0:00:01 - David Williams
Today's guest has run a country music record label and has a movie script in production, so he's just the right person to run a cell therapy and regenerative medicine company, right?
0:00:11 - Pete O'Heeron
That's right yeah.
0:00:22 - David Williams
Hi everyone. I'm David Williams, president of strategy consulting firm Health Business Group and host of the Health Biz Podcast, a weekly show where I interview top healthcare leaders about their lives and careers. My guest today is Pete O'Heeron, ceo of FibroBiologics, which is developing cell therapies and regenerative medicines to tackle serious chronic diseases. If you like the show, please subscribe and leave a review. Pete, welcome to the Health Biz Podcast.
0:00:46 - Pete O'Heeron
Thank you, david, thanks for having me.
0:00:48 - David Williams
Well, we're going to talk about, you know, regenerative medicine, cell therapy, all that fun stuff. But I'd love to hear a little bit more before we do that, about kind of where you come from, your background. What was your childhood like? Any childhood influences that have stuck with you throughout your career?
0:01:03 - Pete O'Heeron
Oh, that's a great question. Well, I grew up just south of Houston in a little small town called Lake Jackson, which is a magical little town. It has produced nine major league players. I think we had two stoplights 13,000 people, nine major league baseball players. Selena the Tejano singer was from there. Rand Paul Senator Rand Paul I went to high school with him. The pacemaker was invented in Lake Jackson, saran wrap was invented there. The Ziploc bag was invented there. It's probably the most innovative small town in America. When I was growing up and then I grew up in a medical family, my grandfather was the first urologist in Houston. He brought kidney dialysis to Houston in the early 50s, late 40s and early 50s. After he fought in World War II he brought it from Dallas. The headlines of the paper said that Dr O'Hare brings a human washing machine to Houston. So I am steeped in medicine. It's all I ever wanted to do.
0:02:09 - David Williams
That's pretty cool. Now, why was there so much innovation going on in this town? Was it just sort of by chance? Or was there something in the water or something in the schools, or what?
0:02:20 - Pete O'Heeron
I think. Well, there was a lot of engineers chemical engineers, mechanical engineers at Dow Chemical, which is kind of the we called it Daddy Dow, and there were. So you had the engineers but you also had the operators, and my grandfather was a boiler maker, so you had these different levels of kind of work product that they produced, but everyone the houses, were all the same. There was not any visible economic difference. That's, my theory is that you didn't grow up thinking you had a particular box you had to fit in, that everybody was kind of in the same boat and it was in the 60s and 70s and a little bit different time. But it's really special. Occasionally I will go on Facebook and put down the list of all the special people that have come from there. The CEO from Bayer, the new CEO, bill Anderson, was a couple of years behind me in high school. The former general manager for the Utah Jazz, dennis Lindsey, is a couple of years behind me in high school. So it's a really unusual, great place to grow up.
0:03:34 - David Williams
Now that sounds good. I ask different guests where they're from and what they're like, and I had somebody who grew up in India tell me he was from a small town in India and I said what is the size of a small town in India? He said half a million people. Tell me he was from a small town in India and I said what is the size of a small town in India? He said half a million people. So so anyway, that was, that was. That was a good, a good calibration, all right. So then for school, I saw you went to Texas state. Did you do science there?
0:03:59 - Pete O'Heeron
I went to Texas state in San Marcos for my undergraduate in hospital administration and then moved on to University of Houston for my graduate degree in hospital administration.
0:04:13 - David Williams
And that was sort of clear that you wanted to do those, you know to do those programs and to be in that neighborhood.
0:04:21 - Pete O'Heeron
Well, I started out pre-med and back then it took a 3.75 GPA to get in medical school. If you had a 3.5, your plan B would be to go to Grenada and Grenada had a medical school with full reciprocity back into the US. So I went into biology class one day and the professor said raise your hand if your plan B is Grenada. And half the class raised their hand. He said move on to plan C, because President Reagan invaded Grenada today and that's no longer an option.
0:04:53 - David Williams
I was going to say you could either go to Grenada as your plan B for that or you could just enlist and get college paid for. But yeah, I think that was a brief occupation, but yes, that was something. So that's how.
