While still categorized as a Schedule 1 substance—and not approved by the FDA—some form of cannabis is legal in more than 60% of the country. In this week’s episode, we speak with Anthony Noto from Benzinga, where he gets into the weeds of this multi-billion dollar industry and the issues it faces.

TRANSCRIPT

Jeffrey Freedman: Hello and welcome to the RP HealthCast by Rooney Partners. I am your host Jeffrey Freedman.

Jeffrey: A very controversial yet almost mainstream subject over the past couple of years has been around cannabis. Whether it is from the potential medical benefits of CBD, which was tattered almost as a miracle cure for all elements, to medical marijuana dispensaries in certain States, or to approving cannabis for recreational use like they did throughout Canada last year. The bottom line is pots become big business. Cannabis, CBD, and medical marijuana have become large tax generators for the certain states that have legalized its use.

One of the interesting things about all of this is the lack of federal guidance and the actual powers that the state government has here. You see, eleven states have fully legalized recreational use of marijuana. Some states fully rejected sale and others have more of a wait-and-see approach. Why this is fascinating to me is because the federal government still classifies cannabis as a schedule one controlled substance. What does that mean? This is the highest level. This puts cannabis in the same category as heroin. To further the irony, thirty-three states plus Washington D.C. have approved medical marijuana for medicinal purposes under a doctor’s supervision and prescription. It is more than half the country, but the FDA whose sole purpose is to ensure the safety, efficacy, and security of all our approved medical drugs, does not even approve the use of medical marijuana, nor does it control any aspect of its distribution and sale. To try and make some sense of this and to break it down for us is our guest today, Anthony Noto. Anthony is an editor for Benzinga, and he covers the cannabis industry.

Anthony, thank you so much for joining us today.

Anthony Noto: Thank you so much for having me. It is an honor for me to be here. Usually, I am the one asking the questions and hosting folks for podcast episodes, so it is kind of a relief to be the one in the hot seat.

Jeffrey: Yes, so we are going to put the spotlight on you, but before we dive into your reporting on the cannabis industry, let us keep that spotlight. Let us talk about your career as a journalist and how you started even covering this industry.

Anthony: Yes, it actually started pretty recently last year. I actually did not write too much about it, but last year I met Tiki Barber of all people, and I have recorded a podcast with him. He launched a company called Grove Group, which is an investment firm that works with a lot of cannabis startups and CBD startups, and entrepreneurs in that space. I just found it fascinating. I realized that there was so much left to learn about the industry that I started looking into it more. I developed a lot of stories in that space on my own when I was with New York Business Journal. So when I saw that Benzinga was on the hunt for a cannabis editor, I basically said to them, I am your man. Then they were warm enough to welcome me on to their team. It has been great coverage ever since. I have learned a lot. Yes, it has been wonderful.

Jeffrey: Yes, I mean, the industry itself has gone through such an evolution in that time period. As you are saying, you are learning a lot and you are living in the industry, but for those of us that are kind of outside, there is a ton of confusion, misunderstanding, misinformation about all of these. So that is what I am hoping we could do right now on this podcast is talk about the facts. To do that, I want to start with some of the basics.Throw around some buzz words about the marijuana industry that people do not really get what is the difference between CBD and cannabis?

Anthony: Yes. This is a conversation that happens with a lot of folks especially those who are, no offense to seniors out there who might be listening, but a lot of folks do not know the difference, so that is a great place to start. I have had this conversation with my aunts and my mom. They have their aches and pains, and they do not want to take CBD because they are under the impression that it gets you high. That is the difference right there, CBD does not get you high. It is short for cannabidiol, which is not a fun word to say or it is for some folks, so they abbreviated to CBD. That high or that state of euphoria that so many people enjoy comes from the cannabis plant, but that has THC. CBD is extracted from that. It is put into a bunch of fun products like creams and gummies and such. You will hear about it from all over, from various celebrities, and former athletes who opt [?] in products that they say helps them feel better. It is true because it does make people feel better. It is used to alleviate anxiety and inflammation with little to no side effects. I actually do not know of any side effects that come with CBD products. Personally, I do not use them because I do not have aches and pains, thank goodness, but for the folks who do, like soccer stars Rachael Rapinoe and Brett Favre are into it now, and pro wrestlers promoted it on their podcast. It works, and it is not a an addictive substance like some prescription anxiety medications can be.

Jeffrey: Yes, it is interesting. So your statement of, so it works and there is a lot of people that use it. I think one thing we have to point out is, CBD is an unregulated supplement. Right? It is not approved per se by the FDA. It is touted as a miracle cure though for everything, from arthritis to depression to sleep disorders. Now the FDA, I will not say now, but over the past several months the FDA stepped in and started penalizing companies for making these health claims. All right, so can you talk a little bit about that in how we feel, in a lot of people that have taken CBD and believe in it, how we feel so strongly it has its benefits.

Anthony: Yes. Well if anybody touts anything as a miracle cure, it should be suspect because that is something that people have been doing for so long with the the snake oil salesman, that whole thing. You should be cautious. It should not be promoted as such. So when it comes to being a miracle cure, it is not but it certainly is a supplement. It is an in addition to the traditional things that could help that are as serious as cancer.

Jeffrey: Have there been any FDA trials or peer-reviewed reports about the benefits of CBD?

Anthony: No, they just started. I think like this year, they talked about it. So there are currently no, although there is one we talked about. There are no FDA approved drugs that contains CBD other than the epidiolex which was approved. That was when they had like zero other options for this particular type of condition. It is an oral solution for the treatment of seizures. There are literally no other options, so that is when the FDA was like, okay. They looked at GW pharma and they were like, you know, sixteen week trial went well, let us approve it. There are other things that CBD is used for, that FDA -well let me take it back a little bit because there was an announcement in March where the FDA said they just started to advance work in CBD related products. So, great they had to wait until 2020. I mean it is been years now that people have been using it to self-medicate. That is what people wants. They want just more studies done. They want more federal oversight. They want it legal. It is something that both conservatives and liberals on both sides really want according to polls. So it just kind of baffles me that, they had to wait until the middle of a pandemic when these businesses were deemed essential businesses, and people were flocking to their local dispensaries to stock up because they knew that they would lose it. They would not be there. The lines would be really long I guess. So yes, it is just bizarre that it just took this long.

Jeffrey: Yes, okay. So GW Pharmaceuticals and epidiolex that was FDA approved, I think in 2018 or 2019 for one small indication for seizures. I think they have expanded that indication. I think there are also three other synthetic cannabis related drugs that have been approved, but again all for very very small indications like for nausea with chemotherapy, and there was one for anorexia.

Anthony: Yes. I looked into it, and it seems like they were looking for options, healthy options to boost appetites. So the science of it, I will be honest I have not looked into it too much, but the science of why they approved those particular products that kind of escapes me. Whatever they did to disentangle the THC from the treatment, I think that is what helped the FDA process along, but to do that takes a tremendous amount of research in time. That is the key here medical marijuana is medical because you medicate with it. It is as simple as that. People self-medicate with a lot of things. The FDA does not approve medical marijuana because of the euphoria it brings about. It is baffling because there is so many other legal medications that make us feel weird. It is just this whole – they are still hung up on the War on Drugs pretty much. Until that changes, the stigma is till going to be with it, but I think we are headed in the right direction.

Jeffrey: Yes. I find that fascinating the term medical marijuana. It is approved in thirty-three states in the country, medical marijuana, yet the FDA, who is in charge of everything medical does not approve this. It is a class one drug along with heroin, so it is a bit of a hypocrisy .

Anthony: Yes. I have spoken to so many folks who are in the industry. They are doctors. They are investors. They are lawyers. They are financial advisors. They are accountants. They are food and culinary specialists. It is just every title you can imagine that you would find in other industries. All the regular players you see crop up in other types of spaces, and it is just like anything else. They drop various types of deals with each other, merger agreements, venture capital deals. In other industries no one bats an eye, but because these folks are in cannabis, they are left at a serious disadvantage in this. It is a long list of things that they cannot do because of this particular industry that they chose to work in. Even if you are not a user, I am not a user in my own right, but the folks that I have spoken to and our coverage in Benzinga, you just learn a lot and just from the perspective of someone who lives in America, where we dump our chest at the beauty of capitalism and how anyone can create any business here without anyone holding them back. It is just not true because some states have come around, like you said that thirty-three states plus Washington D.C., but only eleven of those states allow recreational use. A lot of those states, the social equity programs that are in place are faulty. In some areas it work, in some areas it does not, so a lot of folks have trouble getting licenses and that sort of thing. It is not fair, just from that perspective alone. I mean considering, America is supposed to be about. It is just incredibly difficult to get involved in an industry like this where our viewpoints are just so different depending on what state you live in.

Jeffrey: Our neighbors to the north, up in Canada, year and a half two years ago, full legalization, correct, of marijuana.

Anthony: Yes.

Jeffrey: Of the flower, I should say.

Anthony: Yes.

Jeffrey: Now, what are some of the things that we have been seeing from there? How has it been working? Has it increased crime? Have all these devastating effects that the non legalization people here in the states are foreboding, foretelling? Have we seen that happen in Canada due to their legalization?

Anthony: I do not think of anything about crime. I have not seen that. I think that if anything that was probably less crime because legalizing drugs is just probably the best way to get rid of crime. It is funny you mentioned CanEx. We just posted something today that throughout August the cannabis industry added forty-six stores across Canada. So they have I think close to one thousand one hundred stores across Canada. Since the start of 2020 Canada welcomed like four hundred and thirty new stores and that is a pretty big growth rate.

Jeffrey: It is big growth rate. It helps out the local economies based on the taxes that those stores pay and the retail.

Anthony: Yes. The interesting thing about it is that there is no one dominant player. Okay. So when you think of something like e-commerce, there are a lot of companies that do e-commerce, but Amazon is the champ in that respect. So that comes to mind when people think of ordering stuff on demand and when you think of streaming platforms. There are so many, there is literally a streaming – everybody has a streaming platform, but people Netflix and chill and people do not Hulu and chill, you know what I mean? So there are these names that stick out in every industry, but with cannabis there really is not. It really is a level playing field. A lot of mom-and-pop companies are just trying to hustle in their own right and get access to capital just like any other business.

Jeffrey: Because of the diversity of the states and the state laws, everything is different here in the United States versus Canada, where it is federally approved everywhere. We have other issues such as banking and finance issues, such as taking product across states and across state lines for your supply chain. Can you talk about these things, especially the banking or finance issues?

Anthony: Yes, that is something that actually drew me into the space to begin with. That was something that Tiki Barber was talking about, that is why he started Grove Group because these entrepreneurs do not have access to traditional financing. He has done some VC deals. He has done a couple of private equity type deals. It is tough for folks to break into this space, and that is beginning to change over the past year. I interviewed someone who is involved in lending, and her pipeline is tremendous. She has got a lot of activity in the works. So when you disadvantaged people like that in terms of entrepreneurs and in any other industry, they have the ability to seek financing from traditional banking, and in cannabis it is a lot tougher.

Jeffrey: A lot tougher. Maybe the industry is changing or coming back again, but if we take a look at over the past year with some of these cannabis stocks and cannabis companies – like one company that I followed for a while was company called Medmen. Medmen owned retail stores, as you were talking about. Walking into these types of new cannabis stores, it is like walking into an Apple Store as opposed to like an old-fashioned head shop or the back of a Spencer’s Store. Right? Now Medmen had an incredible rise and also an incredible fall which has been very well documented. Can you talk a little bit about companies like this that were such high flyers and kind of how that is paralleling the industry a little bit and what is going on now?

Anthony: Yes. One of the other companies that I started writing about last year before I joined Benzinga was a company called Anthus. I forget the exact debt number but I think that they are pretty saddled with that unless they find a financier or maybe they just filed for chapter eleven, who knows, but that will really hurt a company. So it varies in every situation, but the situation with Medmen, it is not something that is exclusive to the cannabis industry. I think it is a parallel to just industries in general. The mistakes that they made are very familiar. You get a company that is new. It is flashy. They brag. They scale very quickly. Then they go, well wait a minute. They start cutting costs, laying people off, and shutting down production facilities. That happens with a lot of companies in all types of industries. Every industry has that story. So WeWork was the, like I said, like every industry has like this dominant player, like Uber is the biggest on demand taxi service. WeWork wanted to be like the Uber of workspaces and a flexible work environment. They had a lot of competition, but everybody knew WeWork because it grew like it was on steroids. You had somebody like Adam Newman who spent money like a fool to be honest, and the people who had faith in him and ran those office spaces for him suffer the consequences. He gets paid. He splits. In the end you look at a narrative like that, and you learn what not to do. I think that was the situation, I am not saying it was exactly like that with Medmen, but it was very sour.

Jeffrey: So the early mover to an industry that makes a heck of a lot of sense may not have done the right things but had started the revolution?

Anthony: Yes, exactly.

Jeffrey: Thank you, that makes sense. Switching topics, before we laughed when I mentioned the word flower up in Canada. There is a number of consumer brands and spokespeople, right? You have mentioned a couple. Some spokespeople you kind of expect to be in the space like Snoop Dogg, Willie Nelson, Bob Riley’s family, but as I was doing my research, there are other names that surprised me a bit. You mentioned Tiki Barber. I saw Whoopi Goldberg, Montel Williams even Martha Stewart, right? So you mentioned Tommy Chong. What did he have to say? What was he like? Most of your interview like?

Anthony: Yes. Well, to just preface that with not every situation is the same. Different products are geared toward different things because the truth is not everybody wants the high and that is okay. Senior citizens want something for example that helps them with arthritis or an athlete might want a cream that helps them recover quickly. That is where you see folks like Rachael Rapinoe and Brett Favre and Tiki Barber. That is what pulls them into this space as well. Celebrities will hack anything but when it comes from an athlete where they are saying, look we use this because this will help prevent athletes who get injured from getting addicted to dangerous drugs. I mean my ears perk up a little bit differently than I would with the average celebrity. With Tommy Chong that conversation number one was easy. As soon as he got on the mic, he broke news that he had welcome the grandchild into the world. So that type of spontaneity makes a conversation, when you are a journalist, it is so easy to work with that and just to warm up the crowd a little bit, so we do not get so businessy right away. It was so much fun to just start it off with that. Then from there, he goes into just how much it has helped him. I should say that it is genuine with Tommy Chong. I think he is the truest ambassador of the space because like I said, celebrities will hack anything, but he is not just another celebrity. He strikes me more as like the way Stan Lee was with Marvel Comics. Just the true ambassador of the space where you just get a different feeling hearing him talk and hearing his voice – there is a genuine aspect to it. Like I said, he went to jail for it. He relied on it when he was beating cancer twice. He is sharp as attacking, and he says, he has not get high off of it. He does not get big to whatever, that was all part of the comedy act and whatnot. He describes himself as a one-hit type of guy, that the only bad weed is no weed. He was just a lot of fun. I think that when people look for the types of products or the brands that they –  There is a lot of posers out there, and they want something true that has a genuine quality behind it

Jeffrey: Awesome. What do you see going on in the US market? Do you think cannabis is going to have any role? Do you think it is one side positive, more positive than the other side for cannabis legislation?

Anthony: Yes, because Joe Biden put forward a plan. He has one but as far as I am concern, I do not think the other side has one. I think you will not hear much talk of it going into November, on the presidential election. If you zero in on certain ballots, you will see it. I started paying close attention to what they are doing in New Jersey. I think that is on the ballot for this year. I think what happens in Jersey might influence New York, where I am based in the years to come hopefully 2021. The current administration is not going to vocalize a plan. I do not think, I do not know if it fits into their nativist agenda. If you are looking for that conversation to happen, you are probably going to want to lean the other way. It was clear to me when this poll came out that, this might not be exact I can look it up and correct it for you, but most Republicans want cannabis reform on both the right and the left. So if by me as your president, that bodes well for the folks who want that. It is just as simple as that.

Jeffrey: Well, thank you. This has been both educational as well as fun. So I appreciate you coming on, Anthony. Thank you so much for your time today.

Anthony: Thank you so much for having me.

Jeffrey: We hope you enjoyed this week’s podcast. If you have any questions, comments, or future story suggestions, please reach out to us on social media. Thank you, and we hope you enjoyed the RP HealthCast.

Money’s senior healthcare writer Elizabeth O’Brien explains the difference between diagnostic and antibody tests and the advances that newer iterations need to make when it comes to speed and accuracy.

TRANSCRIPT

Jeffrey Freedman: Hello and welcome to The RP HealthCast by RooneyPartners. I am your host, Jeffrey Freedman. We have been covering and reporting on the coronavirus pandemic now for about six months. One of the common themes is the controversy around COVID testing, and this comes especially as the CDC has changed their guidance again this week. The questions are, are we testing enough? On the other side, are we overtesting and who exactly should be getting tested? We are even questioning the accuracy of the test after hearing about so many false positives or false negatives, and the FDA has taken certain tests off the market very recently due to inaccuracies. So, it raises the question, are some tests better than others and is a rapid test less reliable than a lab test? Why does it take over a week in some instances to get the results from these lab tests?

So, aside from testing to see if you have the virus, there are antigen tests to see if you have previously had COVID-19 and if your body has the necessary antibodies to fight off the virus but there are all different types of antigen tests either on the market or come into the market that tests different biomarkers inside your body, and we are unsure if one is more accurate than the other. And then, even if you are found to have antigens, the question is, do they last, and if so, for how long? There were the first confirmed reports this week of three people catching the coronavirus for the second time. To make sense of all this testing information for us is our guest this week, Elizabeth O’Brien. Elizabeth is a senior writer for Money Magazine who covers health care and retirement. Previously, she was a reporter for the Wall Street Journal’s Market Watch, Smart Money, and other financial publications. Elizabeth, thank you so much for joining me today.

Elizabeth O’Brien: Thanks for having me, Jeffrey.

Jeffrey: Great. Now, before we dive into your reporting on testing in the coronavirus, I want to introduce you to our audience and discuss your career. So, for the past five years, you have been with money, and you have been writing about retirement and healthcare topics but for the past, I think you said 18 years, you have covered healthcare, retirement, financial issues, and that is after receiving a Masters in Journalism from Columbia University. So, I guess you have always known you wanted to be a journalist, right? How did you get into this?

