Guy Reams (00:00.396)
Welcome to the Founder's Journey podcast. This episode is about a great success story in an early stage pharma business. This is an interview with Artie Sukau, the co-founder of DTX Pharma and one of his original investors, Jeff Friedman, principal at Friedman Bioventure. I hope you enjoy. Artie and Jeff, welcome to the Founder's Journey podcast. Glad to have you today.
We're going to be diving into your background and your story, Artie, on your journey with DTX Pharma. But before we do that, I'd like to get a good introduction to both of you. So we'll start with Jeff. Jeff, would you like to introduce yourself to the audience? I would. And to start off by thanking you, Guy, for bringing this story, which I think is really quite interesting to a larger audience. So I'm an investor in the context of DTX.
My background is as a physician scientist. So I'm trained as a pediatrician and a hematologist oncologist, picked up a PhD along the way, ran a basic science lab for about a decade. And prior to meeting Artie had done a career 180 where I went from being a bench scientist to starting to work with early stage companies.
That's interesting. I wanna talk about that a little bit more, but before we do that, Arnie, would you like to introduce yourself? Yeah, thanks for having me, Guy. My background is PhD in pharmacology from UCSD, industry career, Johnson & Johnson, Regulus Therapeutics and AstraZeneca, and then guess scientist turned CEO, founded DTX Pharma in, I think it was 2017.
That's great. So both of you had a similar story in that you started in science and research and went through that process. think if I remember right, Jeff, you got your degrees at Stanford, right? That's correct. So both of you are in this research world very heavily, both heading down that path.
Guy Reams (02:25.39)
Why ditch that, not ditch it, but why move away from that and get into business? What was the call to want to do that? Arty will ask you first because clearly it feels like you probably had that entrepreneur spirit early on. I mean, was this always the intent? Yeah, so one, I would just clarify that I don't know that I've ever ditched my scientist hat. I still consider myself first and
foremost a scientist and I think the people who work with me would probably say that as well. think with respect to the journey to entrepreneur, think when I was in undergrad, I wanted to be a doctor. I took all the courses, graduated first or second in my class. When I thought about being a doctor, Jeff can cover his years.
I was like, it's kind of boring. You just memorize a whole bunch of facts and then you kind of spew them back to patients. And there's like a 95 % chance you have this. And there are some specialties where that's, it's not, not, not as, as boring like that, but, you know, start to get into research and realize that, you know, I felt like, at least for me, I can have a bigger impact by developing drugs, right? You could have an impact on tens of thousands of patients, probably more patients than you could see in your life. So I think that, that was, you know, probably one of the,
bigger inspirations. then, you with respect to entrepreneurship, in my first sort of dabble into that was in graduate school, where you had to come up with, it was called a minor proposition. And it had to be an idea outside of your own research. you know, wrote it up, you wrote it in like an NIH grant style. I don't remember if it was five pages or 10 pages, whatever it was. My idea was an Alzheimer's disease. Well, after the committee meeting had seen it, one of the
chairs of my committee came to me and said, we have some investors that really want to see this idea move forward. long story short, I ended up with my own lab, separate from UCSD while in grad school, but endorsed by UCSD. even though the science was successful, didn't appreciate, I didn't think I could run a company or start a company or begin a company, because I just didn't have enough experience. with respect to each of my stops,
Guy Reams (04:50.957)
in industry, there was a reason why I went to J &J or in my head a reason why I went to J &J, a reason why I went to AstraZeneca. AstraZeneca, I was the second person to join a group that went up to 65, so I learned how to build some things out. And then Regulus, it's a small biotech. My whole idea going there was that I get exposure to a small biotech that was functioning well. I spent five or six years there. And that was...
It was a period of transition for RegUS and they were on a pretty steep downhill trajectory. And there weren't very good people around the table, like I had at J &J and AstraZeneca to learn from, that I could apply to a journey like DTX. So hopefully that gives some color. Yeah, there's more than one person, I think, that goes a similar path where they get into medicine and then they decide to...
get into research and then they end up working in a lab facility. I guess the dream would be to have your own lab and then potentially work for a company like J &J. I haven't met too many people that have made the jump that you did though. So that's rather unique. I think there's a lot of people that are scared to do that. They're fearful because I'm a great scientist, but I'm not necessarily a great entrepreneur or a great business executive. Seems like you might've had some help along the way.
to get into that entrepreneurial role. But how did you feel about that? Was it scary to take that type of jump or was this just something you wanted to do the whole time? I don't know that I was ever scared per se. I think one of the things that helped me and investors and other people should probably cover their ears is I never really thought that far down the road because if I did, I would have realized how insane what I was doing was.
I I literally thought and I mean, you could see from the way DTX was formed. You know, I only thought what do I need to do the next day to make sure that I was around for two days or three days or four days? And so I think I don't think I was scared. I think the other thing that I had everywhere I went was people who were really supportive of me, believed in me and were resources for me. And I think that's also, you know, as the
Guy Reams (07:10.881)
we evolved today over the DTX story, I can just tell you, even with this new fund TCA group, I found people that were better than me at stuff, had more experience to me, and I leaned on them for advice and support. And so I think when I go back, I think what I had around me was a really supportive network of no one told me, no, you can't do this. They all said,
go for it, we believe in you, if anyone could do it, it's you. And so, yeah, I don't think that. And then don't know where I got it from, but whether it's my parents or what, but I don't usually take no for an answer. So entrepreneurship was really for me because all we heard, all I hear was no, right? Every conversation, no, we don't want to invest in you. No, we don't want to do a partnership with you. And so I think that was also motivating. Yeah, that's interesting.
