Simon Brewer  02:29

The late Steve Jobs of Apple said, 'I think the biggest innovations of the 21st century will be at the intersection of biology and technology. A new era is beginning.' So today, we're going discuss biotech, healthcare and venture investing. Well, I'm not, but I hope my guest is, otherwise, it's going to be a very short podcast! And I'm particularly delighted to have as the Money Maze Podcast guest today the honourable Dame Kate Bingham. And as I listened to her speak at the Cliveden Literary Festival last year, I was so enthralled that I've tried for almost a year to steal an hour of her time ever since, and here we are together at our offices in Holborn, London today. So Kate, Managing Partner of life sciences venture capital firm SV Health Investors and former Chair of the UK Vaccine Taskforce, welcome to the Money Maze Podcast.

Kate Bingham  02:34

Thank you so much for having me.

Simon Brewer  03:21

I think we need to leap back to understand your journey, and I've studied a little bit of your academic early success. But were you drawn towards the sciences from a very early age?

Kate Bingham  03:32

I wasn't, actually. I went to a very good girls school where they were trying to get more girls to take sciences. So actually, I was more or less told to do science. And I wasn't particularly academic and I wasn't particularly committed. And when I was asked could I do science A-levels, I said I could probably [do] as well as I could do anything else. So I then ended up doing physics, chemistry, biology, and I really, really liked it. I ended up studying biochemistry because that seemed to be as close as I could get. And of course, in the mid ‘80s is when biotech and genetic engineering and the implications of what could be done with drug discovery to actually target diseases started really taking off. So as an up-and-coming keen student, I really got into it. I wasn't really drawn at the beginning, but having got into it, I was then very excited.

Simon Brewer  04:18

So you get a First in Biochemistry from Christ Church, Oxford, and did that mean that when you were thinking about careers, you had pharma on one hand and finance on the other or was it not as difficult as that?

Kate Bingham  04:30

No. I've never been very creative. I mean, the milk round at Oxford, all these different firms come up and recruit you. And at that point, I was just focusing on how to make money and learn about business because I knew that I really wanted to get involved in drug discovery, drug development, but I actually needed to know something about it and I had to understand what the industry drivers were to actually participate. So I went into consulting because that seemed like a good training, and then went on to do business school in Cambridge, Massachusetts at Harvard, which was one of the two major biotech heartlands. And that was, in fact, my business school essay to get in was that I wanted to learn about business but in an area which had been incredibly high growth, and at that stage, seemed to be very successful in spawning these new companies that were developing funky new drugs.

Simon Brewer  05:15

We had a fascinating interview with Dr Christina McGuire actually, last year, who also got her MBA from Harvard Business School and was also a doctor who gravitated to Goldman Sachs as a manager and now runs a really interesting mid-cap EM domestic fund. So before we jump into SV, I'd like to start from the vantage point of the world of healthcare and medicine today. I was talking to Dominic Hollamby, Executive Vice Chair at Rothschild, who knows this industry well and he commented, having studied this subject in the '80s, that the developments we're witnessing today would have been viewed then as a world of science fiction. And I guess that I as a Luddite can't process the enormity of the change. So what's allowed this immense change to occur?

Kate Bingham  05:59

He's right. There has been a massive change, and I've been doing this now for more than 30 years. And when we started, we didn't have the human genome so we didn't know what was the map of DNA or genes, and we didn't have the level of industrialised tools, whether it's AI or drug discovery, screening, or all the sort of manipulations that we can do now. So the tools for drug discovery have scaled at a massive, massive rate. But fundamentally, it's the understanding of biology that's changed. So again, when I started, we were developing drugs which were largely addressing symptoms of disease for vast numbers of patients. It was very much how many people could you treat and what could you charge them? And therefore, that was the commercial potential for a drug. And now as we understand what are the pathogenic processes that cause disease, we can now start to develop drugs very precisely just to target those mechanisms. And by doing that, you obviously can be much cleverer in how you run the clinical studies, which means those will be much cheaper to run than the huge studies we used to run, where you didn't know what was causing the disease. And actually, the chance of success is much higher. Again, the more precise you can be about the mechanism, the pathogenic and the disease-causing mechanism, the more likely you are to be able to get a drug that works that won't have lots of toxic side effects. So what we are able to do now is get drugs onto the market, or initially safety, patients, and ultimately onto the market, that can actually alter the disease course so that you can actually have disease modification or potentially either stopping the disease, in some case, curing the disease, but certainly going way beyond symptomatic treatment. And you can do that now in a plethora of different types of ways. So what we used to have was pharmaceuticals always used to be little white pills. So they are oral medicines that will get into the bloodstream and hopefully get to where they need to address whatever, either symptom or more recently, actual disease itself. But now we've got antibody-based drugs, protein drugs. Obviously, we've seen a huge explosion in mRNA vaccines to stimulate immune responses. We've got a built cell in gene therapy, so how do you actually manipulate people's own cells to tackle whether it's cancer or autoimmune disease? And then ultimately, CRISPR, so how do you actually snip and amend the actual genetic sequence themselves? It is vastly more exciting than it was 30 years ago, and of course, vastly more complex.

Simon Brewer  08:27

And we're going to come back and talk about some of the diseases that are being addressed as we go through your own approach to a number of them. But let's just take a step back from big pharma because pharma has become bigger and bigger, they've got drugs that we all know are big names and come off patents and replacing them is tough. So the pond in which big pharma fishes is a tougher one. Are they almost going to be forced to spend more time looking at your end of the market because that's where the big drugs are going to come from?

