Angel Invest Boston is sponsored by Peter Fasse, top life science patent attorney.
Repeat biotech founder Todd Zion on SmartCells (acquired by Merck for $500MM) and his current venture Akston Bio which is doing cool things with proteins. Todd has valuable insights on VC funding, angel investing and founding teams. This interview’s a peach!
Click here for full episode transcript.
Highlights:
Intro of Todd Zion, PhD Co-Founder of SmartCells (Merck) and Akston Bio
Todd Zion Was Fascinated by the Potential of Polymers to Do Powerful Things
Smart Drug Delivery – Making Insulin Adapt to Blood Glucose Levels
“…then got bitten by the bug, like I said, of the entrepreneurial spirit that runs quite strong through MIT.”
“…with SmartCells, we made a conscious effort to build a company that could be capital efficient and achieve what angels want out of an investment…”
Jeff Behrens’ Experience at Siamab Is Discussed
Todd Zion Is Leery of Raising Big Money Because It Raises Costs
“…you should always be betting on the jockey and not necessarily the horse.”
“Sometimes you may throw out really good ideas, due to a lack of resources.”
“…anyone with ten million spends the last million better than the first nine.”
“...in a venture-funded world, there's a huge amount of price inflation.”
“…if anyone wants a job at Akston, you can get a covered garage parking in the winter.”
Akston’s Basic Technology: Coupling a Protein to an Antibody to Enhance the Function of the Protein
Reversing the Body’s Autoimmune Response to Insulin Which Causes Type 1 Diabetes.
The Importance of a GMP (good manufacturing practices) Facility of Your Own
Creating an Ultra Long-Acting Insulin for Dogs & Cats
Akston Pivoted to Making a Protein-Based COVID Vaccine
From the Design of the Molecule to Human Trials Took Only 11 Months
Advantages of Protein-Based Vaccines: Easy to Make, Easy to Store and Contain No Genetic Components
Akston’s Protein-Based Vaccine Is Expected to Be as Effective as J&J’s
Parting Thoughts from Todd Zion
If It’s Easy and Obvious You’re Probably Doing It Wrong
Advice Applies to Angel Investors as Well
Making Money Is Important But, You Need Deeper Motivation or You’ll Quit
Repeat Founding Teams Can Be Really Powerful – The Blues Brothers
Transcript of, “Magical Proteins”
Guest: Repeat founder and CEO, Todd Zion, PhD
Sal Daher: This podcast is brought to you by Peter Fasse, patent attorney at Fish & Richardson.
Intro of Todd Zion, PhD Co-Founder of SmartCells (Merck) and Akston Bio
Welcome to Angel Invest Boston, conversations with Boston's most interesting founders and angels. I'm Sal Daher, an angel investor who is very curious to find out how to best build really great technology companies. Today, I am privileged to have with me as my guest, Todd Zion. Founder of Akston Bio, which is a very interesting company. Todd is a successful second-time founder. He had an exit to Merck, a $500 million exit to Merck of a diabetes therapy, which we'll discuss later, insulin therapy. Anyway, welcome, Todd.
Todd Zion: Thanks, Sal. It's a pleasure to be here.
Sal Daher: It's tremendous. Now, the other interesting thing that Akston Bio is working on is actually a COVID 19 vaccine that's shelf-stable.
Todd Zion: That's correct.
Sal Daher: We're going to get into that. Let's just start a little bit with the story of SmartInsulin (SmartCells). That's the company that got sold to Merck. How did it come about and what is SmartInsulin?
Todd Zion: Yes. Well, maybe to start out with, I'm a chemical engineer by training. I did my undergrad at Cornell. I spent a couple of years working for Eastman Kodak in Rochester, New York back when people were still using film in their cameras. Some of your younger listeners have no idea what I'm talking about. After that, I made my way to MIT, where I started the PhD program in chemical engineering there. It was in that environment where I got bitten by both the technology bug for developing this cool glucose-responsive insulin technology, and also just the entrepreneurial bug.
Todd Zion Was Fascinated by the Potential of Polymers to Do Powerful Things
Maybe from the technology standpoint, to start out with, I had been fascinated with materials, polymers, things that you could build in a lab or a manufacturing facility. Up until that point, most of the materials I'd worked with were just holding space. They're either particles to act as matting agents or various structural kinds of things. I had become fascinated with this idea of getting them to do things, smart things, and actually respond to their environment.
