Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.
Speaker 1: Along with my co host Lisa Bramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether you're at the grocery store
Speaker 1: or the trading floor. Find the Bloomberg p m L
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Yesterday,
Speaker 1: the Curious Exchange Commission rejected her request to list a
Speaker 1: Bitcoin e t F run by the Winklevoss Brothers. They
Speaker 1: were study concerns about the reliability of trading and volume
Speaker 1: data for the cryptocurrency. Hester Purse was the only SEC
Speaker 1: commissioner to dissent from that ruler ruling, saying that she
Speaker 1: would have allowed the Bitcoin e TF to listen. She
Speaker 1: joins US now, commission or thank you so much for
Speaker 1: joining us. I want to start with why did you
Speaker 1: disagree with your colleagues on this issue? Sure, thanks for
Speaker 1: having me on. I I disagreed because it was really
Speaker 1: a technical disagreement. I think that the way this was
Speaker 1: presented to US is an exchange presented to US um
Speaker 1: this this a rule change which would allow them to
Speaker 1: trade this particular product and um, the standards by which
Speaker 1: we review that should be whether or not the exchange
Speaker 1: can manage trading in that product, and instead, I think
Speaker 1: we looked to the underlying bitcoin market and we um,
Speaker 1: we looked at things in that market that we we
Speaker 1: didn't like, and we said we're not going to let
Speaker 1: the product trade, which to me doesn't seem like the
Speaker 1: right approach at all. Commissioner person, I was reading your
Speaker 1: descent and I found it really interesting. The implication seemed
Speaker 1: to be that a bitcoin e t F may help
Speaker 1: actually bring more transparency to the market. Was I reading
Speaker 1: that correctly right? I think that in this case, it
Speaker 1: wasn't an e t F specifically, but an exchange traded product,
Speaker 1: which would would allow institutions to play a bigger role
Speaker 1: in the bitcoin market, which I think would would be
Speaker 1: good for the market, and I think would be good
Speaker 1: for retail investors as well. Just can you offer your
Speaker 1: definition of what is a cryptocurrency and what is behind
Speaker 1: the potential value in a cryptocurrency? Well, I think there
Speaker 1: are many different cryptocurrencies, so I think it's hard to
Speaker 1: provide one definition for all cryptocurrencies. Um. You know, bitcoin
Speaker 1: has been traded for quite some time, and and offers
Speaker 1: the ability for people to exchange value in a very
Speaker 1: efficient way. UM. And So you know, I think that
Speaker 1: there there are a lot of people think that there's
Speaker 1: real potential in bitcoin. UM. As I said in my descent,
Speaker 1: I'm not trying to make a judgment one way or
Speaker 1: the other on bitcoin or any cryptocurrency. I'm just trying
Speaker 1: to give investors an opportunity to participate in this market. So,
Speaker 1: Commissioner I was interested by a study that came out
Speaker 1: by coin Metrics this week that showed that up to
Speaker 1: two thirds of the transaction activity registered on the bitcoin
Speaker 1: network has no economic value, with volumes being more influenced
Speaker 1: by reshuffling balances between accounts and outright scams. So how
Speaker 1: did the Winklevoss brothers propose to offset that with their
Speaker 1: e t F that would give sort of more confidence
Speaker 1: to the institutional investors. Well, the way this product was
Speaker 1: set up, as it was pegged to the price on
Speaker 1: on one exchange to the auction the closing auction at
Speaker 1: the end of the day, and so that was that
Speaker 1: was how they chose to do it. There are other
Speaker 1: there are other approaches that one could take, and others
Speaker 1: have come in with different potential potential suggestions of how
Speaker 1: to do that. But again, I mean as you get
Speaker 1: more institutions involved, the markets are going to become more regular, regularized,
Speaker 1: and you know as to whether or not there's economic
Speaker 1: value in particular trading. I think we need to be
Speaker 1: careful in making those kind of kinds of judgments UM
Speaker 1: in our equity markets to there are people who are
Speaker 1: involved in the markets for all different reasons. We have
