[Ken] In the same way that a strategic minded person
really needs to be surrounded by operators,
operators I think, get a lot of benefit
out of of somebody who is strategic minded as well.
So, being able to not have my head really
looking down at my feet and be able to look forward
a few years, I think that's what allowed me to
look at it from the outside and be pretty
clear minded as to what the right thing to do was.
(soft music)
- [Kevin] Welcome to Strategy For Scientists.
This is a podcast for scientists interested
in learning about business strategy through stories.
I am Kevin Hartman, with Strategy for Scientists
at the University of California San Francisco, UCSF.
We just heard Dr. Kenneth Lynn describing how he was able
to bring a new perspective to help set strategy.
Ken is currently the CEO and president of
Ab Initio Biotherapeutics, but much of what
Ken shared with us, relates to his experience
at Ulthera, where he helped define the focus
that would lead them to profitability.
To get started, Ken tells us about the
state of affair when he joined and what needed to happen.
- [Ken] When I joined, it was kind of entering
a period where they were still trying
to fully define themselves, it was
a high intensity focused ultrasound,
it was being studied for a bunch of different applications.
The first application that was pursued
and ended up getting FDA approval was
for a cosmetic dermatology indication.
It was important, at that point, to really
focus the strategy on something a little bit
narrower as opposed to kind of keep
a lot of the options open and that was
absolutely what we needed to do
in order to be the most effective
both in terms of executing on the business
and in terms of positioning the company
and clarifying what paths should be taken
and how capital resources should be allocated.
- [Kevin] Reaching FDA approval is a major accomplishment
and an inflection point for a company.
One of the first strategic steps
that Ulthera took to achieve this
was narrowing their focus, Ken shares
how Ulthera's leadership had been able
to achieve this by running a conservative or lean company.
- [Ken] So, this company, again, great technology,
had done, I think, pretty much everything
rationally and right, for any mistakes
that were made, the conservative running,
the philosophy of the company and the CEO
was to run it in a way that you didn't,
that the entire farm, hoping that
something was going to happen when
it was less than assured so they ran
it extremely lean for a really long time.
Because, it gave them flexibility
for the inevitable delays, regulatory delays.
So, ultimately when they got to their approval,
they were in a reasonably great place,
having not spent a huge amount of diluted
capital in terms of getting there.
- [Kevin] So, Ulthera had FDA approval
for a cosmetic indication.
Determining whether to focus resources on this application
meant understanding the market.
This includes understanding customer trends and how they
would compare to others in the same space.
- [Ken] I mean, it's a great market, obviously.
If you look at products like Botox, these
are enormously valuable products and they
move from things that are not really talked about
to things that are talked about a lot.
The entire cosmetic market has moved to a point
where, our culture has moved to a point where,
these procedures are perfectly acceptable
and normal and there's demand for them,
but they really show this great demand
only for things that actually work over time.
- [Kevin] Some of the technologies
in cosmetic dermatology have been
marketed well, despite lacking long-term effectiveness.
So, these technologies are typically limited
to temporary commercial success.
However, Ken made the case that Ulthera
had a value proposition that set them apart,
that they could deliver sustained value to their customer.
- [Ken] So there was a lot of consternation
about not getting valued properly because,
just being in that sector and the argument
from the outside championed largely by me
was that the differences that we actually
have differentiated valuable technology.
Part of the proof of that is not just
the clinical data that we generated, on top of that,
the value proposition of our technology
was one that just came with much better economics.
So, it was a better business model also.
So, we shouldn't be ashamed of being
great in this particular market.
- [Kevin] Ulthera had explored other applications for this
technology such as medical dermatology and neurology.
These were important to show that the technology
had room for growth and provide some insurance
should they fail to gain traction in cosmetic dermatology.
But when a new opportunity presented itself
with a shared customer base, the cosmetic procedure,
Ken advocated the perspective that Ulthera
was better off narrowing the focus
of their additional investment.
Because this potential acquisition shared
a customer base, there would be synergies
on marketing and distribution, investing
in commercialization in this segment,
would be the best way to drive revenue growth.
