Xconomist of the Week: Tony Coles’ Journey from Mass General Doctor to SF Biotech CEO
Tony Coles was about nine years old when he decided to become a doctor. His father, a government accountant and a minister, told him that medicine and law were great professions. The younger Coles, a fan of math and science, opted for medicine. And even when teachers underestimated him, placing Coles in a math class that he thought was too slow and boring, he kept his eye on the prize.
“I just held onto that belief that I could be a doctor,” Coles says. “It’s funny how these things can become self-fulfilling prophecies. I don’t believe things happen by accident. I was destined to be involved in some way in healthcare.”
Coles, now 51, has put himself into a position to make an even bigger impact on healthcare than a lone physician can, as the CEO of South San Francisco-based Onyx Pharmaceuticals (NASDAQ: ONXX). The company already has developed a drug for kidney and liver cancer that’s approaching $1 billion in worldwide sales, and Coles is now attempting to pull off Onyx’s second act, by winning FDA approval of a second product with billion-dollar potential for treating a type of cancer called multiple myeloma. If Coles can lead Onyx through this journey to become a two-product company, a transition few biotechs ever complete, then it should be in position to control of its own corporate destiny for a long time.
Coles, who signed on as Onyx as CEO in February 2008, will draw on all his various experiences from his upbringing and his career as a physician and pharma executive to make this happen. Hollings Renton, who retired three years ago to bring Coles on board, says his successor has the focus it will take for Onyx to rise to a new level.
“Tony had all the right experience,” Renton says. “He’s had senior level executive positions in pharma and biotech, a heavy duty commercial background, and also a medical background. He’s a very, very clear strategic thinker. I just saw leadership. And he’s a values-based guy, cares about people, and is very empathetic. I thought he would do the right things.”
Coles also happens to be African American in an industry with very few people with his skin color. So by definition, he’s had a lot of experiences that most people in the business have only read about.
He started on his path growing up in a middle-class family in Washington D.C., the oldest of three siblings. His father, as mentioned above, was an accountant who worked for the federal government. Coles’ mother was an office manager who worked for what is now AT&T. His parents were products of the great migration, as many African Americans fled the Jim Crow south in the first part of the 20th century to seek more opportunity in major cities of the north. They instilled at least a couple things in their kids—a passion for learning, and a sense of social responsibility, of giving back to their community, Coles says. Coles looked up to them, and aimed to please.
“I’m the oldest sibling, but you probably could have already figured that out,” he says. “I was the overachieving, highly accomplished kid, follows directions well, never breaks the rules.”
There was plenty of turmoil in the wider world when Coles was growing up, which he struggled to understand. He was eight, an age when most people have extraordinary curiosity about the world around them, when some harsh realities became clear. He was attending third grade in Washington D.C. when the civil rights leader Martin Luther King Jr. was assassinated. He remembers being sent home from school for his own safety, as officials were fearful of riots. “I remember watching the news footage on a small black and white TV. There was a tremendous sense of loss,” Coles says. “I wondered, how could this happen?”
Not long after that explosive event, the family moved to the suburbs, Prince George’s County, Maryland, which is said to be the wealthiest majority-black county in the U.S. The school he enrolled in was about 90 percent white, which was a reflection of who lived in the local area, Coles says. By 1974, when he was 14 and in junior high, Coles was thrust into a forced integration controversy of the kind that local officials still struggle with today. Kids from the suburbs were being bused into majority-black city schools. As it so happened, Coles, a black kid, was one of the suburban children swept up in the forced integration plan, which meant he had to get on a bus to go to school in the city.
This was the moment where Coles says, “I got my first taste for policy, politics, and leadership,” wading right in to the sensitive issue of race in America. Personally, he didn’t want to go to the school in the city, because it wasn’t as challenging as his other school. So he stepped up and became vocal, testifying in front of the local school board, objecting to the forced integration plan, arguing that neighborhood-based schools were a better idea.
He ended up getting sent back to the school closer to his home. But the suburban experience wasn’t exactly idyllic. He remembers being called derogatory names as a teenager, and being thrown out of retail stores as a shoplifting suspect.
