Varda Space Industries raises $187M Series C to scale space-manufactured pharmaceuticals and biologics lab

It's amazing. All right. Great talking as always. Wish we had more time, but we'll talk to you soon. We every week. We'll talk soon. Bye. Uh before we bring in Will Brewery from Varta, let me tell you about Wander. Find your happy place. Find your happy place.

Book a wander with inspiring views, hotel, great amenities, dreamy beds, top tier cleaning, and 247 concier service. It's a vacation home, but better, folks. And soon with Varta, you'll be able to maybe they'll put a wander in space. Let's bring in Will Brewy from Varta. Is this your first time on the show?

I feel like this is a disaster that we are finally rectifying. We did it. We made it. It is. Thanks for having me. Finally. We've had that other the the the kind of knockoff version of you at Varta. The other guy. He's been on the show a ton. Dell something, I think. I forget. Dell. Yeah. Yeah.

Great to finally have you on a massive day. Uh, break it down for us. What's the news? Are we going to make Jordy stand up and ring? I'll hit the gong. I'm looking for the Oh, did you guys get this? We have gong ourselves. Yeah. Oh, you have the gong. Let's both have the gong.

So we we we have the gong for for big moments, you know, either spacecraft bands or you know uh you know sell a mission to a customer, stuff like that. And uh yeah, we love that. Yeah. What's the record here's here's my advice to you. Record every hit.

I want to see a montage in 10 years of just every hit and it will make it will bring tears to your eyes. We record every hit. So we got you we got you on this one. So yeah, what's the uh what's the news today? Break it down. So wow, lots of news today. So, we we're announcing our series C.

Um, and we're getting to uh use that to Oh, yeah. Go for it, baby. How much How much you wind it up? How much did you raise? How much? Tell us. How much did you raise? 187 million. There we go. Congratulations. Thank you. Thank you. I appreciate it. Appreciate it. Yeah. So, the fantastic use of proceeds for this one.

Um, really it's about just scaling up. So, we've kind of shown what we can do both from a spacecraft perspective and a and a drug formulation development perspective.

So all the cap a lot of the capital allocation of this one is going to go for our biologics lab for produc uh preparing drugs for space flight and then also just more space flight ramping up cadence that means great uh flights.

So I've been to the facility in Elsa Gundo uh are you going to get a bigger space a second space for the bolab or you need two gongs right well a gong per facility we got to scale that up too.

So, so, so, so are you thinking about doing a second office essentially or or h how do you see the actual like footprint of Varta growing over the next few years? Yeah. Over well, immediately we just signed a lease down the street. Oh, congratulations. Oh, thank you. Thank you. Yeah, we all right. Big day.

Yeah, that's amazing. Yeah, the uh so this we were actually already moved in. A bunch of the pharmaceutical equipment is already in there. We're starting to use it right now. We got a couple of chlory shots uh you know with folks uh with the lab coats on actually using it. So that's super exciting.

Um long term I mean really I guess zooming out of of what the footprint will look like is think about a formulation development company um that really just provides a gravity off switch uh to the pharmaceutical industry.

So we go to space but you know not really because we want to per se but because you can create new drug formulations when you turn off gravity and you just can't turn it off on Earth. That's Einstein's principle of equivalence. Do you mean new drug formulations or just like purer drug for formulations?

Because when I think no gravity, I think like the way crystals form and the way gravity pulls things to one direction and if that doesn't happen in space, you get just kind of like a n a more natural growth.

Uh and so I always thought it was just it was just about purity, but it sounds like there's actually some binary like you can't make this drug on Earth at all. Is that right? So both those concepts are correct. Wow. So well read there, Kugan. Yeah. Yeah, that's actually a great way to think about it.

Um the the the um purity is one aspect, but because gravity is so broad, there's a I use the analogy of temperature sometimes because temperature is so broad, like making things cold doesn't necessarily make drugs better per se, but you can create a lot of different formulations if you can have a cold cycle during the manufacturing process.

And that'll be even, you know, with chilling things, you can make things more pure sometimes as well, right? So, um, but to your point, uh, when you turn off gravity, um, crystals will typically grow slower and that also means that they will grow more pure. And so, that is one of of a few applications that we look at.

