# Genentech  ## Metadata - Author: [[Sally Smith Hughes]] - Full Title: Genentech - Category: #books ## Highlights - Modern biotechnology originated in 1973 with the invention of recombinant DNA technology, a now-universal form of genetic engineering. It entails recombining (joining) pieces of DNA in a test tube, cloning (creating identical copies of DNA) in a bacterium or other organism, and expressing the DNA code as a protein or RNA molecule. ([Location 144](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=144)) - “Boyer,” a future colleague commented, “consistently tried big things without knowing whether they could or should work.” ([Location 200](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=200)) - the restriction enzymes of bacteria—enzymes that cut up and destroy foreign DNA entering the bacterial cell.9 The word just emerging in the 1960s was that certain types of restriction enzymes sever DNA at unique sequences in the molecule. Perhaps, Boyer and others recognized, one could use these strange enzymes to clip DNA into well-defined fragments and map its structure. ([Location 216](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=216)) - Cohen was using plasmids to transport genes and DNA fragments into bacteria; Berg’s group and others in Stanford biochemistry were using viruses as transport vehicles. ([Location 262](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=262)) - His social activism served as a diversion at a time when his research, despite long, laborious hours, was only marginally productive. He spent four years studying a restriction enzyme that he eventually concluded cut the DNA molecule in an unhelpfully random fashion. What drove him was to find one that made a unique and predictable break.25 ([Location 281](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=281)) - Cohen meanwhile juggled a staggering workload in three different areas. He had demanding clinical and basic research obligations and was also collaborating and publishing on a computer-based system for identifying drug interactions.29 Yet somehow his productivity only increased. ([Location 298](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=298)) - Cohen, meanwhile, was organizing the Honolulu plasmid conference and belatedly got word of Boyer’s as-yet-unpublished work on the new restriction enzyme. Seeing its possible relevance to characterizing plasmid DNA, he issued Boyer, whom he had never met, a last-minute invitation to attend the conference.34 Boyer recognized a golden chance to talk about EcoRI and agreed to come. ([Location 319](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=319)) - In a flash of insight, he wondered: could one use Boyer’s enzyme to sever a plasmid precisely and use the sticky ends to attach a second DNA fragment? The hybrid plasmid might then be inserted into bacteria for cloning.35 The startling concept, if found to work, might solve the randomness and inefficiency of his plasmid transfer procedure. He urgently needed to talk with Boyer. ([Location 325](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=325)) - Cohen proposed a collaboration to find out. Boyer’s first impulse was to donate some of his enzyme, as he had done for the Stanford scientists, and let Cohen conduct the experiment on his own. Cohen recalled saying, “Well, that doesn’t seem quite fair. Your lab has spent a lot of time isolating the enzyme and we should do this as a collaboration.”38 Also to the point, Cohen needed the Boyer lab’s expertise in restriction enzymes for the experiment to transpire as conceived. Boyer agreed to collaborate. ([Location 335](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=335)) - In many ways, they were polar opposites—in manner, demeanor, and approach to life. Boyer came across as gregarious, relaxed, and unassuming. Open to new ideas, he was willing to gamble on possibilities. Cohen struck others as private, circumspect, and exacting of himself and colleagues. Both men were inveterate workaholics and passionate about their science. But their passion manifested in contrasting manners. Boyer ran an expansively chaotic lab and preferred brainstorming over a beer. Cohen headed a small, self-contained lab group and often discussed research in the quiet of his office. Even in appearance, the contrast was striking. Boyer sported a mop of unruly brown hair, an open and cherubic face, a robust figure, and attire of jeans, running shoes, and leather vest that stretched the limits of casual. A reporter later described him as “a baroque angel in blue jeans.”39 Cohen was trim, bearded, balding, and bespectacled. He dressed casually but neatly in slacks and sweater or sport jacket. He was the quintessential image of the professor, solid citizen, and serious intellectual. ([Location 340](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=340)) - The [DNA] bands were lined up [on the gel] and you could just look at them and you knew . . . [that DNA recombination and cloning] had been successful. . . . I was just ecstatic. . . . I remember going home and showing a photograph [of the gel] to my wife. . . . You know, I looked at that thing until early in the morning. . . . When I saw it . . . I knew that you could do just about anything. . . . I was really moved by it. I had tears welling up in my eyes because it was sort of a cloudy vision of what was to come.44 ([Location 368](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=368)) - Things just came together at that time: the study of small plasmids, transformation of E. coli with [plasmid] DNA, the restriction enzyme business; it was all coming to fruition at the same time. . . . [The experiment] went very fast. It was straightforward. There was not much in the way of struggle. The first experiments more or less worked.46 ([Location 376](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=376)) - The paper published in November 1973—one year to the month after the seminal meeting in Hawaii—was a strictly scientific account relayed in the sober language of science.47 But they allowed themselves one speculation. Although the experiment involved only plasmid DNA, Cohen and Boyer suggested something more sweeping. Their method, they ventured, was not restricted to lowly plasmids; they foresaw it becoming a general tool for selecting and cloning the DNA of organisms up and down the evolutionary scale. ([Location 382](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=382)) - In the frog work, Cohen and Boyer achieved a long-sought goal in molecular biology: the invention of a simple and efficient method for selecting specific genes from any imaginable organism and accurately reproducing the genetic material in pure and unlimited quantity. In one of the most influential sets of experiments in biology, Cohen and Boyer had flung open a door long shut to the productive study of the genetics of higher organisms. ([Location 429](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=429)) - scientists—Cohen and Boyer included—did ask for more. Their experiments had not answered a significant question: could simple bacteria “read” the complex genes of higher organisms and express them as proteins like insulin, growth hormone, and so on? ([Location 437](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=437)) - despite this utilitarian strand in American science, biomedical culture into the late 1970s was notably inhospitable to professors forming consuming relationships with business, let alone taking the almost unheard-of step of founding a company without giving up a professorship. ([Location 526](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=526)) - Boyer thought the technology was ready to commercialize and on his own he tried to interest “at least one drug company” in exploring that possibility.89 But the unidentified company, he admitted, was not interested. “I wasn’t thinking about starting a company. I was just trying to think about how we could get these [pharmaceutical industry] guys interested to take this [technology] and do things.”90 ([Location 564](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=564)) - It became Swanson’s task to try to salvage the bank’s stake in a company rapidly going downhill. Serving on the board of the failing company, he met Eugene Kleiner, who with Thomas Perkins in 1972 had founded Kleiner & Perkins, a venture capital partnership with offices in San Francisco.8 Taking a measure of Swanson, Kleiner was impressed, according to Perkins, with the young man’s ability “to think straight and get things done.”9 When