Clint Betts

David, thank you so much for joining us. Seriously, it means a lot. I know you're super busy. You've got a lot going on. Even recently, there's been a lot of news around Valisure. I wonder if maybe we start with what the company is, how you got involved, how you got to where you are today in the role that you're in, and kind of the interesting, I mean, you're in a really interesting field right now that seems to be evolving and changing pretty rapidly. Would love to just give us an overview, a background.

David Light

Sure. Happy to, and thanks for having me today. Really high level, Valisure does independent quality assurance in the pharmaceutical space. And we do that by independently checking the chemical quality of pharmacy products like prescription drugs and over the counter medicines. And we've been very impactful in doing that in the last few years, and I think it's a lot of assumptions that it's already being done or that the FDA is out there checking everything, and a lot of people don't realize that FDA approval does not mean that they're actually checking the chemistry of those bottles of those medicines. It means that they've reviewed the paperwork, that they're inspecting the facilities sometimes, and with most products being made overseas, it raises a lot of concern over who's independently looking at this quality question and not only relying on the self-reporting of the industry and these kinds of inspections that happen. And so we fill that gap by doing not only independent testing but independently certifying chemical quality of these products and we're doing it more and more for large purchasers and health systems like Kaiser Permanente, the military health system, and others.

Clint Betts

How did you know that there was this gap in the industry to do this?

David Light

So the whole genesis of Valisure really started with a good friend of mine who saw these problems firsthand. A friend from college named Adam and he called me up one day a few years ago and basically let me know of, hey, he's been on an anticonvulsant medication for many years, and every once in a while he refills his medication and just feels terrible that month, has all these side effects and relapses sometimes. And he talks to his doctors and his doctors told him there's variability in medications and there's not just a whole lot that the doctors can do about it. It just is what it is, and especially with generics that are over 90% of what Americans take every day. There's a very complex supply chain and no independent quality assurance. So he obviously didn't like that answer and came to me. I'm a molecular biologist by training. And we really started putting our heads together and had that aha moment of, wait a minute, there's no JD Power and Associates like there is for cars or Consumer Reports for consumer products.

You know, we're so used to these independent reviews and metrics of quality. Anything you buy on Amazon or online, you're looking at the star ratings. You're looking at all sorts of elements of quality for not only what you buy, but certainly what we put into our bodies. You know, how many labels are there on our food and, you know, how much do you investigate on all those components? But yet the magical tablet or pill that you're relying on for really important elements of healthcare is entirely unknown. It just comes in an orange bottle and maybe there's a number printed on it. So that's really how it all started and we realized that we can apply some advanced chemical analytics to it.

We developed some of our own technologies and layered on a lot of industry standard approaches, got an ISO accredited laboratory, the International Organization for Standardization, very similar to how Europe builds out independent laboratories, and we were the first ones in the United States to actually do this and do it independently and looking at lots of pharmaceutical products and finding problems, unfortunately, left and right, that's had a lot of impact. But I think it has also been very impactful to find ways to implement this in the supply chain, add quality as part of purchasing decisions, part of contracting requirements, and more and more really influence the entire industry and supply chain to value quality.

Clint Betts

You said something really interesting before where you said the FDA does not check the chemical makeup. Is that what you're saying, the ingredients of these drugs?

David Light

Right. They're going to review the manufacturer's data, and that's typically what they do when they go and inspect a facility in the United States. It's typically every two years. When it's in most facilities in India and China, often every five years or more, especially since COVID, has been quite backlogged. These overseas facilities often get a few months of heads up before they even come in. And yet there are many facility inspections after many facility inspections fail after all of this background. So it's definitely concerning in and of itself, and yes to the point of testing. The testing on the vast, vast majority of all testing is being done by the manufacturers, then self-reported to the FDA. The FDA does test a few dozen products on the market per year, but that's a tiny fraction of obviously the quality assurance.

Clint Betts

That's fascinating. You also brought up something that made me want to follow up on generic drugs and should consumers be concerned about generic drugs and whether they're being tested the right way. And I know if Valisure has tested them, then they're great, but what is your take on generic drugs? Because obviously they're way cheap and accessible compared to the name brand version of the drug. What is your take on that? How is all that possible? I actually don't know.

