Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're Inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership and vision and global business. The dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism, right here, right now, at the NYSE and at ICE's 12 exchanges and six clearing houses around the world. And now welcome Inside the ICE House. Here's your host, Josh King, of Intercontinental Exchange.
Josh King:
Just over 130 years ago, a couple of brothers with the last name Johnson got together to revolutionize the medical field by creating a company to produce sanitary, individually-packaged surgical dressing, kicking off decades of bringing innovative health solutions to market, from dental floss to disposable contact lenses. Today, Johnson & Johnson, NYSE ticker symbol JNJ, is one of the largest companies in the Dow and continues to pursue new ways to improve healthcare, one breakthrough at a time. Johnny-John, as the company is affectionately referred to by the New York Stock Exchange trading community, launched Johnson & Johnson Innovation to help internal and external innovators bring their healthcare ideas from concept to consumer. At the heart of J&J Innovation is JLABS, the external life science incubator that our guest today, Melinda Richter, has guided since its inception just six years ago. We'll find out how JLABS is making it as easy and attractive to start a life science firm as it is to launch the next technology company, and how Melinda got the bug to revolutionize the business of health. Right after this.
Jim Cook:
I'm Jim Cook, brewer of Sam Adams, here in the Holler tower in Germany to select the best heirloom hops for our Boston Lager. You can't tell by looking. This isn't a beauty contest. The ugliest hops are often the best. You have to do this. Rub a handful together to release the aromas, close your eyes, and inhale. We brew Sam Adams Boston Lager with only these hand-selected heirloom hops, not pretty, just delicious. The Boston Beer Company, Boston Mass. Savor the flavor responsibly.
Josh King:
Our guest today, Melinda Richter, is the global head of Johnson & Johnson Innovation's JLABS, which is Johnson & Johnson's external research and development life science incubator program. Previously, Melinda was founder and CEO of Prescience International, which was acquired by J & J to serve as the model for the founding and infrastructure of JLABS. Under her stewardship, JLABS has nurtured the growth of over 450 companies at 13 locations and will be opening another one in China this year. Welcome to the podcast.
Melinda Richter:
Thank you for having me.
Josh King:
You've got 13 locations. I was looking at a picture of one of them in New York City. I can't imagine what China is going to look like, but the one that I saw that you put on your Twitter account looks like the ultimate sort of collegiate library meets technology, a place to hang out but also build billion-dollar ideas.
Melinda Richter:
Yeah. I mean, we wanted it to be a place that invited people in, where people felt like they could come in and be part of a community and a club, because the work that we're doing is so important and it's so hard. It's so expensive. It's so time consuming that we need to make it as attractive and as easy and as inspiring as possible for the best and brightest minds of the world to get into, because let's face it, this is all about our health. This is about you and me. And if we haven't been a patient or if we're not a patient today, we certainly will be in the future. So it's in our best interest to make sure that we have the best talent focused on this.
Josh King:
So you say, Melinda, you want people to feel like it's part of a club. So I think you mentioned it's in New York Soho neighborhood. You go into the building, you go up the elevator. Do you have to show a secret pass?
Melinda Richter:
Almost. Almost secret.
Josh King:
What happens?
Melinda Richter:
As soon as you get off those elevators, you see this incredibly rich experience where you have brick and you have concrete and steel and lights. And then you go in and then you see velvet and leather. And it's all about a combination of materials, both hard and soft, and yin and yang. And that's what it takes, right? It takes us to appeal to all people trying to do all things and balance all of the necessary components to make something special.
Josh King:
Doesn't sound like my typical bandaid.
Melinda Richter:
No, no, no. Not at all. Well, and that's the thing, right? What's health about? At the end of the day, many consumers know about their health as, especially today, "Oh, do I have my Fitbit on? Am I getting my data?" When really health is about many different components. At J & J, we have obviously our consumer health division, which everybody knows bandaids and baby shampoo. And those are all really great things. And we also have our device sector. So, looking at surgery and the robotic surgery of the future, and can we get the average physician to be able to do surgery, so it's more accessible and affordable? And then we have our therapeutics division where we're trying to cure cancer and HIV and Hep C. I mean, those are things that most people don't get religion about, that we need innovation in that space, until you get sick. And when you get sick, that's when you realize, "Oh my God, it takes eight to 12 years to get a drug to market? So what, if you don't have it for me today, and I need to wait, and I don't have any time... Wow." Reality hits you pretty hard.