Smart Drug Delivery – Making Insulin Adapt to Blood Glucose Levels
I joined a lab where they were trying to spearhead a project in what would be generally called Smart Drug Delivery. We picked a project early on, which I think is the most direct connection, which is to deliver insulin in response to the patient's blood sugar levels. I don't know how much your audience will know about diabetes, probably a bit because it does affect quite a few people in the world. There's Type 2 and Type 1 diabetes. In any event, a good number of people, certainly 100% of the people with Type 1 diabetes are insulin-dependent. They have to take insulin. Actually, a fair number of Type 2-
Sal Daher: Maybe a brief explanation of Type 1 diabetes as an autoimmune disease, it depletes the ability of the body to produce insulin.
Todd Zion: Well, there you go. You did a great job. Yes, it is an autoimmune disease. About 30,000 people in the United States are diagnosed each year. About half of them are young children under the age of 12. The autoimmunity really sets in early on, and then it's a lifetime of insulin dependence. Then in Type 2, it used to be called adult-onset, but there's a combination of environmental factors, diet, exercise. Certainly genetics. While you can start out and fight it with pills or even diet and exercise, eventually, it can progress to where you become insulin-dependent. About a quarter or so of the people with Type 2 diabetes are insulin-dependent.
The biggest problem with insulin is that-- Well, it's very potent. It can lower your blood sugar and cause your cells to take up the blood sugar and use it as energy, but it doesn't know when to stop. If you are not taking in enough food or you're taking too much of the insulin, you can go into what's called hypoglycemia. That's dangerously low blood sugar. A fair number of people actually die every year just by overdosing on insulin.
An entire infrastructure is built around administering insulin by injection, which is to test for blood sugar, count carbs, think about whether you're exercising or not. Each person has to become their own pancreas, which is quite laborious. If you're a young child, then that really falls on the parent to tap to do that. Ideally you want an insulin that turns itself on when the blood sugar is high and calls for it and it turns itself back off again when the blood sugar has dropped to normal, and that was the focus- [crosstalk].
Sal Daher: So, you were able to achieve that?
“…then got bitten by the bug, like I said, of the entrepreneurial spirit that runs quite strong through MIT.”
Todd Zion: Well, yes, after some period of time, I like to say you fail every day until the last day when you finally succeed. It's not a very linear path. When we were at MIT, I developed the fundamental workings of it, got it working in some animal models, actually in collaboration with the Joslin Diabetes Center, just across the Charles, and then got bitten by the bug, like I said, of the entrepreneurial spirit that runs quite strong through MIT.
Back then-- Well, they still have it. It's called the Entrepreneurship Competition. It was the 50K at the time. Now it's the 100K, and inflation will take it to ever-increasing heights. I entered a business plan in that with a team and we won actually in 2003, and I think it was right after that, I said, "Geez, we got to figure out a way to get this out and develop it."
It was an interesting thing because the risks associated with it at that point were not as academically interesting. Things like manufacturing, safety, packaging, dosing, all that, but there were still critical risks to the point where you couldn't convince a pharma to license it at that stage. I looked at the enterprise as being a conduit, really a value creator by raising money and deploying it to knock down that technical risk.
Sal Daher: Basically, when you de-risked it enough, then Merck was willing to step in and buy the company and now has a product offering.
Todd Zion: They have it, it's in clinical trials, although I would say, and I'm not sure how much I can reveal, but it went into the clinic. It showed that it worked, it showed that it was safe. I think the biggest drawback at that point for that formulation was that you needed to dose a bit too much of it to get the effect, so it wasn't considered to be as cost-effective as it should have been, but I will say that regardless of the outcome, and it's something we can go into, when you start a company working on that kind of technology, you are entering a potential black hole of resources. To mount a full clinical development program is difficult, challenging, and costly.
You have to, at some point, find the heir apparent of your technology. The only question is when and for how much value can you consummate that transaction, and we were able to do it, I think, at a time that seemed right.
Sal Daher: When you say heir apparent of the technology, you mean the player to whom you can hand off the technology that has the resources to continue to develop it?
Todd Zion: That's right. Whether it's by raising a large venture round at that point and bringing on maybe a more seasoned team, or in our case, finding an acquirer that already had those skillsets and those resources in-house and had the commitment to the end market application.