One of the themes that keeps coming up on this podcast is the idea that angel investment adds significant value to people like yourself that don't understand certain things or need to learn from a community that's willing to give. So Jeff, obviously that queues up your desire to leave the lab environment and start to get into early stage investment. Why did you do that? What was the motivation for
So I think there's, you know, there's definitely some parallels with with Artie. So I would start off and say, you know, at my core, I am a scientist. You can't you can't spend that much time practicing, you know, practicing a craft and and, you know, learning the academics. And that's that's the foundation with which I've entered into the investment realm. You know, I really am. You know, my my one skill is scientific and technical diligence.
So I really do look at the core idea that an entrepreneur is trying to develop or bring to life. And for me, I need to know that there's what I would call scientific plausibility to the idea. Otherwise, I just won't pursue it. So are they working on a problem that's well delineated? It's something that's in need of solution, and therefore, does it have economic potential?
Guy Reams (09:33.141)
And is there approach, you know, as I understand science and it overlaps fields that I'm familiar with, is there some chance that they can actually, you know, create value with the concept? So that's, let's just say every deal that I look at, that's important. In terms of my own career trajectory, you know, I have both an MD and a PhD.
I was slated to be a pediatric hematologist oncologist. And I just that the risk, you know, that's high stakes medicine. So as boring as medicine might be, that's an area where it's really important, know, big wins, big losses. And as I was on the precipice of, you know, let's say having an academic career with a lab and taking care of patients, I just decided that
I should really do one of these things and not both because I didn't feel I could do both well. And so I was lucky enough to get some grants when I was in my fellowship training. That led to opening an academic lab that actually brought me from Boston to San Diego, where I used those grants to open up a lab at Scripps. And I did that for a decade. Then I faced another decision point, which was
it didn't look like I was going to get tenure at Scripps. I had a young family here in San Diego. My wife, who's also a physician, had a good position. You know, I had academic jobs elsewhere. I didn't want to leave San Diego, which, you know, is probably a story that happens over and over again. You know, a lot of people come to San Diego, not many people leave voluntarily. And so I needed to find something else to do. And so, you know, I was lucky I had that.
Again, that scientific and technical diligence background to build on. And I came to the ANGEL group not looking for funding, but looking for colleagues who had complementary expertise. So sort of the same story as Artie mentioned, there are people in the group who had experience and knowledge that I did not. My ability to do scientific and technical diligence was complementary. And so that's sort of
Guy Reams (11:55.757)
how I integrated myself into the angel group. And, you one thing that I did do was, you know, within, I don't know, a year or so joining the group, I took over the life science screening responsibilities. And so that gave me a lot of opportunity to look at, you know, applications or companies that were seeking funding, got better at evaluating companies, and also got to work with other members of the angel group to understand
Kind of what their criteria were when they looked at early stage companies. It feels like it. It's a rare thing, but maybe I'm wrong. Maybe this is unique to San Diego, but maybe there's other communities that are similar. But the idea that an early stage company that is obviously doing something pretty technical in the genetics or other medicine area comes to an angel group and then find somebody like you that is actually knowledgeable about what they're trying to do.
and understands what they're doing. Do you think that's a unique thing about San Diego as a community to have people like you that are a part of the angel community or is that, or do you find that as specialties around the country that focus on different niches or whatnot? It's a good question. think that there, obviously there are hubs around the country where I think the most common model is, you know, IP from a research university
which is continually spinning off ideas, creates an ecosystem around it of people who are looking for ideas and have some experience in bringing them through development to commercial potential. yes, San Diego has UCSD, it has Scripps, and let's say Sanford Burnham. And that creates an environment. Artie wasn't coming out of
he was coming out of, you know, prior pharmaceutical company experience. So he wasn't coming directly from academia, but that environment was here. So I think, you know, but but obviously, it's, you know, the Bay Area, Research Triangle Park, North Carolina, you know, the Boston area, maybe to a lesser extent, you know, New York and San Diego are really where these things happen most often. And companies who farm elsewhere,
Guy Reams (14:22.017)
you know, might still find themselves migrating to one of these areas just because there are better resources. I did want to say one more thing about, you know, within the angel group that, you know, new fund at that time called TCA is large. So you have a big membership, diverse backgrounds, and a fair amount of potential to support early stage investments so that you can pull capital from them. But one thing that
I think was important in this particular instance, you know, the problem that that already was trying to solve was pretty esoteric. And so I felt that somebody like myself who had a scientific background was acting as an interpreter for many members of the angel group who weren't, you know, conversant in that language. And so they needed somebody who they believed had domain expertise to say,
You know, yeah, this is really a good idea. You could make some money doing this. so anyway, so I spoke the language and I served as an interpreter for many members, although there are plenty who did understand it. There is a that's another reoccurring theme. It's the idea that finding an early stage investor that has domain knowledge is very valuable to an early stage entrepreneur. So Artie.
Now I'd like to get into the beginning of DTX. So maybe you can walk us through the inception of the idea and then the motivation to create a company around it. And then I want to get into how you found your first investment or how you got your first backing. Cause that would be important for people that are considering doing this themselves.
Yeah, so I mean, I'd like to think that, you know, the idea, it wasn't just one idea. you know, when I realized that I needed to leave Regulus, I left Regulus and I just, you know, bought a new computer and I locked myself in my room for a week. And I just wrote down my 10 best ideas. You know, I made a slide deck and I...
