Q&A With Bob Tepper on What’s Next for Third Rock Ventures

Xconomy Boston — 

Third Rock Ventures had the biotech industry buzzing yesterday. It raised its third fund, worth $516 million, to invest in early-stage biotech drug, device, and diagnostic companies.

While many biotech VCs are winding down operations or switching to late-stage investing strategies to show quick returns, Boston and San Francisco-based Third Rock has moved in the opposite direction. It has aggressively sought to build companies in disruptive areas of science like genomic-based drug discovery, gene therapy, and cancer immunotherapy.

I followed up on the news yesterday in a phone call with Robert Tepper, a Third Rock partner who co-founded the firm in 2007. He’s the former president of R&D at Millennium Pharmaceuticals, and has training as a biochemist and a physician. Tepper will also be one of the featured speakers at the sold-out event we’re organizing April 4, titled “Boston Biotech Seizes the Momentum.”

Here’s what he had to say about what to expect from Third Rock now that it has raised the new load of cash:

Xconomy: Big day for you guys. What does your inbox look like on a day like today?

Robert Tepper: A lot of congratulations. That’s about 80 percent of the additional e-mail. Then there’s about a 10 percent uptick in LinkedIn requests. I think that’s just because people know we might be hiring in the future. And then there’s another 10 percent random other folks who heard the news.

X: You mentioned in today’s press release you’ll be adding some people to the team. Looks like you have about 40 there now. Mark Goldsmith will become a partner. How many people are you looking to add, and in what kind of roles?

RT: I’d say we’re pretty close to steady-state right now. You won’t see us adding a dozen people or more. What we’ve done, what we continuously do, is just looking at competencies we’re missing. So much of what we do depends on us jumping into the companies and really managing the efforts. There’s a lot of activity on the science side, but also on the business side. Pharma is reaching out much more now than in the past. As we have built some of these relationships with the pharma companies, we’re finding there’s a lot of interest in continuing the dialogue. I think we may need a little more help on continuing what we call business development, or partner development with pharma and biotech. We’re always looking for new entrepreneurs who have great expertise in a particular area. A good example of that, a couple years ago, was when we added Steve Paul to the team as a venture partner. Steve has great expertise in the central nervous system area, which really helped us start companies in that area. I think you’ll see very selective hiring to round out the team.

X: What kinds of expertise would you say you are lacking at the moment?

RT: I don’t know if we’re lacking any one expertise completely, but we may try to branch out into another therapeutic area, that might be one. The business development area is one where we have great expertise with Neil Exter and Cary Pfeffer, and others, but we may want to add more capability. It’s about strengthening existing expertise rather than going into completely new areas.

X: Will there be any operational changes in how Third Rock starts up companies? Will you still have partners be very hands-on, and working as interim CEOs for the first 12-18 months of a startup’s life?

RT: It’s pretty much the same model we’ll be using. It’s worked well for us in the past. The interim CEO roles, we think are good for the companies, and we find it’s really great for us to understand the companies—the opportunities and the challenges and the strategic directions they have. So I think you’ll continue to see partners work as interim CEOs, interim CSOs. For example, Jounce, a company we recently launched in the cancer immunotherapy space, has Cary Pfeffer as interim CEO, and I’m interim CSO. We plan to do that over a 9-12 month period, sometimes a little longer, sometimes a little less, until we can get the right folks in there.

You’ll see the same model. We’ve gone through a lot of numbers on what it takes in terms of the number of people we need to continue with that model. I think we’re close. We will need just a few folks.

X: Any plans to expand geographically? I know you like to keep those companies close to home in Boston and San Francisco, close to where … Next Page »

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