Influence | Intuition

invivo.pharmaintelligence.informa.com MAY 2019

Invol. 37 ❚ no. 05 Vivopharma intelligence ❚ informa

LEADERSHIPInnovation | Influence | Intuition

Biotech CEOs: Can Scientist Founders Beyond The Watershed: Gene Therapy The Eye Travels Wide: ProQR’s Bid Remain In Charge? Investment And Promise For Leadership In Genetics Of Sight ❚ LEADERSHIP: Different Styles And Skills Biotech CEOs: Can Scientist Founders Remain In Charge?

Founder-CEOs do not typically remain at the helm as biotechs mature. Exceptions to that rule are multiplying, though, especially in Europe as companies aim directly for Nasdaq. Composition: KennyK.com and Janet Haniak Janet and KennyK.com Composition:

BY MELANIE SENIOR here are several high-profile examples of biotech leaders who have seeded, nurtured and grown their companies into profitable, sustainable organisa- Most companies start out with a tions. Josh Boger founded Vertex Pharmaceuticals Inc. in 1989 and was scientist in charge, often a scientist- CEO for twenty years, building a $43bn behemoth. Jean-Paul Clozel, with co-founder. But he or she will typically wife Martine and two co-founders, built Actelion Pharmaceuticals Ltd. into lack the skills (and sometimes the will) Europe’s largest, most successful biotech, finally succumbing to a $30bn offer from to lead a company beyond discovery or T Johnson & Johnson in 2017. Art Levinson – not a founder, but a very early employee early development. at Genentech Inc. – was promoted from R&D chief to CEO in 1995, defying skeptics to build the industry leader. The message from these success stories: science rules, not Moving a scientist-founder aside can just at the start, but all the way. be challenging, both for investors and leaders. But there are exceptions - These individuals are exceptional, however. Few combine the broad skill set (and founders that do carry their companies dogged perseverance) required to discover and fund a scientific innovation, as well as to later-stage success. What are the turn it into clinical and commercial reality. Most companies start out with a scientist skills required? in charge, often a scientist-co-founder. But he or she will typically lack the know-how (and sometimes the will) to lead a company beyond discovery or early development. In Vivo reviews the many, varied paths So once technological proof of concept is established, many investors will seek a CEO toward the biotech CEO position, with more experience selling ideas to investors, including potential partners. Leader- and the talents that all leaders need, ship transition becomes necessary. regardless of their background. “Often it is not ideal, or appropriate, for the founder-inventor to be the company’s CEO,” said Jonathan Tobin, investment director at London-based Arix Bioscience. In the case of high-profile academic founders like Nobel-Prize-winning Sir Gregory Win- ter, there is no issue: they would not want to leave their academic post anyway. Their technology or discovery forms the kernel of a commercial venture and they become members of the scientific advisory board.

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But there is another breed of scientist- parties can discuss sensibly and put the founder: PhD-carrying entrepreneurs who company’s fortunes ahead of their own, TO SELL OR NOT TO SELL? want to personally help translate their “it needn’t be a trauma.” ❚ ideas into the clinic. This group is hugely Some incumbent scientist-CEOs ap- Actelion’s Clozel (who became CEO valuable for getting ideas off the ground pear to agree. “It’s more important that after the company’s 2000 IPO) con- when it’s all about the science. But few the company succeeds, than that I keep vinced his shareholders to resist are equipped to lead a company beyond my chair,” said Thomas Pedersen, co- multiple takeover offers over the discovery. “The tough part is when you founder and CEO of NMD Pharma AS. course of Actelion’s evolution, includ- transition into development,” said Morten “I want this [company] to be the kind of ing when facing additional pressure Dossing, partner at Novo Seeds, which, place where we can have the conversa- from activists. Edwin Moses, ex-CEO like many other early-stage VCs, creates tion [about who is best for the role] and of Ablynx, said several board mem- companies as well as investing in them. figure out the way forward. I want to be bers resigned as the company turned Entering the clinic drives up costs and self-aware,” said Emmanuel Simons, co- down an initial low-ball acquisition risks. The company’s needs move beyond founder and CEO of Boston-based gene offer from Novo Nordisk. It is not managing science, toward managing a therapy company Akouos. just about opinions; liabilities and growing palette of investors, and woo- fiduciary duties are at stake for board Misaligned Interests ing the next round of cross-over or even members representing the interests public backers. For that, a leader must be Still, there are plenty of cases where “you of a broader shareholder base. sufficiently versed in finance to be able to may need to extract management with a assuage investors’ concerns, and know chainsaw,” admitted another investor. “how to ask the right questions, and hire These situations tend to arise when a le- the right people,” said Dossing. Such thargic board has waited too long, letting a in 2006. (Another recurring point of ten- skills can be learnt. But an experienced bad situation worsen. Each case is unique, sion between management and board is CEO with an existing investor network but scientist-CEOs may be more likely to whether and at what stage to sell out. (See will often be able move a lot faster and want to run a wider range of experiments, Box: To Sell or Not to Sell.) more efficiently. Founder-CEOs taken out lacking focus. They may also have a deep For many private investors, “add- of their comfort zones can often mean personal attachment to the technology or ing value” means generating tangible R&D “timelines begin to slip, and experi- approach, clouding judgment of its clini- progress that enables a profitable exit. ments are no longer conducted properly,” cal applicability. Many investors, on the That in turn means carefully allocating warned one European-based investor. other hand, are singularly and objectively limited existing funds, perhaps focusing “Quality assurance can be a problem.” focused on the next inflection point: a data on just one or two programs. Yet “very From the other side of the fence, sci- read-out that triggers another funding few scientist-CEOs that I have seen are entist-CEOs feel the heat of investor scru- round (at a higher valuation), a lucrative sufficiently focused on that [capital tiny, especially as larger funding rounds partnership, or a sale. allocation],” reflected one early-stage accumulate. Investors begin to question The interests and the vision of CEOs – investor. “Many lack the skill-set to run “are you the one to deliver a good exit especially founder-CEOs - often diverge a capital-hungry company.” strategy?” said one scientist-CEO. “You from those of the board and sharehold- could get your job curtailed quite fast if ers, even when the founder does step Assembling CEO Skills: they don’t think you’re the person for the aside into a CSO or alternative role. Such Teamwork And Humility job,” said Niall Martin, scientist-CEO of misalignments arise in “over 50% of They can learn those skills, though, just Cambridge, UK-based DNA damage repair cases,” according to one prolific investor like non-scientists do. Indeed, “I think response company Artios Pharma Ltd., (though they needn’t always lead to the the finance is easier to pick up [for a and previously a co-founder and interim CEO’s departure). Given how biotechs scientist] than the science would be for CEO of Mission Therapeutics. are built and funded, in most cases “a a finance guy,” noted NMD’s Pedersen. The transition from founder-CEO can founder-CEO quickly loses control of the A physiologist and associate professor happen smoothly. There are dozens of company,” said serial founder and CEO at Aarhus University, Pedersen created examples of CEOs moving fuss-free, and Arnon Rosenthal, currently heading up NMD to turn his discovery of a new way often with some relief, to a chief scientific San Francisco-based immuno-neurology to strengthen communication between officer (CSO) position, allowing a more company Alector. Founders’ ownership nerve and muscle fibres into new treat- experienced chief executive to take over. percentages typically fall into low single- ments for neuromuscular disorders. The key is managing expectations, and digits once significant funds have been During these early days – NMD raised a tempering egos. If the founders know that raised. That means “the only control you series A in 2018 – having a scientist at the “this moment is bound to happen,” there have is your ability to convince investors helm is vital. “We have intense scientific is no problem, said Antoine Papiernik, that you can add value,” said Rosenthal, debates…and I’m well prepared for that.” managing partner at Paris-based VC who previously co-founded and ran An- Learning to build and manage a team Sofinnova Partners. Even in cases where nexon Bio, and also co-founded and was is a key skill for any aspiring manager, leaders leave the company entirely, if the CSO at Rinat Neuroscience, sold to Pfizer scientist or otherwise. As that team is

