May 10, 2024
44 min
Episode 26

TOP CEO: Tome Biosciences - 'The Genes of Tomorrow' (With Rahul Kakkar)


It was a DNA editing technology that certainly sounded like a quantum leap versus what anyone else was doing in the field. There will be life changing medicines born out of this technology.

Tom Cain  00:12

Imagine you're the CEO of Tome Biosciences, a company focused on developing and commercializing gene editing technology. It's an exciting industry, diving into the genetic blueprint of life itself, aiming to rewrite the rules of medical possibility.


The premise from the very beginning was grow like crazy and keep up with the competition.

Tom Cain  00:36

But along with the cutting edge technology and innovation comes a slew of challenges. All


of the extra liquidity was siphoning out into safer investments and the amount of money going into biotech was declining. rising

Tom Cain  00:51

interest rates and shifting economic tides are reshaping the landscape, making investors wary and funding scarce,


it was very clear that the bottom was starting to fall out.

Tom Cain  01:03

The revaluations from potential funders of the biotech industry means your business needs to be more agile in its approach to innovation. You need to secure funding, maintain operations, overcome market skepticism, and advanced gene editing tech


coming in late but you have to catch up. And you have to move quickly. What happens

Tom Cain  01:26

when a pioneering company stands at the crossroads of groundbreaking science and a financial squeeze. This is the story of Rahul Kakkar. And this is The Genes of Tomorrow.

Ben Kaplan  01:41

It's an interesting past few years you've had because there's a few confluence of a few things beyond your control and some things that you can control that have impacted this company. So take me back to really the birth of the company in 2021. And the investment conditions at that time. And then how you notice those investment conditions are changing in a type of biotech company that requires a lot of investment.


Absolutely, then a big thank you so much for the opportunity. I think there's a lot of very interesting lessons that all of us are learning, as the tectonic plates of the biotech investment environment have shifted between 2021 and where we are today in 2024. So in 2021, company founded in February, I came in in August, the first Series A round closed, some of the best names, investing names in biotech coming together to put about $100 million into this company company really was very little more than something that was being developed in academic lab,

Ben Kaplan  02:42

there wasn't a sense of the commercial possibilities potential yet there were some ideas, but it was still an academic exercise. At this point.


It was a DNA editing technology. That sounded cool. Something interesting certainly sounded like a quantum leap versus what anyone else was doing in the field. And that has continued. But the idea of being able to convert the academic project into something that is utilizing drug like materials that is scalable from a manufacturing standpoint, that is actually working in preclinical models as a, as a harbinger of what can happen in humans, none of that was laid out. And you know, 100 million dollars to do that. And to grow the company quickly with all of the different expertise, we need to do that, that was quite a bit of capital, it still is quite a bit of capital. And we were born into an environment where interest rates were low, there was a lot of money flowing into biotech. And so the premise from the very beginning was grow like crazy. And keep up with the competition. We are relatively late in the cycle of DNA editing companies. It also means that we're the most advanced technology, but think about Apple versus BlackBerry at the dawn of the iPhone, you're coming in late, you couldn't have all of those advantages, all of those lessons learned that others have had to stumble around, but you have to catch up, and you have to move quickly. And so that was the environment that we were born into.

Ben Kaplan  04:06

Meaning capital was plentiful, gene editing technology was in vogue is a technology that holds a lot of promise but requires a significant capital investment. But you were at this point, probably like in terms of biotech investors, the belle of the ball, right? Like they want to take you out, they want to be your partner, they want to take you on the dance floor at that point. But then you started noticing things starting to change.


So in 2022, particularly during the second half of 22, we realized it was time for us to start raising our next round of capital. We had made a good amount of progress on the technology. It was industrialized. We were starting starting to bear it out in preclinical models. I remember the summer of 2020 to stand in front of the company saying I can tell you without a doubt something I couldn't say a year before when we were starting that there will be A Life Changing medicines born out of this technology, something that no other company can do even within the gene editing world. And we really started, particularly as we got to the fall of 2022 embarking on our next fundraise with all of that gusto and and momentum behind us. Did

Ben Kaplan  05:15

you think at that point you had executed on what you said you would execute? You felt like you had made the progress you needed. You had industrialized things. Did you have a feeling at the beginning of the fundraising process that for that second round that things should go? Well,


I think that's fair, there was clearly more progress in the preclinical world to be done. But where we were particularly based on my experience in prior companies, I felt like we were in a very good spot to raise money for a series B, to take us to the next level of proving the technology before we go into patients,

Ben Kaplan  05:47

and how much were you looking to raise? At that point? How much did you need to sort of get to Series B and feel like you had the resources to move forward?