“It just made me angry,” Coles says. “It made me stop and wonder, what kind of person, what kind of adult person, would treat a child like that? Why would you devalue a child, try to dehumanize a child?” He adds: “It’s probably colored the way I think about people who need help, and people who for whatever reason, are disadvantaged, whether it be based on economic status or disease. It makes you a lot more understanding of what it’s like to walk in those shoes.”
None of the obstacles really slowed him down much as the goal-oriented go-getter he perceived himself to be, an attitude his parents encouraged. Not surprisingly, given his willingness to speak out at the school board, Coles went on to be his high school class president. And he followed his plan, going off to college at Johns Hopkins University, intent on taking the first steps toward becoming a doctor.
At Hopkins, he sought to make himself a well-rounded person, studying not just hard science but humanities courses like psychology, sociology, history, French. He met his wife, Robyn.
Coles then moved on to Duke University for medical school in 1982. From the mid-80s through the early ’90s, his resume has all the signs of big ambition—residency training in cardiology and internal medicine at Massachusetts General Hospital, a master’s degree in public health from Harvard University, and a research fellowship at Harvard Medical School. While that was going on, he and Robyn had started a family, she had started a business to make up for his modest wages as a medical resident, and Coles moonlighted as an ER physician to help pay the bills. “When I look back, those were such unimaginably crazy hectic days,” Coles says. One fond memory of those days, he says, is of bringing his toddler son to the hospital to hang around when he had some rare downtime.
Coles says he figured he would pursue a career as a clinician, someone who would both treat patients and help advance his field through research. But he grew disillusioned with the healthcare system, and toyed with different ideas on how to make a bigger impact on medicine, perhaps by becoming a lobbyist or a healthcare staffer for a congressman on Capitol Hill. Mass General fought hard to keep him, offering him a chance to set up a new state government affairs office and work with the CEO, but Coles passed on it. Ultimately, by 1992, he was attracted to job that put him on the leadership track at Merck, the pharmaceutical industry giant.
Many of his colleagues were unimpressed. “People called me names. They said I was a traitor. I had gone to dark side,” Coles says. “How could you throw away these wonderful years, this great training, best in world, and go into industry?” But there were supporters, too. Just in case he ever soured on industry, one of his mentors at MGH said, a faculty position would remain open for him.
But Coles didn’t look back. He moved the family to Pennsylvania to join Merck, and started studying marketing. “It was a real learning experience. It was fundamentally like doing an internship all over again,” Coles says. Within a couple of years, he was promoted to vice president, and was overseeing marketing of ACE inhibitor drugs to cardiologists.
Eventually, he grew restless. “I realized the way to grow in this industry is not to rest on your laurels,” Coles says. So when he got a call from Bristol-Myers Squibb, offering him the opportunity to take on a bigger, more global role in introducing cardiovascular products, including the blockbuster anti-clotting agent clopidrogel (Plavix), he jumped. Bristol-Myers, he says, was “hungry” to get bigger and better.
After six years at Bristol, rising to the level of senior vice president, Coles sought out new challenges once again. He says he saw the writing on the wall in pharma. The pipeline was drying up, and it would extremely hard to sustain aggressive growth at companies that were already very large. The Human Genome Project was coming to a close around 2000, and biotech was booming. By 2002, the bubble had burst, but Coles still saw promise at one of the top biotech companies, Cambridge, MA-based Vertex Pharmaceuticals (NASDAQ: VRTX), which he joined as senior vice president of commercial operations.
Coles doesn’t have much to say about his time at Vertex. He left after three years. Later on, he filed a lawsuit, covered at the time in the Boston Globe, in which he said he was stripped of key responsibilities and essentially forced out. Coles didn’t mention the suit during my interviews, and had nothing but nice things to say about the company and its executives. “It was a great learning opportunity for me to learn what biotech is about.” Founder and former CEO Josh Boger, and current CEO Matt Emmens and team “have done a brilliant job,” he says.
