Mike Nall, Biocept, CEO
Biocept
We are one of the leaders in a space called liquid biopsy. Liquid biopsy is a way that we can get genomic or proteomic information out of a simple blood sample that physicians use to make treatment decisions, in the same way they use a surgical tissue biopsy. In other words, with a simple blood draw, we can give similar information like they would get from a surgical procedure. We’re able to isolate circulating tumor cells (CTCs), which are cells shed from solid tumors into the blood stream. Tumors will shed and spread in different ways. One way they do it is by spinning cells off into the blood stream. Those cells then go around and travel throughout your body and either get killed by your immune system or could lodge in another part of the body and start to metastasize.
We also look at circulating tumor DNA (ctDNA) – which is when the cancer cells themselves break down and release nucleic acid into the blood stream. We isolate the DNA that’s specific to the tumor. It’s pretty amazing because in your blood you have Cell-free DNA from all your normal cells – so when you are healthy it’s typically going to be normal. When you get older and if you have cancer, however, you’ll have a 10 million to 1 ratio. Getting that information – whether it’s the cell or the DNA itself – is like the needle in the haystack.
That’s the beauty of what we do – we’ve developed technologies and chemistries to isolate those truly rare events and then we profile those for genomics or proteomics to make sure a physician has the best information they need to make a treatment decision.
We definitely focus on three areas, but we have validated for numerous tumor types. The three big solid tumors that we focus on are: lung cancer (about 50% of our business today), breast cancer and prostate cancer. Those are some of the three biggest cancers currently in America. We have validated about 7 different tumor types at this point, but it’s mainly those three that comprises over 90% of our business.
It’s potentially tens of millions of folks worldwide. Just here in America, with those three types of tumors I just named, you’re talking about 775,000 newly diagnosed patients every year. Our goal isn’t to replace the tissue biopsy completely – because they actually have to use a tissue biopsy to make a cancer diagnosis – it’s to help with the tissue biopsy. You can do something with blood that you can’t do with tissue biopsy – you can monitor a patient – both during their treatment to see if the therapy is working and post-treatment, to see if there are signs that the cancer is coming back. You wouldn’t want to turn someone into a pin cushion and biopsy them constantly. As a cancer progresses, the patients have to schedule routine biopsies with their physician. The biopsies are very invasive for people who have lung cancer, breast cancer, or prostate cancer, and nobody wants to do that. It can be problematic to take biopsies with lung cancer – the potential exists for a collapsed lung or infection. With our test, doctors are able to monitor treatment response and cancer progression with a blood test that can be done over and over again. Every time an oncology patient goes to see their physician, they get blood drawn. Our test is just two more tubes of blood during that same visit. It makes it very easy to monitor these patients at the genomic level and assess whether the therapy is working or if the cancer is coming back.
Today, doctors are using it primarily when tissue isn’t adequate at the start, but we’re starting to see it used in quarterly monitoring. There is already a predicate for that in lymphoma and leukemia – two types of blood cancers. The standard of care is to monitor those every quarter when somebody is in remission, or undergoing treatment, and we expect the market to evolve this way for solid tumors such as breast, lung, and prostate as well.
Correct, we are not direct to consumer; we market to physicians and they put an order in for the test. That’s not to say we ignore the patients – we’re very involved with various patient advocacy groups and we actually have a whole section on our website targeted to patients. Breast cancer patients, especially, are very interested in what’s going on and what they can do to be helped. With breast cancer, we work with a group called Metavivor, and for lung cancer, we work with both the Lung Cancer Foundation of America (LCFA) and the Addario Lung Cancer Foundation (ALCF). We are always looking for ways to reach out to patients, whether directly or through these advocacy groups.
Well in some cases, like with ALCF, we are doing a study with them. They are helping to fund the study on the benefits of liquid biopsy with cancer and we are doing that with various principle investigators. Ohio State is the main site, but we have other sites that are a part of that study. Then with Metavivor or LCFA, we provide funding and sponsor some of their events, like the LCFA “Day at the Races” in Del Mar. We interact with patients there and they’ll send out information about Biocept to their patient population, and hopefully go back to their doctors and ask more about our tests. It’s a great collaboration with several of these groups.
Liquid biopsy is still early, and we feel we are one of the top providers in this space. We have helped over 23,000 patients and that’s what motivates us every day. We wake up every day and are focused on helping patients extend their life. We help patients who have been diagnosed with cancer, and for most people – that’s some of the worst news they could ever receive. We give them a choice that may be missed with traditional care. We find a biomarker or a gene that’s acting up that hadn’t been identified previously, so they can get on a targeted therapy with the potential to save or extend their life.
