Biotech investor Elliot Hershberg on AI's growing role in drug discovery and the century of biology thesis

Retriever and me, but I love Data Dog so much. It's the greatest company name ever. Uh right up there with a. com. Get a pod five Ultra. I'm back on back on my game. I'm still uh still behind where I was relative to a month ago, but back up into the 75 range. I'm going for 90 tonight. Good luck. Good luck.

They're calling the Pod Five the first fully immersive sleep system that works with any bed. Pod 5 actively adjusts your temperature, elevates your body, and plays integrated soundscapes to improve your sleep. I have some new copy today. Simply too good. Welcome to the stream, Elliot. Hopefully, you're here.

How you doing? What's going on? Hey, what's going on, guys? It's a pleasure to be here. Thanks so much. And I love the suit. You are dressed fantastically. Sign of great respect.

I feel like there was a, you know, there was like a period where people would actually sort of match the vibes and have the suit for the technology brothers. And I feel like it's it's dropped off. So I want to bring it back, you know. I appreciate it. I appreciate it. We we we you're in the boardroom.

You know, it is uh it's I'm glad to be here. Yeah, it looks great. Yeah. Proper uniform. I I I wanted to get a a state of the union uh from you on a few things, but why don't you just kick us off with an introduction on you? Yeah, for sure. Uh my name is Elliot Hersburg.

Um I started my career as a experimental biologist. So I was in the lab trying to make new treatments for cancer. Um got super frustrated, decided to retrain as a computer scientist.

Uh so I became a computational biologist and was obsessed with that as sort of a practitioner for about a decade and then uh got really obsessed with writing about it.

So I was um started writing a newsletter called the century of biology writing about companies in the space uh data on the frontier and then that sort of was a rabbit hole into investing with a friend of the network with uh none other than Pachy McCormack.

Um so spent some time at not boring where I was uh writing and investing and then recently joined Amplify. Uh we just closed 900 million in new capital including 200 million for a dedicated um Did you just Is this Are you announcing the new the new capital the new uh the new fund today or was that a little bit ago?

Uh it was a little bit ago 900 million including 200 million specifically for bio that I'm helping to build. Okay. So yeah, you guys were not loud enough about that. No. Well, that's part of the thing.

I feel like it's a it's um a really quiet fund where um for three of the four funds for Amplify, they've been in the top 5% of venture returns. Wow. Um not top desile, but like top 5% like really good at what they do.

And I feel like it's just um not thought of as much and just like very quiet and stealthily doing really phenomenal work and so um yeah, excited to talk more about it. Okay. State of the Union on bio. I want to know about uh where we are uh in artificial intelligence and technology helping advance bio.

Uh we've seen alpha fold, we've seen kind of tools and amazing breakthroughs. Uh I think everyone has a really concrete idea of the impact AI is having on software engineering whether it's like amazing autocomplete, you have cursor, now you have agents. Um, where are we in the deployment of AI tooling in bio?

A lot of the narrative just jumps straight to we're going to oneshot cancer. And I love that. I'm optimistic. It happens eventually. It doesn't feel like we're there. But where are we actually in terms of the impact on productivity in AI with bio? Yeah. So, you guys know like the Gartner hype cycle, right?

you have these like huge swings uh for new technology where um I've been working in this field for like a decade and there's been a bunch of companies you know Amplify invested in recursion which was one of the early leaders of this right like there's been this general sentiment that you can make a huge amount of progress with new data new tools new technology and life sciences and it just turns out that it's like a really hard problem right and it takes time it takes some time for like the market to ingest that actually figure out the right business models and strategies and so there was like a really like strong wave of early adopters and then there was some disillusionment and disappointment where it's like oh it actually turns out that it's really hard to oneshot a cure for cancer and then you know as the as that sort of happened there was just a bunch of breakthroughs in the technology right so it became consensus that this is making a huge impact on hard problems in biology where we had the Nobel prize for alphafold right so like uh a Nobel prize going to an AI lab to uh epidemis in part to David Baker at the University of Washington because it's actually starting to make real uh meaningful impacts on hard problems in biology.