built, one of the hardest yet most impor- select patient investors that may offer tant parts for a scientist-CEO is “giving up the company a longer runway. Rosen- ❚ A PERSONAL VISION the science, as it’s your natural home,” thal did during Alector’s early stages, admitted Artios’ Martin, who initially and first-time CEO Simons, too, had the Alector CEO Arnon Rosenthal views served as both CSO and CEO. Pedersen luxury of choice thanks to working in a CEO-ship not as an end in itself, agreed that letting go of the detail in the red-hot field (gene therapy for the ear) but as the most efficient means by science is difficult, but necessary. “You with high-profile scientific co-founders which he can realise his vision of have to trust your team,” he said, adding and a top-notch network. developing new drugs for degenera- that “they [the R&D team] are now prob- Some scientist-CEOs will remain pri- tive brain disorders (underpinned by ably better than me anyway.” marily scientists, even as they manage a personally-discovered science). For Humility is another required trait for company through a public listing and be- Rosenthal, talking with investors and emerging CEOs – alongside confident yond. (See Box: A Personal Vision.) Some other business activities are “distrac- leadership. “You need to be honest about will return to the science, while others will tions” – though he acknowledges what you don’t know, and build a team transition to become more conventional their importance. The CEO title does around you that can support you in your leaders. There are no hard and fast rules; “significant damage to the science,” weaker areas,” said Pedersen. Rosenthal “you have to sense” an individual’s poten- he reflected – especially during an goes further. “My goal is to be the worst tial, taking into account the surrounding IPO. But how else to fund clinical person in my company,” he said. “If circumstances – the science, the charac- programs in very expensive indica- someone can be a better CEO than me, ters, the investors, said Christian Schetter, tions like Alzheimer’s? Apart from I’ll give them my job.” entrepreneur-in-residence at Arix Biosci- the money, an IPO also represents “a As for resource allocation and man- ence, which builds and invests in biotech reality check,” Rosenthal said. “How aging investors, “it’s challenging,” companies. Schetter was previously CEO competitive are we really?” Alector’s acknowledged one first-time CEO. “We of Neovii Biotech and Rigontec (acquired shares are up 30% since listing. were criticised at one stage for looking by MSD) and an SVP at Coley Pharma- at too many projects.” What’s important, ceuticals prior to its acquisition by Pfizer. he said, is to have a clear clinical line of sight. And tell investors the truth, “es- Direct-To-Nasdaq Builds with a stronger drive to take one of our pecially when things are likely to take Europe’s CEO Talent internal products to market ourselves longer than they expect.” In Europe, most biotechs are acquired rather than establish partnerships with Scientist-CEOs are clearly learning fast: before getting much beyond mid-stage pharma,” Jhoti said. Alector pulled off a $176m Nasdaq IPO in development. Europe’s risk-averse public Europe’s dispersed biotech hubs and February 2019. NMD raised €38m ($47m) markets – relative to the US - mean few different languages and cultures present in 2018. Artios brought in a £65m series groups are able to raise the funds they another challenge to building the local B in late 2018 – 30% more than it had set need for Phase III trials. The result: few CEO talent-pool, since top executives out to raise. European biotech CEOs get the chance cannot always be found (or be willing to to experience an IPO, compounding an move) near the sites of company-creation. Staying In The Driving Seat existing talent shortage. In sum, although the region “has more But no one is getting too comfortable. Going public is not the obvious job for capable CEOs than 15 years ago, the qual- These CEOs know they may be moved scientist-founder CEOs, especially those ity and quantity is still an issue,” said aside as their companies progress. All seeking to keep their noses in the lab. An Sofinnova’s Papiernik. face a constant battle to prove to inves- IPO involves months-long investor road As more European companies list tors that they are the right person for the shows. The science is important; the directly on Nasdaq, that might change. job – not just delivering the science, but investment proposition more so. “The only way forward for European spotting and executing the next big deal Yet plenty of US scientist-leaders have- biotechs is to go to the US,” said Edwin or IPO. “They are looking at you as an done IPOs, given more generous and dy- Moses, who, as CEO of Ablynx oversaw individual; how you think about your namic public markets that are prepared both a local Belgian listing in 2007 and, strategy, how you discuss and interact to support companies at an earlier stage. ten years later, a US IPO. “We realized we with them. They are constantly assessing Harren Jhoti co-founded Cambridge, UK- were failing to get properly valued” in the team you have built around you,” said based Astex in 1999, becoming CSO then Europe, he recalled. Armed with Phase one scientist-CEO. CEO. The company was acquired by Ot- III data, the company raised $230m on Having longer-term investors may suka Pharmaceuticals in 2013 and today Nasdaq, before selling out to Sanofi for extend scientist-CEOs’ time in the driv- operates as a wholly owned subsidiary $4.8bn the following year. ing seat. Local backers in some parts with Jhoti as president and CEO. He noted Next-generation CAR-T cell therapy of Europe are driven, at least in part, to that, if Astex had been in the US, the company Autolus, founded in 2014 as a help build a biotech ecosystem and sup- company would have listed several years spin-out of University College London, port new talent. Even in the US, some earlier, in 2005/2006. “We may then have did not even bother to list at home. The entrepreneurs may be in a position to become a more commercially-focused, London-headquartered group raised