Kate Bingham  08:53

Yes. And that is a trend that we've seen very clearly over the last couple of decades, maybe more. The vast majority of pharma will source at least 50% of their new drugs from outside their own companies. So they've got to have their own internal R&D so they can assess it and they can challenge and they can continue with the development. But a very large share of the underlying discoveries come from outside. I think of it a bit like the film industry. So you've got all these huge distributors and the promoters and so on, and then you've got all these little, tiny production companies that come up with the clever ideas.

Simon Brewer  09:25

So let's go and talk about your company, SV, founded 27 years ago. Just give me the history.

Kate Bingham  09:31

The actual history goes to the mid '80s when Nick Ferguson set up Schroder Ventures, as it then was, as almost like an arm of Schroders. So the idea was if you had a venture and private equity capability, that would in some way support the investment bank and asset manager. And out of that, there were then developed both a buyout set of funds and teams and strategies as well as venture. And when I joined, I was working on the venture side because that was my background, and very quickly, we created a dedicated life sciences team. And a couple of years later, we then raised a dedicated life sciences fund, which in the early '90s, was quite a punchy thing because they mostly weren't specialist funds. Funds were mostly allocated or investors mostly allocated regionally and then they said, it's either buyout or its venture. And here were we saying, actually, we want to do it sectorally because if you get sick in the UK or Germany or China or America, you can tackle it in the same way. And we wanted to cover the spectrum, both geographically stage as well as different sectors. So we set that up and the first fund, we closed in '93, '94, and then we've raised subsequent funds since then. So we've gone from a very diverse investing strategy where we were trying to address the investors' concerns that this was too narrow, to now actually becoming super narrow. So our most recent funds are now specifically aimed at biotech dementia funds and then of course, public funds, but all around biotech, and then separately in the US, we have funds looking at the other sectors, healthcare service, medical device, but we've become more and more specialist over that 20, 30 year period.

Simon Brewer  11:04

Now, if we put the microscope on your business, the world of venture capital generally is littered with economic corpses. And recently the share prices in sort of healthcare and biotech have been pressured by rising rates, and yet, share prices diverge from fundamentals. Yours is a long game and those who can execute well, there's some outsized returns. So tell me a little bit about how you've built the business from a human population standpoint. What skills have you needed to put around you to be successful?

Kate Bingham  11:31

The key skills are to always recruit people better than you. I mean, it's as simple as that. So I would not be recruited into this business now because we really need people who are much deeper trained scientists, people with much deeper expertise in drug discovery, drug development, regulatory, commercial. I got in because I was right at the beginning of the industry. Now, the people we've got around us are phenomenal. So we've got very, very strong experts across different types of drug discovery, different clinical areas, understanding clinical trials. So actually, the design of trials is completely critical. You get that wrong and you'll kill a drug. And remember, we are in a very capital-intensive long game, so we have to have absolutely the best, smartest brains around the table to help make what are going to be very risky decisions. So the single lesson is just hire the best possible people you can, incentivise them, let them get on with it, and be ruthless about when things are going wrong, are they things that fundamentally mean that's never going to work, in which case you cut them off in terms of our deals or do you double down and really help potentially promising things work, even if they're hitting a few bumps, which they always will. And so we need a team that understands that nature of uncertainty and risk.

Simon Brewer  12:44

You're in the world of commercialising these products. How do you get that balance, because there must be trade-offs at times which are tricky?

Kate Bingham  12:51

I would put scientists into different categories. You've got the fundamental scientist who is writing niche papers and is going to win the Nobel Prize. You need to harness their ideas and expertise but you shouldn't try and turn those people into drug discovery experts because actually, they're much better at the cutting edge of their research, and you feed their ideas into the company and developing new drugs. A company is all about very, very precise testing and development to see how can you develop a drug that specifically targets that particular mechanism or drug or receptor or ion channel. It's a lot of repetitive work and lots of it will fail. And so that is a very different type of scientist. They've got to understand what is going to be drug-like and has potential for working. But it's very different from the Nobel laureate, who's coming up with well, I think this is a new way of treating Alzheimer's disease. Mixing the two is a mistake. And so if academic scientists want to become CSOs in a company, it's a very unusual person that will ever make that happen.

Simon Brewer  13:52

Well, looking back over your history, lots of successes, good returns, which we'll come back to, but is there maybe one particular example of a drug that you have been at the outset from that's gone through that gives you particular pleasure?

Kate Bingham  14:06

Yes, well, we have 20 drugs that we backed at an early stage that are now on the market. The one that I'm really proud of is a UK company called KuDOS, which we sold to AstraZeneca, and it was right at the beginning of this whole field of precision oncology. So again, this idea of targeting specific disease mechanisms as opposed to chemotherapy generally, which is targeting rapidly dividing cells. When I first did the due diligence on this company, which was really a pie in the sky idea of a brilliant scientist, Steve Jackson in Cambridge, the feedback I was getting from industry was, 'Well, you know, it's a nice idea but frankly, it's for the birds and if you can prove it, well yes, of course we'd be interested, but you know, good luck lassie,' type feedback I was getting. Now the diligence, otherwise, we felt was pretty interesting. So we felt it was worth giving it a go. And that company was able to develop the first of its type which are these precision oncology medicines. And it has now radically changed the way in which patients with certain genetic backgrounds, whether they've got ovarian cancer, breast cancer, prostate, pancreatic, it is radically changing their survival. So the most recent data that came out was a 40% improvement in five-year survival, which for diseases which are rapidly lethal and often not diagnosed until quite a late stage, we're starting to see really material changes. So Olaparib, which is the drug that KuDOS developed, which is now being developed and sold by AstraZeneca, I think is a complete game changer. And it's not just that drug which is important, but it's the fact that they've opened up this whole class of how do you actually treat these different types of cancers in a new way. So from a patient's perspective, they now have a potential choice of drugs, because other companies have come in and said, 'Wow, that's a clever way of developing drugs. We can do that too and we'll do it in a slightly different way.' So we've now got a much better portfolio of drugs for a physician to consider how they're going to treat their patient. And that was all because of that early investment in KuDOS. And we've backed the team again, and they're now on their next generation of developing further precision oncology medicines. And that, I think, is really exciting.

