Two CEOs discuss bracing for tariffs, NIH grant cuts and gifting China biopharma leadership position

VO: The Bioworld Insider podcast

Lynn Yoffee: This is the Bioworld Insider podcast. I’m Lynn Yoffee, Bioworld‘s publisher. The impact of the Trump administration and the biopharma sector may soon be felt ever more with the imposition of tariffs on pharmaceuticals. When they will be implemented is unclear, but the threat has pressured the industry all year. Since January and up to April, the Bioworld Stock Index, which includes about 500 U.S. biopharma stocks, is down by about 23%.

Today, we have two pharma executives with us to discuss the new administration’s impact. Robert Williamson is the acting president and CEO of Triumvira Immunologics. The company is in the clinic and uses its T-cell antigen coupler platform to develop therapies for difficult-to-treat tumors. He has seen a lot in pharma, having been CEO of Biotheryx, Arriva and Pharmakea. He was a director of Pharmasset and saw that company eventually sold to Gilead for $11 billion. He also has been a partner with the Boston Consulting Group and a researcher at the Federal Reserve Board.

Welcome, Rob.

Rob Williamson: Thank you. Glad to be here.

Lynn Yoffee: Also with us is Hernan Bazan, the CEO and co-founder of South Rampart Pharma. South Rampart is developing small-molecule pain meds. The company’s lead candidate is a next-generation analgesic that is in phase I studies for treating acute pain. He’s not only a biotech CEO, he’s also a practicing physician-scientist. Hernan has received NIH support in the past, and he understands how that agency works. Hello, Hernan.

Hernan Bazan: Hello, Lynn. Happy to be here as well.

Lynn Yoffee: They’re both here today to chat with Lee Landenberger, a BioWorld staff writer and the BioWorld Insider podcast host. Lee, over to you.

Lee Landenberger: Thanks, Lynn. Thanks, everybody, for being here. Rob is in San Diego, and Hernan is in New York City, and glad to have people coming together to talk about all of this. I wanted to start with Rob first. We’ve talked a lot about tariffs, and we’re still waiting on something to come by. My first question to you is, I want you to talk to me, if you would, about the impact of tariffs on the biopharma industry, and also on how it affects your company, small and mid-caps.

Rob Williamson: Lee, thank you. I think of the tariffs situation in two broad buckets. As Lynn mentioned, I’m a former economist, so I think along these lines. There’s macroeconomic impacts and micro, and macro is the general economy and the impact on our sector on biopharma. The tariffs in general have been really tough on a sector that’s had, as we all know, a rough couple of years up to now. To state the obvious and what is probably well understood, but incredibly impactful on certainly the smaller and mid-sized biotechs who are really dependent on ongoing capital raises. The environment that these tariffs have put in place, the broader tariffs, has been quite negative for capital formation and fundraising. There’s a classic triple whammy of these tariffs, which is incredible downward pressure on equities. Market caps are dropping in general. There’s been a sell-off in U.S. treasuries, which has raised interest rates implicitly. We were just starting to see interest rates come down, which is important for biotechs in a financing environment. And then we’ve also seen a falling dollar. So our purchasing power, as much as we need to buy things from abroad and the strength of the dollar, has really dropped. And I believe that all three of those happening did trigger the 90-day pause that the current administration announced. But 90 days is going to go by pretty quickly. There’s other exogenous things that are going on, such as the pressure on the Federal Reserve by our executive branch and potential Supreme Court exploration of the Humphrey’s Executor. There’s a lot of macroeconomic things that are putting significant downward pressure on the market. So the last time I looked, I think another couple, you know, 50, 100 companies went to negative enterprise value, publicly traded companies. And the investors in biotech are really suffering significantly. You know, some of the bigger funds and the more respected funds are having very tough first quarters in terms of their returns, negative double digits. And that makes it really hard for folks to support smaller mid-cap public companies, much less private companies who are raising money with the promise of an IPO. So that’s a rather long-winded answer around really a very difficult macro environment that’s been put in place by these tariffs.

Lee Landenberger: I’m curious about how you see the possible effect of tariffs on the supply chains.

