by Howard Johnson
Interview with Dave Madden of Narrow River Management
Dave Madden and I worked together at Paine Webber Development Corporation (PWDC) in the late 1980s. At PWDC, we both became excited about biotechnology, working on financing companies such as Genentech, Amgen, Centocor and Genzyme in innovative product development partnerships. Since then, Dave has gone on to have a very successful career in bioscience as a chief executive and board member of several companies, and as an investor and entrepreneur. Starting in 1992, he was CEO of Selectide, which was sold to Marion Merrell Dow (now Sanofi) in 1995. He then was Co-CEO of Royalty Pharma , a leading investor in the biotech space. In 2005, Dave became acting CEO and Chairman of the Board of Adolor, which Cubist Pharma acquired in 2011. He is now Chairman of Dicerna Pharmaceuticals and Founder and Principal of Narrow River Management, a NYC-based management firm focused on developing new biopharmaceuticals.
I recently asked Dave to answer a few questions of potential importance to NYC bioscience entrepreneurs.
1. What’s the key to starting a successful biotech company?
I don’t think there is a single key to starting a successful company in the bioscience space. For me, the key is to have an attractive molecule addressing a disease for which there are no or few treatment options. In addition, I think it is critical to have a finite time frame and a well- circumscribed budget for answering a value-creating question. In our case, this question needs to be a Phase 2 clinical trial. Once these elements are in place, the key to success is execution; that is, performing the trial to get quality data on time and on budget.
2. What type of drug development projects do you think appeal most to the venture capitalists right now?
This is a difficult question to answer, given the state of the life sciences venture business. We are all aware that this financing sector is contracting, making it much more difficult to fund even high quality projects. Having said that, we find there are distinct factions within the industry – for example, there are those that favor our approach of single product focus with short-term milestones and a finite budget. Others favor a less binary strategy seeking to build a product portfolio or technology around a management team in which they have confidence. As far as the hot sector of the moment – if there is one, I do not know what it is.
3. What’s the best advice you can give a young scientist or entrepreneur about starting a biotech company?
I would say the best advice I could give is to critically assess the data in support of your product or technology and to do the experiments that will disprove your hypothesis as early as possible. I think the worst thing that one can do in this business is to have an optimistic assessment of the data that defers making the difficult decisions and increases costs unnecessarily.
4. What did it feel like to get your first product approved by the FDA?
In our case, the approved product was Entereg at Adolor. Given the circumstances of the approval, in which the drug was given an unprecedented black box warning highlighting no known risk, the victory was bittersweet. On the one hand, we were excited to have an approved product; on the other, we were convinced that the label given the drug was unfair. This label continues to impact the use of what is an excellent drug. In addition, we were developing Entereg for chronic use together with GSK and, given some results that we had in those clinical trials, the additional safety data that the FDA requested made this additional indication economically unfeasible to take forward.
5. What are key issues that drive a sale of biotech company? Any negotiating advice you can provide to maximize price?
One obviously needs a product or technology that others might be interested in and a convincing data set that will enable them to bring it to commercialization in a straightforward fashion. In the case of a product, most often this is a Phase 2 trial in the intended population of sufficient powering to be convincing. In the case of a technology it is more variable. We sold Selectide as a technology company (combinatorial chemistry) with a few preclinical programs that had resulted from the technology. Today, the bar might be higher, but this tends to vary according to trends in the pharma industry. Just a few years ago, SIRNA companies were sold for quite handsome prices, for instance.
The key to maximizing the price one can achieve is also obvious – and that is having alternatives. I typically take that to mean the ability to fund the company and the project through the next value-creating milestone.
6. What is Narrow River Management’s mission?
We started Narrow River with a few key premises. The first is that for our particular skill set, the place where we can add the most value and create the most value for ourselves and our co-investors is in proving that a drug works in man – not discovery research, not preclinical development, but Phase 2 human clinical trials. The second premise is that we should allow our co-investors to select the products in which they have an interest. As a result, we fund each product we intend to develop separately in a special purpose corporation. Thirdly, we only take on projects that can be completed within a 2-3 year time frame and for which the result will be a data package that is (if successful) saleable or sufficient to attract the capital needed to complete a pivotal set of studies and register the drug ourselves. Finally, we decided to manage the businesses with very few of the best people and to outsource as much as possible.
Based on these premises, our mission is to find and develop interesting new drugs.
7. Tell us a bit about your current development project.
The first product we are developing is a protein that we are testing in a disease called Thyroid Eye Disease, or TED (also called Graves’ Orbitopathy). TED is a disease, associated with Graves’ Disease, that causes the eyeball to protrude from the socket. It is an orphan disease that affects mostly women and the morbidity associated with the disease can be quite severe. We are starting a clinical study in TED patients that is commencing presently and for which we hope to have the topline data in about 18 months.
photo credit: St Stev