00:00:00 William Rutter discusses the movement of scientists from academic to commercial biotech companies that occurred 1975-1985.

00:00:30 William Rutter discusses the movement of scientists from academic to commercial biotech companies that occurred 1975-1985.

00:01:00 William Rutter discusses the movement of scientists from academic to commercial biotech companies that occurred 1975-1985.

00:01:10 William Rutter discusses the movement of scientists from academic to commercial biotech companies that occurred 1975-1985.

00:01:20 William Rutter discusses the movement of scientists from academic to commercial biotech companies that occurred 1975-1985.

00:01:30 William Rutter discusses the movement of scientists from academic to commercial biotech companies that occurred 1975-1985.

00:01:40 William Rutter discusses the movement of scientists from academic to commercial biotech companies that occurred 1975-1985.

00:01:50 William Rutter discusses the movement of scientists from academic to commercial biotech companies that occurred 1975-1985.

00:02:00 William Rutter led a distinguished career at the University of California in San Francisco,

00:02:06 where he rebuilt a department of biochemistry to become now one of the most prominent in the United States.

00:02:14 He simultaneously, at the height of the activities of the department, was one of the founders of Chiron in 1981,

00:02:23 while still on the faculty of the University of California.

00:02:27 And what we look for now, in his discussion and in the two that follow,

00:02:33 is getting beneath the surface of the transformations in molecular biological research

00:02:40 and how you moved from the laboratory to the industrial scene.

00:02:44 William Rutter.

00:02:46 Thank you. Thank you, Everett.

00:02:56 It's a pleasure for me to participate in this symposium with individuals whom I respect so greatly

00:03:03 and who contribute so much to science and society.

00:03:07 And I'm so pleased to be able to present the transition of academics like myself

00:03:16 from confirmed scientists in the laboratory in the universities to active engagement in commercial enterprises.

00:03:26 I'm going to present a rather informal discussion of the scene in the pharmaceutical and chemical industries

00:03:35 during this period of time, that is, the 75 to 85 time period, 70 to 80 time period.

00:03:42 Then the factors which caused many of us to become very interested in commercial activities

00:03:50 and, in fact, today engage most of the premier scientists in this field in one way or another in their interests.

00:03:59 First, let me point out that the pharmaceutical businesses which have existed over time

00:04:08 have focused primarily on medicinal chemistry, on targets that are either biochemical in nature or animal models.

00:04:17 They've also used natural product screening.

00:04:20 And mostly, at least at that time, there were in-house programs that were rather insulated

00:04:29 from the cutting-edge research going on in universities and a rather distant collaboration existed.

00:04:38 This was, in fact, due to the fact that there were only a few biological products besides insulin and growth hormone.

00:04:46 There are a few peptides like calcitonin.

00:04:50 Vaccines were made from either killed or attenuated organisms or partially purified products derived from these.

00:05:00 And then the natural products isolated, as in the case of antibiotics or certain cancer remedies.

00:05:09 At that time, while there was a rather distant relationship between biologists, biochemists, for the most part,

00:05:18 and the pharmaceutical industry, the personnel transitions which occurred were largely unidirectional

00:05:29 from universities to company labs and very rarely in the opposite direction.

00:05:37 That situation wasn't quite the same as in the chemical industry where there was intense interest in polymer chemistry

00:05:44 and the compounds derived from petroleum which could be used for commercial purposes.

00:05:50 And better living through chemistry was widely known as an appellation both in the industry and also in society at large.

00:06:06 In my early career, I was at the University of Illinois in the Department of Chemistry, the Division of Biochemistry.

00:06:13 And while I was a young assistant professor, Roger Adams, who was the head of the department,

00:06:19 suggested that I become a consultant for Abbott Laboratories.

00:06:23 I think more to educate me than to provide some benefit for Abbott, on whose board he sat.

00:06:30 The president of Abbott and CEO of Abbott was a student of his, Ernie Verweiler.

00:06:35 And I was delighted at the prospects of becoming involved.

00:06:40 And over a period of time, the next 15 years, I became progressively more interested in Abbott's programs.

00:06:50 Not always was I impressed by the quality of their science, but I at least knew something about the processes.

00:06:58 That stopped in 1975, as I will recount a little bit more specifically later,

00:07:04 when I became more specifically interested in the commercial activities associated with insulin

00:07:13 and the development of a vaccine for hepatitis.

00:07:16 And at that time, I became affiliated with Eli Lilly and Merck as a consultant

00:07:21 and in a program sponsored by them.

00:07:26 At about the same time, I joined Amgen's scientific supervisory board.

00:07:32 And then, in the early part of 1981, participated in the founding of Chiron,

00:07:41 for reasons that I'll describe to you.

00:07:45 I had, by this interaction with Abbott, Eli Lilly, and Merck,

00:07:52 an interesting perspective about the science that they supported

00:07:58 and their attitude towards science in general.

00:08:03 Clearly, I felt that one of the things I could contribute to Abbott in those early days

00:08:09 was to broaden their research interests.

00:08:12 And we developed programs whereby some of their scientists

00:08:17 could take sabbaticals in the labs of prominent other people

00:08:22 in order to begin to see programs in modern biology within Abbott.

00:08:31 For example, Lacey Overby, who later became one of the key figures in their diagnostics business,

00:08:38 spent several years with Saul Spiegelman.

00:08:41 And John Carbon took a postdoctoral position in Paul Berg's lab.

00:08:48 Later on, after the Boyer-Cohn experiments,

00:08:55 I tried to help develop a program in biotechnology or genetic engineering itself in Abbott

00:09:05 and was totally unsuccessful in doing so.

00:09:07 This was in the 1975 timeframe.

00:09:12 As a result of that attempt,

00:09:14 I decided that it was not very contributory for me to remain affiliated with Abbott

00:09:23 because I was so much interested in the progress in this field.

00:09:28 And so I resigned from that consultation.

00:09:32 And John Carbon, at the same time,

00:09:34 who had essentially wanted to come back and begin a program at Abbott,

00:09:39 also resigned and took a position at the University of California, Santa Barbara.

00:09:46 He also became a member of the scientific advisory board of Amgen in the early days.

00:09:53 Eli Lilly was very much interested, as it turned out, in a process only,

00:10:00 not in the field in general or the technology in general,

00:10:03 but it was interested certainly in the synthesis of insulin,

00:10:09 a subject, by the way, which I was somewhat surprised about,

00:10:12 both the eagerness and the dedication of this small group in Eli Lilly.

00:10:18 And they set out to have a competition between a group of Genentech

00:10:25 and ourselves at UCSF, Howard Goodman and ourselves,

00:10:29 to express insulin, one via the two-chain method

00:10:33 with a recombination of the chains to form insulin,

00:10:36 and the other with a process in which the intermediate was pro-insulin,

00:10:42 in which the two chains were linked by a connecting peptide,

00:10:46 which was subsequently removed.

00:10:49 Most people know that Genentech won that race

00:10:54 and the process started with two-chain methodologies,

00:10:58 although today the methods involve synthesizing pro-insulin largely.

00:11:05 In Merck as well, even though an academic, Roy Vagelos,

00:11:11 was head of Merck, Sharp and Dome at that time,

00:11:14 the interest in biotechnology or recombinant DNA technology

00:11:19 were rather narrow.

00:11:21 And at that time, Merck was interested in developing a vaccine for hepatitis B,

00:11:28 and there were two processes that were possible.

00:11:32 One favored by the Merck organization involved the isolation of particles

00:11:39 that were derived from the virus, hepatitis B virus,

00:11:42 which existed and infected individuals' blood,

00:11:46 and the other was a recombinant process,

00:11:49 which could essentially provide a mimic of the virus particle,

00:11:56 which did not contain DNA and therefore could not possibly be self-infectious.

00:12:02 And of course, that process itself eliminated the possibility

00:12:05 of contamination with other viruses.

00:12:09 That was a narrow interest,

00:12:11 and as it turned out, Roy himself said on many occasions

00:12:15 that he felt that there would be only narrow applicability

00:12:19 of biotechnology to the pharmaceutical industry

00:12:23 with the only other possible product that he could see at the moment

00:12:28 would be the malaria vaccine.

