Joe: Hello and welcome to On Boards, a deep dive at what drives business success. I’m Joe Ayoub, and I’m here with my co-host Raza Shaikh. On Boards is about boards of directors and advisors and all aspects of board governance. Twice a month, this is the place to learn about one of the most critically important aspects of any company or organization; its board of directors or advisors, as well as the important issues that are facing boards, company leadership, and stakeholders.

Raza: Joe and I speak with a wide range of guests and talk about what makes a board successful or unsuccessful, what it means to be an effective board member, the challenges boards are facing and how they’re addressing those challenges, and how to make your board one of the most valuable assets of your organization.

Joe: Our guest today is Steve Gullans. Steve’s background ranges from CEO of a public biotech company to co-founder and Managing Director of [00:01:00] Excel Ventures, a life sciences venture capital firm. He is currently CEO of Metis Minds, a digital wellness company addressing ADHD.

Raza: Steve’s network and expertise extend from academia to Wall Street. He has managed teams through successful financings, scale up of operations, clinical trials, deal negotiations, IPOs and M&As. He has served as board director for more than a dozen companies, currently including Orionis Biosciences, Alexis Bio, iSpecimen, and Navigation Sciences.

Joe: Steve began his career as a professor at Harvard Medical School, has co-authored over 130 scientific papers and is a fellow of the American Academy of Arts and Sciences as well as the American Heart Association. Welcome, Steve, it’s great to have you today with us on On Boards.

Steve: Thank you. It’s a delight to be here with you, gentlemen.[00:02:00]

Joe: Thanks. Let’s start with just a little background, and there is a lot of background to cover, but let’s give folks a flavor of your work beginning as a professor at Harvard Medical School, but more importantly, perhaps some of the companies and boards you’ve been involved with, and then let’s just talk about the scientific advisory boards with which you’ve been a member.

Steve: I love innovation. That’s really where everything begins in terms of how I think about my life or my day-to-day activities. And the best part about it is meeting the most innovative people in the world whose minds are exploring places that humankind has never been or wish they could go and not knowing how to get there.

I live in the life science community day to day. I read scientific literature every day, but I really relish being with people who want to find a better way to cure disease, a better way to diagnose COVID or do any other thing that could impact the lives of millions, and it’s a lot of fun to try to figure out these disruptive opportunities.[00:03:00]

Joe: That’s fantastic. You serve on a number of scientific advisory boards or have, can you explain what a scientific advisory board is? Some folks may not know, and maybe talk about one or two that you thought were particularly effective and how they were effective in serving the organization that put them together.

Steve: Sure. The scientific advisory boards generally, as the name implies, involve scientists giving advice to a company, or it could be to an institution. I’ve been a scientific advisor at Mass General Brigham, at the Cleveland Clinic and other institutions like that, helping them with their innovations or with a large number of companies as they try to figure out how to maneuver their way through the technical challenges of the scientific process.

The value of the scientific advisory board is that so many CEOs and companies put blinders on as soon as they get funded and never pay attention to what’s going on on the outside world around them. But if you look at something like COVID, where it emerged out of nowhere, there were [00:04:00]some companies who were poised, in part, because their scientific advisors did jump into this space.

BioNtech had no plans to go into vaccines, but if you have the right community of people, you can actually pivot when you need to. But on top of that, it’s really about giving sage advice and critical advice that often the board cannot provide.

I would say there’s more than one type of scientific advisory board. There’s one that really belongs in the mast head of the website that says, “We have our Nobel Laureates and everybody else.” Very common. When I was at VC, I would see that frequently, but I wanted to know if you called them up, did they actually know the name of the CEO? And there were cases where they didn’t.

There’s also a scientific advisory, and sometimes they’re called panels, where you actually convene a group for a very, very specific topic. An example would be like COVID, imagine you want to come up with a COVID test, you’re in the diagnostic space, but you know nothing about viral detection. You actually would convene a panel of experts. [00:05:00] In a short term, people get paid to do that.

