Seattle-based NanoString Technologies hasn’t had a permanent CEO for more than a year, and now the search has ended in Boston. The company, which makes instruments to help scientists perform sophisticated genetic analyses, has named Brad Gray, the former vice president of product and business development for Cambridge, MA-based Genzyme Genetics, as its new president and CEO.
Gray comes to the job after almost six years at Genzyme, where he got experience in the pharmaceutical, venture capital, and diagnostics operations inside the biotech giant (NASDAQ: GENZ). Before that, he spent four years working with healthcare clients at McKinsey & Co. He’s got a bachelor’s in economics and management from the University of Oxford in the U.K., and a bachelor’s in chemical engineering from MIT. Gray, a first-time CEO, was still getting settled into his new office in Seattle’s South Lake Union neighborhood when I stopped by for an interview yesterday.
NanoString’s new leader joins at a pivotal moment for the company, as it seeks to grow into a stronger commercial enterprise. NanoString, founded in 2004 with technology from the Institute for Systems Biology, introduced its first commercial product in July 2008. It’s a digital instrument for academic biologists to help them determine the extent to which many genes are dialed on or off in a sample—what’s known as gene expression analysis. The company has built a base of academic customers at top institutions like the Broad Institute of MIT and Harvard, Caltech, and the University of Washington. While the company raised $30 million in a round led by Clarus Ventures a year ago, it hasn’t yet turned profitable, and it has been operating without a permanent CEO since Perry Fell resigned more than a year ago.
NanoString executive chairman Bill Young, an industry leader who’s currently the chairman of Biogen Idec, said when he joined NanoString in February that the company has some very good people, but it needs “consistent leadership that can take the company to the next level.”
Gray says he envisions NanoString growing into a “very valuable company.”
“I want this to be a company that helps researchers make important biomedical discoveries, and helps physicians to translate those discoveries,” Gray says.
NanoString first hit Gray’s radar screen about a year ago, when he was running the diagnostics operation inside Genzyme. Scientists inside Genzyme told him about the NanoString instrument, called nCounter, and noted that its ability to generate digital readouts on hundreds of genes in a relatively small sample could be useful inside Genzyme. Gray noticed the company again in February when Young was named executive chairman of NanoString. Young, who formerly ran Monogram Biosciences, had noticed Gray’s work at Genzyme, where he ran a $370 million business in 2009, essentially one of the top five diagnostic service providers in the U.S., Gray says.
“We had a few interactions when Bill was at Monogram, and we had a good rapport,” Gray says.
That got Gray to listen when the recruiter called. But when he started taking a closer look, he found the opportunity more and more attractive. He liked the fact that NanoString’s instrument has broad ability to do “multi-plexed” experiments that, instead of looking at one gene, are able to analyze hundreds of genes in a sample to look at a symphony of what might be going wrong in complex diseases like cancer, diabetes, or inflammation. He liked the digital precision of the NanoString results. And, based on his experience in diagnostics, he really liked that the NanoString tool isn’t thrown off track by Formalin-Fixed, Paraffin-Embedded preservation techniques that are commonly used in medical facilities, but sometimes cause problems for competing devices.
Still, this was a big decision to make personally and professionally. Gray, a native of Columbia, SC, had never even been to Seattle until he flew here to interview for the NanoString job. He is married, with a two-year-old son and a newborn, six-week-old daughter. It was no small thing to consider moving his family across the country. For a few more weeks anyway, his family is still in Boston, although they are planning to move to Bellevue, WA, before the end of July, Gray says.
While Young told me back in February that he was willing to consider establishing NanoString’s headquarters somewhere else to recruit the right CEO, Gray said he felt that he needed to be in Seattle to be effective, and “close to the company center of gravity.” It probably didn’t hurt that we had our conversation on a beautiful summer afternoon in Seattle, but Gray said he’s thrilled to be here.
“NanoString was exciting enough that I probably would have gone somewhere less exciting than Seattle just to be a part of it,” Gray says.
Three things stand out for Gray on his to-do list as he gets up and running. The company must continue to build sales momentum for the nCounter system among its customer base of academic researchers, who use the tool to publish high-impact scientific papers. Second, he’s going to whittle down the company’s long list of market opportunities to bring more focus on a couple of top priorities. And third, he’s going to recruit a senior management team with the skills NanoString will need to make the transition from selling a tool to academic researchers into the completely different market of clinical diagnostics.
It sounds like he’s got some serious recruiting to do. NanoString has about 75 employees now, but it will look to add some key posts, like a head of R&D, a chief commercial officer, a chief medical officer, and people with experience in regulatory affairs—which is necessary for a diagnostic application.
The diagnostics market is something Gray knows well from his Genzyme days, and both he and Young have contacts in Big Pharma companies who may be interested in using the NanoString technology to develop companion diagnostics that will help select which patients are more likely to benefit from a new drug than others. This is one of the big trends at work in the era of cost-containment, particularly with cancer drugs, where many drugs only help one-fourth of patients, and huge amounts of money are spent treating people who won’t see any benefit.
Exactly how NanoString plans to tackle this market is still to be determined. It could form a partnership to develop a companion diagnostic tool with a Big Pharma company, develop the application on its own and lean on someone else’s distribution network, or go it alone, Gray says. If NanoString chooses the latter route, it will need to raise more venture capital. Running the kind of experiments that will win over diagnostic customers won’t come cheap.
“You want to prove that the tool is valuable before you try to sell it,” Gray says. “We will continue to need to raise money to succeed if we choose to go it alone in molecular diagnostics.”
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