Elizabeth: Well, yeah. You would assume. That is a fair assumption but I was always that kid who loved to write. I remember, I think I was in fourth grade, one of my classmates and a good friend and I wrote a newsletter about the neighborhood. My parent’s xerox did the work. It was sold door-to-door for ten cents. So, I was that kid growing up.

Jeffrey: You were that kid?

Elizabeth: I was that kid, but I do not think I had a sense then that I wanted to be a journalist because I do not think I had a great sense of this. I did not have any journalists in the family. I do not think I just recognized it as a profession until I got a lot older. So, I did not grow up wanting to be a crusading journalist, even though I am sort of a child of the Watergate era, but it sort of developed later in college for me the idea to pursue it as a profession even though I had always loved to write.

Jeffrey: Well, that is great. It is interesting that currently, your beat right now is healthcare and retirement. That is a huge, really broad territory to cover. So, how do you pick your stories? I mean, there is only one of you.

Elizabeth: Yeah, that is a good question. It is a very broad beat. I do also edit freelancer stories. So, I do occasionally have help from freelancers but even so, I definitely have to be selective in what I can cover because of bandwidth issues. So, it is what is a money story? What do I need to keep my readers informed of? Are there any upcoming deadlines to be aware of for Medicare enrollment, for example? We had a special August 31st deadline to roll back your RMD for this year if you did not want it. There are some specific things relating to the coronavirus this year. So, in any case, it is just a matter of being selective, and I have been covering this a while, so I do have a sense of what I need to jump on for my readership and what I maybe can pass on.

Jeffrey: Right. I mean, today’s topic that we are going to discuss is pretty specific, and you have been writing about antibody testing.

Elizabeth: Mm-hmm.

Jeffrey: Huge topic right now. Very, very important. Let us start out on a very broad level. Let us talk about the differences between antibody testing and COVID testing if you could explain the difference.

Elizabeth: Yeah, that is a good question. So, the COVID testing, the diagnostic testing, you might have heard the phrase “PCR test,” that detects the presence of an active infection. So, if you have symptoms, you get that test to see or even if you do not have symptoms, plenty of people are getting it just to see if they have the virus regardless of whether they are symptomatic or not. That is typically conducted with the swab in your nose. It almost tickles the brain. It goes way deep into your nose, and that detects the presence of an active infection. Whereas, the antibody test is typically conducted several weeks after you have recovered. That can detect whether there are antibodies. That is a blood draw and that detects whether there are antibodies in your blood that indicate that your body has battled the coronavirus. The antibodies are sort of the foot soldiers in this battle against the disease, and if there are leftover in your blood, that means that you have fought the infection.

Jeffrey: Okay. I got it. That is clear. So, the big question in hand and, at first, we are going to be a little rhetorical, right? But for the most technologically advanced society in the world, the United States, why are we having such a difficult time getting the testing right? And I want you to answer the question, but for the listeners, I want to give some history here. So, at the beginning of the year, the Food and Drug Administration discovered contamination in two labs at the Centers for Disease Control and Prevention or the CDC, right? Then, the CDC introduced to the public some flawed diagnostic tests. Then, that was followed with the FDA just allowing everything, permitting scores of companies to sell antibody tests, and many of these tests were just snake oil. They were plainly flawed. They were completely inaccurate. So, some of these shoddy tests, some are actually still in the market, but they have taken most of them off the market. Meanwhile, obviously, the coronavirus is still spreading. We do not have any national standards for testing. The basic things like who, when, how, these are changing on a daily basis still. It is almost embarrassing. It is certainly appalling, all the missteps. How is this possible?

Elizabeth: Yeah, I would agree. It is embarrassing and really appalling what has been going on. I do not have any special insight because I have not done a lot of in-depth reporting on the federal response, to be honest. I focused a bit more on the science end but from what I understand, the US was really caught flat-footed. The Trump administration disbanded the pandemic task force that would have been poised to assist in this kind of situation back in 2018. They got rid of that. So, we are caught in this reactive mode of trying to play catch-up, and really, we should have been on top of it from the beginning. I understand that that is what happened in South Korea. That country had retained a lot of the infrastructure that they used to fight SARS way back in the early 2000s. So, even though that was quite a while ago, they had retained that infrastructure in place. So, they were really able to get on top of this new coronavirus when it started to emerge. Whereas, the US was caught flat-footed and really had to play catch-up and really just was sort of inept. There is probably even more ineptitude on top of the sort of the late response for sure, and it really has been discouraging because it has really led to this unchecked spread that we are now seeing.

Jeffrey: Yes, and without these guidelines or an agency that was specifically in-charge, it is kind of scrambling to get back because as you said it was dismantled in 2018. So now, we get there. Now we have the test but another problem has been the delay in testing results. So, that is outside the government. That is kind of like the quest in the LabCorp, those people. So, there was an interesting story. Elizabeth Rosenthal who is the Editor-in-Chief of Kaiser Health. Now, she published in the New York Times a story about waiting 12 days before receiving test results for her son, and in her quote was “Coronavirus testing in the United States has been bungled in every way imaginable”. That is pretty powerful coming from the Editor-in-Chief of Kaiser, right? So, what is your take on this? Is it just the 2018 dissolution of that agency, or is it the inability to rebuild this?

Elizabeth: I think, about the testing delays, we have a capacity issue, and I remember reading that story when it came out and I was struck by it as well. I think, the federal government made testing and when we say testing, in her case, this was a PCR testing. So, active infection testing and she waited for too long to get those results, and the federal government made these PCR tests free in many cases for adults which is a good thing. You do not want to have to pay for them, but just so many people then rushed to take advantage of it, and the quests of the world cannot process them in time. So, we have these massive delays in getting the PCR, the diagnostic test results back, and if you wait 12 days to get your results back, you might as well not have bothered at all. It is almost meaningless to get your results back so late, so it is really a shame.

Jeffrey: Absolutely agree. Every program that I am seeing, and school is starting, so we are trying to think if we had a federally mandated policy for schools or a national policy, how would that help? From personal experience, I know the University of Tampa does not do any testing. I know the State of New York, the SUNY schools, they test once to allow the kids into the dorms for the first time.

Elizabeth: Oh, interesting. Okay.

Jeffrey: And then you have schools like Tufts that test each student twice a week.

Elizabeth: Oh, wow.

Jeffrey: So, it is across the board. So, Margaret Bordeaux is the Research Director of the Program in Global Public Policy at Harvard Medical School and she wrote a couple of weeks back. She writes, “As summer turns to fall, slow and fragmented testing will fatally undermine the reopening of schools and universities whose plans are predicated on quickly identifying outbreaks in suppressing spread. Testing for millions of students will feed into an already failing national system”. Now, you talked before about the bottleneck of all the tests. Now, all these kids are going to school all at the same time right now. I have to imagine that is increasing the bottleneck. What are your thoughts, and what do you think we are going to see?

Elizabeth: Yeah, I would agree with you. I do not think we have gotten to the point where we can know where it is streamlined in and if the people can get tests back in a reliable manner to act on them, and it really is a shame because, as you said, the safe reopening is sort of predicated on having this infrastructure in place and it is really not. It is really not reliably in place to process these tests in time for students and faculty and administration.

Jeffrey: Yeah, and another thing that you mentioned before. You mentioned South Korea, how they still had their plans in place and they did a great job with their testing. One thing also that they have kept in place and have built, I should say, off of this has been contact tracing.

Elizabeth: Yes.

Jeffrey: Now, without rapid test results, contact tracing is impossible, is not it?

Elizabeth: Yes, it certainly becomes much more difficult because let us say you have a diagnostic, you have a test, and you wait a week or even two weeks to get those results, then you get back positive. Well, you have to think maybe in the subsequent two weeks you were waiting for results, you were in contact with that many poor people, and I guess the point of contact tracing is you have to then go back to everybody who you were in contact with and say, “Hey, I might have exposed you”, and then they have to reach out to their contacts and it is sort of this web of all the potential exposures, but yeah, it just becomes that much more difficult if you have to wait forever and have that many more potential people to have to reach out to. Not only that, but let us say you have to wait two weeks to get your results. Well, maybe you were negative. The diagnostic test is a snapshot in time. Are you infected or not at the moment of the test? Well, maybe you were negative at the moment of the test but you subsequently got went to a party and you got infected but you get your negative result back a couple of days after you go to that party. Well, that could lead you into a false sense of security because you are not actually negative. You have subsequently gotten infected but at that snapshot in time when you had your diagnostic test, you were not infected. So, there are so many problems with these delays in testing results.

Jeffrey: That is a fantastic point. Absolutely. All right, let us turn then to antibodies. Antibody testing. So, at the time you reported, there were 14 antibody tests on the market and some of these tests have been criticized for reporting false positives and false negatives. Now, why do not you explain what that means? What is a false positive, false negative, and is there a federal range where it is acceptable for these tests?

Elizabeth: Yeah, so the accuracy… Well, actually before I get into what makes an accurate antibody test, let us say a false positive as it sounds is when the test says you have antibodies in your blood but you actually do not. It picked up on something that is actually not. It registered something that was not there. So, it is a false positive. Whereas, a false negative, the test did not pick up on the presence of antibodies that were actually in your blood. They failed to detect the presence of antibodies, and we have been getting a lot of these because, especially in the beginning, these tests were coming out with wildly varying quality, some not very good at all and the accuracy of an antibody test depends on two factors. It is called the sensitivity and the specificity. The sensitivity gauges, whether the test can pick up on antibodies if they are present, and then the specificity is whether the test can detect the difference between the antibodies for the coronavirus versus the antibodies for the new coronavirus which is SARS COVID-2. That is the antibodies for that virus that causes a coronavirus versus other coronavirus. SARS was a coronavirus. MERS was a coronavirus. So, your body could have other coronavirus antibodies but not this specific one. So, if the test is not specific enough, it could pick up on the wrong antibodies. So, basically what you want to have on both of these two factors, the sensitivity and the specificity, you want it close to a hundred percent as possible. You want them in the high 90, in a 99%, 100%. If they are 100% specific and 100% sensitive, then that is a really accurate test but we have had tested especially the early ones that are nowhere near that, and they are thrown off a lot of especially false positives which can lead people into sort of a false sense of security.

Jeffrey: Right, and these are, as you said earlier, these are the blood tests, not necessarily the nasal swab test.

Elizabeth: Yes. These are the blood tests. Yeah. It is not a prick. They take a whole little while and they test the presence. They test for the presence of these antibodies.

Jeffrey: Okay. Now, from a biology point of view, there are many different aspects of this virus.

Elizabeth: Yep.

Jeffrey: And there are different tests that test for different parts of the virus. So, is one better than the other? If you find one, you have the other? Or if you are testing for one and it is not there but you could still have it?

Elizabeth: My understanding is that if you have one, you probably have the other. In other words, the immune response is a coordinated response. It is like the virus is the invading army, the immune response is the cavalry that comes in the different parts of that. I was talking to an immunologist yesterday who said that the first antibodies to rush in at the point of infection or kind of crappy, they do not stick that well, they are not great but they are fast so they try to hold off the invader until the more specific antibodies can come in and really attach, and then if the virus exceeds the antibody’s capacity, you have got some memory B cells to come in and then the T cells come later. So, it is this whole coordinated response. It really is quite amazing when you think about it, and for my understanding, if you have one of these immune pieces, if you have the T cells, you have got the other stuff like it all kind of comes. It all works together and they all eventually become present in your blood if you are fighting an infection.

Jeffrey: All right, and that is important. That whole jumbled soup that will call it. Now, these tests also test the number of antibodies in your blood, and the higher the antibody you have, the safer you are, correct?

Elizabeth: Well, that is what they had thought but it is interesting. This doctor I was talking to yesterday, his name is Dr. Deepta Bhattacharya. He is an Immunobiologist at the University of Arizona, and he recently did a test. It was really interesting. Initial tests had said– studies, I should say, had found that the presence of antibodies after you have recovered from the coronavirus several months past, your levels of antibodies fall and that was presented in some accounts, some reports of these studies as an alarming thing. “Oh, no our levels of antibodies go way down”. So, we are less safe but this doctor I talked to yesterday, Dr. Bhattacharya said, “Actually, it is not alarming. It is to be expected because the body cannot sustain that kind of really intense immune response forever”. The cavalry rushes in and they do their job, they fight the infection, and then when the threat retreats, they also retreat but they do not completely go away. They stay at these low levels and then if you get reinfected or if the virus tries to enter your body again, they jump, they spring into action. So, it is not necessarily a bad thing to have low levels of antibodies. They are just sort of lying and wait to be activated again if there is a future threat.

Jeffrey: Yeah, that makes sense. I mean, we heard this week, it was reported that there were three patients so far, confirmed reports that three patients have gotten the coronavirus now for the second time but all three of them are almost asymptomatic so it did not come back as hard. So, these memory cells make a lot of sense to me.

Elizabeth: Exactly. Yeah. Yeah, and apparently the T cells that hang around after the infection are not going to help you from getting reinfected but if you do get reinfected, they are going to help you from getting really sick. They are going to help mitigate the infection. So, yeah, they definitely are waiting to be reactivated in the event of a future threat.

Jeffrey: Got it. Now earlier, we talked about the lack of COVID testing, virus testing, but I think you wrote about already. I have definitely been reading the FDA granted emergency approval to two companies, Quidel Corp and Becton Dickinson, for the production of rapid antibody tests. Both companies reporting difficulty ramping up production. Can you talk about this? Is it hard? Is this something new? They have been doing this. This is what they do.

Elizabeth: Yeah. That is an excellent point. This is what they do so you would think that they would be able to marshal the resources in the event of a national crisis, which we indeed are in the middle of. Now, to be honest, I have not reported on this issue. The Wall Street Journal has, and their reporters have said that these two companies are having trouble sourcing needed materials like collection swabs and testing kits and they also, actually, not only do they make the tests, but they make this box that analyze the tests, and that is a good thing because if a doctor’s office or a school can get their hands on one of these analyzers, they can process their own samples and they are not sending them out to some big processing center that is going to get bottlenecked. So, it is good if you can get your hands on one but I guess they are having trouble ramping up production to make enough of them, and to the extent that they are able to make them. My understanding is that nursing homes are getting them first. So, the priority is going to the nursing homes, and there is less to go around for other places. So, why this is happening? I could not tell you.

Jeffrey: Yeah, it is a mystery to all of us. Great thing. You have one job. All right. So, last question. I just read the whole back-to-school thing. The Los Angeles Schools District, the whole LA school system will provide, now I will quote what they said, “Regular testing and contact tracing for every single student and employee in the district”. Now, that is over 675,000 students and teachers. Talk about a backlog and bottleneck.

ELizabeth: Yes.

Jeffrey: Let us talk about what are they going to be testing for. How do you think they can make this happen especially when nowhere else in the country has been successful in mass testing? How can they go out and raise the flag saying that is what they are going to do now?

Elizabeth: Yes. It is a very ambitious program, and my understanding is that the school district started remotely so they are not putting this into place immediately, but they want to get it into place for the eventual resumption of in-person learning, right? So, they are gonna be rolling it out over the coming months, and I do not know how they are going to do it. They, I think, are going to be using, this is going to be another diagnostic test to detect an active infection, but I think I was reading in the LA Times, it is going to be a saliva test. So, not this nasal swab. It might be a saliva test that you can administer yourself. So, potentially that takes away one element of the bottleneck. If you are able to get the test into the hands of people, they do it themselves but there are still plenty of other stages along that could potentially get bogged down. Those samples need to be collected. They need to be processed. The results need to come out. They are not doing it alone. They are doing it under the oversight of epidemiologists from Stanford UCLA Johns Hopkins, so they got some pretty smart minds looking over things. So, with any luck, they can make it work. If they succeed against all odds, that could be a great model for other systems.

Jeffrey: That would be that would be a fantastic model and one I would love to roll out nationwide. Elizabeth, thank you so much. This has been really, really educational, entertaining, interesting and you have been fantastic. I appreciate this.

Elizabeth: Well, thanks so much for having me. It has been fun.

Jeffrey: We hope you enjoyed this week’s podcast. If you have any questions comments, or future story suggestions, please reach out to us on social media. Thank you, and we hope you enjoyed the RP HealthCast.

In this week’s episode, we speak with Erin Griffith of The New York Times about the impact of the pandemic on start-up activity and the VC community.

TRANSCRIPT

Jeffrey Freedman: Hello and welcome to the RP Healthcast by RooneyPartners. I am your host Jeffrey Freedman. During this pandemic, there are certain aspects of our economy that have been hit harder than others. For example our restaurants and travel and event companies, a concert and entertainment venues, and countless other businesses that coordinate and celebrate people coming together. They have been devastatingly impacted and some beyond repair. In true, while larger companies are certainly set up to withstand the economic recession much better than their smaller brethren. One area of the economy that has not really been too impacted has been in the venture capital and startup space. The VC companies are flush with cash and they are still making prudent investments. And the newly funded small startups, they are nimble enough to adapt their business model to the changing times, and they have the capital to do it. To talk about this with us today is Erin Griffith. Erin is a New York Times journalist based in the San Francisco Bureau, where she reports on technology startups and venture capital. Before joining the Times, she worked as a senior writer at Wired and Fortune, reporting on topics ranging from self-driving cars and social media, to SoftBank and startup unicorns. Erin, thank you for joining us today. 

Erin Griffith: Thanks for having me. 

Jeffrey: Before we get into our topic today of how the VC and startup community has been affected by the pandemic, I want to introduce you to our listeners. 

Erin: Okay. 

Jeffrey: So, before joining the New York Times in 2018, you were a senior writer in places like Fortune and Wired in New York. Now, what brought you across the country to San Francisco? Was that a completely different scene in terms of the startup and VC community? 

