1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,560 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:33,640 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Facebook 7 00:00:33,720 --> 00:00:37,120 Speaker 1: and data privacy. One of the things the company has 8 00:00:37,159 --> 00:00:40,080 Speaker 1: most recently done is to issue it's twenty seven page 9 00:00:40,159 --> 00:00:43,120 Speaker 1: document that governs the behavior of it's more than two 10 00:00:43,280 --> 00:00:48,200 Speaker 1: billion users. This offers Facebook's definitions for hate speech, violent threats, 11 00:00:48,240 --> 00:00:52,320 Speaker 1: sexual exploitation, and more. Here to tell us about the 12 00:00:52,320 --> 00:00:54,520 Speaker 1: efforts of the company and the issues that it faces 13 00:00:54,880 --> 00:00:58,840 Speaker 1: is Monica Bickert, vice president of Product Policy and counter 14 00:00:59,160 --> 00:01:03,720 Speaker 1: Terrorism four Facebook, joining us from Menlo Park, California. Monica 15 00:01:03,760 --> 00:01:06,160 Speaker 1: bicker thank you very much for being with us. Tell 16 00:01:06,240 --> 00:01:10,240 Speaker 1: us about this, uh, this twenty seven page document and 17 00:01:10,400 --> 00:01:13,040 Speaker 1: what you would like people that may not read all 18 00:01:13,040 --> 00:01:15,080 Speaker 1: twenty seven pages, but what would you like them to 19 00:01:15,120 --> 00:01:17,399 Speaker 1: take away from it and know that you're trying to 20 00:01:17,480 --> 00:01:21,920 Speaker 1: convey and communicate. Well, the top line here is that 21 00:01:21,959 --> 00:01:24,800 Speaker 1: we really want to have a safe community, and that 22 00:01:24,840 --> 00:01:27,920 Speaker 1: means having rules in place that say, we don't allow 23 00:01:27,959 --> 00:01:31,400 Speaker 1: hate speech, we don't allow harassment. If you come across 24 00:01:31,440 --> 00:01:34,240 Speaker 1: something like that on Facebook, please tell us about it 25 00:01:34,280 --> 00:01:37,560 Speaker 1: so we can remove it quickly. Imagine when I was 26 00:01:37,600 --> 00:01:42,400 Speaker 1: reading over some of these sort of guidelines, their subjective, 27 00:01:42,800 --> 00:01:45,160 Speaker 1: and you know, how are you going to deal with 28 00:01:45,520 --> 00:01:47,840 Speaker 1: this sort of subjective nature of this? Will it be 29 00:01:48,000 --> 00:01:52,240 Speaker 1: from hiring more people to actually oversee these and make 30 00:01:52,280 --> 00:01:55,840 Speaker 1: a judgment calls on the complaints. We have hired more 31 00:01:55,880 --> 00:01:58,560 Speaker 1: reviewers in the past year. We now have more than 32 00:02:00,040 --> 00:02:04,960 Speaker 1: ball who are reviewing content that possibly violates our standards. 33 00:02:05,000 --> 00:02:07,320 Speaker 1: This would be content that people have reported to us 34 00:02:07,320 --> 00:02:10,760 Speaker 1: through the site, or content that our technical tools have 35 00:02:11,000 --> 00:02:15,400 Speaker 1: flagged as possibly violating our standards. When that content comes 36 00:02:15,440 --> 00:02:19,239 Speaker 1: into our reviewers, they apply our policies. If the content 37 00:02:19,280 --> 00:02:22,919 Speaker 1: violates our standards, they'll remove it, and in those cases 38 00:02:22,960 --> 00:02:25,760 Speaker 1: we're able to make these decisions within twenty four hours 39 00:02:25,800 --> 00:02:29,120 Speaker 1: of getting the report. Now, you have background as a 40 00:02:29,160 --> 00:02:34,280 Speaker 1: former federal prosecutor, and I'm wondering, based on that experience, 41 00:02:34,639 --> 00:02:39,800 Speaker 1: whether doing this for a private organization like Facebook that 42 00:02:39,880 --> 00:02:44,639 Speaker 1: has such a public uh a public face and has 43 00:02:44,680 --> 00:02:48,440 Speaker 1: In a sense, the public has almost as much control 44 00:02:48,600 --> 00:02:53,240 Speaker 1: over what goes on on Facebook than Face as Facebook itself. 45 00:02:53,280 --> 00:02:56,280 Speaker 1: Does That sort of offer a particular challenge and one 46 00:02:56,320 --> 00:02:59,359 Speaker 1: that you've never seen before. Well, one challenge is that 47 00:02:59,480 --> 00:03:01,880 Speaker 1: this community, the is not only large, it's more than 48 00:03:01,919 --> 00:03:05,320 Speaker 1: two billion people, but it's also very global. More than 49 00:03:06,520 --> 00:03:10,560 Speaker 1: of people who are on Facebook are outside the United States. 50 00:03:10,600 --> 00:03:12,880 Speaker 1: So when we think about where to draw the line 51 00:03:12,960 --> 00:03:16,520 Speaker 1: on speech, it can't just be based on how one 52 00:03:16,560 --> 00:03:19,440 Speaker 1: group of people feels. We really have to think about everybody. 53 00:03:19,520 --> 00:03:22,920 Speaker 1: And that's why we constantly talk to safety organizations and 54 00:03:23,040 --> 00:03:26,040 Speaker 1: experts around the world so that we can make sure 55 00:03:26,360 --> 00:03:30,200 Speaker 1: we're learning about new trends, uh, new safety topics, and 56 00:03:30,240 --> 00:03:33,280 Speaker 1: making sure that we're keeping our standards current. One thing 57 00:03:33,480 --> 00:03:36,360 Speaker 1: I was looking at in one of the sections at 58 00:03:36,360 --> 00:03:39,400 Speaker 1: Facebook outlines how they're attempting to fight fake news. Among 59 00:03:40,040 --> 00:03:44,560 Speaker 1: the ways includes disrupting economic incentives for people, pages and 60 00:03:44,640 --> 00:03:49,600 Speaker 1: domains that propagate misinformation. What are the economic incentives currently 61 00:03:49,720 --> 00:03:54,000 Speaker 1: in place for some of these venues that do propagate 62 00:03:54,040 --> 00:03:58,000 Speaker 1: fake fake news quote unquote, well, most most commonly when 63 00:03:58,040 --> 00:04:00,640 Speaker 1: people try to share fake news, they're doing it for 64 00:04:00,680 --> 00:04:04,400 Speaker 1: financial reasons. In other words, they're sharing something that looks 65 00:04:04,440 --> 00:04:06,600 Speaker 1: like a news story, you click on that and it 66 00:04:06,680 --> 00:04:10,160 Speaker 1: actually takes you to some ad farm or some spammy 67 00:04:10,240 --> 00:04:14,440 Speaker 1: page that's off of Facebook. That is has gotten easier 68 00:04:14,480 --> 00:04:16,760 Speaker 1: for us to detect, and we've removed that wherever we 69 00:04:16,839 --> 00:04:20,039 Speaker 1: find it. We also remove any fake accounts, and we 70 00:04:20,240 --> 00:04:24,680 Speaker 1: find that they are often the source of fake news. 71 00:04:24,720 --> 00:04:28,400 Speaker 1: So overall, we're hoping that the situation is getting better 72 00:04:28,839 --> 00:04:32,440 Speaker 1: and that people will also have more context when they're 73 00:04:32,440 --> 00:04:36,080 Speaker 1: deciding the news that they're seeing, when they're deciding whether 74 00:04:36,200 --> 00:04:38,240 Speaker 1: or not that news is something they should rely upon. 75 00:04:38,680 --> 00:04:42,360 Speaker 1: We're helping with that by providing information to people whenever 76 00:04:42,400 --> 00:04:45,200 Speaker 1: they see a story on Facebook that might be fake. 77 00:04:45,760 --> 00:04:48,800 Speaker 1: We are trying to share related articles from around the 78 00:04:48,839 --> 00:04:52,880 Speaker 1: internet and also information about who exactly has published this 79 00:04:52,960 --> 00:04:56,240 Speaker 1: story and what does the internet say about that publisher? 