Swanson decided to leave Citibank and seek a new position, Kleiner recommended him to Perkins to fill a vacancy at the partnership. Perkins, a former Hewlett-Packard engineer with a Harvard MBA, respected Kleiner’s ability to assess individual character and motivation. Late in 1974 Swanson joined Kleiner & Perkins as a junior partner in its Menlo Park office on Sand Hill Road. He was twenty-six. ([Location 620](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=620)) - Glaser, a friend of Cohen’s, presented a glowing picture of the cloning procedure and its possibilities in genetic engineering. Cape and Farley showed no interest, and Perkins, with no background in biology, failed to grasp the technology’s industrial potential. Swanson alone was captivated by Glaser’s account. Perkins recalled: “But Swanson really got that. I remember the next day he took me aside, and he said, ‘This idea [of genetic engineering] is absolutely fantastic; it is revolutionary; it will change the world; it’s the most important thing I have ever heard.’”13 Swanson spent the next few weeks reading up on recombinant DNA technology and urging Cape and Farley to take it up at Cetus—to no avail. He had more luck with Kleiner and Perkins, his infectious fervor finally convincing them that a technology potentially capable of making medical substances in bacteria had striking industrial possibilities. ([Location 634](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=634)) - Pharmaceutical companies, weighing the worrisome political issues on top of recombinant DNA’s uncertain industrial feasibility, largely decided not to initiate internal programs for the time being. ([Location 666](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=666)) - Sometime late in 1975, Swanson decided to act, driven by precarious circumstance and naive faith in the technology’s commercial prospects. Recombinant DNA felt to him “like important stuff,” important enough to build a company upon.21 His seven years in venture capital had provided valuable training in raising money and advising new companies, but the experience had also made him feel “like a coach on the sidelines.”22 He wanted a piece of the action; he wanted a company of his own. ([Location 681](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=681)) - When Bob came along, he explained venture capital to me. He had this desire to start a company of his own, and he didn’t want to start out in the usual fields in the Bay Area at the time, computers or running shoes or other things that were popular at that time. He wanted to do something different. . . . He had read a lot about the [recombinant DNA] technology, and thought it might be useful. I said, “Sure, why not.” ([Location 709](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=709)) - “I always maintain,” Boyer reminisced, “that the best attribute we had was our naïveté. . . . I think if we had known about all the problems we were going to encounter, we would have thought twice about starting. . . . Naïveté was the extra added ingredient in biotechnology.”29 ([Location 714](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=714)) - Swanson’s subsequent market research led repeatedly to insulin, the hormone whose name was currently in the air as a prime target for genetic engineering.34 Used in diabetes treatment since the 1920s, the hormone extracted from pigs and cows was an essential staple of medical practice, yet on occasion caused allergic reactions in human recipients. The thinking was that human insulin, as a natural product of the human body, would not present such problems. Furthermore, there was strong scientific rationale for choosing insulin. Unlike many proteins of the era, its molecular structure—the sequence of amino acids making up the protein—was known, information critical for devising an experimental strategy for making the hormone. Insulin, moreover, was one of the smaller proteins, only fifty-one amino acids long, suggesting easier laboratory synthesis. Swanson, bringing his business training to bear, found insulin economics impressive. The hormone was an immense and reliable moneymaker for a number of American and European pharmaceutical houses, with world sales greater than $100 million and growing.35 A ready-made market with a patient population in place counted as notable advantages for a cash-strapped start-up, precluding the daunting expense of promoting and developing a market for a new and unfamiliar product. Yet there was room, Swanson believed, for introducing a human form of insulin that promised to out-compete the animal insulins on the current market. Human insulin, Boyer and Swanson readily agreed, was their hands-down choice for the first industrial trial of recombinant DNA technology. ([Location 739](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=739)) - His short-term strategy was more realistic. The firm, as his business plan laid out, would identify an existing market in which microorganisms manipulated to produce therapeutic hormones could economically compete with older production methods. The company would then license the engineered bacteria to one of the established pharmaceutical houses with the know-how and deep pockets to handle the exorbitantly expensive process of drug development, clinical trials, and government review and approval.39 By partnering with an established corporation, the start-up would not need to acquire the expertise and shoulder the high cost—staggering for a fledgling operation—of the later stages of pharmaceutical production. ([Location 762](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=762)) - [Swanson’s business plan] was very conventional in that I [representing Kleiner & Perkins] would put up the money, they would hire the people, and it would be a very straightforward venture. I took the view that the technical risk was enormous. I remember asking, “Would God let you make a new form of life like this?” I was very skeptical. I said that I would agree to meet with Boyer. He came in the same week, and we sat down in our conference room for about three hours. Of course, I have a background in physics, electronics, optics, computers, lasers. Biology was never a strength for me. I really didn’t know what kind of questions to ask. So I said, “Let’s just go through it step by step. Tell me what you’re going to do. What equipment you’ll need. How will you know if you’ve succeeded? How long will it take?” I was very impressed with Boyer. He had thought through the whole thing. He had an answer for all those questions—[we’ll] need this equipment, these basic chemicals, and take these measurements, and on and on. I concluded that the experiment might not work, but at least they knew how to do the experiment.40 ([Location 772](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=772)) - As Swanson recalled, “In one of the flashes of brilliance for which [Herb] is famous, he immediately came up with Genentech. . . . It seemed like a terrific name, and the entire process took maybe ten seconds.”44 ([Location 800](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=800)) - Little did Perkins know at the outset how heavily instrumental he would continue to be in the company’s constant fund-raising. “What was so different about Genentech,” he later observed, “was the astonishing amount of capital required to do all this. I know, on day one, if anyone had whispered into my ear that, ‘For the next twenty years, you will be involved in raising literally billions of dollars for this thing,’ I might not have done it.” ([Location 808](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=808)) - “I can’t remember at what point it dawned on me that Genentech would probably be the most important deal of my life, in many terms—the returns, the social benefits, the excitement, the technical prowess, and the fun. By ’79 I was a total Genentech junkie. I was committed to making Genentech into a huge success.” ([Location 814](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=814)) - Reimers was of no mind at that point to grant Genentech or any other company a license on recombinant DNA technology. Yet, as he admitted privately, he appreciated the consequences for Genentech if Stanford decided upon a nonexclusive licensing policy: “This [decision] of course means that Genentech will not obtain its desired exclusive [license], that we [Stanford and UC] forgo equity and a possible substantial front payment for an exclusive, and it may mean that Genentech as a viable company cannot survive.” ([Location 