Rob Williamson: So let’s go a little bit into the micro, right? The specifics and the pending tariffs for biotechs in the supply chain. Right now, a significant portion of not only APIs and final products are made abroad, but of consumables and equipment. And so I think, and I’m pretty sure when the pharma quote, pharma tariffs are announced and they will be, there’s a 232 study that was kicked off in April. And that’s usually a good sign of a significant tariff effort. And my supposition is we’ll see significant pharmaceutical tariffs and we may or may not, but even if they’re not significant, we can argue what significant is. I think there’s a large amount of product that is brought into the U.S. and we’re going to see implications, certainly lower margins for U.S. companies using those supplies. We’ll probably see some higher costs for sure. I think we may see some shortages of drugs over time. There’s a growing concern with so much of the generics being manufactured abroad, a significant amount in India and also China, that we may just see potentially withdrawals of generics, players exiting that market, which is really significant for the consumers. Generics are incredibly cost-effective ways to treat diseases. So I see a lot of knock-on impact there. The interesting thing to me is the supposition behind these tariffs is to bring manufacturing back into the U.S. to really strengthen domestic capabilities across different sectors and to probably raise money in terms of the income. But the broader tariffs is making it even harder to do that. Manufacturing takes three to seven-plus years to build up over time. And even if you decide to do it now, we’re already seeing the costs of manufacturing facilities building that facility going up because of these tariffs. It’s like a doom loop. The tariffs are trying to get you to build up capabilities in the U.S., but it’s now twice as expensive to get that key component you need from Europe or Asia into your domestic facility. So it’s really a tough situation. And my hope is there may be, if the tariffs are inevitable, there may be some sort of rollout that will allow companies the time to really plan and put additional capabilities in place in the U.S.

Lee Landenberger: Yeah, that’s what I wanted to ask you about next, is how do you prep for changes?

Rob Williamson: I think in many situations, there’s carrots and sticks, right? You know, when you want the donkey to move forward, there’s carrots and sticks. Tariffs are a bit of a stick. The carrots could be, you know, incentives, deregulation, financial sort of considerations to help the domestic biopharma sector build up the capabilities domestically again. I still think it’ll be a higher cost in the long run due to workforce and the cost of goods as tariffs are in place. But having some sort of government incentives and facilitation to build up these capabilities would be helpful.

Lee Landenberger: How about a long-term strategy, or was that it?

Rob Williamson: I think long-term, again, I’m a trained economist. I always come back to it. I think tariffs are fundamentally bad. They just don’t work because you will have retaliatory tariffs over time. And what I really hope is that free trade gets re-established in both directions. We may continue to keep some greater capabilities domestically. That’s what the government policy wants and can promote. But I do think ultimately the world will benefit with a lowering overall tariff infrastructure in both directions. And tariffs aren’t just dollar, you know, they’re not just fees on imports and exports. There’s also, you know, things that restrictions, right? You know, China restricts certain companies from participating in their local economy and vice versa. Easing those restrictions over time would be helpful.

Lee Landenberger: I wanted to ask Dr. Bazan a few questions. First off, did you have any thoughts about tariffs and what you may need to negotiate in order to move forward?

Hernan Bazan: Thanks, Lee. I think Robert’s points about the macro and microeconomic impacts are really well laid out. What I can speak to regarding that is from an early private stage, that tech company, it’s understandable that the current administration’s tariffs on a macro level are aiming to protect domestic industries. So, I think we can all agree that that’s a good thing, leaving some room for discussion. From a small private company that’s developing a novel therapy, in our case a novel non-opioid, they do pose some tangible microeconomic challenges. So we’ve all along have done all of the production, the scale synthesis of the API, the ecto-pharmaceutical ingredient in the U.S., in Ohio, and the formulation work, actually, Robert, near where you are in San Diego, the clinical formulation work. However, the tariffs will absolutely increase operational costs because a lot of the lab, the specialized laboratory equipment that’s essential for these things, some of it comes from outside of the U.S. And so there are those microeconomics that I think Robert was speaking to, effects that in those ways drive up the cost and will increase timelines and then eat up more capital, and therefore delay timelines for getting milestones and for developing some of these innovative therapies. And then all of that obviously impacts funding strategies, which I think is what Robert was alluding to. So they are absolutely tied. And obviously, from the beginning, we had a U.S. approach, since we’ve begun this years ago, and then we’ve completed our phase one trial. But there are some specialized equipment that inevitably comes from outside of the U.S., which the U.S. doesn’t have. And it takes time to build that infrastructure here. So I think being optimistic is important in being forward-looking. I think there’s going to be a balance that will be struck in the end so that these innovations can continue to move forward and deadlines, timelines met.

