WEBVTT - Merck Makes Splash with Prometheus Acquisition 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.120 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:21.720 --> 0:00:25.280 So global MNA activity is gearing up for a spring renaissance, 0:00:25.320 --> 0:00:28.440 with more than twenty billion of potential transactions emerging since 0:00:28.480 --> 0:00:31.360 the weekend, the latest charge being led by merk which 0:00:31.440 --> 0:00:35.240 agreed yesterday to buy Prometheus Biosciences for about ten point 0:00:35.240 --> 0:00:37.640 eight billion works out to about two hundred in cash, 0:00:37.960 --> 0:00:40.440 continuing a theme of large biotechs looking for ways to 0:00:40.479 --> 0:00:44.720 boost pipelines and portfolios of new drugs. It's an old story, 0:00:44.760 --> 0:00:47.200 We've seen this before. It is also the latest boost 0:00:47.240 --> 0:00:49.600 for deal makers in healthcare, which is one of the 0:00:49.600 --> 0:00:51.000 few sectors justice to fight. 0:00:51.000 --> 0:00:51.720 The global slump. 0:00:51.720 --> 0:00:52.159 At M and A. 0:00:52.200 --> 0:00:53.760 We are seeing activity here. 0:00:53.760 --> 0:00:55.880 And with more on that, we do have Sam Fazelli, 0:00:55.920 --> 0:00:59.920 who's the senior pharmaceutical analyst at Bloomberg Intelligence on Zoo 0:01:00.440 --> 0:01:05.080 from London and Sam, I'm looking at shares of Prometheus Biosciences. 0:01:05.080 --> 0:01:08.480 That's tickersible. Rx DX is about seventy percent on peace 0:01:08.520 --> 0:01:12.919 Sport's best day since early December. Breakdown this deal for us. 0:01:14.200 --> 0:01:18.280 Yeah, Hi, So basically what we've got is merk is 0:01:18.360 --> 0:01:22.240 going after a drug that has shown which is the 0:01:22.360 --> 0:01:26.960 key asset that Prometheus has, that has shown very good 0:01:26.959 --> 0:01:32.839 at efficacy, accepting that his cross trial comparisons or either 0:01:32.880 --> 0:01:35.000 not being competitive to head, it seems to be the 0:01:35.040 --> 0:01:39.000 best efficacy that we've seen so far in treating inflammatory 0:01:39.000 --> 0:01:41.920 bowel disease, and that's a big market. 0:01:42.520 --> 0:01:45.200 J and J alone has a drug called Stellara. 0:01:44.760 --> 0:01:47.600 Where of course it's used in other indications too, and 0:01:47.680 --> 0:01:50.640 that could be the same for Prometheus's drug is doing 0:01:50.720 --> 0:01:52.160 close to ten billion. 0:01:51.840 --> 0:01:55.560 Dollars expectation this year. So you know, then when you put. 0:01:55.360 --> 0:01:57.560 That into context, ten point eighty billion dollars doesn't stand 0:01:57.600 --> 0:02:01.160 like a lot at least from this basic assessment. But 0:02:01.200 --> 0:02:04.320 of course commercial dynamics could be very different when this 0:02:04.400 --> 0:02:06.280 drug comes to market in twenty twenty six. 0:02:06.360 --> 0:02:08.040 Yeah, I'm just going to say, right, that's a few 0:02:08.120 --> 0:02:10.680 years from now, and you know better than most sam 0:02:10.680 --> 0:02:14.880 about the you know, drug trial process. You know there 0:02:14.880 --> 0:02:18.000 could be some stumbling blocks. So but you would assume 0:02:18.880 --> 0:02:21.119 that Mark has done its homework in a big way here. 0:02:22.680 --> 0:02:25.280 Sure, but this is a this is an early stage trial. 0:02:25.400 --> 0:02:29.680 When you go into larger base three trials. 0:02:29.200 --> 0:02:32.480 Different kinds of things can surface. But I'm not necessarily 0:02:32.520 --> 0:02:33.600 worried about spiderfecks. 0:02:33.600 --> 0:02:35.399 I mean that is a risk that drug companies take 0:02:35.840 --> 0:02:37.880 day in, day out, or the efficause it doesn't pan 0:02:37.919 --> 0:02:40.160 out as well as it did in the smaller trial. 0:02:40.680 --> 0:02:43.679 What I think is interesting going to be interesting is 0:02:43.720 --> 0:02:46.080 that the same drug that I mentioned earlier, Johnson and 0:02:46.120 --> 0:02:47.040 Johnson's drug. 0:02:47.360 --> 0:02:50.440 Stillara, is going off patent imminently. 