But I find that those are extremely useful for companies that are in a dynamic place. Overall, you really need to identify people who can truly be helpful in many ways, not just advising scientifically, but also being an advocate for you and the community of scientists that you’re not a bad company looking to take money out of the pockets of people, but you’re actually trying to help and cure diseases.

Joe: Have you served on in any scientific advisory boards that at some point during a year would report directly to the board of directors as opposed to only management?

Steve: I have not served on an advisory board like that, but I have had boards of directors reach out to ask advice because it was within the domain of what they’re allowed to do. They could certainly seek advice from anybody who’s affiliated with the company. They knew it was under confidentiality, which is very important in order to get key advice.

I have actually spent [00:06:00] some effort on a couple of occasions to educate people, not one-on-one, but more at the board meeting or some other event to say I’m a little concerned about something or maybe you should think about going this direction.

In many ways it’s really about being out in the world because so many scientific advisors, particularly academics, travel globally and hear everything that’s going on in every space.

Imagine the CRISPR space, how many scientists in the world have worked in that? An advisor can actually tell you, “This lab in Singapore has got some really cool stuff you may not have heard about,” and so they actually can be a very big help in many ways.

Joe: One scientific advisory board that I’m very familiar with is the one that we have on St. Jude Children’s Research Hospital, and one of the things they do that is I think extremely impactful, I mean, they’ll come during the year and take a deep dive into one or two or three departments, but then they’ll come to St. Jude and report their findings directly to both management [00:07:00] and the board, and then management leaves the room and gives the board a chance to directly ask questions to members of the scientific advisory board.

There are about 12 members. For some of the deep dives, they’ll bring in outsiders, not members of the ongoing, for very specific expertise, but I think it’s fair to say that for the board, that three, four, five hours that we spend with them is some of the best time that we give all year. Because as you said, they’re talking about things that most board members don’t know enough about, but they’re bringing a wealth of knowledge from both the medical and scientific community from all over the world, and that definitely raises the level of discourse among the board and management.

Steve: I’m highly in favor of that. Fundamentally, the key thing is to have an open dialogue with transparency. I mean, one of the problems I’ve had with the NIH, I was on many, many study sections where [00:08:00] expert reviewers review the grants, but it was anonymous or even their scientific paper review process, so people can say anything they want and get away with unless somebody holds them accountable. If they are the expert, then there’s nobody holding them accountable.

So, in the context of having an open session, particularly board members, that really reveals things, because there’s never a hundred percent agreement on the future of R&D, ever, so you to figure out the best path forward, and having that open dialogue is key to it.

Joe: Another thing I wanted to ask you about to start off with is about the new company that you’re in the process of launching called Thena’s MInds. Tell us about that and what it does and exactly what stage are you with Metis Minds.

Steve: Yeah. This is part of my personal journey. I’ve been retired for three years, but I just decided to come out of retirement. Because I’ve been focusing the last few years in learning about the digital technologies that will allow us [00:09:00] to retrain the human mind. I’ve actually had personal experience through some of the mindfulness with EEGs and everything else that really seen the power of what’s coming.

It’s the confluence of inexpensive components in AI that allows us to see signals, not to modify our brain, just to give us the signal of what we’re trying to do. It’s no different than learning how to play the piano or hit the baseball, a little practice can do it.

What Metis Minds is doing, it was developed by a team in Boston in collaboration with others around the world. It’s simply an EEG device that sits on the forehead of a child or it could be an adult, and it controls through Bluetooth a video game on an iPad or other pad. It looks identical to the games that my grandkids play today, like Subway Surfer or another. It’s an adventure avatar game, and the speed at which the game operates is determined by how much you focus and concentrate.

Eight human trials have shown it actually works. It [00:10:00] works extremely well without drugs, and at the same time, it has sustained benefits over months unlike any medications, which as soon as they’re out of your system, you don’t have any benefits.