Melinda Richter:
And so we're trying to inspire people to get into the business of health across all of those domains. And at the end of the day, our goal is not to necessarily have cures for people. Of course, that's great. What we'd rather do though is prevent you from getting sick in the first place, because if you have cancer, going through treatment is not a pleasant experience. And I'm saying that, and it sounds very cheap as I'm saying that.
Josh King:
We've had folks on the show before who've brought us through the whole experience with Eli Lilly.
Melinda Richter:
Listen, if you can prevent yourself from getting cancer in the first place, that's our ultimate goal. We want to keep people at the optimal health so that they're having the most productive lives, that they're getting to enjoy their families all the time. And that's very difficult to do, not just because it's hard to find those solutions from a biology perspective. What does that mean? How do you prevent somebody from getting sick? But also from a business model perspective. How do you make money off of that? From a big corporation who's got a responsibility to shareholders, shareholders, want to know, "How am I getting a return on investment?" And that's a really important question because if we didn't have those shareholders, we wouldn't have the money to invest in innovation. So we have to be playing all these different sides to make sure we can deliver these solutions to the people who need them all over the world.
Josh King:
Your career, Melinda, has taken you across the globe many times, but it all started in good soil where you were born in a 1000-square-foot home with eight siblings.
Melinda Richter:
Yes.
Josh King:
How did your father's lessons of standing up for yourself and getting an education shape your understanding of success?
Melinda Richter:
Oh, you know...
Josh King:
Where is good soil?
Melinda Richter:
Good soil is at the end of a little dirt road in Northern Saskatchewan, in Canada, for those of you who don't know Saskatchewan.
Josh King:
We'll check out its GPS after the show.
Melinda Richter:
Yeah, yeah. It is a village of about 250 people, 250 to 500 people. And my parents both came there separately as children with their parents as escapees from the war, from Europe. My dad from around the Prague area, and my mom from Belarus. They came over and, as a part of that, they got a homesteading grant where you get a plot of land and a little bit of money, and you settle in a remote area. And my dad always said to us, "Listen, I don't blame Hitler for what happened. I blame everybody who stood around and watched, who didn't take the time to get educated on what's going on in this world, to come up with a truth, your truth, and then to stand up for the truth, and stand up for others. So your job in life is to get educated on what's going on in the world."
Melinda Richter:
And so, always at home, even though we didn't have very much, the news was on the radio or we'd be reading the paper. We'd have to bring things home from the library, and we'd have to debate at the dinner table because my dad wanted us to learn how to search for the truth. And oh my gosh, I can't tell you how much that meant to me and how much that shaped me moving forward. So I was always curious. I always wanted to learn. I was the first one who went to college, and that was a big deal. You know, you just don't know what you don't know. I got scholarships to go to the college in my province. It always makes me appreciate how people who come here to this country, you don't have the same platform that many people do; people who are in poverty or people who are trying to get by.
Melinda Richter:
And so for me, I've taken that aspect into how we designed JLABS, for example, and said, "Listen, there are so many people out there that don't have everything that notable scientists have, who've got a platform of resources that they don't have, and they have amazing ideas. And there's an intellect out there that's untapped. And how do we make this more accessible for everyone, so we get the best solutions to the people who need them?" And that's the premise of Johnson & Johnson Innovation. We believe that the best science and technology should become the best solutions for patients and consumers all over the world. And if we believe that to be true, we also have to be humble enough to say that the best innovation is just as likely to come from outside the walls of a big company like J & J as inside. But when it's out there, it faces many more hurdles to becoming a viable entity that can get solutions to the people who need them. And so our job is to locally embed ourselves in ecosystems around the world, like New York City and take down those hurdles so that grit, that spirit of the people of New York City can turn itself into innovations that can save our lives.
Josh King:
But long before you got to New York City... I still want to hang out in Saskatchewan for a few minutes.
Melinda Richter:
Okay. Tell us, tell us.
