Chinese-American Biopharmaceutical Society K. Fong Award : Visionary in Life Sciences, San Mateo, California. May 7 2016

Somewhere Between Science and Humanity

By Gerald Chan

Thank you very much. I am honored to be here and to receive this award for which I am most grateful.

The award recognizes me as a visionary in life science. I feel somewhat ambivalent about this recognition because in my mind, the word visionary carries the connotation that one can see into the future that which has yet to happen.

Indeed, since time immemorial, men have attempted to know the future. Those who profess to have such ability were variously known as prophets, soothsayers, sorcerers, clairvoyants or seers. Depending on society’s sentiment at the time, they were either held in honor or in disdain. Even a great scientist like Isaac Newton was no exception. He was consumed with the desire to figure out the Biblical prophecies contained in the book of Daniel in the Old Testament and the book of Revelation in the New Testament. Obviously, his extensive writings on these subjects were nowhere nearly as successful as his writings on mathematics and physics. In contrast, the prophecies of Nostradamus have sold well since the sixteenth century. In times of uncertainty in the world, his readership would spike upward.

We desire to know the future because human beings are inherently insecure. The future scares us because it is unknown. Fear rules the human race. Thomas Hobbes described man in primitive times as living in continuous fear of a violent death because life was solitary, poor, nasty, brutish and short. While modernity has brought progress in man’s material condition, the modern man is no less fraught with fear. In describing the coming of the modern age in the nineteenth century, the English poet Matthew Arnold particularly pointed to the new world as having no certitude. (Dover Beach, stanza 5) The desire to know the future is therefore really an expression of the desire to be secured. It is the survival instinct of man which produces the urge to know that which will happen in the future.

When it comes to my work in life science, I can assure you that I have no ability whatsoever of knowing the future – never did and never will. If I appeared as a visionary in that I carried out certain activities before they became main stream, it was simply that I got an earlier start than most people in the biotech industry.  I was at the right place at the right time and was prepared with the right life experiences to participate in the coming of age of biotechnology. Looking back on my life, these life experiences all seemed no more than a constellation of random events. There were no grand plans as I came to fork after fork in my life. I simply chose what felt right at the time. It is only in retrospect that a pattern emerged. Calling me a visionary would therefore be an egregious exercise in historical revisionism. Such fictional narratives are all the more arresting when they are deployed to serve the purpose of aggrandizing those who had made good.

Venture capitalists are in the business of creating the future. We invest on the promise of what exists in order to create what does not yet exist. How then do people who do not know the future engage in the task of creating the future? How are venture investment decisions made? Why did I choose to invest in one project and not another? For those of us who invest in biotechnology, we are blessed as well as perplexed because we are never short of opportunities. Our problem is that we have too many choices. In spite of tremendous advances in science and medicine, it never ceases to amaze me that we have not run out of unmet medical needs. As heroically as we have addressed some unmet medical needs, modern society has also been hugely successful in creating conditions that add to the disease burden. I shall return to this point later. For now, let me focus on investment decisions.

I can assure you that in making my investment decisions, market size and drug pricing are never a concern in my mind. Estimating the profit potential of a drug is not an interesting place to begin. It is not that I ignore economics entirely; I do keep an eye on the financial viability of a drug to be developed but only in so far as how that drug would fit into the practice of medicine in light of today’s healthcare economics. I never do financial projection with spreadsheets. Such an attempt at predicting the future by making a series of arbitrary assumptions in the face of the unknowable is in my mind an exercise in futility.

First and foremost, I consider my biotech investments as investing in science. I consider myself a scientist before I am an investment professional. An investment professional is guided by perceived profit potential and risk. In contrast, scientists are guided by nothing more than their curiosity, at least in an ideal world where science can be practiced in the absence of constraints such as budgetary or time constraints. Much of the progress in modern science came about when science was indeed practiced in such a way. The fact that I wear both hats of a scientist and an investment professional does not in any way compromise my belief and practice that science should be curiosity driven.

Having said this, I would hasten to add that the curiosity of a scientist should not be a raw curiosity. If a scientist is equally curious about everything, I would question that his intellect is short of development. With learning and exposure, a scientist’s curiosity should be trained and shaped. This is why it is so beneficial for young scientists to be exposed to great minds. It is not, so to speak, a matter of acquiring knowledge from the master. Rather, interacting with great minds has the effect of shaping a student’s curiosity. The way I judge a scientist is not so much by what answers he gives, but by what questions he asks. When I assess the quality of a training program, I look for how actively the students ask questions and the quality of their questions.

