Tillman Gerngross, the Scientist Turned Scientific Businessman
Tillman Gerngross came to Dartmouth College 15 years ago desperate for a new start. A biochemical engineer in his mid 30s, he’d just watched seven prime career years go by with little but wasted time, a narrow set of skills, and a few tough life lessons to show for it.
As it turns out, it wasn’t too late for Gerngross to find his calling. He’s used his Hanover, NH, perch to go from an assistant professor to one of biotech’s most respected and successful scientific entrepreneurs. He did something no one thought he could do—make protein drugs from yeast—and turned it into a $400 million payday from Merck. He followed that up by creating a self-sustaining, privately held, dividend paying biotech, Adimab. And now, with the same fearless, in-your-face gusto he’s become known for along the way, he’s taking on university politics and trying to upend decades-old tech transfer practices at Dartmouth.
“People have said of me that I don’t suffer fools lightly,” he says. “I’m sure some people dislike that.”
But Gerngross wasn’t always so self-confident. He stepped onto MIT’s campus as just another youngster wondering if he could hack it with the best engineers in the world. As a young scientist, he can remember the humbling days when he couldn’t get peers to approve his grant requests. Like many entrepreneurs, he also ruefully remembers what it was like to pour his heart and soul into his first startup, GlycoFi, taste success, and then watch his baby get suffocated by the Big Pharma machine.
The mistakes made, the obstacles overcome, the lessons learned all contribute to the irrepressible biotech entrepreneur Gerngross is today. Gerngross, at 50, has become the linchpin of a small, but growing biotech network out of New Hampshire. He still has his academic lab at Dartmouth that does research into biochemical engineering. He does some venture capital consulting. His antibody drug discovery shop, Adimab, was valued last year at more than half a billion dollars.
The Adimab story, though, hasn’t yet reached its climax. The company is still private, so Gerngross doesn’t have to disclose its financial performance. He won’t say how much each pharma customer is paying for antibodies from Adimab. He has grandiose-bordering-on-absurd goals for Adimab, like one day seeing 80 percent of the antibodies in the pharmaceutical industry’s Phase III pipeline with his fingerprints on them. But despite that kind of bluster, Gerngross tends to get the benefit of the doubt inside biotech. High-profile biotech investors like Polaris Partners, SV Life Sciences, and OrbiMed Advisors have backed his first two startups, made millions, and are willing to gamble on what amounts to three additional Adimab spinoffs—Alector, Arsanis Biosciences, and Avitide. Dartmouth officials asked him to reshape its tech transfer office to help more New Hampshire biotech entrepreneurs succeed like he has.
“From the first day I met him I was convinced not only is this guy super smart, but he had just phenomenal energy and if he took on an issue or a problem, he was going to make it happen,” says Charles Hutchinson, the emeritus dean of Dartmouth’s Thayer School of Engineering, who hired Gerngross some 15 years ago and later co-founded GlycoFi with him.
“He takes on very difficult challenges without seeming to blink an eye, and then makes them work,” says Michael Ross, a partner with SV Life Sciences who backed Gerngross at GlycoFi.
It’s a world away from where Gerngross started. His father was an Austrian architect, his mother a German sculptor. He changed schools five times before college, growing up in America’s second-largest city, Los Angeles, and a small city called Graz, in southern Austria. He had to learn early on how to quickly make new friends, and adapt.
Gerngross’s parents didn’t push him to be an overachiever. It was more of an unspoken expectation for Tillman and his younger sister that independent thought and education were paramount. Conversations around the family dinner table were about artistic, philosophical, or historical subjects.
“In the hierarchy of information at the bottom there’s gossip, the middle is facts, and the top is ideas and concepts, and we were sort of in that bucket a lot,” Gerngross says.
Still, the family fractured. Gerngross’ parents divorced when he was 12, and he moved back from Los Angeles to Austria with his mother. He says the divorce didn’t devastate him, but it did create a forced independence, a realization that he had to rely on himself if he wanted to achieve anything, he says.
As a teen, when many kids desperately want to fit in, Gerngross wasn’t afraid to be different. He did mainstream things like play squash and ski, but when he was 17 he also grew a half-acre vegetable garden. The venture represented his first lesson in entrepreneurship. His mother wanted him to manage his own budget, so she wouldn’t give him money to buy seeds. But when she needed some parsley a few weeks later? He charged her one Austrian schilling per bushel.
Early on, Gerngross developed a love for science. He loved the “clarity of thought,” the idea that regardless of what he believed, he could either prove it or he couldn’t.
“There’s a purity in that,” he says. “I just found science to be a framework, or a value system, that just resonated with me.”