80 00:04:57,279 --> 00:05:02,440 Speaker 1: UH Monica, as the vice president of Product Policy and 81 00:05:02,800 --> 00:05:07,120 Speaker 1: counter Terrorism, UH, do you see a time when you 82 00:05:07,200 --> 00:05:09,920 Speaker 1: will have more concerted effort on the part of other 83 00:05:09,960 --> 00:05:13,839 Speaker 1: technology companies in the same context, and is there any 84 00:05:13,880 --> 00:05:16,040 Speaker 1: reason why they wouldn't sign up for the same twenty 85 00:05:16,040 --> 00:05:20,839 Speaker 1: seven page document While all of these social media companies, 86 00:05:20,880 --> 00:05:24,600 Speaker 1: they work a little bit differently. Most of them have policies, 87 00:05:24,640 --> 00:05:27,000 Speaker 1: and most of the policies cover the same topics, and 88 00:05:27,040 --> 00:05:30,239 Speaker 1: we do work together closely on things like child safety 89 00:05:30,680 --> 00:05:35,560 Speaker 1: or combating terrorism propaganda. Uh, those relationships are very strong, 90 00:05:35,640 --> 00:05:37,719 Speaker 1: but I think you can expect in a year ahead 91 00:05:37,760 --> 00:05:41,280 Speaker 1: to see those relationships get even stronger. You know, one 92 00:05:41,279 --> 00:05:44,480 Speaker 1: thing that I'm struck by, Monica, is an apparent attempt 93 00:05:44,640 --> 00:05:48,320 Speaker 1: by the company to put all of the users of 94 00:05:48,440 --> 00:05:54,679 Speaker 1: Facebook under its US based rules and policies. And I'm wondering, 95 00:05:54,960 --> 00:05:57,880 Speaker 1: you know, is that a deliberate decision based on some 96 00:05:57,920 --> 00:06:01,400 Speaker 1: of the European privacy laws. I know that our legal 97 00:06:01,440 --> 00:06:04,320 Speaker 1: team is making decisions based on the new regulations in 98 00:06:04,360 --> 00:06:06,839 Speaker 1: Europe that are in place, as well as regulations that 99 00:06:06,880 --> 00:06:08,960 Speaker 1: we have in the United States, But I want to 100 00:06:08,960 --> 00:06:12,880 Speaker 1: be clear that the standards that we have released are 101 00:06:13,000 --> 00:06:16,040 Speaker 1: something different. These are not based on laws. These are 102 00:06:16,040 --> 00:06:18,120 Speaker 1: based on what we think it takes to keep this 103 00:06:18,200 --> 00:06:22,880 Speaker 1: community safe. Is there something that you wish that the 104 00:06:22,920 --> 00:06:26,440 Speaker 1: community would do to get out ahead of this conversation 105 00:06:26,720 --> 00:06:31,440 Speaker 1: rather than having to face questions from either the US 106 00:06:31,600 --> 00:06:37,159 Speaker 1: Congress or indeed react to situations that become public, such 107 00:06:37,200 --> 00:06:40,040 Speaker 1: as the Cambridge Analytica cases. There's something that you can 108 00:06:40,080 --> 00:06:42,560 Speaker 1: do to be in front of all this, rather than 109 00:06:42,600 --> 00:06:46,320 Speaker 1: in a sense being reactive. As a company, we try 110 00:06:46,360 --> 00:06:50,040 Speaker 1: to stay ahead of issues by talking to safety experts 111 00:06:50,040 --> 00:06:54,000 Speaker 1: and organizations worldwide who have the latest information on potential threats. 112 00:06:54,520 --> 00:06:57,720 Speaker 1: As a community, and thinking about all the people who 113 00:06:57,760 --> 00:07:00,479 Speaker 1: are using Facebook, we think the best thing is to 114 00:07:00,560 --> 00:07:03,839 Speaker 1: share exactly what the rules are and make it easy 115 00:07:03,880 --> 00:07:05,800 Speaker 1: for people to tell us if there's something on the 116 00:07:05,839 --> 00:07:08,599 Speaker 1: site that really doesn't belong there. Is it tough Monica 117 00:07:08,680 --> 00:07:11,640 Speaker 1: to preserve humor while trying to crack down on some 118 00:07:11,720 --> 00:07:14,880 Speaker 1: of the issues that people have had with the platform. Yes, 119 00:07:14,920 --> 00:07:17,280 Speaker 1: it is. There's a real challenge, for instance, when you 120 00:07:17,320 --> 00:07:21,360 Speaker 1: think about something like hate speech or threats. Obviously we 121 00:07:21,440 --> 00:07:23,680 Speaker 1: don't want either of those on the site, but you 122 00:07:23,800 --> 00:07:26,840 Speaker 1: also can envision saying to a friend, if you come 123 00:07:26,920 --> 00:07:28,920 Speaker 1: late to my party tomorrow night, I'm going to kill you. 124 00:07:29,000 --> 00:07:31,320 Speaker 1: I really want you there at the beginning. Um, And 125 00:07:31,400 --> 00:07:34,400 Speaker 1: that's the sort of content that people share without meaning 126 00:07:34,440 --> 00:07:37,440 Speaker 1: any harm at all. So our reviewers have to try 127 00:07:37,440 --> 00:07:39,800 Speaker 1: to make those decisions every day, and they don't always 128 00:07:39,800 --> 00:07:42,240 Speaker 1: have all the context. Well, but one question that I 129 00:07:42,320 --> 00:07:45,920 Speaker 1: have is if there is a human being making these decisions, 130 00:07:46,160 --> 00:07:49,440 Speaker 1: does that put the liability, the legal liability on you, say, 131 00:07:49,560 --> 00:07:52,040 Speaker 1: if if there is a threat like that, I'm going 132 00:07:52,080 --> 00:07:54,640 Speaker 1: to kill you? And you know, the reviewers decided sugest, 133 00:07:54,760 --> 00:07:57,560 Speaker 1: but it turns out to be real. What's important to 134 00:07:57,640 --> 00:08:00,320 Speaker 1: us is making sure that if we become aware of 135 00:08:00,320 --> 00:08:03,840 Speaker 1: an actual credible threat imminent violence, that we do send 136 00:08:03,880 --> 00:08:06,880 Speaker 1: up to law enforcement. Our terms made clear that we 137 00:08:06,920 --> 00:08:10,280 Speaker 1: will do that and that's also consistent with the law. 138 00:08:11,640 --> 00:08:16,120 Speaker 1: Just quickly, based on your experience with the Mark Zuckerberg 139 00:08:16,120 --> 00:08:19,240 Speaker 1: has this incident, has this issue changed him over the 140 00:08:19,280 --> 00:08:22,640 Speaker 1: last couple of months. Well, Look, the company and our 141 00:08:22,680 --> 00:08:27,119 Speaker 1: senior leadership, including Mark has also has always cared about 142 00:08:27,160 --> 00:08:29,640 Speaker 1: making sure that our community is safe. People are going 143 00:08:29,680 --> 00:08:31,960 Speaker 1: to come to Facebook if it's not a safe place, 144 00:08:32,040 --> 00:08:34,640 Speaker 1: and that's really what we want to do is give 145 00:08:34,640 --> 00:08:36,720 Speaker 1: people a place to come and share and connect. So 146 00:08:36,760 --> 00:08:39,280 Speaker 1: that's really priority number one for us. All Right, we're 147 00:08:39,280 --> 00:08:41,080 Speaker 1: gonna leave it there. I want to thank you very much. 148 00:08:41,360 --> 00:08:44,800 Speaker 1: Monica Bickers is the vice president Product Policy and counter 149 00:08:44,920 --> 00:08:49,359 Speaker 1: terrorism for Facebook, speaking to us from Menlo Park, California. 