Speaker 1: people who are who are planning to buy and hold
Speaker 1: for long term, we have people who are holding for
Speaker 1: much shorter for much shorter time frames. And we have
Speaker 1: people who are UM providing liquidity and who are trading
Speaker 1: in and out quite rapidly, and all of those different
Speaker 1: people have a different function in the market. But but
Speaker 1: I don't think we need to make judgments about UM
Speaker 1: whether their their activity has value or not. Commissioner, do
Speaker 1: you think that there's a regulatory bias against bitcoin right
Speaker 1: now and cryptocurrencies because there are people questioning whether they
Speaker 1: have inherent value and whether they are a bubble that
Speaker 1: have sort of nothing behind them. Well, I think there
Speaker 1: are people who are questioning the value of bitcoin UM,
Speaker 1: and I think that as regulators, our role is not
Speaker 1: to judge investments, what the what the value of an
Speaker 1: investment is. It's to give people an opportunity to make
Speaker 1: those judgments themselves. UM. And you know, there are a
Speaker 1: lot of very very smart people who are very engaged
Speaker 1: in the crypto space and have UM have real ideas
Speaker 1: about how it could transform our lives. And I think
Speaker 1: we need to give those people an opportunity to UM
Speaker 1: work work with with what they have, and to to
Speaker 1: see what they can make of it. And and I'd
Speaker 1: rather that we as regulators make sure that disclosure is good,
Speaker 1: which is which is certainly a key part of our
Speaker 1: responsibility UM, but then allow investors to make their own choices. Commissioners,
Speaker 1: do you expect that your fellow commissioners will change their
Speaker 1: mind and could approve a bit coin or other cryptocurrency
Speaker 1: e t F in the near future. Well, I do
Speaker 1: think it's possible. I mean, things in this space are
Speaker 1: changing fast and and UM some of the concerns that
Speaker 1: have been laid out by the commission are ones that
Speaker 1: you know every day people are working on developing solutions
Speaker 1: and addressing those concerns. So I think if we work
Speaker 1: with people in this space, UM, we may be able
Speaker 1: to get more comfortable about things that that have, uh,
Speaker 1: that have raised concerns from my colleagues. So I can't
Speaker 1: speak for them, you know, I can say from my perspective,
Speaker 1: I think we could have gone forward with this with
Speaker 1: this particular et P, and I think that, uh, doing
Speaker 1: so would have been would have been the right thing
Speaker 1: to do for investors. What do you think should happen
Speaker 1: in order to mitigate the agency's concerns over fraudulent and
Speaker 1: manipulative acts or practices that could be perpetrated using cryptocurrencies. Well,
Speaker 1: I think that in many underlying you know, in many
Speaker 1: many assets, underlying products that trade on our exchanges, their
Speaker 1: concerns about manipulation and so um. Yeah, But what could
Speaker 1: specifically be in order to mitigate this having to do
Speaker 1: with cryptocurrencies because this is an unregulated offshore market, Well,
Speaker 1: there there are onshore markets and offshore markets, so you're
Speaker 1: you're right, it's a global marketplace, uh, And and there
Speaker 1: are players involved in this space who are very interested
Speaker 1: in making sure that there's no manipulation. And so there
Speaker 1: is quite a bit of self regulation going on right
Speaker 1: now to address manipulation or or charges The manipulation, and
Speaker 1: I think that's valuable um and I think if we
Speaker 1: were to bring in the possibility of more institutionalization in
Speaker 1: the market, I think there would be even more watching
Speaker 1: for manipulation that would be going on by people who
Speaker 1: definitely have skin in the game. So, yes, there there
Speaker 1: is manipulation and and and there is the potential from
Speaker 1: manipulation and lots of markets and and we uh, we
Speaker 1: can see that that people involved in the those markets
Speaker 1: take steps to address that. And and so obviously the
Speaker 1: exchange that would be offering this product has a real
Speaker 1: interest in making sure that it's offering a product that