As a venture capitalist, people come to me to pitch their projects in search of funding. I still listen to over a hundred presentations each year even though I have slowed down in recent years. My job is to ask questions. It is, of course, not possible that I am an expert on the subject matters of all the presentations, and yet, many people said that I asked great questions and that they have benefited from discussing with me. How do I come up to speed so quickly? Domain knowledge is necessary but not sufficient. Incisive questions emerge from the placement of knowledge into context. The maturation of a scientist is therefore the development of his context through the enrichment of his scientific repertoire and the sharpening of his ability to place new knowledge into that context.

I would describe my context by calling it “a view of how life works.” I know that such a sweeping statement carries the risk of being meaningless, but the vagueness is intentional. It is a sense, an awareness, and with it, a respect for the organizing principles of life. These principles are generally applicable to all life forms in the biosphere. In aggregate, they provide a general picture of how life functions.

Some of these organizing principles are deduced from observations across the biosphere. Yes, I do mean the biosphere as encompassing all life forms in Nature. We study worms, Xenopus, the zebrafish, or Drosophila with the implicit assumption that what is learned from studying these organisms is generally applicable to other species notwithstanding the phylogenetic distance amongst them. The discovery of a gene in C. elegans or Drosophila guides us to look for its homolog in human. What I mean by organizing principles here are as much at the organismal level as they are at the molecular level. They are as much teleological as they are reductionist. Let me give a few examples of what I mean by the organizing principles of life while keeping in view their relevance to drug development.

The first is the principle of redundancy. For life to exist, redundancy may not be necessary, but for life to persist in the face of constant assaults from within and without, life must be organized with a certain degree of redundancy. It is no different from airplanes having to have redundant navigation systems or hydraulic systems. Going back to the early days of the study of nucleic acids, scientists were surprised to find that the codon code between RNA and amino acid was in fact degenerate, degeneracy here being in the mathematical sense. This degeneracy is a form of redundancy used by Nature to blunt the impact of mutations. Many proteins have isoforms that can be mutually compensatory, at least partially, for certain functions. In many biological signal transduction pathways, there is the canonical pathway and then there is the alternative pathway. Some receptors can be activated either extrinsically or intrinsically, either ligand dependent or independent. Drug development programs premised on inhibiting one pathway can therefore be supplanted by the redundant pathways.

Along with redundancy, another principle by which life is organized for robustness is to have multiple levels of control. It has been fashionable to think that sequencing the genome will yield all secrets to life. Such a single-tier, one-way, linear view of how life functions is at best misleading. Like all well designed systems, life must have multiple levels of control with feedback loops in order to be robust and at the same time, responsive to new input. Epigenetics and RNAs that serve control functions are ready examples of additional layers of control. Genetic diseases heritable in a Mendelian manner but have incomplete penetrance offer another clue to multiple layers of control. Long thought of as oddities in genetics, the recently published study of half a million human genomes has given definition to this phenomenon beyond family pedigree studies to the level of DNA sequence. It is not inconceivable that post-translational modification of proteins can act as a last-ditch salvage mechanism when the genome fails.

Besides being robust, the machinery of life is also economical. It is highly unlikely that the machinery of life carries a lot of excess baggage that serves no purpose. Rather than calling the large cache of non-coding DNA junk DNA, I am more inclined to say that their functions have yet to be discovered. Admitting our ignorance is a more prudent attitude than calling Nature stupid. With RNA, transcription of different open reading frames as well as alternative splicing are examples of Nature’s ways of economizing information storage. When it comes to proteins, it is not uncommon to find a protein performing one function when it is located in one part of the cell and performing a totally different function when it is translocated to another part of the cell. Take the protein cytochrome c. It functions either in the electron transport chain or in the apoptotic process depending on whether it is located on the inner mitochondrial membrane or in the cytoplasm. Then there are proteins with multiple structural domains each capable of effecting a different biological function. These proteins lend themselves to being the shared nodes in biochemical pathways and thus creating overlapping network structures. Proteins like mTOR and AMPK are good examples. They remind us that in drug development, the therapeutic window is not just due to so-called off-target binding, but may be inherent to how life is organized and therefore unavoidable. Long before Silicon Valley invented the shared economy with services like Uber or Airbnb, Nature has found ways to be economical.