150 00:08:49,960 --> 00:08:52,400 Speaker 1: This on the occasion of the release of a twenty 151 00:08:52,800 --> 00:08:57,040 Speaker 1: seven page document that governs the behavior of users of 152 00:08:57,360 --> 00:09:15,440 Speaker 1: Facebook more than two billion users on Facebook. So excited, 153 00:09:15,480 --> 00:09:17,480 Speaker 1: I want to get to our next guest, all about 154 00:09:17,480 --> 00:09:21,160 Speaker 1: E t f S and Exponential E t S. Phil Box, 155 00:09:21,280 --> 00:09:24,120 Speaker 1: chief executive of Exponential E t f S, are based 156 00:09:24,360 --> 00:09:26,840 Speaker 1: in an arbor, Michigan, but he joins us here in 157 00:09:26,880 --> 00:09:30,400 Speaker 1: our eleven three oh studios and uh feel great to 158 00:09:30,440 --> 00:09:32,400 Speaker 1: have you with us. We talk about the topic of, 159 00:09:32,760 --> 00:09:37,040 Speaker 1: you know, the overexposure that many investors may have even 160 00:09:37,040 --> 00:09:41,360 Speaker 1: though they do not know it to certain types of stocks, 161 00:09:41,400 --> 00:09:47,800 Speaker 1: for example, Facebook, Alphabet, Amazon, Netflix, Google, and so on. Uh, 162 00:09:48,000 --> 00:09:52,000 Speaker 1: what exactly do you believe that people really think they 163 00:09:52,040 --> 00:09:55,120 Speaker 1: own versus what they really do own. Well, thank you 164 00:09:55,160 --> 00:09:57,559 Speaker 1: for having me on. And you know, when you take 165 00:09:57,559 --> 00:09:59,920 Speaker 1: a look at the sp F or really any mark 166 00:10:00,000 --> 00:10:03,160 Speaker 1: a cap weighted index fund, a lot of people assume that, well, 167 00:10:03,200 --> 00:10:05,120 Speaker 1: you know what, I bought the SMP five hundred fund. 168 00:10:05,360 --> 00:10:07,840 Speaker 1: Now I'm in a broadly diversified representation of the U 169 00:10:07,920 --> 00:10:11,320 Speaker 1: S economy. In reality, because of the nature of market 170 00:10:11,360 --> 00:10:13,680 Speaker 1: cap waiting, where you keep putting more and more money 171 00:10:13,679 --> 00:10:17,600 Speaker 1: into the highest capitalization stocks, you get a very high concentration. 172 00:10:17,640 --> 00:10:21,480 Speaker 1: And right now, if you look at the fang trade, Facebook, Amazon, Apple, Netflix, Google, 173 00:10:21,720 --> 00:10:24,920 Speaker 1: will throw Microsoft into it. They those five stocks have 174 00:10:24,960 --> 00:10:28,080 Speaker 1: contributed thirty of the market return since the beginning of 175 00:10:28,080 --> 00:10:32,120 Speaker 1: two thousand and uh and seventeen UM. The waiting of 176 00:10:32,160 --> 00:10:35,520 Speaker 1: those companies within UM within the SMP five hundred is 177 00:10:35,520 --> 00:10:39,000 Speaker 1: now higher than the bottom two hundred and sixty stocks combined. 178 00:10:39,440 --> 00:10:43,120 Speaker 1: So there's a tremendous concentration risk within those market cap 179 00:10:43,120 --> 00:10:46,000 Speaker 1: weighted indexes. And each of those names has a lot 180 00:10:46,040 --> 00:10:48,200 Speaker 1: of risk that I think a lot of people are 181 00:10:48,520 --> 00:10:50,840 Speaker 1: first now starting to talk about starting to think about 182 00:10:50,840 --> 00:10:52,920 Speaker 1: what we're talking about. Stocks that have run up to 183 00:10:53,000 --> 00:10:57,000 Speaker 1: an unprecedented level, have extremely high valuations, yet they have 184 00:10:57,480 --> 00:11:00,800 Speaker 1: major major anti trust and regulator a risk that could 185 00:11:01,160 --> 00:11:04,160 Speaker 1: very quickly reverse their fortunes. Well, Phil, just to push 186 00:11:04,160 --> 00:11:06,800 Speaker 1: back a little bit, they also are cash printing machines 187 00:11:06,880 --> 00:11:09,280 Speaker 1: and you're seeing, you know, incredible balance sheets at the 188 00:11:09,320 --> 00:11:13,080 Speaker 1: likes of Alphabet, Google's parent company, or Amazon dot. Well, 189 00:11:13,120 --> 00:11:15,560 Speaker 1: Amazon to com is sort of a separate story. Uh, 190 00:11:15,679 --> 00:11:19,720 Speaker 1: but certainly Google and certainly even Facebook. So what do 191 00:11:19,760 --> 00:11:22,079 Speaker 1: you say to that, Well, Facebook is right now earning 192 00:11:22,960 --> 00:11:27,240 Speaker 1: of their revenue from marketing and selling targeted advertisements to 193 00:11:27,360 --> 00:11:30,080 Speaker 1: a user base, you know, can be extremely profitable. They've 194 00:11:30,080 --> 00:11:32,080 Speaker 1: they've turned that into an efficient machine and they do 195 00:11:32,120 --> 00:11:34,680 Speaker 1: it better than anybody. But in order to keep their 196 00:11:34,720 --> 00:11:37,520 Speaker 1: advertisers coming back and paying, the ads have to work, 197 00:11:37,640 --> 00:11:39,440 Speaker 1: and for the ads to work, the users have to 198 00:11:39,480 --> 00:11:42,040 Speaker 1: be engaged. And we're seeing more and more that users 199 00:11:42,040 --> 00:11:45,439 Speaker 1: are becoming disengaged from Facebook. They're becoming unhappy with the 200 00:11:45,480 --> 00:11:48,920 Speaker 1: overall experience that they're getting on Facebook. Um and you know, 201 00:11:49,000 --> 00:11:51,160 Speaker 1: it's a very tricky thing. I mean, the value that 202 00:11:51,200 --> 00:11:54,839 Speaker 1: Facebook has is being able to target advertising specifically to 203 00:11:54,960 --> 00:11:57,880 Speaker 1: specific users based on all the data that they generate 204 00:11:57,960 --> 00:12:00,440 Speaker 1: on those users. But the users don't want that data 205 00:12:00,480 --> 00:12:02,480 Speaker 1: being used and and somewhere in there is a fine 206 00:12:02,520 --> 00:12:05,160 Speaker 1: line that Facebook has to walk. The valuation right now 207 00:12:05,160 --> 00:12:08,120 Speaker 1: for Facebook assumes that the growth is going to continue 208 00:12:08,400 --> 00:12:12,199 Speaker 1: indefinitely exponentially for their revenue line. We think that that 209 00:12:12,640 --> 00:12:15,520 Speaker 1: a peak is is, you know, very closely around the corner, 210 00:12:15,960 --> 00:12:18,920 Speaker 1: you know, Phil, Just to sort of uh push that forward, 211 00:12:18,920 --> 00:12:22,440 Speaker 1: Facebook is set to report their earnings after the bell today. 