That’s what I always say – everybody here does. We even have cancer survivors in the company. Every time I pitch to investors, I know they’ll be interested in what we do. I always start out with, “Raise your hand if you have someone in your life who is suffering from cancer.” Everybody does. Whether it’s you, your grandparents, your spouse, your folks or your extended family, we all have somebody in our life who has perished or suffered from the diagnosis. I think it brings it home for people and level-sets as to what we’re all about, We are focused on taking cancer from being a deadly diagnosis to someday a chronic condition that will be monitored with a blood test.
One of the most exciting partnerships we have is with a company called Prognos – a VC-funded company based in New York who is partially funded by Merck Ventures. Prognos is working with service providers like us who provide genomic information, and they use it to find commercial outlets. We’re generating tons of data that can be used to find trends to someday find cures. This information includes patient age, the tumor stage, and most importantly the results of the testing. The investment we have raised has gone into developing our core technologies and applying them to help patients – we have had limited resources to fund a program to use AI to mine the data. Instead, Prognos is providing that for us. They have created an interface into our L.I.S. and are now marketing the de-identified data we’re generating to pharma and researchers. We just launched that at the end of last year. Prognos is now working with a lot of genomics companies located in San Diego. We are the first liquid biopsy partner they have, and it’s been a great partnership so far.
I think our challenge is the same as any startup company – getting the resources needed to effectively get our message out to all the physicians. You know I have 10 hardworking sales people who do a great job every day, but I could really use more like 50. Our lack of human capital is a challenge unique to being in the micro-cap world. Quite a few San Diego companies are in that same boat, and part of it is we don’t have a huge VC presence down here, compared to the Bay Area. People are trying to change that, with companies like Section 32 and Bill Marris, Greg Lucier’s new group, Corza Health. Hopefully we’ll start to develop more of a VC mentality down here in San Diego and find ways to make us as visible as all of the Bay Area startups. For companies going forward, this is a really important step, because what I found as a CEO is that investors very often are looking for someone else to make the first jump, which is usually going to be a VC. After that, they usually just pile on. They think the VCs did the due diligence, so it must be a good investment. Without that, it’s harder to go out and raise the money you need.
Since I’ve been at Biocept, we have raised about $150 million. By industry standards, we have been successful at raising money. I think it’s exciting to see how far San Diego has come, especially as one of the world leaders in genomics. We are going to need to start figuring out ways, like what Biocom is trying to do with your Capital Development programs, to get folks to understand that the U.S. is the global leader in genomics, and that there are really three main regional hubs: Boston, San Francisco, and San Diego. Of those three, San Diego has the cheapest real estate, the nicest weather and the nicest people. In my opinion, we should be ranked number one. Now, we just have to get the VCs and the financial investment support to follow suit. I am based in San Diego, raising most of my company’s money in New York, then San Francisco and Chicago. We have to get San Diego up on the same level.
I had been at a company up in Orange County called Clarient, where I was the General Manager of North America. Clarient had been a startup that launched in 2004 as a lab. That’s when Ronnie Andrews, well-known in this industry, took over as CEO. I went from being a sales rep there, to being a manager, to Director of Sales, to Vice President of Sales and Reimbursement in six years. The company grew from $0 in 2004 to about $110 million in June 2010 and GE bought us for $580 million. All the C-level guys (Ronnie Andrews and Mike Pellini, of Section 32, being two of them) that I reported to left after the acquisition, so I became the General Manager for the business after GE took over. I was there for three years and one day I got a call from Ronnie and he said, “You’re going to get a call from David Hale.” I knew David’s reputation and I said to myself, “Why is David calling me?” David wanted to talk to me about coming down here to San Diego and changing Biocept from an R&D company to a commercialized entity. That was five and a half years ago, and here we are today, moving the company forward. It didn’t matter as much to me about the company, as it did to work with David Hale. Whatever happens with the company, I thought, I can learn a lot from this guy. I was happy to do it and David has been a great mentor of mine, as Ronnie and Mike had been before.
That’s exactly right. In my particular case, David called up Ronnie and said, “Who do you know?” – and that’s how this whole venture happened for me.
I was lucky enough to have another great mentor in Dave Daly, who is now an executive at Illumina. He was my direct boss – the Chief Commercial Officer when I was Vice President of Sales at Clarient. Dave sent out a motivational message every day that he wrote personally. He would go into work at 3 or 4 in the morning and would work until 7PM at night. Back in the days of voicemail, he would leave one every day that you’d get when you woke up. It got to a point where you looked forward to it, and then you felt like you couldn’t let him down. Since I’ve been at Biocept, I make a concerted effort to send a message out to my team every holiday. That way they routinely hear from me – I think people should hear more from the CEO. In addition, every time we hire a new employee, they come in here and spend 15 minutes with me so that I can get to know them. A lot of them say “I’ve never met the CEO before” – even those from the startup world. How could you not have met the CEO of a tiny little company? I want to know people in the building when I come to work – who they are and what they’re about – it makes it a better experience for all.
