Building A Global Biotech

Speaker 1:
Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.
Yaron Werber:
Thank you for joining us for another exciting episode in our biotech decoded podcast series. I am Yaron Werber, biotechnology analyst at TD Cowen, and I'm super excited to be joined today by John Oyler in this episode called Building a Global Biotech to discuss his path to becoming a biotech CEO, transitioning BeOne Medicines, formerly BeiGene, into a global biotech organization with an unmatched hematology and solid tumor pipeline and his outlook for the biotech industry given the current geopolitical uncertainty.
John is the co-founder, chairman, and CEO of BeOne Medicines. He was previously president and CEO of BioDuro until its acquisition by PPD. Before that, he was also CEO of Galenia Corp, a biotech company focusing on CNS disorders. Previously he was Founder and President of Telefia, an information company that was acquired by the Nielsen Company. He began his career as a management consultant at McKinsey.
John, so great to see you and thank you so much for joining us, especially as you're heading into a busy ASCO weekend and in the middle of such a transformative growth period for BeOne right after you changed your name and redomiciled to Switzerland and turned profitable late last year. John, BeOne has one of the most innovative pipeline in biotech today with a hematology franchise that is already world leading with Brukinsa that's about to become the leading global BTK inhibitor and then unrivaled the novel solid tumor pipeline with multiple readouts this year.
What's the secret sauce to fostering innovation on a global scale?
John Oyler:
Well, I think that our goal since the company was founded has really been to try to discover, develop, and to deliver innovative new medicines to patients all around the world who need them. And that's the guiding light. And as a result, we really have an environment here that's scientific and entrepreneurial, and that's hard. It's hard to build a culture like that. But I think it's pretty unique to our company. We remain founder led, and it really has the urgency of a startup biotech company with the scale and the expertise of a established pharmaceutical company. And I think that's really special.
And I think if you come by the company, people go in the lab with a sense of urgency, they deliver results. We have these scale advantages, and it's really wonderful. An example of this could be as people staying at night to finish an experiment so they know that the next day we can use that data to design the next series or move things forward, and it just gives you a multiplicative and exponentially increase in overall productivity. That's what it's about is building this culture. People do try to think differently. They're always focused on how to be better and faster, and you feel it when you walk in, this sense of ownership and shared vision.
Yaron Werber:
When I think of BeOne, and we've been covering the stock for several years now, your ability to move quickly is a competitive advantage and your breadth of expertise on chemistry, whether it's antibody engineering, small molecule chemistry, essentially now also ADCs, and we're waiting for that data to come out. So as you think about, even on the basic science discovery, med chem, what's the real innovation? What's the real expertise there? Why is it so differentiated?
John Oyler:
At the start, it's the culture and the quality of people in the organization as I've said. I think in terms of speed, the fact that really the same group of people's been around with this understanding of how important time is because when you grow up from being a small company, there's many moments when you're struggling to make payroll. When you've lived through that, you really do understand that time is money, and it changes your sense of urgency, and it changes your understanding of what's possible because when you have limited resources and limited time and you still need to deliver, you figure out ways to do that, and you figure out how to work closely with your team and create one of these very high performing teams.
And I think we grew up that way. It was never easy, and having grown up that way, it's just built into the culture. And I listen to people if there's 12 different stages to a program, you can listen to someone in the stage who's a scientist, who's a brilliant scientist, talking about here's how I overlap before and after with the functions so that we all as a team can work more effectively and develop a program that's weeks faster. I mean, it's impressive.
Yaron Werber:
One of the real competitive advantages that your team talks about is your global reach and your clinical prowess and just the breadth of expertise that you have enriched throughout different continents and different countries. So enrollment essentially staggered in such way that you can seamlessly move very quickly from one core to another. Your CDK4 program I think is now only about six, maybe nine months, 12 months behind Pfizer, and you started a good, you essentially were able to bridge a year in a short two years. What's the code? How do you do that?
John Oyler:
Even in the early days when we were founding the company, we were trying to figure out how can you make an organization that's going to be lasting and how can you build an organization that has sustainable competitive advantage? And I think that our industry's tough. It's hard to make the return on investment that's needed to bring in the capital to do the research, and the industry struggled to do that.
Early on in our process, I think we got great advice from actually Charles Sawyers and Memorial Sloan Kettering and his comment was, "It's great to be excellent at research, but where all the money and all the time is, is clinical trials." And we studied it and looked at it and sure enough, over three quarters of the cost of bringing a medicine to a patient delivered comes from clinical trials. Research is small single digits.