So Gerngross sought out as much scientific information as he could. In high school, students were supplied with coupons to get required textbooks from bookstores for free. Gerngross instead got the required textbooks from kids who had finished those classes, and used his coupons to buy more science books.
As Gerngross soon discovered, this type of scientific appetite made him an outcast. At the time, he says, memorization techniques were preferred in the Austrian schooling system, not challenging students’ minds to solve problems. Gerngross was frustrated. He asked questions—lots of them—and it wasn’t always appreciated by his teachers.
So Gerngross got out. He spent a year and a half at the University of Paris studying French before pursuing science as a career. He enrolled at the Technical University of Vienna in 1983 and pursued a PhD in chemical engineering.
This was his ticket to greener pastures. To get a PhD, he had to do a two-year independent thesis. He gained permission to do that work in the U.S., at MIT, and then turn it into a dissertation he could hand in to his faculty advisor in Austria.
At first, Gerngross was intimidated by his new surroundings in Cambridge, MA. This was the deep end of the pool. But it was also an eye-opening experience that got him hooked on America.
“I walked into this lab, and they said, ‘This is the problem we’re working on. Help us solve the problem,’” he says. “And I’m like, this is awesome.”
Angst turned to excitement. Gerngross worked for two years as a visiting scientist in the lab of Arnold Demain, looking at how to convert sugars into useful bioproducts. He put his thesis together, got his PhD in Vienna, and returned to the U.S. for good.
Things were already in place for an engineering career. Gerngross had made a good enough impression to line up a postdoc job offer at MIT with microbiology professors Anthony Sinskey and JoAnne Stubbe. He spent two years at the lab working on biopolymers, figuring out how to convert carbohydrates into thermoplastics in biological systems. He met his future wife, then an architecture grad student at MIT. “I was super comfortable,” he says.
That, Gerngross says looking back, turned out to be his biggest mistake. He went with the flow, and the flow took him from there to Metabolix, a Cambridge company that came out of Sinskey’s lab. Gerngross wasn’t a founder, but he was the first hired employee, tasked with developing the processes, and the cell engineering, required to make the organisms that Metabolix planned to use to convert sugars into bioplastics. He toiled away. One year went by, then two, three, and eventually five. He didn’t like how the company was being run (“It was very top-down, this is where we’re going, and we don’t want to hear any questions,” he says), and admits waiting far too long before asking the “hard questions”—such as, wait a minute, is this actually good for the environment? Gerngross found that it wasn’t, and eventually published a paper showing why after he left his job at Metabolix.
“He was basically saying that the renewable plastics his company was working on actually used more oil to produce plastics than would’ve been made from oil—and went on to prove it,” Ross says. “[It was] an extremely gutsy thing to do.”
Even so, Gerngross felt trapped. He had a narrow set of skills in process engineering. So Gerngross leaned on his wife for advice. She pushed him to find a place where he could start over and explore new ideas: academia. He applied for several jobs before interviewing at Dartmouth, which needed a biochemistry professor.
Hutchinson interviewed two candidates: the young Gerngross, and a much more “senior” candidate who was favored by the chair of the search committee. While Gerngross had good MIT recommendations and a solid publishing record, his industry experience didn’t make him an obvious candidate. Hutchinson went to bat for him, impressed with the young candidate’s talent and drive.
Even so, Gerngross had his doubts when he initially took the job. He was hired to research biomass conversion. The idea was to make renewable energy from plants.
Not long after getting his fresh start, Gerngross rocked the boat again. He wondered: what would it take to actually 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 control the sugar composition of a glycoprotein, and by doing so, harnessing its ability to create new molecules. (Gerngross wouldn’t say when Merck started doing this, or how far along those efforts are.)
“That’s where the value proposition is. Not trying to make stuff cheaper that someone else has invented,” he says.
Once GlycoFi was sold, things were different for Gerngross personally. As a proven entrepreneur, people in biotech suddenly were asking for advice, asking for help in starting new things, asking for a little piece of his time.
Gerngross soon found his next problem to solve. Demand for biologic drug candidates remained strong. Pharma CEOs were telling Wall Street that they wanted such drugs to take up more and more of their pipelines. Through his time working with Merck, Gerngross says he saw it wasn’t easy to get ahold of a high-quality antibody discovery system in a “long-term, reliable way.” The field was crowded with startup competitors, and there wasn’t much available intellectual property after many of the early-generation antibody platform companies were acquired. But what if there were a way to streamline the process, and come up with something that was both unencumbered by existing IP, and superior?
