[00:01:00] Rick LeMoine: My guest today is Dr. Carol Gallagher, who currently is a venture partner in the biopharma investing at New Enterprise Associates. Carol why don’t you start by giving us a thumbnail sketch of your background, early education, where you grew up and then we can get into the specifics of how you got where you are today.

[00:01:20] Carol Gallagher: Sure, that’d be terrific. So I actually grew up on a farm in Kentucky, in the Blue Grass area, which is a very rich farming environment. And I was a fifth generation person to grow up there of my family. And so a long history of raising crops and cattle and dairy and all types of things. So it was like a small business and I perhaps had some interest even then in terms of thinking about how businesses are run. I was interested in the business of science and didn’t really know what that meant or what to do with that. And so I started as a chemistry major at Vanderbilt thinking I would get a MBA and a chemistry background, and I would work for a company like DuPont. But then I started realizing medicines are much more interesting, and how medicines are made. The biology, pharmacology, the chemistry that was a lot more interesting than just straight chemical manufacturing. And so I had the aspiration I thought to work for the pharmaceutical industry, but I didn’t exactly know how to do that. So I decided to then come back to University of Kentucky. And the College of Pharmacy. There is actually a top five program in the country and still is. And I pursued a BS and a doctor pharmacy degree where that background does give you all the scientific underpinnings of how drugs are made. Not only the chemistry, but the physical chemistry properties once they’re in the body, how they go through the body, the pharmacokinetics, and of course, most importantly the pharmacology. And so it was actually a terrific background that then. Set me up to intern with some pharmaceutical companies, but also eventually then start my career with Eli Lili.

[00:02:57] Rick LeMoine: So describe your arc then from there at Lilly going forward.

[00:03:02] Carol Gallagher: Sure. So really great experience at Lilly, but then got a call from a recruiter to come west to Amgen. In the early nineties, Amgen was the inventor of Epogen and Newgen, both early also biologic recombinant products that were the beginning of a whole era of biotech. I worked a lot with payers because these were considered high priced products, and so I continued to learn a lot about the commercial landscape of the pharmaceutical industry and how innovations get adopted, but also how they get paid for, which is of course a very important component. I then came down to San Diego with a earlier stage company in terms of its life cycle. So now not such a big company called Ageron Pharmaceuticals, and they were launching their first product. It was small molecule chemistry, so fairly straightforward, but it was a probius inhibitor for hiv. And this was at the time where, We were just starting to have the combinations of HIV therapies that literally took people out of the hospital bed and normalized their life. So quite an interesting product to work on. And so helped with the launch of that, but then became what’s called the strategic marketing head, or new product planning, where I became very r and d focused. So now I’m working with the discovery and development teams. To help bring the business context to those products. And how do we think about which types of patients can benefit? What types of clinical trials make sense for not only the scientific rationale, but the adoption by physicians into standard of care and medical practice and how that might happen. And then over the several more years after that. So that company was acquired by Park Davis, which was acquired by Pfizer. So I went back to being in a big pharma, which was actually great for a couple of years. And then I started looking again in San Diego to the more earlier stage entrepreneurial environment. And went to work for IDAC, which was the inventor of Rituxin, which was the first monoclonal antibody that was approved, that type of modality. And it’s for cancer. But also at that time we started exploring autoimmune diseases like rheumatoid arthritis. It depletes B cells. And so in a way it was an interesting tool to help us understand if B cells aren’t there, what happens in a disease process. So it’s sometimes interesting how pharmaceutical products and effect are also tools to help us better understand biology. I then continued to go to smaller and smaller companies and try to work in the entrepreneurial environment and get to know the venture capital groups, and was fortunate enough then after a couple of companies where I was in the C-suite. To then have the opportunity to be a ceo. And that was a company actually in Seattle called Calistoga Pharmaceuticals. And we were developing a new first in class drug and fortunately went into the clinic and were treating cancer patients with leukemia and lymphoma. And we saw between 50 and 80% responders, which is quite high for an early stage clinical trial. And Gilead acquired that company in 2011, and then it became an approved drug in the US and the EU in 2014. And so that was my transition in terms of the entrepreneurial opportunity to work with venture capital and develop a company and build a company. And then, Since then, that’s mainly what I’ve been doing, is not as the ceo, but now as the investor or board member, helping that management team basically build new companies wrapped around typically innovations or sometimes best in class products. Meaning we, we know the target already, but we’re trying to improve upon. Liabilities, but other times also with new modalities that were completely innovative. And so most of these companies I work with starting in the preclinical early stages of that innovation, and then hopefully as we move into clinical trials, will then be able to see proof of concept. And so I’ve really. Enjoyed being able to be part of the innovation cycle. I’ve actually been involved with several Rituxin course and approved Drug. Several others that are now heading towards approval lot and cancer, but other diseases as well. It takes a whole lot of different people to get a drug to market and to get it to patients, and so I’m proud to say that at least I was one small part of.

