John Simboli:
0:00
Today I'm speaking with Pat Aronsdorf, co-founder and CEO of Exai Bio, headquartered in Palo Alto. Welcome to BioBoss, Patrick.
Patrick Arensdorf:
0:09
John, thanks so much for having me on board, it's wonderful to have the time to talk to you and to talk about our story.
John Simboli:
0:16
What led you to your role as CEO and co founder at Exai Bio?
Patrick Arensdorf:
0:20
I've actually been in the diagnostics and biotech industry for about 20 years now. And I became involved in Exai Bio, after leaving a previous company and becoming an entrepreneur in residence at University of California, San Francisco. And almost the first person I met was one of my co-founders, Hani Goodarzi, who is a professor and the expert RNA biologist that really came up with the basic idea that became Exai Bio. Soon after that I met Babak Alipanahi, the third co-founder, who is and AI-ML guru out of Google. And so what you have in Exai is kind of combination of our best and worst features. Between the three of us, I think, we actually made something quite unique. But I've been in this field for quite a while. And UCSF actually was asking me to look at many of their ventures. Of course, all this happened in the midst of the pandemic. So the amazing thing about this is I'd say that a lot of the founding and the teaming occurred all through Zoom. And so it's a different way of doing things than what we had in the past.
John Simboli:
1:41
Was it pretty clear that this was going to be the one? Was this one of many? I presume it was, how did you go about knowing finding out that this was the one you wanted to pursue?
Patrick Arensdorf:
1:50
I actually looked at many different things during this period, and, you know, I think that Exai Bioo, where it really differentiated itself was, it had a lot of opportunities that I didn't see in my previous liquid biopsy companies, in terms of being able to actually work with very small samples, as well as things that had been archived in bio banks by researchers for years before. Diagnostics is kind of unique in that a lot of it is about the sample, you can actually prove a lot of things through observational studies, as well as through bio bank studies that others have done before. So you get this insight into the future by going into the past of a freezer, where things have been stored at minus 80. So with Exai, we could actually prove a lot of these things, actually, in the period that it was still at UCSF, before we actually got our first venture funding.
John Simboli:
2:44
Did it occur to you at any point during those early stages to say to yourself, this is interesting, I think I'll take this to an existing diagnostics company or an arm of a large corporation and see if they're interested? Or was this clearly something you had to build from scratch from the start?
Patrick Arensdorf:
3:01
When UCSF first brought me in as an EIR, that was one of the first questions they asked me. And I think that the reality is that in many of these things, especially when they're really new, it's a new modality to, in our case, to look at cell-free RNA, as opposed to DNA and circulating tumor DNA that so many others have been looking at—you really have to create a new market, and a new awareness about the technology. And so I think that in this case, it was very clear that there was a lot of dogma out there, that cell-free RNA was a molecule that degraded very rapidly, that we had to break down, as well as we had to show across multiple studies that we could see a good signal repeatedly. And so that was one of the things that I think it took a little while to do. And it's something that you kind of need a company focused on it to initially do. That's not to say there aren't partnership opportunities with large companies. And I think that the closer to the clinic, they are, you know, for example, pharmaceutical companies, those are real opportunities for us to show our technology can give unique insight. And I do think that we'll be working with lots of large and small companies over the years.
John Simboli:
4:18
Was there any point in which you thought yourself, there's got to be an easier way to make a living than what I'm setting out to do? Because I know what it takes to build a company?
Patrick Arensdorf:
4:27
Well, I think that that's always been a question. But I think the thing that keeps us in this industry is because of the desire to do something good for mankind. And to really just see, there's nothing more pleasant than seeing what a patient could actually get as a different opportunity because of an answer in your test or your product. And so, yes, I while I do agree, it might have been easier to stay in the financial services industry and, you know, doing mergers and acquisitions or things like that, which is where I started my very early career, I really do think that we do these things, not because they're easy, but because they actually are deeds, and that we really can make a difference.
John Simboli:
5:07
What was it that you were seeing it Exai, early on, that told you there was a gap to be filled? There was something in the scientific principle here that met a need that was not being filled?
