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Businessperson Of The Year - Times of Trial
Scientist, physician and - above all - entrepreneur Leonard Bell steers Alexion toward commercialization and profitabilty
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Business New Haven
1/20/2003
By: Michael C. Bingham
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As founder, chairman and visionary of one of just a handful of Connecticut technology companies poised to make a real difference in the world, Alexion Pharmaceuticals' Leonard Bell, M.D. has been named Business New Haven's 2003 Businessperson of the Year.
The 44-year-old Bell started Alexion in January 1992, leaving behind an assistant professorship at the Yale School of Medicine and a can't-miss career as a cardiologist for a job as CEO of a company whose future fortunes remain uncertain to this day.
For Bell, husband and father of a growing family (that now includes three children), the risk involved in that decision "wasn't even a consideration."
But 11 years and many millions of dollars of investment later, Bell and Alexion more than ever have their eyes on the prize - but no prize, not yet.
Alexion's two leading candidates for commercialization, drugs known as "complement inhibitors" - pexelizumab and eculizumab - have been put to the test in nearly 7,000 patients in clinical trials, patients suffering from a wide array of severe disease states, including cardiovascular, autoimmune and hematologic disorders, inflammation and cancer.
Since its founding, Alexion has devoted substantially all of its intellectual and financial resources toward drug discovery, research and development and clinical testing. The company's two lead product candidates are therapeutic antibodies that address specific diseases that arise when the human immune system produces inappropriately activated inflammation in the human body. One of those candidates, pexelizumab, is an antibody fragment being developed in collaboration with Procter & Gamble Pharmaceuticals (P&G).
Eleven years is a long time for a company to survive without having a product to sell, but that is of course a reflection of the painstaking process by which potentially effective compounds and discovered, tested and - for the lucky few - finally approved for commercial use by the U.S. Food & Drug Administration (FDA).
These rules mean that only a handful of potential drug-makers even make it to the starting line. The even tinier number that make it to the commercialization phase succeed by virtue of having: 1) a focused leader with an unshakable vision; 2) the ability to raise many millions of dollars on a promise and a prayer; and sufficient scientific expertise to discover and refine some chemical compound that no one else in human history has yet discovered.
Leonard Bell has pushed, pulled and prodded Alexion along this path to point where the finish line - actual commercialization of drug products - may be in sight. He says he believes the company may be prepared to file for FDA approval of one of its two main drug candidates, some time in 2004.
Earlier this month Alexion announced a deal with Swiss drug manufacturer Lonza Biologics to manufacture eculizumab over the long-term (see related story, page 8). The company is assembling, for the first time, a marketing team and gearing up for commercial operations.
But Alexion remains "pre-commercial," and that means "pre-revenue." Although the company reported it had $283 million in cash as of October 31, it had still burned through about $21 million for the quarter preceding that date. For now, its only revenues come from its research collaboration agreements with partners such as Procter & Gamble Pharmaceuticals.
Teetering atop this precipice is Leonard Bell. Beyond his soft-spoken demeanor, Bell has been described by some who know him, and others who envy him, as aggressive and maybe a little too self-confident. That may be exactly what it takes to pull off a balancing act like this one.
Early on in life, Bell says, he learned an important lesson: "To be what you're going to be - and don't regret your decisions."
What Leonard Bell was going to be was by no means pre-ordained by his family background. Some believe doctors are born, not made, but Bell grew up in a family that practiced business and law, not medicine.
The third of three children growing up in suburban Ardsley, N.Y. and attending public schools, Bell discovered and interest in and aptitude for science.
That interest was refined and deepened by an illness in Bell's family.
"I had an uncle I was very close with who had had rheumatic fever as a child in the 1930s. He survived that, but [as a consequence] had heart disease all his life [in those days preceding widespread use of antibiotics to treat infections, many children who survived acute rheumatic fever had to cope with progressive cardiac inflammation throughout their lives]. So I was interested in that, and I was always a pretty curious kid."