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$150m in a Nasdaq IPO in 2018, with assets still in early development. So did ❚ CHAIR-CEO: TWO IS BETTER THAN ONE UK gene-therapy company NightStar Therapeutics (now being acquired by One of a CEO’s most important relationships is with the board of directors. Boards – Biogen). Autolus is run by Christian representing shareholders – hire CEOs to run the company on their behalf. The chair Itin, who saw the benefits of a US listing of the board can help a CEO to align investors and keep them on-side. A chair can back in 2006 as CEO of German antibody flag up differences of opinion before they develop into damaging disagreements. company Micromet. He reverse-merged He or she will help ensure board members are appraised of a CEO’s plans before with listed CancerVax in order to access formal meetings, and may gauge each member’s reaction to those plans as they US investors and facilitate follow-on are presented. “If you had to do all that as CEO, you would be overwhelmed,” said funding. Micromet was acquired by Arix’s Christian Schetter. Amgen in 2012. Scientist-founder CEOs with a track A good chair also brings to a CEO complementary skills, experience and an record of making their investors money expanded network. This is especially important for first-time CEOs, including are more likely to be let loose with an IPO. scientist-CEOs. “The chair and CEO fill each others’ gaps,” summed up SV Health Ernest Loumaye, co-founder and CEO of re- Investors’ managing partner Kate Bingham. She cited “heavyweight” chair Pierre productive health company ObsEva, listed Legault at Artios as a key ally to first-time CEO Niall Martin. his Swiss-based group on Nasdaq in 2017, a year before a local IPO. Loumaye, a gyn- In some biotechs, particularly in the US, the CEO and chair may be the same aecologist and professor of reproductive person. Many European investors and executives see this as bad practice; in endocrinology, had partial experience of a some markets like Germany and the Netherlands, governance laws do not allow US IPO with his first company, PregLem, co- it. Combining the roles may make for faster decision-making in a company’s founded in 2006. Loumaye was preparing early days, but later on, too much power residing with one individual could raise to take PregLem public in 2010, “we had all governance issues. Some companies with combined chair-CEO positions, like the documents ready, the due diligence was UK-headquartered, US-listed Autolus, have standing committees and charters done, and the lawyers were on hand.” Then to meet governance requirements. But “they are different roles, so separating Gedeon Richter offered to buy the group, them is a tremendous advantage,” opined Arix’s Schetter. An independent chair making some investors over six times their can also provide a check on a leader’s strategy: activist investors in troubled money in three years. Allergan, seeking change, recently tried to wrench away the chair role from CEO ObsEva was seeking US money to fund Brent Saunders. They failed a first attempt, but Saunders agreed to split the the launch of lead asset nolasibam, in roles – when the next CEO joins. The story rolls on, though; as In Vivo went to Phase III trials as a treatment to boost press, all options appeared to be back on the table. IVF success rates. US investors’ attitudes to this kind of regulatory and commercial Moses was chair and CEO of Ablynx until the roles were split in 2013, after Pfizer risk contrast starkly with many of those returned a key asset and shares plummeted. Although opposed to the timing in Europe, remarks one CEO. “The US of the move, which he felt showed a lack of confidence in management, “in the financiers will ask, ‘Are you sure you end, splitting the jobs was the best thing we did,” he said. “It was much easier have a large enough sales force?’ while to do the CEO job” thereafter. the Europeans are worried about how quickly you can dismantle the sales force you do have, in order to minimise losses dilutive partnership funding from over From an investor point view, “having if the product fails.” half a dozen collaborators, and a local done [a Nasdaq IPO] before is clearly a Plenty of aspiring scientist-CEOs want IPO to help build the in-house pipeline plus” in choosing a CEO, said Sofinnova’s to – and likely will – join this expand- (a first IPO attempt in late 2004 had Papiernik. But, he continued, “it is not ing pool of IPO-experienced European failed). By the time the company listed about the process. Anybody can do that. leaders. But sometimes European pri- on Nasdaq in 2017, Zealand’s board had It is about knowing the public inves- vate investors want a leader already appointed another, more commercially- tors and having their trust before you familiar with, and connected within, the focused CEO to oversee the company’s even start.” Solomon, like many other investment world. David Solomon had maturing assets. European biotech CEOs, spends a week been running healthcare investments Solomon has a US IPO in his sights as a month in the US building share-of- at an early-stage venture capitalist in CEO of UK-based Silence Therapeutics, voice with future investors. “I’m telling New York before taking over as CEO of working in the fast-evolving field of RNA the story over and over, so that when Denmark’s Zealand Pharma in 2008, interference. He’s seeking to revive the it’s time for a transaction, we’ll have replacing scientist-founder CEO Profes- fortunes of this 25-year old company that support base,” he said. “The most sor Eva Steiness. Free from the shackles whose UK-listed share-price, and pipe- important thing as a CEO is to go there of a founder’s vision, Solomon carried line, lag behind those of leading US RNA again and again. There is no substitute out what investors wanted: more non- players like Alynlam Pharmaceuticals. for shoe leather.”

