Terry Lo - Vizgen - Part 2

Intro - 00:00:01: Welcome to the Biotech Startups Podcast by Excedr. Join us as we speak with first-time founders, serial entrepreneurs, and experienced investors about the challenges and triumphs of running a biotech startup from pre-seed to IPO with your host, John Chee. In our last episode, we spoke with Terry Lo about his Midwest upbringing, studying psychology and molecular genetics as an undergraduate, pursuing a master's degree in microbiology at Virginia Tech and an MBA in finance at the University of Chicago, and his transition from investment banking to corporate development and marketing roles at Bristol Myers Squibb. If you missed it, be sure to go back and give part one a listen. We continue our conversation in part two, talking about Terry's transition from big pharma to diagnostics, the challenges of moving into the diagnostics industry, and the contrasts between drug and diagnostic development processes.

 Jon Chee - 00:01:06: And so after BMS, you're doing international BD. When did you know it was time to move on to your next opportunity? And how did that opportunity come about?

 Terry Lo - 00:01:16: Yeah, so then the next step I made was I went to a diagnostic company called Cytek. It's not to be confused. There's another SightDeck out today. This is a Cytek that was focused on liquid-based psychology. And again, this was sort of a point in my career where, you know, I'd kind of been going through like every few years to make a sort of a slight change or a different change. And I was just itching to kind of do something a little bit different because I've been doing like this corporate business development for a while. And even though I did the marketing stint, I was kind of looking to do, again, something where I felt more operational, more closer to kind of running a business than it was to, you know, be what we call a corporate position. That was the role I took next. And that was based in the Boston area. And that role was international strategy. So at the time, SightDeck was just starting to kind of build out its international presence. And so helping to kind of map that out and figure out what the right infrastructure would be needed. So it was two kinds of challenges for me. One was mapping out now an international strategy, which was actually the role. But secondly, it was moving into a different. Type of industry, which was on diagnostics as opposed to pharma. Yeah. And that piece actually was surprisingly, took me longer probably to pick up than I thought it would. Because I had been, you know, kind of coming up through the pharma side and I was kind of used to how pharma companies work and how you think when you're in a pharma company. I didn't realize that, you know, diagnostics is like a totally different world. Yes. The medical sciences should all be the same, but it's a completely different business and there are different drivers there that happen in diagnostics compared to pharma.

 Jon Chee - 00:03:06: Just to double click on that, like for those who may not know the intrinsic differences between pharma and diagnostics, what exactly were just like when you came in, you're like, oh, this is completely different. This will take me a little bit of time of like learning and adjusting to.

 Terry Lo - 00:03:19: Yeah. Well, I think the first problem was I didn't even appreciate in the beginning, like how different it was. I just assumed it was like the same. And so I could have that mindset, like, okay, this is just like a pharma company. And then not realizing until after time has passed that I should probably think about things a little differently than I used to. And just maybe a couple of specific examples. One is that if when you look at the product margins on a pharma drug versus, you know, a diagnostics on the diagnostic side, like if your company can make, you know, more than let's say 60%, if it's instruments and let's say it's instruments and reagents, like you're looking at gross margins, like hopefully over 60%. And then you're saying, Hey, that's pretty good. And if you're in a pharma company, you know, your product margins on pills, for example, will be like 99%, right? So cheap to make those things, right? And they sell it so expensive, right? What does that mean in practical terms? It means that once a drug has been launched, right, it generates so much cash. That's why people talk about pharma companies being so cash rich. They have tons of cash because they're just, their margins are so high. It also means that they have lots of money underneath that gross margin to spend. They spend it on R&D. They spend it on sales and marketing. They spend it on some president's club and some far away, you know, good way to go toward the organization. So the P&L is different. And so you're going to invest differently in that business than you would in a diagnostics business. And you're going to spend a ton more on R&D in a pharma company than you would in a diagnostics. Diagnostics company. So that's one thing that I thought was kind of a learning experience is kind of think about like how that business model actually works. And then another big difference is that, you know, the drug development process versus the diagnostic development process, right? Two completely different sort of processes and how you think about it, right? And, you know, for a diagnostic and also life science tools, which is what I'm in now, you're trying to design something. You're trying to design a very specific solution and you can create requirements around what that looks like. And then you kind of go through the engineering process to see if you can make something like that. Drug development is so different. Like you don't really, until maybe recently, right? You didn't really try to engineer drugs. You didn't try to design them. You just try to hope that you could find some active ingredient that would work against some sort of indication. And the way that it's really about the drug trials and trying to screen it off and get it through. So it wasn't so much that you sit up front to say, I'm going to make this particular product. Right. You're just hoping that you could find something as you go through this filtering process in drug development. So it's a very different kind of thought process. And. Strategic planning, I think, in terms of what is it that carries that business forward and what do you need to do to invest in that business to make it successful.

