Lucy Shapiro

Informational Interview: November 2018

Dr. Lucy Shapiro is a professor of Developmental Biology at the Stanford University School of Medicine. She is the Ludwig Professor of Cancer Research and the Director of the Beckman Center for Molecular and Genetic Medicine. Her work in understanding the basis of stem cell function and generation of biological diversity led to her receiving the 2011 National Medal of Science from then-President Barack Obama.

In 2002, Dr. Shapiro founded Anacor Pharmaceuticals with chemist Stephen Benkovic of Pennsylvania State University to design and develop new types of antibiotics and antifungals. The company focused on developing small-molecule therapeutics derived from its boron chemistry platform and developed two lead products: one for fungal infections and one for atopic dermatitis. Anacor Pharmaceuticals was acquired by Pfizer in May 2016.

What was your role in founding Anacor?

Back in 1999, when we first decided to do this, I had become very concerned by watching big pharma try to design new antibiotics, and I thought that they were not doing well. I thought, by golly, I know how to do that. I knew that it was all chemistry, so I got in touch with Steve. I asked, "Why don't we put in a proposal to DARPA (Defense Advanced Research Projects Agency)?" Based on having practically nothing but a vision and a plan, we applied to get a beginning grant to design new antibiotics. Because Steve and I were both fairly well known in our respective fields, they took a flier and gave us sufficient research funds to initiate the needed chemistry.

Our big idea was that there were just a limited number of targets in bacteria, and everybody was looking at existing libraries and biologicals. We decided that we would do something completely different and make a unique chemical library. We went to the periodic table, and saw that boron was right below carbon, and we said, "Why don't we make a library with boron at the active site and not carbon?" And that turned out to be an absolute winner. Steve made a whole bunch of small molecules, and he sent them to me. I tested their ability to kill an array of bacterial and fungal pathogens, as well as HeLa cells. We got excellent and specific activity against the pathogens, while the human cells were unaffected. We did the critical experiment: Steve replaced boron with carbon, and we lost all activity. We hit a homerun. We now had a novel and effective boron-based chemical library. We immediately hired a lawyer and got intellectual property on our library. The patents, of course, were owned by both Stanford and Penn State. We both ultimately put in our own money to get the exclusive license to our patents.

Armed with the fact that we had an exciting library, we had the patents, and we had the exclusive license, the first thing we did was to go to the government. At that time, US Homeland Security was desperate to get new antibiotics to make sure that biological weapons would not be a problem. One of our compounds was highly effective against Anthrax. Homeland Security gave us enough money to start a company with the idea that we would design antibiotics for the country to protect against any biological weaponry. We incorporated Anacor. We hired quite a good CEO, and that was critical. Not that he knew much about chemistry or antibiotics, but he was a smart businessman and a quick learner. It's very important that you have a CEO who is totally dedicated to making a success of your company. So we incorporated, and we got a small place to work in Palo Alto, CA. Anacor Pharmaceuticals, Inc was born.

Early on, I decided that I did not want to have a company that was totally funded by the government, and I wanted drugs that would be available to everybody. We even gave the government back some of their money, and then we went to venture capitalists (VCs). When you first go to VCs, you present what's called the 'dog and pony show', which means you go to their place, you present your vision, and hope that they'll give you money so you can take your company forward. You wind up talking to a bunch of these guys, barely paying attention to you, and being quite rude. Steve and I did a whole bunch of these 'dog and pony shows'. One VC said, "Alright, we'll give you a few million." That was a well-known VC. As soon as all these other VCs learned that one VC was interested in us, they became more interested. We now had money. We had a library that was exciting. We had lead compounds. And we opened a laboratory, and we just went forward. It took us 16 years to go from that beginning to ultimately selling Anacor to Pfizer with two highly effective drugs, one already on the market and another about to go on the market.

It wasn't easy. I don't want to give the impression that those 16 years were a straight line. We would periodically come very close to running out of money and we had to go through many rounds of funding. In the Bay Area, in the biotech industry, 90% of new companies fail. Steve and I were incredibly fortunate, but it was quite a roller coaster.

Day-to-day, what was your role in Anacor, and how did you balance that with running your lab at Stanford?

What I had observed in the companies that didn't make it, people generally make two mistakes. One, the academics think that they can do anything (which isn't true) so they take a leave of absence from their academic positions to become CEO or some other line position in the company. Almost invariably, that led to disaster. I knew that I was never going to leave my research lab Stanford, and I would never take a job in my company. But, I would maintain very close contact by both sitting on the board of directors, and being on the scientific advisory board. Second, when the academic scientist does not take a managerial job in the company, but gives over the scientific guidance to other people, it never works. We had to make sure the company never lost our vision. I truly believe that the reason the company succeeded is because both Steve and I stayed very involved in Anacor from beginning to end. As far as balancing my academic work and overseeing Anacor, it helped that Anacor was right here in Palo Alto. I'm also very good at managing my time. I would estimate that 75% of my time was in my lab here at Stanford. Maybe 10% of my time went to the company, but that varied with what was happening in the company.

Anacor's lead projects were compounds targeted for fungal infections and atopic dermatitis. These diseases are quite different from each other. What led you to these projects? How did you decide which projects were worth pursuing?

I'll tell you an interesting story. One of our compounds was pretty effective at killing strep infections and had a very clean tox profile. We did a phase 2 trial on the skin of children who had eczema to see if it would control a super infection by strep. We found that it was OK as an antibiotic, but it wasn't great. The doctors running the trials started calling us, saying that our compound, administered as a topical, was controlling eczema inflammation and itching. So we went to Anacor, called a meeting, and we agreed that we had to curtail other projects and find out the mechanism of action for why this compound was stopping the inflammation of atopic dermatitis as effectively as steroids." We discovered that this new compound was inhibiting PDE4. That's a phosphodiesterase that impacts the cytokine cascade. We figured out how this compound, which we thought would be an antibiotic, was much better at bringing down the inflammation of eczema. It was easy to make, safe, and effective. And that's what ultimately led us to be able to sell the company, because it was a great drug.

And there's a message in there. When something serendipitous happens, you act on it. Not everybody would have said, "OK stop, do something completely different because I think this is exciting." And because Steve and I never stopped being in the middle of everything at Anacor, we didn't leave it up to other people to decide what to do. We decided what to do. That's why it was so critical that I was there. We, along with our CEO, said that having a replacement for a steroid is as important as a new antibiotic, and that turned out to be true.
I hope that is also a lesson in serendipity. If you, in your own judgement, think it's worth it, then you push your agenda.

What would you say is the most important thing you learned about founding a company?

Focus. Persistence. Don't give up. Pay attention to even the smallest details. Make sure that the people in your company don't veer off focus. I found that I had to have a pretty strong hand in the direction that things were moving in. A lot of my willpower went into making it work.

What advice would you give to a graduate student or postdoc interested in starting a biotech company?

I think you have to wait until you know what you're doing. Steve and I had lots of experience in the biotech and big pharma world, so we weren't totally neophytes. I had experience sitting on corporate boards, and Steve and I had a lot of experience being scientific consultants. I even took courses at Stanford Law School in how to read a business plan, how to sit on Board committees, how to really understand the money flow in biotech. Yes, I was successful, but only because I knew what I was doing. If you go in too soon, you'll not be very effective. You'll just do what the VCs tell you to do, and your best interest is not always in sync with their best interest. One thing you could do is become an expert in your field, so you can be a consultant or sit on an advisory committee, learn how it all works, and enter that way. It's very hard to come in when you don't know what you're doing.