Curious and academically competent enough to enroll at Brown after high school, where he majored in (of all things) philosophy. "I initially took a philosophy course because I wanted to be able to travel Friday afternoons to see my girlfriend, who is now my wife, in Ithaca (N.Y., home of Cornell University). The philosophy course met Tuesday and Thursday mornings." Of such serendipities are marriages - and careers - sometimes made.
Unlike many physicians, Bell's path to medical school was anything but preordained. "I thought the easiest thing to do would be [as an undergrad] to take all the courses I needed to be able to go to medical school if I decided to," he says.
But Bell at first seriously considered going to graduate school in philosophy. He notes, archly, that "The contrast is pretty stark between the two paths [philosophy and medicine]."
What tipped the scales in favor of the latter were two undergrad summer jobs in New York: the first working as an aide in a operating room at Columbia Presbyterian Hospital; the second in the Department of Social Medicine at Montefiore Hospital in the Bronx. The job exposed him to opposite ends of the health-care spectrum, from surgery in the ivory tower of one of the world's most renowned hospitals to the chaotic reality of how health care was actually delivered in the gritty south Bronx. "I actually enjoyed both very much," Bell says. Enough to decide to subject himself to the meat grinder of medical school, a path that brought him to New Haven.
"When I looked at medical schools, Yale had just built a large primary-care center on Howard Avenue, and I looked at that as a tremendous opportunity to really provide care - probably as a reflection of my experience in socialized medicine [in the Bronx]. As it turned out, when I came to Yale as a medical student, I spent most of my time in the laboratory."
Bell performed considerable laboratory research during his years as a medical student and intern - highly unusual given the pressure-cooker time demands placed on doctors-to-be - including as a lead investigator on a number of patient studies that presaged his future career.
During medical school and immediately thereafter, Bell juggled his twin interests in patient care and laboratory research. At Yale he took advantage of an option to telescope three years of medical training into two years of medicine and two years of laboratory research.
The conflict inherent in Bell's parallel-but-never-intersecting medical interests came to a head, with the result a momentous career change.
In the early '80s researchers made an important discovery about the function of blood vessels. Where previously blood vessels were regarded mainly as the body's plumbing, simple pipes for the flow of blood, it was discovered that the linings of blood vessels "could actually release factors that control all sorts of functions of the body, including blood pressure," Bell explains.
For Bell, that revelation precipitated a shift in his research interest from controlling blood pressure in animal studies to wanting to discover how the cells of the blood vessels control function. So Bell persuaded Yale pathology professor Joseph Madri, M.D. to help him learn more about cellular and molecular biology to complement Bell's already solid understanding of cardiovascular physiology and thus permit him concentrate most of his efforts on pursuing this key link in the laboratory.
"It didn't hurt that I had my own [NIH] funding," Bell adds. "I went from a standard cardiovascular physiology [concentration] to be trained in microbiology with Joe. That had a very important impact on where I went."
After a year or so of single-mindedly pursuing his new research interest, Bell returned for clinical cardiology training in 1988 - a regimen that typically consumes two to three years. True to form, however, Bell was able to persuade the faculty to allow him to devise a "package" that compressed his clinical training into 15 months.
"So here I am - two years out of clinical medicine, in a lab almost all the time except for two hours every other week in the clinic looking after patients - and I come back as a cardiology fellow." Also in 1988 the couple's second child was born, "so life was changing," Bell says with typical understatement.
Even more momentous, that year Bell was awarded a five-year NIH grant to start his own laboratory to pursue his cell-biology research following completion of his fellowship. And he accepted a faculty position as assistant professor of medicine in cardiology at the medical school.
What tipped the scales for Bell in favor of science over practicing medicine?
"One of the attractions of science is that there's always something new. Every experiment is a new experiment; every outcome is a new outcome. In clinical medicine, while every patient is different, after a while you're doing the same procedures [again and again]," Bell explains.
Alexion was born in a manila file folder at the Yale School of Medicine labeled "Fantasy."
Bell is generous in describing the influence and inspiration he drew from the many medical luminaries with whom he rubbed elbows at Yale. But one of the most important contacts he ever made had nothing to do with school at all.
