We didn't support it as directly from a financial and other perspective though. Our board members were active investors and we helped them with the network and the library and the clinical trial networks. Our focus, just being selfish to some degree was that gene therapy is great, but only works for very little kids. Essentially in gene therapy you're taking viruses, you're bringing protein in your body and when you're large, that amount of virus will kill you. Basically the toxicity becomes an issue. But we wanted all three shots on goal to be explored. Look, we got lucky today we have all three as approved drugs. So the first was that biogen cells, the second was gene therapy with the vexis, and the third is Roche, which is just a synergy you take every day. That was incredible luck, I suppose. But part of what we did from a time perspective, because we're desperately worried about the clock running out, was try and make sure that we could have everything in place so that when these drugs were ready, they could go 90 miles an hour. And so, for example, we went to the FDA through lots of relationships on the political side, both to get NIH moving, by the way, in the early days and to help later on. We got to know, if you will, all the relevant senators and congressmen that mattered when it came to drug development, NIH and things like that. And look, our view is just a parent with tears on their face. It doesn't get very far. But we would say, look, we want to be really supportive of you. There's a chance there to actually achieve a success. And that's why you should focus on this. Not just because it's sad, but because it might be fixable. And I think that became a powerful combination. It took some work. We, for example, got 50 top scientists who are Nobel prize winners to sign a letter talking about how there was a really good chance of successor. We then started literally taking out full page colorads in some of the political newspapers in Washington, Roll Call Daily hit, all that sort of stuff, so that all the staffers would see this very striking roll caller ad every day on this stuff, lots of stuff like that, to really go and essentially create a real sense of momentum on the side. Because it did occur to us that while end of the day developed the drug matter and getting companies involved with matter, everyone moved faster if they thought that the other guy was there too. And with the FDA as an example, that really helped. They worked with us and we said, look guys, we need this to move fast and so what can we do? And by the way, kids are dying, we can't afford to run a placebo trial. That doesn't make any sense. And so we worked with them and got their approval to essentially run a natural history study, meaning while the drugs were being developed, we basically paid for people's care for a handful of years so that we could have a log of what the natural progression of the disease was and use that as our placebo. And so when it came time for the trials, the trials didn't have to be placebo trials, essentially because the FDA was willing to accept the fact that they'll compare the results in the trial to what were the natural history study results of kids normally with sma. That saved a lot of lives and a lot of money, because otherwise half the kids would have died in those trials. Looking potentially our daughter with all the persistence and with a few little help from our friends as well. The first estimated drug, I think was then, and maybe still now the fastest approval by the FDA ever in history of any drug.
- [25:03]
Patrick O'Shaughnessy
Wow.
- [25:03]
Alan Waxman
Which is pretty cool. The good news, bad news, of course. My daughter ended up being on the first strike since she was 12, has been stable since then, and has ended up being just the rock star of the family. Went to Yale, won three of the 11 awards for most outstanding student, class speaker, you name it. And during COVID amazingly went unhinged and met up with this unbelievably amazing six four fantastic Princeton kid. They fell in love and they got married last fall. She's now getting her PhD at Cornell. So I guess we'll end up with our doctor in the family. But just watching her thrive has been remarkable. That said, the clock was the clock. Every year she got weaker until the drugs came along. And as to me, the progression typically would be kids get weaker, stuff starts falling apart, like your spine. And you need spinal fusions, and that means your spine is constricted, you can't grow. That creates lung damage. And then you start getting pneumonia and all sorts of stuff. And so you end up. I mean, in the old days, you have enormous deformities with children. And like many degenerative diseases, Als, Parkinson's, even Alzheimer's, no one dies of sma. It just makes you really weak. And then something gets you, whether it's asphyxiation or it's choking or it's pneumonia, more often than not. Val Kilmer just yesterday of pneumonia. But pneumonia was really just a side effect of throat cancer. In her case. Our goal was to manically keep her strong as possible until the drugs can come along. And so physical therapists coming to see her every day. We built a pool in our apartment building for her because you need warm water and just a special therapy pool. But that was important because when you're a person who's weak, part of the problem is it's circular. You're weak, you can't exercise and stretch your muscles and bones, so they keep getting weaker and weaker on top of the original problem in the first place. And that creates this devastating cycle. And so here between diet, between exercise, between therapy. The goal was to go and keep her as strong as possible to hold off that damage from all these things. And it worked and it didn't work. She did end up needing spinal fusion and having rods put on her back, et cetera, but fortunately those were late enough that she had already grown and so didn't create the deformity you'd normally see in someone else. She had problems with her hips