0:02:51.120 --> 0:02:54.360 So this is this peak year and in twenty twenty 0:02:54.400 --> 0:02:57.080 four it's going to be going losing. 0:02:56.960 --> 0:02:59.920 Market share to buy a similar drugs it will be cheaper. 0:03:00.240 --> 0:03:03.120 So when Mark comes to market with this drug, where 0:03:03.120 --> 0:03:06.200 will it be positioned? Will you people be forced to 0:03:06.280 --> 0:03:08.440 use the Laura first and if they fail, then they 0:03:08.520 --> 0:03:12.080 use permifew drug, which would then take longer to ramp 0:03:12.160 --> 0:03:12.680 up sales. 0:03:13.200 --> 0:03:15.640 Sam, I know MRK is really focused when it comes 0:03:15.680 --> 0:03:18.840 to oncology, but I know it's key drug, key Truda. 0:03:19.480 --> 0:03:22.040 It's estimated to bring in around forty three percent of 0:03:22.040 --> 0:03:24.519 its revenues by the end of twenty twenty four. Now, 0:03:24.680 --> 0:03:27.800 as far as the expiration is concerned, it's still wilder. 0:03:27.800 --> 0:03:29.760 But is this really a key play as far as 0:03:29.840 --> 0:03:32.000 the patent front, as far as what it can do 0:03:32.120 --> 0:03:35.440 to still boost those revenues once that patent does expire. 0:03:37.680 --> 0:03:41.320 Yeah, So the patent expires in twenty twenty eight, and 0:03:41.360 --> 0:03:42.960 we don't think that they're going to be able to 0:03:43.000 --> 0:03:43.920 push that much further. 0:03:44.000 --> 0:03:45.000 Of course, it doesn't. 0:03:44.760 --> 0:03:47.000 Expire everywhere at the same time, so it's going to 0:03:47.040 --> 0:03:51.680 be a relatively speaking, at that point, expectations are about 0:03:51.720 --> 0:03:54.480 thirty three billion dollars of sales, but we think that 0:03:54.520 --> 0:03:57.320 it could lose about seventeen over the next two years, 0:03:57.360 --> 0:04:00.000 and that's what consensus has in their expects. 0:04:00.400 --> 0:04:04.640 So will you be able to replace seventeen billion? That's 0:04:04.680 --> 0:04:05.480 a big ask. 0:04:05.600 --> 0:04:07.600 There are other drugs in this pipeline that are looking 0:04:07.640 --> 0:04:11.280 really good from previous acquisitions and this will help, but 0:04:11.440 --> 0:04:14.280 we don't think that it's going to be quite enough 0:04:14.320 --> 0:04:17.640 to make up that difference. That therefore they'll need more 0:04:17.640 --> 0:04:20.000 deals or at least more drugs coming out of their 0:04:20.040 --> 0:04:20.880 own pipeline. 0:04:20.960 --> 0:04:23.360 Hey, Sam, I mean we've seen this movie before, right, 0:04:23.440 --> 0:04:26.960 you know, the big pharmaceutical companies have drugs coming off 0:04:27.000 --> 0:04:28.560 patent and then they got to figure out how to 0:04:28.680 --> 0:04:31.440 beef up their patent pipeline. I mean, is that what 0:04:31.680 --> 0:04:34.720 is at this point once again driving so the acquisition 0:04:35.240 --> 0:04:37.560 mode if you will, among the big drug companies. 0:04:39.760 --> 0:04:41.039 Yes, it is exactly that. 0:04:41.240 --> 0:04:43.520 You know, we've got estimates of over three hundred billion 0:04:43.560 --> 0:04:48.440 dollars worth of drugs exposed to pattern the experience by 0:04:48.480 --> 0:04:49.240 twenty thirty. 0:04:49.560 --> 0:04:51.719 Now that doesn't mean that's the sales that lose, but 0:04:51.839 --> 0:04:54.520 that's a big number. Over some period of time post 0:04:54.600 --> 0:04:55.440 twenty thirty. 0:04:55.200 --> 0:04:58.440 They will lose some of those sales to competition, So 0:04:58.680 --> 0:04:59.960 they're going to have to be able to replace. 0:05:00.040 --> 0:05:01.800 Is that some people will do a better job of 0:05:01.880 --> 0:05:02.920 replacing than others. 