Interview
To
Topic Index
Industry vs. Academia
"It's not quite as perceived,
I think, as a one side vs. the other, but really a union
of strengths…. I think this revolution in gene research is really
an acknowledgement of academia and an acknowledgement by industry
that this is not an "either/or". This is a "together".
If you look at every other industrial revolution… there was always
interaction between academia and industry.... I want to give you
the perception that this has happened time and time again - [for
example] Edwin Land was an MIT professor, but the commercialization
of the technology was done by Polaroid.
The university is not necessarily
the place to commercialize technology but it often spawned the technologies.
In genomics, it's quite similar. One of the things that universities
do extremely well is they spawn revolutionary new ideas.
I think they don't necessarily do well in developing those ideas
to become commercially viable - or even scaling it or bringing it
to fruition, because I think, often, the academic atmosphere is
to come up with novel concepts and ideas, some of which are developed
to a certain point, and [some of which can be] developed in multiple
directions.… Sometimes it's valuable to have some of those directions
continue in academics and beyond [industry]. I think the genomics
revolution is another good example: it became pretty clear that
there's lots of ways to get gene information from the human genome…
two basic ways: one was slow and one was fast. Quite frankly, if
the Human Genome Project (HGP) had remained purely limited to academic
labs, it would have been slow and disjointed…. I think a lot of
innovation was sprung by industry.
Historically, MIT has been highly
proactive in understanding the potential synergies between computer
technology, information systems, sequencing, and defining the human
genome. They have a history of spawning technologies. One thing
that many at Harvard got very right about the Genome Project was
that having a database of sequenced genes is not going to get you
very far toward understanding… and that's been sort of a motto of
Millennium from way back….
The next wave of genomics, as
with biology, has to be multidisciplinary. Sequencing machines are
wonderful to scale up, but what do you do with the information?….
We [Millennium] realized that, unlike companies that focused more
on databasing information -- like Incyte or Affymetrix -- we really
wanted to ask the biological questions, realizing that we would
need a lot of help. So, you need a multidisciplinary platform. Where
do you get the help? - from all over the world: from other industry…
[and] you get it from academia. That's why we have had over 500
collaborations [with academia] since we got started."
To
Topic Index
Moving: Academia to Industry
"…I had the opportunity
in the late '80s to found a biotechnology company called Cell Genesys
[CEGE] while I was still in academics at Harvard. This allowed me
to actually compare, side by side, the building of a biotech company,
…what its capabilities were and how quickly it could move to build
something, with my academic laboratory, which was very competitive
for grants and tremendously exciting. I got to see that side by
side… I realized that there were going to be some problems in biology
that would be hard to do by an individualized lab group competing
with multiple other individualized lab groups, without building
multidisciplinary teams and building an interdisciplinary infrastructure.
That was a company I founded
when I got to meet [Millennium CEO] Mark [Levin] originally. When
Mark was starting Millennium, he asked me to be a consultant again,
while I was still at Harvard, and then I really got to see, side
by side, the building of infrastructure and genomics and really
getting information out. Those direct parallels between helping
as a consultant to build a biotech company with my own academic
lab and the academic labs of those around me made me realize that
building a technology platform to build an infrastructure to do
biology in the future was going to be tremendously important. I
think that's what convinced me that this was a real opportunity…."
To
Topic Index
Moving: Industry to Academia
"…One of the exciting things
is the fact that people from industry and academics are going back
and forth. I wouldn't rule out myself, personally, one day going
back into academics…. It's a lot easier than it was…. I know Joan
Brugge did it and Steve McKnight did - these are some of the top
scientists in the country…."
To
Topic Index
Working with Academia
"…ironically, I interact
more with more Harvard laboratories, clinicians, and basic science
investigators now than I ever did in my academic lab!….
…[It's] because you're a cottage
industry. You have to remain focused, by necessity…. Therefore,
you can never devote [enough attention]… because you don't have
the resources, both in people and in dollars, to create the infrastructure
that has to happen here (in industry) or potentially at a university
level….