[00:07:17] Rick LeMoine: You should be proud because what a remarkable career. Tell me a little bit about Calistoga and how that got formed and what your role, you mentioned ceo, but what about the founder? Part of that would be of major interest to our audience.

[00:07:32] Carol Gallagher: Yeah, so I actually wasn’t the true founder here, but I came in pretty early. Mike Gallatin is really the accreditive true founder, and he’s a scientist and he was the chief scientific officer at a company called ICOs in Seattle. George Rathman was the original CEO of Amgen, and when he retired from Amgen in the early nineties, about the time that I got there, , so he was the early innovator of Amgen. He decided to start a company in Seattle where he would go, and this is in the nineties where we were really having a genomic revolution. and he decided to basically, and at that time, was able to put together because of his success at Amgen, a lot of capital to basically have initially a hundred scientists working in the company, which is quite large for a small biotech. And they were cloning targets. With the idea of we’ll clone it, and then that will enable us to start thinking about building a small molecule against the target. And as the target biology becomes more fulfilled and understood, then we’ll be able to have a better insight about how to make a drug against it. And one of those targets was something called PI three Kinase Delta. There’s four isoforms in p i three kinase, and so Delta is one of the four. There’s beta, gamma, delta, as you would think of in the Greek alphabet or delta gamma I guess I should say. But so they actually were the first company to clone this target. And PI three kinase is a very important pathway in cells that drive proliferation and survival. And in the case of the delta isoform, it’s only in B cells. And so it’s restricted, but yet seems to play an important role and it seems to play an important role in pro-inflammatory diseases. But also as my founder colleague Mike Gallatin had The idea is maybe it might play a role in B cell malignancies, so leukemias and lymphomas that are of the B cell. And so ICOs actually. Then went an interesting direction of a unlicensed product that became Cialis, and they did a big deal with Lily, and they were eventually acquired by Lily for Cialis, but they had all this great early science and chemistry, one of which was our program, this p i three kinase delta targeted inhibitor. And so, Mike retired from I Cosis as it being sold to Lilly and said, Hey, there’s some stuff sitting on the shelf, Maybe we should think about it. And he started working with a venture capital group that I was also quite close to called Fraser Healthcare. And so Mike was the science, but I had. That Rituxin experience where I’d had a lot of experience in leukemias and lymphomas and B cell diseases. And so it was really a pairing then of his scientific basic scientific knowledge, my understanding of the application within patients and how to think about the clinical trials that then made it a very natural match for us to work together. And I do think that is a really important component to bring out here for all entrepreneurs. This is a team sport. And so how do you think about and Mike, to his credit, is a, just a really great person. And so his ego didn’t get in the way of, How do I build a team and how do I find somebody to pair up with that’s gonna help me make this really actionable for patients? So I think that’s a really important example here. And we also had a we ended up we had a chief medical officer who was very experienced at running clinical trials. We had a really excellent toxicologist who could help us with the talk studies and. It does unfortunately have, it’s turned out that it does have some toxicities that you have to manage. And that’s an important component all through the development to really help physicians know about those and be aware of those. And so I think it’s a good story of how entrepreneurship and founding a company. Often isn’t just about one individual, it’s about how do you get the right team. And the team is not only the operational people, but even the right syndicate, the right group of venture capital. And I’ll make a little side note. So I was CEO of Calistoga between 2008 and 2011. Does anybody remember what was going on in 2008 in mine? It was a terrible financial crisis. I was trying to raise additional capital in oh nine and people were deer in the headlight. There were lots of people that were interested, but they weren’t making any investments. They were just sitting on the sidelines cuz they didn’t know what was gonna happen. Fortunately, it had a great syndicate that did reserve for our company. So we just did an insider round. And granted that’s not what you’d normally like to do. You’d like to bring in more investors, get a nice step up, all those kinds of things that make you feel good. But in reality, we just needed the capital to keep going and to keep running the clinical trials and gathering the data and understanding which patients would respond and why. And so it was great to have a really strong syndicate that could support us and help us get through. What was a really tough, broader, micro environment.