This idea that we’re actually going to be able to monitor signals of our autonomic nervous system, including the brain signals for a variety of activities will allow us to actually train our ourselves for better memories, better understanding of complex issues and all sorts of things, and ADHD is something that’s near and dear to my heart for many personal reasons as well as having worked with many patient advocacy groups over 25 years. I know the power of new technology in a very, very large unmet need.

Joe: How will people access this technology?

Steve: Okay, right now we’re just forming the company. Athena is a Greek goddess of wisdom, so Metis Minds is very much about generating wisdom. We’re starting to do pilot studies in the next couple of [00:11:00] months with e-learning companies and behavioral health centers to really define the best approach to getting kids on the program at home or in the clinic or in the behavioral setting.

The idea will be in the early going, you’ll get access by going to one of your local healthcare providers, but within a year we will be over the counter available online and you’ll be able to purchase your own headset.

But at that point, we want to know exactly the best way to onboard. We know that when the child finishes the eight-week, eight-hour total curriculum, they benefit. If they don’t finish it, they don’t. That is the number one objective; it is adherence to the program. That’s what we’re doing this year.

Joe: Now, at what point will you recruit a full board for this company? Because I know it’s very early.

Steve: Yeah, we’re very early. We’re formed, but we’re not fully financed yet. Once we’re up and rolling and have our go-to-market plan in hand we feel confident with, which we will be in the next two to [00:12:00] three months, just imagine that we’re actually hanging out our shingle in at the end of February.

By May, I’d like to recruit two or three new board members. There are just two of us, two of the founders, on the board right now who actually represent different elements of the space we’re moving into. One, somebody in wellness, and somebody in gaming.

I mean, I don’t know anything about gaming, but what better way for a child to actually learn to control their behavior and be more attentive than through a game and learn the best for the best of the best at each of these fields by, again, having them be critical and fundamentally being able to offer introductions to the leaders in those industries, and that’s what we’ll be looking for.

Joe: Sounds fantastic. One of the things we talked about when we spoke last week was your involvement with early stage therapeutic companies, which are very different from a lot of other companies, even in the bio space.

Tell the listeners, if you would, what it means to be in early stage therapeutic companies and some of the [00:13:00] things that really differentiated from other companies with which you’ve been involved.

Steve: All right, in an early stage biotech therapeutic drug company, it really needs a lot of capital. The path is well worn, and at the same time there is capital available, but you have to check certain boxes in order to access it.

In general, you have a preclinical development period. It could be in academia, it could be in a private company, or you use the best available animal model to show the compound you have, whether it’s a biologic, a small molecule, a peptide, it could be a natural product, it could be anything that shows benefits and safety in small animals.

With that, you can then raise money to go the route to the pre-IND and into the FDA process. Along the way, you need to raise money before you begin the FDA process. You need to raise money when you start your clinical trials since there are several [00:14:00] landmarks along the way.

I will say that traditionally it’s been viewed, and this is the big pharma number, that it takes hundreds of millions of dollars to bring it to market, but it doesn’t. The point is that 90% of the drugs fail even after they get into the human studies

Joe: Mm.

Steve: If you say 10% of 700 million, that’s 70 million, so for one, and in many cases, it’s only 10 million if it’s a huge unmet need, and in all indication, you don’t need as much money, but you do need a very, very clear indication of who needs this, who’s going to pay for it, and how high is the hurdle to show benefit.

Cancer is easier to show benefit than transplant rejection because already 95% of kidneys are not rejected, but in cancer, our success rate is under 20% so you have different things.

A fundamental difference in terms of operating is you never have revenue.

GAAP accounting [00:15:00] is very easy, which I think projected spend is only ever off by a quarter because you either delay a quarter or accelerate a quarter on some activity and you have a lot of toggles to do that.

The other thing I’ll add is there are two hallmarks. It gets this 90% failure rate, why would anybody invest? The answer is because you don’t actually have to ever have a sale. By the time you finish phase two clinical trials, the the pharmas line up because they prefer to run the phase three trial themselves and they buy that company.

