Couch Surfing in Biotech with Praveen Tipirneni

Speaker 1:
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Yaron Werber:
Thank you for joining us again for another exciting episode in our Biotech Decoded podcast series. I'm Yaron Werber, Biotechnology Analyst at TD Cowen, and I'm super excited to be joined today by my and our good friend Praveen Tipirneni, who was the CEO of Morphic and my colleague, Ritu Baral, who is also a managing director and senior biotechnology analyst at TD Cowen. And today we're going to interview Praveen together for this episode called Couch Surfing in Biotech to discuss his non-traditional path to becoming a biotech CEO, the Morphic journey, couch surfing in Kendall Square, and his biggest unexpected learning from being a first-time biotech CEO.
Dr. Praveen Tipirneni was most recently CEO of Morphic Therapeutics, a position in which he served since the company's founding in 2015 to the acquisition by Eli Lilly for $3.2 billion. Previously he was senior vice president of corporate development and global strategy at Cubist Pharmaceuticals, a position which he held from 2006 until the company's acquisition in 2015 by Merck for approximately $9 billion. Prior to joining Cubist, Dr. Tipirneni worked at Sun Microsystems, Covad Communications and Deltagen in corporate strategy and business development. He also served as a first lieutenant in the US Army and received his bachelor's degree in mechanical engineering from MIT, a medical degree from McGill University, and an MBA from the Wharton School of Business in healthcare from University of Pennsylvania.
Praveen, while Ritu and I are such great fan of yours, we've really been following the Morphic journey. Ritu actually covered it right from the beginning. You and I got to know each other when we were both sort of on the operating side, and I remember specifically when you took this job. Thank you so much for joining us. It's so great to see you.
Praveen Tipirneni:
Hey, I'm huge fans of both of yours as well, and thanks so much for inviting me. This will be fun.
Yaron Werber:
As we mentioned in the intro, you've had a somewhat untraditional journey to the biotech CEO seat. There's really not many people who kind of started as mechanical engineers and really started in the tech industry and then ultimately had a illustrious career in biotech and ended up being a biotech CEO with an exit. Can you tell us about your career journey?
Praveen Tipirneni:
A lot to talk about there, but let me just try to be a bit brief there, is that I grew up just loving science and technology. I've been a science and technology person since I was a young kid, just very organically. But I didn't know anything about companies, pharmaceutical industry. I think because family was much more just science professional oriented and didn't know anything beyond that.
And so I went to MIT, ultimately med school, but it's really in that process of going through MIT and medical school where I started beginning the process of understanding what companies do, how the world works really. I was very naive at that point and things like that. It's actually when I finished my residency in internal medicine, and I loved my residency and it was really fun and enjoyed what I was doing. But I was also looking for options about what else I could be doing with my career. I was just wondering if medicine could sustain me for an entire lifetime, even though I was really enjoying it at that point.
And so people were making their way, friends of mine were making their way through business school at that point, and people thought that that might be a good way to open up my horizons, essentially. Didn't really have a perspective on what I was going to do, but ultimately that's when I went to Penn to get my MBA at Wharton. And it's really those internships, talking to people. And it is actually kind of funny, just having an aside for a second. I was in the army as an undergrad, that paid for college. And when I met my first VC ever in MBA, he said he was a VC. I was like, "Viet Cong?" I go like, "What?" I was like, "What the hell is a VC?"
So I was starting from ground zero here trying to understand business. But those internships, did internship at DuPont Pharmaceuticals, was doing internships at tech companies. And that's when I started realizing that there's a much bigger world. And ultimately, like you said, in some ways I was better oriented in certain ways to medical devices in the tech world because my undergrad was in engineering. I just knew engineering very well. I was a tinkerer, which we can get to in a minute, but I resonated much more with the scientific culture. I think I was not the ping-pong, foosball, code in the closet. I was much more kind of the scientist, the postdocs, that was much more my personality and the people that I related to. And so after the MBA is when I sort oriented myself toward biotech and pharmaceuticals.
Ritu Baral:
Praveen, did you come from a family of academics or doctors?
Praveen Tipirneni:
Yeah.
Ritu Baral:
Was anybody in business?
Praveen Tipirneni:
Doctors and academic professionals, but no business people whatsoever. So just a world I didn't understand or know at all, or even thought about.
Yaron Werber:
So did you want to be an engineer originally and how did you end up going to medical school?
Praveen Tipirneni:
Yeah, again, I think it was just being young and not really knowing what else there really was more than anything else. So I went to MIT and I was a mechanical engineer and an electrical engineer as well, but I did that thinking I was going to be an orthopedic surgeon. Mechanical engineering, orthopedic surgery. And didn't really know what else people do with that. I just didn't know what people do besides be a doctor. But I think it took some time to be an adult and sort of start to make my own decisions and things like that. One of the things I joke about with Indians is that basically every South Indian mom wants their boy to be a cardiologist. And so when I shattered that dream, it was traumatic for the family.