Patrick Arensdorf:
5:18
Very early on. Hani Goodarzi really showed with the I-SPY Group at UCSF, that not only could he detect residual cancer after treatment, but he also could actually even subtype the patient, you know, see the different hormonal statuses, whether someone's ER or PR positive, or HER2 positive, all through a very small one mil serum sample. Light bulbs went off in my head that, hey, if you could start doing this before you do biopsies, you could actually move more targeted therapies earlier to patients. And that's,I think, the the secret sauce is that we can actually get at that underlying cancer biology, not merely say that you have cancer, but also say you have cancer of a type that can be treated in a certain way. And that's really where the promise is and what really got me involved. To a large extent, what people have focused on has been mutations, but many mutations are just bystanders. Unfortunately, as we get older, mutations build up, and if they build up in the wrong place, cancer ensues. But the vast majority of them have no function. Because we're focused on RNA, not DNA, we're actually dealing with when that blueprint of DNA becomes function. Many of the RNAs that we're involved in actually have regulatory function. In fact, before I was even involved, Hani actually showed that if you blocked some of these RNAs, you could reduce the speed of cancer progression. And so it's clear that in many cases, there's a therapeutic possibility, as well, and not just a diagnostic possibility,
John Simboli:
7:01
Would it be fair to say that your life up until becoming a co-founder at Exai, that part of your professional life was as a serial co-founder, serial founder?
Patrick Arensdorf:
7:12
I've definitely been a serial founder, I've also been a small angel investor involved with angel groups here in Silicon Valley. A part of that on the investing side is I feel there's a strong obligation to give back, you know, I certainly have made mistakes in my career. And, as they say, the school of hard knocks, share some of that scar tissue with others in that situation. At the same time, I feel I've still have a few startups in my own bailiwick. So I actually really enjoy working with founders at the earliest stage, and really coming up with the strategies of how is this technology going to make the biggest difference to patients. Because that really is the difference between winning and losing quite often in startups. There's lots of startups that go after opportunities that maybe won't really move the needle, from a point of view of clinical outcomes. Typically, that relates to whether they're going to move the needle from point of view of actually being successful financially and as a business. And so a lot of my work is trying to bridge that technology to market gap. I think that the typical founder comes from purely a technology or biology background. And trying to translate that into markets is kind of my job. My passion, actually, is that a lot of these technologies actually have 10s, or sometimes hundreds of applications. And it's really about choosing that path.
John Simboli:
8:41
When you got into it and found yourself, you know, knee deep in building Exai Bio, what did you find out about that process that was perhaps different than what you thought you might encounter going in?
Patrick Arensdorf:
8:54
I'm a strong believer, having done this a few times in crafting companies, and really trying to build for the outcome in terms of really choosing teams that share not just filling in the capacity gaps technologically that you need, but also sharing common values. And I actually find that that minimizes the surprises a little bit. When I first started out doing this, one of the recipes is to get diverse people. Well, that's great, as long as they can work together, that they share a common passion. Increasingly, I'm finding that although you might hire a person because they have a special capacity, you tend to break up and fire them really because of whether or not they fit well with the organization that you're building. And so I actually think that with Exai, it's pretty notable that the things that even in our earliest plans are actually coming true. We haven't had to pivot. It's really been about bringing the right people together. We just actually had a big off-site with our team which has gone from zero to 35 people in three months or so. And it was talking about the values that we share as individuals, and we had almost perfect alignment, it was just a delight to actually see that, to see people not only know what their goals are, but you know, the value side is about what happens when your goals are ambiguous? What happens when you get data that maybe is less than clear? For Exai, one of our values is integrity, and really trying to look at the data and seeing what the data says to us. Whereas I think many companies sometimes lose their way in those types of things. We actually, I think, have a core shared value that makes it much easier to have those hard discussions sometimes. And every startup will have hitches. That always happens. And it's really a question about building a resilient organization that can get through those.
John Simboli:
10:55
When people who are perfectly intelligent, but just don't know the biotech industry, when they say, what have you been up to, Pat? What are you doing for a living? What do you say?
Patrick Arensdorf:
11:03
We work on blood tests that detect and help physicians cure cancer. That's basically what we do. And it's, it's pretty straightforward. Now, the detail is, what are we detecting and the biology and all that, but it's very visceral for somebody to know that, out of all the cancers that are out there, less than half of them have any screening at all. And so there's a huge opportunity in what's not screened. And then the other part of it is everybody has an experience in their family of somebody who has suffered through and hopefully survived cancer. And that path is almost never linear. It's almost always about did this therapy work ? Do you have this particular biology or gene? Or when will I wait for the pathology report to tell me what the next step is? And it's a horrible journey. And so how we can help that journey in people even who have diagnosed cancer, I think is some of the earliest opportunities. But there's both a totally unmet need, as well as there's a current methodology that I think can be improved really rapidly.
