Faber Daeufer & Itrato principal Joe Faber recently delivered a guest lecture to about 40 graduate students in the Biomedical Engineering Seminar Series (HST 590) that is part of the Harvard-MIT Program in Health Sciences and Technology.
The HST Program is a unique collaboration that brings together Harvard Medical School, Harvard University, Harvard-affiliated teaching hospitals, the Massachusetts Institute of Technology, and local research centers to integrate science, medicine, and engineering to solve problems in human health, and is particularly appropriate for students who are planning multidisciplinary research careers in academic medicine.
Jeff Behrens, President and CEO of Siamab Therapeutics and founder of LabShares Newton, directs the HST 590 Seminar Series, which focuses on developing interdisciplinary professional skills, covering issues related to medical ethics, responsible conduct of research, written and oral technical communication, and translational issues. “The format is that Jeff lectures for half an hour, usually on a topic with a business, financial or commercial focus, and then brings in a speaker from the biopharmaceutical or bio-medical community, including venture capitalists, business and R&D leaders from leading companies in this space, and patent law practitioners, to share their professional perspective,” explained Faber. “My presentation was intended to cover the role of a lawyer in the context of strategic business transactions, in comparison and contrast to the role of a financial advisor or R&D/busdev head.”
However, most of the session was spent on the importance of weighing ethical concerns when making business decisions… considering not only “what is economically optimal?” and “what is legally tolerable (calculating the NPV of enforcement)?”… but asking also what decision is most consistent with the individual’s values and with his/her organization’s values. “We debated whether and when it may be appropriate for these values-based considerations to override economic optimization. And, we considered various justifications, including the importance of building and maintaining reputation/brand (which may be considered part of economic optimization) and the importance of building and maintaining a community by acting with integrity.”
To support this discussion, Faber led attendees through several real-world examples of decisions Faber clients have recently wrestled with, and some he has had to make in managing a biotech law firm. “We looked at dilemmas involving such issues as drug price setting, demographic selection in trial design, and economic vs mission-based goals in out-licensing by academic institutions. I also talked about how, within our own firm, we struggle with issues of internal compensation, use of technology, and drafting errors by counterparties.”
Toward the end of the session, Faber talked about how decision-making in venture-backed biotech companies often occurs by consensus, noting that investors, independent board members, and managements often have long-standing personal and business relationships, and often share common backgrounds (considering biological and tribal demographics, professional experience in business culture, understanding of national culture, etc.), all of which can result in an absence of independence and which can threaten optimal decision-making. “We discussed the opportunity, and even the responsibility, of organizational leaders to seek and synthesize input from diverse backgrounds,” said Faber. “There’s clearly opportunity to gain new insight and understanding by seeking advice from people trained in other disciplines, who have different demographic backgrounds, who are shaped by different national and cultural values. And, we talked about ways that might translate, not only into better decision-making, but even into more leverage and influence for a CEO in dealing with a homogenous investor base and board.”