Yaron Werber:
I actually went to medical school thinking I'm going to be an entrepreneur and hopefully eventually run a company or do something like that and ended up being a biotech analyst.
Praveen Tipirneni:
And then the family was probably like, "What is that?"
Yaron Werber:
So when I left years ago and left Wall Street and became a chief financial officer of a company and I told my mom, she asked me, "Why not chief medical officer?" The benefit of humanities.
Praveen Tipirneni:
Yeah, yeah. I think there's a lot of parallels between the Jewish community and the Indian community.
Yaron Werber:
Tell us a little bit, okay, so at that point you got an internship and based on all that, you ultimately ended up at Cubist and that led to the sale. Tell us a little bit, you had a major role in that. Talk about your role at Cubist.
Praveen Tipirneni:
Yeah, I had a great experience at Cubist. I was there for 13 years. I feel like I grew up at Cubist Pharmaceuticals, and so just to set the stage a little bit, that when I joined Cubist... It's funny because I had actually two offers at that time, and they're both quite a similar in a way. So one was Alexion and one was Cubist, and obviously both of them ultimately turned into a nice success story. But it didn't look like it at that time either of them. They were actually both trading under enterprise value, negative enterprise value, and both for largely the same reason.
So what happened was Cubist had just failed a Phase III trial in pneumonia and it was pretty unusual for an antibiotic to fail, pretty unprecedented for an antibiotic to fail a pneumonia trial. And Alexion was the same situation. Alexion, it's funny, it's almost historical, almost forgotten, but Solaris, initially they tried it in ACS, right? They actually failed a Phase III trial, ACS, so it was also trading in negative enterprise value. So they're both struggling in a way.
And I liked both companies, a lot of it was the people. But again, I was just entering the industry for the most part. And I was thinking back to medicine where one of the rare situations where you feel really, really good as a doctor is those situations as an antibiotic, someone's coming in on their deathbed practically and then give them a life-saving antibiotic and they're fully recovered and walking out the door a couple of days later, it's just a great feeling as a doctor. And so I could totally of relate to antibiotics and that's why I joined Cubist. But again, I was just sort of just starting the industry. So I can't say I had some great insight on how great the drug would be or anything like that.
But then what happened, I think what's interesting is that I was actually hired into the business development group there after my MBA, but a couple weeks after joining, I actually got put into the clinical group. So the Phase III trials were done, but they were just about to file their NDA and there were no physicians in the company. It was some politics going on, but literally me and one other person were the only physicians in the company.
And so we were charged with taking it through the approval process and ultimately get the drug approved. And that's a story all in itself, but ultimately got the drug approved. And then the big indication for the drug was actually the SNDA, staphylococcus aureus bacteremia and endocarditis, that was the unprecedented indication. So was on clinical team to get it through that indication, and then once we got the label, which was really hard and unprecedented, but once we got the label for that in 2006, then I went from clinical to head of business development. And so my second half of my time at Cubist was head of business development and that was in licensing, outlicensing, M&A. And that ultimately in 2015 led to an acquisition by Merck.
Yaron Werber:
Yeah, that's terrific. And then so tell us a little bit, how did you get involved in Morphic?
Praveen Tipirneni:
After Cubist, I was trying to figure out what to do next, and I didn't really have a great picture of what I was going to do exactly. And so I interviewed at small companies, big companies thinking that maybe by making some decisions it'll help sort of narrow what I really want to do. And ultimately, I did interview at some big companies, got some offers. But I decided I feel like a lot of it was head of business development type of positions. But I felt like I'd been done that a little bit.
And then what happened was that it is actually Gustav Christensen who actually turned out to be the chairman of the board at Morphic later, and he stayed as chairman of the board all the way from beginning to the acquisition. I didn't know it at the time, but he was just in the process of selling Dyax to Shire. It was just in that process. And so I met him, we were on opposite sides of the table on a deal. And I was actually trying to avoid the CEO position, mainly because I had young kids and things like that. And I thought that maybe 10 years down the line when they're in college, I guess right about now really, when they're out of the house, I could think about the CEO role. And it was actually Gustav who kind of encouraged me that this might be the right time for you, because he said, "You're in the mid-forties, you have the right experience, you know the venture capitalists well. This might be the right time to kind of think about it. You have the right set of skills."
It was a good time too at that time, people were willing to take a chance on first time CEOs. It wasn't a tough time in biotech at that exact time. And so that actually kind of reoriented me and got me, I was like, "Maybe I should think about CEO." And this company, Morphic, I got introduced to Kevin Bitterman who's at Atlas now, but at the time he was at Polaris, I got introduced to him, and he mentioned Morphic and it was interesting to me. But I kind of said "I got to look around," and things like that. But after I had that dialogue with Gustav and I started thinking about it, actually that's when I went back to Kevin, I said, "Hey, you know what? I'd like to throw my hat in the ring here. This is a really interesting company to me."