Bell met molecular biologist Stephen Squinto (now Alexion's executive vice president and head of research) when Squinto began dating Bell's wife's best friend in Chicago. Having met several times in informal social settings over a couple of years, Bell and Squinto discovered they had quite a bit in common. Squinto had recently left a faculty position at LSU to come to work for a biotech company, Regeneron Pharmaceuticals.
The pair started pondering whether there was a way of making proteins that could be injected into patients as anti-inflammatory drugs, for use in treating maladies as disparate as a arthritis, kidney disease and various cardiovascular afflictions.
At the same time Bell started talking to his older brother, Larry, who had met a venture capitalist on a train who might be interested in helping to fund some sort of new venture.
One thing led to another, and on August 19, 1991, a number of planets entered into alignment. As Hurricane Bob hit the East Coast, Bell's daughter celebrated her seventh birthday, Gorbachev resigned as president of the crumbling U.S.S.R., and Bell presided over a fateful meeting at the then-Sheraton hotel in New Haven at which Bell decided it was decided to go ahead with formation of what would become Alexion.
That late summer and fall the 33-year-old Bell wrote the business plan, obtained rights from Yale to the intellectual property that were central to Alexion's research, and by '92 had raised enough money from various venture capitalists - about $5 million between August and December 1992 - to cut the Yale umbilical cord. Speaking of which, at this time the Bells welcomed their third child into the world.
Of leaving his Yale position, Bell says now, "The risk didn't even occur to me."
One of Bell's first acts as CEO was to negotiate a lease for lab space at Science Park - the company's first major financial commitment, aside from salaries. The agreement, says Bell, "required [Science Park] to renovate our space within a certain time frame, and if they didn't they had to be pay penalties for every day [the work] wasn't completed." As it happened, "They missed all the deadlines, and owed me tens of thousands of dollars" in penalties. Instead of taking the cash, Bell says, "I swapped that lease, doubled our space and cut our price by a third." Not a bad day's work for a fledgling CEO.
Thus began a long and stormy but somehow symbiotic relationship between Alexion and its Newhallville landlord, a relationship that would end badly (as many relationships do) eight years later.
Meanwhile, Bell and his team were trying to figure out how to sustain a new company that he knew was years from generating any meaningful revenues, but with a growing roster of Ph.D. employees to feed and clothe.
"The financing environment was just atrocious" in the early '90s, Bell recalls. "I learned very really that we actually had more in common with the corner laundromat than with a pharmaceutical company. We were small business scraping by, focusing on every hour and every penny every day. It was just, 'Keep your head down and keep going.'"
For the CEO, "keeping going" meant finding new money to feed the research beast. Nearly every day, Bell recalls, "I would come into my office, put on my helmet, fasten my chin strap and get on the phone for that day to find out how to raise money or what kind of disasters would happen next."
One of the key things that Bell made happen next was finding and hiring a key No. 2 executive, chief operating officer David Keiser, who arrived in the summer of 1992.
Perhaps the most notable characteristic of Alexion's first years was how quickly the company was able to get to the public markets with an initial public offering in 1996.
"In 1992, the financial markets for biotech pretty much closed down," Bell explains. "By 1994 the markets were desolate; in 1995 I don't think there were any [biotech] IPOs."
In late 1994 Alexion was able to raise a new round of private financing, but it was clear to Bell that continued sustenance would have to come in the form of a collaboration with a larger partner. That partner arrived in the form of U.S. Surgical Corp. Then USS CEO Leon Hirsch became convinced that some of the research being worked on in Alexion's labs might have applications for U.S. Surgical products. In the summer of 1995, with the company nearly out of cash, a deal was forged "that effectively saved the company," Bell says. To this day he refers to that period as Alexion's "near-death experience."
Back from the brink, Bell set his sights on finding a potential underwriter for a public offering. "We were still very early-stage; we had no drug in the clinics [trials]," says Bell. "I met an analyst at a third-tier firm, very bright guy, who believed in the concept, and he and I went on a road show" to pitch investors. "About 60 percent of the investors were institutions. In our prospectus we said that by the end of the first quarter [of 1996] we would file an ID for our first drug to go into clinical studies. This was in February. On the last of the first quarter [March 31] 1996, we filed. Not in the morning; not in the early afternoon; not in the mid-afternoon."