0:05:03.320 --> 0:05:05.840 Time will tell, but they certainly need this and there's 0:05:05.880 --> 0:05:07.760 going to be more in Mana to get through this. 0:05:08.040 --> 0:05:09.960 I am also curious Sam that kind of what's on 0:05:10.000 --> 0:05:12.320 everybody's radar. We talk to various folks in the medical 0:05:12.360 --> 0:05:15.839 community and just in the innovative space and disruptive space, 0:05:15.880 --> 0:05:18.760 and they talk about the human genome and you personalized, 0:05:19.560 --> 0:05:22.080 individualized drugs, and I'm thinking, also, we're coming off the 0:05:22.080 --> 0:05:24.400 pandemic and I'm thinking about what we might need next 0:05:25.279 --> 0:05:28.279 and messenger RNA right, that led to the development of 0:05:28.279 --> 0:05:30.320 those drugs. What are some of the things that are 0:05:30.320 --> 0:05:32.279 on your radar that you think are probably on the 0:05:32.360 --> 0:05:35.279 radar of you know, a mercer, a Pfizer and others 0:05:35.320 --> 0:05:35.800 out there. 0:05:38.160 --> 0:05:40.640 Yeah, I mean there are. There's so much going on 0:05:40.680 --> 0:05:43.240 in science. Prometheus is an example of that. This is 0:05:43.279 --> 0:05:44.920 a completely new target. 0:05:45.040 --> 0:05:50.120 Being developed for this inflammatory disease, which has seen quite 0:05:50.120 --> 0:05:50.920 a lot of innovation. 0:05:51.360 --> 0:05:54.720 There are patients with psoriasis, which is pretty bad. 0:05:56.240 --> 0:06:01.320 Disorder that that see one diseaser mission or skin clearance 0:06:01.800 --> 0:06:06.960 with some of these newer drugs. So immunology is exploding. 0:06:07.000 --> 0:06:12.840 Our understanding of immunology is exploding, which frankly touches every 0:06:12.880 --> 0:06:16.200 disease that there is. And so the more in depth 0:06:16.400 --> 0:06:19.000 understanding of immunology will have, the better we'll be able 0:06:19.040 --> 0:06:22.159 to target some of these diseases. At the same time, 0:06:22.520 --> 0:06:25.960 the modalities that we can do it with are expanding 0:06:26.880 --> 0:06:31.400 protein degraders, things that can downregulate the amount of a protein. 0:06:31.080 --> 0:06:34.080 That's produced, even if it's not a standard way of 0:06:34.160 --> 0:06:39.799 doing pharmacology. So there's that element. There's the modern a vaccines, 0:06:39.839 --> 0:06:44.120 there are the gene editing technologies all targeted at trying 0:06:44.160 --> 0:06:48.159 to stall single gene diseases. 0:06:48.160 --> 0:06:52.200 Or targeting immune system disorders, which, as I said, is 0:06:52.240 --> 0:06:54.960 involved in every pretty much every disease that there is. 0:06:56.480 --> 0:06:58.880 And Sam I was curious about what you think this 0:06:59.040 --> 0:07:02.160 says about the macro and the economy as far as 0:07:02.160 --> 0:07:05.040 a sign of confidence if you have these c suite 0:07:05.040 --> 0:07:07.640 executives that want to put more money to work, and 0:07:07.680 --> 0:07:10.320 particularly obviously when we're talking about the pharmaceutical. 0:07:09.800 --> 0:07:13.000 Industry, yep. 0:07:13.120 --> 0:07:15.120 I mean, look at the end of the day, when 0:07:15.160 --> 0:07:18.920 you have that drug that's been become such a success, 0:07:19.040 --> 0:07:22.560 not just for your P and L, but also for patients. 0:07:22.600 --> 0:07:25.400 And I'm talking about Key Truder here as an example, 0:07:25.920 --> 0:07:27.200 you need to do something. 0:07:27.240 --> 0:07:28.280 You can't just sit back. 0:07:28.480 --> 0:07:32.680 And let's not forget pharmaceutical companies are not impacted by 0:07:32.680 --> 0:07:37.400 the macro environment as much as consumer stocks or tech 0:07:37.520 --> 0:07:37.840 or etc. 0:07:39.240 --> 0:07:40.160 They are less. 0:07:39.960 --> 0:07:43.840 Sensitive to interest rate rises because they're very high cash generative, 0:07:43.920 --> 0:07:47.080 highly cash generative, so they're in a position to exercise 0:07:47.200 --> 0:07:50.400 this power. And thank god, because at the end of 0:07:50.400 --> 0:07:53.200 the day, we do need the drugs that they're bringing 0:07:53.200 --> 0:07:55.800 into market, and they are making a difference, putting the 0:07:56.320 --> 0:07:59.640 pricing discussion aside, because that's a whole different kettle of fish. 0:08:00.040 --> 0:08:02.280 Yeah, it's pretty remarkable though you think about what Pfizer 0:08:02.480 --> 0:08:04.880 was it last month bought Siegen for forty three billion. 