Nobody would have guessed the seeds for one of Seattle’s most promising biotech companies were being planted just before Thanksgiving in 2003. That’s when Randy Schatzman had the depressing task of firing all 90 people who worked for him, and closing the doors at Celltech R&D in Bothell, WA.
Celltech’s headquarters back in the U.K. had decreed that research to discover new drugs was getting too expensive. Investors favored safer bets on treatments already in late stages of development.
But during those dark days, Schatzman and three other senior managers who worked together at Celltech had a different idea. None had ever started a biotech company. They didn’t have a lot of money or connections to venture capitalists. But they saw an opportunity to make antibody drugs that were more effective against disease, faster to develop, and cheaper to manufacture than anything on the market. And they knew they worked well together as a team. So they sketched out ideas out a few cocktail napkins at McMenamin’s bar and restaurant in Mill Creek, WA for a new company they called Alder Biopharmaceuticals.
Alder, as regular readers of this site know, burst onto the national biotech scene two months ago. The company, which is developing an antibody for rheumatoid arthritis and cancer, struck a deal with Bristol-Myers Squibb that brought in $85 million in upfront cash, as well as milestone payments that could be worth more than $1 billion over time. Alder’s lead antibody drug has completed a clinical trial of 120 patients with rheumatoid arthritis. While it hasn’t yet presented the results in a peer-reviewed scientific paper, they were compelling enough to clinch the Bristol deal, and set up a final-stage development plan designed to give Amgen’s breakthrough arthritis drug, etanercept, a “run for its money,” Schatzman has said.
That’s impressive for any startup biotech, but it’s astonishing for a company that had zero support from venture capitalists in its first 20 months, and was essentially bootstrapped by the founders. Altogether, Alder’s four co-founders ran up $1 million of expenses from their personal savings, time, and credit cards to launch their company on its current trajectory. None of those four guys took a dime in salary for those initial 20 months, until the first big venture round arrived in August 2005.
To hear Schatzman and another co-founder, Mark Litton, tell the story, they were only able to overcome those long odds against them because a village of people in Seattle biotech offered helping hands.
“This is a small biotech community, and everybody knows everybody. I really don’t think we could have done this anywhere but Seattle,” Schatzman says.