Guy Reams (16:39.881)
evolved all of them to varying degrees. think when I started the company, I probably, or not when I started the company, but when I started to sit down, I don't think RNA medicines was high on my list of ideas. My background was in antibody, antibody conjugation, peptide, peptide conjugation, and in this metabolic disease space that's really hot right now. You hear about GLP1s and what I was doing at my previous stops was
all sorts of combinations of these different peptides. so amongst the 10 different ideas, there was a high prevalence of peptide combinations and ways to combine them. But what kept, I would just go and talk to people and vet the different ideas. And the one that kept sort of, I don't know, peaking people's interest and we kept sort of working, or I kept working on, also approach
my co-founders John and Adam about was this idea that you could use fatty acids to overcome this RNA therapeutics delivery challenge, right? the time, I don't even know if we knew it at the time, but we knew we could get them to the liver and we were just on the verge of GalNAC, this sugar that you could attach to these molecules to get them to go into the liver safely and have some activity. We're either on the verge of approval
or on the verge of the proof of concept that ultimately led to their approval. So that was kind of the backdrop. And I think what was interesting about the RNA approach was my background facilitated credibly telling the story, right? So I worked on fatty acid receptors at Johnson & Johnson. So I learned a lot about the way fatty acids interacted with receptors to get into cells. And so that's a huge problem in RNA medicines, right?
the molecules don't get into cells and then they don't get into the right place within cells. Then at AstraZeneca, we used to use fatty acids on peptides to prevent them from going to the liver or the kidney and just to keep them in the blood long enough. That's the whole thing about semaglutide, which you hear about all the time. There's a fatty acid on there, binds to a protein in the blood that steers it away from the kidney.
Guy Reams (19:01.579)
I guess enough about RNA therapeutics in 10 months to become dangerous at it. so, you know, thought after, you know, maybe not unlike what Jeff was describing, you know, doing additional diligence in space, making sure there was, you know, ideas that could be novel that would enable RNA therapeutics and allow us to move forward as a company. So that, I mean, I don't know. I know it's not that satisfying that I didn't work on something for 20 years. It just sort of...
But this idea of writing down your 10 best potential candidates is really fascinating to me. That exercise you did, locking yourself in the room and, okay, I got to come up with my 10. Did you come up with an evaluation criteria on which of the 10 were the most interesting or had the most potential? No, there was no form. I wouldn't say there was a formal.
evaluation process, I don't know, sort of, I kind of laugh sometimes because a lot of people really want to have scoring systems and they really want things to rise to the top and almost every week, you know, I'm in a process that involves this kind of scoring thing. And I think, I don't know, I think drug development, it's hard to, you know, get it into a, know, a math problem.
And then, you know, the highest number or whatever it is comes out on top. A lot more of it was, you know, talking. It was instincts. It was talking to people in the space. It was like almost like a comedian working out their material, right? Like I would play with, I would go and talk to like, I specifically remember sitting in the Waleeds, I forget his Dan Ho's name. He's one of the most famous peptide chemists in industry.
on all these metabolic peptides. Everyone knows him. He just was in the hall of fame for a bunch of different peptide things before and after he passed away last year. But I remember sitting in his living room in La Jolla, he had just moved there and talking about all these peptide ideas. And he was like, you know, everyone's doing this kind of boring. And then I was like, well, there's this other idea, putting fatty acids onto RNA, but I really don't know how to put multiple fatty acids onto an RNA.
Guy Reams (21:30.221)
Can you tell me how to do that? And so, cause I wasn't a chemist. And so he told me how to do it. So, but he's like, look, I'm like 80 something years old. I can't really help you. So you need to find someone else that's going to get this off the ground. So then I went and found Fabio and Epigen and you maybe the rest is history with respect to how to do that. But I think the long winded point is that, I don't know. I think it was just.
I think I was really good at listening to feedback and incorporating that and then I think ultimately you got to follow the data. So I don't know if Jeff knows this, but I was completely wrong. He probably knows this. I was completely wrong about what was going to work. I thought the way fatty acids interacted with receptors was a certain way that was true. I made those molecules as a positive control or negative control. made them in the opposite orientation in the first experiment.
and the ones that were negative worked. And so I think I could have easily followed, like dug in and been like, no, I'm right. No, we followed that. And then we learned how special it was over the coming months. So I don't know, I answered a lot of questions there. Well, what you said, think is really powerful here. I mean, I have a theory and I don't know if it's true, but I have a theory that success is inevitable if you have a persistent pursuit of a problem domain. So it's not that, it's not that.
And you just basically indicated that you did not have success in your initial interrogation, but you found success by a persistent interrogation and collaboration in your community, right? That's ultimately what happened. A lot of times we worry about, I making the right decision? Am I going down the right path? And we're, like you said, we're trying to figure out the cost benefit analysis and trying to figure all that out when in reality, just getting on the path is the answer.
And I wonder how many people think like that, if that's just an entrepreneur way of thinking. But it's like, you just got to get on the path and just start trying and you're eventually going to find success.
Guy Reams (23:37.931)
Yeah, I mean, to some degree, I definitely agree with you on that on that front. mean, there's so many companies. I mean, I sort of I'm trying to be a champion of people that were like me, like that I feel like I connect with because they're at the beginning of the journey that I just made. And so many times I think they get people get paralyzed at the beginning and
get too hung up on all the flaws with the approach. Like think if there's unmet need, that's really important. And it's not a solved problem. Like for me, that sometimes can be enough. Not to diminish it down. There's a lot, it's way more complicated that especially telling the story and getting people to buy in. But I do think that some people get so drowned in these matrices.
that, you know, and they never come out because it's almost impossible to choose. I mean, everything has words. Jeff, is this a characteristic that you see in early stage founders or look for? So, you know, obviously, you know, Artie is one of the hardest working people that I know. So I think you're asking, you know, persistence. And so, you know, he worked incredibly hard.
You know, I, you know, he was he was there earlier than anybody. He was there later than anybody. He was, you know, as the company grew from, you know, from Arty to two people to three people to, you know, whatever it was, 40 or so. You know, he continued to manage, you know, many, many aspects of the business all the way through. And, and, you know, and so, you know, part of that
Part of that probably is difficulty of finding somebody who can do it better than he can and just having a tremendous capacity for doing work. So yes, for persistence, you heard, I mean, there are nos all the way along the way at every step, right? It's just, you want to be successful, you want to get funded, you got to talk to a hundred people to find one. I did want to, I've been thinking about a personality characteristic
Guy Reams (26:04.873)
that hasn't come up yet. I don't know what it means, but I want to just kind of describe. I was surprised. So, Artie has two co-founders, Adam Pavlicek and John Grundy, both of whom are also pharmaceutical, big and small company veterans. And I've never worked in a pharmaceutical company.
