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00:00This is my kitchen table and also my filing system. Over much of the past three decades I've been an investor the highest quality of mankind. I've often thought this private equity and then I started interviewing while I watch your interview because I know how to do it. I've learned in doing my interviews how leaders make it to the top. I asked him how much he wanted. He said 250. I said fine I didn't negotiate with him. I did no due diligence. I have something I'd like to sell and how they stay there. You don't feel inadequate now because being only the second wealthiest man was that right. FUBAR a fan is an incredible entrepreneur a parallel entrepreneur. He starts many companies in the biotech area at the same time. One of those companies is Modiano a company now famous for having created the vaccine that dealt with the Corona virus pandemic. I sat down in Boston with New Bar to hear more about the success of Mark Gurman and what he plans to do in the future and other biotech areas. When you came up with the idea of modernity. Did you ever in your wildest dreams think that it would change the world in the way that it has. Absolutely not. What we had thought of was that we might well have the next generation of biotechnology and something that had never been even dreamt before which is the body's own ability to make its own drugs whatever it needed. So the notion would be we would introduce a molecule that would code for the drug that we want and the body would in turn translate and make the drug that it needs. That was the basic idea which was itself a fantasy at the beginning. In other words an act of imagination with relatively little proof that platform would go on to create 20 different products that were being tested in the clinic when this pandemic hit was something we could envision. But the pandemic itself and the ability for this technology to be used overnight to fight against this very nasty virus that we could not we did not imagine. When you come up with an idea for a company like Madonna you then go get somebody to be the CEO. You get somebody to be on the board. How does it work when you start a company. So our process of starting companies which is what my company flagship pioneering does institutionally professionally if you will. We don't start with an idea for the company. We start with a range of things that we could pursue of which we try to find which one actually gains advantage and goes forward so much during a followed the same exact process we have which is we ask questions that start with what if. So in this case it was what if we could make a code molecule that when introduced to the body could make any medicine we wanted. Would that question. The question is how do you do that. Is there a way to do that that's been tried. What gets in the way holds. How reliable is it. There's all these questions ahead. And so we don't start the company based on the question. We start an exploration which is what we did. So in the summer of 2010 we began to explore these issues. Is it even possible. Sometimes I've likened it to kind of an archaeological dig except for the future not of the past. You kind of pick up pieces and you look is there value here. Is there value there. So we see we in the lab setting. We started doing experiments now as we went forward. We started realizing that there was actually a path that we could at least point to forward to be able to make this M RNA molecule. And once we get to a stage where it becomes to be clear that there's some intellectual property there that's when we actually say OK how are we going to actually create a team to lead it. And what's the leadership structure with a CEO. Now the company has a market value that's greater than Merck's. It's a market capital or about one hundred and ninety plus billion dollars. When you first invested in how much money did you put into Madonna. Well we capitalized the first couple of years of the company's existence. So altogether my firm deployed about 11 million dollars to stand up the company over a period of a couple of years. And that eleven million dollars has has a return of an infinite amount practically no while north of a thousand fold with this. So when my daughter was moving forward and coming up with the idea of coming up with this vaccine that's helping the pandemic. What did the CEO said he did he say I think I've got the way to really cure the pandemic or what did you say to him. Well when the beginnings of this pandemic were beginning to show themselves this was back in January of 2000 and 20. We had a discussion about the possibility of starting a program just to be in a position in case this got serious. And interestingly the reason was not because it was a pandemic. It was not a pandemic a time that nobody was using that word. But because we thought we'd have an opportunity to also demonstrate one of the hidden advantages of our platform which was just speed speed of execution speed of design. See in the traditional biotech pharmaceutical world speed is hardly ever an advantage because things take such a long time in being approved and regulated that going even faster is often doesn't really result in much of a gain. Whereas in a pandemic or epidemic we thought we would have speed becomes a life or death difference. And so that's what attracted us at first. And then of course the situation caused us to put a lot of our efforts into this. But no was a relatively small company. Very few people heard of it. You go to the government of the United States and say guess what. Forget Merck. Forget Pfizer. Forget all these other companies. Give us some money. Did they laugh at you at the time. They said we whoever heard of you or was it clear that they were so interested in anything that they gave you money that you needed. It's more to second but even more. We were well known in all the circles in the government from the beginning of this effort. We partnered with NIH. The NIH was testing our vaccine in humans. Forty days after we actually started our process. So it wasn't that they left us from a. Of course they were worried that how can a company that we don't know withstand this type of capital slash importance if you will. How can it scale up quickly. So a lot of unknowns. Good news for us. Starting with Stefon and the team he had assembled there were all stars from all