My view is you need to have a portfolio to build a lasting company because not everything's going to work.
Investors may have the view that they want to be the portfolio aggregator, not the company. And they just want you to do one thing. But as a company operator, I'm convinced that the right way to build a company is to have a portfolio.
And this is not about making money. You know, making money is great, but this is really—if you start with that premise, it's not going to work.
Oh, totally. Yeah. No, it's the after effect of things. If you make the patient impact, everything else follows.
I'm delighted to have John join us today because it took over 20 years to develop a biotech drug. And this is a very long journey, and there are very few industries where a new product might take two decades. So, there are some very different aspects of developing biotech drugs. So, John, I'd like to focus on that topic, and I think it might be useful to first start by you telling us a little bit about your upbringing and your background, and how you prepared yourself to go into the biotech industry.
Yeah. You know, I was born and raised in Chicago, in the middle of our country, from two Greek immigrant parents. My father, he gave me the gift of a passion for science and medicine. He was a physician. And my mother gave me an important gift, the gift of optimism. But I had an upbringing where these Greek immigrant parents would, of course, always expect more from me, always put high pressure on me to excel.
Then, in the early '80s, I became excited about biotechnology. I remember going home one Sunday and seeing a Time magazine article about Herb Boyer and the starting of Biotech and Genentech and Biogen and becoming excited about that. And then in 1987, I went to Biogen. And Biogen, of course, one of the pioneer early companies in biotechnology where I spent a decade really getting involved in drug discovery and development and commercial over that time. But that was the beginning of my career.
So it sounds like there are some really important learning that has to take place to go from being a scientist to becoming a manager, a manager of other scientists. And so, how difficult is that?
Yeah. Well, I think it is difficult. And there are certainly skills that are needed to learn. When I transitioned from the science side of the business to the business side of the business, I didn't want to make that transition. The CEO of Biogen, Jim Vincent, in 1994, asked me to transition from a scientific leadership role at Biogen to leading up business development at Biogen. And I resisted the transition as much as I could, and I soon realized that he wasn't asking me if I wanted to make this transition. He was telling me that I could either take that job or not be part of the company anymore. And as a recently divorced person with child support and everything else, I couldn't afford not to take that job. So I made the change and didn't like it initially, but then became so happy that I made that transition. I then was recruited to go to Millennium and lead a subsidiary at Millennium and play a business leadership role at Millennium Pharmaceuticals, but all of that really prepared me ultimately to become a CEO, which I did in 2002 at Alnylam.
Right. So, tell me how do you decide to leave the comfort of an established pharmaceutical company such as Millennium to move to Alnylam as one of its founders? A startup built around a brand new idea, RNAi. And I remember there was a paper that Phil Sharp wrote with Tom Tuschl and a few other people explaining in Drosophila how you could do this. So, how do you go from that background in Millennium to say, 'I'm going to take a risk and join this new company, be one of the founders, and take an unproven technology needing proof of concept, and building scientific credibility. I'm going to do this.' It's a big risk, right? So, how do you decide to make that move?
It was not an easy decision, I have to say. I mean, first of all, I was happy at Millennium. I was working with great people at Millennium. We were about to get our first drug approved at Millennium. And then on a personal side, I was getting remarried that same year in 2002 and about to embark in a whole new life with a wonderful new person in my life, build a family, which I did. So, it was not an easy time for me to take on the challenges of being a startup CEO, if you will. But I really dove into the science of RNAi. And just to explain it a little bit, the central dogma of biology is that DNA makes RNA, which then makes protein.
And the discovery of RNAi was that all living eukaryotic cells have a process of regulating this central dogma by controlling RNA and using small RNAs to basically degrade the RNA intermediate. And so, it was a groundbreaking discovery and Phil Sharp was involved with that, Craig Mello, Andrew Fire won the Nobel Prize in 2006 for that discovery. And what became clear to me was that if we could figure out how to make drugs from this newly discovered pathway, that we can create a whole new class of medicines. And that was irresistible. I could not walk away from the opportunity to be part of that discovery's realization into patient impact at the end of the day.
And being a scientist helped because it could help you see the incredible potential if this could be taken to market.
Absolutely. I mean, I had the benefit of my scientific background to be able to vet the science and, you know, do the rigorous analysis of the pros and cons and everything else. But I also had the business training from my time at Biogen and Millennium to understand what it would take to raise the capital and the time it would take to ultimately do this.