Josh King:
No, you tell me because from Saskatchewan you were recruited to go to Nortel Networks, one of the storied names in Canadian technology of the eighties and nineties and early 2000s, which took you to Beijing. How did your life take an unexpected turn while you were developing a new way to order a Coke?
Melinda Richter:
Well, what's interesting is when I was in Beijing, I thought I had it all. I thought I had the world by the tail because I had grown up in such a humble way. You know, from in the time I was a little girl, I was bound and determined I was not going to be poor anymore. So I worked really hard to get that job at Nortel. It was the plum job. And in fact, they only wanted MBAs. I was an undergrad and I was like, "I'm applying anyway." And they only recruited like five to seven people from around the world. Here's this little girl from the end of a little dirt road in Saskatchewan. I'm like, "I'm going to be that person." And I ended up being that person. So, for me to be there was amazing. And I'd gotten to live all over the world with them. I was on this fast track to be president one day. And I was at the end of my assignment in Beijing. I went to a conference, and at the International Beijing University, I was walking through the woods. And while I was walking through the woods, I got bit by a bug. Within 24 hours I landed in the International Health Clinic. I'll never forget that moment when the doctor came in the room and said, "I'm so sorry, but there's nothing more we can do for you."
Josh King:
I watched your Ted Talk. It was a dire situation.
Melinda Richter:
Yeah. Well, you're 26 years old. You don't know if you're going to wake up the next day. I mean, I got to tell you, just sit and think about that in the dark with your eyes closed.
Josh King:
Far away from home. Are you communicating back to Saskatchewan and getting...
Melinda Richter:
Yeah. In fact, my brother-in-law was a doctor, radiologist. So we were calling him. Of course, it's exactly the opposite time zone.
Josh King:
13 hours, 12 hours.
Melinda Richter:
Yeah. So he was on the phone and, in fact, the doctor said, "Listen, unfortunately, we're going to have to send you to the Beijing Hospital." And back then, the old adage was it doesn't matter what you go into the hospital with; you are never coming out. It was a pretty bad situation in China at the time. And so I refused. I said to the doctor, "No, no, you're not sending me there. If you send me there, I'll die." And he said, "I'm sorry, but if you stay here, you'll die." So yeah, that was a very reflective moment for me. And I realized that if I got the chance to stay here, that I had to be here not to just change my story; I had to be here to change many people's stories. And yet at the same time, that story had to be personal to me.
Melinda Richter:
So I was struck by the irony that here I was in Beijing, and my team and I were trying to figure out how to order a soda from the vending machine with my cell phone. And yet I'm here in this hospital and you cannot take a blood test and figure out what I have. How is it possible that all this money and press and talent is going over here to the tech industry for something that seemed now so frivolous, when a pretty basic human healthcare gap existed over here? And how could I have been working on this technology platform when my life now depended on this? And I vowed to myself that if I got the chance to stay here, that I would come back and try to change the healthcare industry, that I would try to make it just as innovative and productive, as advanced, as sexy of an industry for the brightest minds and the best money to get into, as in the tech industry.
Josh King:
So, in 2004, you launched Prescience International to offer your business knowledge and tech experience to healthcare discoveries. What were some of the walls that you had to walk through to launch your own firm?
Melinda Richter:
Oh, gosh. Well, first of all, I had to learn what I didn't know. I was tech industry. I didn't even know life sciences was a career choice, was an industry where you should have a career or could have a career. So I decided to learn through comparing it to the tech industry, right? In the tech industry, you give a couple of guys a couple computers and a couple hundred thousand dollars, and a couple years later, they can turn around and sell that to a Microsoft, a Yahoo or Google for $200 million. It's fast and easy like a rap song, right?
Josh King:
Exactly.
Melinda Richter:
The life science industry, as I learned, is more like a long, drawn-out opera. It takes at least a year to get the kind of financing, the big financing you need, to get all of the specialized equipment you need, the specialized facilities, the operation scene, performance licenses. And then, and even then, it still takes you what? Eight to 12 years and billions of dollars to get a drug to market. So, who in their right minds would start a life science company? By the time you got it to market, if you ever did, the only thing you're making is a difference, and that's not sustainable over time. So, from the outside looking in, I thought, "God, that's a problem we need to solve. We need to make it just as fast and cheap and easy to start a life science company as it is to start a tech company."