And I think the other part of it that might be interesting, and it kind of goes to a question we might talk about later about picking companies is that the things that were crossing my radar screen, crossing my desk at the time were these gene therapy companies. They were very hot at that time. But I say that being an internist in some ways, I am a little bit conservative as well. And so they were really interesting, great technology. But I was having a really hard time seeing the whole path from where I was to the end with gene therapy. And this one just fit my sensibilities much better. You had in some ways no less risky, but I figured there's a set of targets, I like the fact that people worked on these targets in the past. There's a lot of tacit knowledge about them from a chemistry standpoint, a biology standpoint. You got a combination of validated targets as well as novel targets. So we sort of calibrate our risk depending on how well we're capitalized. We'll see.
And although really the founding thesis of the company was very molecular, and I certainly did not have the background to understand it at that atom level like some of the other founders. But the big picture thesis very much kind of appealed to me. That this target class, which was the integrins, seemed like it was following the trajectory of every target class essentially. If you're talking about nuclear hormone receptor, talking about kinases, all these kinds of things. Which big picture again is just that you discover a class, you have some low-hanging fruit, the next generation turns out to be harder than we thought. It takes another decade of scientific chemistry, biology insights, and then you get another generation of drugs, and we're kind of in the same place with the integrins. And that was very intriguing to me.
Ritu Baral:
Praveen, how important was the Tim Springer name to picking Morphic? And can you talk about what appealed to you as far as the structural dynamic of Morphic? What were green flags as part of the VC backing of this company and the structure of this company?
Praveen Tipirneni:
Yeah, so it's interesting. So Tim, I did not know Tim and the postdoc who did a lot of the work in his lab, Albert Lin, who turned out to be the first employee of Morphic. And Tim actually only gave me 15 minutes of his time. So Kevin introduced me to Tim and they put me 15 minutes on the calendar. So I was assuming that probably a lot of people go through there, and that's kind of his MO a little bit. And then when I met Tim, it actually ended up being a 90-minute meeting. So I think we got along well and he liked me and I got along well with him. But Tim wasn't as well-established at that time as he is today, 10 years later. I mean he was well established in the science area, but he wasn't as well known as he is today.
And so you actually had some conflicting, some people said that he was difficult to work with and even discouraged me from it, but we got along well. But the thing I liked again, and a little bit goes to selecting the company because the other thing I liked about this company, like I said, is I couldn't understand at a molecular level in the same way that an Albert or Bruce Rogers or Tim could understand it. But we were going back to his legacy essentially, which was in discovering the integrins. And also Kevin Bitterman who had just turned partner at that time, this was his first company that he was starting as a partner.
And so the way I was kind of looking at it is that you had these two folks who are really incentivized to make this work. And so these companies are inherently risky, but you want to get as much of the dots and the wind at your back as you can. And I had these two individuals who were founding this company who are both highly incentivized to make this company work essentially.
But to the second part of your question I think, and I joke with Kevin Bitterman a little bit about this, is that I was like, "There are going to be payback someday, right?" Because ultimately after I joined the company, I'm like, "Okay, this PowerPoint is nothing like the actual reality on the ground at all." I thought I had all these lead optimization and development candidates and stuff like that, but when you really looked at what we actually had, it was much earlier stage than I had sort of thought. And actually what ended up happening, I've been telling this story quite a bit lately because we know how important target selection is in all these things.
And so I just turned 45 and I just wasn't in a real patient mood at that time. And so I joined the company and I was looking through the targets, and by the first board meeting, I was thinking to myself that, "I don't know if we're working on the right targets here." But I was like, "Oh, look. I came from an antibiotic company. I'm an antibiotic expert. What the hell do I know about autoimmune companies? You have Tim here, you have all these smart guys around the table." So I was kind of just left at the first board meeting at, "Look, I'm looking at these targets again." But by the second board meeting, I was convinced. I actually went to my wife that morning and said, "Honey, I'm going to get fired today." And I thought I might actually to tell the truth because I basically went to the board, the second board meeting and I said that, "Look, I don't just dislike our programs, I hate our programs. I think we should just cut them all and start over from scratch."
And so that's kind of what I was saying is that at some level they either had to fire me or at some level listen to what I was saying. And this was seed level too. This was kind of pre-series A. We had to raise a series A round as well. But I think they understood what I was saying and why. And ultimately went to Albert and Blaise, who was head of chemistry at the time, after the board being and said, "Stop everything. We're starting over." And Bruce Rogers, he still jokes, he was our CSO at the time, you guys know him, now our president, but he still jokes to this day that it was like I bait and switched him. That we had a pipeline when he was interviewing and then by the time he started, we had nothing. So we started from scratch essentially at 2016 and put 60% of the goals on the alpha-4 beta-7 receptor that year and just kind of went forward.
Ritu Baral:
That's amazing. So Praveen, tell us a little more about the highs and lows through this journey that were shockingly not covered in that initial PowerPoint that was presented to you.