I think in an ideal world, we would have raised between 180 and 200, we ended up raising about 120, in that second round, a little shy of 100. Okay, right.

Ben Kaplan  06:01

And so 180 200 120, that's a significant reduction, what was the factors in the investment world and for other CEOs listening that had something like certain assumptions you made that seems to be changed, but not by your doing by just other types of trends and conditions.


Our fundraising really subsequently got underway at the beginning of 23. And as we got into the second quarter of 23, it was very clear that the bottom was starting to fall out on biotech investing, interest rates were rising very, very quickly, all of the extra liquidity that was around in 2020, and 2021. And even the first half of 22 was siphoning out of the investment space into safer investments. And the amount of money going into biotech was declining. And you saw that most evidently, in the precipitous fall in the SPI, which is the ETF of biotech, the peak of the SPI was about $120, a share in the first half of 2021. By the time it needed in, I believe, around the middle of 2023, or maybe third quarter 2023, it was down to 65. That's a huge reduction,

Ben Kaplan  07:11

and explain for people listening that don't follow this closely. Why something as simple as interest rates, where people might think, hey, biotech is a risky investments to begin with, right? You invest a lot in these companies that don't have a product for years, sometimes decades. Right. So it's risky. So why does something like interest rates rising as it did dry up the capital source, when it's not like people are choosing between? Do I keep money in the bank? Or do I invest in a biotech are two different classes, but how does that kind of trickle all the way through in terms of the investment, right?


So in many ways, it is exactly what you just said. But there's a few other a few other prevailing winds there. One, if I'm an investor with $100, and I can make 5% return or better in a safe standard money market ETF or Treasury bill, I'm going to do that. But in a zero interest rate environment, that option isn't there, your money actually declines in value, because it's earning nothing. And so the capital that goes into more risky investments to try to seek that yield, grows. And so the pool of capital that's available in a low interest rate environment is massive, because everyone's looking to get their money to actually work is if stick in a bank,

Ben Kaplan  08:23

because all of these pension funds, sovereign wealth funds, all these big funders that in turn fund the people, the VCs or private equity or other things that invest in you, their funding source dries up, because they have other ways to earn a return on our capital. And it goes all the way through the system


that is much safer. Exactly. Add to that, as the money comes out the public, biotech companies fall in price. And that's what I was talking about that, that almost 50% decline in public biotech companies. And so Pharma. So how do VCs make their return? Either you go public, or you get bought. And so we're talking about the public markets no longer funding these these companies. And so the upside

Ben Kaplan  09:02

looks significantly less for an investor at this point, saying like, hey, maybe I'm not going to have the amazing exit that makes this all worthwhile, it's going to be something less than that the risk reward ratio is even worse, it's even worse than


worse. And so we're sitting there as a very expensive company to run as the bottom is falling out. And the shift in interest is away from biotech in general. And what does stay in biotech are really public companies that have gotten very cheap and have drugs already in human testing far better risk reward than somebody like us who's still in animal testing, and very

Tom Cain  09:41

economic changes have made it tougher for companies to secure investment, putting the pressure on them to be strategic as funding becomes more limited and costly. Previously, low interest rates made it easier to raise funds, but now each round of fundraising is more challenging than the last At Tome Biosciences, the team is feeling the pinch. They're having to stretch beyond the usual roles in biotech to keep the company running smoothly and efficiently. As excitement around gene editing wanes, it's crucial for the company to redefine its value to a market that's becoming more skeptical. Rahul is striving to push innovation forward while juggling tight budgets and keeping his team motivated. So how is Tom turning these obstacles into opportunities?