It’s Lonely At The Top HONEST CEOS ON… All CEOs need a strong team around them. ❚ THE MANY PATHS Each CEO may perform slightly different TO BIOTECH CEO THE JOB tasks based on his or her competencies. “The hardest part is to stay focused This does not matter, “as long as all the There is no single path toward becom- despite uncertainty. To convince important functions are covered and ing a CEO. The job requires many dif- people, internally and externally, people work well together,” commented ferent skills, often concurrently: sharp that the risk is rational and that Sander Slootweg, managing partner at analytical capabilities, strategic think- diversification often increases VC firm Forbion. He cited the example ing, clear communication with multiple rather than decreases risk.” of oncolytic virus company Replimune, audiences, curiosity and perseverance. run by scientist-co-founder Robert Cof- It demands strong leadership but also – ARNON ROSENTHAL, fin (also founder and Chief Technology humility, and a willingness to acknowl- CEO and founder, Officer of BioVex, sold to Amgen in 2011). edge mistakes and knowledge gaps. Alector Therapeutics Investors were comfortable with Coffin CEOs emerge from a variety of back- “Give your staff ambition and as CEO, knowing that former investment grounds. In biotech, science training is confidence. Don’t try to pull the banker and BioVex CEO Philip Astley- clearly very helpful. But for later-stage wool over their eyes.” Sparke was at his side as executive chair. companies – in development and be- “They [Coffin and Astley-Sparke] worked – EDWIN MOSES, yond – a science degree or PhD is not well as a team. They knew each other’s ex-CEO, Ablynx necessary. Being too involved in the strengths.” Replimune raised $100m on science can even be a disadvantage. Nasdaq in 2018. What is important for the top-job in bio- GOING PUBLIC Yet even amid a tight-knit team, be- tech, according to CEO-turned-investor “Going public makes you grow up. ing a CEO can be a lonely job. Whatever Christian Schetter, entrepreneur-in- It brings a formality. You need to your background, “everyone wants to residence at Arix Bioscience, is having be more rigorous – in both internal tell you you’re doing it wrong,” said one experienced “lots of different kinds of and external communication.” CEO. “You have to be able to go into a challenge across your career.” Whether dark room, reflect upon your decisions these challenges were in development, – ARNON ROSENTHAL, and then have the confidence” to follow manufacturing, marketing or IT, what CEO and founder, them through, whatever others are say- matters is appreciating the significance Alector Therapeutics ing. “It’s no good flipping on what this of each, and learning from them. or that [individual] board member says,” EGOS “You don’t need to be experienced he continued, though if the whole board in everything. You just need to know Once you are in the job, “it’s questions you, you may have a problem. enough to ask dangerous, critical ques- important to put aside your ego and A good chair can help avoid that situations; to be the one who can step out of, kill things early. Don’t invest your tion. (See Box: Chair-CEO: Two is Better and see across, specific business func- time, your money or other people’s Than One.) tions and areas of expertise,” Schetter money in anything that’s not viable; CEOs have the power to make things said. You also need to adjust to the situ- in a project that has become an happen. That is what draws people to ation in hand. Each company will face extension of you. If you’re too the top-job. Yet CEO-ship also means particular technology-, market- and/or connected to an idea, you are not remaining outwardly confident amid investor-related challenges. going to be flexible enough as near-constant uncertainty and challenge, outside circumstances change.” and being comfortable addressing a – DAPHNE ZOHAR, wide range of issues, often concurrently. LAW AND ECONOMICS: founder and CEO, “You have to be able to hold lots of balls Nikolaj Sorensen, CEO And PureTech Health in the air, and enjoy the feeling of do- President Of Orexo ing so,” said Nikolaj Sorensen, CEO of “I’m an economist with a law degree,” Being asked to be CEO is a thrill and Stockholm-listed specialty pharma firm said Sorensen. That law degree would an honor. But it’s important to “do Orexo AB. The buck stops with the CEO, become far more relevant than he’d your diligence carefully. Find out who is under pressure to lead, and to “hoped or dreamed” as he took over who is in control of the company. manage the priorities of, employees, the the helm at Orexo AB in 2013. Orexo What are the issues? What do the board, and shareholders. As for being markets Zubsolv (buprenorphine and shareholder(s) want? What are a CEO more than once, notes one serial naloxone), used to treat dependence on their constraints? Will they pull in scientist-entrepreneur: “it takes a certain opioid drugs like heroin and oxycodone. the same direction?” kind of insanity.” The field is competitive and politically IV124257 sensitive too, given the US opioid ad- – DAVID SOLOMON, CEO, Silence Therapeutics Comments: Email the Editor: [email protected]

