Matthew Meyer & Jake Chabon | Where law and business guidance meet — the world of startups

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For innovation companies, their success is often tied to the skill with which they handle the legal and regulatory issues in their industry. Law and business strategy go hand in hand. And this lesson is especially important for emerging companies… and junior lawyers. Today, we hear directly from a successful emerging company about the need for and value of combined legal and business advice.  

 

Interviewed by Wayne Stacy


Episode Transcript

SPEAKERS

Wayne Stacy, Jake Chabon, Matt Meyer

 

Wayne Stacy  00:00

Welcome, everyone to the Berkeley Center for Law and Technology’s Expert Series Podcast. I’m Wayne Stacy, the Executive Director of BCLT. And I have something special for you today. For innovation companies, their success is often tied to the skill with which they handle their legal and regulatory issues. Technology is a key portion. But as you know, the law can get in the way of a lot of innovation at times, or it can actually support innovation. And what you find is that law and business strategy go hand in hand. And this lesson lesson is especially important for emerging companies and in real really junior lawyers as they begin to explore their careers. The Berkeley Center for Law and technology is focused on sharing knowledge and creating conversations around this reality of innovation, the combination of innovation, business and law. And today, we’re lucky to have one of the world’s leading law firms talk to us about how they support innovation. So let me introduce Matt Meyer from Wilson Sonsini, Matt leads Wilson’s Life Science business advisory practice group. And Matt brought a guest with him today that I’ll let him introduce. But this combination of Matt and his special guest will give you an idea of where the law needs to go and where that intersection of law and business needs to go. So Matt, thank you for joining us.

 

Matt Meyer  01:26

Thanks very much. Great to be with you. Yeah, I have the pleasure of introducing Jake Chabon, who’s the CEO and co founder of foresight diagnostics today. Foresight is a venture backed molecular diagnostics company that is developing non invasive cancer detection technologies. And it uses a unique cell free DNA testing platform that enables the ultra sensitive detection of tumor derived DNA in the bloodstream that leads to a more personalized and effective cancer treatment strategy for patients. So Jake, it’s great to be with you today. Thanks for taking the time. I know you’ve had a busy couple of years since you founded the company in early 2020. It really at the beginning of the pandemic. Can you tell us what the catalyst was to start the company at such a challenging time?

 

Jake Chabon  02:19

Yeah, absolutely. And I just want to thank you for having me, Matt, and Wayne, the pleasure to be here today. So I did my postdoc, my PhD training in my postdoctoral training at Stanford, and I spent close to eight years focused on cancer diagnostic development with my three co founders, all of which are of faculty members at Stanford. So we have been focused on developing more accurate non invasive cancer detection platforms for many years. And we generated some really exciting data, kind of mid to late and 2019 that really showed the potential for this technology that we’re now commercializing it foresight. And it’s a technology that enables about 100 fold improvement in analytical sensitivity from the blood for cancer detection compared to existing methods. And, you know, the timing of that just happened to coincide with the beginning of the pandemic. But we we didn’t really let that stop us, it was such a powerful technology that had so much potential to improve, you know, how we’re going to treat cancer patients that we needed to launch the company. So that it’s really kind of the development of the technologies, what catalyzed the formation of the company. And it just happened to coincide with the pandemic.

 

Matt Meyer  03:37

You know, take starting a business in any environment is challenging. You know, you mentioned it was you started this company, because it was the time was right. How did it play out for you? And, you know, what were some of the learnings along the way, in starting a company in the midst of the pandemic?

 