He sifted through potential solutions with a former student, Errik Anderson. They looked at E. coli as a potential discovery tool, for instance, before returning to yeast. Gerngross obviously had experience engineering it, and his former MIT colleague, K. Dane Wittrup, was already using it to discover antibodies.
So Gerngross connected with Wittrup, pitched his vision for a new company, and enlisted the support of his former colleague. Adimab was co-founded by Gerngross, Wittrup, and Anderson in 2007. They designed, and created, a yeast-based discovery technology that essentially works by mimicking the immune system, and in doing so, can help discover a specific antibody aimed at a specific biological target in as little as six weeks—far faster than the norm of several months.
Financing was much easier this time around. Adimab has raised around $50 million since inception from many of the same investors that bet on Gerngross before.
At first, Gerngross thought the ultimate goal with Adimab would be to sell it to another pharma company. But instead, he found that these companies weren’t interested in paying top dollar to own another antibody discovery engine. They just wanted reliable, long-term access. Gerngross was thrilled. Mindful of the GlycoFi experience, he and his team quickly adjusted Adimab’s model.
This gave Adimab more opportunities to succeed. Instead of doing a couple big deals that would hopefully lead to a monster acquisition, it would first craft a series of small deals, giving pharma companies the ability to kick the tires, so to speak, by testing out the technology for a single, or even a few disease targets. Then, assuming they liked what they saw, they could buy the car, or bring the technology in-house. By amassing deals like this, Adimab would get up front fees, recurring payments, and ultimately royalty paydays should those antibodies ever lead to marketable drugs.
None of Adimab’s antibodies, of course, have yet reached that point. But after getting nibbles from a number of pharmaceutical companies—Roche, Merck, Pfizer, Gilead Sciences, and others—this year Adimab finally signed three tech transfer deals with Biogen Idec, GlaxoSmithKline, and Novo Nordisk. Though Gerngross hasn’t divulged the numbers behind these deals, he’s said that Adimab is now serving more than half of the top 20 pharmaceutical companies, and is getting business from several startups too. It’s profitable, on track for between $50 million and $100 million in revenue this year compared to about $15 to $20 million in annual costs (Gerngross declines to specify further). Its last venture financing was done at a valuation of more than $500 million.
Adimab doesn’t need to go public or get acquired to turn that paper wealth into liquid returns. It turned itself from a C-corporation into an LLC so it could distribute cash to shareholders via dividends. If any shareholders were to start itching for a sale, Adimab could just buy those shares out. The company is still 54 percent owned by its employees, Gerngross says.
“I have very little interest in selling it—and no need to sell it,” he says.
Indeed, Gerngross now defines success in more than strictly financial terms. In five to 10 years, he wants 80 percent of the antibodies in Phase III trials originally discovered by Adimab.
With Adimab now humming, Gerngross has been able to step back a bit. Though he still spends a majority of his time with the company, he says he doesn’t have to micromanage it anymore. Gerngross still teaches at Dartmouth. He loves to sail and ski. He bought a racetrack. He spends roughly a month each year traveling around remote areas in East Africa like Kenya and Uganda, interested in how other cultures live.
At the same time, he’s developed a strong bond with Dartmouth. He has no desire to live in the Boston biotech hub; he loves New Hampshire, and being able to commute to any of his offices in five minutes rather than sit in traffic. He has stayed on the Dartmouth faculty, and says he likes mentoring and helping to shape young entrepreneurs, and finds it just as rewarding as the financial gains of the business world. That drive has led him to head the tech transfer office at the college, which he’s hoping to reshape, in part, to get top entrepreneurial talent to Dartmouth—university politics be damned.
“If he succeeds in what he’s trying to get done there and it differentiates Dartmouth from other institutions, it will be a great thing for the school,” Ross says. “And it will just be because he’s tenacious as hell.”
He’s also using his influence in other ways. Adimab helps Gerngross attract new deals for his existing investor base, and drug development opportunities for entrepreneurs.
This led to Arsanis Biosciences, which is using Adimab’s discovery engine to find antibody candidates it can develop further against infectious diseases. Alector, started this past year by Gerngross’s former colleague Arnon Rosenthal (the co-founder of Rinat Neuroscience), is doing the same to make an antibody for Alzheimer’s disease. Avitide, too, comes from Gerngross’s network. It was co-founded by Adimab’s head of high-throughput manufacturing, Kevin Isett. No surprise: all three are backed by Gerngross’s longtime backers at OrbiMed and Polaris.
“The more senior you become and the more you’ve seen, you become more a catalyst of certain events,” Gerngross says. “By catalyzing or slowing down certain things you start shaping certain organizations or processes that you care about.”