When medicine meets the business world
Yale alumni heal the sick—not at the bedside one by one but in the boardroom by the thousands.
The symptoms emerge in early childhood. A previously healthy boy starts to have trouble in school. Soon his hearing and vision are impaired. After that, the course is rapid: dementia, a vegetative state, and death. Boys with X-linked adrenoleukodystrophy (X-ALD) are genetically unable to break down very long-chain fatty acids, which accumulate in cells and destroy the myelin in the central nervous system. The short list of therapeutic options includes bone marrow transplantation, but that does little good once the symptoms are far advanced; moreover, not all affected boys can find a match.
That was the case for two 7-year-old boys with X-ALD for whom no marrow donor could be found. But when a team of researchers in France treated the boys with an engineered lentivirus that introduces a good copy of the faulty gene, the procedure halted the progression of their illness and made the pages of Science in 2009. The boys are now leading largely normal lives, and global trials of that engineered agent as well as agents for two other genetic diseases will soon begin.
The virus was developed (and the trials will be run) by a company called Genetix Pharmaceuticals in Cambridge, Mass.—and it was a Yale physician and venture capitalist who played a key role in the decision to fund that company. Philip R. Reilly, M.D. ’81, J.D., also a lawyer, author, internist, and clinical geneticist, wants to combat genetic diseases by merging business and medicine. “We represent the major hope for their lives,” he said of the families of patients with rare genetic diseases. “When a venture capital firm commits to funding a very rare disorder, it is in effect pouring more money into that disease than the NIH is.”
Reilly is one of a number of medical school alumni who have entered the business world. While some continue to practice medicine, others find entrepreneurship or venture capital to be more rewarding than clinical work. And contrary to the less-than-noble image they may have in the eyes of medical colleagues, some continue to save lives from their desks.
While they still represent a small fraction of physicians, M.D.s are becoming an increasingly common presence in the halls of venture capital firms, banking, and startup companies. There are few mentors to point young doctors toward careers in business, and physicians drawn to such work undergo a lot of soul-searching. Sometimes they face criticism from friends or colleagues who expect them to fill the traditional role of doctoring the sick one by one. How can someone enter the noblest profession, then leave it? Is there something grasping or acquisitive about such an impulse? But physicians who become entrepreneurs or venture capitalists have seen firsthand that medical skills can be leveraged in the business world through decisions that can help thousands of sick people at once. An experienced physician’s informed decision about a new business idea can lead to a treatment that transforms the standard of care. A doctor-researcher who shepherds a scientific discovery through its licensure, funding, and development may in some sense be more effective than one who moves on to new science after publishing the novel findings. Perhaps it’s ironic that such doctors can far outpace their clinical colleagues in terms of numbers of lives saved.
For Sara Nayeem, M.D. ’06, M.B.A. ’06, sitting at the bedside didn’t feel right. But this recognition took time. While deferring medical school, she spent two years working on Wall Street for Morgan Stanley. When she matriculated at the School of Medicine, she found herself drawn to biotech consulting projects through the School of Management as well as a health policy journal through Yale Law School.
“Once I started the M.B.A. classes after the third year of med school,” she said, “I realized that I enjoy business strategy and financial analysis more than pure clinical reasoning.” She had found during her years on Wall Street that she enjoyed “digging into” multiple discrete projects that each lasted a few months. Outpatient clinics, on the other hand, made her restless. “Seeing a patient for 20 or 30 minutes two or three times a year did not provide enough continuity for me. ... I enjoyed thinking about the other issues around medicine [more] than just the straight clinical questions. Something that’s more creative and more strategic. Clinical medicine had begun to seem very algorithmic to me and very repetitive.”
After much soul-searching, Nayeem decided not to enter a residency program. She worked instead as an investment banker at Merrill Lynch, then joined a venture capital firm, New Enterprise Associates, in Chevy Chase, Md. Since starting there in January 2009, she has examined well over 150 biopharmaceutical companies to decide whether to invest in them. “I’m thinking through their strategies. What’s the market for this particular drug or device? What do we think of the clinical data? How does it fit into a treatment paradigm? ... It’s a perfect mix of things I enjoy.”
When Stephen C. Knight, M.D. ’90, M.B.A. ’90, an English major who especially liked poetry, arrived at Yale in 1985, his heart was set on academic research. He had already begun work at Bell Laboratories and the National Institutes of Health and, building on those efforts, he started to investigate how research in artificial intelligence might improve medical decision making. “Maybe this should be a business,” he recalls thinking. He “wandered over” to the business school and impulsively decided to apply. “I was very naïve,” he said. “I didn’t know what consulting, investment banking, or venture capital were. It opened my eyes to a world I didn’t even know existed.” But what he did know was that he was different from his medical school classmates, some of whom seemed born to be doctors. Though he valued the humanitarian aspects of medicine, Knight came to understand that if medicine is a calling, others heard the voice louder. “I didn’t want to always pick up Harrison’s,” he said. “I’d much rather read The New York Times.”