the major pharma companies. So when it was hard to get that people call you up all the time in the middle. I'd say guess what can you get me some other Mark Gurman did you. Unless your phone number or something. I did get calls that I never thought I would ever get before from many many country leaders. What did you say. They got me. The reality is I couldn't do anything. I was completely I mean nobody could do anything legally. The entire vaccine supply was a possession of the U.S. government. They're the ones who were making the US. It had not been authorized for any other used in emergency use. So any supply kind of under the table if you will would be an illegal act. I in fact told many people that I would more readily get an assault rifle here than I could a vaccine because it was completely illegal to do anything with it. So I just it was very difficult for me to understand because they viewed it as though it's an innovation. And surely you must have some lying around and people don't realize just how carefully governed this whole thing was. And in a way it made it a bit easier for us to be honest with you because had we been able to do this the demand was in the hundreds of thousands of demands not one or two. So the efficacy is around ninety three and a half percent or something like that which means that if you get it you have a pretty good chance of not getting the virus right. That's right. But now the Delta variant has come along and presuming there gonna be other variants. Is modern a vaccine going to be working against Saturday. You have something just for the Delta variant. We are as technology developers preparing for any eventuality including looking at what our baseline vaccine after two doses does which so far six months data we have available is very very robust. We haven't seen any real deterioration of our protection. That's first against the Delta virus. We have very strong protection and we expect that will continue for a period of time. The problem is we don't know for how long because don't you find out when your guard is down after your guard is down. So in order to prepare for that eventuality we have begun to make variant vaccines vaccines that have different sequences that if needed we could accelerate so that we can actually use that. So I think we're going to work very closely with regulators FDA CDC here and the Europeans to figure out from an arsenal. The beauty about the MRSA technology is that we can actually do this type of rapid response versus conventional biotechnology. It takes years and years to do the same thing. I'll get to the heart of the problem. My own personal situation. So I got to modiano shots. Do I need a booster shot. I think that the best advice so far is that people after a certain age and I cannot tell you right now what that each cutoff will be because that'll be set by the government are most likely going to need a booster to be well protected against the variant. And over time again public health officials going off the side of everybody should get a booster shot. My guess is that given enough time we may well end up in a situation where we have yearly let's say at a minimum yearly vaccinations just like the flu. So Tony Fouchier said that we should use this example of what happened with the coronavirus to prepare for other potential viruses down the road. And that helps companies like yours will do that. Are you working on that kind of thing and now already are. Absolutely. Absolutely. A very big part of it. In the future will be in being the leading vaccine developer but also with MRI technology but also additional new technologies that we're considering to augment our capability. But I should also say that within the broader flagship pioneering context which is where I operate we have multiple projects as well looking to expand the security net for future pandemics. As we talk today we're in Boston and it's probably not a surprise that many people would say that people from M.I.T. or Harvard were involved in Modiano but your background is different than many people at M.I.T. and Harvard. You did not grow up in this country is that correct. That's right. I was born in Lebanon. Beirut Lebanon of Armenian parents lived there till the civil war in 1975 and ended up escaping the civil war and growing up in Montreal Canada. So you were a teenager when you went to Canada. I was a teenager and I was extremely fortunate. My family was that they took us with basically as political refugees. We escaped Lebanon. She went to McGill University. And what did you major in chemical engineering which was an interesting field at the time because that's the field that first got drawn into biotechnology. When that industry started actually empty you graduated. You then went to M.I.T.. Yes. I was the first graduate from the by what was called the by process engineering center. It was the first time engineers were being trained to really do kind of advanced work in biology. And the notion was this new industry was being born. And so you needed engineers to come up with how to make the products. That's how I got in where there are a lot of Armenians in this M.I.T. program. I don't think that. I mean I teach for many many years had been some. But no it was not I was not surrounded by familiar faces when you got your HD where you're gonna go teach. Which was why sometimes people do with HD and that. Or do you want to go into industry and what do you decide to do. Well it was interesting time. I've reflected on it quite a bit because because this was a new field and I've since realized this how kind of advanced education systems work. The most prestigious things would have been for me to go teach. And here was a field which didn't exist by chemical engineering. And so I could go teach anywhere. I mean this was a that they needed people who came you know who were proficient in this. I did not really seriously think about that. Personality wise kind of what I saw a lot of the professors doing. I just felt that this was not my temperament. Basically by the way I've since because I've taught them I did business school court courses I've since realized that education itself higher education has changed so much that you can be an entrepreneur and be a faculty member at same time. Back in 80s 583 that was not the case. So that's that was not something I pursued. The choices then were join the large pharmaceutical