Video

Biopharma And The Management Of Wall St. During A Pandemic

Source: Life Science Leader

From a high where the Dow Jones Industrial Average (DJIA) topped 29,550 points, to a low nearing 18,000, the volatility of the U.S. stock market in the first half of 2020 has even the heartiest investor queasy. But how about the leaders of such publicly traded companies? Rob Wright, chief editor of Life Science Leader, recently conducted a virtual roundtable with three CEOs of publicly traded biopharmaceutical companies to learn how they are leading their organizations, while also managing the expectations of Wall St., during the COVID-19 pandemic. Appearing in this video (in order) are:

  • Bill Newell, J.D., CEO, Sutro Biopharma
  • Mike Sherman, CEO, Chimerix
  • Karen Zaderej, CEO, Axogen

Edited Transcript

Editor’s Note – The following is an edited transcript from a Zoom call roundtable conducted on Friday, May 22, 2020, with three biopharmaceutical industry CEOs.

Hello, I'm Rob Wright, chief editor of Life Science Leader. You know, during COVID-19, we've been trying to do some different things and tried some virtual Zoom round tables. And the one that we wanted to organize today was a bit around Wall Street, because the first half of 2020 has been unlike anything we've experienced in the past. I mean, I was looking back and in February, on February 12th, the Dow Jones industrial average was approaching, you know, almost 30,000. It was like 29,500 and some points. About six weeks later, it was closing in to go below 18,000 points. I mean, it was almost a 12,000 point swing. And I have to say, that even the hardiest investors, yours truly included, were pretty queasy with this whole whipsawing back and forth. I mean, in March alone, we saw the highest point gain and the highest point loss within eight days of each other. What we thought it would be really interesting to do is, if it's hard on investors, let's talk to some of the CEOs that are trying to lead these companies during these really turbulent times. So, we got three CEOs of publicly traded companies with me today. And, what I'd like to do is have them introduce themselves in alphabetical order, and then we're going to ask them a few questions about their businesses. Let's start with you, Bill.

Bill Newell, J.D., CEO, Sutro Biopharma:

Good to be here Rob. I'm Bill Newell, CEO of Sutro Biopharma.

Mike Sherman, CEO, Chimerix:

Great. Mike. I am Mike Sherman, the CEO of Chimerix.

Karen Zaderej, CEO, Axogen:

Hi everybody. I'm Karen Zaderej. I'm CEO and chairman of Axogen.

Wright (LSL):

Thank you all for joining us. We're going to start with some direct questions, and the first one I want to pose to Bill Newell. On February 28, 2020, the company announced this borrowing of $25 million. Usually, when entering into a volatile market and potential recession, taking on debt is often something people may try to avoid to do. But you also announced not long after, a public offering. Could you tell us a little bit about the thinking over at Sutro Biopharma with the taking on the debt and the relationship to the public offering that you were involved with.

Newell (Sutro Biopharma):

As we got to the February, March timeframe, it was clear that there was a pandemic that was about to sweep the globe. We just didn't know how bad it was going to be. And you know, I, I took a look with my CFO and spoke to our board about the company's cash position and what our plans were for our expenditures on our lead clinical programs, which are in cancer. We have Phase 1 programs in oncology. And the questions we had to ask ourselves were:

  • How bad is this going to be?
  • How deep is it going to affect the financial markets?
  • When will we be able to raise capital again?