Erin: Yeah. So, I mean, I had been covering the same beat, variously big Tech startups, venture capital, everything in between for I guess almost 10 years now. Before that, I was writing about private equity and finance, but I had been doing it from New York. And so, I thought that it was totally okay to cover the tech industry from New York because all the big executives and all the startups would come through the city and I fly out here often, and all the media was in New York so it worked out. But I will say actually being in San Francisco has made a little bit of a difference, not now in the pandemic when I cannot leave my apartment to go out and meet people and go to events and dinners and demo days, but there is a definite difference in being here and just sort of, tech is kind of in the air. It is like I am soaking it up by osmosis almost. It is definitely different in New York. When I was covering Tech, I would leave work and be out in the real non-Tech world. And my friends would not be talking about what was happening on the internet that day between VCs and I wouldn’t overhear conversations of startups pitching VCs and coffee shops. It was just a very different sort of thing and I had a much more of an outsider perspective looking in, and now I feel like I am really in it. Sometimes I have to check myself and step outside and try to remember that outsider’s point of view because it is kind of the belly of the beast out here. 

Jeffrey: See, you are not just writing about it anymore, you are actually living in it. So, it is a full immersion program for you. That is terrific.

Erin: Yeah. Yeah, it was. I mean now I am kind of like in my apartment. It is a little bit different with the pandemic. 

Jeffrey: Awesome. Now, what attracted me, how I found you actually is one of your articles entitled “Startups raced for the worst, but the worst never came.” And to me, that article was so interesting and enlightening because in the news here, we hear so much about businesses shuttering and the high unemployment rate due to the economic crisis. But in this world you are living in, the world of Tech startups, it does not seem to be the case right now. And so, let us just start talking about this. I want to start from the beginning of the year, even pre-coronavirus. If you could just walk us back there, what did the VC and Startup Industry look like back then? 

Erin: Yeah. I mean in January, it looked like the unicorn bubble was finally going to crash. For the last decade, all of these highly valued, well-funded, unprofitable Tech startups have just been growing, growing, growing and going up, up, up. And every year, it seems like there is this prediction of like, okay, well, this is a bubble and now it is going to burst. In January, after Uber and Lyft last year had disappointing IPOs, after Wework, the mother of all unprofitable, well-funded unicorn startups failed to go public spectacularly. Everybody was kind of looking around and saying, “Okay, this is the end.” Now the austerity is in, we need to sort of pull in the reins. Startups were doing layoffs, investors were wanting to see profits which was sort of a new phenomenon for some of these founders, and everyone was kind of thinking, “okay, this is a reset.”, and that was way back in January before the pandemic. And then, the pandemic arrived and it just was panic among all of the startups who are already worried about, okay, how are we going to get profitable? Maybe the money is finally going to dry up. The good times are over. And now on top of this, the entire world is collapsing. We do not know what is happening with the economy. We do not know if we, for some companies, if we even have a business anymore. And so, it went from uncertainty and a little bit of fear and nervousness, and lowering the risk to just straight-up panic. And so in March, that was when we saw some venture capital firms were sending these memos out to their portfolio companies saying things like, “Prepare for the worst. This is the Black Swan event. Make the cuts you need to make. Raise emergency funding if you can.” There is so much uncertainty that everybody was just sort of scrambling and trying to figure out in survival mode. So, that got us to march and I guess I will stop there. 

Jeffrey: Yeah, that is perfect. I mean for our listeners to remember back then, San Francisco was one of the first or if not the first city in the nation that had a lockdown, right? 

Erin: That is right. Yeah. We beat New York by a few days. 

Jeffrey: So, when the pandemic started to take hold, San Francisco shut down. And as you said, this Black Swan event, everybody was thinking about or worried about. You wrote about, you know, you had an article entitled “Startups are Pummeled in the Great Unwinding”, right? That is a terrific term, the great unwinding. You wrote about companies like Getaround and also some larger companies like Airbnb. So, what do you mean by the great unwinding? What was going on with these two companies? Let us talk about. 

Erin: Well, yeah, that was exactly what I was kind of referring to is like there was just a sense of panic. I mean startups every day were announcing layoffs and there were tens of thousands of workers who were just very suddenly cut. I mean startups spend a lot of time and energy trying to recruit the perfect employee and these like rockstar engineers, and all of a sudden they are just cutting across the board because they are not sure, no one was sure what was going to happen to the economy. And a lot of companies woke up to having no revenue. Like if you look at a company like ClassPass, they provide an online platform for people to book fitness classes, and there’s no fitness classes anymore. So, their revenue just disappeared almost overnight. And if you look at companies that are selling tickets to concerts or sporting events. So, there was a chunk of companies that were just absolutely screwed. And travel is one of them. So, Airbnb, no one could travel. They lost a billion dollars in cancellations in a matter of a few weeks. And so, this is just kind of like hair on fire panic for a lot of these companies. On the flip side, there is a portion of companies that were poised to really benefit. Suddenly, there is a huge demand for Zoom, as we all know. Suddenly, EdTech and online learning tools were in high demand. Suddenly, Telehealth companies were scrambling for ways to figure out how to help doctors see people who should not be leaving the house and going to the doctor. So, there was a group of companies that were poised to benefit. There was a group of companies that were absolutely devastated. And then, all the rest in the middle were sort of muddling through and trying to figure out, okay, are we going to be on the right side of this pandemic? One of the companies that happens to be lucky enough that our tools are in demand or “are we going to be one of the victims of it?” So, companies like ClassPass, they quickly tried to pivot and like, “All right, let us build an online platform for yoga instructors to sell their class to do live streaming classes.” I am not sure how well that, hopefully that has kept them in business. I do not know if it is going to be as big as their original business company. In Airbnb, you know, sort of had to raise emergency funding. They had to lay off almost 2000 employees. They moved their experiences product which is like kind of activities to virtual. So, people are offering virtual experiences now. So, everybody kind of scrambled to get on the right side of the virus. A lot of people raise emergency funding. A lot of companies took out those PPP loans to keep themselves alive. So, there was a lot of sort of jockeying for position and cutting. As it turns out maybe some of it was a little bit premature or some of the expectations about what was going to happen were a little harsher than what actually did happen. 

Jeffrey: Right. I mean absolutely, you know, you brace for the worst and they had certainly a knee-jerk reaction in certain instances. But it is also interesting, companies like Airbnb are probably large enough to withstand this type of pause in their business, but it certainly puts their customer service to test. And they had a billion dollars in bookings that they had to return, correct? 

Erin: Yeah. They were not sure if they would be able to cover that. They had to raise emergency funding and then they were able to give some of that to their host, but did not really cover all of it. But, yeah, I mean I think businesses across the board not just in Tech have sort of experienced this, but Tech startups are super vulnerable in this instance. They generally were not profitable to begin with, their position for growth. So, they are hiring ahead of what they need and they are basically designed to expand quickly. And so, when you are a startup that is overnight shrinking, that makes it really hard to get investors interested in your business even though VCs do not want to invest in a business that is flailing and trying to stay alive. They want to write checks for a company that is like thriving and growing. And so, it really creates this kind of dangerous death spiral for companies. And so, I think a lot of people expect that to happen. But in fact not that many businesses went bust. There has been a sort of a handful, but a lot of startups fail. That is kind of like part of the game. And so, I would not say it has been more than what you would expect in normal times. Some of the companies that were maybe already on the cusp or struggling for other reasons have failed, but in general a lot of them made cuts and now they are kind of chugging along. I would not say they are out of the woods yet, but they are seeing pretty solid recovery. Airbnb being the main one, you know, they have said their business has now bounced back to pre-pandemic levels. People are not traveling internationally. They are not doing business travel, but they are booking a cabin in the woods to get away from their tiny city apartments. 

Jeffrey: Right. So in your recent article, you labeled this and I will quote you if I can, a surreal disconnect between Tech startups and the broader economy. 

Erin: Yeah. 

Jeffrey: I mean that is pretty colorful. So, now you are basically, I mean, why don’t you explain what you mean further about that? Like you just mentioned Airbnb, but what about some other companies like Getaround? 

Erin: Sure. I mean, it is Getaround was one that they started the year, they were nervous about having expanded too quickly. And so they had made one round of cuts before the pandemic. And then when the pandemic came there like, oh boy, this is going to be even worse. They made another round of cuts. And then they realize, wait a minute we are on the right side of this. People do not want to take public transit because of the virus and so they are more interested in cars and we rent cars so we are actually in demand. And they saw demand kind of ticking up in May and then they brought back a bunch of their company employees that they had furloughed. And now they are outpacing where they were last year. And so, there are some companies that have found themselves in that position. And, yeah, it is a little bit surreal because I get pitches every day from startups saying things like, “We have grown like 50% in the pandemic and we are actually thriving”, and they want to tell this counter-intuitive story, but it is actually very common. I am getting tons of these kinds of pitches and it is just really delicate because it comes off as a little bit tone-deaf because there are millions and millions of people who are out of work right now. All of our small businesses are poised to go under. Our entire economy is teetering on the edge and economists have said we are in a recession already. This is like there is bad stuff out there. And so for the startup world to be thriving and for venture capital to be still flowing almost at the levels that it was in a boom time last year. It just feels like I am in a bubble. I mean, like I mentioned earlier that I do feel the Tech industry does live in a little bit of a social bubble and that is sort of one example of it. I think the companies are sort of aware of that, but it is just very weird to report on this on people like, “we are doing amazing. Look at us, we raise this huge round of funding at a higher evaluation and we are expanding faster than ever.” You know, I do not fault them. They see an opportunity and a lot of companies are being genuinely helpful at this moment because we need technology and it has accelerated the adoption of technology for a lot of people. But it still feels very very weird. 

Jeffrey: Right. And it is surreal. So, I mean, your words are proton. So, one of my first bosses ever always told me, “You always invest in the jockey, not necessarily the horse”, right? So, that means that the leadership of these startups that is what a lot of the VCs are investing in is the people in the quality of the management there. Another expression, I think my parents even always told me, necessity is the mother of invention, right? So, in this time of oh my God plan A did not work. What is plan B? And you tell a bunch of different stories about companies adopting, right? So, you told us two of which, you know, I wrote down a company called ActivityHero and a company called Envoy, and how they had to adapt their business models to meet the present reality. Do you think, for one tell us a little bit about it? And then do you think these new business models are going to stay for the long run or they are just a quick salve till they get back into whatever normal means and it can get going on their original business plans? 

Erin: Yeah, I think it kind of varies across the board. I mean, I picked these two companies but there were countless other examples that I could have used. ActivityHero, they are kind of a booking platform for kids summer activities, mostly summer camps. And all the summer camps got cancelled and so they suddenly had no business, and they were worried they would not make it through the year. Then they started pushing their activity providers to offer online camps and they also advised them to kind of up the prices because parents are suddenly having their kids at home now and they are desperate for something for them to do because they still have to work. And so, there was a huge demand for that kind of thing. And so, that ended up being a pretty successful pivot to them. I think ActivityHero ultimately wants to get back to in person. Their philosophy is that they believe that in person activities are better than online having kids stare at screens all the time. But now they are planning to use their online expansion to help them move into more cities when things do return because now they are in a few cities and this is giving them a much bigger, almost a global audience. So, it will help them expand faster. That is the hope. Envoy is an office sign-in company. Like when you go into an office to see if there is a little iPad you need to sign in. They run those for a lot of the startups and Tech companies around the valley and elsewhere. Obviously people are not going into offices and companies are trying to cut costs. And so, that is one obvious place that you could cut but they quickly learned that people are eager to get back into the offices, some people are. They either have a small apartment or they need to get out of their house for whatever reason. So, companies were letting people come back but in limited ways. So, they realize they could help companies manage that by making and while businesses are trying to add dividers and do construction to space desks out to make them safer. That means there are a lot of construction people coming and going. So, they were helping companies to manage that to make sure that there is contact tracing in case someone gets sick. So, they sort of position themselves to be useful even in a moment when their business does not seem like there is a lot of demand for it. And they said that that really saved the business and stopped people from canceling. So, I do not think that they are long-term. I believe this is, you know, they are the key to their growth and their core business stays the same but it at least helped them to survive. That is one thing that is kind of fun about covering startups is that there are small businesses. They do not necessarily have a lot of bureaucracy. They are able to move very quickly and they are very adaptable. Sometimes that means in a moment of an emergency like this, they are very well-positioned to take advantage of the moment. So, those were two examples but there are probably countless others like that out there. Any company that sort of found themselves in a position where maybe their services were not in as high demand is trying desperately to change that. I think that is just sort of natural. Some make more sense than others. I have seen some examples where I am like, yeah, I do not think that is going to work for you. But you know a lot of travel companies in particular. It is like if you are a company that is offering business travel booking, there is just not going to be a lot of business travel for a while. Other things like that that I think will take a very long time to return but, you know, they have to try. 

Jeffrey: Yeah, absolutely. All right, so let us take a step back and talk about the overall venture capital market right now. The Wall Street Journal this week put out statements that venture funds a master record setting one billion dollars in the first half of 2020. That is a hell of a lot of zeros and incomprehensible. Are they just creating war chest? I mean what is going on in the VC world or deals getting done or investors just sitting on the sidelines and waiting to see how this shakes out? 

Erin: Yeah, deals are definitely getting done. There has been for the last several years, just every single quarter, every single year the VC firms set new records for how much capital they are amassing because the stock market is at such a high interest rate or at such a low. High-risk venture capital is very attractive. And that just continues to be the case even though the opportunities seem somewhat limited. I mean, how much money can Tech startups really absorb? I guess the answer is probably infinite because they are not going to turn it down. But a lot of the deals that we saw, I think this year since the pandemic, a lot of the money is being concentrated in big late stage companies that can absorb a really big check. So, it is kind of like going to the winners. Like you saw Robinhood which has seen a lot of stock trading apps, which has seen a lot of use in the pandemic because people are just bored and day trading and playing the stock market I guess. They raise eight hundred million dollars across three different rounds in just the last few months. I mean, that is kind of crazy. But investors just keep writing them checks. And so, these like “winners” are really like magnets for capital now. We have seen a little bit of a fall-off in the number of deals for the early stage companies. It has been a little bit harder particularly if you do not have a network or you have not been able to go out to all the VC parties and smooch and get those connections, and you do not get to meet someone in person for the first time while you are pitching them so they do not get a sense of who you really are, or you are pitching over Zoom. I think that has been a little bit trickier, but I think the VC world is trying to figure out how to adapt to that and maybe that will bounce back unclear. A lot of people are seeing new opportunities, all these laid off started workers could be working on new companies as we speak. But in general, the VC world has been fairly active and some deals have been very very competitive. And that the stock market is hitting new highs. Companies are able to go public. There is a real disconnect there too. And the VC world often tends to kind of follow, private markets tend to kind of follow the public markets. So unless there is a massive crash there, I do not think valuations and funding raise is going to fall off too much. 

Jeffrey: Right, I mean, all right. So, everybody hates this but it is the proverbial crystal ball question, right? So in the future, you know your thoughts, so you mentioned a few things. A few market dynamics going on. Deals are getting done but they are being done more towards the winners like the Robinhood, you know, following on capital. When that happens, as we know, that just raises the valuations of these companies. And Robinhood, the valuation was some crazy billions of dollars. 

Erin: Eleven point two billion.

Jeffrey: Eleven point two billion dollars, right. The VCs invest for their goal as exit strategies most of the time as IPOs. Thank goodness the market for these guys keeps going up, up, and up. But what can the exit be? And how if there is that much competition and these valuations are just going higher and higher, does this make sense? And what are the rest? 

Erin: Well, I have learned over the years of covering this industry that those kinds of questions actually do not even matter because it is not a rational industry. They are investing for crazy unpredictable irrational growth. And then afterward, they can say I predicted this. I am so smart. I knew all along. But they want a Facebook or a Google. They like something that is just completely rare but hundred X their investment and it is so hard. There are so many factors that go into what makes a company a Facebook versus a Friendster that it is really, really, really, really hard to know. So, would that whole caveat, I guess I am constantly amazed by companies’ abilities to exit. To raise at a higher valuation. To get that valuation, they go public to get that stuff pop and they go public. I think last year we did see some tempering of that was Uber. I mean, Uber had been talking about going public at a hundred billion or maybe even a hundred twenty billion valuation. And then they ended up sort of going a little bit under their last private valuation in the stock has sunk ever since because they just lost so much money. So, it does show you that there is some rationality in the private markets and that public markets investors do care a little bit about the path to profitability and business fundamentals. But, I do not know, I kind of had to throw my hands up sometimes because sometimes I am like I just do not get it or I miss something. It is an irrational industry. 

Jeffrey: I mean, you mentioned Uber. That was a great example, but we work. Wasn’t that long ago? 

Erin: Right. And we were sort of like I had mentioned the kind of pinnacle of this like, okay, money-losing irrational growth at all costs, sort of cult to the founder, founder control tech company. And so like, you know, once we work crash everyone was like, ha ha ha, it is over now rationality, but it is some we are still seeing a little bit of that. We are still seeing companies with founder control, with huge valuations that seem very overvalued. And investors are more excited than ever because they believe that, for some of these companies, because they believe that the virus is actually speeding up the acceleration of tech adoption like a few have a video streaming company. You might have a lot more leverage now to get movies as their release as opposed to having to wait for them to go out of the theaters. There are a lot of examples of things like that where disruption was really accelerated because of the virus. And so, investors see that and it is definitely easy to just miss because of how expensive it is and that is why I am not an investor. But, yeah, I have seen the argument made a lot and people are optimistic about a lot of these things. So, yeah, I am not going to be one to dismiss it because I have been wrong before and no one likes a Cassandra. 

Jeffrey: Well, that is great. Erin, thank you so much. This has been informational, educational, and entertaining, and fun so thank you. 

Erin: Well, thanks for having me.

Jeffrey: We hope you enjoyed this week’s podcast. If you have any questions, comments, or future story suggestions, please reach out to us on social media. Thank you, and we hope you enjoyed the RP Healthcast.

In this week’s episode we speak with public school teacher Rebecca Martinson on why she won’t risk the health and safety of her family by going back into live classroom teaching.