Speaker 1: isn't being manipulated, and if it sees problems in the
Speaker 1: underlying it can step in and stop trading. We've got
Speaker 1: to leave it there, But I want to thank you
Speaker 1: very much for your time and your comments. Hester Purse,
Speaker 1: Securities and Exchange Commissioner, speaking about the rejection of the
Speaker 1: VINKL Boss Twins Crypto e t F. Another company that
Speaker 1: has been in the news is n XP a semiconductor
Speaker 1: Why because Qualcom was looking to acquire the company, but
Speaker 1: that deal has gone by the wayside. And here to
Speaker 1: tell us a little bit more about it is Rick Klemmer,
Speaker 1: President and the chief executive of an XP Semiconductors. Thank
Speaker 1: you very much for being here. Maybe just explain why
Speaker 1: do you believe the deal didn't get done. Well, you know,
Speaker 1: it's hard for us to understand completely. We don't think
Speaker 1: there was any real regulatory issue that prevented the transaction
Speaker 1: from being approved in China. It was approved by twenty
Speaker 1: something other countries around the world, so it really wasn't
Speaker 1: a true regulatory issue, So it was probably a political issue.
Speaker 1: But you know, at this point in time, it's all
Speaker 1: about how we move forward and how we can get
Speaker 1: back to driving the growth that's the best for our
Speaker 1: company and our shareholders. When you talk about moving forward,
Speaker 1: I have to wonder did you get about ten calls
Speaker 1: from other potential acquirers right after that saying hey, I
Speaker 1: want to meet for coffee. We haven't, and you know
Speaker 1: we don't plan on doing that. I mean, with the
Speaker 1: issue being the regulatory approval process, I don't know why
Speaker 1: it would be any different with anyone else. So you know,
Speaker 1: we have a bright future when you look at where
Speaker 1: we are, we're the leading semiconductor supplying to the automotive market,
Speaker 1: very focused on autonomas driving, which really in the next
Speaker 1: few years are actually probably next ten years, is about drive,
Speaker 1: making driving safer, not really automatic driving, and so we're
Speaker 1: focused on that. We're focused on facilitating the Internet of Things,
Speaker 1: which you know is going to have seventy five billion
Speaker 1: connected devices by three times what it is today. And
Speaker 1: our technology really is in a position where it can
Speaker 1: take advantage of that and really provides some useful solutions
Speaker 1: for everyone. Now, just to knowe you have a career
Speaker 1: that goes all the way back to the world of
Speaker 1: Texas instruments. Correct, Okay, Uh. The reason I bring that
Speaker 1: up is because an XP Semiconductor Phillips. I mean, that's
Speaker 1: really can you look forward into and tell us what
Speaker 1: do you think the chip company of the future is
Speaker 1: really gonna look like? Well, you know, we're trying to
Speaker 1: be sure that we're that. So I I get I
Speaker 1: get that. But it's come through a lot of acquisitions
Speaker 1: and combinations, and so we did a merger of equals
Speaker 1: about three years ago with three freest which was the
Speaker 1: Motorola Semiconductor company, and and that's proved to be very
Speaker 1: successful for us in the automotive space where we can
Speaker 1: bring the combination of both technologies together to be able
Speaker 1: to make a difference for our customers in the car industry.
Speaker 1: And so I think that those opportunities are really key.
Speaker 1: But it's about focusing on the future. And you know,
Speaker 1: we are in a unique position where we can provide
Speaker 1: the processing and the security because with all the hacking
Speaker 1: and risk of of hacking, being able to provide security
Speaker 1: in the connected world as a critical value. What did
Speaker 1: it do to morale to have this deal after so
Speaker 1: much hype and so much drama fall apart. You know,
Speaker 1: it was really interesting. Initially our organization was very excited
Speaker 1: about the combination with Qualcom. When the confusion came in
Speaker 1: when Broadcom made the hostile bid for Qualcom late last year,
Speaker 1: it really created a damper on the environment because no
Speaker 1: one was looking forward to be in a position to
Speaker 1: be there. But you know, we've gotten through that fatigue.