869](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=869)) - Tags: [[aqua]] - Was Swanson discouraged by the outcome? No, [he later asserted], because it was pretty clear that someone else wasn’t going to get [an exclusive license] if we weren’t, and that Niels would make a decision to make [the licenses] broadly available. Remember, at that time nobody else believed [recombinant DNA technology] could work [commercially]. We hadn’t even proven that we could make a useful product out of it. So he saw the potential and I saw the potential, but there weren’t a bunch of other companies clamoring to invest money in this field.55 ([Location 873](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=873)) - Tags: [[aqua]] - Swanson’s unswerving—some called it stubborn—determination and persistence were plainly evident. As a colleague remarked, “Bob, like many entrepreneurs, was very single-minded and very goal-oriented, and having set himself in a certain direction, he trudged through whatever was required to attain it. . . . I think one of Bob’s great geniuses was his ability to stay the course toward discrete objectives.” ([Location 884](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=884)) - Tags: [[aqua]] - Like most business plans, it was a thoroughly promotional creation, designed to convince potential investors of the certain success of the business venture and glossing over the harrowing technical, financial, commercial, and political challenges. ([Location 903](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=903)) - Tags: [[aqua]] - Boyer recalls that after his seminar he and Riggs retired to Riggs’s office to discuss an idea for a collaborative experiment that, if they were fortunate, would produce an unlimited supply of pure DNA. Boyer re-created their thinking: “We said, ‘Why don’t we clone this chemically synthesized DNA and you only have to synthesize it once and we’ll let the bacteria do it after that [via the cloning procedure].’”2 They decided that Itakura would provide a piece of syn thetic DNA (the lac operator) he had previously made in his dissertation research, and the Boyer lab would try to clone it. For Boyer, the idea of using synthetic DNA in experiments was not only familiar but one he had put into actual practice. As early as 1974, his lab was using short pieces of synthetic DNA (so-called linkers) in studies of the interaction of restriction enzymes with DNA.3 Boyer and Riggs agreed on the spot to collaborate.4 ([Location 938](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=938)) - Tags: [[aqua]] - The experimental results, arriving in February 1976, exceeded all expectations. The chemically synthesized DNA was biologically functional. The proof lay in the fact that the synthetic DNA bound to a bacterial protein, leaving a telltale sign of blue coloring, an indication of natural biological function.5 Man-made genetic material had behaved in identical fashion to natural DNA. It was an astounding discovery, blurring the boundary between the chemically inert and the biologically active. ([Location 954](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=954)) - Tags: [[aqua]] - We didn’t try to copy a human gene and put that in bacteria. We designed a gene that would work in bacteria. So this was a totally man-made—not only man-made but man-designed—gene, and I thought that was one of the most key aspects of what we were doing, of our approach. We didn’t know that it was going to be successful, but we thought we had a good chance.12 ([Location 985](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=985)) - Tags: [[aqua]] - Riggs recalled the uncertainty: So we had shown [in the collaboration with Boyer’s lab] that the DNA would function in vivo. Nobody had shown that you could actually make a protein product [in bacteria]. So DNA makes RNA makes protein—none of that had been done using synthetic DNA, or even using any other approach, really. ([Location 993](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=993)) - Tags: [[aqua]] - Convincing Swanson to switch targets was considerably more difficult. Digging in his heels, he clung stubbornly to insulin, a proven therapeutic substance of world renown and an established moneymaker. He adamantly resisted going after somatostatin, an obscure hormone without clear clinical application and market potential. He wanted products—marketable products. “I fought that [proof-of-principle experiment] like the devil because I always hated the idea of doing a demonstration of anything,” he recalled. “If you are going to go for something, go for the real thing.”18 The “real thing” was human insulin, the high-profile product that would attract investors and bring in the money Genentech desperately needed. The scientists, on the other hand, focused on experimental do-ability rather than marketability and the bottom line. It was not only a battle of wills; it was a contest between scientific and business objectives—a conflict that research-driven companies repeatedly experience. ([Location 1017](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1017)) - Tags: [[aqua]] - For more than a decade, representation of Genentech would give Kiley a venue for his flamboyant legal intellect and veneration for all things technical. It would fall to him to indoctrinate the firm’s future scientists, predictably naive in business matters, on the central importance of patenting, especially critical for a fledgling company in which the basic “products” were their own technical know-how and innovative power. It was crucial, then, to protect and monetize this intellectual capital as patents and licenses. ([Location 1056](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1056)) - Tags: [[aqua]] - Itakura found the oversight irritating, particularly when it came to Swanson’s projected timetable for the research: “[Swanson] has all kinds of schedule—DNA synthesis finish such and such; [somatostatin] expression such and such; and then fund-raising, such and such. He showed me that kind of a table, exactly scheduled, step by step. . . . I said, ‘Meaningless.’ I told him you never know when experiment works [or not].”39 Biological research, Itakura meant, did not advance in the predictable and timely manner a business mind expected. ([Location 1117](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1117)) - Tags: [[aqua]] - The scientists, accustomed to research setbacks and with less riding on the experimental outcome, quickly recovered. Surmising that bacterial enzymes had destroyed the tiny somatostatin protein as soon as it was made, they came up with a new experimental scheme. They would try to produce the hormone as a short tail on a much larger portion of the bacterial protein. The hybrid protein, they speculated, would be too large for the bacterial enzymes to degrade. In the final step, the scientists planned to chemically sever the somatostatin chain from the bacterial protein. If all went well, they would produce free-standing somatostatin. ([Location 1135](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1135)) - Tags: [[aqua]] - Somatostatin was by no means close to a marketable product and in fact would never become a commercial product for Genentech. Yet the research, contrary to predictions by reviewers of the Riggs-Itakura grant proposal, constituted a swift trajectory from the invention of recombinant DNA in 1973–74 to foreign protein production in bacteria in 1977. Basic and applied research had become proximate in a manner new to molecular biology. ([Location 1167](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1167)) - Tags: [[aqua]] - Kiley for his part had to get up to speed in molecular biology. He read Watson’s Molecular Biology of the Gene and impressed everyone with his quick grasp of the subject. ([Location 1195](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1195)) - Tags: [[aqua]] - In patent law, those originating the concept for the invention are deemed inventors, and only their names appear on the patent application. Convention in scientific publication, on the other hand, is to acknowledge every contributor to an experiment by listing them all as authors. Patenting protocol tends to reduce the many to the few, while scientific publication protocol tends to expand the few to the many. ([Location 1218](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1218)) - Tags: [[aqua]] - We’ve bypassed the potential hazards in recombinant DNA research. The gene is manufactured in a test tube. It’s clean and has no contaminants. This [synthetic DNA and recombinant DNA technology] bridges