Simon Brewer  16:15

Before we leave that, because it's a great example of the excitement of the success that you have had and continue to look for, did you lead that research? Did you go to the lab or the drawing board? Because at some point, somebody had to make a judgment which was, let's go with this.

Kate Bingham  16:28

It was brilliantly done by Cancer Research UK as it was then, so CRUK. And they had basically gone through all their different professors and labs that they had been funding. And they forced ranked them and said, 'Who do we think is doing the most exciting work and how can we actually start to fund the translation of their fundamental work into something that can go out and treat patients?' The people who went to the lab was the CRUK team to begin with and then we got involved at that stage so that we then brought in, for example, the CEO and we helped put the management team together and helped put the plan together. But it was CRUK who spotted the genius among their mix.

Simon Brewer  17:06

And I think sometimes there's a mistaken sense in VC that it's all about the money. But what you're saying here is that actually, it was the positioning. So just talk to me a little bit about what else goes into the mix.

Kate Bingham  17:16

Yes, it is not really about the money. Everyone thinks that, you know, you have to be a spreadsheet jockey to be good at venture. But actually, the reason why that's not the case is, first of all, venture is incredibly risky to begin with. Then when you overlay drug discovery on top, 90% of drugs that go into clinical trials will fail. So you've got the cards massively stacked against you. The difference between a good venture capitalist and a less good one is you manage the risks. And so in our case, it's working out what is the critical data set that you need to have that convinces you that actually the hypothesis that you're trying to test and develop drugs against is actually legitimate. And so actually you're seeking to try and kill things rather than persuade yourself that it's working. You obviously need to have data that is persuasive that it is working. But if there's an early dataset that tells you that you're on the wrong path, you need to do that. So that's what we need to think about. So it's about bringing the people in that actually understand what is the critical data, what is the value inflection data, and what's the cost. Now, if somebody comes to us and says, it's going to cost £100 million and it's going to take 10 years before we know that answer, it's not an investable proposition. So everything has to come back down to the investor lens, which is we're here to deliver outsized returns and we can only do that in the context of really understanding what has potential for big impact both from a patient and commercial impact, and can we do that within the envelope of a venture capital investment. It isn't all about models and NPVs. It's about scientific judgment and how do you fund it and milestones.

Simon Brewer  18:54

And also sometimes saying wrong CEO, jettison, parachute in a new management.

Kate Bingham  18:59

Yeah, but we do so explicitly. As we build our companies working with management teams, we will agree with them, what are the key and critical datasets? So there's no ambiguity. But equally, when some data comes out of left field or something comes up that's unexpected, good or bad, we're quick to pivot. So again, that's something that we can do. We can change course based on context. And that is, again, I think an attraction of venture-backed businesses is you can have that nimbleness without having to go through endless layers of subcommittees in order to change an oil tanker.

Simon Brewer  19:31

So I think your firms’ had over $3 billion of historical committed capital across nine specialist funds. I had a conversation yesterday with Denise Scots-Knight, who is CEO of Mereo BioPharma, and she made the point, which I want to explore with you, is there's no poster child in the UK of one of these companies growing, standing alone, being financed because it gets swallowed up or we don't have the capital base. So let's just talk about what happens down the road with these companies.

Kate Bingham  19:57

So she's completely correct. We don't have an Amgen, a Genentech, Regeneron, any of the big guys. Historically, that's been because we've just had inadequate supply of cash. Typically what the UK and Europe, but UK in particular, has been very good at is that fundamental research and turning that into early drugs or new ways of intervening in disease. We're very good at getting that through the safety testing and into early clinical trials in patients where you can show that yes, your drug is doing something that you want it to do in that particular disease. In the States, those companies will typically list on NASDAQ and then raise a lot of money, and either partner, sell or just continue funding publicly using public dollars. In our case, until recently, we've not been able to list our companies on an exchange that really understands what we do. So some companies were getting listed on the London Stock Exchange, but it's not a specialist market, it's not supported with specialist investors, and the history of those companies listing has been a rocky one. So typically, companies have oversold, over-promised, haven't raised enough money, have under-delivered and it's all been pretty painful. What has changed in the last few years, which is incredibly exciting, is NASDAQ, which is a sophisticated exchange and obviously where biotech is largely listed in the States, has now accepted non-US companies. Because historically the question was, why are you not listing on your home market if you're trying to list on NASDAQ? Whereas now they understand that NASDAQ is the exchange of choice for biotechs. So we do have examples of companies that have listed there. So they're based here but they raised their money in the States, and that is a game changer for us because that now allows us to think much bigger and much longer and to start building those standalone companies that could potentially get those drugs through pivotal studies and onto market in a way that we've never had the ability to do before. And so that is something that I am very keen to see that we continue seeing, and we need to bring in more money into the markets, more money both early but especially at later stages, because we simply haven't had that growth capital.

Simon Brewer  21:57

So there's been a capital disadvantage here. Has there been a scientific deficiency or is, in fact, the playing field more equal with the US because we've got some great universities?

