The Business Of Science

Posted May 21st, 2020 by Jonathan Montagu, in Business Development, From The Trenches, Talent

This blog was written by Jonathan Montagu, CEO and co-founder of HotSpot Therapeutics, as part of the From The Trenches feature of LifeSciVC.

Today marks an important milestone for HotSpot Therapeutics as we announce our Series B financing, but it also marks a milestone for me personally – 20 years in the business of biotech.

In this blog, I want to reflect on some of the learnings that I have had during this time.  Moreover, with so many companies in our industry run by individuals with advanced science degrees, I frequently get asked what role “business types” like myself can or should play in the leadership of science-driven enterprises.  My journey is specific to me but I see commonalities with others with business backgrounds who have followed a similar path and are leading high science companies — Sam Truex (CEO, Quench Bio), Jeb Keiper (CEO, Nimbus Therapeutics) and Ron Renaud (CEO Translate Bio) to name a few.

For business types that are too busy read this blog, I conclude the following:

  • Aligning scientific and business goals is critical and not a given in many organizations
  • In a business as complex as pharmaceutical R&D, broad functional experience is invaluable and enables you to ask the right questions even if you are not a content expert
  • Early innovation can’t be simplified down to a number in a spreadsheet and the path to value will undoubtedly have many twists and turns. As a businessperson, it’s critical to work with outstanding scientists that have a bold vision
  • Your most valuable currency is your time so have the intellectual honesty to do the thesis bearing experiment early
  • Value creation takes time in this industry so enjoy the ride and stick with it long enough to derive the learnings from the decisions you made some time ago
  • The big picture perspective provides a source of leadership during good and bad times
  • This business is really hard. Humility is essential

First, I should disclose that I have scientific training but transitioned to the dark (business) side shortly after completing a degree in Chemistry at Oxford University.  Midway through my Masters, I became increasingly disillusioned with day to day lab work and decided it was time to make a change.  I realized that I simply didn’t have the meticulous attention to little detail required to succeed at bench research.

In January 2000, right at the start of the new millennium, I took a job at the Boston Consulting Group (BCG) serving clients across industries but I admit that didn’t feel a connection to the work outside Pharma. Truth be told, I wasn’t a great consultant.  I recall a close colleague of mine at BCG explaining how he would wake up in the early hours of the morning in a deep sweat, stressing about his client’s problems.  In contrast, I never lost any sleep thinking about how to sell more tractors or how a major oil company could offer dog-walking services … although I do shed a tear for those crazy dot com days!

That all changed as I went to work for a former BCG partner, Craig Wheeler, who was heading up the BioPharma division at Chiron, with a dotted line to Bryan Walser, Vice President of Strategy.  I served as a general dogsbody, taking on projects across manufacturing, marketing, business development and research. I had found my calling and my passion at the intersection of science and business – turning great science into products that make a difference in people’s lives.  It was then that I recognized the value of bridging science with business.  Science that is not directed toward a market need will not see commercial success; and a business strategy unsupported by scientific reality will fail. As a businessperson with a passion for science, I could be that bridge.

Working for an fully-integrated Big Biotech allowed me to appreciate the awesome complexity involved in drug R&D.  Planning manufacturing campaigns in a multi-use facility is a mind-blowingly complex game of Tetris involving millions of dollars at every move.  While I was seemingly taking a random walk through different functional roles in biotech, this experience was building my pattern recognition repertoire in the same way that a research scientist develops an intuitive feel for different biologies or chemistries.  This led me to put value on broad experience across the value chain.   Beadth of functional experience helps reduce the number of “unknown unknowns”, to quote Donald Rumsfeld, and the likelihood of issues appearing out of the blue .  As we make IND-enabling decisions at HotSpot, I am not the expert but I know what questions need to be asked.  Or as my former Operations professor noted, “you know enough to be dangerous.”

Following business school, I was recruited into a four-person team responsible for the launch of two recently in-licensed antimicrobial products at Johnson & Johnson.  One day, I was sitting contemplating the beautifully manicured corporate gardens outside our Ortho McNeil facility in New Jersey, when I received an offer to join a new biotech company called Concert Pharmaceuticals. The team and investors were stellar. The question at the time was whether I was going to leave the salary, benefits and comfortable life at J&J to take up an uncertain position at a biotech that no one had heard of, “unencumbered” by real data but nonetheless full of promise.  My analytical brain was sounding alarm bells since net present value (NPV) analysis was overwhelmingly negative and completely uninformative.  What swayed me ultimately was that this was my ticket to join the biotech “glitterati” in Boston and learn from legendary Vertex drug hunter, Roger Tung, and deal maker Rich Aldrich.  I had read the Billion Dollar Molecule and, like a groupie getting to hang out with Axl Rose, I was in my element.