And when you look at time all the time's clinical development time. And I think in this industry, most companies I know have feedback from their Board, "You're behind on your clinical development and it's the CROs behind. This is how things are working." We actually had a Board call today and one of our Board members said, "This is the only company I've ever worked on where we talk about the fact you're ahead of schedule on clinical trials." This is really from design at the beginning. And the sense was if you want to bring medicine more quickly to patients, you want to build a model that's going to have a better return on investment dollar, you want to be able to have medicine that's more affordable, you need to rebuild clinical trials.
And why is there a problem? The problem's largely most of the clinical trials have been run at the top centers in the top countries. The number of patients has increased marginally but not dramatically, but science is exploding and the opportunities that we have right now to test incredible hypotheses, it's increased by one to two orders of magnitude, and we just don't have the capacity. So everything's backed up and it's expensive because there's a shortage.
And so the general sense was one thing we need to do is figure out how can we build a system that, whether it's here in the United States or in Europe or somewhere else in the world, get more patients into clinical trials, get more centers into clinical trials. And the two things that are really important I think to doing that, one is being able to work where CROs aren't. So we don't work with CROs for the large part. And secondly, it's adopting the latest technology so that you can have everything internal, build your own system and optimize the heck out of the process, which is what we've been trying to do.
So for 15 years in a painstakingly hard process, we've invested very heavily, I think people questioned our investment at times, but now built a global internal team of more than 3,700 colleagues, and this is operationally helping us run clinical trials in over 40 countries all around the world.
And I think today what people can see are the fruits of that investment and of those efforts and because we're controlling our programs, the sense of urgency's there. The sites love to see us, which isn't always their experience with CROs, and we're in sites other places struggle to get to with much higher quality because you have people with a system we've designed for quality that have a real sense of ownership.
As a result of this, we've really substantially optimized the time per dose escalation cohort by being able to anticipate timelines and optimizing speed down to the day, not at weeks, not at months. Really now we're excited about implementing technology to its fullest extent, and because of the virtue of our scale and the fact that we're doing things ourselves, we have the ability to incorporate things like language learning and AI across the whole development organization.
One of the examples we talk about is the CDK4 program, and that program I think entered the clinic and enrolled 300 patients in just 18 months. And for this study, a lot of the patients are from here in the US, but we also went to Brazil and we enrolled a lot of patients there including CDK4/6 naive patients, which really helps accelerate the program specifically for first line. And this is a program that probably came into the clinic about three years behind Pfizer, and we believe we've cut their leadership position probably in half already.
Yaron Werber:
That's even three years. Yeah. So let's talk about with your recent redomiciling to Switzerland, you really are a global oncology player and you were there originally and continuing to grow. More than half the revenues are now outside of China and that's the fastest actually growing segment. But what are some of the challenges of running a large global biotech, different organizational cultures, different time zones, communication's not as easy, streamlining things is not as easy. How do you make that work?
John Oyler:
It first of all starts with culture. One of the things that's always been very important to us is this entrepreneurial and sense of urgency, and that gets you a long way. But I think another part of this was understanding if you want to provide medicine globally across the world, you've got to understand who you're providing it to and what the system is.
For example, with our PD1 in many countries, IV is fine, but a lot of places in the world, there aren't IV centers. The cold chain isn't as mature, so how do you think about getting medicine to those patients? It's a different set of challenges. So I think we knew, even when you look at Europe, what's needed for reimbursement or approval can be quite different than what's needed in the US, at times better, at times worse. From those perspectives, unless you really understand the system in those countries and the patients and the clinicians, you can't develop things the proper way.
Part of the question is how can you be an expert globally without becoming a local company somewhere? And I think from that perspective, it's hard, and our view was we really want to build a company that's global from day one. Part of that was making sure that our leadership team was dispersed across the globe, which it is.
Often on planes, the leadership team is everywhere and wherever we happen to congregate together. I think our next, we just had a big congregation here in San Mateo, the next big congregation is in Basel in a week or two. We travel a lot, and we have been adamant implementers of technology with Zoom and with many of the other workplace tools that enable you to work remotely.
I think that we really tried to study high-tech companies and the way they're able to work remotely and they do very effectively, which has been different in our industry. It's challenging because I think what we're doing is more complicated and more cross-functional and it's not easy, but I think it's figuring out how you truly work globally without declaring everyone who's seen your needs to sit in the same room very regularly to make decisions. How do you find the right ways to congregate when you need to and the right ways to communicate on other things given the evolution of technology and the way we can organize and make the best decisions.
Yaron Werber:
How do you do that? Do you push the responsibility to the senior operational leaders and you still meet as a management team once weekly? How do you actually run that system?
John Oyler:
Yeah, well, I think the first thing we all have to acknowledge is the amount of information that we consume today is, it's not one order of magnitude more than it used to be, it's two because you're getting information at all moments of your life unless you really can turn it off, which we struggle to for hours, we struggle to when we're asleep. The amount of information is incredible. The question then is with all of this information flow, how do you organize and prioritize that and make it available in the most useful way across your organization? And I think that's one of the most important things to being effective, not overwhelmed, and prioritized in a way of working.