Carrying it that far is the objective, and so as long as you understand that the drivers and the driver to economic increase is, number one, human data. I know the scientists love to think their mouse data is wonderful, but human data can easily increase the value of your company by a lot, and it could just be safety data or a validating partnership with a large pharma.

Joe: From a board [00:16:00] perspective, what else is important other than raising revenue?

Steve: Raising money.

Joe: Raising investment.

Steve: In these companies, you generally have a board that includes venture capitalists who have a deep network, and so the raising money piece can come because they actually have co-invested with other funds that build a trusted relationship. That’s something that people tend to underestimate, I think, when they are first entrepreneurs.

But in addition, the 90% failure rate are a lot of learnings, and for young CEOs in early companies, you have to know don’t run a study in this country because of X or do run a study in that country because of Y, and these little learnings can help a great deal.

So much of it is about the network. Drug development is very much an outsourced activity, so who you outsource to for your trials or for your manufacturing is just as important. Again, it’s something that board members definitely know or have someone they can call.

Raza: Steve, the last number that I [00:17:00] heard was $1.6 billion for an FDA-approved drug that’s kind of in the blockbuster category, and so I totally understand that company A might be able to sell before, but from the approval pipeline perspective, because of the cost of failure, that cost has been increasing.

In fact, I think people have coined the term Eroom’s law, which is the reverse of Moore’s law to signify that every 18 months or two years, the cost of getting an FDA- approved drug to market is doubling.

As you mentioned, these are the kind of companies that are going to take a lot of funding, even for a long haul with no revenue. What is the role of the board and how to be an effective board in such situation or an effective board member for guiding such companies that have no revenue and customers yet?

Steve: The first rule of thumb is it’s about the clinical data. First and [00:18:00] foremost, most of these companies, not all, but many, are started by scientists who understand all the pre-preclinical development, get caught in this endless loop of making the perfect drug, and that costs you more time, more money.

Finding something that’s good enough to move into the clinic and making that decision is something the board has to intimately be involved in. In addition, there’s often when you have clinical trials going, you have to be wary about the indication in recruiting of patients and all of these things.

A clinical center will say anything to get you in the door because not only is it revenue for them to be running a trial, but it’s career making if your drug works, so that the individual leading that trial suddenly is publishing papers and an invited speaker everywhere.

You have to be wary of, do they really have the patients, are we really going to get what we need? The board can actually be very helpful telling you about these, the non-leading [00:19:00] institutions, but other institutions you should.

Raza: I think as you alluded, that at a given point, the company may have a portfolio and possibilities of uh, compounds and variations, and which one to take into the next step is like a really key call to make. In terms of who these board members should be for an early stage therapeutic company, should they gather something like a Theranos board?

Steve: I am one of many scientists who looked at this Theranos’ slide deck during its multiple financings, and my partners say, “Why can’t we invest at this round, Steve? Because look, the valuation is now 3 billion, it used to be only 1 billion.”

Joe: Oh, my God.

Steve: The answer was because people who knew the science knew that it defied the laws of chemistry and physics, at the same time, they didn’t use a drop of blood to find a bacterium. If there was only one bacterial cell per 10 milliliters, you’re going to miss it. That’s a very simple concept.

It was really [00:20:00] a charade from so many angles, and I feel so sorry for the people who got caught up in it. In the end, unscrupulous people can take advantage, particularly in something as arcane as drug development and diagnostic testing. It is the future of where we will get to someday, a drop of blood for everything, but we’re not anywhere near that now.

Raza: Well, wonderful. That truly means that you need the right mix of skills on the board for such a company that’s fit for the job. Now, going back to fundraising, would you view fundraising as primarily the CEO’s job, or is it the board’s job? Who is responsible for fundraising when there’s no money coming in?