212 00:12:22,640 --> 00:12:26,160 Speaker 1: I'm just wondering, are you seeing investors start to realize 213 00:12:26,240 --> 00:12:29,559 Speaker 1: there perhaps over exposure to the fang names, including Facebook, 214 00:12:29,760 --> 00:12:33,560 Speaker 1: and start to demonstrate some concern pull back anything of 215 00:12:33,600 --> 00:12:37,200 Speaker 1: the like. Slowly, slowly, we're starting to see it. Um. 216 00:12:37,280 --> 00:12:40,800 Speaker 1: Jeff Gundac was talking about it yesterday at the own conference. Um. 217 00:12:40,840 --> 00:12:43,760 Speaker 1: You know, we we are et f F shoers and 218 00:12:43,800 --> 00:12:47,200 Speaker 1: we deal all of our products are systematic process based funds. 219 00:12:47,360 --> 00:12:49,240 Speaker 1: And I think there's an assumption in the e t 220 00:12:49,360 --> 00:12:51,600 Speaker 1: F world and in the index investing world that the 221 00:12:51,600 --> 00:12:54,480 Speaker 1: products that market capuited, you know, broad index products are 222 00:12:54,520 --> 00:12:58,479 Speaker 1: broadly diversified, and it's really the concentration within those indexes 223 00:12:58,679 --> 00:13:00,720 Speaker 1: that we think is a huge risk to investors, and 224 00:13:00,760 --> 00:13:03,560 Speaker 1: that's really where we are focused on on, you know, 225 00:13:03,600 --> 00:13:07,040 Speaker 1: trying to bring some light into it. Has the creation 226 00:13:07,120 --> 00:13:09,840 Speaker 1: of e t f s gotten away from the creators 227 00:13:09,840 --> 00:13:13,920 Speaker 1: of e t s very possibly, very possibly. I mean 228 00:13:14,000 --> 00:13:15,880 Speaker 1: there's really two different things. There's e t f s 229 00:13:16,080 --> 00:13:18,480 Speaker 1: and there's index investing. And without the invention of the 230 00:13:18,480 --> 00:13:21,080 Speaker 1: e t F we think index investing would still be 231 00:13:21,120 --> 00:13:24,520 Speaker 1: growing tremendously through you know, futures and options and just 232 00:13:24,600 --> 00:13:27,160 Speaker 1: index mutual funds and you can buy share of every 233 00:13:27,200 --> 00:13:30,240 Speaker 1: one of the SMP if you want, and that becomes 234 00:13:30,280 --> 00:13:32,600 Speaker 1: the index, and and trading has become more and more 235 00:13:32,600 --> 00:13:35,240 Speaker 1: efficient and cheap now, so institutions can do that, and 236 00:13:35,280 --> 00:13:37,320 Speaker 1: we're starting to see that happen. The e t F 237 00:13:37,360 --> 00:13:39,560 Speaker 1: is simply a vehicle, it's a wrapper, and it's you know, 238 00:13:39,600 --> 00:13:41,160 Speaker 1: for a bunch of geeky reasons that would take a 239 00:13:41,200 --> 00:13:43,160 Speaker 1: while to get into. It's just a little bit more efficient, 240 00:13:43,240 --> 00:13:46,440 Speaker 1: especially from a tax perspective, than mutual funds, certainly than 241 00:13:46,520 --> 00:13:48,559 Speaker 1: hedge funds. So, you know, there's kind of two different 242 00:13:48,559 --> 00:13:51,120 Speaker 1: things with the vehicle and the index investing, but there 243 00:13:51,200 --> 00:13:54,480 Speaker 1: is no doubt that the proliferation of index investing and 244 00:13:54,559 --> 00:13:57,520 Speaker 1: e t F simultaneously have contributed to the run up 245 00:13:57,559 --> 00:14:00,280 Speaker 1: in these you know, it's market cap waiting is really 246 00:14:00,400 --> 00:14:03,600 Speaker 1: a momentum strategy. You're at every rebounds, you're taking money, 247 00:14:03,600 --> 00:14:06,199 Speaker 1: you're putting it into the biggest names. We've launched a 248 00:14:06,400 --> 00:14:09,080 Speaker 1: uh we have a strategy that reverse cap weights, and 249 00:14:09,120 --> 00:14:11,240 Speaker 1: what we're trying to do is take money out of 250 00:14:11,240 --> 00:14:13,400 Speaker 1: the winners and put it into the losers. And at 251 00:14:13,440 --> 00:14:15,880 Speaker 1: the same time, we're getting a little bit of what 252 00:14:15,920 --> 00:14:18,480 Speaker 1: we call the size premier, the small money's big factor 253 00:14:18,920 --> 00:14:21,560 Speaker 1: in the strategy. So, um, you know we've seen over 254 00:14:21,600 --> 00:14:24,080 Speaker 1: time based on you know, SMP back tested data, to 255 00:14:24,080 --> 00:14:25,480 Speaker 1: take it with a grain of salt, but you know, 256 00:14:25,520 --> 00:14:28,360 Speaker 1: over a twenty year period it has consistently provided alpha 257 00:14:28,440 --> 00:14:31,040 Speaker 1: over both equal waiting and market cap waiting. But really, 258 00:14:31,080 --> 00:14:34,160 Speaker 1: what we're seeing now that's different, that's unprecedented is the 259 00:14:34,240 --> 00:14:36,680 Speaker 1: run up in these top tier names by market cap 260 00:14:36,720 --> 00:14:39,080 Speaker 1: in the SMP five hundred. We've never seen anything like 261 00:14:39,080 --> 00:14:41,480 Speaker 1: it before where such a small group of stocks have 262 00:14:41,640 --> 00:14:43,720 Speaker 1: such a large waiting and we think it's a very 263 00:14:43,720 --> 00:14:46,320 Speaker 1: big risk right now for investors. Phil What kind of 264 00:14:46,360 --> 00:14:48,680 Speaker 1: fees do you charge on these funds? So we have 265 00:14:48,720 --> 00:14:50,760 Speaker 1: an E t F that charges twenty nine basis points 266 00:14:50,760 --> 00:14:53,440 Speaker 1: to takers r vrs. It's a reverse cap way to DTF, 267 00:14:53,640 --> 00:14:55,440 Speaker 1: and we have a sixty five basis point E t 268 00:14:55,600 --> 00:14:57,400 Speaker 1: F that is UH the A C S. I and 269 00:14:57,400 --> 00:14:59,080 Speaker 1: I would just ask everyone to speak to a financial 270 00:14:59,080 --> 00:15:01,960 Speaker 1: professional to see if investment is appropriate. Well, the reason 271 00:15:02,000 --> 00:15:04,160 Speaker 1: why I ask I know that you have a long 272 00:15:04,280 --> 00:15:07,120 Speaker 1: history at ETFs working with the New York Stock Exchange 273 00:15:07,720 --> 00:15:11,080 Speaker 1: as well as Google, have investments where you developed alternative 274 00:15:11,280 --> 00:15:14,920 Speaker 1: mutual funds. What type of tolerance to investors have to fees, 275 00:15:14,960 --> 00:15:17,080 Speaker 1: given the fact that we've seen the rush of money 276 00:15:17,080 --> 00:15:19,560 Speaker 1: into e t f s disproportionately go to the lowest 277 00:15:19,640 --> 00:15:22,440 Speaker 1: fee funds. When you look at a new strategy, or 278 00:15:22,440 --> 00:15:24,880 Speaker 1: you look at any investment, the return is very uncertain, 279 00:15:25,280 --> 00:15:28,120 Speaker 1: and even if you're in a you know, the safest investment, 280 00:15:28,160 --> 00:15:29,600 Speaker 1: you don't know what your return is going to be. 281 00:15:29,680 --> 00:15:32,320 Speaker 1: The only certainty is the fees. So investors have been 282 00:15:32,360 --> 00:15:35,080 Speaker 1: focusing more and more on fees, and I think they should. UM. 283 00:15:35,160 --> 00:15:37,000 Speaker 1: You know, we're unable to compete with the likes of 284 00:15:37,040 --> 00:15:40,520 Speaker 1: Vanguard and Schwab