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, researcherscan investigate the function of each small piece in order to screenfor useful drugs.High throughput screening: Some of the breakthroughs herehave come from discovering new concepts of biology.Combinatorial chemistry: This can involve designingmoleculesbased on three dimensional structures that will fit into a biologicalreceptor.In December Crouse’s venture capital firm finished raising moneyfor its sixth fund, the $300 million Healthcare Ventures VI; it hasmade seven investments for this fund so far and is very close tofinishingseveral others. The fund added follow-on money to earlier investmentsin 3-Dimensional Pharmaceutical (now with a branch at Cedar BrookCorporate Center) and Advanced Pharma in Gaithersburg. The latestfund makes new investments in CellGate in San Francisco, Novazynein Princeton and Oklahoma, and Integrity in Cincinnati, Tolerex andU.S. Genomics in Boston.Before leaving hands-on management to be a venture capitalist, Crousewas most recently worldwide president of Ortho Diagnostic Systemsin Raritan and vice president of Johnson & Johnson International.A graduate of finance and economics at Lehigh (Class of 1964) withan 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 directorof DuPont Pharmaceuticals, responsible for international operationsand worldwide commercial development. Kurt Landgraf, now CEO atEducationalTesting Service, was his successor there.Crouse’s job at OrthoDiagnostics was to resuscitate the company, andhe took it from $200 million to $500-$600 million in seven years.But his major thrill came when Ortho introduced a blood test to screenagainst Hepatitis C that could protect the transfusion blood supply.”Before that, there was no test for it, and blood tainted withthe virus causes cirrhosis of the liver and liver cancer in the longterm,” says Crouse. “It was an exciting time to be there,and a lot of fun to rejuvenate a company that hadn’t had an excitingnew product in several years.”His other exciting moment was Squibb’s launch of Capoten, when hewas director of the worldwide product planning group. “We workedwith R&D and marketing to be sure it got rolled out in the bestpossibleway — it became Squibb’s largest selling drug ever, and mydepartmentplayed a major role in the introduction.”Crouse says he advisesyoung people to consider a career in the health care industry. “Itis a very exciting field. Our knowledge base explodes on a dailybasis.We have great opportunities to make major breakthroughs in advancingthe field. Healthcare is something that everybody wants, and thepopulationis growing, so it is a growth business, and not particularly cyclical.A certain degree of altruism is involved with working in an industrythat ultimately provides some very handsome benefits to mankind interms of morbidity, mortality, and quality of life.”Top Of PageBiotech Hiring:Move QuicklyThis is the tightest biotechnology market in history,and companies are finding it difficult to hire and retain scientistsand executives, says Gene Mancino of Blau Mancino, the executivesearch firm at 12 Roszel Road, but it is still possible to recruitquality people. Just be very clear about what kind of person isneeded,and then take quick action.”Companies need to have a game plan to identify, evaluate, andhire the people and not wait for the perfect hire,” says Mancino.”That doesn’t mean they have to compromise, but they do have tomove quickly. If you come back to your second choice, the candidatewill be gone.” His firm works on a retainer basis, for a companyor a venture capitalist, to fill senior level management positions.Mancino will speak at Biotech 2001, the regional biotechnologyconference,on a panel entitled “Labor Issues — Finding and RecruitingKey People.” The moderator is Lawrence Cunningham, vicepresident, human resources, Centocor Inc. Other speakers includePeterJohnson, president and CEO, TissueInformatics Inc. and KevinMullen, director, human resources, 3-Dimensional Resources.A native of Guttenberg, New Jersey, Mancino received a BA inpsychologyfrom Princeton University, Class of 1978, and worked in sales atProctorand Gamble before joining Blau Kaptain Associates in 1979. Blauretired in 1985, and Mancino becameprincipal owner of the firm in 1995. “I thought I would do itfor two years, and now I own the company,” he says(www.blaumancino.com).Other fee-based recruiters in the life sciences field includeKorn/Ferryon Roszel Road and Ken Clark International on Lenox Drive.The fee for placing a senior executive, who might earn from $250,000to $300,000, is one-third of the first year’s compensation package,including base salary and performance bonus. Together with three otherrecruiters, Mancino and his firm might take on 10 assignments at once.One recent placement was Christian Schade, who came from Merrill Lynchto be the new chief financial officer at State Road-based Medarex.Another was Stephen Sudovar, who had been a senior executive at RocheLaboratories and is now the CEO of EluSys Therapeutics in Pine Brook.Timing is crucial, Mancino warns. The more people involved in aplacement,the harder it becomes. If a senior candidate must be interviewed byeveryone including two members of the board, the logistics of thosemeetings 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. About30 percent of his business is in New Jersey — an ideal territoryfor the headhunters, because so many pharmaceuticals and biotechsare located here. Executives can move from one company to anotherwithout changing school districts. “Particularly at the seniorlevel,” he says, “they will commute long distances and aren’tafraid to work long hours, but if they have a kid who is a sophomorein 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 internalmanagement 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 emergingcompany,”says Mancino.In this industry, nevertheless, money isn’t everything. “Thereis a very strong positive feel about these folks,” he says.”Theylike to help people. Life sciences as a whole is a great industry,and we can do lots of positive things with the combination of bigpharmaceuticals and biotech, you just have to work at it. It has greatpeople, very smart, and very passionate about what they do. It’s neatstuff. I enjoy it — I’ve done it for 22 