David Light

Yeah. So it's a great question and I think it's actually really important to underscore that we look at the pharmaceutical supply chain and the chemical quality of product agnostic to is it a brand or a generic, is it made in India, China, Europe, or the United States? You can have a serious quality problem in the United States. You can have a very high quality product being made in China. And same for generic or brand, we famously found issues with products like Ranitidine, an antacid drug, but we saw the same problem in the brand as we did in the generics. So that said, generics are the vast majority of what people take. The fact that they also change around a lot constantly with how pharmacy purchasing works, which generally only looks at price. And so if you've noticed as a consumer, as a patient, that the color and the shape changes around because changing from manufacturer to manufacturer often just chasing the lowest possible price.And so that is generally concerning that quality isn't being factored into those decisions.

And I think we really see our opportunity here as adding more trust into generics, adding more trust for those that are infusing quality into their practices and doing it in an independent fashion, which is in addition to what the FDA requires, in addition to the regulatory practice. And we do not do any regulatory work. We don't do any good manufacturing practice type of analysis or incorporate those kinds of systems with an accredited facility to ISO, but it is really important that it is independent and additional to the existing framework of quality. And that's really important to add to generics and to brand. But I think a lot of people have those concerns more inherently on the generics.

The fact that they see it changing often, the fact that they are heavily located overseas, the manufacturing facilities, and I am a scientist. The molecule doesn't know where it was made, doesn't know how it was packaged, and the important part is to look at the chemistry of it, the objective chemical quality and give patients and give the big purchasers that are really making a lot of the decisions on which many factors and which versions of these drugs are they keeping in their own pharmacies and their own formularies have that kind of quality assurance and that kind of confidence that they're picking the highest quality products for their patients and for their health systems.

Clint Betts

You said something before where you said you have contracts with the Department of Defense and Kaiser and things like that. I wonder what your sales process is like. What are these partnerships like? How does this all come together and work?

David Light

Yeah. It takes a while.

Clint Betts

And these are big organizations.

David Light

Right. It's very different from the world of consumers. And we actually started off that way, by the way. We built out this technology and laboratory and accreditations, and we first plugged it into our own online pharmacy at a time, 2019 or so, where a lot of people were getting into value add direct to consumer pharmacy where they were really focusing on convenience value add. And we decided to focus on quality value add. And it was a great learning experience. It allowed us to really prove how important this kind of testing and quality assurance is and the fact that we're finding serious issues and can add value to patients and to the healthcare system as a whole, to public health really to plug this additional quality assurance in. But a very different sales cycle to sell an action to an individual patient than to a large existing organization.

But it's also extremely rewarding from the standpoint that you then, once you finally get to the end of that cycle and you're able to integrate into a large existing network, you're immediately impacting millions of lives. You know, it could have taken us a very long time to get to that kind of scale trying to do it one patient at a time. Whereas now we're very proud of the fact that we're able to integrate in a few of these key clients and hopefully obviously more in the future that have millions of patients already integrated, already part of their networks, and therefore able to bring that value not only to a critical organization that's critical for the growth of our company, but to millions of patients and really improve public health in a very effective manner that way.

Clint Betts

There have been a number of news stories and even Senate hearings recently around drug shortages. How is this happening? What would your solution be? What recommendation would you have? And what is your overall take on drug shortages?

David Light

Absolutely. It's unfortunately a very visible result of this lack of quality being part of the pharmaceutical supply chain, part of pharmacy and pharmacy procurement decisions. The number one reason for a drug shortage is a quality problem, and then either the manufacturer doesn't make it anymore or it's being recalled, and then if that was the only manufacturer or only one of just a few manufacturers, you end up with a drug shortage. So obviously a lot needs to be done to address the immediate effect of the drug shortage right now. And there's actually hundreds of drugs on shortage in the United States and reaching record levels, but what's been at least encouraging to see is in the press and in these Senate hearings and so on, people are really starting to not only understand, but recognize that the lack of quality and the lack of incentive for quality, the lack of even financial reward for quality, these generics especially, are so cheap that there's an immense incentive to make a product as cheap as possible. And what's an obvious way to do that? You can cut corners.

