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Innovation Economy

Why biotech CEOs need to think like Steve Jobs

CEOs in the life-sciences business are supposed to be sober, scientifically grounded leaders.

So, when Josh Boger, chief executive of Vertex Pharmaceuticals Inc., showed a slide last year comparing one of the drugs his Cambridge company is developing to Apple's iPod, he raised a lot of eyebrows.

"Every so often," Boger told the audience at a healthcare conference, "there is a game-changing product -- one that transforms an entire category, one that transforms a company, and one that transforms an industry."

Apple Inc. chief executive Steve Jobs is legendary for the "reality distortion field" he can create; in private meetings and at public speeches, Jobs can persuade even the crustiest skeptic that his vision of a desktop computer, a portable music player, or a new kind of cellphone will come to pass. Boston's technology scene, unfortunately, has few people who share that talent. But in life sciences, our petri dish runneth over.

When it comes to commercializing a new scien tific discovery -- taking it out of the lab and turning it into a product that is to improve or extend human life -- a Jobsian personality is often crucial. It helps companies raise the vast sums of money required, and attract the employees necessary to get a drug or device approved and out into the world. Vertex, as an example, has been around since 1989, has racked up roughly $1 billion in losses and has yet to bring a drug of its own to market.

"There's a lot of money that has to be raised in biotech before there's a product," said Bob Higgins, a healthcare investor at Highland Capital Partners in Lexington. "One guy raises the money, and his personality is a lot of the argument for investing, so people need to believe."

But Higgins said there's also a dynamic at play that he calls the "Music Man" phenomenon. When a life-sciences CEO can tell a captivating story about a new product's potential, there are some who buy into it -- and others who wonder whether they might be listening to a Harold Hill-style huckster.

Because of the long development times, it can take a while to find out whether a charismatic CEO actually can deliver.

Millennium Pharmaceuticals Inc. of Cambridge has been a font of visionary CEOs. John Maraganore, a former senior vice president at Millennium, raised about $50 million in venture capital for Alnylam Pharmaceuticals Inc. before taking the company public two years after it was founded. Alnylam is developing drugs based on the science of RNA interference, a natural mechanism for switching off genes that cause disease. The company hasn't gotten a drug approved, but it is conducting clinical trials for an inhalable drug that combats a respiratory virus called RSV.

Steve Holtzman, a former philosophy professor who is chief executive of Infinity Pharmaceuticals Inc. in Cambridge, describes Maraganore as "a great communicator." Holtzman was an early employee at Millennium, and soon after joining Infinity, he hired Julian Adams, one of the Millennium scientists who developed Velcade, a breakthrough cancer drug that this year will generate about $250 million in revenue for Millennium.

"If you're going to be innovative," Holtzman said, "you have to communicate your vision in order to recruit really talented people. A highly motivated, intelligent person doesn't sign up for a job -- they sign up to help create something."

Just as Jobs depends on hundreds of Apple engineers to develop cool stuff, Boston's Jobsian CEOs rely on pioneering research conducted in academic labs.

The RNA interference work upon which Alnylam was founded was conducted in the labs of two Nobel Prize winners: Craig Mello at the University of Massachusetts Medical School in Worcester and Phil Sharp at the Massachusetts Institute of Technology. Bob Langer's lab at MIT seems to have spawned half of the interesting companies in Boston, including MicroCHIPs, which is developing implantable silicon chips that can either deliver measured doses of a drug or sense changing conditions in the bloodstream.

Sirtris Pharmaceuticals, which went public in May, sprang from David Sinclair's lab at Harvard. The company is developing drugs based on resveratrol, a substance found in red wine that has been shown to reduce fat, increase endurance, and extend life spans in mice, worms, and yeast, but not yet in humans. Sirtris isn't proposing to come up with pills that will add 10 years to your lifespan or help your triathlon time, but drugs that combat age-related diseases like type-2 diabetes.

The company is run by one of only two life-sciences CEOs in Boston known by their first name: Christoph. (Christoph's last name, which I should mention for the sake of those who don't work in biotech, is Westphal. The other mono-monikered CEO is Henri -- Henri Termeer of Genzyme Corp.)

Atlas Venture investor Jean-François Formela likens the high-profile CEOs to Hollywood stars. "You can end up spending too much money on a big-budget company and a big-budget team," he said.

While he invested in Alnylam, he passed on Sirtris. Having a star involved can reduce the risk of funding a new start-up, he acknowledged, but lately Formela has been trying to create companies that resemble B-movies, with smaller budgets and lesser-known players, but strong scientific script.

It's too early to tell whether Tempo Pharmaceuticals Inc. of Cambridge will be a big-budget endeavor or a shoestring project. In May, the company raised a first round of $12 million. Tempo is led by Alan Crane, a master explainer who is a bit more subdued than his fellow Millennium alums. (The other top three executives at Tempo also hail from Millennium.)

The company is engineering nanoscale particles that will deliver two drugs directly to the site of a tumor: One drug will shut down the blood vessels that feed the tumor while the other will deliver chemotherapy over a sustained period. By custom-building the package that will contain these two drugs, Tempo believes it can get the drugs to the right place -- and reduce side effects.

"Nanotechnology," Crane said, "has the potential to redefine drug therapy over the next five to 10 years."

Many life-sciences CEOs in Boston simply aren't that comfortable making grand pronouncements or talking about lofty goals without noting the possibility of failure.

And vision, as Infinity's Holtzman acknowledged, only goes so far. His company, which is working on a drug for gastrointestinal tumors, lost $28 million last year. "At the end of the day," he said, "you will only be successful if you make important products that make money."

On that front, this crop of visionary CEOs still has something to prove. In the most recent quarter, Apple sold nearly 10 million iPods. The drug that Vertex's Boger compared to the iPod last January, intended to treat hepatitis C, still isn't on the market.

Innovation Economy is a new weekly column that will focus on entrepreneurship, technology, and venture capital in New England. Scott Kirsner can be reached at kirsner@pobox.com.

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