In projects with paradigm shifts
in science that need major infrastructures, I think ou have to think
about doing it not in the traditional cottage industry kind of way….
I saw that very graphically because I crossed the… bridge from my
lab to consult with Millennium, and it became very obvious to me
- the differences…."
To
Topic Index
Genomics: University Centers
(Institutes) vs. Industry
"…I think the universities
realized that they needed a paradigm shift as well as industry [did]….
I think MIT saw that a little bit earlier… and I think Harvard is
realizing it. I have no doubt that Harvard will build a terrific
enterprise in this area. I think there is very little difference
in opinion, now, about this next wave in biology, in terms of the
tools you need. Again, we're not talking about replacing individual
laboratory investigators; we have [them] here…and that will never
be replaced… but you need the infrastructure to do certain things."
To
Topic Index
Intellectual Freedom and
Publishing in Industry
"…I'd ask you the same
question, 'How much freedom is there in a focused academic lab when
you have to get the renewal for your grant out in, in a year?' Is
there an opportunity to really [be that free]?
In an industry setting, it varies
a lot. We happen to be a company that is involved in a lot of basic
research. Because we're mining the genome, we don't always know
on face value - yet - know which is going to be potentially the
best target. But we do try to focus on the best opportunities
for drug development, because our goal is not to starve but is to
continue to treat human disease in different ways. So, it varies
from company to company.
Most companies in today's world
keep people focused but, at the same time, encourage innovation.
There is a significant amount of innovation that is expected, not
only encouraged, from the scientific groups - because they want
them to continue to work on novel things, not just necessarily what's
known….
One measure of that is publications,
as well…. We [companies] have to publish. The world expects a metric
of the science going on in industry… because if you're one [of 1200
biotech companies], how do you distinguish yourself: one way is
by innovative business transactions, but the other way is by innovative
science…. If you follow how companies are evaluated, major scientific
publications and breakthroughs that appear in major scientific journals
are valued very highly…. It's always a balance because we're working
in a world where proprietary information is important -- and you
have to balance that.
…to play Devil's advocate: do
you think academic laboratories are concerned [about this] - do
they immediately share everything they're working on at the next
scientific meeting?… It's really the same balance: it's when
you publish. Do you publish the next day or do you publish when
you have enough of a story - enough of a lead time - to remain competitive?
Because grants are competitive, and so is funding and developing
drugs….
As head of research at Millennium,
I really have to balance that, as well. There are times when we've
held back a publication when the scientist would have preferred
to publish - I have to be honest with you. At the same time, there
are mechanisms that each group can push forward… with publishing,
and it's in our own best interest to get those publications out.
We realize that that's a delicate balance, not only for our scientists
but also for [the company's] well-being."
To
Topic Index
Skillset: What Do Companies
Look For?
"…First and foremost is
to be a great scientist. No question. But some differences [from
academia] might be: really liking to be part of a larger team --
often a multidisciplinary team. Often, if you're a molecular biologist,
[this means] working with biochemists, and small molecule chemists,
and informatics people - to really look at a problem in a much broader
way.
…We like people who are innovative…
willing to take chances… not to be too risk aversive… to really
be able to think of new methodologies, new approaches…."
…[As far as personality,] communication
is very, very important…people who like to - it gets back
to teamwork - share information and receive information [from others]….
…You have to have those willing
to embrace the questions and/or approaches that may be brought to
bear on a given question by another discipline - not overly intimidated
or turned off by what is outside one's own area of expertise….
…people who know how to handle
database information. Reusing information is not a skill [commonly
taught in school]…. When we have the genome identified, re-utilizing
information becomes really important. Being able to store, retrieve,
and understand how to re-utilize… information [is very important].
…Strong skills in informatics
or at least an appreciation of the possibilities is important."
To
Topic Index
LeukoSite Acquisition
"We are involved in … pretty
much all the major disease areas, but three areas in particular
that we're very excited [about] out in the future are: 1. Metabolic
disease; 2. Inflammation; 3. Cancer.