At Concert Pharmaceuticals, we went on to build a pipeline, progress multiple programs into the clinic, raise a lot of capital and do a series of interesting deals. I couldn’t have imagined any of this as Roger, Nancy Stuart and I shared the tiny Regus office in Burlington on my first day.   The lesson for me was the importance of working with world class scientists that have a bold vision while recognizing that the path to value may have a lot of twists and turns.  As Sheryl Sandberg noted, “If you’re offered a seat on a rocket ship, don’t ask what seat. Just get on.”

My next lucky break came in 2008 in the midst of the recession with a meeting with Bruce Booth at Atlas Venture who paired me with Rosana Kapeller and Gerry Harriman to shape an embryonic Nimbus Therapeutics.  Like other Atlas companies, Nimbus embodies the Atlas philosophy of grounding companies with the highest quality science while being unafraid to do the thesis bearing experiment. This has resulted in successful failures because management focused on unearthing scientific truth rather than prolonging the financing merry-go-round.  This type of intellectual rigor and efficiency strongly resonates with me because I believe that our most valuable currency is our time.  It is critical for me that I am investing this valuable resource in activities that have the highest likelihood of leading to a new medicine.  This is where the business mindset can be important: while I appreciate cool science more than most, if we aren’t progressing towards data that can help the business make decisions, we aren’t making the right investments.

Creating value in this industry takes a long time and this means there can be a long “incubation period” between decision and demonstrable impact.   A project decision early in a company’s life can have dramatic, unforeseen consequences 5 years later.  Despite the up and to the right value curve often portrayed, and the “we knew it all along” post hoc rationalization, every biotech company goes through ups and downs.  Dealing with adversity is the best teacher as we found when raising Nimbus’ Series A during the depressed financial markets in 2010.  Sticking through the tough times to gain those learnings is something that’s happening far less in this overheated job market.  If a company has even the slightest hiccup, business executives are soon loose in the saddle and are lured away to another company.  This prevents the critical learning cycle between decision and effect that allows a business leader to learn from mistakes.  I admit my personal motivations and biases are strongly apparent here.  There’s certainly a lot of money to be made by making career decisions like a stock picker: work for the next company to go IPO and then leave to go to the next.  However, you are never going to learn the true skills of leadership, entrepreneurship and company-building.

As business leaders, we are constantly painting a vision that looks far out into the future.  We need to excite investors to give us money, hire team members to be part of the journey, and recruit patients to try our experimental medicines.  As an industry of storytellers, we are constantly riding waves of the hype cycle.  I have experienced a number of big waves during my first 20 years in the biopharma industry where everything seemed possible: the genomics and combi chem revolutions of the late nineties; the explosion of RNAi and CRISPR; and, more recently, the rise of machine learning.   Biotech has also experienced times when the market is oversold.  Following the financial crisis in 2008, relatively few investors were interested in buying into speculative drug discovery enterprises.  There was an unmistakable sky-is-falling feeling at that year’s JP Morgan conference.

But, looking back, it’s clear that the unbridled optimism never really fully played out and getting to real products took at least a decade longer than anyone expected.  Similarly, the lows weren’t as bad as we thought and the leadership teams that focused on innovation delivered incredible value, and even took advantage of less competitive labor and real-estate markets.  Riding the wave takes the dexterity of a Californian surfer: leveraging investor excitement to raise capital at good valuations while keeping a close eye on where the wave is going to crash.  As business leaders, we have an important role to play in providing the big picture perspective, stepping back to give the right context for investors, employees and partners.

In closing, the business of Biopharma research and development is hard.  It’s crazy expensive and risky. We are constantly surprised by Nature’s complexity and how the sure thing turns out to be infinitely more complex than previously thought.  While the stereotypical image of the businessperson is the Wolf of Wallstreet, over confidence has absolutely no place in biotech and it likely underpins an incomplete understanding of what’s really going on.  Humility in the face of this challenge is essential.  After all, we are doing something that humankind has never done before.  We are pushing scientific boundaries and, despite all the odds, delivering new drugs to market.  Each drug takes a village to invent, develop and market so we can celebrate the contributions made by both our business and science colleagues.  There’s no other job I’d rather have and I am honored to work alongside some of the best in the business.

Jonathan Montagu

CEO of HotSpot Therapeutics
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