In the last 20 years, Knight has relished the marriage of the scientific and humanitarian aspects of medicine and the practical power that companies can provide. He worked as a consultant for mergers and acquisitions in the pharmaceutical industry, served as president and coo of a public biotechnology company called Epix, and has helped start several health care companies (one of them with his wife, Elizabeth Quattrocki Knight, M.D. ’94, Ph.D. ’94). For the past seven years he has served as the president and managing partner of Fidelity Biosciences, Fidelity Investments’ health care venture capital arm. “We have a great group of M.D.s (a few from Yale) and Ph.D.s whose accomplishments and intellectual horsepower rival that of any academic department, and we are investing over a half-billion dollars in companies all over the world, many of whose therapies we are convinced will save lives and decrease suffering. This is what I hoped for over two decades ago when I wandered down Hillhouse Avenue to the School of Management.”
Other physician-entrepreneurs have turned their liking for science into a viable enterprise. Owen Garrick, M.D. ’98, M.B.A., is chief operating officer of Bridge Clinical, a company that manages clinical trials of treatments for diseases of underserved populations. A love of banking and a business degree from Wharton after medical school led him to positions at Morgan Stanley, Goldman Sachs, Merck, and ultimately to McKesson and Novartis, where he was head of mergers and acquisitions. The latter jobs, he said, “put me firmly where I was very close to the science, evaluating companies from a financial perspective but also from a scientific and clinical perspective.” He too had been restless at the bedside as a medical student, and as he began to think about residencies, he realized that his heart just wasn’t in clinical medicine and decided to forgo further medical training.
That’s a risky proposition when you’re fresh out of medical school and burdened with debt. Nayeem recalls a friend who didn’t find a business job for months after medical school, even as he watched classmates launch their clinical careers. But M.D./M.B.A. types, Garrick says, tend to be creative and risk-seeking. “You have to be comfortable venturing out where there has not been a lot of groundwork laid before. And you have to be by definition interdisciplinary.”
Given that doctors who leave the bedside for the business world are sometimes dismissed as opportunists, it may be surprising that many of them say they do it to help people. Like physicians who work in public policy, they relish the idea of helping people by the thousands or even millions. Reilly’s personal goal is to start 10 companies to treat 10 rare genetic diseases and save 100,000 lives each year. Garrick likes the idea of using the resources of a large corporation to make a large-scale impact in health care. “Maybe we’ll luck out and launch a drug that cures 2 million people,” he said.
That scale is familiar to one Yale physician who has been at the forefront of drug development for more than two decades. In 1986, while still a hematology/oncology house officer at the University of California, San Francisco, Howard S. Jaffe, M.D. ’82, was hired by Genentech, a company that has been called the founder of the biotechnology industry. It was itself begun by Herbert W. Boyer, Ph.D., FW ’66, a pioneering scientist in recombinant DNA. For six years Jaffe worked on interferon-gamma, tumor necrosis factor, and anti-HER2 antibodies; he then joined the biopharmaceutical company Gilead Sciences as vice president of clinical affairs. Jaffe continued to practice medicine until 2000, driving to San Francisco General Hospital for morning rounds, proceeding to Gilead’s headquarters in Foster City, then returning to the hospital on the way home. He worked on Gilead’s major antiviral medications, including oseltamivir (Tamiflu) and the HIV drugs tenofovir (Viread) and emtricitabine (Emtriva). Now president of the Gilead Foundation, he gave up clinical medicine in 2000. “When I look back at the good I’ve done at various times in my life,” said Jaffe, “nothing equals what I’m doing now.”
Like Jaffe, Reilly maintained dual professional roles in medicine and business until recently. He said he hasn’t met with any stigmatization from medical colleagues—in fact, he has found that many doctors react to his career with great interest. But Nayeem has had to mail articles from The Wall Street Journalabout her business deals to skeptical family members who didn’t think what she was doing was important. And Knight recalls that when he was in medical school, “it was apostasy not to go on [to residency].” Even to some physician-entrepreneurs, it still is.
“When I meet doctors who are in business but just did medical school and nothing else,” said Reilly, “I react negatively to that. I don’t think they’re real doctors, frankly.” He has more respect for physicians who have practiced medicine. For her part, Nayeem thinks of herself as a venture capitalist rather than a physician and does not regret having skipped a residency, saying that for purposes of understanding the medical side of a business proposal, “You can get 90 percent of the way there as long as you can read the literature.”
Venture capitalist Gregory P. Licholai, M.D. ’95, M.B.A., decided to make a “clean break” during his residency. Out of curiosity about the ways in which business and medicine influence each other, he began an M.B.A. while a neurosurgery house officer at Brigham and Women’s Hospital in Boston. Much to his surprise, he loved his business courses. And as he considered ways to stay involved in the business world, he couldn’t see a realistic way to practice neurosurgery part time. “It was the fact that I was a surgery resident, in particular a neurosurgery resident, that kind of informed the decision [to leave medicine]. ... I wanted to be good at one thing rather than mediocre at two.”
