The Soul of Biotech

On Friday afternoon, I formally accepted an offer to transfer into the Enbrel Derm sales force, serving in the Portland, Oregon territory. Relocation timing and details are still pending, but I’ll probably get up there by October or so.

I’m incredibly excited to learn how to sell effectively. Both my district manager and regional director have vast reservoirs of sales experience within Amgen, so I’m confident that I’ll learn a great deal from the feet of a couple of masters.

Plus, this will be an enormous personal adventure. I don’t know a single person in Portland. In fact, I’ve never set foot in Oregon in my life. And I can’t wait to find out what’s waiting for me when I get there.

(So far, people tell me: “beer,” “rain,” and “hipsters.”)

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From Episode 1×14 of Sports Night:
Isaac: “Thanks, this won’t take long. There’s gonna be a piece in tomorrow’s Wall Street Journal. Don’t worry about it. (BEAT) That’s all.”

Yes, I still have my job. Furthermore, there’s no rationale (barring the sale of Amgen to a competitor) by which I would not continue to have my job. By now, you’ve probably read all about Amgen’s planned layoffs and cutbacks. While I’m obviously not thrilled about it, I understand why we need to cut expense growth in light of the finalized CMS ruling, which impacts our expected revenue growth. It stinks, of course. The news has affected morale a little bit. Some who sense that their jobs are potentially vulnerable have been wondering whether or not to start planning for a transition. Others have already begun to look for other opportunities “just in case.” Still, I’ve continued to be impressed by the strength and transparency of management near me, up through to the VP level.

In one respect, however, I am disappointed. What I have found to be conspicuously absent from Kevin Sharer’s messages to the workforce is any indication that he or the other executives are willing to share in the pain being experienced by those whose jobs are at risk. In Jim Collins’ Good to Great, Collins points to a “culture of discipline” present in great companies — it is a culture in which members of top-level management forgo luxuries in order to set an example for the rest of the firm. For example, at Nucor, a large steel company, workers’ pay was cut 25 percent during the 1982 recession. Executive salaries, however, were slashed by 60 percent, and the CEO himself took a 75 percent pay cut. By “feeling the pain,” rather than distancing themselves from it, executives demonstrate that they share in the entire company’s reality. Indeed, a recent Scientific American article suggests that the leaders who position themselves among the group rather than above it have generally proven to be most effective.

Kevin made over $34 million in compensation last year, placing 24th on Forbes’ 2006 list of most highly-paid CEOs. Although 2006 was a stellar year for the company, I would imagine that Kevin’s 2007 compensation will still be fairly generous. I wouldn’t ask Kevin or any of his team to take a pay cut without a better idea of the big picture. In fact, I sincerely believe that his senior team deserves healthy compensation for their difficult and important jobs. I simply hope that Kevin is not missing an opportunity to win the loyalty of the workforce by actively participating in the cutbacks and setting an example for the rest of us.

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Danny Halperin is a second-year graduate student in Molecular & Cellular Pathology at the University of California at Los Angeles, working in the laboratory of Dr. Peter Tontonoz. Before attending UCLA, Danny spent four years at Amgen in Clinical Immunology supporting pre-clinical and clinical development of biologics. Danny and I sat down over Thai food in Santa Monica on Thursday evening to talk through the relationship between academic and industry research, the promise of pharmacogenomics, and building a healthy R&D culture. This is the first in a series of interviews.

JS: Thank you so much for meeting me. This is the first one of these I’m doing, but I’ve been looking forward to this all week.

DH: Happy to. I really like the blog, especially as someone looking to learn more about the business side of the biotech industry.

JS: Thank you very much. It came up mostly because I didn’t see anything like it out there. I do subscribe to a number of the pharma and biotech blogs, but they’re all talking about market events, and I didn’t hear about anybody who’s in the industry, and doing something, and learning from what they’re doing. Right now, most of the blogs are from pundits, like John Mack’s pharma marketing blog. Don’t get me wrong, I like his blog very much, it’s a great blog. But it’s not personal enough for me. I want to see people putting themselves out there.