Steve: A number of people have pointed out to me that no company has ever failed for having too much money. There are many ways to fail, particularly in the drug development business, but having too much money is not one of them. So many people get caught up in valuations and the uncertainty about the next milestone, “Let’s wait till the next milestone.” What if it doesn’t happen?

You also get into positions, “Well, we’re going to run out of [00:21:00] money one month after we hit the milestone.” Well, that’s a little late if you fail a milestone. The answer is all financings come about through trust. Occasionally, you see something as a runaway train, maybe SpaceX or something where everybody piles onto the next round because it’s larger than life. But in so many cases, you have to trust the team and trust the other investors if you’re a new investor coming in, and the best person to do that is the CEO of the company.

I found when I was an investor, if I didn’t know the CEO, I’d say, “Tell me what your next milestone is, then invite ‘them back on that date and see how they did.” And often they fail. Anyway, it’s a very, very important job that most CEOs don’t take seriously.

Joe: I wanted to go back to the board. Two questions, one, let’s talk about the importance of having one or more independents on the board and what value they add. And the second thing is, just [00:22:00] how important is it for one or more board members to actually have a deep experience with bio?

Steve: In healthcare well, first of all, independents are very important. Ideally, someone the CEO can build a relationship with and trust. So many in the drug development space, particularly, so many boards are dominated by three, four VCs, and this is one of eight portfolio companies they’re each managing , and then you can have egos flying around about each company.

It’s not necessarily about this company and I’m just sort of telling what everybody knows. When an investor from a venture fund is on the board, what is in the best absolute interest of the company is not necessarily what’s in the best absolute interest of the venture fund, and an independent brings that view on how do we actually deal with this.

In addition, there often could be in terms of abilities or experience. There’s sometimes a niche, whether it’s a deep [00:23:00] finance knowledge because you need to understand how the cash flow and the accounts receivable work, you could be really press on that, and if you have that experience as an independent board member from a finance perspective, it’s helpful.

On the scientific side, you don’t necessarily help the company a lot, but it helps you build rapport so that you can actually communicate with them. One of the worst skills for any scientist in a company they have is communicating with lay people, and if you’re going public, that is critically important. You have to have slides and you see slides with 2 point font and 43 error bars on it that are useless. Having someone who could speak science and say and tweak their messaging, which I play a strong role in, can actually help them see great opportunities they wouldn’t have seen otherwise.

Raza: Steve. What about recruiting boards these days? [00:24:00] How is effective recruitment of boards happening and what would you suggest people looking for great board members do?

Steve: Yes. In today’s environment for all the right reasons, there’s a real emphasis on finding women and minorities to join boards. This was led in a wave in California, but it’s really crisscrossed the country and even the NASDAQ is pushing for it, and I wholeheartedly in favor of that.

What you often need to do is you need to reach outside your network because there is such a demand for highly talented people that the shortlist of obvious people already have appointments at Pfizer and the big companies.

I’m finding that I’m meeting a lot of great people through recruiters and there’s even a lot of companies or nonprofits that are building women board groups to actually build a cadre of people who are already trained in how to do this.

All of my training was on the job. I would love to have somebody teaching me this as we go. Right now, I’m involved in a couple of board recruiting event, and word of mouth, [00:25:00] everybody wants to use because it’s a lot less expensive than a board of directors, but diversity requires that you look in places that you don’t know, and so I’m highly in favor of whether it’s through a third-party agency or a recruiter of reaching out and finding someone.

In terms of skillset, as long as someone has an operating role in a company, in a domain, whether it’s finance or sales or anything, they have enough expertise to sit in a boardroom. Because that particular skill, it should be relevant to the company, it is something that is valuable because they’re coming from a totally different environment, maybe even a different product line or even a different industry coming in.

One of our companies, we had somebody from Wayfair on the board, and this was in a life sciences company, but her understanding of IT technology and how you actually do marketplaces online and everything was instrumental in pointing the company to the right partnerships, the right people, and all [00:26:00] sorts of things. It was really nice.