0:05:04 - Pete O'Heeron
I ended up. So I went, what any college student would do. I grabbed a six pack of beer with my buddy and we sat in his pool, his apartment complex, and said we got to find a new major. Yeah. And the buddy came by and said how about hospital administration? And I didn't even know that that was a degree plan. And when I got into it I don't think I ever made another B in my major. I was at home. At that point I knew that's exactly what I wanted to do.
0:05:30 - David Williams
That's good if you get into something a little bit haphazardly, but you were next to it. You just didn't know that it necessarily existed.
0:05:38 - Pete O'Heeron
Right right and I loved it. It was a fantastic, great broad training. I like to say if you have a graduate degree in hospital administration, you can do virtually any job in America. Really great training.
0:05:52 - David Williams
So I'm hearing like a relatively straightforward path. Right Grew up in an innovative place, medical family went to school nearby, just made your medical capital. You shifted into hospital administration. A lot of things on your resume sort of say you know healthcare. But I also heard this part about you know country music and movies and all that like. Is that just like a recent thing, or was that part of the plan B and a half at the time?
0:06:17 - Pete O'Heeron
Well, you know, I didn't know. I was kind of the music guy growing up so I was the one trying to introduce all my classmates to the newest band. I brought Van Halen album to school in seventh grade to show it around, you know, when they first came out. So I was always that guy but I never considered country music. But I'd sold a company and they had me on a two year non-compete and really looking for something to get into compete and really looking for something to get into. And a relative of mine was a singer and I said I don't know, even know what this means, but you want to go to Nashville and cut a demo. She said what does that mean? And I said I have absolutely no idea, but it sounds great when I say it. So 14 years later I had a record label. Not 14 years later, but two years after that we formed a record label and I had a record label on Music Row in Nashville for 13, 14 years. It was a great run. We really enjoyed it.
0:07:14 - David Williams
You know there's a lot of negative things about non-competes and not the Reagan administration, but the Biden administration is trying to do away with them. But I have heard, you know, from entrepreneurs who've been in something that heads down on it and they can't imagine doing something else. They're actually like really being forced, like you're not allowed, you're gonna have to give up your fortune. If you do that and really look at something else, not enough of them actually take the type of path that you described, something totally different, but they really might have, you know, really might scratch an itch.
0:07:42 - Pete O'Heeron
Right. Well, you know, we we had cut a few songs. And then, uh, we're trying to meet with attorneys and they would just wouldn't meet with us, because I guess a lot of people try to get attorneys to pitch their artists for them. And I found one attorney and he was actually Faith Hill's attorney at the time and I said, uh, what do we do? And he said I love the music. What we'll do is we'll shop her around. If she gets a record deal, you're in the game, yeah. And I said, well, that was easy, how long does that take? And he said, well, I have a client who's cleaning homes right now and she's been signed to a major for seven years and I said they, what do they do?
just sit on the bench. And he said they sit on the bench until they're ready to jump, until they're ready to put them in the game. And I said what if we start our own label? And he said you might be ahead of the game, but you know, you certainly have more control over it. So we started that process, had no idea the politics involved in getting music played and all of that, so we kind of went, went a little blindly into it, but really enjoyed the studio time and all the people we've met in Nashville and at radio. It's just been. It was a really great. And then in 2019, when we saw the explosion of Discovery and Fiber Blast, I just told Nashville I'm sorry, yeah. Yeah, I love what we're doing, but there's too much at stake here and there's too many people to cure. We've got to wind down that label. So that's what we did.
0:09:11 - David Williams
Yeah, all right, well, sounds like a good story. So back to health care a little bit here. So I saw you were at Christus, which is a big health care system. Neosurge Fibrogenesis were a few that I saw there. Give me a couple of highlights before we talk about fibrobiologics.
0:09:27 - Pete O'Heeron
So I was at Christmas. That's where I did my hospital administration. I had a great run there. It was a multi-billion dollar hospital system owned by nuns from Ireland, believe it or not. So I remember my first day there. My mentor said Pete, do you have a problem working for women? And I said I don't think so. I don't think I've ever even thought about that, but I don't think I do. And he said great, today you work for 363 of them.
0:09:52 - David Williams
They're all dones.
