BoB@JPM: Stefan Scherer, M.D., Ph.D., 3T Bioscience

Dr Sher , it's a pleasure to have you . Thank you for joining me .

So take us back to that , yeah , that inflection point in your life when you decided you were going to move into pharma yeah , definitely so I was always interested basically in medicine and this was one of the careers I was early on in my in school thinking about to to go in medicine or bio life sciences , so to say so at that time .

Basically , then I I actually I got a , I got a place in med school . I started it liked it became md and was treating patients and that was very rewarding and this is a very nice . It's a very nice job it's . It's um , I really liked it , enjoyed it to help patients , to treat patients and see basically the success , so to to say you have .

What I was missing there a little bit was the deeper science .

I always wanted to understand not only how to treat patients , how to diagnose patients , and I also wanted to understand what is the cause of the disease , what drives the disease , what makes the cancer basically cancer , why does it come to a situation that cells mutate and proliferate and don't stop ?

And that was a piece which was at the time when I studied , so to say , not so much a part of the curriculum , so , and then I decided at that time to branch out basically into a separate PhD and after that I spent some time in Albert Einstein doing research and then actually came , the inflection points here , to say what to do in a way , how to combine

one and the other in in medicine and science the best way .

And and that's kind of what drove me to to industry , where I thought basically drug development is a piece where medicine , clinical experience , but also basically science and scientific input , how to develop the drugs , which kind of mutations , which of disease , which kind of conditions to treat , kind of matches .

And this is the moment where I thought , okay , I try it out and give it a shot . And then started in industry and enjoyed actually the complexity , enjoyed also the interaction with basically , as I said , patients on one hand , still science on the other , but also basically the business aspect came in .

As I said , patients on one hand , still science on the other , but also basically the business aspect came in and I found a fascinating triangle the medicine , the science and the business .

Because at the end of the day , in order to keep innovation going , in order to develop the next drug , you need to return some of the investment right .

So it means the drug needs to be successful in the market and in order to get there , you learn early on that it's not only about science and medicine , it's basically also you need to serve the patient and the shareholders . And in this business aspect you learn gradually in the process of being in big pharma and drug development .

Certainly it's amplified in if you work with , with venture partners or in vcs , like what I did as an eii in westlake and later on . That's certainly amplified because this is kind of not only to help one company and one truck to come to the market . You want to amplify that and do this 10 , 20 , 50 , whatever the capacity of the fund is .

On the other side and and this is something which you kind of , when you want to bring your truck to the market , you need to understand what's the competition right ? Can I enter the market ? Under which condition can I enter the market ? What's the pricing scheme looking like ? What will be access ?

How can I even make it possible that patient can get to the truck ? Right ? And this is , globally speaking , very diverse and in this aspect , basically , you learn this very early on in a way that business and commercial parts matter equally as much .

So then they look for people who come with relevant experience in the field of medicine , translational medicine , biomarkers , but also basically the commercial and business aspects of of truck development , and with that , basically they give you the opportunity to basically look a year , in a way prospecting so what kind of company you want to work with or you want to

build , actually with Westlake in the background , so to say .

And this is really a year where you spend time looking at tons and tons of opportunities right across the board and , with the help of fest lake , you also have a lot of freedom to kind of branch out and talk to check , to check transfer officers , talk to universities , basically talk to pharma , because they want to out license some molecules which then they're of

strategy , they don't want to do from a development perspective . So you learn a lot . It's it's it's really enriching .

And then after a year , kind of in a way for me it was nine months basically I landed at 3T and was doing basically the due diligence and identified the opportunity for T-cell biospecifics as one of which we certainly were supposed to invest at that time . And this is how I transitioned later then from Westlake into 3T Biosciences .

And this platform was outlicensed and the team was kind of trying to industrialize the platform , to make the platform more high throughput , to make it basically a platform which is not only academic and scientific , which also can kind of bring trucks to the market and bring and identify molecules . At the end of the day , we can treat patients .

When I joined , this was kind of a wider portfolio of opportunities and in various directions cell-based therapies , t-cell biospecifics , etc . So it was very much a research company .