Um, the other one is particle size distribution. So, when you create these crystals that will then go into the human body, you want them all to be the exact same size so that you know, one big one doesn't get stuck in your elbow and and you don't have uniform bioavailability.

So um the u crystals will particle size distribution is also affected by gravity. So that's a whole separate thing compared to um uh uh purity which is another rationale for for going to space.

So really the gravity knob is very broad and there's kind of these verticals of science of how we can improve the drug formulation and and to your point again as far as like what I mean by drug formulation is going from molecule to medicine, right? So uh is it a pill? Is it an inhalable? Is it um an IV bag?

Is it a shot? um the the drug the company uh or a pharmaceutical company does a trade study to determine which of those is the best for the patient given the disease given the manufacturing costs. Um but ultimately all of that is limited uh to what the chemistry can actually do, right?

Nobody wants to take a needle to the arm. Uh they only do it because they can't uh deliver that molecule via a pill or something like that. And so um by opening up the chemistry outcomes by going to microgravity, we can also open up the formulation outcomes and therefore give better patient experiences. Yes.

So um I I mean I imagine that this is still this is such an ambitious project that is still kind of R&D phase of a lot of the bio stuff.

It's not I mean when I think about the manufacturing capacity of like GLP ones like they're probably making that thing in like vats the size of like you know what they brew Bud Light in at this point where they got a bunch of the lizards. Yeah. Yeah. Yeah. Yeah. It's probably massive.

Um the monster but but but walk me through how we scale this up. I'm I understand launch costs falling. I understand you put up a capsule every you're doing it like every quarter now it's going to be every month. Then it'll be multiple times per day.

like the that capability seems clear but um but how much actually how much drug can you make on a single capsule? Yeah. Yeah. Great question. So this is actually a lot of fun because we can imagine how VTA will go from what's real today um to making tomorrow's reality.

And so to answer your question immediately about 20 kilograms um on a on a per capsule basis right now today. Of course you know we want to scale up everything and that's one of them but that's what how much we can do today which is actually quite a lot.

Yeah, that seems significant if you just think about like you go to the doctor and the doctor gives you like a you know a thing of pills that's like not one kilo.

So you're probably talking about like I mean yeah unless unless you know you're having more fun than being prescribed but but for most for most drugs I feel like 20 kilos is probably enough for like a 100 people for a year or something like that.

So you're actually in like $100,000 I'm I'm seeing the numbers kind of start to math out already. Correct. Correct. So it's uh and every drug is a little bit different.

So we go through a process of selecting which drugs make the most sense both from a scale perspective like you're saying but also unit economics how gravity affects them. And so we have a portfolio management team that explicitly does that for identifying and quantifying opportunities.

Um but but going back to like what today looks like and how and how it goes tomorrow. Um I love the temperature analogy because it it really runs deep.

So, for example, right now, if you think of us having a anti-gravity oven where we can make drug formulations that you can't otherwise make on Earth, but we only get to run it four times a year and each one is a few million bucks a run.

Uh, you might use it for different use cases than you would use it from five years, 10 years from now when you can run it every day for a few thousand dollars.

And so um in the near term some of the use you know imagine yourself with a super you know the first refrigerator or you know or in this case the first anti-gravity um bioreactor what you might use it for in the near term is just information right how can we isolate gravity as a variable to inform what formulations can be improved on earth is gravity ruining this chemical reaction or not right we can answer those questions and then that applies to the entire drug with just one flight or um in the very near term we also O want to do uh polymorph uh seed crystals.

And so what that means is we go to microgravity, we go to space, but just to develop the seed crystals. Uh and then once those seed crystals are developed, we can then use them to grow um uh more drug crystals on the ground. So we're only going for the nucleation event.

And that's kind of like a sourdough bread mother business model. That makes sense, right? You have the mother of the sourdough bread, then you can cut it a bunch and then regrow it and stuff like that. Um, so that makes a lot of sense when we're still scaling up the use of our anti-gravity machine, if you will. Yeah.