Praveen Tipirneni:
Let me just talk about what surprised me as a VC first. Sorry, as a first-time CEO first. And the thing that surprised me, and again I say it in some ways provocatively, when we always say, "It's about the data, it's about the data." And of course it is at some level about the data. But the other side of that, which is surprising to me a little bit, is that there's never a time period in biotech where you have enough data ever. You can always ask for more time, except for more data. There's never a time where you're saying, "Oh wow, okay, now we have all the data we need." So I think what surprised me is that although you had Tim here, Kevin, and ultimately Amir took over for Kevin from Polaris, every single round of the Morphic journey, so this is the series A, this is the series B, this is even the IPO, really, every single anchor investor, every single lead in those rounds was actually a personal relationship of mine.
And so some of those were not long relationships. Some of them were in the context of Morphic, for example, Nalish who was at Novo and Rajiv, who was at Fidelity, and those are two people that I met during the Morphic journey. Nalish for example, I met him during the series A, but he turned me down during the series A, but we had a real chemistry there. And so we kind of stayed in touch, we became friends and he's very disciplined about valuation, which obviously he should be. He couldn't really do around for a long time because it just didn't fit his sensibilities from a price standpoint. But you could see he was trying to stay close, he wanted to work with me, and once he could make the numbers work, we had that AbbVie deal coming in, and then once he could make the numbers work, that's when he jumped and led the series B.
And in the same way, Rajiv, he was a big anchor of the IPO. I met him through the context of Morphic, but again, you tell a story there, but we got along well, we built a relationship, and so all the way talk, "It's about the data, it's about the data," and I found it's a lot of it. It's about the people really almost, if not as much or more than it is about the data, because you can always ask for more data. So I think that was my biggest surprise that it is how much the personal relationships do matter in our industry because you never have that kind of traction that you do in the tech area where everything's clear, everything's going hockey stick to the right, that kind of thing.
Yaron Werber:
That's one of the first things I learned when I left and joined the other side on the BD side is that people do deals with people, companies don't do deals with companies. It's exactly what you said, for sure.
Praveen Tipirneni:
And then I guess the naive question there with you a little bit is again, I was sort of impatient, because a lot of people like to keep the whole thing looking like this big pipeline, and I obviously cut our pipeline to zero and started over. I think the question you could ask is that was that a naive decision? And I don't even exactly know the right answer to that because the question, I've talked to people and some pretty prominent people about that decision later and they're like, "That's crazy. You don't cut the pipeline to zero before the financing round. You wait at least until after the financing round."
And I kind of spun that earlier work as sort of a semi proof of concept. And I'd say, "This is really what we want to work on, and that was a path to get to this," kind of thing. But I think the question you could ask there is if I wasn't able to raise the series A, let's say six, eight months later, would people all be like, "Well, that was a phenomenally dumb decision you made?" But I was not in the mood to waste time. And I was like, "Well, let's just focus on what we want to do and just go after it hard."
Yaron Werber:
Yeah, I would argue that, look, we're the recipients on the other side, right? Companies then go public and then they start killing things and they don't get a second chance or they flip their first cards and those work well, and then it's hard to come back. And at the same time there's a saying, well, in the industry this better than me, hurry up and get your first blow up out the way. So I think doing that early on, look, it worked out great.
Praveen Tipirneni:
Yeah, yeah. I don't know. Rit, do you have a view on that? What do you think?
Ritu Baral:
It seems like it. I don't know that I've covered a company from IPO to takeout or profitability without at least one blow up or one sort of return to the drawing board on something. Even ones where if you look at their stock chart, they look like they're smooth sailing. If you go under the hood, there were trials that didn't enroll or data sets that disappointed the street for sheer trial operations reasons that ended up working out. But I would love Praveen. So I was on the record when I covered you guys thinking there was no way that this story was going to end until you had your Phase IIB data. I thought people needed that to cut you a check that you thought the company was worth, and yet there it was one morning in that press release. So can you walk us through how this sort of came together? And I warned you I would ask about this mysterious ISI Evercore Conference that the rest of us know nothing about. What's the deal with that conference?
Praveen Tipirneni:
Yeah, yeah. Well, before get to that, let me just talk about one thing, hopefully was some skill involved, but I came from an antibiotic company where really pharma is not interested, it's not in favor at all and things like that. And I was really fortunate at Morphic and it started pretty early on that within a year, a year and a half of founding Morphic and taking it forward, we've always had pharma circling Morphic, right? We're always talking to pharma about something, negotiating something with somebody. I felt always very fortunate that Morphic was on the radar screen of pharma, which was very different than the company that I came from before.
And I've been sort of reflecting on that in the last few months of how did that happen? And I think for a small molecule company, and probably a biologist too, but I'm contrasting it a little bit with the really new modalities of let's say know CRISPR gene therapy or something that in a small molecule company, the thing I say is that everybody knows how to evaluate a small molecule. We've had decades of experience of evaluating small molecules. And so there's really only one strategy. If you want to do it, not count on luck, that there's only really one strategy for a small molecule company and you have to have the highest quality operations you possibly can and take no shortcuts, right? Because we just know how a small molecule company is evaluated and any shortcuts will bite you later. And so I feel like what we had at Morphic, we had just very heavy experience base.
