George Scangos, the Boy From Working Class Boston, on His Road Back to Lead Biogen Idec

8/31/11Follow @xconomy

George Scangos spends much of his time these days in an office about 10 miles from the working class Greek neighborhood in Lynn, MA, where he grew up. You could say he’s come a long way in those 10 miles. The kid who didn’t speak English until he went to elementary school, and who didn’t get serious about biology until his mid-20s, is now leading a comeback at New England’s largest independent biotech company, Biogen Idec (NASDAQ: BIIB).

“I’ve spent a lot of time here. It feels like home, in a lot of ways,” says Scangos, 63, during an interview at his office in Kendall Square in Cambridge, MA. He did add, though, that after spending the previous 17 years at biotech executive posts in the San Francisco Bay Area, he is still re-adjusting to the seasonal changes of New England.

Scangos (pronounced SKANG-goce, with a hard “G” as in “go”), is settling in for at least a few more seasons in New England, as Biogen has mounted a turnaround during his first year as CEO. This was no small feat, given that Scangos was hired to be a change agent at a company that hadn’t introduced any new marketable drugs since 2004. Some decisions were tough to swallow—like cutting 650 jobs, dropping whole lines of R&D, and closing its San Diego research center (originally the home of the Idec part of the company)—but the more focused end result has gotten positive reviews from shareholders. Billionaire investor Carl Icahn, who battled for several years with previous management, has sold his stake in the company to make some big profits. And the company’s stock, after years of lagging biotech peers, has broken out to become one of the S&P 500′s best performers this year.

Biogen Idec certainly experienced some good luck during Scangos’ watch, and he’s quick to admit it, like when clinical trials that had begun long before his tenure showed positive results for a new oral multiple sclerosis drug. But those who work with him closely say his leadership style has also played a role in bringing renewed focus to Biogen.

“George’s leadership style is open, welcoming of input and fair-minded in his decision-making. He has the ability to be your peer and your manager in a simultaneous and seamless fashion,” says Fran Heller, who previously worked for Scangos as head of business development at South San Francisco-based Exelixis (NASDAQ: EXEL). “He is often referred to as the most lovable CEO in our industry, and deservedly so.”

Scangos’s path to the top job of one of Massachusetts’ leading companies began in a lower-middle-class section of Lynn, where his paternal grandparents had immigrated from Greece and had settled down with what became a family of 10 kids. His father was an accountant at what later became Exxon, while his mother stayed at home to care for George and one younger daughter. The family spoke Greek in the home, and young George never learned English until it was time to go off to school. There were about 30 cousins nearby, some of whom still live in Massachusetts, Scangos says.

Scangos moved with his parents to Connecticut when he was in elementary school, and attended public schools there until it was time for college. He was smack in the baby boom generation, among the group that came of age during the social upheaval of the ’60s. He says he didn’t work very hard at academics, other than French class.

“You know how at the back of your high school yearbook where it lists people who were the best at various things?” Scangos says. “I had two of those. One was in typing, which has turned out to probably be the most useful skill I learned in high school. The other was in French. I won the award for the best French student in the state.”

He went on to win scholarships to attend Cornell University. He thought about majoring in French, and only took science classes to fulfill graduation requirements. Even then, he was initially planning to take physics, until a classmate urged him to try biology, because it was easier. “I hated bio in high school, didn’t have a good teacher,” Scangos says. “I had to be talked into it.”

Freshman biology at Cornell, as taught by the professor and textbook author William Keeton, was “unbelievably good,” Scangos says. It was interesting enough for him to take another class in genetics, which he found similarly fascinating. So that was the end of French—Scangos was hooked on biology, specializing in courses that concentrated on the neurological basis of behavior: things like fight vs. flight response.

To be at Cornell in the mid-60s meant that Scangos was exposed to some serious, and occasionally violent, Vietnam War protests. He was sympathetic with the anti-war protests, civil rights movement, and other challenges to the Establishment. Scangos says he didn’t have much direction then, and just tried to have a good time, but he also says he became a lot more socially aware.

“A lot has been written about the boomers, about their unwillingness to accept the status quo. The status quo was not good. It was not a country where it was equal for everybody, and not everybody had a voice,” Scangos says. “To some extent, it’s still not, although it’s way better than it was. I fit in well with a sense of iconoclasm, and wanting to do things a bit differently.”

Around the time when he was due to graduate in 1970, his student deferment from the draft was about to expire. He and a couple dozen friends huddled around a radio and listening in suspense as draft cards were drawn based on birthdays.

He drew a favorable number, which meant he had gotten lucky, and wasn’t going to be shipped off to Southeast Asia.