DH: There is one guy who isn’t necessarily a blogger, but presents jobs related to the industry. It’s called biojobblog.com. The reason I bring that up is because there are opportunities available for people in the biotech & pharmaceutical industry. He has a lot of articles about the state of the industry as it relates to job opportunities for scientists. He’s very knowledgeable. He’s worked in different settings for 30 years: he’s worked in industry, he’s worked in academia, he’s been a consultant, he’s done freelance writing, he’s done everything.

JS: I think having that broad base across academia and industry is so valuable. You were writing to me earlier this week about the contrast between the two.

DH: Well, as much as the pharmaceutical companies would like to tout that they have cutting-edge research, obviously the most cutting-edge stuff goes on in universities. There are research groups in places like Genentech and Amgen that have really qualified people and do really awesome things, but for the most part, the big companies are interested in clinical development and commercialization and getting it to the patient. And that’s cool, because that’s really what they’re good at. But the really basic research and cutting-edge stuff happens in the academic circle.

JS: I absolutely agree. There’s the stuff that’ll become a marketable therapy in thirty years versus what will help churn out quarterly revenue.

DH: Yeah, and I think if you’re someone in the industry who’s able to identify academics that are doing good things and know how to communicate with them on their level and know how to establish the collaborations in a real personal manner. That’s the kind of thing that I envision myself being a part of, and that’s why business development is becoming appealing to me. UCLA now has a fairly mature technology transfer office, and they even offer internships and educational opportunities for students who want to get involved in technology commercialization. I see myself doing that at some point in my graduate career. Maybe not in the near future, but at some point.

Personally, my overall goal is to become the most well-rounded biotech professional I can become, because I have this deep connection toward trying to convert ideas into marketable products and services. And I think that’s what my experience at Amgen gave me: that sense that you could actually turn science into reality. Being in academia, sometimes it’s hard to tell if what you’re doing is really worth it. Seeing products that at one time were in people’s heads and then seeing them go into patients and really help people, got me excited about the tinkering that all these people are doing in university labs. It can lead to something.

While I’m in grad school, even though I’m happy to have stepped outside of industry for a while, I still feel a sense of disconnect. The cultures are very different. I envision myself probably not even doing postdoc. I really want to go back to industry after my PhD. I don’t know in what capacity. It could be something in R&D, still doing bench-type stuff. Or it could be something more business-related. I want to do something that is at a high level. More so than what I did at Amgen for four years, which was just routine experiment after routine experiment. It’s nice for someone who wants to have a nice safe job all their life. But for someone ambitious who wants to take it to the next level, it felt very unsatisfying. But three or four years was a good time, good experience, good education, and hey, I made some money.

JS: How did you figure that out, though? What about your experience at Amgen told you that you needed to go back?

DH: Well, first of all, I was burnt out. I got burnt out by the job. I also felt like Amgen during the time I worked there started discouraging transfers across departments. At one time, that was very common, because a lot of people did get burnt out and applied internally for jobs. Then, at some point, Amgen got very corporate. Even though it was still possible to do so, as I saw people trying (including myself), I started seeing roadblocks every step of the way.

I also made a conscious decision that I wasn’t of the mindset that I wanted to do an MBA. I can’t tell you how many people in my department with a bachelor’s in science doing benchwork were doing MBAs. And it got to the point where they stopped allowing people to go to business school. You had to do something in science, which is ridiculous, because what does a master’s in science do for you? Nothing. Very few people were able to do a PhD at the same time. I know one guy, who right now is an Amgen full-time employee working on his PhD part-time at UCLA, but he was in a very particular spot, and he’s been at Amgen since the mid-nineties. His department’s work is very transferable to his graduate work. He got lucky, and was in the right place at the right time with the right people. But that’s rare. I know a handful of people at UCLA who left Amgen for the same reason I did: They got burnt out. They realized that a bachelor’s level for people who are ambitious is really stifling.

That’s why I wish scientists were more like engineers, because it seems like engineers have an easier time of upward mobility. They don’t really have to get a PhD. And I think that in the culture that science stems from, the PhD is considered the pinnacle, and especially at large companies like Amgen, it’s almost required. Even though “technically” it’s not required, it essentially is required. Hence you have people like me going back to school.

