Biotech is a long-term business, in a world that places more value on short-term thinking. Pharma companies often cut long-term R&D budgets, or do disastrous mega-mergers, mainly to juice their profits for a quarter or two.
But sometimes people come along who are willing and able to buck the trends. They have a strategy for the long term. Not only that, they have the guts, the monomaniacal intensity it takes to carry out their plan, and the resilience to achieve something of lasting significance.
These are people I’d like to write about in this space occasionally under the banner I just made up, of “profiles in long-termism.” Chris Garabedian, the CEO of Cambridge, MA-based Sarepta Therapeutics, is one of these long-termers. He hasn’t really accomplished anything of truly lasting significance yet, but if you’ve followed what he’s done the past two years, it’s remarkable, and he’s taken a company that was going nowhere fast and turned it into one of the most intriguing biotech drug developers you’ll find.
Sarepta (NASDAQ: SRPT) exploded on the scene in the past year. One year ago, its stock was worth 69 cents. Today, it will open trading at more than $37. Many smart people now believe that Sarepta has come up with the first effective drug for treating Duchenne Muscular Dystrophy, a disabling and deadly neuromuscular disease. The product is a molecular-targeted drug that is designed to help boys with the disease who can’t make enough dystrophin for proper muscle function because they have an abnormality in part of the dystrophin gene called exon 51. About 13 percent of Duchenne Muscular Dystrophy patients have a form of the disease caused by this genetic variation. The company is competing in this field with GlaxoSmithKline and its partner Prosensa, but most observers see Sarepta as the leader.
How in the world did this turnaround happen?
I’ve been privileged to see this story unfold up close, as I did the first in-depth interview with Garabedian in the spring of 2011, when he was still settling in as CEO at what was then known as AVI Biopharma. I wrote a lengthy feature story in June 2011, with the following headline:
In that story, he audaciously invoked a comparison to Cheshire, CT-based Alexion Pharmaceuticals (NASDAQ: ALXN), an $8 billion company at the time. Garabedian declared, “We could make this a breakout biotech. It will take some time. It’s not going to happen in a year. But I think this could be a company valued in the multi-billions in the next several years.”
Given the history of AVI, readers would have been excused for chuckling at what looked like pure hubris. Garabedian had been a dealmaker at Celgene (NASDAQ: CELG) and Gilead Sciences (NASDAQ: GILD), but he was young (44 at the time), and a first-time CEO.
Worse, AVI Biopharma looked like a complete mess. The company had been around since 1980, and it was built on a technology, RNA-based antisense drugs, that few people in the industry believed in at the time. The company’s track record was awful. It had spent 30 years on R&D, and burned through more than $250 million of investor cash, with no FDA-approved drug to show for it. Nothing was even within hailing distance of a Phase III clinical trial. The company had about $33 million in the bank at the end of 2010, about enough to operate for another year. Shareholders pushed out the previous two management teams, frustrated at the lack of progress.
Garabedian joined AVI’s board in June 2010. He says he considered it a diamond in the rough. As a young executive, he learned a lot at Gilead and Celgene about what it takes to be successful as an independent biotech, and he vowed that if he ever got a shot to be a CEO, he wanted to build an enduring company that did something really important for patients.
When the board asked him to consider joining as CEO, Garabedian said in a recent interview at his office, he had three conditions. First, the company needed to retain whole ownership of its Duchenne Muscular Dystrophy candidate, and not sell off most of the commercial rights to a partner. Second, he needed the freedom to bring in his own management team. Third, he needed the board’s blessing to raise more money (therefore diluting the value of their existing shares).
“I said to the board, ‘This is a program that every company in the industry would love to have, why would we partner it? Why don’t we bring it forward ourselves and create value?’” Garabedian recalled.
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