John Simboli:
12:11
The description of why you're doing what you're doing seemed clear to me. The question of how do you spend your time is always an interesting question. So sometimes, the loved ones will say, but what are you doing all day, dad or husband or wife? And then of course, that brings up the question, how does the CEO or how's the founder know how to prioritize? There's no real cookbook for this sort of thing. So how have you tell people what you do all day?
Patrick Arensdorf:
12:38
It appears that I meet all day. And I think that is true to a certain extent. But I think that there's different kinds of meetings. And right now, you know, a lot of what I'm doing is building the team, and making sure that the team has the strong foundations on how they communicate with each other. Some of the meetings are really about just making sure that across the organization, we have commonality of knowledge and are pushing in the same direction. Others are really about, you know, we have lots of young high-potential people mentoring, and those tend to be more one on one meetings. Certainly I do spend a lot of time, as well, externally meeting with physicians, meeting with people like yourself, in terms of communicating our story. So the joke that I say to my kids is that honestly, if the CEO is doing well, they actually don't do anything, they just meet with other people who really make things happen. And, you know, the key thing is about attracting those people, allocating the resources properly, so that they actually have what they need to get their jobs done. And supporting that communication, so that we actually, when we get to the next stage, we can effortlessly hand things off between different groups within the organization. As CEOs, you do have to be a firefighter at times. And especially when you're talking about, let's say, a section of the company that you still haven't hired for. And a lot of your work is, let's attract the right consultants until it's right to hire for some of these positions, you know, because some of it relates to where you are in the product development cycle, for example. But it is something where there are surprises every day, that's okay, that's part of the spice of life. So you just have to build that into your expectations. And I think that after a while, there is some pattern recognition that does occur. And perhaps the fires don't seem as burning or as threatening as much as that's a statement of stage, the stage that you're at, and, you know, what you've just discovered is that you have some new additional needs that maybe you didn't have three months ago. And when you're moving rapidly, that actually is the realization that you just need to be able to anticipate as early as you can. So you can hire ahead of need as opposed to be caught in a bind because you don't yet have the right people. That's my big lesson. I mean, I think that early in my career as a CEO, I often waited too long to start building the organization in certain areas. And I think that I've now become much more forward looking in terms of that. I also am much more aware of how long it takes to hire the perfect person. And so you have to build that into your repertoire of always looking for these types of people. And if we have to move a headcount forward a few months, because the perfect person is available, that is worthwhile.
John Simboli:
15:34
When you were eight, or nine, or 10, or whatever the formative age might have been, and you are trying to, as you recall it, you were trying to picture what kind of grown-up you might be, which I'm sure for almost all of us is, what did our parents think, what do we think our parents want us to when we got to be big people? Do you remember that time? And does that have anything to do with with what you're actually doing professionally?
Patrick Arensdorf:
15:55
I was born and raised in Hawaii, actually, in Honolulu, and about seven, around that time, I moved to Maui, where I'm still, I'm one of five children. I still remain the black sheep of the family that went away and didn't come back. All the rest of them are definitely enjoying the good weather and the healthy environment out there. But back then I kind of knew that I was a little different. I think that my family probably views me as a mutation or aberration in terms of how different I am. And I actually dreamed about being a physicist, actually being a scientist and a physicist. I then went away to college, went to Princeton, where there was Einstein and a whole history and tradition of physics. And I quickly realized that I was not a physicist. But what I was was somebody who could really explain science well and build stories. And I had an entrepreneurial bent as well in terms of running various businesses. And that actually led me to the finance industry, even though I actually had made it clear to myself, being from a family of healthcare workers, my father, a doctor, my mother, a nurse, knowing that I wanted to potentially look at biology. When biology became more industrialized, and became more molecular, it started intersecting more and more with physics. And so in my undergraduate years, I switched to actually being one of Princeton's first year of molecular biology majors. And I think that some of the insights of that being very quantitative, are increasingly being able to be applied to these problems, especially now, with the advent of next-gen sequencing and the massive amounts of data that we work in. In things like liquid biopsy, where I am, it's all about sifting the meaning out of what usually is a very huge background of everything else. So in all these fragments of RNA and DNA, and blood, basically, there's only a few of them that really relate to the cells of interest, the tumor cells. And so a lot of what we have to do is do massive amount of data analysis to separate the signal from the noise and the background. And so I actually think that it's a theme. I it's not what I thought I would do, I knew I wanted to get the heck out of Hawaii, which is kind of a strange thing to begin with. But it's always been a very quantitative science. And even on the business side, I've always viewed it very much as a quantitative discipline, you know, we have to really let the data speak to us.