0:09:54 - Pete O'Heeron
And so I did that. And then I was working on a project and a gentleman showed up with an instrument that he had talked to some doctors about and they said that he didn't know where to go from there. And they said you should go take it to Pete and see what he thinks. And so I launched into product development back in 1996, I guess it was and that was my real home. I mean, I loved hospital administration.
But product development, innovation, inventing commercialization, inventing commercialization, that was it was a kind of a winding road to get to that point, but that was the real place I was supposed to be. All along was in that area. So we developed a line of surgical instruments and we showed them to every venture capitalist in the country and said we invented the best surgical system in the world. And all 100 of them said no, you didn't. Well, 25 patents later we returned 950% to those shareholders and went back to those VCs and we thanked them for their guidance and told them what we'd done. And they all said well, we're check writers whatever you do. And I said we just deal with individual angels and surgeons. We love that group, they're natural inventors, they have great deal flow.
And so we launched into fibrogenesis French neurosurgeon, wife's French dermatologist. They had this idea that you could take a dermal fibroblast, a skin cell, and if you applied pressure to it in a low oxygen environment it would turn into a chondrocyte or cartilage type cell and you could regrow the disc. So I loved it. I mean, everything we'd kind of worked on in the past were improved technologies, but this one was a game changer. So that's what started us down the pathway of working with fibroblasts. We were the first company. We're still the only one that I know of working on it.
0:11:46 - David Williams
Well, you more or less answered my question about what are fibroblast cell-based therapies, and it sounds like there's a whole range of therapies that can come out of this approach.
0:11:57 - Pete O'Heeron
So they are, you know I guess I would explain it kind of stem cell 2.0. There's two cells in the human body that you can use to regenerate tissue and cure chronic disease. There's a stem cell which everybody's heard about and there's a fibroblast which almost nobody's heard about. The irony is that fibroblasts outnumber stem cells 5,001. They're the most common cell in the human body and they outperform stem cells. They're more potent, they're easier to harvest, easier to grow, they are lower cost than stem cells. And when I explain that, people inevitably say well, if they're so good, why don't we know about them?
And my theory on that is that stem cells won the Nobel Prize in 2012 when Dr Yamanaka in Japan created the first induced pluripotent stem cell. That is, to take one cell type and turn it into another cell type. The second irony of the story is he used a fibroblast to do that. So fibroblasts are really what created the stem cell revolution. Then, after that, jim Allison in Houston won the Nobel Prize for Immunotherapy for Cancer. You saw that was a hot button product for years after that. And then, most recently, jennifer Doudna and Emanuela Charpentier won for CRISPR. So you can see the kind of the trend is who's ever been highlighted by that Nobel Prize. They get a lot of oxygen, a lot of investment, and so while everybody 30 plus companies were running off and developing stem cells, we were discovering fibroblasts had much more potential, virtually an explosion of discovery. We were at one point filing two to three patents a week on these discoveries.
0:13:40 - David Williams
So, pete, all these people that won these Nobel prizes, they're all from your town. Also, I take it.
0:13:45 - Pete O'Heeron
No, they are not, but we would love to have them.
0:13:49 - David Williams
Yeah, sounds good. All right, so you've got all these patents, all this approach, and fibroblasts can do all sorts of things. You've got some very interesting indications that you're going after. I saw on your website it looks like MS, wound healing, cancer, anti-aging. If I pick those out, right, what is the logic behind the ones that you're going after, and are those the ones?
0:14:12 - Pete O'Heeron
Well, wound care is. We used a human dermal fibroblast, so wound care seems like a natural progression of that and we're seeing great results in that it heals in half the time compared to the leading wound care product on the market, which is really exciting. We gave a presentation on that this morning. Our multiple sclerosis we've done a small safety trial on humans and while it was only five patients, we stopped the progression of multiple sclerosis in all five patients, so that's really exciting for us. We're also working in degenerative disease and orthopedics, which is kind of where we started. We also have psoriasis coming up. We're launching our cancer preclinical work this summer. And then thymic involution is an area that is really exciting, a little bit exotic.