Now, we ended last year in a very strong financial position with $133 million in cash, and really a runway that extended into 2021. But, if the pandemic got to the levels that we were fearful of, the capital markets could close up. And so the question we asked ourselves was, do we have access to capital today? And in what form do we have that. Now, having had a robust balance sheet, in a low interest environment, we were able to go back to our lenders and persuade them to lend us an additional amount of money that gave us just a bit of cushion. But, that cushion wouldn't have been adequate if, the economic downturn was even deeper than it's been, and longer than it is currently projected to be. We knew we had to continue to think about access to other capital. I would have bet in late February, early March, that there would be no equity market available for the biotech community, had you asked me to place a bet at that point in time. But as we watched the evolution of the capital markets during the pandemic, we saw that biotech was actually doing something quite unique. There were offerings, some public offerings, initial public offerings (IPOs), and then a number of follow on offerings that indicated to us, that investors in biotech companies could get behind new investments, even in a troubled economic environment. We were fortunate, in that our lead program, STRO-002, a folate receptor, alpha targeted antibody drug conjugate (ADC), was going to have some data that was going to be revealed at the American Association of Cancer Research (AACR) meeting, which was scheduled to take place at the end of April. So, what we decided to do, was to look and see whether that data might resonate with investors and give us an opportunity then to take advantage of what we perceived to be was an open capital market. As the data revealed itself, and we decided how we were going to present it at AACR, we were able to tell a very positive and encouraging story for ovarian cancer patients who have run out of treatment options. And our antibody drug conjugate had a very good safety profile and it had good clinical benefits in this early Phase 1 study. So, we were able to go out to investors, reveal and talk about the significance of the data. We discovered that investors liked what we were telling them and wanted to have access to purchase additional shares in the company. Working with our investment banks, we were able to rapidly pull together a follow on public offering and raise almost $98 million. The thinking here was, if the market is open and we don't know what it's going to be in the future, we should take advantage of that in order to give us the resources into now 2022, to continue to advance our programs, whether it's STRO-002, for ovarian and endometrial cancer, STRO-001, for non-Hodgkin’s lymphoma and multiple myeloma, or the partnerships that we have with Bristol-Myers Squibb for myeloma, with EMD Serono, and Merck. All of those things were very real opportunities for us to continue to build shareholder value. But if we run out of capital, then we put those opportunities at risk. So we were pleased to be able to do the financing. It was not the typical financing, as you couldn't go face to face but had to do it on Zoom. But it was successful for us, and now we've got the capital to continue to drive our business forward.

Wright (LSL):

I next wanted to ask Mike Sherman a question around the Chimerix April announcement of the initiation of a Phase 2/3 study on dociparstat sodium (DSTAT, a glycosaminoglycan derivative of heparin with known anti-inflammatory properties) in acute lung injury for patients with severe COVID-19. I mean, so, what I really want to understand is your company wasn't, you know, like out in that space, prior, so you're making this R&D pivot. Tell us a little bit about how that whole decision-making process came about.

Sherman (Chimerix):

It really stems from the notion of the uniqueness of this drug that we acquired last fall, late summer, called DSTAT. We acquired it, based on the data that was generated in a randomized Phase 2 trial in acute myeloid leukemia (AML). We were in the process of preparing for and getting FDA alignment on a Phase 3 trial [for DSTAT] in AML. One of the things that we knew about this drug, which is a derivative of heparin that essentially allows you to dose the drug at a much higher level than commercially available heparins without triggering bleeding risks, is that heparins are known for having anti-inflammatory properties (this agent included). We anticipated pursuing anti-inflammatory opportunities [for DSTAT] down the road. In fact, we have some really compelling pre-clinical data in acute lung injury. Along comes COVID-19, and my instinct as a leader is to stay focused, keep the organization focused on our AML trial. But as we were getting these incoming calls from physicians who had done some early work on the drug, it became somewhat compelling to investigate. And so we set up clear criteria for this decision. If we were going to divert any resources to a COVID-19 program, we needed to clear three hurdles. The first one was a very compelling mechanism of action. We understand the drug, relatively well and its mechanisms, but the question was, "How does that overlap with what's going on in COVID patients?" We found a very unique overlap, from the inflammatory process that's primarily impacting the lungs, to the cytokine storms that are impacting multiple organs, but also, and somewhat uniquely, the clotting disorders. So, when you have a derivative of heparin that is able to be dosed at higher levels, there's a bit of this automatic connection that there may be something here. And so that overlap was quite compelling to us. The second, question that we needed to answer was, "Would there be sufficient interest among investigators to execute a trial quickly?" Partly because of the clotting disorder [around COVID-19] and the connection with our drug [to potentially alleviate], there was quite a bit of interest. While we wanted to do a trial, a general philosophy of mine is to do one such that it gives you definitive answers. There's a tendency, and I've seen some other examples of this doing single arm trials, but with the disease that's so heterogeneous in terms of how it impacts patients, and the heterogeneity of the patient population that's experiencing the virus, is that, unless you do a randomized trial from the start, you're not gonna learn a lot. So, we were able to get alignment both with investigators and ultimately with the FDA on going straight to some randomized work. Part of managing Wall Street in that process, was making sure they understood that this mechanism was real. We actually went pretty robust in terms of our explanations of the science, maybe more so than you ordinarily would. Part of that is because there's so many drugs that are being repurposed for COVID, and not all of them have an equally compelling rationale. The second thing we did was to walk through the decision making process. The fact that we were able to accelerate data milestones on this drug probably by about 18 months, is certainly supportive and helpful in that discussion, as you think about Wall Street's desire for new data and catalysts. The other thing that was sort of a natural outcome of COVID, was our initiation of the AML trial was likely to be suboptimal anyway. There are certain sites that are out there that are unable to start new trials. We did have some sites that were able to continue work during the lockdowns. But, unless we could activate all of the sites that we had targeted in a short timeframe year, we'd essentially be stretching out that trial. So, this natural pause gave us a window to accelerate on a different path. Finally, the opportunity for this drug is probably much bigger within this inflammatory space than just with COVID itself, but hopefully we can help some patients with COVID in this window while it's still such a danger. But longer term, the opportunity is in other acute lung injury, acute respiratory distress syndrome cases that derive from other causes [besides COVID-19].