[00:12:30] Rick LeMoine: So it really does take a village.

[00:12:32] Carol Gallagher: It takes a village, definitely.

[00:12:35] Rick LeMoine: And the founder may not be the best person to be the ceo. Was that another part of your.

[00:12:42] Carol Gallagher: Absolutely. And that’s a really important thing when I work with new companies. In my venture role and just even sometimes as an independent board member, is really trying to have that honest conversation about your self assessment. And the really great leaders are people who are very introspective. And they understand they don’t have it all the pieces, and they don’t have to pretend they do. They just have to be able to be good at getting those people in the room with them that can do those other things. And most importantly, I really feel like, particularly in the CEO role, I like the analogy of you’re the conductor of the orchestra, but you play no instrument. You make beautiful music, but you play no instrument. And I think that’s the key here is how do you find people who have specific expertise that’s gonna help your application? Particularly innovations that have never been done before. That we all are good at sort of saying, Oh, we’ll just follow this same recipe. but what if the recipe’s never even been made yet? We’ve never made this before. And so you really have to think about how to build that team and bring that expertise. And maybe sometimes the founder’s the right person, particularly at the beginning because they’re so close to the innovation. But the openness to say, How do I just have the best people around this and let your ego be set aside. And even for me, I, if we had continued with Calistoga, even though I have a commercial background, I was open to the idea that maybe I wasn’t the best person to grow the company to a thousand person scale. Maybe that was somebody else. And I had already started to have conversations with my board saying, We’ll have to think about this. We’ll have to really decide. How we’re gonna build the company as if we’re gonna scale to something much bigger than we were at the time.

[00:14:28] Rick LeMoine: Yeah. Without giving away a lot of trade secrets, what do you look for when you are. Making a decision about an investment, what? What are some of the things that turn your crank in a positive?

[00:14:40] Carol Gallagher: So thank you for asking that cuz I think it’s really important and I think a mindset, and at least in my business of patients are first and maybe in all businesses, it might be customers first. But in this case, healthcare is pretty special because we are talking about people who have an illness or this is their health this isn’t about selling an app or something that if it goes wrong, yeah, you might be disappointed, but it’s not gonna cause somebody to have a change in their healthcare . And so patients first, the other thing is, We do have a longstanding history that’s built up of medical practice and standard of care. And yes, innovation can change standard of care and maybe should in some cases, and that we could choose medicine instead of surgery or these big shifts. But that’s hard. It takes a lot of data and a lot of time to basically change that. So I know that as innovators, we love to think about the big thing, the big change, but sometimes incremental is good and incremental in the timeframe of the investment. So that’s the other piece here is this doable and a venture capital model. Which means, Yeah, I mean we’re pretty long term when you think about it, when we’re saying, Gosh, we’ll spend five to 10 years in this investment, that’s a pretty long time relative to a public market shareholder, but it still has to happen in that timeframe, and particularly more like three to five, not five to 10.

