A very interesting and thoughtful question.
My background assumption is that drug development is risky - no matter how good mangement or the science is, there is always going to be a chance of a drug blowing up, as did Tysabri and Reverset. Conversely, a company can simply be lucky - think Tarceva for OSIP. So no, I would not equate good management simply with success.
There are a couple of different dimensions that you have to look at when judging management:
1. Ethics - can you trust what they are telling you? How much should you be worrying about what they are not telling you? How leaky is the company - will you be the last to know?
2. Judgement - do they make good decisions? In-licenses are the clearest metric here, because in that arena they have a pretty free hand, whereas with internal drug development they mostly have to go with the existing program. Willingness to cut a program that is marginal is another good thing to look at.
3. Shareholder value - are they interested primarily in building shareholder value, or are they more interested in empire building and feathering their own nest?
4. General style - are they flexible, and where do they fall on the risk-averse vs. go-for-broke spectrum? One of the hard decisions in running a biotech is whether to push-ahead quickly or slowly. Straight into phase III, or run a few more Phase II's first? There's something to be said for both approaches, but it's nice if they are at least somewhat upfront about what their style is.
5. Good financial savvy. The principal issue here is capital-raising - timing, quantity and methodology. Tightly linked to 3. above.
So using these metrics, we can look at some of the companies you mentioned. I would say INCY does well on all of these. CBST was a good in-license, and they did a decent job of struggling through under difficult circumstances. LGND does poorly on the "shareholder value" metric, on the judgement metric (think about their inlicense record) and on the "trust" metric. Elan in early days was way over-ambitious, but the recent Tysabri issue can't be laid at management's door. OSIP flunks the in-license metric.
Bottom line though is that good management is no guarantee of good results - but it certainly helps. GILD management has shown flexibility and good management, and it shows in their results. REGN was overly-cautious in advancing their VEGF-trap and I believe shareholder value has suffered. VPHM and MOGN had brilliant in-licenses. SEPR does very well on 5. and showed good flexibility through some tough periods (but miss on some other metrics).
Peter |