And then we were sitting down and looking what is the best opportunity to take it forward , what can we really do with this platform in order to serve patients , to help patients and being a little bit more on the forefront of science and next-generation medicines .

And then we identified the opportunity basically that T-cell bispecifics could be the niche , if you want , where 3T can play and which is coming in the next three , four , five years , an important modality for treatment of patients . And then we focused the company purely on T cell bispecifics and solid tumors .

Second , it has also the components of AI , ml , in a way embedded in truck development . So the complexity of the platform , the complexity of the data , is beyond the human brain . So in order to analyze this and in order to match that basically with human proteome and these things , you need much , much more sophisticated methods .

And that was something basically early , early days in AI . I mean now is a very different story , but in this one that was fascinating for me , the opportunity , so to say this platform gives right , and it's not only a thing . We can go in oncology , I mean , could go into immunology or immune diseases .

You could even do vaccines , so to say , with cancer vaccines or others , I mean , and we're not pursuing these opportunities mainly also for reasons of focus , and but the diversity and the opportunity does with a new modality , kind of , was something which drawn me to 3T .

Ai , ML I mean everybody loves that if it's working effectively . What's your sense right now of sort of market receptivity to the platform concept versus the lead compound that you're working on ?

Then all the biotech crisis came right , a downturn came and all these things , and this was also beginning of COVID 2020 , 2021 , right . So , in this way , in this case , and the whole thing shifted to a much , much more de-risked model .

So people wanted to have assets which are in the clinic phase one , phase two , in essence , basically , who kind of more de-risked than a platform early , early on assets , so to say , yeah , then you as , basically , as entrepreneur or as ceo of a company , you have to switch strategies because we we invested in platform , right , and we wanted to have to run

basically to develop a pipeline , to develop a portfolio and bring it to the clinic , et cetera , and this takes years . Yeah , the market condition shifts in much less than this many years . Actually , in half a year , the market condition was totally different .

So we had to refocus , right , and then this is where we refocus basically the company fully on the asset we have as a lead asset . We continue to do pipeline .

We did some business deals with Bering-Engelheim in order to kind of substantiate and have access to additional resources , and this was basically where we then ended up in order to make the lead compound further successful and were actually able to bring it to a development candidate .

And now in the ind phase , yeah , when you're talking out investors , basically what many want is a pipeline , a portfolio and something in the clinic . Of course they do , they want it all exactly so . And I mean and even now in jp morgan we talk to companies and then in the clinic is not good enough anymore either . So they want basically then clinical data .

Yeah , right , so , which means end of phase one , phase one , b , phase two , whatever . And this goalpost shifting thing is interesting to maneuver , but it's from a cash runway perspective it's relatively difficult because it's almost unplannable . Yeah , yeah All right .

When you went through that phase , what did that mean from sort of a personnel and management standpoint for you as the leader of the company ?

We also had to make the decision on personnel right , because if you plan for a big portfolio , if you plan for a big portfolio , if you plan for a big pipeline in a way , five , six , seven trucks to develop more or less in parallel , you need a different set of of scientists right in the company .

When you learn to need to focus , basically , you focus your company on on one or two , what we did , basically assets and but also you need to kind of , in a way , focus your company , your hiring plan , your development plan from people and a resource perspective is very different , you know , and then you take actions on this as well .

Right , and cut down on on people , you cut down on on the hiring plan , you , you really focus the company on all aspects in order to to do this and this is managerial , not easy , because not only it's hard decisions , it's also difficult to decide , so to say , when you have two , three compounds in the lead , which one you want to process right forward and

progress forward , and uh , and that's uh . That was a lot of , let's say , strategic meetings , um discussions , deep dive in data in order to find , basically , the molecule we found . We thought it's the one to go forward .

And the molecule we identified comes from a patient who suffered colorectal cancer and this was a patient who had this mismatch repair stable MSS colorectal cancer and these cancers actually are generally not susceptible for IO .

So any IO treatment in MSS has not been successful in the past and that we identified this target , so to say , out of these patients was high percentage in this patient , looked in how many other patients could have that and really were surprised because 80 to 90% of colon cancer patients have this target .