and have absolutely dirt you know, dirty ETFs, 285 00:15:40,640 --> 00:15:43,200 Speaker 1: you know, as a startup company, but we are trying 286 00:15:43,240 --> 00:15:46,360 Speaker 1: to offer everything as as cheaply as we possibly can 287 00:15:46,440 --> 00:15:49,920 Speaker 1: because it's tremendously important to the after tax returns, to 288 00:15:50,000 --> 00:15:52,840 Speaker 1: the you know, to the net that investors receive. UM. 289 00:15:52,880 --> 00:15:54,880 Speaker 1: I think it's a very healthy thing for investors to 290 00:15:54,920 --> 00:15:57,120 Speaker 1: focus on FEZA and you know, quite frankly, even though 291 00:15:57,120 --> 00:15:59,800 Speaker 1: it talks against our book, we hope that continues. One 292 00:15:59,840 --> 00:16:01,600 Speaker 1: of the things that just want to note is that 293 00:16:01,680 --> 00:16:08,600 Speaker 1: while you talk about the dominance of these few stocks Facebook, Amazon, 294 00:16:08,720 --> 00:16:12,000 Speaker 1: and Netflix and so on. There's a huge divergence in 295 00:16:12,000 --> 00:16:15,360 Speaker 1: their performance this year, so you might own them in 296 00:16:15,400 --> 00:16:19,640 Speaker 1: a concentrated way, but then when you combine their performance, 297 00:16:20,160 --> 00:16:22,840 Speaker 1: it may not actually give you the results that you 298 00:16:23,000 --> 00:16:25,160 Speaker 1: thought you were going to receive. And give you an example, 299 00:16:25,240 --> 00:16:28,720 Speaker 1: Microsoft is up seven percent so far this year, Netflix 300 00:16:28,800 --> 00:16:31,560 Speaker 1: is up. But then if you look at companies like 301 00:16:31,600 --> 00:16:35,720 Speaker 1: Apple down three percent, Facebook down ten percent, Alphabet Google 302 00:16:35,920 --> 00:16:39,320 Speaker 1: down two percent, Amazon no up, So you have a 303 00:16:39,400 --> 00:16:42,720 Speaker 1: huge divergence of performance, and so you're not really even 304 00:16:42,800 --> 00:16:46,720 Speaker 1: selecting for performance. You're just selecting based on inclusion in 305 00:16:46,760 --> 00:16:51,680 Speaker 1: an index that you have no idea the relative waitings 306 00:16:51,880 --> 00:16:55,520 Speaker 1: of these stocks because they're cap weighted. Is that right? 307 00:16:55,560 --> 00:16:59,960 Speaker 1: Is that an accurate description? Ye? I mean, ultimately, when 308 00:17:00,000 --> 00:17:02,280 Speaker 1: you look at index investing, I think, you know, we're 309 00:17:02,320 --> 00:17:06,320 Speaker 1: reaching a point where index investing is really becoming process 310 00:17:06,400 --> 00:17:09,959 Speaker 1: driven investing or rules based investing. So market cap waiting, 311 00:17:10,200 --> 00:17:13,240 Speaker 1: you know what was really it came to prominence back 312 00:17:13,240 --> 00:17:16,200 Speaker 1: when there was a very high cost to execute trades. 313 00:17:16,240 --> 00:17:18,639 Speaker 1: And what market cap waiting does more than anything, is 314 00:17:18,640 --> 00:17:21,000 Speaker 1: it manages the liquidity of the holdings. The most liquid 315 00:17:21,080 --> 00:17:23,520 Speaker 1: names get the biggest allocations, and it was a way 316 00:17:23,600 --> 00:17:26,639 Speaker 1: for for you know fund companies or you know Vanguard 317 00:17:26,640 --> 00:17:28,800 Speaker 1: in particular, to manage the expenses of the trading in 318 00:17:28,840 --> 00:17:32,080 Speaker 1: the fund. But it was never optimized for returns. And 319 00:17:32,119 --> 00:17:33,920 Speaker 1: we think there are more optimal ways, and that's where 320 00:17:33,920 --> 00:17:35,760 Speaker 1: we get to the reverse cap waiting. We think it's 321 00:17:35,760 --> 00:17:37,600 Speaker 1: exactly that. It's the it's the other side of the 322 00:17:37,600 --> 00:17:39,560 Speaker 1: trade and that is where we think we can really 323 00:17:39,560 --> 00:17:43,200 Speaker 1: optimize you performance returns. Phil Back, thank you so much 324 00:17:43,200 --> 00:17:46,040 Speaker 1: for being with us. Phil Back is chief executive officer 325 00:17:46,160 --> 00:17:50,040 Speaker 1: of Exponential ETFs, which is based in an arbor, Michigan, 326 00:17:50,080 --> 00:18:06,600 Speaker 1: but he joins us here in our live in three studios. Well, 327 00:18:06,680 --> 00:18:10,639 Speaker 1: we talk a lot about tariffs and the increasing trade 328 00:18:10,720 --> 00:18:14,560 Speaker 1: tensions between the US, China, and Europe. Here to talk 329 00:18:14,600 --> 00:18:17,840 Speaker 1: about this all from a first hand perspective. From the 330 00:18:17,880 --> 00:18:21,280 Speaker 1: CEO seat is Eric Fearwald. He is chief executive officer 331 00:18:21,359 --> 00:18:26,800 Speaker 1: of Senta based in Basel, Switzerland, but is a broad 332 00:18:27,119 --> 00:18:31,680 Speaker 1: company that was acquired by Kim China. Acquisition was completed 333 00:18:31,880 --> 00:18:35,679 Speaker 1: last year and does business across the world. Eric, thank 334 00:18:35,720 --> 00:18:38,640 Speaker 1: you so much for being here. So let's start there. 335 00:18:38,880 --> 00:18:42,040 Speaker 1: How have you already seen some of these trade tensions 336 00:18:42,200 --> 00:18:45,800 Speaker 1: trickle into your every day. Well, so far there has 337 00:18:45,840 --> 00:18:49,119 Speaker 1: not been significant impact. Um. There obviously is a lot 338 00:18:49,160 --> 00:18:53,200 Speaker 1: of concern about tariffs being being levied by China for 339 00:18:53,680 --> 00:18:59,639 Speaker 1: soybean imports from the US, which would be a significant 340 00:18:59,640 --> 00:19:03,200 Speaker 1: impact because then then likely China would end up buying 341 00:19:03,240 --> 00:19:06,840 Speaker 1: more soybeans from other markets. The U s farmer is 342 00:19:06,880 --> 00:19:09,639 Speaker 1: the most productive in the world. It's our most important market. 343 00:19:10,119 --> 00:19:12,760 Speaker 1: We bring out new technology and United States first. We 344 00:19:12,880 --> 00:19:16,040 Speaker 1: do most of our research here. Our global seed businesses 345 00:19:16,080 --> 00:19:20,399 Speaker 1: located here, headquartered here, so that's really important market for US. 346 00:19:20,760 --> 00:19:23,159 Speaker 1: So we would hate to see that happen. On the 347 00:19:23,200 --> 00:19:25,840 Speaker 1: flip side, Lisa, we see this as a huge opportunity 348 00:19:26,320 --> 00:19:29,719 Speaker 1: for US agriculture to be part of the solution instead 349 00:19:29,760 --> 00:19:33,000 Speaker 1: of part of the problem. There's a great opportunity for 350 00:19:33,240 --> 00:19:37,399 Speaker 1: US agriculture to export more grain, more soybeans and other grains, 351 00:19:37,880 --> 00:19:40,800 Speaker 1: as well as ethanol because China is going to an 352 00:19:40,840 --> 00:19:44,720 Speaker 1: E ten policy temper cent ethanol to to help their environment, 353 00:19:45,240 --> 00:19:48,960 Speaker 1: as well as more meat exports. There's today significant amount 354 00:19:48,960 --> 00:19:51,560 Speaker 1: of poultry. There could be more meat exports, so we 355 00:19:51,640 --> 00:19:53,720 Speaker 1: could be a big part of the solution instead of 356 00:19:53,760 --> 00:19:56,159 Speaker 1: the part of the problem. Speak if you can a 357 00:19:56,240 --> 00:19:58,840 Speaker 1: little bit about the context in which you operate, because 358 00:19:58,920 --> 00:20:01,800 Speaker 1: I know that you've done some and acquisitions. One is, uh, 359 00:20:01,960 --> 00:20:07,040 Speaker 1: what is it Abbott and Cobb cut right? And um right, Abbot, 360 00:20:07,600 --> 00:20:11,879 Speaker 1: Abbot and Cobb. And I'm tell us about the acquisitions. 