has to buy things in order to continue to grow—there are certain companies that do that for a living, the classic specialty pharmaceutical company has to acquire its next product because they don’t have their own innate R&D capabilities. We’re not that kind of company, we have all kinds of innovation that’s being generated within the four walls here. But that said, from time to time, particularly when the market gets volatile and conditions shift around, assets become available. And you want to have the financial resources to [capitalize].
X: What’s the biggest lesson you’ve learned in partnering with pharmaceutical companies?
RP: Big Pharma’s value-add is very, very limited other than their capital. We can build these companies, we can hire, attract experienced drug professionals, and we can build cultures here that are more amenable to moving quickly, with a patient-centric point of view, rather than relying on large structures that exist within large pharmaceutical companies. And that’s not a disparaging comment on the part of large pharmaceutical companies, they do what they do as global commercial engines and regulatory engines, but as innovators, we can innovate much more quickly in companies of our own creation rather than relying on large pharmaceutical companies as collaborative partners.
X: Given that, would you go back and change some of your strategic decisions and early partnerships if you could?
RP: I would really do it the same way. We really benefited from the enormous amounts of capital and infrastructure that we were able to leverage when we were building our company up. Remember, our company was also at the same time building significant manufacturing capabilities, which isn’t always a biotech thing. We actually benefited from those interactions.
X: What about for other young biotechs without a drug delivery platform, but in need of pharma’s help?
RP: I think for a younger company today, the problem with large collaborations around your key assets is, if you have limited key assets, then it’s a one-way valve. If you pick the wrong partner, you’re going to be saddled with that as your partner for developing, potentially, a really important medicine. It’s difficult to make that judgment early on as a young company.
X: What’s the most common mistake you see those types of companies make?
RP: The classic mindset of young companies is the belief that their product is going to work. And that leads sometimes to less diversification than might be appropriate. You need to have a backup program. You need something that’s not covariant with your lead program in order to be sure you’re going to succeed. If your lead drug makes it, then that’s easy right? That makes life very simple. But the planning case is that it doesn’t. So what are you going to do when your most important asset fails? Because what we’ve learned over the years here is, virtually everything that the universe can throw at you, they’ve thrown at us. What’s allowed us to survive and thrive is our diversification across technology platforms and partnerships, and drug development categories, and individual assets.
X: As opposed to being caught dead to rights when your lead drug flops.
RP: You shouldn’t be surprised when your drugs fail. I mean we always say ok, what are we going to do when this fails? And that’s not being mean, or being a pessimist, that’s just a clear-eyed assessment of what you’re up against generally. Often, there’s a mismatch between the street expectations and the scientific expectations. Obviously we operate on a very long wavelength as a company. Wall Street operates on a very short wavelength. And when you superimpose those two, that’s the magic of why people invest in biotech, because they can create short-term events around long-term projects. But sometimes you see biotech management teams that interpret data in kind of a self-serving way that’s not truth-seeking. Other times it’s entirely truth-seeking.
X: So how do you survive with one drug prospect then?
RP: You have to be sensitive to the environment that you’re in. So when capital is abundant, as it is on a reliably periodic basis, capitalize. Raise money. Build your financial resources. When the markets are bad, when assets are undervalued, acquire them. Diversify. Following the trend is actually something we’ve done since the early 90s, believe it or not. There was a big biotech bubble in the early 90s, we went public on that wave, we got hypercapitalized at that time, and then the inevitable crash came and we ended up buying two or three companies over the next several years. And then finance again, and buy other things. That’s viewing the business as a business as well as a project management exercise of a complex scientific project.