00:12:30 And if these didn't work, why he was going to withdraw himself

00:12:36 from vaccine development itself.

00:12:41 Those three sets of experiences made a big impact on my own view

00:12:47 because they came at a time when both the development of processes

00:12:54 for producing human molecules and viral species

00:13:00 to be used in treatment and prevention of disease

00:13:04 and the natural process of aging

00:13:06 seemed to be within the vision of reality in our lifetimes,

00:13:11 and this was a truly exhilarating prospect for me.

00:13:18 Now, to recast essentially the situation in personal terms,

00:13:25 in 1968, I joined UCSF at a time of transition,

00:13:33 and helped to develop there with Gordon Tompkins,

00:13:37 a colleague of mine, an MD who was certainly interested

00:13:42 in eukaryotic and human biology,

00:13:46 a group which was essentially focused around the theme

00:13:50 that it was time to move to the eukaryotic system

00:13:54 and attempt essentially to develop both information

00:13:59 and understanding in practical terms of human biology,

00:14:03 which was directly relevant to medicine itself.

00:14:07 This was a unique opportunity because at San Francisco,

00:14:12 the clinical departments which had developed,

00:14:16 I'd say, to a level of distinction in the late 60s,

00:14:20 were looking aggressively to have some basic science backup.

00:14:26 And they themselves were more intensely interested

00:14:30 in quality in the new biology

00:14:33 than the members of the scientific departments themselves.

00:14:39 So I was recruited by medical folks,

00:14:42 sort of an unusual situation at that time,

00:14:45 and we came together with the understanding

00:14:49 that there was a good deal of opportunity for cooperativity

00:14:53 between basic science departments and clinical departments,

00:14:57 and it was in that context that we had joint relationships

00:15:03 with people who were focusing on clinical disease

00:15:07 much more aggressively than was ordinarily the case

00:15:10 in basic science departments,

00:15:12 which were somewhat isolated from clinical departments.

00:15:16 Secondly, this was a time to focus on molecular and cell biology

00:15:21 and physiology, in a sense,

00:15:24 and a time to bring the departments which had sometimes been isolated

00:15:28 rather more collectively into an ecumenical approach,

00:15:31 a multidisciplinary approach to science.

00:15:35 And it was in that context that we had extremely good relationships

00:15:39 with all the folks in the various departments

00:15:43 who were moving in this direction,

00:15:45 and of course among those were Herb Boyer and Michael Bishop

00:15:50 and Harold Varmus and others,

00:15:52 who at that time were in the Department of Microbiology

00:15:55 but sooner or later coalesced into a single macro institution.

00:16:03 After the Cohn-Boyer experiment in 1973,

00:16:07 of course there was a tremendous amount of focus on the technology itself

00:16:13 and the utility of that scientific development for each of our activities.

00:16:20 And with Herb working on plasmids, expression plasmids,

00:16:27 and with Howard Goodman and his group working on the other ancillary technologies

00:16:33 and with a great group of young scientists,

00:16:37 we moved in the field quite aggressively as a department and as a school,

00:16:44 and out of that then came programs for the cloning and expression

00:16:50 of insulin and growth hormone and somatostatin

00:16:54 and other molecules of clinical interest at the time.

00:17:04 My own interests prior to that time had focused on gene expression,

00:17:09 especially the enzymes, the RNA polymerases,

00:17:12 which were used to transcribe DNA information into RNA information

00:17:17 and get them expressed.

00:17:19 And the key issue was how three enzymes,

00:17:23 three fundamental RNA polymerases,

00:17:25 could transcribe selectively each of the many thousands of genes

00:17:31 which were necessary to have a specific cellular function

00:17:36 and basically how the differentiation process worked.

00:17:42 My own program focused on the pancreas,

00:17:44 and naturally one of the major products of the pancreas,

00:17:48 which we all know about, is insulin.

00:17:50 So it became a key element in being able to understand how the beta cell worked

00:17:57 and how its expression was regulated.

00:18:00 So I was interested very much from that standpoint,

00:18:05 and Howard Goodman and our lab began to collaborate on cloning experiments.

00:18:13 As a result of those and the availability of good plasmids,

00:18:17 we were successful in cloning the DNA

00:18:22 but immediately became involved in a controversy associated with risk and benefit,

00:18:29 due in part to an alleged infringement of the guidelines

00:18:33 during a time when the guidelines were not well,

00:18:36 or the process of regulating the guidelines were not well known.

00:18:41 And as a result of that,

00:18:44 I became intensely interested in risk over benefit.

00:18:49 And as an aspect of that,

00:18:51 decided that I would, in fact, focus on developing a vaccine for hepatitis B,

00:18:59 first because hepatitis B was a very small virus, just 3,226 bases.

00:19:06 So it was something that one could accommodate to the technology of the time.

00:19:11 It was a major public health problem.

00:19:15 And I was also concerned at the time that the fidelity of transcription

00:19:21 might not be complete in a microorganism as it would be in the human cell

00:19:29 due to various technical considerations.

00:19:32 Vaccines themselves didn't require 100% fidelity,

00:19:38 and therefore the process itself seemed to be tuned to the technology at hand.

00:19:43 In order to become competitive,

00:19:47 we began to focus in UCSF and established a program with Merck,

00:19:54 derived from the fact that they had some crude material

00:19:59 which we could use to clone hepatitis B, that is the virus.

00:20:03 Incidentally, I learned at the time

00:20:05 that they also gave Abbott Laboratories the proteins from the hepatitis virus

00:20:09 which Abbott used in diagnostic tests.

00:20:15 The issue there then became how to essentially deal with the competitive environment.

00:20:21 We were moving dramatically into a stage

00:20:24 when we needed to compete with commercial enterprises,

00:20:27 and the university lab by itself was simply not set up

00:20:32 to carry on that kind of activity.

00:20:35 I tried to engender at UCSF a technology transfer lab

00:20:41 that essentially would act as an intermediary between university labs in general

00:20:46 at UCSF and maybe in the university as a whole to the pharmaceutical industry,

00:20:52 which didn't at that time have the capability to carry on these activities by themselves.

00:20:58 That was itself a fruitless effort,

00:21:02 and in hindsight, probably an ill-advised one.

00:21:06 Then there was the possibility with Genentech or Cetus across the bay

00:21:10 to establish a rather global relationship.

00:21:14 Those relationships didn't work.

00:21:17 I joined the Amgen Scientific Advisory Board.

00:21:24 At that time, Amgen was focused rather broadly.

00:21:28 This is before George came in and reshaped the programs of the company

00:21:35 and made it a much more competitive organization

00:21:43 and essentially developed the tremendous organization

00:21:46 which has made it number one in the industry today.

00:21:49 The turning point came for me when in the spring of 1970,

00:21:55 the spring of 1981,

00:21:58 I attended a symposium organized by the Battelle Institute,

00:22:02 which I thought was going to discuss science itself

00:22:07 and the possibility for the development of programs

00:22:12 and found to my surprise that it was people largely,

00:22:15 that is, the symposium was largely attended by patent attorneys,

00:22:21 by venture capitalists, by investment bankers,

00:22:24 and by entrepreneurially oriented individuals.

00:22:28 There was a rather narrow group of scientists themselves.

00:22:33 It became immediately obvious as people were targeting one program after another,

00:22:39 hepatitis B being one of them,

00:22:41 a vaccine for hepatitis B,

00:22:44 that the university environment was simply a not practical venue

00:22:51 for developing a program which was going to be a general target

00:22:57 for development in the industry.

00:23:00 So I left the conference shortly after my talk,

00:23:09 made a trip to Raleigh to see Roy Vagelos

00:23:12 and told him that if we wanted to be competitive,

00:23:14 we had to set up a separate lab.

00:23:16 Within a couple of weeks he'd agreed to do that,

00:23:19 although interestingly it turned out that Merck at that time

00:23:25 and Roy decided not to take an equity position in Chiron

00:23:29 because he felt that that would signify that this was Merck's window on biotechnology

00:23:37 and would have exclusively limited its being able to play the field.