Lee Landenberger: I wanted to also ask you about NIH funding and the grants. You have a lot of experience with that. And I’m curious, can you give me a little bit of background on what kind of NIH funding you’ve had and how you see these cuts affecting the industry?

Hernan Bazan: Sure. So the NIH is absolutely critical for this. So let me offer this overview. Consider that over – and this is a conservative number – over 90% of all U.S. FDA-approved drugs were supported by the NIH at some point. And in fact, there’s a study from the American Association of Hematology, from ASH, that states that between 2010 and 2019, over 99% of drugs approved by the FDA were NIH-supported. I think we can conservatively say that over 90% had some sort of significant NIH support at some point. So clearly that speaks to the biomedical innovation that we all know about. And obviously they do a lot of very important fundamental basic science research that sometimes doesn’t have complete application to biotechnology or life science, yet we all know that years later there’s some mechanism that then is utilized clinically. So I think recognizing this is an important general point from which to start with. We’ve been fortunate. I’ve had two NIH grants. I have one current one. I have one under review now. And last year, I was very fortunate to be granted the Trailblazer Award by the NIH HEAL, the Health and Addiction Long-Term Directors, award for our work with double non-opioid SRP-001. The reason to mention all of this is that they have evolved into becoming extremely entrepreneurial and supporting a small business. Having said all of those things, there are absolutely challenges with timelines, talking about timelines. The average time to get an NIH grant funded is 10 months for submission. And that’s if you don’t have to do what’s called a resubmission, which you usually do because usually you get a score, but I’ve only had one grant funded the first time. Usually you have to resubmit and you get a good score and you address it point by point. And so then it’s 15 months. So clearly that timeline, if that can be streamlined, that will be a positive thing. Again, talking about timelines and meeting deadlines and so on, because each time, as Robert alluded to, you’re eating up capital and being efficient. So I think all of those are positive things that hopefully will be helped. Years ago, pre this current administration, there was a report where there was a discussion to make the NIH more efficient by merging certain institutes and centers. So that had been in the works for some time. I think the writing’s on the wall that that’s going to be happening. So some of the national institutes will be likely merged to increase efficiency. So hopefully that will be a good thing. And the point on that is obviously there are people that are thinking about this a lot more than we are, that hopefully that will be done in a very concerted way so that critical projects and where there has been a lot of development are still supported as this efficiency is made.

Lee Landenberger: You had mentioned to me earlier when we were chatting about reminding policymakers about what is important. Could you kind of expand on that a little bit?

Hernan Bazan: Well, I think these topics about that conservatively, we can say the number over 90% of all FDA-approved drugs were at some point supported by the NIH, No. 1. No. 2, the NIH has evolved, and I’ve noticed in the last four or five years, a lot more business, pro-business, small business, there’s a small business office, and those individuals are very engaged. They’ve tried to bring in people, probably junior to Robert, because he has extensive experience but with some amount of industry experience to help to develop companies that are supported by the NIH, what are called EIR, entrepreneurs in residence. And they give you good feedback. Some are better than others, but you learn a lot from this, and with the whole goal of taking fundamental mechanisms that are innovative and translating them for a clinical product, which is obviously a huge distance to get to. And so I think those are all things that are important to recognize because really, again, that’s where the innovation comes from. I’ve had it. I was a Howard Hughes Medical Institute scholar, research scholar. We’re not at the NIH, so not from Howard Hughes, not from other world-governing bodies of biomedical research in Europe or Asia-Pacific or so on, but it comes from the NIH. And by the way, we can talk about this, but we are going to absolutely be in a biotech arms race with China and Asia-Pacific, and so that’s something to keep in mind.

Rob Williamson: I just want to chime in, Lee, on one thing. I’m working on a couple startups that are, quote, stealth and everything like that. And obviously, these early startups are coming out of academic research, right? And luckily, one of my key academics that we’re working with is privately funded, and is one of the luckiest people I’ve been working with because everyone around this academic and others I’ve been talking to are just hiring has stopped, projects have stopped. I think there was recently a list of NIH programs that were stopped. It was like 750 long. I think the reduction is about 40% in the NIH right now. That’s sort of the lead number. And I’m just hearing about this in all of my really early startup discussions where the academics are dismantled in terms of their efforts. There’s a significant stoppage of work and progress unless you happen to have another source of funding in place. So I think we’re going to see an impact of this over the next 10 years in terms of innovation of drugs.