the gap between chemistry and biology. These two disciplines are now married, and I think it’s a marriage made in heaven.68 ([Location 1283](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1283)) - Tags: [[aqua]] - Swanson’s urgent need, before the money ran out, was to show that the company could make substitutes for the larger and more complex proteins used in common medical practice. Human insulin was that test. The project placed Genentech in direct conflict with two elite academic teams, already well advanced in their quest for insulin. The ensuing cutthroat contest became all the more so for the promise of concluding lucrative research agreements with a major pharmaceutical company. The competition for insulin was forbidding enough. But it was a particular challenge for Genentech, which was little more than a virtual company existing largely on paper except for an inconsequential physical presence in Swanson’s rented office in San Francisco. To launch the ambitious insulin project, Swanson urgently needed lab space and a scientific staff, and he needed them fast! At the beginning of 1978, his priorities were to locate and lease a facility, hire scientists for a trial-by-fire attempt to make human insulin, and attempt to raise yet more private money. ([Location 1387](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1387)) - Tags: [[aqua]] - Early on Boyer had suggested that Genentech strike research and development agreements with pharmaceutical companies.2 But it was not only access to their deep pockets he and Swanson wanted. To see a drug to market, Genentech would need the pharmaceutical industry’s expertise in drug development, manufacture, and regulatory approval. Negotiating research contracts with established companies became yet another priority. ([Location 1400](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1400)) - Tags: [[aqua]] - Swanson and Perkins also weighed the local political situation. Unlike U.S. centers of unrest in San Francisco, Cambridge, Ann Arbor, and Berkeley, South San Francisco was not contemplating ordinances unfavorable to genetic engineering, and its citizens were unlikely to take to the streets in protest. Leery of Berkeley’s history of political activism and the city council’s tough ordinances regulating recombinant DNA research, Perkins observed that they chose South San Francisco in part because “it was not Berkeley. We perceived that Cetus would have a lot of trouble [with restrictive ordinances] in Berkeley, and they did.” ([Location 1434](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1434)) - Tags: [[aqua]] - As Swanson summarized: Of the group of people that understood what was going on [in cloning research] at that point in time, [Rutter and Goodman] were the leaders. I wanted to get the best advice we could. . . . There was this competitive technology, cDNA [complementary DNA] cloning technology. So I wanted to make sure that if it progressed, I had access to that technology and to the leaders. And Goodman and Rutter and Ullrich and Seeburg were on the forefront of that.20 ([Location 1489](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1489)) - Tags: [[aqua]] - To let off steam, the Harvard youths produced a run of newsletters taunting the West Coast team. One issue—titled “Gilbert Hustlers Outmuscle Boyer Cartel in Dual Meet: Coast Crew Crumbles as Gilbert’s Gapes”—used the metaphor of a football game defeat to put the UCSF team in its place as a sorry loser to Harvard’s elite.26 But the barbed humor failed to disguise the ferocity of the east-west contest. At stake were scientific repute, corporate alliances, and the prestige of being first to clone a human gene for a celebrated medical substance. ([Location 1515](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1515)) - Tags: [[aqua]] - Kleid’s description of what these climbs entailed throws light on Goeddel’s winner-take-all mentality, whether applied to rock climbing or research: While Dave worked at SRI, he climbed El Capitan [a 3,000-foot vertical rock formation in Yosemite Valley], and that’s a one-week thing. He explained to me how he does this: you have a rope, and you get a certain distance, and after about a day your rope doesn’t reach the ground anymore, and you can’t go back down. You have to go up. There’s no way to go down. You must complete the trip. If you get nervous, your fingers sweat, you fall right off. So you have to be absolutely focused and confident and just climb that rock.28 ([Location 1538](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1538)) - Tags: [[aqua]] - By February 1978 Johnson and Swanson were in touch, Swanson pressing hard for a research and development contract with the venerable drug firm. It surely took all of his considerable promotional talent to represent Genentech, without a scientist in place, as a credible enterprise, able to outpace its prestigious academic competitors and produce the vaunted hormone. Johnson convinced his dubious superiors at Lilly to keep all options open and reach into their deep corporate pockets to fund the improbable effort that the infant company aimed to launch that spring. In June Lilly and Genentech reached a preliminary understanding in which Lilly agreed to support Genentech’s insulin effort at $50,000 a month. ([Location 1557](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1557)) - Tags: [[aqua]] - Making the DNA for human insulin was no easy endeavor. The molecule is considerably larger and more complex than somatostatin’s—as mentioned, fifty-one amino acids compared to somatostatin’s fourteen. It consists of two amino acid chains, the so-called A and B chains, which required the chemists to synthesize two DNA sequences, one for each chain. Itakura and Crea spent several days designing the chemistry. As in the somatostatin research, they were not aiming to make an exact copy of the natural gene. In fact, the complete sequence of the human insulin gene was unknown. Instead, they worked back from the amino acids composing the insulin molecule and, guided by the genetic code, selected DNA sequences for chemical synthesis that they believed compatible with bacterial cell machinery.34 It was a strategy designed for a utilitarian purpose—to force bacteria to produce a human protein. ([Location 1568](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1568)) - Tags: [[aqua]] - Within weeks they had the A-chain genetic sequence assembled and inserted into plasmids for cloning. The B chain was another matter. Goeddel labored obsessively to clone it but made little progress. He paused only to eat and drop into exhausted sleep when Kleid took over the shift. Itakura, no slouch himself, observed that Goeddel was a “crazy hard worker,” toiling as much as twenty hours a day and applying his do-or-die tenacity.38 ([Location 1590](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1590)) - Tags: [[aqua]] - He and Heyneker fell into a spontaneous rhythm of groundbreaking research done under exceptional pressure. Heyneker recalled: We worked so well together. [Dave] understood exactly what I wanted to do, and I understood quite well what he wanted to do. So we took turns sleeping, to speed up things. When we had to [radioactively] label the DNA fragments, we were so much in a hurry that we exposed an X-ray film only for as short a time as possible and looked at an angle at the film so that we better could see a slightly darker position—everything to be as fast as possible. We had a bunch of [B-chain clones] within a week or five days. And we took them home [to the Bay Area], they were sequenced, and we were successful in getting the right B chain. . . . The experience was fantastic, very exciting—how efficient can you be! ([Location 1609](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1609)) - Tags: [[aqua]] - Swanson made clear that Genentech scientists, the cream of his budding enterprise, would be free of the endless grant writing and fund-raising that burdened academic life. “This is a science-driven company,” he told recruits. “Don’t worry about money. Anything you need, you’ve got.” ([Location 1632](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1632)) - Tags: [[aqua]] - Scientific ingenuity, technical proficiency, and relentless drive defined Genentech’s triumph over rivals. ([Location 1673](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1673)) - Tags: [[aqua]] - their use of synthetic DNA turned out to have important competitive as well as technical and political advantages: Genentech was not burdened by the crippling and costly