Speaker 1:
Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.
Ritu Baral:
Hi, this is Ritu Baral, senior biotech analyst at TD Cowen. Thank you for joining us today for our podcast with Sionna. Joining us from Sionna, we have Mike Cloonan, CEO.
Mike, you've had an interesting path through company formation and your recent IPO. Managing to navigate that very smoothly in some very, very, very turbulent market. We'll get to that. Thanks for joining us today.
Mike Cloonan:
Thanks, Ritu. Pleasure to be here.
Ritu Baral:
Talk to us a little bit about your own professional journey. Tell us a little bit about the event or series of events that led you to knowing that you wanted to become a biotech CEO. It's an exhausting, if rewarding commitment, and one that doesn't happen without some level of intent.
Mike Cloonan:
Great question. When you look back, I've been in biotech now for over 20 years. When I started my career, I was definitely not thinking CEO path. What I was really trying to think through early in my career was think a couple of moves ahead as you build your career. How are you going to build the skills and capabilities that could just make you successful in the industry? But not necessarily thinking about the end game just yet. I had some very good mentors when I was at Biogen that gave me the advice of don't be so focused on a vertical path, of just trying to get up fast. Think about capabilities and experiences that you can gain over time, be willing to take challenges outside of your comfort zone and push you to do things differently.
My early career, I developed skills in finance, business development, strategy. And then made the switch over to commercial, and was doing international US roles and cross-functional roles. It gave me a lot of breadth and depth in my early career.
The point to your question, when I started to think maybe a CEO path was in play, was when I moved to Australia to be the country leader of Australia and New Zealand. I lived in Sydney for three years. Yeah, for Biogen. I worked there for three years, moved the family over. I have four children and my wife, we moved over when the kids were very young. It was one of the best both personal and professional experiences I ever had, and I really am appreciative of Biogen giving me that opportunity.
What that role really enabled or showed the possibilities, it was the first time I had responsibilities for commercial, R&D, and the G&A function. Really, almost like a CEO of the country. But yet, you're underneath the safety of the umbrella of Biogen at large. You're running those two countries, but you had the support and the capital from Biogen. It was a tremendous experience. It pushed me in ways that I had never been pushed, both in terms of moving to a new country, learning a different culture and assimilating. But also, new areas that I didn't know in terms of the business and learning to be comfortable being uncomfortable. I think that was one of the first times I felt like I think I could do something like a CEO job in the future.
From that country manager role, that country leader role, I started to shift more to general manager type of roles that would give you a lot of breadth and depth. That was the first time. Business unit heads, heading up the US for Biogen, that was the next thing. Then I'd say the next stepping stone, which you and I worked together, was at Sage. When I went to Sage and had the chief operating officer role there for four years, that was also a very broad role and gave you much more direct experience on what it might look like to be a CEO.
After four years of being that leader at Sage, I felt like I was ready to be a CEO. It was really a combination I think of skills built up over the 20 years, being ready to do things that were different and not just up a vertical path, and try different experiences that you had to be comfortable in some ways being prepared to fail, because things you hadn't done in the past and being open to that. But I learned a ton through that 14 years I spent at Biogen, and then the four years at Sage, I think it prepared me very well to be a CEO. Then once you're ready, it's really how you pick the right opportunity. That was the next step for me was why Sionna. Why did I pick Sionna to be that?
Ritu Baral:
Why a startup? That's a very different animal, very different role psychology really, than an established company. What are the character strengths or flaws of a good startup CEO that may just not be as important for leadership at a larger, more established company?
Mike Cloonan:
Yeah, it's interesting. When I think about now, I was at big biotech at Biogen. Then I was at mid-sized with Sage. Then obviously, Sionna was a small biotech when I joined. When I initially joined Sionna, I wasn't really thinking that was probably going to be the phenotype of the company that I was going to go to. But it really came down to, for Sionna, we'll get to the why, what's the characteristics of a CEO of a small company, but the reason why I picked Sionna was the differentiation of the science. Obviously, NBD1 being so unique in drugging the undruggable in a big market where the unmet need continued to be high. Being able to build out the team from scratch and establish the culture. There was so much to love about Sionna that it was the right opportunity for me to join.