Sal Daher: Todd, why is it that you didn't just stay in academia, discover the science, and develop some of this technology?
Todd Zion: I think a lot of it just had to do with- I don't know if it's in my DNA or just throughout my experience, I really am enamored with seeing things working in the real world. I'm actually enamored with the messiness of the real world, even though it's incredibly frustrating. I saw a lot of great science around me that I could tell would probably not see the light of day for the masses because of- you could fill in the blank, but there are a number of things. I really got interested in what could you do with good science, but then apply the filter of, "This has to be ready for the masses and it has to be manufacturable, cost-effective, it has to deal with regulatory challenges."
Sal Daher: Very interesting. I understand that in your career so far, you've raised $50 million from a variety of investors, private investors and angels. What role do angels play in raising that kind of money? Because usually angel rounds, if you really push the outer limits, it's $5 million if you're syndicate and so on.
“…with SmartCells, we made a conscious effort to build a company that could be capital efficient and achieve what angels want out of an investment…”
Todd Zion: It's a great question. I think early on with SmartCells, we made a conscious effort to build a company that could be capital efficient and achieve what angels want out of an investment, but do it in a realm where angels normally don't belong which is in biotech or life science investments in general. The way we really thought about that is that we were going to have to find others to do the heavy lifting for the technical risk in order to offset the limited capital that's usually at the disposal of angels.
At that company, we raised about $10 million over six years and brought in about that same amount from NIH, SBIR grants, a collaboration with the Juvenile Diabetes Research Foundation, we had a DOD grant, and it's that marriage between the two that I think is really fascinating. We recognized that we had to be able to do this without taking on a very large venture round because if we did, the angels would not be happy with their position in the company.
Sal Daher: Dilution would be too much. Who were the angel groups that you worked with on this?
Todd Zion: Now it's kind of a network beyond just the angel groups, but in the early days, we had the Boston Harbor angels, which has- well, they used to be something called the Keiretsu Forum. That's a great group. That group has evolved over the years. Love everyone over there. There's a group called Cherrystone out of Rhode Island.
Sal Daher: Yes, I've co-invested with them in a couple of startups.
Todd Zion: We had folks come in, not as organized through the groups, but from Launchpad and Common Angels back when Common Angels was still- I don't know, maybe they're still around, but they were active. Then we had just a group, I would just say the high net-worth individuals that we found either through, in that case, the diabetes community. So, folks that had wealth and were interested in our application, or in other cases, connected through investors that came in through the groups. Then they extended the network beyond those groups. Now I think that it's even amplified more because, at Akston, we have not only the former investors who did well, but also people who want to hopefully be part of a similar thing or at least be a team that's proven itself once.
Sal Daher: That's outstanding.
Todd Zion: Oh, MIT Angels is actually involved recently in Akston. They didn't get involved in SmartCells, but I got a few folks in, and that's a great group. Actually, I would have probably never had a chance, but the age of Zoom and being able to really speak with folks on the West Coast or other places without leaving town, I think that's helped a lot in some respects.
Sal Daher: That's outstanding. Do you know Jeff Behrens?
Jeff Behrens’ Experience at Siamab Is Discussed
Todd Zion: I know Jeff well. I knew Jeff back when he was at- I think Edimer was his company before. I had just sold SmartCells right around when he started up at Siamab. I was an advisor to him, and an investor, and love what he did over there. There's an example, to be quite honest, is if you put him in front of a technology that was even more robust and sexy, I can't even imagine what he could have done. He was really able to accomplish a lot there.
Sal Daher: One of the things that he took away from that experience was how hard he tried to raise venture money to back Siamab and he was not able to, and he had to do it all with angel money, and he ended up raising $14 million of angel money. He had strategic money and so forth. He went on to do research, a PhD precisely on the funding of life science companies and came up with this concept of the charmed circle of startups that are either one of the founded entities in one of the big venture capital firms, Moderna's a little bit like that, or someone who comes out of the Langer Lab or one of these places who get a lot of attention. If you're not, life is very hard. It's not just money. It's also supporting them with talent, helping get the kind of advice and support that they need. It's just going to be a lot more of these companies because of all these technologies that are developing so much.