In terms of communicating, we communicate time delayed through voicemails and chats. We communicate live through videos and calls. We communicate in person reasonably regularly because you just need to. You need to build those relationships. And we try hard to create the side conversations that aren't on agenda because that's where most of the magic's created. I wouldn't say that we have become as optimal and we're as caught up to the world with everything as where it can be. We are improving like everyone else, but I think we're really on the cutting edge of this for companies and I think we're probably extremely on the cutting edge of it for companies in our space and we'll continue to evolve as the technology continues to evolve and we're excited about that.
Yaron Werber:
Can you also talk about how is BeOne innovating from a research perspective on a global basis?
John Oyler:
Great question. I think for starters, similar to in clinical trials, we've had a view of we want to do things ourselves. We're less CRO dependent than most companies that might have a small team and then ship all of their work to Wuxi or a similar company. We wanted to do all of this ourselves. As a result, we clearly have a big research presence in China because we're doing that work ourselves. We're not sending it out in Beijing and Shanghai in mainland China. We also have a research site in Taipei in Taiwan, and we have a research site in St. Carlos where I'm sitting in California.
But our general sense is we want to do things ourselves internally because we can be better, faster, and improve the system and put information together. I think of course there's huge strengths and capabilities in all of these areas, and we want to be around people that are highly capable and highly motivated, self-selecting for that. I think we'll continue to grow that organization, although it's quite large at this moment, it's been an important part of what we're doing, and it's critical to our success for sure.
Yaron Werber:
And can you discuss your manufacturing footprints as well? That's global at this stage.
John Oyler:
Yeah, I mean the thing we're most excited about is the Princeton site that we built out and launched I think early last year. It's an $800 million biologics manufacturing site and clinical development center just outside of Princeton in Hopewell, New Jersey. That's a place that is 42 acres, and we're talking about expanding it in lots of ways at this moment, but it's a great place to be with incredible talent.
And again, to us, we've had an original center in Philadelphia, I think shifted more north to New Jersey where the oncology giants are. That's where BMS is and Celgene who were our partner for a while and that's where Merck, our original investor and J&J who licensed us assets, these are great oncology companies. There's tons of talent there, so it's great to be there. And Basel on the other hand is the home of Roche and Novartis, two of the other great ones, really the center for Europe from that perspective. We're trying to be all over and just get the best people we can find anywhere and understand all the markets and be able to run clinical trials everywhere because you need to.
Yaron Werber:
And also questions that we're getting a lot is how is BeOne now navigating, there's a lot of uncertainty globally relating to potential tariffs and most favorite nation pricing, how are you tackling that?
John Oyler:
Sure. I think around these IRAs and other example and how that's being administered and such, but it's an uncertain world out there, which is complicated and not good for the industry. It's better to be in a more certain world because we can all plan well. Again in our industry, these are long, huge investments that take a long time to play out, so it's hard in an uncertain world.
I would say that on the Q1 earnings, despite all this uncertainty, we were comfortable with reaffirming our guidance. It does include the best estimates we have for the impact of new tariffs as we understood them at the time. That means we didn't change things dramatically, so it's not a huge piece. I think relative to some of the peer companies in the industry we have, our exposure to tariffs is really mitigated to an extent given that our US supply of Brukinsa is manufactured in the US. And we also have really proactively invested in global supply most recently again with this state-of-the-art biologics facility in Hopewell, New Jersey. These are steps we've made to have a global diverse supply chain, which was well in advance of any of this. We wanted to have that anyhow. It just makes sense. You don't want a center to be closed down. You need duplicity for everything you're doing and you never know what's going to happen, especially seeing COVID and how supply chains can be interrupted for non-tariff reasons.
I think with all that said, we definitely recognize there's a lot of uncertainty remaining, and it's evolving and it's going to change. We try to address that at every moment. We run scenarios to plan for it. And in general, I think we're a fortunate company where we're at a stage that we have a pretty diverse global business, and we have this very diverse supply chain around it and we think we can weather however the world is evolving given this entire focus from the beginning to build a set of strategic competitive advantages that do make it less expensive for us to do R&D than for most companies.
Yaron Werber:
Let's maybe shift a little bit because very few people have built a global company that's now profitable and have been at the helm the whole time. Probably on a single hand you can count how many founders are still CEOs. Maybe so what's the single hardest decision you ever made as CEO of BeOne? Why was it hard?
John Oyler:
Hardest decisions you ever make are both around strategy and honestly, they're around people. Those are hard decisions.