TRANSCRIPT

Jeffrey Freedman: Hello and welcome to the RP HealthCast, by Rooney Partners. I am your host Jeffrey Freedman. Well, the start of a new school year is upon us and what normally is a very exciting time for parents and children. This year it is now clouded with fear and confusion. You see going back into the classroom this year, it is still uncertain in most districts, and with massive disruptions, the pandemic is causing. There is no telling what that return will look like or when. As can be seen all over the media this past couple of weeks, there is a heated debate raging over the reopening of the schools. On the one side, it is about the safety of our children and their teachers. On the other side, you have the need for families to put their children back into school for the socialization and standardized education and to allow the parents to do their own work as well. Some schools have decided to move ahead with live in-person learning. Just a closer week or so later, due to large positive COVID cases, and some universities that started the year with live teaching just one or two weeks later closed and sent their students back home for online-only learning. Also, six months into the pandemic, were just now learning how efficiently children can spread the coronavirus. A recent study in JAMA Pediatrics stated that infected children have at least as much of the coronavirus in their nose and throats as infected adults. Sadly, news this week, the passing of one of the youngest COVID patients a six-year-old in, Florida. To further shed light on this topic, and to offer her own perspective, We have as our guest this week Rebecca Martinson. Rebecca is a public school teacher from Washington State. She recently had an opinion piece published in the Sunday Review section of the New York Times. For the past nine years, Rebecca has taught at the Northwest Career and Technical Academy the NCTA, in Mount Vernon, Washington. Rebecca, thank you for joining the RP HealthCast.

Rebecca Martinson: Oh, thanks for having me.

Jeffrey: Great. Let us start by having you tell us a little bit about NCTA. What is the mission, and shed some insight into the composition of the student body there?

Rebecca: Well, NCTA, we are operating in our 11th year. It is a skill center on the East Coast. They think they are often called technical or tech centers. What we do is that is a really unique and really necessary High School experience. We take Juniors and Seniors in high school. We take them away from their comprehensive or their regular high school for half a day. We teach them on a career centered path where they earn some of their high school credits and they earn some college credits. They really get kind of a foot or maybe just a toe in the door of their chosen field. So, I teach a class applied to medical science, which is an intro to the nursing class.

Jeffrey: That is interesting. I know in New York state we have a BOCES and so is NCTA a part of the public school system, and is it like a BOCES?

Rebecca: It is. We have 11 skill centers in Washington state and we are part of the public school system. So, I am a public school teacher.

Jeffrey: Got it. Now, you said, you teach nursing. Are you a trained nurse?

Rebecca: I am. That is my career as a nurse with the local hospital system, to become a public school teacher. I teach, again, some foundational medical stuff along with technical English lab science and we call it AskEd other places call it CTE Career and Technical Education, which is a graduation requirement of Washington.

Jeffrey: So, having a Nursing degree and your nurse training, it definitely forms your view, of the coronavirus as it relates to school re-openings, right? You have a little better understanding from a medical side as to what is going on. Now, I would like to read to our listeners the opening of your New York Times opinion column, and this is what you wrote, ” Every day when I walk into work as a public school teacher, I am prepared to take a bullet to save a child. In the age of school shootings, that is what the job requires.
But asking me to return to the classroom amid a pandemic and expose myself and my family to COVID-19 is like asking me to take that bullet home to my family. I will not do it and you should not want me to.” That was the quote and to me, that is so powerful. I also know from speaking to friends and family and reading all about this. I know your words and your feelings are being expressed by thousands of other teachers across the country.
What is your school administration’s plan for the fall?

Rebecca: Our plan actually has just solidified this week. I do not know, not being from Washington, probably not aware Governor Inslee and the superintendent of Public Instruction, Chris Riddell, came out yesterday, with some guidelines for in-person learning. They are pretty strict, which is not surprising. Just last week, my school district made the call to do all remote learning at least to start with because our area is experiencing a significant uptick in transmission rate. Since I wrote the article in the time since then, my district has made the decision to go all remote. There are many districts in the state that still have not made that call. Of course, there are districts around this country with kids in class right now. It does not seem to be going really well.

Jeffrey: No, I mean we just spoke a second ago of the podcast about CNN having the image of a school in Georgia of just packed always, right? Everything that we are hearing about social distancing, wear a mask, it is not followed. They can not be followed in schools. Good for your school district, on the remote learning and unfortunately, mine is not there coming up with an in-person view. But, what has your experience been with remote teaching, how has that worked out before the initial close out?

Rebecca: Right. So, I think about it is really important to acknowledge the difference between what we did in March and what we did in June and what we are coming up within August. In March, I had one day to get out of my classroom and to stayed up at home. I had a day. So this was crisis management mode of how are we going to feed these kids, keep them safe, and try to teach something. The emphasis was on keeping children safe, as one would think would always be the emphasis. I am pretty tech-literate, I got right to work, produced a lot of content. Kids were getting mixed messages. So in the beginning, I did not have very much consistent contact with kids, which improved over time. Now, we graduated from this group in June. I took on a summer school group. This time, I had some time to prepare. This time I knew it was going to be all remote in advance. This time I think we delivered really high-quality content. Now, is it as good as face-to-face? I would say, it is not as good as face-to-face, was a year ago, but that face-to-face does not exist right now. There is no way to safely have that exists.

Jeffrey: Agreed. But, that being said, as of last week, even the Centers for Disease Control and prevention the CDC has shifted its position on the school rules. They said, and quote, “The new guidelines open with the discussion that played up the benefits of having children in school and play down the potential health risks” according to the New York Times. So what do you make of the CDC’s revised guidance now?

Rebecca: Well, really a couple of things. I think we go down a really dark path when our Public Health officials are being scolded and coerced. I feel like coerce might be a strong word. But when pressure is being applied to Public Health officials to change or alter their guidance based on political will. Now, the second point that I would make is if you really dig into that CDC guidance beyond the headlines, it does say that in areas with the uncontrolled transmission, which is a great deal of the countries right now, that in-person face-to-face learning is not appropriate. That has not been getting a lot of air time but it is there.

Jeffrey: Okay. As you are seeing and they are taking advantage of that Washington State in your District, which is great.

Rebecca: Yeah.

Jeffrey: But you also have the other voice. So, you said that is a CDC but the US Department of Education has also Full Steam been pushing for the full reopening of public schools. Now, our education secretary Betsy DeVos is threatening to cut off funds to a public school that does not fully open. Now, you mentioned a little bit, you do not understand the political aspect pushing forward, but that is it. It is right here, what is your reaction to that?

Rebecca: First off, secretary DeVos has never been a public school teacher nor have she been a parent of a public school child. Second, she simply does not have the authority to do what she is threatening. Those are congressionally appropriated funds which I have heard you can get into a bit of trouble for misdirecting. Then finally, only about 8% of funding for schools comes from the Federal government. The rest comes from state and local tax levies. So the money that comes from the Federal government supports children with disabilities and supports the national school lunch program. So when millionaires, billionaires like Betsy DeVos and Donald Trump say that they want to cut funding to schools that will not put children in grave risk. What they are saying is that they want to take away food from hungry children and services from disabled children. I do not know how we square that in our heads. I think it is shameful.

Jeffrey: Agreed. Now, let me ask you. From a healthcare point of view as a nurse, as general rule children are infected by the coronavirus that is thought to be at low risk of becoming seriously ill or dying. But, we have seen a number of recent clusters of virus cases around the US being linked to school-related events, whether it be proms after proms, graduations. Can you talk about some of that?

Rebecca: Well, certainly over the summer. We saw some cases especially older kids being linked to graduations and graduation parties in state Louis, in Upstate New York, but more recently just this last week what we have seen is exactly what many of us in healthcare kind of thought would happen if we got children together. So the Cherokee School District in Georgia started last week. School started Monday, a pre-symptomatic child was in attendance. So the child went Monday. Tuesday, symptomatic stayed home, had some testing done, came back positive. Now, as of today, there are four positive children and 60 quarantined in Cherokee School District that started Monday. In Mississippi Corint School District started last week. By Friday, there was one sick, High school student. Today, six tested positives and a hundred sixteen students are quarantined. This idea that children do not get sick, first as a fallacy. We know that children have gotten sick and have died morally, responsibly, and globally in March. We took children out of the equation by setting them home to relative safety. As we send more children back into the classroom, back into these centers of high transmission, I think we are going to see more sick children, unfortunately. Even if we do not, we know that children can spread the virus. We have a recent study out of South Korea that shows that children over 10 are at least as likely to spread as adults. Children under 10 are still able to spread. So no child is an island. We do not have schools full of children that go home and live with other children and are taught by other children. What we have, our adult staff teachers and parents that go to their work, go to their shopping center, go to their medical appointments in our community. Communities that have high spread certainly anytime we gather a large group of people whether they are two or a hundred years old. We are at risk of transmission. It is just math. It is just Math, it is not a motion. It is just Math.

Jeffrey: It is Math and Science, exactly.

Rebecca: Right.

Jeffrey: You touched on this before but I want to bring it up again and get your thought on it. St. Andrew’s Episcopal School is a private school in Washington DC, in the Maryland suburbs. They just sent out a letter to parents that it was still deciding whether to adopt a hybrid model for the fall or allow a limited in-person education or to resume holding all classes completely online as was done in the spring. They just decided to hold all classes online from what I understand. The reason why we are bringing that up is that the president’s son attends the school so he will most likely be attending classes online because of the health issues raised. What is your take on this?

Rebecca: I am not sure, I have popular opinion on this. I have seen the hashtags. They have seen the social media Firestorm around this it says, “Send Baron first”, and I do not agree with that. I am a teacher. I am a nurse and I have made a commitment to keeping children safe and healthy and Baron is a child. He is the president’s son and I understand the view of hypocrisy there. I feel it too. But, ultimately at the end of the day, he is a child, his safety matters to me. I applaud a school for making the correct decision regardless of who is in attendance.

Jeffrey: Agreed. That is fantastic. Now, if all schools were to reopen. All right, we got to keep them safe one way to do that is by testing and making sure we isolate those that are testing positive. The problem is, as testing increases the problem is the test results. According to the editor-in-chief of Kaiser Health News, he states, “If it takes up to two weeks to get results, we can not detect growing outbreaks and respond with targeted shutdowns. We can not do meaningful contact tracing”. She continues, “One cannon of medical practice is that you order a test only if you can act on the result. With that, with a turnaround time of a week or two, you can not. What we have now is often not testing. It is testing theater”, right? You are just talking about Georgia. Everybody being some people the outbreak happening. Do you share this analysis? Do you think testing is going to help? Do you think it is going to make any difference, right now?

Rebecca: I think that testing, accurate testing, and timely testing will help reduce community transmission, which would make it more likely that a successful start to the school year could happen. Let me just expand on that point. You make a great point of saying how long it takes to get test results back and it can take anywhere from a week to two, those are not very actionable. But it also takes us about five to seven days to have enough antibodies in our system to be tested. If a child at say Cherokee School District, was exposed to another child, they likely would not have enough antibody or enough antigen to be tested, until at least five days. So then we top off another two weeks after that point for them to possibly get the results back. We are talking about 19 days. There is not much we can do, a lot can happen in a school in 19 days. The number of contacts in the community within 19 days could be in the thousands and you have a really widespread Community outbreak that could be traced back to one child. These are super spreading events. Schools are ripe for the picking to be this access point for super spreading events. If we fix our testing crisis in this country, which makes no mistake. It is a crisis no matter what our leaders and government are saying, we actually tested fewer people last week then we did the week before which is not the right direction. If we get testing to be meaningful and actionable and get away from, as you said, testing theater, then we can lower transmission in our community enough to really consider reopening face-to-face instruction on our schools. It should not be the other way around. It should not be, “Well, let us reopen the schools and shore up testing.” We really need to get testing and community transmission in check before we consider sending our children into schools.

Jeffrey: Those are great points. In your New York Times piece, you wrote in a quote, “If I am asked to return to school, I will have to walk away,” and luckily you got the good news. You are going online for remote learning. Were you really prepared to sacrifice your career as a teacher?

Rebecca: Yes, and that is yes. I thought about it. I thought about my own child. Most teachers I know even though our risk honestly of dying in a school shooting is low, it is not zero as we know that many of our colleagues have found themselves in that position. When I go to school I know that there is a risk. I know that I am willing to lose my life to potentially protect a child. What I am not willing to do is throw that child in front of the bullet to check myself. For me, the decision really came down to, “Am I willing to let a child take a virus home that could be deadly to their family member or could be deadly to themselves? Am I willing to allow that to happen because if I do not my loss would be my employment?” The answer was no, I was not willing to use my own child as a shield and I am not willing to use someone else’s as a shield for me to be able to make my car payment. I have had a little pushback from people saying, “Well, she is clearly very privileged if she walks away from her job.” The truth is I will lose a lot but I do not think I could go back into a classroom after attending someone’s virtual funeral knowing that I contributed to that loss of life. I could not do it. I teach about epidemiology. How could I live with something else? I do feel very fortunate that my district seems to be making the correct and moral decision here. But I said what I said, and I meant what I said. If I can not go back safely, I can not go back, not for just myself but for my community.

Jeffrey: I know you are not alone, and I want to thank you. Thank you for your time today and for everything you do for our children. This has been a privilege speaking with you today.

Rebecca: Oh, thank you.

Jeffrey: We hope you enjoyed this week’s podcast. If you have any questions comments, or future story suggestions, please reach out to us on social media. Thank you, and we hope you enjoyed the RP HealthCast.

In this week’s episode, Michael Brown, co-editor of The Deal, and veteran financial reporter Charlie Paikert discuss the pandemic’s impact on corporate mergers and acquisitions.

TRANSCRIPT

Jeffrey Freedman: Hello and welcome to the RP HealthCast by RooneyPartners. I am your host, Jeffrey Freedman. The public health and economic fallout from the coronavirus has been well documented but the pandemics impact on other financial areas such as mergers and acquisitions is not as well understood. So we’re going to talk about that and to help shed light on the state of play for business purchases and mergers, we’re joined by Michael Brown, co-editor of The Deal and Charlie Paikert, veteran financial reporter who currently contributes to RIABiz and Family Wealth Report. Charlie’s also been a senior editor at Financial Planning and Investment News and a contributor to the New York Times, to Barons and to Reuters. And is the co-author of a book on college basketball entitled ‘Madness: The Ten Most Memorable NCAA Basketball Finals’.

Gentlemen, it’s great to have you here with us today.

Michael Brown: Thank you, Jeff.

Charlie Paikert: Thanks Jeff. Glad to be here.

Jeffrey: Great. So Michael, let’s start with you. Why don’t you give us the broad strokes and some data points on the pandemics impact on the deal industry.

Michael: Sure. So, I think so far in in 2020 since mid-March, we’ve seen both deals being announced that is pulled back and then the deals that were announced prior to the pandemic, a lot of those have been redrawn. So you’ve seen a few deals fall through. I think Victoria Secrets, L brands that sealed the Sycamore was one of the bigger ones that fell through but I think others have gotten now renegotiated. So, it’s changed the scale of deals as well reduce those evaluations obviously and at the same time the announcements volume is half of what it was this time last year. I think especially at the top of the room, you are not seeing a hundred billion dollar transactions, you are seeing those companies kind of look inward and say, “How can we fix what we have and deal with what we’re going through” as opposed to write a hundred billion dollar M&A deal, check.

Jeffrey: Right. To most people, these are numbers, right? Fantastically large numbers and big figures, hundred billion dollars, we can’t– I personally can’t wrap my mind around how much money that is, right? But why should our listeners really care about a healthy deal market? What does that matter to people right now?

Michael: Well, look. I think deals are what powers change and innovation in a lot of ways. Whether it’s a large company looking at an encore division that they haven’t been investing in. They can use M&A to sell that division to an investor that can appreciate and grow and scale that business. At the same time, I think from a markets perspective, it’s another catalyst for stocks. It’s another place where debt can be offered and at a healthy price and again, these things you need liquidity, you need these markets moving. You have no deal activity, there’s a pretty big bottleneck within a lot of the markets out there.

Jeffrey: Right, and it makes a lot of sense and as you know, this is the RP HealthCast, my business fellow Healthcare and Pharma and BioTech companies and I know for them, from a deal scenario, it’s still quite frothy, right? So, have any other sectors of the economy been spared from this downturn?

Michael: So I think, similar to what you see in the public markets. I think the Technology companies have held up a little bit better. You’ve seen some Tech deals. You’ve seen sort of the consumer Tech business in Postmates, GrubHub. Those deals have been going on and continuing I think the urgency and sort of the switch to some of these consumer trends that we were already doing pre-COVID only accelerated and now companies such as Uber are seeing the value in having that delivery service in the scale of that delivery service. And then Healthcare as you mentioned, I think a lot of companies are– there hasn’t been a slowdown in a lot of Investments there whether it’s new drugs or new applications for existing drugs. I think people are still putting money to work in the Healthcare, in the Pharma and BioTech space at least.

Jeffrey: Yeah, so that’s where deals certainly are getting done in the Technology and high-Tech and BioTech and Healthcare. But you mentioned before, a couple retail establishments, manufacturers some of those deals that were expected to close were pulled hold as Myers saw to either back out. And can you walk us through some of the high-profile transactions that were scrapped due to the coronavirus?

Michael: Sure. So I think again, like I said the Victoria Secrets sale to L Brands was probably the most high profile and Sycamore pretty prolific retail private equity firm. They’ve done a lot of good, a lot of bad some– but some would say in retail over the years but I think that is probably the quintessential deal. You’ve seen a few others that I think are on the ropes. Probably the most interesting and maybe not the most high-profile but Simon Properties and Tubman. They’re two mall operators that were merging and that as far as I know still going on but there’s going to be I think some jostling over the price there whether those guys should continue with that deal. So yeah, those are probably the two that I am most interested in have been–

Jeffrey: Yeah. I mean it’s fascinating. So much goes on as part of the M&A. So, as part of the transaction, right? So you are negotiating the price but as part of that you have to assess the risk and to assess the risk, you have to a heck of a lot of due diligence not just on the markets and comparables but on the company itself and usually do that by going into a data room, going through file cabinets, going through all sorts of material. Now, how are companies and investment banks handling that due diligence process? They’re not able to visit plants and facilities and go into these data rooms are this–?