“That was a big night. Everybody went out and got drunk,” Scangos says. “You either were happy you weren’t going, or you were drinking because you were. That was a dramatic time.”

After graduating from Cornell, Scangos didn’t know what to do next. He took an entry-level job as a lab technician at MIT, stayed about a year, and got bored. The next challenge was as a sales rep for a lab supply company, which gave him access to some of the top labs at Harvard and MIT, and plenty of other labs in New England. The science at those top institutions fascinated him, even it was over his head at the time.

And he soon realized sales wasn’t for him. “After about a year, I really came to the conclusion that I didn’t care whose product these people bought. Our products worked, a competitor’s product worked. My life, I thought, was being wasted on spending all my time working on things that didn’t matter,” Scangos says.

So he got serious about learning biology, and that meant graduate school. He had good grades from Cornell, but the epiphany hit him in August 1972, long after most fall classes were fully enrolled. Still, he felt so strongly about this new direction that he got in his car with a copy of his undergraduate transcript and drove to UMass Amherst. It was a school he thought he could afford, and where he thought he could get started in microbiology. He figured he’d probably transfer somewhere else after a year.

That all seemed reasonable until Scangos ran into secretary who told him he was basically nuts trying to get in that late. Like when he was able to miss the draft, Scangos got another good break. This time, Scangos says, the department chair overhead the conversation and called him into his office. Scangos says he pleaded his case, telling the professor he had good grades and strong recommendations and would be a terrific student. The department chair listened, then told him that a student had just dropped out, creating a vacancy. If Scangos follow up with proof of recommendations, and an official transcript, he could be admitted as a provisional student for one semester, with a chance for permanent enrollment if he did well.

That was all it took. Scangos had never taken a microbiology course at that point, but he threw himself into the subject and did “incredibly well” that first semester. When Scangos found some of the lab work mundane, he asked for more challenging assignments from his thesis advisor, Albey Reiner, a Harvard-trained biologist. The work he was given was challenging enough that Scangos never felt the need to transfer. He got his doctorate in 1977, as genetic engineering was picking up.

After getting his Ph.D., Scangos set off for postdoctoral work in the lab of renowned geneticist Frank Ruddle at Yale University. Scangos’ claim to fame as a young postdoc was when he and another of Ruddle’s charges, Jon Gordon, created the first mouse with foreign DNA that could be passed on to offspring—a transgenic mouse. This was an historic advance, which made the front page of the New York Times, and the major newsmagazines.

Scangos was in Baltimore when the Times’ story broke, interviewing for a faculty job at Johns Hopkins University. Ruddle was in Europe. “I got a call from Frank, and he said ‘you better get back to New Haven, there’s going to be a big press conference.’ I had no media training, what did I know as a postdoc? But I got on a train to back to New Haven, there were 30-40 reporters asking questions.”

Gordon got most of the credit for the advance, but it didn’t hold back Scangos’ academic career. He took a faculty job in biology in 1980 at Johns Hopkins, where he stayed full time for six years.

The biotech business was gaining momentum in the early to mid-80s, but Scangos was only dimly aware of it. As proof, he says he and Gordon didn’t file any intellectual property on the transgenic mouse work.

The lure of biotech finally got to Scangos in 1986. His old mentor, Ruddle, was part of a team starting a company originally called Molecular Diagnostics in New Haven, with financial backing from Bayer. Scangos took a yearlong sabbatical from Hopkins to join them. “I had a safety net. I could try it, and if it was awful, I could say thank you very much and go back” to Hopkins, Scangos says.

Once he re-settled in at New Haven, with people he knew from his earlier days in the Ruddle lab, he was hooked. “It was so much fun. The science was really good. We did very high-level science. I thought it was compelling to try to develop drugs not just for the knowledge, but to use it for a practical purpose,” Scangos says.

So he stayed, resigning his faculty position. Colleagues in academia, predictably, weren’t pleased. But Scangos didn’t look back. Within three years, by 1989, he was tapped for bigger things, invited to come get some international experience at Bayer headquarters in Germany. The goal for Bayer was to have Scangos help modernize its labs there, while also offering him some valuable management experience.

By this time, Scangos and his wife had two young daughters, and his wife was finishing her doctorate and embarking on her own career. So there were factors to consider besides his own advancement. Scangos remembers discussing the move after the kids went to bed, only to be peppered with a bunch of questions by his 9-year-old who knew something was up. Scangos says his daughter wanted to know how long they’d stay (2 years, he promised); whether the schools were good (yes); whether they’d come back to New Haven (yes); and whether they’d move back into their old house (yes). Family approval was secured.