00:23:42 So we decided, Ed Penhold and Pablo and I,

00:23:47 with our own money and with a little help from venture capitalists,

00:23:50 to get started.

00:23:52 Now the focus truly, and a secondary reason,

00:23:57 a major reason for starting Chiron,

00:24:00 was first of all that competition,

00:24:02 but second of all the view that I'd gathered,

00:24:06 that the pharmaceutical industry itself was not interested in protection from disease.

00:24:11 After the polio epidemic in the late 1950s

00:24:16 in which the vaccines themselves caused disease,

00:24:20 all of the companies began to essentially withdraw from vaccine development

00:24:31 and from prevention itself for the reason of legal risk

00:24:36 and also for the fact that it was considered to be an entitlement

00:24:40 rather than a profit-making enterprise.

00:24:43 I felt that in the future protection from disease,

00:24:47 with the increased understanding of immunology

00:24:49 and the ability essentially via genetic engineering technologies

00:24:54 to eliminate the risk part of it, that is the infection part,

00:24:57 because nowhere would the virus or the infectious agent be part of the development process,

00:25:02 that prevention and vaccinology would be a tremendous boon to health care.

00:25:11 And that, together with the belief that the production of regulatory molecules,

00:25:18 hormones and growth factors, which were not favored by the industry,

00:25:24 would themselves contribute dramatically to health.

00:25:29 And finally, as a result of my experiments or experience with HABIT,

00:25:36 why I had become convinced that metrics and diagnostics themselves drive the practice of medicine.

00:25:42 And most, in fact, nearly all of the pharmaceutical businesses then and today

00:25:48 really don't, in fact, involve the development of sophisticated metrics,

00:25:56 which I think is part of the future.

00:25:59 Now, beyond those personal interests,

00:26:01 there were a number of other factors that coalesced in the early 1980s,

00:26:08 supported by the government with the prospect of developing

00:26:12 potentially a U.S.-dominated global industry of broad scope.

00:26:17 The availability of venture capital, which was especially vibrant in California

00:26:23 as a result of Silicon Valley.

00:26:26 The Bayh-Dole Act, which essentially allowed universities to patent material

00:26:35 developed through research grants.

00:26:38 The famous Chakraborty case, which allowed material to be patented

00:26:46 and the development of essentially a specific patent position around that.

00:26:53 The Kennedy Bill died in Congress, that is to regulate DNA-based methods.

00:27:02 And, of course, the gradual relaxation, as Dr. Singer has talked about.

00:27:09 And finally, I'd say, most importantly, the opportunity to translate scientific information

00:27:15 to products of value to humans with the feedback that Arthur Kornberg mentioned

00:27:22 of continued and even increased government support of science,

00:27:28 which was so important in this field.

00:27:31 I think I'll stop there. Thank you.

00:27:44 Thank you very much, William Rutter, for taking us into the mix of that interaction

00:27:50 between the university laboratories, the commercial sector,

00:27:53 and the changing nature of the regulatory systems in which these activities were embedded.

00:28:01 If you spotted a sense of interlocking directorates as the morning has gone on,

00:28:08 at one level you're probably right.

00:28:10 People move back and forth among some of the same firms,

00:28:15 some close linkages in the same university settings.

00:28:19 There's at least some cohabiting of the same spaces.

00:28:23 Intellectual spaces, which is quite clear.

00:28:26 Technical spaces, as the ability to handle molecules, the ability to handle organisms developed.

00:28:34 And, of course, then organizational spaces, as figures joined each other,

00:28:38 then came apart in different departments, joined each other in research enterprises,

00:28:43 and then moved into separate utilization of them.

00:28:47 George Rathman, our next speaker, spotted the future and then went on to help make it.

00:28:53 He, too, had been at the Abbott Laboratories, but early on in 1980,

00:28:58 as the company was getting underway, he joined Amgen.

00:29:01 Became its CEO and president until 1988, when he emerged as the chairman emeritus.

00:29:07 Went on then and remains the CEO and president of the Icos Corporation.

00:29:14 Someone very much in the midst of the creation of modern biotechnology in the United States.

00:29:22 George Rathman.

00:29:33 Thank you.

00:29:34 It's a pleasure to add my recollections to those of Bill Rudder.

00:29:38 And I'll start out with the state that we've referred to quite a bit today.

00:29:43 Watson and Crick Determining the Structure of DNA, 1953.

00:29:47 When that great event occurred in the early 50s, I was in my first job at the 3M company,

00:29:53 and I was very excited about the fundamental structure-property relationships of fluorochemicals.

00:29:57 This was a very interesting event.

00:29:59 I had no thought that it would ever affect my career and went on about my business.

00:30:03 Not very insightful and not very visionary.

00:30:05 Didn't seem so obvious that this would have importance in a real practical sense.

00:30:10 Now, as this article stated, it was a masterful understatement.

00:30:15 We wish to suggest a structure for the salt of deoxyribonucleic acid.

00:30:19 This structure has features which are of fundamental biological interest.

00:30:23 It has not escaped our notice that specific pairing suggests novel mechanisms for copying and replication.

00:30:30 And many other statements in this very short article, which, of course, Maxine would probably agree,

00:30:35 proves the invalidity of the idea that brevity is inadequacy,

00:30:40 because this achieved a Nobel Prize from that one page.

00:30:44 But in the article, it also suggested the enormous potential for humankind.

00:30:48 But some of us were pretty preoccupied,

00:30:51 and in contrast to many on this panel that were active right from that date on,

00:30:55 I merely watched from the sidelines.

00:30:58 Some of the things that happened, of course, were these bacteriophage studies,

00:31:02 in which this type of organism was studied because of the simplicity of its DNA.

00:31:07 Yet it's all over the microscope slides.

00:31:09 You can see just how complex those basic issues were,

00:31:12 in this case funded by the federal government, basic science, and fundamental work.

00:31:17 One of the things that was necessary before commercialization was possible

00:31:21 was that you not only could direct an organism to produce the product that you wanted,

00:31:25 but you had to be able to tell the organism when and how and how much to make.

00:31:30 I think it was clear, as I think Maxine or someone said,

00:31:34 no one ever estimated how cooperative E. coli was going to be.

00:31:38 This particular E. coli is so cooperative that it distends itself

00:31:42 and produces more protein at the request of the molecular biologist

00:31:46 than the mass of the cell itself in the absence of producing that protein.

00:31:50 These kinds of discoveries really set the stage for the 1980 period,

00:31:55 which is when I became terribly excited about this field,

00:31:58 quite late compared to the other members of the panel.

00:32:00 So in January of 1980, Charles Weissman at Biogen indicated

00:32:05 that he had cloned and expressed interferon.

00:32:08 This was a molecule that people viewed as more or less the holy grail.

00:32:12 It was elusive, it was hard to get, and in fact,

00:32:15 it was deemed to have enormous therapeutic potential.

00:32:19 Yet it would take 10 years before really important uses came out for this interferon.

00:32:24 But it didn't.

00:32:25 This captured my attention, and so did the fact that hybridomas

00:32:28 were reaching a stage where they could be useful for detection

00:32:31 and identification of tiny nanogram quantities of materials.

00:32:36 So as an augment to what was happening in molecular biology,

00:32:39 there was a good chance of doing some things that had never been done before.

00:32:43 And then this is the article that was perhaps the turning point in my thinking,

00:32:47 much like Bill's recollection of the Battelle meeting,

00:32:50 DNA Can Build Companies in Fortune magazine.

00:32:52 It was the story of Biogen.

00:32:54 And in that picture we see two members of that group

00:32:57 that subsequently received Nobel Prizes, Phil Sharp and Wally Gilbert,

00:33:01 and we see a group of intellects getting together

00:33:03 and deciding the course of the company's future.

00:33:06 And one of the comments in that article really grabbed me,

00:33:08 and that was, it's an amazing company when the scientist has his hand

00:33:14 on the jugular of the company at all times.

00:33:16 It sounds like a terrible thing, and yet to me, having had a career at 3M

00:33:20 and recognizing that the best business strategy

00:33:23 is based on sound science and technology,

00:33:25 I thought that might be a wonderful, wonderful place to work.