Ben Kaplan  10:35

I also want to go back and tell the story of what you had to do in the aftermath of that second round raise where you wanted 180 to 200 million, you got 120 million. What happens at that point for a capital intensive company, and this isn't just the type of company and the stage you're in. For other industries were like, Oh, we're gonna cut the marketing budget, we're gonna cut the like, just things that are kind of nice to have. But you don't really need I mean, presumably, at this point, you're long ways from product and market, presumably all the things you're doing as essential when you have like, you lose 1/3 plus of the budget you hoped to get. What do you do at that point? How do you change? How do you have to pivot?


There's two ways to go about it. One is, I would consider more brute force, knee jerk, obvious, simple, and one is more subtle, and more surgical, and ultimately better for the long term health of the company. So the first one is you can simply cut programs, right? You can simply say, Well, I'm going to cut X y&z program and all the teams associated with it, I'm just gonna start amputating parts of the business.

Ben Kaplan  11:43

What are those? Are those non essential programs? So the core mission? Are those extra things like what can you cut in this? How many different programs do you have? At this point?


Yeah, I mean, for gene and cell therapy company like we are, there's the potential for a near limitless number, limitless number of programs, given that we are entering new technologies into new disease areas.

Ben Kaplan  12:04

So you might think of a program is like an applied disease area, that you could tackle a technology, which is kind of like a platform that can do a lot of different things. And you're going to apply these areas, but you might not do so many of the applied areas that you can do it.


And you can cut yourself all the way back to where you're only working on one disease effectively, and you're not doing any core innovation, you're really just developing one product, and you're no longer really a platform company in that in that sense. That's not really the underlying thesis of companies like this, which are technology platforms, we're not developing one asset or one drug, we're developing a technology platform from which numerous drugs will spring. But that is the sort of obvious kind of knee jerk way of doing it. It's like, let's just start chopping anything we're doing on how we deliver programs, how we deliver the drugs, let's stop anything we're doing on anything besides our LEAD program.

Ben Kaplan  12:53

At an extreme, it could be like this, this sort of solve your problem in the sense of we're no longer a gene editing company platform, we are a disease X company for this. And you could pick a disease that's like sort of the the heart disease to cure or the trendy disease, right, which might help. So that's one option you could do.


That's one option. But in my estimation, that was not the right maneuver for this company, because we lose the essence of not just who we are, but the potential we have to deliver to society in the future. And so we made the more surgical decision and the harder decision, rat, we did cut some programs, some things that were more scientific fringe to what we were doing, enabling technologies that we were exploring with, and really one hype focused on not one, but a set of core programs that we want to execute that we think are not just the one but the several hot areas we can work in, in both cell and gene therapy. But more importantly, we had to throw away the old playbook of how you build a biotech platform company, where you've got individual vertical silos of different expertise, that then all work together, you're

Ben Kaplan  14:06

saying the normal playbook and you know, you've obviously been involved with a couple biotech companies before they've had billion dollar exits. But the normal playbook you're saying just for people who don't follow it closely is five subjects experts in these areas, they work in their area, and management, your role is to facilitate all of that working together. But everyone plays their instrument. If we're a symphony, you have your, your horn section, you have your string section, you do that and you keep them separate, and then try to coordinate right, that's the normal playbook.


It's a great analogy. And to carry that one step forward. What we did was say, well, we don't need the harps playing through the whole piece. We need the violence here, the harps here and the oboe there. So we're going to find a multi instrumentalist who can hop around and have a far smaller team, but still creating the same music. So

Ben Kaplan  14:57

people that are going to wear multiple hats. have multiple disciplines Did you know if those people exist? Because I mean, this is like highly specialized information. This isn't someone who can dabble in something, you have to have significant training and education and experience.


