By Charles Craig

Since being forced out as Genentech Inc.'s CEO two years ago, Kirk Raab has been busy as a globe-trotting chairman of four biotechnology companies on three continents.

However, efforts to form a "biotech dreamworks" fund to acquire and merge small biotechnology firms into one fully integrated drug company never materialized, he said, but it wasn't for lack of money.

"The easy part would be raising the money," he explained. The problem, he realized, was getting CEOs and executives at the potential merger targets to give up their independence for the good of a combined company run by someone else.

"The idea was to acquire and merge four, five or six biotechnology companies," he said. "Put the gems they were working on in fast-track development and throw out the high-risk products. There was quite a lot of interest."

That was two years ago when Raab was only two months removed from Genentech, where he served 10 years at the helm of one of biotechnology's oldest, most respected and most profitable firms. (See BioWorld Today, Sept. 14, 1995, p. 1.)

He was forced to step down in July 1995 when it was learned he sought a $2 million personal loan guarantee from Genentech's majority stockholder Roche Holding Ltd., of Basel, Switzerland, to pay his U.S. income taxes. Raab's request came during negotiations between the two companies on an extension of terms for Roche's buy-out option for Genentech, generating conflict of interest concerns among the company's minority shareholders.

"Frankly, I still don't believe I did anything wrong," Raab said. "But I did do something pretty stupid."

Raab discussed his life after Genentech at Shaman Pharmaceuticals Inc., in South San Francisco, not far from his former company. He had just returned from England where he is chairman of Oxford GlycoSciences Inc., in Oxford.

Raab also heads the boards of Connetics Corp., of Palo Alto, Calif., and Sinogen International Ltd., of Shenzhen in the Guangdong Province of China.

Shaman was the first biotechnology firm to tap into Raab's experience following his departure from Genentech, naming him chairman in September 1995.

He had served on the company's board, establishing a close relationship with Shaman's president and CEO Lisa Conte.

"Lisa and I are real partners," Raab said. "She depends on me for my experience with pharmaceutical companies."

Raab spent the early part of his career with Pfizer Inc., of New York; A. H. Robins Inc., a subsidiary of American Home Products Corp., of Madison, N.J.; Beecham Group Ltd., which is part of SmithKline Beecham plc, of London; and Abbott Laboratories, of Abbott Park, Ill.

This June Raab will celebrate 38 years in the pharmaceutical and biotechnology industries. "I started in 1959 in Brooklyn as a salesman with Pfizer," the 61-year-old Raab recalled. "I've been at the executive level since I was 31.

"I love what I do," he said. "I'm the luckiest guy. My departure from Genentech was a heartache for me. But I was happy to have a wonderful successor in Art Levinson, (the current CEO of Genentech)."

Raab said the fallout from his resignation was minimal. Only one business contact ever checked with Genentech on the circumstances.

"I've been very forthright about what happened," he added. As for today, he said, "I have a wonderful home in Woodside. I paid all my taxes. I have reasonable security. And I'm very proud of what Genentech is doing."

At Shaman, Raab not only provides expertise in negotiating alliances with pharmaceutical companies, but his international business experience comes in handy with Shaman's search of tropical forests in Latin America, Africa and Southeast Asia for traditional herbal medicines. Shaman extracts the active ingredients from the natural products to make drugs based on their historical uses.

"We have a whole mechanism set up where physicians and ethnobotanists work with the healers," he said. If the active ingredient of a traditional medicine works, "we get it into animal models. If it isn't patentable, we dump it."

Shaman's Advantage Over Big Pharmas

Raab served in Latin America with Pfizer, Beecham and Abbott. He also was vice president of international operations for Abbott before moving up to president of the pharmaceutical company.

To compensate people whose herbal medicines provide Shaman with drug candidates, Raab said the company established a foundation to pay them a percentage of profits.

"We didn't just charge in there," he said. "And as a result there are countries where we are welcome and some big pharmaceutical companies are not."

At Oxford GlycoSciences, Raab said his first two orders of business were finding a CEO and raising money. "We hired Michael Kranda from Immunex Corp., (where he was president), and raised $20 million," Raab said. "We hope to float the stock by year end or the first quarter of 1998."

Oxford GlycoSciences focuses on proteomics for sequence and functional analysis of glycoproteins and their links to disease. Two clinical trials will be launched this year in liver cancer.

"The company is involved in very profound Genentech-like science," Raab said.

Connetics Corp., formerly called Connective Therapeutics Inc., "has a couple of key products that came from Genentech," Raab observed.

Gamma interferon, a lymphokine, is in Phase III trials for severe atopic dermatitis, and relaxin, a peptide hormone in Phase II studies for scleroderma. Genentech markets gamma interferon for chronic granulomatous disease and conducted Phase I and Phase II trials in atopic dermatitis.

Connetics also has licensed additional late-stage products from other sources, such as SmithKline Beecham, and is building a sales force.

China's Challenges And Opportunities

The biggest challenge Raab faces may be in China, helping Sinogen get started.

Its scientific link is to the University of Beijing. Raab helped the company hire Peter Huang away from SmithKline to serve as CEO. At SmithKline, Huang "ran Korea, Taiwan, Hong Kong and China."

And Sinogen already has a product, recombinant alpha interferon, for hepatitis B and C.

Doing business in China today, Raab said, "reminds me of the old days in Brazil where I was in 1963. People are go, go. China is the most capitalistic society I've been in with centralized control."

As for biotechnology, Raab said very few U.S. companies have a presence in China. Most big pharmaceutical firms are there "with varying degrees of real commitment."

"This company is on the ground floor," he said of Sinogen, adding plans include positioning it as a China partner for manufacturing and marketing drugs from U.S. and European firms.

"We hope to do an initial public offering," Raab said. "The assumption is on NASDAQ, but we're looking at London too."

When he left Genentech, Raab said, he had an offer to join the investment group, Domain Partners, of Princeton, N.J.

"I wasn't interested in making investments," he said. "I wanted to participate in a meaningful way. I wanted a sense of ownership."

For now, he added, he is busy enough serving as chairman of four companies and as a director of three others: Bridge Medical Inc., of San Diego; Applied Imaging Inc., of Santa Clara, Calif.; and Plant Cell Technologies Inc., of Daly City, Calif. *