ABOUT THIS EPISODE

Nimbus Therapeutics is in the business of building structures. Molecular yes, but corporate too — they’re unique and fit-for-purpose. CEO Don Nicholson explains it all: the partnerships, the code names, the high energy water, the bowling, the rapping. And how, at any given time, fully half of Amazon’s cloud computing power may be in use to create your next medicine.

English
United States

TRANSCRIPT

00:00:09hello I'm Janelle Anderson and welcome to human proof-of-concept the biotech Venture Capital podcast Nimbus Therapeutics is in the business of building structures molecular yes but corporate to their unique in fit-for-purpose CEO Don Nicholson explains it all the Partnerships the codenames the high-energy water the bowling the wrapping and how at any given time fully half of Amazon's cloud computing power may be in use to create your next medicine
00:00:41stay tuned for the podcast and seating for my announcement at the end of it and stay tuned For an upcoming Nimbus announcement one of these days
00:00:53Don Nicholson thank you for being a guest in the human proof-of-concept podcast absolutely my pleasure to know you are not Dyno Don Nicholson the drag racer from Georgia who won 90% of his races according to the National Hot Rod Association
00:01:12do you want to start a company on Prospect Ave it's in voted best tattoos in Cambridge I'm tempted
00:01:23or another John Nicholson and you run another sort of in Cambridge called Nimbus Therapeutics so so now that we needed the confusion tell me about it ever since it was released partnership with Schrodinger which isn't able to really leverage computational drug Discovery could you describe that relationship and to what extent following Basilico path LED you to focus on demonology metabolic disorders in oncology so you know the original concept for Nimbus and the foundations for how we discovered drugs in this company was going to be based on copy tationil methodologies so as a starting point we partnered accompanied with Schrodinger who are actually co-founders of nimbus so Schrodinger and Atlas Ventures co-founded the company and the principal was that this company was going to go after high value targets that had been previously intractable to the industry as a whole and use this next generation of computational capabilities to be able to discover those drugs and
00:02:23a couple of key things that happened at that moment in time when the company was first founded first of all the algorithms in the understanding of the quantum mechanics of how molecules interact with one another and the software to be able to predict that had evolved substantially and well beyond what is canonical used in the industry as a whole and secondly in this would surprise you to actually the hardware was just getting to the point where the algorithms could be run in a reasonable. Of time and so for example you know we in a single Nimbus program when we're running some of the computational algorithms you so much GPU horsepower that we have to lease as much as half of Amazon's cloud computing capability be able to do that that is a surprising fact but what it shows is that the hardware component of it to be able to run these very complex algorithms was actually needed to match the ability to actually predict goes out
00:03:23Rhythm send to apply them to the methodologies for drug Discovery and so all those factors started to amalgamate and come together and as a consequence of that the company was formed around the concept that competition chemistry had turn that corner and that Nimbus was the right home for placing those capabilities and technology and so the partnership had started up at that point and did it also enable you to go after more say allosteric sites program which was our Flagship program until recently eyes you are no doubt aware you know we sold the subsidiary that held that program to giliad last year it was a very interesting Target to and has been a very compelling Target for metabolic diseases for decades and I would say that large Pharma companies including one that I work for previously I had work very diligently on trying to find inhibitors for that ends
00:04:23how to take into the clinic and have successfully take them and taking them into the clinic but they you haven't been of the qualities necessary to be able to make much progress and that's because the catalytic site in that particular protein or that enzyme is not really a mandible to the compounds that have drug-like properties but it's a consequence of the computational chemistry that we were able to apply to the ACC Target the allosteric site that exists on that protein which was actually known at the time because there was a natural product made by microbes that bound to an allosterically regulated the ACC enzyme and its a consequence of that we were able to use computational methodologies to figure out what was important in the way that that Mac recycle I was bound to the allosteric site and as a consequence of that not try to reach week the Mac recycle like in a lot of other companies would do but actually just denovo start from scratch and say what what's important for the way that
00:05:23natural product binds to the allosteric site let's use that information content actually design molecules that have the right drug like properties and that evolved into our 976 program would shift calendar 6th January and we called the Apollo and then that was the that was the asset that we sold to giliad in 2016