Jake Chabon  03:58

I’m sure, yeah, that’s, I mean, it’s a great question. We were uncertain, you know, at the beginning as to how this was going to affect our efforts. Within a couple of months, though, it became pretty clear that business was going to be able to continue with, you know, technologies that enable remote work. The pandemic did pose challenges, but in some ways, I think it also enabled my team and myself to focus on this venture more than we would have been able to otherwise actually, because, you know, ironically, there was nothing else to do right during the times of lockdown other than really focus on the task at hand. So, I think actually put on a lot put in a lot more hours than I might have been able to otherwise. And that allowed us to pretty quickly incorporate obtain a license to the key IP from Stanford, which was a critical step. You know, Wilson and you in particular, Matt, were very helpful in that process. You know, also during this period, the broader investment climate I think actually improved again, somewhat ironically, for companies like ours, in the diagnostics sector, because there was a lot more focus on, you know, the importance of molecular diagnostics for identifying diseases. Then additionally, I would say like, you know, towards fundraising, during the pandemic, that was certainly an interesting process, like, you know, having those conversations and numerous conversations with VCs and getting to know them and doing that entirely over zoom. But, again, looking looking back on it, I think we were actually able to run a more efficient fundraising process in a relatively short period of time than we might have been able to otherwise, if every one of those interactions had to be in person, which I think was kind of more, you know, common prior to the pandemic. So we were able to fundraise pretty quickly and get on to the more important task at hand that was actually like operationalizing, the test and, you know, beginning our commercial efforts to bring this technology to patients, which is actually the goal. So I was kind of a, you know, somewhat unexpected answer. But I would say ironically, it actually, I think, allowed us to accelerate things in many different ways.

 

Matt Meyer  06:10

Yeah, I want to get back to the fundraising process in a moment. But you mentioned, working with Wilson Sonsini. And you know, I remember our first conversation was on a zoom call, I think, right in March is the pandemic was just getting started. And, you know, can you talk a little bit more about the factors that led to you still working with Wilson versus other options that you were considering? Yeah, sure.

 

Jake Chabon  06:38

I mean, you know, this is my first startup. And I knew that I needed more than just kind of,

 

Wayne Stacy  06:45

I don’t know, you know,

 

Jake Chabon  06:48

what cookie cutter kind of legal advice I needed, like business advice, I needed more information about, you know, what are the steps needed to put myself in a favorable, favorable position for fundraising. And, you know, just generally advisors who could help me across like a wide variety of domains like incorporation, securing our IP from Stanford, bolstering our IP portfolio, securing financing for the company, you know, engaging with investors putting a business plan together. And, you know, when I learned that Wilson Sonsini also had a business advisory practice, I was like, particularly interested in taking advantage of that. And I think that was one of the key factors that led us to, to work with you, because it really was, you know, a one stop shop for pretty much all of our legal needs. And then the, you know, the icing on top with the business advisory needs and helping with like literally putting pitch decks together, putting a business plan together. So I think it just felt a lot more efficient and made a lot of sense to me to work with one firm that could provide all of those services for foresight. Yeah, I would say that’s, that’s, that’s pretty much kind of how the decision process went, I will say, we did talk with a number of different firms. And it was a, we took any you’ll remember, right, I ran a bit of a process, kind of like talking with different groups, and I’m very happy with the decision we ultimately made.

 

Matt Meyer  08:18

Let’s get back to fundraising. You talked about that process. And, you know, you mentioned, Jake, you’re you know, this is your first startup. And, obviously, you’ve been successful so far in attracting capital and building the company. But it would be helpful if you could talk a little more about the fundraising process, please. Sure.

 

Jake Chabon  08:42

You know, we felt that to successfully raise our first round of financing, we were really going to need a team to support us that understood our business, but also understood it, you know, understood the process of discovering, developing and ultimately commercializing diagnostic products. We also needed a team that could help, you know, connect us with institutional investors that are, you know, active in this area, and you know, the right fit for us. And, you know, you know, Wilson’s business advisory practice that helped us develop, you know, a lot of pieces that were very critical for that, like our strong business plan, and you guys really did support us through the process of engaging with VCs, honing our pitch over time, going through the technical due diligence process. And at the same time, during this time, we were actively building out our teams in my advisory network. And, you know, it was also also useful for, you know, the introductions you were able to make for us for, you know, advisors that I still work with, you know, to this day that have, you know, relevant domain expertise that have been very helpful. In terms of the fundraising process itself, you know, again, everything being done over zoom was interesting. You You get you have to be almost more on your game as a founder kind of pitching, because we found that the investors can actively fact check you while you’re pitching on the side, right? Because the do they have screens up, and they can kind of be Googling and looking up questions and interacting with one another. So it was an interesting dynamic to have everything be done over zoom. But yeah, I mean, ultimately, I think, you know, it went well, you know, I worked with the, you know, you, your group, the corporate group and the IP group, to successfully like run this the series, a fund financing process, and, you know, successfully closing our $12 million series a financing it towards the end of 2020.

 

Matt Meyer  10:47

So, so you raised your first round, and you had the capital to start to really lean into the development effort. And as you mentioned, Jake, ultimately, that’s what you wanted to do quickly start to move these, these tests through the clinic and start to help patients and their clinicians. So can you talk more about your your product line, please?