company with just beginning to hire people who were engineers in this field. And then what I ended up doing by a chance encounter I had with somebody who's actually decide to start a company which was extremely rare back in the mid to late 80s let alone for a 24 year old immigrant with zero experience as your family say get a real job don't start happening. Absolutely. Absolutely. I mean even though my father was an entrepreneur in the more trade you know import export type of entrepreneur. But but it was definitely the risk was throwing away the education and the brand. All right. So you started a company when you were 24 years old. Yes. And how that company the company failed to fail and therefore it succeeded eventually in becoming the largest instrument company in in the biotech field at the time which was the late nineteen ninety five seven timeframe. We invented a number of new technologies that could be used to study and make proteins. And we grew to about 110 million in revenues about 900 people was a public company for a number of years. Lots of ups and downs lots of learnings. But it was for them for the period ultimately a successful adventure. So you started the Perkin Elmer. Eventually yes. And so you cashed out and got a lot of money for a young person. Did you say I'm going to retire now or just go teach or just relax. What did you decide to decide to do. It was a little more complicated because I had along the way in the last few years started coast started co-founded a number of other companies. So between 94 and 97 I'd been involved as a co-founder for other companies. Each of them went public. Three of them got sold. And so actually in a way it was worse than just doing one thing and then kind of calling it a day because I had not also sample doing multiple things and instead actually. And so I did not consider retiring. But one thing I did realize is that doing get another company wasn't going to accomplish much just because you know I was not drawn into this notion of being a serial entrepreneur. And so that's kind of when I started thinking about ideas that have led me to do and I do now which is in the mid 90s I got enamored with this notion of parallel entrepreneurship. And at the time there was not even a thing. Even now it isn't. But the notion of parallel entrepreneurship was why can't you simultaneously think about deeply about major new innovations and organizing companies all at the same time. I was doing it individually by partnering with different folks. And that led to institutional versions. Norm would be Shery Ahn entrepreneurial. Where you start a company you finish it and go on next when you're doing several at the same time. Yes. Not unlike when Elon Musk is doing. He has Space X and he's also a Tesla. Yes. 20 30 years later. Yes. So when did you start raising funds where people could give. Money to invest and you would then invest in various biotech ventures. Why did you start doing that. So since 2000 we have operated a series of funds some of which has been my capital increasingly so even in the larger ones now. And and the reason we did it that way was very interesting was that our idea was to deploy the funds exclusively to companies that we conceived create the science of which we generate. So as as opposed to the typical investment deal flow diligence select the winners etc.. We don't have any of that. Whatever projects make it through our system get capital and they get fenced. If I had been lucky enough to know you in 2000 when you raised your first fund and I put a million dollars in how much would I have made by now. I don't have a simple answer to that but I'd say it's safe to say that over the last 15 years we've we've operated north of 30 percent that are across everything we've done. OK so recently you went out and raised a new fund three point four billion dollars and that money came from individuals from all over the world institutions who who beg you to come in and didn't turn people away. We did have to turn some folks away but we were very very pleased with the interest we got. Much of the capital came from investors we've had for well over a decade but upon some of it was also new. These are endowments large large pension funds in this country. I'm happy to say we probably represent the FSA the best investment multiple states have made. It's up to them to say so. But I know their I know their results. It makes me proud. Look as an immigrant it does make me proud to have a state in some place actually feel good about what we've been able to generate for their own people. You've had a great achievement with modernity. Do you think you can do anything as great as that in the future. Well we're saying we can generate an engine that can produce companies that might be either not or 10 times a mother or a tenth of a mother and a. A lot of companies in Silicon Valley and I guess in the Boston area as well Boston Cambridge are started by immigrants. Maybe they are harder working. Maybe they're trying to prove something. Have you observed that many companies are immigrant founded. Well factually they are the majority in by different counts certainly in the Silicon Valley area. And I've been involved in various discussions certainly over a few years ago when the political environment was quite against immigration even if talent. But but indeed it is the case that there's a lot of immigrants who tend to get to the cutting edge of frontiers of things whether it's because there's things to prove or by nature they're taking very little for granted and therefore they're comfortable with discomfort. You know if you change countries let alone forcibly it's you really don't have much time to say what's owed to me and how come I got this advantage. I mean these are all privileges of rooted people. If you're unsuited or uprooted you don't actually you need roots to feel like you're entitled. That is a completely connected concept. Now sometimes when you have a great success in life in whatever area it might be it's hard to do it a second time because it's rare that somebody has a second great achievement. You've had a great achievement with modernity which really didn't. Incredible things to help save the world from the pandemic. In many ways do you think you can do anything as great as that in the future. So. So David what matters more to me even than one instance is actually create. And that's