years, and I learnsomethingnew every day.”Top Of PageWall Street Wins and WoesIn March, 2000, biotech stocks were exuberantlyovervalued,says Gordon Ramseier of the Sage Group, and this happenedwithoutany rational reason. “My advice to anyone who wanted to hear whatI had to say was `Raise money. As fast as you can. Put it away becauseit is going back down,’” says Ramseier. “None of the analystswere hollering this is crazy. They were trying to figure out why itmade sense.”The valuation changes have been “an incredible roller coasterride,” he says. “At the end of ’99 the market capitalizationof the Jersey biotech companies was about $8 billion. By March of2000 it was $23 billion. By the time we made a year-end report inDecember, that had dropped to $15 to $16 billion, and last week itwas $8 billion.”Ramseier moderates a panel on Tuesday, April 24, at 1:30 p.m. forBiotech 2001, the convention in Atlantic City. His panel will tellhow to structure a partnership between a biotechnology and apharmaceuticalcompany. Panelists include Ronald Pepin, vice president ofbusinessdevelopment at Medarex, John S. Zawad of AventisPharmaceuticals;John Keller of GlaxoSmithKline, and Peter E. Grebow ofCephalon. Call 800-231-2022.The ups of last year’s market certainly provided an opportunityfor many companies to raise cash. “The smart ones like Celgene,Medarex, and Enzon went to the market when the buyers were frothingand they raised a lot of money.” If the employees’ stock optionsare worth half what they were, at least they have had the flexibilityto manage their businesses and grow.The picture is less rosy for the have-nots. “Companies that didn’tcash in last year are going to find it harder to get this year. Ifthey 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 aretwo-fold, Ramseier says.1. Better partnering. Those companies that were able toamass cash can do their partnering more carefully. “A lot ofpartneringis done because they run out of money and go partnering franticallyas a source of funding. If they were in good shape and raised moneythey bought some time so they could do partnering in a rationalway.”2. New partners emerging. Not just the big pharmas aredoing the partnering nowadays. The Amgens and Genentechs — themature biopharmaceuticals below the big tier — are also becomingbuyers 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 thebusinessand the challenges from 1999 are still there. There are no new magicways to succeed, and no barriers to success have been erected,”says Ramseier. “We are a unique industry because little companiesthat form themselves as biotechs face totally unique challenges. Goodthings happen.””I tell everyone the same thing I have been telling them for thepast two years. Do the science well. Communicate well. Do your jobright. 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 totallynew arena.”— Barbara Figge Fox”Biotech 2001: Opportunitiesin the Nation’s Pharmaceutical Center”, Monday, April 23 andTuesday, April 24 at the Atlantic City Sheraton and the Atlantic CityConvention Center. Jan Leschley , chairman and CEO of Care Capitalon Nassau Street, the keynote speaker. Cost: $400. Call 800-231-0022.Top Of PageAmong the sessions:Fundamental Business Strategies. This course will examinefundamental business strategies for biotechnology and biomedicalexecutivesand service providers. Focusing on companies in initial start-up,early and middle stage development, presenters will analyze anddiscussthe critical issues underlining the creation and management of lifescience companies. The moderator is Thomas Penn , generalpartner,Meridian Venture Partners.Law and Biotechnology. This workshop will examine issuesin the law that executives need to understand in order to successfullymanage transactions in the biotechnology arena. Moderators areMichaelMalinowski, professor of law, Widener University Law School andauthor of Biotechnology: Law, Business, and Regulation; and ManyaDeehr, partner, Morgan, Lewis & Bockius.Making the Jump from Big Pharma to Biotech (CEObreakfast).By invitation only, this event features former senior Pharmaexecutivestalking about what it is like to make the transition to Biotech.Speakersinclude John Jackson, chairman and CEO, Celgene Company;DavidU’Prichard, CEO, 3-Dimensional Pharmaceuticals Inc.; P. RoyVagelos, chairman, Regeneron Pharmaceuticals Inc.; and DouglasWatson, president and CEO, ValiGen Inc.Living with Disclosure: What Impact are the New SECRegulationsHaving on Biotech. An exploration of how new SEC rules have changedthe role of financial information, what investors and analysts reallywant to know, and what the SEC will let you say. The moderator isJason Rubin, president, the Redstone Group. Speakers includeLinda Griggs, partner, Morgan, Lewis & Bockius; Michael King,principal, Robertson Stephens Inc.; Eric Schmidt, seniorbiotechnologyanalyst, SG Cowen Securities.Innovation in Clinical Trials Management. A discussionon how new technologies, including the Internet, are having an impacton the design and management of clinical trials. Moderator isLeonardJacob, M.D., chairman and CEO, Inkine Pharmaceutical Inc. Speakersinclude Walter Kozachuk, medical director, research andregulatoryaffairs, Stat-Trade Inc.; Leslie Michelson, CEO and co-founder,Acurian Inc.; and John Riefler, M.D., medical director, OmnicareClinical 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 financialdisclosures.Moderator is Erica Rose, head, R & D policy, U.S.,GlaxoSmithKline.Speakers include Linda Carter, assistant director for regulatoryaffairs, FDA; Mary Gross, senior policy analyst, FDA; InaRoy, M.D., assistant graduate studies director, University ofPennsylvaniaHealth 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. Adiscussionof how biotechs can tap into partners and dollars in Europe and Japan.Moderator is Richard Sherman, managing director of QEOTechnologiesInc. Speakers include Alain Munoz, president, science andbusinessmanagement, S.A.R.L.; James Foley, vice president and directorof business development, GlaxoSmithKline; and Tamar Howson,consultant and former senior vice president and director, businessdevelopment, SmithKline Beecham.For another article about this conference go towww.princetoninfo.com/200104/10418f03.htmlPrevious StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