We were capitalized fortunately in a way that we didn't have to take shortcuts. So we kept the quality end of everything that we're doing tier A quality. And so whenever pharma looked at us, I kind of say that they saw really just a faster version of themselves. And then we knew how to talk the language of pharma. And I think that's why we were in a situation where there were always kind of people hovering around. And so when we're talking about the M&A, the thing I talked about for years is that that alpha-4 beta-7 program since preclinical, we could have partnered it. There's always people interested in it. There are always some sort of discussions going on at some level. The question was when do you get that match in valuation was really the question. And so I think we all kind of assumed that that was probably after the Phase IIB, right? Is what we assume, the valuation would batch, because we've had lots of discussions, but the valuation just never could match.
And so we were just executing and I think again, there were a lot of companies that were likely to be involved in some manner post-Phase IIB, at least three, four companies most likely because other people that we always meet and they knew us well and were saying that post-Phase IIB is something that they were ready to act on very aggressively. But Lilly, who interestingly enough is a company we actually didn't know as well, they came on the [inaudible 00:30:21] pretty late. It's not a company that we were year after year after year after year like we were with these other companies. They came in pretty late.
But I think that, first of all, they had a strong champion that really liked that alpha-4 beta-7 mechanism. Secondly, because of just how much cash flow they have these days is that they have a very aggressive Phase III plan far beyond what others are probably capable of and something that is so aggressive that really, someone has had to start now to be able to enable that kind of an aggressive Phase III plan. And I think they liked the mechanism enough that they didn't want to be part of the auction later and lose. And so they were kind of willing to act on it early in a way that others weren't able to. And so I think it's all those kind of things came together and that's why Lilly acted aggressively. But again, going back to, it's actually the Centerview Conference and getting that valuation to match, still wasn't trivial. And it took a lot of effort to get that valuation to match.
And I think actually, I'll ask you guys the question too. I know I've talked to a lot of investors about it. I do some soul-searching myself, but I think the question you could ask is should we have sold at that point? Because we were 90% enrolled in the Phase IIB, the perspective from banker, from your own bankers even were that with pristine data that the following year, so the next year we probably could get double the price. And with pristine, we could discuss what pristine means, but with really good data, they're like, "You probably get double this price next year." So do you sell now or do you wait until the following year? And for me, the equation was this one, at least my own perspective was that at least we felt, Morphic felt that we kind of knew where the efficacy is going to land from that Phase IIA data.
So we felt that we could handicap where this is going to land. It was efficacious. We knew where the remission rate's going to land, but the thing we can't handicap, the thing there's just nobody could give a good answer on is what is that placebo rate going to be? And that is the problem is that the problem is that even pharma with two Phase III trials have vastly different placebo rates.
And so on one hand, if you're very low and lucky, it's going to look amazing. But if you get unlucky and there are reasons to believe with the validated mechanism, the trials are rolling fast and maybe the placebo rate's going to be higher than we thought. And so that was really what was weighing on my mind that I just can't handicap that placebo rate. And you're in a situation where for this kind of a compound, it's not one where it's comfortable taking it through Phase III and commercializing. And so if the market is not excited, we have to raise a massive amount of money the following year and I just can't handicap it right now. And so that was what was weighing on my mind through the whole thing.
Ritu Baral:
You asked the question, I heard no complaints. There were surprises, there was acknowledgement that you probably could have gotten more later, but let's face it was a bear market. It had been a long bear market at that time. You made people money by not sort of letting your ego get in the way and people appreciated it.
Praveen Tipirneni:
Yeah, guys, it's funny, because I asked that question. Investors universally say, "Yes, you should have sold." And I do some soul-searching, but I was like, "You should have sold." But when you talk about that ego, I really wanted to have a six in front of the price, and we were at 57, but I was just like, "Okay, it's close enough." But bankers and things were telling me about many situations where the CEO said no and did not lead to good outcomes later. And so I was trying the best I could to keep the ego out of the way.
Ritu Baral:
It's impressive because I feel like in my experience, there have been more cases of ego than people willing to step out of the way for a couple dollars. Praveen, you said something very interesting a few sentences ago when we were talking about why pharma had been circling around Morphic. You said, "We know how to speak to pharma, we know how to speak pharma." What does that mean and how did you learn it?
Praveen Tipirneni:
Yeah, and again, I'm trying to reverse engineer it today because I'm like, how did we get into that situation? It was such a fortunate situation and have a few thoughts on it that I've been sharing with people just wondering was it skill, was it luck and things like that. My feeling is that when, and I think I've been talking about small molecule companies, but I think this would probably also apply to biologics, and again, I'm sort of contrasting it to the very new modalities, is that because these kinds of capabilities are within pharma, and so you're always at some level fighting a not invented here syndrome, especially in the early stages. It changes a little bit obviously later in the clinical stage. But I think what that team needs to look like, what the whole situation needs to look like is when you're meeting with pharma, what they need to see, what they need to feel actually viscerally is that they're looking at themselves, but maybe a little bit better and a little bit faster version of themselves.