Melinda Richter:
So then you go back and say, "Well, so that's the problem. What's the solution?" And I went back again to what I knew, which is when I was at Nortel. I was going to all these different locations around the world to express intent to get a product or a project up and running within a year to two years. And the only way I could do that is if I landed in a place and there was a facility, there was all the equipment, there was an operations team, a legal team, marketing team, et cetera; so all I had to do is focus on my project. So then I could go really fast. And I thought, "Well, what if I could apply that same principle to life sciences? What if I could create a big company infrastructure for early stage companies? Can we make it just as fast and easy for them to get to a proof of concept as it was for me to get a product or a project up and running?"
Melinda Richter:
And so that's what I did. I went to get my concept going, and I'll never forget. I peddled it a lot, this concept, and I went to two very notable people in the industry. And I won't say their names, but let's just say people would know them. And I said, "So, what do you think about this idea?" And the one guy said, "This is too crazy. This will never work." And the other guy said, "There, there, little girl. Everybody in this industry has a PhD. Even the janitors at Genetec have a PhD. So please run along." It's one of those moments again in life where you can say, "Okay, that's the end. I don't deserve to be here." Or you can say, "Well, that just makes me want to do it even more." And listen, I go up with five brothers. That just made me want to do it even more. And so I kept going until I found somebody who gave me $6 million to create my very first facility, and that's...
Josh King:
Where was that? What city?
Melinda Richter:
San Jose, California, in the Bay Area. It was 36,594 square feet. And I will forever remember that number because I put it into so many different spreadsheets and so many different contracts. I made half of the space all common space, common community space, where people would get together and share ideas and interact, and common research base filled with capital equipment that most companies would need to go out and raise a big round for. So you could do biotech development, device development, consumer health development. I made the rest of the space into individual wet lab, dry lab, and office module. So somebody could come in and get something as small as a six-foot bench and put it on their credit card, like a gym membership, and they could try out their idea without risking it all.
Melinda Richter:
And then I had an operations team who would take care of the day-to-day activities, because it's very technical in this space, and a lot of companies fail because of that. And then I hired a business services team that could do everything from as basic but not inconsequential as help turn a research project into a company, provide educational programs. So business people could learn about science, and science people could learn about business; and bring funders to the table so that the people who had money could meet people with technology, and people with technology could meet people with money. We got started, and within five years, our companies had raised more than a billion dollars, which was phenomenal at the time. But more importantly to me than that, they said they could do in eight months what had typically taken them four years to do before.
Josh King:
So, how did you connect with Johnson & Johnson? And why were they the right partner to scale up what you had already created with Prescience?
Melinda Richter:
Well, so I realized that so far so good. We had made some remarkable progress, but had we really changed the industry the way I wanted to change the industry? Was innovation in the healthcare industry the same way we were picking up our iPhones and looking at our email first thing in the morning? No, not even close. So, to do that, I thought I had to scale. So I went to San Diego. I organized a meeting of all the leaders in the industry, and I presented this topic. I said, "Listen, I want to do this here. Do you think this will work?" J & J happened to be in the meeting. In fact, they hosted the meeting because they had heard about what I wanted to talk about. After I presented, I said, "What do you think? Will this work?" And the guy there at the time, Diego Morales, he said, "Whoa, whoa, whoa." He goes, "I got to shut this meeting down." And I said, "Oh my God, I'm sorry. Did I offend you." And he's like, "No, no, no. We don't need everybody because you and I, we're going to do this here at J & J." That was the kind of spirit that exists in J & J, then and now, where they have the same passion for the pursuit of patient solutions that I've only seen in small companies. And it's really because of the leadership that's there.
Melinda Richter:
Dr. Paul Stoffels, who's our chief science officer at J & J, started out his career as an infectious disease doc on the front lines of AIDS in Africa. And he got tired of trying to fix people after they got sick, including his good friend who was also a doctor there, who ended up contracting HIV, and decided he was going to try to figure out how to stem the tide of the disease and became an entrepreneur. And so he started coming up with his own cocktail for HIV, which is still one of the three cocktails that you use to make HIV a chronic disease rather than a death sentence. And so here's this man who has the voice of the patient in everything that he says and understands the value of innovators. And so that is what compelled them to say, "Listen, we want to do this too. We want to scale innovation in the industry. And with our global footprint and our scope of activities, with your entrepreneurial model, if we put those two things together, we could really make a difference."