Wright (LSL):

You know, Mike, I was curious about the Wall Street expectation component, because we've seen so much speculation around companies like Moderna and Gilead. We're all hopeful that these companies are going to be successful. But like you said, you wanted to be clear on the science so that there wasn't a lot of hype around this (i.e., just an announcement to fluff up the stock price a little bit).

Karen Zaderej, your company is in a very different situation, because as we saw COVID-19 starting to impact, businesses, you had essential businesses, and then those that were considered less essential (e.g., elective surgical procedures put on hold during lockdowns). That impacted your company, Axogen, as revenue dropped really quickly in March due to COVID-19. So, could you tell us a little bit about how you go about managing internal and external stakeholders while balancing Wall Street expectations during a period where you really can't do what you need to do?

Zaderej (Axogen):

It's been an interesting roller coaster over the last several months. We provide nerve repair products for both elective procedures and traumatic injuries. And early in the U.S. Course of the pandemic, we obviously saw some procedures starting to get canceled from an elective standpoint. But more interestingly, we saw patients who were afraid to go to the hospital and just not showing up for their surgeries. That was our first indication that this was really a very different scenario for the U.S. than we'd ever seen in surgery. Through the course of March and into early April, we saw procedures go down 70 percent from where we were before, so the only procedures that were still being done were significant traumatic injuries. We needed to be able to both support and serve those patients and healthcare providers while at the same time, protect our employees and their safety. So, we had to think through all of the steps of our supply chain, as well as what our patients and surgeons we're really gonna need to support these serious injuries. We've worked out a very solid protocol. We pulled our reps from hospitals in the early March timeframe, though they could go in to support patient care if asked, and provided product and support remotely. Often you do a planning step with the surgeon that is done at the scrub sink. We did that via FaceTime. With the circulating nurse holding the phone, we were able to talk to the surgeon while scrubbing in to make sure they had the necessary inventory, understood what the details of the case were, and help if they encountered any challenges (i.e., thinking through technical components of the surgery). All of that support was done virtually to make sure that we could still do our primary mission, which is continuing to support these patients with nerve injuries. It's been an interesting roller coaster ride back up the other direction as stay at home orders have changed. Both the incidents of trauma is, is going back up as well as there's these delayed cases that are now coming back into the operating rooms (ORs), although at a very different pace regionally. So, there's not one rule that applies across the board within any and all hospitals. Some hospitals are working seven days a week trying to make up both lost revenue and deal with the backlog of patients. There are others that are still at a very modest ramp up to try and manage both their COVID-19 patient population, as well as restart their surgical routines. We see a tremendous amount of variation around the country. One of the things that we've done, is become very proactive at sharing best practices and tips within our sales team to be able to think about what are, ways that they can help understand what is the hospital's protocol. Who do the sales team need to touch base with? What procedures are they currently doing? This was so we could continue to make sure that we were an effective resource for the patient, surgeon and hospital populations that we work with.