00:05:44Nimbus decided to enter into a strategic partnership with Schrodinger rather than just purchasing their products and services ala carte Y and has choosing that type of relationship made a difference in any of the abilities or Milestones that you've accrued absolutely you know the relationship we have with Schrodinger's is very unique and very symbiotic so when you think about it be like Schrodinger trying to build the algorithms that are going to be predictive of how a small molecule can interact with and modulator enzyme are receptor but they don't have wet Labs or the capabilities to actually reality check whether or not those algorithms are going to be as productive as they assume they're going to be now they have a lot of venues for being able to do that including other Partnerships but the partnership with Nimbus was unique wherever is cofounders of this company the goal was really to interact directly with their software designers with their own copy tationil Camas and to be able to build
00:06:44the future generation of algorithms that'll be used in this industry and use Nimbus as its partner to be able to turn those molecules into Therapeutics and so the symbiotic relationship comes from the fact that shredding his primary business of course is software and try to be able to build software that enables this business is a hole and that's why they're the premier company in this industry and our business isn't to develop software our business at Nimbus is to develop drugs and so through the symbiotic relationship where we're building the next generation of computational tools to do drug Discovery we're evolving the field as a hole in a partnership with Schrodinger which benefits everybody including other large Pharma companies are there biotech companies and the product of that for us is that we actually get the drug Products that come out of that relationship and that's what we care about most at Nimbus
00:07:44Equity Partners their Equity holders within Nimbus of course they benefit financially from the relationship as well they do get Milestones from us you know the exact relationship isn't publicly disclosed but they do have a financial stake in the company and they do receive the rights that any Equity holder would receive as well
00:08:07you mentioned the nice meaty acquisition of one of your assets last year the fast-tracked ACC inhibitor for Nash not too shabby 400 million up front I think another 200 million in mountains already absolutely I came within a couple of months actually of the original deal for Gilead to have plucked that out that project of Interest out of the company will leaving the rest of the Nimbus structure still standing I think of it as biotech Jenga and the reason is your creative corporate structure could you explain the ins and outs of having established C Corp subsidiaries under an LLC umbrella reference because of course you know eventually that all collapses right exactly so I'll have to think about a different metaphor is it is we have this conversation know that you know what in fact when we were founded in 2009 that we were actually the first of the Bay
00:09:07tech companies that have that LLC architecture it was it isn't without it so I can Park Cities and it's very complicated to operationalize and it I wouldn't recommend for everybody tech company but for ours it's really been an outstanding architecture that served as well when we were building up racc program we were also building up a number of other programs simultaneously but of course they were at different stages and when we ended up selling the subsidiary that contained racc program to giliad if it was actually mutually beneficial for both companies so what Chiliad were interested in where the assets they didn't want to acquire a company and its infrastructure including people and desks and staplers and so on and so forth what they wanted was the head way that we had made on a very complex and difficult Target in a therapeutic area that they were extremely interested in and you could see through the evolution of both are acid as well
00:10:07was some of their other Nash assets that it's pretty clear to us that they are trying to dominate the Nash base in the future and do that in the way that giliad is well recognized for doing another Fields as well so as a consequence of our LLC architecture they were able to acquire out right the sub city are they bought the seacourt that held the entire program and so that worked out very well for them and they were able to transact that deal in only 3 months it was very straightforward acquisition the benefit for us it was that unlike a lot of other biotech companies which typically go through the cycles where if they are acquired than the leadership team and all the scientist they disperse now they go off in the form of other companies and that's kind of the natural cycle of Biotech in our case we had our entire team intact after the acquisition so the ACC program ended but the
00:11:07he was entirely attacked and all the scientists in the capabilities that we had brought to bear to move the ACC program for when I shifted into our next most important asset or other Assets in there they've been evolving marvelously as a consequence of that and so you think of it this way there is the umbrella LLC and that is strictly that's a holding company and then each of our individual scientific programs is a different subsidiary that is Harvard within a Delaware registered c-corp and then all of the actual employees myself included are held within another subsidiary that's under the LLC called Nimbus Discovery and we provide services to each of our own subsidiaries as a consequence we move money between the LLC wear for exam