361 00:20:11,920 --> 00:20:14,080 Speaker 1: Did I'll get to the China question. Yeah, so we were. 362 00:20:14,200 --> 00:20:16,880 Speaker 1: We were acquired June of last year by KEM China 363 00:20:18,280 --> 00:20:21,000 Speaker 1: forty four billion, by far, the biggest deal that China's 364 00:20:21,000 --> 00:20:24,920 Speaker 1: ever done overseas. And since then they've been very supportive 365 00:20:24,960 --> 00:20:27,440 Speaker 1: of more investment in the base business. We've invested in 366 00:20:27,520 --> 00:20:31,359 Speaker 1: more commercial people, more research, um, more breeding for our 367 00:20:31,400 --> 00:20:34,240 Speaker 1: seed business around the world, and we've done a number 368 00:20:34,240 --> 00:20:36,800 Speaker 1: of acquisitions four and out so far. But I can 369 00:20:36,840 --> 00:20:38,800 Speaker 1: tell you there's a number of others in the pipeline. 370 00:20:39,280 --> 00:20:41,360 Speaker 1: And of those four that have done so far, two 371 00:20:41,400 --> 00:20:44,800 Speaker 1: are in seeds, one large corn and soy bean business 372 00:20:44,920 --> 00:20:48,560 Speaker 1: seed company in South America, Brazil and Argentina called ne 373 00:20:48,720 --> 00:20:52,000 Speaker 1: Dara Seeds. And then one vegetable seed company Abbott and 374 00:20:52,080 --> 00:20:55,000 Speaker 1: Cobb here in the US that it's a leader in 375 00:20:55,080 --> 00:20:59,040 Speaker 1: sweet corn for for food consumption and we're going to 376 00:20:59,080 --> 00:21:02,359 Speaker 1: globalize that two of them are in the digital space, 377 00:21:02,480 --> 00:21:05,359 Speaker 1: which is a hot area in agriculture. One is a 378 00:21:05,440 --> 00:21:09,000 Speaker 1: farm management system digital system for for farmers in Brazil, 379 00:21:09,160 --> 00:21:11,560 Speaker 1: which has had a lot of progress in Brazil. And 380 00:21:11,640 --> 00:21:13,840 Speaker 1: another is called farm Shots, which is which is a 381 00:21:14,000 --> 00:21:18,320 Speaker 1: digital imaging company, a satellite digital imaging company that has 382 00:21:18,359 --> 00:21:21,960 Speaker 1: applicability all over the world. So very exciting support that 383 00:21:22,000 --> 00:21:25,040 Speaker 1: we've been getting from cam China already, and we see 384 00:21:25,119 --> 00:21:29,760 Speaker 1: more both in strengthening our base business and the biggest 385 00:21:29,800 --> 00:21:33,159 Speaker 1: opportunity for that in China because the China market is 386 00:21:33,440 --> 00:21:36,080 Speaker 1: ripe for it. There's no company with significant market share 387 00:21:36,119 --> 00:21:38,199 Speaker 1: and either seeds or crop protection. We see that as 388 00:21:38,200 --> 00:21:42,359 Speaker 1: an opportunity but also in in in further acquisitions. All right, 389 00:21:42,400 --> 00:21:45,800 Speaker 1: then to follow up on the China context, and uh, 390 00:21:46,280 --> 00:21:48,800 Speaker 1: can you describe if someone just say to you, what's 391 00:21:48,880 --> 00:21:51,560 Speaker 1: the economic health of the U. S. Farmer right now? 392 00:21:52,480 --> 00:21:56,639 Speaker 1: It's the U. S. Farmer is really challenged by the 393 00:21:57,160 --> 00:22:02,840 Speaker 1: global commodity low prices in Agrican culture um and the 394 00:22:03,040 --> 00:22:06,399 Speaker 1: US farmer gets the lowest subsidy of any farmer in 395 00:22:06,440 --> 00:22:09,640 Speaker 1: the world except for Australia. Every other farmer gets more 396 00:22:09,760 --> 00:22:13,080 Speaker 1: subsidy as a percentage of of their their price selling price. 397 00:22:13,840 --> 00:22:16,760 Speaker 1: But the good news is the U. S. Farmer is 398 00:22:16,840 --> 00:22:21,800 Speaker 1: by far the most productive and for those concerned about 399 00:22:21,840 --> 00:22:25,240 Speaker 1: climate change, has the least impact on the climate. Because 400 00:22:25,359 --> 00:22:29,360 Speaker 1: of the productivity, there's less greenhouse gas emissions, there's less 401 00:22:29,400 --> 00:22:33,600 Speaker 1: water consumption. UH. An environmentally sustainable way the U. S. 402 00:22:33,680 --> 00:22:37,040 Speaker 1: Farmer is it has the highest yields, the lowest cost, 403 00:22:37,520 --> 00:22:40,760 Speaker 1: and and the most environmentally sustainable. So I think the 404 00:22:42,400 --> 00:22:45,800 Speaker 1: farmer in the US that owns their farm, owns their 405 00:22:45,880 --> 00:22:50,120 Speaker 1: land is still very healthy. Those that rent are are challenged. 406 00:22:50,680 --> 00:22:53,080 Speaker 1: But I think the future is still bright because the 407 00:22:53,720 --> 00:22:57,520 Speaker 1: demand for agricultural products continues to grow with population and 408 00:22:57,640 --> 00:23:00,399 Speaker 1: poor people getting wealthier and starting to eat meat. So 409 00:23:00,560 --> 00:23:03,280 Speaker 1: so there's still great opportunity for the American farmer. So 410 00:23:03,560 --> 00:23:05,280 Speaker 1: I I want to ask, I want to shift our 411 00:23:05,280 --> 00:23:08,760 Speaker 1: focus to Europe from the U as the European Union 412 00:23:08,880 --> 00:23:10,560 Speaker 1: is expected to vote this week and whether to ban 413 00:23:10,920 --> 00:23:14,600 Speaker 1: a certain pesticide that is associated with b deaths. UH. 414 00:23:14,760 --> 00:23:19,960 Speaker 1: This could potentially harm your business. No, well, Europe. Europe 415 00:23:20,000 --> 00:23:22,160 Speaker 1: has had now a history of a number of years 416 00:23:23,040 --> 00:23:26,960 Speaker 1: of of of going away from agriculture. Technology and the 417 00:23:27,119 --> 00:23:31,480 Speaker 1: European farmer productivity declines. Why the rest of the world 418 00:23:31,520 --> 00:23:33,520 Speaker 1: gets better as as as the rest of the world 419 00:23:33,640 --> 00:23:38,480 Speaker 1: uses modern agricultural technology tools. So to us, the U 420 00:23:38,640 --> 00:23:41,359 Speaker 1: s farmer just gets more productive relative to Europe, the 421 00:23:41,440 --> 00:23:44,440 Speaker 1: Brazilian farmer, the Argentina that the demand will be met 422 00:23:44,560 --> 00:23:46,920 Speaker 1: by someplace in the world, and we supply everywhere in 423 00:23:46,960 --> 00:23:49,760 Speaker 1: the world. So for us it's neutral, but unfortunately for 424 00:23:49,840 --> 00:23:53,359 Speaker 1: the European farmer it's it's it's a big negative. I 425 00:23:53,400 --> 00:23:54,800 Speaker 1: want to thank you very much for coming in and 426 00:23:54,880 --> 00:23:58,600 Speaker 1: spending time with us. Erica Fearwald is the chief executive 427 00:23:58,720 --> 00:24:03,000 Speaker 1: of cent Genta. They are a global seed and agriculture company. 