Symbiosis is another cardinal principle of how life is organized. Medicine has always treated man as an autonomous agent in determining his health outcomes. The recent explosion of research on the commensal bacteria in the gut has upended that view of man. Experiments have shown that altering the composition of the gut microbiota can alter the mood and the behavior of the host not to say its metabolism, immune system and susceptibility to cancer. The deleterious effects of antibiotics overuse highlight the fallacy of the “me versus them” view between the human host and the bacteria in his body. The flip side of this is that the gut bacteria may offer a new avenue of therapeutic intervention for the benefit of the host’s health. One of our portfolio companies is attempting to co-opt the gut microbiota to promote growth in livestock in lieu of using antibiotics for that purpose.

Let me use another investment case to further illustrate. In oncology, I never invested in kinase inhibitors even though it was tantalizing that kinase inhibitors have finally overcome the bane of the therapeutic window which plagued all previous cancer therapeutics. Notwithstanding the alluring term of targeted therapy coined to describe the kinase inhibitors, I find the idea fundamentally unappealing on grounds that the more targeted a drug is for its target, the more pressure it exerts on the target to mutate and escape. The experience with both antibiotics and antiviral drugs attest to this. The ability to adapt is a fundamental principle of how life functions. To me, the efficacy of targeted therapies is necessarily short-lived, all the more as genomic instability is a hallmark of cancer cells. In expressing my reservation about targeted therapies, I by no means make light of the benefit of extending survival even by a few months that these therapies offer to cancer patients and their families. I also grant that multiple targeted therapies can be combined to reduce the chances of escape such as has been used in antivirals. While I truly applaud the development of targeted therapies and consider them as a major milestone in oncology, they are not where I chose to spend my time and resources.

My proclivities in science are therefore akin to a taste in the sense that some people like their wines sweet and others like their wines dry. The people from Hunan like their foods spicy and the people from Shanghai like their foods sweet. The strongest determinant of one’s taste, in addition to genetics, is one’s upbringing. My wife, being Cantonese, never had spicy food in her family while growing up. To this day, she cannot stomach any food that is the least bit spicy. On reflection, my coming to life science late in my studies played an important role in shaping my taste in science. Having changed my major so many times in my undergraduate and post-graduate studies, all in the physical sciences and engineering, I had sojourned across a rather large swath of the scientific landscape before coming to life science. My mind was therefore shaped to look at big pictures rather than minutia. I tend to look for generality when I encounter particularity, and subject any particularity to the test of generality. My mental habit is to map any scientific finding to the general picture of how life works and thus to get a handle on its strength, its weakness and the scope of its validity.

My growth as a biotech venture investor is to a large extent the furtherance of the ability to abstract any investment proposal into a small number of cardinal features and to assess them against my context of the fundamental organizing principles of biology. It helped that I invested across different therapeutic areas, diagnostics and medical devices. This diversity provided a constant broadening of my context. In this light, I regret that the PhD training in life science nowadays stresses so much more the need to focus than the need to broaden. The explosion in the amount of scientific findings has ironically forced students to be more focused lest their projects become intractable. Equally, the multiplication of experimental tools has shaped the students’ minds to ask questions for which there is a tool designed to readily answer. Tools have supplanted ideas as the starting point of a student’s research. Finally, in the face of an ever tightening funding environment, the peer review system has the tendency of forcing grant proposals to be highly focused. Big picture, open ended, and seemingly off-the-wall questions have become taboo. Such grant applications are dead on arrival.  For grant applicants today, the blue sky has become the death zone. The safe thing to do, or rather, the only way to survive in science today is to ask small questions and not worry about the big ones. The system now favors incrementalism over bold new thinking. These developments do not bode well for the future of science.

In the last few years, investing in biotechnology has become fashionable in China. Tycoons who made their fortunes in real estate, in coal mining, manufacturing or information technology have flocked to investing in biotech. I have heard these tycoons speaking ever so confidently about their life science projects. Unfortunately, many of them were sold a bill of goods. I don’t mean that those who sold them the projects are all charlatans. They may indeed be earnest about their projects, but those projects were conceived from very small views which were usually centered on that person’s narrow expertise. More often than not, those projects turned out to be ill-conceived.

Let me now return to the point I made earlier of my amazement that we never ran out of unmet medical needs. As fast as we are solving them, we are also creating new ones. China never had an epidemic of childhood obesity; now overweight kids are everywhere. American children used to grow up on peanut butter jelly sandwiches; now warnings of peanuts have to go with any food that contains peanuts as an ingredient. One out of ten children in America under the age of 18 has asthma. The latest statistics show that in Korea, one out of every thirty-eight children born falls on the autistic spectrum. One out of eight women in America will have breast cancer in her lifetime. Three out of five Americans are on prescription drugs for chronic conditions, most notably medications for high blood pressure and high cholesterol, painkillers and antidepressants. Then there are all the new microbial pathogens from MRSA, antibiotic resistant tuberculosis to new viruses like HIV, SARS, MERS, chikingunya, bird flu, swine flu, Ebola and Zika. However one looks at it, whether in absolute terms or relative terms, the human disease burden is mind boggling.