But what I found interesting was, you know, none of them have particular respect for the big companies. In fact, I think all of them feel kind of disdain for the way that big companies run, you know, how they waste resources. And so it sets up a dynamic where, you know, you have these behemoths, which are
you know, I don't know, tens of billions to hundreds of billions of market cap have resources that are essentially unlimited. But, you know, it turns out that, you know, somebody with a good idea, and with an attitude, can actually, you know, and run them to a solution that they're trying to achieve at the same time. And so I found that fascinating. And I do think it's an important characteristic of
of Artie and probably of his co-founders as well, which is like, you know, these guys, you know, these elephants are, you know, chasing the wrong thing. They're going in the wrong direction. We're going to go over here and we're going to solve this problem. You know, and he did. And so I just I just found that fascinating. And it's something that I, you know, having not been in pharma, I wouldn't have appreciated.
I don't know if it's that the emperor has no clothes or what it is, but I'm just kind of curious if Artie wants to comment on that because I found it fascinating.
Guy Reams (28:06.689)
Yeah, I mean, I don't I don't know how to say it nicely. But I think if you are in pharma, I don't know, you, you, you understand how hard it is to emerge there. And they, you know, they, don't think they look, there's, I don't know, biases or what, but they don't, when they develop things, they don't really look at the whole picture in these early stages, like they don't
follow the data or pay attention to data and the people that do get drowned out. So if you're the one saying, hey, we shouldn't waste money on that because it doesn't work, say on X receptor or it's PK isn't good enough. doesn't matter. The train already left the station. And I've just seen that. I mean, I've seen that happen in even the year since I left DTX with, you know, small companies that are overly resourced. They put the milestone. It's all about milestones. doesn't matter.
and reaching the milestone, it doesn't matter what the data is. They just check the milestone. And then they're probably gone from the company before they would ever be held accountable to that. I don't know. I can say it's inefficient. Obviously, I don't have a whole lot of respect for a lot of the senior decision makers that I worked with. That's not true for maybe as I've
grown and gained more perspective, or maybe pharma has evolved. There's actually a number of companies where I've grown to respect some of the decision makers. Obviously, we're pretty happy with Novartis, Jeff and I, but I don't think the deal gets done if we don't trust and respect them. I don't know. I tend to agree. I just don't think pharma is set up nimble enough
you know, for a DTX to happen within it. Like, I don't think you could go to the new project committee and convince them to play around with this for a year and provide money or capital or resources. And there's probably no amount of experiments that you could do on a shoestring that would, you know, sway them because they're ready, you know, they're, they're rigid. Yeah, this is, you know, we started talking about RNA research and now we're talking about big organization and dynamics. But, you know, I think it's,
Guy Reams (30:32.811)
That is not true of just pharma. I've heard this theme multiple times across many different industries and I've experienced it myself. I have a theory that humans can only optimally perform in a tribe of a certain size. And once you get to that tribe that's too large, it just starts to run into organizational dynamics that lead towards complexity and complexity slows the whole machine down. It doesn't matter what it is. It could be anything.
But once that organization gets to a certain size, it's like complexity is the rule of the day. So it's interesting that you have that same experience in pharma, because it's certainly been true in my background as well. Well, and maybe I'll just add that even I think you could see it at DTX to some degree. Now, I always joke, and I think our investors would back this up, that even when we were 50, we could still run laps around most companies in terms of how much we get done and how quickly we make decisions.
I mean, just look at the output that we had, but it was harder. was slower. It took more time when we were 10 people than it did when it was just Jill and Jeff and I, right? We could, we would just go do it. Like it wasn't like, you know, delegate the task or answer a hundred questions, whatever it is. Like as we got to 25, it was hard. It was slower. and I don't, I don't necessarily know.
maybe it was more complex, right? There was more cooks in the kitchen, so to speak. So I don't know, I just validating that I found that same challenge as DTX grew, even though I was in charge. It's interesting. I think this is a productivity paradox in large companies because certainly they would be very interested in having such a successful discovery that you had that led to the success of DTX. They would have loved to have incubated that within their own walls.
but they're unable to do so because of organizational dynamics. So I think this is a challenge. This is a large challenge, especially when we live in an environment where mergers and acquisitions are happening every day. So everybody's getting bigger. So how do we keep that spirit that you're talking about and maintain discovery and new inventions and all that sort of thing? It's complex to say the least. Yeah, and I think maybe just, can I just add one quick thing on?
Guy Reams (32:58.591)
on pharma. do, know, as frustrated as it was to kind of grow up in pharma from a, know, from a create a new product or have a new idea and have the resource to push it forward. think pharma was still a very important part of our journey, almost for the reasons we're knocking like Andrew Adams at Eli Lilly, you know, a lot, know, Jeff was there, but you know, Andrew Adams joined Jeff.
very early on in the DTX journey before we had an indication. there are people and maybe even organizations that kind of see the light in terms of how to fund some of these challenges that they have, right? That they want to incubate. So, I don't know, just a shout out to Pharma because they were part mergers. They definitely do that, but they always do that outside of their organization, right? Yeah, agree. Yeah, yeah, yeah.
So I was just gonna say quickly, Andrew was the head of RNA medicines internally within Lilly. And one of the inflection points for DTX, I think in terms of, let's say external validation was in our fundraising path when we did a series A, we were lucky enough to have Lilly be engaged and to join the series A.