what Fox it's all about is we're an experiment in whether you could institutionally make breakthrough innovations with huge impact regardless of what fields we're in and to create companies that can realize that impact. If we could do that systematically over and over and over again that is such a defiant thought to conventional wisdom that says rare things only happen rarely. Well we're saying we can generate an engine that can produce companies that might be a Madonna or 10 times them or they're not or a tenth of them are there. Madonna itself was not kind of what our design goal but then it was the result of a process that we had already operated multiple. But then it was called let's say 18 when it was born. It was the 18th set project we've done. We're now on number 88. And in terms of projects that are born exactly the same way sometimes people say well I don't like to see people be too successful. And therefore can you make people feel better by saying you failed at something. Any of your company has not worked out. You just said this is not going to work. And I just write it off. That never happened. Many many of them. Many many of them. And and in our case quite a bit differently than it's an investment. So therefore I write it off and I move on. I can't write it off. We own the entire entity so we can't wash ourselves from a particular company. Look maybe I'll step back and say very quickly what we're about. The reason we use the word pioneering is we leap into things that are not yet known to be viable and we try to make them real. So this leaping inevitably you leap to places where there's no value. Now let's suppose we're going forward thinking live vaccines out for a moment. What are the one or two or three things that you're most interested in trying to do in biotech. That's going to make my life better or other people's life better. Anything that make me live longer live healthier avoid cancer is anything like that. One major theme that we that inspires us and that we're doing a number of things in is broadly what we call pre-emptive medicine or health security. And what we mean by that is that we observe that what we call today healthcare is really a euphemism for sick care. And the way you know that is because you got to get sick to get any of it. But other than that there's fitness and living a good life. But in between we now know scientifically that the beginnings of disease go away before we know we have a disease. And if we could intervene at that time and delay or completely deterred the disease then we have a very different health care cost challenge let alone a lifestyle. Currently there's no way of developing products for that. For that field because the FDA doesn't regulate it. They don't they won't let you do it. Their insurance won't reimburse it. They need a good disease let alone a really advanced one to do their thing. We have to change that mindset. So how how can flagship contribute to this. And we're doing this. We started five different platform companies that attacked that whether it's through diet better early detection tests or whether it's creating new types of vaccines that protect even before there's a threat. All of those things are all trying to create an environment where governments and other corporations start doing that now. Today the average person I'd say lifespan is maybe in the mid 80s or something like that. How do you think it's possible through things that you might develop to live to 100 or 100 and 10 or 20 years that a good or bad thing. I think it's possible. I'm not so sure it's a good thing let alone in a planet that's dying. And so I think that we have to think of our existence not as individuals anymore than are our hepatic sites in our liver. Don't think of whether they're going to live. They think of whether your whole body is going to live. If we don't start thinking of whether our society is going to live in our planet's going to live then it's a moot point as to whether we as individuals live. Two hundred and ten or a hundred. So I think there's gonna be this record reckoning that we've got to create an environment within which it's worth living. Did your parents live this your success. My parents saw a success back in. I lost my parents in the late 90s early 2000s. They saw a far greater success than they would have ever imagined or wanted. They didn't see the most recent few years let alone the last twelve months. But I know that they felt that the decisions they made on behalf of their children particularly moving us to North America and giving us the kind of opportunity this country gave us as as having been more than validated. So what keeps you motivated. You're obviously wealthy by any normal human standard. You could retire tomorrow and be famous for what you did with Madonna among other things. What keeps you motivated to work so hard and keep doing all these things and not spending your money on lavish kind of toys that often rich people like to buy. I really do think that we've seen the beginnings of a startup industry in this country that has revolutionized the world. I think the next few decades that industry will become professionalized institution institutionalized and will do in the creativity world. What institutional investors did in the financial world. And I'm drawn to being one of the pioneers of that if I can show one way of doing it organizationally kind of just methodologically and that leads to companies that do this for a living that interests me as a lasting impact. Of course the fact that every single thing we work on has societal impact. People tell us what's your social impact strategy. 100 percent of everything we work on either through health or agriculture has societal impact. And so if that keeps me into what draws me in what keeps me interested are two different things.

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The David Rubenstein Show: Moderna Chairman Noubar Afeyan

Noubar Afeyan has started 76 companies over his career. One of those companies is Moderna, the Covid-19 vaccine maker that recently surpassed Merck in market value. Afeyan discusses Moderna’s success and where his firm, Flagship Pioneering, is looking for its next opportunity in this episode of “The David Rubenstein Show: Peer-to-Peer Conversations.” This interview was recorded August 10. (Source: Bloomberg)

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