Josh King:
You have a huge amount of talent inside these JLAB locations, but then realities are always present in a business environment. How does the 'no strings attached' concept work? And what percentage of companies choose to stay in the Johnson & Johnson family versus flying the coop?
Melinda Richter:
Yeah, it was important for us to make the JLABS model a 'no strings attached' model because we wanted everyone to feel like this was a place for them. And we wanted them to have the freedom and the flexibility to build value before they had to give it away, given it was a long road and they were going to have to give so much away over the long term. At the same time, we have our innovation centers who have our early-stage deal teams in them, which include our corporate venture arm, JJDC. And we have them as a part of our JLABS community. They help us select the companies for JLABS and meet with them along the way. And the whole goal is for us to figure out, as we get to know each other, do we want to partner together over the long term? Because listen, let's face it, in the healthcare industry, very, very few early stage companies that make it all the way to market, they have to partner because it's a huge distribution network and a huge cost to get to the people who need them. So we want them to feel like we're their partner of choice. And so we want it to be a mutual choice, a mutual decision.
Melinda Richter:
And so, over time, we've done collaborations with 113 or 115. I don't know. The number keeps changing on a daily basis with those 450 companies. For us, there are many that choose other companies, and we're excited about that. Our credo says we're first beholden to the patients and their families and the doctors and nurses who serve them. So, however it gets to patients, we salute and we celebrate. So our companies have done deals with our competitors, and we think that's fantastic. Again, the goal is to change the industry. A lot of people ask me, "Why would a big company do that?"
Josh King:
Why would a big company do that?
Melinda Richter:
Well, because doing the right thing is good business. And listen, at the end of the day, I think we get a preferred spot at the table. I think our companies think we're in the trenches with them. We understand them. I think they'd want to partner with us more, and we've seen that. And so I think it gives us a distinct advantage. And I think we gain a lot of insights by doing what we do. I think what we end up being is, ourselves, the largest startup in the world.
Josh King:
So it looks like a return to China for you may be imminent as JLABS continues to grow. We were talking about this formative experience that you had there so early in your career with Nortel. What are your 2019 plans? And are there other areas that you'd like to expand into?
Melinda Richter:
Yeah. So we're going back to China. I never thought I would say that. I certainly, at the time, never thought I was going to go back to China. But I got to tell you, if you haven't been to China in the last year or two, it's amazing. It's exploding. And talking about digital health, that is a place in the world that's leading in terms of digital health and infrastructure. So, anybody who's in that space, I highly encourage you to spend some time there. It's inspiring. And certainly, as we go along, we're going to think about which are the key ecosystems that can make a difference.
Melinda Richter:
But also I think we're always innovating on our model. We came up with the QuickFire Challenges as a way to reach out to all of those entrepreneurs all over the world, to invite them in to solve a particular problem. And for that, they get in exchange usually grants and residency at JLABS and mentorship from folks at J & J. And so we're going to continue to evolve that model, come up with new solutions that can help make it easier and faster and cheaper for innovation to get to the people who need them.
Melinda Richter:
And I think we're also going to start looking at all of the different things we see along a patient journey, all of the innovations, and say, "Where are there holes? Where are there gaps? Where do we need to feed new ideas?" So, for example, on the road to somebody getting diabetes, we're going to look at: What's a healthy state of an individual? How do they start getting symptoms? How do we diagnose it? How do we intercept it? How do we cure? How do we manage it? Look at all the innovations along that roadmap and say, "Where are there gaps? Or where are things that are not going well that we need to power up?" And I think that's where we're going to start focusing more on. How do we take innovations and how do we get them to the next level across the board and all of these areas that are important to us, right? Whether it's in the neuroscience area for depression, mood disorders, Alzheimer's, whether it's in diabetes, obesity, or whether it's in immunology, all these inflammation diseases that really are the cause of many other diseases. I think it's time for us to get to a whole other level of innovation across the industry.
Josh King:
After the break, we look at some of the discoveries coming out of JLAB resident companies and how J & J Innovation identifies startups and innovators for inclusion in its programs. That's right after this.