that blew out and things like that. When she was turning 10, 11, every year there became a major surgery and even aside from those major surgeries, she was in the operating room or she was in the hospital probably three times a year with severe pneumonia, at risk of dying each time. And with all these things, it is bit Humpty Dumpty. Like once it breaks, you can't just put it back together again. On one hand, if it had been a year earlier, that would have been all the better. But the good news is that compared to what we expected at the outset, to see her here in a rock star and truly happy with amazing friends, and it's just so touching. I described to people, if you have a boat and you have a hole in it, trying to build water out of the boat is not really going to be a useful strategy. You're going to sink just maybe a tiny bit slower once you fix that hole. And now there's water on a boat. Now bailing water, the boat could actually be a really good strategy. Mission stage two now is that we're working on a ton of drugs that we think can regenerate muscle. Nerve is harder to do, but muscle is a bit easier and also help existing nerves get a little bit stronger on stuff. We have one already in the clinic. It's not the best one, but we expect to have three or four things coming forward that could be really impactful. And what's actually pretty cool about this is that the SMA drugs are SMA specific. 20,000 kids, so it's a lot of people, but they're SMA specific. These regeneration drugs will actually help lots of people. And it's ironic because SMA is actually becoming a poster child for this, because take muscle as an example. I assume that there'll be tons of people and experts that knew all about muscle development from muscle stem cells called satellite cells into muscles, et cetera. There may be six people in this country that know what they're talking about when it comes to muscle. It's crazy. I assume, oh, gosh, you know, she got a rod and steroids and all that. Kind of stuff. I mean, there must be big money in it. But the reality is, muscle has been a really tough field for a couple of interesting reasons. There are two types of people that have muscle problems. People with degenerative diseases like sma, muscular dystrophy, et cetera, or on the other side, old, weak people. Old, weak people are a disaster to go and do trials on. And you're trying to see what a moderate impact to make when there's such decline happening. And so clinical trials, and this is the problem with Alzheimer's, are very, very challenging in elderly degenerating parents. And in that first category, people with muscular disease, until sma, none of them have been solved. And so it's a bit like that boat that you haven't fixed the hole in in the first place. SMA is now becoming this really fascinating area because suddenly, if you have an idea for a muscle drug, you can actually test an SMA and actually see whether it actually does something. Because now you've fixed that boat, if you will. And so it is funny, quite a difference from 20 years ago when no one cared. Now suddenly we're calling out people saying, look, we think there's an idea. Your drug can really work here. Let's go test it out. They're doing it, so fingers crossed. I think my hope here is that we'll end up with a handful of drugs in the next handful of years that could really help bring back some strength for kids with SMA and other things as well. That would be amazing because as amazing a life as the daughter has now, she is still fragile. And when you're fragile, as you get older, things happen. And so if we can bring back some strength, that will be even more transformative and even more impactful. So it's exciting stuff.
- [30:34]
Patrick O'Shaughnessy
The third time, I'll say it, one of the most remarkable, inspiring, incredible stories I've ever heard of this type. And I'd love just to put a bow on it by asking what the prognosis is now for a new child born with this issue with these drugs available from a very early age versus from the age of 12 when your daughter started on them.
- [30:56]
Alan Waxman
So a child born and getting the drug close to diagnosis will never show symptoms.
- [31:01]
Patrick O'Shaughnessy
Unbelievable. 20,000 kids.
- [31:03]
Alan Waxman
Yeah, 20,000 kids and their families. Many of the people that we've gotten know the best over the years are people whose kids are affected by disease because there's a commonality and it's devastating for everyone. Parents who lose their jobs because they keep taking time off and they can't afford the insurance. I mean it's just this horrible spiral. There's a family of the father worked at Walmart. They had twins with SNA and he just wanted to cry hearing their story. That is the funny irony with all this stuff. My parents were both scientists and they would joke that it was such a tragedy that both their kids became partners Goldman Sachs. In some ways this all came vic full circle because having some of the science background but having the good fortune and the good luck and privilege of working in investing in finance helped us go and actually put that science to work. Further amazing irony, Columbia was our leading center in all this and my mom had worked on factory Columbia and Roche makes the drug that my daughter's on. And my father got a job at Roche and as a Roche scholarship that paid for my college.
- [32:06]
Patrick O'Shaughnessy
Unbelievable.
- [32:07]
Alan Waxman
Funny how it's ended up being a circular process but costs a lot of money. I think we spent probably $150 million of our own money on this. But in the scheme of things, the commitment that we made at the beginning to ourselves was that if there was a way we were going to find it and no matter what make sure that we were able to go and drive through it and winding back to where we started. In some of this, I guess that's a bit of a stubbornness but also maybe preferable word it's the determination I saw in my parents. So in that sense, I think really nothing less than one that I would.