John Simboli:
18:39
When people ask you, who is Exai Bio, how do you like to answer that?
Patrick Arensdorf:
18:42
I do think that we have a particular phenotype of somebody who is really an explorer of new technologies and where they can take it, as well as somebody who is very much a scientist at this stage, but with a real direction towards making a clinical impact. Amongst our values, it does deal with exploration, of course, any startup it has to deal with teamwork, but there's a strong push for integrity. And in terms of, how we do our work, how we actually do the right science before we do the clinical trials, how we're really going to prove the clinical evidence that's necessary for people to adopt products in the end and, and to ultimately make the difference for patients.
John Simboli:
19:32
What area is Exai Bio, investigating that is unique to or a specific to Exai Bio, that you're really focused on, that maybe that others are not?
Patrick Arensdorf:
19:43
Unique to Exai Bio really is, it's a blend of, I'd say, wet lab and data science in that we actually have people who have extremely deep software, data engineering, AI and ML background right next door to people who really are great molecular biologists who live and breathe enzymes and different reactions to be able to do these workflows. And it comes together in a wonderful way in the data in the end, but they have to really work hand in hand. So it's kind of a systems issue, in that you actually have to bring all these different expertises together. And that's, that's actually, a great joy of mine is to bring all these different components together, and meld it together into a team that really works well together and is productive. That's actually I'd say, is the most underrecognized product of startups is really these new teams. At Exai each of us founders actually came with two or three people on day one that we brought right into the organization, whether it was people that Baba had worked at Google or Hani had had as postdocs, and as researchers within his lab. And for myself, people had worked with me at other companies, Bluestar, all the way back 15-20 years. I actually have a few people that I've worked in three or four startups together, that all came together. But it is that mix of the different skills that really makes us great as a group.
John Simboli:
21:18
In what way are those elements being brought together to meet the needs of patients and physicians in a way that there's a gap?
Patrick Arensdorf:
21:26
I think that a lot of what we're doing as a diagnostic liquid biopsy company is to try to figure out a way to, from a relatively small and simple blood sample, get answers that previously only could be done through surgery, through biopsy and invasive procedures. And it really is an effort of, again, this data team or this microbiology team, to extract that kind of data out of the a huge amount of background of, of proteins are a very rich environment of nucleic acids in blood, separating it from background signals that might be the blood cells themselves and things, things like that, to actually you get a very clear answer. And an answer that's actionable by a clinician. And so it what we're allowing is for someone to get an answer much earlier, that lets them go and treat a disease that frankly, you might not have a huge amount of time if it's left untreated. And so I do think that the the value that we're adding here, directly relates to what is the technology? And what is the the application in terms of non invasive liquid biopsy diagnostics is, as opposed to the traditional surgical biopsy and wait for the pathologist type of model that most standard of care is still built around?
John Simboli:
22:49
And then why is it that the RNA approach is the path that gets you to where you're going?
Patrick Arensdorf:
22:54
The RNA approach allows us to have several advantages. One of them is that we're dealing with the transcriptome, as I mentioned before, which is more about being closer to the biological activity and the function of cells, as opposed to DNA, which is more about the blueprint, as opposed to the actual construction and building of things. The other part of it is that RNA is actually actively released from cells, exosomes, continuously while the cells are living, whereas some of the competing products that focus on circulating tumor DNA, those are only released when the cells die. And in CTDNA, circulating tumor DNA, typically, in a given cell, you only have two copies of every gene, RNA often gets amplified many-fold. And so many-fold and continuous, that equates into a better sensitivity. From a bioinformatics point of view, we have also looked for very specific molecules that relate to cancer but not to normal. We actually have done this through very large population scale tissue cohorts, as well as now plasma cohorts, where we actually are able to fish out what is really different here than what you'd expect to see in a normal. And so that's where the bioinformatics side is really critical. We're often looking for a pattern of things. Because in any given cells, there's a lot that's going well across the diversity of cells in the body, all of which are leaving the remnants in the bloodstream somewhere along the way. We actually have to pick out that pattern as being something that's representative of a cell that has many things going wrong with it. And so it really is a cross-disciplinary team that's necessary to do all of this. And RNA really gives us a whole set of advantages and sensitivity as well as specificity.