Wright (LSL):

What types of platforms are being used by your teams to communicate during this time of remote work?

Zaderej (Axogen):

You name it. We've used all kinds of things. Internally we're using Microsoft teams as a way that we can quickly share information across the sales organization, and have found that to be a really useful platform. In terms of communicating directly with the surgeon or the hospital, it's really communicating with whatever they're most comfortable with. Sometimes it's just old style text, as that may be the easiest way to work with a circulating nurse who's trying to balance a lot of things happening at the same time. So, we work with whatever they're comfortable to work with to make sure that we can reach out to them and, and again, be a value added service. What we found in this, as I think our reps were initially a little bit hesitant doing things in this manner, as they felt like they were bugging people when saying things like, "I'm going to text you three times during the case. I'm going to talk to you beforehand. I'm going to do a debrief afterwards by video." But what they found was that this approach was truly appreciated by the hospital staff, as we were interested and engaged, and doing everything possible to make sure that the case went through without a glitch. And again, these are some of the worst traumas, so you really want to make sure that these patients get the attention needed during this pandemic when surgery is so difficult.

Wright (LSL):

Thanks Karen. So Bill [Newell], I was gonna jump back to you and ask you a bit about the company's furthest along asset. It's in Phase 1 right nowfor ovarian and endometrial cancer. Can you tell us a little bit about the clinical trials that are being impacted by COVID-19, and maybe discuss a bit of your approach to not just managing that, but managing Wall Street's expectations of wanting everything done yesterday?

Newell (Sutro Biopharma):

Yeah. It's definitely not the way it was when compared to when we started that clinical trial back in March of 2019. One of the things that we are fortunate about, is that we have our clinical trial sites spread throughout the United States, for both of our products. As a consequence, we don't have a concentration in any one area where if COVID-19 is a serious medical issue from a hospital and patient care delivery standpoint, everything else gets pushed to the side so they can focus on that. We didn't really have any hospitals open in Boston or New York or Chicago for this STRO-002 trial. And as a consequence, people were able to continue to enroll patients, maybe not at the same pace, but we had a waiting list of patients. These are women for whom, if they don't get onto our clinical trial, they're probably going to hospice. So, they're highly motivated, even in a pandemic environment, to take a therapy that could have a life extending benefit for them. We found, that while there were adjustments and processes and procedures, patients wanted to stay on trial. Physicians wanted to keep their patients on trial. Now ordinarily in a clinical trial like this, you would have patients come back to the office after they've received their administration of the drug on a routine basis to get lab work. Well, that's really not as practical in this environment. But there are other alternatives, and the FDA loosened up some of the clinical trial guidelines to allow you to consider using some of these other alternatives. So, instead of driving into a very specialized medical center, which might actually have needs to address COVID, you could go get your lab work done at a diagnostic center that was underutilized because there were fewer people being treated. So, we found work workarounds so we could continue to manage the patients, continue to make sure their safety was insured, but also, get the data that we wanted. It just wasn't done in the way that we had originally thought it would be. Now we get a lot of questions from Wall Street about that, as it's natural to ask about a trial and whether or not it is going to be delayed. Fortunately, we've been able to say to this point, "No. The clinical trial is not a problem." But they also ask us about our manufacturing capability, because we have a cGMP manufacturing facility in San Carlos, CA, that provides the drug supply for the three clinical trials that we have ongoing. And if that drug supply gets interrupted, because that manufacturing facility shuts down, then we know that in the future, patients who are going to need our medicines might not have them available. So, we've been able to take special precautions in order to keep that manufacturing facility up and running and productive, and keep our employees safe at the same time. We've been able to communicate that to Wall Street as well, so that they understand that the work that we're doing for cancer patients is able to continue. We're fortunate it's not a Phase 3 study where everything has to be by the book. But we we're able to ensure patient safety. We're able to collect data and we're able to keep progressing patients on our therapy and adding in new patients when the time is right to do that. So, fingers crossed, we'll be able to continue to maintain that trajectory. No one really knows. But so far, we've been able to manage through and communicate that to Wall Street in an effective way.