Jim Cook:
I'm Jim Cook, brewer of Sam Adams. For 34 years, I've made my Boston Lager inefficiently. The expensive imports, industrial beers, made as efficiently as possible. Many use cheap bittering hops, faster fermentation, whatever it takes to drive down costs. At Sam Adams, we brew with 100% heirloom hops and lager our beer for over a month. Glorious inefficiency in every sip. Ah, the Boston Beer Company Bston Mass. Savor the flavor responsibly.
Josh King:
Welcome back. Our guest today is Melinda Richter, the global head of Johnson & Johnson Innovation's JLABS. And we've been discussing how JLABS developed from a single location in San Diego to a global incubator ecosystem, helping hundreds of companies. Melinda, are there specific areas of strategic interest to Johnson & Johnson that you consider when choosing JLABS resident companies for new location like here in New York? We talked earlier off air about gender diversity, minority diversity.
Melinda Richter:
One of the things that we believe is important is that to design the right innovation for the people who need it, you have to reflect the diversity of that population. And so, for us, it's been very important to look at gender diversity and minority leadership of our companies. And you don't progress what you don't measure. So we measure that every year. How many women-led companies? How many minority-led companies? And in our latest impact report, not only did our companies do $11.2 billion worth of financing and partnerships so far over the past six years, but they represent that diversity that we're looking for. So 26% of our companies are women-led. And why that's remarkable is because the industry average is 1%. The industry average for minority-led companies is 8%, and ours is 23%. And so it's something that we focus on, both in terms of looking at the diversity of people coming in the door with innovations, but also supporting it and fostering it with educational programs and networking events, and bringing in funders who represent that diversity perspective as well. So we've been really excited about that. And because of that, we're getting the types of solutions that match the population.
Josh King:
What are J Pals, and how else does J & J and its employees support J & J Innovation startups and their entrepreneurs?
Melinda Richter:
Our future is everywhere. There is so much untapped potential in big companies. And so what we do with every new innovator or small company that comes in, we match them up with a J Pal, somebody who's an expert within J & J, who can help that company understand where they're going with the technology, what kind of data that they need to show to prove that it works, and to access all the resources that a big company has for those early stage companies. So we assign everybody a J Pal who can give them kind of broad advice, and then they can access other more specific J Pals who have, let's say, regulatory experience or marketing experience, who can help fill in the gaps for those small companies. So, that helps power them up amazingly.
Josh King:
There's so many potential billion-dollar ideas within your JLABS locations. How do you foster an environment of collaboration among your resident companies in a field that's often rife with intellectual property litigation?
Melinda Richter:
People were concerned about that, especially as a big company. J & J concerned about IP contamination, or the company's concerned about IP contamination. And we've had not a single issue ever. And it's because those companies, first of all, appreciate the resources that they're getting. And everybody realizes that they do talk to each other, they get ideas from each other, and that just makes them better, because the problems that we're solving are so hard and so big that the only way we can do that is through collaborating. And so what's great is you see people coming up with brand-new ideas that wouldn't have existed before.
Melinda Richter:
So, for example, we had a committee that was doing a sticker for kids that would help them understand when they needed to reapply suntan lotion. So the sticker would change color as the suntan lotion came off their skin. Yeah. And we had a vaccine company that was doing vaccines for kids, and they were like, "Wow, what a great idea. Why don't we do vaccines instead of needles as stickers that would infuse the vaccine for a child?" And so that's what happens when you put bright and diverse minds together. You come up with solutions that would've never existed before. So, that's why we do it.
Josh King:
I think we referenced a little bit of this in the first half of the show, but you've helped, I think, over 450 companies secure over $11.5 billion in financing, and nearly all are still in business, including 14 of those companies, which have now gone public. What does a JLAB success story look like?