We really saw the opportunity
in LeukoSite, as a company that has really made great strides in
developing drugs for inflammation and, to a lesser degree, cancer….
They had the skills in pre-clinical and clinical development that
we had not yet built. There's two ways to build -- you can go slowly
or you can go quickly - and one way to build is to bring in expertise,
and we saw that.
So, it's part of the [technology]
platform that merges beautifully with our genes, disease biology,
small molecule biochemistry, and clinical… biology, as well… We
thought it would be a great match for one of our key areas - and
also, in that sense, cancer….
… One of the things that they've…
done very, very well is that they've focused on what we feel are
some very fundamental pathways [and conditions]…. It's a
really nice match for one of our key areas [inflammation]…. LeukoSite
is a company that has tremendous expertise in chemokine receptors
and integrins - two of the key superfamilies that are involved in
moving inflammatory cells around the body, getting them where they
need to go. Therefore, with those assays in place, Millennium and
LeukoSite feel like [we're] poised to take the entire genome, survey
for those molecules and really start building chemical structures
to inhibit them, testing them in ways….
So, if you ask the question,
'In a decade, where are the new drugs for treatment of autoimmune
disease - arthritis, multiple sclerosis, inflammatory bowel disease,
asthma, [other] inflammatory autoimmune diseases - where will those
drugs come from?', more than likely, they'll come from these targets
because…we know the families - at least some of them - that traffic
inflammatory cells in the body.
If you've got a database of
those molecules, you've got the assays to screen for them at the
chemical level and understand their functions in biological systems,
then you've got a pretty good pipeline of the next wave of drugs,
or potential targets for drugs, to cure diseases.
So, you can see why LeukoSite
and Millennium merge beautifully, now: we've got the leads, and
they've been active in setting up beautiful assays for them in animal
models. You put them together, and you've got a pretty significant
franchise, if you will, in those areas of biology."
To
Topic Index
The Future "Post-Genome"…Millennium
"One of the areas for the
future that you'll know about soon is the whole area of 'pharmacogenomics'….
A drug effect is just another phenotype, and so it should be associated
with a genotype. The pharmacogenomics area is going to be a real
opportunity…. Having the human genome in a useful form allows us
to start getting molecular markers of effects -- DNA variation.
Both from new diagnostics and pharmacogenomics, determining what
drugs for what people - those are going to be really interesting
areas for the future. And, I think we'll know a lot more about that,
soon….
…Millennium started with the
assumption that the human genome, the expressed genes, would be
sequenced in several years… way back in 1993. That's why we were
building the biology, the databases - particularly the chemical
databases, the tissues, DNA samples…. We started building that infrastructure
early-on [with] the assumption that it was just a matter of time
before [the genome] would be sequenced. In fact, [in 1993] the motto
[at Millennium] was 'Genes are Not Enough'….
But, what does 'finished the
genome' mean? Right now, and even when it's 'finished', there's
a lot of work that needs to be done in putting together and having
the physical plans. It's one thing to see it on the screen, but
it's another thing to have it in tubes so you can do biological
studies. So, where our efforts have been focused over the last several
years is, obviously, using the electronic information, developing
algorithms to really shrink the process of identifying the full-length
genes - and then working to scale-up ways to visibly isolate… with
molecular biological studies. The assumption was that the genome
would be done - whether it was going to be in 2000, 2003, or 2005,
it didn't matter.
…Profiling expression, scaling-up
the inactivation of genes in cells or in animals (Knockouts, transgenics)…
building what is called 'functional genomics, now… it used to be
called 'biology' -- the only difference is scale and linking it
with information systems… grouping genes in families and having
the assays available to screen….
Millennium feels that small
molecules will be very important tools to test the function of genes
in the future….
So, again, I think it's pulling
together the chemistry, information systems, biology… to really
understand and annotate the genome - which is the next step,
and that's going to take several hundred years. But the good news
is the genome won't change for… millions of years."
