It’s easier and more fun to learn through stories. And here’s a captivating story about the long Odyssey of a biotech company that made it to Ithaca.
Pharmacyclics, founded in 1991, is a biopharmaceutical company that gained prominence for its work in oncology, particularly in the development of novel targeted therapies for cancer treatment. Under the leadership of its CEO, Robert Duggan, who took the helm in 2008, the company reached new heights of innovation and success. Its flagship drug, Imbruvica, was a game-changer in the field of hematologic malignancies, revolutionizing the treatment of conditions like chronic lymphocytic leukemia and mantle cell lymphoma. Duggan’s strategic acumen and unwavering commitment to advancing therapeutics led to the company’s acquisition by AbbVie in 2015.
Here are eight insights for those who want to succeed and have an impact in this beautifully unique business:
1. Ambition + Purpose > Skill.
Bob Duggan, the man who took over Pharmacyclics from its founder and Stanford professor Richard Miller, was neither a scientist nor a doctor. He was a college dropout!
“Robert W. Duggan was not destined to lead a biotechnology company. He had no scientific training and no experience in the highly regulated biopharma industry. Zero. The companies in the sector were generally led by gray-haired men, often with MDs or other advanced degrees, who had climbed corporate and academic ladders for decades. Duggan didn’t even have a college diploma. But at the age of fifty-two, what Duggan had was a track record of business success and supreme confidence in himself. He literally believed he could accomplish anything
if he put his mind to it.”
Yet, he had a strong why. After the tragic death of his son at age 26 from cancer, Duggan had an unwavering determination to save lives:
“But even with financial markets and the global economy on the precipice, Duggan found purpose in the company. He wanted to find a medicine that would change people’s lives, especially those with brain cancer. ‘We take full responsibility for what we know and we know the work we are engaged in is work worth doing.’ he said at the time about his decision.”
Maky Zanganeh, the Head of Business Development who later became Pharmacyclics’ COO and the second most powerful person in the company, had no pharma or oncology experience either. She was a … dentist!
“Duggan would soon promote Zanganeh to the position of Chief Operating Officer. But even before he did, it was clear that Zanganeh had become the second-most powerful person at Pharmacyclics—the person Duggan valued above all others. Exceptionally smart and a shrewd negotiator, Zanganeh had Duggan’s complete trust. Together, they challenged long-held industry assumptions and made sure to keep in close contact with the investment community—people like the Baker brothers, Felix and Julian, whose hedge fund had become Pharmacyclics’ second-biggest shareholder. Both Duggan and Zanganeh worked extremely hard—they lived and breathed Pharmacyclics.”
2. An outsider challenges beliefs and pushes for innovation.
If you’re not an outsider, surround yourself with people who’re going to challenge your assumptions.
“Duggan questioned things. Why couldn’t they get a discount on the CT scans they were
ordering for patient trials? The life sciences veterans had to carefully explain that these tactics were industry no-nos, as there could not be bias in the decisio of whether to enroll a patient in a clinical trial. Duggan and Zanganeh mostly accepted the pushback, but kept prodding
people to be innovative.”
3. God, Save the Billionaires.
Duggan loaned Pharmacyclics $6.4 million in 2009 when investors were running for the hills.
Without his loan, the company would have gone bankrupt and never developed the drug that’s saving hundreds of thousands of blood cancer patients today.
“But Miller had left, and Duggan was holding the bag of a cratering company running dangerously low on cash. Days after Miller’s exit, Lehman Brothers, the big New York investment bank, collapsed. The financial crisis left Pharmacyclics with few options. Raising money had become impossible. Investors were running for the hills. Many small biotech companies had been forced to restructure, and some filed for bankruptcy. Pharmacyclics seemed headed in that direction as well.”
Wayne Rothbaum, the man who started the rivalry company that developed the other blockbuster drug, was a billionaire New York stock trader. He invested one-third of his net worth into the company and convinced his billionaire friends to shoulder the rest of the investment.
“At one point, Dave Johnson called up Rothbaum and told him the company coffers had only six weeks of cash left. Rothbaum raged over the company’s inability to accurately budget. He had been told a few weeks earlier that Acerta had enough cash to get through the year. Now it was almost bankrupt. Rothbaum was forced to accelerate Acerta’s next phase of fundraising, a Series B round planned for the late summer. In less than three weeks, Rothbaum pulled it off,
and Acerta had raised $3 75 million.”
You can’t start a biotech company in your garage. It costs more than $1 billion to bring a drug to market. I agree with the author that we need venture capitalists, hedge fund managers and Wall Street to be involved in drug research.
Also, these guys are not just “backers”. They have insight, they’re extremely knowledgeable, they’ve seen patterns and they’re active players in the fight against cancer.