Two years later, as promised, Scangos was back in the U.S. taking on increasingly bigger roles in Bayer R&D. But by the mid ’90s, Bayer was increasing its bets on biotech, and the place to be was Berkeley, CA. For a while Scangos oversaw some of the work from New Haven—sensibly located between Germany and California—but he soon gravitated to where the action was at Bayer’s Berkeley operation.

By the time he was considering the move, Scangos’ older daughter was entering high school, and his younger daughter was entering junior high. They extracted a promise: if they moved to California, no more moves until after they graduated. Scangos agreed.

A couple years later, the Human Genome Project was starting to rev up, huge amounts of information was transforming biology, and Scangos says he didn’t think pharma companies were in position to take advantage of it. Once again, the action was in academia and biotech. In 1996, he was wooed to lead a Cambridge, MA-based startup called Exelixis that was seeking to industrialize genetic research, by knocking out genes in fruit flies to see what effect that had on disease processes. The thought then was that this would provide valuable information for drug development.

Scangos loved the concept, but didn’t like the fact that Exelixis was in Cambridge: he had promised his daughters he wouldn’t leave California so soon. He declined the move, but the board wanted him so badly that Exelixis moved to California—almost all of its 24 employees, anyway—to set up shop with Scangos at the helm there.

It was at Exelixis that Scangos cut his teeth as a biotech CEO, raising money, recruiting talent, and switching strategy when it became clear that selling information wasn’t as good a business as developing drugs. Over the next 14 years, Scangos oversaw the building of a broad and deep pipeline of new cancer drugs, and struck a number of Big Pharma partnerships. But by 2010, which turned out to be Scangos’ last year at the helm, Exelixis hadn’t yet won FDA approval for any new drug, and when investors demanded more tangible progress in clinical trials, the company had to do some painful downsizing and re-focusing. (Exelixis has since bounced back under his successor, Mike Morrissey).

Scangos initially says he wasn’t interested when a recruiter called him to gauge his interest in being CEO of a large independent biotech company in Boston. But the recruiter persisted, saying the board really wanted to meet Scangos.

Scangos ultimately warmed up to the board’s pitch. After all, few biotech companies ever get to Biogen’s position, with thousands of employees, a multi-billion-dollar valuation, several drugs on the market, lots of infrastructure for science and manufacturing, loads of cash in the bank, and a long history of profits. And the kids were out of the house, so that was no longer an issue. “It’s such a unique company, and a unique opportunity, I figured I’d be crazy not to take it,” Scangos says.

The story of Biogen’s renaissance since Scangos took over in mid-2010 has been well-told. He made a big round of cuts in his first few months, recruited a couple of well-respected former CEOs to his senior management team, and decided to move Biogen’s headquarters from the suburbs back to Cambridge next to the company’s scientific core and where it had been until just before he took over.

Those moves reflect a philosophy that Scangos has been forming on his journey. He’s been around long enough to know that drug development is a major gamble, despite all the advances in our understanding of biology. One minute you might be the hero, while the next minute people will be calling for your head. To hear him talk about how he approaches decisions, he sounds pretty humble.

He quoted another former mentor of his from Bayer. “Horst Mayer once told me ‘as you rise up in management, you know less and less about more and more. Then you become the CEO, and you know nothing about everything,’” Scangos says. “What he meant by that is you have to recognize the limits of your own knowledge.” That means a scientist like him needs to recognize that other people know more about things like reimbursement, sales, marketing, and manufacturing. A CEO at a big company like Biogen needs to oversee all of it, defer to the subject experts, but also have a good “BS filter.” As he put it: “You have to have big picture, you have to know the issues, and you have to ask tough probing questions.”

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  • http://www.xconomy.com Bill Ghormley

    George Scangos’ story is a powerful life story that tells so much about technology, business and the culture that surrounds life science endeavors in our time — well-written, and, it seems still being written.
    Thank you, Luke, and George.

  • jOHN rOZAKLIS

    i Hold a sales & Marketing position with Arista power corp.
    I Was born in Greece. Every time i read a story like mr Scangos, i
    am very proud & happy to be greek.

    Thank you Mr Scangos, for the enxample ,that a good education & vision , works.
    I , father of 3 , two of them with Phds, i am very proud.

    My best regards. John Rozaklis

  • Tom

    We the Greeks of diaspora are all proud of the achievements of fellow Greeks such as Mr. Scangos. His story is a lesson to all young people…they should never hesitate to learn different things at a young age because they never know what will turn on their “lightbulb”. And if something was taught by a lousy teacher, take it one more time with a more passionate one.

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  • ayasha

    may you tell me more