early guideline restrictions on experiments involving natural human genetic material. The UCSF and Harvard insulin researchers were not so fortunate. Because their approach used human genetic material, they were subjected to the full weight of the guidelines and their mandated safeguards. The most significant roadblock was the requirement to conduct their experiments at the highest level of biological containment, conditions available only in a handful of biological warfare labs. ([Location 1681](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1681)) - Tags: [[aqua]] - On August 25, 1978—four days after Goeddel’s insulin chain-joining feat—the two parties signed a multimillion-dollar, twenty-year research and development agreement. For an upfront licensing fee of $500,000, Lilly got what it wanted: exclusive worldwide rights to manufacture and market human insulin using Genentech’s technology. Genentech was to receive 6 percent royalties and City of Hope 2 percent royalties on product sales. ([Location 1706](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1706)) - Tags: [[aqua]] - For Swanson, doing his dogged best to protect the interests of his fledgling company and above all retain control of its core technology, the negotiations with the pharmaceutical giant were harrowing. A youthful-looking thirty-one-year-old facing pharmaceutical executives far senior in age and experience, his worst fear was that Lilly would appropriate Genentech’s technology, its crown jewel, and apply it in its own projects. Yet Swanson also fully recognized that without Lilly’s financial resources and manufacturing and marketing acumen, the human insulin experiment was likely to remain little more than a basic-science demonstration. ([Location 1720](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1720)) - Tags: [[aqua]] - The contract stipulated that Genentech was to develop and provide to Lilly bacteria producing human insulin of a specified quantity and purity. To ensure that Lilly got what it wanted without wasting money on unproductive research, it specified a series of research benchmarks that Genentech was to meet by specific dates. Lilly would provide periodic milestone (progress) payments—but only if Genentech reached the benchmarks on time. If it failed to do so, Lilly had the option to terminate the agreement. The system gave Lilly control over the extent to which it sunk money into a commercially uncertain project and outlined an orderly, time-dependent progression toward specific production goals. Genentech in turn received crucial financing without diluting equity by selling stock. ([Location 1732](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1732)) - Tags: [[aqua]] - the contract represented more than a legal seal on a business deal. It signaled the presence of a new organizational arrangement in the pharmaceutical industry—the big company–small company alliance. Genentech and future small research firms like it would function as entrepreneurial sites in which biology-based technologies were developed for large-scale manufacturing. As intermediaries spanning the university-industry divide, scientists at entrepreneurial start-ups would perform research generally too utilitarian for a university environment and too early stage for the average pharmaceutical company. ([Location 1763](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1763)) - Tags: [[aqua]] - Genentech’s scientists, steeped in academic tradition, assumed all along they would publish the insulin research findings in scholarly journals. Swanson, they found, was resistant. Cultured in business practice, his instinct was to keep experimental findings secret to protect the company’s intellectual property from possibly being stolen and copied by competitors. The scientists were dismayed. They wanted their research findings published in time-honored academic tradition as contributions to the open scientific literature and a primary means to achieve individual scientific credit and professional status. Boyer stepped in and settled the dispute: Genentech scientists would publish; in fact, they were to be encouraged to publish. He recalled: I insisted that we have the scientists publish their research in journals. Any proprietary information would have to be covered by patents. I felt this was extremely important for attracting the outstanding young scientists in the community that were interested in doing research in an industrial setting. I also wanted to bring in scientists that were outstanding and have them have an opportunity to establish their own reputation, get their own recognition. So we tried to set up an atmosphere which would take the best from industry and the best from the academic community, and put them together.76 ([Location 1805](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1805)) - Tags: [[aqua]] - Although charged with protecting Genentech’s intellectual property, Kiley came to appreciate Boyer’s decision as the years rolled by: One of Herb Boyer’s great contributions was insisting that Genentech publish its work. It helped us attract scientists who crave the peer recognition publication brings. It acted as quality control, that being one of the great points of refereed journals. If you can pass muster with the referees and get published in a reputable journal, you’re doing good science. It helped to validate the company in the eyes of potential customers. If you will, it enhanced our celebrity. And it greatly aided us in recruiting the best and the brightest from academic centers, where traditionally they’d been chary of industry because of the perception, not inaccurate, that in industry and particularly in the pharmaceutical industry, trade secrecy trumped publication.78 ([Location 1823](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1823)) - Tags: [[aqua]] - Looking back on his initial resistance to Boyer’s publication mandate, Swanson remarked: No, it wasn’t an argument or anything. It was rather, hey, we have to get the best people. How do we get them? So it all came from the philosophy, get and keep the very best people. And they were all in the academic world; how are we going to get them to come? Well, Herb said, “I know them. If we let them publish, they’ll come.”80 ([Location 1841](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1841)) - Tags: [[aqua]] - despite Boyer’s insistence that Genentech would publish its work, he himself refused to appear as an author on its scholarly publications. Boyer had consulted frequently with Riggs and the molecular biologists as the insulin research progressed. To a man, they appreciated his input. But Boyer adamantly refused all entreaties to be made an author.82 In fact, he decided that after the somatostatin research, he would never again directly engage in Genentech’s research or allow his name to appear as author on the company’s scientific publications. Boyer explained the decision: One [reason] is I wanted to continue my own [UCSF] research, which I couldn’t do at the company. . . . Another reason was I didn’t want to manage a large group of scientists. I had enough of a taste of doing that at a small level to know that I didn’t like it. And third, . . . I wanted to make sure that the young scientists at the company were getting the recognition. I didn’t want my figurehead overshadowing anything they did. So it was a conscious decision, and I think a good one.83 ([Location 1848](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1848)) - Tags: [[aqua]] - Recalling that human insulin “began the real fund-raising for Genentech,” Perkins went on to comment: “We were able [after insulin] to raise money at much higher prices. So high that Kleiner and I made only token investments after that, because Kleiner & Perkins already had a significant ownership of Genentech.”94 ([Location 1909](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1909)) - Tags: [[aqua]] - Heeding these developments, Nature reported: Growing confidence in the US business community that the development of recombinant DNA technologies promises large profits has led to a steady flow of venture capital to support research. No one has yet made very much money, but high commercial expectations have helped raise the value (on paper) of the five small private companies most deeply involved to a figure estimated at more than $150 million.98 The article referenced five companies—Cetus, Genentech, Biogen, Genex, and Bethesda Research Laboratories. All except Cetus (1971) were founded between 1976 and 1978. ([Location 