And so that's true for sort of molecular machine learning where you're thinking about um designing new molecules and proteins. The uh virtual cell research where you're trying to actually model how cells behave.

Um and so you're seeing this sort of step change now where like there are a couple sort of uh you know actually faster than Moore's law curves. um DNA sequencing is is is decreasing in cost faster than than Moore's law. And so you get this huge data tailwind plus the tailwinds in machine learning and modeling.

People are actually starting to scale these models and it's just like getting pretty impressive pretty fast. Where where are we on uh new drug discovery companies? We're targeting a single thing. We're going to build a drug to solve a problem versus we're going to start a company that's SAS. It's tool.

It's going to help with all different drug companies. what's what's working? What's more overhyped, underhyped? Where what's your take on like picks and shovels versus drugs basically? Yeah. So, like short answer is we do both. Um, so you guys had Jake on the other day at Centivax, like absolutely insane founder.

Uh, was one of the early computational immunologists at Stanford and like he's making a medicine that you just couldn't otherwise make without these technologies, right? where it's like all these impacts within biotech and within modeling to make these just really incredible drugs you couldn't otherwise make.

And so that's people just like making these singular things that are like really phenomenal. Like there's also a real platform opportunity there for other things beyond the universal flu vaccine.

And then I think like if we take like a little trip down like history lane and think about like how hard it was to actually sell software in the life sciences. Uh one of the early companies in the space is Schroinger and they've been around for about 25 years.

um they're a molecular dynamics company and it just took an extraordinary amount of of time and effort to actually saturate and get people to adopt the technology and get people to pay for it. And you know they're a phenomenal business. They're a public company.

Um they're actually vertically integrating into making their own drugs. But the thing that we're hearing consistently like from CEOs of top pharma companies um is just like there's huge demand for new infrastructure. people realize this technology is here now and that they need to adopt it.

They're hearing this from their shareholders. They're hearing this from the scientists at their companies. And so there's just a very different moment um post AlphaFold and post even chat GPT where like they're using it, their kids are using these models and they're just like, "Oh, I really actually need to adopt this.

" And so, uh, I think opportunity for both like fundamentally new picks and shovels where you sort of replace experiments with compute, um, and then also just fundamentally new drug products. Jordy, last question.

No, I mean, uh, I think we should have you back on as as new news hits because, uh, yeah, I think there we'll do the TVPN, uh, bio drop in, you know, it feels like there's, uh, within the traditional labs, bio has been used as like a as a as almost like marketing, right, of being or or even Elon yesterday saying like, we're going to discover new physics.

Um and uh I don't think that that's obviously not where like a lot of the true innovation is is happening. So um yeah, let's make it a regular thing. Yeah, this is great. Thank you so much.

When you think about that, right, like there's just been a couple things like I had I had an investor who made a joke that like there's just a couple things that have consistently delivered venture returns and that's like software and also drugs.

And so like as far as a physical prediction goes for it being something that's super valuable, um if you can make your inference be a billion dollar uh drug product, that's a pretty good spot to be. We're excited about it. So see you guys soon.

There there's uh who I forget who we had on when when Trump had the executive order around drug prices. We talked to a few different people that were saying biotech has like on average been a terrible asset class be and there's some amazing outliers. Weber maybe. Yeah.

Like b b b b b b b b b b b b b b b b b b b b basically there's all these amazing outliers that that do deliver returns but if you just index the market you were going to underperform dramatically underperforms specifically. Yeah.

in the venture category feels like this could be a massive shift where suddenly you know the next five years become the golden age of of venture uh bio investing.

I mean there have been some massive companies before right so you have like breakouts like the Janentex of the world huge companies there actually is you guys you guys should have Bruce Booth on who's an OG biotech investor at Atlas Ventures he's done a bunch of analysis in the fact that like there's actually some interesting just return data for biotech versus tech where it's like not as gloomy as you would as you would think but I think in general like biotech's