Subscribe and listen to the episode.
Alice Lloyd George: Welcome to the latest episode of the podcast. I’m excited to introduce Kevin Caldwell. He is the founder of Ossium Health. They are building the world’s first bank of on-demand bone marrow stem cells for transplant. These cell therapy products can cure leukemia, blood cancers and aid in organ transplantation. Ossium is backed by top firms, including First Round and Village Global. I’m excited to get into the rise of Cellicon Valley. Thanks for joining.
Kevin Caldwell: Thanks for having me.
ALG: Also shout out to Isaac Silverman, the person we originally met through at a dinner party in San Francisco, back when we had dinner parties.
KC: Props to Isaac for introducing me to awesome people like yourself.
ALG: You’ve done so many incredible things before getting into what you’re doing now. Undergrad at MIT, Harvard Law School, McKinsey. What haven’t you done? I’m curious how you navigated those life choices and ended up in biotech.
KC: From high school through my time at McKinsey, the primary thing that motivated what I chose to do with my career was what was most intellectually interesting to me at the time. So I ended up going to to law school and in the summers I interned at law firms. I found the practice of law less intellectually stimulating than the study of it was. By the time I was finishing law school, I realized I didn’t want to be a lawyer. There I was with degrees in physics and economics and didn’t want to be a physicist and had a degree in law and didn’t want to be a lawyer. I thought, I should figure this out. The thing that fundamentally changed was a shift in my goals, from what’s the most exciting interesting thing I can do, to what’s the most meaningful thing I can do. If I wake up at 90 years old and I’m looking back at my life and career, what will I have want to have done with my life that would make me most proud? It’s that process of inquiry that led me to life science and to Ossium.
ALG: Is any of your family in healthcare or was there a personal reason that got you interested in this problem?
KC: When I was a kid I spent a lot of time with my grandparents. My grandparents had a farm in West Tennessee. Every summer, many long weekends, I was there working and spending time with them on the farm. When I was in high school, they were getting up in age and they would get sick a lot. One of the things I noticed is that I would see them getting sick at home. Then we would take them to a doctor who would diagnose them and retroactively give them a treatment. That usually reduced their suffering but didn’t restore their health. I would ask, why can’t we anticipate what’s going to make them sick beforehand? Why don’t we have more interventions that actually bring them back to the level of health and vitality that I remember them being at a few years ago? Why are we just treating their symptoms? The answer I got back then was, well that’s not how healthcare works. I never accepted that answer. I’ve always thought that healthcare should be about preserving health, not just treating disease.
Ultimately the vision of Ossium is to transition our healthcare system away from the retroactive symptom treatment model to more of a proactive, preventative, regenerative medicine model. Because that leads to better outcomes for people over time and also because in many ways it’s more sustainable and economical.
ALG: Let’s get into the product, the market, and where you are in terms of traction. From what I understand this is a huge spend — the U.S. spends about $43 billion a year treating blood cancers and organ rejection issues. How did you think about tackling this market and what is the product today?
KC: Our model is we recover bone marrow from deceased organ tissue donors. We bank or cryopreserve that bone marrow —
ALG: That’s the key difference to the existing market, right? Previously, it was being harvested from living donors rather than deceased donors?
KC: That’s right. Usually when we think about stem cell therapies, we think of 21st century medicine. For the most part it is. But bone marrow transplants are a kind of stem cell therapy that has more than 60 years of history. Virtually all of that history is from living donors. These transplants have been done more than a million times around the world. Historically, they’re used to treat people with blood cancers like leukemia. There area basically a few things Ossium is doing:
1/ One of them is making it faster, easier, cheaper to do bone marrow transplants for traditional applications like leukemia treatment.
2/ The second thing we’re doing is dramatically increasing the volume and genetic variability of bone marrow that’s available so that you can use those cells for entirely new uses. One of those is doing organ transplants without immunosuppression. We can give the same bone marrow cells that we are getting from our organ donors to the recipients of those organs so that they can live without immunosuppression and organ rejection.
3/ And then there are more novel applications of stem cell therapeutics, everything from regenerating damaged muscle to damaged arteries to damaged skin.
There’s never been this vast a repository of cells before. There are two complementary but different arms to our business. One is creating this resource — getting all these cells from donors, banking them and making them available. The second arm is using that resource to develop novel therapeutics that would not otherwise exist. That’s what our clinical trials are focused on.
ALG: So you’re doing both B2B as well as in-house therapeutics. Why hadn’t anyone used deceased donors before? It seems a huge advantage to do that.
KC: There are a few reasons. One of them is that with organs, although there is some amount of matching (say for kidneys), for the most part we don’t do a rigorous genetic matching between organ recipients and donors. It’s usually not feasible. You only have a few hours or at most a few days, depending on the organ, between when you recover it and when it has to be transplanted. You need to get it into the first available patient you can.