Lee Landenberger: Lynn, did you have any questions you’d like to ask our guests?

Lynn Yoffee: I do. I have two questions. The first one is related to the fact that 90% of FDA approved drugs are supported by NIH. This is for both of you. Do you believe that over time, private investment can step up and fill that gap? Is it possible? There’s a lot of wealth in the United States, but is it realistic that VC can close that gap assuming all things stay on the same trajectory?

Hernan Bazan: Right, Lynn. I think that’s a really important question. And I think it’s going to be a three-pronged process that will have to hopefully evolve. So if you look back to where I am now visiting in New York City, if you look back to the industry, this industrial industry revolution, it was Vanderbilt with railroads right across Grand Central Station that he built. Then it was Carnegie Steel, and then JP Morgan bought it, made U.S. Steel. And then all of these people that really changed the industry, and not only the U.S., but for the world, then all did philanthropy. And then they built these amazing medical schools and research facilities all over the U.S. So the reason that I bring to that is because I think philanthropy, U.S. philanthropy, has really been disorganized. And this is the time when U.S. philanthropy can step up to help fill some of these gaps to then supplement private-public partnerships. And what I mean by that is to then help, not necessarily, without even getting into professional money, VCs, some private-public partnerships to help roll out technologies in a concerted way out of universities. And then the universities are going to have to be much more creative about how to tap into their endowments. So I think that’s going to have to supplement maybe federally funded money to get this. And that’s how, obviously, it’s a broad statement that I’m making, but I think these types of ways of thinking is going to be a way to move forward in the next decade. Who will lead that kind of effort? I think you’re going to have to have some case studies be done, some groups forming these partnerships and seeing that it’s successful, and then others will come along.

Rob Williamson: I do think the interesting challenge, well, there’s several fold challenges to the private sector stepping up. And I think this falls in the background of a larger sort of de-governmentalization that’s going on and an increase in private entities. But the NIH has a global perspective on these opportunities. I’m not saying they’re making the right choices, but there’s that global perspective. And then when you fragment the funding, you’re probably going to have people making decisions that are less globally involved and or have a very specific agenda. Bill Gates has done amazing work, but his agenda was world health, right? And if you didn’t fit into that agenda, you’re not going to get a dime out of the Gates Foundation. It’s just not, you’re not part of that game. And so I think when you go to a more private-based early research support, because venture capitalists, because of the timeframe of the investment, it’s really hard to even invest in biotech in general, right? One of my good CEO friends says, “Your business model is dopey.” And it’s tough. It’s just tough. So you need that philanthropy, government support to get the notions to a level that’s barely investable early on, right? And then you do the seed investments. But when you privatize it, you’re going to have a non-global perspective, almost most likely. And you’re going to have agendas that may or may not be what’s best for the industry or best for society.

Hernan Bazan: So they’ll say it’s dopey, Robert, until they have a 10x return, and then they become a believer.

Rob Williamson: Yeah, no, until they sell pharmaceuticals, and then they’re like, wait, wait, wait. Yeah, no. But it is, on a macro level, it’s a very tough business to make money. It’s not easy. No.

Lynn Yoffee: I have one last question, then I’ll hand it back to you, Lee. We’ve been talking about this from a business perspective, the impact to companies. But what about the patients in the short term over the next, say, five years? You mentioned, I think, Rob, you mentioned drug shortages. But how bad? What is this going to mean to patients in terms of the tariffs in the short run? But also, the brakes are going to be hit on innovation. So that’s sort of a two-part question.

Hernan Bazan: Well, look, I see patients four days a week. So I can tell you the reason that we’re doing this in a huge way is because of the huge void in the pain space. Because there is a tremendous void that has been present for several decades. And there’s one good lead now from Vertex that will hopefully help fill that. There’s still a tremendous amount to be done, though. For example, in our case, to treat pain in a safer way with novel non-opioid, that’s not toxic, and that actually works. So that is the real reason that we’re all in it. And obviously, we have to demonstrate a good return to Robert’s point, because this cannot be done without professional money and without professional support from private investors. So they have to see a good return. The unmet need, the true patient need, is what drives all of this. And I think there was some maybe exploitation of that because of the way rare disease vouchers have been used and so on and so forth. That’s a whole different topic. But I think as long as we keep the large unmet need and urgencies for not just pain, but let’s say for certain cancers, for certain types of cardiovascular disease, for certain other large needs, in the end, all of these things can be justified. I think to the other part of the question, Lynn, hopefully, if the tariffs do affect some of the actual clinical manufacturing, those things are pretty well optimized so that it’s not going to be a large trade secret about how to replicate those reagents and materials so they can be done readily in the U.S. But I’m not close enough to people that are doing that to tell if that’s going to be feasible or not. But I imagine that that would be feasible.