00:12:07call all of our investors hold equity and put Capital into the LLC not into the individual cquartz and we migrate and fund that individuals seek works out of the LLC and that money as it flows into each of those see corpse then by services from Nimbus Discovery podcast it it bee baby pretty simple and I getting that off the ground was was complicated and I made a comment that this isn't for everybody and I think that depends what you're trying to do with your company but also it depends on whether or not you were single asset company or whether you're just working in one pathway for example probably isn't suitable yeah and I suppose if a company was working either in all the same therapeutic area or perhaps with assets that were Advanced roughly the same amount it's also not so great but
00:13:07yeah I can imagine that if you were structured in a traditional way as one legal entity I can imagine that you could have easily been taken out by Gilead just to get that one asset and then disperse but also your other Assets in various earlier stages of formation would be completely discounted your left on the Shelf if there are other CEOs of police listening that'll be very familiar to them right where they see their lead acetate usually the lead ass at the one that's most progressives use you to want one that's most appealing in the one that's the most valuable get Acquired and have the rest of the company just Wither on the vine and those assets you know they might not be as valuable at the time of the transaction but there's a lot of pent-up value in his other programs in those other Assets in our LLC structure allows us to elaborate further again with the same team and Tack and a group of people know what they're doing and move them forward
00:14:07would having to dissipate and dissolve the company and leave those assets stranded and try to sometimes you know there's other ways of spinning them off but that has its own complexities and it's just actually similar in the end to be able to do it this way but it's not for the faint of heart because you know the finance and bookkeeping and accounting and tax treatments and so on are something that you have to be very diligent about but if it's the right structure for the company certainly works very well and you know even though it's been practiced only once we learn so much from that particular transaction that we feel pretty well-versed in it now I need to bring up a Canadian philosopher take a right
00:14:53I'm in the podcast where I bring up the Canadian philosopher about The Tragically Hip 2
00:15:01is the message it's almost like this structure is the strategy it isn't it isn't so the structure enables the strategy it's hard for us to articulate the company's strategy without it sounding like something that you see paste it on the side of a bus no operating around Cambridge no but we are predominantly focused on making therapeutic medicines that's what we want to do those of us like myself who have spent large part of our time in large Pharma companies are in this industry that's that what is what drives and motivates us we also recognize that some other companies are better at it then then we are and so for example we had a deep philosophical conversation in around the Gilead deal and recognize that they as a company who were expert in liver hepatic biology who had the clinical horsepower to be able to migrate a drug like our ACC compounds forward they were actually going to be better at getting a drug on
00:16:01Mark market for the treatment of Nash then we were going to be so we felt pretty comfortable letting go of that asset knowing it was going to be in good hands there were others who were after that ass at as well we actually had four term sheets on the table at least a couple of those companies wouldn't have been nearly as good you know the financials would have been just as good but the they wouldn't have been as good at navigating it forward and so we choose them as partners is it in part as a consequence of that so all that to say that you know what we're trying to accomplish is making Therapeutics we're also trying to be a successful business so they LLC architectural allows us to financially continue to invest in the company off of the proceeds from those deals and yeah we have different ways of parsing it out as returning money is to our investors as well as retaining some of those Monies to be able to continue to operate the company and other thing that we do for example when we have either investors
00:17:01for employee Equity holders are they have equity in the LLC not in the individual see court and that turned out to be really important I'm so for example when we were raising our series B we had a lot of interest in investing in the seacourt that held our lead acid battery logical when you think about it, but we didn't want is to have richer and poor cousins we wanted to be able to make sure that while we were evolving are lead asset and at the same time we were in the best investing in bring for the next generation of assets that to an investor at that. Of time largely because they're early they're not as appealing and yet you know if we're going to build and perpetuate our company you know we had to find a way of actually driving those forward and so and the same is true for the scientist that work for us you know we didn't want all the scientists working on acc that ended up going to Gillian
