Kendall Squared brings you dispatches from the world’s epicenter for biotechnology and drug discovery.
As more and more high-ranking executives from global drug companies have broken from the confines of Big Pharma to run startups in and around Kendall Square, they’re finding that operating without the strictures — and safety nets — of huge bureaucracies is liberating. Also, terrifying.
“I remember going to one of the [venture capital] guys and saying, ‘Is there, like, a checklist?’” said biotech entrepreneur Michael Gilman.
There was not.
As executive vice president for research at Biogen, Gilman was “seven or eight levels away from people doing any real work,” he said, cloistered in an office with “more furniture than I had in any room of my house.” Two years ago, he launched Padlock Therapeutics, which employed just 10 people before Bristol-Myers Squibb bought it last month.
Dr. Steven Paul made a similar transition: In his five years in charge of R&D at Eli Lilly, he had 8,000 scientists under him and an annual budget of about $4.5 billion. He now runs Voyager Therapeutics with 60 employees.
“I’m rolling up my sleeves in virtually everything we do,” Paul said. “Everything I do on a daily basis is much, much closer to the science and just the business of the company than it was at Lilly.”
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Here are five lessons learned by executives who left the corner offices of pharma to run biotech startups.
Lesson one: You get a clean sheet
The allure of joining a biotech startup, in part, is the freedom from pharma’s inherent bureaucracies, where research heads are often bogged down with restructurings and budget reviews — what Annalisa Jenkins calls the “the antithesis of innovation.”
At a small company, biopharma expats can start from virtual scratch.
Jenkins used to lead R&D operations at Merck KGaA, a position in which she oversaw a staff of some 3,000. Two years ago, however, she came aboard as CEO of Dimension Therapeutics, a Cambridge-based company with a little over 50 employees.
“I had a white piece of paper, a clean sheet,” Jenkins said. “And I was thinking, ‘Gosh, you know, I’m going to get to build the company I’d always wanted to work for.’”
Lesson two: You have to fill it in
Once that breath of fresh air is comfortably exhaled, there comes the matter of growing a business. You need to incorporate, lease some space, and get insurance, for starters.
At a big drug maker, these things are handled by small armies of human resources professionals, financial experts, and lawyers. At a startup, they often fall to first-time CEOs.
“You get in and you realize that as a CEO, you’re not just a CEO; you’re everything,” said Ron Renaud, CEO of RaNA Therapeutics, who previously ran the much larger Idenix Therapeutics.
One of Renaud’s first tasks at RaNA: fixing a malfunctioning ice maker in one of the company’s Cambridge labs.
Lesson three: You have to learn the language
Heads of R&D don’t generally talk like CEOs, and the boardroom comes with a glossary that can be foreign to the ears of a scientist.
This became especially clear to Jenkins in late 2014, as she sat before her board at a year-end meeting. Dimension then had four drug programs on its docket, and Jenkins believed it could successfully expand to eight with an infusion of cash.
“And I remember them saying, ‘OK, Annalisa, you need to go and raise a mezzanine round,’” she recalled. “And I remember coming out of the meeting and saying, ‘What’s a mezzanine round?’ and going and looking it up on Wikipedia.”
Lesson four: You’ll need help
That’s where the Kendall Square ecosystem proves invaluable. Buzzing around the many entrepreneurs hoping to build a company are dedicated service providers who specialize in helping them do just that.
Gilman relied on colleagues and acquaintances who had been down the same path, finding a CFO-for-hire who could help with the duller aspects of starting a business while his growing team focused on actually developing a drug.
His company also offloaded nearly all its experiments on a German contract research organization called Evotec, allowing Gilman to keep just a handful of employees on his payroll while outside scientists did the heavy lifting.
“The beauty of this whole thing is that we outsource a lot of organizational complexity,” Gilman said. “We could have 30 people [at Evotec], but still be four or five people here.”
Lesson five: Startups are fragile
Jenkins got a stinging reminder of that last year. She was in the process of raising an all-important financing round when she got word that Dimension might be driven out of business by a snowstorm.
Winter Storm Juno dumped nearly three feet of snow on the Boston area, bringing the city to a halt and shutting down the company’s headquarters. The biggest problem, however, was that the power had gone out, and Dimension, which uses reprogrammed viruses in its investigational treatments, had millions of dollars of work stored in refrigerators that simply had to stay on.
If things went awry, months of labor would be wiped away, dashing development timelines and possibly imperiling the company’s future. “We had to decamp our entire company to the Hilton Doubletree, and then camp out by our refrigerators with backup generators to keep the experiments all going,” Jenkins said.
In the end, Dimension managed to raise that mezzanine round and later go public, but its experience illustrates a trade-off: Big Pharma’s layers of bureaucracy can sometimes stand in the way of nimble science. But they do keep the lights on.
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