… Obviously, our academic collaborators
[and advisors] are key.
To
Topic Index
Overview | Tepper |
Topic Index
CV Summary
Name: Steven H. Holtzman
Title: Chief Business Officer, Millennium Pharmaceuticals
Age: 46
Background: Steven Holtzman began his college career in
zoology and genetics but switched to liberal arts and received
his B.A. in Philosophy from Michigan State University in 1976.
He went on to earn a B.Phil. graduate degree in Philosophy from
Oxford University, which he attended as a Rhodes Scholar. Following
his studies, he founded, and was named Executive Director of,
the Ohio Edison Program, one of the nation's first state government
programs for funding newly formed high-tech business ventures
and collaborations between universities and industry researchers.
In 1986, Mr. Holtzman founded
DNX Corporation, a pioneer in the development of biomedical and
pharmaceutical applications of transgenic animal technology, and
served as President of DNX Bio-Therapeutics, Inc., a wholly-owned
subsidiary of DNX Corporation (now called Nextran, a subsidiary
of Baxter Healthcare).
Since 1994, he has been the
Chief Business Officer of Millennium Pharmaceuticals, Inc. He
also serves on the Board of Directors of Millennium Predictive
Medicine, Inc., a majority-owned subsidiary of Millennium.
Mr. Holtzman currently serves
as Co-chair of the Biotechnology Industry Organization's Bioethics
Committee, is a member of the National Bioethics Advisory Commission
and is a member of the Board of Trustees of The Hastings Center.
To
Topic Index
Moving Into Biotech
"…There was an emerging
school of thought, from the Kennedy School [of Government], focusing
new government-sponsored economic development initiatives around
technology, technology-driven business, and university/industry
collaboration. I put together a program - eventually called the
Ohio Edison Program - which was one of the first two programs in
the United States for state-funded initiatives to encourage university/industry
collaboration, out-licensing of technology through universities
to local companies, funding high-tech, young companies, setting
up small business, high-tech incubators, etc., etc….
The emerging technology fields…were
largely centered around microelectronics and computers, on the one
hand, and biotechnology on the other. Given my background in the
life sciences, I was very interested in biotech, which was a very
young industry at the time. This led me to become involved in starting
DNX Corporation, the first commercial company organized around developing
transgenic animal technology. That's how I found my way into biotech.
(laughing) Partly lacking in scientific and business training, no
one would hire me, so I had to found a company!…"
To
Topic Index
MBA: Important? Necessary?
"It's one way of checking
a box. A lot of what life is about is trying to remove obstacles.
In some respects, we are in a pedigree driven world in terms of
evaluation, where people say the best predictor of future success
is past success. So, they look at what you've done.
We recently hired into the business
side someone who had just come out of Harvard Medical School; no
MBA. Her background is in international relations. Before Harvard
Medical School, she was a Rhodes Scholar. I'm willing to bet
that this person can pick up the business concepts - and maybe we'll
send her to an executive MBA program to get some basic tools.
For most people, it's easier
to learn the business tools than it is to learn the science. Having
said that, what makes a great education is having learned how
to teach yourself what you did not learn in school.
Being a great business
person is another story. An MBA gives you tools, but it doesn't
give you the great 'business sense'. It's similar in science and
medicine: a great doctor is distinct from someone who simply knows
how to practice medicine…."
To
Topic Index
The "Glass Ceiling"
for Those Without an MBA
"I don't know that in any
industry there's a 'glass ceiling' created by [not having an] MBA.
An MBA can help you get in the door. By getting an MBA, you can
acquire tools and skills that you will use, that are important to
use. But, if you acquire and use those tools another way -- through
a life of practical experience or reading the textbooks, for example
-- that's fine, too. If you can read a hematology textbook, you
can read a finance textbook, if you're so inclined. Again… in a
good MBA program, you learn useful stuff, and I think that's important.
But, I don't think there's a 'glass ceiling' without an MBA. Once
you're in industry, it's no longer about credentials on the business
side the way it is on the science side. It's very hard to become
a Senior Scientist unless you have a PhD….