And then we got a little bit lucky here , if you want , right in a way , with this target . And then we thought , okay , this is a big market because colorectal cancer , especially MSS , where IO is not working in second and third line , there is not much available for these patients .

You know , the PFS in first line is about a year , the PFS in second line is six months , in third line is three months . Yeah , so it goes very much down . So there's a high unmet medical need .

So that kind of couple of things came together where we thought this is a good target right , and the target is involved in DNA repair , in genomic stability , so it's very high expressed in tissues which proliferate . So by nature tumor cancer is a high proliferating tissue , high proliferating disease , if you want .

So it's a high expressed target in this disease entity . You know , we also see it in normal tumors , this target in much , much less frequency and that basically provides us a very good therapeutic window , you know . So that we feel we won't have , we won't hit normal tissue , we won't hit normal expressing tissue but we will definitely hit tumor tissue .

And that's where we kind of felt like that's a target which is worthwhile to pursue Because it is expressed in high proliferating tissue , it's not only in colorectal , we also see it in triple negative breast cancer , we see it in non-small squamous and a few others .

And that of course again comes back to choices , right , because we cannot run a phase one trial in five different indications . So that's the second time you have to make , basically to make a decision what is your lead indication right ?

And that's where we decided , as the high unmet medical need is in many of these indications , but we went for colorectal cancer .

But that poses for us a different risk , right , because we work with someone who is not necessarily experienced in the field . So we went to the big guys right , so to say , and looked at those who have done this in the past , who have shown they can do it , et cetera . And there is actually quite a lot of capacity available right in in general for this .

And and the manufacturing takes a year , no matter with whom you talk , right , so it's the same timelines roughly yeah , yeah , all right .

So whatever other sort of dynamics or forces come into play , let's unpack that a little bit .

Biopharma and the people who worked in 3T and still working in 3T and we continue to need them . There's no change very much .

Researchers , right , they help to develop , identify the targets , help to develop the targets , and basically protein scientists , protein engineers , who really help to put this molecule , the complexity of the molecule together that it can be manufactured . Now , going into clinic , you need people with clinical development experience .

Yeah , so we have to add on skills to the company which we didn't use and we didn't need before . Right , so now , kind of the company transitions again into more clinical stage part . We need to hire , like , people with the cmo background . Right , we need people with clinical development experience , clinical operations , regulatory affairs , et cetera , et cetera .

So those are the skill sets .

We're also engaging , of course , search firms right to help us with the right talent , because if you work in such specialized field , it doesn't help me if I find a clinical developer who has never done T-cell by specific cell-based therapies or anything .

So you need to find not the needle in the high stack , but you need someone who has the relevant skill set right in this one , and that's not so easy , right , because if you want someone who come in and lead and put his stamp , so to say , on the program , I mean we need one who has a relatively speaking short learning curve .

Yeah , and this is what we're currently looking into . So to find a CMO , find a VP of clinical looking for clinical operations , these people is what is our hiring plan for 2025 .

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Yeah , and I imagine that hiring up in anticipation of clinical development is sort of the tip of the spear on another inflection point , and that would be funding First you've got to pay for these people , then you're going to have to pay for some clinical trial activity , which is , which is not , uh , inconsequential money .

so tell me about preparations for that .

I mean clinical trial is double digit millions , and so we need to kind of make sure we resource the company adequately in order to get through the clinical trial right . It doesn't help me if I have money to get in the clinical trial but cannot finish it right . That that's not fair to the patient , as it's not fair to the investors .

That's not fair to the company . So we need to be clear that we resource the company adequately for that . So we are now in the race of a B round , so we're targeting 80 to 100 million . For that . We have raised from insiders who have been investing in the company previously , currently about 45 million .

So let's say we're halfway through , yeah to to the fundraise and we're using jp morgan and of course , also post jp morgan and the next couple of months to close the round , um , with another 40 to 50 million . Yeah , what's ?

What were you , I guess , what sort of the temperature of the investment community community for this move into clinicals and what maybe is standing in the way .

