Harvard University chemical biologist Greg Verdine has been learning how to start and run biotech companies for almost two decades. He’s been a scientific co-founder of ten startups, worked at three different healthcare-focused venture capital firms, and even run a few biotechs in their early days before handing them off to more seasoned life sciences executives.
Now, Verdine (pictured) is putting all those lessons to the test. When he retires from Harvard in two to three years, he aims to become a full-time biotech CEO and run one of his latest startups, FogPharma, for the long haul. And he wants to do it while maintaining a “ferocious independence,” holding on to more equity, and strategic control, than can typically be achieved with traditional venture financing.
“I feel like I’ve learned quite a lot about how to do a startup company,” Verdine says, “and that there might be an opportunity to really do it all myself this time.”
Verdine’s transition from academic to biotech executive has been underway for some time. Since 2015, he’s teamed with a business colleague, Weiqing Zhou, to form Fog and another startup, LifeMine Therapeutics, which both share space at a lab in Cambridge, MA. Zhou and Verdine have raised initial financing rounds for each company—a $10 million Series A for Fog, and a $5 million seed round for LifeMine—and Verdine is currently the president of both, even as he remains a tenured professor at Harvard University, where he has worked since 1989. But when that gig ends, Verdine plans to run FogPharma full-time, and have a less prominent role at LifeMine. (Zhou, meanwhile, heads business development at Fog, and is the COO of LifeMine.)
Verdine took a two-year sabbatical from Harvard to run another startup he co-founded, Warp Drive Bio, between 2013 and 2015 (more on that below). But he is eligible to retire in roughly three years, he says, at which time he’ll become an “emeritus” or former, honorary Harvard professor and work at his startups. Through a deal with Harvard, Verdine says, he is allowed to spend a “mutually agreed upon amount of time” running both Fog and LifeMine while “transitioning out” of his tenured professorship. “This is basically a retirement plan for me,” he says. “The university really does want to become more accommodating of entrepreneurship.”
Both FogPharma and LifeMine aim to pursue new ways of making drugs. Fog is developing molecules called “cell penetrating mini proteins,” which combine attributes of small molecules and biologics, to try to get at drug targets that can’t be reached by other methods. LifeMine is mining the genomes of fungi to try to discover and develop drugs that work in novel ways.
But the companies are being built very differently. LifeMine, Verdine says, is raising a large Series A round (he wouldn’t specify the size) and will pursue a very “traditional” type of venture syndicate. It’s been seeded by WuXi Healthcare Ventures, where Verdine is a venture partner. Fog is taking a more unusual path. It’s currently financed by an atypical mix of high-net-worth individuals and institutions, and Verdine aims to keep the company very closely held and to control its strategic path.
“Greg is a brilliant and creative thinker who could succeed in many walks of life, certainly including this one,” says Warp Drive CEO Laurence Reid, who took over for Verdine in 2015.
Fog’s backers include WuXi Healthcare founding partner Ge Li; Leerink Partners CEO Jeff Leerink; former Pfizer and Biogen executive Robert Cawthorn; the general partners of Chinese investment firm Boyu Capital; and William Poorvu, co-founder of hedge fund The Baupost Group. Two institutional investors, Deerfield Management and WuXi Pharmatech’s corporate venture fund, are also backing Fog, but Verdine says they are not taking board seats and are allowing him and Zhou to “pursue [their] vision in an unobstructed way.”
Before Fog and LifeMine, Verdine co-founded eight startups and two non-profit institutions, the Gloucester Marine Genomics Institute and the Gloucester Biotechnology Academy. Five of those companies—Variagenics, Enanta Pharmaceuticals (NASDAQ: ENTA), Tokai Pharmaceuticals (NASDAQ: TKAI), Eleven Biotherapeutics (NASDAQ: EBIO), and WaVe Life Sciences (NASDAQ: WVE)—went public, and a sixth, Gloucester Pharmaceuticals, was sold to Celgene. Verdine says none of his startups have gone out of business, but Variagenics, Eleven Bio, and Tokai each merged with other companies after clinical setbacks and other struggles.
Along the way, Verdine has had advisory and part-time “venture partner” gigs at TPG Biotech Ventures (2007-2011), Third Rock Ventures (2009-2015), and currently WuXi Healthcare Ventures, which helped him watch, up close, how early stage biotech VCs build and manage biotech companies. Verdine was also the founding CEO of WaVe, but he considers the two years he spent as the CEO of Warp Drive as his “first intensive business training.”
Verdine says he was “blissfully ignorant” of the business aspects of biotech before heading up Warp Drive, and that he 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.”