The interesting thing about our company is we started the company with a culture of, I don't use the word collaborate, internal collaboration, because that's somewhat cliche, but more a lack of internal walls, when I sit down with new employees once a month, and ask them, What was your impression of Tom, before you got here? And how is that lived up to your expectation, the UN, and it's surprising how universal This is. Every time I sit down with new employees, it's in our interviews, we got the sense that everyone at home was open, willing to teach no question what couldn't be asked, very accepting, very embracing of whatever background that was coming from, and that has borne itself out. And I think that culture, of camaraderie, and, look, if you don't know something, I don't care if you're just out of college, or this is your fifth biotech company and a senior scientist, I'm, if I've got something to teach you, I'd like to teach you if you're willing to learn. And so there are limits to this, of course, but we have manufacturing people and r&d people working side by side on the same projects in the same groups. That's almost unheard of. Because what we found is that when you hire people who in inherently have a passion to learn, and the seek to understand mentality, that a manufacturing person better understanding how an r&d person gets something off the ground, and an r&d person better wanting to understand how a manufacturing something scales something for clinic, they're very curious about each other's worlds, and they're actually happy to work together. So we were forced to not create those silos, and to internally cross pollinate expertise. And that's why we've been able to create a company under 150 people that has gone further on fewer dollars than any of our peers in the gene editing, in the history of gene editing.

Tom Cain  17:08

If you enjoy this show, you'll love

Ben Kaplan  17:11

TOP CMO with me, Ben Kaplan, there's never been a better chance or opportunity to do that. I


would definitely encourage marketers to be engaged in the product development process, because if you're banking

Customer 1  17:23

your brand's great moments, but it's the great brands that create movements. And that's the spirit

Ben Kaplan  17:28

of justice. This is the podcast where we go around the globe to interview marketing leaders from the world's biggest brands, fastest growing companies, and most disruptive startups available wherever you get your podcasts. To give people context on that, I mean, you've raised around 200 million, you're under 150 people, but in some industries could sound like quite a lot. But for your peers, as I understand it, I mean, you're you're dealing with like pure type companies that would raise 350 to 400 million, maybe twice as much and have at least 200 people. So you are kind of lean by industry standards for what you're trying to accomplish within


the gene editing world. I think if you look at biotech in general, you know, many companies that are that are even beyond where we are in human testing, are 60 to 80, people having raised, you know, under 150 million or 150, to 200. But like I said, Gene editing is a very different world. Most of our peers who are where we are, if not beyond are above 200 people and like you said have raised 350 to 400 million. Whereas we've gotten that far on less than 160 people on a 200 million raise, we haven't you know, we still have runway. So

Ben Kaplan  18:43

aside from the technical side, before of a CEO side or management side, I can see, depending on the people in the company, depending on the perception of those people, depending on the culture, what you just described could be described incredibly positively or incredibly negatively. The positive side has means, wow, this is exciting. We get to work with different people. And we get to learn about different things. And it makes us better and we get exposed to new ideas. That's one story. The other story is we're spread too thin. We don't have enough resources, we should have this other departments, other people, they're making me do this. This isn't how it should be run. And it's two sides of same situation, same circumstances, but the perception is exactly the opposite. So how does one get the former rather than the latter? If people are saying like, Oh, this is how companies are built, this is how they are. We have less resources,


less people. That's a phenomenally insightful point. And while we have had some individuals who have felt stretched and strained, we also have a HR department that works very closely with those individuals to understand what's the bottleneck is the bottleneck that you truly feel stretched and don't have enough resource versus if there's something going else going on in your life that's causing competing stressors. We are very close to our, our colleagues, when it comes to both anonymous and in person feedback on what the culture is and and how it's supporting individuals. But I would say the real answer to your question is that without even realizing it, and I guess it's better to be lucky than good. When we began the company, we recognized that we wanted to create a company that felt like a startup at 13 people, which is what it was around the summer of 21 230 plus, which is where we are now, no matter how far we grew, we always wanted that passion and intensity of a startup. And if you start with that premise, and you and you logically track it all the way back to what kind of culture do you want to build, you have to build a matrix environment where people feel like they're doing a lot of different things, and always engaged in what they're doing in the beginning of a startup. And I've done a few now, no one complains about being under resourced. They're all incredibly excited about this new venture.

Ben Kaplan  21:10

That's the appeal of it. That's the excitement of it, that you could go work for a 50,000 employee company doing X but you choose not to, because this sounds a lot more fun.