Kate Bingham  22:07

I wouldn't claim that we can compete with the US on every single part of every type of science. But for sure, we have great universities and for sure, we've got some great science and scientists. I mean, you only need to look at this at the allocation of Nobel Prizes in niche papers. UK punches way above its weight on that. So we definitely have some very strong underlying science. We're good at that early translation, turning that science into early drugs, but we have much less experience than the more mature market in the US of the commercialisation side of it because we don't have many biotechs here that have taken products themselves through to market.

Simon Brewer  22:44

Got it. So in your portfolio and silos of expertise, one of them is the International Biotechnology Trust PLC, which is listed in the UK. It’s an investment trust, and all investment trusts have that dilemma of discounts to NAVs and the rest of it. Just tell me a little bit about what it's trying to do.

Kate Bingham  23:00

IBT is a fund that allows retail or institutional investors to invest in a liquid investment trust that covers the whole arc of biotech investing. So it has an exposure to venture, which otherwise is very difficult for any investor to get exposure to, certainly in our sector in specialist biotech VC, through to small, medium and large cap biotechs. So it is a representative actively managed fund that gives you a full exposure to the sector. It has done well and it's managed by a very smart team downstairs, Ailsa Craig and Marek.

Simon Brewer  23:35

And when we talk about the investor base, obviously there are a lot of gatekeepers of capital who are our regular listeners on the Money Maze Podcast, outside of the listed vehicle, how would you describe your preferred client?

Kate Bingham  23:48

Preferred investor is one that actually understands what it is we do. My best investors are ones that want to be in healthcare, want to be in biotech, understand the risks and benefits of what it is we do, and are willing to take a long game, because drug discovery and drug development is long. We don't have to get to market in order to generate a return. Our assets are basically data, preclinical and clinical data, and patents. So that's what we will sell along the route of a drug being developed or a company with a pipeline of drugs. But it is a long game. So an investor that wants to start getting proceeds back in three years is not one that's suitable for our fund. So we need a long-term investor. So that goes to the big asset managers who want to have a small slice of their portfolio in high-potential alpha investments. But equally, they've got to have big enough portfolios that they can accept the losses. And you will well know the stats on venture investing, but it is a big spectrum of high to low. And of course, these are illiquid funds. So you can't get out. Once you've committed, you're in. So family offices, the big asset managers who will have that sort of allocation. We have strategic investors who have different reasons for coming into the funds. We do have pension funds, we do have some insurance companies and fund of funds, actually, because that's another way of bringing in a broader range of investors. But fundamentally, it needs to be people who understand what it is we are doing. And then of course, we have some impact investors. Because really almost by definition, what we're doing if we're trying to alter disease courses and develop drugs that are going to affect the quality of life and survival of patients, that is impact. But we do so in a way that we really measure so that we can assess whether or not we're delivering that sort of impact. But of course, impact investors we like.

Simon Brewer  25:32

So underlying all of this is back to the talent and reading one of your reports, you said we invest in talented innovators. I understand talented writers, journalists, sports stars, but talented innovators, how do you evaluate them?

Kate Bingham  25:45

Well, I think there's two ways. The first is have they got a good idea that really solves a problem? And if you think about it, most diseases are not cured. So there's a big wide playing field to address. The first thing, is it an innovative solution which we think is tractable? Again, with a venture capital investment, we do have constrained fund lives so we have to be in and out within 10 years. Now, 10 years is a long time for an investment. But equally, it may be that biology is actually not understood well enough that 10 years isn't enough. So the first thing, is it tractable and is it innovative? Does it address a commercial and clinical need? And is the person flexible in how they're thinking about it? What we don't want is to be told how the clock works each time. We need to find out what is the shortest possible solution to get into the answer we need for the smallest investment. Because once you've got to that yes, this is a good first step, then you can continue to invest. But what we don't want to be finding is that we're having to write a very large cheque only to have that written off if it's not succeeding. So an entrepreneurial innovator is someone that actually understands the benefit of investment to get to an answer flexibly and quickly and an ability to pivot when they get different data that may change their course. And none of our companies will follow identically the course that we set out for them when we start. We've got to have that flexibility of management.

Simon Brewer  28:57

When you think about some of these critical medical areas where transition is occurring, high on the list for most of us, and I speak personally having seen my mother with Alzheimer's, is the whole progress or journey in that direction. Just tell me where are we in, it's too simple to say solving the problem, but where are we in progress?

Kate Bingham  29:17

We are a lot further on than we were. So dementia generally, I think is 10 to 20 years behind cancer. If we’d had this discussion 20 years ago, we would be talking about cancer of the organs. So we'd talking about breast cancer, colorectal cancer, pancreatic, whereas now, we're talking about specific mechanisms, so we talk about triple negative breast or HER2 positive breast, for example. We haven't got to that point yet with different forms of dementia. So we give them labels like Alzheimer's disease, but Alzheimer's disease is going to be driven by a whole bunch of different mechanisms and in due course, we will slowly unpick them. It's just because the disease is so slow and takes such a long time, that it's been much harder to unpick than it has with cancer, which in many cases is much, much quicker. We are making progress. Last week, we heard about the Lecanemab data, which is Eisai and Biogen. So this is another amyloid beta antibody but in a slightly different format that has generated statistically significant data, but the clinical effect is very small. It's definitely a forward step but it's a little forward step. In another dementia fund, we've got 40-something new mechanisms being explored across the different companies in which we've invested of which over 30 are first-in-class mechanisms. Now, again, most of those will fail, but some won't, and some may teach us about what we should be doing next time. So I would hope that in 20 years’ time, there will be some of the different dementias that will be better understood for which we will have targeted treatments. Whether or not we've managed to tackle disease-modifying drugs for all of Alzheimer's, I don't yet know. But we will be much better than we are now.

