As part of our series about the “Five Things You Need to Be a Highly Effective Leader During Turbulent Times,” we had the pleasure of interviewing Lindsay A. Rosenwald, M.D.
Over the last 25 years, Lindsay A. Rosenwald, M.D., has acted as a biotechnology entrepreneur and has been involved in the founding and recapitalization of numerous public and private biotechnology and life sciences companies. Since December 2013 he has served as Chairman, President and Chief Executive Officer of Fortress Biotech, and he has been a member of its Board of Directors since October 2009. Dr. Rosenwald is also a director of Mustang Bio, Inc., Chairman of the Board of Directors of Avenue Therapeutics, Inc., and a director of Checkpoint Therapeutics, Inc. From November 2014 to August 2015, he served as Interim President and Chief Executive Officer of Checkpoint Therapeutics, Inc. From 1991 to 2008, Dr. Rosenwald served as the Chairman of Paramount BioCapital, Inc. He received his B.S. in Finance from Pennsylvania State University and his M.D. from Temple University School of Medicine.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
After getting my degree in finance and economics from Penn State University and graduating medical school at Temple University, I found myself drawn to the emerging biotech industry, using both parts of my education on Wall Street. I wanted to be in the business of acquiring clinical-stage programs and building companies around those assets. But, several years before taking control of the company that is now Fortress Biotech, I retired and became a passive investor. In 2013, I realized how much I missed searching out those programs, assumed leadership of Fortress Biotech and have been building the business ever since.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
The first drug candidate I ever licensed was a potential blockbuster from a French pharmaceutical company for several thousands of dollars. The drug took several years to develop. Along the way, we made a business agreement with another large pharmaceutical company. As often happens in this industry, a few years after the transaction, that company was about to be a acquired by a larger, multinational pharmaceutical company. The new company did not have the right to keep this drug, according to our contract. We told the company that we wanted a multimillion-dollar payment to agree to the merger or we would take the drug back and pay them royalties. The company verbally agreed to pay us what we requested, and the deal was supposed to close on a Friday. If it didn’t, the deal would fall apart. Toward the end of the week, we had not received a signed agreement or the money. The CEO of the company that we had licensed the drug from sent a message through his legal counsel letting us know that he was traveling in Europe without access to a fax machine and couldn’t sign an agreement until Monday. We were pretty naïve, had horrendous legal advice, and couldn’t believe a large company would lie about a business deal. Unfortunately, the deal went through, but we never received the money and had no recourse to take further action. It was funny because the joke was on us, but I’m still not laughing. The lesson that I learned was to get everything in writing. I never made that mistake again.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
I am grateful for Robert Langer, ScD, at the Massachusetts Institute of Technology, who is probably the most influential scientist of my generation. I got lucky. At one of my first startup companies, Dr. Langer came in as our chief scientific advisor and a board member. From his mentoring, I learned how to do proper due diligence and drug development. He also taught me how to combine science and medicine. I’m eternally grateful for his experience.
Extensive research suggests that “purpose driven businesses” are more successful in many areas. When your company started, what was its vision, what was its purpose?
Since I took control of Fortress Biotech in 2013, we have had a unique business model of efficiently identifying and acquiring high-potential marketed drugs and development-stage drug candidates. Once we identify a product candidate, we work to acquire the asset, develop, and commercialize it both within our company and through our partner companies. We focus on the data and review these drugs to see if they are something that might meet our threshold for acquisition. If so, we reach out to the sponsor of the drug, whether it is an academic laboratory, government laboratory, or a company, foreign or domestic. The drugs that I’ve developed in my career prior to joining Fortress Biotech have helped countless people around the world for a variety of disorders including prostate cancer, Parkinson’s disease, and leukemia.
Thank you for all that. Let’s now turn to the main focus of our discussion. Can you share with our readers a story from your own experience about how you lead your team during uncertain or difficult times?
The economy was reeling from the Great Recession in 2009. The U.S. unemployment rate hovered around 10 percent, and the pharmaceuticals industry lost thousands of jobs. Despite this economic disaster, I helped sell one of the companies I co-founded, Cougar Biotechnology. We had acquired a small molecule for prostate cancer that showed positive data in patients. Johnson and Johnson took interest in the small molecule and bought the company. The drug, which is now known as Zytiga, is the biggest selling prostate cancer drug in the world. The deal turned a $500,000 investment into an approximately $1 billion sale.
Did you ever consider giving up? Where did you get the motivation to continue through your challenges? What sustains your drive?
My motivation comes from helping patients get access to the medications they need. My wife’s friend had a daughter who was diagnosed with a rare form of leukemia and underwent treatment, but at one point, the doctors told her to take her daughter home as there was nothing else that could be done to help her. My company developed and brought to market a drug shortly thereafter, which she took as a last resort. After treatment, she went into complete remission, and now, many years later, she is well and married. She would have died, and her children would never have been born had it not been for our drug. That’s what gives me inspiration and sustains my drive. That’s the “business” I am in.
What would you say is the most critical role of a leader during challenging times?
There are a few roles I think are critical as a leader, the first of which is to look beyond your own company to the broader business environment. Chances are if we’re having a hard time, so are the companies around us. It is also important to show continued optimism while leading your team. Finally, persevering during challenging times requires looking for the best opportunities to take advantage of — in our business at Fortress Biotech that means acquiring available assets that other companies may need to sell.