00:33:29 At the same time, or roughly at the same time,

00:33:31 the top court, as we've heard, ruled that organisms could be patented.

00:33:35 Man-made organisms could be patented by man.

00:33:38 Even though the molecule that might be produced

00:33:41 was developed by nature over millions of years,

00:33:44 if an organism was now producing that molecule

00:33:46 at the request of the molecular biologist,

00:33:48 that particular organism could be patented.

00:33:50 It gave the opportunity to protect this intellectual property

00:33:53 that was directed toward natural proteins

00:33:55 that, of course, had existed for a long time.

00:33:58 And it was a key point, and we'll see what had happened a little bit later,

00:34:01 but it should be mentioned also that in 1980,

00:34:03 it was apparent that the implications of biotechnology

00:34:06 would extend to agriculture and many other areas.

00:34:09 I did not focus on those areas,

00:34:11 but they certainly broadened the scope of what was happening.

00:34:15 And that year, announcements were made concerning gene transfer.

00:34:19 Those experiments were not well received by the community.

00:34:22 They felt they were ahead of their times,

00:34:24 but the fact was that gene transfer was a brand-new idea.

00:34:27 There were examples, certainly in both mice and humans,

00:34:31 that were accomplished,

00:34:33 and although those experiments were not successful,

00:34:36 it set the stage for later work that about 10 years later

00:34:39 has resulted in certainly very important developments

00:34:42 and a great potential for gene therapy.

00:34:45 But getting back to the financial side,

00:34:47 Genentech jolted Wall Street on October 14th

00:34:50 when they went public at $35 a share

00:34:53 and within hours were up to about $90 a share.

00:34:56 This certainly was a noteworthy event for me.

00:34:59 I had just accepted being the first employee at Amgen and its first CEO,

00:35:05 and the idea was that we could possibly raise enough money to be successful,

00:35:10 and Genentech paved the way.

00:35:12 There's no question about it.

00:35:14 It's also interesting, Paul got a notification of his Nobel Prize on that same day.

00:35:17 It was certainly the day for a big stride forward in biotechnology.

00:35:21 At that time in the pharmaceutical area,

00:35:23 and I don't mean to overlook those in agriculture,

00:35:27 but that was not of great interest to us.

00:35:29 In the pharmaceutical area, there were these companies at that time,

00:35:32 and there were six,

00:35:34 and our venture capitalists and scientific advisors

00:35:37 thought there was room for one more.

00:35:39 That was quite an understatement.

00:35:40 Over 100 companies would form in the next 12 to 18 months,

00:35:44 but Amgen was the first of the 1980 companies,

00:35:48 and we selected, at the suggestion of Winston Salzer,

00:35:52 who was one of the prime movers behind getting this company started,

00:35:55 the word Amgen for Applied Molecular Genetics,

00:35:58 and a scientific advisory board was put together largely by Winston Salzer,

00:36:03 and in this board we have Norm Davidson from Caltech,

00:36:06 Bob Schimpke from Stanford,

00:36:08 Arno Motulsky from Washington,

00:36:10 Gene Goldwasser from Chicago,

00:36:13 and John Carbon, some of the names have already been mentioned.

00:36:16 We also had Lee Hood and Irv Weissman,

00:36:20 and not pictured were two very important members of the committee,

00:36:24 naturally Bill Rudder and Marv Carruthers.

00:36:28 So they were there working together,

00:36:31 and in a sense we had recreated the Biogen format

00:36:35 of having a scientific board decide how this business was going to run

00:36:40 and what our directions were going to be.

00:36:42 Another shot of Norm Davidson,

00:36:44 and this is a shot of one of our first employees,

00:36:47 quite an impressive, obviously sophisticated businessman.

00:36:51 This was Larry Souza, who was the man who, with his associate,

00:36:56 created granulocyte colony stimulating factor,

00:36:59 possibly the most successful biotechnology company,

00:37:02 and he joined in, and I think this merger between science and business

00:37:07 and scientists and leading scientific institutions

00:37:11 was something that had not been duplicated in most industries in the past.

00:37:16 We were set out, my first job was to raise money,

00:37:19 in fact I wasn't going to get any compensation until I did,

00:37:21 that was quite a motivator,

00:37:23 and the idea was that we'd have to satisfy venture capitalists,

00:37:26 and what was their expectation?

00:37:28 I learned 42% compounded rate of return.

00:37:31 What does that mean?

00:37:32 That in five years for every dollar they put in,

00:37:34 they'd like a shot at $5.7,

00:37:36 and over a ten year period,

00:37:38 they'd like a shot at about $32 for every dollar put in.

00:37:41 The key was, they wanted to multiply their money by a factor of ten

00:37:45 in five to seven years,

00:37:47 and those numbers all compare to that.

00:37:49 And on this basis, the reason for this thinking is that

00:37:51 if they only get one out of ten that have that ten year yield,

00:37:55 they'll still have a very successful outcome.

00:37:58 So that's what they expected,

00:38:00 and I found out quickly that when we didn't offer that,

00:38:03 they didn't invest.

00:38:04 So we decided that we would offer that,

00:38:06 and this is a rather sophisticated chart it's showing here,

00:38:09 and in a sense, our financing strategy drove our business strategy.

00:38:13 Once you found out that we ought to raise $15 million,

00:38:16 because Genentech had just raised a bundle,

00:38:18 and if you had to raise $15 million,

00:38:20 and you're going to sell half the company,

00:38:22 it meant your company had to be worth $30 million the day you started.

00:38:26 And if you're going to multiply that by a factor of ten,

00:38:28 you're going to be worth over $300 million,

00:38:30 and that's what these tables show,

00:38:31 and I'll give you an example in a minute.

00:38:33 And if you're going to be worth more than $300 million

00:38:35 within five to seven years, guess what?

00:38:37 You're going to be a Fortune 500 company within the decade.

00:38:40 And that's a fairly ambitious chore.

00:38:42 I didn't recognize that it was going to be our fate to do that,

00:38:45 but once we started thinking about how we were going to raise the money,

00:38:48 we had no real alternative.

00:38:50 One of the key lines in here was we couldn't predict sales in five years.

00:38:54 That would have been misrepresentation,

00:38:56 and amazingly enough, I don't think biotechnology companies

00:38:59 did misrepresent as often as people thought.

00:39:02 We really told them there wouldn't be any sales in five years,

00:39:04 but we told them in a roundabout way.

00:39:06 We described how it might be in ten years,

00:39:08 and we suggested in ten years we might have revenues

00:39:11 with our partners of something as big as $900 million.

00:39:15 And if we did, that would be a business enterprise

00:39:18 that had a certain very significant value,

00:39:20 and if we discounted it back to their period of five to seven years,

00:39:23 sure enough, we hit their goals right on the nose,

00:39:25 and that was quite satisfying.

00:39:27 There were three other ways of making this calculation,

00:39:29 and it could have been described as pie in the sky,

00:39:32 but you'll see that it all worked out.

00:39:35 We raised $18.9 million,

00:39:38 and we used the title Applied Molecular Genetics.

00:39:41 We were a little afraid that the words Amgen

00:39:44 would be thought to be American something or other,

00:39:46 and nobody would understand the Gen part,

00:39:48 so we said we better call it right out, Applied Molecular Genetics.

00:39:51 And we raised the $18.9 million, and that launched the company,

00:39:54 and in a very fine direction,

00:39:56 because it meant that we could work on the things

00:39:58 that we thought were important

00:40:00 and not necessarily have to spend our time right away

00:40:02 trying to figure out who to please to do the work

00:40:04 that would raise some more money.

00:40:06 The allocation of resources, as Bill mentioned, was quite broad.

00:40:09 Actually, I was a party to this bill, I have to admit it.

00:40:11 It seemed to me that we had to really start,

00:40:14 and it was the Scientific Advisory Board's counsel as well,

00:40:17 we had to start at a very broad base,

00:40:19 because it just might be, for example, in human therapeutics,

00:40:21 what if the FDA blocked something that was derived from recombinant DNA?

00:40:25 We might never get it approved.

00:40:27 And chemicals seemed to have some lure,

00:40:29 and so we did make a route to alpha-naphthol and actually indigo.

