The future leader of Biogen Idec might be as familiar with a petri dish as he or she is with a spreadsheet.
That’s according to Bill Young, who took over as Biogen’s chairman of the board on January 1. Young is on the board committee that’s searching to replace CEO Jim Mullen, who announced last month that he’s stepping down after a decade at the helm of the Cambridge, MA-based biotech giant (NASDAQ: BIIB). I met with Young last week while he was visiting a startup in Seattle.
“We have a whole list of criteria, but the most important of which is that we find someone who has managed and understands the role of science in a biotech company, and how that needs to be bridged to the commercial side of things,” Young says. “That may mean it’s a scientist or someone who understands how that fits into what biotech companies are designed to do, which is develop products.”
The job is one of the higher-profile gigs in biotechnology. Biogen, which also has operations in San Diego, is the world’s largest maker of multiple sclerosis drugs. It generated $4.4 billion in revenue last year, and came close to a $1 billion annual profit in 2009. Biogen had 4,750 employees worldwide heading into this year, and a stock market valuation of $15 billion that ranks it behind only Amgen, Gilead Sciences, and Celgene among biopharmaceutical industry peers.
Yet Biogen has its share of headaches. Uncertainty about the side effects of its fastest-growing multiple sclerosis drug, natalizumab (Tysabri), are a constant worry. Billionaire investor Carl Icahn ripped the company last year for poor R&D performance that he said added up to “failed leadership.” Icahn persuaded shareholders to give his slate two board seats, and he already has given notice that he wants three more in this year’s board election. This fight has gotten personal at times, like when Icahn reminded shareholders that Mullen was paid $60.8 million in total compensation, combining salary, bonus, and stock options over a five-year period, while Biogen stock declined from $66.61 to $47.63.
Mullen sounded battle-weary last month when he spoke at a Goldman Sachs conference about this exit: “If you’re going to have a mid-life crisis, you can do one of two or three things, right? Sports cars I’m too big for. Mistresses are not approved at home. Maybe a career change is what’s in order. I decided to go with Number 3. I think it’s a good time, for, you know, a transition.”
While Mullen looks for something else to do, he doesn’t appear to have groomed an obvious internal successor. It’s also worth noting that Mullen has a business background, not a scientific one.
“There may be some internal candidates we consider, but they are largely external,” Young says. “We have a lot of people interested. As you can imagine, there are not many large, cash flow positive biotech companies around these days. Many have been acquired or haven’t reached that stage yet. Biogen Idec is certainly one of those. There’s a lot to work with there. Good culture, strong science. Jim [Mullen] has been there 20 years, done a good job, but I think he was ready to try something else. That’s OK and appropriate. People will make that decision from time to time.”
The search committee has hired the headhunting firm of Spencer Stuart to help identify candidates, and the goal is to hire the new CEO within 90 to 120 days, Young says. Mullen, while still currently a member of the board, isn’t involved in picking the successor, although he’s still working at the company to aid with the leadership transition.
While the CEO search is going on, Biogen has decided to wait a while to seek out a new head of research and development to replace Cecil Pickett, who retired last year. That position will stay vacant until after the CEO is hired, so the new leader can be sure to have an R&D chief that he or she is comfortable with, Young says.
Of course, I asked Young about how the board is working together now that Icahn’s two directors have had a few months on the job. He didn’t say much, other than a lot of predictable things about how everybody works together just fine. But when I asked if the board is taking on any new strategic shifts because of the input from the new directors, he offered an interesting answer that certainly made it sound like the board isn’t just trying to defend the status quo. Young was named to the Idec Pharmaceuticals board in 1996, when he was the chief operating officer of Genentech, and he has stuck around since San Diego’s Idec merged with Cambridge’s Biogen in 2003.
“If you look at the board, most of it is new. There are only three directors that have any length of service after this coming annual meeting when Jim [Mullen] and Bruce Ross step down,” Young says. “The only three with any length of service are Lynn Schenk, Bob Pangia, and me, who were all Idec directors. Everyone else has come on the last couple of years. The board is largely new.”
Exactly how receptive these new faces are to change, and what kind of change, will be one of the big storylines at Biogen Idec in the first half of 2010. While Young emphasized the company wants scientific thinking in a CEO, he also made clear he didn’t think anything was broken. When asked about the kind of R&D chief he wants, Young went out of his way to compliment Pickett, for doing “a really good job of rejuvenating things” in the R&D pipeline.
So who ends up getting the CEO job will say a lot about the board’s vision for the company. And Icahn’s reaction will show pretty quickly whether it’s a unified one.
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