Former Allogene CFO Eric Schmidt talks about his new role at Cantor and the future of cell therapies

Cantor Fitzgerald announced on Tuesday that Eric Schmidt and Josh Schimmer are joining its biotech research group.

Josh Schimmer

Schimmer is a former senior managing director of Evercore ISI’s biotech research team, while Schmidt was most recently the chief financial officer at cell therapy company Allogene. Prior to Allogene, Schmidt spent 20 years as an analyst at Cowen.

Endpoints chatted briefly over Zoom with Schmidt about Cantor’s biotech equity research and the future of cell and gene therapy.

This interview has been edited substantially for length and clarity.

Lei Lei Wu: Can you give us a sense of what you’re planning at Cantor?

Eric Schmidt: Cantor’s probably historically known for their trading platforms. Over the last five or so years, Cantor has been building out its healthcare practice, both in banking — where they’ve made a number of hires and are continuing to make a number of hires — and also research. There’s a fairly large team here writing on the industry. The team has been a little bit younger in their career, and what Josh and I hope to do better is to create a little more consistency of product.

But we aspire to do something big. Josh and I — we’ve been doing this for a long time. And this, in many ways, is probably going to be our legacy. We want to build something that’s absolutely world-class, differentiated and innovative in a way that other investment banks aren’t doing right now.

Wu: When you say what other firms aren’t doing — what aren’t they doing?

Schmidt: I don’t think they’re working as a team. If you think about Wall Street, there’s this star culture. Josh and I, we’re from time to time viewed as star analysts, whether it’s in the polls or any other sort of reward mechanism that you see on Wall Street.

And the star culture really incentivizes more of a pyramid scheme. You have a top dog analyst who’s supported by a number of juniors. In some cases, our colleagues have very large teams, a support structure that reports up to a single individual.

What we want at Cantor is a very flat structure where we have a lot of analysts — all of whom are very senior — each of whom has an area of expertise. None too worried about prizes, or awards or recognition personally, but all trying to create a spotless brand.

Wu: I cover cell and gene therapy at Endpoints. And I think one of the questions that we’re always running into is the high cost of these treatments and how they can become profitable. I’m curious about your perspective on that.

Schmidt: That’s something that Allogene and others in the allogeneic space are very mindful of, and I think the key is scalability. When you’re making an autologous product, when a single patient requires a single — or even sometimes multiple manufacturing runs — to produce a product, there is no economy of scale. You’re just going to be stuck with high cost of goods, and that’s going to require high price tags.

But if you can make a product at scale, as you can do with an off-the-shelf product like an allogeneic T cell therapy, in that case, you have the ability to create a much-reduced cost of manufactured products and potentially price at a lower price point. But it remains to be seen how companies will actually price their products.

Wu: Aside from cost in the cell and gene therapy space, what are some other major trends or issues that we should be paying attention to?

Well, the ideal product has yet to be defined, right? When you have a technology like gene therapy or gene editing, there are so many attributes that you can dial into or design into your product. And I think we’re still learning. We have this whole panoply of the human genome that we can edit in or edit out. And there’s almost an infinite number of combinations that you can create.

I’m sure that there will be major advances. There’s no doubt that when you have such an open landscape and so many different things you can design, there are going to be some major advances in terms of efficacy and safety beyond what we’re seeing today in a clinic.

The other question is manufacturing. These are living organisms, right? These are live cells that, for the first time, are being put into patients as medicines, and nobody can adequately characterize and reproducibly manufacture the same cell twice. It’s not possible.

Controlling as much as you can from a manufacturing standpoint and investing in all the tools and technologies that will enable these companies to quality-control their product is going to be critical. There’s a long way to go before we fully understand all the components of manufacturing that need to be controlled and addressed. It’s a little bit of a Wild West right now.

manufacturing
cell therapy
gene therapy
gene editing
biotech
healthcare
trading