You can invest less in quality components of manufacturing and so on. And it really needs to change where the industry rewards quality and perhaps that's a healthier margin for those that are performing objective measures of quality. And really what's come out of a lot of these hearings and witnesses and is actually talked about by Senator Crapo in the recent hearing where it's saying straightforwardly, I understand that we need to do more to compensate better for quality, but who's going to determine that? Is that going to be a government organization? He at least doesn't think so, and I don't think there's a framework for that, and that could take a very long time. But there are industry-based approaches like what Beshear is working on, and actually health systems like the University of Kentucky Health System have developed their own internal quality and testing programs where they're reviewing the quality of their products.

And better integrating that into existing health systems is exactly what we need to be doing more of to prevent the drug shortages, to prevent the quality problems, to improve a marketplace that rewards quality and make it a much healthier marketplace is all a part of Beshear's focus and is a lot of what we're doing with the defense department, honestly, and the military health system and how they see this evolving over time is not only having certification requirements on quality, but having very visible and objective metrics based on chemical testing and expert panel reviews on what is a red, yellow, or a green rated product.

And then obviously trying to incentivize the purchase of green and avoiding red and incentivizing the industry to turn a red into a green. So I think there's a lot that we really can do, and it's really encouraging to hear key decision makers understanding these issues and hopefully soon some of these proofs of principles and major partners that we're all working together to have real actionable solutions that are applicable broadly throughout healthcare. I mean, a lot of what we're doing, what we're talking about, plugs into a national drug code NDCs. Anybody in the United States that touches or pays for a drug is interacting with an NDC. So I think there are very scalable ways to do this, and when we're already showing that.

Clint Betts

What does a typical day look like for you? And how do you decide what to focus on?

David Light

Probably anybody in the startup world would have a tough time answering that question. I don't think there is a typical day, to be honest with you. I've had days where there just isn't much on the calendar. I'm like, oh, great, I can relax a little bit. And those end up being the busiest days in the entire month. So a lot can certainly change from day to day. And I think honestly, that's the biggest question that certainly any startup and small company CEO has to grapple with every day, every quarter. And just in general, what do you prioritize? I think for probably most and certainly myself, there's way more to do than there is time to do it. So you're quickly in a situation of triaging time, obviously, and all sorts of resources, the team's time, money. Where do we invest? Where do we pull back?

And I think I know that the best startup advice that I ever got from a really important mentor for me, this entrepreneur, Jonathan Rothberg, was this concept of F squared, which stands for F-ing focus that wasn't exactly said like that. And it's really important and you have to try to integrate it day to day, and, you know, maybe one day there'll be a typical day and nice schedules. And, you know, I've worked at some big companies too, and you start to form that obviously over time as the business matures. But having that F squared mentality for your time on a day-to-day basis and for the company as a whole, I think is critical.

Clint Betts

F squared. I love it. I love that phrase. I'm going to use it all the time now. I wonder, so as you mentioned, what you're working on saves lives and is super critical to the way humans live on a day, I mean, a lot of people are on medications every day. Right? And making sure that those are quality and able to digest and not hurt you not be harmful is a big deal. And so I wonder because you're not selling potato chips. Right? And so I wonder what the culture of the company is, and I mean is there is this sense of mission and the employees kind of all like, hey, we are doing something meaningful here that's beyond just like a startup or again, like a consumer goods company like you were talking about earlier.

David Light

Absolutely. And I think I'm personally very fortunate. I like to think that a lot of the folks that work with us or even partnered with us have an amazing opportunity to really do good. I think that's one of the wonderful things of working in healthcare in general is, you know, you get to do really exciting work and build businesses and be innovative, but do that in a way that's going to hopefully positively impact the lives of millions of people, the lives of your own loved ones and yourself is for me, extremely meaningful. That's what really drew me to the biotech world and healthcare as a whole. And for us at Valisure, that is key. We're a very mission-driven organization. We really center around quality in everything we do, the scientific, the chemical quality of the processes and the science behind our day-to-day work, which also feeds into innovation. You can't just be stuck in one process. We're always looking to grow and improve, but impact is a key driver in our company culture, in what we spend our time and resources on.

