Jim Flynn - Building a Healthcare Investment Platform Across Public, Private, and Venture

**Michael Mauboussin** (0:02)
Welcome to a new edition of the Value Investing with Legends podcast. My name is Michael Mauboussin, and I'm an adjunct professor at Columbia Business School and a faculty member at the Heilbrunn Center for Graham and Dodd Investing. I'm here with my co-host Tano Santos, the Robert Heilbrunn Professor of Asset Management and Finance at Columbia Business School and the Faculty Director at the Heilbrunn Center.
Hi Tano, how is all with you today?

**Tano Santos** (0:25)
Everything is good. Just came back from London where I went to spread the Gospel of Value Investing for a week and it was a lot of fun. As always, when we go to London, we meet a lot of interesting investors, but also see a lot of alarms. So a fun visit.

**Michael Mauboussin** (0:38)
Health care is a fascinating part of the economy and the market. Health care is about 18% of US GDP, touches all of our lives and seems like an area that may undergo a great deal of change with the introduction of some of the new tools in artificial intelligence.
It's also a sector that is both large in public and private markets and has substantial interaction with governments around the world.
Our guest today is an ideal person to walk us through the opportunities and challenges that are out there. We're delighted to welcome Jim Flynn, managing partner of Deerfield Management. Deerfield is a health care investment firm that manages $16 billion in assets with a mission to achieve health care through investment, intelligence, and philanthropy. Jim joined it in 2000 and is responsible for managing the firm and overseeing its investment activities. Under Jim's leadership, Deerfield has expanded into multiple areas within the health care system. The firm has built Deerfield Intelligence, expanded into venture and private structured financings, created Deerfield and Foundation, developed Deerfield Discovery and Development, and founded CURE, a health care innovation campus in New York City. Before Deerfield, Jim was an analyst at Firm and Cells, covering pharmaceutical and medical device companies, served as Vice President of Corporate Development at Alpharma, and began his career at Kidder Peabody. Jim earned his degree, undergraduate in cellular and molecular biology and economics from University of Michigan, and a master's degree in biotechnology from Johns Hopkins. Jim, welcome to the podcast today. Great to be with you.

**Jim Flynn** (2:15)
So much.

**Michael Mauboussin** (2:15)
Good to be here. Let's start at the beginning. Can you tell us a bit about your early life, your interest in biology and economics, what you studied as an undergrad, and how those two fields led you to health care investing today?

**Jim Flynn** (2:27)
I think we all just went our way to a certain extent. What we're talking about college and early years after college, my dad was a physicist and scientific thinking was always very prevalent in my household. My mom was a social worker, so human welfare was always a strong topic. So how I ended up exactly at the intersection of those two things, scientific field that ultimately is about human welfare. So I don't think it was all accidental. But when I graduated from Michigan, I really just wanted to perch to view the world from. So I interviewed at consulting firms and investment banks and the Federal Reserve, and all that kind of stuff.
I ended up meeting a guy who became my mentor at Kidder Peabody, who was a biotechnology and pharmaceutical analyst. We hit it off, and so that's where I kind of started and ended, I guess.

**Tano Santos** (3:20)
So Jim, do you remember when you were a young man, when you were studying, being interested in investing? Were you already interested in a potential career there? Were you doing any trade in stocks? What were your first memories of being interested in an investment career?

**Jim Flynn** (3:32)
I think it was less being interested in investment as, again, it was just interest in how things came together. So I was interested in the psychology of people in the market. I was interested in the analytics around business and the market. The market is such an interesting combination of different components of humanity and our lives that I was generally interested in it, but it wasn't so much specifically investing itself that captured me.

**Michael Mauboussin** (4:05)
So Jim Warren Buffett's got this famous line where he says, being an investor made him a better business person and being a business person made him a better investor. You started your career as a healthcare analyst and then you spent some time inside a corporation working in corporate development and licensing. So can you speak a little bit about how that operational experience along with that analytical experience affected or shaped the way you analyze, assess companies or businesses today as an investor?