Odd Lots — “D.A. Wallach Explains Why Biotech VC Is So Different”

Bloomberg, December 12, 2025 Hosts: Joe Weisenthal & Tracy Alloway
Guest: Da Wallach (Biotech VC, former Chester French frontman)

Episode Overview

In this episode, Joe and Tracy dive into the unique challenges and dynamics of venture capital in biotech with D.A. Wallach, a former musician turned investor. The discussion unpacks why early-stage biotech investing is radically different from standard tech VC, explores the bottlenecks in medical innovation, and touches on the global competition between the U.S. and China. D.A. also shares perspectives on the intersection of science, regulation, and market incentives — and even treats listeners to a live Odd Lots jingle.

Key Discussion Points & Insights

1. From Musician to Biotech Investor: D.A. Wallach’s Journey

• Unconventional Career Path: D.A. details moving from being lead singer of Chester French to early Spotify investor, then into broader venture capital, and ultimately into healthcare and biotech.
  • "There are a couple ways I can think about it. One is I tell people now my job is like being a record producer for scientists.” (06:59)
• Draws analogy between “producing” artists and “producing” scientists, noting both fields balance creative vision and commercial realities.

2. Why Biotech is Unlike Other Venture Investing [08:15–11:06]

• High-Risk, Long-Timeframe: Biotech companies are described as “a bag of options”— each drug candidate could be worth billions, but time horizons are often a decade or more, with very low probabilities of success.
  • "The base case is like a 5% probability of success from the original idea to an FDA approval." (09:18)
• Compared to software, where traction and metrics are visible early, biotech's promise rides on uncertain science and clinical trials.

3. Sourcing and Evaluating Talent in Biotech [11:06–13:44]

• Scarcity of Capital vs. Ideas: In biotech, there’s a surplus of promising ideas (usually emerging from universities), but a shortage of money and experienced “translators” to bridge research and commercial products — the infamous “valley of death.”
  • “The expertise and the personnel required to do that translational work is not the same expertise that is required to do the inventing in the first place.” (12:37)
• Large pharmaceutical companies have built core competency in this translation, but many ideas get stuck before reaching them.

4. What Makes a 'Great Biotech Founder'? [15:54–18:15]

• Biotech VCs look for experienced “gray hair” — veterans who’ve managed the long, expensive, and mostly irreversible drug development process. This contrasts with tech VC’s badge of young, agile founders.
  • "There's a real premium on, quote, gray hair in the biotech industry because the only way to learn this stuff is to do it over and over again and to have had a lot of failures." (16:20)
• Discusses the “TechBio” trend: Silicon Valley’s attempt to inject tech-founder agility, supported by AI and cloud-infrastructure analogies. Still, experience trumps youth thus far.

5. The Role (and Limitations) of AI in Biotech [18:15–23:54]

• AI has supported remarkable leaps (e.g., DeepMind’s AlphaFold protein folding breakthrough), but most claims about AI revolutionizing drug discovery are exaggerated.
  • "The religious movement that is powering all of the investment and a lot of the entrepreneurship here across industries is full of hot air and is making claims that are preposterous.” (22:53)
• Major bottleneck: Human clinical trials are still the gold standard, costly, and slow. AI can assist early research, but can’t yet replace human testing and safety assessment.

6. Regulatory Choke Points & the Funnel [23:54–27:59]

• The biggest hurdle is transitioning from idea (top of the funnel) to proven, safe, effective drugs (bottom). Clinical trials remain the core bottleneck.
  • "The tragedy of our moment is that the only way to figure out if drugs are safe and effective is, is to try them in human beings, living, breathing human beings." (24:37)
• The U.S. maintains a high regulatory bar. China is moving faster by adjusting regulatory standards, which could shift the global biotech landscape.

7. U.S.–China Dynamics in Biotech [31:07–33:55]

• China’s biotech sector is rapidly accelerating, helped by regulatory flexibility, a large talent pool (including many U.S.-trained scientists), and more efficient clinical trial pipelines.
  • "If I had to make a bet today on our sector, it would be that China is going to be the big story over the next decade or two." (31:24)
• Trials conducted in China are increasingly trusted internationally, though maintaining data integrity and transparency remains an ongoing challenge.

8. Biotech Public Market Investing: Specialists vs. Generalists [33:55–36:01]

• Only specialized firms with PhD-level science teams consistently excel in biotech stock picking — generalist investors tend to follow specialists’ moves.
  • "In biotech you have a small number of firms that have been doing great for sometimes decades." (34:26)
• Sector fortunes are cyclical, recently rebounding from a multiyear downturn exacerbated by higher interest rates, capital flight, and a post-COVID hangover.