Michael: Yeah, you can’t have you know dinner with the executive team of a particular target you are looking at. So I’ve heard a couple of funny anecdotes that I’ve heard over the last couple of months on the– I think on a grander scheme, we’ve seen a few investment banks employ drones to do due diligence and whether you are going through a factory or a plant and the foreman is walking you through with a drone saying hey, can you fly it into that corner of the factory? Can I check out this piece of equipment? And we actually have a middle market. The Deal has a middle market event going on and we were talking to a couple of investment banks that work with smaller companies, family-owned companies and they were saying how they’re still doing the due diligence having the zoom calls and that but for their local businesses, they’re looking– they’re driving a couple hours and meeting a guy or gal that they would have had dinner with. They’re meeting them in their driveway for a drink and doing take out, having a sort of conference call in a socially distance sort of way. So a couple of I thought, those were pretty interesting. But it’s tough. I think Tech and BioTech, the physical space– BioTech maybe a little bit different but Tech, the physical space is not as important. It’s a human capital business. I think there’s a lot of industries that are human capital. So there’s– not as affected by some of this but with the manufacturing that kind of thing. Some interesting tactics being employed.

Jeffrey: That is I mean, necessity is the mother of all invention, right? That’s fantastic with the drones.

Michael: Yeah.

Jeffrey: Alright. So from very broad point of view, before we bring Charlie in. What’s your expectation for the remainder of 2020? As companies navigate the business challenges around the pandemic, do you think that M&A activity will soon begin to increase? And what sort of pressure are some of these funds going through by their investors?

Michael: I mean, I think that you are going to see continued status quo for M&A. I think it’s going to stay very similar. You’ll have a few drips and drabs of big transactions that make the second page of the front page of a Newspaper but I think it’s going to be pretty subdued for the rest of the year. I think the smaller sides of transactions company selling smaller divisions to concentrate on core. Smaller businesses where founders have to sell. Those kind of deals will continue but I do think it’s going to be tough to see a lot of large cap deals. Potentially some take private opportunities out there in the market for private equity. But yeah, I think it’s going to be a tough second half if I had to guess but barring a dramatic shift, but I do think things will remain relatively steady or be it maybe not the trajectory we had seen in 1819.

Jeffrey: Yeah. Great. Absolutely makes sense. Now Charlie, from your side of the business and you deal in something called RIA for the most part and now I want you to describe kind of what that is for our audience. Have you seen that sector slow down as much as Michael alluded to with the others?

Charlie: All right. All right, it is a registered investment advisors and they are otherwise known as independent advisors. They are fee-based for the most part. They’re different from brokerage firms like the Merrill Lynch’s of the world and they have a higher fiduciary duty to their clients. They’re the fastest-growing sector of the financial advisory business. They’re gaining I think at double-digit percentage increases and eating into the market share of the wire houses or brokerage firms. There has been a slowdown in the second quarter. Up for the last six years, the M&A market for RIAs has been going straight up. It’s been one increase after another. Quarterly and certainly annual increase but the second quarter of this year for the first time had a big double-digit decline–
a 17 percent decline in deals. This is according to the Devoe and Company statistics. There are an industry consultancy for M&A. And it was the slowest quarter I believe in deal volume in two years. Notably, the activity for smaller firms with less than one billion dollars in AUM assets under management declined dramatically. However, the activity– more than a billion in assets. The deal volume for those firms actually increased a bit. So that was interesting. Devoe thinks that this is what he calls the lull phase of M&A for this year impacted by COVID of course, and he does think a surge is coming but it all depends of course on the severity of how the virus is impacting the economy because advisers especially smaller advisors who do not have somebody who’s just focused on business, they’re busy dealing with clients. Whether it’s retail clients or smaller businesses. They need to spend a lot of time with clients and of course COVID is also impacting projections for the future and for a while anyway, it was impacting assets of the advisory firms, which is the lifeblood of advisory firms. So, still very uncertain times.

Jeffrey: Absolutely, and thank you for that. That was very broad. So, in a nutshell, deals are slowing down right? Due to the pandemic this [crosstalk] advisors.

Charlie: For now. Yeah.

Jeffrey: Smaller advisor, there’s a lot of hand-holding but it seems that while deals have slowed down, the structure of those deals have changed dramatically. So from what I understand, they used to be very rich upfront payments. You are paying for a book of business. And since this is changing, how are the deals now being structured in this pandemic world?

Charlie: So because of COVID, deal structure is changing, upfront payments were as high as seventy to even sometimes over ninety percent. Sellers were getting that cash up front and that has now gone down to around fifty percent more or less. Buyers want to mitigate the risk they’re taking and they want to share risk with sellers. So that’s a big change. The sellers are no longer as much in the driver seat. There’s more emphasis on what’s called contingent payments or earn outs where the seller has to hit certain targets in the metrics that they are expected to generate for the buyer. So, one other change in deal structure is that those contingent payments are now stretching out to three or four years. Whereas in the bull market up until March had been compressed to sometimes as short as one year or two years, but as John Fury whose prominent industry consultant has said the emphasis now in M&A is shared risk based on shared outcome.

Jeffrey: Right. And that makes sense. Certainly with more risk in the marketplace. Now, what about the negotiations between the buyers and the sellers? Is a negotiation more protracted, is it more difficult to bring a deal over the finish line now?

Charlie: I think it is. The negotiations are more difficult. I did a story recently for our RIABiz and one of the big buyers in the industry used the term, use the phrase ‘heightened tensions’. It’s not as casual. It’s obviously not in person anymore. And as I mentioned earlier, there’s a lot more risk. They are negotiating exactly what are their earn out incentives going to be? Before the pandemic, it sometimes didn’t really matter as much if the sellers didn’t meet their earn out targets. Buyers either let it go or was actually in the negotiations there was some cushion, but now as Corey Kupfer who’s a prominent attorney in the field told me for that article, sellers are not in the driver seat as much. The sellers are not in the driver’s seat as much anymore. So, it’s a different ball game, but it’s also mitigated by the fact that seemingly the supply, the demand exceeds the supply. There are more buyers than sellers. One negotiator told me that he is seeing as many as ten buyers for every seller. I think that might be a bit exaggerated, but there does seem to be agreement that it still is a seller’s market. So, that makes things very interesting.

Jeffrey: No, absolutely. Well that bodes well for sellers, but it doesn’t excuse the risk that is still at the marketplace right now.

Charlie: Right.

Jeffrey: Switching topics for one quick sec. So, I want to talk about one non deal question. Something that is kind of affecting everybody in this pandemic. It seems a number of financially secure RIA firms received a number of funds from the Payroll Protection Program the PPP and like a large firm like Ritholtz Wealth. I think it was written that they accepted 1.3 billion dollars or something from the Payroll Protection Programs. Were you surprised that wealth managers would seek money is meant for small business owners at the risk of losing their businesses?

Charlie: Oh, that’s been a huge topic in the industry. I wrote an opinion piece in RIABiz a week before last and the point that I think a lot of people kidded on was– So on the one hand, wealth managers were telling reporters, myself included, that they were doing great. They were getting new clients. They were getting new business. Everything was good. And I believe they were telling clients similarly that they were doing well. However, a lot of them it turns out at the same time, who were applying for and received PPP loans had to certify. Certify to the government that the funds that they were seeking were quote “necessary to support ongoing operations”. Wow! So, which is it? Right?

Uhhh wait a minute, you told me you are doing great? But to get the money you told the government that you needed the money to keep in business. So that was a big point of contention. The other point of contention, and this was raised by Dan Weiner who is the chairman of Advisor Investments. He’s an RIA who originally applied for a PPP loan, but then withdrew and decided not to because he thought that small businesses were more deserving and he pointed out that wealth managers who emphasize of course financial planning to their clients and tell clients that they need a rainy day fund of six odd months of cash on hand. Apparently didn’t have one themselves. So… what’s going on? Why weren’t they better managed?

Now, from their point of view, the RIAs would argue that they need liquidity like everyone else and at the time in March when– perhaps in April, early April when the loans were originally being applied for. There was a severe market downturn and their profit margins and ability to pay was presumably in question. However, that market downturn of course turned out to be very short, but from a business point of view, if you can get low-cost working capital from the government that is available, perhaps you can argue as they do that you should take advantage of that as a going concern. But again, someone like Wiener would argue that if these loans are forgivable as they could be if advisors spend sixty percent of the loans on salaries within twenty-four weeks, Weiner would argue that that’s double-dipping, that their advisors are charging client fees and they’re also ultimately getting another slice of money from clients through their tax dollars. And then I think the final argument is that however much the RIAs wanted and we’re able to receive this money, the fact is that unlike restaurants and hair salons and other small businesses, their business never closed. It always stayed open and demand for their business by all measures seemingly never went down. And recurring fees kept coming and the conclusion of the article, the opinion piece that I wrote, I quoted “Another industry consultant Jamie McLaughlin who said that this is not a glorious chapter in the history of the RIA industry.”

Jeffrey: Well, thank you. Now, one last question for the both of you actually. Before time runs out on us. During the past five months of the pandemic, where have you seen the smart money quote unquote “smart money”, the private equity and venture capital financing’s go? Michael, let’s start with you. Where are people putting their money? Where’s the M&A? Where are these– if cash are being stockpiled right now, where is that little bit being spent today and where do you expect to being spent by the end of the year?

Michael: Sure. So, I think there’s a couple of places I think. Like I said earlier the sort of small and mid-cap areas of the world are going to continue to see deal activity. I think sort of across all sectors, but I think if you are watching the public markets and you are watching some of these companies like Norwegian Cruise Lines or Dave & Buster’s, they’ve done what are called ‘pipe deals’ where they’re selling these big swaths to private equity firms. I think you are going to see more of those transactions going on. And I think that when you look at those companies that private equity firms are investing in in the public markets at a reduced evaluation, that’s going to be something that I think a retail investor might want to take a look at and say “Oh, why are they putting the money into this company that seemingly has no end in sight to their troubles.” Sort of zigging when everyone else is a zagging or zagging everyone else is zigging if you will. So I would look to those types of industries and things that people are really aren’t looking at right now from a retail perspective.

Jeffrey: The smart money you feel is kind of being contrarian or will be contrarian for the end of the year?

Michael: Yeah.

Jeffrey: Okay. And Charlie, from your side of the business?

Charlie: In the advisory business, we are seeing private equity still continue to invest in RIA, M&A when they can. Now, as we discussed previously, there is a slowdown for the reasons we discussed because of the pandemic and advisers have a lot of other things to do, but when they can invest they are Mercer advisors is one of duh big RIA firms who is controlled by certainly backed by one of the big PE firms. They are aggressive buyers. We’ve seen over the last few months. We’ve seen PE firms takes stakes in big RIAs who are also buyers themselves like Beacon Point, Creative Planning both have sold stakes to private equity. And one of the biggest RIAs, Hightower, that is controlled by TH Lee, a big PE firm. Just today they announced that they have taken a minority stake in a three billion dollar Texas Firm Frontier Investment Management. So, PE is full steam ahead when they can.

Jeffrey: Got it. Well gentlemen, thank you so much. This has been really interesting and very enjoyable. So thank you for joining me.

Michael: Thank you Jeff.

Charlie: Yeah, Jeff. Thanks for everything.

Jeffrey: We hope you enjoyed this week’s podcast. If you have any questions comments, or future story suggestions, please reach out to us on social media. Thank you, and we hope you enjoyed the RP HealthCast.

We talk with our guest this week, Julie Hyman of YahooFinance, about companies big and small having to manage their businesses and employees around the complexities of the coronavirus—and now finally—a larger focus on social justice issues.

TRANSCRIPT

Jeffrey Freedman: Hello and welcome to the RP HealthCast by RooneyPartners. I am your host, Jeffrey Freedman. To say that our lives have been turned upside down this year, it’s an understatement. Between worrying about our health, worrying about our jobs, our finances in the economy, worrying about who to trust, worrying about our family, and getting our kids back to school. It is a wonder we are still able to function in society, but we must and we are. As we adapt, our economy must continue to open safely and while doing that, companies as well, they have to learn to adapt to this new normal. Both for their employees and for their customers, and for attracting new customers. But what is that new normal? Not only do corporations have to change the way they do business due to the coronavirus but as importantly, our country has reached an inflection point due to a groundswell of focus on civil liberties and social justice. How is Corporate America going to respond to this hopefully new norm? And have more of a focus on social and racial equality. To talk about this with us today is Julie Hyman. Julie is an on-air anchor at Yahoo finance, and she co-hosts the program: On The Move. Julie has covered financial markets for over 20 years and spent the bulk of her career at Bloomberg television, as an anchor and Senior markets correspondent. Julie, it is so great to have you here with us today. 

Julie Hyman: Thanks for having me. 

Jeffrey: Before we get into the heavy topics of how companies are responding to what I am terming the new normal. I would like to introduce you to the audience and explain your background a little bit. From your time as a reporter at the Washington Times to working at the Paris Bureau for Bloomberg and then as a Bloomberg television host and now co-hosting On the Move, your show at Yahoo Finance, it seems you have always been on the business finance and corporate reporting side of the news. For doing this for so long, what do you enjoy about that? How is your industry changed over the past 20 years? 

Julie: Wow, that is a big question. I enjoy following how markets, finance, business, kind of intersects with everything else, right? Because what I have discovered during my time covering all of these topics is that they do kind of intertwine with politics, with regular people’s lives in ways that people are not even cognizant of. So it is nice to draw those connections. What I also really like about it is the sort of education piece and explanation piece. If you will, sort of explaining to people how markets work, how businesses work, and why they should care for that matter as well. In terms of how the business has changed during my career, I think it is like many businesses, it has become a lot more digital. That has been a big change. This just has been happening in journalism generally, not just business journalism, of course. A lot less locally-based, but what has also been interesting in business news in particular is the increased transparency. I find that when I started, there were sort of more scoops. There was more inside information one could gain as a reporter. Not the sort of SCC not allowed inside information. But to find out stuff that other people did not know. Just because of disclosure because of social media, you have to work harder to sort of find those kinds of nuggets and stories that are not widely available and known.

Jeffrey: It has changed the digital aspect of it. It kind of brings it a little quicker. The news gets to people a lot faster and you have to be more on top of it, I guess from that aspect. 

Julie: Yeah, you have to be more on top of it. But there is also because of that in part, there has always been a good space for analysis. I think now it is more important than ever because things come so quickly. It is very important to sort of take a step back and explain things to people. Rather than, you have to have your sort of first blush analysis, but you also have to take a beat and say “Okay, this is what this means.” 

Jeffrey: I think you guys did that well. So we have mentioned before you host a show on Yahoo Finance called On The Move and you have been doing that for a couple of years. And you talk about localization but you guys moved into a brand new studio last year, I believe. 

Julie: We did. 

Jeffrey: Yes, and Kevin Chupka was telling us about that a couple of months ago. But you are now producing and co-hosting the show from home, right? 

Julie: Yes, I am. My normal home is New York City, but we have had a place in the Catskills for about eleven years. So when this began we came up here and so I have been doing this show from our spare bedroom here for the past several months. 

Jeffrey: What have you, I mean, working from home we all have similar experiences. I was telling you about the construction across the street. What are the learnings that you have now on producing live television from home? What do you think when you get back to normal, whatever that is. Are you going to keep any of these learnings? Do you think any of this will be ongoing for you? 

Julie: That is a great question. I think some of the things that serve you well anytime, serve you well now, being nimble. I think we have dealt with a lot of technical difficulties as everyone has. I think we have learned to sort of deal with those and talk through them. I think there is a certain level of transparency that you did not necessarily have in the studio. In other words, if a guest needs to unmute themselves, you just say “Can you please unmute yourself?”. Whereas in the studio there would be people, sort of audio people frantically working behind the scenes to repair that stuff. I personally as a consumer of news and also as a maker of news programming, I kind of like it when the behind the scene shows. So I would not mind preserving some of that when we get back to it. That has been interesting and educational and it has also been an equalizer in a nice way.mA CEO can forget to unmute him or herself as equally as a fellow reporter or anchor can. We are all sort of in the same boat right now. We are all operating under pretty stressed conditions in some cases. We are all concerned about becoming ill. We are concerned about people we know who have become ill or even died in some cases. We do not know what the economy is going to do. We are all sort of experiencing this together. I hope that we can retain some of that feeling and empathy as we go forward. That just goes for regular life and being fellow humans, but I hope it also goes for the workplace and sort of trying to see into what our colleagues and what our interview subjects might be going through as well.

Jeffrey: I think that is, not only is it a fantastic segway, but it is a fantastic sense of it. I mean I think this whole aspect makes us more human. It shows our humanity and it takes a part of that veil. I want to segway into the topic of this podcast, about companies. Companies both big and small, now that we are coming back to work, we have to manage our businesses, we have to manage our employees around a lot of new complexities. So we have the coronavirus right now. Finally a larger focus on social justice issues. Companies have to manage both of these dynamic issues simultaneously. As you have been speaking with all the CEOs out there and different work, you know from the C-suite. What do you think has been the cumulative impact of these two situations and this historic moment in time, both in brand image and personas of these large corporations. How have these companies been able to adapt? 

Julie: I would say first of all sort of by way of a backdrop. I think over the past several years, there has been this corporate movement to sort of take on some of the roles that were traditionally more governmental. You see this in places like Davos, but you also see it in just everyday corporate operations. I think, to be frank, this is particularly true because the Trump Administration has not been as active perhaps on some of those issues. For example climate activism, you have seen corporations try to pick up that mantle over the past several years as the US has withdrawn from the Paris Climate Agreement. We are already seeing some movement in that direction. Some of that movement has been not genuine, to be honest, and some of it has been more genuine and more real. But there has been that sort of shifting movement and self-perception on the part of companies. You saw that reflected in The Business Roundtable adoption, late last year, that companies were going to focus more on all stakeholders not just shareholders of the company? I think now that has been put to the test in a lot of new and interesting ways during coronavirus. You have seen several companies when this first started happening who said, particularly retailers, whose folks were still going to work. “We are still going to pay people if they decide that they do not feel safe. Or we are going to give them a bonus for coming to work under these conditions.” You’ve even seen it health-wise much more recently now, Target, Walmart, CVS, Starbucks. All of these companies have been saying the federal government is not having a mask mandate, but we are going to have a mask mandate for anyone coming into the stores. So on the health side, it has been happening. And now it is happening on the social justice side as well. Wherein companies, I think over the past several years, it was more sort of consumer pushing, right? The consumer said, “I expect certain things from the companies I buy from and deal with.” Now the companies themselves are starting to finally become a little more proactive on these issues as well.Just sort of getting back to what I was saying earlier, I think part of what may be happening also, is that leaders of companies again are experiencing this if not equally. We know for example coronavirus has affected people of color in a higher percentage than it has non-minorities. However, I think that even captains of the industry if you will, they have been stuck at home too. They have been seeing what has been going on. They probably have people in their families who have been affected by all of this. Their employees are affected by this. I think in a way it has been an equalizer. Maybe that has also created more of an empathetic response. Maybe I am viewing that naively in thinking that. That it is entirely altruistic because I am sure it is not entirely altruistic right? Some of these companies want to have a good image and image of social justice and image of caring about people’s health, or maybe it is a combination of both. 