Wright (LSL):

Did anybody else have anything to add on Wall Street communications around clinical trials to building on what Bill [Newell] just talked about?

Zaderej (Axogen):

We had difficulties in our trials. In many cases, trials that weren't cancer or COVID-19 related were put on hold, which is what happened to us. We've got workarounds that allowed us to continue them, and we've seen them picking up at this point. From a follow-up standpoint, we had to make sure we didn't lose patients already enrolled during a follow up period in the middle of a lockdown. We've essentially done home follow-up visits to make sure we didn't lose any of those important patients.

Sherman (Chimerix):

In our case, we had milestones ahead of us to start our AML trial mid year. We could have easily achieved that milestone of initiating that trial. There's always a temptation to deliver on what you've promised. But in this case, it was not going to be the smartest move from a business perspective, because the end date of that trial would still have been extended. It would have compromised our ability to execute the COVID trial, as we'd be trying to do two at once [under extenuating circumstances]. So, for us it came back to focus, and I think Wall Street was receptive to our doing what was right for the patient and the business.

Wright (LSL):

How are you finding engaging with Wall Street right now as a leader, because the tools and the conditions are different? Guidance that companies provided in late December or early January for 2020, for most companies, aren't going to be met. Could you tell us a little bit about the experience overall of working with Wall Street during this difficult time.

Newell (Sutro Biopharma):

It's definitely been different. We've always taken the view that it's important to be transparent with your investors and potential investors. We like to do that by getting in front of them. So, historically I was on an airplane quite a lot, whether it was going to an investor conference, or to various cities and having a slew of different investors that we would take half hour or hour meetings. The thing about being face to face is, you can communicate your messaging directly, and you get those body language cues and that person-to-person interactivity, and we thought those were very effective in terms of ensuring that we were communicating clearly to our investors and potential investors. Now, in the era of, the pandemic, investors aren't going into their offices. We're not traveling by airplane. So we have to find other ways to communicate. And while it's great that we're here on Zoom today, you do lose a little bit of the nuance of how a person is reacting. You just can't get the same feel as when you're face to face with somebody. And in a lot of instances, because we're all working from home, some of us might have not had a haircut or a shave in a while, and we might not be in the attire that we would be if we were working in the office, a lot of people just choose not to go on camera at all. And so it's effectively like a telephone call. I accept that you can share your screen and show slides and, and do it in that direction. It's a little different, but I think we're compensating for it. For example, because investors aren't wasting as much time going into the office, it's easier to schedule them at various hours during the day. We've probably talked to more investors in this timeframe than we would have otherwise. And I certainly haven't lost a day of travel time, so we can be more productive in that regard.

Sherman, (Chimerix):

That was a thorough answer. I would just add, that what we have to offer in those discussions is an opportunity to build trust in the management team. And so [by not being able to meet in person] we're compromised in that regard. What I've found is [I've been] tapping into those investors more where you have a historical relationship and that trust exists, and you build the business conversations around that [existing] framework. It is more difficult to engage a new investor and build that [type of] relationship in this environment. Hopefully, we'll be able to adapt to the tools and get back to the face to face soon enough.

Zaderej (Axogen):

I'm trying to reach out by phone to a lot of these virtual conferences now. So, you have lots of meetings with people in an all day format through a virtual conference. I don't find them as effective as face to face. But again, we're trying to be transparent about where we're going. For example, we pulled our guidance at the end of first quarter. Obviously, it's hard to project revenue (especially at that point as revenue was still going down) to really understand what the full year was going to be. We try to be transparent with investors and say, "Like you, we are modeling multiple scenarios and trying to understand and explain what we saw as the toggle points between each of the scenarios." The other question that we see as having changed is not just being focused on revenue as a growth company, but also making sure that there's an understanding of the balance sheet. And fortunately, we had a strong balance sheet coming into this. Investors want to see that there's a pathway to profitability. They want to understand what's going to happen to their investment overall. I think we've been able to show that in the conversations that we've been having.