The thymus gland sits right below your breastplate. That's the teaching center for the immune system. So you've heard of T cells. Those are thymus cells. As the thymus gets older, or as the human gets older, and when they get in their 50s, 60s and ultimately 70s, the thymus gland starts shutting down through a process called involution. It's almost non-functioning in your 70s, so you don't have more cancer in your 70s than you had in your 40s. Is that your thymus gland stops teaching the immune system. So we had an idea a number of years ago to regenerate that thymus gland, to take it back to when it was younger and to re-energize it, Because I can't think of anything that could lead to extension of human life more complete than a fully functioning immune system. So we're working in that area and we're seeing some really exciting preclinical data.
0:15:57 - David Williams
So where do these different development programs stand? It sounds like you've got some safety, some starting in, but they're giving you maybe an exciting glimpse into what the efficacy could look like. Where do things stand?
0:16:10 - Pete O'Heeron
So we'll be starting our diabetic foot ulcer trial in January, followed by multiple sclerosis, and then right after that you'll see degenerative disc disease and then by the time we finish that, we should have all of our preclinical work done for psoriasis and we should have a pretty good pathway for cancer at that time.
0:16:33 - David Williams
What would you imagine, sort of looking ahead, what's your plan for how you're going to do development? Would you imagine, you know, going all the way through and becoming a vertically integrated major bio tech or pharma company? Or is the objective to get some good phase two package data together and and to be able to out license?
0:16:54 - Pete O'Heeron
I think I would say we're we're proceeding towards commercialization and we would be open to any sort of partnership or collaboration that's out there. You know I saw CRISPR. You know they just received their approval for sickle cell anemia in December. Their partner on that was Vertex and they chose to partner, to roll it out through Vertex instead of starting their own sales team, and so they're doing a split with Vertex. That you know. Those are the decisions we'll have to make as we, as we come up and see what's in the best interest of the shareholders.
0:17:30 - David Williams
I saw a quote from Walter Isaacson on your website and I wasn't sure whether he was an author, whether or not he was endorsing your company explicitly or if you were drawing inspiration from him or somewhere in between.
0:17:46 - Pete O'Heeron
I'm just a big fan of his work. I just finished the Elon Musk book. He did. I finished the Jennifer Doudna book. If you haven't read those, those are great Walter Isaacson books. I'm just a big fan of his work.
0:18:02 - David Williams
You know, someone recommended the Elon Musk book to me and I read it. I partly listened to it. It's available actually on Spotify Premium, it's included within that, and so I listened to it and I read it. I partly listened to it. It's available actually on Spotify Premium, it's included within that, and so I listened to it. I listened to most of it. I read part of it and it was fascinating and gave a really very good insight into Elon Musk and he figures the guy's in the news. So much you already know about him, but there was a lot to be learned from his early upbringing and sort of how he did things. And it made some of the more recent things that he's done, especially with the like firing everybody in the supercharger team and then hiring some of them back, you know that's just part of his algorithm.
0:18:43 - Pete O'Heeron
I know, you know you hear that stuff and it's so drastic, but it works for him. The takeaway I had from the book was that if they're doing cost-cutting measures, I mean he's on the factory floor. He's saying why does that piece go there? Why does it take two people to do that? Can we do it with one? And so his single-minded obsession for cost-up management of his car is what led him to be the most successful in the world. You see, there's nobody else with electric vehicles making money. So not only are they producing the most, they're making more money than anyone else. And that was a single-minded obsessiveness with the cost structure. I just am a huge Elon Musk fan. I mean, you think about it in our lifetimes, the people that we that have come through these tremendous innovators, from Gates to Steve Jobs to Elon Musk I mean they're just. You know, it must have been what it was like when you know the, when they were developing, when Thomas Edison was developing the light bulb. I mean we're getting to watch it in real time off.
0:19:49 - David Williams
I mean, we're getting to watch it in real time. Yeah, no, it's definitely exciting. I mean, steve jobs is the one that is probably in some ways the most similar, and, and uh, isaacson wrote a book about him. Um, as well, and I'm not. I am a kind of a Tesla fan boy. I've had one for several years, uh, now it works. It works great, you know so, and it's a very low cost of ownership and uh, it's, uh, it's a very low cost of ownership and it's terrific.
0:20:09 - Pete O'Heeron
So I had a friend who asked me to ride in his, and he took his hands off the steering wheel and changed lanes at 70 miles an hour on the highway. And it's a lot of faith.