Jeffrey: I think it has to be a combination of both because I think we started by saying we are all human and we all have these same issues. We are all going through this together. I think that is what is showing right now and I think that is great. But have you found any industry sectors or companies that you think are making these pivots better than others? 

Julie: I mentioned some of the retailers and some of the actions that they have been taking. I have been pleasantly surprised by a company like Walmart, which was you know, used to be the Boogie Man. That would come in and shut down all the local businesses and in town. In some cases now on issues of social activism have been a little bit more out front. I think financial services which traditionally have not been that inclusive, I think they still have a ways to go. I mean listen Corporate America in general still has a ways to go when it comes to diversity and inclusion. I do not know that this is industry-specific rather than sort of company-specific of companies that are pushing ahead and doing a little bit better with it. 

Jeffrey: We are certainly seeing this from the PR side. People have been stepping up and saying great things. You mentioned Walmart, right? So now masks are necessary and all Walmarts and I think that is fantastic. But what about from a kind of a fundamentalist systemic change like a change in hiring practices, more diversity in the c-suite? Do you think at this time, this actually will lead to more sustainable systemic change? 

Julie: I hope so. I mean if you listen to Barack Obama, for example when he made comments about this and if you listen to some other folks who have been watching this fight for years, they will say well the difference now is that you also have a lot of white people who are taking to the streets who were participating in these protests. We have seen a little bit of loss of momentum perhaps or at least not as many protests going on as this has progressed. We have still been having a lot of conversations with people whose job it is to improve diversity and inclusion. I think they have been very busy filling these calls and trying to improve things. I think it is an open question. We are not going to know until we know, I mean a lot of companies right now also are not hiring. It is tough to tell if they are going to change their hiring practices because they are not hiring anybody right now. Technology, which has been one of the industries, I guess about industries that are doing it right. I think Tech has pretty clearly been an industry that is not doing it right over the past several years in terms of inclusivity. They are hiring in many cases. So we will see what happens. It is really difficult to know right now. A lot of companies are saying the right things, but I think we are going to have to just wait and see what the proof is.

Jeffrey: As you mentioned a lot of companies are not hiring and that brings me to another topic here. That is our economy. So when we take a look at the market and economic impacts that the pandemic has had versus if we look back at the 2008 recession there, what parallels do you see if any, and what are some of the tangible differences? 

Julie: I think that you do not necessarily have a systemic financial risk as you did then. There are some issues with, are we going to see some credit losses when we have just recently had the banks’ report right? All of them are setting aside more money for credit losses, but I have not seen any suggestion that that is going to become more of a systemic problem. So I tend to think there are more differences than there are similarities between that situation and this situation. One lesson from the financial crisis is to be careful. Be careful of diminishing the risks and something I have learned as a journalist for all these years is that you should not talk in absolutes. So to say, “Okay, it is completely different”. There are no systemic risks, which is what I just said. I am going to hedge a little bit and say, “Of course, we do not know.” There is always the Black Swan. There is always the thing that maybe you do not see. What I do think is going to be one of the big effects of this economic crisis is that once again, we are going to see a much more dramatic widening of the Wealth Gap in this country, for several different reasons. Corporate America is going to be fine. Yes, you are going to have some casualties. Yes, you are going to have particular pain in industries like the airline industry, and the hospitality and leisure industry. Corporate America in general I think is going to be just fine. Small businesses are going to go under in pretty unprecedented numbers, especially if we have more rolling closures going on throughout the United States. Businesses have already gone out of business, you know, restaurants and such. That is going to widen the gap. We are going to see because of what is happening with schooling, a widening in the education gap which then exacerbates the wealth gap as well. Because as I mentioned we are seeing communities of color that are more adversely impacted by a coronavirus. I think that the US economy, you know, it might take a couple of years to come back to where it was before as a whole. I am always interested in economic stories. And yes, you talk about the whole but you gotta be interested in the individual stories. Whether it is individual companies and individual people. Because those are interesting and that is good to get back to the human stuff. That is the human stuff. So I think that is going to be one of the biggest takeaways is the widening of that gap in the wake of all of this. 

Jeffrey: The only thing you know going forward as you said is we are driving down this road and all we have is a rearview mirror, right? So we do not know what the future looks like. Certainly from a small business point of view, I would have to imagine that is going to trickle down and it has to affect the economy. The economy over the next couple of years along with this election. From working On The Move as a co-host you speak to all these market and economic experts every day, name a couple like one or two insights that struck you the most from your interviews recently. 

Julie: We have been talking a lot about the so-called work from home trade. That as more of us migrate to working from home, in some cases perhaps over the longer term, right? Because a lot of the tech firms, in particular, are saying they are going to allow people to work from home for a long time. I think the idea that there are companies that are going to benefit from that is an interesting one. Whether it is the classic ones like Zoom, that so many people are communicating on right now to other sorts of cloud-based companies that are helping people work at home in greater numbers. I think it makes sense to think that there is going to be a longer-term trade for that. We also talked to a strategist today who said another effect perhaps of the longer-term work from home trade is that there is not going to be inflation anytime soon. It is just that it is a lower-cost way to operate. So that is an interesting concept to me. Sort of related to that I think is the idea that the FED is still pumping so much stimulus into the economy. Something Mohamed El-Erian, who we speak to as a regular guest on the show, has sort of hammered over and over again is as long as the FED is out there propping things up, the market is likely to behave as it has to some extent barring a shock-like we saw when this pandemic first came to be. Until the FED starts to pull back, it is hard to imagine things from a market perspective are going to change significantly. That makes sense to me and that is kind of an interesting idea. It also means it is going to be perhaps tougher for people in the market to make money, to sort of differentiate themselves. Then you also have this trend that I think has been interesting, the so-called Robin Hood Trader. I think a lot of strategies have said, “Well that is not affecting the overall Market. It’s affecting individual stocks.” That is not so much a market inside, I am just interested to see how that trend is going to evolve. And whether those people are going to sort of stick around and keep trading at home as the country gets back to work. 

Jeffrey: You do not think ten thousand new accounts per hour for Tesla is going to make a difference? It is crazy. 

Julie: Well it makes a difference to Tesla but maybe not to things overall. 

Jeffrey: I agree. That is the economic aspect of it. What about if we could talk and finish on maybe the social justice aspect of it. The different guests that you come on, it is a very powerful and very topical aspect to discuss. What has been your takeaway from these issues? And where do you think we go from here? 

Julie: I think when everyone, “everyone,” I am exaggerating. When how to be an anti-racist is like on the bestseller list for multiple weeks in a row, I have to hope that things will get better. Listen to people who are bigots and who are racists are going to remain bigots and racists. It is people, probably like myself, who have done things over the years because of unconscious bias that now we are hoping to work on a remedy. I am hopeful that those things will get better. I am hopeful that companies, my company, for example, has been having a lot of discussions about these issues in a way that it did not before. I think other companies are doing the same. Maybe it would not be the big dramatic one year, two year change, but you know if my kids are learning about this stuff. I hope that there will be generational change both on an individual and on a corporate level. 

Julie: I do think that you know when for example, we talked to a company recently that provides services to corporate boards. They are starting a new effort where all of the board members who are in their network when there is a new position on a board that opens up, they are going to ask everyone to nominate minorities; women, people of color to the boards. Because the old canard is that “oh, well, we cannot find anybody qualified who is a woman or who is a person of color.” And so I think that kind of effort helps put that canard to rest and helps populate these boards with diverse individuals. Things like that do give me some hope that things are indeed going to change even if I am not under the illusion that It is going to be overnight. 

Jeffrey: I think that is great. I think you struck upon a great word about that education. And what we could do for our children has been better done for us. I think that is the greatest gift that we can give going forward. Julie, thank you so much for your time today. This has been great. I very much appreciate you being here with us. 

Julie: It is my pleasure. I enjoyed it. 

Jeffrey: We hope you enjoyed this week’s podcast. If you have any questions, comments, or future story suggestions, please reach out to us on social media. Thank you, and we hope you enjoyed the RP HealthCast.

Melinda Wenner Moyer writes a column for Slate and is a contributing editor at Scientific American magazine – she writes for the New York Times, Mother Jones, and a number of women’s magazines.

TRANSCRIPT

Jeffrey Freedman: Hello and welcome to the RP HealthCast by Rooney Partners. I am your host Jeffrey Freedman. So there is an old saying and it goes: “the more you learn, the less you know.” That may sound paradoxical but unfortunately, it is part of the issue we are having with really understanding the coronavirus. You see each day brings about new findings, and that is great. But these new findings are raising new questions. Now, for example, we are finding out that the disease is not just a respiratory illness, but it is causing a lot of other issues like stroke and brain damage as well. So to break this down and to talk about some of the other neurological issues caused by COVID-19, we have with us Melinda Wenner Moyer. Melinda is a science writer and she is a visiting scholar at NYU’s Arthur L Carter Journalism Institute. Melinda writes a column for SLATE and she is a contributing editor at Scientific American Magazine. She also writes for the New York Times, for Mother Jones, and a number of other women’s magazines. Melinda, it is a pleasure to have you here with us today. 

Melinda Moyer: Thank you so much for having me. 

Jeffrey: Now before we discuss your recent New York Times op-ed piece. I just want to set the stage to introduce you to our listeners. So in 2006, you earned a Master of Arts in Science Health and Environmental Reporting from my alma mater, New York University. Since then you have been the recipient of numerous awards and citations for your Science and Healthcare reporting and you even received a fellowship from the Alicia Patterson Foundation for Journalism. Did you always want to be a science and healthcare journalist and can you tell us about this fellowship? 

Melinda: Sure. So no, I think I had a very roundabout way of becoming a science journalist. So I mean, I have always loved to write but I never really knew what to do with that and I actually studied music, piano performance and music composition in college and molecular biology. 

Jeffrey: Because they go together. 

Melinda: Yes. I was a busy college student and really did not know what I was doing when I graduated from college, and I ended up working in biotech for a few years in the UK in marketing. I realized that I was doing some writing for the marketing literature for this company and it kind of reinvigorated my love of writing and I realized I love science. I love writing. I kind of gave up the music stuff at that point and I thought, I wonder if there is a way to marry these two things and write about science and I was reading a lot of New Scientist magazines at the time. It just kind of dawned on me one day. Maybe I could be a science journalist and that is when I applied to NYU and moved to New York and did that program and I am so happy in my job. I love my job and the fellowship that I got that you mentioned the Alicia Patterson Foundation Fellowship was also just wonderful. So this Foundation is named in honor of Alicia Patterson who was the editor and publisher of Newsday for more than twenty-two years, and this Fellowship essentially is awarded to a handful of journalists around the country every year and I decided to apply and I wanted to do a fellowship on vaccines. I have always been really attracted to controversial and complicated scientific topics. So, this seemed like a natural choice for me and it was amazing. So with the money from the foundation, I went to West Africa to report a piece and just learned a ton. So it was amazing.

Jeffrey: Wow, that is incredibly interesting. I want to get into the vaccines and talk more about that. We will do that in a little bit, but on June 29th to New York Times published an op-ed piece under your byline. It was entitled “Can COVID Damage the Brain,” right? So it is interesting. We always talk about it as a respiratory illness. So I would like to walk through some of the different cases and patients you wrote about regarding these brain issues. One case I particularly probably start with was the case of Chelsea Eleanor and what was our experience? 

Melinda: So Chelsea is thirty-seven years old and she lives in Oregon. She was previously just a very healthy young woman. On March 9th she got essentially the worst headache of her life and she told me she gets migraines. She has had a lot of headaches but this was a headache like no other and she did not know what it was. She did suspect maybe this is COVID, maybe it is just a weird symptom of COVID and she tried to get a test but back then as you may remember it was very hard to get COVID tests. So she was not able to get a test until more than a month later and when she did it came back positive but throughout her COVID experience, which is still ongoing. She is still not well. She had dizziness, lightheadedness, blurry vision, she falls down sometimes, she is confused and forgetful. She says it kind of feels like she has early dementia and she’s also lost her sense of taste and smell which is something we have heard about with some coronavirus patients. She said she lost almost thirty pounds over the course of forty-five days because she just did not want to eat. She said numbness in her fingertips and in her toes and she says she has gone deaf in her left ear for the last month. So it is just a crazy constellation of terrible debilitating symptoms a lot of which seem to affect her nervous system. 

Jeffrey: That is a crazy story. It is awful. You wrote the op-ed. Actually I quoted it earlier, “The more we learn about the coronavirus, the more we realized it is not just a respiratory infection.” So I would like for you to elaborate a little bit on that thought and describe what you found as the evolution of reported medical conditions associated with the virus. 

Melinda: Yes. Sure. So there is now a lot of evidence that the coronavirus even though it infects the lungs first, it is really not a respiratory disease or not just a respiratory disease at least. Most people who are developing really serious symptoms and who are dying or not dying from pneumonia or other respiratory complications. This is in part because it has largely been found actually to be a blood vessel disease, a vascular disease. So this cellular receptor that the virus uses to get into cells, this receptor is found on endothelial cells which line the blood vessels and this means that the virus can infect cells in many different organs and systems that are rich with blood vessels. So kidneys, liver, the circulatory system and the nervous system. It can directly infect cells in these different systems, but also indirectly affect them through the kind of widespread inflammation that then harms parts of the body, even if they are not directly infected with the virus. So this all makes sense considering that the symptoms that people are reporting with the coronavirus are not just respiratory systems. They are kind of all over the place as Chelsea’s example illustrates. 

Jeffrey: So it is kind of like inflammation and hypoxia, like all together 

Melinda: Yes. It is a lot of stuff. So many organs are getting harmed in the process. 

Jeffrey: Yes. All right, so as the virus’s impact is on the brain. What have you been hearing from the medical authorities and other people about the neurology nightmare that they are experiencing?

Melinda: Yes. So right now there are still so many more questions than there are answers about how COVID affects the brain but again, we can certainly get hints from the symptoms that patients are experiencing. So in addition to the ones that Chelsea has experienced there are a lot of patients with brain fog, with seizures and confusion and many of these are persisting for a lot longer than the respiratory symptoms are. There have been studies that have shown that these kinds of nervous system issues are pretty common. So there was one study that evaluated patients who had been hospitalized for coronavirus in China and found that more than a third of patients had nervous system symptoms, which included seizures and even impaired consciousness. In France, there was a study that found that eighty four percent of COVID patients who have been admitted to the ICU also have neurological problems and a lot of them continue to have neurological problems after they were discharged. So these all collectively tell us the nervous systems being affected and there is also some growing evidence that we were starting to understand a piece together how this happens and how the virus is doing this but there is controversy too. When we think about a virus directly infecting cells in the nervous system, this is one claim that is a little bit controversial. There is some evidence that suggests that the virus can directly infect nerves because nerves also express receptors, I mentioned before. Some researchers think that actually the virus is traveling along nerves as it moves to different parts of the body. So one piece of evidence is case reports and there was a case report of a woman in Los Angeles who was found to have the virus in her cerebral spinal fluid. The reason this is controversial is because there are not a lot of studies yet showing that the virus can directly get into nerve cells. There are a few studies here in their case studies here and there but that is in part because it is really hard to get direct evidence of viruses inside the nervous system infecting the nervous system. You cannot just do a biopsy of somebody’s brain in an outpatient clinic and then send them home. So often this evidence comes from post-mortem brain studies and there are not a lot of those and even if we think the virus does get inside these brain cells, we do not know what it then does. There is really not a lot of information yet so researchers are speculating based on what we know can happen when viruses infect brain cells. It might affect the function of these brain cells and might even affect the structure of the brain but ultimately we do not know. We know there are reasons to be concerned. We know we need to be doing more research but when it comes to what is actually happening inside the brain, it is really hard to tell. 

Jeffrey: Yes, so your op-ed piece, you talk a lot about the trauma as you just mentioned, the brain inflammation and cellular inflammation. We have also heard a lot in the news about this inflammation leading to cytokines storms. So can you explain a little bit about what that is and how it affects the brain? 

Melinda: Yes. Sure. So separate from this question of whether the virus is getting inside brain cells and affecting brain cells directly. One thing we are pretty sure of, scientists are pretty sure of right now is that the virus is leading to a kind of widespread inflammation throughout the body and including the brain and we know inflammation is very bad for the brain. So when people have systemic like really serious infections these infections can kind of poke at the brain and nervous system, communicate with it and activate immune molecules outside the brain that then travel into the brain. These immune molecules are helpful and that they are trying to fight off the infection, but they are also kind of like a double-edged sword. They are also very harsh and abrasive and they damage a person’s own brain cells. So they are meant to be killing just the virus that is not supposed to be there but they are also inevitably damaging and killing some brain cells. We know even if the virus is not getting directly into the brain that the systemic inflammation that happens as a result of the virus is affecting the brain through this inflammation, through these immune molecules and in really severe circumstances this inflammation can lead to a cytokine storm which we have all heard about. Cytokines are a class of immune molecules that are important for fighting off infections. There are a bunch of different kinds and they are harsh and abrasive and can harm somebody’s own body in the process of fighting off an infection. So what happens with the cytokine storm is that your body’s cytokine production just goes haywire. It goes into overdrive and essentially attacks your own body and tissues and organs along with the virus and your body essentially becomes this kind of collateral damage. It can lead to organ failure, blood pressure drops and racing heartbeat. I guess the other thing that is important to mention — a lot of great news here, right? The other thing that is important to mention about inflammation is that it also leads to blood clots, which we have heard a lot about with coronavirus. So blood clots occur, and this is again because coronavirus is largely a vascular disease. Blood clots occur in as many as thirty percent of critically ill COVID patients. These clots can get into the brain and affect how it functions and they can also lead to strokes and strokes are very bad for the brain because they starve it of oxygen. All these different ways that inflammation itself regardless of whether the virus is getting into the brain, this inflammation affects the brain. 

