Eight Lessons from Art Levinson (Genentech/Calico)
Tags: Venture Capital, Biotechnology, Investing, Healthcare, Medicine

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Art Levinson is the CEO of Calico (a company funded by Google to develop new medicines for aging) as well as the Chairman for Apple, and he was CEO of Genentech from 1995 to 2009. In 15 years, Art went from a scientist to CEO of Genentech, which was his first job after doing a postdoc at UCSF. His tenure was characterized by increasing the company’s focus, preserving its science-first culture, and leading the approval for a string of transformative medicines from Herceptin to Avastin.

When Art first arrived at Genentech in 1980, the company gave him freedom to still pursue his own research projects: figuring out how to make mammalian cells usable for biomanufacturing of drugs. This work actually led to the use of Chinese hamster ovary (CHO) cells to make biologics, which has become a standard in the industry. In 1995, Art became CEO of Genentech (a decision that was seen with skepticism since he was a scientist and not an executive) where he doubled down on R&D and became the leader in oncology drug development leading to Genentech’s acquisition by Roche in 2009. However, Art’s impact on Genentech can still be felt to this day in terms of clinical success and scientific culture.

1. “Genentech can only develop one product at a time.” When Art became CEO of Genentech, the company’s culture had shifted toward marketing the previous 5 years. So his job was to reorient Genentech back to R&D and give the company a new focus.

2. “Almost since I can remember, I’ve been interested in understanding how things work, how things are put together. That’s always been a very important motivator for me.”

3. “I completely love this place. It was very tough for me to see us getting beat up.” Art was appointed CEO in the backdrop of Genentech dealing with its prior CEO looking for a personal loan guarantee during negotiations with Roche and probes into whether the company promoted its human growth hormone (HGH) product for non-approved uses. Art was a Genentech-life and worked to perverse the unique culture of the business.

4. “Some people look at the sky because they like to marvel at how small we are. I’d rather marvel at how much we’ve learned and the possibilities that are still out there.” Art’s first love was astronomy, which ultimately led him to study biology after reading a Carl Sagan Book.

5. “By the early 1990s, the bioentrepreneurial drive of Genentech’s researchers posed a dilemma for the company’s future. As we learned over the years, the financial realities of the marketplace would not allow us to pursue every research opportunity into development. Yet, we needed to preserve a core asset of our business: The innovation that comes in an environment where scientific freedom is held sacred.

Around the time I assumed leadership of research at Genentech, we launched an effort to examine in detail all of the projects that used a significant proportion of our scientific infrastructure. From this, we established a way to rate projects based on scientific feasibility, medical need, market potential, market protection, and manufacturing economy.

To ensure that the company would have the resources available to back the most promising projects, we decided to move forward only with those projects that met our criteria for all five of these considerations. In so doing, we terminated more than half of our research projects. We used these same criteria to determine which projects to move into and to continue through clinical development.

With our discovery research and clinical scientists accustomed to considering only some of these criteria, this was not an easy task. But over time, Genentech’s scientists came to recognize the benefit of considering medical need and market and manufacturing realities relatively early in the process. It is far worse to have an exciting fortuitous discovery dropped at a later stage because there are simply not enough resources available, than to have an agreement upfront that as long as your project meets these criteria, Genentech will pursue it. In this way, we still encourage our scientists to use their unique backgrounds and skills to develop novel areas of research.”

Genentech was no longer the small startup Art first joined. The company had a series of approved medicines, a pipeline of drug candidates, and a push to generate profits. As a result, he had to find a way to build a profitable biotech company while preserving the scientific culture. Art focused on 3 areas: immunology, cancer, and vascular biology and changed the ways research projects were measured.

6. “The biotechnology industry will typically spend up to 40 percent of its revenues on research and development, while other high tech fields — computers, semi-conductors — spend a fraction of that. We’re still expected to make a profit, so it’s a tightrope we’re walking. Drug development is very expensive, and you’ve got to take risks. In the past few years, I’ve started to feel relatively confident that, with the level of profitability we’ve achieved and with our commitment to the basic science, we have established a new business model, at least for this industry.” Art mastered the balance of leading a profitable biotechnology company.

7. “These ads with people running through flowers and dancing are distasteful.” Genentech did not use television advertisements directed to consumers; this reinforces the strong scientific culture of the company.

8. “I was finishing my postdoc and I thought that maybe I would go to this company for a year or two, learn some of the recombinant DNA technology, and then go back into academia. At that time, very few respectable scientists went into industry. Most of my academic colleagues thought I was out of my mind. Of course, many are now on Genentech’s scientific board or they are shareholders.” Art ended up staying at Genentech for over 3 decades.