00:18:01at the benefit more than the scientists were building our future and so that's why our employees are Equity holders in the LLC or a holding company is also everybody benefits equally regardless of Which acid within our company goes forward so now I actually as I have this conversation with you I'm almost turning my thinking round at Marshall mcluhan might have been right and you know maybe to a large degree the LLC structure at least enables us to be more successful and we we just spoke about the major advantage of not having to dissipate a highly capable of a scientific team that work here at Nimbus where each and every one of them would get snapped up overnight where they to choose to go elsewhere and I think that's a very positive thing for this environment that you know people are working for the companies like Nimbus because they want
00:19:01be part of this company and not because they have to go with a superb Syndicate lightstone visor sr1 Lily but now you have some m&a cash did you buy new fleece jackets with a company logo for all the employees substantially herein are over air conditioned offices are you adding new project / sequence corks yes correct are you doing more projects alone unpartnered
00:19:56that's the goal yes we haven't considered but that's really interesting idea if you want to come and run it let's talk offline about that have weave you know we've had that's all part of the sort of natural growth and in fact you know we've been thinking about where we want to go in the future and of course what we don't want to do is get stalled in a cycle where we build up assets to either the development Kennett stage or even as far as we took we made out of the ACC program Phase 2 ready when it in hand it off to giliad when it was sold to giliad the week we don't want to do that in perpetuity either what we want to do is actually start to build assets that we progress further and further down the line ourselves to get to the point where we could actually register them ourselves and then figure out where we're going to go from there we'll obviously do that well in advance
00:20:56but right now with the people we have here in the company we are capable of taking compounds all the way from Discovery up to our registration so we have that capability in the house right now but we don't have any immediate aspirations of being ready for manufacturing and marketing and sales and things like that I think we have to kind of evolved the company first before you even start contemplating where our future might lie there but as a precursor to any of those choices we've got to start holy owning some of our programs and hanging on to them and navigating them down the road ourselves and so yeah we've been pretty open about our strategy for doing that we've modeled it substantially and we estimate that we need to partner about half of our assets as they're evolving in order to be able to find the other half of the assets that we want to migrate forward and retain is fully owned now course that becomes complicated because as we become successful
00:21:56imagine that we're able to navigate those assets into the clinic with the financing that we have off of our deal architecture no doubt we'd be able to finance them through Phase 1 in the early Phase 2 studies but as they start to get into the capital intensive phase to be in Phase 3 Arenas that requires a whole different magnitude of capital and that would likely require us doing a public offering at that point to have access to the public markets and so we are always thinking about that is something that we we should be considering and and Engineering to in the future
00:22:31okay so you mentioned the name of the project that you sold the delay I was Apollo Saturn is your sting antagonist drug Titan is your sting Agonist is the public domain by not sure I could remember them all without a cheat sheet yeah I think we have about 15 subsidiaries at the moment and you'll notice that each of them is named after a god of some sort and we tried to be agnostic to religion so you know for example are take to program is Nimbus Laxmi srk rash program was actually can't that was named after a advisor to this company who actually died sometime ago complications related to cancer and so that was part of the reason we
00:23:31laughed our normal naming strategy and then there is several others usually the first letter is the name of the target so there's a big reveal all right that you personally are great example of a recent yet major Trend long-time large Pharma execs transition right into entrepreneurs interesting me in a way we have large format to thank for the extent of that Trent sure do first what stands out to you from your 25-year career at Merck it was fabulous the number of things that stood out I mean one is when you think about large farm that boat has an industry but also when you think of Mark is a specific company so I think that you know what stands out for me as soon as you know maybe your listeners don't but I start at Merck frosst which was a small it was really a small biotech Harvard within the Merc environment and in fact I often think
00:24:31Mark Frost is having being a biotech and I just happen to have a pre-established relationship with a large Parma that happened to be Mark you think of the productivity that came out of that site Singulair which I believe is the largest product ever to come from work and terms of sales at least all that came out of a small biotech site for all intents and purposes that at its peak was only 120 scientist so that resonates with me in terms of what I do right now here at Nimbus because Nimbus what is a small number of permanent employees but with our consultants in with the full-time people that are working as contractors for us that's about the same number of people that work for Nimbus so this feels very familiar to me so I think that it is a part of a train but there were a lot of very outstanding things that happened to me during my time at Mark Bates where I think I actually learned and got the bug for entrepreneur