- [32:43]
Patrick O'Shaughnessy
Do for my daughter when I step back. I've now had the luck to hear the story twice. When you told it to me the first time, it seems almost absurd if you submitted a screenplay for this, you'd get laughed out of the room by the producer. You're going to start one of the fastest growing investment firms, one of the most successful investment firms. Save your daughter, save 20,000 kids, develop a drug which just economically is very valuable to say, which is a footnote compared to the impact it has on the lives and the families. It's almost not believable. It's so incredible. It's such an incredible story. What you didn't say the first time, which makes it even more magical is the tie back to your parents and their persistence. And honestly, it's just one of the most incredible inspirational stories I've heard. And a follow up question that I have is what you learned maybe that you've taught other parents about persisting through years of this kind of effort and what advice you might give to people that have to dig deep every day for so long to be able to accomplish the thing that they're trying to do for a loved one or for a similarly powerful reason. Because it's not hard for me to imagine the love for the child, but it's hard for me to imagine the ability with my body to get through it for so long. And I'm curious how you did that.
- [34:06]
Alan Waxman
I think when I was like two or three, we were getting into nursery school and by the way, another saga and another crusade that I'm going to be on more aggressively going forward. Getting schools to care or take her was unbelievably hard. When she was going to private school, I think she was the only kid in a major in New York City private school in a wheelchair. And I kind of know this as well because I'm on lots of boards, public library, lots of discussion boards, lots of influential friends, lots of charity relationships. I couldn't find a single school that would take her. Many are perfectly accessible. But I'd get calls from friends on the board saying let's take her. It's just not going to happen. The ostensible reason, I think one school said she wasn't bright enough. Crazy turned out to be maybe not bright enough for them, but bright enough to be straight A's At Yale Supercommerce they didn't know what to make of. We had one school actually asked to see her medical records and talk to her doctor. Oh my God, consider. I mean guys, you know that's absolutely illegal. But you had to do it because it might be legal. But unless I tried, I mean. So when she would start in school we would send up write ups to other parents basically saying here's what SMA is, here's what to make of it. But in any event, for nursery school she went to All Souls which is the interior church school. And initially they didn't want to take her and they said look, there's great cerebral palsy schools you could send her to. Like yeah, that'd be great except she doesn't have cerebral palsy. Guys, this is a totally different disease. But eventually I think they felt badly and they took her. And she had a great experience. But you're supposed to go and volunteer to give sermons as members of the congregation. And so I did. I'll read you that quickly. Speak to a data please. Most of you probably never heard of sma. We certainly hadn't and we're horrified by what we learned. It is the most common genetic killer of infants and it's untreatable, incurable and eventually fatal. It's described as a children's version of ALS or a genetic version of polio. Simply put, motor neurons die, muscles break down, leading to eventually fatal complications in most cases estimate kills in the first two years of life. Less severe cases, such as our daughters depression can take many years, so as the mind grows, the body steadily weakens and eventually betrays it. Obviously, we were devastated and shattered. And over the past year our hearts have broken every day as we've watched her become irresistibly adorable and learn to sing, tell jokes, talk endlessly, but also lose the ability to stand up, the ability to crawl, settle and walk, the ability to even sit up by herself. And yet, three realizations have helped us slowly face the future. First, we've truly learned and appreciated the importance of friends and community. The comfort and love of friends has been a source of incredible strength for us, and meeting other parents with issues and learning from them and the incredible challenges many of them deal with has been an incredible source of inspiration for us. We've realized that there are no good diseases, but there are many, many strong people and their courage is truly infectious, far more than any disease. More than ever, we've come to realize how much deeper our reserves of strength are as part of community than as individuals. Second, through the strength, comfort and space from our friends, we've gained some perspective and been able to focus on finding the joy in the life that we have. We slowly realized that if we just hold our heads in our hands, we're accomplishing nothing for our daughter or ourselves for that matter. And first, it's hard not to be consumed by the shattered dreams and lost notions of what could have been. Yet over time, we've come to focus on the many good things that can be and realize that there is joy in every day. If anything, we're now much more focused on appreciating the little things in life. And today, despite all the issues, our daughter is as happy and joyful as any child we know. And we are as lucky as any parent we know to have a child as sweet and adorable as she is. So we've learned from our daughter that while the sources of joy and happiness might be different than what previously imagined, that doesn't mean that the magnitude of the joy is any less. Third, we realize the importance of channeling the nettle, anger and sorrow into productive channels so as to perhaps have some good, some purpose, some meaning in all, this joint is not a Parents of children with SMA in efforts to improve care and further research that this disease may one day be eradicated. In doing so, we found a productive outlet for our sorrow and our anger and also a real reason for hope. And finally, let me just say how grateful we've been be part of such a wonderful community. The strength and comfort offered by many of you has helped us focus on life, not on sorrow. After all, in life, there are no do overs, no attractions, there are no appeals. You either find joy in the life you have or live a life without joy. And while the circumstances of your life might not be up to you, whether you choose to find joy and purpose in them is very much ultimately up to you. So that was the speech.