1922](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1922)) - Tags: [[aqua]] - Kabi was the world’s leading commercial supplier of human growth hormone—the only form effective in humans—which it extracted from the pituitary glands of human cadavers. It was a scarce and costly drug. In high demand for treating pituitary dwarfism, the hormone was Kabi’s most profitable product. But because human pituitary glands were often in short supply, the worldwide stock of growth hormone was sufficient to treat only the severest cases of pituitary dwarfism.5 There was obvious room for market expansion—if Kabi could find a means to make the hormone in greater quantity. ([Location 1982](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=1982)) - Tags: [[aqua]] - The Genentech-Kabi contract predates the Genentech-Lilly contract by more than three weeks. It is therefore not only Genentech’s first R&D agreement but the first anywhere between an established corporation and a genetic engineering firm. Yet because Kabi was not one of the pharmaceutical giants well-known in the United States, the Lilly-Genentech contract is usually taken as the original model for contractual relationships in biotechnology. ([Location 2002](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2002)) - Tags: [[aqua]] - Although the full contract has not been publicly released, as is commonplace in business practice, certain details have come to light over time. Its terms gave Genentech twenty-four to thirty months from the August 1978 signing to develop bacteria producing human growth hormone. Åberg later reported (and as a signatory to the agreement was in a position to know) that Kabi agreed to pay Genentech $1 million for engineered bacteria producing human growth hormone.11 The contract also gave Kabi exclusive foreign marketing rights, but with Kabi and Genentech sharing rights in the United States. Kabi was to provide Genentech with human pituitary source material and send protein chemists and fermentation experts to South San Francisco to collaborate in creating a production process. Swanson insisted that the contract made clear that Kabi was to apply Genentech’s engineered bacteria solely for the purpose of making growth hormone. As in the Lilly contract, he was willing to sell know-how and biological material for specific applications. But he adamantly refused, as a hard-and-fast rule, to sell Genentech technology for other than the uses the contracts spelled out. ([Location 2009](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2009)) - Tags: [[aqua]] - Note: Protects against tail events where IP turns out to be more general purpose than originally thought. Allows for further licensing agreements - Swanson put it concisely: “I think both [Seeburg and Ullrich] felt that Genentech was the best atmosphere to actually get the thing done, that they could move more quickly at that point in a corporate environment than an academic one.”14 In September Seeburg signed Swanson’s recruitment letter and gave the university notice of his departure at the end of October. ([Location 2027](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2027)) - Tags: [[aqua]] - Note: Ambitious people want to get things done. Make it clear that they have an environment where they can move fast and not deal with bureaucracy - Because the growth hormone molecule is almost four times larger than insulin’s—191 amino acids compared to insulin’s 51—the scientists concluded that chemical synthesis of the DNA coding for that many amino acids would require an inordinate amount of time and labor. Crea later estimated that to synthesize the complete gene using the technology of that era would have taken one to one and a half years—far too long and costly for a company premised on speed of execution and frugality.15 The methodology of the human insulin experiment was clearly impractical for making growth hormone. The scientists then proposed a highly original concept: they would attempt to build a semi-synthetic gene coding for growth hormone, using DNA synthesis and complementary DNA methods. ([Location 2034](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2034)) - Tags: [[aqua]] - as Yansura recalled: “[Swanson] didn’t want to irritate Seeburg or push him out because Peter Seeburg had [the skill to make] the growth hormone [cDNA] gene, and wherever Peter went the growth hormone gene went. That would be a bonus to our competitor.”28 ([Location 2098](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2098)) - Tags: [[aqua]] - To Genentech scientists, worried that somatostatin and human insulin might be mere flashes in the pan, achieving growth hormone meant more than the successful synthesis of another recombinant substance. The company’s first two projects had fallen short of establishing that its technology was widely applicable for the bacterial production of useful proteins. Everyone recognized the fusion-protein approach as cumbersome and restricted to making a narrow range of substances.34 A nagging concern was that Genentech could not build a sustained business on the limited utility of the fusion-protein approach. That concern evaporated with the growth hormone triumph. Genentech’s hormone was not a fusion protein; it was not a precursor; it was a pure and freestanding substance, and it was produced in relative abundance. Lab tests showed it to be biologically active and identical to the natural hormone. It all added up to the creation of a seemingly versatile and efficient model for making the larger and more complex proteins in common clinical use. Substances such as the blood-clotting factors with genes too large to synthesize now seemed within eventual grasp. One perceptive reporter remarked, “The laboratory production of HGH is . . . probably most significant for what it implies about the future possibilities in this [genetic engineering] field. If Genentech can make HGH, what else can it make?”35 In short, the making of growth hormone indicated a far clearer path, albeit with inevitable detours and impediments, to a viable commercial future. ([Location 2115](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2115)) - Tags: [[aqua]] - Swanson soon came to see growth hormone as more than a cloning success and a likely future product. He believed that only by making and selling its own pharmaceuticals could Genentech capture full monetary value from the heavy cost of pharmaceutical research and development. As he observed two decades later: Over the long run—and really the timing is when you can achieve it—in order to capture all the value from the research that develops a new drug that treats a disease, you have to be able to make and sell that drug yourself, in part to control the distribution of it, not relying on someone else; and in part because you capture greater rewards by selling it yourself. Over the long run, unless you capture those rewards, you cannot invest as much in R&D that allows you to develop the second and third products.45 ([Location 2166](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2166)) - Tags: [[aqua]] - Taking on drug development, approval, and marketing was a monumental challenge for a start-up with no products generating income, no deep investor pockets, and just over fifty employees.46 A more realistic approach, Swanson decided, was to tackle corporate integration stepwise, research project by research project. With an incremental approach, Genentech might build up its own manufacturing capacity and break away from reliance on a pharmaceutical company for product development and approval. He reasoned that creating a comprehensive internal research and development program would compel Genentech to obtain the knowledge and resources to practice the full range of expertise entailed in bringing a pharmaceutical to market. Clearly, Swanson had no intention of the firm remaining solely a contract research operation; he had more expansive ambitions and little patience for tarrying. ([Location 2172](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2172)) - Tags: [[aqua]] - His mind made up, Swanson approached Kabi about amending the contract. In 1980 he succeeded in licensing from Kabi exclusive rights for Genentech to sell recombinant growth hormone in the United States. In return, Genentech reduced the royalty rate Kabi was to pay Genentech on foreign sales. ([Location 2188](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2188)) - Tags: [[aqua]] - Anticipating clinical applications beyond the treatment of pituitary dwarfism, he began to publicize the financial windfall likely to result from