When the future seems so uncertain, what is the best way to boost morale? What can a leader do to inspire, motivate and engage their team?
Leaders should use whatever motivates their employees as individuals. Some people are motivated by money, and others are motivated by the idea of helping to bring a drug to the market. Some employees want to hire other people. People all have something that motivates them, and you have to put them in a position to do that. It’s all psychology.
What is the best way to communicate difficult news to one’s team and customers?
The best way to communicate difficult news is to be direct and tell the truth. It may not be the easiest thing to do, but it is the only way to deal with it.
How can a leader make plans when the future is so unpredictable?
I don’t feel the future is unpredictable. It has been said that “history doesn’t repeat itself, but it does rhyme.” As a leader, it is necessary to determine what the risks of your business are and the odds of them happening to redirect your business accordingly. I keep a checklist of potential issues and how we can deal with them, but they rarely arise. My business of drug development is a risky business, so we address those risks by having an enormous portfolio of potential opportunities.
Is there a “number one principle” that can help guide a company through the ups and downs of turbulent times?
You have to be willing to be beaten up and get back in the ring. And each time you get back up successfully, you will be a bit better than before. People think that there are overnight sensations, but they rarely exist. You have to be willing to take the pain and keep moving forward; I think that’s the key to business success. You also have to understand what you are doing and be a great motivator.
Can you share 3 or 4 of the most common mistakes you have seen other businesses make during difficult times? What should one keep in mind to avoid that?
To quote Warren Buffett, “Honesty is a gift. Don’t expect it from cheap people.” The hardest mistake is hiring dishonest people — and sometimes it takes a while to find out who those people are. Another mistake I’ve seen is when other companies get so nervous about difficult times, that they ratchet down their business too far and cannot participate in a recovery. Conversely, a third mistake is when companies are too optimistic during difficult times that they over expand or over invest and then are unable to make it through the recovery period.
Generating new business, increasing your profits, or at least maintaining your financial stability can be challenging during good times, even more so during turbulent times. Can you share some of the strategies you use to keep forging ahead and not lose growth traction during a difficult economy?
Overall, my main strategy comes down to risk management. You want to make sure your business is well financed and ensure it can withstand the volatility of the capital markets. Be cognizant of your costs and try not to spend too much. Finally, invest in opportunities with people who are willing to share the financial risk.
Here is the primary question for our discussion. Based on your experience and success, what are the five most important things a business leader should do to lead effectively during uncertain and turbulent times? Please share a story or an example for each.
- Communicate with your team, be open, direct, and honest. Early in my career during one of the usual biotech bear markets, I did not communicate well with my team. They were nervous, as many companies were going out of business. Nearly half of my staff left because they felt we would not be around and chose to move on to bigger, well capitalized companies. In retrospect, I should have better communicated that we were in great shape and that our company was going to stick around. We lost good team members, and this experience helped me learn the valuable lesson of talking to my team openly and directly.
- Encourage your team to keep working and to keep seeking out opportunities. Many years ago, there was a terrible bear market which was devastating the ability of life science companies to get financed. As a result, most bankers, venture capitalists, and entrepreneurs left the business. While it was a scary time, I was one of the few people who decided to stick around. Within months, my team and I found unbelievable opportunities that we never would’ve had otherwise. Several months later, the financing markets opened like a deluge, and we were able to do five years’ worth of business in one year.
- Hire quality people who may be leaving more distressed business environments. Distressed can mean many things to many people. For example, large mergers have led to major layoffs including business development and search and evaluation teams. During those times, we try to reach out to everyone affected. We have been lucky enough to recruit some of those affected by these environments who wouldn’t have been available if it weren’t for their company laying them off due to the evolution of its business.
- Make sure to keep enough financial resources on hand so you are prepared to invest when others may not be in the same position. The biotech markets are incredibly volatile. Given scientific, payer, stock market, and economic risks, there are frequently times when the financing window is shut. It is always important to make sure that you not only keep your spending going but can increase it to take advantage of other companies that are in distress. Over 20 years ago, we were in a biotech bear market and had the means to buy a distressed biotech company that was almost too good to be true. There were no other bidders for the company because everyone was scared given the turbulent market. Several months later, we flipped the company for a 500% profit.
- The hardest times can result in the greatest successes. This was my experience during the horrible economic collapse of 2008 during the subprime crisis. During this recession, I was leading a company that sold a drug which became one of the biggest selling prostate cancer drugs in the world. While we sold the company to Johnson & Johnson for $1 billion, the drug has reached nearly $4 billion in annual sales for the company. In retrospect, we should have held onto it.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“Good things may come to those who wait, but only the things left by those who hustle.” This quote is a daily reminder of the philosophy that guides my leadership and our work at Fortress Biotech. The team consists of driven entrepreneurs, and our success is accomplished through proactively seeking appropriate opportunities, not waiting for those opportunities to show up on our doorstep. Every successful opportunity that I have pursued was one that I went after, not one that came to me. Early in my career, I invested in opportunities that came to me in product licensing, and invariably it did not work out.
How can our readers further follow your work?