0:08:04.880 --> 0:08:06.760 I mean, there's so much going on in the space. Hey, 0:08:07.320 --> 0:08:10.840 any thoughts if you will, Sam, on Prometheus, it's trained 0:08:10.840 --> 0:08:13.200 below two hundred. We know that two hundred in cash 0:08:13.320 --> 0:08:15.560 was what Mark put out for it. Does that mean 0:08:15.600 --> 0:08:18.520 anything significantly to you just quickly? 0:08:19.240 --> 0:08:20.640 Not really? Not really. 0:08:20.680 --> 0:08:24.600 I mean if you look at Merk's current areas of 0:08:24.880 --> 0:08:27.240 activity in this disease area. 0:08:27.360 --> 0:08:29.920 There really don't. I don't really think there's much competition. 0:08:30.000 --> 0:08:31.920 The drug is early stage, is high risk. 0:08:32.280 --> 0:08:35.840 I think this is just six months of waiting for 0:08:35.880 --> 0:08:38.240 it to close, or a few months of waiting for 0:08:38.280 --> 0:08:40.560 it to close on that gap will likely close. 0:08:41.040 --> 0:08:42.600 So I don't read too much into this. 0:08:42.600 --> 0:08:45.199 Okay, well, good, good to get some perspective and fun 0:08:45.240 --> 0:08:46.960 to have kind of another m and a Monday, which 0:08:46.960 --> 0:08:48.559 we don't always have, or it has it feels like 0:08:48.679 --> 0:08:49.520 we haven't in a while. 0:08:49.800 --> 0:08:50.839 Hey, Sam, thank you so much. 0:08:50.840 --> 0:08:52.480 I know it's a little bit later out there in London, 0:08:52.520 --> 0:08:55.520 so appreciate you hanging around so we could talk with you. 0:08:55.559 --> 0:08:59.240 Sam Fazzelli, he's Bloomberg Intelligence senior pharmaceutical analyst, as we said, 0:08:59.440 --> 0:09:02.680 joining us zoom from London. Check out Bloomberg dot com 0:09:03.160 --> 0:09:05.199 for some of the additional research by Sam and the 0:09:05.240 --> 0:09:07.960 team and some of the other reporting when it comes 0:09:07.960 --> 0:09:11.880 to this acquisition. But it is typically you know about 0:09:11.880 --> 0:09:14.080 the pipeline, Jess. That's what it's about for these big 0:09:14.080 --> 0:09:18.120 pharmaceutical companies. You know, if you know covering business news 0:09:18.160 --> 0:09:20.400 a lot, you see this, these cycles that go through 0:09:20.400 --> 0:09:23.080 for these companies that have these blockbusters that bring in 0:09:23.120 --> 0:09:25.840 so much money, and then they go off patent and 0:09:25.880 --> 0:09:27.800 then they've got to think about, okay, what brings in 0:09:27.840 --> 0:09:29.000 revenues from right? 0:09:29.160 --> 0:09:31.760 And when you think about how much cash these companies 0:09:31.800 --> 0:09:34.800 were sitting on in the pandemic, Carol, and then wondering 0:09:34.880 --> 0:09:38.080 what do we do with the money? Well, particularly with 0:09:38.120 --> 0:09:40.040 the pharmaceutical giants, maybe more M and. 0:09:40.040 --> 0:09:43.079 A yeah, exactly, and we've seen a fair amount already 0:09:43.160 --> 0:09:43.640 this year. 0:09:44.040 --> 0:09:47.600 You're listening to the Bloomberg Business Week podcast. Catch us 0:09:47.640 --> 0:09:50.960 live weekday afternoons from three to six Eastern Listen on 0:09:51.040 --> 0:09:55.079 Bloomberg dot com the iHeartRadio app and the Bloomberg Business app, 0:09:55.360 --> 0:09:57.640 or watch us live on YouTube. 0:09:58.480 --> 0:10:05.560 It's not easy being green, having to spend each day 0:10:05.880 --> 0:10:08.600 the color of the leaves. 