Speaker 1: Now the organization is re energized. We we had an
Speaker 1: all hands meeting after the morning after it was announced,
Speaker 1: and everyone was quite excited about the future and just
Speaker 1: having certainty and clarity about where we're going. Just to
Speaker 1: quickly when a client or a customer goes to a
Speaker 1: store and pays using their mobile phone like Apple Pay
Speaker 1: or Google Pay. What are they using an an XP product?
Speaker 1: Most likely they are. We have roughly a d eighty
Speaker 1: five percent market share in the mobile wallet. We invented
Speaker 1: NFC some near field communications, yes absolutely, which facilitates the
Speaker 1: mobile wallet, and so we're designed in and most of
Speaker 1: those applications to be able to do that. We see
Speaker 1: that expanding, especially in Asia where it's becoming much more
Speaker 1: useful used for transit and other applications. Uh in India,
Speaker 1: they're actually where people don't have a bank account are
Speaker 1: now using their phone basically as their bank account to
Speaker 1: facilitate transactions, to be able to store money, save money.
Speaker 1: So we're seeing a real boom in usage in the
Speaker 1: India for the population that really doesn't even have a
Speaker 1: bank account today. So you know, Apple talking about your
Speaker 1: smartphone use and and the smart pay. Apple has talked
Speaker 1: about possibly creating more of its own chips and trying
Speaker 1: to create more of its own infrastructure. How concerned are
Speaker 1: you about that? Well, you know, Apple has certainly got
Speaker 1: a bright future and they've clearly moved towards where they're
Speaker 1: creating a significant amount of their own technology. I think
Speaker 1: we're uniquely positioned with some key technology that they probably
Speaker 1: don't want to invest in to be able to drive
Speaker 1: based on the broad usage from a broad customer base
Speaker 1: where they wouldn't be able to serve. So I think,
Speaker 1: based on our experience, we think we have a good
Speaker 1: relationship with OLI our uh you know, mobile handset customers,
Speaker 1: and I think we can continue to make good progress there.
Speaker 1: Biometric passports. I love the details of this stuff, so
Speaker 1: I mean that's you as well, right, Biometric chips. We
Speaker 1: we do the chip that's used in the electronic passport
Speaker 1: that helps facilitate you know, processing information. So we do that.
Speaker 1: And I think any six countries around the world, what
Speaker 1: do you think is going to be the biggest smart
Speaker 1: market that is not smart right now? In other words,
Speaker 1: where chips going to be in the future that where
Speaker 1: they aren't today. You know it's gonna be ever place.
Speaker 1: You know, as you start thinking about seventy five billion,
Speaker 1: you know it's huge. And so like your thermostat, all
Speaker 1: thermostats are going to be connected. Security, your security and
Speaker 1: your home or office or industry is all going to
Speaker 1: be connected so you can see what's going on wherever
Speaker 1: you are around the during your work day or around
Speaker 1: travel or whatever. So I have regulators been working closely
Speaker 1: with you Is they start to get concerned about surveillance
Speaker 1: and safety and all that. We we work with a
Speaker 1: number of governments relative to how to provide that best security.
