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replace petrochemicals? What would the replacement look like? He published a number of papers calling into question whether any of the approaches would work, and decided it didn’t make sense. He bailed on a small team of faculty researchers. Two more years of his life, down the drain.
“It was very polarizing,” he says. “There was a small group who felt that I was shitting in their nest. But there was a much larger group that said, ‘Hey, that guy has balls, if he believes in something, he’ll tell you.’ And so there was a very loyal following that developed from that experience that still to this day I have great relationships with.”
It also defined Gerngross’s decision-making from then on: Always be sure of the quality of the problem you try to solve. He asked himself: Who cares about it? Why would it make a big difference? How might his expertise be used to solve the problem?
That’s where Gerngross’s career path took a turn. He’d been at Dartmouth about a year and a half when the genomic craze started. Drugmakers were now gaining greater understanding of biological targets and mechanisms. New ideas were being explored beyond traditional oral pills made through chemical synthesis. He thought, where would those drugs come from? And what if you could find an efficient, cheap way of discovering them?
Gerngross homed in on fast-dividing yeast cells. Yeast had been used in the food industry as a host organism for cheap manufacturing of enzymes at industrial scale. People had tried for years, but no one had been able to use yeast to manufacture protein drugs.
“I said, ‘That’s a good engineering problem.’” he says.
Gerngross applied for grants from National Institutes of Health and the National Science Foundation. He was rejected. The problem couldn’t be solved, they said. Yeast could make proteins, but they were either quickly recognized by the immune system as foreign invaders, or had such short half-lives in the bloodstream that they were useless. Further, Gerngross wasn’t the right person to do it—after all, he was a glycobiologist, not a yeast geneticist.
Those rejections didn’t dissuade him. Gerngross brought the idea to Hutchinson, and the two decided to create a company out of it. Hutchinson’s help was huge for Gerngross, who didn’t have experience creating a business. Hutchinson became the CEO of what would become GlycoFi, freeing Gerngross to focus on the science. Hutchinson reached out to longtime friends Terry McGuire, a member of Dartmouth’s board of overseers and a co-founder of Polaris, and Ross—also on the Dartmouth board, and one of the original employees of Genentech
Ross ultimately helped Hutchinson and Gerngross write the business plan for GlycoFi. And then McGuire and Ross—once he became an SV Life Sciences partner—decided to take the leap, and invest $300,000 in seed cash.
As it turns out, GlycoFi didn’t need a lot more money or another big name VC firm. With Ross and McGuire’s backing, Gerngross solved the key engineering problem—which a couple MIT engineering consultants said couldn’t be solved—in nine months. Gerngross found a way to make genetically engineered yeast cells that yielded proteins with human, rather than yeast, carbohydrate structures. That meant GlycoFi had the potential to make protein drugs that people’s immune systems wouldn’t automatically reject.
In doing so, GlycoFi began hitting its milestones. Hutchinson and Gerngross turned the startup cash into another $1.5 million, and eventually $32 million in total (just $20 million of that from VCs) as they built a 60+ employee company that churned out difficult-to-make proteins. Companies like Eli Lilly and MedImmune became customers.
Even so, Gerngross was still a naïve, first-time entrepreneur unschooled in boardroom dynamics. GlycoFi was his baby, but he was more focused on solving the scientific problems of GlycoFi’s customers. So when an unnamed company approached GlycoFi with plans to buy, a whirlwind ensued. Three companies began bidding. Numbers flew around that GlycoFi’s investors couldn’t possibly ignore. Even though Hutchinson says Gerngross wanted to make sure the “right” company bought GlycoFi, one that would take care of it, the winning bid would be the one that wrote the biggest check.
Merck won. It shelled out $400 million for GlycoFi in 2006, giving Gerngross’s investors a more than 10x return in less than six years.
From a pure financial perspective, GlycoFi was a hit. But Gerngross has his regrets. He stayed on for a year as a consultant. He grew to hate Merck’s plan to use GlycoFi to create so-called “bio betters,” or slightly cheaper/structurally similar versions of existing biotech drugs. He likens it to buying a calculator and using it to nail in nails.
“A lot of that experience really ended up shaping the way we thought about Adimab, and why it’s a very different company than GlycoFi,” Gerngross says.
Still, Gerngross still stays in touch with, and informally helps, GlycoFi. He says Merck has since gained a better appreciation of what to do with the technology, and is now using it to … Next Page »