00:40:33 Human diagnostics, we formed a relationship with Abbott,

00:40:36 and animal health care was quite attractive,

00:40:39 and we thought that those things might be better than human therapeutics.

00:40:43 I should point out that it was Abbott that put $5 million into this Fledgley company

00:40:48 that really made the $18.9 million possible,

00:40:51 and it was, I think, as Bill pointed out, sort of a fallback position.

00:40:55 They had not been successful in getting recombinant programs

00:40:58 underway very effectively at Abbott,

00:41:01 and now they thought, well, this looks like a good way to bet.

00:41:04 In fact, as a matter of fact, people who put the money in said to me,

00:41:07 you know why we really did it?

00:41:09 We thought you'd probably give us some technology.

00:41:11 And if you didn't, we thought maybe the investment would pay off.

00:41:14 And if both of those failed, we thought we'd take you over cheap

00:41:16 and have these great scientists on our staff.

00:41:18 So they had a number of reasons for doing it.

00:41:21 In any case, we later would very relatively rapidly concentrate on human therapeutics.

00:41:27 And the one that we had as a target,

00:41:29 formulated by that scientific board that Bill was on,

00:41:32 was erythropoietin involving Gene Goldwasser at Chicago

00:41:35 with the starting materials, very microgram quantities of this material,

00:41:39 and involving Lee Hood and his sequencing

00:41:42 so that we could learn something about these very tiny quantities of material.

00:41:45 If you look at the history of erythropoietin, it's quite interesting.

00:41:48 It was first defined as a molecule in 1907.

00:41:51 Nobody knew what it was, but they knew what it did.

00:41:53 It was going to cause red cells to form.

00:41:55 Nature's way of producing red cells in the human body.

00:41:58 It was not until 1947, 40 years at last,

00:42:01 before the kidney was identified as the source of erythropoietin.

00:42:04 And in 1968, the first tiny quantities were purified by Goldwasser,

00:42:08 and even that did not lead to anything particularly useful

00:42:11 until 1980 when Goldwasser became the consultant to Amgen,

00:42:14 and we initiated the program with a Taiwanese, F. K. Lin and his associate,

00:42:20 and they successfully cloned the product in about three more years,

00:42:23 and it eventually went on the market to complete basically an 80-year history

00:42:28 that was consummated through biotechnology.

00:42:31 Now, how did companies do that?

00:42:33 And we, like the other biotechnology companies,

00:42:35 really had only a few resources to put together.

00:42:37 We put together gene synthesis, we put together some vectors,

00:42:40 put together some expression systems.

00:42:42 Those were the hallmarks of biotechnology, molecular biology.

00:42:46 But we also were hoping in this chart

00:42:48 that maybe we'll be able to show something really important medically,

00:42:51 in this case, that erythropoietin would in fact cause red cells to form.

00:42:56 So we had 12 projects we launched,

00:42:58 and we knew that if we succeeded in any one of these,

00:43:00 we'd have to build all the rest of the blocks.

00:43:02 What are those?

00:43:03 Scale up in production, manufacturing, regulatory affairs, clinical affairs,

00:43:08 all of the things that actually were already in existence in the big companies,

00:43:12 and that's certainly one of the anomalies.

00:43:14 Why didn't the big companies just add these three things

00:43:16 and go on about solving all the problems that biotechnology could solve?

00:43:20 But it wasn't to be, and I think Bill gave you some insights on that,

00:43:23 and I think they had other things to do, I guess,

00:43:25 and this didn't seem all that interesting, but it certainly turned out to be.

00:43:29 What we had to do was set up a place to work.

00:43:32 We had 1,000 square feet that we used,

00:43:34 and we leased this space that was going to be 20,000 square feet.

00:43:38 It was just at the point of the tilt-up walls when we decided to lease it,

00:43:42 and then we modified the inside,

00:43:44 and over a period of eight or nine months,

00:43:46 finally had a laboratory sufficient for the staff we were putting together

00:43:49 back there just in early 1981.

00:43:52 My office during that time when we were waiting for the building

00:43:55 was in a trailer in a warehouse,

00:43:59 so we had to crowd our scientists into the first 1,000 square feet just to get going.

00:44:04 This was at a place in Thousand Oaks.

00:44:07 And some of the guidelines that we had,

00:44:09 the guidance that we had besides Genentech's going public

00:44:12 and making the financing a lot easier,

00:44:14 they also had some plans that we studied rather carefully,

00:44:17 and these plans were displayed here in a thing I've copied that's rather crude,

00:44:21 but I think you get the idea,

00:44:23 that an analyst from Eberhart, it was actually Scott King,

00:44:28 had defined this course for Genentech's future,

00:44:31 and it taught us quite a lot.

00:44:33 First of all, it showed that they expected that by 1983 and 1984,

00:44:37 things like interferon and human growth hormone

00:44:40 would be bringing them tens of millions of dollars of revenues,

00:44:43 which was a very significant need,

00:44:46 and where we could see the interesting dimension on this chart

00:44:51 was that they weren't producing a lot of profits.

00:44:53 What Genentech expected was that they would be matching their revenues

00:44:57 with their research costs,

00:44:59 and the research costs clearly were going to be zooming large,

00:45:03 and that meant to us that we at Amgen

00:45:05 better think about pretty big dimensions in everything we did.

00:45:08 First of all, we better be careful about licensing away rights

00:45:11 and taking just the royalty stream

00:45:13 because it wasn't going to support a $50 million to $80 million R&D budget.

00:45:16 So we learned a lot from Genentech.

00:45:18 Another thing we saw was some of their products,

00:45:20 and of course they began to emphasize very early human therapeutics,

00:45:24 and that seemed like it was practically a perfect fit with recombinant DNA.

00:45:28 There's an interesting point here.

00:45:30 We've talked a little about the RAC or the Recombinant Advisory Committee.

00:45:33 These blocks in the Genentech plans that are blue

00:45:36 represent those programs that had been approved

00:45:39 or would be approved by the Recombinant Advisory Committee.

00:45:43 Now, by being later, Amgen was five years later,

00:45:46 we never had to have anything approved by the RAC.

00:45:48 By that time, these relaxations of the guidelines made it possible,

00:45:52 and I think in some respects we were given the benefit of lower hurdles

00:45:55 than what the initial companies had to face, including that kind of a problem.

00:45:59 When we started, we had the need to raise this kind of money, $94 million,

00:46:04 as indicated by the pharmaceutical PMA,

00:46:07 42 of which had to be raised for the clinical studies.

00:46:11 Little did we know that looking into the future,

00:46:13 those numbers would stretch out to $280 million,

00:46:16 and they're now up to $500 million,

00:46:18 but it was tough enough to think about raising 42.

00:46:22 If we look at the history which goes into the future,

00:46:24 beyond the 80s period we're interested in,

00:46:26 we see the importance of the Genentech public offering in 1980

00:46:29 because that led to all of these offerings over the years.

00:46:33 Amgen participated in the 1983 surge, the 1986 and 1987 surge,

00:46:37 and in fact probably participated in the 91 and 92 surge

00:46:41 because of the results of some of the products

00:46:43 that Amgen and Genentech and others had come up with.

00:46:47 The batting average was better than was ever expected by the PMA,

00:46:51 and in fact these 14 molecules were the only ones that had come up

00:46:54 in the early years of biotech companies,

00:46:56 and all of them went on the market except one.

00:46:59 One is pending approval, and the others are all on the market.

00:47:03 The only one that didn't make it is TNF,

00:47:05 and even that one has produced great insights into inflammation.

00:47:09 Now, what did Amgen yield?

00:47:11 Well, we were supposed to return $32 for each dollar for these first-round people.

00:47:17 That's the group that bought in in 1981,

00:47:19 and they received $65 per dollar, so they were well rewarded,

00:47:23 and in fact all the other investors down the line did pretty well.

00:47:28 If we look ahead, however, there's still plenty to do,

00:47:31 and some of the things that are left to do are these diseases,

00:47:34 $543 billion worth of diseases out there yet to challenge

00:47:38 biotechnology companies today and in the future.

