Some Notes on Immunex
I received a call from Steve Duzan in the spring of 1981 saying that he had been offered the position of CEO of a new company, Immunex. If he accepted, he wanted to know if I would be willing to be outside legal counsel. He briefly told me that Immunex was a biotech company being formed by Steve Gillis and Chris Henney, two scientists who had discovered something called IL-2 and were leaving the Fred Hutchinson Cancer Research Center to launch Immunex.
I am not sure whether Duzan or I was the least qualified to be involved in a biotech company. Duzan had been CEO of two small non-tech private companies, Cello Bag Co. and North Star Ice Equipment Corp, which manufactured ice making equipment. I was a corporate/securities lawyer at Perkins Coie mostly handling public offerings for Boeing and Puget Sound Power & Light and the beginnings of an emerging tech practice. I could tell you a lot about aircraft and dams, but nothing about biotech other than that Genentech, founded a few years before, was doing something with DNA and had gone public in 1980, raising $35 million. I don’t think that I was aware of Amgen, which had been founded the year before, in 1980.
Needless to say, Duzan and I both said yes.
I had known Duzan beginning in 1967 when he and I were part of a group called CHECC, Choose an Effective City Council, which had been composed of then Young Turks who banded together to replace a staid city council with reformers Tim Hill and Phyllis Lamphere and later John Miller and Bruce Chapman.
Our first task was to negotiate a license agreement with the Hutch so as to secure the technology that Gillis and Henney had developed. License agreements were novel territory for Duzan and me, but I quickly looked at some treatises and sample license agreements. The Hutch was willing to take stock instead of cash. When we offered 25,000 shares, they countered with 50,000 shares. We accepted. I don’t remember anyone asking about percentages.
Another early task was to negotiate a rental agreement for offices. Immunex had identified some space in a Martin Selig building on Queen Anne Hill near Seattle Center. Duzan and I went to Selig’s office to negotiate a lease with him and after some initial skirmishes, we agreed on the terms. Selig seemed positive, so we were shocked to hear from him a few days later that he couldn’t lease the space to Immunex because his bank, Seattle First, didn’t think Immunex was viable and wouldn’t lend to him against the lease. SeaFirst shortly thereafter lost enormous amounts on its loans in Oklahoma to speculative oil companies and was taken over by Bank of America. Selig has managed much better and today is a friendly landlord to tech companies.
Immunex’s initial equity capital was provided later in 1981 by Cable & Howse, Seattle’s earliest institutional venture capital firm. Tom Cable and Woody Howse were the pioneers of modern venture capitalists in Seattle along with George Clute and Denny Van Ness, founders of Olympic Venture Partners (originally, Rainier Venture Partners, until they separated from Rainier Bank). Prior to its IPO in 1983, Immunex raised about $6 million from Cable & Howse along with the California venture funds, Mayfield and NEA, but this was by no means enough to build a biotech firm. Immunex in following years raised enormous amounts of capital beginning with its IPO, successive public offerings and funding from partnerships with major pharmaceutical firms.
In order to secure license agreements with large pharmaceutical companies, Duzan and I travelled to various foreign paces, including Tokyo, Frankfurt and the Philadelphia/New Jersey corridor (foreign to us). Along the way we gained expertise on the substance of license agreements which began to match our confidence and Duzan’s superb negotiating skills. His most effective technique was to storm from the negotiating room, leaving me as the good cop.
Fortunately, a younger lawyer at Perkins Coie, Steve Graham, was willing and able to take on an increasing amount of Immunex’s legal work and developed considerable expertise on licensing and other legal issues confronting biotech companies. Graham ended up becoming one of the leading biotech lawyers in the world.
Duzan proved to be just what Immunex needed, a strong executive capable of raising large sums of money, dealing with powerful pharmaceutical firms and managing an ever growing group of scientists. It wasn’t easy and there were many growing pains, but Immunex would not have reached the 1990s as an important, full-fledged research and development biotech company without Duzan’s leadership. Immunex spawned and trained many of the people active in the tech community today, including Alan Frazier, Stewart Parker and many entrepreneurial scientists such as Gillis and Henney. I learned a lot.
Duzan also had talents and interests outside the tech industry, which is rare among most tech executives. He actively supported political candidates, leading an effort to reform the state business tax laws. As chair of the Corporate Council for the Arts in the late 1980s, Duzan is credited by Peter Donnelly as convincing him to come back to Seattle to be its executive director. Duzan was also a brilliant writer, mostly in has annual Christmas card ramblings and in odes to his friends on their weddings or significant birthdays in lively, and often mildly salacious, lyric poetry.
Duzan’s decision in the late 1990s to move to San Juan Island and then warmer southern climates was Seattle’s loss. But the Immunex success story and the entrepreneurial skills and experience gained by dozens of Seattleites from their Immunex years was Seattle’s gain.