The founder of the company is actually a scientist, a Korean gentleman named Soonkap Hahn, and he started the company here in 1999. When David brought me in here in 2013, the company had been around for fourteen years and had already gone through a ton of investor money and never had a commercialized product. That’s a lot of R&D over the years.
Bob Reese – a serial entrepreneur that had started IMED pumps – one of the first two automated pumps that you see people walking down the hall with in hospitals – provided the initial investment and was the first CEO. He had previously founded IMED and sold it to Cardinal for lots of money. Then he started a new company called IVT, located here in San Diego. It made balloon catheters that had little razor blades in them which they used for cardiology to clear up blockages. He then sold that to Boston Scientific for a lot of money. After that, he put the money in Biocept and unfortunately he died of cancer several years later. So the company kind of floundered for years until they recruited David Hale to come in as Chairman.
David really rebuilt the team and got us to where we are today. I am very fortunate in my life that I have been able to work with the folks I have. Our whole board consists of some very accomplished people, including Ivor Royston, who along with David, were the founders of Hybritech and essentially biotech in San Diego.
I was over at the event they held the night before the surfing competition at Sam Armstrong’s house! Ivor said, hey they are doing this thing to honor me, over at this house in La Jolla, you should come over. I show up and it’s all the movers and shakers of that generation. I’m thinking, I shouldn’t be in this group. David Hale looked at me and said, why are you here? I said Ivor invited me! It was great – I got to meet and network with a lot more of our customers and partners through our relationships with the Moores Cancer Center, of which Ivor has also served on the board. That’s the beauty of networking in San Diego.
Well it has a lot to do with great people. Most of these people are serial entrepreneurs, people like David and Ivor, and once they have their first success, they continue to make investments over the years into various life science communities. Take Gen-Probe, for example. What a huge success that spun off a ton of wealth. There is a lot of smart money here in San Diego, most of it family offices. David has his venture fund and that’s different than the big VC groups that spend other people’s money. There are a lot of smart companies here that get acquired and/or merge. There is this constant flow of new ideas coming out of San Diego. I think that’s exciting for people.
Well you have to have both – you wouldn’t want family office investments to go away. What San Diego needs is to get some VC groups that have other people’s money to go out and make big wins like a Google, Facebook, or like Foundation Medicine, a genomics success founded with the help of Kleiner Perkins and Mike Pellini’s leadership, resulting in a $5B sale to Roche. I think that in ten years, it’s going to look a lot different here in San Diego – we just need to build more hype. Boston has the academic hype, you know from MIT and Harvard. The Bay Area has Stanford and Silicon Valley.
I was at that event! I actually sat next to Mark Stevenson. Biocept partners with Thermo Fisher, as well – we have a great relationship with that team. We are creating their first Center of Excellence for liquid biopsy. Biocept has most of our assays on their platforms, so they’re a good partner for us. We also have some assays on Illumina, and count on their partnership as well.
And I agree with Mark, for the most part. While hospitals like UCSD are ranked high here in California, when you look at the US News Report under Top Hospitals in America, most of our institutions are not mentioned. So whether that’s fair or not, I can’t tell you – a lot of that has to do with politics and history, it just takes a while. It seems like they’re doing the right things to get us up there but I just recently looked at that and nothing in San Diego is in the top 25. That’s a challenge.
We have good partners at all three major hospital systems in town. I don’t think that’s what hurts or helps our industry as much as the funding available. I’ve heard David talk about it at length with other folks in the industry – we have got to somehow get more VC investment in San Diego. The whole world goes to New York for money, that’s never going to change. The other centers like that are London, Shanghai, and Tokyo, and maybe Belgium. For the type of funding we’re talking about, it’s still New York, San Francisco and maybe Chicago. Then San Diego and Orange County are thrown in with the next tier, including Minneapolis, Dallas, and Houston. We need to move San Diego up to the San Francisco level to be taken seriously from the investment side.
I’d probably say 30-40% of my time is either raising money or taking care of the investors after we raise the money. The rest of the time is spent here with the team. I wish I could spend all of my time doing that. But I also like the other side – the investment side. I like our investors, going out and seeing them, visiting New York. I just love what I do here. We have a great team. We are all friends, as well as co-workers. I look forward to coming to work every day.
