George Rathmann Interview (page: 2 / 9) Founding Chairman, Amgen	Print Interview

It's obvious that your science background has hugely enhanced your business life.

Get the Flash Player to see this video. George Rathmann: One thing that always struck me was that when I was dealing with businesspeople, they were always impressed I was one of the best scientists they knew. And when I was dealing with scientists, they were always impressed I was one of the best business persons they knew. I never quite got the stamp of approval from the businessmen that I was a businessman. I never quite got the stamp of approval from the scientists that I was a scientist. But, as you say, they kind of worked together, and it worked out all right.

You subsequently left Amgen, but looking back on very rich years, it's hard to think of a company that took better advantage of being in the right place at the right time, in the development of science, in this case biotechnology.

George Rathmann: Well, we weren't quite so wise as it sounds. The people had demonstrated the moment to us, in a sense. Genentech had been formed in 1976, and this was 1980.

Get the Flash Player to see this video. We had a pretty good role model in Genentech, and as it unfolded, they were even better. So that the month I started at Amgen, Genentech went public. That told us something. They had the courage to go public with a company that was not making money, that had no products, no sales, and that was almost a first in its own right. But it meant to us, "Well, when we need it, we'll be able to raise money and go public, " and on and on. Genentech had really been the visionary company that said, "This is the moment in time." Of course, sometimes being second, you actually get some benefits of not having to be the guy that breaks all the ice, and you can follow the better -- maybe more attractive -- pathway. So it took about five or six years, and then Amgen really outstripped Genentech. But it was certainly not without the guidance that Genentech provided, and us getting going in the right channels. We would never have gone into the pharmaceutical thing, for example, if it hadn't been that Genentech showed it was feasible. We had some programs, but they weren't very successful at first. And it was discouraging, and you thought about the huge cost of the FDA. And you just thought, ""Can you really do this?" And Genentech said, "Yeah, we can do it. We're going to be the next pharmaceutical company." So I said to our Board, "We can do it. We can be the next pharmaceutical company," and two of the pharmaceutical people on my Board just about killed me on the spot. "You'll never be a pharmaceutical company. You can't do that from being -- a biotech company should never try to be a pharmaceutical company. Bring your products to the pharmaceutical industry and that will be the way to exploit them. Don't try and do it yourself." "Well, let's watch Genentech. They're doing pretty well." "I don't think Genentech is a reasonable company as a model for this company. We don't want to use Genentech." Mm, maybe. But we did, and we learned a lot, and they did show us the right way.

[ Key to Success ] Perseverance

You said there were some things that didn't work out. Could you tell us about some of those setbacks, and how you reacted to them?

George Rathmann: Yes. Well, I was surprised. Someone asked me that today. "How did you keep going when you had so many reversals? You had eight products that weren't successful."

Get the Flash Player to see this video. The stock went from $18 a share, with a lot of enthusiasm, to $12 a share, with somewhat less enthusiasm, to $9 a share, to $6 a share, to $3.75. That's a big burden to have to carry, because you have investors that are very disturbed, and you have, supposedly, employees that are disenchanted. Except it never happened. The people at Amgen always felt that we were on the right track, we were going to do great things. They had great science. They liked each other. They knew they were brilliant. We had a brilliant scientific board, and we knew that we had the right ammunition to win the war. But there were times that it took a lot of that kind of enthusiasm -- and might have seemed to some people misguided enthusiasm -- and that's what sustained the effort. We were sort of even prepared to change direction. We weren't locked in by any rules of the company that we couldn't go this way, you have to go that way. That happens today a lot more. Even the successful biotech companies will tell you that, well, they can't go into that field because their franchises are over here. And I always worry about that. I think I like the uninhibited approach. It's dangerous. You can spend too much money, you can scatter your shots. But boy, it's hard to predict ahead of time where the answers that are really going to pay off are. So we had the good fortune that we could change direction with ease. And the board that we had was visionary enough to say, "Well, if that's what you fellows want to do, then we'll support that." So we went in and out of fields, and we went back into the pharmaceutical thing, even though the first pharmaceuticals we tried to work with hadn't been very successful. And then huge advances were made by some really wonderful scientists in the company, and they set the stage. It's basically -- it's all science. The era that Amgen was in -- and I think Genentech started it -- it's all science. You think business is it. Well, without the science, you've got absolutely nothing. And the science that you have is closely linked to academic science. So there's a huge transition to make it a business proposition, but you still have to have really some of the best scientists that are around in that field at that time.

[ Key to Success ] Perseverance

When did you realize that these products wouldn't work out?