So, by way of example, I am
where I am in a biotech company without an MBA and without a science
degree. The CEO of this company is a chemical engineer with no formal
business training. He's been in biotech for a long time, and he's
learned, and he's thought, and he's read…."
To
Topic Index
Breaking into the Business
of Biotech for a PhD or MD
"Let's talk about natural
entrance points. Any time you do anything in life, it's gratifying
to be able to make an immediate contribution. This is a function
of background…. What I think of as 'natural' entrance points are
jobs that take their start from the technical expertise the PhD
or MD has and can bring to bear on a set of business problems immediately
to create value.
So, one natural entrance point
into biotech [for the PhD or MD] is the technology evaluation and
licensing route. You use your technical background to evaluate technology
in the context of strategizing about how it can positively impact
the business. You then negotiate smaller transactions, dealing with
the academic community on collaborations and licenses.
A second entrance point is via
intellectual property (IP) - patents. Scientists become what we
call 'technical specialists' and interface between scientists and
the patent attorneys who are drafting, prosecuting, and litigating
patents. Many of these folks end up going to law school.
The third entrance point is
in product and strategic marketing evaluation. You try to understand
the potential of a research program or product in the early phase
of research, or clinical development, in terms of its potential
utility in medicine. The person I mentioned who just came out of
Harvard Medical School is in this group. She interacts with the
MD's at Millennium and in the marketplace and speaks their language
to obtain information about 'how would you use this product', 'what
do you like about it', etc., …forming a product profile.
So, those are the entry points.
Technology licensing folks, if they don't go towards the strategy
side, will tend to migrate up towards the business development side
to do transactions. The product strategists might move more towards
a sophisticated marketing, strategic marketing role…."
To
Topic Index
Personalities That Fit
"Personality types. In
a world of transactions, there are many different 'personality types'.
One most often thinks of people who are very good at it because
they are 'hail fellow well met' types - the kind who slap you on
the back and just really enjoy interacting at parties… 'people people'.
This personality type isn't necessary for success. I'm not one of
those people.
What you do have to do
is enjoy working with combinations of ideas, emotions, and logistics
-- which I phrase as, 'in order to get a large transaction done,
you have to move peoples' hearts, minds, and bodies.' If you're
only attentive to ideas and the intellectual component, you fail
to get it closed because you didn't pay attention to logistics….
The 'hail fellow well met' who was just dealing with the emotional
aspect fails as well.
You need to be able to synthesize
all the elements that are part of a transaction. And, because no
one is typically good in every aspect of anything in life,
you supplement yourself with team members. But, being able to rapidly
assess what's important and what's not in all of the different disciplines
you're dealing with is critical to success. Plato called it 'cutting
at the joint.'
If you're someone who likes
to just dwell and think through all of the implications of something,
you'll go on forever, and you'll never close a deal. You have to
be able to race down the logic train, take it to its conclusion,
and then come back and know where to 'cut'.
On the product evaluator side,
you can be much more analytical. You're going to be working with
people who are like you. It is not as important to be able to deal
effectively with a broad range of people.
So, [this points] to something
very important - that self-knowledge about not only your CV but
also your emotional and intellectual constitution is very important.
Most people tend to do better at things they like doing. Life is
too short: choose something that's fun and fulfilling for you."
To
Topic Index
Other Routes: Consulting,
Banking …
"Consulting. The advantages
are you can see a number of different situations and get exposure
to different practices. Also, consulting companies typically have
a lot of very, very bright people. So, certain modes of analysis
become part of the toolkit. The downside of consulting is this sort
of rarefied atmosphere about it. And there is a big difference between
recommending to someone to do something vs. being put on
the line to do it. Having said that, we have a business person who
works here who came to us from Anderson Consulting, and she's just
fabulous. I always want her on a project team because of her ability
to synthesize what's going on and render clear 'this is the way
we're analyzing it' and then make a presentation…. Fabulous.
