Invest Like the Best with Patrick O'Shaughnessy: Tal Zaks - Bridging Science, Medicine, and Returns (EP.406)

Release Date: January 14, 2025

In episode 406 of Invest Like the Best, host Patrick O'Shaughnessy engages in an insightful conversation with Tal Zaks, a physician-scientist turned biotech executive and investor. Zaks, known for his pivotal role as Moderna's Chief Medical Officer during the development of the COVID-19 vaccine, brings a unique perspective on the intersection of scientific innovation, medicine, and venture-scale investing. This detailed summary encapsulates their comprehensive discussion, highlighting key topics, notable quotes, and profound insights.

1. Career Overview and Background

Tal Zaks' Professional Journey

Tal Zaks begins by outlining his extensive career path, emphasizing his dedication to translating scientific breakthroughs into viable medical treatments. Trained with an MD and a PhD, followed by rigorous postdoctoral work, residency, and fellowship experiences, Zaks devoted the initial phase of his career to oncology drug development. His tenure at Moderna allowed him to harness the company's mRNA platform not just for vaccines but also for personalized cancer therapies. Transitioning into venture capital, Zaks now focuses on aligning scientific innovation with investment returns to foster advancements in medicine.

[07:05] Tal Zaks: "I'm a physician scientist who spent all of my life figuring out how to translate the wonderful innovations of science in our era into better medicines for patients."

2. The Current and Future Landscape of Medicine

Optimism Tainted by Challenges

Zaks expresses an overall optimistic view of modern medicine, driven by robust scientific and technological advancements. However, he tempers this optimism by highlighting significant challenges: the unpredictable nature of translating science into effective medicines and public skepticism regarding innovation and its costs.

[08:46] Tal Zaks: "I think we're overall in a good place. I'm optimistic because the advances in science and technology have been so robust and amazing."

Balancing Innovation with Return on Investment

At a National Academy of Science, Medicine, and Engineering panel, Zaks underscored the necessity of aligning investment with innovation to meet unmet medical needs. He candidly discussed the imperative of generating returns on investments to sustain progress, a balance often misunderstood by those outside the investment sphere.

3. Investing in Biotech: Processes and Pitfalls

Distinctive Investing Approach

Zaks delves into the unique aspects of investing in the biotech sector compared to other industries like technology. He emphasizes the unpredictability inherent in biotech investments, stemming from biological and pharmacological uncertainties.

[13:06] Tal Zaks: "In biotech, you have to account for two variables that are extremely hard to predict. One of them is whether the biology will pan out, and the other is whether the pharmacology will pan out."

Investment Diligence and Multidisciplinary Collaboration

When evaluating biotech investments, Zaks considers the investment thesis, capital requirements, likelihood of achieving milestones, and the strength of the management team. He advocates for collaborative venture capital, where syndicating deals and bringing in complementary expertise enhances the potential for success.

[23:22] Tal Zaks: "It's really interesting being a venture capitalist, a partner at a firm. You've got two very different sides of the same coin... managing team... get the right people around the table."

Learning from Failure and Success

Zaks highlights that successful investors not only learn from failures but also glean deeper insights from successes. Recognizing patterns that contribute to successful outcomes, such as talent and strategic capital deployment, is crucial in distinguishing adept investors from the merely lucky ones.

[34:50] Tal Zaks: "I would argue that the best investors actually learn more from the successes than the failures."

4. The Moderna COVID-19 Vaccine: A Case Study

Preparation and Rapid Response

Zaks recounts Moderna's strategic positioning prior to the COVID-19 pandemic. The company's prior research on various viruses, including vaccines for eight different viruses, primed them for a swift response once the pandemic emerged.

[42:24] Tal Zaks: "By the beginning of 2020, Moderna had already tested the ability of mRNA to generate neutralizing antibodies in humans against eight different viruses."

Operational Excellence and Government Collaboration

A cornerstone of Moderna's success was its robust partnership with government agencies like the NIH. Operation Warp Speed facilitated expedited protocols, manufacturing scale-up, and trial site optimization, enabling rapid development and deployment of the vaccine.

[18:49] Tal Zaks: "We were well prepared as a company with a platform."

