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great people and good process (i.e., lack of excessive bureaucracy) at Celgene. George Golumbeski, Celgene’s senior vice president of business development, and Tom Daniel, the company’s president of research, are known for their shared curiosity in leading-edge science, their close working relationship, and their power to get deals done inside the company.
To hear Golumbeski tell it, the company needs to stay nimble, because it is going to need to pick up lots of groundbreaking treatments if it wants to keep its revenues growing in a few years.
“It’s a long-term view,” Golumbeski recently told my Xconomy colleague Ben Fidler. “We’ve thought very deliberately and deeply about what Celgene might look like then, and what our growth needs might be—we need a healthy, big pipeline to fuel us at that time. We are really looking for absolutely the highest science, novelty. The word that comes up frequently in our quest for the appropriate target is ‘disruptive.’”
While entrepreneurs like to complain about how long Big Pharma companies sometimes take to make decisions, you don’t hear that said often about Celgene.
Katrine Bosley, the former CEO of Bedford, MA-based Avila Therapeutics, said the working relationship between Golumbeski and Daniel is part of what’s different. Bosley, whose previous company was acquired by Celgene in January 2012, said Celgene does careful scientific due diligence that takes time. That’s just like every other big company scouting a prospective partner.
But the senior people at Celgene are known for being involved and decisive. And when these two decide on something, the decisions can quickly be put in front of the board for approval.
“The partnership of Tom [Daniel] and George [Golumbeski] is pretty special. They work closely together,” Bosley says. She adds: “I don’t see that kind of partnership elsewhere. I see lots of good individuals, but it feels like at other companies, a decision goes to a committee. At Celgene, Tom and George are empowered to make it happen, they feel accountable, and they do make it happen.”
The other thing you hear entrepreneurs talk about with Celgene is “flexibility,” which is actually a sign of healthy humility for a big company. It means Celgene doesn’t have a standard deal template, with one-sided terms in its favor, that it constantly tries to impose on little companies.
“Celgene is willing to explore the biotech’s approach to accomplishing the objectives, as opposed to, ‘This is how we would do it—please do it our way,’” says Steve Tregay, the CEO of Watertown, MA-based Forma Therapeutics.
Celgene has shown it’s willing to strike deals in all kinds of shapes and sizes—strategic equity investments, option licensing deals, structured acquisitions—that are tailored to fit the little company’s needs at the time. Celgene is often comfortable making these deals and allowing its partner the flexibility to control its own destiny, while providing assistance from its own labs when needed. That’s a lot better than arrogantly dictating strategy to a little partner, or worse, bringing its assets in-house and then letting them fall through the cracks as internal R&D priorities shift.
Golumbeski, in his recent interview, said Celgene essentially doesn’t want to behave like the rich uncle who thinks he knows it all. “They’re focused, they’re experts,” Golumbeski said of Celgene’s partners. “We want to use as much as of that expertise as we can. Celgene does an outstanding job at listening to what its partner is saying.”
Of course, Celgene isn’t interested in every single disease, so it’s not a great partner for every little biotech company out there. Its main focus is cancer and inflammation. But this is clearly a smart strategy at work, especially the part about being flexible on deal terms. After all, if you structure deals that are so one-sided that the little company can barely survive, how do you expect them to produce anything valuable for you?
The fact that Celgene is willing to strike deals on fair terms is good news for everybody who has a role to play in life sciences innovation. Too often over the past few years, I’ve heard stories of pharma companies sticking it to little biotech companies on deal terms, and then complaining about how there aren’t enough innovative products to acquire anymore.
“They [Celgene] are clearly better at understanding that the small company needs to win,” says Bob Nelsen, a managing director with Arch Venture Partners and an investor in several of Celgene’s partners. “This means allowing the small company to retain some of their own products, and also using market mechanisms that do not cap the financial upside that the company may obtain from its products. Pharma is now trying to emulate this because their old model of trying to control everything is clearly broken, and they are being outmaneuvered on the hot deals by companies like Celgene.”
Of course, most of the hopes Celgene has pinned on these companies will be dashed. Science is a humbling thing. As time goes on, we will learn more about all these experimental drugs that Celgene has bet on, and begin to see some warts.
But when a company bets on this many promising fields of science, this many talented management teams, and this many flexible deal structures, I believe it is tilting the odds of success in its favor. We won’t know the definitive answer for another five to 10 years. But I suspect by then Celgene will be known for more than doing a bunch of share buybacks.
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