Wright (LSL):

Chimerix did an R&D pivot to see if an asset might be beneficial for fighting COVID-19. As a leader, you want people to remain focused. Previously, the company was really focused on smallpox. How do you capture the excitement that you can get from having the team work on something for COVID-19, and funnel that into their efforts around smallpox, while making sure "the street" doesn't also lose focus on the long term goal?

Sherman (Chimerix):

Fortunately, there is quite a bit of inertia around that smallpox program. The company has been working on that for the better part of a decade. What I'm really pleased with is how over the last 12 months, the execution on that program, to get it to the point where we were able to announce, just a couple of weeks ago, that the FDA has given us clearance to move ahead with a rolling NDA submission. When you're going into that phase of submitting an application, it's not hard to get the energy and excitement and enthusiasm of the organization to deliver on, because (A), they've been working on it a long time; (B), it's important for the U.S. strategic stockpile, something just two months ago many people knew little about. The other reason it is important for the organization and Wall Street to understand, is it's a mechanism to fund the company. The potential approval and procurement agreement to put this product in the "stockpile," and keep that stockpile sustained over time, the company will receive capital, that we can then put into other novel development programs. This is non-dilutive capital, and capital that does not have to have a sales and marketing organization around it. As such, we can take the vast majority of those resources and put them into new research for other important discovery work. So, Wall Street gets all of those things. The fact that we had this news, and that the organization was able to pull off what they've been able to in the last three to five months [during a pandemic], has been impressive. It's another sign of execution, which investors like to see. Those announcements came back to back. To your point about, making a news story to hype a stock. We announced those two announcements on the same day essentially. Some [companies] may spread that news out. Our interest is to communicate openly, transparently, so both the employees and Wall Street have perspective on as to what's important for us is, which is smallpox and getting that across the finish line. Maybe the best assessment or answer to that question is, we do remain on track as it relates to that execution and expect to.

Wright (LSL):

Karen, when we were talking earlier about the COVID-19 impact on your company's business, what I found interesting is, as I was looking through the company's press releases, the COVID-19 plan that was laid out that involved layoffs and pay cuts and things like that. Number one, I thought it was really well thought out. So a compliment to your team on, on thinking that through. But can you tell us a little bit about how whole process came about? We're going to have revenue challenges. We're going to need to make cuts, and then communicating that effectively so that Wall Street doesn't think that this is a "sinking ship" kind of thing.?

Zaderej (Axogen):

Recognizing that you have a crisis is the first step, and we recognized it was a crisis. One of the things that we did very quickly, was to go to a disaggregated decision-making model. So, we set up smaller teams focused on individual objectives. For example, there was a team focused on what do we do with our supply chain, which was one of the most critical things. We know there are still severe traumas that are happening, even if all [elective] surgeries are shut down. How do we shore up our distribution center to make sure that it remains safe and continues to be able to supply? First, we said no more visitors of any type to the distribution center. We wanted to make sure that it was sort of contained [as far as minimizing the number of] contact. We split it into two work teams, so that they work one week, and then the next team comes in the second week. This was to make sure that again, if somebody contracts COVID-19, that we don't have the entire work team that's impacted. We actually set up a separate site as a backup distribution center in our corporate headquarters, actually made physical changes to our corporate headquarters, to make sure that, again, trauma is an unscheduled case, and 24/7, our commitment is to our accounts, and that we will be able to get them product. And so we did all of that in the space of a couple of weeks. That was one team's focus. We had another team looking at the safety of all other employees, our field employees, our people working in the offices and the labs. What do we do with those? Our people work in manufacturing. What do we do with each of those teams and what's the best business decision, while balancing our goals of employee safety, as well as support and safety of our surgeons and their patients? At the same time, we had a team looking at our financial health. Recognizing that, while we had a strong balance sheet, this is going to be a quarter where we're going to burn more cash than expected, and we want to make sure that we can show that we can manage that for the long term to achieve profitability. And we've always felt that we had a flexible business model that we could scale things up or scale things down as needed to be able to adjust to the conditions presented to us. Now this was an extreme condition, not one within the bounds of what we thought we'd be running into. But we laid out a proforma financial model. Actually, we developed three different scenarios for what we thought revenue would be. We created decision points and toggles between each of those financial models so that we would have metrics to be able to say, if this happens, then we do these things. And from that, laid out a pretty comprehensive and quick plan to help stem some of the financial burden for the company. We laid off about 10 percent of our employees, sadly, great people. But they were in roles that were some things that we decided we're going to be long term impacted by COVID-19 (e.g., some clinical programs that we were just getting ready to start that we decided to delay, some of our manufacturing operations and supply chain). Those types of jobs we expected to be impacted for a longer term, we laid them off. We did pay cuts for all the rest of the exempt salary associates. We delayed certain programs that helped us to either defer or cancel expenses, all with the intent of being able to show that we can have a moderated cash burn that will help protect, from an investment standpoint, the company's investment profile. But even more importantly, to make sure that in the event that the are surprises in the future, say there's a resurgence of COVID-19, that the company is healthy and able to weather that for the long term. We're not in this for the short term. Axogen is in this for the long term, to continue to be a high growth company focused in our nerve repair market. And for that, we need to be able to weather the storm.