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diction crisis. One of Sorensen’s first FINANCE: Biresh Roy, but development scientists, regulatory tasks as CEO was dealing with defeat CEO Of Ascension Healthcare and commercial experts and more. Jump- in a patent dispute with generics firm Biresh Roy, CEO of Ascension Healthcare, ing straight from Big Pharma country Actavis. Another was managing a divorce knows about P&Ls. He was formerly chief manager to biotech CEO is not always from Orexo’s European commercial part- financial officer at respiratory-focused wise, though, as it may not always pro- ner, Mundipharma, which decided for biopharma Verona Pharma PLC, and vide the relevant experience working as strategic and PR reasons to exit opioid joined Ascension in that capacity, where part of a senior management team and dependence treatment. he served for only months before getting dealing with a board and investors. “CEOs are the last resort [to settle the top-job. Having just completed the Mary Kerr, CEO of NeRRe Therapeu- partner disputes] before arbitration,” annual accounts, Roy understood “where tics Ltd. and KaNDy Therapeutics, did said Sorensen, who had previously the real value resided” in this highly move directly into the top-job after 20 worked at consulting firm BCG and as complex group (previously known as Pro years at GlaxoSmithKline. But she had, managing director of Sweden for Pfizer. Bono Bio). Over the years, Ascension as- within GSK, moved towards running As such, understanding the content of sembled a diverse range of companies “standalone businesses on the edge contracts, and some of the principles of and assets, and a palette of demanding of the company where I had freedom to law, “is a relatively big part of the CEO investors, including three Berkshire operate and could nurture and inspire job.” Unlike functional experts, CEOs Hathaway pension funds and Russian people to be creative,” she said. Kerr don’t get asked only about marketing, state-funded Rusnano, which supports set up GSK’s European Critical Diseases development, or commercial issues. the nanotechnology industry. Unit and ran HIV-focused ViiV Healthcare They have to address all of them – and As CEO, Roy is focusing on build- in Europe, before becoming SVP and most involve a legal aspect. ing sales of FlexiSeq, a marketed OTC global franchise leader for immuno- product for osteo-arthritis joint pain, inflammation and infectious diseases. “I and on advancing a clinical pipeline of knew I wanted to be in charge,” she says. SALES: Edwin Moses, potential treatments for haemophilia (GSK’s experiments with biotech-like, Ex-CEO Of Ablynx A, including PEGylated intravenous and therapy-area-focused R&D structures, For Edwin Moses, who ran Nanobody sub-cutaneously-delivered forms of the with ring-fenced budgets, nurtured other company Ablynx for 12 years, a training blood-clotting protein Factor VIII. These biotech CEOs, too.) in sales was a great preparation for being assets employ Ascension’s proprietary So when the opportunity arose to run CEO – where the job “is selling the com- nano-lipid delivery technologies, includ- a biotech co-founded by GSK colleague pany and the idea behind the company,” ing the tiny, flexible hydrophilic spheres, Mike Trower, Kerr seized it. Trower, previ- he reflected. Moses had a PhD and Post- known as Sequessomes, that comprise ously VP and Head of External Drug Dis- doc when he started out selling high-value the topical gel FlexiSeq. covery in GSK’s Neurosciences Center for reagents to scientists. “The principles are Ascension’s investors appointed Roy Excellence for Drug Discovery, became very transferable,” he said – taking great with a clear goal: to build the commercial CSO of KaNDy, built around neurokinin-1 science and working out how to extract product business and the pipeline in receptor antagonists bought from GSK. commercial value from it. After gaining preparation for a sale. There is unlikely The company’s pipeline initially in- exposure to shareholders and the invest- to be a single buyer - FlexiSeq is a concluded programs targeted at neuronal ment world through working alongside the sumer-focused product; the haemophilia sensitivity disorders such as chronic CEO at Italy’s Raggio Italgene, he joined assets are highly specialist prescription- cough, and at women’s health condi- tiny chemistry services company Oxford only treatments. As such, Roy, with a tions. Some investors wanted more fo- Asymmetry as CEO. “You never know what background in economics, accounting cus, so KaNDy was spun off in September you need. You feel under-prepared,” when and consultancy, is managing lots of 2017 devoted exclusively to women’s taking the top job for the first time. And different interests and priorities – from health. For that business, Kerr targeted Oxford Asymmetry, which became profit- the current investors and board, to future longer-term and crossover investors, able, provided vital training in “paying investors in both parts of business, and including US investor Longitude Capital. proper attention to costs and margins,” employees. “It’s like being a politician As for the cultural and operational added Moses – an experience that those on the road, canvassing votes,” he said. differences between a big pharma and a coming up through traditional loss-making “Your life is no longer your own.” biotech – they are not an issue, for Kerr. biotechs may miss. Understanding the im- “My integration into biotech has been portance of cash, and the various sources easy,” she said. “Biotech culture suits of cash, would prove key during Moses’ BIG PHARMA: Mary Kerr, CEO Of me a lot better than big pharma [cul- tenure at Ablynx, which raised over $1bn KaNDy And NeRRe Therapeutics ture], but I can only do what I have done from investors and partners before its sale Big Pharma is an important and growing because I learnt my trade in pharma.” to Sanofi. source of biotech talent – not only CEOs IV124258

Frank Mathias, CEO of Rentschler Biopharma, a contract development and manufacturing organization, talks to In Vivo about the company’s new corporate strategy and why he allowed 18 months to prepare that plan for delivery.

FRANK MATHIAS, CEO

BY LUCIE ELLIS ounded in 1927, Rentschler Biopharma is an independent, family owned company headquartered in Laupheim, Germany. Mathias joined the com- CEO Frank Mathias talks broadly pany as CEO in 2016, prior to which he was chief executive of Medigene AG. about the contract development and Since taking the helm of Rentschler Biopharma, Mathias has been focused manufacturing landscape in Europe on preparing the company for the next decade of contract development and how Rentschler Biopharma and manufacturing. One trend he noted as an important change and opportunity to is differentiating itself from the F the CDMO sector was the move by pharmaceutical companies toward outsourcing competition. R&D arrangements. “More and more we find that companies are deciding not to take on production themselves, but they give it out, and we can profit from this action. It Rentschler Biopharma is a mid-sized happens that we have more demand for our services than we have capacities avail- player in the CDMO arena but has plans to grow its reach outside of Europe. able,” Mathias said. Keeping his finger on the pulse, Mathias Despite this positive trend, Mathias noted that Rentschler Biopharma also faces discusses what he thinks lies ahead greater competition now than in previous times. “The competitive environment for the CDMO sector as the biopharma around CMOs and CDMOs will certainly become tougher in the upcoming years. A lot industry continues to evolve its of capacities have been built up around the world, within other manufacturing firms approach to novel treatment of disease. and within pharma companies. There’s really a lot ongoing, so this is one challenge for us and the sector,” he noted. So what? To stay ahead of the game, Alongside this, the needs of Rentschler Biopharma’s clients are shifting. “The Rentschler Biopharma’s CEO believes whole market is changing and there are various new therapies coming in. We have the relationship between biopharma cell therapies, we have gene therapies and we have even more complex molecules.” and manufacturer needs to evolve to Although challenging, Mathias noted that “at the same time this is an opportunity for be more of a strategic partnership. In us because we have a strong track record with such complex molecules, which is not parallel, CDMOs are likely to serve fewer the case for a lot of our competitors.” biopharma customers but under longer term and repeat deals.

