BoB@JPM: Tom Chalberg, Ph.D., Genascence

Dr Tom Chalberg is leading the charge , I'm Ben Comer and I'm Matt Piller , and this is the Business of Biotech , jpmorgan 2025 edition , and we're here in San Francisco with Dr Chalberg to learn about his role in driving gene therapy from the stuff of academic research centers to a doctor's office near you .

So I'm curious when you were coming out of academia with those degrees , was pharma like immediately on your radar or was it an opportunistic move on agenda working in pharma ?

You know genetics and and you know basic science . But I was really always interested in genetic medicines and the idea that , you know , we could use this new knowledge in genetics and in molecular biology to treat human diseases . And so at the time , I joined a lab that was really , you know , more than basic science .

It was interested in the applications of , you know , gene therapy and in this case it was really an early form of gene editing in order to help technology assessment and technology development in preclinical models of disease .

And so I was really always interested in , even when I was in grad school , in how do we use this technology to bring forward improvements to human health . And you know , I was actually a Howard Hughes fellow and that was part of his vision of the Howard Hughes Medical Institute was how do we always think about furthering human health ?

And so when I was looking for a job , you know , genentech was , you know , absolutely one of the greatest places to work and it was growing massively at the time . This was back in 2005 .

And I started in commercial operations and then marketing because I really wanted to learn about the business of biotech and sort of how does that end of the spectrum you know exist , and sort of really being the endpoint for what we all do now as development stage biotechs is to kind of bring forward medicines to make them available to patients who have , you know

, big needs and and and help them live their lives .

I was , um , you know , despite being in Silicon Valley , you know , in the early two thousands and , and I think you know , um , maybe now I would say entrepreneurial by nature , but I certainly didn't know that at the time I was , uh , you know , definitely um , enjoying , you know , big company life and it was really , you know , just an opportunity that came by ,

that said something that I had worked on and been close to a grad school , you know , started to form the ideas of a company and so , together with , you know , some great mentors and co-founders , we decided to to kind of have a go at it . And , you know , if you think back , that was actually 2008 .

And if you remember 2008 , it was a very difficult time for his money .

But , at the same time , I think you know , during these down cycles are really times when you can think about innovation . You know , in a more quiet way , you don't have , you know , very well-funded competitors that are , you know , trying to outpace you and , as an entrepreneur , I think often we have to think about , you know , where , where's the puck going .

How do you , uh , you know , not imagine what everybody knows is going to be great today , because it's really hard to out-compete .

You know companies that are more well-resourced but , um , you know what , what is going to be possible in three , four or five years and how can we start working on that now so that , once you know the rest of the you know investor community and world takes notice ?

You know we've made some progress and have you know some kind of um , uh , you know um already had start an advantage basically over over a well-funded competitor .

Rare disease will come in and out of fashion , or you know CNS , or you know now , immunology is a buzzword , I and I . Immunology and inflammation is something people spend a lot of time . Car-ts were hot for a while . You know ecology everybody remembers that wave no-transcript interested in something before the field is .

And I think that's where , you know , entrepreneurs you know spend a lot of time and kind of think about okay , this has come a long way , but nobody's noticed it yet . What's the overlooked area that we can capitalize on with this ?

And sometimes I think you're right and sometimes , of course , you're wrong , but in the end that's part of where entrepreneurs can fit in . The ecosystem is sort of in this area , sort of before the big well-funded competitors take notice .

Um , you know , sitting around looking for new projects . And you know , some academics are terrific entrepreneurs and start many , many companies and they start all of their own projects and some would rather , you know , stay in academic labs and sort of let the technology licensing offices you know , prosecute the opportunity .

So I think , you see , you know a huge variation across the board , Um , but you know , as , as someone who you know developed this interest in entrepreneurship , you know there's certainly opportunities if you look for them where exactly , as you say , there's , you know , projects and discoveries that are waiting for you know , because universities don't sell things Right ,

they don't manufacture and sell drugs , and so there's , of course , always a handoff to industry at some point in the process .

Where are we going to be a year from now ? And just sort of being filled with this uncertainty around the future , right , and sort of oh my gosh , where's our next funding going to come from ? We don't know what the data are going to say .