00:47:41 And I think it's this driving force that continues to make biotechnology

00:47:45 as attractive as ever, and in fact these diseases, the chronic diseases,

00:47:49 are the ones where a molecular understanding as provided by biotechnology

00:47:53 is almost essential to the solution, just as Maxine pointed out for the AIDS problem,

00:47:58 where would we be without biotechnology?

00:48:02 And that, for that reason, I think is a pretty good basis

00:48:05 of why the Business Week decided that the 21st century would be the biotech century,

00:48:12 and we're all hoping they're right about that,

00:48:15 and in fact many in this room should accept our acknowledgement

00:48:19 that it's their work in many instances that made this entire story possible.

00:48:24 Thank you.

00:48:27 I guess I should punch it once more.

00:48:35 Thank you very much for taking us one step further

00:48:39 into what a biotech company looks like

00:48:43 and what it takes to make it going.

00:48:46 I sense, at least for people like myself,

00:48:50 who still remain on a university professor's salary,

00:48:54 as good as they are at Harvard and Stanford,

00:48:57 I sense there must be a tension, not always immediately present,

00:49:01 between the university role and expectation

00:49:05 and the enormously impressive industrial development and recreated expectations,

00:49:12 and it's one of those things that I think we'll want to turn to this afternoon

00:49:16 to see how they've worked with each other.

00:49:20 Herbert Boyer comes out of that same nexus,

00:49:25 University of California in San Francisco,

00:49:28 Department of Biochemistry and Biophysics,

00:49:31 who was among those engaged in some of the early important experiments

00:49:35 Cohn and Boyer has referred to on a number of occasions,

00:49:39 and it's in him and his work that you can recognize the very rapid move

00:49:46 from key experiments to industrial exploitation.

00:49:50 In 1976, early in that chart of biotech companies that were founded,

00:49:55 relatively early, he joined with colleagues in co-founding Genentech,

00:49:59 and it's quite clear Genentech has been one of the,

00:50:03 not only leaders, but stimulants.

00:50:05 They were successful in raising cash.

00:50:07 Amgen was able, in a sense, to at least benefit by that early success.

00:50:12 Herbert Boyer joins us now to further fill in those elements of that interaction

00:50:18 between a new science and a new industry.

00:50:35 Thank you, Everett, and thank all the people at the Foundation

00:50:39 for this opportunity to provide a few afterthoughts here.

00:50:44 Coming at the end of the program, it's always a distinct problem

00:50:48 because everything's been said by the time the last speaker gets here,

00:50:52 and there's nobody left after me,

00:50:55 but I'm fortunate enough to have an audience stick around.

00:50:59 I am going to give you perhaps a slightly different slant

00:51:06 on the history that you've heard today.

00:51:09 Each one of these individuals that have been before me

00:51:14 have given a very personal viewpoint and very scholarly,

00:51:21 but everyone has their own remembrances of things past,

00:51:26 and they're not always accurate,

00:51:29 as mine surely has a tendency not to be,

00:51:33 as memory fades quite easily with age.

00:51:37 Nevertheless, I would like to combine my years as a scientist

00:51:46 with those of a businessman

00:51:48 and to perhaps give you a slightly different perspective on what happened,

00:51:53 but it won't be terribly different from what you've heard.

00:51:56 My interest in restriction enzymes,

00:51:59 which is what got me into this business in the end,

00:52:04 was developed when I was a graduate student at the University of Pittsburgh,

00:52:09 just a little west of here,

00:52:12 and it was an observation I had made at that time,

00:52:16 and then as a postdoctoral fellow I went on to work on the genetics

00:52:20 of this particular finding that I made,

00:52:23 and it was one of the first genetic mapping experiments

00:52:28 of the restriction and modification of DNA.

00:52:31 So as a postdoc at Yale University in Ed Adelberg's lab,

00:52:36 I was interested in plasmids at the time.

00:52:40 Ed's lab was one of the laboratories interested in that field of microbial genetics,

00:52:48 but I couldn't get rid of this fascination with restriction and modification of DNA.

00:52:54 In particular, I thought it would be a very interesting biological phenomenon

00:52:59 which could be explored in terms of how proteins recognize specific sequences of DNA,

00:53:05 and this was one of the key problems of the day for molecular biologists.

00:53:12 I spent some time doing some plasmid work and other things with Ed,

00:53:18 but in the evening I'd go and learn how to purify enzymes

00:53:22 because I wanted to purify these enzymes that had been postulated

00:53:27 by the work of Arbour and Dussois a number of years, several years earlier.

00:53:35 And I won't go into all the trials and tribulations,

00:53:39 but needless to say trying to find an assay for a restriction enzyme

00:53:45 was an extremely difficult thing to do.

00:53:51 By the time I was ready for a faculty position,

00:53:54 I went off to UC San Francisco in the Department of Microbiology,

00:53:57 and my first research grant dealt with trying to identify

00:54:02 and purify restriction and modification enzymes.

00:54:05 Unfortunately, the genetic system that I had worked with,

00:54:11 which is usually the paradigm for molecular biology in those days,

00:54:17 we wanted to characterize a protein and purify it.

00:54:20 You need a well-defined genetic system to help you along.

00:54:23 So I took that paradigm to heart,

00:54:26 and unfortunately it didn't work out in this case.

00:54:29 Although we had a lot of mutants and done a lot of genetics on several of these systems,

00:54:33 they turned out to be enzymes that had very bizarre, at the time anyway,

00:54:37 very bizarre requirements for activity.

00:54:40 And although they recognized DNA at unique sequences,

00:54:44 they didn't cut the DNA at unique sequences.

00:54:47 So it was an extremely disappointing adventure.

00:54:52 But around this time, there had been some reports that the plasmids,

00:54:59 the resistant transfer factors that you heard about earlier,

00:55:03 actually were involved in controlling the restriction and modification of DNA,

00:55:07 that they carried the genes for this.

00:55:10 And so we began a search for different plasmids or resistant transfer factors

00:55:18 that might contain the genes for different restriction and modification enzymes.

00:55:22 And I had a graduate student at the time who had a background in clinical microbiology,

00:55:28 and I sent him down to the clinical labs to get a couple of hundred strains

00:55:33 that had been isolated there, and to bring them back to the lab,

00:55:38 and we would analyze them for their restriction and modification properties.

00:55:42 And one which turned out particularly useful, and you've heard referred to today,

00:55:46 ECHOR1, came from a patient who had a urinary tract infection

00:55:50 and had an E. coli with about four or five different drug-resistant markers in it.

00:55:56 And all of the other plasmids that had restriction and modification activity

00:56:00 had the same specificity.

00:56:03 So out of about 30 different plasmids that had restriction and modification activity,

00:56:10 29 of them were identical, and one was the ECHOR1 enzyme.

00:56:15 We began purifying these enzymes around 1970, the early 70s,

00:56:22 and having given up primarily on the other less interesting ones.

00:56:28 And in a short period of time, we were able to ascertain that these enzymes

00:56:34 did indeed make unique cuts in the DNA.

00:56:39 But the ECHOR1 was again particularly interesting

00:56:43 because it made fewer cuts than the other class of enzymes.

00:56:48 And so we initially focused our attention on this enzyme,

00:56:53 and we proceeded to purify and characterize it in a preliminary way

00:57:00 and then attempt to identify the nature of the break made at the end of the DNA

00:57:05 or what was the sequence recognized.

00:57:08 And about this time, people were hearing about this enzyme

00:57:13 that was making unique cuts in DNA,

00:57:16 and I remember giving Paul Berg a bucketful of this enzyme to work with,

00:57:22 and he gave it to me.

00:57:26 And it was through the efforts of several investigators at Stanford

00:57:38 that you've already heard about in our own lab

00:57:41 that we finally came to the conclusion that the sequence cleaved by the DNA

00:57:48 and the fact that it was a cohesive end.

00:57:51 So we then determined the ECHOR2 sequence and so on and so forth,

00:57:57 and at that time I was interested in exploring ideas that I had had,

00:58:05 actually back when I was a postdoc at Yale University

00:58:10 where there was a strong effort in molecular mechanisms of DNA recombination,

00:58:16 and I had been vaguely interested in how one might do recombination of DNA

00:58:24 and test tubes at the time.