 

Jake Chabon  11:10

Yeah, so we’re, we’re a blood based cancer diagnostics company, were initially focusing on disease surveillance, and then kind of Furthermore, we’re focusing more on looking for relapse following curative intent treatment strategies, trying to understand which patients are cured and which patients are not to kind of more more, you know, efficiently move patients that were not cured by that upfront therapy on two additional lines of treatment, while they while the disease is still localized and potentially curable. There’s, you know, more than, you know, 1.2 million new cancer cases diagnosed every year in the US that are amenable to our approach, it corresponds to a very large market opportunity about a $25 billion market opportunity for foresight. And we’re prioritizing cancers where detection by our assay, you know, could could lead to curative intent treatments, as I mentioned, and initially, we’re focusing on lung, breast, colon and others. And then in particular, we’re also very focused on on lymphoma right now and B cell lymphomas where we have the most data currently on our assay in terms of the clinical utility of the assay. And dlbcl is the the most common blood cancer and is the one indication that we are primarily focusing on right now. So we offer a variety of products. But broadly, I would, I would kind of categorize the the lymphoma assay. And then our custom workflow which is amenable to solid tumors and other heme malignancies. But both assays achieve about 100 fold improved sensitivity for detection of tumor derived cell free DNA from the bloodstream compared to existing approaches.

 

Matt Meyer  13:01

So at the end of 2020, not only did you stand up a new company and raise impressive series A then you decided to pull the company out of the Bay Area and into Colorado. Why make that move?

 

Jake Chabon  13:16

That’s a, that’s a good question. And we didn’t completely, you know, vacate the Bay Area, we have, we do have a presence in the Bay Area of executives there, and bioinformatics staff and my founding team is in the bay, and I travel there regularly. So we do still have a presence there. But we did move the laboratory operations to Colorado, there was there’s a number of, you know, there’s a number of things that led to this decision. One was that we identified an existing CLIA lab that we were able to operationalize in, that let us operationalize that the test and the, you know, the, the laboratory operations much faster, it probably saved us, like, easily six months, more like 12 months to get a CLIA lab up and running. So the speed was a major factor. And then, you know, long term, we were, like, very conscious about the fact that we wanted to base the company in a locale that had a, you know, a more affordable cost, eliminate cost of living, then, you know, then we were seeing in the Bay Area, but that also offered access to world class talent. And I grew up in this area, and I’m kind of familiar with the, the talent pool and there’s, you know, a number of universities and really, really strong, you know, life science, r&d talent in this area. And we found that we, you know, we thought that this this market, in particular, kind of the Front Range Denver Boulder, kind of locale really offered a rich mix of what we were looking for in terms of r&d talent, people in the life science industry, with the type of industry experience that we’re looking for, and then, you know, a very important consideration was just, it’s much more cost effective here to run a lot Have they our rent for our lab and office spaces is much more affordable than then in the Bay Area. The cost of human capital is lower here. So there’s a number of reasons that that tied into it. But I do think it is a very up and coming geography for the life sciences industry.

 

Matt Meyer  15:20

Got it. And I know Wayne and I are going to chat a little more about the Colorado life science industry later in the program. But just to wrap up, Jake, you know, as you grow the company and look to the future, what advice would you share with fellow Life Science entrepreneurs about starting and scaling a knowledge based company like yours?

 

Jake Chabon  15:43

Um, you know, I’d start by really being clear and okay with like, what you know, and what you don’t know. So I’m a, you know, a PhD and postdoctoral trained scientist, focused on cancer diagnostics research, I was went into this with eyes wide open that I have not licensed a patent before, I have not, you know, raised around a financing. And I from the beginning, really tried to surround myself with advisers, that that could fill those gaps. So I think being okay with what you don’t know, and really just surrounding yourself with people that kind of fill those those functional gaps with you. You know, all companies are on a learning path and Miss missteps do occur. But I think all you can do is surround yourself with with a support structure and a hard working team. You know, that that spans into all parts of the business, right, like my co founding team is that has been excellent. My board members are legal and business counsel, through Wilson. And I guess I’d say your extent your extended team is really what helps you lead your venture to success. So that’d be my biggest, biggest piece of advice is, you know, surround yourself with people that you trust that can that can help you be successful.