“Rothbaum’s entire identity had become wrapped up in Acerta. He took a step back from trading stocks and mostly focused on the company. For years, he had been an interested spectator of biotechnology companies. For the first time, Rothbaum was now deeply involved. To speed things up, he wanted to make sure Acerta did things in parallel and not sequentially. From the preclinical work in the laboratory to tax strategies, Rothbaum had a hand in almost everything. Sometimes his obsessiveness yielded important results.”
4. The regulators are people.
You’re not dealing with the FDA; you’re dealing with people. Believing that regulators exist to make your life harder won’t get you far. Richard Miller, the founder and ex-CEO of Pharmacyclics had declared war against the FDA. It didn’t help:
Miller sketched out an opinion article that blasted the FDA for denying treatments to cancer patients. The gap between medicine and statistics had simply paralyzed the FDA approval process, he wrote. “The FDA bases its approvals—for everything from medications for minor ailments to new cancer treatments—on the rigid application of the same outdated statistical standards,” he expounded. Miller submitted his article to the opinion pages of the Wall Street Journal. […] Miller was escalating things further with the FDA, the government regulator that had the power to make or break his company and its experimental drugs, by taking his beef to the pages of the Wall Street Journal . While Miller’s argument had merit, many in the biotechnology community thought that publicly contesting the FDA’s decision over Xcytrin was madness. How would Pharmacyclics be treated by FDA officials going forward? […] In August 2007, he wrote a second opinion piece for the Wall Street Journal , arguing that “current FDA policies are discouraging the development of groundbreaking treatments for cancer and other killer diseases.” Before the year was out, Miller wrote a third Wall Street Journal opinion piece, decrying the FDA’s “cumbersome and overly restrictive policies.” He at least expected the FDA to give him a shot. Instead, the FDA sent him a “refuse to file” letter. The regulators were not even going to consider Xcytrin’s application and denied the drug without a review. It was
strike three for Xcytrin.
When Robert Duggan took up the reins of the company, things changed…
“Rich Pazdur was known in the FDA as Doctor No. It was very hard to get drugs approved by him. But after his wife lost the battle against cancer, Pazdur changed and set out on what he described as “a jihad to streamline the review process and get things out the door faster”. Though nominally on opposite sides of the table, Duggan and Pazdur found themselves as allies. Cancer had profoundly affected their lives on a personal level. The disease had changed them both.In fact, the reason Duggan and Pazdur were in a room together talking about ibrutinib was that Pazdur’s office had repeatedly rejected the brain cancer drug Richard Miller had championed, leading to Duggan’s takeover of Pharmacyclics.”
Regulators are walking on a very thin line. Being a little too loose or being a little too tight both risk the lives of thousands of patients.
“In the end, the FDA is in an impossible situation, and I have been in that impossible situation. You are either approving drugs too fast, you are approving drugs too slow,” is how Pazdur would explain it. “But what we try to do is establish a balance of safety and efficacy.”
5. Capital will always be available to those who want to redefine human health.
The current economic environment may look gloomy for biotech and all industries (February 2023), but I’ve always held a firm belief that capital will always be available to the crazy ones, the misfits, the rebels…
“Even as the Great Recession hit the economy, Duggan did not believe there was ever a scarcity of money or ideas. There was only a scarcity of confidence in the ideas. The key to building confidence was to do whatever you say you are going to do and not promise to do what you can’t accomplish.”
6. Biotech is a people’s game.
Vardi said in an interview: “In my book, I wanted to answer one question: how amazing drugs are created today.”
To me, Vardi’s book is about people: human emotions, egos, motivation, ambition and the transcendence of human existence. To bring a breakthrough to the patient, extraordinary effort is required from scientists, biopharma, investors, and regulators. All these players have their own legitimate and honourable agenda. There’s no way you can succeed in this business unless you’ve understood each player’s motivations. And you may do all this and still fail, which brings me to the last point…
7. You also have to be lucky.
Oh yes, For Blood and Money is about luck too. It’s extremely humbling.
“From personal experience, Hamdy understood that developing cancer drugs was like buying a lottery ticket. Most cancer drug researchers were stumbling around in the dark. Occasionally, a variety of factors—including luck—came together to produce a winning treatment. It was a game of overwhelmingly negative odds. The vast majority of novel cancer drugs tested in patients failed.”
8. Every motivation is beautiful.
Although the book is called For Blood and Money, I don’t think that biotech is the easiest path to riches. Every character in this book, including the hedge fund managers, is motivated by something beyond money. In my case, seeing founders/CEOs who were willing to go against the odds to get their technology to the patient was seductive! I thought, if I can support these guys and increase their odds of success, I’m having my own impact on human health.
But that’s just my motivation. To me, every motivation is beautiful and necessary in this business as long as one is not being unethical. So, for blood… or money.