 Jon Chee - 00:06:21: Thank you for sharing that because I think that level of nuance is so critically important to understand if you choose to embark on the diagnostics route, tools route, or going pharma, R&D. Obviously, drug R&D has changed really quickly. So it's a brave new world right now in terms of how it's being approached. I just have a funny story about drug development. And obviously, protein folding, very important. And there's been a lot of media coverage on AI/ML being able to help simulate that. My family friend's father is a bear biologist at Berkeley, but also a master origami maker. And Big Pharma used to, way back when, consult him on protein folding, pre-AI/ML, because of the protein folding similarities to origami.

Terry Lo - 00:07:07: Really?

Jon Chee - 00:07:08: Yeah. It just reminded me of that story. I brought the bear biologist thing because that's just what he does day to day. He does origami on the side. But that was drug development. All right. We're thinking about it. Protein therapeutic. Can you help us conceptualize how the peptides are going to fold? David uses origami expertise.

Terry Lo - 00:07:27: Well, that's something you would not have expected to be, you know, something to leverage as part of your career. That's a great, great story in terms of how those things kind of intersected.

Jon Chee - 00:07:38: Yeah. And obviously now we have the computers that kind of run the simulations. But every time we'd have family dinner or meals, he would tell us these stories. We're like, what? This is crazy. And also just a quick question too. You went from BMS to SciTech, which I'm going to assume was drastically different in size and company experience. And SciTech, I'm going to assume, was a smaller company. How was that experience for you going from big pharma to a smaller organization?

Terry Lo - 00:08:07: Yeah, you know, it's probably similar going to a big university to a small college, right? That's definitely more intimate. You definitely get to know more of what's going on, different parts of the business. I think the other thing in pharma, at least big pharma, right? They're huge companies. And again, because they have a lot of cash or they have a lot of profit that they can use to invest. There's a lot of very specialized roles. They're like very specialized. You have someone who can cut paper just the right size, right? As opposed to somebody who's just doing general office work. So it's very specialized versus you go to probably any smaller company. But particularly, I'd say diagnostics, there wasn't so much of that level of specificity. So you get opportunities to overlap in other areas. It's not so clearly defined that, okay, this is my scope and I'm only going to be in this little world. So I think. That was good. I mean, that was great to kind of be able to stretch out a little bit where it's a little bit less defined, right? Exactly what we're doing. It wasn't not such a mature company. So obviously there are huge diagnostics companies as well. So I worked for one of them, which was Roche, that Scitech at the time, which later merged with Hologic. So today that company is Hologic. And it was still very young at that stage. And after

Jon Chee - 00:09:26: that merger, did you stick around at Hologic as well?

Terry Lo - 00:09:29: I did, because as I was doing the international strategy, part of what I was working on was a strategy for China. And the plan at the time as I was kind of doing that was, hey, great strategy about China. Why don't you move over there and run it? So that was my next role. And then the merger with Hologic happened. Hologic at the time didn't really build out a lot of international infrastructure. They were more kind of what we call dealer based. So they have a few people based in different regions, and they just made it a network of dealers rather than having their own direct infrastructure around that time. So it was a little bit unclear for a little while exactly what would happen to that position. But I ended up going over and running the China diagnostics business for Citec slash Hologic at the time. But it did deviate a little bit from, you know, here was the plan I proposed. Right. And that was going to be the plan to execute on. Suddenly, OK, let's. Strip that down a little bit, because that's something we're really comfortable with here. And it sort of changed a little bit in its strategy, but still was an incredible experience, you know, as an expat living out there for two years in China.

