Kirk Raab is over "the shock" of being ousted asGenentech Inc.'s CEO and now is getting back tobusiness, which he said Wednesday means findingpartners and capital to put together another fullyintegrated drug company.
"I'm working on the possibility of putting a fund togetherto acquire, probably, private biotechnology companies,"he told BioWorld Today. "There are a lot of companies, agreat many exciting companies and it's difficult for themto become another Genentech Inc. or Amgen Inc. My ideais to look for the synergies between companies andprovide the capital to build a pharmaceutical business."
Raab said he envisions his fund as a "biotechdreamworks," bringing together start-up companies withcomplementary technology and investors to support them.
He estimated the fund will need between $50 million and$100 million to acquire companies and once merged, thenew entity _ with Raab at the helm _ will need about$500 million to get a drug to market.
"Look at Amgen, from a business point of view, theyraised $400 million before they sold their first product,"said Raab, who served on the board of the ThousandOaks, Calif., company, which is biotechnology's toprevenue producing firm.
He added that South San Francisco-based Genentech _No. 2 to Amgen in revenues _ raised $800 millionbefore it sold its second product.
Raab said his first move will be to assemble a team thatincludes a medical expert and a legal expert to help himidentify takeover targets.
"This is not something that can or should be donefrivolously," he said. "I need the right people . . . peoplewith strength, integrity and vision."
As for potential team members, he said, he has discussedthe idea and "people are very enthusiastic." As forpotential sources of capital, he said he will use some ofhis own money and will seek funds from private investorsto jump-start the effort.
In departing Genentech in July after 10 years, Raab got aone-time payment of $1.2 million, will receive annualsums of $400,000 for the next 15 years and will get fullhealth care benefits. In addition, he has stock options thatcontinue to vest.
A Mentor For Shaman's CEO
Raab's formation of a "biotech dreamworks" is one oftwo ways he's spending his time since being ousted asGenentech's president and CEO. Genentech's boardforced him to resign after learning he sought a $2 millionpersonal loan guarantee from Roche Holdings Ltd. whilethe two companies were negotiating an extendedagreement on the Swiss pharmaceutical firm's mergeroption. In addition to potential ethical questions inseeking the loan guarantee, the board said its decisionwas based on a review of Raab's leadership the past fewyears.
When he's not looking for small biotechnologycompanies to buy, Raab said his other project willinvolve helping established firms improve.
Wednesday he was named chairman of the board ofShaman Pharmaceuticals Inc., of South San Francisco,where he has been a director since 1992. The chairman'sposition was vacant.
"I'm looking at a few other relationships similar toShaman's," he said. "I'm talking to six or sevencompanies now, but I'll only work with three or four. Iwould not want to be just on the board. I want to adviseand support the CEO."
Shaman President and CEO Lisa Conte said Raab, whoseposition is part-time, will have input on corporateplanning, product development and commercializationstrategies. He also will have an office, from which he willconduct his business as well as Shaman's. Hiscompensation will be similar to that of other boardmembers with a differential for being chairman.
Conte said she recruited Raab as a director and favoredhis appointment as chairman because she considers him a"visionary on health care reform, price controls andchanges in the biotechnology industry."
Shaman conducts drug discovery based on itsethnobotanical approach, which involves screeningextracts from tropical plants that have a history ofmedicinal use. Shaman's stock (NASDAQ:SHMN)closed Wednesday at $6.25, up 25 cents.
An Ominous Golf Game?
With an office and a new title, Raab said he's ready towork. And he said he's starting off with a little extraconfidence. Two weeks ago he shot his first hole in oneon a 115-yard par three on a golf course in Wilmington,N.C. "What a wonderful omen," he commented.
"It's been two months since I left Genentech," Raab said."The first few weeks were a shocking experience, but I'mover that. I'm very proud of what I did there. I'm veryproud of Genentech and I'm very proud of Art Levinson[Raab's successor as Genentech president and CEO]."
What was shocking, Raab said, is that he was surprised athis dismissal. He said he never expected to leaveGenentech.
"I loved and love Genentech," he said. "It's something Ihad to adjust to and I really have." n
-- Charles Craig
(c) 1997 American Health Consultants. All rights reserved.