Now, clearly when you think of RNAi, it can be essentially any genetic disease where you can address the molecule and either prevent the gene from being expressed or modify the gene by changing, you know, exon skipping or whatever, right? So, how do you decide as part of a team, I'm sure, which disease to target as the very first indication that RNAi could perhaps resolve? You know, this is important because if you can't get the milestones early enough, you can't raise capital and therefore you can't grow the company, right? So, how did you choose those early, you know, I believe it was TTR, transthyretin amyloidosis, that was the first. How did you decide on that?
Yeah. Well, the first thing you have to do with a new technology like this is figure out how to make medicines, how to make drugs out of a new piece of science.
And test it in animals, understand what it can do, what it can't do, you know, what are the different pharmacological properties of the science itself. And once we figured that out, it almost took us eight years to figure that out, but once we figured that out, we had a clear view as to the types of drug targets that would be appropriate for RNAi therapeutics, if you will. We learned enough about the platform technology to then understand what the low-hanging fruit opportunities were that number one would make a big patient impact. That's where it starts. But number two, where our technical likelihood of success would be as high as possible. And that strategy, which we called at the time Alnylam 5 by 15, led to the birth of many programs that all had very similar characteristics. Most of them in the rare disease space.
And the transthyretin amyloidosis program, which became the landmark program for the company, was the first one to ultimately get to market.
Now, I'm guessing because you said it took about eight years to get to this point, you had to be very careful in terms of cost control. And you had to be very careful in terms of deciding how many scientists, how many business development people, how many managers to have. And balancing that was probably a difficult but essential part of becoming and taking this company on. So, how did you manage that? And how did you manage this whole issue of cash flow? Because my understanding is most biotech companies are constantly running out of money and they have to raise more money, which means dilution. So, you have to constantly think about, okay, how far can I make this initial seed capital or this initial fund raise work before I go back to my VCs or to some, you know, source of capital.
Well, let me give you some numbers to start. I mean, we ended up raising over 7 and 1/2 billion dollars.
It took us 5 billion dollars before we brought our first drug to market. And the company only went public last year in 2025, which was 23 years after it got started.
So, in terms of cash flow, it only just now turned cash flow positive. And so, the company depends largely on a balance sheet of cash, which it either generates and raises through equity capital or through business development partnerships that it forms. So, those are the two inflows, if you will, that a company can partake in well before it ultimately becomes cash flow positive, which doesn't happen for years.
Right. And I know you went to Sanofi, to Novartis, to Roche. And each of these companies came up with hundreds of millions of dollars.
Those were critical sources.
So, these are all European companies, incidentally. So, my curiosity is how did you decide who to partner with? And what were those negotiations like? What did they want from you? What did you want from them? And how did you come up with these successful longer-term partnerships, which as you point out was critical in allowing the company to keep growing and moving along on milestones and developing drugs without diluting and constantly having to go to the market?
Yeah. Well, we formed over 20 partnerships, actually, in the time that I was there with companies ranging from Merck to Novartis to Roche to Takeda to Regeneron, many, many companies globally. And all the deals are quite different at the end of the day. And it depended on where we were in our life cycle. You know, in the early days, the partnerships were really around the platform technology. And those partnerships had a scope of rights that we would grant to our pharma partner. And in return for that scope of rights that we would grant to them, we would get milestones and royalties and upfront payments.
The later partnerships that we did were much more focused on specific products that we were developing. For example, the Sanofi partnership we did in 2014 was a partnership where we retained US and European rights for our pipeline, but we gave Sanofi the rest of the world from a commercial and development perspective. And so, these type of partnerships all had different flavors and shapes, but consistently across all the partnerships, they were aimed at really a few things. One is raising capital in a less diluted manner than having to go to the equity markets, number one. And number two, getting access to scale and capabilities that might come from a global partner, but those were all the different elements that really came into play.
Now, almost every drug company that I've heard of, there are going to be some failures. And one of the critical decisions is when to essentially stop a project, cut it off, and say, 'That's not worth pursuing. We thought it would work. It's not working. So, let's essentially cut our losses and move on.' Can you give me one or two examples of how this might have happened at Alnylam and how you moved on?
I'll give you a few. Sure. You know, I mean one example was early on when we were beginning to think about our clinical pipeline, we did start some programs that we ultimately stopped because they weren't going to yield exciting products. And so we made the portfolio decision to stop them proactively. A second case I can give you is one where we were in phase three development with a product and we had a safety issue with the product. And of course in that circumstance, you immediately stop the product. Patient safety always comes first. A third example that I can point to is a product called Leqvio which is a drug for hypercholesterolemia. And in 2013 we decided to partner that program because it was a large market program that would require very large clinical studies and we decided that we would partner it with a company called The Medicines Company. And they ultimately brought it all the way to market and then got purchased by Novartis for $10 billion in 2019. And so it was a portfolio decision around what we could afford and what we can't afford. Where should we be putting our dollars? Where should we be partnering? That one needs to make in terms of deciding the best portfolio design at the end of the day.