Melinda Richter:
So, my favorite story is a story of these two young guys who wanted to start a company. They lived in San Diego, worked for a mid-tier, mid-size, biotech company. And they'd always thought the best way to make a difference for patients was to start a committee about who were they? They were just ordinary Joes. In fact, the CEO's name is Joe. And so, for many years, they thought about it until JLABS came to town. They started going to the programs and started building up their confidence that they could do it too. And so with $50,000 saved between the two of them, they quit their jobs and applied to JLABS. Now, they were working on RNAi technology, which was not a platform we were interested in. They were going after rare diseases, which wasn't a strategic area of interest. But we were so excited about their passion to make a difference for patients. We accepted them. We did a research collaboration with them, not to progress the science, but to be a big company that validated the data that they generated, if they did have it, so that they could get financing, which they did. They ended up getting $13 million.
Melinda Richter:
And then I put them in front of our R and D heads to tell their story. And suddenly our infectious disease vaccine group said, "Oh my God, this is the technology we've been looking for, for hepatitis B, one of the 10 deadliest, most debilitating diseases in the world." And so then we did a multiple hundred-million-dollar deal with them. And then they came to us and said, "We still want to do rare diseases. Can you help us?" So we helped them figure out which market to get into and which companies were interested in it. And soon they did a $1.6 billion deal with Ultragenyx, and they did over $2 billion worth of deals from the time they quit their jobs.
Josh King:
From $50,000?
Melinda Richter:
From $50,000 to more than $2 billion worth of deals in two and a half years. That's tech time and life sciences.
Josh King:
And where are they now?
Melinda Richter:
Now they're at a public company. They're still in San Diego. They're going after many different disease states. They've got multiple collaborations. They've grown significantly. They're a huge success story. They're going to make a difference, not just in the industry, but for patients all over the world.
Josh King:
And what are they called now?
Melinda Richter:
Arcturus.
Josh King:
Arcturus is the story of a perfect example of what JLABS does from $50,000 to going public. And here at the New York Stock Exchange, we've been vocal about the barriers to going public for small companies. What are you hearing on the ground, working with hundreds of these startups different than Arcturus?
Melinda Richter:
They don't see it as accessible for them, and they don't see it as... Again, people feel like, "Oh, that's somebody else. That's not me." And we want it to seem accessible, and we want to bring them here. We want them to feel like this could be you too. Everybody thinks they're an ordinary Joe, and we want them to feel like they're extraordinary. And I promise you, if we make them feel extraordinary, they're going to bring solutions to all of us that we need when we need them. So I think going public has obviously been a big thing over the past couple years. It's been going very well for many individuals. Now we need to democratize that a little bit, make it more of a reachable dream for all these entrepreneurs.
Josh King:
And some of those dreams may be coming true a little south of here in Philadelphia. For a life science startup to get off the ground, it takes far less than the millions needed to scale up. You recently announced a Philadelphia JPOD, including $30,000 in grants and a residency at Pennovation, the U Penn innovation hub. How does JPOD differ from a JLAB?
Melinda Richter:
Yeah, JPOD is a little pop-up JLAB. So it's everything but the labs. And so there are many great organizations around the world that already have labs or incubators or world-class research in academic institutions or even in hospitals. And so we want to have little pop-up JLABS in there, so the talent within those organizations can quickly access educational programs, networking events, funders, and again, J Pals, so that they can move their technology forward. So, that's what we're doing in Philadelphia. We've seen incredible science and technology there already that's blown our doors off. The talent there is rich and it's ambitious. It wants to make a difference. So we want to be there and help them get to the people who need them.
Josh King:
The Biomedical Advanced Research and Development Authority, we sometimes know it as BARTA, and JLABS just announced the re-imagining respiratory protection QuickFire Challenge. The challenge calls upon innovators to revolutionize respiratory protection, to submit novel ideas to better protect against the inhalation of harmful infectious agents. What breakthrough is this challenge looking for?
Melinda Richter:
So listen, if you don't know the BARTA organization, it's our counter-terrorism group for the United States. It's out of the Department of Defense. They have the DARPA group that does a lot of innovation for the military, that ends up becoming part of civilian use, like the internet. And BARTA is a counter-terrorism unit where they're trying to help prevent us against biological, chemical, or radiological attacks. An incredibly important organization for all of us. And they have big dreams, right?
Melinda Richter:
So they're in a whole new phase. Their leader, Rick Bright, is phenomenal to listen to, if you ever get a chance to hear him. He's saying, "Listen, we've done really well over the past 15 years. We've brought 30 new vaccines through regulatory approval, and they're all sitting in warehouses, and that's really exciting. And yet, will they get to the people at the time that they need them if one of these attacks happen?" Not really at this stage. We need to change the entire healthcare system so, again, it's more accessible; they're at a minute's notice when we need it.