What you don't want to trigger is that these people are different than us. I think that leads to viscerally that these guys are not as good, we can do it better ourselves. So you have to get the team, you have to get the processes, you have to check all the boxes in the right way, and you're just inevitably going to be faster because you are in a smaller company. That big company just cannot match. And I talk about that because, you've been there too, we've been in the AstraZeneca facilities. And so I actually say, have you guys ever heard of AB testing? Have you heard of that term AB testing at all?
Ritu Baral:
No, not me.
Praveen Tipirneni:
Yeah, it's actually a tech term. And where when Google, they show one page to one person and the slightly modified version to this person and they see which was more effective. I actually kind of say that in some ways, Morphic, AstraZeneca is the perfect biotech, pharma AB testing. And the reason I say that is that if you look at what we do in relation to AstraZeneca when we were in their small molecule oncology area buildings, is that look at some level, we were doing drug discovery in exactly the same way pharma does it, structure-based drug design. It's a cell surface receptor. It's largely the same equipment. We shared a lot of the same equipment. We got some of the equipment from AstraZeneca. The people are largely very similar as well. We've brought in a lot of people from AstraZeneca, and certainly some people have left Morphic to go to big pharma.
And so I was like, "Literally all these check boxes are exactly the same. So why do we have, our timelines are twice as fast?" A lot of it's decision-making, a lot of it's management and things like that. But I think that's what it has to look like from a small molecule company is that they have to be looking at themselves in the mirror and saying, "Hey, this is a really good version of us, or even a better version of us." If it registers alien or different, then it viscerally just feels this is not a company that's going to succeed.
Ritu Baral:
So other than hanging out with your favorite covering analyst after the Cowen Health Care Conference at the bar, what is your absolutely most favorite fun part of being a CEO?
Praveen Tipirneni:
Yeah, I mean, that's hard to top, hanging out with the favorite analyst at the bar, at the Cowen Conference, so that's a tall order. No, I do think that, and I've said this to other first-time CEOs, it's a tough job for sure. It's a tough job. There's a lot of uncertainties long-term. But the other side of that is that if you have a perspective on what type of culture you want to build, the great thing about a CEO job is that you can actually go build that. And I say it somewhat in jest, actually, Blaise actually wrote that small book about Morphic, and in there he put that the very first things, literally the first sentence I said when I walked in the door. What was it? "No voicemail, no email, no PowerPoint." And obviously I say it a little bit in jest, but largely that's what we did.
Because I had a perspective that first of all, I was like, I hated voicemail because I was like, voicemail just seemed like so eighties. I was like, "We are not having voicemail." And also for the first probably four years, it changed a little bit as we got bigger and more experienced, people came on and stuff like that. But probably the first four years, we didn't have PowerPoint. I just had a view that, look, we've had hundreds of years of human progress with written documents, and I just felt that PowerPoint does not capture the nuances of a scientific enterprise in the way that a document can. And I was like, "Why do we have journals written?" Journals are not in PowerPoint. And so if you looked at the first four years of Morphic, even at a board meeting, there was no PowerPoint. It was all written documents. And again, I'm not even saying it's right, but the great thing about a CEO job is that that's something only a CEO could do. So if you have a culture in mind, you have a chance to really shape it the way you'd like.
Yaron Werber:
Praveen, we did a video back in the days, and we'll come back to that video in a second, but it was about the first time biotech CEO. And you at that time, this is almost four years ago or so, made a lot of comments. You've had a lot of experience since then. What advice would you give to first-time biotech CEOs now?
Praveen Tipirneni:
In some ways, yeah, because I think that was probably when we were just going public in some ways. And so now it goes a little bit with, I think Ritu's comments earlier as well. The challenging thing with a public company CEO is that we are all very type A. We are execution oriented, but especially in retrospect, if you look at the Morphic data, how consistent it's been, we've been fortunate how consistent it's been with each other, and we had a commercial drug on the market we compare it with. It's very, very consistent. But if you look at the stock price, it's all over the place. It is literally all over the place. And I think that's the hard thing to get a handle on is that, because some people say ignore the stock price, but you can't really ignore the stock. I mean, you can't focus on it, but you can't ignore it because you have to raise money and you're always thinking about your cost of capital for a long time.
But I think because even, and I kind of say if you look at the Morphic data, it's been so consistent, but such a volatile stock price, which means that most other biotechs are even more volatile stock price. So I think the advice is you really have to stay very conservative because there are just so many uncertainties that you need a really big safety margin and cushion for all the unexpected technical and market challenges that will come up. I think that just conservatism will serve you well.
Yaron Werber:
I mean, if the stocks were very prescriptive and predictable, Ritu and I would be out of a job. We would be doing podcasts full time.
Praveen Tipirneni:
I have newfound appreciation and respect for you guys after this whole journey.