Now you're getting to the heart of it. And why is it that companies that grow to 100, or 150? Lose employee? One, two and three? Right? Why do they lose that enthusiasm and engagement that drove people to go into a company at the very beginning? And so we worked very, very intently to think about how do we preserve startup mentality when we get to 100 to 150, where we are now. And incredibly, so as we do our yearly engagement surveys, which talk about things like psychological safety, engagement, burnout, enthusiasm, are you learning from your peers, those scores have not changed year on year, it's incredible source of pride for us. But that is what has allowed us to stay on the heads side, have your perspective, which is this is great, I get to learn from my peers, every day is different, I get to do different things, I get a lot of transparency as to what's happening in the organization, rather than the tail side, which is I'm only supposed to be doing X, you know, I'm stretched, thin, et cetera, et cetera, I've actually found that our employees, my colleagues, really appreciate that they know exactly what's happening with the organization, there aren't silos where management is doing one thing. And then messages trickle down. At my month at my quarterly CEO chats with a whole company, he's allowed to come into a room and ask me whatever they want, at our monthly, what we call a tome halls, or town hall talk meetings. These are incredibly transparent discussions, everyone knows what's going on the challenges we have, that we have to be incredibly efficient, more efficient that our peers, and I actually had one employee come up to me and say you've chosen rather than to take some alternative investments that could have come in with some very punitive terms, to say, No, we're done raising, these are terms that are beneficial to us, and we're gonna better own science to drive us forward, you're betting on us and employees are coming to me and say, we appreciate that you bet that you have bet on us and our science to keep going rather than tried to jockey you know, money from whomever and wherever, even if ultimately, it might be damaging to the company.

Ben Kaplan  23:36

And has this affected your hiring now, do you specifically look for multidisciplinary people, people who want to interact with other types of scientists is Has that changed? And how you sort of screen and bring people in?


It hasn't, because the way we've screened and brought people in from the very beginning has served us so well, that we haven't changed it. So specifically, we have a policy, which is if it's not a Hell, yes, it's a hell no. Which means we have a panel of people, a team of people, that either of you any prospective candidate, and any one person can throw their hands up and say something doesn't feel right. And we don't go forward that individual. The specifics that we look for, are someone not only who is technically capable, and intellectually curious, but also someone who is open minded when it comes to learning new skills, learning from their peers, and giving back to the organization. And if things don't line up, there are plenty of phenomenally technically talented people who we've said no to, because they may be technically oriented, but their their personality was not one that was intellectually an an open and intuitively curious. And we look for all of that.

Ben Kaplan  24:50

Take me through that. What happened in the aftermath of you're going to take this approach, but you still have to execute right? So you say you're we're gonna do the more surgical way we're gonna kind of multidisciplinary, were more hands, we're going to get more done with less. But then he actually have to follow through on that. So what happens? Is it just work well, right out of the gate? Or did it take some fine tuning to sort of figure out? How are we even going to have managers that are managing more diverse types of people that might not have the subject expertise in the people they're managing? And was it some baby steps? Or did he get it right away,


we definitely did not get it right away. And your comment on managers is also very insightful. The core of our of our culture is very dependent upon our managers. And so we have put the resources that we can put in talent development towards manager training for those exact reasons that you, you know, very articulately highlighted, and it was, you know, again, really through all of 2023, focusing on being very transparent with the company as to where we are with with funding, that we have to move faster than we thought we had to with the resources that we have, rather than building as we thought we would. And really putting a lot of investing a lot in the development of our managers, we have a very young workforce, many of whom are managing for the first time, and it's putting a lot of support around them as to you know, how do you keep in close contact with those you're managing? How do you help them achieve their full potential? And how do you manage the inevitable friction that occurs when people are in a high stress, high pressure environment, we still operate in that sense, as a hybrid between a startup culture, but a larger, larger organization that has a management layer, and that management layer has to effectively function as if each one of their divisions as a startup in and of itself?