This is always a challenge for us. I think by and large, most of our employees are pretty happy. We started doing an annual employee survey, which has been a huge game-changer, and most recently had about 87% of the responses come back with positive remarks. We have some work to do, but there are different needs for folks based on different demographics. We have a very diverse workforce here. When people say diversity, a lot of the times they’re thinking of cultural diversity, which is important, and we have that, too. About 75% of the managers here are women, VP and Director Level included. We have people that work for us that are older as well – our CSO is in his seventies! We also have folks working for us straight out of college.
This is the challenge: how do I balance the expectations of what a workforce should look like to multiple generations? There are such different expectations right now of the new workforce coming in, then the folks that are still working. It used to be everyone retired at 65, and now a lot of people want to work and continue to contribute. What if I told one of our managers who is in his sixties, and has been at numerous San Diego startups over the years, that we’re going to put a bar downstairs and people are going to bring their dogs to work? He’ll say that’s just not what you do at work, right? Some of the older generational employees already think I’m crazy with all the things we do for employees as it is, today. The young people, that’s what they want – a more open type of culture. Nothing is right or wrong, it’s just a constant balancing act.
So when you say how do you develop culture? We are doing our best. We host town halls – I try to have them every month – where we all just have lunch together, and employees are encouraged to ask me anything they want. I field questions on everything from financing, stock options, employee benefits, and smaller things like they don’t like how the app works for the time clock. We introduce all the new employees, we bring food in all the time, and the list goes on. We do our best to make it a good place and a fair place, for everyone.
There are a lot of labs here in town. To be able to work in a molecular lab, where you look at genomics or proteomics, you need to be licensed in the state of California, so it’s a limited number of people we have to pull from.
For R&D, we are looking for scientific expertise. The commonality amongst whoever we’re hiring is that we need people who can get along well with others. We have had to terminate people in the past, not because they weren’t smart, but because they couldn’t get along with other folks they worked with. So it’s more important for me to have a team that’s all moving ahead together, than it is just to have one brilliant person that nobody can stand to be around.
Biocom membership for our company has helped tremendously with being able to afford competitive, best-in-class benefits for our employees. As a small company that’s always trying to raise money, we can buy through the group purchasing programs and actually get better rates – especially on our health insurance, employee benefits, and Directors and Officers insurance – that’s been incredibly valuable for us. For me personally, along with some other members of our team, I’ve benefitted greatly from all of the networking opportunities and educational seminars available through Biocom. I like to meet people and I’ve made a lot of good friends that are CEOs in town. When I’m at different conferences, I run into a lot of them, and we get to catch up and talk about similar challenges we’re facing. There is no easy road, that’s the hardest thing as a first time CEO. You don’t really understand what a CEO does until you’re in this seat and it doesn’t matter what company, it’s a tough road for everybody. There are ups and downs, and the key is to keep your eye on the ultimate goal every day and face it like it’s your first day on the job.
I think the best thing you can do is just be reliable and do what you say you’re going to do. That’s true of businesses across the board. I’m mainly a sales leader – I’ve hired many salespeople and have mostly had high performing teams. The commonality amongst the top performers is being perseverant and reliable. People like to buy stuff from people they like number one and number two, when you make a promise if you say hey I’ll get you that pricing next week, you get it the next week. They call up and say my test didn’t get here on time, you call right back and say what can we do to solve that, let me check the lab, it’ll be here tomorrow. That’s what people want, as long as you are service-oriented and you actually do what you say you’re going to do, you can go far because you’ll make your customers and your co-workers happy and earn their respect along the way.
Well, I travel a lot for work – so it depends what time zone I’m in and what’s going on. I wake up to see what happened overnight within the company – I definitely check my emails first – then I check my Apple newsfeed to see what’s going on in the world. Lastly, I check my social media to catch up with my network, then I get to work. If I’m local, I try to get into the office around 7:30, that way I can have a few minutes to catch up before the day starts to unfold. Every Monday starts the same when I’m not traveling: we have Senior Staff at 10AM where all the different department heads meet for two hours and we make sure we are on track with our goals and see what’s going on within the company. From there, it’s meeting after meeting, and phone call after phone call.
That’s if I’m not traveling. I’m out of the office on travel an average of 10 days to two weeks every month, usually to New York because we have a need for cash. We are a micro-cap startup company. Most of the investment funds are in New York, so I’m in New York about every five weeks. The other cities like Chicago and San Francisco are the secondary markets for fundraising. My job as CEO is primarily to make sure there is enough money to keep the lights on and to make sure we have the tools and staffing we need to continue to help patients every day.