My experience overall at Amgen was good. It was a really fantastic place to work, but it’s also becoming increasingly corporate. And there’s a lot of people who are there because they make good money and they’re not there because they like their job or because they’re in love with the company’s direction. But these are people with families and at first it was a fantastic thing for them, but over time things change. Management changes. Culture changes. And Amgen certainly has changed over its lifetime.

JS: Absolutely, I think that happens when you get to be a big company. On the other hand, you see a mentality of “we need to deliver.” Suddenly we’re the big guys, and we haven’t been the underdogs for a while now. The funny thing, though, is it’s that exact mentality that opens the door for the sort of position you’re describing. What I hear from people who are more on the business side is, “I wish that these science guys would understand that we need to get things done. How can we get a scientist who’s focused on delivering? Someone who’s focused on translating a concept to a marketable product.” I think it’s exactly what you’ve described. And there is more of that focus now. So someone like yourself, who has the scientific acumen and the interest in asking about the practical benefit, can do very well. I think there’s a great opportunity for you there.

DH: I hope so. I have a lot of education left ahead of me, and I expect to be in graduate school for probably at least three to four more years. Hopefully not any longer than that! But in that time, I’m going to try to supplement my education with some business classes. In fact, UCLA has started to offer business classes that are geared towards scientists, which is refreshing.

JS: That’s great, I’m glad to hear that. That’s the sort of class that got me out of my master’s and into consulting. Those classes will give you some flexibility, so that you can authentically say, “Yeah, I know about the bench science behind this project, and that’s why I can calculate its net present value, too.” That puts you in a very marketable position.

DH: The other things I’m curious about are licensing in and out, contract negotiation, stuff like that. I bought a book on bargaining. I’m reading a lot right now, and we’ll see where that interest takes me. But overall, I think that the biotech industry is a fun industry to be in. It encompasses every single discipline in the world. I think that’s why I’m so stimulated by it. There’s always something else to learn, which is why a lot of people go into science in the first place: they love learning new things. And there are so many facets to the business of biotech that you’re always forced to stay on your toes and keep learning. Unless, of course, you’re in a particular box, like a lot of people are at large companies. I’ve often wondered how companies can try and mitigate that.

JS: Try and mitigate… what exactly?

DH: That sense of burnout at a large company. What’s cool about a small company is that even though it’s riskier, and maybe the company isn’t going to last the year, and you may not get quite the bonus that you would at a big company… You get to put your hand into so many different things. Whereas at Amgen, their interests lie in getting you to do a small number of things, really really well, over and over and over again. It can be really tough for people who are of a scientific mind because sometimes scientific people are really creative.

JS: And curious. It’s tough because the most brilliant people are the ones who will be most frustrated with any sort of constraint. That seems to go with the territory. There’s a balance there, though, when you decide to run R&D like a business. As a result, you need to try to specialize people and make sure you have all the parts you need to make everything go. Is there a better organizational design that introduces the right amount of flexibility as a company gets bigger? It’s a huge challenge for guys like Perlmutter [Amgen EVP of R&D] to set up that culture. So what’s the right culture? For any R&D organization, really.

DH: I don’t know if Perlmutter really cares about those issues. He just seems so far up. The guy is pure genius, though. He was a university professor, you know. In biotech. Even as a professor, he was at Howard Hughes and all that. He was an amazing professor.

JS: That is something I’ve found that’s pretty cool at Amgen, though. They really do find the smartest people at each position.

DH: They can afford ‘em! [laughter] And I don’t blame ‘em, frankly. I was in an immunology-based department. A couple of these immunology scientists we had were just amazing. I mean, they had to be pulling down at least 200 G’s. At least. These guys were so crazily qualified. Overly qualified, even. It’s nice to have that ability.

JS: That’s part of the equation, too, though, right? Maybe we give some people free reign and some people not? Maybe that’s where the PhD comes in? Whom do we give that flexibility to? Probably to people who have demonstrated a certain level of scientific independence.