Yaron Werber:
Yeah, that's one of the first thing I remember. I tell my teams on the sales side, and I used to talk about when I was in the operating side a lot, what we do, what the company does every day is not how the stock trades every day. And I think one of the hardest things inside a company is talk to people. We don't get paid to come to work. We get paid to build value. They are two different things. So I want to talk about the famous couch. So it was four years ago right before the pandemic started, literally I think that the pandemic was coming in as we were shooting the video in Kendall Square on your motorized couch. And I remember at some point, "Why are all these people watching us?" And then it dawned on me because we're on a motorized couch in the middle of Kendall Square. So can you talk about how you built that couch and how it came to be?
Praveen Tipirneni:
Yeah, yeah. So like I mentioned before, is that at heart, I'm kind of a tinkerer. And so just to get to the recent version of it, I mean way back when it was just to sort of inspire the neighborhood kids in STEM and things like that is the original. But then what happened was that this version of it, I'm trying to recall exactly, but it was something like it was kind of a pep rally almost for Morphic is a volleyball team and sports related with the Morphic team. And the Morphic employees were very excited about volleyball. AstraZeneca had a big kind of event every year.
And so I said, "Look guys, if you guys win this, I will do anything you want. Tell me what you need." And they said, "Okay, will you build the motorized couch for it?" And I said, "Look, if you guys win, I promise I will build the motorized couch for you guys." And so that's how it came to be. Actually in the end, they didn't end up winning. They were literally one volley short of winning. They got second place, but they went from last place to just about winning. And so I felt that that was enough to build a couch. And so I built it for our employees for that huge effort in volleyball that they made.
Yaron Werber:
And so that was gen one, and then you actually built a second-generation version. And I remember my one request for the second-generation version is to have a built-in bar. And I don't think that made it to that one.
Praveen Tipirneni:
It didn't. Even though it's funny because the second-generation one, I think it was a result of actually your efforts there because remember, we had to transport it to Kendall Square and stuff like that. It wasn't trivial to transport it there. So the next version is actually a couch that you can take apart and put in a SUV and stuff like that. But I think we got busy and it's actually still in the garage. I don't think we've ever used it again, even though we have a very portable version of it that could easily adopt to a bar. If you can think of a use or a kid that wants it, I'm happy to give it to somebody.
Yaron Werber:
I think we almost need to take it and put in the biotech hall of fame.
Praveen Tipirneni:
We can do that. We can do that. And you just put it in museum somewhere. Yeah.
Yaron Werber:
What are you going to do next? What's next for you?
Praveen Tipirneni:
Yeah, I don't know yet in that I had a health scare last year. Look, I'm a science and technology guy. It's actually quite easy for me to get interested in stuff. And it's funny, because after we closed the transaction, I said, "0% chance I'm doing this again." And now it's been, what, a month or two? And I'm saying, "10%." They're like, "Well, if it's gone from zero to 10% in two months, it's going to 100% at some point." And maybe that's true, I don't know. But for now I'm just trying to be on some boards and the rest, spend some time with family and things like that. But like I said actually, and I've been talking to a lot of people, but I love the people in the industry. I love the science. I love kind of what we do.
Still, I say that to me, it's almost kid-like, I still find it magical that you can take a pill and all these things can happen in the body. You can cure a disease by taking a pill. That just still blows me away. Just like when you're flying in an airplane, you kind of think about it. That's amazing that this hunk of metal can fly through the air, right? In the same way when I look at a pill, I'm like, "It is just something like magic." And so I do think it's not over yet for me, but right now I'm just spending time with boards and family.
Ritu Baral:
Praveen, as you think about the board opportunities, you must have a number. What are you looking for? What are signs of success in a company when they ask you to join as a board member?
Praveen Tipirneni:
So first of all, I have a lot of gratitude to all the people that helped me during the Morphic journey. And I say that from investors to the analysts, to the banks. I have a lot of gratitude and appreciation to all the people that helped us. I say that have a lot of appreciation to Colin and the other banks because you guys believed in us when others didn't, right? And so even when bigger banks came to me later and I was like, "Look, I know I'm friends with you guys, but you weren't there when I needed you. These guys were there when I needed them." And so a lot of graduates.
So right now, the board positions have more been focused on working with the people that I'm sort of thanking in some way is that Nilesh from Wellington asked me to be on a board, Michelle Doig from Omega, she asked me, Amir. So these are people that are close to me that help me a lot with Morphic. So those are the people today that I've sort of been focusing on. But I think the bigger question, and you were there when I actually asked this question, remember? Remember the question I asked Rajiv at our event, at the Cowen Conference is it's a question that we always kind of debate. Is it the science? Is it the technology, or is it the people?
Ritu Baral:
People.
Praveen Tipirneni:
People are on both sides of it. And for me, I am sure it's different for different people. It's actually both. It's not one or the other. And the quote I always use is the Buffett quote. Buffett has this quote where he says, "When good management meets a bad business, the bad business wins." And so I am definitely not the purest where you have a great management team and they'll just figure everything out because I've seen a lot, and I can talk about that one a second, but I've seen a lot of great management teams that did not figure it out because they put themselves into bad situations. So for me, I do actually look at both the science as well as the people. So I think each one is sort of unique in and of itself, but my perspective is you need both. It's not just one or the other.
