The Blech Effect
For those not familiar with Blech, there was a thing known as the “Blech effect” in the 1980s and the first half of the 1990s. D. Blech and Co. was involved in a number of important biotech company financings. Pre-internet, journalists received dozens of press releases from the company each year.
Blech, who holds a Masters degree in music, grew up under the tutelage of his rabbi father, who was a stockbroker interested in medical technologies. “That’s when I first learned of the gut emotional appeal of investing in companies that were working on potential cures for disease,” he said.
Blech, his brother Isaac, and his father, along with Robert Nowinski, Ph.D., from the Fred Hutchinson Cancer Center, founded Genetic Systems, one of the first monoclonal antibody-based firms. Dr. Nowinski served as chairman and CEO. The company developed the first quick test for chlamydia.
According to Blech, Genetic Systems eventually went public in 1981 with a valuation of $20 million. It was sold five years later to Bristol Myers Squibb for $300 million.
“That deal gave us the credibility we needed. The Blechs became famous on Wall Street, I was known as a whiz kid, and I had $30 million in the bank,” he recounted.
The Blechs also co-founded Celgene, a biopharmaceutical company with a current market cap of $60 billion.
Blech and his brother, however, parted ways in 1990 over differences in investment philosophy. “I did not behave responsibly after that,” he said.
Yet, Blech went on to help to start Ariad Pharmaceuticals, Alexion Pharmaceuticals and, with the late George Rathmann of Amgen fame, Icos, which developed Cialis. What was the secret of his success? He claimed his talents were based on being a good underwriter.
“I understood valuations, how to price deals, and how to raise money,” he said. “I also knew how to get investors the kind of returns that would make them come back for more.”
When considering getting involved with a biotech financing, Blech said science was always the first thing he examined. “The science had to be high quality,” he noted, adding that he relied on the opinions of top-flight researchers and scientific consultants.
“If we knew we were dealing with credible researchers, we did not challenge the science,” emphasized Blech. “We challenged the business proposition and the amount of money needed to get the company in play.”