Luck, Curiosity, Naivete: The Essential Ingredients of Innovation
It’s cold outside, so I was a little bummed there was no actual fire at an event last night billed as a “fireside chat.” This get-together actually took some time to warm up (pun intended). But once it got rolling, three of the most experienced life sciences entrepreneurs in the region shed some light on inspiration that makes them do what they do (and some lucky breaks they got on the way).
This trio of executives—Bruce Carter, Bruce Montgomery, and Stewart Parker—offered lots of insight for entrepreneurs in all industries, not just those trying to develop new drugs.
These people know more than most about taking on big challenges. Biotech and pharmaceuticals is just about one of the riskiest, most expensive propositions in all of global business. The pharmaceutical industry pumped about $45 billion into the effort last year, and it yielded just 19 new drugs, the worst output in 24 years. So a little inspiration can’t hurt.
Here are the highlights of the speakers’ comments, at the event at the Rainier Club in Seattle, organized by the Washington Biotechnology & Biomedical Association.
Bruce Carter, CEO of ZymoGenetics
On the role of serendipity in biotech: “You’ve got to have curiosity and an open mind.” He pointed to the example of Paul Janssen, a Belgian chemist who had an extraordinary run in the mid-20th century in which he discovered 40 drugs in 30 years. He did all sorts of off-the-wall experiments, and tried to learn from them when the results were hard to explain. In one case, he was looking for anti-parasitic drugs, and found one worked in chickens. When he tried it in mice and rats, it didn’t work. “Instead of throwing it away, he said, ‘How curious,’” Carter related. When he took the chicken’s feces and fed it to mice, the drug worked. That showed that something about the chicken’s system broke down a metabolite of the drug into an active agent. It was later isolated and turned into a drug. “It’s about curiosity when facing an unexpected finding, and then following it,” Carter said.
On why the United States is the undisputed leader in biotechnology: “Europeans always want to focus on the 100 reasons why something won’t work. Americans are willing to look at the one reason why it will work.”
On how biotech is such a tough business: “Last spring, I was talking with the CEO of Merck KGaA. I told him that if I was 20 again, I’m not sure I would go into biotech again. It takes too long, it’s too difficult, and takes too much money.” The other CEO’s response? “I used to be the CFO of Lufthansa, and obviously, you’ve never tried to run an airline.”
On roadblocks to innovation: “You may think I’m being glib when I say this, but I mean every word. One of the keys to innovation is naivete.” He explained that at a large pharmaceutical company, there are always some experienced people who pour cold water on new ideas, saying they’ll never work. Small biotech companies are more willing to concentrate on the positive, he says. He said some of Big Pharma’s innovative success stories happened because they didn’t have very much expertise in the area, and thus were willing to try a more off-the-wall concept. The examples he listed were GlaxoSmithKline’s sumatriptan (Imitrex) for migraine headaches; Pfizer’s sildenafil (Viagra); and Johnson & Johnson’s minoxidil (Rogaine). “Too much knowledge is a dangerous thing when it comes to drug discovery,” Carter said.
Stewart Parker, Former CEO, Targeted Genetics
On inspiration: “Inspiration is the opium, or the morphine, that keeps us doing what we do, because it’s so hard. If it weren’t for inspiration to numb you to how hard your task is, I don’t think you could get it done.”
On the role of luck: “At Immunex, I can remember one point we had about six weeks worth of cash left. The employees didn’t know.” Then she got a call from a writer with Fortune magazine in 1985, who said he had heard about a new drug called Interleukin-2 from one of Immunex’s competitors, Cetus. He wanted to learn more about the Immunex approach. Stewart spent a weekend with the writer and photographer, the story made the cover of Fortune, the stock tripled, and Immunex raised enough cash to get out of the ditch.”We were lucky. We had hope, and we believed in it.”
On President-elect Obama: “Obama is the epitome of change and transformation. That translates into innovation.” She said biotechies need to do a better job of marketing themselves to policymakers, like Obama, to show that the expensive new drugs benefit society, keeping workers’ productivity high, reducing visits to the hospital, and lowering overall health care costs. The problem is that the industry often lacks data to back up this point, she says.
On centers to study innovation: “You can’t institutionalize innovation, because then it becomes something other than innovation.”
Bruce Montgomery, Senior Vice President, Respiratory Drugs, Gilead Sciences
On luck: Montgomery told a story of trying to raise $30 million for the IPO of Seattle-based Pathogenesis in 1996. After a nearly three-week road show with investors, he still needed to raise $10 million in the last day. In a meeting at the Waldorf-Astoria on Manhattan’s Upper East Side, “one guy fell asleep, and the other was looking at the ceiling,” Montgomery recalled. Then, amazingly, they ponied up the $10 million. Why? The fund manager’s next door neighbor had a kid with cystic fibrosis, and thought the company’s inhaled antibiotic sounded interesting for it. Later, when it came time to raise more money in a secondary stock offering, the investor bought again. Why? The fund manager saw the 10-year-old child riding a bike, knew the kid was in the clinical trial, and surmised the drug must be working. (If you passed biostatistics 101, feel free to laugh out loud now). “So I was saved by a 10-year-old kid on a bike,” Montgomery said. “You really can’t take your own success too seriously sometimes.”
On how universities could develop more future leaders: “We need to think about how to train people to not just be technically great, but to be leaders. The universities encourage individual performance, and not so much teamwork.” That’s because individual stars are more likely to become grant-winning academic scientists of the future, Montgomery says. Training people to work better in teams, like they must in industry, would be more helpful.
On how to sustain a company in an economic downturn: Montgomery advised getting a diversified investor base, of VCs that invest because they believe in your technology, some that believe in the management team, and some that invest because you fit their strategy of, say, developing late-stage projects. This way, if the technology suffers a setback, some investors will want to get out, but others will stick with you for other reasons. “Hard times are going to happen, you’ll have bad days. You need a diverse investor group.”
On advice to President-elect Obama: The incoming president will have to appoint a strong FDA commissioner, Montgomery said. The FDA is paralyzed, he said, because it has gotten beaten up in Congress over drug-safety scandals like with Merck’s Vioxx. In the last week, the FDA’s safety division said the newer generation of asthma drugs aren’t safe. He called the decision “unscientific” and pointed out that even drug safety critic Sidney Wolfe of Public Citizen said the FDA went too far in castigating the asthma drugs. “The safety people at FDA are running amok,” Montgomery said. He noted he’s encouraged that Obama has picked physics Nobel Laureate Steven Chu of Lawrence Berkeley National Laboratory as the nominee for Secretary of Energy. Montgomery also wants to see a talented head of the National Institutes of Health, who will push to reward more innovative research for the future, rather than letting it become “too much of a good ol’ boy system.” He added, “Obama wants to hire the smartest people, the whiz kids, like Kennedy did. I want to see more of that.”
On roadblocks to innovation: “IP is a real minefield.” He singled out his former nemesis, Chiron, for demanding exorbitant royalties to license patents on its work for hepatitis C, which stifled the field of research for years.
On innovation think tanks, or centers for the study of innovation: “They are worthless.” Margaret Mead had it right when she said that ‘a small group of thoughtful, committed citizens can change the world, Indeed, it’s the only thing that ever has.’” He added, “If you leave innovation in small companies, add water and money, you’ll get growth.”