Strong Recommend: 'For Blood And Money' by Nathan Vardi
Book notes on an excellent narrative non-fiction read
I highly recommend reading For Blood and Money: Billionaires, Biotech, and the Quest for a Blockbuster Drug by Nathan Vardi.
This is the book’s 1-sentence summary: Robert Duggan, a retired serial entrepreneur, investor, and Scientologist1 loses his son to cancer so he takes over a Pharmacyclics, micro cap biotech company developing a blood cancer drug called ibrutinib, and leads it to $42B exit (AbbVie paid $21B for a 50% stake) while making billions for himself and hedge funds, and millions for the scientist-employees.
Why Read It At All?
You'll get an education in blockbuster drug development, biotech investing, pharma partnerships, dealing with the FDA, and some really creative dealmaking. It's simply an entertaining read; the author’s writing is concise, with the right amount of detail. He brings to life the larger-than-life egos clashing over billion-dollar molecules. He also gets all the facts about hedge funds right–most journalists, even business journalists don’t do a good job when it comes to explain hedge fund investing.
These are some of the other themes in the book:
The Outsider CEO
Duggan's leadership offers a fascinating case of an outsider, non-technical CEO disrupting a highly specialized industry through unconventional, Scientology-inspired business practices – he read children’s books on biology to learn more about biology.
Duggan’s bold moves, decisiveness, intense focus on execution, quality, and hands-on involvement reminded me of Frank Slootman’s Amp It Up approach2.
There’s a great anecdote in the book on how Duggan came to his own ‘competition is for losers’ realization and pursued monopolist status for his knitting kit business after reading about a contemporaneous FTC antitrust case against the four major cereal companies. He used their practices and tactics of flooding grocery stores with similar products and controlling prime shelf space to block competition. “Wow, isn’t that the goal of every business to get to monopoly? Isn’t that the winner’s circle?” His company dominated the market and sold it for $15 million in the 1970s.World-Class Dealmaking
Some instances of very clever dealmaking in the book include:
Duggan's deal with Johnson & Johnson to partner on ibrutinib development, where Pharmacyclics retained significant control and rights while gaining over $1 billion in funding.
Pablo Legorreta/Royalty Pharma acquired Quest Diagnostics rights to a slice of ibrutinib revenues because Quest had previously acquired Celera Genomics that still retained a small piece of future sales of the drug.
The acquisition of the BTK inhibitor drug rights from Merck by the Acerta Pharma (scientists who were fired from or left Pharmacyclics to start a rival biotech firm) for an upfront payment of $1,000 and 5% of any net revenues the drug generated. They also end up with a multibillion dollar exit.
Marxist Alienation of Labor
Many scientists who initially developed the drug, Richard Miller, Daniel Pollyea, Ahmed Hamdy, etc. were literally and figuratively separated from the product they helped create when they were fired from Pharmacyclics and even their names were left off key scientific publications, but Wayne Rothbaum, a major investor without any medical training or education was listed as an author.As Pharmacyclics grew under Duggan's leadership, many scientists felt they lost autonomy in directing research.
Capital vs. Labour
Few think of capital as a catalyst/critical ingredient to an enterprise because most think of it as an output or an accelerant at best, but here and in many other cases, capital deserves its seemingly outsized returns because it is betting on very long odds.Labour, physician-scientists, felt they should be wealthier because they only got millions but Capital i.e. the hedge fund managers and business executives got billions/hundreds of millions. Both the prologue and epilogue are about Ahmed Hamdy, the former Chief Medical Officer of Pharmacyclics, whining about how he should be in the top 0.01% and plotting to move above his mere top 1% status.
Comparison remains the thief of happiness. Water remains wet.
I only include this detail about Duggan’s religion because he brought Scientology-inspired self-help and management techniques to Pharmacyclics, and some employees did not agree with that.
No can say if this is Founder Mode or Manager Mode because the original essay sets up and blows down a thousand strawmen.