>> It appears that Dr. William Haseltine, the founder and chairman of Human Genome Sciences, Inc., has decided to retire from the Maryland biotech company that he has headed for the last dozen years, and is now preparing to devote himself to the pursuit of what opportunities may await him in the non-profit sector.
What I don't get is why, since opportunities galore still await him at Human Genome, where the good Doc had been doing a bang-up job of not making a profit for more than an entire decade now.
I know of no one who keeps records of these sorts of things. But if someone were to put together a list of Wall Street's all-time CEO money losers, Doc Haseltine would be right up there near the top. And if we were to base the list on bottom-line losses as a multiple of top-line revenues, our boy would definitely stand at the pinnacle of Wall Street renown: Doc Haseltine, Red Ink Superstar.
Can't quite place his name? That's probably because the good Doc has slipped annoyingly below the fold as a newsmaker in recent years. But back in the bull market 1990s, when you could take a ham sandwich to market as a Wall Street IPO, Doc Haseltine's was a name to contend with.
Back in those days, Doc Haseltine (he's got a PhD, not a medical degree) had everything going for him. For starters, he had just landed himself a trophy wife, Gale Hayman, a former ballerina and the twice-divorced ex-wife of Fred Hayman, the Beverly Hills retailer who created Giorgio perfume.
Thus adorned with an arm-piece passport to the other side of society's velvet rope, the doc almost immediately morphed from "medical researcher" (how he was described in a New York Times story about his 1991 wedding) into "emerging star in the AIDS research field" (the Boston Globe five months later), and was soon turning up in the gossips among the boldfaced names of the period.
But Doc Haseltine really came into his own with the launch of Human Genome Sciences, Inc., which went public at $14 a share in December of 1993, just as biotech fever was beginning to sweep through Wall Street.
The basic idea behind the company was that you could make a buck by creating a database of all genetic information in the human body (this would be the so-called "genome") and then licensing out access to the information to pharmaceutical companies interested in developing gene-specific drugs of various sorts.
Now out here at Curmudgeonly Arms, where any investment proposal that does not bring an instant hurrah from our perpetually scowling and pain-wracked manservant, Igor, is discarded out-of-hand, we began publicly not liking Human Genome Sciences from the moment we first heard of the company - which would be early in 1996.
For one thing, researchers at various non-profit institutes and in the government were doing pretty much the same thing as Human Genome was doing at that point, and giving the information away for free to anyone asking for it. And out here at Curmudgeonly Arms, where no one is very bright, we thus tend to stick with the easy questions, like who's going to pay for something when he can get it for free?
But Doc Haseltine didn't let problems like that slow him down, and before you knew it he was turning up in magazine articles as poster child for biotechnology's ultimate promise of them all: eternal life - or at least, let us say, living to one hundred-plus through the wonders of genomics research.
Is it thus any wonder that by the summer of 2000, this $14 stock had surged to a split-adjusted high of $289, even as Doc Haseltine had become the "gene genie" of Wall Street? When an analyst at Robertson Stephens predicted a year-ahead value of $6 billion to $8 billion for the company in 2001, its stock jumped 15% in a single day.
There was just one problem: The company wasn't making any money. In fact, the only revenue it was collecting at all came from a couple of pharmaceutical companies - most notably, GlaxoSmithKline - from collaborative research agreements that wound up lapsing and were not renewed.
One thus finds, during the Doc's twelve years at the helm, that Human Genome took in $230.9 million of revenues while spending $1.27 billion to get it. Folks, that's an upside-down ratio of more than $5 of costs for every one dollar of revenues, and to have achieved it not just for a year or two at a time but for more than an entire decade is, I am sure, something of a record.
It is not easy to keep raising money, year after year, on the promise of spending it to come up with a cure for death. In fact, until Doc Haseltine came along, one would have thought it impossible. But in sum and substance, that is what Doc Haseltine has done.
When he ran out of string with one spiel, he switched to another. When the last of the pharmaceutical companies that had signed up to collaborate with Human Genome Sciences failed to renew its contracts in the summer of 2001, Doc Haseltine somehow made this sound like great news by claiming that the company thus wouldn't have to share its database research with anyone and could thus now begin developing new drugs all by itself. [I listened to the CC held to discuss this “transition” and remember thinking it was pretty good spin.]
Meanwhile, the Doc himself made a bundle. Since the launch of the company in 1992, he has taken home cash compensation of more than $6 million, as well as $26.8 million more from the sale of stock options, plus whatever else he was able to collect from his stock holdings in the company, which at their peak in the summer of 2000 were worth something approaching $400 million.
All in all, the math works out to roughly $1 of cash to the Doc for every $27 of shareholders' money he's been able to lose during his years in the corner office. And with roughly $980 million of cash still showing on the company's balance sheet at year-end 2003, the Doc could probably have kept this up until at least 2007 at the current burn rate, putting another $36 million in his pocket along the way.
Alas, it now appears he's not going to try, and faced with the staggering costs of trying to develop, test and market all the various gene-based secrets in Human Genome's database, the company last week announced that it was laying off 20% of its 1,000-employee workforce, as well as scrapping development plans for all but five of the experimental drugs in its pipeline.
As for the Doc, well, he let it be known through a prepared press statement that it was with a "heavy heart" that he had decided to retire - though his heart was not so heavy that he would be retiring 100% from the business of not earning a profit.
Thus, from the man who raised and spent more than $1.2 billion in an effort to sell what no one was willing to buy, comes the following goodbye: "I intend to continue both my scientific and not-for-profit activities[LOL] and to use my skills and knowledge for the betterment of human health in both the developed and developing world."
And from Curmudgeonly Arms, where your humble correspondent and his shingles-wracked manservant, Igor, stand vigilant on your behalf, like the two-headed guard dogs of Hell, comes this warning: Next bull market and he'll be back. To the American El Dorado they always return. Grrr. <<
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