Business therapy

31 July 2006

Having helped develop some of the best known therapies at Genentech, Dr Cori Gorman joined a biotech start-up and saw it through to IPO. Now a consultant, she has plenty of advice for entrepreneurs

Dr. Cori Gorman spent ten years as a scientist at Genentech, joining when there were just 400 employees. Among her many development projects there, she headed one of three groups involved in the early development of Herceptin, the well-known breast cancer therapy, and Avastin, the targeted colon and rectum cancer therapy. She left in 1993 and became involved in two biotech start-ups, helping take one of them, Valentis, public. A board member of the Women's Technology Cluster in San Francisco, she has since founded DNA Bridges, providing consultancy to start-ups in the biotech, pharmaceutical and diagnostics industries.

Every start-up wants to know how to drive innovation. How did Herceptin evolve?

In my experience, innovation never comes from the top down. At Genentech, people had some freedom to work on their own projects - twenty-five to thirty per cent of the time in research, you could do almost anything you wanted. Almost all the products on the market were originally 'underground' projects, developed through this kind of informal research. That's how Herceptin was born - it was an underground project driven by two or three different people. That's also how Avastin got started - it was underground for seven to eight years. You have to have people who are a little bit renegade to do underground projects - not people who only do things they're told.

You can't undervalue being at Genentech at that early stage - you could talk to everyone. I was in a very useful place - I got to know all the research people, but another group in my lab was also working on process development. So I was involved in both.

What prompted you to leave for a start-up?

A lot of us who had been there in the '80s still had an adventurous, risk-taking spirit - we wanted to take things to the next big horizon. In the early '90s, gene therapy was really hot, and I had a call from two angel investors about a technology spin-out with three academics from the University of California, San Francisco and the University of Wisconsin. They needed someone to help form a company, Megabios [which subsequently became Valentis].

For the first summer, there were the academics, me, and the angel investors. One of the angels was CEO, and he and I raised the venture capital. The first thing we did was find and initiate a corporate partnership with Glaxo [now GlaxoSmithKline], as well as continue to focus on finding VC funds. The angel investor had been looking for investment for three months before I joined - it took another four months to raise $3 million. We set up some small labs, and I ran the science for the first eighteen months, while he did the business side.

Then we recruited a CEO. I never could have been CEO, and the angel didn't want to be. It's always a challenge recruiting a CEO who's not a founder - you're looking for someone with experience who can share your dream, and we relied very heavily on some of our investors to help. Most of the people we interviewed were in business development roles, looking to become a CEO for the first time.

How did your role change as the company moved towards IPO?

I learned so much because I was so close to the business side. But as the company grew, I wasn't even in a position to be VP of R&D - I was always going to be a department director. As a company grows, it brings in specialists and you divide up tasks more, so you're not always close to the seat of all the decisions - which is a hard adjustment for anybody in a small company. Part of the thrill of a start-up is learning something new.

Megabios floated and after the IPO they bought a larger gene therapy company in Texas. There were now many more people, and half of them were in Houston. At that point I decided to leave.

To another start-up?

I tried one other start-up, working with a faculty member at a university in California. They had some technology to spin out, had founded a company, and had got to the point of finding investors. The big lesson I learned there was that there's a lot of inherent conflict in having a scientific founder heavily involved in a company. It's the challenge of mixing cultures. This person wasn't going to leave academia, so she still needed to remain famous and publish, but she didn't understand that we needed to keep some things private. So some things got released publicly which undermined the intellectual property. It didn't work out, and I moved on to get my MBA and then started consulting, working with large companies and a lot of early stage companies.

You've seen a lot of the mistakes that start-up CEOs make - where do they typically go wrong?

A lot of CEOs don't understand how to manage the board. The CEOs that work well keep the board up to date on critical issues, and never let them be surprised by something. But at the same time, they don't want the board to run the company - you lead it as CEO, because you're in it day-to-day. One thing I often see lacking on boards is an understanding of what it takes at an operational level - some investors don't have enough industry experience, don't understand what it takes to build a team and so on.

One CEO I worked with would have a personal call with one or two of the board members every week - so when it came to the board meeting, there were not a lot of surprises. And he listened to them, so at the board meeting, they felt they'd already been heard.

What's also important is how you handle the board in a moment of crisis - for example, when a lead component isn't panning out or you're running out of money. If you're going to be a CEO of an early stage company, you need to figure out how you're going to handle a crisis, because crisis is inevitable.

You've spoken to g2i before about bridging the gap between science and technology ( see Culture Clash).

What do you advise your clients? For scientific founders, it's important to understand before they start the company - what do they really want to be? It seems obvious, but a lot of people don't know. The culture is so different - fame is what you trade in academia, but that can't be the most important thing in a company. It must be to commercialise.

Dr Cori Gorman was speaking to Keith Rodgers of Webster Buchanan Research