There's for better or worse, so much to do in this space and we're true pioneers in it, I'd like to think. And so looking towards impact and improving the most lives, the most impactful processes to really improve the product quality that we look at and find even business models and partners that are most impactful to bring this to the most number of patients to best address the core issues, to really improve and address these market failures of a price driven only pharmaceutical market, and how do we most efficiently and impactfully insert that in a system that's sustainable, that can grow, that can really have the broad impact of our mission. And that's all a lot more complex than selling potato chips or a standard widget. And there's nothing wrong with that. Of course, plenty of really amazing and innovative businesses are in the widget business, but I think that's why, especially for us, innovation and impact is so important as guides and an integral part of the culture.

Clint Betts

How has the biotech industry changed since you got started? And what do you attribute to the rapid acceleration? I'm thinking about something like Project Warp Speed and the fact that a vaccine was able to be developed in under a year. Right? I don't know that that would've happened 15 years ago. I'm not sure though. What do you think? What is causing this rapid acceleration in the biotech field right now?

David Light

It's a great question, and honestly, I think for better or worse, incredible events like COVID-19 and even just the crisis we have now with drug shortages really brings to the forefront the absolute need for thinking outside the box, whether that's outside the regulatory box. And, you know, it was actually, ironically you mentioned it, Operation Warp Speed, one of the leading colonels from that product in the military, a Colonel Victor Suarez, was one of the primary advocates, and the reason that we were able to relatively quickly get a contract with the Defense Department, find ways to start to have meaningful and impactful projects and data come out that can be used by not only the military health system, but others as well, that all look outside of the box to solve these problems. And I think that it's becoming increasingly apparent even in highly regulated industries, to your point, like coming up with a vaccine, sometimes you need to look beyond the standard box, and that includes approval pathways. It includes this concept of independent quality assurance and review and certification.

And I think it really boils down to people like Colonel Suarez that think outside of the box and are willing to act on it. You need action. You need leaders that are going to go out there and spend some of that leadership capital and say that there is a box and we recognize the box, but how can we think outside of it and how can we make this a more efficient process and really address serious public health concerns that need to be addressed sooner than later, obviously still done in a responsible and scientific manner? But I totally agree that this is being looked at more and more and take some critical thinking and strong leadership to properly address it. And I think it's going to have a lot of positive impact in the future. And we're seeing it already.

Clint Betts

David, I can't thank you enough for spending some time with us, and thank you for what you do too. I mean, it's such an important company that you're leading here. We ask every guest the same question to end the interview, and that is at Ceo.com we believe the chances one gives is just as important as the chances one takes. And I wonder when you hear that, who comes to mind that gave you a chance to get you to where you are today?

David Light

Absolutely. And that's an easy one for me. So that would definitely be Dr. Jonathan Rothberg, who I actually had the pleasure of working at four of his companies. And it's been not only an amazing experience, but I think exactly that, somebody that was willing to say, hey, this guy seems to know what he's doing and really wants to work hard, and where can I plug him in to have an impact? And I think he personally took a number of chances on me, and I've always strived to live up to those chances and really embody a lot of what I learned from him, you know, putting a dent in the universe and having an impact on projects and companies that are meaningful and impactful. You know, keeping F squared in mind is really important. And also really valuing family, by the way, was something I always admired about him and how he handled his day-to-day life.

So, yeah, that's I think a really important point. And actually one of the things that I like to say is that it's not what, it's who you know that knows you know it. The network is important. But at the same time, just because somebody doesn't mean that you're the answer. You need to show that something. But building these connections and finding people like Jonathan, and obviously everybody's got their own answer to that question, that's willing to take a chance on you and give you some opportunities is really important. And getting out there and finding those folks, I think, is another important part of day-to-day work for emerging leaders every day. So yeah, just to say that I appreciate that question. Appreciate what Jonathan has done for me personally, and hope that there's many others out there willing to take some chances on folks that want to make a difference.

Clint Betts

David, thank you again for joining us. Seriously, it means a lot. Really appreciate it. Have a Happy Holidays.

David Light

To you as well, and a Happy New Year. Thank you so much.