00:58:26 And when we developed the recombinant DNA enzymes,

00:58:29 I was interested in how this might be accomplished in vitro.

00:58:35 And during the summer of 1972, Bob Helling came to my lab

00:58:41 and we began a program to try to do recombinant DNA using ECHOR1

00:58:47 and a type of plasmid called lambda DV,

00:58:51 which is an extremely terrible plasmid molecule to work with,

00:58:56 and our experiments were just a total failure.

00:59:02 That fall we went to a conference in Hawaii

00:59:07 where Stan and I initiated our collaboration,

00:59:12 and I won't go into all of the details of that, it's already been covered,

00:59:17 but prior to beginning this collaboration I came back from this conference

00:59:22 and went to Cold Spring Harbor to give a seminar,

00:59:24 and I think one of the most important contributions to genetic engineering

00:59:29 and recombinant DNA technology came at that time when I got to Cold Spring Harbor.

00:59:35 I walked into, I think it was Joe Sandbrook's lab,

00:59:39 and he said, Kelm, I want to show you something.

00:59:42 And Joe took me and Phil Sharp and we went to a darkroom

00:59:47 where he had shown that you could stain DNA bands with ethidium bromide

00:59:53 that were separated on an agarose gel.

00:59:57 And I looked at this and I just almost fell over,

01:00:01 realizing that this was the thing that was going to make

01:00:07 the whole effort of genetic engineering possible.

01:00:12 And so I came home to San Francisco,

01:00:17 and the first thing I did was I asked Bob Helling if he would look at the parameters

01:00:22 for agarose gel, electrophoresis, staining, etc., etc.,

01:00:25 which he did, and that preceded, just by a matter of days,

01:00:31 the collaboration that Stan Cohen and I began.

01:00:35 And I can't emphasize enough how important that breakthrough was

01:00:41 with the gel electrophoresis and ethidium bromide staining.

01:00:45 Prior to that, we had been trying to do this with radioactively labeled DNA,

01:00:51 virus and phage, and it was so difficult and messy and time-consuming.

01:00:58 It was just impossible to describe how laborious that was.

01:01:04 And this changed things just overnight, made it so rapid.

01:01:09 And we went on to do the experiments that Stanley has described,

01:01:22 and along came the days of considerations of regulations and guidelines and so on and so forth.

01:01:31 And during this time, we went on to develop cloning vehicles in our laboratory,

01:01:38 a number of these and a number for expression.

01:01:41 And I had people coming through my lab all the time,

01:01:45 and it was an extremely exciting and stimulating time, a lot of discussions,

01:01:48 a lot of young people, a lot of older people.

01:01:51 Two of the scientists at Amgen spent a sabbatical in my lab,

01:01:57 and it was quite exciting.

01:02:01 I had the opportunity to do a collaboration with Art Riggs and Kichi Itokora at City of Hope.

01:02:09 After I'd given the seminar there, they approached me and told me about their research

01:02:13 dealing with the lack of operator DNA, which they had chemically synthesized.

01:02:18 And Itokora had just been a postdoc with an investigator

01:02:22 who had developed some new, faster, more efficient means of synthesizing DNA.

01:02:28 But Art complained that the problem is you spend all this time and money and energy

01:02:35 in synthesizing a small amount of chemically synthesized DNA,

01:02:39 you do the experiments, it's gone, you've got to start all over again.

01:02:42 And so we said, well, why don't we clone this chemically synthesized DNA,

01:02:47 and you only have to synthesize it once, we'll let the bacteria do it after that.

01:02:51 So we cloned the lack of operator DNA and showed that it was functional,

01:02:56 and at that time I was extremely impressed with what chemically synthesized DNA

01:03:03 could do for the field of genetic engineering.

01:03:06 And that was my first introduction to chemically synthesized DNA in a practical sense.

01:03:17 And about this time, I got a call from Bob Swanson, who introduced himself.

01:03:25 He came to visit me one Friday afternoon, and I was very impressed with his age.

01:03:32 He was about 29, and I was about 10 years older.

01:03:35 And he came with the proposal that we start a company.

01:03:40 He said he had been a venture capitalist for a number of years

01:03:44 and was in San Francisco.

01:03:46 He had money that perked up my ears because I was looking for all sorts of ways

01:03:51 to fund postdocs and research in my laboratory.

01:03:55 And he told me that he would be able to get money to start a company.

01:04:01 And was this technology ready to be commercialized?

01:04:05 And I said yes, probably without thinking.

01:04:10 Fortunately, I didn't think about it too much.

01:04:13 He later told me that he had started with a list of people

01:04:17 whose names had been in the news and newspapers about genetic engineering events at that time.

01:04:23 And he started calling them in an alphabetical sequence,

01:04:27 and I was the first one that said yes.

01:04:30 And I guess one of the things I said that Bob and I always had in common

01:04:35 is that we were both very naive.

01:04:38 But the reason I said I thought this technology was ready to be commercialized

01:04:41 was that there were three technologies that sort of come together,

01:04:44 and you've heard about them already.

01:04:46 But one was the recombinant technology per se,

01:04:50 chemical synthesis of DNA,

01:04:52 and the nucleotide sequencing technology, which had been developed around the same time.

01:04:56 Those were the three key technologies, from my point of view,

01:05:00 that made the attempt to go into commercialization a particular attractive thing to do.

01:05:08 So Bob and I put together a business plan.

01:05:12 We formed a partnership.

01:05:14 We put together a business plan in which we would chemically synthesize the genes for human insulin,

01:05:22 the A and the B chains.

01:05:24 You've heard a little bit about that from Bill Rudder.

01:05:27 And one of the things that I had insisted immediately

01:05:34 was that we get Riggs and Itacora on board because of their capability of chemically synthesizing DNA.

01:05:41 There were few labs in the world at that time actively synthesizing DNA in any reasonable way.

01:05:49 And so we made a trip down there and got them interested in the project,

01:05:54 becoming part of the company early on.

01:05:58 And so we had the experiment designed to synthesize the A and B chains of insulin,

01:06:07 the DNA for the A and B chains of insulin,

01:06:10 so that they could be produced in bacteria by genetic engineering techniques.

01:06:15 And we looked over that, and Art Riggs, in his usual insightful way, said,

01:06:21 that's going to take too long.

01:06:24 He says, I've got an idea for doing something a little quicker.

01:06:28 And he says, matter of fact, I have a grant request here which actually was a grant application to NIH

01:06:37 which had been turned down by NIH.

01:06:39 They didn't fund it.

01:06:41 And here's a case where industry actually does something that NIH didn't do.

01:06:48 But this particular grant request was a proposal to chemically synthesize a gene for somatostatin

01:06:55 and to express it in bacteria.

01:06:58 And the reason this made eminent sense was, one, it's a very small protein.

01:07:04 You didn't have to synthesize a lot of DNA.

01:07:07 It could easily be expressed.

01:07:09 And there was an extremely sensitive assay for the detection of this protein.

01:07:14 And so we went on to use this as a demonstration that technology was viable.

01:07:21 It could be commercialized.

01:07:23 And after that, we next quickly jumped into doing the human insulin experiment, which we did do,

01:07:34 thanks to the just energetic and productive and brilliant efforts of Dave Goodell and his group at Genentech.

01:07:44 And that gave us the opportunity to generate a reasonable amount of excitement in the venture capital field.

01:07:54 And we were able to obtain funding, proceed with renting more space and hiring more people.

01:08:01 Most of the people we hired in those days were scientists.

01:08:06 And my particular role in Genentech, other than giving it its name,

01:08:14 was bringing in the chemical synthesis of DNA, which Genentech had the advantage of having

01:08:25 and where other companies did not have for some number of years.

01:08:31 I insisted that Bob be very much in tune with the type of culture it would be required to recruit young scientists.

01:08:41 And my first order of business was to convince him that any research done by the scientists in the company could be published.

01:08:50 The patent lawyers would have to work fast, but it was very important for scientists.

01:08:55 And every scientist I knew wanted to publish, and rightfully so, and achieve their own recognition.