- [39:00]
Patrick O'Shaughnessy
Wow, Jesus.
- [39:02]
Alan Waxman
But I think it captures the process that one goes through. I think for every parent, it's part sorrow and it's part rage. And depending on the moment, sometimes it's more rage and sorrow. You just want to go and break everything. But I do think that you do eventually figure out that that is, well, very consuming. It's not going to get you under any circumstances. And so this is where knowing other people and talking to people that have gone through things like this actually is hugely helpful because it just helps you recognize that there's a journey on all this stuff. And so I think every parent I know whose child has an issue was unbelievably emotionally supportive to us. And as well, almost every couple weeks I'll get a call from someone saying, look, I've got a friend or someone, et cetera, who has a disease. They want to make an impact on it. They've heard your story. Can you help? And that's, to me, the greatest joy I have speaking to other parents and helping them think about what they can do, what can be done, what can't be done, et cetera. I joined the board of Jackson Labs. They essentially invented mouse models and are still the leader in that. It's an incredible institution. No drug has ever been developed without using their mice. So I joke, it's the most important biotech institute that no one has heard of. Early on, we had gone to them to work on building mouse models and making them free so people could call them up and they'd send the mice overall. But I'm working with them at setting up actually a we're going to have a squad of people to do a bit of what we did in sma because I hear all these heartbreaking stories and they're the same things that I had 20 years ago. People that want to make a difference don't just want to go and make random donations that I Think will just be like throwing water on sand. They don't know how. And like in our case, we had a lot of resources and a lot of connections and money and could essentially go and reinvent or invent the wheel. But for other people it's a waste of money, it's a waste of time, both of which are incredibly scarce when you're a parent with a child who's suffering. And so our goal is to actually have. They call it the Ghostbusters of rare disease, where if you have a disease, you call us and we'll actually get some scientists to work on it, to go and help you put together a plan, not caring whether it's with us or not, but essentially help be the brain trust for people to want to go and think about game plans for trying to solve disease that affects somebody that they care about.
- [41:05]
Patrick O'Shaughnessy
How do you hope the world of biotech evolves or changes given your incredible ground level experience, not only just knowing how the system works and also the extreme steps it took for you to speed up timelines, but also knowing the potential impact can be so massive. 20,000 kids, no evidence, no symptoms in their life because of your work and everyone that you worked with and their work. How do you hope with all that experience and knowledge that the system itself evolves?
- [41:36]
Alan Waxman
Well, some good things and some bad things, I guess, that have happened, leading to what I hope will happen next. On the good side, you don't have to bash someone over the head to get them to understand that urgencies can be lucrative for them. I mean, SMA has been, there have been that many. But when people have seen the money that's sort of been made on this stuff, people care. But the challenge remains, which is that if you're a company working on oncology, even if there isn't a drug tomorrow, you're going to be working in oncology for the next hundred years. And that information can be useful in other things. The challenge of versus remains that a lot of these are pretty bespoke. So the difference from 20 years ago is that you don't need to convince someone that it could actually be very profitable, but you still have to convince them that there's a good chance that they'll be able to go and cure it. Because that early stage investment is tricky. There needs to be a much more thoughtful effort working with nih, FDA and disease groups to find ways to go and have a much more thoughtful, practical early stage. Because scientists writing papers and grants is really not a very effective way to get this done. And there's still too big a gap between a good scientific idea and when a biotech company is actually going to go and spend the money and do it. You don't have to get into the 10 yard line anymore, but you still have to go to midfield. And so I think more novel structures would actually be great. And I actually took it back to that NIH translational research program from way back when. Well, it didn't end up making that much of a difference in SMA because we just end up throwing the money out and going it ourselves. It's a pretty cool idea. And if one could do that again, it's that Ghostbusters idea that I'm doing at Jackson Labs. Because the problem is we found in this world that companies mean well, but they're not trying to solve a disease, they're trying to attach value to an IP that they have. Meaning if you solve SMA with something that they don't have IP on it isn't very useful. Scientists are in the business of getting grants and you don't get grants for, let's say parallel processing or ruling things out. You don't get a grant by saying, I don't think this is going to work, but I just want to prove it doesn't work so I can then move on. That