Simon Brewer  31:01

Just to be clear, that’s this dementia discovery fund, which is a £250 million pounds specialist venture capital fund just focusing on that in particular?

Kate Bingham  31:09

Correct.

Simon Brewer  31:10

Okay, and so that's back to your earlier point of you started wide and you've become narrow because very specific specialisations under your umbrella to address very specific unmet needs. Looking forward 10 years, how is the healthcare landscape likely to evolve?

Kate Bingham  31:27

So I will just answer this as regards to pharmaceuticals and drugs, because medtech and healthcare service, I mean, there's going to be massive changes there largely, I think, will be driven by digital innovation. So how can you actually use patient data to actually manage disease better and more importantly, diagnose and prevent? There's going to be a whole thesis around that. On the pharmaceutical and drug side, I would hope that we will be diagnosing much earlier so we can treat much earlier and so that we can actually stop diseases ever actually progressing as rapidly as they do. So if you take colorectal cancer, ovarian, patients present very late. And so by the time they are diagnosed, they're Stage 4 metastatic. And actually, at that point, it's really hard. And the same thing is true with Alzheimer's. I mean, in those cases, those patients have probably had Alzheimer's for 10 years. But it's only when they start to show symptoms that they get diagnosed. And if you compare it to something like heart disease, we don't wait for people now to have heart attacks before you intervene and say, you need to start taking statins, stop eating the chocolate cake and go for a run twice a week. Whereas we need to do the same thing with our brains, and generally with immunology. So how can we actually improve life or healthspan? By preventing those diseases killing us. I think there will be a change in terms of regenerative medicine, individual treatment. So I've not had full genetic sequence, but I've had all my SNPs done so I certainly know what I'm predisposed to and what I'm not and I think there will be much greater use of individual data to understand what diseases are possible and then we'll be getting it much earlier. For example, if you take the COVID pandemic and the rate at which we've been able to vaccinate against infectious disease, there's no reason why we can't take that same approach and vaccinate against major cancers, but do so at a point before the cancer is likely to have started so that you can actually prevent those cancers from ever kicking in. Now, that feels like Sci-Fi now, but in 10 years, we're going to have those effectively prophylactic cancer vaccines, which really is going to be incredibly exciting. And so then we're going to start getting into this whole idea of healthspan as opposed to lifespan. So how can you actually increase people's functional and productive useful lives rather than, you know, you don't want to increase somebody's life with the expense of the last 10 years. They got dementia and they're having to be looked after 24/7. That's not a good way to increase people's lives. We need to increase their functional life.

Simon Brewer  33:53

Before we leave your company, you made the point when we were talking earlier on and in connection with Philip Bassett, who we both know helped raise money in your first fund, is that venture cap is a pretty critical force in vaccine development.

Kate Bingham  34:06

Well, it was hugely, I would say. If you take COVID, almost every vaccine had come from a venture-backed company initially. Now in many cases, they've partnered with Big Pharma to then do the manufacturing and distribution. But the innovation almost always comes from the little companies and not just in vaccines, but in therapeutics. So venture is definitely a force for good. And if you take for example, the US public markets, less than half a percent of all new companies every year that are set up in the states are venture-backed yet venture-backed companies represent about three quarters of the market cap in the States as an example. So they are disproportionately effective. And venture-backed companies, of course, they're not venture-backed by the time they're big public companies, but they started off as venture-backed companies responsible for over 60% of R&D of the public companies again in the States. So it is a good instrument to support those innovative R&D-intensive companies to actually get them to products. I think it's just a well-governed, very focused investment instrument that has proven its success time and time again.

Simon Brewer  35:11

Terrific. Now, one of the recurring themes we have on the podcast is encouraging women to think about finance. Let's just talk about female presence in your industry. Marks out of 10.

Kate Bingham  35:22

I would say marks out of 10 in biotech in Europe is probably 5. Marks out of 10 biotech in the US is probably 2. And in venture, again, the proportions will be similar, as in Europe is a bit better than the US. In the US, women in venture is really poor so that tends to be a very male-dominated industry. Here, it's not that bad. And because we have some visible senior women in biotech venture capital, actually, it attracts women into companies. So we don't have a single venture-backed company that doesn't have at least one woman in the C suite and we have plenty of companies that will have over 50% in the C suite. So I think that is a very positive thing. Getting women into finance is a bit tougher because that is historically a very male industry. And again, when I came into the sector, it wasn't a pure sort of financial role. It was a company-building role, which is, I think something that women are good at, because they're good at juggling and handling ambiguity and keeping lots of balls up in the air at the same time. So it's something I think we all need to make sure it gets better, but it's not terrible.

Simon Brewer  36:26

Got it! We partner with GAIN, which are Girls Are Investors, who are absolutely pushing that whole process and encouraging. But before I leave that, do you need more girls to be encouraged to study the STEM subjects at schools in the UK or do you think that actually, there's a lot of momentum there?

Kate Bingham  36:42

I think we absolutely need more people to study sciences, but to study in a creative way, because just learning dry textbooks is not fun. And what, again, this pandemic has shown beautifully is how you go from learning immunology to thinking about a product that can actually help save millions of lives, because it is the fundamentals of immunology. So how can you mount an immune response, which is what has translated into all the different vaccines and therapeutics and antibodies that we've used to manage the pandemic. The more practical and the more useful we can make it, the more exciting it is. And when it's again, there's no right answer, that's really fun. That's what I would hope teachers are going to really embrace in how they teach science.