Ben Kaplan  26:40

And is your role as CEO, are you like a manager of an organization, it happens to be a technical field, but it's really actually about shepherding people and empowering people and getting them through like any other company, and then there will be and how much of it is like technical on your side technical, like, you're not doing the minutiae of it. But like the vision of where this is going, making the right technical bets, making sure that your technology, the ladder is up against the right wall. How do you view your job,


my role has shifted over my career from being highly technical and COVID. As the Chief Medical Officer and head of strategy to CEO of Pantheon, which was somewhat outside of my field as an autoimmune company. I'm a cardiologist by background, I still see patients in Boston. And so that's very much my technical field core video was a cardiology company. And although my my expertise was both in cardiology, and inflammatory diseases, Pantheon is an autoimmune disease, I still had some, some technical expertise to bring, although that was far eclipsed by our chief science officer, and eventually our chief medical officer, the field that I'm in right now. So in gene editing, I had no experience with before 2021, our chief science officer has been in this field for 20 years, our head of manufacturing and quality was on the leadership team at Maderna, during the ramp up of commercial activities, to save the world during the pandemic. These are individuals who are highly technically trained and have been through the crucible. And our head of HR who's been instrumental in our culture is one who cut her teeth in managing global teams for Big Pharma. So we have a highly technically oriented leadership team, who I fully depend on. And as I've gotten further in my career, I've gone further away from the technical and more towards setting overall company strategy and vision, and really being a sounding board for the technical experts who I consider far superior than I am in those technical matters. And I think one of the key things is they're knowing me that I'm caught up enough to be a sounding board for them. But more importantly, if something goes sideways, I will always be where the buck stops, I will always take the hit for something going sideways, which frees them up to make the kind of calls they want to take.

Ben Kaplan  29:07

I mean, less of a like, I need to cover my backside for this for the decisions, but like no, I feel like I have someone's got my back. So I can actually make the best decision and you think that wouldn't necessarily be the case or in an even in technical, you might make a decision like that just to protect yourself that would be different if you didn't have that cover.


And we see this in Big Pharma all the time, right? People protecting their careers, protecting their political standing in an organization. That's not to reason I'm Big Pharma. That's not an environment I work well in. And so really, I've seen and I really learned this from my first boss in pharma at AstraZeneca, who ran a mini startup within AstraZeneca was a very unique group. He clearly was not going to be a technical expert in cardiovascular matters when I was coming right out of a training program at Harvard. He was what he was going to do was protect me from all of the political winds that happen above my paygrade and that's really what I See, my job is to be a technical sounding board. For those who are actually on the ground doing the work, our head of quality and tech ops, our chief science officer, or chief of people, our finance, head, or head of corporate affairs, I am there to be a sounding board to them. But also if things go sideways, I'm there to protect them from anything that may come down from on high.

Tom Cain  30:22

To tackle tough economic conditions, Rahul and his team have crafted strategic solutions. They've honed their investment pitches, emphasizing the unique advantages of their gene editing technology to reignite investor interest. By showcasing its potential to transform medical treatments and offering a strong risk reward proposition. The aim to draw in more funding. Operationally, role has streamlined the company structure. Promoting roles that overlap functions to boost efficiency and cutting costs. This strategy taps into the team's varied expertise, enhancing their ability to innovate and solve problems quickly. To combat market skepticism, toma has also ramped up its public and investor relations, sharing success stories and trial data to better communicate their scientific progress and milestones. But are Tome Biosciences poised to tackle future challenges?

Ben Kaplan  31:35

Let's get back into the present day. Now. You've come a long way. Where are you in terms of like, what is the path ahead? What is the path to a product? And what are the challenges that you face now? New sorts of challenges, but some old challenges also in terms of investment, how your thought of what are the hot industries take us to the moment you're at now, we are


certainly not out of the woods when it comes to our asset class being disfavored. And you see that in the public valuations of gene editing companies, particularly the ones that have recently gone IPO have done terribly in the marketplace, this is continues to be a very challenging field that's on the negative on the positive side, we are far further in development and technical derisking than we were last year. And we have a far clearer sense of what our value proposition will be, as we have our eyes on moving into the clinic. So

Ben Kaplan  32:26

the first part when it says technical derisking, you've proven certain things out that make it more likely that the technology is going to do what it is supposed to do. Is that what you mean, take us through that the first part of that? Yeah,