Yaron Werber:
Praveen, so we want to get to our favorite part of the podcast, which is a little personal touch and humor to really get to know the guest. And you've already really shared a lot of your life stories, so we're already getting to know you really well, and we've known you really well. So we think we know where this is going. What is the biggest prank that you ever did in your life?
Praveen Tipirneni:
The biggest prank. Okay. It's a long time ago. And yeah, like I said, I am a bit of a tinkerer ever since I was a young kid. And so I went to MIT as an undergraduate, and MIT has that big hacking culture associated with it, A lot of hacks and things like that, and hacking at MIT because now hacking has a different connotation with Facebook and things like that. But yeah, at the time, hack was somewhat synonymous with prank of sorts, kind of a creative prank of sorts, and sometimes technology enabled. But the biggest prank of all time at MIT is what's called the Harvard Yale game hack. And it's doing a prank during the Harvard Yale football game, and there's some legendary ones, but when you look at in the 100-year history, it's only once or twice that successfully it happened.
Once, I think it was right after World War II where they put in the ground with detonation wire, MIT. It said MIT on the ground when they did. And then in 1982, there was a big balloon that came out of the ground in the Harvard Yale game that said MIT on it. And so this is a prank. We thought it was time again, it was a couple decades later that it was time again for someone to attempt this. Right. And it's funny, in this day and age, there's absolutely no way you could do this. Right? And I'll get to what exactly is, but we're talking explosives in ground. We're talking battery packs in our jackets in the game. Could you imagine in this day and age? Post-9/11 and stuff like that, these kind of situations would be just unthinkable. But back then-
Yaron Werber:
It would go swimmingly well.
Praveen Tipirneni:
Yeah. But back then what we thought is, again, kind of brainstorming and things like that, but what we came up with is that we were going to launch rockets out of the ground of the Harvard Yale game that would launch a banner over the horizontal goalpost and spell MIT as it rolls down the goalpost. And so this has led to a lot of nights under the field, putting in these mechanisms, putting in these rockets. And ultimately, knowing MIT, we actually tried with timers and stuff like that, with digital watches and things. It was all kind of quirky, never quite worked. So we thought, "We're going to have to launch it manually ourselves." And so what we did was we put wires underneath the ground of the Harvard Yale game, and they were connected up to the bleachers essentially, which you could get to by stepping down to the front of the stadium. And so we had battery packs in our jackets, and during the third quarter held hands, and the one person held this bleacher, one person held that bleacher and launched the rocket.
It was just as the Yale kicker was kicking. So there's smoke all over the field. There's a quote in the newspaper that we thought the stadium was exploding. The Yale kicker missed the field goal, the smoke was in his eyes, and then it launched this rocket that said MIT on it. I mean, obviously MIT people, it was like a hero's welcome from MIT's standpoint, but the Harvard Yale people were pissed off at the whole thing. It got covered by all the newspapers and things like that. Yeah, I mean, I think it's way down somewhere, because I actually tried to find the articles at one point last year. I couldn't actually find them anymore, but my kids' friends sometimes find them. So they are available on the internet somewhere.
Yaron Werber:
Did you take some of the clippings and send it to McGill when you were applying for med school?
Praveen Tipirneni:
I never did that, but for years, literally the first question anyone would ask at any interview would be on this because it was like the first thing that would come up. If you Googled my name at the time, it'd be the first thing that would come up. So for probably 10 years, my professional life, this is the first question that anybody asked about during the interviews.
Yaron Werber:
Love it. And tell us something about you that no one knows.
Praveen Tipirneni:
That no one knows. Okay. Okay. I got one. I got one. Right. So maybe this is in retrospect, but you know how someone has to be in the bottom of their med school class?
Ritu Baral:
Was that you?
Praveen Tipirneni:
Yeah, well, we didn't have class rankings, but my med school class was so smart. And so I'm wondering if that was in my psyche somewhere that I just can't compete. My colleagues are so smart and they're so good. They're so perfect doctors that I could never be as good as them, so I need to do something else. But I mean, it's interesting because I think med school I found was quite for me because I think I totally have more of an engineering mentality, a math orientation, and so engineering came a little bit more natural to me, but just the sheer amount of memorization and the sheer amount of knowledge base that you have to know, I just don't think I had the memory for it in a way that my classmates did, because the medical school was really hard.
Yaron Werber:
The moral of the story is finish last in your med school grade as a way to go to Wharton and become a successful biotech CEO.
Praveen Tipirneni:
Because I think they asked me to give a talk next year, I think at the reunion. And this is kind of what I was going to say at some level, I was like, "Guys, there's no way I could compete with any of you guys as a doctor, so I had to go do something else."
Yaron Werber:
Well, Praveen, it's always great to see you. Thank you so much for joining us. We're going to stay very closely tuned to see what you're going to do next.
Praveen Tipirneni:
And thanks for all you guys help. Yaron, Ritu, you guys were invaluable and helping me through all this.
Speaker 1:
Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.

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