Jon Chee - 00:10:43: Very cool. That was my next question is like, how is like adjusting to life in China, business and personal?

Terry Lo - 00:10:48: I mean, it's tough. My Chinese is not great, but just a marginal ability to get around. Again, it was a very exciting experience. It was a new experience. So the company offered to have a driver for me, but it wasn't very practical because like when you actually use the drivers, like they have hours, but that's the hour I'm in the office, right? And so it's really the off hours I need a driver, not the person that I'm in the office. So I ended up just not having a driver and just driving myself. So driving in China was a great experience. That was a very, very interesting thing to learn about. And I think it's true. Like every city, like even in the United States has a different driving culture. But I quickly learned actually, like it looks like driving in China is chaos and then just a mass of cars everywhere. But there's a very clear logic to kind of how they go about it. And the logic is like, you just have to be the first one to that spot. There's no such thing as right away. You just get there first. And then like everyone just like backs off. So, you know, as long as you know that that's the rule, you get along fine.

Jon Chee - 00:11:47: Yeah, it's kind of like that implicit understanding.

Terry Lo - 00:11:50: Yeah, social rules there. So it was good. I mean, there was obviously a lot getting used to. And actually, my wife was pregnant with our first child when we were over there. So we had a little bit of a tricky decision to make whether or not to have the baby in China or to actually have her come back to have the baby in the United States. And the interesting thing was that I, at the time, I mean, as I was saying, you know, SciTech is liquid-based cytology, so it's pap testing. And so I knew all the top hospitals in China because those are the ones that are going to use this type of product in their hospital, all the OBGYN department chairs and all of those folks in China. So I was very familiar with the OB system in China. And that did take a big part of my decision-making to decide to bring my wife back to the United States, have the baby in the United States, and not have it in China. So it was still not quite up to the level. I think that you would like to see a comparative standards of the United States.

Jon Chee - 00:12:50: Got it. Got it. And when you moved back to the United States, was that when you went over to Roche?

Terry Lo - 00:12:56: Yeah, actually, so we did two years in China. So I had the baby at some point in the middle and then baby came back and then we went back to Hologic. So I stayed there at Hologic for a little while longer. You know, the pap test is really for cervical cancer screening. So the larger field that I'm in now is cervical cancer screening. And Cytyc had also acquired a HPV testing company as well. So we also had an HPV test along with pap testing for cervical cancer screening. And Roche was just launching their own HPV test. So that's the role I ended up taking was running their HPV business from California, part of Roche Molecular. And part of my, also kind of the circle, part of this journey is that I actually wanted to get back into something that was more molecular-based, molecular biology-based, which was not necessarily what I was doing, you know, at the time at Hologic. And it's funny because later after I left, Hologic. I bought GenPro, which is a big, huge, you know, molecular diagnostics company. But at the time, I never thought that Hologic would have really the portfolio to focus in on that, in that sort of molecular diagnostics field. So that's kind of one of the reasons I went to Roche at the time.

Jon Chee - 00:14:10: Got it. And did you move to California for the role?

Terry Lo - 00:14:13: Yeah. So we left Boston area at that point to come to the Bay Area to work at Roche.

Jon Chee - 00:14:19: Awesome. And how was the Roche experience, comparatively speaking?

Terry Lo - 00:14:24: It's great. It's a massive company. In California, it was the molecular diagnostics business unit. So they have these separate business units, even underneath diagnostics, that are fairly independent. And, you know, that was, again, another great learning experience, kind of the Roche way of doing things and a lot of structure, a lot of process there. I've heard.

Jon Chee - 00:14:44: Yeah.

Terry Lo - 00:14:45: But it's great to be part of like alumni from Roche. I mean, half the people in the diagnostics field have worked at Roche at one point or another in their career because it's so big. And so having kind of gone through that, it was a really, really good experience. I just met also a lot of great people there as well.