Simon Brewer  37:24

So we're going to change tact. It strikes me that to be a successful and sought-after healthcare investor and Managing Partner at such a respected firm is very rare. For that person to be viewed as so able she is asked by the Prime Minister on the COVID vaccination program from procurement to deployment is pretty exceptional. And your work on the UK's vaccination rollout program has been praised by scientists and international media, particularly for securing 350 million doses of six vaccines and setting up infrastructure for clinical trials, manufacturing and distribution. Now, I know there is a book, it's called 'The Long Shot: The Inside Story Of The Race To Vaccinate Britain’ written by yourself and Tim Hames, which is going to be published, I think, on the 20th this month. So that obviously is going to be a must-read. I've listened to you before and I've read a lot about this. But let's just start when this thing kicked off. You were on this expert advisory group with Patrick Vallance and then you were approached with the offer to run the Vaccine Taskforce. You went home because you wanted 24 hours to think about it. What was the conversation around the dinner table?

Kate Bingham  38:28

I spoke incredibly loudly, so much so that my husband and daughter came running down to figure out what was going on.

Simon Brewer  38:34

Because it was a rare event?

Kate Bingham  38:35

Well, I hope so. But I was completely gobsmacked. I'd actually asked for 24 hours to think about it because it was just so beyond anything I'd ever thought I would have ever done. So I was caught by surprise, even though I'd been working on this advisory group. And I then basically spent the next few hours working with Jess, what were the conditions on which I would take it on, and speaking to people who had actually worked with government who could either give me confidence or not about whether or not it was going to be possible to do something. So once I made a few calls and then agreed the conditions on which I would do it, I then went back the following day and said yes.

Simon Brewer  39:14

And how much doubt was there, personal doubt, about your ability to execute given all those forces at work?

Kate Bingham  39:21

Massive, massive doubt, of course. I mean, I didn't know anything about government, and I think actually, it was a positive, because it meant I didn't know how the rules worked so then I would do things on the back of first principles as opposed to trying to sort of fit within guidelines. But one of the conditions was that they had to understand that if we were going to get any vaccine, they would need to invest ahead of knowing whether or not it was going to work. And that's both to do the clinical development, but also simultaneously to do the manufacturing and scale up because there'd be no point ending up with clinical data saying yes, this vaccine is fantastic, only to have to wait another year while you manufactured and scaled it to population levels. So that was a condition to say, do you agree that that is the principle? And the Prime Minister said yes. They agreed to the principle that there would be rapid decision making, because I hadn't had much exposure of government but that's probably not two sets of words you'd have in the same sentence as government. And they agreed to all of that. So I thought that actually, when I started, we would have as good a shot as was possible, given that they'd agreed to the principles of how it was going to get done. And then by far the biggest doubt for me was whether it was even possible to get a vaccine against SARS-CoV-2, because what we didn't know at that point whether or not it was possible to vaccinate against. We knew that the SAR-1 and MERS vaccines had failed. We knew that the most advanced vaccine formats that were being developed had never been approved, so the mRNA and the adenoviral vectors, and we didn't know at that point how rapidly the virus would mutate. So if it was a very rapidly mutating virus, it would be very hard to vaccinate against. So with all those reasons, massive doubt. But even so, I still thought it was worth giving it a go. You couldn't just say, well, this is too difficult, we're not going to try. It made much more sense to give it a go but recognise that the odds of it succeeding were low.

Simon Brewer 39:26

I know when you spoke in Cliveden, you described a couple of roadblocks. Just tell me about when things got a little bit more tricky.

Kate Bingham  41:19

There were lots of bumps. I mean, the things I guess I'm most disappointed about are that we never were able to solve the immunocompromised population. For anybody who has a functional immune system, we got vaccines for them so that they can be vaccinated. Their immune response then is triggered such that they get protection against severe disease and death. But for those people who are immunocompromised because of disease or drugs or for whatever reason, actually, there's no point giving them a vaccine if they don't have an immune system that can actually respond. And so that was definitely a block that we were never able to solve and still not to this day, of those people, which is several hundred thousand people in the UK. So that was a battle that we didn't win. Another one which I would say was disappointing is we never really did a good job on the global distribution of vaccines. So this was very much an example of the high-income countries grabbing all the vaccines ahead of all the low-income countries. And even though there was rhetoric and discussions about COVAX and commitments to COVAX, it wasn't an effective way of vaccinating the world. And that clearly is a political decision but that was something that didn't, I wouldn't say, work particularly well. So I had three goals. One was vaccines for the UK, second was vaccines for the world, and third was ensuring the UK was better prepared or at least start putting plans in place to be better prepared. And again, I think there were some things that we should have done and should be doing now that aren't in place to make us better prepared, though some things are in place. So we definitely are better prepared than we were. But I think we could be even more on the front foot here.

Simon Brewer  42:55

Well, I think those disappointments that you've alluded to have to be placed in the context of the extraordinary overall success. So, you know, you're being extremely modest here. Was there one skill or asset that you think helped propel the success that you achieved?

