The Color of Biotechnology : San Diego Firms Lure High-Priced Talent With Top Pay, Entrepreneurial Spirit

Taken on its own, Corvas International’s hiring of Pieter Bax earlier this year as vice president for product planning and business development could be seen as just another successful bit of “headhunting” by an upstart San Diego biotechnology company.

But Corvas’ luring of Bax from Syntex, a major Palo Alto-based drug firm where Bax had spent 25 years as a top organic chemist, was an example of the growing influx of major talent into young San Diego biotechnology companies from older established pharmaceutical concerns.

The list of pharmaceutical managers and scientists that have taken jobs with San Diego biotechnology firms over the past year is staggering.

They include Alain Schreiber, a top scientist at Rhone Poulenc Rorer, who recently was made chief executive at Vical. David Robinson joined Ligand Pharmaceuticals last summer after 12 years at Abbott Laboratories. Mycogen just announced that it is hiring former American Cyanamid executive Charles Dumbrell to head a new biopesticide unit.

Although a tide of experienced managers and scientists has flowed into San Diego steadily as the local biotechnology industry has grown, the movement has accelerated over the last year.

And the reason is mainly, but not exclusively, money.

Many biotechnology companies that have gone public over the past year, which means more firms have cash on hand to pay what it takes to draw top talent. Corvas, for example, has raised $64 million in capital, including $36 million raised in a January initial public stock offering.

Moreover, the stock offerings have created fortunes for many biotechnology executives. That creates the incentive of a huge potential payoff for managers who are willing to sacrifice the stability of a drug company job to gamble on a young start-up. Most companies attract talent with substantial salaries but also with significant stock ownership plans that can be worth fortunes if the companies go public.

Martin Nash, chief executive of Neurotherapeutics of San Diego and head of the local chapter of Assn. of Biotechnology Companies, said he believes recruiting biotechnology executives and scientists is getting easier because the industry is now “legitimized.”

“More are willing to take the leap out of the big companies such as Bristol-Myers Squibb, Johnson & Johnson to more entrepreneurially driven biotech companies because they have seen the success stories,” Nash said.

A survey of biotechnology companies released earlier this year by J. Robert Scott, a Boston-based executive search firm, and Coopers & Lybrand, found that the average equity owned by chief executives in the companies they manage had grown to $5.4 million, up from $2 million the previous year, said Cynthia Feldmann of Coopers & Lybrand’s San Francisco office.

“The equity just skyrocketed last year,” Feldmann said.

The jump was largely because of the sharp rise in values of most biotechnology shares. Base salaries, on the other hand, have not risen as fast. The average biotechnology CEO was earning $148,500 in 1992, up only 4% from the $146,700 average base salary in 1991, said Katie Vande Water, J. Robert Scott’s director of marketing in Boston.

As far as Corvas President David Kabakoff is concerned, money is only partly responsible for having been able to attract a growing corps of experienced scientists and managers. Kabakoff said many of his hires were attracted by the opportunity of making a direct and tangible difference in the success of Corvas, which is trying to develop a line of bioengineered products to prevent thrombosis, or blood clots.

“Obviously you have to be competitive in hiring scientific and management talent,” said Kabakoff, 44, himself a Yale-educated Ph.D in organic chemistry who formerly held scientific and management posts at Syntex, Baxter International and Hybritech. “But you have to attract people also by the quality of your science and of your organization.”

He attributed much of Corvas’ staffing success to his hiring of William Ripka in May, 1990, as vice president of pharmaceutical research. Ripka spent 24 years at E.I. du Pont de Nemours in research positions that included heading up molecular modeling and drug design.

Ripka’s hiring was a “magnet” that has helped Corvas attain scientific credibility and to lure other top researchers, Kabakoff said.

“Prospective hires look not only at who’s running the company but who is running the laboratories,” Kabakoff said. “What’s attractive about a company is the scientific environment, to be in a position to impact the company and its strategy. There is more independence of action at a company like ours” than at a huge drug concern, he said.

Despite those incentives, the venture capitalists who are in positions of having to fill top slots in new companies say luring top management personnel from “fast-track positions” at major drug companies remains a very tough job indeed.

“It’s a game of supply and demand, and there are a few things pushing demand,” said Howard E. (Ted) Greene, a co-founder of Hybritech and venture capitalist who, as general partner of Biovest, helped start up six biotechnology companies. Greene is now chief executive at Amylin Pharmaceuticals of San Diego.

As more and more biotechnology companies raise money in public stock offerings, there is a corresponding increase in demand for highly experienced and trained management--executives typically with advanced degrees in science and business and with 10 years experience with a major drug manufacturer, Greene said.

The high level of expertise and experience is an imperative, given the amount of money at risk. “Amylin, for example, has raised $95 million since 1988. That’s a lot of capital, and you don’t want an amateur in charge,” Greene said. And, drug firms are now fighting harder than ever to keep their people happy and on board in the face of biotechnology recruitment, he added.

Howard Birndorf, also a co-founder of Hybritech who has helped start up several San Diego biotechnology companies, including Gen-Probe and Ligand Pharmaceuticals, said that drawing people from “fast-track” jobs with major companies is difficult. Part of the problem is the difference in corporate cultures.

“It’s hard for some people to change from a big company.” Ligand “hired one guy who didn’t last more than three weeks. He was used to flying first class, having staff assistants all over the place, taking limos to the airport. That’s not the way it goes in biotechnology,” Birndorf said.

Still, the major drug firm is the logical place to recruit top talents because they are likely to have the requisite experience, Birndorf said.

“They know the business. If they are in general management they know all aspects: sales, marketing, manufacturing. They have an idea of how to build something. That’s not to say other people can’t do it. But I’m saying in the long run, it’s going to be easier for someone with that kind of background,” Birndorf said.