DH: That’s more than a PhD, though. That’s postdoc, university affiliation, and a lot of publications. But the difference between PhDs can be quite wide. I saw some PhDs who were really… well, shitty. And some who were gods. For me, it’s not my goal to be an expert in some area, and put out years and years of papers, and then go into biotech. I’m more interested in just getting in and figuring my way through that industry and seeing where I end up.

JS: Well, from what you saw of Amgen, if you could design your own job within the organization, what do you think it would look like?

DH: Hm. That’s a really good question. Well, I wasn’t in a research job, so I would’ve liked to have been in a more research-oriented department. I failed to do so, but I was hoping to get involved in pharmacogenomics and biomarkers. That department, when I was there, was more in the beginning stages. I’m very interested in personalized medicine. I guess my ideal job would have been something along the lines of doing research on patients that were targeted for clinical trials and seeing how appropriate they were for Amgen’s medicines, as well as monitoring the therapeutic effects of drugs under development to establish appropriate biomarkers and pharmacogenomic gains. That would have been my ideal job.

JS: I agree with you. You probably already know that pharmacogenomics was one of the things that I was really interested in. I absolutely think it’s going to be a huge part of the future.

DH: I don’t know if companies like Amgen think of it, because they’re so used to that blockbuster, you know?

JS: Yes, but there have been some recent efforts along that dimension. There was a Forbes article about pharmacogenomics that mentioned an Amgen project in that area. It turns out that the Cambridge Amgen site is working with Brigham and Women’s Hospital in Boston, and they’re doing pharmacogenomic research together on osteoporosis. I actually tracked down the guy in charge of the project by playing six degrees of separation across the company, and we had lunch together when I went home to Boston for father’s day.

DH: I think you’re right, it is the future. I wonder what the business model is going to look like, given smaller patient populations. Hopefully this area of research would make clinical development cheaper, because you’re targeting patients that are already going to be predisposed to the therapeutic effect. And therefore maybe your clinical trials would move more swiftly or smoothly and could do more fast track kind of stuff, because you’ve already honed in on where you should be. And that might cut costs. But I don’t know if the margin is wide enough to make it attractive to investors.

JS: I agree. I think there have to be some great gains in efficiency first. Think of the $1,000 genome contest, which aims to bring down the cost of genotyping people, which is a critical step, obviously. And on a long enough timeline, it will happen. We’re hearing about genotyping breakthroughs all the time. But I think you’re right. I think a lot of companies are closer to dabbling in it, and waiting on the sidelines for it to get cheap enough for that equation to work out.

DH: Well, there are small companies that are working on accumulating pharmacogenomic data.

JS: Are you familiar with Perlegen?

DH: [nods] Yeah. In fact, the CEO of Perlegen came and gave a talk at a class I took at UCLA. He’s clearly a smart guy, and I was really impressed. At the same time, he seemed really into what he was doing, and when I probed him about other things, he seemed a little not with it, you know? But a very smart guy, and what they’re doing is very interesting. I read one of their papers for a genetics class, too.

The future is very… I don’t know if scary is the right word. Uncertain, I guess. Because you’re going to have all this fantastic technology. Things are only going to progress more. The $1,000 genome is on its way. But that’s all converging with the whole healthcare thing. That’s why I was so interested in your articles on the state of healthcare delivery. I wonder what technology will be able to provide versus what technology will people be able to afford.

JS: I think it’s a huge problem. Premiums are always going up. They are increasing faster than the rate of inflation. Which is not too surprising, I suppose, but unfortunate nonetheless.

Don’t forget, too, that those two technologies go together. We just talked about pharmacogenomics and healthcare delivery. Those can go together. Because you’d better believe that insurance companies would love to get a hold of your genetic profile and charge you accordingly. Just like the car insurance companies that will give you a break if you let them install a wireless device that monitors your driving behavior.

DH: I’m still trying to figure out HMOs and how all that fits into the big picture.

JS: Don’t worry, so is Congress.

DH: It’s a funny place to be because philosophically you’re providing such an important product to people, and the hard work that goes into those products comes out of a desire to help the world and improve the human condition. Yet the business aspect has to dictate, because at the end of the day, people need to get paid. I still believe that we’re doing the best we can.

