Biotech Hiring:

Wall Street Wins and Woes

Among the sessions:

Corrections or additions?

These articles by Barbara Fox were prepared for the

April 18, 2001 edition of U.S. 1 Newspaper. All rights reserved.

Biotech’s Blooming: William Crouse

Intriguing dynamics are at play in the biotech

industry

right now, says William W. Crouse, managing director of

Healthcare

Ventures LLC at 44 Nassau Street (609-430-3900). "The year 2000

was the biotech industry’s most significant year ever, and biotech

is without a doubt now a real business, with real products, a rich

pipeline, lots of money on the balance sheet, and a real bright

future,"

says Crouse. "Yet there are still many, many opportunities to

start new and exciting companies."

Crouse moderates the opening panel at Biotech 2001, the regional

conference

set for Monday and Tuesday, April 23 and 24, at the Atlantic City

Sheraton and the Atlantic City Convention Center. Billed as the

largest

regional biotechnology conference in the country, the event is a joint

undertaking of the Biotechnology Council of New Jersey (BCNJ) and

the Pennsylvania Biotechnology Association. The organizations’ goal

is to build a new biotechnology industry by capitalizing on the

concentration

of pharmaceutical giants in the region. Cost: $400. Call 800-231-0022.

Crouse’s session features an overview of the past, present, and future

state of the biotechnology industry. The speakers include

Anna-Maria

Zaugg, vice president of strategic business planning, IMS Health;

Keith Brownlie, partner, Ernst & Young; and Jessica

Hopfield

of McKinsey & Company.

Crouse explains the often-confusing difference between

"pharmaceutical"

and "biotechnology." Pharmaceutical companies evolved from

chemical firms and traditionally focused on making compounds that

could have a therapeutic effect. In contrast, the biotechnology

companies

turned to the latest discoveries in human biology to develop

therapies.

"Twenty-five years ago there was a biotech and a pharmaceutical

industry," says Crouse. "Now what we have is a

biopharmaceutical

industry. Those lines will continue to get even more blurred as time

goes by." For instance such biotech pioneers as Genentech and

Amgen are now fully integrated biopharmaceutical companies.

"The large pharmaceutical companies have always been excellent

at clinical development, regulatory, and marketing. There has always

been some difficulty in transferring new technologies out of academe

and bringing them to the market place, and biotech has stepped in

to fill that role very well."

In the last 10 years the biotech industry has matured, he believes,

and is positioned for strong growth. "Progress is being made in

understanding biology. Companies are marching towards making major

advances. The industry’s pipeline has more products in late stage

clinical development than ever before, and it is better funded than

ever before. The pharmaceutical companies look more and more to

biotech

for their new product flow." Some of the tools helping to fuel

R&D productivity:

Genomics: After sequencing the human genome, researchers

can investigate the function of each small piece in order to screen

for useful drugs.

High throughput screening: Some of the breakthroughs here

have come from discovering new concepts of biology.

Combinatorial chemistry: This can involve designing

molecules

based on three dimensional structures that will fit into a biological

receptor.

In December Crouse’s venture capital firm finished raising money

for its sixth fund, the $300 million Healthcare Ventures VI; it has

made seven investments for this fund so far and is very close to

finishing

several others. The fund added follow-on money to earlier investments

in 3-Dimensional Pharmaceutical (now with a branch at Cedar Brook

Corporate Center) and Advanced Pharma in Gaithersburg. The latest

fund makes new investments in CellGate in San Francisco, Novazyne

in Princeton and Oklahoma, and Integrity in Cincinnati, Tolerex and

U.S. Genomics in Boston.

Before leaving hands-on management to be a venture capitalist, Crouse

was most recently worldwide president of Ortho Diagnostic Systems

in Raritan and vice president of Johnson & Johnson International.

A graduate of finance and economics at Lehigh (Class of 1964) with

an MBA from Pace, he started out as a sales representative for E.R.

Squibb & Sons.

He has worked for Revlon Health Care Group and been division director

of DuPont Pharmaceuticals, responsible for international operations

and worldwide commercial development. Kurt Landgraf, now CEO at

Educational

Testing Service, was his successor there.

Crouse’s job at OrthoDiagnostics was to resuscitate the company, and

he took it from $200 million to $500-$600 million in seven years.

But his major thrill came when Ortho introduced a blood test to screen

against Hepatitis C that could protect the transfusion blood supply.

"Before that, there was no test for it, and blood tainted with

the virus causes cirrhosis of the liver and liver cancer in the long

term," says Crouse. "It was an exciting time to be there,

and a lot of fun to rejuvenate a company that hadn’t had an exciting

new product in several years."

His other exciting moment was Squibb’s launch of Capoten, when he

was director of the worldwide product planning group. "We worked

with R&D and marketing to be sure it got rolled out in the best

possible

way — it became Squibb’s largest selling drug ever, and my

department

played a major role in the introduction."

Crouse says he advises

young people to consider a career in the health care industry. "It

is a very exciting field. Our knowledge base explodes on a daily

basis.

We have great opportunities to make major breakthroughs in advancing

the field. Healthcare is something that everybody wants, and the

population

is growing, so it is a growth business, and not particularly cyclical.

