In part 1 of What Makes A Biopharma Serial Entrepreneur Tick, we met Brad Margus, a serial entrepreneur who came from the food industry to found three biopharmaceutical companies. We pick up the conversation with his second biopharmaceutical industry venture, Envoy Therapeutics.
After the learning experience of Perlegen Sciences, Margus took another stab at a startup when cofounding Envoy Therapeutics in 2009 with Nat Heintz, Ph.D., a professor at Rockefeller University. Heintz, along with colleagues Paul Greengard, Ph.D., (a Nobel Prize winning neuroscientist) and Jeff Friedman, M.D., Ph.D., told Margus about a new methodology (i.e., bacTRAP technology) they had invented that allowed a scientist to profile the specific genes expressed in each cell type in a mouse brain “We thought if we could leverage this methodology inside a company it would allow for better/faster targeting in early-stage drug development, so we started Envoy.”
One of the big differences between this and his previous company was the funding. Perlegen raised $257 million in equity, while Envoy only raised $8 million in a series A, with probably another $20 million from research collaborations with Merck and Takeda. “But a lot of it was a non-dilutive, and when you do it that way the founders and employees get to own a nice share of the company,” he relates. Another big difference was the eventual outcome. Takeda had been in collaboration with Envoy, and within three years made an offer Envoy’s investors couldn’t refuse. “They essentially bought the company for what turned out to be about 16 times the invested capital,” he smiles. “When it happens this way, it’s really fast, and there’s a tiny part of you that’s a little disappointed, as you had dreams of building a bigger company.” But as a businessperson Margus certainly liked the win, along with knowing that the platform and technology was going to be scalable on a much bigger level inside a global pharmaceutical company.
Next for this serial entrepreneur came the nonprofit endeavor, Genome Bridge (2013). Eric Lander, Ph.D., president and founding director of the Broad Institute of MIT and Harvard, and David Altshuler, M.D., Ph.D., also a founding member and now EVP and CSO at Vertex Pharmaceutical, talked to Margus about a concept to leverage his experience with biopharma building, along with the relationships established in the rare and genetic disease communities. “The goal was to build a platform that would be a place to hold, harmonize, and freely share with other researchers all the data that was starting to come out from genomics studies,” he explains. “We thought it would be really hard to do this in a for-profit environment, because people wouldn’t necessarily trust that any for-profit business model would not have a way to monetize the data.”
About 12 engineers were brought together, along with Margus and a few others, and Genome Bridge was born. Over the next 18 months the group played with the idea and even started developing prototypes. And during this time, the Broad Institute came to realize that this was something it should be doing internally, so rather than spin it out, it was decided to keep it in house. This meant they really didn’t need Margus anymore. But Margus found the experience too perfect, especially for someone having just exited as a biotech CEO. “There’s really no place in the world as fertile for new ideas as Kendall Square in Cambridge, MA, as you’re surrounded by VCs, scientists, engineers, biologists, and chemists, and it really gave me time to think about my next gig,” he attests.
Margus’s latest venture, Cerevance, a company working to discover new treatments for brain diseases, began in late 2016. “Envoy’s technology allowed you to profile specific cell types across the whole brain, and if you did that and then did comparative analysis, you could find drug targets that were selectively expressed only in the cell types for the disease you want to modulate,” he begins. But this technology was based on mice, which Margus says isn’t as good for studying late onset diseases like Alzheimer’s, or other cognitive/ psychiatric diseases lacking good animal models. “So, after we sold Envoy, Nat [Heintz] and I continued to think about how to do this with human tissue that is efficient and deep.” Heintz and his post-doc, Xiao Xu, eventually came up with NETSseq, a new technology that can profile post-mortem brain tissue. So, they started Cerevance to license the technology from Rockefeller University, which is now using it to identify new targets in CNS diseases while building a drug company. Along the way, Margus talked to some of his friends (e.g., former employees) now at Takeda, and realized there might be a way they could work together. “I thought we could get some people, lab space, and maybe even some programs from Takeda to put into the company, which they did,” he grins. Cerevance is currently focused on profiling thousands of human brain tissue samples and has a pipeline involving several assets out-licensed from Takeda, including one now starting Phase 2 clinical studies, originally from Envoy.