And that just, it made a lot of external eyes look at DTX and say, hey, what's going on there? Which was tremendously important. And I think probably relatively low risk for the pharma, you know, to put a toe in. you know, while it doesn't matter for a company as large as Lilly, they got a great financial return in the end for their investment.
And DTX got guidance, got resources, and this sort of external validation that was really important, especially at that time, I'd say. So Arti, so let's, on that subject, because I think we're hitting on the reason why early stage angel investment, people like Jeff, are so valuable to this ecosystem. Because getting started is so difficult that the lift off of the runway is not
Guy Reams (35:26.155)
Not simple. So let's get to the point where already, so you have your co-founders. I think it was Adam and John, I think we said. So you have your co-founders. You need money to get going. So talk to me about your early attempts to go raise funds. Where did you start? How did that process begin for you?
Yeah, so, you know, I think in in our case, where it was just, you know, I don't know, I wouldn't say it was half baked, but it wasn't an evolved idea. It was just an idea. Right? You really need to go to people who sort of blindly believe in you. And so, you know, I think the early money, you know, John and Adam, each put in, like, I'm blanking, it either 10 or $20,000. And then, you know, both had
you know, more extensive networks, you know, than me, at least of people who had money that they were willing to invest in, in biotech, which is obviously highly, highly risky. so I think, you know, two things sort of happened. We got, you know, a tiny bit of money between John and Adam and a couple of their friends. And we didn't wait to deploy that capital. Like I was very adamant that we need to, even if it was just
growing cells or transfecting cells, demonstrating to people that we were going to do this and we were going to check boxes as we go. so we just, did that. we, we fortunately, JLABS was a thing. We got a single bench at JLABS, you know, bought, you know, I went, got flasks, got, got cells, grew the cells, did the transfection, you know, found the tool molecule we were going to use to, to validate, you know, the fatty acids.
or combinations of fatty acids. I think coincident with that, the other thing is that I did was I was a scientist and as Jeff can probably validate, early on I knew how to talk to Lilly. I knew how to talk to J &J, but I had no clue how to talk to anyone else. That's what I grew up in. I joined, which I think before we jumped on, you were talking about Springboard Connect.
Guy Reams (37:47.757)
And so they assigned a group of five or six individuals that were to match me. actually didn't even get into the program initially. They put me on like probation or whatnot. And I worked with one advisor to put some slides together. Eventually I graduated from that and I was allowed into the real deal. But those folks who largely volunteer their time to help
companies are usually in between jobs looking for the next opportunity is common. there was one James Callaway who was just kind of semi-retired. And he sort of adopted me, not unlike the way Jeff adopted me in a different way, and helped work through the slides and the plan and the vision. And I think that allowed us to get, well, at least momentum in that we could actually credibly
you know, tell the story. I think the other thing that happened at that time was Adam introduced me to Jeff. And I think Jeff was probably, I mean, he can tell you for himself since he's here, but you know, I think he was suspicious. It was just an idea. But I think what was awesome about Jeff was, I think, I think you did initially put some money in, but he agreed, you know, to come to the team meetings and just
watch us go and then provide advice and ultimately that involved, it evolved into him becoming, you know, an active member of the team as the COO. And so, I don't know, I sort of just talked to anyone and everyone who would listen. I knew that no one was gonna write a check the day I met them and that I had to tell them what I was gonna do.
go in the lab and do it and then go back to them and hopefully convince them that this is a good idea. Convince them that this was a good idea and that the train was leaving the station. Did they want to join? And I think maybe the most fortunate thing, because DTX doesn't get off the ground without Jeff, is that Jeff was around the table. had a big network and he was sitting in the room every week. So when we did make progress, when we did need team members,
Guy Reams (40:11.037)
could help us get resources through his network. We went to TCA at least twice to my recollection and also there was other networks at TCA. don't know, Boing let down it was, tell people what you're going to do, go and do it. Beg your friends and family to give you a little bit of money to prove that you're actually going to do it. I think a lot of people stop at
I've got this idea, they go and pitch it, people sort of roll their eyes at them. I don't, you know, there's so many people come to me like that and then I never see them again and they never start a company. So I don't know, it's a little bit of rambling, but that's really the truth of how it came to be. Leaning on my network was a big part of it. I think you've hit on a really important topic that I think is valuable in that.
In the angel community, there are unsung heroes that actually dedicate and spend a lot of time uncompensated to help early stage folks like yourself. And I don't know if it's entirely greed that motivates that. It feels like it's motivated by, yeah, I'd like to make some money on a potential company, but it's also, I'm just really passionate about helping in this space and it's fun, honestly. I mean, that's really what it's for me.
I like to get involved because it's fun. don't know, Jeff. So you got involved. You heard Artie's story. What motivated you to get involved, to start attending meetings, give that first check? What hit you the hardest? So, I'll amplify what you said. It is fun. And I think there's a degree of freedom as
as an angel investor. mean, you're beholden only to yourself. you know, you're not you're not running a fund, right? You don't you don't have fiduciary responsibility. And so you get to work, you get to sort of pick and choose problems that appeal to you. That could be because you like the problem that's being solved. You like the founder, you know, whatever it is. And in this particular instance, I had a warm introduction from Ardi's co-founder, Adam.