A relentless focus on the practical, on what plan will actually succeed, is central to both clinical work and entrepreneurship and is part of the pleasure of each. Will a treatment prove clinically significant? Will a business earn money for stockholders? But some physician-entrepreneurs, particularly those involved in research, take that priority a step further. The desire to see a discovery reach patients can itself be the force that drives a physician to the boardroom.
If you want to see new and effective treatments make it all the way to patients, said James N. Campbell, M.D. ’73, also a neurosurgeon, “just sitting in your lab and coming up with new targets [is] not in itself sufficient.” In addition to his clinical practice, Campbell conducted groundbreaking NIH-funded laboratory research into the neurobiology of pain as a professor at Johns Hopkins. When his lab discovered in the late 1980s that a topical clonidine patch could help patients with abnormal sensitivity to pain, Campbell approached a pharmaceutical company and then the Hopkins patent office, thinking that the discovery would attract commercial interest.
It didn’t. At that time, he said, the notion that chronic pain merited pharmaceutical interest was novel, and no one seemed to think the idea had commercial value. The term “neuropathic pain” had begun to appear in the literature only recently, and doctors and patients treated all kinds of pain with NSAIDs, acetaminophen, and opioids. “I ran into a stone wall. There was just zero interest.” But Campbell couldn’t let the discovery drop. Hopkins allowed him a waiver, granting him the right to independently patent and license his discovery. Several years and patents later, a venture capitalist approached him. And it was in conversation with that man, Campbell says, that a light switch went on.
“At that time,” he said, “the ethos at Hopkins and probably at other places was that you just didn’t dirty your hands by considering the commercial translation side of things. That was almost like talking to the devil.” Yet he had begun to understand that lab work is only the first step. If he wanted to have a measurable effect on patient care, he would have to be a savvy promoter of his ideas in order to find a commercial partner with the money to develop them.
“If you publish the cure for cancer and you don’t have the patent protection,” he said, “it’ll never see a patient. No one’s going to spend $50 million or $100 million to get it through the FDA and trials in order to offer it to patients. ... As I think back on it, how incredibly naïve I was not to understand that. I think that epitomized much of the academic world.”
Tempted to switch careers, Campbell thought long and hard about leaving academic neurosurgery. It felt like an existential battle between what he wanted to try and what he had been trained to do. But he began to feel that he had been too sheltered, his field too narrow. “I thought that this venture world was amazing. It meant that every article in Science and Naturethat I read could potentially be of some interest to me. ... [The] kernel of an idea could transform our care of patients. That was just staggeringly awesome to me.”
So he took the plunge. With the blessing of supportive colleagues at Hopkins and in gradual stages, Campbell wound up his research career, gave up his surgical practice, and moved to Menlo Park to do a sabbatical at a major venture capital firm in the life sciences and to work on forming companies based on his patents and other ideas. Then he helped launch a new company based purely on Hopkins technology in immunotherapeutics. “The first book I bought was a book on molecular biology,” he recalls of the steep learning curve that confronted him in his first business job—he had not only to bone up on business but also update his knowledge of sciences that had advanced while he’d been focused on his more narrow neurosurgical research. After helping found a second company, Campbell now heads a third company and is starting up a fourth. “Every day is a new challenge and a new opportunity. It’s a real roller coaster.”
Research and publication in the academic world are all very well. But Campbell is concerned that academic discoveries don’t go far enough. “There’s a saying that truth is the daughter of time. … But unless you’re passionate about pursuing it, time is not necessarily on your side. If you have great ideas and you don’t have the passion to see it through, you have to be prepared to see these ideas die away.”
Campbell does not have an M.B.A., and he did much of his learning about running a company on the job. But even doctors with M.B.A.s may not be adequately prepared for the biotech world. “We do not do a sufficient job in training people for translation,” he said, referring to the process of turning scientific discoveries into commercialized treatments that are readily available to patients. “Medical students get some exposure to basic research but typically get very little exposure to the vast gulf between discovering a target and then figuring out how to exploit that target and ultimately get the therapeutic innovation to the patient.”
Pharmaceutical companies, he said, generally turn to contract research organizations rather than university centers to get clinical trials done. “The more efficient development path is outside the academic institutions—which just often have little clue of what’s involved in drug development.”
That could change, he said, if curricula are updated. “What we need is an M.B.A. with another initial, referring to training for business people going into biotechnology.”
Education for doctors might also overcome what Licholai calls an outdated mindset. In medical school, he recalls, “there was always this kind of negative opinion about people going into business—it wasn’t creative, it wasn’t intellectual, it was the dark side. I have to say, 100 percent of my experience has been really almost the opposite. Just about all the people that I know who are working in companies, whether it’s biotech companies or big pharmaceutical companies, they have a tremendous ethical sense and tremendous sense of responsibility for what they’re doing. ... We’re not talking about the 19th-century robber baron corporations who enslave children.” He would like to see physicians gain a better understanding about how medical discoveries are paid for—that new ideas for patient care need access to capital in order to be realized. “It’s that piece that somehow needs to get incorporated into medical education,” he said. “We really are working toward the same goals.” YM