doesn't get you grant money on stuff. But a lot of those things and the tools and things like that are very much the nitty gritty that actually get you through that early stage where you say, whoa, I've got something. And so whether it's places like Jackson Labs, whether it's NIH having these amped up translation research efforts where people can set aside a little bit of money. Because honestly, that early stage doesn't cost that much either. It's later on that you really start going down money rabbit holes. But for a relatively small amount of money, you could actually go and get people a good chunk down the field to where companies would care more. When you think about, obviously the flavor of the day is terror governed down. Government did a pretty good job in some of the stuff, but certainly we can make government smarter. And I think whether it's government or whether it's institutions like Jax, there is a role here to be played that could be pretty thoughtful, where a few diseases are picked at a time and a modest amount of money is put in or coordinated so that you actually end up having a game plan. Because what a lot of people just need is a game plan as opposed to handing money out randomly. And also a third party who that's viewed as being somewhat neutral because academics are great people, but, man, they don't like collaborating that much. And companies really don't like collaborating with each other because it's an IP problem. And companies and universities actually now are having more difficulty collaborating because universities want IP because they've seen the money you can get from royalties and stuff like that. So having a third party that's sort of Switzerland and can be a bit of an honest broker on this stuff is actually pretty important. So that's my hope. Finding a way to have a more thoughtful process so that people don't have to go and try and figure out how to go and see if there's something there now on the back end. Boy, I mean, it's good that people care about disease, but the cost of this stuff is insane. I mean, what companies are charging is just nuts. I wish when we had put all the money in, we had put in restrictions on what companies could eventually charge because a million to 2 million bucks a year is bonkers. Give you a funny example of it, I remember talking to the people of Columbia when the first drug was coming out, and it actually was a working capital problem that had to bring their CFO in, because since Columbia was a major centrist, they could fill in Harvard or Stanford or whatever as well. The SMA drug cost $800,000 a year, the first one. And so to go and actually buy the doses to treat the kids would have cost tens of millions of dollars that they didn't have their budget. It's crazy. It's a real issue. And I still get calls, and we get calls all the time from people in other countries because, for example, there's a Goldman Sachs analyst who is from Uzbekistan, and they called asking for help because their family knows someone close to them whose daughter is diagnosed. And if they get treatment, they'll be saved. But Uzbekistan, there's no place to get treated in Uzbekistan. You can't just come to the US and get treated because all sorts of legal and other issues and loopholes and of course then you got to cough up the money to do it as well. Cost you a couple million bucks. You can't just go to London and do it, because again, the whole regulatory framework is crazy. And so there are still kids dying of sma, even in cases. In this case, for example, the family had gone around through supermarket stuff, meaning cans and signs in town, raised $400,000 to get her treated, and they couldn't find someone to take the money or find a practical way to treat her on stuff and so she was going to die or suffer unnecessarily because of crazy regulatory bureaucratic stuff between countries. We got to figure out something on the cost and maybe it's with these drugs having some amount of money get set aside when there are these windfall profits to go and help charity care or things like that. But the notion that we develop these drugs and their kids that are dying because they can't afford them is pretty insane.
- [47:09]
Patrick O'Shaughnessy
It's hard for me to ask my traditional closing question in this particular case because of the story you've just told, and knowing that contained in the story is so much kindness in so many directions that I'm sure it'll be hard to know where to begin. But my question that I ask everybody is for the kindest thing that anyone's ever done for them.
- [47:31]
Alan Waxman
After my daughter is diagnosed, people just giving me hugs was about the best feeling on earth. There's nothing more powerful than just compassion from friends, strangers, just to feel like you're all human together. I think in life at our worst moments, just getting some of people's strength and energy imbued in you a little bit gives you the ability to go and stand up and move forward the next day.
- [47:55]
Patrick O'Shaughnessy
I'm sure I speak for literally everyone listening when I say thank you for telling this story. You've imbued us, certainly me, with that same strength and determination. It's incredible what you've done already. I'm sure what you will continue to do. I love hearing about your daughter's current state and her wonderful marriage and what a way to spend my day. Thank you so much for your time.
- [48:18]
Alan Waxman
Of course. Thanks guy.
- [48:21]
Patrick O'Shaughnessy
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