Jon Chee - 00:15:00: Awesome. And I've heard the same thing. A family friends was around during the Genentech Roche transition and is kind of a similar experience in that way. And so you're in California for the diagnostics division and you're kind of like meeting some like stellar alumni and just kind of like a very history diagnostics company. I believe your next opportunity that you went into was PerkinElmer. How did that transition and opportunity come about?

Terry Lo - 00:15:26: Yeah, so the opportunity at PerkinElmer wasn't so much, I would say, PerkinElmer as it was, there was a very specific product that they had launched that I was very interested in. And this is now the first part of, I would say, my journey into what we're calling spatial biology. So it was one of the first commercial platforms that was very successful in kind of creating this value proposition that, hey, there's something going on inside the tissue that you can identify different molecular markers, in this case, protein markers, and really start to understand what's happening in that biology based on this relationship of different cells. And this, to me, started to really, really become very fascinating and what I was thinking would be a very hot, explosive area to move into for the future. And this is now moving from the diagnostics world. To life science tools, meaning that this is not clinical. This is more research focused, at least at this point in time. And they were also kind of on the fringe of that, which was they wanted to bring that actually into the clinical space. And that was part of the thought process of, hey, this is still a research tool, but can this become clinical? And that was, again, what was interesting for me, having a diagnostics background, was to be able to kind of come into that and see if I could kind of help that transition into the diagnostics.

Jon Chee - 00:16:56: Very cool. What were some challenges and triumphs that you experienced jumping into this new field?

Terry Lo - 00:17:00: Yeah. So again, a lot of learning, like it's like starting over again. It's like, here we go again. So certainly a lot of learning, but there's a lot of crossover as well. And I think that's another thing that, you know, I always try to find sort of what's connecting it to something from the past or something I've already done and how do they relate. So for my prior role, which was in the HPV testing, or even before that, which was a liquid-based psychology. So this was cytopathology, you know, it's a field of kind of looking at under the microscope, these individual cells and trying to make diagnosis based on looking at those cells. This is now moving into the histopathology field, right? So it's same kind of pathology. It's just more now on tissue-based rather than cell-based. So there's a lot of same kind of experiences. You know, these are pathologists, customers doing the same types of things. So there's a lot to kind of cross over in terms of, just getting up to speed in this field very quickly. But just some of the specifics around the technical side were quite different, obviously, in what we were doing. So one of the things I was finding is like, when you get into a new role, right, you sort of have this grace period, right, where it's like, okay, I'm new, I'm the new guy, get like two weeks, right, to be the new guy. And usually there's some onboarding plan, right, where you're going to spend the first few weeks learning and training and trying to get up to speed. But a lot of times, depending on your role, you never really get the formal training, like you're supposed to get the training done to learn the technical parts of the product. I've found like over and over having made so many transitions, like that's like the most critical phase. Like you never want to lose that piece when you're first starting into a new role and you have that opportunity really to get the deep dive technical training. Because after two months, you don't feel like you want to ask that question. Like, come on, you've been here three months, you don't know how that works. So best opportunity to kind of learn and really understand and get up to speed is really that first phase. So you have to take advantage of that as much as possible and not let yourself get pulled into, you know, oh, there's this meeting happening or you should sit in on that. You kind of want to separate yourself as much as you can in that beginning in order to be able to get that experience because you won't get that back later. Like it takes so much longer to get that learning over such a long period of time versus what you can do in the beginning in a short period of time.

Jon Chee - 00:19:24: Totally. And that's a great point too, because you're exactly right. Like once you kind of get out of that phase, they're like, okay, here are deliverables.

Terry Lo - 00:19:31: There's no time to do your like, oh, I'm going to sit back and learn. Yeah.

Jon Chee - 00:19:35: It almost feels like you're undergraduate, you know, you're in school, take the classes, do some learning. Yeah. You have to take some exams, but you can go and ask these questions and just like be a sponge. And same way in the company too, is exactly you have the ability to be like, hey, I'm new here. In your head, you can be like, well, I can ask the quote unquote dumb questions and no one's going to snap at me for it.

Terry Lo - 00:19:57: Right. But you only get a limited grace period, right? And then at some point, the honeymoon's over, right? Like you got to be able to deliver, as you said.