Kate Bingham  43:12

Well, I would say this, wouldn't I?  But I think looking through it all in a venture capital lens made the difference. So understanding uncertainty risk and the likelihood of failure is not something that government is comfortable with, but it's what we do in the venture business all the time. So the idea of building a portfolio in order to mitigate different failure, I think, is important. Building expert teams who are really integrated into industry so that you can bring in the best experience and skills is really important. And again, that's why we had set up a vaccine taskforce because we didn't have those skills in government. Quick decision-making, I think is critical and milestone funding. So again, we don't put all the money upfront. You fund to a key critical inflection point. If that works, you continue funding. If it doesn't work, you pull the plug. But I think most of all, it's this idea that we work as partners. So we're not there to sort of mark their homework and just tell them when they're doing things wrong. We're there to lie in the tracks to give them every possible chance to succeed. And that's what we do with our portfolio companies so that we can maximise the chance of a successful investment, and that's what we did with the vaccines, because the chances that any of these vaccines is going to work was not high. So we wanted to absolutely make sure that we weren't missing a trick to help them if there was something that we could be doing.

Simon Brewer  44:24

And did you meet a lot of resistance when you wanted to go, what I would call, deep and wide, you wanted to write some large cheques? Did you find yourself battling with people who don't operate in the commercial world in the same way you do?

Kate Bingham  44:35

Yes and no. I mean, actually, at the ministerial and prime ministerial levels, they got it. So they were fine with the concept of a portfolio and recognising that we were making recommendations because ultimately, it was the ministers who took the financial decisions, we just made the recommendations. They understood it. The difficulty is fitting that into the civil service process, which is all about value for money and ranking all your different options all side by side and force ranking them and marking them and then coming up with a number and saying, right, we'll go for that, because we didn't have the data. So we had to rely on judgment based on incomplete data. And that doesn't fit well in a classic civil service procurement role. And that was where some of the issues happened. But equally, it actually ultimately worked out pretty well, because we were able to make quick decisions. I mean, we were the first to sign a term sheet with the FASB on tick vaccine, we were the first to start vaccinating with that vaccine. So we were absolutely on the front foot at the front of every single discussion with these different companies. We managed it, but it was awkward because it didn't fit neatly into the normal processes.

Simon Brewer  45:45

Let me be a fly on the wall for that conversation where the UK departed with what was the norm and went to vaccinate more people with longer breaks between the first and second vaccine.

Kate Bingham  45:55

So that's actually nothing to do with me. My role was not to develop a vaccination policy. That's the JCVI, the Joint Committee of Vaccination and Immunisation. They are vaccine experts and they advised the government on who should be vaccinated and with what. We of course, shared with them ahead of time, all our due diligence and data, because actually, we were much more informed knowing what the likely vaccines were that we were going to have and what the different characteristics were. JCVI actually made a very smart set of decisions. Fundamentally, in immunology, the bigger the gaps between dosing, the higher the immune response. So extending the period between dosing was not a surprise to anybody who understands science, because that's what you would have expected. But in the context of a pandemic where you've got people dying and you need to get people vaccinated as soon as possible, it's then a tension between what's the shortest possible timeframe to get a vaccine approved that you can show works, through to what is the optimal time of deploying a vaccine in patients to then save their lives and stop severe disease. So to get a vaccine approved quickly, you want the shortest possible interval between dose one and two. But to maximise the immune response, you actually want a longer response. Now, because the Oxford vaccine was originally designed as a one dose vaccine and then they changed halfway through to realise, actually, they got a better response with a second dose, they actually had a spectrum of intervals between the first and second dose because of the change of protocol halfway through. So that meant that some people had received doses with four weeks apart, and some had had doses 12 or more weeks apart. And because there enough volunteers, they were able to look at the immune responses as a result, and based on that data, that's what JCVI used to then recommend the increased dosing interval. And that went down like a lead balloon around the world who all said, 'This is outrageous, it's ridiculous. That's not the way the clinical trial had worked,' which is true. The clinical trials were designed to have fixed dosing intervals with the other vaccines such as Pfizer. But JCVI said, based on this data, we know the vaccines are safe and we can see you have an improved response. And also, it is a better public health response to vaccinate as many people as you have with your limited vaccine, rather than vaccinate half as many people more securely. So I think they made those calls right. But that, of course, had nothing to do with me.

Simon Brewer  48:11

We look forward that maybe in time another pandemic, I suppose there will be another pandemic, the question is whether it's in our lifetime, for you observe the machinery of government and the way it operates. What would you most like to change or see happen to be more responsive and effective?

Kate Bingham  48:28

Easy. I would have a Pandemic Chief in the government, just like we have Chief of Defense. So we prepare ad infinitum for potential defense threats and yet, we don't do the same thing for pandemic threats. And you say if we have another pandemic, we will have another pandemic. It's inconceivable that there won't be one. All the data is showing that these pandemic threats are coming more frequently, and so they will come. We just have to be in a position where we've got somebody leading this in government, who actually has the skills and capabilities and that means they do need to understand the scientific, clinical manufacturing aspects of not just vaccination, but therapeutics, diagnostics, and then surveillance. If we keep going upstream, they've got to be able to actually influence the different responses. And that's not there at the moment. I hope somebody will get appointed, but that isn't there at the moment. Also, fundamentally, you need to increase the skills and scientific understanding within Whitehall, because only 10% at best have STEM degrees, and almost none of them have experience in the industry. And so there is a very fragile relationship with industry and government. So government largely, from my experience, was seeing industry as sort of companies always asking for handouts as opposed to here is a solution. An effective partnership with industry is a way out to address a lot of the world's major challenges, whether it's aging, hunger, climate. I mean, industry is going to play a key role as will academia, and so having a more embracing and partnership-type relationship with these different groups, I think is going to be really important.

Simon Brewer  50:06

I don't know whether you read 'The Premonition' by Michael Lewis. We had Michael Lewis as a guest on the show and he was, not only is he fantastic and he was fantastic, but of course, the fact that the US had had a whole policy around a pandemic which then withered, makes for great reading.