Safety and Public Perception

Zaks emphasizes Moderna's meticulous safety evaluations, asserting unprecedented rigor in data collection and analysis. Despite robust safety profiles, public backlash stemmed from factors like fear, misinformation, and perceived overreach, highlighting the complex interplay between scientific progress and societal trust.

[33:48] Tal Zaks: "mRNA vaccines have been the most well studied medical intervention in the history of mankind, full stop."

5. Future Technologies: mRNA and Beyond

Expanding the mRNA Platform

Looking ahead, Zaks envisions the mRNA platform catalyzing diverse therapeutic advancements beyond vaccines, including personalized cancer vaccines and gene therapies. The flexibility and reproducibility of mRNA enable rapid development of targeted treatments tailored to individual patient profiles.

[54:22] Tal Zaks: "Nucleic acids have that unique property of almost software-like... you change the information, you get out a different drug."

Ethical and Moral Considerations

With the advent of advanced gene therapies, ethical dilemmas arise concerning patient autonomy and long-term societal impacts. Zaks stresses the importance of maintaining a humanistic ethical framework alongside scientific and technological advancements.

[57:57] Tal Zaks: "It's the humanistic moral compass that needs to frame how we deploy them."

Digital Twins and AI Integration

Zaks expresses cautious optimism about the potential for AI and digital simulations to revolutionize drug discovery and patient care. While acknowledging current limitations, he anticipates that integrated AI systems could significantly accelerate medical advancements if aligned with appropriate ethical standards and incentives.

[80:30] Tal Zaks: "That for me is still a little bit the realm of science fiction... balance this with the ethical obligations to patient autonomy."

6. The Role of AI in Medicine

Bear, Base, and Bull Cases

Zaks outlines three scenarios for AI's impact on medicine:

• Bear Case: AI advances in narrow, vertical domains without integration, leading to fragmented and slow progress.

  [77:48] Tal Zaks: "The bear case is that they make slow roads one thin vertical domain at a time."

• Base Case: Continued slow, incremental improvements with limited transformative impact.

• Bull Case: Comprehensive integration of AI systems with aligned incentives, substantially enhancing productivity and accelerating medical breakthroughs.

  [78:07] Tal Zaks: "If we figure out how to turn this on its head and actually find ways to put in systems that will improve productivity of the healthcare system... that's where the bull case is."

Limiting Factors and Integration Challenges

Zaks identifies systemic barriers such as entrenched practices, lack of incentives, and integration challenges as impediments to AI's potential in medicine. Overcoming these requires not only technological innovation but also structural and cultural shifts within the healthcare ecosystem.

7. Investing Beyond Domain Expertise

Accessibility for Non-Experts

Zaks asserts that successful investing in biotech is attainable even for those without deep domain expertise. Critical skills include asking the right questions, leveraging expert insights, and fostering multidisciplinary collaborations.

[75:11] Tal Zaks: "Those investors who can and have earned great returns without the deep domain expertise have done so because they're smart in recognizing the multidisciplinary nature and knowing how to ask the questions."

Importance of People and Sweat Equity

Emphasizing the primacy of talent and dedicated effort (sweat equity), Zaks recounts his personal experiences at Moderna, illustrating how belief in the team and their mission can drive unprecedented success.

[77:25] Tal Zaks: "It's the people who make it work and it's the people who believe who are putting their time on earth and their talents to drive it that are going to make the difference and are going to make the returns."

8. Human Interest and Personal Reflections

Mentorship and Kindness

In a heartfelt conclusion, Zaks shares a personal story about his mentor, Steve Rosenberg, highlighting the profound impact of genuine mentorship and support in his career.

[81:57] Tal Zaks: "The kindest thing anybody's ever done for me was probably Steve Rosenberg when he took me into his lab back in the NCI in the late 90s."

Concluding Insights

Tal Zaks' conversation with Patrick O'Shaughnessy offers a rich tapestry of insights into the biotech investment landscape, the transformative potential of mRNA technology, and the intricate balance between scientific innovation and ethical considerations. Zaks underscores the importance of multidisciplinary collaboration, strategic investment, and the human element in driving medical advancements. His reflections provide invaluable guidance for investors, entrepreneurs, and medical professionals navigating the complex interplay of science, technology, and business in the pursuit of better health outcomes.

For those interested in the full episode, transcripts, and additional resources, visit Join Colossus.