Fulfilling that commitment enabled the company to raise $20 million that first public offering. A year later, two more rounds of private financing yielded an additional $20 million.
Alexion went public in February 1996. The company was able to raised money in the public markets again in 1997 and '98, somewhere between $25 million and $30 million.
And all that money, it turned out, was actually yielding laboratory results. In early 1996 Alexion began the first human study with its lead drug, pexelizumab, followed a year later with an initial patient study for eculizumab. By this time the company had 60-odd employees, and was growing. "We had some encouraging clinical data in early '98 from early studies in heart-surgery patients," says Bell.
In January 1999 Alexion formed a critical collaboration with P&G Pharmaceuticals, by which the latter agreed to pay for the development of pexelizumab. "For a company that was constantly undercapitalized, it allowed us to relieve some of the operating expense," Bell says. "That helped us look forward toward growing the company now that the immediate expenses were now less of an issue.
Alexion was able to raise an additional $50 million in the fall of 1999 and reported encouraging early data from trials with rheumatoid arthritis patients.
"In 2000 we raised almost $330 million - a lot of money," Bell observes. "In early 2001, we had some important Phase II data in rheumatoid arthritis and heart surgery that suggested we were further along the right track.
"We had a series of discussions with the FDA in 2000 and received approval to go forward at the end of 2001 with our first pivotal trial in heart-surgery patients with pexelizumab. We also started a larger 250-patient trial in rheumatoid arthritis."
Since then, Alexion has been focused on the transition from late-stage development to pre-commercial operations.
As part of that, Alexion spent much of last year assembling a team to manage commercial operations, including marketing. The first pivotal trial in bypass patients with pexelizumab is nearly complete. The almost six-year trial process in kidney-disease patients with eculizumab has yielded "encouraging" results, as has trial involving the same compound in patients with a rare blood disorder known as PNH.
"Over the last month or two, we're focusing now on pre-commercial operations regarding bypass," Bell explains. "We had data showing a 70-percent reduction in [mortality] among heart-attack patients with pexelizumab - a very surprising and dramatic finding." Meanwhile, eculizumab was strongly linked in trials with remissions in kidney disease.
The next 12 to 24 months? "If the current trial in bypass is successful, then we would expect filing [FDA] applications for approval of [pexelizumab] some time in 2004." A similar timetable might attend eculizumab for use in PNH patients, pending continued positive clinical results. Upon FDA approval, commercialization would follow soon thereafter.
Even if that scenario turns out to be best-case, Alexion is well positioned financially to go the distance - and reap the rewards. In December 2001 Alexion renegotiated its deal with Proctor & Gamble to take back more of the R&D risk on pexelizumab development in return for a larger cut of the potential rewards. "You've got to pay to play," is how Bell puts it. "Rather than getting a ten-percent return" on potential pexelizumab royalties, "we're getting closer to 50 percent."
"We certainly have enough capital to see through development of our drugs," says Bell. He acknowledges, however, that "Some time early in commercialization we may need to raise more capital."
While New Haven and state officials have for the better part of a decade toed the company line that biotech would be Connecticut's savior, Bell and Alexion generated controversy three years ago by announcing that the company would leave its Science Park incubator for greener pastures in Cheshire.
At 70,000 square feet, Alexion was one of Science Park's flagship tenants, and then-Science Park Development Corp. Chairman Richard Grossi tried to persuade Bell to be patient while the SPDC searched for a project developer.
That wasn't enough for Bell, and his company's decision left a bitter taste in mouths of city and Yale officials who hoped to grow a tenant base around relatively mature bioscience firms including Alexion and Vion Pharmaceuticals.
"The history of Science Park is such that even if they say they will have a developer, who knows what they'll have six months from now," Bell told the Yale Daily News in April 2000. Bell characterized the complex as a "dilapidated, post-war industrial sector that has floundered for 20 years."