A certain degree of altruism is involved with working in an industry

that ultimately provides some very handsome benefits to mankind in

terms of morbidity, mortality, and quality of life."

Top Of Page
Biotech Hiring:

Move Quickly

This is the tightest biotechnology market in history,

and companies are finding it difficult to hire and retain scientists

and executives, says Gene Mancino of Blau Mancino, the executive

search firm at 12 Roszel Road, but it is still possible to recruit

quality people. Just be very clear about what kind of person is

needed,

and then take quick action.

"Companies need to have a game plan to identify, evaluate, and

hire the people and not wait for the perfect hire," says Mancino.

"That doesn’t mean they have to compromise, but they do have to

move quickly. If you come back to your second choice, the candidate

will be gone." His firm works on a retainer basis, for a company

or a venture capitalist, to fill senior level management positions.

Mancino will speak at Biotech 2001, the regional biotechnology

conference,

on a panel entitled "Labor Issues — Finding and Recruiting

Key People." The moderator is Lawrence Cunningham, vice

president, human resources, Centocor Inc. Other speakers include

Peter

Johnson, president and CEO, TissueInformatics Inc. and Kevin

Mullen, director, human resources, 3-Dimensional Resources.

A native of Guttenberg, New Jersey, Mancino received a BA in

psychology

from Princeton University, Class of 1978, and worked in sales at

Proctor

and Gamble before joining Blau Kaptain Associates in 1979. Blau

retired in 1985, and Mancino became

principal owner of the firm in 1995. "I thought I would do it

for two years, and now I own the company," he says

(www.blaumancino.com).

Other fee-based recruiters in the life sciences field include

Korn/Ferry

on Roszel Road and Ken Clark International on Lenox Drive.

The fee for placing a senior executive, who might earn from $250,000

to $300,000, is one-third of the first year’s compensation package,

including base salary and performance bonus. Together with three other

recruiters, Mancino and his firm might take on 10 assignments at once.

One recent placement was Christian Schade, who came from Merrill Lynch

to be the new chief financial officer at State Road-based Medarex.

Another was Stephen Sudovar, who had been a senior executive at Roche

Laboratories and is now the CEO of EluSys Therapeutics in Pine Brook.

Timing is crucial, Mancino warns. The more people involved in a

placement,

the harder it becomes. If a senior candidate must be interviewed by

everyone including two members of the board, the logistics of those

meetings might take 60 days. "At the senior level,

nothing replaces face to face meeting in a room," he says.

Geography is another big obstacle to recruitment, Mancino says. About

30 percent of his business is in New Jersey — an ideal territory

for the headhunters, because so many pharmaceuticals and biotechs

are located here. Executives can move from one company to another

without changing school districts. "Particularly at the senior

level," he says, "they will commute long distances and aren’t

afraid to work long hours, but if they have a kid who is a sophomore

in high school, they are loathe to move."

If you are 22 years old and your goal is to be a life sciences CEO,

Mancino has this advice:

1. Get a marketing job at a major pharmaceutical company.

Rise up to become vice president of marketing or business development.

2. Get recruited for general management or get internal

management experience. Run something or have full P&L (profit & loss)

responsibility.

3. Spend a little time in finance along the way.

"Then I can recruit you to be the CEO of an emerging

company,"

says Mancino.

In this industry, nevertheless, money isn’t everything. "There

is a very strong positive feel about these folks," he says.

"They

like to help people. Life sciences as a whole is a great industry,

and we can do lots of positive things with the combination of big

pharmaceuticals and biotech, you just have to work at it. It has great

people, very smart, and very passionate about what they do. It’s neat

stuff. I enjoy it — I’ve done it for 22 years, and I learn

something

new every day."

Top Of Page
Wall Street Wins and Woes

In March, 2000, biotech stocks were exuberantly

overvalued,

says Gordon Ramseier of the Sage Group, and this happened

without

any rational reason. "My advice to anyone who wanted to hear what

I had to say was `Raise money. As fast as you can. Put it away because

it is going back down,’" says Ramseier. "None of the analysts

were hollering this is crazy. They were trying to figure out why it

made sense."

The valuation changes have been "an incredible roller coaster

ride," he says. "At the end of ’99 the market capitalization

of the Jersey biotech companies was about $8 billion. By March of

2000 it was $23 billion. By the time we made a year-end report in

December, that had dropped to $15 to $16 billion, and last week it

was $8 billion."

Ramseier moderates a panel on Tuesday, April 24, at 1:30 p.m. for

Biotech 2001, the convention in Atlantic City. His panel will tell

how to structure a partnership between a biotechnology and a

pharmaceutical

company. Panelists include Ronald Pepin, vice president of

business

development at Medarex, John S. Zawad of Aventis

Pharmaceuticals;

John Keller of GlaxoSmithKline, and Peter E. Grebow of

Cephalon. Call 800-231-2022.

The ups of last year’s market certainly provided an opportunity

for many companies to raise cash. "The smart ones like Celgene,

Medarex, and Enzon went to the market when the buyers were frothing

and they raised a lot of money." If the employees’ stock options

are worth half what they were, at least they have had the flexibility

to manage their businesses and grow.