But when I think about, to your question, what's the differences between a CEO of a big company, and mid-sized, and a small, there's a lot of overlap in many ways, I think, of a CEO across any biotech company. There are certain skillsets that will make you successful, including following the data, being science-driven, being mission-driven for the patients, hiring great teams, all of those things would apply.
What I think is unique about a small company now having lived in this is that I'd say you have to be a little more nimble at a smaller company, as a CEO. The change hits you I think more rapidly, more quickly. Capital is hard to come by in a smaller company. You have to do more with less in many ways. You have to stretch your capital and your runway further. You don't know when the next time you might be able to raise capital is. You also have to have a lot of expertise as it relates to prioritization. Which compounds are you going to prioritize? Which programs are you going to prioritize? What spend are you going to prioritize? All in the bounds of stretching your capital and your runway as far as possible.
Then on the human side, the people side of things, as I said, it's important in any company to hire great people and select great people. But when you're in a small company, a small biotech, every one hire is so important. When I joined Sionna, we were 12 people. Every next hire was eight to 10 percent of the company was that one person that you were bringing in. They can have such a big impact on the culture and the overall performance of the company. People that you bring into a small company have to be prepared to wear multiple hats. When you're in a bigger company, you swim in your swim lane, you do your thing. But when you're in a smaller company, you're really a business athlete. You're coming in, you have a job description, but then you have a lot of other roles and responsibilities because you need people to do more in a small company. I think that's really important.
I'd say the last piece of being in a small company CEO is you have to be a salesperson for the company. You have to be one of the best evangelists for the company with all stakeholders. With your investors, with new investors, with the community, et cetera. You have to get used to hearing no quite a bit, especially when you think about fundraising and the number of investors you might meet with in a fundraise, and how many actually then do invest in the company. It can be a little humbling to have that responsibility as a CEO, but it's for the longterm outcome of what you're trying to pursue and you really believe in the mission of what you're trying to deliver at that company, and knowing that this is part of the process.
I'd say those are some of the key criteria that I've seen that are differentiated from being a small company CEO. Then one last thing I'll probably say is more of a servant leadership. You're serving the company more broadly and you have to do a lot of things as a CEO in a small company, again that maybe you're a bigger team, more capital, you do different things as part of a bigger or mid-sized company.
Ritu Baral:
Going to that point about being an investor-facing salesman, you did navigate a very smooth IPO through the last few weeks, which has been extraordinarily turbulent in markets. Investor concerns about FDA concerns, about drug pricing concerns, about pretty much everything under the sun. How have you and your team held up? Can you tell us maybe the high point that kept you going through that very intense week?
Mike Cloonan:
There's a few things. One, as you said, very appreciative of the support of the Cowen team, and Goldman team, and Guggenheim, and Stifel, our syndicate, was outstanding. We are very pleased with the money that we were able to raise, 219 million gross proceeds. That gives us runway into 2028. We're very happy with the outcome of the IPO.
To your question, how did we work through that? There was a couple of key points in the overall process of the IPO, going all the way back to TTWs, and then the road show, there are probably three things I would point out. The first was, for us to even think about doing an IPO as a phase one company, we wanted to see the interim phase one data and understand could it deliver a path for us to an IPO? We started to get the interim phase one data to see that it was generally safe and well-tolerated, and that the exposure we were achieving was delivering the target product profile that we had in mind. Which is a dual-combination of NBD1 plus one other compound that could drive clinically-meaningful benefit over the standard of care, that was our goal. Once we started to see that data justify that, that's when we said, "Hey, it's a time where we could start to kick off an IPO process." And then get the feedback back from the investors, to see if the timing made sense.
First, having the quality data that we had. Then the second is going through the TTW process, you start to get that initial validation as to whether people would be interested in the data you have, the story that you have.