Todd Zion: I agree. I think I've experienced a similar situation as Jeff, although I guess having hacked through it with SmartCells one time, I was able to at least be able to call on a set of resources as a known entity or at least more known.
Sal Daher: That's part of the charmed circle, being a successful second-time founder.
Todd Zion Is Leery of Raising Big Money Because It Raises Costs
Todd Zion: That's true, but I do think there's a limit to that. I think too that when you want to build an enterprise or let's even just say an asset, there's something to be said about not wanting to take on more and more overhead just to get that incremental amount of money. I do think that if you go to the institutional route, you find that even though you're able to bring in now, instead of 10, maybe $50 million, you're also spending a lot of that money on maintaining the enterprise. You've got to have a very large now board of directors and they all have to get their voice in. Then there's getting a big HR and all the liabilities of hiring the big law firms. I do think that there can be diminishing returns on going out and raising those large rounds as well. I think it is a question of style and approach too, but yes, there is the blessed few out there that seem to be good.
“…you should always be betting on the jockey and not necessarily the horse.”
In their defense, and this is something I tell angels all the time, having been a Common Angel investor, albeit quite an amateur one, not a very successful one, is that you should always be betting on the jockey and not necessarily the horse. You all know it, but that ends up being a problem for some folks that are sitting on really good technology, but for whatever reasons, they can't get the team thing figured out.
Sal Daher: Angel investors, since they are investing their own money, their decision is a very personal one. They decide whether or not they like the person they're investing in. That's how they make the decision.
Todd Zion: It is, but sometimes I'll see angels and they'll be sitting and pouring over technical data when they have no business to, and I'll sit in the room and meet the CEO and go, "Gosh," after five minutes, "I don't think this is going to work out so well." Yet there is that disconnect sometimes. I don't know if they just get enamored with the technology so much that they turn a blind eye to who's presenting it. Anyway.
Sal Daher: That is interesting. Would you care to discuss the pros and cons of having lean funding, of not being richly funded? We've talked about the downside of being richly funded. What's the downside of not being richly funded?
Todd Zion: There was the obvious that you always seem like you need more money than you have, but I think that's true almost at every level. I think that the biggest challenge is that you're constantly-- It's a challenge and it turns into an asset, but when you have limited resources you have to be very, very focused, where are you going to spend those resources?
“Sometimes you may throw out really good ideas, due to a lack of resources.”
Oftentimes, with a technology company, there are just way too many ideas than you'll ever be able to fund. You spend a lot of time triaging those sorts of things and it's frustrating because they are good ideas. Sometimes you may throw out really good ideas, due to a lack of resources. I do think that if you develop a way of doing that well, you find that you can be very good at being efficient with those resources, and therefore, I think ultimately, getting more for every dollar spent than you would in the higher funded scenario, or put differently, anyone with $10 million spends the last $1 million better than the first 9.
“…anyone with $10 million spends the last million better than the first nine.”
Sal Daher: [laughs] No doubt.
Todd Zion: If you're getting it at $1 million at a time, you tend to do better. I do think the other thing is that you end up spending more of your time raising money. If you're raising limited amounts of money and getting to the next milestone, you do find yourself out on the road more often. That's just another nature of it. The CEO does spend less time strategizing about what to do with those resources just because they're getting the new ones in, but if you have a good team, that can still work out pretty well.
“...in a venture-funded world, there's a huge amount of price inflation.”
The other thing is, you do find that, in a venture-funded world, there's a huge amount of price inflation. What I mean by that is that everyone needs legal representation, but if most of the money paying for legal representation is coming from venture-funded companies, the cost per hour of a good lawyer that knows what they're doing in this field is much higher. The same goes for manufacturing, assays, and all sorts of other things, and employees. All those things, there's just so much more money being thrown out at it because of the institutional venture money that that becomes frustrating. You've really got to convince folks to come on board, for example, working for equity, and less about the salary and the perks and other things that you might get at a venture fund.
Sal Daher: Right. That's very true. Another thing that gets inflated by venture money is the cost of lab space.
Todd Zion: Yes. We're up in Beverly, Massachusetts, up in the Cummings Center.
Sal Daher: That's a good place to be.
“…if anyone wants a job at Akston, you can get a covered garage parking in the winter.”
Todd Zion: We love it up here. Ample parking, if anyone wants a job at Akston, you can get a covered garage parking in the winter. No cost, plenty of space, but we couldn't run a company with this funding structure in Cambridge, these days, or Boston, not at the price per square foot for an empty space.