Speaker 1: But you know, with the new implementation of the you know,
Speaker 1: the new acts in Europe, we have to be very
Speaker 1: careful about that information and certainly we're working with them
Speaker 1: to be able to protect it but not ensure that
Speaker 1: it's not abused. Alright, well, I guess that uh, the
Speaker 1: future of an XP semiconductor as you see it right
Speaker 1: now independent. Absolutely, we look forward to continuing to drive
Speaker 1: a bright future. And is the M and A wave
Speaker 1: in the semiconductor space dead? You know, I don't know
Speaker 1: that it's dead. It's clearly going to go through a
Speaker 1: very thoughtful process. If this transaction didn't get approved in China,
Speaker 1: where it was approved by the twentysomething countries around the world,
Speaker 1: I think people are gonna have to really think about,
Speaker 1: you know, how much risk they want to take. Twenty
Speaker 1: one months is a long time to put your organization
Speaker 1: into a disruptive nature. So I think there will have
Speaker 1: to be a reflection associated with that. Did you feel
Speaker 1: any of the effects of the ban on purchasing products
Speaker 1: from China's ZTE Corporation purchase shipping product in Yes, we
Speaker 1: z T is a good customer of ours, and just
Speaker 1: last quarter we announced thirty one million dollar impact for
Speaker 1: the fact that the US had had prevented that from
Speaker 1: taking place. So I think they're a good customer. I think,
Speaker 1: you know, it's important that you know the UH the
Speaker 1: appropriate steps are taken to provide the security about information.
Speaker 1: But with the proper oversight, it seems like it's only
Speaker 1: appropriate for the company to be able to to be competitive.
Speaker 1: There are no US companies that are still in that
Speaker 1: market the ZT serves, so it's not certainly not like
Speaker 1: it's UH anti competitive for any US company. And they
Speaker 1: probably purchased around three and af or four billion dollars
Speaker 1: a year of semiconductor components, and my guess is sent
Speaker 1: percent of that is from US companies are US manufactured
Speaker 1: like our product is. So you know, I think it's
Speaker 1: a big decision, and you know, I I applaud what's
Speaker 1: been done recently where they're putting them in a little
Speaker 1: bit different fashion with appropriate oversight to protect U s
Speaker 1: national security, but yet at less, at least letting them
Speaker 1: continue to operate as an independent company. Rick Clamora, thank
Speaker 1: you so much for being with us. Really a pleasure
Speaker 1: to speak with you. You're such a celebrity and sort
Speaker 1: of star of this soap opera we've been talking about
Speaker 1: for so long. Uh, the potential tie up of Qualcom
Speaker 1: and n XP. Rick Klemmer as a president and chief
Speaker 1: executive of n XP Semiconductor's NXP Semiconductors to remain independent
Speaker 1: for the foreseeable future, you know, talk about another curveball.
Speaker 1: Investors in Twitter got a nice curveball and they whipped
Speaker 1: down right now. And here to tell us a little
Speaker 1: bit about Twitter's results and the changing nature of social
Speaker 1: media is Jim Anderson. He is the chief executive of
Speaker 1: social Flow. Uh. They are a company that sort of
Speaker 1: measures and monitors flows of information on social media. And
Speaker 1: in full disclosure, social Flow is a platform used by
Speaker 1: Bloomberg for social media purposes. Jim Anderson, thanks very much
Speaker 1: for being here. Tell us, did I describe what you
Speaker 1: do at all accurately? You did. We're the platform most
Speaker 1: of the big media companies used to get their content
Speaker 1: out to Twitter, Facebook, and other social platforms. We do
Speaker 1: a measure and sort of if you think about stock
Speaker 1: market analysts, we're not an analyst of the stocks, where
Speaker 1: an analysts consumer attention, right, And that's important because as
Speaker 1: a publisher, you want to know whether real people are
Speaker 1: really looking at your content. That's exactly right, that's the
Speaker 1: entire game. If you can't get real people to pay
Speaker 1: attention to what you're doing, why are you doing it? Okay?
Speaker 1: Is Twitter getting more real people to do what they're
Speaker 1: supposed to do on the Twitter platform? The irony is yes.
Speaker 1: I mean you wouldn't know it from their stock price,
Speaker 1: and I think the takeaway and Facebook in the same category.