Wisdom From A Serial Entrepreneur on Entrepreneurship
While it remains to be seen as to what will happen with Cerevance, it isn’t likely to be this serial entrepreneur’s last build. “It’d be hard for my family or me to imagine retiring,” he admits. And then he shares an interesting observation. “I’ve been on some boards looking for new CEOs, and I’m starting to realize that biotech CEOs who’ve had successful outcomes and exits rarely want to be CEOs again,” he states. “They want to become VCs or board members, and I believe this to be because the startup journey is so hard.” The fact that Margus seems willing to suffer such punishment over and over seems an important attribute for those interested in becoming a serial entrepreneur.
As for advice to those aspiring to start their own biopharma, Margus had this to say. “In my experience of mentoring entrepreneurs, people usually limit themselves.” While some might think having a credential like a Harvard MBA gives an unfair advantage, Margus says there are too many other examples of successful entrepreneurs without such. “They just didn't understand the answer no, and took a big problem, broke it into pieces, and then found people to help,” he states. He adds that it helps being the type of person whom people are willing to join in these types of challenging journeys.
Looking back, one of Margus’s regrets is that perhaps he thought too small. “I have a great appreciation for working in an industry where most companies are advancing new therapeutics that not only can change peoples’ lives but won’t get to market unless they have some benefit over the current standard of care.” In the food business, Margus used to tell his team that they were bringing culinary pleasure to the world. And while admirable, he says it simply doesn’t compare to working in an industry trying to advance treatments for terrible diseases. “I don’t care if you work in the accounts payable department at a biopharma, you should still appreciate the meaningful company you have when compared to what so many other people do for a living,” he contends.
What about the non-profit that started this whole biopharmaceutical entrepreneurial journey in the first place? Margus says he continues to drive the A-T Children’s Project, only now as a volunteer. “This fall we will be testing an antisense oligonucleotide gene therapy in a two-year-old girl with A-T,” he exclaims. While such a historic first provides hope to those families with children suffering from A-T, our fingers are crossed that perhaps it can provide so much more (i.e., stopping the progression of her disease). “We never quit working on our kids’ disease, and the A-T Children’s Project remains relentless in pursuing a treatment for A-T,” he concludes.
How Do You Motivate Employees?
When Brad Margus was leading his very first company as a very young CEO (i.e., Kitchens of the Oceans, a shrimp-processing company in Florida), he learned a lot about employees, such as not everyone is motivated in the same way. “My leadership style is to be soft spoken and thoughtful,” he begins. “I had a foreman in a factory I had gone to see. We had this plan, which everyone had agreed to, and the foreman, to my face, agreed to do what we had discussed.” But when Margus returned a few days later and saw that nothing that had been agreed upon had been done, he lost it. “I got really upset, which was very out of character, and felt embarrassed afterwards,” he states. “If you’re not used to getting upset vocally, then you’re likely not very good at it, and I ended up sputtering all that sort of stuff in front of everybody.” Though he knew textbook teachings that stress pulling someone aside for a one-on-one, he couldn’t change how he instinctively responded. But lo and behold, upon showing up the next morning he found everything he had asked to be done, done. “From this experience I learned the importance of studying people to best understand their motivations, and then doing whatever necessary to get them to join the team and do what needs to be done.”
In the year 2000, Margus cofounded his first biopharmaceutical company, Perlegen Sciences. “The great thing about Perlegen was the opportunity to think about science all the time, as there are a lot of nuances, pitfalls, and realities about drug development that most lay people don’t appreciate,” the serial entrepreneur elaborates. But he also liked the idea of learning how to lead a completely different type of employee (i.e., scientists usually more educated than he). “How do you motivate them?” he asks. “How do you get them to focus on certain goals while giving them the freedom to be creative?” In his experience, some scientists are motivated by fame, others by funding, and still others seeing a picture of a child with a disease. “But most got into science because they really like solving problems,” he attests. Margus says he is particularly attracted to these types. “If I say, I bet you can’t solve this problem, and they can’t sleep for the next three days as they’re up trying to prove me wrong, that’s someone I want on my team.” From his perspective, one of the most important skills of an entrepreneur is finding these types of people and convincing them to join your team. “The CEO's role, in my opinion, is to make sure that you create a culture that is right for good scientists to do what they do,” he contends.