Raza: Well said, Steve. I think going to uncorrelated network, whether it’s via recruiters Or by using groups, we mentioned on our show, Extraordinary Women on Boards or The Chicago Network or The Boston Club where you would have access to a much bigger network of, in these cases, of women directors that are ready for service.

Joe: I’m so glad you talked about diversity in terms of the diversity of perspective it brings. When you talked about the woman who’s from Wayfair bringing her onto a life science company, I think sometimes in thinking about board composition, companies and management and boards miss the fact that diversity means diversity in a lot of different respects, and the more diversity you can bring together, the more likely you are to identify opportunities, to identify risk and to understand how to manage both, so thanks so much for [00:27:00] saying that.

I do want to go back to Extraordinary Women on Boards, because if you don’t know them, they’re one of the premier groups, 700 to 800 women all on boards

Steve: hmm

Whos

Joe: primary goal is to make themselves better board members. It’s just such a great approach. Any chance we can give them a shout out, we’d like to do it.

Steve: Let’s do it. I agree.

Joe: Yeah. Let’s talk a little bit about a company you’re involved with called Arkayli.

Steve: Yeah. This is a new startup. I have a sweet spot at my heart for academic entrepreneurs who see an unmet need, in this case, it’s Beth Drolet from the University of Wisconsin who’s a dermatologist and a neonatologist, and she sees lots and lots of kids born with hemangiomas.

It’s the red uh, tumor-ish spot on a new infant, just born and it happens to tens of thousands of kids. Often they disappear on their own, but she’s identified a way to treat it with a cream, but she didn’t have the wherewithal or the [00:28:00] understanding how to do it, and at a conference, she met some people who were experts in drug formulation and making creams with absorbable medications. It’s an approved drug.

In this case, she needed to understand sort of the finance world, how to make pitch decks and everything else. I helped her recruit a new CEO to the company, and because the company is based in Wisconsin, they’ve had a lot of success raising from local community investors.

Because the earliest stages, especially last year when the investment climate was so poor, really requires people who have emotional connection to the founder or the disease or something like that. In this case, that works very, very well.

But at some point, you do need to go out and look like a grownup company, which is why I insisted that we bring in a real CEO who’s done drug development, a friend named Seth Reno, who’s been through the process, and with him, he brings the gravitas of how do you run real trials, how do you do [00:29:00] all of these things.

This is a nice story because it started with the unmet need and the insight of an investigator, but then the willingness not to have to control it and run it every day, but understanding you need a professional to help you and finding the right mix is critical.

Raza: Steve, you used the term orphan drug. Could you tell our audience what that means and why that’s important for such endeavors with smaller populations of patients?

Steve: Yeah. A number of years ago, Congress passed a law with the Orphan Drug Act that enabled companies to have some exclusive commercial opportunity, an extra seven years if they bring a drug forward, particularly in children, that serves a population of less than 200,000 people. Even without a patent, you could own a particular disease area for a few years.

It really addressed the fact that too many diseases were going un investigated because there was not enough money to be made or there was not enough [00:30:00] opportunity to repurpose an existing drug where a small population, so this 200,000 individuals is the key.

I’ve been involved in a number of companies, including the public company I was CEO of where we called it an orphan first strategy. You have a drug that will work in a very large population, in that case, it was dyslipidemia, your blood level lipids were too high.

But there’s also some orphan indications where people are born with genetic defects that you could actually rapidly recruit; they die at a early age from having these genetic defects and you test your drug in that population. You still need to test it in the typical everyday person, but it allows you to prove safety very quickly and to actually get in even under the market with fewer than a few hundred patients. In some cases for very, very rare diseases like you’re seeing in gene therapy. It could be fewer than 10 patients that are in the trials altogether.

Raza: [00:31:00] I think a lot of the companies have used that strategy of orphan drug first very successfully for getting into various markets.