And then long term, when we're on the daily basis, then it totally makes sense um to uh make every single dose, manufacture every single dose in microgravity. And then that's when certain use cases come online as well. So kind of that's how that's how it progresses over time. Yeah.

How's the uh geopolitical landscape evolving for you? We saw some of flights come down in Australia as as you know redblooded Americans. It pained me to see them take a slice of the catch of the catch market. Uh are we are we getting these coming down in America anytime soon? Is it what's the progress there? Yeah. Yeah.

Absolutely. So um long term we want to have re-entry sites all over the globe, right? Um and and really that's about availability and the key metric to success of Barta is cadence. How often can we go up and back?

because the more we do that, then the more we just look like a specialized piece of equipment to the pharmaceutical industry that quite frankly does not care that we're going to space. They'd much rather us have a real anti-gravity oven uh in in the lab. Um so really re-entry sites are about cadence and availability.

Um, and right now Australia is great for us because they have a private commercial re-entry range, whereas any re uh any range in the 48 states here locally have are intended for military use exclusively. And so if we're doing a DoD mission, that that works well.

But if we're doing a commercial mission, we're you know um not the highest priority, understandably so, right? And so um in the near term uh Australia makes the most sense but in the long term we want re-entry sites all over the place.

And why that gets enabled is because as our precision of landing and our cadence goes up that um data that legacy history allows us to use a smaller and smaller plot of land and then that and that's where really it makes more sense to go anywhere uh because we don't need such wide open spaces like without that many people like we would do right now today.

Do do we have the legal infrastructure to create commercial landing sites in the United States? And it's just that nobody's done it yet.

Or is there laws or regulations that would need to change so that some enterprising young member of the Gundo could go buy, you know, a lot of land out uh in the middle of nowhere and start landing spacecraft, you can do it. Now, the uh the constraint is the real estate cost.

Um, and so one, uh, you know, Spaceport America, for example, right next to White Sands Missile Ranch is a good example of that.

Um, but the the so I guess the real reason why they aren't there that that many of them is because there wasn't a demand large enough to warrant such a real estate purchase, but you know, thanks to Varta, that that could change. So, uh, yeah, definitely let the the Gundos know.

I have a I have a question from a a fan of yours, fan of the show. He says, "Ask him what big dogs got to do. Oh my gosh. So, uh it's become a little bit of a uh of an expression of excitement um with a long and um uh history of of lore at at Varta.

But, uh uh for some reason um uh you know, it's it's really just a specific instance of conservation of mass, right? You can't have a big dog without eating, right? So, that's just physics right there. Yep. Uh I want to talk about the evolution of the FAA. I remember I was filming a video.

I fil I filmed with you guys and at one point I actually was driving back with Ben from San Diego. I filmed a a phone call with Delian and he's like we just got our I don't even know if I should say this, but like it was like we got some bad news from the FAA. You guys sorted it out.

It seems like you have a great relationship now. How did that happen? Do is this is this a lobbying thing? Is this just storytelling? Is this uh structuring deals, getting better at paperwork? like how do you get how do you fix a relationship with a government entity like that? Yeah.

So, it was definitely a little bit um warped in the press obviously, but I figured uh you know, keep my head down and get the spacecraft home more so than worrying about what's being said in the press. Sure.

But so, what actually happened in the background is um we were originally going to reenter this space or we did reenter the spacecraft at the Utah test and training range, which is ultimately a weapons range for testing weapons and training warriors. That's their mission statement, right?

So likewise, we're not um the highest priority there. And so we got bumped for higher priority um work being done at the range.

And in doing so caused a domino effect to lose the FAA re-entry license or not be able to get it granted because part of the regulations say, "Hey, you need a range and all of these accommodations that come with a range. " So the second we lost the range, we lose the license.

So it wasn't really about a bad relationship with the FAA at all. Um although it's it's much it's very easy to say, "Oh, they lost their license. Yet another space company and the FAA are having problems, right? " It fit that narrative well, but it actually wasn't the case.

And so what we did was we we scheduled a new date with the range farther out in advance to to give them some time and give us some time to we had to redo the analysis of course because the atmosphere is different and that's part of the analysis.