Yeah, I think it makes sense to say we've got five projects here and three of them I'm going to farm out and let me just get the licensing and royalties.
In the meantime, I'll focus on these two which I think have the highest possibilities. Now to do that, you have to protect IP. Without IP, you don't have a company, right? So you know, you were in a position where some of the IP was owned by German entities, Max Planck I think it was, right? And then you had the company that essentially had the LNP, the lipid nanoparticles that you needed to be able to do the drug delivery or RNA to deliver. So, how did you manage this very critical task of making sure that Alnylam had sufficient IP either proprietary or controlled through licensing so that they could at some point go to market without having issues about we don't have the IP to be able to get approved?
Yeah, you know, IP was a critical strategy at Alnylam. In the early days, we proactively decided to consolidate all the intellectual property in the RNAi field and avoid the fragmentation of value that occurs in some technologies like monoclonal antibodies. And the reason we did that, Robbie, was we knew that we had to raise a lot of capital to build our company and to fund our pipeline. We knew that having very strong IP would be critical to investors at the end of the day. So, that was a very explicit strategy that took many, many years to perfect, took many lawsuits ultimately, but it was a critical part of our overall strategy. Now, unfortunately, over the years, even as we were building Alnylam, we've seen an erosion of intellectual property value in biomedical sciences through a number of Supreme Court decisions that's occurred, legislative acts like the America Invents Act, which have made IP a little bit more challenging, I would say. Still important in building a great biotech company, but it certainly has become more challenging than it used to be at the end of the day.
Now, another aspect of biotech is the FDA, at least in the US, right? In Europe, you have European Medicines Agency, etc. And when did you start working when you were at Alnylam with the FDA in terms of getting them beginning to understand that, 'Hey, we're doing RNAi. You probably don't know much about it as yet because you haven't had any companies come to you.' And without FDA approval, you can't commercialize the drug. So, what was your strategy for working with the FDA?
We had an amazing engagement with FDA. I mean, first of all, the FDA is a group of scientists and clinicians. They're high-quality people. They are as committed to biomedical innovation as a company is. But they have a different job. They have to ensure the safety and the efficacy and the appropriate benefit-risk of a product. But we respected them, worked with them closely, engaged with them in a collaborative manner, and had to teach them as we were learning ourselves about RNA interference. In fact, the commissioner of the FDA in 2017, 2018 when we got our first RNAi therapeutic approved was Scott Gottlieb. And Scott in his press release commenting on the first approval commented on the fact that this is a new approach for medicine. And in many ways it was a mark of how Alnylam and the FDA really worked closely together to bring this whole new class of medicines forward to patients.
And would that also apply to international regulation working with the EMA or any of those other agencies?
Yeah, it would. I mean, we engaged very frequently with regulators across the world. The EMA, the MHRA in the United Kingdom, PMDA in Japan. And when we started our phase three trials, for example, we needed to get alignment across all the global regulators around the design of the phase three trials that we were doing in order to ultimately start the studies. So that engagement was critical as part of bringing our drugs to market.
So you needed to have an international staff and some of your international partners on your side to work and introduce you to and if necessary clear the way sometimes.
So now we move to commercialization right because at some point you have to start saying it looks like we're going to get to market with an approved drug so we better start thinking marketing the drug. And there's so many interesting steps there right? Beginning I suppose with reimbursement, thinking about patients and how can patients afford it, pricing of course but then you know setting up the sales force etc. So do you want to talk a little bit about how you went around all those, what are the key phases and how you went about them?
Yeah. Well for starters Robbie we always knew that we wanted to directly commercialize our medicines. We obviously had partnerships for some of our assets for some products to be commercialized but then we ourselves, we Alnylam always wanted to commercialize our own medicines directly. The first thing we had to do was really engage with the patient communities. I mean these were our customers at the end of the day. And we learned a lot from engaging with patient groups, understanding their burden of disease, what unmet needs existed, how we could help them with the medicines that we were creating. So that was the beginning of it. The next layer was really working with payers. And we engaged very proactively with the payer community to basically understand how they thought about value. And how they thought about a drug acting a certain way from a value proposition standpoint not from the price perspective, but truly from a value perspective.