I'll go one step further without speaking in too much detail, because I don't want to take the wind out of the sails of our scientists who will be presenting a lot of this data, particularly starting next month. But certainly as we get to the second half of this year, as we roll into some of the marquee scientific conferences for our sector in cell and gene therapy. And so I want to do you know, due respect to those scientists will be making those presentations and all the hard work they've done. It's not that we are more likely, as I speak to investors. Now, no one is asking us after they've been through the diligence on understanding our preclinical studies, the data that's rolling off of our preclinical studies and various model systems, no one questions that our platform is going to create drugs and no one questions that those drugs will be either first or best in class and all of the diseases we're going after those questions don't even come up, there is no longer a reticence to invest based on the technical realities of our business. Because we've come so far from that standpoint, the criticism that we hear is to the point you made earlier, there are things in our control and out of our control, the criticism we hear out of out of our control, these companies are expensive, there's still a long way from proving themselves out. And the entire asset class of cell and gene therapy is markedly out of favor today. So there's the the resistors that we're seeing are completely extrinsic to our business. And this is why I feel like those investors who vote who invest on fundamentals are seeing the value in our company.

Ben Kaplan  34:12

And to solve this issue. What do you actually need for the next round? How much are you looking to raise? What do you have to get to? Are you faced with the same dilemma as round to raise? Which is do we get the full raise we get we want to get or do we get some portion of that that causes us to have to be creative? Again, some


of the resistors are the same summer different I think, again, given how much technical progress we've made in the last year, the resistors around Oh, you're still too early from a technical side. Those don't exist anymore. But the marketplace forces and the headwinds, they're certainly do exist. The difference is we are far closer to being able to be a public company than we were last year. And so now it's more of how do we structure fundraising from here to the public markets, rather than Oh, wow, you've got you know, A few private rounds in front of you, this is going to be very hard to maintain, I think some of those stormy winds are behind us, we're not out of the storm front completely. But then you

Ben Kaplan  35:09

still have the problem of the valuations of the companies that are public. And your asset class limits the perceived upside that you have today, is that correct? That


is correct. But valuation is something that is solvable for your valuation is set in the private world by an investor coming in saying, I'm going to lead your next round, and I'm gonna set a certain price. And so what has happened historically, in our industry is as the public valuations come down, it takes time for that to trickle into the private market, because public valuations are set on a minute by minute basis based on whatever the public stock prices are. Private valuations are set at each successive round of investing. And so you only get a reset on price either up or down. Whenever a company goes out to actually raised, it's not moment by moment, like in the public marketplace. And so what we're seeing with a lot of our peers in the public marketplace, we've declined significantly in value, but even our private peers is that they're starting to reset their value as values now. So valuation is actually something it's painful for our investors, early investors, but it's something that can be solved for, it all depends on what the private price setting mechanism is, which are the conversations we're having with investors right now.

Ben Kaplan  36:20

Do you then specifically have a strategy than to look for the contrarian type investors that are out there? You can say contrarian, you could say, visionary, you can say there's a lot of people who've made a lot of money, seeing things when things went out of favor and investing in those do you specifically seek those out? Or how do you find those folks who would appreciate understand what you've accomplished? And what the potential is? The short


answer is yes. The longer answer is, I've never worked with momentum investors. Because if you think about the companies that have done, they've always been high risk, high reward. Core Vidya was the first company to truly build a dedicated anti inflammatory for cardiovascular disease. Pantheon was the first dedicated multi asset platform auto immune company, I've never done a me too, I've never done a bio better, I've never done a follow on program, everything I've done has always been highly innovative science. And so in general, the investors I've gotten close to over the years, are those who've been willing to take a risk. And so far, they've done quite well for doing so.

Ben Kaplan  37:27

And then what happens is just like, the perception of who you are, if it's that, oh, gene editing companies are now out of vogue, once that takes hold. What can you do about that? If you're like, oh, that's no, that's a gene editing company? Yeah, we're not we're not doing that. Now, no matter how good you guys are, no matter how great the team is about I agree that technology, what happens when you sort of get bucketed in these buckets? And how do you change the bucket you're in?