growth hormone sales. In September 1979 he told a group of stock market analysts at the brokerage firm E. F. Hutton that achieving a genetically engineered form of human growth hormone in the unprecedented quantities expected would allow investigation of its uses in treating wounds, bone fractures, and other medical conditions. Predicting a market of over $100 million if these additional indications materialized, he told the analysts that “HGH, as it is called, may turn out to be one of the most important substances yet to be produced via genetic engineering.”51 Swanson, it was obvious, no longer regarded growth hormone as a small-market product; in his opinion, it now had signs of huge sales potential. ([Location 2199](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2199)) - Tags: [[aqua]] - Swanson had predicted in the 1976 business plan that insulin would not undergo long regulatory delays because, as he put it, “insulin is not a new drug.” He predicted that it should consequently sail through the clinical testing and FDA approval processes.68 He was largely right. The regulatory approval process for insulin went forward without a major hitch. ([Location 2274](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2274)) - Tags: [[aqua]] - In October 1982 the FDA approved the sale of the Genentech-Lilly insulin, under the trade name Humulin. It was the first recombinant pharmaceutical for human use to reach the marketplace.69 The trajectory from lab bench to product had taken a mere four years—less than half the time onlookers had originally predicted for commercializing recombinant DNA technology. ([Location 2278](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2278)) - Tags: [[aqua]] - The company had been proactive in taking steps to move quickly into the market once Protropin was approved: it had stockpiled the hormone for close to a year and, having mined the pharmaceutical industry for seasoned salespeople, had a marketing team assembled and ready to go.84 Within a week of FDA approval, Genentech began to ship growth hormone to hospital pharmacies around the country. ([Location 2315](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2315)) - Tags: [[aqua]] - The new hires soon learned that job titles fell short of describing the full scope of their responsibilities. They found themselves performing any and all tasks required to keep research and the company moving. Byrnes described what he learned to expect, a far cry from the circumscribed job descriptions of the pharmaceutical industry: “You have to be flexible . . . and not overly concerned about what you do day-to-day—whether it’s running out to get a liver for a scientist or playing the role of vice president in a negotiation. It doesn’t matter. The point is, I’m a resource.” ([Location 2338](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2338)) - Tags: [[aqua]] - Swanson remarked, “I think one of the things I did best in those days was to keep us very focused on making a product.”94 His goal-directed management style differed markedly from that of Genentech’s close competitors. Cetus, a company of multiple visions, seemed unsure of what exactly it wanted to become. ([Location 2353](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2353)) - Tags: [[aqua]] - Genentech stood out as a nose-to-the-grindstone, eyes-fixed-on-the-goal, product-oriented operation—Swanson’s basic business philosophy writ large. ([Location 2361](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2361)) - Tags: [[aqua]] - Despite the fixity of Swanson’s corporate goals and bulldog tenacity, his management style was conspicuously informal and interactive. In dealings with the scientists, he was mainly a facilitator and cheerleader. With no background in molecular biology except what he picked up, he could only reassure and applaud from the sidelines. Yet he delighted in popping unannounced into the labs, looking over the scientists’ shoulders, asking questions, exulting over positive results, goading everyone on when results disappointed. It was a form of hands-on management that one of his heroes, David Packard of Hewlett-Packard renown (and a Genentech director as of 1981), called “management-by-walking-around.”101 Swanson would continue this highly personal practice well into the 1980s, until the company grew too large. ([Location 2372](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2372)) - Tags: [[aqua]] - At executive board meetings and on periodic rounds of the labs, Boyer was also casually contributory and helpfully communicative. Swanson recalled: Herb was always interactive, primarily at the board level where the basic questions of which projects we should work on were decided. He had a clear insight of what the technical feasibility was, and where you couldn’t push the science too far. Was it ready now? That was a big contribution. Boyer was always the one. I think his judgment calls were critical. . . . The other thing Herb did in those early days was wander around the labs, as I did. Where my job was “Okay, where are we on this [project]?” and to act as cheerleader to get people fired up and to coordinate between groups; his was, in a sense, [to act as] a scientific sounding board. “Okay, here’s how I’m approaching this.” So he was somebody to talk to about the scientific details. He did that very well.102 ([Location 2378](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2378)) - Tags: [[aqua]] - Note: Motivation + mission-orientation from Swanson, technical approach and roadmap audits from Boyer - As Dan Yansura remembered: Bob wanted everything. He would say, “If you don’t have more things on your plate than you can accomplish, then you’re not trying hard enough.” He wanted you to have a large enough list that you couldn’t possibly get everything done, and yet he wanted you to try.107 ([Location 2429](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2429)) - Tags: [[aqua]] - Fledgling start-ups pitted against pharmaceutical giants could compete mainly by being more innovative, aggressive, and fleet of foot. Early Genentech had those attributes in spades. Swanson expected—demanded—a lot of everyone. ([Location 2436](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2436)) - Tags: [[aqua]] - Even Ullrich, despite European discomfort with raucous American behavior, admitted to being seduced by Genentech’s unswervingly committed, can-do culture: Even though I was not the prime example of such a [fervent] employee, I was just pulled in. We were very excited about Genentech and this feeling of belonging—very important. Rationally or not, I was just pulled into this stream of conviction that we were on the right way and that we were doing something important and exciting.111 ([Location 2446](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2446)) - Tags: [[aqua]] - The egalitarianism was even mapped onto the physical landscape: there were no reserved parking places and, as Genentech expanded, offices were designed to be of roughly the same size and appearance to avoid any visible sign of seniority. ([Location 2465](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2465)) - Tags: [[aqua]] - Perkins then broached the idea of a public stock offering in which the firm would offer shares for purchase on the stock market. An offering, Perkins forcefully insisted, was a means to raise money—perhaps big money—more than was generally available through venture-capital financing. Furthermore, he pointed out, the stock market was finally turning favorable to initial public offerings.18 The market, for most of the 1970s in the doldrums, was on the rise in 1980, and financiers, encouraged by the newly favorable tax and investment laws, were eager to invest. A result was that in 1980 the total amount of capital invested in new business ventures rose an estimated 50 percent over the previous year. ([Location 2566](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2566)) - Tags: [[aqua]] - From the start, Genentech had considered interferon a possible research target but had resisted jumping on the bandwagon until it had made better-understood proteins with existing markets. Insulin and growth hormone were the low-hanging fruit, as the scientists referred to them, recombinant replacements for natural hormones with well-documented medical uses and public demand. Interferon, whose protein sequence was unknown and for which no established market existed, was in a far riskier category and hence, Genentech’s scientist deemed, an inappropriate initial target. ([Location 