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made his share of mistakes there. Without discussing specifics, he says academics running a lab tend to “hyper-delegate,” whereas when running a business you need to “own every single thing.” He didn’t really know how a budget worked, or how to work with corporate attorneys to structure a company. He credits Third Rock and Sanofi, which along with Greylock Partners formed Warp Drive with an unusual alliance, for being willing to give him a chance to lead the company.
“There’s just a lot of stuff that you don’t get exposed to as an entrepreneur,” Verdine says of his time at Warp Drive. “I got some things right, and I got some things wrong.”
According to Reid, Warp Drive was fully aware of the intellectual property from Harvard that would form the basis of Fog and Verdine’s plans to start a company around it. Verdine was still Warp Drive’s chief scientific officer until 2016, and while there, Reid says Verdine was still sorting through different opportunities—it wasn’t clear whether he’d make a big commitment to a new startup (or two).
Now that he has, however, Reid thinks Verdine will need to rely on strengths as a recruiter and motivator of scientific talent to succeed. “He will need to build a great team to complement his leadership to ensure execution on his vision,” he says.
One major lesson Verdine has learned over the years: venture investors can’t wait around forever to get returns. Nearly all of Verdine’s startups are drug discovery companies, meaning they are formed around some sort of new way of identifying and developing drugs. That adds extra layers of time and cost—proving the technology works, and figuring out the best way to apply it—to the already long and expensive journey of developing a drug. But as time goes on, there becomes an “increasing emphasis,” he says, for VCs to get to some type of return or exit. Sometimes that can cause a shift in strategy.
Verdine, for instance, points to Eleven Bio. The firm started out as a protein engineering company when it was formed in 2010 but eventually narrowed its focus to an experimental eye drug. The drugmaking platform, Verdine says, was de-emphasized. The eye drug, isuankinra, helped Eleven Bio go public in 2014, but ultimately failed in clinical testing, leading Eleven Bio to abandon the effort and merge with a cancer drug developer. “If the company didn’t need to achieve [a] liquidity [event],” he says. “you might have really continued to put capital into the platform itself.”
Verdine is careful to say he isn’t pointing fingers at VCs that have given him “tremendous” support over the years, and that Eleven’s story is a common one in the industry. Working within venture timelines is just “the reality of things,” he says. But Verdine has been mindful of that with Fog. He wants more time and more strategic control with this company. So he and Zhou are going about things much differently.
Fog’s $10 million Series A is a pittance, as biotech startups go, but Verdine says that’s by design. His goal with the Series A was to get the company’s founding technology up and running without significantly diluting ownership stakes with a massive round. The next step is to secure non-dilutive financing in 2017—he didn’t give specifics, but partnerships will be crucial—that can keep Fog afloat without having to turn to traditional venture funding sources. The startup is about two years away from human clinical testing, he says, and is developing cell-penetrating mini-proteins aimed at beta-catenin, a so-far intractable molecular target implicated in a variety of cancers and other diseases.
Verdine looks at his future with Fog as a way to force himself to evolve. He points to the paths taken by David Schenkein, CEO of Agios Pharmaceuticals, and John Maraganore, CEO of Alnylam. Schenkein started out as an oncologist before rising through the ranks in industry to lead Agios (NASDAQ: AGIO), a developer of cancer and anemia drugs. Maraganore was initially a senior scientist at ZymoGenetics before learning business development at Biogen and Millennium Pharmaceuticals and eventually becoming CEO of Alnylam (NASDAQ: ALNY), a maker of RNA interference medicines. Verdine is “totally psyched” by the idea of being the CEO that takes Fog public someday, too.
“It remains to be seen what the future holds—situations change,” he says. “But I wanted to run a different experiment for company formation, and one that really forced me, as a matter of personal growth, to really dig into every single aspect of how you build a company.”