Melinda Richter:
And one of the things that we need to reinvent is something as basic as the respiratory mask. The most accessible respiratory mask is that little white thing that you put over your face. That's only built for adults. That hasn't evolved in its design since it started. How do we create something that everybody has, that's custom fit for them, that has technology to it that can detect things as they come in? Or it might even be something that we then position within the human body that can scrub anything that's dangerous out before it even gets in? So we want people to be incredibly creative about how we can solve this problem, so that if an attack happens, we can protect every citizen here.
Josh King:
So, from those initial J & J products that we all grew up with, to some of the things that we've been talking about before, you might think that the company that we know for bandaids and baby shampoo is now really becoming a digital healthcare company. Is that the story of J & J's future through work that JLABS is doing?
Melinda Richter:
Yeah. So I would say that we're looking for innovation that you would see in Mission Impossible or a Star Trek. I mean, that's what we're going for. That's why we want to change the industry. So it's not just about bandaids and the old healthcare system as you knew it or as we know it. And one of those elements is digital health technologies or technologies that enable every part of the system to work. It's something that allows us to, again, democratize the healthcare system, make it more accessible, make it more affordable, from how do you receive your care? Can you call up your care, do it through Skype versus having to go into the office? It also is about how do we look at making drug discovery much more efficient? How can we come through biology to find those targets within a second, as opposed to needing years and years? Or how do we create this robotic surgery so that we could do surgery from Boston or Silicon Valley in Africa? These innovations will completely transform the industry. And we want to be a part of helping to elevate it.
Melinda Richter:
And listen, tech people have been coming into the industry in droves, and that's fantastic. And they need some of the infrastructure and insights and resources that a big company like J & J has to understand what are the regulatory issues? What's the environment like in a hospital? How do we get electronic records that has everybody's information at our own fingertips, so we own it? We can give it to the people we want to give it to, that we can do analytics on it, all of that stuff. We need to help those entrepreneurs, whether tech people coming into the life science industry or life science people coming into the tech industry, so that they can be better equipped to land their ship.
Josh King:
I follow you on Twitter, Melinda, so I'm conscious of how quickly you find yourself jetting around the globe to the various JLABS sites and other events that you're speaking at. But how do folks stay closer to what JLABS is doing? And in general, how do you apply to become a JLABS resident company?
Melinda Richter:
Definitely follow us on Twitter and Facebook and Instagram, whether it's myself or my team or J labs, we're out there a lot. We've realized we're in a whole new generation of talent. And so we even trying to transform how we reach people. And then, you know, if you're interested in applying, you can and certainly go to the website or reach out to some of the local people in your region. All we're looking for is for you to tell us what unmet need are you going after? How is your science and technology going to solve that problem? And who are the people that are doing it?
Melinda Richter:
And listen, we get the whole serial scientific founder entrepreneur who's been there and done that, and that's like gold. And we love them and absolutely check mark. And we love that rockstar new group of people that have never done it before, but they're so passionate about what they want to do, and they're driven, and they're ready to walk through every single wall that it takes to make it happen. Because that's what it takes. At the end of the day, you've got to be willing to break down every hurdle that comes up in front of you. And the only way you can do that is if you are so passionate about what you want to do. And we want those people too.
Josh King:
Let's go find some of those people to walk through walls.
Melinda Richter:
Yeah. Walk through walls.
Josh King:
Melinda Richter, thank you so much for joining us on the ICE House today.
Melinda Richter:
My pleasure.
Josh King:
That's our conversation for this week. Our guest was Melinda Richter, the global head of Johnson & Johnson Innovation's JLABS. If you like what you heard, please rate us on iTunes, so other folks know where to find us. And if you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet us @NYSE. Our show is produced by Pete Ash and Ian Wolf, with production assistance from Ken Abel and Stephen Portner. I'm Josh King, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties expressed or implied as to the accuracy or completeness of the information, and do not sponsor, approve or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell or solicitation of an offer to buy any security or recommendation of any security or trading property.