Ritu Baral:
It was going in prepared?
Mike Cloonan:
Going in prepared, right. And knowing what you needed to see before the IPO kicked off. You do a lot of planning work ahead of time to say, "What do we need to see?" Getting your own existing investors on board and your board on board that this is the right path to pursue, yeah. And you really need the external validation, though. You need the new investors coming in and seeing what we see, and what our existing investors saw. We got that validation through the TTW process.
Then it's all about the road show and it's the finalization of that process. That you've already done your diligence, and you've planned this out, you meet with all the investors at that stage, and then you get the final determination of what the IPO looks like. We felt very good about the overall process, despite a challenging market backdrop, that we felt like Sionna could add value in that space as an IPO company.
Ritu Baral:
The TD Cowen team, within many of our publications, we've long held that investors underestimate entrenched competition. But here you are, you've elected to lead a company heading right into the teeth of a huge established CF juggernaut company. What are going to be your strongest tools in this process to emerge successfully?
Mike Cloonan:
Let's step back for a second and think about CF. It's an $11 billion market today, with a single player that's growing to $15 billion. It's a massive opportunity and we've always thought driving more options for patients is ultimately the goal.
What I will say, to your point on competition, we have a tremendous amount of respect for Vertex. What they've been able to do for patients in the advancements they've made over the last decade-plus has been fundamentally game-changing for patients living with CF and their families, so you have to respect that. But having said that, we also do know, and we've talked about this, is the unmet need is high still in CF despite those advancements. One of the ways we look at that unmet need is through CFTR function as defined by sweat chloride. We know for even the patients that are on the standard of care today, two-thirds of them are not achieving normal CFTR function.
When we engage the community, and talk to the physicians and patients, they want to get more patients to normal CFTR function. That should ultimately be the goal to get to as many patients as possible to normal. The way we have an opportunity to do that is through this differentiated target NBD1. That is really our best opportunity as a differentiated target that has long been considered undruggable, but the biology is very well understood. It's very unique and novel, and we think there's an opportunity to drive even an increased benefit with NBD1 being the tool that we have in our portfolio.
Then I'd say the other part is not every drug is going to work for every patient. That's why that options for patients is so important. But we have a unique opportunity to deliver what we call a dual-combination, so NBD1 combined with one other corrector, that could deliver clinically-meaningful benefit over the standard of care, create more options for patients. Potentially get more patients to normal CFTR function, which again, should ultimately be the goal. You have to think about efficacy. In any market that I've been in with competition or not, efficacy tends to be one of the key drivers that allows you to compete. We've been very focused on, with NBD1, the potential for driving incremental clinical benefit where we can.
Ritu Baral:
Mike, biotech is incredibly fast-paced. Technology is advancing every time we turn around. What is the biggest advancement in the sector, in the CF space, that you're really looking forward to in the next three years?
Mike Cloonan:
Yeah, there's a lot of innovation. I'm super proud to be part of the biotech space. I feel like there's always this greater good that we're trying to achieve in helping patients and their families, so there's a lot you could speak about in terms of innovation that's on the horizon. I'll maybe stick within the CF realm. I think we've got a great opportunity with Sionna to advance NBD1, as we've said.
But I'll also point to gene therapy, gene editing. There's some new modalities being explored within CF. The reason I bring them up is because today, the current standard of care is approved and benefits about 90% of the patient population in CF. Our programs would go after that same target population of about 90% of the patients. There's 10% that really do not have an option today. That's really where gene therapy and gene editing are focused in CF. Can we provide more options or an option for those patients that don't have one today? That would be an amazing outcome that I would welcome, even being in the CF space, because it's not an area that we can solve for today at Sionna. Hopefully, we'll see those come to fruition in the near-term, where that 10% of the CF population have options.
Ritu Baral:
Thank you for joining us today, Mike.
Mike Cloonan:
Thanks, Ritu. Pleasure.
Speaker 1:
Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.