Wright (LSL):

Karen, what impressed me about your plan, was right out of the gate, everybody was getting pay cuts, but the executive team took a higher percentage pay cut. And I think that's a great leadership quality of saying, Hey, look, we're all taking a cut. We're going to take a bigger cut. So, I applaud you on that.

Zaderej (Axogen):

Well, thank you. I also want to acknowledge the team that I have, in that we talked about the pay cuts, and I talked about what I was going to do, and all of the senior executive said they're going to do the same. And the board did the same. So, it was/is in essence, a volunteer pay cut to take the higher level, because people are very committed to what we are doing. We are a very mission driven organization. People are very committed to that mission. I think they have a real opportunity to do something unique and special and impact healthcare in a novel way. And as I said, I think we're all in this for the long term.

Wright (LSL):

We're kind of getting near the end of time on our call, but there is one question that I had developed for Bill [Newell of Sutro], but I think it's going to be applicable to everyone. Bill, in April your company announced plans to present updated clinical data at the AACR virtual meeting. Can you tell us a little bit about some of your experiences around some of these virtual scientific presentations? Are you finding that you're more involved in a virtual scientific presentation of data now, as compared to pre-COVID-19 when someone was going and presenting at a conference like BIO or DIA? I'm curious to hear about the CEO's level of involvement with such data driven presentations now being done virtually.

Newell (Sutro Biopharma):

No question that you lose the randomness of bumping into somebody, or even the plan bumping into somebody, that's all gone with virtual meetings. I think what was hardest for us to get our hands around. Everyone knows how to get ready for a scientific conference that we went to last year. We know the cadence of it. We know what we need to do and we know how to plan for that. And we had planned for that as the pandemic emerged, and conferences first got canceled or postponed. You had to ask yourself, well, what does that mean? How will we get the data? Because we do have data that's ready for presentation. How will we communicate that? And what was interesting was to see the organizations kind of migrate their thinking about what they were going to allow. Originally, AACR was all one meeting. Well now, they have two virtual meetings. So what does that mean? Are we in meeting one? Are we in meeting two? And you know, how are they going to think about a virtual meeting? The way they ultimately decided to do it was, you got five slides, five minutes. So now, instead of having a poster that you can stand in front of and over the course of a couple hours interact with people who come by and want to talk about it, you actually have to think differently about what are the key messages in the poster scientifically that we want to communicate to the scientific and investment communities. Then, how do we articulate those messages crisply. In a lot of respects, when posters are presented at scientific conferences showing updated data, I will review the poster, make certain that I understand what's going to be communicated, and then think a little bit about the messaging that goes along with that. But it's largely driven by our chief medical officer, because we're presenting clinical data. In this instance, we actually had to think about not only what is the data, but how do we crisply and concisely communicate that data because we're not going to have the same amount of time that we ordinarily would. From that standpoint, since, one of my jobs is really to frame communication strategy for our company, I was more actively involved in that. Around the time of a normal conference, I would be involved in saying, "the poster data is here, and now we're going to talk to investors." So, I would be helping to frame the investor communication. In this instance, because the virtual presentation was one mode for communicating to investors, I wanted to make certain that we had the right messaging and were crisp and focused on that messaging so investors understood what our data meant. I think we were successful in achieving that at the end of the day.