Kate Bingham  50:21

It's a phenomenally good book. And actually, Richard Hatchett, who was part of the team with the George W. Bush pandemic planning team is running CEPI here now. So he was part of the original UK vaccine advisory group, and he is a very brilliant person.

Simon Brewer  50:33

So the last question on this whole space is timelines for drug approvals were accelerated because it was a pandemic, is that setting a new standard or some different thinking?

Kate Bingham  50:45

Yes and no. So there was no change in the timeframe for assessing safety. So that was exactly as it always has been and there were no shortcuts whatsoever in understanding the safety of the different vaccines. The bureaucracy and the regulatory procedures to get the approvals to start the clinical trials was radically shortened so that was a massive plus. And then because we had funds available, we were able then to compress the Phase 2 and Phase 3 pivotal studies so that they could run largely in parallel, as opposed to sequentially which is what takes time. And so in July 2020, Oxford announced their initial immunogenicity data, which was a massive fanfare and a very exciting time. So they were able to show that they could stimulate an immune response. What we didn't know was whether or not that immune response was going to be effective. But what was interesting was that at that point, they were already way through the recruitment of their pivotal study. That doesn't normally happen. So it was that compression which was incredibly helpful. And then the way the regulator here in the UK, the MHRA, handled it was incredibly exciting. So they moved from being sort of an arm's length policeman regulator, where typically you'd have to produce your whole dossier, every single table cross-referenced, I's dotted, T's crossed, all of that, then you hand over the dossier, it then goes into the MHRA for a while, and then eventually they come back with either white smoke or not. And the MHRA had recognised in part, I think, because of Brexit, that they were going to have to redefine how they worked with industry, that actually, the way that they could work most effectively was as a much closer partner to these innovative vaccine or therapeutic companies. So their whole approach of saying, ‘Come to us right at the beginning and just share with us whatever incomplete data you've got and we will start reviewing anything you've got as and when you've got it. So give us your essay plan and then when you've written the first chapter, we'll read that then, you know, as you do it.’ So that meant that when they had the final efficacy data, they'd reviewed the rest of the dossier. So they were able to make a decision very quickly. It was called a rolling review process. And I think if they can replicate that type of regulation, it will be game changing. Because then the UK, if we could position the UK to be the clinical trials centre of the world so that innovative new drugs or vaccines or therapeutics, whatever, can come to the UK, get tested first. So that gives patients an opportunity to have these potentially transformative drugs quickly, and then you get them on the market to get them approved, and you start treating patients more widely after that, then you start getting real-world data, which is what's so important, which is outside the confines of a clinical trial, how are these drugs really working and is this anything we need to know that would change how we'd use them. That is a huge opportunity for the UK and I would hope again that the government would recognise that because it's a massive tool for economic prosperity.

Simon Brewer  53:40

That is very clear. I have three closing questions. What's your favorite daily habit?

Kate Bingham  53:46

That's a fun question. I think getting on my bicycle because I like to bicycle to work every day and on weekends, I love to e-mountain bike.

Simon Brewer  53:54

I'm a big mountain bike fan as well. But having come over the handlebars the other day, I'm nursing some rather sore hands so putting that on hold. What would you tell a 20-year-old Kate Bingham?

Kate Bingham  54:04

I would tell her 20-year-old Kate Bingham, try new things because you never know what it is you want. I had no life plan and I've ended up in an incredibly exciting career. Say yes. When people offer you ideas of things to try, say yes. Don't worry about failure, because you are going to fail and you'll be better if you fail because you can figure out how you learn from failure. And ultimately, you know, set yourself some big goals. That's what you really want to do. You want to be able to get out of bed in the morning and know you're doing something important.

Simon Brewer  54:35

And if you were finding yourself alone and able to listen to one piece of music and read one book, what would they be?

Kate Bingham  54:42

One book, I love Rohinton Mistry. It's very sad book, 'A Fine Balance', but it's all about aspiration and hope and not getting knocked back in the face of severe adversity. So that's my favourite. On music, it completely depends on what mood I'm in. Do I want to be happy or sad?

Simon Brewer  55:01

You want to be happy, please.

Kate Bingham  55:02

The piece of music I love that makes me want to dance around the room is by a South American composer called Márquez and it's called Danzón No. 4. It starts off very, very quiet and it just ends up where you're swinging from the rooftops because it's got this just wonderful brassy rhythm, salsa party feel. If we played it now, you would be getting up. By the end of it, you'd be swinging, and if I'm on the train and I'm doing my work and I'm listening to it, I'll be starting to jiggle around in the seat. It's absolutely fabulous.

Simon Brewer  55:35

Márquez, Danzón No. 4, you think. So well, there you go. So we're featuring that on the show notes. Kate, I waited a year and a bit but my goodness me, it was worth waiting for. Thank you so much for being so entertaining, so informative. You know, we've had two conversations here. The world of VC has been beautifully explained. It's incredibly exciting. It's generally for sophisticated investors with a few caveats. But I think you've laid out why the potential of when you get success is so great, how one needs to think about risk, why one has that portfolio approach and the fact that we're sitting at a new threshold of discovery, which is going to open up all sorts of cures. And then we've heard the country is indebted to you however modest you are for your extraordinary efforts. I'll say thank you because you did a brilliant job. And you've given us a few really pithy comments. I've written down so many of them. So I'm just going to say one, and that's I think something that is terrific, 'Set yourself some big goals', and really, really important. So Kate, it been absolutely terrific to be with you here today.

Kate Bingham  56:36

Thank you so much for having me. It's been really fun.

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