0:10:12.760 --> 0:10:15.000 All right, everybody, a little kermit for you, because we're 0:10:15.000 --> 0:10:17.559 all talking about being green, We're going to talk about 0:10:17.800 --> 0:10:21.240 farming and growing green something. This next company knows a 0:10:21.280 --> 0:10:22.680 lot about it, and I've got to say, you know, 0:10:22.880 --> 0:10:25.240 we've been talking about this a lot here Jess on air. 0:10:25.720 --> 0:10:27.280 We recently caught up with the founder and CEO of 0:10:27.280 --> 0:10:30.800 the ag tech company Regrow, and a lot is going 0:10:30.840 --> 0:10:33.440 on when it comes to farming, food and the AG space, 0:10:33.600 --> 0:10:36.760 which is really seeing some disruption and also growth in 0:10:36.840 --> 0:10:39.160 terms of the market size. So let's get into it 0:10:39.160 --> 0:10:41.880 with someone who's well versed and embedded in the agg 0:10:42.000 --> 0:10:44.679 and farming space. We welcome Irving Fine, founder and CEO 0:10:44.720 --> 0:10:47.760 Barry Farming, which is backed by GV formerly Google Ventures. 0:10:47.840 --> 0:10:50.400 He joins us via zoom in New York City. Irving, 0:10:50.400 --> 0:10:53.760 I've been looking forward to having you on air. Welcome 0:10:54.000 --> 0:10:57.200 and good to have you here. First of all, how 0:10:57.720 --> 0:11:00.480 should do you think the world think about modern arming? 0:11:02.160 --> 0:11:07.080 You know, it's it's an important question, and I imagine 0:11:07.240 --> 0:11:08.960 at some point you all have talked about. You know, 0:11:09.000 --> 0:11:12.240 we have a big and important farm bill that is 0:11:12.280 --> 0:11:16.199 coming up again quite soon, and so not only does 0:11:16.200 --> 0:11:18.040 the world need to be thinking about farming, but this 0:11:18.120 --> 0:11:22.160 country is very specifically thinking about farming. And you know, 0:11:22.200 --> 0:11:24.400 one of the statistics that I think a lot of 0:11:24.440 --> 0:11:27.680 people always find surprising or often find surprising, is that 0:11:28.200 --> 0:11:32.000 agriculture is actually the second largest source of global greenhouse 0:11:32.040 --> 0:11:36.000 gas emissions, right after the production of electricity and heat. 0:11:36.120 --> 0:11:39.120 So it actually accounts for a bigger slice of greenhouse 0:11:39.120 --> 0:11:41.840 gas emissions than the transportation sector, which you all were 0:11:41.880 --> 0:11:45.920 just talking about. And so when you think about what 0:11:46.000 --> 0:11:48.480 does modern farming need to look like, one of the 0:11:48.920 --> 0:11:51.640 critical recognition that we all need to have is there 0:11:51.720 --> 0:11:54.040 is no path to that zero. There is no path 0:11:54.080 --> 0:11:59.040 to decarbonization that doesn't lead directly through all of agriculture. 0:11:59.080 --> 0:12:03.120 And so the question you're asking is an extraordinarily important 0:12:03.160 --> 0:12:05.599 question for all of us to answer, not only in 0:12:05.600 --> 0:12:07.840 the next few years, but in the next few decades, 0:12:07.880 --> 0:12:11.320 as we need to transition to a more sustainable system 0:12:11.640 --> 0:12:13.080 that needs to feed a lot more people. 0:12:13.240 --> 0:12:15.400 Are we doing it yet? I mean, I feel like 0:12:15.480 --> 0:12:18.240 you're involved in it. There's definitely pockets. But I also 0:12:18.240 --> 0:12:21.720 think about industrial farming. It's massive and controls a lot. 0:12:21.840 --> 0:12:23.640 So where are we in. 0:12:23.640 --> 0:12:25.960 Not only thinking about it, but doing something differently that's 0:12:26.040 --> 0:12:27.440 better for our world? 