Guy Reams (42:32.855)
We had worked together on a philanthropic project previously. I was a board member of a foundation and Adam had generously donated some time and resources to researchers associated with that foundation. So I was certainly favorably inclined. I knew absolutely nothing about the problem that Artie was trying to solve.
you know, you know, again, he was, you know, serious, had the had had a well formulated approach was, you know, sort of honest about where he was and, and was sharing data. And so I'll just say when I when I when I came on the scene, I think the company had already raised 350,000 from, you know, insiders and friends and family. And we, you know,
As Artie said, experiments had started and we went to the ANGEL group. The ANGEL group said, it's too early now. And so, okay, think we raised a little money, but we went back to the ANGEL group, I don't know, four or six months later. And there was additional data at that time that said, okay, here was the idea we presented to you guys six months ago.
here's data suggesting that this might actually work. And that was enough to capitalize, at that time it was a convertible note financing. And I think we raised, I don't know, 1.8 million, 2 million, something like that, which was really gasoline in the tank for trying a lot of ideas. I think, yes, I sat in on the meetings
I felt like I had something of value to contribute. And I just kept getting deeper, more deeply and more deeply engaged. As the company kind of moved up the, let's say the value chain for financing, as an investor, I was in an ideal situation or seat to understand
Guy Reams (44:58.753)
the personnel of the company, the technology of the company, and the potential opportunities. And so, you know, that allowed me to have a high degree of confidence for, you know, putting in my own capital as well as bringing in other people and telling them, you know, look, I think there's really something here. think there's a, you know, yes, it's early stage biotech. Yes, risk is through the roof, but there's real potential here in this team and technology.
You know, I hear a lot of early stage founders always really curious about the motivations of people like yourself. They always ask questions like, why would somebody risk their money like this? Why would they do this? I mean, this is crazy. I barely even have an idea and I don't even know if it's going to work. Why would somebody do this? I'd be interested to what your response to that question would be.
Guy Reams (46:01.677)
I think investments or what you do with your finances, it's a very broad and diverse marketplace. You can spend it on consumption. You can spend it on vices. can spend it on philanthropy or you can spend it on something where you're supporting something that may ultimately bring an economic return. So truly an investment.
And, you know, for in my particular case, you know, yes, I wanted to make money. Yes, I wanted to put my skills to work. But there really were problems that I wanted to solve. And, you know, from a medical or disease perspective, so I've always, you know, I've been very interested in neurodegenerative disease.
very interested in oncology. Turns out that, you know, we were never able to find an application for DTX's technology in oncology, but we did see many potential applications potentially game changing in approach to neurodegenerative diseases. And so I had mentioned that I had spent time in a foundation, that foundation was focused on a rare neurodegenerative disease.
it was of interest to me because my father passed away from it. And so, you know, you know, correctly or incorrectly saw DTX's technology as, you know, a potential, you know, avenue for approaching these neurodegenerative diseases. And, and I think that that's, that's still the case. You know, the, the, the technology continues to have potential in those areas. And so that was
you know, personally meaningful to me and had the advantage of also if successful bringing a good financial return. So Artie, a lot of times, so you got past the initial phases, you found some people that were listening to you, even giving you some early stage money. At some point you got to the point where you're given a pretty significant pitch in front of a larger group of people to try to raise more money so you can keep this thing going.
Guy Reams (48:25.995)
Walk us through just what that was like for you. Was that intimidating? Was it scary? Was it just part of the process? Just walk us through that part of the challenge to get more money. Yeah, I mean, maybe it wasn't scary or intimidated in part because some of this was being done in COVID. And we were on Zoom calls when we were going out for the Series B, right, the $100 million.
round, you the series A, think, I don't think it was ever scary or intimidating in that like I was Lily was my people, right? That was the like the scary one where I was Lily. And so I think that I mean, I don't I don't think I was scared. think though, it exposed. I think early on, we were exposed. And I learned a lot from it. I think, you know, to get that next level,
So we were a platform company, right? Almost in search of a problem, right? That a killer application is what I usually call it. And early on, and I think we had to do this, like almost anything that was like on the first half of that list, we kind of talked about that scored, we would write a grant for and explore whether our technology could work for it. you know, Jeff and I wrote a number of grants in the Taopathy space.
a number of grants and the ophthalmology space. And then ultimately we came across the indication that that kind of was the, know, quote unquote killer app. And there could have been many killer apps and it sort of depended on the audience. But the challenge that we faced when we got to that next level of investment is you need to have the killer app and, know, where's the value gonna come from? What's the disease? What's the drug? And so I think
you know, we pitched an ophthalmology indication and there were lots of challenges with the target and the indication in terms of, you know, checking a lot of the boxes that people care about, The big investors, some of, they say that they're, they have a long view in mind, but really when they get to the clinic, they want to know what's going on as quickly as possible, right? You want some target engagement marker. They want to know that you're going to be able to recruit patients fast.
Guy Reams (50:53.717)
you're not gonna be, there's not a whole lot of competition, right? You're differentiated. And so, at the beginning, didn't, don't think when we went out to raise that money, we didn't know what our killer application was. We knew it was gonna come from a bucket of indications that we'd get there. But sometime, and so I think a lot of the challenge was
working out the order of the story and what was resonating. And so I realized that somewhere in the middle, and it really is like a comedian working out the material that Charcot-Marie-Tooth, the disease that we went after, one of the diseases we went after was really piquing people's interest, right? And
Even until we literally all we did was change the order of the story to put Charcot-Marie tooth first and then ratinitis pigmentosa because we found out that when we talked about ratinitis pigmentosa, everyone was sleeping by the time we got the Charcot-Marie tooth and sometimes they woke up. But so change the focus, you that brought its own challenges, right? Because no one knew what Charcot-Marie tooth was. Most people thought it was almost like a lifestyle disease. wasn't real.
There wasn't a whole lot of, no one really, there was a couple clinical trials, but nothing that resonated with people. So yeah, I think that was hard because now you had to pivot to the killer applications and then, you know, deal with those warts. And I always joke with people, like, you think you start an RNA medicines company, there's all these genetic diseases, it'd be really easy to find something that would resonate with people, but it's not. I mean, it was hard. I mean,
and hard because the clinical path, hard because there's a hundred other companies working on it. So that was probably the biggest problem. And I think getting over the hurdle was, you know, fortunately, RA Capital had Charcot-Marie Tooth on, you know, one of their lists of, know, if we could find anything that works in this, this would be huge. Good marriage. We had a couple other term sheets. was, maybe Jeff didn't know at the time, I was suspicious of the term sheet, the other term sheets, not because of their valuations or.