Speaker 1: When you're a tech growth stock and you're not growing
Speaker 1: as much as is the market expected you to grow,
Speaker 1: you're you're going to be punished. But the reality is
Speaker 1: there are just as many, if not more, real people
Speaker 1: using Facebook and Twitter today then there were six months ago,
Speaker 1: three months ago, yesterday. I mean they're still growing, they're
Speaker 1: just not growing as fast as they were and as
Speaker 1: the market expects. And Twitter's results are sort of complicated
Speaker 1: a little bit by this whole bond problem, and they're
Speaker 1: trying to clean up their ecosystem when I think they
Speaker 1: deserve amazing credit for trying to do that. But the numbers,
Speaker 1: you know, the total accounts, and whether they report them
Speaker 1: and whether they were including the numbers, you see a
Speaker 1: lot of you know, sort of questions about how you
Speaker 1: count these things. Well, Jim, you know, it's interesting that
Speaker 1: you say that there are more real users that are
Speaker 1: paying attention and signing up for Twitter and Facebook. Roger mcnameee,
Speaker 1: one of the original investors in Facebook and currently head
Speaker 1: of Elevation Partners, was on Bloomberg Television yesterday and he
Speaker 1: said that he thinks that Facebook in particular is running
Speaker 1: out of potential users in its more profitable markets. Do
Speaker 1: you agree, yes. I mean Facebook's over two billion people
Speaker 1: and there's seven and a half billion people on the planet.
Speaker 1: You know that a significant number of them aren't going
Speaker 1: to be candidates for for Facebook for all kinds of reasons.
Speaker 1: So I think that's absolutely uh been on their horizon
Speaker 1: for a long time. It's an open question how far
Speaker 1: can they grow. Of course, you have to wrap up
Speaker 1: Instagram in there, which is owned by Facebook. You have
Speaker 1: to wrap up What'sapp. So again you get into these
Speaker 1: counting questions. But without a doubt that that point I
Speaker 1: think has to be front and center. How big can
Speaker 1: you possibly grow? Having said that, if you are an advertiser,
Speaker 1: what is the alternative? Is it Amazon? Well? Increasingly so.
Speaker 1: I mean I think it's interesting. You know, we talked
Speaker 1: about the fang stocks, right, Facebook, Apple, Amazon, Netflix, Google,
Speaker 1: and now you see the analysts starting to decouple Amazon.
Speaker 1: Amazon didn't hit his revenue target either, and there are
Speaker 1: stocks up four percent, but their profitability to make sense
Speaker 1: of Wall Street, which I know, it's it's kind of crazy.
Speaker 1: Well except for the fact that Amazon has demonstrated the
Speaker 1: ability to layer on higher margin services on top of
Speaker 1: a relatively low margin, low profit commerce business, and so
Speaker 1: Amazon is closer to the point of purchase than anybody
Speaker 1: out there, even Google. I mean, look at how profitable
Speaker 1: Google is. It knows when you type in the search
Speaker 1: box I want to, you know, go on a vacation
Speaker 1: or whatever. They know you're shopping for a vacation. That's
Speaker 1: one of the reasons Google is able to make so
Speaker 1: much money off of advertising. Amazon is poised to become
Speaker 1: an advertising powerhouse that they have fift of e commerce
Speaker 1: revenue in the US goes to Amazon. They know what
Speaker 1: I'm buying, and I say that in all candor, they
Speaker 1: know what probably what you're buying is once they get
Speaker 1: you in this store. Yeah yeah, But Jim, that raises
Speaker 1: a question for the profitability and usefulness of Facebook and
Speaker 1: UH and Twitter as advertising advertising behemoths because they don't
Speaker 1: have the direct channel to the actual retailers. I mean,
Speaker 1: could this be part of the issue that from a
Speaker 1: consumer engagement standpoint, Twitter and Facebook just are not the
Speaker 1: best places to advertise. I don't know that. I would
Speaker 1: say that. I I put Twitter and Facebook more in
Speaker 1: the category of Netflix, which may seem odd I mean,
Speaker 1: they they're completely different business models. You know, ones ad
Speaker 1: supported and free and the other is subscription and doesn't
Speaker 1: have ads. But they all three of those companies, Facebook, Twitter,
Speaker 1: and Netflix are really trying to get as much of
Speaker 1: your consumer attention as possible, essentially your recreational entertain information time.