One thing that we did in 2017, just as we were beginning to launch our first drug, is we initiated a patient access philosophy proactively. And we publicly reiterated our commitment to patients as the number one driver of how we think about market access. Number two, we committed to not do any price increases for our drugs. At the time, it was a very common practice in the pharmaceutical sector to see annual drug price increases. And we committed to grow our business with innovation, not with drug price increases. And the third thing we did, very importantly, was commit to proactively establish value-based agreements with payers. And so we met with payers as we were bringing our drugs to market and established a risk-sharing agreement with them, over 60 agreements with payers in the United States, to basically enable a reward if the drug worked, and less of a reward if the drug, for some reason, didn't perform per its intent.
And that approach was really critical. It gave us a very—I mean, our drugs were rare disease drugs, very expensive medicines, and we ended up having minimal headwinds from the payer community because they accepted the value of the medicines that we created, but they also, frankly, found us to be fair actors in putting our money where our mouth is as it relates to the performance of the drugs we brought to market.
You brought up something interesting, the rare and the orphan drug market. That was also a very deliberate choice.
It was. It was, indeed. Yeah. And it was a deliberate choice because for many reasons. Number one, most importantly, there's enormous unmet need in rare disease. And so that was important. A second reason was that from a technical likelihood of success, given the fact that human genetics typically underpin a rare disease, if you have an approach that is grounded in human genetics, your likelihood of technical success is much higher.
And then the third reason is that as an upstart biotech company wanted to go to market, doing it in a rare disease setting where there's a much more concentrated marketing and selling effort that's needed. I mean, you don't have to have thousands of sales reps. You can have less than 100.
Right? So it was a very explicit strategy to really tackle the rare disease sector with our technology at the beginning, for all the reasons I just went through.
Yeah. Now, you alluded earlier to the safety incident, right? So you had this big problem with phase three trial failing. And so this was revusiran, if I recall, right?
And you halted it completely.
Two years later, you were able to get onpattro approved. That's a very very interesting turnaround to me.
So can you—I think that's fascinating. Could you tell me more about how you managed this crisis and set the pivot plan so that you could get a new drug approved in 2018?
Yeah. Well, the first—At the time we had two ongoing phase three trials.
One with revusiran and one with onpattro.
The revusiran study, as it was being conducted, we started hearing about safety issues. And so we ended up, appropriately, asking the safety board of the study to do an unblinded look. It was a randomized study, blinded. We asked the safety board to do an unblinded look on the safety side, which they conducted at our request, and they found an imbalance of mortality against the drug.
Now, when that happens, there's only one answer. You stop the study, and in fact, you stop the drug, which we did. And it was a very painful moment. We shed, when we announced it publicly shortly after learning it ourselves, we shed half of our value, over $4 billion of value in a single day to tell investors we still have confidence in our platform, but we don't have all the answers at the same time, which is a tough thing to tell investors when you don't have all the answers, but how could we have all the answers? We decided to take it very seriously. We investigated what went on. We ultimately learned why this happened, but remarkably, and this is the benefit of having a portfolio, within 1 year of that very sad event, we had this very positive result with Onpattro, a different medicine that we were developing for TTR amyloidosis, and I think, Ravi, at some level, we were a stronger company as a result of that unfortunate revusiran situation. We learned a lot about our platform and what went wrong, and how to make it better, and how to improve upon it, which we did.
And so, in many ways, as terrible a moment as it was, it was also a very important moment for the science and for the patients that we would ultimately help with the technology.
Yeah. I think you made a very interesting point, and that is you had the foresight to plan a portfolio of drugs built on this platform of RNAi, so that even if one arm of that portfolio started failing for safety reasons, you had the ability to pivot and say, 'Let me start taking a look at one of the other ones that seems to be doing much better.' And you know, it's interesting because sometimes biotech companies get criticized for having too broad a pipeline.
That they're frittering their resources.
Well, I mean, my view is you need to have a portfolio to build a lasting company at the end of the day. Investors may have the view that they want to be the portfolio aggregator, not the company. And they just want you to do one thing. So I understand the investor perspective from it. But as a company operator, I'm convinced that the right way to build a company is to have a portfolio, because not everything's going to work.
And you'd hate to be finding yourself in a situation where with a single asset you're left empty-handed.
Yeah.
So it's really binary then, either it works or it doesn't. Whereas you had the opportunity to say, well, I still have my portfolio.
Because you talked about how you approached the US in terms of first the patient and then the payers. International markets you have single payer for example in Europe and then in the UK. So was it different growing international markets?
Yeah. It was different. But we decided at the beginning that we were going to be a global company.
And part of this is the rare disease markets that we were in.