0:12:28.400 --> 0:12:32.520 So massive it is, and changing a system that is 0:12:32.600 --> 0:12:36.920 as large and embedded as sort of broad based industrial 0:12:36.920 --> 0:12:39.880 agriculture is is not something that happens overnight. And I 0:12:39.920 --> 0:12:41.920 think you can just look towards the energy sector, the 0:12:41.920 --> 0:12:45.160 transportation sector, which are in many ways far ahead of 0:12:45.200 --> 0:12:49.400 where we are agriculturally, to see how long real transformational 0:12:49.520 --> 0:12:52.720 change takes. And you know, I think there's an interesting 0:12:52.720 --> 0:12:56.400 statistic that really answers your question more effectively than anything 0:12:56.440 --> 0:12:59.280 I can say, which is, for every gigaton of CO 0:12:59.600 --> 0:13:03.680 two that's generated annually by the combined global energy and 0:13:03.679 --> 0:13:09.200 transportation sectors, fifty one billion dollars was invested in low 0:13:09.360 --> 0:13:12.120 carbon energy transition in twenty twenty two. So for every 0:13:12.120 --> 0:13:15.599 gigaton of CO two that was generated from energy and transportation, 0:13:15.920 --> 0:13:19.199 there's fifty one billion spent for low carbon transition in 0:13:19.240 --> 0:13:23.280 twenty twenty two. At the same period, the transition to 0:13:23.400 --> 0:13:27.240 cleaner and more efficient agriculture got two billion dollars of 0:13:27.280 --> 0:13:31.360 investment for every gig aton, so twenty five time difference. 0:13:31.920 --> 0:13:35.560 And so are we moving, Yes, we're moving, and yes 0:13:35.640 --> 0:13:38.000 there's a lot of innovation, there's a lot of excitement, 0:13:38.280 --> 0:13:41.280 but what is very clear is we're not moving as 0:13:41.360 --> 0:13:44.600 quickly and as aggressively enough as we really need to. 0:13:44.720 --> 0:13:47.520 When you think about how substantial the food and agriculture 0:13:47.720 --> 0:13:51.280 ecosystem is for the entirety of the global population. 0:13:51.360 --> 0:13:53.480 Irving take a step back and talk to us more 0:13:53.480 --> 0:13:57.720 specifically about Bowery Farming and specifically what your company does. 0:13:58.679 --> 0:14:03.480 Absolutely so, our belief at Bowery is that wherever food 0:14:03.520 --> 0:14:06.080 is needed, we can grow it, and we do that 0:14:06.160 --> 0:14:11.240 by growing in warehouse scale smart growing environments. We stack 0:14:11.280 --> 0:14:13.520 our crops from the floor all the way up to 0:14:13.600 --> 0:14:17.559 the ceiling. We grow under lights that mimic the spectrum 0:14:17.559 --> 0:14:20.440 of the sun, and we grow in a totally controlled 0:14:20.480 --> 0:14:23.280 and contained environment, so we can grow three hundred and 0:14:23.280 --> 0:14:26.640 sixty five days of the year, independent of weather, independent 0:14:26.640 --> 0:14:30.720 of seasonality, so it's reliable, consistent supply of pure produce 0:14:31.240 --> 0:14:35.240 year round. On top of it, we grow completely pesticide 0:14:35.280 --> 0:14:38.880 free and agrochemical free food. And whereas in the field 0:14:38.920 --> 0:14:42.760 that not only hurts your quality and productivity in our case. 0:14:42.920 --> 0:14:45.800 First of all, our produce is really the purest expression 0:14:45.840 --> 0:14:48.400 of what you would imagine came out of your grandmother's garden, 0:14:48.960 --> 0:14:51.920 and it's one hundred times more productive than a square 0:14:51.960 --> 0:14:55.880 foot of farmland, all the while using a very small 0:14:55.920 --> 0:14:57.960 fraction of water compared to traditional. 0:14:57.680 --> 0:15:02.640 Agriculture packed on the environment, the footprint much smaller. Forgive 0:15:02.680 --> 0:15:06.000 me for interrupting, but so absolutely, how does it compare. 0:15:06.000 --> 0:15:08.280 I'm just thinking for people who are listening, how does 0:15:08.280 --> 0:15:11.040 it compare from traditional in terms of the impact. 0:15:11.640 --> 0:15:16.000 It is fractional, so ninety percent plus less water than 0:15:16.040 --> 0:15:22.200 traditional farming, uses no pesticides, no herbicides, no fungicides, no insecticides. 