Guy Reams (53:13.661)
or the amount of capital, but more because I was worried we weren't philosophically aligned in terms of what direction to take the company. I came out pretty strong. sure Jeff and I argued a little bit. We were good at arguing with each other and then forgetting it the next day. I knew that this was the investor that could get us over the finish line with CM and support us in our vision for the next
24 months. yeah, mean, the challenge was finding the killer app and being able to tell the story in a way that, people could see how you could extract value from it. So once you start to hit on something like you did there, clearly the neuropathy thing and all of that's a growing expanding area of, of, of research right now, but you, you hit on something big and you hit on a specific application that, was working for you, but then you start getting a lot of interest from investors because of that.
and now you start struggling with control of the company and what the future control is going to look like. Sounds like you overcame that, got through that. Any advice you would give to somebody that's starting out in your shoes about that giving up control issue that so many founders run into? Yeah, I don't know. go back and, I mean, there's so many things that could have gone wrong, but I come back to philosophical alignment.
And maybe being authentic and transparent about what you really have. I think Jeff instilled that in me, you know, pretty early on, or maybe reinforced it, because I was always pretty transparent and authentic, but would reinforce it. Even the way I talked about different indications and some of the data, there were times where he was like, I wouldn't go that far. And I'd be like, why? That's what the data said. And he'd be like, just be careful. And I'd be like, I know I sort of roll my eyes in the moment, but then when I reflected on it later. So I think.
philosophical alignment going into the next round is absolutely critical. And then, I don't know, I more recently learned this. I think it's really important when you build out your board to have people who've been there and done that. And what I mean by that is built a company, done deals, raised money. I was in a situation very recently where, you know, the board was a board of investors and I was just
Guy Reams (55:33.857)
banging my head against the wall. Like, have they ever done this before? they have any, you know? So I think you need a voice of, you need your voice of reasons. And, fortunately, Jeff was very supportive of me bringing on champions, like, like people like that, right? We had Tim Scott on the board. He wasn't, I wouldn't say he's hardcore biotech, but he was a rational human who had clearly good business sense, good chops. And when I couldn't communicate to the board something that it clearly needed,
He would help people see why we needed that or whatnot. I don't know. Philosophical alignment, though, is absolutely critical. Otherwise, you'll be fighting the whole time. Sounds like it's a bit of a mixture between getting philosophical alignment, but also surrounding yourself with people that know more than you do in a particular area so that it can aid you in your process. Sounds like that's a bit of a balance. Sounds like you navigated that well.
Jeff, this idea of transparency comes up a lot. So there feels like a little bit of a challenge between being very open and transparent, but also trying to sell people to get money from them. So maybe you can comment on that. Because obviously every investor wants them to be transparent, but there's also the salesmanship about getting people to write checks too.
Yeah, so I don't know that there's really much of a conflict. I think I always, I very much come down on the sort of full disclosure side of things. As an investor, I want to know everything. get quite upset if I feel there's material information that's withheld when I'm making an investment decision.
If I'm inside a company, I don't want anybody on the outside who's evaluating it to be in that situation. you know, there's full disclosure. You know, how you pitch and the potential of technology. I mean, this was a technology that had and still has, you know, hundreds of potential disease applications, you know, that we never had enough resources to explore all the possible.
Guy Reams (57:58.349)
you know, places where it could be deployed successfully. So I don't think there was a problem selling the technology as a tremendous opportunity. So I just I didn't feel the conflict there between, you know, being honest about what you have and touting the potential. you know, one other thing I want to say about, you know, sort of bored and
you know, discussion, you know, internal discussions, a really important thing for DTX, you know, early on and later is just like, you know, all the people who are involved are pretty darn reasonable humans. Artie's co-founders, you know, John and Adam, you know, you know, really understanding, you know, incredibly reasonable at every step along the way, you know, we want to do what's best for the company. Our strategy,
in fundraising early on. And really throughout was this like, look, you know, we're a biotech company, we're trying to develop drugs, we need unlimited resources. You know, can't do anything without resources, we can't build the technology. And so we were we were never, you know, we never had pitch battles about the valuation of what we had. It's like, look, we'd rather finance it and create value than argue about what what our pre money is and
And I think that that's a trap that a lot of founders and management teams fall into that make it harder to get resources. unfortunately, if you're in biotech, you just need money and you have to be reasonable about going out there and raising it.
Great, well, we're getting to wrap up time. So Artie, I'd like to, I'll start with you and then we'll go to Jeff. But Artie, I'd like you to talk a little bit about the success. Clearly you sold the company to a very great company Novartis and I'd like you to comment on that if you can. And then more importantly, I'm really targeting this podcast to people that are interested in doing, following your footsteps.
Guy Reams (01:00:17.089)
So if you have any advice or guidance, the last minute parting words you'd like to say, I'd love to hear it. And then maybe just give us a quick, what's next for you or what are you working on today? Yeah, so I mean, on Novartis, obviously a very successful outcome. think there, and I think this is really important in pharma, probably in both of our experiences, why that gets done is because there's a champion at the organization. So that's really...