For example , immunocore was was able to put chemtrack on the market for uvul melanoma right , which is very helpful because it shows it's possible right and it shows a molecule like that can actually really treat the disease or can retreat patients right . There is others in development . This is more cs , cancer testis antigens like MHA4 , mha8 , also PRAME .

So these developments basically help . What is a bit like what we hear often is exactly where I think 3T can shine in this way is the cross-reactivity , because the people are a little bit afraid with these molecules and side effects . These molecules are really , really active , so it's really a hot molecule if you put it into the patient , right .

So what it binds , it kills , you know , no matter if it's normal or no matter if it's tumor , right . Of course you want tumor , you don't want the normal . But what you actually target is actually a kind of a 9 , 10 , 11 amino acids .

It's a very small peptide , so the risk that you find a similar sequence or a homology-based thing elsewhere in the body is not zero because it's very small right , so that you find something which is equal , either equal or homology , equal from a sequence or from a structural perspective . These two things we need to exclude .

And in previous experience in the clinic you have seen really very bad side effects , you know so . One prominent example is mage a3 . Yeah , so people put a head of against mage a3 and then they said a cross-reactivity with titan . Titan is a molecule which is expressed in cardiomyocytes . So what happened ?

Actually , the patients died on cardiogenic shock because the , the molecule killed the heart and not only the tumor . And there is other molecules where basically , side effects not of this magnitude , but similar side effects have been preventative of developing these tumors further .

And that's where we think the platform we have helps , because we can kind of reduce these cross-reactivities in these molecules significantly compared to what has happened in the past .

That's an uphill battle , right , in order to explain that to investors , because they know this data , right , and I've seen this data so to explain them that the molecule is relatively , relatively speaking , safe .

You know , I mean we will see side effects in the clinic , right , like CRS and a few other things , no doubt on this end , but we won't see these terrible side effects , right what others have seen and have experienced . That's basically something you need to explain to investors , and this is not easy in the current market .

Yeah , yeah this is not easy in the current market ?

Yeah , um , we are not disregarding pipeline and certainly not disregarding platform , because , as I told you , investors are more attracted to if you have a platform , you have a pipeline and the molecule in the clinic or close to the clinic , right , so try to fit the bill .

Yeah , and we try to make this a situation where we kind of be kind of in the sweet spot , if you want , you know , for investors .

What do you do as the leader of the company to sort of obviate for that , to prepare for it and be in an agile position to shift if necessary ? Is it even possible ?

But you can say , okay , we pause the target ID , which we have done to a large degree in the part we had to focus on the lead molecule , right , and now we would do similar things .

Basically , so we kind of yeah , if you want , putting less emphasis on the , on the pipeline and on the platform , certainly the highest , the highest investment and resources go in the development of the drug and bringing it into the clinic , because this is where the value is right . This is where the value is in general .

This is where the value is in general . The second piece , basically , would be developing trucks which are coming after , you know , the second and the third molecule and then the pipeline .

That the target ID would then kind of really pause and with a platform , as I mentioned before , this is not too difficult , right , and you're not destroying value directly because you keep the platform alive , yeah , but you're not basically running it and and running hundreds and thousands of samples over it yeah , what does it take from a resource perspective to keep

a platform alive , because I mean it , theoretically , it makes perfect sense , right ?

So in that essence , you need to keep a core activity on the platform going , even if you don't do it right . And I mean , in our case it's actually relatively kind of fortunate , if you want , because we're using the platform not only for target ID , we're also using it for de-risking .

So in any molecule we bring to the clinic , we need trace and the trace platform basically also for identifying cross-reactivities . So and this is the minimal part of the platform we would leave alive , right , we would not do target ID , but we leave it for cross-reactivities , and this is just a different use of the platform , but it's still the same platform .

So in this case , we're not losing people , we're not losing competencies , we're not losing expertise . We would just shift the resources to a different purpose of the platform .

What are you looking to accomplish and how are you spending your time ?

Um , I think the big advantage is also , you meet , you have easier access to senior leaders in the company , right , if you want to have partnering discussions and um and bd business development discussions or kind of also with investors , etc . Etc . So this is easier because that the leadership , the decision makers , say to say , are now at one place .