Speaker 1: Amazon is really quite different. I don't know too many
Speaker 1: people who go to Amazon just to entertain themselves, right,
Speaker 1: I go to Amazon when I need to. You know,
Speaker 1: shopping is uh, shopping is an activity fair points, So okay,
Speaker 1: I guess my male bias here. I don't go to
Speaker 1: I'm just saying, you know, you look at what people
Speaker 1: purchase and how they purchase it, and you think did
Speaker 1: you need that? You know, you didn't need that, but
Speaker 1: you were there and you started clicking around and pretty soon,
Speaker 1: you know, another brown Box shows up. But then it
Speaker 1: raises a question entertainment, Right, what is the sort of
Speaker 1: uh I guess the Amazon. Is it as effective to
Speaker 1: advertise on that type of platform versus one where people
Speaker 1: are actually focused on actually buying things, they're opening up
Speaker 1: their pocketbooks. Well, you're getting into now, and this is
Speaker 1: a really big deal in the world of advertising, is
Speaker 1: sort of upper funnel brand awareness versus lower funnel direct response.
Speaker 1: And historically that the simple way to think of this
Speaker 1: was face Book was traditionally more upper funnel. You know,
Speaker 1: I just want your Volvo wants people to know that
Speaker 1: Volvo cars are great and safe and and you know,
Speaker 1: all the attributes they're trying to convey. Contrast that with
Speaker 1: sort of Google more click to buy. Right. I know
Speaker 1: that you're planning a trip to uh an exotic locale,
Speaker 1: and I want to sell you a hotel room or
Speaker 1: or airline tickets, and so all of advertising is tending
Speaker 1: to move towards more direct response, and so again Amazon
Speaker 1: is incredibly well poised to capitalize, and I think that's
Speaker 1: part of what we're seeing in the markets. Well, certainly
Speaker 1: that is what the investors believe. So you're seemingly on
Speaker 1: target there, because if you look at Amazon shares today, uh,
Speaker 1: they are up one and a quarter percent. Twitter shares
Speaker 1: not so much. Twitter shares down a little bit more
Speaker 1: than Thanks very much for being with us, Jim Anderson,
Speaker 1: Chief Executive. Social Flow. Alzheimer's is a crippling disease that
Speaker 1: affects millions of people. One company, as I, has created
Speaker 1: a drug that will slow the progression of the earliest
Speaker 1: stages of the devastating condition, and a new study show
Speaker 1: that it did so by thirty percent. The response, however,
Speaker 1: in the company shares with a steep decline. Joining us
Speaker 1: now is Ivan Chung, Chairman and chief executive of as I,
Speaker 1: which is based in Woodcliff Lake, New Jersey. Ivan, thank
Speaker 1: you so much for joining us. Were you surprised by
Speaker 1: the market's reaction given that this sounds like a pretty
Speaker 1: positive result. Thanks for having me. I'm not in a
Speaker 1: position to comment on the short term movements in the market,
Speaker 1: but um as we present it at the scientific Congress.
Speaker 1: This is the first large trial that if you could
Speaker 1: remove enough a lot of toxic amyloid plaque in the brain,
Speaker 1: it could slow down Alzheimer's disease. Mr Chung explained to
Speaker 1: our listeners the way in which cognitive ability was measured
Speaker 1: in the study, whose results were released at that Alzheimer's
Speaker 1: Association conference in Chicago. Thank you for the question. We
Speaker 1: use an endpoint called at cooms, which is a composite
Speaker 1: of the key elements from three well validated traditional measures.
Speaker 1: These three well validated traditional measures have been used for
Speaker 1: many years primarily to detect improvement in later stages of
Speaker 1: Alzheimer's disease, such as what as I developed almost twenty
Speaker 1: years ago are accept now we are testing to four
Speaker 1: SERO one in earlier stages of Alzheimer's disease because as
Speaker 1: you can imagine, these earlier stages of Alzheimer's disease patients,
Speaker 1: they're still functional, most of them are still at home.