Steve: Yeah, the FDA is a little bit suspicious of it in some cases because how you define an orphan indicates, in some cases, it would be a common disease, but the patients hadn’t responded to the 15 previous medications. Anyway, it’s been gamified a little bit, and I think we’re beyond that for the most part. The FDA has figured that.

Joe: Let’s talk about some of the boards on which you’re currently serving. I think there are a few of them. Tell us about a couple or a few of them that you’re actively involved in and a little bit about how they run.

Steve: Okay. They come in different flavors. The earlier ones are the collegial ones where everybody knows everybody and you talk all the time and there’s very few formal board meetings with board minutes and resolutions and everything else, and that’s okay as long as you have minutes that come along and you actually show a track record.

If you don’t have that, you won’t get the extra round of investment. You have to [00:32:00] pay attention to governance. Governance is very, very important. But the nice part about that style is it’s an open line of communication. In Alexis Bio, we’re very casual, which is a pig transplant company; they’re transplanting skin to humans, and they’ve been through phase two trials. I’m on the board there, using transgenic pigs. There, we celebrate every patient with just a phone call because this is an open label trial. You know the patient is getting it and it’s had phenomenal results and so it really builds cohesiveness to have this kind of open dialogue.

At the same time, when we’re having challenges, whether it’s an FDA or manufacturing or anything that goes on financing, we have an open dialogue, but we do convene regular board meetings.

The other style is the CEO never wants to talk to anybody, not because they have something to hide, but because they’re just an introvert who loves the science and, “Oh, gee,, I’ll get back to you later,” and I’ve been in a number of those companies. There, [00:33:00] you have to have regularly-scheduled board meetings, or there would be no documenting of progress, of failures, and more importantly, documenting of hirings and firings and all the things that make a company grow into a sustainable and exciting business rather than just meandering along fine until you raise your next round.

I can live in either one, and I’m very proactive on governance. I learned my governance from Tommy Thompson, the former governor and the former head of HHS. We were on a board together, and he knew every rule there was about governance within a board setting and whose turn it was to nominate and everything else.

I talked to him a couple weeks ago. He’s a wonderful man, and when you have structure, it’s actually beneficial.

Raza: Steve, we love all of our children equally, but I do relate with the passionate scientific founder /CEO, dynamic with the board and them not thinking as much, so I think scheduling, not necessarily forcing, but having that [00:34:00] cadence is really important.

Steve: The one thing I would advise all CEOs to do is, before every board meeting, one, two weeks beforehand, call each board member and say, “What would you like to hear about?”

Raza: Yeah.

Steve: And you’re probably going to talk about it anyway, that simple phone call is a key message, “We’re listening to you. You talk to us about what you want,” and you don’t need to do more than that because otherwise someone shows up and they said, “Oh, 90% of the meeting was wasted because I wanted you to talk only about the clinical trial development”.

Raza: Yeah.

Joe: Great way to get engagement from your board members. Absolutely a great idea. I agree. Let’s talk about something else. I know you’ve taught a number of classes at Harvard and a couple of them really kind of caught my eye and I thought it was kind of be interesting to give a taste of how you operate in the classroom.

Steve: I have formal classroom lectures I give and I have informal, meaning it’s by invitation. The more formal ones actually I have fun with. [00:35:00] When I was at Harvard Med, there was one called You and Your Urine, where the students had to come to class and then they had to pee into a vial.

We’d measure everything about it. We’d measure what the pH was and the salt in it, the water, and then I’d make them all drink a solution. It was either a sugar or it was water, or it was salt water, and it was always Mikey we will drink the salt water. One year we had one of the former linemen from the Washington Redskins, who was huge, he had to drink like a liter and a half of the salt, and three to five minutes later, everybody goes to the bathroom and comes back and what they learn is the salt water says in your body 24 hours, and so he comes back with no urine and the young woman comes back with like a half a liter after drinking all the water she drank.

You got to have a little fun while educating. I guarantee the students remember that lecture. But I also taught a class on how to get out of school fast, graduate school.