01:09:01 So I got that through, and then I insisted that scientists have a major say in how things were done.

01:09:09 They always had access to management, and they would be rewarded financially for the risk they were taking.

01:09:15 And so we went on, and early in the history of the business, we explored many avenues of products.

01:09:24 We looked at agriculture, we looked at animal husbandry, chemicals, special chemicals, and biopharmaceutics, as we call them now.

01:09:34 And we soon realized that we were going to do nothing but kill ourselves if we took that approach.

01:09:42 And so we narrowed our focus very early on to biotherapeutics.

01:09:48 And in addition to the science, just the genetic engineering science, developing products,

01:09:55 we first harvested those products that were very obvious, the fruit closest to the ground.

01:10:02 And these included human insulin, human growth hormone, interferons, and so on and so forth.

01:10:07 And this took a reasonable scientific effort, a fairly extensive one.

01:10:16 But more importantly, this culture at Genentech of collegiality, a very campus-like atmosphere, people interacting,

01:10:25 although there were still the petty jealousies and quibbling,

01:10:29 but there was a strong sense of cooperation and interaction because everyone had a common goal.

01:10:36 It just wasn't their own careers being identified with their publications,

01:10:42 but their careers were their publications as well as the eventual approval of products that could be used to treat people with diseases.

01:10:52 The absolutely amazing thing to me was the manufacturing component of the industry which had to be developed.

01:11:04 It was totally new. It wasn't fermenting beer. It wasn't making antibiotics. It was completely different.

01:11:09 It was engineering organisms to make a unique protein which in turn could be purified

01:11:16 and expressed in large quantities by the organism that was engineered

01:11:21 and to provide this in large enough quantities to do the clinical studies

01:11:27 and eventually to make it available to physicians for clinical use.

01:11:33 And today we have the capability of making hundreds and hundreds of kilograms of purified proteins by tissue culture techniques, let alone bacteria.

01:11:45 Matter of fact, many of the products made today are actually derived from tissue culture rather than bacteria.

01:11:51 The new phase of biotechnology, which I think it's really not new.

01:12:00 It hasn't just started now, but it started a number of years ago,

01:12:04 is the role that the biotech industry has in providing materials to research activities for investigative purposes

01:12:20 but both at the clinical and the basic science level.

01:12:23 Today we need to understand how the basic mechanisms of disease work.

01:12:32 What are the pathways? What can we target?

01:12:36 And this is the approach that is necessary today for a biotech company to be successful.

01:12:46 You just can't identify a protein and say I'm going to make this and we're going to find out how it works.

01:12:51 But the actual target for a particular product has to be identified.

01:12:56 And this is going to be the role that's being taken today.

01:13:01 So the genetic engineering techniques that I spoke about earlier and you've heard about before

01:13:07 now represent sort of a standard repertoire of technologies which are used by everyone practically

01:13:16 in order to understand biomedical and biological mechanisms

01:13:23 and to try to provide some understanding of the disease process.

01:13:27 The technologies that have developed are numerous.

01:13:31 I don't have time to mention them, but I think we are in a new period for the biotech industry.

01:13:38 And I think, personally, I think the next 20, 30 years are going to be even more exciting than the last.

01:13:46 Thank you.

01:13:57 Thank you very much, Herb Boyer.

01:13:59 I must admit, as I listened to your comments, which came out with such a rational structure to them,

01:14:06 following on the rationality of the industrial developments of your two colleagues before you,

01:14:13 it all seems so easy, and yet it's quite clear it wasn't.

01:14:17 And, indeed, the discussions this morning, as I listened to them, really had a remarkable quality to them.

01:14:25 I can't remember a time when we brought together in a single room in a single place

01:14:31 the people who were engaged in the fundamental scientific breakthroughs, engaged in the utilization,

01:14:38 engaged in the policy debates surrounding it.

01:14:43 This was a fascinating set of comments.

01:14:46 Indeed, for the historian and for those who are going to use this materialist history,

01:14:52 here were the actors themselves, the principles in the activities, discussing, describing,

01:14:59 attempting to reconstruct, to remember, and then to put in some order of priority

01:15:04 what it was that seemed important in retrospect and, in a sense, where they came from.

01:15:09 What we watched being identified, in the first place, were the series of successful research sites.

01:15:16 Anyone who's ever studied the history of science or been involved in science itself

01:15:20 knows that unless you get a sense of where to turn, you can be a footnote in history rather than a principle in history.

01:15:28 And it's that choice of a successful research site and then being able to ask the right questions at that site.

01:15:37 But, as became apparent this morning, technique loomed very large, and that elucidating techniques,

01:15:45 many of them new, many of them shifted or developed from other fields.

01:15:50 And second, of course, was the expectation and then the realization of finding successful utilization sites.

01:15:59 What do you do with the new science you're developing?

01:16:02 Where do you turn to utilize it?

01:16:05 What kinds of things can it do?

01:16:07 And what does the expectation of utilization mean for the nature of the questions you ask in your research?

01:16:13 This tension came out in very nice form in a number of the comments right through the morning.

01:16:20 And then, of course, we closed with that set of questions concerning the construction of the organizational forms.

01:16:30 Building an industry is not accidental, as was very apparent.

01:16:33 And although Herb Boyer made it seem very easy as you move from one step to another,

01:16:38 it became clear that there were lots of gambles.

01:16:41 There were lots of intuitive leaps made.

01:16:44 There was a lot of searching going on.

01:16:47 And then, of course, there were a lot of people who didn't take those steps.

01:16:50 There were some who did, and one wants to know why and what.

01:16:54 And one illusion which kept coming through had to do with what I would call that, well, you did also,

01:17:01 the culture in which scientists can work successfully.

01:17:05 And one of the fears traditionally has been the inability of people used to the easy culture,

01:17:12 the no necktie or jacket, the work your own hours attitudes of the university laboratory,

01:17:19 and the culture in which you're going to bring people to work in a fast-moving, profitable industrial activity.

01:17:27 Some of you remember during the years of the intense period of the Cold War

01:17:32 when people were being recruited to the various parts of the aerospace industry.

01:17:36 And you'd see those advertisements in the Scientific American showing an open window and a campus-like atmosphere.

01:17:42 And indeed the text would say, come join our campus-like center and take part in.

01:17:48 And then came that series of high-tech developments.

01:17:51 In a sense, as the comments were here, that creating a culture which allows creative people to make their way was important.

01:17:59 And then, of course, the question of how do you move from the laboratory into industrial production?

01:18:04 A number of you alluded to the problems of scaling up.

01:18:07 It's not obvious, nor is it just a linear function, as you made clear.

01:18:13 The policy issues came out in fascinating form, and I wonder how it'll seem.

01:18:19 In retrospect, our colleagues Berg and Singer can say it turned out that there was no problem.

01:18:28 Is that always the case? Will that always be the case?

01:18:33 What are the implications of setting something out as a policy issue and then seeing it resolved?

01:18:39 In retrospect, does it mean there was no policy question?

01:18:43 Or is it that policy questions emerge and then changing situations deal with them?

01:18:49 Did no one alter their behavior, in a sense, to make the policy issue not seem critical?

01:18:54 My sense is, certainly, around Cambridge, we watched it.

01:18:57 We watched issues develop, be handled, and some deferred.

01:19:02 Now it's your turn.

01:19:05 Your questions, your comments.

01:19:07 I've been making my list up there.

01:19:09 I hope each of you has also been making your own list.

01:19:14 I hope that what you'll do is take the time, if you haven't done it already,

01:19:17 to jot down some questions or very pointed observations on that sheet we handed out to you.

01:19:22 They'll be collected at the door on your way out.

01:19:25 We will work with them over lunch to take some of the most interesting, some of the most pointed,

01:19:30 some of the obscure issues, and some of the critical issues to deal with them.

01:19:35 Hand these questions in as you leave, and let's make sure that this afternoon

01:19:39 the panelists respond to the issues that you've got in mind

01:19:43 and indeed respond to some of the explicit but then also tacit differences

01:19:47 that emerged in their own conversation.

01:19:50 Now join me in thanking them for a fascinating morning.

01:19:53 Thank you.

01:20:23 Thank you.