Sal Daher: Well, actually, we're talking about that. Why did you start both companies here in the Boston area?
Todd Zion: I guess, to start out with, I was here at MIT. In the early days, most of the advice I was getting was centered around that area. I went to MIT's Venture Mentoring Service, which is a wonderful organization. If folks don't know about it, and you have a connection at MIT, I encourage you to reach out to--
Sal Daher: An excellent organization. Yes.
Todd Zion: Then we had the technical expertise and the initial folks that I was recruiting for my team, all around me at MIT. We just didn't think about going anywhere else because we had the key assets early on. Yes, the first decision to break out of our Cambridge-Boston bubble was when we were looking for lab space. That brought us up to Beverly, where we subleased from a company that was mid-stage pharma, and we're able to build more of the company with less money by not spending it on rent and spending it on experiments.
Sal Daher: Excellent. Let's talk a little bit about Akston.
Todd Zion: Sure.
Sal Daher: Describe the basic technology that you're using because I understand it's a platform for engineering proteins. Can you give me a general description an intelligent layperson can understand?
Akston’s Basic Technology: Coupling a Protein to an Antibody to Enhance the Function of the Protein
Todd Zion: Sure. Well, I think that the platform itself can be best described as taking a protein of interest and hooking it on to the business end of an antibody, to make the protein work in the body in a way that either enhances its effect or just changes its effect in a useful way.
What got us on to doing this, and by the way, others do use versions of this technology, it's just that I think we've honed it in for some very unique applications that would not have otherwise been thought about for this. The first and I would say the most ambitious program, which is supported by nondilutive funding in the form of the Helmsley Charitable Trust as well as the NIH, is in Type 1 diabetes, so it's going back to our roots in insulin.
Reversing the Body’s Autoimmune Response to Insulin Which Causes Type 1 Diabetes.
Here, we have an insulin attached to the part of the antibody that I've described, that then essentially goes in and can reverse insulin autoimmunity as it relates to the development of this autoimmune disease. One of the first things that can go wrong in young children, especially as their body starts to develop an autoimmune response to their own insulin, and eventually that cascades into other antigens, and ultimately, there's a cellular response at the pancreas level. Our idea is to make this compound that you can give to people who are at risk of developing Type 1 diabetes, to short-circuit that process. That's kind of an interesting technology. It's on the doorstep of running clinical trials. We did get a hiccup during COVID, which I can tell you about our pivot there, but basically have it GMP manufactured. We have all the characterization, we have a place to run the clinical study that's agreed to do that for us. That's moving right along.
Sal Daher: Explain the significance of GMP manufacturing.
Todd Zion: This kind of dovetails into the whole angel funding versus venture and all this is that I believe that you really do need to have human proof of concept data in the pharmaceutical space to get a meaningful transaction and to effectively hand it off to the heir apparent that we talked about before. If you're going to do that, you are regulated by all sorts of rules and laws. The most significant is that you need to manufacture it according to good manufacturing practices or GMP.
There's a whole litany of rules associated with this, and that pertains to not just how you make it but where you make it, and how you characterize it once you've made it. With proteins like the one I described, those need to be made in what's called a clean room, so you have to ensure that no viruses or bacteria can have any chance of contaminating because you're making this stuff in cells, then you have a whole host of tests you have to run on it to prove that you have what you thought you had and it's at the right concentration.
The Importance of a GMP (good manufacturing practices) Facility of Your Own
We've built our own GMP manufacturing facility here in the Cummings Center in Beverley because if you want to go out on the market and get someone to make something for you, GMP, you go to a contractor like-- Well, there's a bunch out there, Catalent, Lonza , or one of these companies. If you want to make one batch of GMP material, you're probably talking about five to seven million dollars. If you have five products that you want to test in people-
Sal Daher: [laughs] The money goes very quickly.
Todd Zion: For about the same amount, we built our own facility and now just for labor and consumables, we can pump out GMP material, so that's the significance.
Sal Daher: Excellent.