- [Ken] Ultimately, the catalyst in this case
was that we had the opportunity to actually
buy another company and that company only fit in
if they are were to say, we are
a cosmetic dermatology company and
the most valuable thing that we can do
is focus on the marketing channel, the commercial channel
where we're building a really important
and sustainable presence and that's
a very, very valuable thing with
a constant stream of revenue and relationship
with these customers to be able to go in
after them having successfully bought
a technology and been running that business
successfully, to be able to sell them
another procedure, another product
that fits right in with their existing customers,
fits in with their workflow, and actually,
again, has the backing of really solid
clinical studies to show that it works.
That was actually the smartest
decision, smartest strategic fit.
So, that was the catalyst in terms of moving
things forward to make sure that the company
actually focused on this as a strategy instead of saying,
oh, we're an ultrasonic technology company or we're
a women's health company, which, really, we were not.
- [Kevin] Ken's awareness and analysis of new circumstances
didn't support the company's original hypothesis.
With this new data, he was able to build
the consensus needed to set Ulthera's new focus.
Ken applies these same principles of maintaining agility
and setting focus at Ab Initio Biotherapeutics.
Given that this company is in a much earlier
stage of development, how does strategy differ?
- [Ken] Our company right now, we have a really
proprietary technology and we can do things
that I believe are, if not unique, then very,
very close to unique in the entire world
and I think what's important for us
is to really think about the fact that okay,
we have a platform technology, it can be pointed at
a lot of different targets, that are provably
valuable and to solve a lot of problems
that people have been trying to solve for a very long time.
The conventional wisdom would be to say,
build a big company, pursue products immediately,
you know, I think that's not exactly bad,
but given where we are right now, the smart
thing to do as a young company is to focus
on being a platform company early on,
find partners to help fund us and to help
validate and to help move forward
and build a body of evidence that we can
do what we say we can do and then also
create our own programs in parallel with that
and that allows us to be spending our dollars
more efficiently and getting more out of it early on.
- [Kevin] So, Ab Initio will focus their strategy
on being a platform company that uses their
core technology in its niche market.
He also defines their organizational context
and how they will meet their company objectives.
For example, they will work with other enterprises
to validate targets and define funding.
The partnerships that they will form, will be critical
to take forward potential products.
With that in mind, what is the best approach
for forming these partnerships?
- [Ken] You have to think about what your weaknesses are,
where you have the gaps, for example, for us,
we are excellent at the drug discovery piece,
at the discovery piece and protein engineering,
but we do not have expertise in advancing
drugs through development and so I think,
for now, the best thing to do is actually
to find great partners who are excellent
at those pieces where we can hand it off,
instead of feeling like you've gotta run
the entire marathon, it's more of a relay race.
You do the part that you're the best at,
you hand it off to the best partner who's
great at that next part and then
the other things that you care about
are that your program is actually important to them,
that they actually want to succeed, that they want
to move it forward, do anything they can
in addition to being the best, the most competent.
- [Kevin] With all these strategic
decisions that we discussed, what is
the scope of strategy that can be set?
- [Ken] While you might have a long-term strategy
that's 10 years in the future, I think,
it's really valuable to have a strategic
mindset also for a two-year future or
a five-year future as well and then
one-year, it's really hard to say
those that are strategic decisions
made over a one-year period, that I think
comes more down to the discipline to the strategy
and then being very operationally focused,
being very focused on getting done
the things that need to get done
in order to stay on that strategy.
- [Kevin] Success in business or otherwise,
is a combination of setting the correct
longer term goals and following through
on the shorter term tasks that get you there.
These two are intertwined in a
dynamic and iterative process.
Strategy cannot exist in a vacuum and
must be assessed by its ability to be executed.
We thank Ken for sharing his experience
in the leadership of these two companies.
Thank you for listening to Strategy For Scientists.
(soft music)
If you're interested in learning more,
check out the online lectures co-produced
by iBiology and the UCSF Office
of Career and Professional Development.
We would like to thank the Burroughs Wellcome Fund
and the NIH Institute of General
Medical Sciences for grant funding.
Thanks also to the PRX Podcast Garage
for the studio space and helping us
get started with this production.
Tune in here for more stories
about scientists using strategy.