That model would not work for bone marrow. You can’t take bone marrow from any person and transplant it into someone else. They have to be a close match based on a set of alleles. Call it an HLA type, which stands for human leukocyte antigen. It’s a way to determine the genetic compatibility of two people with respect to the major histocompatibility complex, which determines how compatible their immune systems are. What that means is that in order to provide bone marrow transplants from deceased donors, you need a bank of the bone marrow so you can accumulate enough donors and reliably find good matches for the recipients. That’s a major project that requires a lot of investment and coordination. We have 20 something partners around the United States who recover the bones for us that we use for banking, and we had to build that network of partners.
ALG: And no-one had built this network of procurement orgs?
KC: No one had built one like this before, no.
ALG: It sounds like a liquidity problem. Putting enough assets, in this case cells, into the bank to be able to build up matches.
KC: Right. That’s a big part of it. There’s another element that is even more important though. There are new uses of the cells that have emerged over the last decade that did not exist before. A lot of our clinical research is focused on proving that it’s possible to do transplants of solid organs and limbs and almost anything from one person to another without rejection using cells from a deceased donor. That’s incredibly powerful in that it means that people, after they receive organ transplants, would live longer, healthier lives, have a higher quality of life because not an immunosuppression, fewer infections. And it’ll be cheaper because they’re not paying for the immunosuppression and for the infections that they get. If you were trying to build a bone marrow bank 30 years ago, you might have been able to use it to treat leukemia patients if you could build a partnership. But the basic science that was necessary to do organ transplants without immunosuppression didn’t exist. So the opportunity is much bigger now than it was before.
ALG: That makes sense. So the long-term goal is to build a bank, a cellular bank and an information bank. What does that really mean? If you fast forward, how much data or cells do you need for this to be viable? What’s the threshold and how will you query it?
KC: We usually think about the resource we’re building as the cells themselves. Then second, we usually think about the basic scientific insights of discoveries about how those cells can be used through the preclinical studies. It is also true though, you’re right, that we are building a vast repository of data from all of these donors that we could ultimately use to improve bone marrow transplantation beyond what’s been done historically, simply because we have so much information about so many donors. There is still a lot that’s left to be understood about how optimal matching of one donor to another works. There are exciting studies that we will eventually be able to do where we try to improve leukemia treatment by doing different combinations of matches and collecting more data from individuals. Because all of our donors are also organ donors and we’ll be using the cells for multiple applications, there’s also a sense in which we are one of the first transplantation based companies to be taking cells from donors and then using them to save and improve lives in many different ways. There are many different categories of patients with different indications that could benefit from it. We may learn things about how one donor’s cells may be more effective for some indications like blood cancer treatments than for other indications, like for doing immune tolerance induction. There could be powerful insights that would come out of that. The data piece is exciting.
ALG: The field of possibilities is huge. There’s a lot of combinatorial questions, in terms of what you modify in the stem cells and what interventions you can make. Stepping back a bit, it seems that there are hundreds of new stem cell gene therapies and hundreds of T-cell based immunotherapies. There are so many in development. What are your larger views on the space and specifically on the bespoke nature of producing therapies. What does it take to be able to manufacture and scale?
KC: I’m incredibly excited about the future of stem cell science and of cellular therapeutics. If you want to compare it to the pharmaceutical industry — with a pharmaceutical, you have a small molecule that you package into a drug and deploy into a patient. That molecule is rigorously characterized. Every pill is exactly the same and ideally does exactly the same thing in every person’s body. You try to get as close to that as you can. In many ways, cell therapies are the opposite. It is a living drug. The cell is a small organic machine that takes in information, signals from its environment and responds dynamically to that environment. Using cell therapies it is possible to treat very complex diseases that may have been difficult to tackle with a single, focused therapeutic because the drug that you are deploying is capable of adapting to its environment when it’s there.
The flipside is that it can be difficult to demonstrate the consistency of the product when every donor is different. So there are a lot of manufacturing challenges that groups have faced. Sometimes they have trouble demonstrating efficacy because of the variability in their performance for different patients and different donors. Sometimes they have high manufacturing costs because you have to run the cells through many doublings in order to get enough cells to make an economical drug. One of our goals is to break down those barriers by giving companies that are developing cell therapies access to a far larger numbers of cells than they could ever get from another source. So they don’t have to run themselves through as many doublings, they don’t spend as much on manufacturing and they’re really able to focus on doing great clinical studies, to demonstrate value for their patients.
ALG: So you become the components or parts supplier, and they hang onto their IP and solutions?
KC: That’s right. There’s a huge range of different diseases you could treat with mesenchymal stem cells and bone marrow. We have picked the ones we think we are uniquely positioned to directly develop. But there are many, many more that we’re not. We can’t run two hundred clinical trials. For those other indications, our goal is to reduce the cost and the timeline of drug development for other companies and universities doing research.