And having , you know , grown up and spending your time in school , where you really have quite a lot of control over you know , your whatever next grades , your project in grad school , your project at work , where you kind of have a pretty , you know , clear idea of the progression of your career , and so on and I could certainly see that , had I stayed at

Genentech , that it was so different . Being an entrepreneur and sort of the stress of that is actually quite real and quite significant .

But then sort of realizing that you know , when you take step back and take a moment of like , this is why we're here , this is why entrepreneurs are doing what they're doing because it's risky , because it's uncertain , and sort of letting that , you know , watch over you and drowning in the , in the uncertainty of the position , and going from there to okay , we

don't know what tomorrow's going to look like , we're just going to make good decisions along the way and follow the there to okay , we don't know what tomorrow is going to look like .

We're just going to make good decisions along the way and follow the data and , you know , listen to advice and try to build something that's valuable and then you know , hopefully , good things happen , yeah .

Deerfield were starting and it was based in Boston . So I spent most of my time in Boston for about a year , year and a half to get that off its feet , and that was a great experience .

It was awesome to work in a different biotech market you know we'd been in the Bay Area to get to know the Boston ecosystem a little bit and to work with some terrific investors and a great board and some really terrific operators as well .

So that was always designed as temporary because I wanted to move back to California and so in 2016 , came back and since then , really have been doing , you know , formation and seed investing , and this means , you know , starting companies , putting you know capital in the first you know , couple million dollars and really , with the idea of , can we de-risk some of

the key elements so that we can get to a place where it's really fundable at a bigger level , and so that really involved tech transfer from universities , designing some experiments that we thought could add a lot of value , and then building the rest of the story so we could go out and pitch it to , you know , later stage investors who are ready to fund later

stage work . And so the first project that we did was Cyclos Vision , and this was founded , you know , right about that time , 2016 . Um , cyclas Vision , and this was founded , you know , right about that time , 2016 .

And it was , uh , you know I had the great pleasure of working with um Jay and Maureen Knights from the University of Washington , who had this terrific um technology for myopia and um , basically , they had , you know , developed this hypothesis about how myopia works , and they had even done a very early clinical test with kids wearing special glasses that could slow

down the progression of myopia works , and they had even done a very early clinical test with kids wearing special glasses that could slow down the progression of myopia , and I thought this is pretty interesting . Now , myopia people really don't appreciate . I think in the United States it doesn't have quite the visibility and it's for the market .

We're a little myopic here about myopia , um , but when you get into the field a little bit you realize that this is an enormous problem in east asia and singapore and china and taiwan and japan , where almost everyone has nearsightedness and one in five people , by the time they turn age 18 , have severe nearsightedness that can lead to ocular complications and other

kinds of retinal problems later in life . And so um , cyclist vision Cyclas Vision was a terrific project . You know , my co-founder , michael Furtick , came from the tech world and we started this company together .

We licensed the technology from University of Washington and built a company , ran a phase through trial which was really successful , and um ended up selling the company to Cooper Vision , then spun it back out into a joint venture , a standalone joint venture with Esselor Luxottica .

Product's been very successful and is selling very well in China and ultimately helping kids see better , which is so gratifying . So really credit to Jay Knights and Maureen Knights and their team at University of Washington for having the vision to create that product . You know , after Cyclops we've done a couple of more companies that are really in this formation .

You know , spirit of putting the first capital , transferring technology from the university to the company , building the company and trying to get it through the initial stages . One has been Genesance , and we'll talk about that .

The other is , as you mentioned in the introduction , a separate project for Glaucoma coming out of Trinity College of Dublin , and so both of those have been major focuses for , for for for me for the last several years .

Well , it's like right in the name , gene therapy , genetic disease , and so a lot of people were sort of having this one-to-one correlation of gene replacement , genetic disease , mendelian , you know , trait , and this has been , you know , successful for a lot of companies , a lot of investors and patients , but not a lot of patients , right ?

