172. Growth Investing in Biotech, Genomics and Pharma (Jim Tananbaum)

Jim Tananbaum of Foresite Capital joins Nick to discuss Growth Investing in Biotech, Genomics and Pharma. In this episode, we cover:

• His 25 years in the industry working as both an entrepreneur and investor.. often at the same time
• Jim’s investment focus at Foresite
• The major changes in biotech over the past two decades
• The key elements he looks for in a business
• The main drivers causing more opportunity in the sector
• The key challenges to investing in biotech, pharma and genomics
• The role of data science in their process
• How the experience of building and IPO’ing companies has helped Jim as an investor
• How they target specific areas to invest in
• Jim’s take on predatory pharmaceutical pricing
• and finally how some of these solutions might become more affordable for more people that need them

Guest Links:

• Foresite Capital
• Foresite on Twitter
• Jim on LinkedIn
• The Midas List: Top Tech Investors 2018

1. Jim first began making products that didn’t have enormous cost or uncertainty associated with them.
2. Working with George Whiteside, a Harvard alumnus, he created a series of drugs designed to remove specific items in the body and naturally excrete them like fiber.
3. Geltex launched a Phosphate Finder and cholesterol finder that they launched to market very quickly. Both products were conceived in 1991, filed in 1994, and on the market in 1995.
4. When he sold the company In 1999 they were doing $250M/year.
5. The product reached $1B of revenue in 2007 and maintains that revenue level today.
6. Jim worked for Merck as he started his first startup.  He was Product Manager for Prilosec.
7. Jim predicts there will be larger changes made across the entire healthcare GDP this decade than there have been in the last 20 years, as the usage of data and frameworks of measurement become more prevalent and integrated into healthcare products.
8. His company Foresite was started in 2011 with a focus on data in healthcare.
9. Jim’s goal w/ Foresite was to deliver more than cash investment to entrepreneurs– including resources, information, frameworks, and networks that were uniquely additive to healthcare infrastructure.
10. The key elements he looks for in Series A franchise companies include a) focus on solving impactful problems b) the right management team that understands how to scale c) demonstrated best-in-class products representing a major advancement w/ few alternatives and d) their potential positive impact on the economy.
11. There are no bounds to how genomic information and single cell sequencing will going to be used to influence healthcare over the next decade.
12. The two top factors that are driving change in healthcare are, 1) having large data sets that present patterns and 2) a testing framework to continually evaluate progress.
13. Capitalization in healthcare is a success factor.
14. Jim has veered away from technical risk when investing.
15. As an investor, Jim strives to support products that will have the best economic result instead of focusing on the big IPO and publicity.
16. He looks for entrepreneurs that have high energy and drive in areas that are strategically primed for change.
17. Jim emphasizes the global need for better healthcare products and defines them as products with statistically superior clinical results while reducing costs to the healthcare system.
18. Jim recognizes the expensive costs associated with the majority of quality healthcare and states that over time with a more systematic understanding along with efficient engineering, costs will become more affordable.
19. The surprisingly small pharma market in China is 5% of the healthcare GDP although they have an aggressive entrepreneurial spirit and high-quality products.