Creating an Ultra Long-Acting Insulin for Dogs & Cats
Todd Zion: Then we said to ourselves, "Well, geez, if we can get that part of the antibody to no longer interact with the immune system, but take advantage of the other part of it which causes it to circulate over long periods of time, could we create an ultra-long-acting insulin?" Indeed, we've been able to do that, so we have a once-a-week insulin that is actually partnered up for dogs and cats who have diabetes, and if you don't know anyone right now, I guarantee you when you're at dinner or something, you're going to hear about it.
Sal Daher: A diabetic dog, okay. [laughs]
Todd Zion: Or a cat, yes. You'll hear about them chasing around the house trying to inject them twice a day, wearing chainmail for the cats, that's the status there. Because you have to run animal studies anyway, we decided that we would design a dog version and a cat version, and we've partnered that up with a company called Dechra. Then we have a human version that's about ready for clinical trials. Then the last thing that's worth mentioning, maybe the most important is the COVID vaccine.
Sal Daher: That was your COVID pivot?
Akston Pivoted to Making a Protein-Based COVID Vaccine
Todd Zion: Yes. That was my COVID pivot, and you think, "What is he talking about? He's got cat diabetes, he's got Type 1. What is he doing?" Rest assured, they are all really built off the same platform. You just have to tweak different parts of the molecule and you can get it to perform for these different verticals. With that same facility I've described, we can reach all these different areas, but with COVID, what we have is we took off the insulin part and put the receptor-binding domain-- If you look at the Coronavirus, they have these corona spikes. At the very tips of each of those spikes is what's called the receptor-binding domain and that's what binds to our cells and causes the virus to gain entry.
We fuse that with the part of the antibody. To the immune system, it looks like an antibody has already grabbed onto this and is presenting it to the immune system. You mix that with something called an adjuvant, you have a very potent protein-based vaccine.
The cool thing about it is because it's all based on protein and antibodies, that you can manufacture tons of this stuff for dirt cheap and it's stable, we talked about this earlier, it's stable at room temperature, you can actually heat it up to a hundred degrees for a couple of weeks and it still maintains its stability.
Sal Daher: It's basically a synthetic antibody.
From the Design of the Molecule to Human Trials Took Only 11 Months
Todd Zion: Yes. Normally your body has to create the antibodies and then it kicks off a cascade. We've already made the fusion between the two. Now, all we have to do is let the body do what it normally does. It's pretty cool. It's in clinical trials. Actually, the coolest thing about it is that I guess- what are we at? We're at June. I would say in late April of last year, we wrote out the potential designs of this molecule, having no idea whether it would work at all.
In early- about, I would say, 11 months after that, we were injecting our first subjects in the Netherlands, in the EU, and have now completed injections on 60 subjects, and about ready to start another 120 at the end of the month. It's pretty, pretty amazing.
Sal Daher: That is awesome. There are three vaccines that are approved in the United States right now. Is there room for another vaccine, albeit a shelf-stable one?
Todd Zion: There should be. The United States is tough because the FDA has already said now that they're not approving any more vaccines under emergency use unless you're already in their system, which is a shame in some ways. I think that we have to look at it from a few standpoints. The first is that every vaccine that's ever been approved in the history of man has either been a protein or has been a killed version of the virus.
Advantages of Protein-Based Vaccines: Easy to Make, Easy to Store and Contain No Genetic Components
None of those has been approved in the United States yet. None of those technologies, neither of those, it's all been only mRNA and DNA adenovirus vector through Johnson & Johnson. The idea that we have these vaccines, it's true, but we don't have anything that's built on what I would say is the more traditional technology, and there are folks out there who really don't want genetic vaccines genetic vaccines. There's that.
The second is that you have to worry about boosters. There's plenty of data out there. The J&J type vaccine is an adenovirus. What ends up happening is your body develops immunity to the vector itself. You have to keep injecting this thing, you're going to run into trouble. I think they're also showing that with the mRNA. The more times you inject this, the more severe the side effects are. I do think that from just a fundamental- "Is it safe and does it work?" I do think there should be room for that. We're not going to belabor that. I think that there are probably about 5 billion people left in the world that still need this.
Sal Daher: Oh, absolutely, yes.
Todd Zion: The problem there is that you can't even really--- Even if you wanted to export all the mRNA vaccines, to keep them cold, it's just not-- Then the price points. Our vaccine, we could sell for five bucks a dose and still make a profit. You're just not getting there with the designer vaccines. I think there's room for us in the world. I think also as a new platform for designing vaccines for the future, I think we've at a minimum proven that out in the early clinical studies. It's exciting.