JS: And we’re trying to fund the next generation of medicines, don’t forget that. A big part of getting additional money for the company is the opportunity to fund R&D.

DH: At the same time, I’ll take you back to what I said about universities. I think you cannot underestimate the money that comes from the government. And I’m not saying that biotech / pharmaceutical companies are not a big piece of the important puzzle that delivers medicine to people. But without the ideas that start in government-funded labs, a lot of these companies would be in trouble.

JS: There was one more thing I wanted to be sure to ask you about. You had one comment in one of your emails that made me laugh out loud. You wrote, “Why the hell would anyone want to become a scientist anymore?”

DH: It’s tough. It’s a tough choice. It’s a lot of education. In terms of social status, you aren’t the highest on the rung. Physicians are treated like gods. Scientists are not. And becoming an academician, which is the dream of a lot of people coming into sciences, is becoming increasingly difficult.

And you see that reflected in the number of people coming into science. A lot of them are foreign-born. Their own countries, like India and China, are supporting the people who are becoming scientists much more so than America is supporting scientists here. And many of those people are going to go back to their home countries, instead of staying here like they used to. So this is a really tough time.

Getting funding is next to impossible. In 1970, the average age for an R01 grant, which is the major grant that the NIH gives out, was 30 or 32. They were giving away so many to people coming out of graduate school or postdoc. Now the average age, I believe, is about 41. People have to do postdoc after postdoc or become a professor or something until they actually get the real massive grants that take people to the next level academically. Some people nowadays never reach that level.

The deficiency in training for private sector is even more of a problem now, because you have all these people who are trained by universities to be academicians. They realize that their chances of finding a good job are very low, so then they look at their skill sets and opportunities. And lo and behold, they have no experience in management, no experience in the business sense, no experience working in industry-related activity. And it becomes increasingly hard for them to find a job. And then they get older. And then they do something totally different and their talent is wasted. And that’s sad.

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Normally, I start each post with a single question that I ask myself. This time, I’m starting with a whole list of great questions that Danny Halperin from UCLA asked in response to my first post. Thanks, Danny!

So, I’m curious what kinds of responsibilities do you have in your job? Your background seems to be in computers and engineering so how did you get into market analysis? Are you considering doing an MBA? Where do you see your career going? Do you interact with the business development group at Amgen?

Switching from consulting to market research wasn’t quite as big of a shift as the one from research to consulting, at least in terms of mindset. Our group, Business Analysis and Information, acts much like an in-house marketing consulting firm. In fact, the running joke in the hallways is that BAI acts as a retirement home for ex-consultants. Our clients are the Amgen brands that have yet to launch (for example, denosumab) as well as brands that have already launched (for example, Aranesp and Enbrel). Each staff member is aligned to one or more brands, forming cross-functional brand service teams that include primary and secondary market research, as well as forecasting.

The advantages to consolidating these functions into one group are:

• Best practices within a functional area spread more quickly across brands and can become standard practice within the company.
• Results from different research methods, such as primary and secondary market research, can be triangulated and sanity-checked against each other more easily.
• Working in cross-functional teams teaches us a lot about functions that we don’t work in ourselves all the time. We frequently see staff move around and gain experience in each function to become more well-rounded.

Working in secondary market research, it’s my job to translate the immense volumes of secondary data that Amgen owns into actionable answers to important business questions. The most commonly used data are account purchases and physician prescriptions. Studying trends in these data help our marketing teams measure the impact of market events, whether externally-driven (such as the ESA black box warning) or internally-driven (such as a specific promotional activity). We also work on more sophisticated projects that measure patient outcomes as a consequence of particular treatment regimens.

As for my own career, I am interested in pursuing an MBA, although I haven’t decided on the most appropriate timing. I’d also like to join Amgen’s field sales force at some point. I was truly inspired by my ride-along with one of our reps this spring. For all the flak that reps get, I believe that they serve a critical purpose in helping overworked physicians understand how to get their patients the best available care. I think that’s a great mission, and one that I’d like to share in. Plus, going after the business in an entire territory would tap into my competitive nature.