So , because these areas are , you know , very severe , high in need , but tend to affect fairly modest patient populations , and so , you know , even going back to Avalanche , the idea was , you know , we know that this target is important , but delivery is a problem . So how can we get away from injections into the eye every four weeks for the rest of your life ?

Wouldn't it be nice to have something that lasts longer ? And can gene therapy be used as a biofactory , if you will , to create the protein ? You know ?

We say , instead of making it , you know , over in South San Francisco in a big bioreactor and then splitting it up into millions of patients , can we inject something in one patient's eye and have those cells themselves make the therapeutic protein that continues to last . And so that's been a hypothesis for you know , a long time .

And I think there was at first resistance , which is unfamiliarity with this idea , because gene therapy and genetic disease sort of went hand in hand .

But as people started to think about you know we've learned so much about the manufacturing , the regulatory , the quality control , the immunology of these gene therapy vectors how can we sort of leverage all of those tools into major diseases that affect a lot of people that still have very high end need . So certainly osteoarthritis is , you know , leads that list .

Drug delivery to the joints is very , very difficult . And recombinant proteins or small molecules , whether you inject them in the joint they quickly leave the joint . If you inject them systemically they really don't reach the joint in very high concentrations .

And so how do we sort of flip that narrative into a local , long lasting delivery following a single injection ? And so you know it was Anita Caravalla , who's our co-founder at Genesance , who had become familiar with this project when she was at Pittsburgh University of Pittsburgh in graduate school and sort of brought this idea of .

You know we're interested in gene therapy for comedies , can we do this in joints for osteoarthritis ?

And so we , you know , worked with Chris Evans , who had moved from Pittsburgh to the Mayo Clinic , and his other longtime collaborators , Paul Robbins and Steve Ghazani , to take the technology that they've worked on so long in terms of the molecular mechanisms of osteoarthritis into a commercial entity and be able to bring that forward in terms of real development .

Um , his longtime postdoc went from pit to university of Florida and had um , in large part actually been attracted to be a Florida because the vet school has a very active um equine uh research program and so , um , you know , it turns out that horses actually get naturally occurring osteoarthritis which turns out to be the closest thing to the human disease , that

that we see in the preclinical world . And so that the ability to you know model that in horses and then um , and use that large animal model and I think that's been a really a key success factor for gene therapies is the ability to scale up in preclinically so that then we can just scale over .

And you think about the early experience and you know , leprous congenital hemorrhosis for lexterna or in , you know , with the hemophilia products , where those were , you know , proven out in large animal models before going clinical , and that was sort of the ability to you know really learn a lot um with these preclinical models .

So you weren't kind of scaling up and moving into humans at the same time . You were doing it , you know , sequentially , and I think that's been a key success factor for the field .

The mare developed osteoarthritis and I took the horse to the Cleveland Equine Clinic and had images taken and the veterinarian came out after taking the images and said the good news is this horse's arthritis is so progressed that it doesn't know which leg to limp on , so you can't tell that she's limping half the time .

And she's very safe for your daughter , because she's not going to want to jump , so you prompted that story .

It's just that it's local in one or more joints . You know , as we age and , of course , brought about by , you know , like many diseases of aging . You know complex etiology .

But we think that by blocking interleukin-1 , which is the lead inflammatory actor and also causes cartilage degeneration In fact the original name for it was catabolin because it catabolizes tissue that by blocking this important central bad actor that we can hopefully have an impact for patients that we can hopefully have an impact for patients .

I mean one times 10 to the 16th total vector genome particles , right , or more . That's a lot of vector to manufacture and the cost of doing that is very high and and these are rare diseases .

So it's justifiable to charge high prices because you're having a huge impact on the patient's um , you know , health and outcomes and lifespan , and so all you know , whether it's a gene therapy or protein therapy , rare disease medications are more expensive , right .

But when you are looking , thinking about bringing this forward to a very common disease , you face a totally different pricing . You can't charge three million dollars for a product and you wouldn't want to be completely economically infeasible .

And so the idea is OK , if we , if we want to charge something that's a five figure price tag instead of a six or seven figure price tag , how do we go about doing that ? Well , one of the things is that the cost of goods needs to be . You know , in order to be a business , the cost of goods needs to be much lower of goods needs to be much lower .