Bell would soon sign a lease with Adam Winstanley, a Boston-based developer, to move into a 100,000-square-foot lab (with virtually unlimited expansion potential) in Cheshire, where the company moved in November 2000. Alexion also operates a satellite facility in La Jolla, Calif.
Looking back, Bell expresses less bitterness than disappointment in his company's departure. "My first choice was to stay and build the company in New Haven," he says. "Cheshire is a very pleasant setting where we're able to flourish. I think we could have flourished in New Haven as well, though." Alexion's prospects - vast potential, as yet unfulfilled - mirror those of technology companies throughout greater New Haven. While the city touts itself as a budding biotech haven, results where the rubber meets the road have yet to live up to the hype.
In its controversial study of a year ago, Incubating Biotech: Yale Prospers, New Haven Waits, the Connecticut Center for a New Economy noted that New Haven had in fact lost momentum as a tech center after three of its most successful and promising biotech companies - Cellular Genomics, Gene Logic and Alexion - had decided to grow outside of New Haven or the state (Gene Logic early in its life moved to Maryland). A fourth, CuraGen Corp., with facilities in Branford and New Haven, had planned to consolidate all operations at a new facility in Branford before the tech stock collapse two years ago.
For the Elm City itself, biotech has produced few jobs and negligible property taxes, concludes the report. While the city has recently attracted two new developers - Lyme Properties to Science Park and Concord, Mass.-based Winstanley Enterprises to redevelop the former SNET office building at 300 George Street - the report asserts that "New Haven will need other assets to offer companies ready for expansion."
The problem most in need of attention, the report says, is New Haven's public education system. "Biotech companies won't stay in New Haven until the city can provide a well-educated, well-prepared workforce," it says.
Meanwhile, Yale University is moving determinedly to position itself as a stronghold of cutting-edge science. Last year the university announced plans to spend $1 billion building new biomedical and scientific research labs.
As head of a company that traces its roots to Yale science labs, Bell has a keen perspective on the university's key decision in the 1990s to embrace commercialization of research, which had previously been a lightning rod for institutional distrust.
"I've been associated with Yale for over 20 years now," explains Bell, "and what's apparent is that there's a substantial change in the way the university looks at commercialization - and it's generally all for the positive.
"When I came to Yale it was in large part because it wasn't Stanford; it [had] a faculty that was very focused on academics and science," says Bell. "For many years Yale had difficulty distinguishing between commercialization of its technology and commercialization of its faculty. Yale finally understood that it could commercialize technology without compromising the integrity of its faculty."
Bell is indeed an important beneficiary of that revelation.
"Yale was an early investor in Alexion, and they've done a very good job [in recent years] of changing their orientation to create more opportunities and allow technology to emerge from Yale.
"It's a long time coming, but I think they deserve credit."
What drives Leonard Bell: ego, money, making the world a better place? "There's a challenge in accomplishing something that very few people get an opportunity in their lifetimes to accomplish - and that is to affect, on a large scale, the outcomes for lots of people," he explains.
By "outcomes" Bell means medical, of course. For those patients - few now but potentially thousands soon - it's a matter of life and death.
"I've accomplished creating a company that has created a meaningful benefit to patients, and we're well on our way toward moving that into the marketplace," he says. He acknowledges that perhaps his most important accomplishment is "surrounding myself with talented, focused, committed, hard-working people."
At Alexion's holiday party last month, Bell found himself reflecting on the meaning of his long and continuing journey.
"There are 20 or 30 elderly people who had heart attacks who are now alive who may have been dead otherwise if not for [their participation] in our trial with pexelizumab," he told his colleagues. "Similarly, there are about a dozen [PNH patients] in England - a teacher, a farmer, a student, a gardener - who for the first time in 20 to 30 years are feeling well [by having taken eculizumab]. It's easy to lose sight in all the minutiae and details of getting drugs developed, that our objective is to cause good. To make people feel better."
That's the challenge - and it remains so today as it was 20 years ago to a callow but ambitious medical student.
"It was unequivocally a challenge to accomplish something that was very, very difficult but would be able to affect patients on a much broader scale than I ever could as a single physician."
And - so far, at least, Leonard Bell hasn't met a challenge he wasn't up to.
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