By late 2005, Coles moved on for his first chance to run a biotech company, joining Bedminster, NJ-based NPS Pharmaceuticals (NASDAQ: NPSP) as chief operating officer, as an interim step on his way to becoming CEO. He took the top job in May 2006, and it wasn’t long before it became an unhappy experience. When he joined, the company had submitted an application to the FDA for clearance to market an osteoporosis drug, and was gearing up its sales and marketing plans, which was right in Coles’ wheelhouse. But the FDA took a negative view of the drug, and never approved it. NPS stock plummeted from more than $15 to about $4, and Coles had to make the hard decision to make deep cuts in the company’s 400-person workforce. The first round wasn’t deep enough, so a few months later, he had to make a second round of layoffs—never a good thing for morale. “I can remember standing in front of employees and shedding a tear. It was that difficult,” Coles says.
Painful as it may have been, it was some necessary medicine for NPS, Coles says. The company has since recovered, with a pipeline of multiple drugs, a partnership with Amgen, and a market valuation of more than $650 million. “What we did saved that company,” Coles says.
While NPS was putting the pieces back together, a recruiter for Onyx came calling. Coles, having lived his whole life on the East Coast, didn’t really know the Onyx CEO, Renton, and didn’t see himself moving west. But he agreed to meet Renton over dinner.
Coles liked what he heard about Onyx. It had a product for cancer that was established in the market. Importantly, it also had $470 million in cash on the balance sheet at the end of 2007, which could serve as a war chest to survive tough times. Those were both key strategic assets Coles didn’t have at NPS. “A strong balance sheet empowers the CEO. You can begin to think about things with a commercial product and money,” Coles says. “I wanted to run an enduring company. I wanted to run a company that wanted to grow itself.”
Investors didn’t quite know what to make of the new CEO at Onyx, as the stock took a dive in the spring of 2008. Coles spent much of his first year learning the company, and nudging it to broaden its focus on marketing its cancer drug not just to oncologists, but also to other medical specialists who see kidney and liver patients.
Coles’ biggest strategic move came about 18 months after he joined Onyx, when the company agreed to acquire South San Francisco-based Proteolix for $276 million upfront, and milestone payments that brought the potential tab to $535 million. This was mainly to get the rights to one core asset, carfilzomib for multiple myeloma. The drug had shown promise in early trials, but hadn’t yet nailed Phase 2 clinical trials, which are an essential proving ground for the effectiveness of new drugs. The move wasn’t broadly popular with investors, who wanted Onyx to do more to maximize profits from its single drug.
“We knew we couldn’t be a one product company,” Coles says. “It took courage, because buying an untested asset is a scary thing. It’s daunting. The question I posed to our team on the eve of the acquisition was not one of business judgment. It was one of courage.”
It was a gamble that appears to have paid off, as Onyx has hit its goals in subsequent clinical trials, and has filed an application for FDA approval. If all goes according to plan, Onyx could be marketing the new product in the first half of 2012.
As a manager, Coles has a reputation for getting out of his office and walking around, trying to keep his finger on the pulse of the 300-employee company. He says he likes to make himself available for candid one-on-one interactions that don’t happen in team meetings. When I asked him what might surprise people about his management style, Coles says “I think people would be surprised by my sense of humor and how silly I can be. People read me as a serious, intense, cerebral guy. I think people would be surprised by how I love having a good time in any setting.”
Business, Coles says, is really about people and how you relate to them. And biotech drug development is really about the people who are patients, and family members of patients.
He can relate on a very personal level. Coles’ oldest son, Andrew, was diagnosed a decade ago with non-Hodgkin’s lymphoma when he was just 12 years old. After some tense months, a scary relapse, and an uncertain hunt for a matching bone marrow donor, his son was cured. So if Onyx can do something like that for patients with multiple myeloma, he’ll have a much deeper than average understanding of what that means for them and their families.
“If there’s one thing people should know about me it is that I’m in this world to create a big impact,” Coles says. “Onyx is an opportunity to create a huge impact for patients and their families. That’s what I’m about. I’m grateful to have the opportunity to serve.”