Sal Daher: That's good. Basically, you had your facility set up, and this is one more thing that you're putting through in addition to the cat diabetes and dog diabetes.
Todd Zion: Yes. It leapfrogged a couple of things due to the pandemic and the need to get things through. Actually, it's put our facility through the paces sooner than all the other products would have so. Because there's such an urgent need and the amounts of material we need are so great, it's caused us to really turn the screws on the facility and make sure it can deliver. We, as a platform, benefit tremendously from this endeavor, no matter what happens.
Sal Daher: Basically, the big differentiator with the existing vaccines is that you don't need the cold custody, maintain everything cold, and the cost.
Todd Zion: Yes. Related to the cost is that a single bioreactor in our facility can produce anywhere between 50 and 100 million doses a pop. Obviously, that translates into low cost, but it also translates into having much more production capacity worldwide than you can for any of the other technologies.
Sal Daher: Your vaccine, you inject it. Is it delivered in any way, or is it just the proteins are suspended in fluid?
Todd Zion: Yes, it is a two-part mixture, like some of the conventional vaccines, and an adjuvant, and then it's injected under the skin. It's a fairly straightforward delivery system.
Sal Daher: It doesn't have to be encapsulated in LNPs or anything like that.
Todd Zion: No.
Sal Daher: Lipid nanoparticles. Okay.
Todd Zion: Yes. It's just protein and adjuvant straight off-- The adjuvant's straight off the shelf kind of stuff, already been in hundreds of thousands of people.
Sal Daher: Looking at vaccination rates in Massachusetts, it's slowing down. I think we're getting to the point where there's a bit of vaccine resistance among people. I imagine- well, not that it could ever get it approved in the US, but if you had a protein-based vaccine, I think it doesn't involve any mRNA or anything like that, I guess it would be a great selling point.
Todd Zion: Yes, I think so. Around the world, it's almost like the difference between a vaccine and no vaccine. It's not whether you get this one or another one.
Sal Daher: Are you willing to speculate at all on how much protection it'll give?
Akston’s Protein-Based Vaccine Is Expected to Be as Effective as J&J’s
Todd Zion: Well, I think that will probably be just as good as the J&J vaccine. The only thing that we can compare to is- because all the assays are different, but if you compare it to convalescent serum, so this is basically people who were infected, presumably developed a good immune response, were at or above those levels with our injection regimen, which is I think a pretty good standard to compare, I do think that this will be true for all the vaccines is that there will be some level of waning immunity, which will require a boostering, at least until we get out of the pandemic mode. That means lots more people need to get vaccinated. I think as variants arise and as antibody levels drop, we're going to want to maintain immune vigilance for as long as possible. I would say, if you can get into a yearly injection regimen, that would be good for any of the vaccines that are in play including ours.
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Parting Thoughts from Todd Zion
Todd, as we think of wrapping up our interview and this conversation about vaccines, take a moment and think about as a repeat founder, successful founder, what you'd like to get across to our audience of founders, people who are thinking about founding companies, of angels. What would you like to tell them that we haven't touched on so far?
If It’s Easy and Obvious You’re Probably Doing It Wrong
Todd Zion: There are a number of things. I think we start with something that is probably obvious, but if it seems what you're doing is easy, you're probably doing it wrong. We all get enamored with the story of Facebook or, some other- it was just shot out of a cannon, and everyone's having fun on a beach somewhere. I think the reality is it's just rough and tumble.
You really ought to be experiencing difficulty and that's okay, that's normal, and get used to it. Learn to live with that uncertainty and having lots of rejection and failure. I think if you're not ready for that, probably this isn't the milieu for you. You could get lucky, but that's probably not the best strategy. That would be the first thing.
Sal Daher: That's extremely valuable advice. Very realistic advice.
Advice Applies to Angel Investors as Well
Todd Zion: Yes. I think that goes for the investor side of it, the angel investor side of it, as well as the founder and management side of it.
Sal Daher: Todd, that is really, really important to emphasize, particularly investors who might be first-time investors in life science. They have to understand that it's not like a software company, where if you put enough money, you can build a code that works, that's reliable. In life sciences, you're dealing with evolved systems, biological systems that are complex. You're also dealing with having to acquire human samples of COVID.