I'm critical and I think also, you know, I don't know how Jeff saw it. think maybe probably similar to me, like DTX was our baby. And so giving it up, you know, to someone we were really going to have to trust that they were going to be good stewards of the technology. And us, but we made a lot of promises to CMT1A patients, raise money from, from neuro foundations and such. so like it was a high bar, reasonably high bar.
where I, at least for me personally, I had to believe that they were gonna take this into patients for CMT1A in a way that we couldn't and be patient and it was gonna be tricky. The clinic was gonna be tricky for this indication. And so I think that we got that in Novartis, they've kept the entire part of the team that it makes sense, all the research folks. I feel good that, I think everyone got to an exciting, or had an exciting
retained an opportunity to continue to stay with the technology, which was important to a lot of us. I would say, I don't know, there was a lot of places where there could have been different outcomes with DTX, right? In January of that year, we were like, well, if anyone will give us money, we would take it and sign up now. then all that changed almost overnight. And I think maybe the...
the three or four words that come to mind about DTX are, I think, be resilient. You're going to hear a lot of no's, but learn from those no's. Why are people saying, no, if there's something common, well, you either have to go do an experiment to fix it or go on offense about that topic so that you just got to be on offense. So resilient, a lot of people are going to say no, learn from the no's. It's really hard to raise money. I think be adaptable.
Guy Reams (01:02:41.121)
There's so many wait times where we were adaptable. But I think the most important one is following the data. Like follow the data. I've seen so many, I can give you five examples from my own career at other places where people didn't follow the data. The data told them it wasn't gonna work. And of course it didn't work for the reason that they knew three or four years prior. Be transparent. I think that's really important. You know, be authentic.
share what you know and relationships. This is a relationship game. DTX doesn't get off the ground if not for relationships I developed with John and Adam, if not for Jeff and I relationship, if not for the relationships from the mentors that came along the way, some of which were from New Fund like James McKay is a good example of someone from New Fund. So I don't know.
resilience, relationships, adaptability, transparency. I don't know, my new favorite one is be ethical or do the ethical thing. and we did that a lot at DTX. So I'll leave it with that. I, know, as for what I'm doing next, had a hard summer on a consulting gig and sort of taking a break for a couple of months mentoring, like I said, mentoring companies that are in the same.
you know, both that I was in six or seven years ago where I think I can have an impact or allow them to not make as many mistakes as I did. mean, you know, we didn't talk about that, but, you know, you know, I made a lot of mistakes along the way and tried my best to learn from them. Great. Jeff, you want to talk about the success and then what advice you would give to people that are in art issues? Yeah, so I think it's, you know,
really important to think about, you know, some things that, you know, went right. I mean, if you have a success, you want to you want to try to take lessons and apply them to other other, you know, opportunities or companies in a portfolio. It's not always easy to do that. But, you know, I want to I want to shout out, you know, some things that that already did, which I think
Guy Reams (01:05:01.771)
were incredibly valuable. And that is, you know, from very, you know, first of all, the company was incredibly careful about resources. So, you know, it, there was a tremendous amount of value creation, you know, compared to the amount of capital that went in. And I think that that was at every stage of the company. You know, JLABS is a good, is a good, you know,
case in point, you you can rent a little space, you can build it up incrementally, there's not a lot of capital expenditure. You know, he started off with a part-time technician, when we had money, we hired her full-time. But Artie had a vision from early on about how he wanted to build the company when he had the resources. And he reached out to people who he knew from prior work experience,
who he respected who had specific domain expertise and he told them, hey, I've got this startup, you know, when when I've got the resources, I'd like you to consider coming and joining us. And and I don't know for maybe the first eight or 10 employees, I think that's how already built the company, he got the people that he wanted. You know, he kept them warm beforehand, we went we went out and raised the resources. So so there was really
foresight that I don't think is obvious from the outside in building that core team. And that core team was, again, incredibly efficient at generating the kind of data the company needed, which was running cellular assays to identify potential lead molecules to explore the technology and shortly thereafter to test those.
in vivo, in animal models. And the speed with which the company was able to do that, the sort of the cycles of technology development, I've never seen it before. I don't know if I'll ever see it again. was very efficient and remarkable. So that's, I guess if you could think about what you want a startup in this area to do, have it have control over its technology.
Guy Reams (01:07:25.183)
its development cycle, you know, to sort of be able to build up the IP and know how around its core technology. With regards to, you know, sort of the financial aspects of the successful exit, the decision making process there was, you know, I think in the end relatively straightforward. You know, we were looking at doing
you know, two clinical trials, not necessarily simultaneously, but we looked at our capital requirements. That was something like, 200 to 250 million over the next couple of years. And we had an offer on the table that gave the company a certain valuation. And we just we just looked ahead and thought, you know, we're going to take tremendous dilution to push the company forward into, you know, sort of clinical proof of concept.
and we could fail. There's a lot of risk in going into the clinic and we just, everybody looked at it and said, no, this is the time to unload the technology to a player who has the resources to carry it forward and guarantee a nice economic return for existing investors and team members. So it was pretty straightforward, at least as I remember the decision-making process.
What's next for you, Jeff? What are you up to? So I continue to do a lot of work with early stage companies. We lead a few financing rounds. I've got companies in oncology, diagnostics, and basically trying to deploy capital, get in early in the company, do...
I'd love to recapitulate this model. don't know if I ever will, but get insight into a company where my knowledge base can be useful, help them out, help them with raising capital, and just, again, be in a position where if I believe that there's significant value being created, that we can make a substantial investment in, both for financial return and to advance technologies that we see as promising.
Guy Reams (01:09:46.935)
Well, let's hope that somebody listens to this podcast and hooks up with you. And that's the next big thing. already I, I, I, I suspect, and I get the sense that there's another, another couple of runs in your, in your, in your future, or at least I hope there is. but I would love to recapitulate Jeff's, you know, what Jeff observed again, I'm confident that Joe and I are ready to do it again. Thanks guy. Thank you so much for being on the podcast today.
Thank you. Thank you. Thank you for listening to this episode of the Founders Journey. You can follow us at foundersjourney.fm for updates on our episodes and to recommend future guests. Special thanks to our primary sponsor, New Fund Venture Group, who can be found at newfund.com.