[00:16:10] Rick LeMoine: Carol, it’s probably not lost on many. Are listeners that you are a female and it’s wonderful that life seems to be changing and more opportunities for everybody, but it couldn’t have been easy for you. You must have some opinions and thoughts and suggestions around that part of life, and I’d love to hear them.

[00:16:37] Carol Gallagher: First it is true that most of my career I spent, that I was the only per only woman in the room. And it’s much better now, which is great to see. I often, my boards, I’m on the, our firm has diversity and not just women people of color and we are getting better. So it’s just great to. And so I think of it in two ways. One is if you’re the person, if you’re the minority, if you’re the woman who’s trying to break this glass ceiling, , what advice do I have for you? And that’s, forget about that. You’re different. Just do your thing. Be highly effective. Just stop thinking about that you look different, . Now you do have to be, I think, true all of us have to be true to who we are or we lose authenticity. And so you are a woman and people are gonna respond to you because culturally we have mindsets about females and males and they are gonna respond to you differently. But you don’t have to continue that. And it’s really all about business and being effective and being a great leader. And so just keep focusing on those parts and ignoring the other cultural things. If as much as you can certainly if people are being inappropriate, you should call them out. But just in general, I think give people a benefit of the doubt that they don’t really mean to be doing it. They culturally, maybe not as sophisticated. So that’s on the side of if you are the person, if you’re everybody else and you’re trying to think about how do I increase diversity in my team? You have to really start to think about what are the ways that I inadvertently make it harder for that person? Do I set up a situation where I’m doing it over golf and maybe some people don’t play. How do I change that? Because if you’re a leader and you’re trying to create a diverse team, it’s really about you want a highly effective team and you wanna make it easy for people to participate and contribute. You don’t wanna make it hard. So if you sit around and talk about your fraternity, but the other people weren’t in a fraternity, you’re already building a wall. If you sit around and talk about you like smoking cigars, and maybe a lot of you know, that becomes more sort of gender specific. Maybe not, but it’s just those things culturally where people, I don’t think they intend to separate you, but sometimes you do. And so it’s really just a mindset change for the people who are trying to build diverse teams. To say all that really matters is talent. and how do I get the best talent and how do I create environment where that talent will thrive? And now the final piece is both ways. Feedback. Feedback is so important to being able to be more effective as an individual, but also as a team. And so I tell, for instance, women who, you know, for whatever reason, sometimes we’re more emotionally responsive and that can be really difficult if a male is telling, giving very constructive feedback to a female and she starts crying. , even though that’s a natural human response, it makes it really hard. It makes it hard to get the feedback. And the most important thing you want is the feedback . And so do your best or try to find a way to hold those emotions and check or at least communicate to them that you want to hear this and that they shouldn’t be put off by your emotional response. Likewise, that. Leaders of teams should be open to hearing from individuals how the environment could be better for them. and quite frankly asking do you feel comfortable in our team? Did you know, was that a team building exercise? Because we did it at the golf course? That really wasn’t your thing. What would be your thing? And if you really engage people and you show you’re really trying to be inclusive, They’re gonna respond greatly and it’ll be such a better place. So I think we all own a part of how to create this more diverse landscape, and we have to all take our roles seriously to do so. but I think by having it, both sides trying to come together we are gonna get there

[00:20:35] Rick LeMoine: Great. Carol I want to thank you for a couple of things. I want to thank you for doing this interview. I want to thank you for being the model that you. Are and have been, and obviously will continue to be, not just for women or entrepreneurs, but a model for leaders in healthcare. And I want you to I, I wanna particularly thank you for your role at Sharp Healthcare as a board. Which is you bring a perspective that few other people have. You are one of my absolute heroes. Every time I talk to you I get the heartbeat go goes a little faster. And and we do have pills for that now, by the way. Again, thank you very much and just absolutely fabulous.

[00:21:14] Carol Gallagher: Thank you.