8 | In Vivo | May 2019 invivo.pharmamedtechbi.com invivo.pharmaintelligence.informa.com invivo.pharmaintelligence.informa.com LEADERSHIP: Contract Development And Manufacturing ❚

Doing Your Research they expected from us. We want to be a When Mathias joined Rentschler Bio- company that is really client-oriented,” pharma three years ago, he was asked he said, adding that those discussions by the supervisory board to develop a were “extremely fruitful.” comprehensive strategic outline for the company for the coming decade. While Our slogan is from Three Key Findings this type of activity can be completed in Mathias said Rentschler Biopharma had a few weeks and be centred around fi- gene to vial and from learnt three key messages from its meet- nancial goals, Mathias said the company ings with peers and clients. decided to go another way. “If we want to concept to market, Firstly, quality will remain the main know what our company might look like driver for success 10 years from now as in 2025, we need to first understand how so we try to offer a it is in 2019. “When I say quality, I don’t the world might be by 2025. This is not so only mean the API or the finished prod- easy to predict,” he explained. service across the uct, I also mean the quality of everything Firstly, the company analyzed the 12 we do. The quality of the reporting we so called “mega trends” affecting our entire value chain do; the quality of the consultant work society, including the health care sector, we do; the quality of the dossier we give such as “silver society.” Mathias said, to clients for registration. All this will “People are becoming older but want to be extremely important for success in stay healthier. This is a very positive trend the future.” for us.” Another trend is interconnectiv- Secondly, Mathias said the company ity, how IT and artificial intelligence had learnt more about how communica- technologies are changing the world. tion between clients and CDMOs needed “We looked at all these mega trends, for to evolve. “It will be more of a strategic each of them we asked ourselves, “What partnership in the future. I predict for does this mean for society in general and companies in our area of business, in what does it mean for our company?” the future, we will have fewer clients He added that Rentschler Biopharma’s in total but we will serve those clients leadership team took these trends and in a more strategic way.” Mathias cited assessed how the company needed to examples of possible deals where Rent- adapt. “After taking all of these mega schler Biopharma would become the changes into consideration we started sole manufacturer for a company’s entire to have an interesting discussion about pipeline. This has several advantages, what the world might look like in 2025.” including only having to negotiate once To further build the knowledge base for and allowing a company to more easily its new 10-years business plan, Mathias secure manufacturing slots. and his management team sought in- Thirdly, Rentschler Biopharma found sights from other experts. For example, that the one-stop shop approach would Mathias visited venture capitalists. “We remain favorable. “We were one of the asked private equity firms where they first companies offering this. Our slogan are investing their money today. VCs are is from gene to vial and from concept to very interesting trend setters. They put market, so we try to offer a service across their money in different companies to- treating cancer today and how will you the entire value chain,” Mathias said. day because they expect a return on that treat cancer in 10 years’ time?” Mathias Rentschler Biopharma is already think- investment in seven or so years.” noted that while many things will change ing about how it can go one step further Mathias noted that the company also for the treatment of widespread diseases by providing additional services that visited head hunters to ask them about over the next decade, other features go beyond the vial – such as secondary the upcoming generation of talent in will remain unchanged. “We got a lot of packaging logistics for example. the life science sector. “We asked them, insight from these visits to hospitals.” “What do we need to change about our Finally, Rentschler Biopharma reached The Issue Of Talent leadership?” The way young people want out to CEOs of start ups to ask them about When considering the competitive envi- to be led “is totally different from my new business models. Mathias said the ronment, Mathias has one key concern generation for example,” Mathias said. company spoke with biotechs as well as for the future of Rentschler Biopharma On this fact-finding tour, Rentschler Bi- CEOs of emerging business from other that holds true for the entire industry opharma also visited hospitals to speak sectors. “We took all this information and that is recruiting the right talent. with medical professors and physicians, together and we approached our clients “Certainly, we have to work hard to at- asking them questions like: “How are you around the world, to ask them what tract talent in the CDMO sector. This is