Get the Flash Player to see this video. George Rathmann: We thought we had successes in those eight products. The success of finding that you can make chicken growth hormone, I'll tell you, it made Genentech very envious. We were the first to have chicken growth hormone. There are nine billion chickens in the world, four billion chickens in the United States. This was going to be a great thing. It just happened that it didn't do anything to the growth of chickens. The prediction was that it would enhance their growth, they'd grow more efficiently. They might even grow bigger. We talked about chickens as big as turkeys, and they never got any bigger than chickens. They weren't any cheaper, and they didn't get there any faster. So that was one of those. It was a great success that we got the gene and it functioned as a growth hormone. It just didn't affect the commercial end of the chicken market -- broiler market as it was called. And then we had indigo. We made indigo, and brilliant science work, and made indigo in bacterial cells, E-coli, common bacteria, and we were able to make indigo blue dye. It was a hundred million-dollar business. We thought we'd certainly get a piece of that. But we couldn't dislodge the existing ways of making the drug, even though it involved toxic chemicals and so on. Environmentally, the Amgen approach was far superior. But the overall economics weren't there. So that was a disappointment.

[ Key to Success ] Perseverance

Get the Flash Player to see this video. Interferon, as I mentioned today. The Holy Grail, we thought. If you have an interferon, you're going to have the cure for everything. Well, it didn't work. As far as we could tell, it didn't work. The interferon we had just didn't do anything particularly useful. But we just kept looking around and looking around, and the first big success was a program we had started at the very beginning of the company. So it wasn't redirected, it was just that we were now spending more time on the pharmaceutical side. And this was erythropoietin -- EPO, as it's called. Everybody knew since 1907 that there was a molecule that would cause red cells to form, that it existed probably in the bloodstream. In 1947, 40 years later, it was discovered that it was actually produced in the kidney. And 20 years after that, somebody was able to isolate a small amount from a patient that was actually spilling over into their urine, because they were aplastic anemic patients, and that would cause a very high level of erythropoietin, so you got some isolated material. So all that process taking years and years and years, and when we picked up the ball, it was to take that first smidgen of EPO and see what we could do. And a Taiwanese scientist just worked night and day, and I mean night and day. And he was working in the face of people saying, "Fu-Kuen Lin..." which was his name, "...there isn't really much hope you're going to find this." Genentech couldn't find it. Biogen couldn't find it. A half a dozen other biotech companies had looked like they'd tried to find it, but they can't find the gene. But there has to be a gene. I mean, you know there has to be a gene. The fact that you can't find it is almost a paralyzing experience, but you know it has to be there.

[ Key to Success ] Perseverance

We now know a lot why we missed it. It's expressed at very, very, very low levels. The benefit of that turned out to be apparent once we had the gene and the protein.

Get the Flash Player to see this video. If you give a patient erythropoietin for the rest of his life -- a patient that has no kidneys will be totally anemic -- you can restore them to normal red blood cell levels with erythropoietin, or EPO as we called it. Aad if you gave it to that patient for the rest of his life, he would consume one aspirin tablet -- 500 milligrams -- of erythropoietin over his whole life span. It was that potent. It's that rare. It's that rare in the body. And it's for that reason that it was very hard to find it. So it was just a heroic effort to do it, and once it was done, it was one of the great success stories, because everything clicked into place. How would you make the molecule stable? It was intrinsically very, very stable. What were the yields when you tried to make it? The yields got better and better right away. How hard was it to purify? We had absolutely pristine purity very quickly. And it was just like you were charmed. After all these many years -- and it took us four years and we didn't have anything -- and suddenly we had this. It was heaven on earth. It was a very exciting time.

Get the Flash Player to see this video. Some of the scientists there helped inspire some of the other scientists to look for things like erythropoietin, and one of them was working with Sloane-Kettering and discovered a molecule that they thought produced white cells. They actually thought it was a basic molecule that produced more what was called the basic stem cell, or the basic cell in the white cell family, or in the whole hematopoietic family. I was trying to avoid the word, but I couldn't. Anyway, so there was a thought that this was going to be a very potent molecule. And of course, it turned out to be potent, but it was not the molecule they thought it was. It did not do all the things they had hoped. It did only one thing: it made neutrophils. It turns out, with cancer patients, the one thing they need more than anything else is a chemical that will make neutrophils. So we had found the Holy Grail in a funny way, and it was really the Holy Grail. That compound, when it was introduced and was approved by the FDA, had enormous pick-up right off the bat. I don't know how many patients -- I'd rather talk patients than dollars -- but it sold $50 million worth of Neupogen the first week. One week's sales, $50 million. It was a miraculous drug, and it was curing people from day one. Really a very important drug. It made it possible to have chemotherapy without inducing such a compromise that the patients got sick from infections. So the chemotherapy -- one of the offsets of chemotherapy is that it runs your white cell levels down and then you get infections. So these were two marvelous, marvelous drugs.

Surprisingly, it's been hard to find another one anywhere near as good as those. And the amount of money spent since then has been vast compared to that. But at the same time, the company had to redirect its thinking to making sure they exploited the benefits of these molecules, and how to extend them into slightly different versions, that would last longer and do things that the initial molecules didn't do. So that improvement cycle has been very well conducted. But the discovery of equally interesting molecules has not been there.

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