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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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December 12, 2008

The Worst Biotech CEO?

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Posted by Derek

I'm pleased to note that Adam Feuerstein over at has announced his first-ever "Worst Biotech CEO" award. In what was surely a contested field, he's named Elan's Kelly Martin as the winner. I was pulling for Ariad's Harvey Berger, who seems to have come close. Well, there's always next year - and yes, I do need to update the Ariad story soon.

Martin's win is a result of the troubles with the anti-Alzheimer's antibody bapineuzumab this year. When pivotal trial results came out back in July, they weren't too exciting. Investors, though, had been very excited indeed, and Elan's stock took a terrible beating as a result. According to Feuerstein, Martin's cheerleading for the drug was the reason for this unprofitable disconnect from reality.

He certainly wouldn't be the first CEO to beat the drum for his company's drug, but this kind of thing has a big risk of backfiring. How do investors believe you after they've been burned in this fashion? You don't want to have to depend on fresh crops of people who haven't heard your story yet. Alzheimer's is a tremendously difficult field to make headway in, and everyone who wants to buy into something in it needs to understand that. As an investment, such drugs are worth taking a flier on, but with a clear understanding that the odds are long. I think that Elan (and their partner, Wyeth) deserve credit for going after something as unusual as an immune-based therapy for the disease, but there's no excuse for making people think that it's working if it really isn't.

Anyway, be sure to check out Feuerstein's take, along with the comments on Vanda, Medarex, and other favorites. I hope he keeps this up year after year: there will never be any shortage of contenders.

Comments (7) + TrackBacks (0) | Category: Business and Markets


1. Sili on December 12, 2008 10:34 AM writes...

Any comment on the possible (very very tentative) correlation of Alzheimer's with herpes simplex?

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2. Anonymous on December 12, 2008 11:19 AM writes...

I'm not inclined to cut Kelly Martin any slack, but lets be honest, cheerleading and the ability to sell the 'story' is exactly what you want in the CEO of a development stage biotech. Their primary respnsibility is fundraising i.e. keeping the money flow incoming to advance the programs.

Investors in development stage companies should expect this, and not presume that corporate presentations contain a 'balanced' analysis of a companies prospects and recent results.

I'm far more inclined to label as 'worst' those CEOs who make bad decisions with the funds or cash-out excessively.


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3. milkshake on December 12, 2008 1:16 PM writes...

The herpes infection link looks plausible. There are recent reports that anti-TNF antibody injected centrally provided a dramatic (but only temporary) reversal of Alzheimer symptoms.

CEOs of small biotech companies: of course they hype what they have. If the results happen to be dismal, they need to buy more time and break the bad news gently - while they introduce something else that the investors can get excited about again. There is vast distance between prospectus mailed to the investors, the dreamy publications about the "proprietary technology platform" and the reality in the labs.

I worked at two startups and that's why I would never put my money into one.

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4. Hap on December 12, 2008 1:17 PM writes...

If you're a stockholder, the CEO has a job to be honest to you (he works for you after all) - if selling the stock to others is in conflict with that responsibility (and demonstrably in conflict with the available data), then he has been a bad CEO. Selling the stock is usually a form of cashing out, anyway, since he's likely getting stock (which may or may not have limitations on its sale).

Unfortunately, Ariad is probably doing right by their stockholders - they're screwing the system and everyone else, but I think the above article is from the view of stockholders, so that doesn't matter (yet).

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5. Cellbio on December 12, 2008 7:55 PM writes...

I'd be cautious about that anti-TNF therapy data, it comes form a real suspect character who writes patents then generates "data" and begins charging patients, on a cash basis, no insurance.

As for worst CEO, I'd pick the from those that fail to run successful companies well (success that preceeded them). I've got one in mind who has done nothing but rake in millions.

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6. Biotech CEO on December 12, 2008 8:13 PM writes...

Derek Lowe, is correct, Harvey Berger should have been the top pick. However, Ariad's compounds ('573 and '534) will be best in class..

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7. Craig on December 24, 2008 11:09 AM writes...

Harvey Berger should never ever be allowed to have anything to do with any type of public company ever again (private as well). This guy is nothing but a selfish, self-serving jerk.

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