0:20:21 - David Williams
All right. So now your company actually went public through some sort of an innovative direct listing mechanism. But you know what? What is that? Why? Why is that an important way to to? Why is that important for your business?
0:20:32 - Pete O'Heeron
Well, when you're ready to start doing your human trials, you need access to capital, and it's just where you have to be if you're going to be in this space. So we looked at the different avenues available to us. We looked at SPACs and they were suffering a 95% redemption rate. It wasn't really a great option at the time. We looked at traditional IPOs. We didn't like the fact that we would have a fully underwritten IPO, take us nine months to get there and then the night before they could say well, market conditions forces us to recalibrate your valuation. So that was not attractive to us.
The other one was reversing into a public shell. Well, I mean, I've done that before. Once you reverse into a public shell, I'm sure you're going to end up with a rogue shareholder showing up with a non-dilutive agreement written on a restaurant napkin, and then you're going to have to deal with that. So that led us to the direct listing, and to me it is the best combination of all of those, because you have control over the process. You go out. When you say you're going to go out, you price it at the valuation that you agree to with the bankers and with NASDAQ. And you're not behold, go out. You price it at the valuation that you agree to with the bankers and with NASDAQ, and you're not beholden to any one particular group.
So it was a lot of work. But I think the true test of it is would you do it again? And I would do it again in exactly the same way. And there's not many of us out there. I think NASDAQ told us there's only two companies that have ever done it in Texas. One of them was a software company, the other was us. So it's a lot of work. You have to do a lot of heavy lifting yourself, yeah, but I would do it again.
0:22:20 - David Williams
Okay, and so do you think more people will copy that, or are there some other reasons not to?
0:22:24 - Pete O'Heeron
We've had a lot of phone calls. I think the limiting factor for a lot of companies in biotech is they take their original investments from venture capitalists. Yeah, and so the issue you run into is do you have enough shareholders to meet the criteria for NASDAQ? Right, so when you take it through venture capitalists and you're ready to go public, you might have 20 or 30 shareholders. Yeah, we had 400 accredited investors, so we easily met the highest level for NASDAQ and and uh. So that was a uh, a big strength for us Interesting.
0:22:57 - David Williams
Okay, so uh, pete, is there? Is there a film in your future?
0:23:06 - Pete O'Heeron
We'll see, maybe. Yeah, we've uh, we, uh, uh. I've written a couple of screenplays and one is in uh is in development.
0:23:15 - David Williams
So yeah, is it about a direct listing or some other topic?
0:23:18 - Pete O'Heeron
No, I need to. Maybe. Maybe when you find five minutes of free time, I will start one about the direct listing.
0:23:24 - David Williams
Yeah, yeah, All right. Well, we'll have to circle back on that.
0:23:27 - Pete O'Heeron
Now question I ask for all my guests although I feel we sort of wandered into this topic already is if you've read any good books lately, if there's anything you would recommend for our audience. You know what, david? I listen to so many books a year. My most recent one I'm on right now. If you're a music fan, I'm listening to the autobiography of Geddy Lee about Rush, which is fascinating. It's a really long book but it's great. I did the Cabeza de Vaca. One of the conquistadors who landed in Florida, came in with just a really crazy Odyssey story over a decade and ended up in. Maybe it was four years, but he ended up in California, came through Galveston, was enslaved, escaped, re-enslaved, allowed himself to be enslaved another time and ended up in California. So that is a fantastic book. Of course, I read all the biographies I can get my hands on. Jim Johnson and Oscar Munoz from United Airlines was a great one. And then everything that Walter Isaacson comes out with Excellent. Always have something queued up.
0:24:40 - David Williams
No, that sounds good. Well, pete O'Heeron, ceo of FibroBiologics, and a whole lot more. Thanks for joining me today on the Health Biz Podcast.
0:24:50 - Pete O'Heeron
Thank you for having me Appreciate it.
0:24:53 - David Williams
You've been listening to the Health Biz Podcast with me, david Williams, president of Health Business Group. I conduct in-depth interviews with leaders in healthcare, business and policy. If you like what you hear, go ahead and subscribe on your favorite service. While you're at it, go ahead and subscribe on your second and third favorite services as well. There's more good stuff to come and you won't want to miss an episode. If your organization is seeking strategy consulting services in healthcare, check out our website, healthbusinessgroup.com.