Jon Chee - 00:20:05: Yeah, totally. And so you've gone through the grace period, you've absorbed everything in your first foray into this nascent industry. Can you talk about once you got out of the grace period, what were the things that you were doing at PerkinElmer? I know eventually Akoya also joined forces with PerkinElmer, your team specifically. How did that all kind of like transpire?

Terry Lo - 00:20:24: Yeah. One of the things in getting back to kind of what we were talking earlier about that transition from pharma to diagnostics, I mean, this was also maybe not as a dramatic of a change, but still a big change to go from diagnostics into life sciences, which is basically unregulated. So the regulatory agencies and the reimbursement, I mean, they effectively define the diagnostics and pharma industry. Like everything kind of goes through that process. And life science tools, you don't have that. And so there's so many more degrees of freedom in terms of theoretically what you could be doing because you don't have that control process necessarily limiting you. And that's actually certainly one of the big benefits, I think, of being in this field is that there's ability to move very quickly. You don't have to wait for the FDA to tell you, hey, you can't get that launched or you gotta do this study before you can release the product. And you don't have to wait for CMS or reimbursement to come in and say, hey, we're gonna reimburse this amount so now you know how to price your product. So you can move very, very quickly. And that's, again, a change in how you think about how do you develop product and how do you invest behind it. That's one piece. But in our case at PerkinElmer, what we actually were trying to do was actually trying to see, could we move it more into the diagnostics field? We were actually asking to get into that regulated real world. So, you know, certainly it's an enormous hurdle to get through, right? And just trying to understand, particularly when you have new technology that has never been approved by the FDA before, and now you have to kind of explain to the FDA, well, what is this thing? How does it work? And then what would be the right regulatory plan for studies and things to get approved, right? Safety and effectiveness and all of that. So there's not even a defined path there. So it can be very challenging to kind of figure out how to do it even. So we spent a lot of time just trying to figure out, like, how do you get this through the FDA? Like, how do you make it a clinical diagnostic that can go through? And then, of course, none of it really matters unless you have sufficient reimbursement on the back end. So what does that look like? And what codes can we use? Or we have to create new codes? And what studies do we have to show? And what payers do we have to get in front of? So it was a lot of that, actually, which was really more on the regulatory reimbursement side. And trying to solve. For that, in order to say, hey, as we continue to develop the product, this is the pathway that we see in terms of opportunity.

Jon Chee - 00:22:57: That's like a whole world. Everything you just described, it's a very big aspect of diagnostics and getting a drug approved. You know, whenever I think about going from working at the bench to getting that point feels so daunting. It feels like this insurmountable amount of like, I know biochemistry, but I know nothing about regulatory reimbursement. And all of this, you're learning spatial biology, and you're now a regulatory wizard. Or like, you know, you've embarked on that.

Terry Lo - 00:23:27: Yeah, it's certainly very challenging. And I think what's tough about it is even more so on the reimbursement side, because these are things that you really don't have a whole lot of control over. You're going to do your economic modeling, your cost effectiveness, you're going to do your clinical studies and try to show the clinical benefits. But then it really comes down to. You know, there's decision making bodies that decide like how much reimbursement is going to go in. The private payers, you know, have to make these also decisions. You don't control necessarily timing. You don't control decisions. So you don't really know like whether or not this can be successful or not. So there's a lot of risk around it. And it's, you know, potentially a lot of cost, right? Because you're going to have to invest behind getting it forward. So that really has been one of the more daunting things, particularly with these new technologies. Like you're saying, okay. Look, yeah, everyone can see like there's a benefit here. There's added value. There's medical value here. But to get through all of those processes are just very, very tough.

