Plenty of people have made their fortunes in the competitive biotech environment with groundbreaking ideas and innovative products. However, just as many with equally outstanding concepts and worthwhile products are struggling to show a profit, much less earn millions for themselves, their employees, and their shareholders. What makes the difference, and can their personal financial success be replicated today?
These are the questions we put to a number of individuals who appear in our annual listing of GEN’s Molecular Millionaires. The group is composed of scientists and physicians who hold stock in biotech and pharmaceutical companies. Some of the interviewees requested anonymity while others were happy to go on the record with their comments.
One venture capitalist compares biotech companies to baseball teams. “They lose money, so why do people own them?” The answer, he says, is that when the team is sold, the owners make money. Likewise, biotech companies have value even when losing money, as seen in their stock price. As products move toward the clinic, the risk decreases. Time to market decreases, and the company is worth more. “If you can raise money,” he says, “you have a shot at success.”
Look at some of the serial entrepreneurs. They formed a company, raised money, advanced a product, sold the company, and then did it all again. Often, they increased their own net worth even if the product itself failed. “Your career isn’t over if you have a failed company,” the venture capitalist emphasizes. Instead of dwelling on a failure, analyze what happened and move on, he adds.
Most of the entrepreneurs on this year’s Molecular Millionaires list actually haven’t focused on accumulating personal wealth. Instead, they say, they formed their businesses because they wanted to make a real difference in the world. They were passionate about the science, and acquiring wealth wasn’t necessarily their goal.
“Success is in the eye of the beholder,” one biotech exec notes. “I never went into it thinking, ‘Wow! I’ll make a lot of money. I’ve never traded in one share. Therefore, I’m wealthy on paper, not in the bank.”
In business, however, wealth attracts wealth. To attract capital, the most successful entrepreneurs have developed a clear goal and a viable business plan. Some of the bullet points, one industry insider says, include why you think your product will work when others don’t, why your company will succeed where others fail, market size, and your patent position. Also, “Be careful what kind of capital you attract,” another exec adds, as well as how the deal is structured. Molecular millionaires tend to retain ownership of their companies.
For a company to succeed, there needs to be a blend of science and good clinical work, another exec says. “The stumbling block is in not building enough clinical work into biotech.” For his company, that translates into some seminal research that may pay off many years later and applied research that moves the product pipeline along.
The most successful biotech execs are a hardworking lot, burning the proverbial midnight oil, in many cases, to build companies that create real value through products that solve real problems. And early on, they surrounded themselves with successful people. Each has a stellar education and mentors who were tops in their fields. Interviews repeatedly reveal early work with Nobel laureates and genetic pioneers.
They also advise being very focused but realize that being a brilliant scientist can take one only so far. To go the rest of the way, they must either also be brilliant in business or surround themselves with those who are. To their credit, several of these successful entrepreneurs also hold degrees in business or economics, as well as their scientific specialty, and all have surrounded themselves with experts in each of the fields necessary to make their companies commercial successes.
Luck of the Draw
To some extent, many admit, success is “the luck of the draw.” Success may be harder to achieve today than in biotech’s early days because, as one gentleman says, “The low-hanging fruit has been picked.” Still, he says, there are some tenets that may increase one’s chances of success:
• Never build a company around a single technology or product idea. You need as many possibilities as you can muster because good science doesn’t always translate well into the clinic.
• Have teammates who complement your knowledge.
• Hire the very best people for every position who truly buy into the vision.
• Excel in both science and business.
• Raise as much money as you can when it’s available.
Above all, the successful are extremely determined. As one says, “It is easy to find a reason not to do something. Be very tenacious.”
Several respondents publicly provided their advice on how to achieve success in biotechnology and maybe even make it into the lofty ranks of molecular millionaires.
Charles L. Cooney, Ph.D.
Outside Director, Genzyme
Success is about relationships, Dr. Cooney says. Find colleagues and mentors who ask challenging questions and who challenge what you do. “It’s important who you associate yourself with.” He attributes his own success, at least in part, to sharing ideas openly and listening to what others say. “Good people have lots of good ideas in response to conversations.”
Additionally, “The interesting problems are at disciplinary interfaces. People shy away from these areas because it’s risky—they don’t know the answers,” but that’s also where the greatest advances can be made.
Dr. Cooney, a professor of chemical and biochemical engineering at MIT, used that advice as part of a multidisciplinary team of MIT professors who formed a consultancy during biotech’s earliest days, helping venture capitalists make sense of the new industry and helping biotech companies hone their strategies. Genzyme was one of those companies and it invited Dr. Cooney to join its board of directors.
James A. Bianco, M.D.
CEO and President, Cell Therapeutics
Scientists’ biggest stumbling block is not making the transition from scientific founder to a business person, according to Dr. Bianco. After 16 years as president and CEO, he says, “companies change as they grow, and the executive who may be excellent at leading a company of less than 100 people could be horrible at leading a company of more than 500.”
His goal has been to expand his knowledge base to understand everything that affects the company, including financial, legal, and marketing issues. For example, he says, “We have a CFO, but I was involved in all the financial issues so I could understand them.” Developing a broader knowledge base “helps prevent the company from being under-resourced or over-leveraged,” he adds. “That’s a character trait of a good leader.”
Arthur T. Sands, M.D., Ph.D.
CEO and President, Lexicon Genetics
The most critical factor of success, remarks Dr. Sands, “is to identify early a fundamental problem in science that when solved, will have significant impact for medicine. There are a lot of interesting undertakings, but not all will have a broad impact on human medicine. When you can connect those two properties—interest and broad impact—your career will more likely translate to success and funding.”
It is vital, he says, that you find a way to create value. The desire to create value must come before the desire for financial success.
In terms of educational training, “coming from biology, it’s very important to at least complete a postdoc fellowship and then move into biotech. Make a choice at that juncture.” Although the lines are blurring between academic and corporate research, “the steps of post-training lead down the path of terminal differentiation.” His advice: “Be relentless.”
Russell J. Howard, Ph.D.
Dr. Howard says that nine conversations made the difference in his career. “If I deconstruct my career, there’s been little continuity from one job to the next. There have been very big changes, and every major change was the result of a conversation and a five-minute decision. I’ve never applied for a job. Not one.” Instead, he says, “the persons were seeking me.”
He managed that, he says, by being “open at all times about talking about what you’re interested in. I told my kids, I have no care at all what your job is. All I care about for you is that you’re passionately interested in your job. You’ll be the best, and things will open up for you.”
Throughout the changes from marine biologist to immunologist, Dr. Howard says he focused not on salary or perks but on the research opportunities. At the NIH, for example, “I was a GS 9 or 10 and worked 24/7.” Following his family cross-country, he entered biotech “as a lowly postdoc,” until, frustrated and ready to move his family back East to return to the NIH, he finally approached the company president. That conversation resulted in a vp title, 3,000 sq. ft. of lab space, and some assistants. “There’s a huge amount of luck in life.”