So you know , thinking about that , systemic doses and common diseases are currently , you know , not workable because the systemic dose costs six figures to make . You can't sell for five figures , that's not a business .

But you know , the diseases that we've worked on , whether they're ocular or whether they're intra-articular injection , are far lower doses , like 10,000-fold lower , than a systemic administration and that means that cost of goods are very approachable if we scale in the right way that we can get it down to the four figures or maybe the high three figures in terms of

the cost of making these therapies . So at the same time I think we run into other sort of new challenges , right ?

So when you're charging a very high price for a drug , you know the way that these companies for rare diseases currently think about distribution is they work through distributors to kind of take orders , but oftentimes they ship directly , you know , on dry ice or on liquid nitrogen , to a tertiary academic medical center who has all the hospital , pharmacy and facilities

to be able to receive that , to store it for as long as they need and then to administer it to the patient , and the several thousand dollar cost of doing that shipment is inconsequential right to the price and the overall cost of the medicine .

I think in common diseases , you know , we're facing a very different kind of a dynamic where , if we're trying to make it and deliver it to the patient for , you know , $1,000 , a $2,000 shipping cost is completely impossible and infeasible , right ?

So what that means is that you know we need to do this through sort of a traditional distribution pathway , like biologics , you know , like Lucetis , which I worked on in Genentech , are distributed today and the cost of doing that is , you know , much more to the unit economics .

But that being said , we don't expect that every single , just as an example , every single clinic will have a minus 80 degree freezer , and so , you know , generating the kind of stability data that will let us , you know that's compatible with , you know , are overcoming or have overcome on the way to , you know , delivering on the promise for gene therapy for common

diseases .

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It occurs to me that there's got to be a challenge there too .

Like regulatory bodies that are , you know , that are evaluating or prosecuting genetic therapies for rare disease , ultra rare disease , disease , ultra-rare disease , I'm assuming tend to be a little bit more liberal than someone who comes along and says , hey , we're developing a gene therapy , uh , that for an indication that has a giant patient population .

I can imagine the agencies would be like all right , let's pump the brakes here a little bit like . This is a modality that we , you know we haven't necessarily seen a lot of broad patient population applicability Also .

And so the idea of a rare safety event , you know , becoming a major public health problem just doesn't really exist . And so that framework for rare diseases is , you know , sort of over here . Right , the framework for common diseases has existed for a long time , you know , with small molecules , with biologics , et cetera , and it is feasible to do .

You know large studies and it is certainly , you know , going to be used in large populations . So , yes , fda and EMA and other regulatory agencies want you to characterize those .

You know the safety profile , in other words those adverse events , and you know the safety profile , in other words those adverse events , and you know , but to say that products like this haven't been used in those populations , I mean that's not quite right .

When we think about what was the first gene therapy , you know it was probably the polio vaccine , right Back , you know , and this is given to millions of healthy people , including kids , and so the bar for vaccines being very broadly distributed and healthy people rather than sick patients is very , very high .

Right , probably rightly so , yeah , and so I think probably the gene therapy for common diseases is somewhere in between . These are sick patients , but it's a large population , so of course we have to go characterize them , I think you know , of course it's .

You know the office of OTP within CBER , you know , has their own way of doing things that's separate from the device division and separate from the drugs division , and so you know we're in the process , the genus , of going to talk to the agency this year about phase two design and sort of future development program , and so I think we'll learn more .

There are phase three programs that are , you know , in large indications , for example for macular degeneration , and we're entering phase two . So we're going to learn more and more about how regulatory agencies are thinking about these uncommon diseases . But the framework is sort of , you know already laid out by vaccines and by other major indications .

You know where biologics and small molecules have come before us , yeah .

So certainly not tiny , but certainly not huge either . I think you certainly can study in a well-designed pain trial . You can certainly see clinical symptom improvement in osteoarthritis patients with OA of the knee .

You know it's been more difficult to finance companies privately , it's been more difficult to do IPOs and prices , you know , and valuations are down right . And so I see that as an investor and , of course , you know , as an operator and entrepreneur as well .