And so we gave ourselves a few months um and then that allowed them to reserve the dates that allowed us to prepare and that allowed the FAA to re orient the license for the new dates.

And ultimately kind of in the background here was like this was the first time this has ever happened a commercial re-entry capsule with drugs on board coming back to America. So there was no way onto onto soil, right? We're not doing a splashdown.

Um and so there was no process or mechanism to have the Utah test and training range coordinate with the FAA. Um and so basically each organization saw themselves as taking on all the risk associated with this. So we had to do duplicative work because there was no process to to split it, right?

Um and so it was really cool to kind of be a trailblazer to to establish this so that now of course our competitors are going to come in and do the same thing, right? Uh and learn from our mistakes, but whatever. That's part of that's part of leading the way, right? So um anyway, that is that's what happened.

But that um you know six months was it was uh quite the life experience, right? Because you have you're it was the first mission, right? So we we we didn't have any proof that this was going to work.

People poured three years of their lives into this thing and our dreams are just like orbiting the earth like please come home, you know? Uh so when it came through, man, it was uh certainly, you know, I I can't think of a better day. Yeah, that's amazing. I have one last question.

How's the uh how's the talent market in the in the space economy right now? Uh has it been in the headlines the last couple weeks? There's been another story in uh in AI dominating, but um but uh yeah, what's it like today? It's like AI and software engineers.

I mean, you know, if you imagine yourself a software engineer coming out of school right now, um you know, AI is is certainly where I would be interested. Um so, uh so there's definitely a software bent towards AI right now. Uh that being said, um there's a lot of disciplines we're hiring for.

Software isn't the only one. And really it comes down to the application interest like we're looking for missiondriven folks um at Varta. And so if you're only looking oh you only want to do AI because it's cool or whatever we that might not be the type of person we want to hire anyway.

Now if you want to do AI for mission purposes then great you know like uh by all means um but we don't have that much overlap there right we're very specific of what we're trying to do.

We're trying to uh make microgravity formulations so that we can help pe help patients on Earth by using a gravity as as a knob essentially and developing these formulations.

And so um you know we we always kid around we explicitly don't want the spacecraft to learn you know and so if you're a software engineer and you're missiondriven bent towards that mission then you've got a home at Varta. No question.

and if and and you know fads come and go and that sort of thing but there is definitely an effect on um I I would certainly be a lord to AI as a as a graduating software that's a good sorting function um one last question from me we've there's been headlines companies talking about this uh so far this year trying to dig into how real it is people talking about putting data centers in space yeah with everything that you've learned why is that exciting good idea or bad idea what what are some potential blind spots for people that haven't taken something to space but would like to?

So, it all comes down to the why, right? Why are we putting data centers in space? It's not uh are data centers in space in and of themselves a good idea, but what's the why? So, the why is is a is the only why that resonates with me is latency, right?

Because if you want to do compute power, space is not the place to put a data center if you just want a data center, right? I'd much rather have convection, right? that like that's a great heat uh um or a great way to get rid of heat uh and and have it be able to be serviceable on Earth and all that sort of thing.

So um but there is one use case that comes to mind where I think data centers in space make sense and that's only for very low latency use cases.

So for example, right now if you want to use Starlink and you're transmitting a signal to Starlink, it goes from the ground to Starlink to another Starlink satellite to the ground, then to the data server and back, right? So you can cut that trip in half if you put the compute in the sky.

Now that compute is way way way more expensive, but if your value prop of latency warrants uh uh that extra cost of the in orbit data center, then you'll start to see that. So it's it's kind of like edge computing. Edge computing. Yep. I was about to say.

So yeah, for for ve it sounds like a very niche use case at least to start, but uh I'm sure we'll see some companies we already are seeing some companies test it out and experiment with it because uh there's you know all these things need to be evaluated in the tech tree. Um but thank you so much for stopping by.

This is fantastic. Congratulations. Thanks for for having me and hopefully not so long I'll see you again soon. Absolutely. Yeah. Yeah. Hop on. Got a good feeling about it. We'll talk to you soon. Have a good one. Cheers. Congrats to you and the team. Bye.

Up next we have Joel from Meter coming on to talk about the impact of AI