Jeffrey: Yes. The cytokine storm aspect is scary stuff. So there was a group quote in your op-ed. It was from Dr. Majid Fotuhi, a neurologist and neuroscientist affiliated with Johns Hopkins. You quoted him as saying, “It is like the defense system is called to a quiet small riot in one neighborhood, and all of a sudden the whole military’s ticked off and they do not know what is going on so they just bomb everything.” I thought that was a pretty powerful description and kind of summed it up really well for me to understand that, so thank you for sharing that. Another health condition that you wrote about that has been triggered by the coronavirus, and I hope I am pronouncing it right, Guillain-Barre syndrome. Can you talk about the case of Michele Heart in this instance? 

Melinda: Yes. So Michelle is a forty-one-year-old psychotherapist who lives in Colorado and on April 25th she started having really bizarre symptoms. High blood pressure, racing heart, pins and needles, shooting nerve pain and like a burning sensation in her skin along with other weird brain-related issues like memory loss and brain fog. When she first went to the ER she was kind of dismissed by doctors. She thought maybe this is coronavirus and they said, “No, this does not sound like the coronavirus. Go home and get some rest.” They did not give her a COVID test, even though she asked for one because again her symptoms were atypical and as we are learning a lot of these symptoms are atypical but back then the doctors really did not flag it. She ended up back in Urgent Care back in the ER and was diagnosed about a week later and had coronavirus. Very soon after that she was hospitalized because those symptoms of the nerve pain, burning sensations, high blood pressure were getting worse and she was given a lot of tests and she was diagnosed with Guillain-Barre syndrome, which I also cannot say, which is an autoimmune disease in which the body basically starts attacking its own nerves. In fact, she was back in the hospital last week. I was in touch with her. She is getting more treatment for this autoimmune disease. So this is thought to be incited by the coronavirus in rare cases. There have been COVID patients that have developed these kinds of neurological autoimmune diseases, which may again be triggered by inflammation kind of going crazy and the body suddenly just starting to attack its own nervous system tissue.It is really scary.

Jeffrey: So it is different types of cytokines storms with a body just starting attacking things regardless of where the infection is? 

Melinda: Right. 

Jeffrey: So all right to go back then to actually where we started with vaccines and what you like to study. You have studied and reported on the anti-vaxxer movement and I saw a Washington post poll last week that twenty-seven percent of those people surveyed do not intend on getting a coronavirus vaccine when it is available. Now, how do you feel about this? Are you concerned that once we have approved vaccines that resistance can mount to take the vaccine, so that would leave a lot of people exposed to the coronavirus kind of making the vaccine negligible in its effect. What do you think? 

Melinda: Yes, that poll is really terrifying. I hope that it does not turn out to be twenty-seven percent of people who reject the vaccine, that would be hugely problematic because I mean ideally with a vaccine like this you want to reach herd immunity so that we minimize the transmission of the virus. So once enough people are immune, it really stops spreading as easily. One of the reasons it is so important to reach this herd immunity is because there are a lot of people in the country who cannot get vaccines because they are immunocompromised. They have other medical issues that prevent them and those are people who are going to be at very high risk for serious complications with the coronavirus. So ideally we want to be protecting people who cannot get a vaccine. The other thing is, I mean vaccines are amazing, but none of them are a hundred percent effective. Once we get a vaccine for coronavirus we do not know at this point whether it will be ninety percent effective protecting people or eighty percent. Hopefully, it is ninety-nine percent but a lot of people I think have this idea of, well, it does not matter if other people do not get vaccinated because if I get vaccinated and my family gets vaccinated, then it will be fine. There is no risk to us of getting the coronavirus and that is not necessarily true because vaccines are not a hundred percent. So ideally you want to have everybody getting this vaccine. So even though it may not be a perfect vaccine it will get to this herd immunity threshold and really just slow down and stop coronavirus transmission. 

Jeffrey: I hope so, but I think we are several months away still until we find out about vaccines. So with that, I would love to talk further as we get closer to these vaccines. Maybe have you back to talk more about vaccines and the thought about herd immunity, but thank you so much for your time today. This has been really, really informative. 

Melinda: You are welcome. My pleasure. Thanks for having me. 

Jeffrey: We hope you enjoyed this week’s podcast. If you have any questions, comments, or future story suggestions, please reach out to us on social media. Thank you, and we hope you enjoyed the RP Healthcast.

Misinformation about COVID-19 seems to spread faster than microbes. In this episode, Emmy-award winning journalist, author, professor and epidemiologist, Dr. Seema Yasmin, helps separate the fact from the fiction.

TRANSCRIPT

Jeffrey Freedman: Hello and welcome to the RP HealthCast by Rooney Partners. I’m your host, Jeffrey Freedman. For several weeks on this podcast, we’ve been learning more and more information about the Coronavirus in terms of the disease, things to be aware of, potential ways to stay safe, and drugs and development to treat it. I keep saying that the more we find out, the more we realize what we don’t know. While I still believe this is absolutely accurate, there’s something else we need to be careful of. With the amount of new information that’s being put out into the public, sometimes that information gets misunderstood or twisted to meet different agendas. Part of the problem we’re having in this country right now is that at times we don’t know who we can turn to for unbiased truth and we start to question some of the information coming from our leadership. Our guest this week has spent her entire career searching for and communicating the unbiased truth about diseases ranging from Ebola to the Coronavirus. Dr. Seema Yasmin is a trained medical doctor, an epidemiologist, a university Professor, a sought-after lecturer, an on-air medical analyst for CNN, an author and she hosts a YouTube series for wired that debunks myths about diseases such as the Coronavirus. Dr. Yasmin has spent her whole career researching diseases and communicating about them today. Seema, it’s a privilege to have you here with us today. 

Dr. Seema Yasmin: Thank you so much. 

Jeffrey: Now, before we start discussing the Coronavirus and your work in the space, I’d like to spend a couple of minutes talking about your journey into science journalism. Your professional journey is just fascinating and you were or are a medical doctor and then you went into public health at the Centers for Disease Control and Prevention where you studied outbreaks of diseases in prisons, border towns in American Indian reservations, can you share with our listeners this part of your career journey? 

Dr. Yasmin: Yeah, sure. So I trained in medicine. I went to medical school in England, worked as a hospital doctor there, and became really interested in epidemics and so about ten years ago, I moved to America just for this job at the CDC. I served as an officer in the epidemic intelligence service. So what I was doing then was I was part of a team that was deployed whenever there was an epidemic and that could be in the US, it could be in other parts of the world and my job really was to try and contain an epidemic before it became really really bad and to try and understand how it spread, why it spread, and who it was affecting. So, interestingly, a lot of what I do now, I think people are more familiar with because they know terms like contact tracing, for example, people know more about epidemic investigations right now because of what we’re going on, but that was the bread and butter of my work. But then what I noticed is every time I got sent to a Hot Zone whether it was a viral outbreak, a bacterial one, I had a very singular focus on containing the disease and what I saw each and every time was that disease was not spreading alone; disease was spreading alongside misinformation and disinformation. So that it could be a virus that was contagious but there were also these medical myths and health hoaxes and rumors that were just as contagious and helped diseases spread. So I thought why in public health are we not very good at addressing that part of it when information can fuel viral contagion? Why do we kind of dismiss the information part of it? And I became really interested in that. I had a big eureka-moment during an outbreak of flesh-eating bacteria in the Navajo Nation. And I thought, “I think I need to train as a journalist because I think I need to understand how journalism is part of the public health ecosystem and besides just being a public health doctor, I need to know how I can make a compelling argument to make people care about these epidemics, make people care about public health.” So I felt a bit weird at that time, so I thought medical school, then being an EIS officer, and then going to journalism school like that last part, that’s not a normal trajectory. But I told my supervisors at CDC, don’t write me a reference on my next job, write me a reference for journalism school and actually people were really really supportive. So I went to journalism school. I then got hired straight out of j-school as a newspaper reporter, moved to Dallas, Texas, a place I never thought I would live and arrived there just as Ebola arrived in Dallas. This is in 2014, so that’s a small part of my journey. 

Jeffrey: That is something movies are made of. That’s unbelievable. So, then, all right, so let’s fast forward. So you got into communications. You became a reporter. You were a medical analyst or maybe still are for CNN. You were a professor at the University of Texas, not just working there. I think you gave a TEDx Talk and then I believe now you move from Texas to California. You’re at Stanford now. Can you tell us a little about the Stanford Health Communication Initiative and your work as Director of Research and Education there? 

Dr. Yasmin: Yes, so I direct the Stanford Health Communication Initiative where we run educational programs and do research around health communication. So we do the micro which is how can a doctor be a better communicator with their patient in a one-on-one interaction, but then how does all of this information factor into how diseases spread on a global level? And so it’s really amplifying my discoveries as an EIS officer, kind of, amplifying the work I’ve been doing as a health and science reporter to kind of plug-in all those different pieces. Because, journalists play a really important part in how we understand disease, how we understand our own bodies and our health. Journalism is part of the public health information ecosystem and you may have even heard people talk about journalism as the immune system of a democracy. So we study that, we support that and we’re really tracking not just disease but also my interest, which is misinformation and disinformation about disease, and then trying to figure out innovative ways to counter it. Because as I said in public health, we’ve been really good at focusing on disease, but not at the medical myths and the health hoaxes. So we’re trying to change that. 

Jeffrey: Right. So, speaking of this, I guess in your part-time job now since you sound like you have so much free time, you were nominated for an Emmy, right? 

Dr. Yasmin: I won an Emmy. 

Jeffrey: You won an Emmy, okay. That’s for the Chagas disease? 

Dr. Yasmin: Yes. I did a TV news series as well as a written series about neglected tropical diseases in the US, the kind of diseases that you think would happen in faraway places but actually are infecting Americans and are not being counted because public health agencies don’t think they are a concern and therefore aren’t doing surveillance. So, yeah, I was very, very surprised to win an Emmy for that but really happy that public health work was kind of getting that platform and something as important as neglected diseases in the US was being profiled. 

Jeffrey: Yeah, that’s incredible. You’re also an award-winning author and you have a new book that’s coming out. It’s on pre-order on Amazon and also at Johns Hopkins University Press. I love it. So, the new book it’s entitled, “Viral BS: Medical Myths and Why We Fall For Them.” It explores how as you said misinformation can spread faster than microbes. Now you started a little, you talked a little bit about this but explain the thesis, and what prompted you to write this book? 

Dr. Yasmin: So this book started off as a regular newspaper column I used to write, where readers would send in all sorts of questions about, should I starve a fever and feed a cold? Should I be worried about chemtrails? Do vaccines actually cause autism? And so every week I get to dig into these questions and say, “Look, here’s the evidence, here’s how you can make up your mind about this.” And then an editor was like, “This is really cool and it’s reaching a lot of people, turn it into a book.” So I started working on this about three, maybe even four years ago, you know before we thought a pandemic would hit us. It just kind of gets into the nitty-gritty of about fifty very common, very relevant questions, whether it’s to do with taking a Statin, whether it’s to do with the “detox cleanses” we keep hearing about. But really at the center of the book, we’re asking “why is it people often don’t trust science and scientists.” Because being in the scientific world, you can get kind of very prideful and a bit complacent that we have science on our side, we have facts, we have evidence. And you can see just during COVID-19 how that can fall flat, how you can have incredible evidence and really good studies and still people will refuse to wear a mask. So even though I started working on this a long time before the pandemic, it really gets to those central questions of what are facts? Who develops facts? And why is it the facts don’t always work at countering misinformation? 

Jeffrey: Yeah, and I guess even to emphasize this, I’ve been watching you on YouTube, and you have a series with Wired about medical myths and about coronavirus myths, and some of these things are addressed on the YouTube series, correct?

 Dr. Yasmin: That’s right. 

Jeffrey: Yes, so, I think it’s great. Let’s talk about more of these Coronavirus– I don’t call them myths but for the purpose of this, more about misunderstandings and communication and things that are going on that people don’t necessarily hear about or haven’t heard about yet. Let’s talk about this one thing that I’ve been tracking, which is the coronavirus mutating. There’s a doctor, Michael Worobey, he’s an evolutionary biologist at the University of Arizona. He said a second, like a mutant second virus, may have been responsible for the spread that we’re currently witnessing there. And also, virologists at Scripps Research from Florida, they found a mutation of the Coronavirus called D614G, which they said is far more infectious. Can you share your understanding of the existence of mutant variants of the Coronavirus, have you seen this? Have you been shown this? And what could be the issue or the effects of these?

 Dr. Yasmin: So the first thing to know is that this is really predictable because viruses replicate at such a high rate and as they make more copies of themselves, they make mistakes if you want to call it that. So that’s how you end up with these viruses that are almost like cousins of one another instead of absolute clones and what we’re seeing primarily is some of this research coming out of the US and out of Europe as well, where scientists are looking specifically at the spike protein of the Coronavirus. That’s that bit that sticks out and gives it that halo shape which is why we call it Coronavirus because Corona is Latin for Crown and it’s that spike protein that is really good at latching on to some of our cells and enabling the virus to get inside. The spike protein, in doing that, in that latching process and getting in, sometimes can break and what some scientists have found is a version of the Coronavirus where there’s just one amino acid chain in that spike protein. So the spike protein is made up of about 1,300 amino acids, which are the building blocks of proteins. And in this version where there’s just one amino acid that’s different, it makes this spike protein a bit stronger and a bit tougher. So it doesn’t seem to break as easily. And what scientists are saying is that in some experiments, this slightly mutated version of the Coronavirus, it can be about three to eight times more infectious. But that doesn’t necessarily mean that people infected with that type of the virus are getting more sick. And in fact, there isn’t data to support that. So I think we need to do a lot more research. I want to make sure people don’t get scared, you know, the term mutant virus can sound a bit sensationalist and frightening, right? A very Hollywood. But as far as we know at the moment, this slightly evolved version of the virus doesn’t seem to be increasing hospitalization rates or increasing the severity of the disease. So, it’s to be watched for sure but right now we think it might make for a more infectious version of the virus, but maybe not a more serious one. 

Jeffrey: Okay, that’s scary, fascinating, scary. New topic – super spreaders. Okay. Now I’ve read different reports that suggest an average, let’s say 2% of the people could be responsible for 20% of all Coronavirus infections, right? Why is that? You know, why are some people more infectious and are they doing anything different, and is it their fault? What’s the information with this?

 Dr. Yasmin: So, again, this is not anything new. We see this in some diseases that about 20% of the infected people are responsible for about 80% of the infections, and we don’t fully understand why that is and I think it’s because it’s complicated. Partly, it’s probably to do with some biological factors. Maybe in some people, a virus is able to replicate more efficiently. Maybe in some people, the immune system doesn’t control the infection as well. But then I think that there are more behavioral and less biological factors at play too. Maybe some people are able to transmit more infections because of the kind of lifestyle they have. Maybe they are like kindergarten teachers or maybe they’re really popular and they’re always going out, versus somebody who’s really reclusive. So I think probably there are these multiple things at play, but I do want to say that the term “super spreader” has been criticized by some anthropologists as being a term that we should be careful about using because it already adds some stigma to this idea of a person as being responsible for so many infections perhaps through no fault of their own. The reason we worry about that is because stigma can be very harmful to an individual person but also to public health efforts, because the last thing you want to do is single-out people for being infected, for being contagious. That often can make it more difficult to do public health containment work. But add to that the fact that as I said, we don’t fully understand what it is about some people that could mean that they transmit the infection on to many more. It’s just a phenomenon we’ve seen over and over again. In fact, we saw it with SARS and MERS and from an information perspective, I’ll tell you something really interesting because I’m very interested in the parallels between how disease spreads and how information spreads. Actually you see in the same way that a virus is transmitted from person to person so is information and actually, in the context of information, you also have people who can be “super spreaders”. Maybe it’s because they are a celebrity, they have a massive platform. Maybe it’s because they’re an influencer and they have a lot of Instagram followers, but there are some people who also are really good at getting misinformation out very far and very wide. 

 Jeffrey: So that’s incredibly interesting. So super spreaders. We don’t know why it could be genetic but what about if we turn it around a little bit. Why have we found that there’s a hugely disproportionate impact on people of color? And why would people of color or minorities be more affected by the Coronavirus? 

Dr. Yasmin: So this is also something that’s not surprising. Unfortunately, in fact, if you’d asked scientists and sociologists and anthropologists like a year ago if a pandemic virus, a respiratory pathogen was to hit America, where would infection rates and death rates be highest? It would have been very easy to find evidence to say actually it’ll be people of color or be queer people, disabled people, people living on the margins of society who will suffer the most. And it’s exactly what we’ve seen and so it’s actually really tragic I think that we haven’t fixed those kinds of societal problems that caused so much suffering and so much needless death during the pandemic. I saw one analysis that showed: had there been equity across the death rates in the US, if equal proportions of White Americans and Black Americans had died, then something like 15,000 Black Americans would still be alive, but they died from COVID-19 because of these disproportionate rates. Overall, we’ve seen from The New York Times and other researchers have also published data that shows that in the US, Black Americans and Latinx, people are about three times more likely to get infected and get sick with COVID-19 than their white neighbors and twice as likely to die. But actually it’s a lot more serious and a lot worse in some places. In Kansas, black Kansans are about seven times more likely to die from COVID-19 than their white neighbors and a lot of this comes down to structural inequality and racism. Unfortunately, people often don’t want to hear this or they think that that sounds like not a reasonable explanation, but we have so much evidence of how it is that systemic racism causes people of color and black people and indigenous people to suffer disease more, to receive treatment a lot later, to have really poor health care experiences where doctors dismiss their pain and dismiss their suffering which explains exactly what we’re seeing now. 