428 00:24:03,000 --> 00:24:06,280 Speaker 1: They are based in Bosel, Switzerland and once again the 429 00:24:06,359 --> 00:24:09,720 Speaker 1: completed deal to takeover by KEM China in Juno last 430 00:24:09,800 --> 00:24:28,600 Speaker 1: year for forty four billion dollars. One holy grail in 431 00:24:28,640 --> 00:24:32,040 Speaker 1: the pharmaceutical industry is a cure for cancer. Pair that 432 00:24:32,480 --> 00:24:35,159 Speaker 1: with an answer to the opioid epidemic, and you have 433 00:24:35,680 --> 00:24:39,080 Speaker 1: something quite interesting joining us now to talk about some 434 00:24:39,400 --> 00:24:43,480 Speaker 1: new cancer treatments as Dr Silvieu Tescu, his chief executive 435 00:24:43,480 --> 00:24:46,639 Speaker 1: officer of meso Blast, which is based in Melbourne, Australia, 436 00:24:46,680 --> 00:24:49,040 Speaker 1: but he joins us here in our eleven three oh studios. 437 00:24:49,080 --> 00:24:51,359 Speaker 1: So Dr Tescu, can you just start with what is 438 00:24:51,440 --> 00:24:53,320 Speaker 1: meso Blast? Can you talk a little bit about the 439 00:24:54,040 --> 00:24:57,200 Speaker 1: stem cell drug treatments that are all in late stage 440 00:24:57,240 --> 00:25:01,200 Speaker 1: phase three clinical trials? Sure, thanks for having me as a. 441 00:25:01,240 --> 00:25:04,560 Speaker 1: Blast is a public listed company both here on NASDAC 442 00:25:05,160 --> 00:25:08,240 Speaker 1: as well as on the Australian Stock Exchange. We're developing 443 00:25:08,680 --> 00:25:13,040 Speaker 1: late phace therapy is based on a common platform technology 444 00:25:13,080 --> 00:25:17,640 Speaker 1: called Misenkamal lineage cells. These cells are able to respond 445 00:25:17,800 --> 00:25:22,800 Speaker 1: to inflammation by releasing factors that switch off damaging inflammation 446 00:25:23,119 --> 00:25:26,719 Speaker 1: and at the same time help rebuild damaged tissues. Um 447 00:25:26,960 --> 00:25:31,119 Speaker 1: The cells themselves are highly scalable. We industrially manufacture them, 448 00:25:31,160 --> 00:25:34,359 Speaker 1: We understand the mechanisms of action, and we are able 449 00:25:34,400 --> 00:25:37,879 Speaker 1: to generate off the shelf therapeutics that targets some very 450 00:25:37,960 --> 00:25:42,159 Speaker 1: large unmet diseases and unmet needs in terms of cancer. 451 00:25:42,280 --> 00:25:45,400 Speaker 1: You're you're you're doing about our recently completed face free 452 00:25:45,480 --> 00:25:48,800 Speaker 1: program in children with graph versus host disease, which is 453 00:25:48,800 --> 00:25:52,439 Speaker 1: a devastating complication of a bomarrow transplant for children who 454 00:25:52,480 --> 00:25:56,960 Speaker 1: otherwise have been cleared of their underlying cancer. Fifty of 455 00:25:57,200 --> 00:26:00,840 Speaker 1: children who and and adults who undergo BOMAT transplants from 456 00:26:00,840 --> 00:26:05,760 Speaker 1: an unrelated donor developed graphers host disease, which in severe stages, 457 00:26:06,000 --> 00:26:09,240 Speaker 1: particularly children, has as high as seventy percent mortality rate 458 00:26:09,920 --> 00:26:14,160 Speaker 1: in a In a fifty patient face retrial, we demonstrated 459 00:26:14,240 --> 00:26:19,000 Speaker 1: that over seventy percent of children treated with ourselves responded 460 00:26:19,760 --> 00:26:24,440 Speaker 1: UH and and had had clear improvement in outcomes, and 461 00:26:24,560 --> 00:26:27,160 Speaker 1: we met the pre specified primary endpoint of the FDA 462 00:26:27,240 --> 00:26:30,040 Speaker 1: put in place for us to move forward with a 463 00:26:30,160 --> 00:26:34,440 Speaker 1: new treatment paradigm to treat this devastating condition UM. We 464 00:26:34,960 --> 00:26:38,080 Speaker 1: expect to be reporting in the next over the next 465 00:26:38,840 --> 00:26:41,600 Speaker 1: couple of months. This quarter really on on the overall 466 00:26:41,640 --> 00:26:44,520 Speaker 1: survival of these children at a hundred days UM and 467 00:26:44,640 --> 00:26:47,440 Speaker 1: then subsequently a day one eight and on the basis 468 00:26:47,560 --> 00:26:50,679 Speaker 1: of of those results, we expect to be to get 469 00:26:50,720 --> 00:26:52,200 Speaker 1: in front of the FDA towards the end of this 470 00:26:52,359 --> 00:26:55,840 Speaker 1: year and talk about what what filing for approval looks like. 471 00:26:56,800 --> 00:27:01,800 Speaker 1: As a cellular medicine company, where did the cells originally 472 00:27:02,040 --> 00:27:05,639 Speaker 1: come from? We have a very very well established program 473 00:27:05,760 --> 00:27:08,600 Speaker 1: to obtain the cells from healthy donors. We have a 474 00:27:08,680 --> 00:27:12,119 Speaker 1: donor program that's here in the United States. UM. We 475 00:27:12,480 --> 00:27:17,560 Speaker 1: obtain the cells from healthy young donors of the ages 476 00:27:17,600 --> 00:27:22,919 Speaker 1: of eighteen four roughly and and these unique cells are 477 00:27:22,960 --> 00:27:26,200 Speaker 1: then extracted and they're able to be expanded in very 478 00:27:26,280 --> 00:27:30,240 Speaker 1: large numbers, so they can be ultimately put put into 479 00:27:30,400 --> 00:27:34,840 Speaker 1: vials and shipped and they generated really an off the 480 00:27:34,880 --> 00:27:38,680 Speaker 1: shelf product for various indications. Our whole manufacturing process is 481 00:27:38,760 --> 00:27:42,760 Speaker 1: industrial and we're able to delineate each product based on 482 00:27:42,800 --> 00:27:46,960 Speaker 1: our manufacturing capability. So our product for graphers host disease 483 00:27:47,040 --> 00:27:49,840 Speaker 1: is distinct from our product that's currently in phase three 484 00:27:49,880 --> 00:27:52,359 Speaker 1: for chronic heart failure, from our product that's currently in 485 00:27:52,440 --> 00:27:55,960 Speaker 1: phase three for chronic low back pain. From severe the 486 00:27:56,000 --> 00:27:59,760 Speaker 1: generation of the disks. What's common to these various disparate 487 00:27:59,840 --> 00:28:02,959 Speaker 1: can auditions is that they're all they're all derived from 488 00:28:03,080 --> 00:28:08,240 Speaker 1: severe inflammation, and ourselves are very very potent eveno modulatory 489 00:28:08,520 --> 00:28:11,680 Speaker 1: agents that can switch off damaging inflammation in a way 490 00:28:12,119 --> 00:28:14,720 Speaker 1: that you just cannot get with other small molecules or 491 