I don’t formally work with our business development team, although my peers who work on in-line forecasting are often asked to assess prospective product acquisitions, including the recently completed acquisitions of Alantos and Ilypsa. Still, I have met a few people in business development through informal networking, and I could see myself ending up there in a post-MBA role.

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If you’ve been following our news, you may have heard about the FDA’s warnings on erythropoetic-stimulating agents, or ESAs. ESAs are a class of agents manufactured by Amgen that treat anemia. The first ESA was epoetin alfa, which was marketed in dialysis as Epogen by Amgen, and marketed in non-dialysis indications as Procrit by Johnson and Johnson (J&J). In 2001, Amgen launched Aranesp (darbepoetin alfa), a longer-lasting agent that can be dosed less frequently. Amgen retained the rights to all indications for Aranesp, and competes with Procrit in the non-dialysis markets such as chronic kidney disease (CKD) and chemotherapy-induced anemia (CIA).

In December 2006, a Danish head and neck study concluded that when Aranesp is used in anemia of cancer (AoC), it triggered adverse events. It is important to note that Aranesp had never been approved by the FDA for use in AoC, and as such, Amgen has never promoted the use of Aranesp in AoC. When Amgen learned of the preliminary data, it informed the FDA within 24 hours, per FDA rules. However, because the data was preliminary, it did not tell investors until late January. (This is what the informal SEC inquiry is about.)

In February, the FDA confronted both Amgen and J&J in February and asked both companies to add a black box warning to their products that advised physicians to use the lowest possible dose of ESAs in treating anemia. Initially, this warning covered all use of ESAs (even use in chronic kidney disease), but after an outcry from the nephrologist community, the FDA amended the warning to include only AoC.

In May, the FDA’s Oncology Drugs Advisory Committee (ODAC) voted overwhelmingly to ban the use of ESAs on patients with certain types of cancer. The committee also recommended placing greater restrictions on ESA usage, including stopping the use of ESAs once chemotherapy treatments are over. Furthermore, the committee unanimously decided that more studies were necessary. As this is an advisory committee, its recommendations to the FDA are nonbinding, although the FDA usually follows its advisory committees’ recommendations.

The following week, based on the ODAC recommendation, the Centers for Medicare and Medicaid Studies (CMS) announced that it would curtail reimbursement for ESAs when used in AoC. Additionally, although CMS would still reimburse for CIA, they added a grace period to the last chemotherapy dose, after which they would not reimburse for ESAs.

ESAs make up a large portion of the CMS budget. Given that budgetary significance, it looks a lot to me like the FDA and CMS are working together to create policies that would reduce the cost of ESAs to the federal government.

But what’s the impact to Amgen? Well, although Aranesp and Epogen aren’t indicated in patients with AoC, we do make some money from off-label use, and that revenue source could taper off. Furthermore, the general cloud of suspicion over ESAs could cause physicians to use lower doses of ESAs or administer them less frequently, even for CKD and CIA. As a result, Amgen’s overall anemia revenues could grow more slowly than anticipated.

Our stock price took a major hit over this month, of course — major enough to make it to a lot of national news outlets. We took a bigger percentage hit than J&J did over Procrit, probably because more of our revenues are concentrated in ESAs than J&J’s revenues are. On the other hand, we have a more flexible cost base, so although it has been a little uncomfortable to make adjustments to cope with the new reality, we’re not going to become much less profitable.

Overall, I have been impressed by how well upper management handled this crisis, especially internally. Communication from the senior team has been forthcoming, and every manager between myself and my VP has sent out communication encouraging us to come talk about any concerns we have. I see a lot of confidence in the hallways, and no one is whispering about jumping ship. I bought our stock at $55 right after ODAC, and it’s already up to $57. We feel good. I feel good.

My only complaint is that I wish we had taken a more aggressive stance in messaging that our drugs are safe and effective when used properly, because I believe they are. Epogen and Procrit have been safely used for EIGHTEEN YEARS. Aranesp has been on the market for six. This stuff ain’t rat poison. Amgen is still learning how to win battles of public opinion, but if that’s our biggest problem, then we’re going to be just fine.

What are your thoughts?

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