John Simboli:
24:48
If Exai continues to develop as you hope it will—the success of Exai's technology, what would that mean for patients and clinicians?
Patrick Arensdorf:
24:57
I think our vision really is of a world where cancer can be detected very early, when it's still extremely curable, it can be actually characterized accurately, when we can actually take a very targeted therapy, as opposed to a therapy that might have to be systemic, like chemotherapy or radiation, which is obviously a standard of care in many cancers nowadays. And ultimately those two together will allow a cure. In fact, I think that what's going to happen with technologies like ours is that we're going to be able to push the envelope so much earlier, that cancer will become more like a chronic disease, where we really will be able to see it at the earliest stage and maybe through different therapeutic preventive approaches, will actually be able to reduce the impact of cancer. That's the long, long vision. In the short run, there's a lot of work to actually help patients that are here today. The patients that actually already are diagnosed with cancer, and where using a liquid biopsy sample, you can actually monitor their therapies and actually see whether recurrence is occurring, and whether there's residual disease. But in the long run, I think that these kinds of technologies hold the promise of bringing cancer to be very different and established, as opposed to life threatening and shocking phenomenon. And I do think that the reality is with increasing life expectancies, increasingly cancer is the thing that starts hitting us all, in the end. The longer you live, the more likely you are to get cancer somewhere. And it's really going to be about do I detect it early enough to prevent it from becoming a major issue?
John Simboli:
26:39
How do you like to talk about the pipeline, and how is that an expression of your vision for the company?
Patrick Arensdorf:
26:43
One of the things that's so great about this RNA space, is that with a common assay, that actually we look at all the different small RNAs in blood, we actually can serve a lot of different applications. And so I actually think about us a lot more like a pharmaceutical company. And so you have individual indications where we have a lot of synergy on the product. And perhaps you can view it like it's a molecule that actually has different indications that it can go into in a therapeutic setting. And we have a large program that spans different indications, each one of which is a market in itself. And I think RNA and this assay allows us to have that opportunity. We have two major thrusts. One is in molecular residual disease. So within a patient already diagnosed, being able to monitor therapy and really see when treatments are successful or not, and if not, to potentially give information and insight on what to switch to, as well as to follow after therapy to see if there's recurrence. And the other thrust is really in early detection. And that may be in screening in cancers that have no screening, but also in cancers where there currently is screening methodologies. For example, in mammography, where there is actually a very high recall rate for patients to come in for a second scan. I think that's one of the areas where actually having a molecular biology scan, in addition to the imaging scan can bring new value. And in particular, in areas like in dense breasts, where we actually have a large number of women every year are told that their mammograms are not as accurate because of the density of their breasts, it doesn't mean that they have cancer or even pre-cancer. But it means that the existing screening tool is not serving what we need out of it. And I think that's where doing a liquid biopsy that actually gets the biology can add huge value. So those are the two thrusts, molecular residual disease as well as early detection. Within each of those, we have individual indications based on the clinical setting, but it's all held together by a common technology.
John Simboli:
28:59
When you describe for, let's say at an investor conference, some of the things you've been describing to me, the two main paths you're going down and different indications that you're working in and and how the technology platform connects to all that. Sooner or later, there's someone in that investor audience who likes to say, Okay, well, that means you're an X company. And I would think with your background, in the investment world, you sometimes find yourself saying, well, actually, no, we're in the Y category. What is the X and the Y? How do you get people back on track?