Sherman (Chimerix):

We're in the fortunate position, I guess, or unfortunate depending on your perspective, but we don't have any eminent data to present. Our focus is on generating data. Like you, I look forward to the days of the face-to-face interaction. I think it's just a higher quality interaction. In the meantime, where we've had maybe the closest parallel that we've had, is our interaction with the FDA. So far, I have not seen that process compromised, and we've just been through an end of Phase 2 meeting, a pre IND meeting for a new indication, as well as a pre-NDA meeting. All of those, one in person and two essentially virtual, it helps, as in our case, that we didn't have any issues that were really controversial. In fact, we're able to cancel one of those and do it in writing, because the path was so straight forward, as in the case of the NDA. In the meantime, we've not had to worry a lot about how we position new data, because that's in front of us.

Zaderej (Axogen):

For the scientific conferences, what we're concerned about is, you're interested in multiple stakeholders, and one of the important ones for us are the surgeons. And if surgery is ramping up, I think the pull to actually spend time in the operating room versus attending a virtual conference will mean there'll be very poorly attended. We're trying to think about multiple supplemental things we can do to get the new data exposed to the audience that we need to, because I don't think the conferences will be as effective as they historically have been to either the surgeon community, or by reference from that, to the investment community.

Wright (LSL):

Do you have a partying pearl of wisdom to share?

Zaderej (Axogen):

We certainly are faced with a crisis. But a crisis means that there's change, and change is not all bad. Change can steer things towards good and new opportunities. We see a number of those coming out of this crisis. There were new guidelines for CMS for outpatient and ambulatory surgery centers. Very little trauma is actually people above 65. So we need those changes to roll out now through the commercial payers. And we see renewed interest in doing that, so that they can move those trauma procedures out of the jam packed ORs and hospitals. I think there's a good thing that will happen that will be beneficial for the marketplace and ultimately for our business. And [so my parting pearl] is to not to be afraid of change, lean into the opportunities that come out of it as well.

Sherman (Chimerix):

I've been in this role for about a year. And I think with the benefit of hindsight in the context of COVID-19 pandemic, the most important action I've taken over those first several months was really about a focus on culture. And I always believe, that a big part of my role as CEO is to be the best listener in the organization. That's particularly true when you're facing intense decision making processes. And we've been through a dozen of them in the last year at least. By building, over this last year, a culture where it encouraged open and candid dialogue unencumbered by what function you were in, or what your seniority was, we established this foundation of trust. Without that foundation, I cannot imagine how we would facilitate this decision making and communication process internally, which to me, is absolutely a foundation for how you execute. That's where Wall Street gets excited (i.e., the execution). So for us, it's been building that culture of trust internally.

Newell (Sutro Biopharma):

Here we are at the end of May 2020, and states are starting to reopen. What I am trying to do, is be alert to the changing circumstances so that we can be nimble in our thinking about moving forward. It would be lovely to think that we are all on a path to recovery, and that we will be back to life as normal as we knew it as normal before in the not too distant future. But I still have concerns that we haven't seen the end of the pandemic, and that it could be longer and harder on our economy and in our businesses than people are optimistically hoping for. So, I want to be attuned daily, to understand what's going on, so that we can be reactive and responsive in our business to make the most of this opportunity. Karen said it well. This is a time of change. If you're able to make that change rapidly, recognize the opportunities that I think you're doing the best job you can for your company, for your investors and for your employees. But you have to be alert, and then you have to be transparent about what you're doing and why you're doing it to the investment community or you leave them behind. So communication is job one for me in this era.

Wright (LSL):

And my parting pearl is, make sure you subscribe to Life Science Leader.