00:25:31science that certainly was the K I think I was cognate to me or in a dish at least but certainly that was the way that Mark Frost operated I also learned everything I know about drug Discovery from one of the most outstanding drug Discovery institutions on the planet and I learned a lot about the industry is a whole because now that of course I I'm in a different situation so for example going to JPMorgan I'm not on the by-side anymore we're looking at large number of Biotech companies you have coming through the Merc offices to cut a describe what they do at I have the opposite lens I'm out there on the south side and what's really interesting to me is my walking off a lot more which is good cuz you get an awful lot more exercise and get fed continuously out of it is that you really got to see our industry as a hole at the JP Morgan conference is kind of that consolidating event and you recognize a couple of things 1 is that just how important large
00:26:31Pharma is to human health and Healthcare despite the controversies over drug pricing and a few bad actors that have unfortunately tainted our business as a whole and then secondly the remarkable ecosystem that starting to evolve and the symbiosis between large Pharma companies and biotech companies and one of the reasons that I found coming to Nimbus are coming to buy Tech in general so compelling is the fact that vitec is a really important source of future drugs for the see this ecosystem so I'm very pleased you have to be on this side of the ecosystem at this point it it's like that fun thing you see on your grandparents pillow right which is if I realized you know how fun grandchildren where I would have had them first so it's a bit like you know I think of that if you know if I you know head realize how much fun by attack was I would have done that first but of course the 25 years that I spent and large Parma
00:27:31put me in a position where a particular in this environment I can I can bring a lot of the skills I learned that at Mark to bear for Nimbus and and for other things that I'm doing now too
00:27:44how do you prepare yourself to lead a small start-up I didn't as much as you might anticipate I mean I was part of the appeal so coming in to buy attack in particular coming into the CEO roll I recognize a couple of things that we're going to be important very early on first of all as somebody who spent most of their time in the science side in large Pharma and the Other Drug Discovery side I obviously was going to be really important for me to be able to let are very talented CSO actually run the science in this company and not to not essentially become the CSO so that was one of the things that I prepared myself for which was to make sure that I totally boned up and understood the scientific Targets in the rationale for them within this company so I can participate intelligently and some of the choices we need to make and did make very early on in the way that we prioritized Harper
00:28:44grams in that turned out pretty well that was a team effort obviously but I prepared by making sure I understood every nut and bolt on on the programs that we were going that the company was engaged in and to understand the process by which they thought of the next generation of targets and what the methodology was for that the second thing that I needed to do is and this was part of the appeal of coming into a biotech company was that I think that scientists are chronic Learners they really are insatiable in terms of their desire to learn new things and it's not that you can ever saturate yourself you can't learn all scientific knowledge but why it was really motivating for me to come into this environment was learn how to run a business because this is a business so very shortly after I first arrived but the company was actually pretty close to being out a cash I think we had three to six months worth of cash left when I arrived and we were
00:29:44how to Chief business officer and so very rapidly we hired an outstanding Chief business officer who is now both Chief business and Chief Financial Officer in this company Jeff Kuiper and for the first thing we did was go out and pound the pavement and raise our series B and so I spent a lot of time trying to understand how that whole ecosystem works the investment to the Venture the bank and communities this was all new to me and I think I benefited a lot by the nurturing environment of the investor group that was around me particularly at Atlas Ventures they make a covert effort to help you integrate into understand what it is that you need to do is a new CEO and of course you have the executive chairman of our board at the time Dan Lynch who was an outstanding mentor and was very helpful and bring me up to speed in terms of how to how to tell the Nimbus story in a way that would be honest and compelling and wood
00:30:44allow us to get future financing and its consequences that we successfully were able to secure 43 million dollar series B we brought in Pfizer Ventures and lightstone ventures in addition to all the a participant in the early Founders as well and that's been our last financing round to know the deal that we did is providing adequate financing for now it won't forever you know so that was one of the things that I had to prepare myself for as well and I think in terms of doing deals and things like that I think that was in a but telling the story is one part of it actually getting it executed in to both the term sheet an agreement is another very complex component of this business fortunately one of the great things about being CEO is that if you if you surround yourself with extremely talented people you don't have to be the expert on everything you just have to be able to pull together the right team in the make things