even more the case for us because we late to the game when it comes to cell are located in a region where there is a and gene manufacuturing, but the com- lot of competition. We have Boehringer pany is assessing several new alliance Ingelheim GmbH 15km south from us; options, for example, AI technologies we have Teva Pharmaceutical north of that could make production more ef- us. All of this in a very small region,” he We are not looking ficient. “We are not looking for merger noted. “We need to be able to get people and acquisition opportunities. We would to come to us, we need to be attractive for for merger and prefer to go into an alliance by taking people talent-wise.” shares, for example, and to continue to Mathias added that human capital acquisition work together in partnership. That’s the played an important role in Rentschler way we approach innovation.” Biopharma’s business plan out to 2025. opportunities. “In the past people were extremely happy What Next? to come to a company that had a good We would prefer Kick starting its corporate strategy for the name. Today you need to approach young incoming decade, Rentschler Biopharma people totally differently. It is about what to go into an alliance also recently acquired a site in the US. we can offer them as a challenge in their “Until the end of last year, we were a work. How we can develop them. They by taking shares, German company, even to say a South want to grow with the company,” he said, German company. However, we have a lot adding that Rentschler Biopharma had for example, and to of international clients. Our clients asked been ranked second within Germany as about an expansion into the US market an employer in the health care sector. continue to work and we took this seriously,” Mathias said. In January 2019, Rentschler Biopharma CDMO Innovation together in completed the acquisition of a manufactur- Mathias noted that Rentschler Bio- ing facility from an affiliate of Shire plc. pharma was keen to keep evolving the partnership. The 93,000 square foot site is located near company to be an innovative CDMO busi- Boston in Milford, MA. It represents the ness, to be able to offer services that its first site for the company outside of Europe. peers cannot. He cited the company’s al- Mathias noted that the business cul- liance with Leukocare AG as an example ture in the US was very different for Rent- of its work to stay novel and ahead of schler Biopharma. “One of the biggest the curve. Leukocare has developed a challenges I see when you bring people Stabilizing and Protecting Solutions together is how you integrate them, how (SPS) platform, which provides next gen- you bring them to the culture of the com- eration formulation technology able to pany, but also to the culture of a country.” increase stability of therapeutic proteins All employees have been retained at the in dry and liquid formulations. Milford site, as part of the acquisition He said Rentschler Biopharma was from Shire. “An interesting part of our job able to avoid “not invented here” syn- currently is to integrate our new Milford drome and accept that there was better staff members into the German culture, innovation to solve a key problem for but also the other way around. We want the business outside of its walls. “We to integrate some of the Milford culture had a formulation department already, into our German people.” but it was not at the level of Leukocare. Rentschler Biopharma’s CEO said the We closed our formulation department Milford acquisition was one step for the in Laupheim when we entered an alli- company on its journey to become a truly ance with Leukocare. They are now our to final product manufacturing and global business. Geographical expan- exclusive partner for the development will also be responsible for managing sion, innovative services, and company of formulations, which really brings a key strategic collaborations to ensure growth are Mathias’ goals for Rentschler competitive advantage to our partners.” Rentschler Biopharma remains at the Biopharma as it enters the 2020s. Rentschler Biopharma also recently forefront of innovation and technology. IV124253 appointed a new senior vice president Prior to joining Rentschler, Zurdo was of process science and innovation. Jesús senior director of strategic innovation Zurdo joined the company in January at Lonza, with a particular focus on 2019. He will provide scientific leader- enabling technologies for bioprocessing

ship for development and manufac- and new therapeutic modalities. Comments: turing services from cell-line through Rentschler Biopharma has been a bit Email the author: [email protected]

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To ﬁ nd out more, visit: www.pharmaintelligence.informa.com ❚ LEADERSHIP: Failure Analysis Leading In Product Development Means Planning For All Eventualities

What is the cost of an adverse event, and the resulting safety action for a medical device that is already on the market? It is the kind of question that no company with products on the market wants to have to confront, but it is also one they know they should plan for, says the design consultancy and innovation organization NCS Lab srl.

MATTEO MANTOVANI

BY ELENA VARINI* AND ASHLEY YEO nfortunately, there is still a knowledge gap to fill before we, as an Understanding failure is the most industry, can claim to be compliant with the currently-available complicated process in a medical performance standards for medical devices: we need to be sure device product’s life, and a study we are able to face compliance issues once the product is on of it delivers probably the most the market.” That could be part of the mission statement of comprehensive and valuable NCS Lab srl, a technical assistance and lifecycle research company with over 10 years’ information a designer needs and “U should focus on in order to avoid experience in the sector. market recalls. The Italy-based company observes that the evolution of medical device innovation has led to the concept of “mininvasivity,” which is a term that embraces miniaturiza- So what? There is a way to use failure tion, incision rescaling and bone stock preservation etc. The push to reduce the impact investigation at an earlier stage in of surgery is one driver of this development. the design and development process But this has brought with it an intrinsic increase in the stress level on devices (due to improve understanding of how to their reduced dimensions), together with a higher degree of difficulty on the part of devices fail to perform when out in the the user, where new techniques relating to miniaturization and the constant drive for field, and thereby avoid potentially new technological solutions need to be factored in. Both of these considerations can catastrophic effects. bring a higher probability of device failure. The standards apparatus can, in some cases, support and steer technological and oversight developments in an optimal way, but in most cases, the methods of approach are related to the manufacturer’s knowledge and experience. But with evolutionary innovation trends leading the way the industry is driving to develop medical devices today, in contrast with the situation in the past, the manufacturer’s expertise can be threatened or even be insufficient.

12 | In Vivo | May 2019 invivo.pharmamedtechbi.com invivo.pharmaintelligence.informa.com invivo.pharmaintelligence.informa.com LEADERSHIP: Failure Analysis ❚

Exhibit 1 Effect On Cost And Reputation Rises Sharply If Failure Analysis Is Done Post-Market Launch

Cost Impact on Reputation (a)

Low High Low High

Concept Preliminary Failure Production Failure Market Failure Tests Investigation Investigation Investigation

(b)