Banking, from the analyst position,
leverages off the technical, scientific skill set. You get to see
a bunch of different companies. You will learn the tools of integrating
scientific product-line analysis with financial analysis, and so
you understand the translation of science into shareholder value.
That's a form of MBA training, if you will, on the finance side,
to complement the science. Again, it has some of the other downsides
of the consulting track in that you're a voyeur. On the other hand,
before becoming the Vice President of New Product Development at
Genentech, David Ebersman was the assistant biotech analyst at Oppenheimer
[investment bank]. He's doing a fabulous job at Genentech because
they were at a point in their history where they needed to institute
portfolio management processes, and he was used to working with
portfolios. He's done a great job…but he wasn't hermetically sealed
- he had personal tools.
So, as with everything, there
is no one way. Part of it is what you do with it…'just do
it'… Nike's right. (laughs)….
…[Another route is] the university
or medical center OTL (Office of Technology Licensing). The advantages
of going in through the OTL is that it starts from the technical
background and you interface with the technical areas. You get exposed
to and learn the tool-set of licensing, which is part and parcel
of what is involved in business development. So, it is a fertile
ground…. It is a good way in for talented people. What's the downside?
Not all OTLs are equal. You have to distinguish yourself - but people
can make those distinctions."
To
Topic Index
Organizational Philosophy
"We have business units
and subsidiaries. I think the philosophy behind this is that as
we got larger, we began looking for ways to preserve what was right
in an entrepreneurial environment. Critical in an entrepreneurial
environment is that people feel empowered to do great things. As
the company gets bigger, what you effectively have to do is create
local units or local spheres of empowerment for people, in which
people can be self-determining, integrating various functions necessary
to realize the goals of that unit. It also creates more opportunities
for younger people to move up. Rather than glass ceilings, they
have more senior responsibility, albeit on a more local level….
The challenge is you can lose potential synergies and integration
unless you have very good communication across the units.
In organizations, I think you
find a school of thought that says every three years you should
totally turn the company on its head to keep it fresh. So, I can
envision us doing more spinouts, I can see us bringing them all
back in, I can see us putting it all back out again,…. And you keep
changing over time, partly to stay fresh and give people new opportunities.
The thrust of the business, moving forward, changes over time. 'Form
should function,' as the leaders of the Bauhaus movement said."
To
Topic Index
The Leukosite Acquisition
"The fundamental challenge
of a biotechnology company is that you start early-on with ideas
for drugs, and you are anywhere from 8-12 years from revenue-bearing
products. How do you put the money in the bank that you will need
to feed your scientists and feed your innovation? Well, you either
raise capital by selling stock, or you need to sell something short
of those products that are the end-products for patients. In other
words, you're selling ideas or things along the way to products
to pharmaceutical companies. When you hit a certain stage of maturity,
you need to forward-integrate yourself - add the back-end (clinical
development and marketing drugs) to the front-end (research and
early development) pipeline - in order to get closer to and eventually
generate revenues from products.
The Leukosite transaction was
about acquiring a later-stage pipeline of product candidates as
well as the capabilities associated with clinical development. And,
we'll be doing more of that.
To
Topic Index
Millennium's Future in
a "Post-Genome" World
The question of what happens
once the Human Genome is complete, I think, bears more on the biological
research enterprise and how it is performed in the biotech or pharmaceutical
environment. [Also see Tepper interview] Ten years ago, when we
were still in the mode of discovering genes, we did so by identifying
the biological function and then asking the question, 'what gene
encodes the protein?' or 'what is the protein that is responsible
for that function?' In the genomics era, you start with all of the
genes, not knowing anything about their function. And that is the
difference between, effectively, starting with a word whose meaning
you know and then asking how do you spell it, versus starting with
all the letters and not knowing what the words mean. So, the biological
enterprise has been stood entirely on its head…
…The striking feature of the
change is that, historically, the pharmaceutical enterprise was
essentially a chemistry-driven enterprise, and now it's becoming
a biology-driven enterprise. Chemistry obviously stays important,
but biology raises its head.