I think you know investment groups are different , right , and they all have different theses on , and that's wonderful because they have different ideas of what the future holds . Some investors are going to say , you know , osteoarthritis , not for me , it's a very difficult area . And some are going to say , osteoarthritis , not for me , it's a very difficult area .

And some are going to say , wow , this is the biggest opportunity in all of biotech . Why ? Because when you're putting together a huge patient population 32 million Americans with osteoarthritis , 1.2 million new cases of knee osteoarthritis every year , huge patient population together with a massive unmet need there are no therapies , right .

All we have is pain control and sort of temporary symptomatology , nothing really treats the underlying disease , and so these two things together really drive an enormous opportunity space , and so that's what got us excited . Hey , people have been trying to block this target for a long time . No one's been successful .

We think we can do this with gene therapy , and now , with the latest clinical data , we've shown we can express this at the target levels in these patients' joints for the long term . So what's next ? Okay , we need to run a proper phase two to really show the value of it .

I've heard other people say this feels a lot like 2023 and 2024 . So I don't know , I won't look into my crystal ball too hard . I'm sort of certainly hopeful that inflation coming down , perhaps interest rates coming down and the market's sort of back to normalizing and rewarding innovation Certainly hope for that on all our behalf .

Right in the biotech industry , that 2025 will be a great year .

So this is a broad question , but what advice would you give a biotech builder on , you know , turning over the right rocks to find an investment partner , tough times or otherwise ? Right , because you don't want the wrong investors either , when things are flush , when there's money to be had .

So what advice do you offer around finding the right investor for your specific approach ?

What you think someone should be interested in , you know doesn't necessarily correlate to what their internal discussions you know are mapping out the strategy for that company or that fund . So you know , therefore you really don't know what meetings are going to be useful .

So take meetings , because you may learn something , you may get an introduction , you may something may surprise you .

Another thing is that you know it's easier if investors declare themselves , right , and so getting out there at academic conferences to talk about your science , putting press releases out to say you know , here's where we are Sort of being open about , and broadcasting , you know this is where we are and kind of what we're working on , what we hope to do , actually

will help investors who are interested declare themselves , and that's easier than reaching out to , you know , hundreds or thousands of different funds , and so sometimes that's a , you know a good strategy . I'd say you know , in terms of you know who are the right investor partners . In my experience it's very hard to predict .

You know , going in and sort of just by the tenor of you know the conversations , what those relationships are going to be like . You know four years down the road , when things get tough right . That's actually quite hard to predict , but it is possible to align incentives to some extent and sort of pick investors who are going to share incentives .

So if you have a long-term strategy and you need investors that are going to be there for a while , pick someone who has that long-term mindset that can be patient capital that's not going to want you to . You know , do an IPO in six months , right , I think it's . I think it's possible to sort of align those incentives .

Um , obviously you know people's reputation . Talk to other companies that they've worked with in the past and sort of get a read on . You know what was ? What was this investor like when things were going great ? What were they like when things were going not so great ? How helpful were they in terms of , you know , helping you overcome your challenges ?

And so you know , certainly those are all helpful and you know , look , it's kind of fancy to prognosticate and say , oh , this is exactly the type of investor that I want to have in this company , but at the end of the day , like you have to eat the food that's on the table and so you know , if every company we're so lucky that you know we have , you know

20 different . You know sets of opportunities to choose from and you can optimize who you want to work with , like , wow , amazing , that's wonderful . In my experience that's not every time .

Yeah Right , that's that's a little bit of a rare moment , um , or a rare company , and so you know often a deal's available and that's the one you're going to do , and I think you know most entrepreneurs will realize you know that's that's kind of the real policy of you know , uh , you know biotech , entrepreneurship and and , and you know , early stage um stage ,

raising capital .

How would you compare Boston and California for a biotech company that's looking for funding or that's doing science ? Which do you like better and why ?

You know large pharma , commercial entities , right , and that was certainly true , you know , 10 , 15 years ago , probably more true here than it was in Boston when we were kind of getting around the time , we were getting out in Coruscant .