Jeffrey: Now, to combat misinformation, we need data. You mentioned this before about the New York Times and about the article that they wrote and the data that they’ve been provided, but they were only able to receive that data from the CDC because they had to sue the CDC to get the data. 

Dr. Yasmin: Right. So. all that talk about transparency of the Chinese scientists and Chinese officials, which is a question I was getting a lot early in the pandemic – are Chinese scientists sharing all the information? But then you look here at the US and we haven’t had transparency in terms of data, very basic data. So as you mentioned, the New York Times had to sue the CDC to get about one and a half million case records of people who had had COVID-19, but even after they sued and they got the information, there were only race and ethnicity data for about half of those, one and a half million records. So even at that level, we’re still missing these really important data points that help us figure out in the crisis, who needs help? How do we respond to the crisis? And then, afterward, helps us look back and make sure this kind of thing doesn’t happen again. But we are sorely lacking in even the most basic access to data. 

Jeffrey: Do you have any insight as to why that would be from CDC? 

Dr. Yasmin: I think we’re seeing it’s not a secret and you don’t have to look very hard to see how much political pressure is being exerted on scientists across the board, but especially scientists employed by a federal agency, the CDC. We’ve seen a few times, CDC scientists spend hundreds if not thousands of hours developing reports and guidelines to help lawmakers make policy and then we’ve seen their reports censored. We’ve seen their reports delayed or be sent back for revision. So I think that’s what’s happening is that the scientists at the CDC do about 11,000 of them within the US are trying to do the best work with the best available data, but politicians especially the administration has its own agenda and so isn’t letting scientists do the work and is exerting this political pressure so that they can spin the information and it’s very dangerous and detrimental to the public health response. It’s partly why we’ve seen America continue to smash records in terms of the number of new cases and deaths. 

Jeffrey: Okay. All right. So then about vaccines, what’s your opinion on the likely timeline of a vaccine reaching the global population, and do you think it’ll be just one vaccine, or do you think it will be a one and done shot? Or do you think it’ll be an annual vaccine like the flu? 

Dr. Yasmin: I think the fastest we’ve ever developed a vaccine previously is for mumps and that took four years and that was a record but we are working at a massively accelerated rate. It’s just amazing to me how far we’ve come along in the vaccine development process already, which is what happens, I think when you have more than a hundred groups of scientists looking at like a hundred and something different vaccine candidate and you have drug companies using completely brand new, never before approved technology and strategies for developing a COVID-19 vaccine. However, none of that is a guarantee that we’ll have even one successful vaccine. Although I hope we have multiple vaccines that make it through clinical trials and that are approved. I have to think about things like malaria and HIV where we just haven’t after decades of work been able to develop safe and efficient vaccines. Like I said, I hope that’s different now because we desperately need one and I’m looking very closely at Pfizer’s work, also the University of Oxford in the UK seems quite the furthest along I would say. If you ask those scientists, I’ve been interviewing different Drug Company CEOs and vaccine scientists around the world. If you ask them, some of them will say, “We plan to have a vaccine available by the end of the year, even or by early 2021,” and the US government itself has Operation Warp Speed which has a very ambitious goal of developing millions of doses of vaccines by January 2021. I’m hopeful and cautiously optimistic that that happens, but I think we have to be really open with people that vaccine science is tricky and sometimes what happens is you end up with something that’s amazing in clinical trials. But then you stumble at the stage of scaling up to millions of doses that in itself can take years and millions of dollars. So my hope is that we end up with a few vaccine candidates that give a long-standing immunity but there’s just no guarantee of that. What we wanted to see is governments, especially collaborating and continuing to invest in vaccine research.

Jeffrey: All right. Last question, somewhat related though. We’ve heard the term herd immunity as this relates. Can you explain what this means? And do you think we can ever achieve that in the United States?

 Dr. Yasmin: So, herd immunity is this concept where when you have a specific proportion of a population whose immune to a disease, it stops outbreaks of disease occurring in that community just because there are so many people who are immune, the virus can’t get a hold of that community and cause an outbreak. The proportion of people that need to be immune to achieve herd immunity, that proportion is different for different diseases depending on how contagious they are. So measles is like one of the most contagious viruses on the planet for humans and you need to have like more than 90% of people immune in a population to have herd immunity to measles. For COVID-19, we’re thinking it’s more like 60 to 80% of people need to be immune. It’s unlikely we’re going to get that with natural infection, because what we’re seeing is that with people who get COVID-19 when you check their blood a few months afterward, the levels of antibodies are dropping. That’s not to say they don’t have any immunity, but we still need to understand what level of protection that gives them. On the other hand though, vaccine-induced immunity can be quite different to natural immunity. So say you get COVID-19 and then you have antibodies but they go away versus you get a COVID-19 vaccine and hopefully it gives you so many antibodies that they stick around for a really long time. So we still don’t know which vaccine will be able to do that. With Pfizer, we saw some very early data that showed that people who get their vaccine end up with antibody levels that are higher than people who get the infection naturally. So that is promising but in terms governments early on saying, “We’re going to have a herd immunity approach.” The British government even said, “We kind of let the virus just run through.” That clearly doesn’t work and also it’s really dangerous because then people suffer, get sick and we have no treatment for this disease. So we do really need a vaccine. But time will tell if that’s possible and also what kind of immunity and for how long a vaccine will confer. 

Jeffrey: Thank you. This has been incredibly educational, informational, and highly interesting. So thank you so much for joining us today.

Dr. Yasmin: Of course. Thanks for having me.

Jeffrey: We hope you’ve enjoyed this week’s podcast. If you have any question, comments or future story suggestions, please reach out to us on social media. Thank you, and we hope you enjoyed the RP HealthCast. 

As the United States continues to see record-breaking new coronavirus cases, the country’s reopening has become one of today’s most critical topics. We discuss the issue with Forbes’ reporter Alexandra Sternlicht and examine the unsettling resurgence, complications with testing, and the disproportionate impact of the virus on communities of color.

TRANSCRIPT

Jeffrey Freedman: Hello and welcome to the RP Healthcast by RooneyPartners. I am your host Jeffrey Freedman. New York up until a few weeks ago was the epicenter of the coronavirus activity in the United States, but with increased testing and social distancing and a slow and methodical reopening, we seemed to have turned the corner and our infection rates have dropped dramatically. But, unfortunately we cannot say the same for other parts of the country where States like, Florida, Arizona and Texas are hitting all-time highs in terms of infections, hospitalizations and even deaths from COVID-19.  

To talk about this and other issues related to these rising figures is Alexandra Sternlicht. Alex is a breaking news reporter for Forbes. Prior to this role she was the under 30 editorial community lead at Forbes and she’s worked for the New York Times as well as the New York Observer. Alex, thank you so much for joining us today. 

Alexandra Sternlicht: Thank you so much for having me, I am thrilled to be here.  

Jeffrey: Great! Now Alex you have been a prolific writer about the coronavirus for Forbes. For the purposes of today’s interview, I want to focus on three important topics that you cover. That is the apparent resurgence in the number of coronavirus cases in the U.S., issues surrounding testing and virus detection and the disproportionate impact to the virus on communities of color. But, before we jump into all that, I would like to start with a question about you and your role as a breaking news reporter for Forbes.

Alex: Oh, thank you. 

Jeffrey: Yes. Now you have been on staff with Forbes for almost two and a half years and during that time you have written on a variety of topics besides coronavirus and as a breaking news reporter, how do you decide what to write about?  

Alex: Oh well thank you so much for having me. I am really excited to get into those topics with you today. So there are three main things I focus on for sourcing breaking news. The first is, I look at notable leaders’ addresses, people like Bill Gates or Governor Andrew Cuomo. The second is subject matter experts such as Dr. Aaron Bernstein who is the Director of the Harvard School of Public Health who can comment on studies and complex topics like you know coronavirus, and the third is social media as this is where movements form from conversation. So I will talk a little bit about that. I look at Twitter, Instagram or Tik Tok and I will see what people are talking about, and then I will figure out how I can best insert facts into these popular conversations. As I believe this is really the role of journalists in this day and age. So, an example of this, a couple days ago I found Jimmy Kimmel trending on Twitter as people called for him to be cancelled due to his black face impersonation from the 90s. Upon further examination and discussion with my editor, I found that conservatives were at least in part leading that movement, including Donald Trump Jr.. Kimmel has been an outspoken anti-Trumper and so this seems like an important thing to add to the conversation. 

Jeffrey: That is really interesting. You also mention something while Tik Tok, all of a sudden that has been a leading form of news so it is not just my teenage daughter trying to make a video? 

Alex: Right totally, one really interesting story I found on Tik Tok is you know primarily teens were talking about saving Baron Trump for the White House and they had all these theories that he actually does not like his father and he is actually a really cool guy. So, there is a whole Tik Tok campaign with I think it was like twenty six point two million views on it to rescue Baron Trump for the White House, which was hilarious and amazing.  

Jeffrey: That is a lot of eyeballs. Wow! All right, but back to the coronavirus and your coverage there. Now, across the world the outlook for containing the spread of the coronavirus has worsened, right? Recorded cases had spiked and here in the United States many states that reopened are experiencing either surges or record-breaking new cases. Can you provide some color and details on which states are having the most issues right now?  

Alex: Absolutely! It changes on a daily basis, but I felt half the states in the US are seeing a surge in cases. We are seeing really troubling statistics in Florida, California and Texas. Florida and Texas did not have shutdowns that were as severe as places like New York and those dates were some of the first to reopen. That’s not so much been the case with California which is interesting to note. One area that’s been particularly fascinating to me is Florida’s Miami-Dade County, where a lot of officials are saying that the lack of social distance practices and eating and drinking is leading to a spike in cases. You know, now experts are saying that Florida may be the new global epicenter of the virus which is quite concerning, and today we heard from both the governors of Texas and Florida who said that all bars will have mandatory shutdowns.  

Jeffrey: Florida and Texas, if they had shut down the same time New York did and really clamp down, don’t you think they would still be having, or let me rephrase that, would they still be having the same issues now? I mean, are they not on such a lag, I mean New York is opening now, was it really expected that they could stay closed for that long?  

Alex: Yes I mean that question is, it is a great one, but unfortunately it is truly impossible to answer. So you know we are just looking at what we have now and with all the differences in states, we are seeing some really troubling things in Florida and Texas.  

Jeffrey: Yes I mean, I think they are doing the right thing now by holding back and certainly if they have to start closing they have to start closing. It is definitely getting scary.

Alex: Absolutely!  

Jeffrey: What is even scarier though you have reported that the number of covid-19 cases and deaths could escalate further in the fall months. So while we are at the epicenter, while we are at the peak right now, the fall is just a few months away, why? What about the fall? 

Alex: Yes so that is another great question. So the IHme model. The Institute for health metrics and evaluation which is used by the White House and other decision making bodies has three predictive models to predict the future of coronavirus. So the first model that they use is the current production which you know, I will give you the definition of, so they say mandates are re-imposed for six weeks when every daily death reaches eight per million. The second is mandate easing, meaning that we continue to lift social distancing mandates and those don’t come back no matter what happens. The third is universal masks, which is really really interesting and that is a scenario in which 95% mask usage in public is mandated in public in every location and same thing as the current projection, mandates reimposed for six weeks if daily does reach 8 per million. So under both the current and mandates easing projections, the models have coronavirus steadily rising until October. Those cases will rise in the fall, but the thing that is fascinating is that the third projection, the universal mask one, though cases will still rise, it will be much much flatter until October 1st. Which suggests the power of PPE with something, so that will be maybe so easy as wearing a mask and you know, nothing is for certain, we have seen that across the board throughout this pandemic, but scientists do point to the virus rising in the fall due to historical precedent where you know, every single fall we see seasonal influenza rise and they believe that coronavirus will be similar in that way. 

Jeffrey: Alright so they think it is going to be cyclical in that regard. That is really interesting, but you mentioned that something as simple as wearing a mask will help flatten the curve. Now compare that to my next topic, you know where you reported on the disproportionate number of covid mortality rates among minorities right? So can you walk us through the facts and figures and explain why the virus is having such a devastating effect in these communities? 

Alex: Absolutely! Yes, very sad the virus disproportionately affects black, hispanic and other minority groups due to the nature of systemic racism which impacts housing, community, health and all the other conditions that lead to increased fatality from the virus. One of the aspects of this that I would like to focus on that I have written about is the exposure of air pollution as it relates to severe covid-19 outcomes. So Harvard School of Public Health on this issue, Dr. Aaron Bernstein said that ‘people who live in cities and next to freeways are disproportionately black population and those people are more likely to have more severe outcomes from covid-19 as they are more exposed to air pollution that creates the pre-existing respiratory conditions known to make covid-19 fatal.’ So this is not nearly all encompassing of why covid-19 disproportionately affects minority communities, but it is something to think about as we think about climate change and systemic racism. Another community that I would like to talk about and that I have written about is Navajo Nation and Indigenous Americans. So, Navajo Nation is home to some a hundred and seventy three thousand Indigenous Americans and it is the location of America’s worst coronavirus outbreak in terms of infections per capita, which is awful. The reason that the disease has hit this the largest Native American Reservation so hard is multifaceted. Many residents live in multi-generational homes, so that makes it nearly impossible to stop the spread within a home because there are just so many people living there. More than 30 percent of residents do not have access to running water so that makes things like hand washing which we know can curve coronavirus really, really hard. Also, the Navajo Nation has very few grocery stores and the grocery stores are used by so many people so that means that grocery stores turn into virus hot beds and that is really, really devastating that community. 

Jeffrey: It really is. There have been a number of different articles. I mean you have done a great job reporting on this. The New York Times Magazine, Linda Villarosa wrote a very powerful narrative of one family’s tragedy in New Orleans during Mardi Gras and the article is entitled ‘who lives, who dies’ and it puts a face on the statistics. She wrote about this gentleman, Dickey Charles, whose only 51 and he was a Zulu Club member in New Orleans and according to the Times article, titled ‘eight weeks after Mardi Gras at least 30 members of the club have been found to have covid-19 and eight would be dead’ and there is just been too many Dickey Charles. I mean, is there anything you have found that could be done differently in the African-American or minority communities that could make a difference? 

Alex: You know it is absolutely horrible and there have been way too many stories of family birthdays, graduations, pool parties and more that ended with such deep sadness. I truly do not have an answer to your question because again, you know hindsight is 20/20, but yes it is so sad.  

Jeffrey: Yes I guess going back to the basics when you can wear a mask, stay socially distant and hand wash but in a lot of these communities they can’t as you say, because they are multi-generational and they are all living together.  

Alex: Exactly. 

Jeffrey: It is very tough. All right switching topics to testing and the related issue of contact tracing. You have reported several times actually that some people believe increased testing is the reason while others refute the notion that testing explains the spike in new cases. Can you explain what the facts are here? 

Alex: That is such a good question and it is so pertinent to what we are seeing right now in the rise cases in the United States. So while increased testing can help explain this rise because you can’t, you obviously cannot be confirmed positive for coronavirus without taking a test, but we no longer have a test shortage in this country. So at the beginning of the pandemic when tests were hard to come by in the United States there were likely under reported cases. The side note, we have seen this to be true from recent studies that actually measure coronavirus levels from sewage of all things. I recently wrote about this, so they did a test on the sewage in Erie County in New York, and that showed that there were almost three times the amount of positive cases as those reported, and that gets back to testing and potentially test storage and asymptomatic cases. But, with increased testing, should come increased contact tracing, those things are hand in hand. So epidemiologists argue that you actually see a decrease in positive cases as testing increases because you should be able to contact those in close proximity to those testing positive for COVID-19 and say ‘hey you have likely been exposed to a COVID-19, please self-quarantine or take a test.’

Jeffrey: You mentioned contact tracing and how that is supposed to help, but I live in New York and while we were the epicenter and there are so many positive corona cases around here, I haven’t seen any contract tracing. I know I have been in contact with people and thank goodness I did not get the virus but why is it that I find in the definitely New York or the United States even, why are we so against contact tracing where it is pretty popular outside of the United States?  

Alex: Yes, Jeff, that is such a good point. I think a lot of issues around contact tracing and why you are seeing what you just described is the fact that contact tracing has become really politicized in the United States where people are saying it’s hardcore surveillance, it violates citizens rights. So that is why it has been such a contentious issue here and why some would argue that our contact tracing efforts are not where they need to be. Where if you look at South Korea, which has been a really interesting place for the virus as they have pretty much avoided doing any sort of major shut down basically due to large-scale testing and contact tracing, they have pretty much successfully curved the virus. But their contact tracing efforts many would say in the United States, they just totally violate privacy because it is surveillance of citizens and the government mandates that they would be monitored in order to trace where they are going and trace the virus. So there is a lot to unpack there.

Jeffrey: So personal privacy versus public health conflicts. 

Alex: Exactly. Exactly. 

Jeffrey: All right so if contact tracing is out, testing is our only way then. So, in April the Rockefeller Foundation published a roadmap for the U.S. to reach 3 million tests per week by late June and to quote from their report, this is their report, ‘testing is our way out of the crisis, instead of ricocheting between an unsustainable shutdown and a dangerous uncertain return to normalcy, the United States must mount a sustainable strategy with better tests and contact tracing and stay the course for as long as it takes to develop a vaccine or a cure’. Now, what is your reaction to this and is this plausible?  

Alex: That sounds right to me. Again, I go back to South Korea, it is not perfect and cases do continue to occur there but they have increased testing and contact tracing to such an extreme where anywhere you go, you take a test. Yes we just talked about their contract tracing methods maybe being too invasive for the United States but you know, it is up for debate and they have been really successful. So it makes me very hopeful to see other countries effectively combating COVID-19 and the fact that we have these precedents around us in our surrounding nations. I hope that our leaders will draw from this and bring America to a comfortable new normal.  

Jeffrey: I agree with you. I hope so. Alexandra this has been great, it has been so informative. Thank you so much for your investigative reporting and for joining us here today.  

Alex: Thank you so much for having me. It’s been a real pleasure. 

Jeffrey: We hope you enjoyed this week’s podcast. If you have any questions, comments or future story suggestions, please reach out to us on social media. Thank you and we hope you enjoyed the RP Healthcast.