9. Drug Pricing, Profits, and Innovation Incentives [37:30–40:33]

• The U.S. pays high drug prices due to its willingness to pay for early access and cutting-edge drugs. Other countries impose more price controls and limit availability.
  • "We get to choose how much innovation we want to occur, and the way we choose that is by determining the size of that bounty that exists." (39:39)
• Patent law and profit pools shape the pace of pharmaceutical innovation — there's no free lunch.

10. Distrust and Communication in Science & Medicine [41:23–43:18]

• The pandemic fueled both anti-Big Pharma skepticism and distrust of the scientific establishment, stemming partly from poor communication and medicine’s “witchcraft” historical legacy.
  • "Medicine is filled with common practices that are not rigorously based on evidence, and that is symptomatic of where we are in that journey that I'm describing." (42:25)
• D.A. advocates for transparent, accessible science communication to earn and maintain public trust.

11. Patient Autonomy & Role of Insurers [43:18–45:49]

• D.A. argues for maximal patient choice in personal medical decisions, with some limitations when costs are socialized.
  • "Ultimately, you have to make the best decision you can make. And you should regard physicians, nurses, others in the system as consultants..." (44:34)
• He strongly critiques private insurance, calling its value add to U.S. healthcare “almost zero.” (45:31)

12. Music, AI & Creativity [45:49–49:39]

• D.A. still makes music for fun and reflects on the challenge and opportunity AI poses to musicians.
  • "AI is going to make music. And I think like all creative people... everyone's going to think about how they can use it to be more effective, have more leverage, have a cooler output." (47:09)
• He notes genuine artistry depends on mastery of craft (“knowing the instrument inside out”) — language-based AI prompts will miss some of the nuance.

13. Odd Lots Song! [50:20–51:01]

• At Tracy’s spontaneous request, D.A. improvises a short, soulful Odd Lots theme at the keyboard.
  • "It's all about Tracy, it's all about Joe..." (50:40)

Notable Quotes & Moments

• "My job is like being a record producer for scientists." – D.A. Wallach (06:59)
• "A typical biotech company is like a bag of options... you're trying to price things based on their ultimate potential scale times their probability of succeeding." – D.A. Wallach (09:18)
• "There's a real premium on, quote, gray hair in the biotech industry... the only way to learn this stuff is to do it over and over again and to have had a lot of failures." – D.A. Wallach (16:20)
• "The tragedy of our moment is that the only way to figure out if drugs are safe and effective is... to try them in human beings, living, breathing human beings." – D.A. Wallach (24:37)
• “Medicine is filled with common practices that are not rigorously based on evidence, and that is symptomatic of where we are in that journey that I’m describing.” – D.A. Wallach (42:25)
• On biotech VCs: "I believe the private insurance industry adds zero value to the United States healthcare system almost. I mean, that may slightly overstate it, but it's close to zero in my book." (45:31)

Timestamps & Topic Guide

| Timestamp (MM:SS) | Topic | |-----------------------|----------------------------------------------------------------| | 03:37–06:25 | D.A. Wallach’s journey from music to biotech | | 08:15–11:06 | Biotech vs. traditional VC—“bag of options,” risk, timelines | | 11:06–13:44 | Sourcing deals, “valley of death,” role of universities | | 15:54–18:15 | What makes a strong biotech founder | | 18:15–23:54 | TechBio, AI, and their real vs. overhyped potential | | 23:54–27:59 | Drug development choke points, regulatory impact | | 31:07–33:55 | U.S.–China biotech competition | | 33:55–36:01 | Public market investing, specialists vs. generalists | | 37:30–40:33 | Drug pricing, U.S. as pharma’s “bounty,” patent law | | 41:23–43:18 | Medicine, science communication, post-COVID trust issues | | 43:18–45:49 | Patient autonomy, insurers’ role | | 45:49–49:39 | AI in music and artistic nuance | | 50:20–51:01 | D.A.'s live Odd Lots song |

Conclusion

This episode offers a candid, insightful peek into why biotech venture investing is uniquely challenging — from scientific bottlenecks and regulatory barriers to talent pipelines and global competition. D.A. Wallach combines hard-won wisdom from dual careers in creativity and investing, making the case for humility, expertise, and honest communication in both biotech and beyond.

Recommended for:
Anyone fascinated by how scientific breakthroughs make it to market, the limits of AI and Silicon Valley hubris in healthcare, or the parallel worlds of music and medical innovation — all in Odd Lots’ trademark blend of curiosity and candor.

Listen for:

• Succinct explanations of why biotech is “lottery tickets on lottery tickets” (53:08),
• D.A.’s critique of U.S. healthcare insurance (45:31),
• The live Odd Lots jingle from a real pop musician (50:40),
• And much more.