Source: NCS Lab srl

Risk Of Undesired Drift Away From “The answer to these questions is not department. Is there a way to use failure Expected Experiences obvious and it took me a while to connect investigation information at an earlier Device innovators can therefore witness the dots and obtain a clear picture from stage to help improve our understanding undesired drift away from expected the clues,” said Mantovani. of how a device performs in the field? Is performance due the fact that current The apparently easy answer is that there an effective way to prevent poten- design criteria do not take account of the mental methodology of design is to tially seriously harmful consequences? the needs of new devices, but instead are blame. But this is wrong. “For some rea- still focused on meeting standards that son in our minds, as in many designers’ Failure Investigations In Early R&D were appropriate for the “old way.” This mindsets, the common default is that The answer to both questions is: yes. is relevant for all new device design ac- failure investigation is the final step in Mantovani noted that failure investiga- tivity, including the often-inadequately- a product’s life. Putting attention to it is tions can be used as an R&D tool at the planned-for activity of failure analysis. often perceived as an open criticism of early stages of the development process. That is the view of Matteo Mantovani, the final product.” This would avoid potentially “cata- CEO and technical director of NCS Lab srl. Understanding failure is the most com- strophic” events, thereby also lessening He said: “Over many years as a failure plicated process in a product’s life, but the impact of device failures on patients analyst, I have amassed a solid experi- focusing precisely on this yields what is and companies’ financial accounts. ence in understanding how components probably the most comprehensive set of Failure mode and effects analysis fail. Despite the thousands of broken valuable information for designers, giving (FMEA) and, in general terms, risk parts analyzed, I realized that in the di- them all the insight and examples needed analysis, are advanced processes that versified world of medical devices, many in order to avoid recalls from the market. can be very useful in trying to intercept competencies are needed to provide a A failure investigation offers: 1) com- future problems in the product lifecycle. complete understanding of all the facets plete understanding; and 2) the evalu- “If we take a close, analytical look at and concepts involved.” ation of a “phenomenon,” but it also where most of the risk mitigation actions This became clear to Mantovani when he needs: 3) expert input from a range of come from, there is a strong correlation started designing medical devices and real- sources, spanning from the clinical to between the available standards and ized that he was repeatedly coming across materials to engineering departments. problem solutions.” the same problems that needed attention The crucial step is to understand how In view of that, several questions arise, and analysis. He asked himself, how was this information can be truly valued if such as: Is this a satisfactory solution in a it possible to keep coming across mistakes failure investigation is the last step in world where the general trend is to drive that had been seen and analyzed many the product’s life, where the investiga- for extremes both in terms of design and times before? How could such problems tion is usually managed by the Quality technical functionality? be avoided, and where was the advice? Assurance or Regulatory Affairs (QA/RA) And isn’t this the right time to start

thinking about how to expand develop- ❚ MAKING A SUCCESS OUT gation carried out on samples can, most ment and risk management processes OF FAILURE ANALYSIS of the time, provide evidence, including by using the failure investigation as a non-obvious details, that are extremely routinely-conducted activity with the Matteo Mantovani first became in- valuable for a complete design evaluation. principal aim of collecting additional volved in private labs dedicated to NCS Lab’s laboratory manager, Andrea information, and with the purpose of failure analysis in Italy in 1999, and Vecchi, added, “The approach developed re-introducing it into the design cycle? to date has founded three innovative by NCS Lab for failure analysis combines Furthermore, “we need to figure out companies, including NCS Lab srl, in design engineers, materials and processes the range of expertise and the technical Carpi, Modena, Italy, in 2008. NCS is experts, application engineers and clini- background needed to really value the a certified research lab that engages cians to exploit fully the information col- whole range of the information that can in medtech lifecycle research, in- lected. We then use this to interpret the is- be gathered, which is extremely wide.” cluding, design, testing and failure sue and evaluate the connection between It is rare that one individual will have analysis. He is CEO and director of design input and product performance.” a combination of all skills, such as a me- research at the Italian group, which Under this approach, and in line with chanical engineering background, materi- in 2018 set up a US branch, NCS the recognized added value of this critical als and processes know-how, and clinical America Inc. in Dover, Delaware. activity, it is possible to redefine failure in- expertise. And even if so, it is not common vestigation as a “complete comprehension that the individual would have expertise in Mantovani also co-founded injec- and evaluation of a phenomenon” – one all these topics to the same level. tion mouldings company Mimest that needs competencies spanning from SpA, to service medtech industry clinical to materials to engineering – with The Multidisciplinary Team View needs (2004), spearheaded a new the aim of providing sets of information That is why, in a risk analysis process, a platform in shape memory materials that are useful in confirming or rejecting multidisciplinary team is needed to be (also 2004), and founded Newcast performance, working environment and able to assess the project or product from Services srl (2005) to prototype or clinical indications. Understanding all different points of view in an attempt innovative materials and technolo- the root causes provides a valuable set to capture and deal with non-obvious gies in the motorsport industry. He of updated design inputs that must be potential issues that may arise. The same has a Masters Degree in materials considered, and which loop back to the goes for a failure analysis process; in fact, engineering (University of Ferrara) design specification. to really analyze the information set and and an MBA from CUOA Foundation. Failure investigation, as defined above, the connection between the elements, a is a development tool, which seeks to char- lot of expertise is needed. His career has been characterized by acterize product performance and isolate So, in view of this, a failure investiga- leading R&D activities, exploiting a product failures at an early stage of in the tion should no longer be the “final act” background in materials science, lifecycle – when the failure impacts only that must be done merely for legal liabili- and taking strong interests and roles on test specimens and not on patients. ties or quality compliance. Instead, this in biomechanics, fatigue design and Mantovani concluded: “Based on my most under-valued and under-employed failure analysis. He is described as experience, this is the real embedded activity should be conducted and planned an executive who needs to have an value of managing failure investigations alongside the product’s development, to impact on company strategy organi- in medical device development. The old guard against post in-use failures. zation and growth. Born in Sermide, concept of using this activity only for “Based on our experience, and as we Italy, in 1972. compliance to quality system require- now operate in our daily routines at NCS ments is now seen as pointless and an Lab, failure investigation is a design in- unjustified cost.” strument that is used in the development IV124262 phase as early as possible in the process. That is because we truly believe that *Elena Varini is director, business strategy understanding technical performance & operations, at NCS Lab srl follows a solid understanding of how Comments: failures develop,” said Mantovani. Email the author: [email protected] A failure investigation in the early stages can provide additional information that is of great help in preventing future problems that can have serious effects. In many situations, the set-up chosen LET’S GET SOCIAL for product performance verification is inappropriate and not completely rep-

resentative of working under real-world @INVIVOnow conditions. Despite this, a failure investi-

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