00:28:14,760 --> 00:28:17,400 Speaker 1: monoclon on anybody's So this is a whole new way 492 00:28:17,480 --> 00:28:21,280 Speaker 1: of treating the most severe forms of inflammatory conditions. Dr 493 00:28:21,320 --> 00:28:24,040 Speaker 1: at TUSCU I'm just curious. What you're talking about sounds 494 00:28:24,040 --> 00:28:27,760 Speaker 1: incredibly promising, especially the idea of it being uh, you know, 495 00:28:27,880 --> 00:28:30,960 Speaker 1: marketable in a quick sort of trial to shelf type 496 00:28:31,000 --> 00:28:37,200 Speaker 1: of transition. Why are the shares down seven in the US? Well? Yeah, Look, 497 00:28:37,240 --> 00:28:41,560 Speaker 1: I think there's there's a general perception that that we 498 00:28:42,160 --> 00:28:45,880 Speaker 1: we need to have sufficient capital to bring these products 499 00:28:45,920 --> 00:28:49,840 Speaker 1: to market. And I think what we're able to demonstrate, 500 00:28:49,840 --> 00:28:54,400 Speaker 1: and we have recently through a through a a partnership 501 00:28:54,440 --> 00:28:58,640 Speaker 1: with UM with Hercules with up to seventy five million 502 00:28:58,640 --> 00:29:02,400 Speaker 1: dollar draw down facility, is that we're able to raise 503 00:29:02,440 --> 00:29:05,320 Speaker 1: substantial amounts of capital when we need it in order 504 00:29:05,360 --> 00:29:09,200 Speaker 1: to support the launch capabilities and plans that we have 505 00:29:09,280 --> 00:29:12,520 Speaker 1: in place. What about the public debt markets or other 506 00:29:12,600 --> 00:29:15,120 Speaker 1: types of ways to get financing given how low interest 507 00:29:15,240 --> 00:29:18,480 Speaker 1: rates are at this point, That's exactly what we're addressing 508 00:29:18,520 --> 00:29:23,000 Speaker 1: in the Hercules UH program is, in fact, is a 509 00:29:23,320 --> 00:29:27,680 Speaker 1: debt structured outcome, which I think speaks strongly to the 510 00:29:27,960 --> 00:29:31,560 Speaker 1: the the opportunities in front of us, the fact that 511 00:29:31,640 --> 00:29:34,120 Speaker 1: we're able to back ourselves and that that folks like 512 00:29:34,240 --> 00:29:38,280 Speaker 1: Hercules have backed us um through through debt repayable on 513 00:29:38,920 --> 00:29:41,640 Speaker 1: future sales. I think it speaks to how mature the 514 00:29:41,720 --> 00:29:44,160 Speaker 1: pipeline is. Can you give us an update on the 515 00:29:44,240 --> 00:29:50,320 Speaker 1: treatment for chronic low back pain because of disc degeneration, 516 00:29:50,440 --> 00:29:55,160 Speaker 1: because that's about pain management, isn't it? Absolutely the the 517 00:29:56,320 --> 00:29:59,880 Speaker 1: the number one cause of opiate prescriptions today is in 518 00:30:00,040 --> 00:30:04,080 Speaker 1: chronic glow back paint. In fact, of opiate prescriptions are 519 00:30:04,160 --> 00:30:09,120 Speaker 1: written for patients with chronic unremitting back pain, predominantly from 520 00:30:09,200 --> 00:30:12,760 Speaker 1: degeneration of the intovertible discs. Most of these people are 521 00:30:12,920 --> 00:30:17,280 Speaker 1: relatively young, uh and and and have have a robust 522 00:30:17,520 --> 00:30:21,760 Speaker 1: working careers that are being you know, significantly impacted by 523 00:30:21,760 --> 00:30:25,000 Speaker 1: the chronic pain. And central to that is the inflammation 524 00:30:25,080 --> 00:30:29,240 Speaker 1: that goes on in this degeneration. So we've completed initially 525 00:30:29,320 --> 00:30:33,280 Speaker 1: a two D one patient phase two trial which demonstrated 526 00:30:33,320 --> 00:30:37,280 Speaker 1: that a single injection of our specially manufactured cells into 527 00:30:37,320 --> 00:30:41,920 Speaker 1: the disc alleviated pain in patients for at least two years, 528 00:30:42,840 --> 00:30:47,959 Speaker 1: quite a dramatic pain reduction associated with also improvement in function. 529 00:30:48,720 --> 00:30:51,080 Speaker 1: We've then gone on to phase three and have just 530 00:30:51,280 --> 00:30:55,160 Speaker 1: completed enrollment of a four hundred patient randomized, place ever 531 00:30:55,280 --> 00:30:59,920 Speaker 1: controlled Phase three trial. That's literally complete enrollment over the 532 00:31:00,080 --> 00:31:03,960 Speaker 1: last month or so, and we hope that that over 533 00:31:04,000 --> 00:31:07,440 Speaker 1: the over the next period, the release of data from 534 00:31:07,480 --> 00:31:11,040 Speaker 1: that trial will will confirm the initial observations that we 535 00:31:11,120 --> 00:31:14,640 Speaker 1: saw in Phase two. I think given the current crisis 536 00:31:14,960 --> 00:31:20,240 Speaker 1: in the opioid abuse area, I think we we potentially 537 00:31:20,320 --> 00:31:23,560 Speaker 1: have a treatment that could in the in the in 538 00:31:23,680 --> 00:31:27,040 Speaker 1: the treatment of patients with severe disease, be an alternative 539 00:31:27,280 --> 00:31:30,760 Speaker 1: and be used well in advance of anybody considering opiates. 540 00:31:30,800 --> 00:31:33,200 Speaker 1: So we're pretty excited about it. Just real quick. Has 541 00:31:33,240 --> 00:31:36,680 Speaker 1: the government expressed interest in this at all, So we're 542 00:31:37,160 --> 00:31:40,959 Speaker 1: certainly talking to the FDA around how best to progress 543 00:31:41,360 --> 00:31:44,520 Speaker 1: this product under Under the new guidelines of the FDA, 544 00:31:44,560 --> 00:31:48,640 Speaker 1: there's an accelerated pathway called regenerative medicine Advanced therapies for 545 00:31:49,400 --> 00:31:51,600 Speaker 1: disease that have high unmet needs, and in fact we've 546 00:31:51,600 --> 00:31:54,760 Speaker 1: already obtained one of these are met designations for chronic 547 00:31:54,840 --> 00:31:57,920 Speaker 1: heart failure in patients with end stage heart failure who 548 00:31:58,200 --> 00:32:00,240 Speaker 1: are so sick that they require ELEFF and we Gord 549 00:32:00,280 --> 00:32:03,280 Speaker 1: devising plant. Those patients have have a mortality that is 550 00:32:03,320 --> 00:32:05,960 Speaker 1: as high as most cancers. Thank you very much for 551 00:32:06,080 --> 00:32:09,040 Speaker 1: being with us and sharing this information and giving us 552 00:32:09,040 --> 00:32:12,600 Speaker 1: an update on the company. Dr Silvio Tescu is the 553 00:32:12,640 --> 00:32:19,360 Speaker 1: chief executive of Meso Blast. Thanks for listening to the 554 00:32:19,400 --> 00:32:22,480 Speaker 1: Bloomberg P and L podcast. You can subscribe and listen 555 00:32:22,520 --> 00:32:26,680 Speaker 1: to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform 556 00:32:26,760 --> 00:32:30,600 Speaker 1: you prefer. I'm Pim Fox. I'm on Twitter at pim Fox. 557 00:32:30,960 --> 00:32:34,440 Speaker 1: I'm on Twitter at Lisa Abramo. It's one before the podcast. 558 00:32:34,520 --> 00:32:37,120 Speaker 1: You can always catch us worldwide on Bloomberg Radio.