ALG: That point you make about small molecules is interesting. If you think about the history of things we do to treat our body, for most of the 20th century it was small molecules. That’s what our conception of drugs was. Things that we created in factories and turned into pills from plants, and maybe later some proteins like insulin. Having a living drug — that feels like the future. Like we’re finally at the beginning of the future. Though as you say it goes back to the Fifties. What feels like a revolution has been an evolution of people optimizing over many years. I was looking up Edward Donald Thomas, the physician scientist (practicing scientist) who did the first transplant in the Sixties. He won a Nobel Prize for his research.
KC: There’s a long history. Some of the earliest bone marrow transplants that were successful were between identical twins. They were trying these without knowing about HLA matching. There were cases of bad rejections because the patients weren’t well matched. But over time they learned that you need to match the patients and protocols have improved over the decades. Now there are 10,000 allogeneic (from one person to another) bone marrow transplants in the U.S. every year and another 10,000 or so autologous transplants (when you give the transplant to yourself.)
ALG: When you think about the dominant businesses in this industry — say Lonza, one of the incumbents, a supplier— how do you think about your position versus other players? Why is this a good business to be in, besides the fact that you’re saving lives.
KC: Usually if you look at a life science company, especially early stage companies, there’s one big bet, maybe a couple of big bets. They’ll spend a decade working on a clinical trial and either it works, in which case there’s value, or it doesn’t work.
Ossium has taken a radically different vision to building a therapeutics company. Some of our work, such as the organ transplant clinical trials, does look like that. It is a seven to 10 year clinical study. But there are other things that we’re doing, like building a bank of cells to treat blood cancer, that have a comparatively short timeline to get to a clinical grade product. Then there are other things in between where we’re actually selling cells to other companies. They then take on the risk and the effort of doing a clinical trial. We’re just a provider and we’re insulated from that risk.
We’ve rolled all three of those profiles into one to be a 1/ bio banking business, 2/ a B2B sales business and 3/ a fundamental therapeutics, clinical research business. They’re all complementary because they all rely on a single source of cells. That diversity at some level insulates us from the risk associated with specific drugs, regulatory and basic science risk. It also allows us to scale quickly because we can reinvest resources that we get from the applications that generate revenue faster, like B2B sales into the clinical research, which ultimately will create even more value.
ALG: You’ve successfully raised several rounds of financing in Silicon Valley. Since biotech has not been a main area for the software-focused funds, how did you find that process?
KC: Historically, there was a cluster of investors that did tech and a different group of investors who did life science. If you were a life science company, you raised life science investors. Ossium from the very beginning took a different approach. We’ve actually raised from both classic tech and life science investors. We find that they bring different strengths to the table. Our vision for the company and the impact that we want to have is ambitious. It’s bold. The tech investors like the business model, the depth, the number of moving parts and yet the simplicity of being a bank of cells and finding great ways to use that. The life science investors have deep expertise in the science itself and and in the relevant regulatory regimes and they are excited by the potential clinical value of the research. For us, the tech investors act as business advisors, which is valuable. And the life science investors act as clinical and in some cases scientific advisors. And they’ve been terrific.
It is possible to understand Ossium’s value without understanding the details of the clinical research. Because some of the ways it creates value, like enabling more bone marrow transplants, really plugs into well-established procedures and amplifies them. That’s helped us bring in a broad range of investors.
ALG: In science fiction people have thought about aspects of what a bio future could look like and played it out to extremes to ask interesting questions. Do you think about the future much and are there things you would like to see? Things that you or other people might be building, or not yet building, that you would like to exist?
KC: For all of our ups and downs, I would say that life, especially for the last 500 years, has tended to get better. Each generation has had a higher quality of life than the one before it, globally. Our level of enlightenment, our prosperity, even the decency with which people treat each other, has tended to increase. As imperfect as the world today is, I believe that the continual progress of science, the increased interconnectedness of the world and our mutual exposure to each other will allow those to those trends to increase over time. If the world 500 years from now is anywhere close to as far beyond today as our world is from 1500, then humanity has an incredibly rich and beautiful future ahead of us. It’s incumbent on us here and now when so much is at stake to do what we can to leave the world better off for the next generation. Ultimately, that’s what Ossium is about — trying to take the problems of our time and the scientific tools that we have and deploy them to create products that are will allow human beings to live healthier, longer and richer lives. That’s it.
ALG: I, too, am a tech optimist, so I love to hear that. It’s exciting what Ossium is doing. Congrats to you and the team and good luck. Excited to cheer you on. Thanks for coming on the show.
KC: Thanks for having me.
Village Global's Venture Stories on Apple Podcasts
Village Global's Venture Stories takes you inside the world of venture capital and technology, featuring enlightening…