This week, I sat down with Shelby Newsad, Partner at Compound VC, to break down what makes a great biotech investment and why so many platform stories fall short.
Shelby lays out a playbook forged across therapeutics, diagnostics, and lab automation. We dive into why mechanistic understanding predicts success, how diagnostics evolve into data businesses, and why the next wave of value may come from closed loop automated labs that combine hardware and software to finally link the whole bench.
We explore faster paths to human evidence through compassionate use, phase 0 trials, and cassette microdosing, and how biobanks move discovery closer to patients. Shelby also explains how RNA secondary structure targeting with covalent small molecules could merge phenotypic and target based discovery inside one company.
Then things get wonderfully weird. We discuss manufacturing as value capture in a world where intelligence designs drugs, gene edited flowers as a low regulation high margin venture canvas, and what it means when biohackers and LLMs push healthcare outside traditional borders.
Key Takeaways
Mechanism > platform: Companies prosecuting mechanistic disease biology have a 3–4× higher chance of success than platform first bets with fuzzy “why.”
Diagnostics as engines: Tests that are profitable and build biobanks create data and network effects and decouple cost from revenue via services and licensing.
Human evidence faster: Use compassionate use, phase 0, and cassette microdosing to de risk earlier with real PK PD and binding data.
Automation gap: Most lab robots lack vision systems. Closed loop labs that are miniaturized and observable are the usability unlock.
RNA covalency: Covalent binders to RNA secondary structures offer clean transcriptome readouts blending phenotypic and target based discovery.
Value capture shift: If AI designs the drug, manufacturing of proteins, chemicals, and gene therapies could own the margin stack.
Global arbitrage: The United States leads, but Australia and China accelerate timelines. Trials and approvals follow speed and clarity.
Weird is good: Gene edited flowers that are non edible and simpler to regulate marry beauty, margins, and scale, unexpected but venture real.
But in case you’re short on time, here’s a quick teaser:
Watch on YouTube; listen on Apple Podcasts or Spotify.
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