00:31:44things work and not everybody would describe their investors is nurturing nurturing but with expectations yeah I pointed out that you were not a drag racer you mentioned you wanted to get a tattoo but there are some photos on the website in which I'm pretty sure I saw you with a bowling trophy was playing electric guitar so care to elaborate on that sure will the bowling is actually so we we have a lot of social events every year and their team building by accident because we it's a great group here we like to get together we have our annual bowling tournament I'm glad you picked that picture up because that was the first annual bowling tournament and of course my team won but I have to admit since we're obviously enough public forum hear that this past year my team came in second and are cheap business officers team took the
00:32:44will be so you know we did it obviously is something that it was a bad year was going to distracted with the other things in my bowling skills weren't up to par been by tell you a cool thing about that our picture so we wanted to celebrate the deal that we did with giliad yeah we had the company over and board and spouses to my house and we set up a tent in the backyard and we had a band and then of course at the urging of several of the people here at Nimbus that knew that I played and collected guitars they wanted me to play with the band in the band was very amenable to that I'm sorry I that's where the picture was taken so I rocked a little bit with the band but what I did I also wanted to do a thank you speech and so on the flyer do a little bit this record blues and wrapped at the same time to do a bit of my time I thank you speech was a combination of doing 3 chord Blues in and wrap to to thank everybody who is there and it to do the deal
00:33:44that's where that picture was taken in the in the background of it so it's it wasn't important and cherish moment and I have to tell you that I don't get nervous very often but I was really nervous about the board the employees in band just the band but they were Pro so they made me look good. If you know what it's like you know everybody's got their phone up so you just know that you're going to be living with that for the rest of your life at the Battle of the biotech bands is falling apart as we wanted to put a nimbus sub and together and compete so we're hopefully
00:34:28if anybody's listening we can get that back off the ground again for the challenges on there seems to be an art form this to Nimbus the website is images of the targets protein structures slowly spinning there's pros like designing breakthroughs which I personally love the name is itself must be ideal reference to molecules electron cloud and the cloud computing employed to discover it unless there's a triple or quadruple entendre don't know about that that absolutely was the name that you also the the company was originally called project Troubled Water and and that's because the evolving technology at the time working with Schrodinger was to look at these high-energy Waters that were in the active site or in the allosteric site and to try to predict ways that those can be displaced by small molecules and acquire there another binding Affinity is a
00:35:28consequence of that and so getting rid of those Troubled Waters with small molecules whose call Project Troubled Water so the other you know crawler e with the name is of course trying to associate water with the with the name which of course because nimbus clouds are the ones that rain comes from that was also and the water comes from is also part of that the metaphor face with a architectural firm underneath and and clearly they're Flair through the entire building and there's a moose head on the walls of Sidelines in the yard so I want to thank you for joining me today for this human proof-of-concept podcast it's in my pleasure talking such a pleasure speaking with you thank you thank you
00:36:16do you realize we weave on through a whole podcast and not said the word a either of us we should maybe
00:36:35thanks for joining me for my conversation with Don Nicholson CEO of nimbus Therapeutics for this month's press pause for a cause Don has selected the American Red Cross so if you like this free podcast and you're inclined to get back visit Cuban poc.com cause to find out how and thank you for your engagement and support over the past two years and 24 episodes of human proof-of-concept ungrateful the response to the podcast has grown a good order of magnitude above my wildest expectations that being said I will be going on Hiatus I'm embarking on a new role that will preclude producing podcast on the side for the time being but I'd love to hear from you visit the website human pse.com for contact information also complete show notes and the list of Charities featured in press pause for a cause you can still subscribe to get all the human proof-of-concept podcast on iTunes Stitcher TuneIn in Google Play music and follow me on Twitter at human POC
00:37:33that's always the soundtrack behind human proof-of-concept 3 we buy the Gordon Webster Trio the podcast is produced by Shane Williams and EJ Howard and the statements and opinions expressed herein are solely those of the individuals and do not necessarily reflect the views of Affiliated organizations

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