First in Human Episode #10 featuring Kevin Caldwell

For episode 10, we sit down with Kevin Caldwell, CEO & Co-Founder at Ossium Health.  Stay tuned to find out what trend we’ll see continue as the field matures. First In Human is a biotech-focused podcast that interviews industry leaders and investors to learn about their journey to in-human clinical trials. Presented by Vial, a tech-enabled CRO, hosted by Simon Burns, CEO & Co-Founder. Episodes launch weekly on Tuesdays.

Simon Burns: [00:00:00] Kevin, thank you for joining us in First in Human. 

Kevin Caldwell: Thank you for having me.

Simon Burns: Let’s kick it off with a quick round of introductions. Tell us about yourself and Ossium’s background.

Kevin Caldwell: I’m Kevin Caldwell, CEO and founder. At Ossium, we’ve developed a process for recovering and banking bone marrow from organ donors. We use that bone marrow to make therapeutics to treat diseases of the blood and immune system. We started the company about seven years ago and we’re at the clinical stage.

Simon Burns: Tell us a little bit more about the bone marrow transplant space and some of the challenges in building around that fairly unique space.

Kevin Caldwell: We often think of cell therapies as modern medicine. And many of them are, but bone marrow transplants have been around since the 1950s. It’s, in many ways, the first true living drug. Even though the procedure is well-established and has been done about a million-and-a-half times around the world over the last 70 years, there’s still quite a few patients who go looking for a bone marrow donor and don’t receive one. 

About 40% of all patients diagnosed with Acute Myeloid or Acute Lymphoid Leukemia who go in search of a bone marrow donor ultimately don’t find one. One of the initial inspirations behind Ossium was to dramatically increase the availability of the bone marrow so that more of those patients could receive transplants.

Another longer term and equally impactful application of Ossium arises from having ready access to very large numbers of bone marrow and the cell types that are in it for engineering and use in cell therapies. This could be anything from enabling people who receive organ transplants to live without immune suppression by giving them infusions of stem cells from their organ donors to treating diseases of inflammation like, Graft-Versus-Host Disease or Fistulizing Crohn’s Disease. All of these are things that Ossium is working on at different levels and it’s all rooted in this organ donor bone marrow platform that we’ve built.

Simon Burns: You don’t come from a traditional CEO background. You’re a lawyer, you were at McKinsey, you were at Bridgewater. Tell us about the steps that got you into Biotech and this is increasingly part of the fabric we’re starting to see more founders come from, technology and different backgrounds. Do you think it’s a trend that we’ll see continue?

Kevin Caldwell: I do think it’s a trend that we’ll see continue because, as the field matures, the diversity of skillsets that a founder needs to be successful is only broadening. You need to be thinking about your ultimate commercial and market plan and the impact that you wanna have from before you start the company. 

You need enough depth in the science underlying the company that you can put together a vision for how you’re going to get from your initial idea to an ultimately clinically approved therapeutic. And, you need enough familiarity with the regulatory framework that we all work within to be able to anticipate how to minimize the amount of time that it takes to get to approval.

This is a skillset that really requires expertise in everything from Bioengineering to regulatory law to the commercial dynamics of pharmaceutical markets. Founders that have dabbled in a large number of different areas are gonna be the best equipped to address that going forward.

Simon Burns: What advice do you have for Biotech founders, in general? You’ve been largely successful getting to the clinical stage. Running a Biotech company requires a series of different skills. What, in particular, would you give advice to new Biotech founders around?

Kevin Caldwell: There are a handful of lessons that have rang true for us over the years. One is that part of the- power of our field in Biotechnology is that, in general, companies are developing products, whether it’s a therapeutic or a diagnostic that ultimately will save lives, that will improve the world in a tangible, meaningful way, such that when you succeed there will be tens of thousands, hundreds of thousands of people walking the earth who are able to enjoy their life because of the work that you did. And if your team, people who are employees at the company, partners at the company, if they really live and breathe that, if they internalize that, it can be incredibly powerful.

Despite all of the progress and the innovation that we’ve seen in large scale pharma companies, I think one of the shortcomings of pharma historically is not really conveying a public image to the broader world. These companies are fundamentally in the business of saving and improving human lives. If Biotech founders can really build the mission into the daily operating cadence of the company, it’s incredibly powerful for recruiting, retention, and many things.

Another thing that has proven to be very helpful for us is really thinking about our business model and our product as being co-equally important from the very beginning. One of the things that we, at Ossium, rather than working on a single sort of therapeutic and having one asset and one clinical trial, we really began by developing a platform: our bone marrow bank that could be used potentially for dozens of different applications.

