Bioentrepreneur

Supplementary information to “Company founders: voices of experience” from Bioentrepeneur ( by Laura DeFrancesco, published online March 2004.

Original interviews conducted and edited in 2003 by De Facto Communications plc, No.1 London Wall Buildings, London Wall, London EC2M 5PG, UK.

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The opinions expressed below are those of the contributors alone, and are not necessarily those of the companies to which they belong, or those of the writers.

The contributors are:

Dr Mark Brann

Dr Colin Dourish

Professor Vidar Hansson

Professor Adrian Hill

Professor Sir David Lane

Dr Ole Jørgen Marvik

Professor Phillip Sharp

Dr Bruno Tocqué

Dr Greg Winter
Mark Brann, President and CSO founded ACADIA Pharmaceuticals in 1993 based on technology for the functional analysis of gene products. Before starting ACADIA, Dr Brann was a tenured Associate Professor at the University of Vermont. He also directed a research group at the National Institutes of Health (NIH). He is an inventor on many U.S. patents involving gene-derived drug targets. ACADIA’s drug discovery programs are aimed at major diseases, such as glaucoma, chronic pain, schizophrenia and Alzheimer's disease. The Company's corporate headquarters and biological research facilities are located in San Diego, California. Its chemistry research facilities are located in Copenhagen, Denmark.

As CSO, my main drive is the scientific development of the company. I gave up the role of CEO early on, as it is my belief that being CEO entails a fiscal responsibility that gets in the way of science. There is a conflict of interest, which in my opinion doesn't work in the long term.

In terms of how the company started, during my days at NIH in the late 1980s, I was interested in drug discovery and how genetic technologies could impact on the drug discovery process. I was developing these technologies and wanted to see them rapidly applied to drug discovery. I had the opportunity of working in large pharma but felt that an inherent conservatism in these large organisations would delay bringing the technology to the discovery process. I believed that starting my own company was the only viable option.

My first attempt at starting a company was during my time at NIH. We actually developed technology and drug targets but, in retrospect, I really didn't have the experience or connections at that time to make the company a success. I was able to raise some money very quickly from investors but this led to a high level of accountability. The research had long-term goals and a fast return for investors was not possible. Also, there were major restrictions on what could be done in the private sector while still working for the NIH. Ultimately, the venture was undercapitalised.

I went on to work at the University of Vermont where I became Associate Professor of Psychiatry and Pharmacology. There was a great deal more flexibility in the University environment. I had the freedom to collaborate with companies, essentially working with big pharma, but from the outside. This was the route that would lead to what was to become ACADIA, but development was gradual and more controlled. We started with just a few people under the name of Receptor Technologies (R-TEC) a spin-out from the University. We sold our science and it was profitable. The first patent was filed in 1994 and, in 1995, we started building the company based on revenues from commercial contracts.

I was able to maintain both my academic and commercial interests at this time and acted as a consultant to many different companies. I had government grants for university research and revenues from the business through pharma contacts. We were winning work from companies such as Procter & Gamble, Allergan, Pfizer, Werner Lambert and Novo Nordisk, work that more than doubled revenues between 1995 and 1996. I hired John Barberich as CFO in 1996 who was very knowledgeable about biotech and venture financing. He and I worked as a team, and he helped me to transform the company into the venture capital backed drug discovery company that it is today.

In 1997, we raised US$13.5 million and this is when ACADIA Pharmaceuticals formally came into being. We recruited an executive team with significant big pharma and biotech experience. I resigned from the University and devoted all my time to ACADIA. I also stopped my consultancy work.

During our quest for funding, we got a call from a trade group in Denmark interested in biotech companies. I had connections with Denmark through our work with Novo Nordisk and with Dr Povl Krogsgaard Larsen, a Danish chemist with whom I had collaborated on many occasions. We decided to pursue the offer. The first round of financing included US$7 million from the Danish Development Finance Agency, and US$6.5 million in equity capital from a syndicate of large Danish Institutional investors. Part of the deal, however, was to set up in Denmark.

We set up a chemistry research facility in Copenhagen at the same time that we set up the San Diego site in the US. Working from two vastly separated sites, for a small company with just 25 people, was very difficult. It was hard even when we had 70 employees, and many would have said the global strategy was a mistake, especially as Danish involvement initially had a significant negative impact on our US financing activities. The Danish investors, on the other hand, were patient, loyal and supportive in a way that the US investors might not have been. Later we raised much more money from leading institutional investors in both Europe and the US. Now it really runs smoothly.

In addition to outstanding investors, Denmark also offered us some local expertise, which would not have been available in the US. Recruitment of chemists with pharmaceutical experience has been much easier in Denmark than in California. Povl Krogsgaard Larsen is now on our scientific advisory board.

