Former Biotech CEO Richard Hollis Unveils Web Startup Holonis
Richard Hollis, who lost control of his namesake biotech company in 2009, is staging a comeback with the launch of San Diego-based Holonis, an online marketplace providing e-commerce software and services on a subscription basis for business customers.
While Hollis spent 30 years in the pharmaceutical industry, beginning in 1978 as a salesman with Baxter International, he’s now focused on the Web, saying he “fell in love with the opportunity that the Internet represents.”
In a statement today, Holonis says it is now accepting new users for the beta launch of its online marketplace, which integrates e-commerce with content publishing, search, social media, e-mail marketing, and analytics. The company says its target customers are the 28 million small and medium-sized businesses in the United States, and “nearly 50 percent of those businesses have no Web presence.”
Of course, the e-commerce market that Holonis is targeting is already dominated by some of the world’s biggest Internet retailers, including Amazon, Apple, Staples, eBay, and Alibaba, along with dozens of more specialized e-commerce sites like Etsy, Zappos, Netflix, and NewEgg.
But in a recent phone interview, Hollis said the big e-commerce players like Amazon and eBay were founded 20 years ago during the first dot-com boom, and still basically operate only as e-commerce websites.
Holonis is taking a more holistic approach. “What we’ve basically built, in a nutshell, is an ecosystem that empowers global commerce,” Hollis said.
Hollis, who has a stream-of-consciousness way of talking, said: “I would like to think that we’re a more modernized and up-to-date marketplace that takes advantage of search engine optimization, takes advantage of publishing content—photos, videos, and articles—takes advantage of the distribution of that content to social media channels, to e-mail channels, to search engine channels, distributes that information, [and] creates conversations with consumers who are looking for you. Now you’re into customer engagement, and the customer engagement leads to transparency because now the company is producing content and becoming exposed to consumers, and all that transparency and conversation leads to trust, and that trust leads to transactions, and all the transactions lead to data.”
Hollis plans to make money by renting space in its online marketplace to small and medium-size businesses, and by providing them with access to Holonis’ suite of software and back-office services.
Hollis, 62, said he started Holonis in March 2009, immediately after he was ousted from San Diego’s Hollis-Eden Pharmaceuticals, the biopharmaceutical startup he founded in 1992 and where he served as chairman and CEO for over 17 years.
Hollis-Eden was focused on developing small molecule compounds known as immune-system modulators (in this case derived from adrenal steroid hormones), and what Hollis described as “the idea that you could possibly regulate [changes in] immunity and inflammation that occur as you age and become susceptible to a lot of end-of-life diseases.”
It was a strategy that met with some skepticism at the time.
Hollis-Eden went public in 1997 through a reverse merger, and its shares traded over-the-counter until late 1998, when the company’s listing moved to the Nasdaq market.
As a development-stage biopharmaceutical, Hollis-Eden never generated any product revenue, and incurred losses every year since 1994, when the company was officially incorporated. At the end of 2009, Hollis-Eden reported a net loss of $15.6 million and an accumulated deficit of $251.8 million—with only $9.7 million in available cash.
In a regulatory disclosure filed at the time Hollis left the company, Hollis-Eden said he had been fired “for cause” in accordance with his employment contract. The contract spells out a variety of sins for termination, including the improper use of company funds for personal use, fraud, and participating in any activity or engaging in behavior that is competitive or injurious to the company..
Beyond this filing, Hollis-Eden never elaborated or explained why Hollis was fired. James Frincke, who succeeded Hollis as CEO, did not respond to an e-mail query from Xconomy.
Hollis, however, maintains that he was fired because of a dispute with Hollis-Eden’s board of directors. Hollis said the board wanted to halt an ongoing mid-stage clinical trial of HE3286 (Triolex), a small molecule drug the company was advancing as a treatment for type 2 diabetes.
Indeed, according to a 10-K regulatory filing submitted about a year later, Hollis-Eden reported that a series of interim analyses showed the experimental drug was failing to meet its primary endpoint of lowering hemoglobin A1c (HbA1c) in diabetic patients. As the company reported, “There was no statistical difference between treatment and placebo for HbA1c in the overall patient population.”
The great recession was in full throttle at that time, and Hollis said the board wanted to shut down the trial to conserve the company’s remaining cash. In opposing the shutdown, however, Hollis said he sided with Hollis-Eden’s scientists. They noted that a sub-group of patients had improved with the treatment, and argued the clinical trial should be allowed to run its course as originally planned.
In the 10-K filing, the company notes that a retrospective analysis of unaudited data showed that 10 patients who were representative of “the inflamed, obese, insulin-resistant, diabetic population” were found to “show improvements in clinical parameters.”
So there is some support for Hollis’ explanation in the company’s regulatory filing. The company also noted in its filing that it made no changes in its internal financial controls after Hollis left. But the company never disclosed if such a dispute was, in fact, the reason Hollis was fired—or if there were additional grounds for his dismissal.
“I only owned 18 percent of that company by 2009,” Hollis told me. “I didn’t have the voting control to carry out the vision I had for almost two decades.”
Meanwhile, Hollis-Eden changed its name to Harbor BioSciences almost a year after Hollis was ousted. The company fell out of compliance with listing requirements for public companies in 2010, and the Nasdaq exchange delisted the company’s stock that September. The company changed its name again in 2012 to Harbor Diversified.
Hollis called his experience with Hollis-Eden devastating. “When I lost Hollis-Eden, it was like losing a child, and I had to recuperate,” he said. “I had to dust myself off and reinvent myself, and come back at it in full fervor.”
Otherwise, Hollis said that making the transition from the life sciences to a Web startup has been relatively easy. “I became very confident [about working] in digital code, and what I could create and translate, and I wanted to retain control,” he said.
He said retaining control is one reason why he has self-funded Holonis, which currently has 16 employees in San Diego, including a chief technology officer and director of engineering, and 15 coders in India.
In two weeks, he added, Holonis will be making its debut at the South by Southwest Interactive conference in Austin, TX. “To me, there are brighter days ahead,” Hollis said.
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