Additionally, in a world where
you're not dealing with one gene or one protein at a time, the industrialization
of your experiments in order to increase the amount of data, and
the industrialization of your data curation becomes paramount in
order to gather the data in a manner in which you [get] information
relevant to the relevant questions. You have the same kind of challenge
now that American Express has to keep the bills straight, or the
airlines have to keep the schedules straight…. There's this industrialization
of the front-end of the research process which has an immediate
impact on how research is done."
To
Topic Index
Millennium's Integrated
"Big Science" Approach: Why Big Pharma Has Not Dominated
"…Some of them are
doing it. And if you were to ask which companies or research processes
look most like Millennium, you'd be inclined to point to places
like Glaxo and Smith-Kline, precisely because the biotechs don't
have critical mass. We had an early vision of where it was going
and, fortunately, could generate significant amounts of financial
revenues and resources to be able to bring about the vision….
…[Getting there early] was part
of the plan. It was: hit hard and blow everyone out. It is more
or less hard for the pharmaceutical industry to do it, depending
on the company, because of cultural and organizational impediments.
Don't underestimate for a moment how hard it is to change the culture
or structure of an organization. It has a life of its own….
Companies are social organizations.
It's that fundamental. That is the lesson. Imagine trying to change
social institutions in our country or our social and political structures.
We have all sorts of vested interests. We have people at different
points in their careers, with different aspirations. Something that
will be successful in three to five years may not be worth the investment
for someone who's thinking about retirement. All of that is real.
… So, it has to do with the
organization…There's a certain amount of evolution and there's a
certain amount of revolution you have to continuously foment. In
principle, there's no reason Big Pharma couldn't do it…. Some of
them are, and some of them are doing it to a lesser or greater extent.
It's a question of organization, culture, leadership….
It also has to do with focus.
There's something called the 80/20 rule in life: for instance, 20%
of drugs are responsible for 80% of the sales. Similarly, management
can only focus on so many things. If you're a pharmaceutical company,
80% of your R&D expenditure is probably in late-stage clinical
drugs. And those are the ones that are going to have the most impact
on your stock price in the next quarter, year, two years, three
years…. What, as a senior manager, are you going to focus on? Are
you going to focus on your late stage clinicals or are you going
to focus on the early stages of innovation?…
…[part of it] is what's near-term
as opposed to long-term… the [perspective of the] market. But the
other part is just, so to speak, the span of human attention. You
write down your list of priorities, and we all know that the bottom
third of the priorities you never get to look at. The better CEOs,
the better companies, recognize the importance of [focusing on the
long-term, as well]."
To
Topic Index
Risk of Growth Diluting
Millennium's Focus/Edge
"…That's the great challenge
right now. An entrepreneurial situation is characterized by creative
but manageable chaos because it's small. When you get big, there
is a polarity between chaos and rigid bureaucratized organization.
Of course, the answer has to be that neither of them will work.
If you stay chaotic, you will be effectively less efficient and
lose your entrepreneurial [edge]… you won't be able to make a decision.
The same if you're bureaucratic.
So, the analogy I always think
of is jazz. To the uninitiated, improvisational jazz sounds like
people just doing whatever they want. To the initiated, there is,
in fact, a clear sense of rhythm, key…structure… and it's the structure
around which one innovates, one improvises, one is creative - you
know when it's your turn. So, in that sense, [it's about] creating
structure and clarity and transparency that allow people, within
defined spheres, to improvise….
Another cut at it is to distinguish
two concepts of freedom. One from [John Stuart] Mill gets translated
as freedom to do anything you want to do. One from Aristotle is
that freedom is the existence of structure which allows you to achieve
perfection. - I am an Aristotelian on organizational freedom."
To
Topic Index
Millennium's Ability to
Strike Big (Pharma) Deals
"Again, these deals are,
in essence, our selling research capabilities that produce intermediaries
on the way to pharmaceutical products. That's the simplest way to
think about them. And others have done them, just generally not
on the same scale, particularly at early stages of the companies'
development, as Millennium has.