Joe: Was that a popular class?

Steve: It was very popular, no faculty [00:36:00] allowed, and I have very specific rules. I’ve even given that lecture on chair lists. I’ve bumped in to people from all over who are in graduate school, and hopefully not in their last year, because that is too late and they get upset with all the mistakes they made, but that’s a good one.

I also teach now a class in bioethics, do you own your body. which is interesting because I’m teaching that at Framingham State which has a geographical distribution of students from around the world that show up for a graduate program, and I love that because the ethical dilemmas we deal with can be viewed very differently in India or Africa or the Middle East, and how you actually deal with the transplant of organs or suicide or all of these things is so intriguing.

But anyway, it brings an interesting dimension to the life sciences because you are on the frontline changing the way the world is going to operate and it’s important.

Raza: In the life science world, then, Steve, these companies not only don’t have revenue, but sometimes they [00:37:00] actually go public and do an IPO. What is the board to do for that? What is the board’s role for IPO in such companies?

Steve: Yeah, there are several roles. In many cases you’ll have a board member who’s from a crossover fund like RA Capital or ComREIT or Deerfield, and I did a couple of crossover deals myself, where you invest right before they go public. You jump on the board and then you help with the S-1 and the filings and everything else.

If you’re a crossover investor, they know all the public investors and they sort of are on the bellweather of whether it’s a good deal, so ideally a board member helps recruit a crossover investor to be an investor in the round before the IPO.

That’s a very strategic thing that the board can do because it’s not something the CEO is necessarily going to understand. For a therapeutics company, it’s very much about the story, the narrative, why is this a good investment. Because until the clinical trial completes the next one, you don’t really know, and so it has to be a narrative [00:38:00] I was talking about before. It is not just the nuts and bolts of the science. It’s about this is going to be a blockbuster because it’s a once a month injectable, not twice a week.

Raza: Yeah.

Steve: That is bullet point number one, gang. I know you have love all your science, but it’s these kinds of understandings that really trigger the public. Both retail and institutional investors want to do it.

At the end of the day though, the decision about when to go public, whether to actually pull the string and do it to what the pricing is, that you need experience with. The bankers are in the business of getting the transaction done, but if it’s a bad transaction, you’ll never get out from under it.

Raza: I suppose the board also has to look at the timing, is the IPO window open or not, and if it’s not, what to do.

Steve: I was on a board of a company that was planning to go public, I did the crossover, and we were with the banker in early May and they [00:39:00] said, “We go to postpone, it’s not going to work this week,” and I said, “What date are you going to postpone to?” And they gave us the date in June, and I said, “Well, that’s the date they vote for Brexit.” “Ah, that’s irrelevant. We don’t care about Brexit.”

Needless to say, it was the day after, it didn’t go well, so the IPO was canceled. We did get public a few months later, but the bank was so clueless because for them it’s about the transaction at any price, because they force you to take the lower price if it’s not timed right, and if it doesn’t feel right in the mind of a board member, they have to act, “Let’s find another approach.”

Joe: Hmm. Great.

Raza: critical role for the board.

Steve: Absolutely. Absolutely.

Joe: Steve, it’s been great speaking with you today. Thank you so much for joining us.

Steve: This has been a joy. I enjoy this show because you’re really sharing the stories and the experience that matter to people in young companies and early and even seasoned veterans, there’s a lot to learn.

Joe: Thank you. And thank you all for [00:40:00] listening to On Boards with our guests, Steve Gullans.

Raza: Please visit our website at OnBoardsPodcast.com. That’s OnBoardsPodcast.com. We’d love to hear your comments, suggestions, and feedback. And if you’re not already a subscriber, please be sure to subscribe at Apple Podcast, Spotify, or wherever you get your podcast, and remember to leave us a five-star review.

Joe: Please stay safe and take care of yourselves, your families, and your communities as best you can. We hope you’ll tune in for the next episode of On Boards. Thank you.