Part of the reason for that is that the nature of research is such that it’s impossible to have too much conviction about what exactly is going to unfold before it does or how long it’s gonna take or exactly how much funding it’s going to take to get there. If you can identify [00:05:00] multiple complementary paths for ultimately having clinical impact, ultimately commercializing and scaling, it will dramatically improve the odds that the overall business succeeds.

Another thing we’ve done is really think about our pipeline as cumulative. We have some indications that we’re able to serve patients very quickly. So the core bone marrow transplant program for example, a bone marrow transplant is a transplant, and from a regulatory perspective, it’s looked at as much the same way as an organ transplant is. It’s not a drug, it’s not something that we invented. But we did do was develop a process for obtaining it from a new source, but because of that structure, it’s possible to ultimately get into the clinic and treat patients and improve lives quicker than if you had to begin with a novel small molecule from the gate.

At the same time, we also have programs that we’re doing in parallel that do involve further manufacturing and engineering on the cells that require full three phase IMD programs. And then we have things in between. We have some opportunity to begin to commercialize within the company’s first five-to-six years, other things that unlock in the second five years, other things in the third. And that overall is derisking to the business and increases the opportunity set. I would encourage founders to try to find multiple applications for the technologies they’re developing.

Simon Burns: At Vial we think a lot about clinical trials, where clinical trials are broken, where they’re inefficient, how to make them more efficient with a particular lens on how to use technology to do so. Now, as a clinical stage company, you’ve seen some of the challenges firsthand. Where do you think there are gaps for technology to come in drive an improvement in inefficiency? 

Kevin Caldwell: Before getting into Biotech or studying law or economics, the very first thing I did was study physics, actually. One of the great unlocks in mechanical engineering which is built on physics, over the last century, has been the transition from needing to really build a prototype of something before you could even begin to test it, to being able to, in a computer simulation, crash a car and get useful information about how the vehicle would actually handle the force of the impact without needing to even build a prototype car.

In life science, the number of variables that we deal with and the complexity of their relationships is exponentially higher than you generally have in traditional mechanical systems. Today, it takes far more computational power to be able to build those models. But, that power is coming and as we approach a world where it’s possible to build useful simulations that can tell you something about how your drug will behave before actually doing the experiments and waiting for your cells to culture or observing your model organism for weeks or months, etc. That will have an enormous impact on the pace of biological research. 

Simon Burns: Last question for your Kevin. XBI went into a bear market before the rest of the market. It’s now a couple of quarters that there’s been a challenging environment for Biotech companies raising money. What advice do you have for companies as they think about raising capital in this environment? What approaches should they take in shifting capital allocation, how should they think about investor outreach, really any advice you have?

Kevin Caldwell: The overall theme of this market is that risk has been repressed and we’ve moved from a world in which investors are optimstic about growth and particularly excited about biotech because of its association with the companies that pulled us out of the pandemic to a world where investors want safe, steady predictable cash flows. Which is about as far from what a typical Biotech, even a publicly traded Biotech is, as you can get. Some things about the structure of this market are and will be fundamentally challenging because of macroeconomic factors that are beyond the industry.

With that said, I think that the practical thing, the most helpful thing for Biotech founders to do is one I’ll say the obvious thing, minimize cost. Because you should not assume that this environment is transient. The safer assumption is that we’re going to be in this more difficult fundraising paradigm for a long time and to build to weather this storm. Two, and this builds on the point I made earlier, if there’s any opportunity to generate revenue in the near term instead of 5 or 10 years out, identify what that is and think about how to put resources against that. Because that revenue is gonna be your best protection against this market.

Three, there are some companies that raised in the 2021 environment and then got results in the 2022 environment that changed the opportunity set associated with those funds. Being really thoughtful about mergers and acquisitions and figuring out is there some other group that actually raised when the market was better that maybe actually shouldn’t finish their phase three program that you can combine with and reallocate those assets towards a program that you have that is more valuable. Those sort of creative MNA structures I would encourage people to think about, too.

With that said, it is possible to raise in this environment, it’s just harder. Great companies with great data can raise. What I would say is that even though it’s possible to raise in this environment, what is challenging is, [laughs], is raising at the kind of valuation that you might’ve [00:10:00] had on your prior rounds in earlier years. I would just encourage founders to be realistic about valuation and just focus on keeping the business alive.

Simon Burns: Well, with that, Kevin thank you for joining us and I appreciate your time today. 

Kevin Caldwell: Thanks Simon. Thank you for having me.

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