2592](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2592)) - Tags: [[aqua]] - By common standards of conventional business practice, Perkins was jumping the gun in pushing for Genentech to go public. Companies at the time usually waited until they had one or more products on or very near the market and at least a semblance of sales revenues before staging a public offering.43 Genentech of course had neither. If the firm went forward with a stock offering, it meant asking for public investment earlier in the corporate life cycle than was customary. Yet Perkins believed that Genentech had to go sooner than later to the public markets, where money was sufficient to support corporate development and to finance costly clinical trials. Swanson, he argued, could not fulfill his dream of a fully integrated, independent Genentech by limping along on periodic risk-capital infusions and corporate benchmark payments. ([Location 2674](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2674)) - Tags: [[aqua]] - He also saw robust competitive advantages for an immediate IPO, as he recalled years later: I was very keen on taking Genentech public because I thought—I was right—we would dominate the field, we’d suck up all the oxygen, and we would be able to use our new celebrity status to hire the best people in the world to help us grow. All of which we did. And we could use our public price to set the stage for subsequent rounds of financing, which we did do and which we had to have, in [negotiations in] Japan and Europe and all kinds of places.44 ([Location 2681](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2681)) - Tags: [[aqua]] - Middleton recalled: People just listened and gaped. Herb [Boyer] got up and did his trick with the pop beads, showing how recombinant DNA works. . . . Basically, we had a little clear plastic box with pop beads in it—the baby toys that popped together. [The box] was supposed to represent a bacterium. He took out the beads and showed how you spliced genes together. A very simplistic little model. The fact that a UCSF professor was up there explaining it had everyone mesmerized. I gave the talk on the financial side, Bob gave the talk on the strategy, Herb gave the talk on the technology. It was pretty elementary. Every time we asked for questions, there weren’t any. People didn’t know what to ask. There were no experts, there were no analysts. Everybody was just amazed.90 The lengths to which the team went to explain the technology were laughable, but the pitches worked in conjuring up images of miracle drugs. A simple model and straightforward presentations allowed imaginations—and financial expectations—to soar. The Economist, in an article entitled “Frenetic Engineering,” commented that the “mystique of genetic engineering” to create “medical wonders” had built an extraordinary market for the shares. ([Location 2863](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2863)) - Tags: [[aqua]] - By October excitement over Genentech’s imminent offering had reached fever pitch. Investors breathlessly awaited a chance to buy a piece of hot biotech action. On October 14, shortly after market opening, Genentech, under the NASDAQ stock symbol GENE, offered 1.1 million shares for sale. The last-minute increase in shares from 1 million indicated the strength of investor demand. A minute after the opening bell, the share price skyrocketed from $35 to $80—the fastest first-day gain in Wall Street history. The price peaked at $89 within twenty minutes, rose and fell over the course of the day, and ended at $71 at market close. Genentech had raised over $36 million.94 Based on the closing price, the company’s value was an estimated $532 million.95 It was, Perkins recalled, “the hottest stock offering in history to that time.”96 Even the staid Wall Street Journal called it “one of the most spectacular debuts in memory.” ([Location 2885](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2885)) - Tags: [[aqua]] - For Genentech employees, the IPO was a startling revelation. To their amazement, the struggling start-up they had labored to keep afloat had gained an instant trove of cash and become the acknowledged front-runner in what could now be seen as an emerging industrial field. The offering’s roaring success awakened them to the realization that the stock they had so casually accepted suddenly had real monetary value. It began to sink in that Genentech was not only a place to do frontier science but also where a scientist could make money, perhaps big money. DNA had acquired highly visible dollar signs in more ways than one. Dan Yansura recalled his reaction: My first thought on that day [of the IPO] was that Genentech went from being a research boutique to becoming a “real company” with publicly traded stock. Up till that point, money for supplies or for our paychecks was not a guaranteed thing. . . . Now all of a sudden we had a financial cushion to rest on a bit. . . . There was also an excitement and pride about being at the cutting edge of this new field. . . . Of course the last thoughts were about [my] own financial reap for the stock that I owned. This was more money that I ever thought of attaining at that point in my life. And just like that, there it was—kind of shocking.109 ([Location 2924](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2924)) - Tags: [[aqua]] - Public demand to own shares in the expected biotech bonanza remained for a time sky-high and had a spill-over effect on other industries. Genentech’s blazing good fortune exhibited to a rapt audience that a company without products and substantial revenues could nonetheless raise impressive amounts of public money. Executives of entrepreneurial, research-based companies took note of this significant departure from conventional business practice. A few abruptly changed their business plans. The Economist predicted—correctly, it turned out—that the lively action in Genentech stock would “whet appetites for other glamorous share offerings expected soon.”112 Appetites were indeed whetted. Investors were reported to be “positively salivating” over Apple Computer, which, following Genentech’s lead, went public in December 1980.113 By then Genentech’s stock price had dipped below $45, nearer the offering price of $35. But the company had already made its mark as a trailblazer and inspiration for others. ([Location 2944](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2944)) - Tags: [[aqua]] - Genentech’s triumphal public debut was neither predictable, predetermined, nor inevitable, whether taken from the standpoint of technology, politics, cultural precedents, social norms, or the variable factors of human motivation and performance. Important as recombinant DNA techniques were, Genentech’s early evolution, social impact, and significance for a new industrial sector were emphatically not centered solely upon its technology.123 On the contrary, as this history illustrates time and again, Genentech and the origins of biotechnology were far more than the successful industrial application of a novel technology. A concatenation of political, social, and economic factors and strategic scientific, financial, and business decisions molded, shaped, stymied, and encouraged Genentech’s rise to the temporary pinnacle of its stock market debut. ([Location 2986](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=2986)) - Tags: [[aqua]] - Underlying Genentech’s achievements was the prime importance of its people. As Swanson profoundly appreciated, they were the firm’s most valuable resource. “Most of our technology,” he was wont to repeat, “walks out every night in tennis shoes.”3 And because research was the heart of the company, the basis upon which the early enterprise would sink or swim, it was the first generation of scientists who were singularly important to the firm’s success and future viability. Again, it was Swanson who commented: “If the research goes well, we can handle the rest of the problems of the world.”4 The firm’s freewheeling, go-for-broke culture—an electric distillation of individual high energy, creativity, competitiveness, and hubris—not only helped to keep scientists and managers coming to Genentech but also counted as a significant ingredient and treasured asset. Swanson’s unflagging insistence on product focus and fiscal responsibility kept industrially inexperienced scientists supported and in line with business objectives and the firm headed toward products, patents, and profits. ([Location 3021](https://readwise.io/to_kindle?action=open&asin=B00629MDKI&location=3021)) - Tags: [[aqua]]