0:15:22.880 --> 0:15:26.880 And there's even more benefits beyond this, because number one, 0:15:27.000 --> 0:15:30.160 we locate our farms close to the actual points of consumption, 0:15:30.360 --> 0:15:33.600 so our product is harvested and delivered within twenty four 0:15:33.640 --> 0:15:36.560 to thirty six hours versus weeks of time in the 0:15:36.600 --> 0:15:40.960 traditional agricultural supply chain, and oftentimes even months. That means 0:15:41.000 --> 0:15:43.920 you're wasting less food, it's fresher when it shows up, 0:15:43.960 --> 0:15:47.440 and it's more nutritious. You also are reducing all the 0:15:47.480 --> 0:15:51.920 transportation miles that are required in today's existing supply chain. 0:15:52.040 --> 0:15:54.760 So in many respects, what we are doing is actually 0:15:54.800 --> 0:15:57.320 reinventing the fresh food supply chain, and we're building a 0:15:57.360 --> 0:16:01.840 supply chain it's simpler, it's safe, it has much more 0:16:01.880 --> 0:16:04.440 surety of supply, and it's a lot more sustainable than 0:16:04.520 --> 0:16:05.640 the existing system today. 0:16:05.880 --> 0:16:09.520 How does this exactly reshape the food patterns if we're 0:16:09.520 --> 0:16:12.560 talking about either gen Z or millennials. 0:16:14.200 --> 0:16:16.600 In a number of ways. I think this is meeting 0:16:16.640 --> 0:16:19.160 consumers where they are and what they're looking for. So 0:16:19.240 --> 0:16:22.360 Number one, what allows us to do what we do 0:16:22.400 --> 0:16:25.720 at Ballery is leveraging an enormous amount of technological innovation 0:16:25.800 --> 0:16:28.320 that's occurred over the last decade or so. We certainly 0:16:28.440 --> 0:16:32.480 leverage improvements in lighting and LEDs, but it's also leveraging 0:16:32.600 --> 0:16:38.000 artificial intelligence, computer vision, software, center and control systems, automation 0:16:38.120 --> 0:16:42.440 and robotics. It forms the intelligence layer across our farm 0:16:42.720 --> 0:16:46.040 and allows us to automate the entire process from when 0:16:46.080 --> 0:16:48.200 we plant the seed to when we harvest the product 0:16:48.200 --> 0:16:51.320 and put it into a package. And the reason that's 0:16:51.360 --> 0:16:53.960 important is it both allows us to be more sustainable, 0:16:54.000 --> 0:16:56.960 it allows the product to be safer, and it's using 0:16:57.120 --> 0:17:00.720 technology and smart and effective ways to produce a more 0:17:00.720 --> 0:17:04.399 sustainable system that we sell a product today at or 0:17:04.400 --> 0:17:07.879 below the cost of field grown organic and so consumers 0:17:07.920 --> 0:17:11.760 are looking for that sustainable solution. They're looking for technological 0:17:11.840 --> 0:17:15.520 solutions to age old problems and systems that we've lived in. 0:17:15.840 --> 0:17:18.800 But they don't want those solutions to cause them to 0:17:18.840 --> 0:17:22.359 have to bend their lifestyles an excessive amount. And that's 0:17:22.400 --> 0:17:25.840 where and how we can use technology effectively to deliver 0:17:25.880 --> 0:17:27.480 the solution. We do about and cost. 0:17:27.560 --> 0:17:30.320 Remind us about cost differentials between what you guys are 0:17:30.320 --> 0:17:32.480 doing and what kind of the rest of the are 0:17:32.560 --> 0:17:33.960 much of the ag space is doing. 0:17:34.359 --> 0:17:36.840 We are selling at or below the cost of field 0:17:36.840 --> 0:17:40.000 grown organic products today, and we sell across We are 0:17:40.040 --> 0:17:42.400 the largest into vertical farming company in the US now 0:17:42.440 --> 0:17:45.800 eighteen hundred plus retail doors. We work with Amazon and 0:17:45.840 --> 0:17:48.520 Whole Foods and Walmart and safe Way, Albertson's, and I'll 0:17:48.520 --> 0:17:51.880 hold so many of the grocery stores that you all 0:17:52.119 --> 0:17:52.760 shop and. 0:17:52.720 --> 0:17:54.760 Know and Irving. I know I've had the benefit of 0:17:54.840 --> 0:17:57.240 talking with you earlier this year at this incredible dinner 0:17:57.240 --> 0:17:59.679 that you and your team hosted and you brought together 0:18:00.520 --> 0:18:02.560 you know, people from different walks of life, I feel like, 0:18:03.320 --> 0:18:05.640 and it was just a really rich conversation about what's 0:18:05.680 --> 0:18:08.480 going on in terms of food, food production and how 0:18:08.480 --> 0:18:10.840 we think about wellness and the importance of food production 0:18:11.000 --> 0:18:12.080 in our wellness. 