Patrick Arensdorf:
29:35
The big area for investors that I see the confusion in is whether we're DNA versus RNA. The vast majority of liquid biopsy companies really are focused on DNA. They may not any longer just be focused on mutations. In fact, they've moved to things like the methylome so methylation patterns, or the fragmentome, the what is the weight pattern in which small pieces of DNA get broken in cancer versus normal. And what we're doing is RNA, and it's just very different, in many ways, from the most fundamental scientific way in a way that it's released from a cell. And so that's often what we have to differentiate from is, why is it that RNA-based therapeutics have different indications and different abilities than a DNA-based at a very fundamental level. But that's usually the category that we have to most distinguish from. I think that the diagnostic space is actually quite large. There are things that are not liquid biopsy altogether, there's things that focus on tissue, and so on. Most people don't confuse us with that. But in the liquid biopsy space, they usually think that, Oh, you must be another circulating tumor DNA company. We probably also focus a bit more because we have this biological insight on potentially looking at what therapies might work and a little bit more of the partnering opportunities with pharmaceutical companies where I think there really is a great story about how, by detecting earlier, we actually increase the size of markets for targeted therapies that we might be able to see the, through RNA, the applicability of a therapy to a given patient earlier,
John Simboli:
31:25
Pat, what kind of companies are a good partner for Exai Bio?
Patrick Arensdorf:
31:28
I think that the natural partners for Exai Bio, really are pharmaceutical companies in the oncology therapeutic space, where quite often their current drugs are selected by a tissue biopsy-based process to begin with. And in many cases, that biopsy process really is for expression or for proteins that you really can't get from the DNA alone. And so by doing a test from Exai Bio, we actually can start to see that non-invasively, which allows us to do that earlier, as well as get the answer back, not just more quickly, but also continuously. So after you've maybe resected a tumor, you still have the ability to monitor. And so you actually have the ability to see whether the patient is changing with response to the therapy. And in many cases, the cancer changes. It's not unusual in breast cancer, for example, for patients to subtype switch, 30% or more patients might switch their hormonal status during the course of treatment. And being able to measure this non-invasively allows you to actually move to different therapies in a cancer where you actually do have choices. And so I do think that we create new opportunities there both in earlier patient populations, as well as in terms of giving a second chance at therapy, when resistance or when subtype switching is occurring.
John Simboli:
32:59
This combination, this space that you're working in, it really is the way you've described, the way I understand it really is . . . you must wake up almost every day and say, I realized now what I didn't know before, which makes it all the more thrilling. It must be fun.
Patrick Arensdorf:
33:16
It honestly, it's like a candy shop every day. I come in every week. And then we have new data, because what we're doing is also very high throughput. And the ability to use archival and bank samples that might be a clinical trial, that didn't work, but we don't understand why or an observational study where patients who've been followed for many years, and suddenly get new meaning out of this frozen sample. It's just delightful. And it is mind boggling at times, it's like, wow, we can actually see that difference that you didn't anticipate, It's really important for partnering not only with pharmaceutical companies, but with great clinicians that have taken the time to annotate their patient populations properly, and store their samples properly. But when it all goes together, it's just like a amazing, revelatory moment. And it's coming, like, almost weekly, which is great as we go through each program, as we go through different cancers. Every week brings new results.
John Simboli:
34:23
What aspect of thought leadership is most appealing or most engaging to you at this point?
Patrick Arensdorf:
34:28
There's no more engaging discussion than with a clinician who immediately says, Wow, if I could do that with the blood test, I would actually be able to help that patient so much faster, or better. Or I would have been able to anticipate this where, unfortunately, we had to continue on what's really a horrible systemic therapy with lots of side effects. If I had known that, we would have switched to something earlier. And that's what really inspires us all is that conversation and it's not not necessarily about thought leadership than it is about leading ahead in terms of thinking about now, what would I do with this. And that's what really, really inspires us to the next day. Now, there are great scientific discussions about trying to understand pathways and biology and how the all these things linked together. But the thing that really engages me is is talking to clinicians who say, this is a real need. And this is something that if I had this tool, you know, I would do something different, that really would help that patient.
John Simboli:
35:35
Thanks for speaking with me today, Pat.
Patrick Arensdorf:
35:37
John, I really enjoyed the discussion and the opportunity to talk about Exai Bio. I do think that it's great how you actually give us the opportunity also to see how we see leadership. And I do think that that is one of the things that we hope to distinguish ourselves as a company, in the people that we hire and the teams that we build. So thanks very much for the time and hope to talk to you again.