Todd Zion: Regulated. Just think about the-- I joke around with my partner, Tom Lancaster, who was my labmate back at MIT. We've been with each other since 2000.
Sal Daher: Are your co-founders?
Todd Zion: We are co-founders, yes, both SmartCells and Akston. We just joke around that, "Geez, we just picked the wrong field to be in. We wish we were in a basement somewhere, coming up with some code for the next thing." We say it half-jokingly. I think that what drives us is the high-level alleviation of suffering through new medicines. I think you have to be bought into that vision.
Making Money Is Important But, You Need Deeper Motivation or You’ll Quit
I think that was the second thing, it's a good segue into the other thing, which is making money-- Yes, you've got to make money. Your plan has to be a plan that's targeted toward making money. I oftentimes find that those who are the most successful have a higher-minded vision to the whole thing that helps get through the rough patches. If you're constantly worried about making money for the sake of it, I don't think that can sustain you through all those ups and downs purely. I think you're likely to move on to something else, and you do see folks like this out there who when the going gets tough, they find another gig and do that thing. If you're really doing the angel thing because the angel thing, remember, it has no safety net, there's no 2.0 of the company. If the key people leave, that's usually it.
Sal Daher: Well, that's the main reason why companies fold is that the founders give up.
Todd Zion: Yes. You've got to be ready that it's going to be tough, but you also have to have something guiding you mission-wise, that maybe goes beyond just making the money, although, you do need to keep your eye on that.
Repeat Founding Teams Can Be Really Powerful – The Blues Brothers
Then the other thing, I think, that's really, really important, is that early team recruitment, organization, and connection. I have Tom and then Jim Herriman is my other co-founder, each of us wears a different hat, and we all know each other's strengths and weaknesses.
I think you have to have a nucleus there that's beyond one and probably isn't much greater than three, I don't know, maybe it could be four or five, you don't want too many people around because then you just can't make decisions. I do think that's really important and paying attention to that because once you get in the pressure cooker, you've got to know you have a solid core team there willing to dig in and help you out.
Sal Daher: Right. Excellent. Repeat co-founders. I see this, for example, Jeff Arnold and Waseem Daher at Pilot, they founded two companies together before. Mike Singer and his co-founder in two previous companies, they were together at med school MD/PhD program, and they've founded three companies together. Explain a little bit further why it's so powerful to have that kind of relationship.
Todd Zion: I think it starts with a realization that finding good people that can connect with you on your wavelength, and make something together, that's a very difficult thing to find in general. Once you found it, and it's proven out, you're very reluctant to let that go. I think that's just the bottom line. I also think that there's some benefit to being in the war together. We're war buddies. "Hey, you remember when we were pulling out our credit cards to make payroll?"
Sal Daher: Yes. This feels like-- Exactly, yes.
Todd Zion: Well, it's not as bad as it was back then.
Sal Daher: No.
Todd Zion: It's bad, but it's not that bad. That helps a lot, and it helps keep perspective. Also, there's just an efficiency. Communication is key, but if you can communicate almost with hand signals and eye movements, that helps a lot in the early days. All those things count.
Even when we founded Akston, actually, we didn't even know what we were going to do. We just knew we wanted to work together again. That was the founding of Akston, and we had some money. We didn't have a lab anymore, we sold that to Merck. We didn't have anything. It was like, "Well, let's do that." Then eventually it started to morph into a cohesive business plan. That was the overriding factor.
Not only that, but we have now- gosh, I should know this number exactly, but we've been hiring so much to ramp up. We have something like 30 to 35 employees now, but I think close to 15 of them all worked for us at some point at SmartCell. It's not even just the founders, but when we needed people to build the team back up, I think that's really important.
Sal Daher: It's like the Blues Brothers putting the band back together.
Todd Zion: Jake and Elwwod, the band's back together again. A few more miles on the odometer, but we got our whole team back.
Sal Daher: Awesome. Well, Todd Zion, I'm really grateful to you for making the time to talk about this really fascinating topic and the amazing things that you've done with SmartCell and now achieving with Akston. This is Angel Invest Boston. I'm Sal Daher.
I'm glad you were able to join us. Our engineer is Raul Rosa, our theme is composed by John McKusick. Our graphic design is by Katharine Woodman-Maynard. Our host is coached by Grace Daher.