The picture is less rosy for the have-nots. "Companies that didn’t

cash in last year are going to find it harder to get this year. If

they haven’t improved, the situation is probably worse for them now

— but it wasn’t very good then either."

The effects of the bull market on the companies that got funded are

two-fold, Ramseier says.

1. Better partnering. Those companies that were able to

amass cash can do their partnering more carefully. "A lot of

partnering

is done because they run out of money and go partnering frantically

as a source of funding. If they were in good shape and raised money

they bought some time so they could do partnering in a rational

way."

2. New partners emerging. Not just the big pharmas are

doing the partnering nowadays. The Amgens and Genentechs — the

mature biopharmaceuticals below the big tier — are also becoming

buyers of technology from the smaller companies.

"If you just suspend time and pretend the year 2000 didn’t happen,

not much has changed in terms of overall value. The rules of the

business

and the challenges from 1999 are still there. There are no new magic

ways to succeed, and no barriers to success have been erected,"

says Ramseier. "We are a unique industry because little companies

that form themselves as biotechs face totally unique challenges. Good

things happen."

"I tell everyone the same thing I have been telling them for the

past two years. Do the science well. Communicate well. Do your job

right. Persevere. There is a market out there, and there are partners,

and they are not going to go away. We haven’t stepped into a totally

new arena."

— Barbara Figge Fox

"Biotech 2001: Opportunities

in the Nation’s Pharmaceutical Center", Monday, April 23 and

Tuesday, April 24 at the Atlantic City Sheraton and the Atlantic City

Convention Center. Jan Leschley , chairman and CEO of Care Capital

on Nassau Street, the keynote speaker. Cost: $400. Call 800-231-0022.

Top Of Page
Among the sessions:

Fundamental Business Strategies. This course will examine

fundamental business strategies for biotechnology and biomedical

executives

and service providers. Focusing on companies in initial start-up,

early and middle stage development, presenters will analyze and

discuss

the critical issues underlining the creation and management of life

science companies. The moderator is Thomas Penn , general

partner,

Meridian Venture Partners.

Law and Biotechnology. This workshop will examine issues

in the law that executives need to understand in order to successfully

manage transactions in the biotechnology arena. Moderators are

Michael

Malinowski, professor of law, Widener University Law School and

author of Biotechnology: Law, Business, and Regulation; and Manya

Deehr, partner, Morgan, Lewis & Bockius.

Making the Jump from Big Pharma to Biotech (CEO

breakfast).

By invitation only, this event features former senior Pharma

executives

talking about what it is like to make the transition to Biotech.

Speakers

include John Jackson, chairman and CEO, Celgene Company;

David

U’Prichard, CEO, 3-Dimensional Pharmaceuticals Inc.; P. Roy

Vagelos, chairman, Regeneron Pharmaceuticals Inc.; and Douglas

Watson, president and CEO, ValiGen Inc.

Living with Disclosure: What Impact are the New SEC

Regulations

Having on Biotech. An exploration of how new SEC rules have changed

the role of financial information, what investors and analysts really

want to know, and what the SEC will let you say. The moderator is

Jason Rubin, president, the Redstone Group. Speakers include

Linda Griggs, partner, Morgan, Lewis & Bockius; Michael King,

principal, Robertson Stephens Inc.; Eric Schmidt, senior

biotechnology

analyst, SG Cowen Securities.

Innovation in Clinical Trials Management. A discussion

on how new technologies, including the Internet, are having an impact

on the design and management of clinical trials. Moderator is

Leonard

Jacob, M.D., chairman and CEO, Inkine Pharmaceutical Inc. Speakers

include Walter Kozachuk, medical director, research and

regulatory

affairs, Stat-Trade Inc.; Leslie Michelson, CEO and co-founder,

Acurian Inc.; and John Riefler, M.D., medical director, Omnicare

Clinical Research.

Getting Your Ethics Right. Panelists discuss the legal,

ethical, and public relations aspects of managing competing interests,

with special attention to the new FDA regulations for financial

disclosures.

Moderator is Erica Rose, head, R & D policy, U.S.,

GlaxoSmithKline.

Speakers include Linda Carter, assistant director for regulatory

affairs, FDA; Mary Gross, senior policy analyst, FDA; Ina

Roy, M.D., assistant graduate studies director, University of

Pennsylvania

Health Systems, Center for Bioethics, Michele Russell-Einhorn,

director, clinical research consulting group, PricewaterhouseCoopers;

Bruce Williams, vice president of marketing and sales, Celgene.

Finding an International Pharmaceutical Partner. A

discussion

of how biotechs can tap into partners and dollars in Europe and Japan.

Moderator is Richard Sherman, managing director of QEO

Technologies

Inc. Speakers include Alain Munoz, president, science and

business

management, S.A.R.L.; James Foley, vice president and director

of business development, GlaxoSmithKline; and Tamar Howson,

consultant and former senior vice president and director, business

development, SmithKline Beecham.

For another article about this conference go to

www.princetoninfo.com/200104/10418f03.html


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