I think around strategy, we've had our opinion scientifically around what may work and what may not work, and I think early in our company scientifically, a lot of people were very, very excited about the EIDO target and our scientific team wasn't. We had options to do things making a bet in that space, and we chose not to do them and chose to do something else instead. And I think that something else instead turned out to be good, but that's just one early decision where there probably was a lot of pressure from industry to do X, and we went a little counterintuitive and said, "We're not going to do X because we don't believe X is following the science, it's following hype."
I think there was another example around the BTK program which has led to Brukinsa, which just is such a wonderful medicine. I love to see the data for that because it makes you feel really proud of what you've done. From that perspective, when we were candidates selecting that program, there was a lot of talk about Ibrutinib as a dirty kinase and the reason it works is the dirt. It's not BTK, so you can never make a compound that will recreate that. But actually we did. We made one that was just dirty at all the same places because that's what everyone was saying, and it was probably misinformation, but that's what every investor we talked to was saying, "What are you going to do?" And the science said you should make something selective that had much better PK that actually could get into the tissues and be there sustainably 24/7, and Imbruvica can't do that and it's working from the BTK activity.
I'm sure you remember, but there was all this ITK story too, which we couldn't recreate that data, we didn't follow that data. And we were having a conversation, all investors are saying, "Be dirty. Which one do we candidates select?" My co-founder came in and said, "This is the stupidest conversation I've ever had. We follow science here. Why are you even having this? We don't follow hype." And we didn't. We picked Brukinsa, and immediately we stopped the conversation and we followed the science, and I think that those are tough decisions in a way because they're counter to what the world wants, but they're decisions that show the character of the organization, its ability to try to do what's right even when it's not what's easy.
Yaron Werber:
I remember that was a battle. Every day we would go to work, go to war about misinformation as you said, because the data always looked very good, but you need to wait for the clinical data, the real outcome data. Let's talk a little bit about you as a CEO. What do you think is your strongest trait as a CEO?
John Oyler:
Having a great team around me, no question, being lucky from that perspective. No, I think that team is everything and really what's important is having people that are by your side that share a vision with you, that are spectacular and incredible and that inspire you and you can learn from every day.
Every company I've done, I've not done alone. I've had a partner and a team. There's tough days. No matter what you do, we all have tough days, and in those tough days, you need other people to carry the burden of things, and every day there's lots that gets done that has nothing to do with any of us. It's somebody really making something happen. And I think it's just, I don't believe that the CEO makes a company, I believe that team makes a company and I think that that's, we're just blessed from that perspective and I think the remarkable thing is it only gets better and we've hired a bunch of people now that aren't entrepreneurs, so Aaron's not an entrepreneur. Aaron's from Merck, he's a lifer at Merck. Xiao Bing is not an entrepreneur. He's a big company guy his whole life, but I got to tell you, they're total entrepreneurs. They couldn't be more. Huge sense of urgency, huge ability to figure things out.
There was a friend of mine who's a CEO, who was a CEO and maybe he's still a CEO, and he said, "You can have bureaucracy even in a company with four people if you're not careful." So small company, big company, that doesn't define what's entrepreneurial. You need to be very careful even in a small company that you fight bureaucracy, and I think that's so true. The best thing is we have a team with a shared vision that is good people, we love each other, we enjoy spending time together and that's the blessing that makes the company special I think.
Yaron Werber:
What part of your leadership style would you say you're still working on?
John Oyler:
All of it. All of it. Positive feedback, always. I think it's really important a team does focus on what can we do better because it's easy to pat yourself on the back all the time when you are talking about what can be improved. People also, they like them both. I think that's something we all can remember. I think that from other perspectives though, everything, how to prioritize better, how to make decisions more efficiently, how to evolve as everything's changing more quickly, how to make hard decisions that you know are the right answer more quickly. All of these things, we're all work in progress and I'm just like anyone else, lots I can improve.
Yaron Werber:
Yeah. I think we've already sort of touching on it, but last question is a little personal touch and humor and in this case, what's your superpower that you really think fueled your success? You mentioned the team, which is critical, but there's something else that you did that got you here and got the company here. What do you think that is?
John Oyler:
I think my superpower, if I have any, is my family. Just having a family that's been incredibly supportive of what I do and understanding of the challenges, and they want to fight cancer too. They hate it. I think that that support is everything because this isn't easy, and there's hard days and there's long days and there's moments when you're tired and exhausted and there's lots of days where what you think is right, people may not agree with. Sometimes you're wrong, sometimes you're right. Having a group of people around you that are very supportive of what you're doing and trying to be helpful and there for you when you need to talk. I think that's the superpower that makes any of us strong and successful in what we do.
Yaron Werber:
Well, John, thanks so much for joining us. Always great to see you and I'll continue to follow very closely. This is one of the most exciting and interesting stories in biotech and there's a lot more to come, so we appreciate the time.
John Oyler:
Great. Thank you.
Speaker 1:
Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.