Yeah , right , if you reach out to a company , then you go through search and evaluation , you go to to bd , you go to this and it takes .

It takes a couple of more steps , right , in order to reach the decision makers and to reach , basically , the people from development , research , whatever you need in order to progress the discussions you know , here it's all kind of at one place and the meetings kind of happen directly , with more decision makers at the at the table than it is in other things .

So what we do at the moment is this kind of an starts at 8 and ends at 11 . One is every day , so I need a bit of a vacation after that .

Right , you have roche , novartis and others , and I mean , as these companies are also restructuring and and people looking for new opportunities , etc . Etc . Not everyone can move to san francisco and everyone can can accept a us contract in a way .

So we made the If they can't come to us , we come to them , and then we opened a small office in Switzerland and that enables us access to talent and so at the moment it's more like development people a few there , so to say it's very small , but as we grow in the clinical space we may grow this as well further .

Yeah , is that home for you or is San Francisco For me ? It's actually a mix between Europe and here , so I'm frequently here and officially my home is actually in New Jersey .

What is how much prep work goes into that , like making sure that you're going to be in the right place at the right time , creating meeting opportunities in advance of coming here , or are you just so good you can , like walk the streets and recognize all the people you want to meet with ?

So you , you know , former friend from roge is now at gilead , another one is that is at novartis , and so on , so forth , so you can reach out and say , hey , can you connect me with a , b and c right who may be interested in looking at our target , right , and this goes both ways , right , so to say , and um , and then you , you get connected and you get

contacts to the people who are relevant in terms of bd , but also basically who are relevant in terms of development and research , to make a decision in order is that a molecule this company may be , may be interested in and wants to have in their portfolio , or not ?

Yeah , so that's how things work right in this way , and it's a lot of relationship , business right . And this is also why JPMorgan is good . It's kind of you meet them in a let's say also a quote , unquote social setting , you know , at various receptions , and this and that , and then you can interact . And canions and this and that , and then you can .

You can interact and can connect and that speeds the things up hence the going until 11 pm , exactly .

Uh , you know , I I feel like I feel like the tone is a little bit more stable now . What do you think Like ? What do you think Like ? What's your gut tell you about 2025 in terms of you know , some of the activity that's going to make the world go around for biotech ?

Right , people talk and we're getting these conversations but in order to make decisions , I think the change in the administration right in a week essentially makes people a little bit pause . Right ? So you say it's , it's calling for unpredictable . Probably what will happen under the new , ex new administration from all perspectives , geopolitically , tariffs , right .

What will happen with pharma , um pricing , um m a and all these types of things ? Right , will there are restrictions which we have seen or some people experience ? Will they be lifted ? Will they not ? Will the tariffs come ? Will the economy go up , go down ? These types of things are .

Everyone has a different perspective and I'm not a banker , I'm not an economist , but but when you speak to the people , a lot of them kind of saying we will wait maybe a month to two , so probably to march , something like that get a feel where the world is going .

You know where the things are going with the new administration and then I think , if that is quoting quote positive or neutral to what we see now .

So we're waiting basically to get our first kind of GLP materials , you know , glp-gmp materials in our hand to run kind of in a way in vivo tox studies , so to say , with organ widths and this that will tell us if what we have seen in cell lines and what we have seen in preclinical thing holds true in , uh , quoting what human samples you know , and and

materials .

And then we really gearing up with writing the phase one protocol , um preparing interactions with the fda and probably ema in europe , um to have eventually present representation of the clinical trial on both sides of the Atlantic , you know , for patient recruitment speed and also introduction into the market , you know , to get physicians familiar with the molecule etc .

So that's kind of where 25 will be a busy year , a very busy year . In addition , we have to recruit the talent we need in order to make that happen , especially on the clinical side and clinical execution side , clinical operations .

So that's the next piece which will come and then hopefully by the end of the year we can push the button and file for the IND . Yeah .

But yeah , I'll let you know .

This is the Business of Biotech , coming to you from JPM 2025 . We drop every Monday morning , so we'll catch you next week and thanks for listening .