I think the quality of the science
and technology was, and is, so extraordinary here at Millennium
that it commanded a premium. I think that we were good at the business
development aspects and creative in our thinking but that these
things alone weren't sufficient. The thing that made the difference
was sitting across the table and having the other side see, feel,
and hear the burning conviction of the Millennium team that we were
going to do something extraordinary, and that the other side was
being given the opportunity to participate in it. And it wasn't
hype. It wasn't bull. It wasn't sales. Because, if it were, we never
could have pulled it off. And now I'm just basically quoting one
person with whom I've negotiated a major alliance. She said, 'at
the end of the day it's just that you guys…(laughing)…you're either
pathologically nuts or you're actually gonna do it!' And I think
that makes a huge difference. People can read burning, honest
conviction."
To
Topic Index
Retaining People as Millennium
Grows
"Again, I think much of
what we talked about is retaining with structures, with organization,
with a consciousness of the role of structure versus the role for
improvisation - creating spheres of empowerment - I think it all
goes to that. You are inevitably going to lose some great people.
That's ok.
Organizations, again, evolve
over time, and there are people who just are happier and are more
fulfilled in a smaller environment. They have made extraordinary
contributions to the company and we appreciate that. Conversely,
there are people who couldn't have survived in our chaotic environment
in the early days who have come on since, and have made equally
extraordinary contributions. So… I would not want to characterize
a set of polarities between the entrepreneurial versus the more
staid. I think it takes all types to make a great company. And the
job of management is to understand the balance and to provide the
environment where they all can excel."
To
Topic Index
The Negative Market Reaction
to the Leukosite Acquisition
"There is a technical market
phenomenon that occurs when company X buys company Y using what's
called a 'fixed-exchange ratio'. Say, for every share of business
Y, you will get .42 shares of X, regardless of price - there aren't
what's called 'collars' around the price. That creates an opportunity
for a group of financial players called 'arbitrageurs' to take advantage
of imperfections in the market. And the way they do it is by selling
Millennium stock and buying Leukosite stock. That locks in a gain.
[Without getting into] the details of how that works… if Millennium
goes up, Leukosite will go up with it - because of the fixed-exchange
- and [the arbitrageurs]will win. If Millennium goes down, having
sold Millennium, you make money - you don't technically sell it,
you enter a contract to sell it to someone at, say, 80, and it goes
to 60; you now have $20 bucks per share. So, [that's] a purely market-driven
phenomenon….
There are also different kinds
of investors in a stock like Millennium. There are a large number
of long-term holders. There are what are called 'momentum players',
funds which try to identify trends to get in, not based on the fundamentals
but on the belief that there's a momentum [to the price]. They want
to ride the momentum. As soon as you make a major announcement of
any kind, they flee because the momentum will change - something
has changed in the environment. You also have a proliferation these
days of day-traders And remember, whether someone sells 100,000
shares or 100 shares, if they sell it for a quarter of a dollar
less, it still brings your stock price down.
Plus, stock price always goes
down on mergers because of the potential for dilution. So, in that
respect, there was no surprise, whatsoever, at the immediate drop
in our stock price. The question was, 'what will it look like in
three weeks? three months? six months?' It's back where it started
[at the time of interview].
One analyst said, 'Leukosite
sold much too cheaply.' Well, that's good news - that means that
Millennium stock should go up…. There were any number of other analysts
who said, 'long-term this is good for Millennium, but it now has
new risks it didn't have before'. Yeah, well, welcome to the real
world - yes, if you have products in clinical development you have
clinical development risks.
The fact that certain analysts
said we paid too much and certain said Leukosite sold too cheaply
- which means we paid too little - says we probably did just about
right (laughs)!…
If you're building a great company,
and you're thinking about what [it will] be doing ten years and
100 years from now, you really don't worry about day to day price
swings (laughs)."
To
Topic Index