Jon Chee - 00:24:30: Absolutely. And PerkinElmer is a sizable company. You probably had a team. It wasn't just like one person, like this is your job. It's kind of like you have experts who may have done it before. Well, that

Terry Lo - 00:24:40: actually was not so much the case. I mean, we did have regulatory people there. Certainly there was a clinical side to PerkinElmer, but it's sort of a different field. And I think this ultimately was, you know, without getting into sort of too much of the detail here or what went behind closed doors, part of the spin out for my business there, which was the Phenoptix platform and merging it into Akoya. I mean, we weren't looking to spin out. And part of the reasoning from the PerkinElmer management at the time was, look, you know, we don't have a kind of infrastructure that's going to be able to resource this. So we're like, we'd have to build this. And guess what? We don't have a budget to build it. So. Probably is not going to be as effective as you would like it to be in PerkinElmer. So maybe we can find a different home for this to be able to continue to drive that forward. And that really was on the PerkinElmer side and my business side, how we sort of moved out. And the reason why I think both sides felt like it was a good idea to kind of separate out. And, you know, it makes sense. It's not, it was not a core area for PerkinElmer. So they would have to just build and invest in it. And it would be very difficult, I think, within their sort of financial structure to be able to do something like that at that time. Yeah, so then that's how then I ended up at Akoya Biosciences because we were looking either to go as a standalone, right, as a standalone company. But it just so happened that there was this other company called Akoya Biosciences Biosciences, which was pre-commercial at the time. And they were planning to launch a product that also looked at proteins in tissue. So this time even more proteins. So this is where we thought, hey, that would work well. We could put together both platforms under one umbrella and then we branded it the Spatial Biology Company, which we did. And that became sort of the new Akoya Biosciences Biosciences at the time.

Jon Chee - 00:26:33: Awesome. And it is interesting too, because like Perkin Elmer's kind of large company and Akoya Biosciences is a smaller outfit than Perkin Elmer. How was that process, this kind of like acquisition merger M&A event? What was your experience with that? Being a part of a larger org and then joining forces with a smaller org?

Terry Lo - 00:26:51: So the first part was there's a transactional piece to it, which is, you know, how do you negotiate the deal? Between PerkinElmer and Akoya. And when I say Akoya, it's really the private equity firm that owns Akoya or majority of Akoya, right? So they're negotiating on like, okay, what's the price? What's the deal terms? All of this stuff to be able to divest it out and then integrate it into Akoya. And for me, it was such a interesting experience because I was literally on both sides of this, right? In some respects, I'm PerkinElmer, trying to help manage that part of the deal process. And, you know, I'm a big fan of PerkinElmer. So I was able to make it go through. On the other hand, I knew I was going to be brought over into the new Akoya. So those are sort of my new best friends on that side. So I had to play both sides. And so some of the deal discussion, I was left out because, you know, I'm kind of conflicted. But in other situations was just as challenging, kind of trying to figure out how you balance your role in that transaction to divest out, you know, as the PerkinElmer side, or I'm kind of representing now sort of the Akoya side as the buyer. Of the business. So that was probably the first piece of it. But it definitely was going into now what was a really small company at the time. So we brought over, I don't remember how many people we brought over from PerkinElmer, from my business, but it's probably like 35 people or so, and maybe 15 people already at Akoya. So, you know, the company at the time, maybe when I started, was like 50 people combined. Now we're at a scale that's completely different than what I'm used to. It is a really kind of startup scale company at this point. Although what we brought over was a more established product line, which was already generating revenue, was already part of a business. So at the same time, we had to manage that as a business without really having a lot of scale for the company.

Outro - 00:28:46: That's all for this episode of the Biotech Startups podcast. We hope you enjoyed our discussion with Terry Lo. Tune in to part three of our conversation to learn more about his journey. If you enjoyed this episode, please subscribe, leave us a review and share it with your friends. Thanks for listening. And we look forward to having you join us again on the Biotech Startups podcast for part three of Terry's story. The Biotech Startups podcast is produced by Excedr. Don't want to miss an episode? Search for the Biotech Startups podcast wherever you get your podcasts and click subscribe. Excedr provides research labs with equipment leases on founder-friendly terms to support paths to exceptional outcomes. To learn more, visit our website, www.excedr.com. On behalf of the team here at Excedr, thanks for listening. The Biotech Startups podcast provides general insights into the life science sector through the experiences of its guests. The use of information on this podcast or materials linked from the podcast is at the user's own risk. The views expressed by the participants are their own and are not the views of Excedr or sponsors. No reference to any product, service or company in the podcast is an endorsement by Exceda or its guests.