That is a great question, because that's the challenge we're facing. Now, as we're raising again, which is, we have come from middle of 23, and the second half of 23, to where we are now, we have made leaps and bounds worth of progress from where we were we raised our series B. In fact, you I have investors agreed with us that there's no substantive risk in our technology left to discharge, the amount of data that we've produced, and we'll be showing some next month at a scientific conference. And certainly, as we get into the second half of this year, we have really removed the key risks from our technical platform. Despite that, and particularly investors who have invested in my companies in the past and have done very well who have very strong relationships with who tell me exactly what they're thinking, some of whom I've been on the phone with this week itself are very clear. You've made Herculean progress on far less capital than any of your competitors, your technology is very, very clearly a standout. Even within the gene editing field, your your intellectual property is very strong. Your team is one of the best in the business, like everything lines up, but this entire asset class is out of favor, right now we're focused elsewhere. And that's really hard. Because there's no amount of data, there's no amount of logic that I can bring to the table when capital has become irrational, right? It's nobody is evaluating a gene editing company based on the fundamentals of the business. And frankly, as I talk to investors I'm very close with Why would even call a mentor. Their comment is it is times like this at the downturns of markets, when everyone else is afraid and going with the herd towards the safer investments, where when I take risks, I've had the best returns of my career. And so it's a more limited number of investors who've taken the time to look at us from a fundamental standpoint and see the value proposition objectively who are continuing to take an interest and talking about coming into our capitalization table and making an investment. So this is really the time in an industry as hard as it is for companies and I think there's a lot of Good that comes out of this, we've had to make a lot of strategic decisions that have strengthened us as a company, where from an investment standpoint, some of the best investments are made when no one is focused on fundamentals. The few that actually do that are the ones that end up winning big. And that history of biotech investing has shown that to us again and again, in previous cycles.

Ben Kaplan  40:19

Finally, how do you have to evolve in as CEO now for the company to realize its full potential, you've had evolution over your career, from the more technical side to some technical but a little bit out of your core area, to now much more of a manager side? What does your growth have to be next for the company to realize everything that can be


my entire career to date, and this is a conversation I was having with one of my current board members and mentor, who have been with for a couple of companies now, all of my companies to date have really been in fundraising is never easy. But it's always been in relatively easier fundraising environments, where we're where there was a lot of money flowing into biotech. And what we're in right now is what, and so moving from a peacetime to a wartime CEO has been my major evolution over the last year and a half or so, which is really having to be a lot more ruthless at times, cold blooded at times objective. And this is part of the function I also serve on leadership team is, you know, my colleagues on the leadership team are very, very close to their teams. They're emotionally invested in the individuals and the careers of their reports, and I respect them for that, I admire them for that. But there are times where I'll have to say, look, it's a matter of this company surviving in a world where capital is far less plentiful than what our peers had to deal with. So even though you've worked in cell and gene therapy before, or an RNA therapeutics before, you've worked in times when capital is plentiful, we're going to have to do things differently. And we're going to have to do things in a way that's going to be uncomfortable at times. But I'd had to be that words, I've had to learn to be that wartime CEO.

Ben Kaplan  42:02

And are you as a wartime CEO? Are you a Iron Fist? In a velvet glove? You put a nice exterior on it? Are you a, I don't know velvet fist and an iron glove? Are you iron an iron? What have you learned that you have to be to make tough calls tough decisions, also keep the support


of your team. I've liked the way you said that. I had more of a direct message in the leadership team. And let's go get a shot in a beer at the end of the day kind of CEO. So we're going to make some tough calls during the day and we're going to have some heated debates and arguments and, and healthy arguments that get us to the right decision. But at the end of the day, I'm going to take you out and we're going to have an honest conversation about how just hard this is. And the way we do this is by by leaning on.

Tom Cain  42:52

Navigating a tighter investment environment demanding fundraising efforts and the necessity for operational creativity has been a challenging journey for Tome Biosciences. Here are the key takeaways from this episode. Firstly, the ability to adapt is essential. The shift that Rahul made from focusing solely on growth, to adopting a more resource efficient strategy really underscores the importance of being flexible as a leader, particularly when economic and market conditions are constantly evolving. Secondly, clear and effective communication is key. Whether it's engaging with skeptical investors, or keeping a team motivated under pressure, the ability to convey a clear vision and value is vital. Finally, a commitment to innovation, even when faced with significant obstacles reflects the kind of resilience necessary to lead at the cutting edge of technology. With that, it's case closed

Tom Cain  44:05

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