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Jim Blair’s Early Days with Amgen to New ‘Domain’

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By Jennifer Boggs
Managing Editor

It’s hard to imagine there was a time when stalwart biotech giant Amgen Inc. was just a small start-up begging for investments. But veteran life sciences venture capitalist Jim Blair doesn’t have to imagine; he was there.

In 1981, when Amgen raised its first significant funding round of $19 million – “by today’s standards, that’s like $75 million out of the gate” – Blair was working for N.M. Rothschild & Sons, a diversified venture firm that had added a biotech-focused fund only the year before. And that first year, “we only looked at 10 deals, and did four or five,” Blair said.

One of those was Amgen.

But back then the Thousand Oaks, Calif.-based firm was not the industry powerhouse it is now. In fact, the firm was still called Applied Molecular Genetics, and its business plan wasn’t exactly fleshed out. At the time, it had four employees – its founders – and by June of that year was down to one: George Rathmann, Blair said. “To find yourself months later down to one founder? It was a little scary.”

Fortunately, Rathmann, who would go on to become a biotech legend, was a “superb leader.” He was able to see the potential in early work on erythropoietin that eventually would lead to Amgen’s blockbuster Epogen and Neupogen products and change the way kidney disease was treated. “But in those days,” Blair said, “[Amgen’s success] wasn’t obvious.”

Early investors and executives also had to navigate the fledgling industry. Now biotech players can hash out different business models at every business development conference. But in the early 1980s, “it was a little less orderly,” Blair said. “You’d try a little of this and a little of that. And you didn’t have the management teams who had been there, done that.”

Amgen’s original business plan, for instance, had included gene sequencing capabilities. But it became clear that activity wasn’t going to operate well with the company’s other plans, so those technologies went on to become Applied Biosystems.

In 1983, Amgen went public with an initial public offering (IPO). That year proved an “intense” one for biotech IPOs, with the likes of Genzyme Corp. also hitting the public markets to great fanfare, Blair said, “only to find that in 1984 and 1985, many had dropped back down.”

The enthusiasm for the new industry was matched only by its unknowns. “How do we evaluate companies that have no products, no revenue?” Blair asked.

‘The Strangest Character’

While Blair has racked up roughly 35 years in the life sciences business, it’s not exactly where he started. With training as an electrical engineer, he moved to Wall Street in the 1970s, joining investment bank F. S. Smithers. “I became what people now call a tech analyst.”

In 1978, he began working for New Court Securities, the venture arm of Rothschild, where he later set up the dedicated biotech fund, despite having no background in life sciences. Having grown up as a Christian scientist, “I wasn’t even allowed to take a biology course,” he said, adding that his sole exposure to biology was a hobby raising parakeets that he trained and sold to a local pet store.

“I’m the strangest character to be involved in this business,” he noted wryly.

Blair had struck up a friendship with Rothschild patriarch, Victor Rothschild, who held PhD in biophysics and was keen to create a biotech fund. “I said, ‘A, it’s a great idea and, B, it’s not an area I know anything about.”

But Rothschild also was friends with Sydney Brenner, a renowned biologist who headed up the Laboratory for Molecular Biology in Cambridge, UK. Blair described the Nobel winner as a “very good judge of raw talent. He became a kind of quote-unquote tutor for me.”

With Brenner’s acumen behind him, Blair headed up the U.S. side of the new Biotechnology Investment Ltd. (BIL) fund – the UK venture was helmed by David Leathers – and raised the first round of funding that eventually would help jumpstart Amgen and other firms.

By 1985, “activity started to mushroom,” Blair said. It became important to bring in resources and experts to help young scientists and entrepreneurs. That kind of hands-on involvement was difficult for Rothschild because of its diversity. A new venture fund dedicated to life sciences was needed.

So Blair founded Domain Associates LLC. But he kept ties to his work at Rothschild. In fact, Domain’s first client was BIL, for which it handled U.S. advisory relations. “We worked side by side until 2000,” when BIL wrapped up and Domain became fully independent, Blair said. The venture firm has raised eight subsequent firms.

Strictly on the basis of returns, Amgen has been the biggest deal Blair has had a hand in. But, when asked for his favorite success story, he recounted a deal in the late 1980s that started with firm called Immunetech Pharmaceuticals. At the time Domain got involved in Immunetech, the company looked like a sure-fire winner, with an asthma/allergy drug that had finished up Phase III testing and was under review at the FDA.

“They had run out of steam raising capital,” so Domain stepped in, Blair said, expecting an FDA approval around the corner. But the agency rejected Immunetech’s application, requesting more data. Immunetech ran additional studies over the next three years – struggling against a pesky placebo effect – and submitted again.

While awaiting word from the FDA, Domain realized a distribution network would need to be in place to sell Immunetech’s drug, so it paid $3 million to acquire Dura Pharmaceuticals, a San Diego firm that did a modest business selling generally recognized safe products, gaining a sales force that could be built out for the allergy/asthma drug.

But the plan hit a snag, again courtesy of the FDA, which declined to approve Immunetech’s drug. That left the biotech and its recently acquired sales network in limbo. The obvious move would have been for Domain to cut its losses, writing that investment off as a loser.

Instead, Blair said, Domain decided to change direction. He shifted focus to Dura Pharmaceuticals, bringing in a new CEO and ramping up a specialty pharmaceuticals business. “We built sales from $3 million to $350 million” when Dura was sold to Elan Corp. plc for $3 billion in 2000, he explained. (See BioWorld Today, Sept. 13, 2000.)

That experience drove home the importance of remaining flexible. “I feel the need to stay involved, stay fluid,” he said, a strategy Domain has continued.

Ready for the ‘Biology Boom’

While the venture firm recognized that biotech often required long-term involvement, as it moved into its fourth fund, Domain began incorporating a “five-year mantra” into its investment strategy, Blair said, aiming for “liquidity in a five-year time frame.”

One way it did that was to look for de-risked products. For instance, “we began scouring Japanese companies, looking for products to partner,” he said. In 10 to 12 years, about a dozen products were licensed, with about half of those going on to become successful companies.

One of those was Novacardia Inc., a company that began operations in 2003 under chairman Eckard Weber, a partner at Domain, by licensing a congestive heart failure candidate from Tokyo-based Kyowa Hakko Kogyo Co. Ltd. In 2007, Novacardia went to Merck & Co. Inc. in a $350 million stock deal. (See BioWorld Today, July 26, 2007.)

Advancing globally is a focus for Domain, too. It made headlines in 2012 inking a deal with Russia’s state-owned venture capital firm Rusnano for $760 million. (See BioWorld Today, March 12, 2012.)

Domain also has added an emphasis on diagnostic tools – representing about 30 percent of its most recent fund – as that part of the industry has gained ground in recent years. The industry, Blair said, is at the “tip of the iceberg” for personalized medicine. He pointed, for example, to gene sequencing costs, which are dropping “much more dramatically” than consumer electronics did during the technology boom in the last decade or so of the 20th century. “We think now we’re going to have a biology boom,” he told BioWorld Today. “In five years, you won’t be treated for cancer the way you’re treated today.”