Lynn Yoffee: Rob, any thoughts on the short-term impact for patients?

Rob Williamson: I think short-term, we’re going to see price issues, supply issues, things that are going to hurt the patients. Especially, I mean, it’s going to be money and access. And that’s just going to be a challenge. And that’s not good. I think even worse is those short-term things, people will figure stuff out. Well, either you just pay more, there will be things that happen. But it will be painful. I think in the medium and long-term, just the fact that this is happening is crushing the biotech space in a lot of ways. There’s certainly on the private investment side, things are frozen right now. Some biotech investors say the industry has just been really hurt. I also think, as was alluded to before, we’re giving, in theory, this is to bolster our capabilities domestically. But what we’re really doing is by really freezing the domestic biotech innovation and supply space, we’re handing other countries even more space to eclipses. And we’ve mentioned China before. And I think China, in cell therapy, China’s just dominant. They’re building scale. They’re building innovation. They’re figuring out how to do it. Whereas certainly in the U.S., it’s much more difficult. And I think we’re gifting China this future leadership in the biotech space with some of these tariffs. So I think the short term will be painful. Long term will be actually probably worse unless we figure out how to remove those tariffs rapidly over time, ideally through mutual beneficial negotiations, which will be hard to do given we have to do it with 100 countries. And I believe the government office in charge of this has 200 people or something like that. So yeah.

Lynn Yoffee: Understood. Is there anything else that either one of you would like to share that we haven’t already covered? I realize it’s a huge topic and very dynamic. But any final comments?

Hernan Bazan: Everything that we’ve said, I agree with. And I think it’s important to maintain optimism and to be forward-looking, as I think we all are trying to be. And hopefully, I mean, listen, the way things have been done in the past was not ideal. I think we would all agree with that. Particularly timelines and efficiency of getting things turned around, both at the NIH and the FDA, although there are so many good people working that are trying to do what they can. So I think if things are done in a way and streamlined to make things move a little more streamlined and coordinated, and specifically things that are required for manufacturing critical materials to get to patients are not affected in a significant way, and innovation is still supported. And the approach that we talked about, getting other groups like philanthropy, endowments, and private to look, I think all of those things can then maybe make the process be better and still have a lot of success. We do have to be aware, though, of the competition, the global competition. Even Europe, EU, there’s a lot of innovation coming out of there. And they don’t want to be second fiddle to the U.S. The thing is, Americans aren’t going to want to take medicines that are produced or manufactured in China. It’s just not going to happen, unlikely. And so I think the US public will demand that a lot of things come, not only innovation comes from here, but it’s manufactured from here. So I think all of those things are going to help drive this forward in a positive way.

Lynn Yoffee: Great. Thank you. Rob, any final thoughts from you?

Rob Williamson: I agree. Try to look for the positives. And I think none of us were happy with the systems in place, right? The FDA was, regulatory processes were challenging over time. And I think we were all working on making it better and faster. I think you always see inefficiencies. What I hope we see with the disruptions that are happening is we come out of this with a better process for drug development and manufacturing and delivering really important medicines to patients, right? But it’s a challenge right now to see it. We’re definitely, I think there’s going to be a significant near-term pain. And our job is to figure out how to repair that and find workarounds. And we haven’t talked much about the FDA, but I worry about that as well, right? We’re losing some key people there. But it would be great if the FDA ended up being an even better entity at the end of this, right? So let’s hope that happens.

Lynn Yoffee: Robert Williamson, Hernan Bazan, thanks so much for your time and insight today. That’s our show. As always, Bioworld will continue to keep you informed of all the most important scientific, clinical, regulatory, and business updates. We’re a daily news service covering the development of the most innovative human therapeutics designed to improve the human condition. If you need to track the development of drugs, turn to bioworld.com. You can follow us on LinkedIn or X. And if you would like to share news with us, drop us an email at newsdesk@bioworld.com. Also, if you’re enjoying this podcast, don’t forget to subscribe via your favorite platform. Thanks for joining us today.

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