 

Matt Meyer  16:59

That’s great. Jake. I appreciate your, your your comments and your time and really helpful insights.

 

Wayne Stacy  17:06

Yeah, thank you. Jake, I have to tell you that one of the reasons I was excited about this particular interview is you know, I spent 16 years in Boulder focused on the startup community even lived lived there in downtown Boulder, than on the outside of Boulder and absolutely loved it. Life. Kids eventually brought me to, to to California, so maybe the only person that moved from Colorado to California to get a higher cost of living. So I do feel for you on that move. Yeah, thank you.

 

Jake Chabon  17:39

You know, it’s it’s a great area. We’ve we’ve hired some people actually from the Bay Area that are they’re relocating to Colorado, and they’re quite excited about the move. So yeah, I couldn’t agree with you more.

 

Wayne Stacy  17:52

Well, I hear that the secret is out. Real estate prices are going up at the California real estate prices rate local recently.

 

Jake Chabon  18:01

That that’s true, but you know, they’re still lower than the Bay Area.

 

Wayne Stacy  18:07

They have to be they have to be? Well, it makes sense for for tech companies to relocate. I know that the talent pool is tremendous. That meant a lot of great mature companies come out of Colorado. I’m a boulder fan, not a not a Denver fan, just because you have to pick a team when you’re there. You’re either boulder or Denver, and I chose boulder. But it’s all a great a great state for that front. One of the questions, though, is what’s the legal market? And how does the legal markethill And it seems that a lot of times people have in Colorado come to California or go to New York for top end legal help and don’t stay local. Then Wilson shows up what’s what’s the long term plan method?

 

Matt Meyer  18:55

When you know, I think, as Jake and the foresight experience have exemplified, you know, Colorado is is only growing in terms of its its importance in the life science ecosystem nationally and internationally, I would argue, and you know, that’s why Wilson decided to open an office in Boulder. And we want to be where the technology the science is, is growing and where the capital is flowing. So you know, if you look at the look at the trends in the industry, there is more money being raised in Colorado now than ever before. Specifically, in 2021. bioscience companies raised a combined total of $2.4 billion, which is literally double the amount raised in the prior year 2020. So as more capital flows into the state, more scientists and entrepreneurs like Jake, coming to Colorado, again, Wilson wants to be a resource to support this assessing the growth of those companies, both on the legal and the business advisory side.

 

Wayne Stacy  20:04

So you see the the legal community growing hand in hand with with the growth in the bio fields?

 

Matt Meyer  20:12

I do. Again, I think for the some of the reasons, some of the themes that Jake touched on, as those companies grow their need for counsel, experience, life science counsel, to help them with the license agreements that they’re going to need to sign the fundraising processes and all the related legal support that comes from building a company. I think, yes, the market will grow in tandem with the growth of the of the industry. Now, you

 

Wayne Stacy  20:44

lead something that has a name that most law firms don’t have called the, you know, the business advisory practice support. I mean, it’s in its name is the the key to the key to the job is its its business advisory. And I heard Jake, talk about it a little bit, actually quite a bit about how important that is to have that partnership beyond just the legal question. How does the California based advisory practice, migrate or support this growing Colorado effort?

 

Matt Meyer  21:18

Yeah, well, maybe first, it you said touched on it. But I think having a business advisory practice within a law firm is unusual. And Wilson, I think is an unusual firm in that it’s always focused on the entrepreneur. And we cut our teeth as a law firm in the 60s in the Silicon Valley, supplying legal advice to companies like Hewlett Packard, and Apple Computer. And then we realized that not only can we help these companies be successful on the legal side, but if we can provide them with the business counsel, that Jake touched on helping them think through financings, business plans, business models, etc, it will support those company’s growth and success. So as we open our office in Colorado, we plan to support the needs of these companies on the business side as well. So right now, that means a lot of trips from the Bay Area over to Colorado to support these companies. And over time, we anticipate having a direct presence, some colleagues, professionals on the business side, who would be on the ground there to support the efforts of the firm, broadly.

 

Wayne Stacy  22:31

Wonderful look forward to watching the growth in Colorado of the industry, both legal and the life sciences. So Matt, Jake, thank you for joining us today.

 

Jake Chabon  22:43

Yeah, Thank you Wayne was a pleasure. 

 

Matt Meyer  22:45

Thanks, Wayne.