But look , the Boston ecosystem has just grown so enormously with big pharma setting up shop there , with university collaborations , and one of the delights about being in Boston is that it's all extremely concentrated in kind of Kendall Square area .

And then of course you have you know other businesses that are out in , you know Waltham and other areas , but there is such a vibrant biotech community , you know in Boston tech community . You know in Boston Um , at the same time I , you know Palo Alto still has such an amazing entrepreneurial uh , ecosystem and vibe , and I think you know one of the um .

I was asking you , you know in the in the elevator right up , if you watch the HBO show Silicon Valley , because it's this just incredible um sort of , you know art imitating a life parody of Silicon Valley , and you watch that show .

You know living here and you recognize all these patterns right , and there's a real joy to being an entrepreneur in this area because the ecosystem is so rich in terms of all the supporting elements , but also because I think , you know , people are really um sort of , you know , culturally rewarded for taking risks and rewarded for thinking big and thinking bold and

being brave , and so that's , that's a you know we're we're incredibly lucky right here in in in the Bay area and Silicon Valley , to um be part of a culture that says , yeah , that's possible . Let's , let's dream about a world where that could be true .

I mean , of course , you have , you know , incredible , you know computer scientists you know coming to MIT and Harvard and in Boston as well , and so I do see a lot of you know kind of research and platform companies you know coming out of the Boston area that are just you know , just absolutely tremendously innovative .

And so , um , the initial first human study was run by Chris Evans at Mayo clinic and this was back in , you know , approximately 2022 .

And then we Genesance was , you know spun that technology out and completed our Series A , and then we got a serum grant from the California Institute of Regenerative Medicine , and those two you know financings together allowed us to progress into the next stage , which was a Phase 1B clinical study .

So we call it Donatello , in keeping keeping with the renaissance theme of genasance and the idea . You know there were a couple objectives .

One was to it was dose ranging with and without immune conditioning , because so many gene therapy protocols have some kind of immune conditioning , whether it's with steroids or biologics , to see if you can improve safety and efficacy of the gene therapy by modulating the immune system . So nobody had tried this in the joint before .

So we were quite innovative , thinking about gee . Is there a role here for immunosuppression ? We didn't have any in the phase one . The first demand at Mayo Clinic , should we bring that forward to the phase 1b and test whether we can get any insights ? And so we started that study let's think about this in 2023 and began enrollment toward the end of 2023 .

We completed enrollment and now we finished the six-month follow-up . We announced the data from that follow-up just last week leading up to JP Morgan .

So that was six-month data and the conclusions are really it was safe across all doses tested and regardless with and without the immune conditioning and whether that immune conditioning was a short course of oral steroids or whether it was a very brief course of oral with an interarticular injection of steroids , and so it was well tolerated across all of those cohorts .

An increase in the transgene , which is interleukin-1 receptor antagonist to our target levels , in the synovial fluid , so inside the knee joints of these patients . So throughout we were sampling the synovial fluid from the patients to test that in a qualified clinical assay , are we seeing levels of the transgene , the IL-1RA increase ?

And the answer was yes , it was getting target levels and it's lasting six months . So that's terrific news . So now we know we can have the pharmacodynamic effect that we're looking for , and what's next is to say , okay , we know we can intervene in this pathway .

It's been a longstanding hypothesis that interleukin-1 is important in OA symptoms and disease progression . Now can we bring that forward into a proper clinical proof of concept study , looking at pain and function and starting to look at joint structure to see do patients improve symptomatically and can that last long-term following a single injection ? And what's happening ?

Start to ask the question as an exploratory implant what's happening to the joints of these patients over time ? Are they actually improving in terms of inflammation and are we seeing a trend toward improvement in cartilage and other markers of disease progression of mri ?

Uh , so we're we launched a series b to try to um fund that study and so you know very , very in the early stages of that and so you know hopefully um we'll get some good feedback from investors in the coming weeks .

We also like to use this week as an opportunity to talk to strategic partners that you know may be more diffuse in the ecosystem , you know , coming from Europe or coming from you know , different parts of the U ? S , and also to catch up with , um , you know , folks who have been following our story , to kind of give them an update .

So , um , a little bit of everything and more to come .