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Author: bjanssen Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1856  
Subject: Re: Some thoughts on R&D Date: 6/27/2000 7:30 PM
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Chris and Greg asked and be warned the answer is not short....but hey when do I ever post short answers :)


So how do we identify a good knowledgable management team as E7 suggests? For the non-scientist this can be a difficult task.


OK lets start into this one proper. So far the best management structures I've seen in biotech have two things in common.

1 The board of directors either includes a couple of very very good scientists OR they use a scientific advisory board. These scientists are sometimes at the tail end of their career maybe still teaching maybe editing some journals but sometimes these folk are very active scientists still.

What you have to do for these folk is look at their CVs which are usually available to shareholders at the very least. What you want to see is a strong steady publication record in good journals (Cell, EMBO, Science, Nature are the top tier but there is a very good second teir usually associated with each field of research). You want to see review articles written by them since that usually means they are considered an authority in their field by their peers. You want to see that they've spent time on NSF or NIH grant review panels, again recognition of their knowledge. All that adds up to at least a couple of experienced scientists overseeing company direction and having input to strategic planning. They don't need to be the majority of the board of directors but you really want to see that the board takes advice from them.

2 The second thing I've seen in good biotech management structures is a CSO or chief scientific officer. Sometimes they'll have a slightly different name for example in MLNM you have Frank D. Lee, Ph.D., Chief Research Technology Officer, Michael Pavia, Ph.D., Chief Technology Development Officer and Robert Tepper, M.D., Chief Scientific Officer, Pharmaceuticals. But when you look at the company structure the presence of all three makes more sense. Essentially these guys are each CSO for a different part of the company. The problem of course is you have to evaluate three guys or more if your keen. The other problem is that it's possible to get three empires being pulled in different directions, that's why I like to see one CSO....because that means one scientific direction...one place where the scientific buck stops.

Like the CFO the CSO answers directly to the CEO (sometimes is the same person but that's not optimal). This is the person responsible for all the scientific work. As an investor you need to know this person intimately. You need to be confident that this person isn't going to make stupid research decisions with your investment. The reason I like to see one person labelled as CSO is that it means that the on the senior management team there is one person whose sole responsibility is to get the science right. Where you see a senior management team without a CSO I start to worry. It's too easy for the research to go undirected without a CSO and it's too easy for a senior management team to head off away from the science without a CSO championing that cause.

So for a start I'd look for the 3 or 4 people on the board of directors and the senior management team that are responsible for science planning and study them (a couple of directors or members of the science advisory board and the CSO). I know it sounds like hard work but really we are trying to figure out just how good this management team is and that means studying the key managers.

So in practice how do you find out more about these folk. Well if we pick on Robert Tepper, M.D., Chief Scientific Officer, Pharmaceuticals of MLNM again the first place I'd go to is Medline. I use this portal http://www.ncbi.nlm.nih.gov/Entrez/ and then enter his name, but wait there is a problem here, if you just enter tepper you'll get hundreds of hits so you need his initials, a quick trip to the MLNM publications page http://www.mlnm.com/company/bib.shtml and search on that page for tepper gets you two hits (kinda low but remember MLNM will use patents more than scientific publications) with the initials RI. So head back to entrez and search for Tepper RI and you get 21 hits.

Now personally from confused and bitter experience I wouldn't bet that this is still the same person so lets double check. From his bio on the MLNM site http://www.mlnm.com/company/srmgt.shtml#tepper we see he worked in the tumour lab at Mass Gen Hospital and got his MD at Harvard (yeah it's impressive but what did you expect an MD from a correpondence school?). So lets have a look at one of the abstracts http://www.ncbi.nlm.nih.gov:80/entrez/query.fcgi?cmd=Retrieve&db=PubMed&list_uids=7670493&dopt=Abstract Yup it's gotta be the right guy unless there were two R Teppers at Mass Gen at that time:).

So now we're reasonably sure we have the right guy lets look at his publications. You don't need much training to get an idea from the titles that this guys works on interleukons and cancer, which just happens to be an interest of MLNM. There are 21 papers on the list, he probably has more publications that aren't listed in entrez but 21 is enough for an evaluation. He has a nice mix of first and last authorships and personally I like to see people who have their name in the middle of the list a couple of times as well. BTW in science, traditionally the person who did the most bench work was the first author, since the head of the lab usually did no bench work it was common for the head of the lab to be last author. Thus the two most important positions are first and last author. However nowadays it gets tricky because many heads-of-lab have their name as first author. Middle authors range from technicians to people who provide a special skill that was used to round out the paper, like specialist microscopy. The reason I like to see middle authorships is that it indicates the person was willing to contribute to a team even if they were'nt getting the most credit.

In the list of papers you can see some very nice journals. In 1990 a Cell paper with Tepper as first author, in 1992 a science paper, first author as well (now would really kick his career into high gear)! In 1994 a single author review paper for human gene therapy. A scattering of single authorships and last authorships which indicate that the ideas were his and they're in reasonably good journals. 1995 Nature Genetics and 1996 Cell both excellent journals. And then in 1997 PNAS. BTW that Cell paper is a key piece of MLNM research in the obesity control area. All in all a nice publication list, I've seen longer lists that impressed me less, in science as in life I'd rather have quality over quantity.

So what can we conclude? Well it looks to me like the CSO of MLNMs pharma division is a real scientist with a really nice scientific pedigree. BTW that isn't a given because MDs don't always make good scientists but Robert Teppers publications look pretty nice.

Anyway that's how I go about working out how good the scientific skills on the management team are. If you get really keen you go to the library and get some of the papers and read them, but that is probably overkill. So anyone want to chip in and describe how you assess the business skills?

cheers
Bart
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