0:18:12.880 --> 0:18:14.640 So when you think about. 0:18:14.440 --> 0:18:16.480 What's going on in the food space, it's going to 0:18:16.560 --> 0:18:19.320 require a lot of parties right in order to get 0:18:19.359 --> 0:18:19.760 it right. 0:18:21.400 --> 0:18:26.200 Absolutely, And you know, like any large scale system that's 0:18:26.280 --> 0:18:29.840 global in nature and that in essence touches every person 0:18:29.920 --> 0:18:34.040 on the planet, the notion that there's a single silver bullet, 0:18:34.119 --> 0:18:37.040 a single industry, you know, let alone a single company, 0:18:38.000 --> 0:18:40.800 is of course false and would never be the case. 0:18:40.840 --> 0:18:44.600 And so again not the point to the energy decarbonization 0:18:44.760 --> 0:18:48.280 and transition. But there are so many different companies and 0:18:48.359 --> 0:18:52.679 approaches that we're seeing play out in that space. And similarly, 0:18:52.880 --> 0:18:57.000 we are going to need many different ways to approach 0:18:57.000 --> 0:18:59.639 the new agricultural ecosystem. We're going to need lots of 0:18:59.680 --> 0:19:02.600 different solutions, and we're gonna need to look at every 0:19:02.720 --> 0:19:06.000 aspect of the agricultural ecosystem as well. And you know, 0:19:06.760 --> 0:19:09.760 we're talking today about farming and fresh food production, but 0:19:10.400 --> 0:19:14.440 equally we have to look very closely at animal agriculture 0:19:14.760 --> 0:19:17.719 and how that is transpiring and taking place. We need 0:19:17.760 --> 0:19:20.920 to look at food waste in general and how that's handled. 0:19:21.280 --> 0:19:24.399 We need to look at developing countries across the world 0:19:24.480 --> 0:19:28.879 and the way they're farming, their actual availability of not 0:19:28.920 --> 0:19:34.080 only capital but actual tools, and the types of understanding 0:19:34.119 --> 0:19:37.600 that we have and the access to equipment and to 0:19:37.640 --> 0:19:39.800 inputs and things that we have in the developing world 0:19:39.840 --> 0:19:42.280 that they may not have access to which can raise yields. 0:19:42.680 --> 0:19:46.439 It is a large scale problem that will need many people, 0:19:46.760 --> 0:19:49.600 lots of capital and a lot a lot of focus 0:19:49.600 --> 0:19:50.800 and attention in the coming decades. 0:19:50.840 --> 0:19:51.400 Well, and what I. 0:19:51.359 --> 0:19:52.840 Wonder too, and I think this came up at the 0:19:53.240 --> 0:19:55.520 dinner that you guys hosted, is that when we talked 0:19:55.520 --> 0:19:59.760 about plant based proteins which haven't necessarily lived up to 0:19:59.800 --> 0:20:01.840 what thought they were going to be and they're ten years, 0:20:01.960 --> 0:20:06.399 you know, right old and counting whether it's beyond impossible 0:20:06.400 --> 0:20:08.640 and a lot of other players. Everybody was so excited, 0:20:09.400 --> 0:20:12.000 but it hasn't quite worked out how we thought. Is 0:20:12.040 --> 0:20:15.240 there going to still be you know, a really important 0:20:15.320 --> 0:20:18.760 role for plant based protein in your view, because I 0:20:18.800 --> 0:20:21.080 know you reach out and really are looking at things 0:20:21.160 --> 0:20:22.000 on a bigger level. 0:20:23.000 --> 0:20:26.720 So you know, I don't in some ways there was 0:20:27.240 --> 0:20:31.199 a structural disadvantage that plant based protein had, and you 0:20:31.240 --> 0:20:33.680 could argue whether or not they created this on their own, 0:20:33.720 --> 0:20:36.919 but this notion that they themselves and the set of 0:20:36.920 --> 0:20:39.560 companies were going to be able to displace the entirety 0:20:39.640 --> 0:20:43.159