Compared to the first venture, the development of ACADIA was gradual – a much safer strategy. I also had a better, more mature perspective, one that had benefited from my first experience and working with the process as it developed.

Dr Colin Dourish is Senior Vice President Research & Chief Scientific Officer at Vernalis, a biopharmaceutical company with expertise in neuroscience and CNS medicines. The disease areas on which the company has a focus include migraine, obesity, Parkinson’s disease, depression and anxiety. Dr Dourish joined Vernalis in 1999 following the acquisition of Cerebrus, a company he co-founded in 1995. Previously he worked for Wyeth and Merck Sharp and Dohme. He is visiting Professor of Psychopharmacology at the University of Durham, visiting Professor of Neuroscience and Psychological Medicine at Imperial College of Science Technology and Medicine, and a William Pitt Fellow of Pembroke College Cambridge.

In 1995, when I was working for Wyeth, the company acquired American Cyanamid and, as a result, Wyeth had three sites working on CNS research, one in the UK and two in the US. They decided to amalgamate in the US and the UK research site was closed down. At that point I made the decision to start Cerebrus with four other ex-Wyeth colleagues.

The original business plan had a two-part strategy. One part of the plan was to establish a preclinical contract research business to bring in revenue, which was based around expertise gained at Wyeth, particularly in models of psychiatric and neurological disorders. The other part of the business was drug discovery for various CNS disorders, such as obesity, anxiety, and Parkinson’s disease. With this initial plan, we obtained funding from VCs, but we only ran the contract business for about 18 months. It was successful and brought in significant revenue, but as the company grew a conflict of interest developed between the needs of the contract business and our own drug discovery and development needs. If we had wanted the contract business to continue, it would have been necessary to spin it off as a separate company. It was, however, integral to our own drug discovery operation, so we decided to keep it, but stopped selling its services.

We didn’t actually take any IP from Wyeth, the projects that we started were based on our own novel ideas. One idea, involving the role of serotonin 5-HT2C receptors in feeding and obesity, became the biggest research programme in Cerebrus. Now, with Vernalis, we are continuing to develop selective 5-HT2C receptor agonists for obesity in collaboration with Roche.

My academic and drug discovery research background was very important in securing funding. VCs are very keen on ideas, IP, and novelty, but they are also interested in management capabilities. Ideas can go awry and projects may fail, but if you have a strong management team, it is possible to adapt. I was CEO of Cerebrus for the first nine months and carried out all the negotiations with VCs to raise the first £2.5 million investment in 1995. A principal objective for the company during the first nine months involved recruiting an experienced CEO with a more commercial background. If the company was going to expand rapidly to a point where it could do an IPO, it needed someone with extensive commercial expertise. With the help of Schroder Ventures (the initial VC investor) and Chris Evans, who later started Merlin, the company recruited Andrew Smith who had been the managing director of SmithKline Beecham in the UK, and who had a strong sales and marketing background. I then became Head of Research and subsequently that has been my role in Cerebrus, and in Vernalis.

Although I am Head of Research, it doesn’t mean that I focus only on research. I retain a significant involvement in the corporate and commercial activities. I think that is common in small organisations; people wear a lot of different hats. My academic role has diminished, but I frequently get invited to speak at meetings, especially in the serotonin and obesity areas, which are my particular speciality.

People often ask why Cerebrus was sold to Vanguard Medica in 1999. The reason was that it had grown substantially and employed about 100 people. For a private company that requires substantial funding. We had two further rounds of funding in 1996 and 1997, but by 1999 VCs didn’t want to put more money into the company and were looking for an exit. The anticipated progression would have been to do an IPO, but in 1999 the IPO window was closed. The only viable option was to sell the company.

The acquisition by Vanguard Medica to create Vernalis was driven by financial imperatives but also provided business synergies. Vanguard was a development organisation that had no research capabilities and acquired compounds by in-licensing. We were largely a research company with a small development group. It was a good marriage; our combined skills and expertise strengthened the company. Vanguard, up to that time, also didn’t have a focus in terms of therapeutic area. The Cerebrus focus became the combined company’s focus, that is, discovery and development of CNS products.

The key thing I have learnt over the past six-to-seven years is the importance of having enough cash in the bank. That has significantly influenced the direction of the company. When I started out, I was unaware of how much the market could fluctuate, and how difficult it could be at certain times to raise money. I have learned that it is a good strategy to raise money even when it is not needed, so that there is always a sufficient cash cushion for when the market is uncertain. It is also important to stay focused on specific areas of expertise, and this has been key to our success.