The gross health statistics mask another part of the story, and that is, health inequality. In isolated pockets of high risk areas, the incidence of certain diseases can skyrocket. I was in Chicago a few weeks ago and learned that the risk of children on the south side of the city getting asthma is eight times the risk of the children on the north side of the city. Not surprising, the south side is the poor part of the city and the north side, the affluent. The epidemiological research of Professor Michael Marmot showed that the gap in life expectancy for men between the affluent and the poor neighborhoods of Glasgow, Scotland, is a staggering fifteen years. I recently attended a concert put on by the glee club of a historically all-black college in Tennessee. The lyrics of one of the songs made me think, in relation to health inequality, “If health was a thing that money could buy, the rich would live and the poor would die.”

A sense of social obligation to address health inequality is strongly behind some of my investments. A good example of this is the portfolio company named Matrivax where we are attempting to use new chemistry to drastically lower the manufacturing cost of the vaccine against Streptococcus pneumoniae. Those of you that have children know that this vaccine costs $280 in America. There is no way that children from developing countries or underprivileged backgrounds can afford it. From time to time, there would be outcries in the Chinese press protesting the unaffordability of this vaccine by the average Chinese family. Because of the multi-valency of this vaccine and its immunogens being polysaccharides rather than proteins, the cost of manufacturing is very high. If we continue to make this vaccine in the same way of conjugating each polysaccharide to the carrier protein, the potential for lowering the manufacturing cost would be limited. And as long as no one has come up with a cheaper way of manufacturing, Pfizer and GSK will continue to charge extortionary prices for this vaccine. Even though the biotech industry may never be able to have the same kind of low cost disruptions as are commonplace in the IT industry, we should at least attempt to move incrementally in that direction. With IT products, cost reduction is business; with vaccines, it is human lives.

Science is value free. A social conscience, on the other hand, is value laden. In the latter years of their lives, both Albert Einstein and Richard Feynman spoke eloquently on this dichotomy. If we examine the biotech industry from the viewpoint of science, we can beat our chests and gloat about all the novel products. Progress indeed has been great. Lest scientific triumphalism should get the better part of us, let us be reminded that in Greek mythology, hubris is at the root of tragedy. In the face of the unmet medical needs worldwide, we should stand humbled by how little we are able to do. I, for one, while having had the privilege of participating in many exciting scientific breakthroughs, am unable to rid myself of paroxysmal episodes of anguish. I anguish over the human condition, the social injustice in the world, and the feebleness of our work in alleviating human suffering. I bemoan the corrosion of unbridled greed to the disregard of human lives. It troubles me to see promising therapies not being developed because the drugs involved are generic and therefore perceived as offering no financial upside, all the while when intellectual property is used as a license to set extortionary prices to milk the system. It troubles me to see promising science abandoned because of the lack of funding while vast amounts of resources are wasted on politically motivated projects that are scientifically flawed.

If I sounded pessimistic, it is because I am pessimistic, at times. In The Two Cultures by C.P. Snow, voted in Britain as one of the most influential books in the twentieth century, the author described the disposition of scientists as fundamentally optimistic while that of the humanists as fundamentally pessimistic. That pessimism is not without good reason. Humanists are not, as the Chinese would say, moaning in the absence of any malady. Any sober observer of humanity will not long be an optimist. Anyone who has looked into the abyss cannot help but be gripped by pessimism.

I consider myself both a scientist and a humanist. As such, I find myself wandering to and fro between the two ends of optimism aroused by scientific breakthroughs and pessimism provoked by the human condition. The optimism gives me energy while the pessimism imposes sobriety. The optimism keeps my melancholy at bay while the pessimism keeps my exhilaration in check. I find this tension to be both necessary and healthy. Somewhere between this optimism and this pessimism, I have managed to find the enthusiasm to keep going these many years. Somewhere between science and humanity, I still harbor the hope that my endeavors will yet bear fruit for the good of mankind.

My journey would not have been possible without companions who share the same passion for science and the same commitment to social impact. With some of you, I have had the pleasure of collaborating. I appreciate your dedication, your creativity and your scientific prowess and I look forward to doing more together in the future. In education terms, we are all in the top 1%, or 0.1%, or 0.01% of society. We share in this blessing and we also share in the responsibility that comes with this privilege.

I thank you again for the honor of being here with you today.