Speaker 1: So we have to detect the initial milder changes so
Speaker 1: that we can delay the progression of these of this disease.
Speaker 1: And that's why we developed the atcoms which have the
Speaker 1: key elements that are more sensitive to the earlier onset
Speaker 1: of these milder cognitive impairments. UM. So I'm wondering, even
Speaker 1: just given the fact that there was definitely some proof
Speaker 1: in this study that there was a slowdown in the progression,
Speaker 1: but perhaps not as much as people were expecting, do
Speaker 1: you still see an accelerated approval as a possible path
Speaker 1: or a viable path to pursue for this drug. I
Speaker 1: think in the scientific community there are different numbers being
Speaker 1: thrown out. For example, improvement would be clinically meaningful. In
Speaker 1: our study, we specifically defined improvement will be clinically meaningful.
Speaker 1: As you saw in the presentation earlier this week, we
Speaker 1: have shown a thirty percent uh improvement in delaying the
Speaker 1: decline and progression of Alzheimer's disease. We definitely believe is
Speaker 1: clinically meaningful, and by two other measures, which are the
Speaker 1: more traditional measures. One we saw forty seven percent decline
Speaker 1: forty seven percent less decline and the other measure percent
Speaker 1: less decline. So we are confident about the robustness and
Speaker 1: the clinical meaningfulness of this data set. With regard to
Speaker 1: the Health authority and the FDA, let us do the work.
Speaker 1: We'll meet with them, we'll, I'm sure we'll have a
Speaker 1: productive conversation to understand the best path forward for pan
Speaker 1: too for CERO one. Not just to give a little
Speaker 1: more detail, there were there was a high dose arm
Speaker 1: to the study, right, yes, correct, tell people what is
Speaker 1: a high dose arm. The high dose arm is taking
Speaker 1: pen midigram per kg twice a month. That's the high
Speaker 1: dose arm. And in this study, the high dose arm
Speaker 1: is the one that's the best dose that showed statistically
Speaker 1: significant and means clinically meaningful results as what I described earlier. Okay,
Speaker 1: the reason I raised that issue is that European regulators
Speaker 1: have raised some concerns about some of the issues related
Speaker 1: to that high dose arm. They were worried about the
Speaker 1: threat of brain swelling. Right that was back in two
Speaker 1: thousand and uh fifteen when the trial was at the
Speaker 1: initial stage. At that time, none of us in the
Speaker 1: field knew too much about this phenomenon call old area E,
Speaker 1: and that's why the European authority took more conservative approach.
Speaker 1: Now the European Authority does not have that concern anymore.
Speaker 1: Together with our partner Baugan, we have two other Phase
Speaker 1: three late stage clinical development programs for two other compounds.
Speaker 1: We are in the European site and we have no
Speaker 1: such issues. That was a matter a few years back
Speaker 1: when the field didn't know much about how to take
Speaker 1: care of this issue, and now we don't have that
Speaker 1: issue anymore. All right, I want to thank you very
Speaker 1: much for helping us understand this a bit. Ivan Chung
Speaker 1: is the chairman and the chief executive of a SI.
Speaker 1: The parent company is ASI Company based in Tokyo, and
Speaker 1: he's talking about the release of new information having to
Speaker 1: do with their study of an Alzheimer's drug that was
Speaker 1: released at the Chicago Alzheimer's meeting on Wednesday. Thank you
Speaker 1: very much for joining us. Thanks for listening to the
Speaker 1: Bloomberg P and L podcast. You can subscribe and listen
Speaker 1: to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform
Speaker 1: you prefer. I'm pim Fox. I'm on Twitter at pim Fox.
Speaker 1: I'm on Twitter at Lisa Abramo wits one. Before the podcast,
Speaker 1: you can always catch us worldwide on Bloomberg Radio.