What does it take to be a successful entrepreneurial leader in biotech? For a start, vision, establishing a problem-solving culture, attracting great talent and the ability to find funding from investors with a long-term orientation. For those last two strengths, two veteran life sciences leaders believe more entrepreneurs and investors are going to be looking toward Chicago.
“We’ve got the technologies. We’ve got the universities. We’ve got the talent … the elements are here,” said Sean Nolan, former president and CEO of gene therapy company AveXis.
Jeffrey Aronin, Chairman and CEO of healthcare innovator Paragon Biosciences, and Nolan, now Chairman of gene therapy company Encoded Therapeutics, appeared at a recent “Tales from the Trenches” session at MATTER, the healthcare incubator based at Chicago’s Merchandise Mart. Aronin and Nolan, both veterans of large pharmaceutical companies early in their careers, met and worked together at Ovation Pharmaceuticals, which Aronin founded in 2000. Nolan succeeded Aronin as president after Lundbeck A/S acquired Ovation in 2009. Subsequently, Nolan made news last year by selling eight-year-old AveXis to Novartis in a multibillion-dollar deal.
Aronin kicked off the Tales from the Trenches discussion by asking Nolan about his approach to leadership, building companies and why Chicago’s relatively quiet status as a bioscience center might be on the brink of change. “You’ve built many companies here in Chicago and raised capital. We’ve been able to raise capital in Chicago,” said Aronin. “Yet there’s still a belief that Chicago’s a very difficult environment for that. Why does that exist?”
Nolan responded, “I think Chicago, traditionally, has been big pharma and specialty pharma … when I was a kid, there was Abbott and Baxter and very few other healthcare opportunities,” adding that Chicago’s heavy-industry roots traditionally made the local investment community culturally “a lot more cash flow-focused” in its approach to funding new companies.
Seasoned biotech venture capitalists are more comfortable playing “a longer game” as new medicines, diagnostic tools and medical devices face a multiyear path through development and regulatory hurdles. But for Chicago startups to get the same support as startups on either coast, it’s going to take a bit more awareness and cultural change, Nolan notes.
“I think it’s still going to require some people who have been there and done that to get more people comfortable,” said Nolan. “…the money from New York, San Francisco or Boston will come to Chicago if there’s good technology and they’re comfortable with the management team.”
Nolan drew a laugh from the MATTER audience as he described a conversation years ago with an investor about Nolan’s plans to base a company in Chicago. According to Nolan, the investor responded, “‘Look, you’ve got a good track record, so we’ll let you do that. But there’s no talent in Chicago.’ So, I asked, ‘Then why did you pick me as CEO?’”
To watch the event, go to https://vimeo.com/346550173/4c78ba8595
Eighteen months later, that same investor changed his perspective – or at least Nolan’s results did. In a phone call to Nolan, the investor opened the conversation by saying, “’I’m wrong. There’s a lot of talent in Chicago. I’m just used to make my investments based on technology – I’ve learned that management matters.’”
Skills matter too. A recent Chicago Tribune story reported that 1 in 10 U.S. computer science degrees is produced at an Illinois college or university – and a recent LinkedIn study showed that those grads are five times more likely to work in Chicago than any other city in the country. That’s significant as a recent JAMIA study noted fierce competition throughout the healthcare industry for experienced data scientists and machine learning experts.
If that talent is grown in Illinois and opts to stay in Illinois, that’s positive for Chicago’s reputation as a growing biotech center.
Said Aronin, “I think we have all the pieces, great research, great institutions. The big pharma talent that’s here is as good as anywhere in the country, and that’s critical … and Chicago was built with an entrepreneurial mindset. We were built after a fire, from nothing! It’s in our culture to do this.”
Aronin asked Nolan what qualities the best entrepreneurial leaders have. Nolan said best practices start with a culture that harnesses “the competitive spirit” most innovators share “in a positive…constructive way,” starting with ample transparency and a reasonable tolerance for mistakes and obstacles that generally accompany the creation of new businesses.
“We’ve all probably worked for people, who, if there was a mistake made, you could lose your job,” Nolan told the crowd. “If you’re in a situation where you’re trying to build value and do something that hasn’t been done before, that is the fastest way to create major problems for yourself. So, I always try to just let people know that we’re going to make mistakes” to foster a more trusting environment.
Nolan says it’s also important to hire people who recognize why that transparency is important. Admitting mistakes immediately within a team “actually puts (the business) forward faster than if you waited three months to bring (the issue) to the forefront and have a real discussion about it.”
Nolan also believes high standards of transparency works with funders, too. Describing another investor conversation, Nolan was asked what his biggest concern about his company was at the time. A colleague reacted with horror at Nolan’s detailed response, arguing that Nolan had been too candid.
Nolan told the MATTER audience that the investor he was speaking with reacted with an offer to lead the first round of funding, eventually telling Nolan that, “‘If you told me nothing bothers you, I wouldn’t have funded the round.’” Said Nolan, “It just reinforced that you need to be as transparent as you can. Do things the right way and manage expectations as you can.”