Prof Vidar Hansson is founder, President, and CEO of Photocure. Located in Norway, the company develops and markets pharmaceuticals and medical devices based on its photodynamic therapy technologies for oncology and dermatology markets. Dr Hansson is also Professor in Medical Biochemistry at the University of Oslo, a position he has held since 1981.

Photocure was founded in 1993 with the aim of commercialising technologies developed by the Norwegian Radium Hospital, the largest comprehensive cancer centre in Northern Europe. I was Chairman of the Board of Directors of the Hospital’s Research Foundation and was coordinator of its priority programmes in research for new diagnostics and therapies. Photocure was a spin-out from the Radium Hospital and came out of one of the seven projects that I was directing.

While at the Norwegian Radium Hospital, I was involved in developing a technology transfer office with the idea of commercialising basic and clinical research. This actually involved establishing a business at the hospital, so during this period I was getting relevant experience to start a biotech company.

Although, Photocure was founded in ’93, it had no employees until ‘97. Three of us, Kjetil Hestdal, Liv Stoettum and myself met as employees of the company on the 2nd January 1997, in a small room in the Radium Hospital. We looked at each other and said, ‘We are going to make a global pharmaceutical company’. We had no telephones, no computers or any other essential equipment, but we did have a very strong ambition – and that is very important to any new company.

When I raised the first NOK50 million for PhotoCure, I went to the Research Council of Norway and to The Norwegian Industrial Fund (SND) and proposed that if they gave me NOK25 million, I would raise the further NOK25 million from the investor market. They didn’t believe that I would be able to do this and so agreed. I then went to VCs and again proposed that they give me NOK25 million and that I would get the remainder from governmental sources. Again, they didn’t think it was possible and also agreed, and that is how we got our first funds. We later raised more than NOK500 million.

Our first product, Metvix for skin cancer, took three and a half years to develop. We now have approval in 18 countries. To put that into perspective, it takes on average 10.8 years to bring a product to market in the pharmaceutical environment. If we can go from research to final product in one third of the time, and at lower costs, there must be something that we are doing right.

Interaction with academics and clinicians at the Radium Hospital has been very important to our success. Now we have similar contacts internationally, in Australia, Europe and the US. We don’t have any internal research capabilities at PhotoCure, but we have 400-900 people working for us, for varying periods, during a year.

I have been the CEO of PhotoCure since the beginning, and this has given me fantastic opportunities. The most difficult thing for me with a background as a scientist, is to keep a strong focus. Balancing business and academic roles is difficult, but you have to prioritise. In the last six or seven years, business has taken the lead.

I started another biotech company, Lauras, in 2000. Presently, I am the Chairman of the Board of Directors and we are in the middle of a financing round. The company develops drugs for immunostimulatory therapy in HIV/AIDS and other immune diseases. By blocking the function of certain signal molecules in CD4 T- lymphocytes, we have found that the immune function of HIV infected cells can almost be returned to normal. The scientific basis for the company came from research in my own laboratory at the University of Oslo.

As the basis of PhotoCure we have around 20 patents and patent applications. Intellectual capital is very important in any company, not only in terms of IP, but also in the people. We always try and get hold of the best people and they need to be competent, engaged, imaginative and excited by what they are doing. We share responsibility in the company; there is no hierarchy. I expect everyone to contribute and we learn from each other. We have incentive schemes through share options, and that forms the collective reward.

Co-founder of Oxxon, Professor Adrian Hill is Chairman of the Scientific Advisory Board. The company develops novel pharmaccines (therapeutic vaccines) for the treatment of chronic infectious diseases and cancer. Prof Hill is a Wellcome Trust Principal Research Fellow in the Nuffield Department of Clinical Medicine, and Professor of Human Genetics at the University of Oxford. He has made important contributions to both the host genetics and immunology of infectious diseases. His current major interest is in developing new vaccines against malaria and tuberculosis.

My situation is unusual as I run two labs; one in immunology and one in genetics, which both focus on infectious diseases. Oxxon sprang from a finding within the immunology laboratory. The story started about ten years ago when we began work on a new type of vaccine to harness the cellular immune system. Most vaccine approaches at that time aimed to generate antibodies. Our genetic research had shown that the cellular arm of the immune system was more important than antibodies in inhibiting malaria. We tried a great many vaccination strategies from peptides, to DNA vaccines, to viral vectors – but none of them worked. It was only when almost accidentally, we used a combination of two vaccine types, one after the other, that things started to happen. The combination vaccines worked really well. We were getting about ten times the response that we had seen previously. This happened in 1996. We patented our approach and began to think about setting up the company. The post doc that was involved in the research, Dr Joerg Schneider, now Oxxon’s Research Director, was a real driving force in setting up the company. He had a background in cancer research and could see the potential significance of the work we were doing to that field.