David: Mark Levin now joins us, the CEO of Millennium Pharmaceuticals, a stock that's up in the last two years about 750% against a market up less than 100%. Mark has been CEO of the company since November 1994. He was a partner at Mayfield Fund, a venture capital firm, before that, and the founding chief executive officer of several such outfits: Cell Genesys, CytoTherapeutics, Tularik and Focal are all on Mark Levin's resume. He holds an MS in chemical and biomedical engineering from Washington University. And before we bring Mark on, Tom, I want to ask you: Did you ever take any biomedical engineering classes there at Brown University?
Tom: I think I walked by a room where they were studying chemical and biomedical engineering, and I poked my head in and said, "What the heck am I doing here?" and turned around and went back to the campus bar.
David: Thank you, Tom, for that, and let's welcome Mark aboard. Mark, great to have you on the show!
Levin: Thanks, David.
David: Picking right up off of Tom's story, if someone were poking their head in the room of your company, what would they see? How would you explain what Millennium Pharmaceuticals does to our Uncle Fred?
Levin: Well, what Uncle Fred would see is a lot of people identifying genes and targets that are involved in the cause or pathway of all major human diseases. We're working in cancer, in cardiovascular, in schizophrenia, depression, asthma, obesity, essentially every major disease, trying to identify the cause, and to develop therapeutic products and predictive products.
David: That's a pretty good overview to what Millennium does, and what some other companies today with this technology are trying to do. Let me ask you, a major part once we develop a solution, is deploying that solution, and gene therapy seems the new buzz phrase there. It's a phrase for something that doesn't exist in quite a thoroughgoingly successful enough way yet and I want to hear from you about genetic therapy, gene therapy.
Levin: Well, I think if we look at all the therapies that are delivered today, most of the therapies are what are called small molecule therapies. These are small organic molecules that really compose the entire pharmaceutical industry and it's a hundred billion dollar business in the States today. Then there are the large molecules, the proteins, the Amgens and the Genentechs. That's somewhere between 15 and 20 billion. Gene therapy products today are really zero. These are technologies in development today. They're very exciting, but for really broad usage, it's going to certainly take many years before they come to the market across many different areas. But an exciting technology and should be important in the future.
David: Are there any public companies that you think have a good gene therapy answer or some company to watch there?
Levin: Well, none that I would recommend personally. I think there's lots of different companies in the area. There's a broad array of different technologies in what are called vectors, different types of genes that are used to deliver the important gene that you're trying to get into the system. And so I think it's just a field where you're going to have to look at all these different technologies, all these vectors, all the different delivery systems over the next few years to really identify the best company. It's moving along quickly, but it's going to take a few years before it's really effective across lots of different diseases.
Tom: Mark, I'm wondering what you think now about the latest "controversy" in the world of biotechnology between private sector developments and the government's investments and potential partnerships with some of the pharmaceutical companies, to keep a lot of this information free so that they can develop drugs for the human genome. What do you think about what came out from the White House this week, and how should it affect us as investors in this industry?
Levin: Well, I think there was a lot of misunderstanding last week with what Clinton and Blair said. Because what they actually said were things that certainly are very supportive to what we're doing at Millennium, and actually, it's not really anything different than what's been said in the past. They mentioned two key points. One was that all raw sequence data, or the raw code that's being identified in the public sector today, should be made available to everybody. And that actually is already happening. And they also said, and they supported very strongly, that gene-based inventions should continue to be supported, and should be an important part of the pharmaceutical and biotech industry. And that again is something that's currently in place and again another supportive statement. So I think most of it was a misunderstanding.
I think one of the interesting things to think about is, you think about this whole genomic revolution, it is really creating lots of different companies; lots of different types of companies. And I think that's one of the things that may be confusing to everybody. What comes out of this genomic information are really five major companies from my standpoint. One type are database companies; as you identify all this information, you end up with databases, and you can sell databases. There are tool companies; these are the informatic tool companies or the chip companies that are selling in the entire industry. There are diagnostic companies that are finding the diagnostic marker for a particular disease. There are therapeutic companies that are working on a particular disease and bringing molecules to the marketplace. And then there's Millennium. It's the biopharmaceutical company of the future which is really working on personalized medicine for all diseases, and revolutionizing the productivity in the industry by a platform from gene to patient.
David: OK, a very good overview. Let's fix now on Millennium a little bit. Jim from our Motley Fool community asks several questions. We want to just flip these your way. "How long before Millennium makes a profit?" he says.
Levin: Well, that's going to be in the next several years. We're a company that's about seven years old. We broke even plus or minus for the first seven years. Over the next few years we're going to be investing quite a bit more money in our clinical area. We've got two products coming out on the market this year in the cancer area; we've got six molecules in human clinical trials, with hundreds of molecules in basic research today. And so over the next few years we're going to continue to invest in this pipeline. And the company should turn profitable in the next several years.
David: Is the FDA quick enough?
Levin: You know that's always something that we all jump in and have a tendency to criticize. I would say on average they could do better certainly in some areas. But it is an agency that's protecting the public. Safety is its first concern; that's what the Phase I early trials are about. And the later trials are certainly typically more focused on efficacy. There are ways, certainly, to improve what's going on. They're working on computerization, better interfaces with biotech and pharma through funding, so I think they're beginning to do a much better job. But there's always room for improvement.
David: Millennium recently struck a deal with Abgenix, and you're going to have access to their XenoMouse technology for the creation of fully human antibodies. For those of us not familiar with this technology, can you unpack that and explain the significance of the Abgenix deal?
Levin: Millennium actually works very heavily in the antibody area. We have three molecules in clinical trials on antibodies, and dozens of molecules now in basic research. Antibodies are molecules that were actually, the concept of antibodies as products were developed almost twenty years ago, but it's not until the last couple of years that they've become an idea that's really bringing products to the market. There'll be well over a billion dollars in products on the market this year. The reason they haven't been successful is because antibodies in the past have been mouse antibodies. These are proteins that would actually go into the body and essentially attack a particular molecule on the surface of a cell, and essentially stop that from functioning. But since they were mouse antibodies, all of us humans would have reactions to that mouse antibody, and you couldn't deliver it for a long time. Abgenix and Millennium are developing human antibodies with our human mouse, a mouse which generates human antibodies, so we can now inject human antibodies where you will not get that kind of reaction.
David: When we started hearing about transgenic genetic engineering, moving genes from one species to another, it reminds me of one of those companies that out there today has a lot of publicity for what it's doing and that's Monsanto. A lot of bad publicity, particularly in Europe, for genetically modified food. Do you think Monsanto is getting a bum rap?
Levin: I think they have. Monsanto is certainly a partner of ours, we worked with them for several years and they really had an outstanding concept of bringing biotechnology, pharmaceutical, and the whole ag area together, and revolutionizing this with the genomics revolution. I think what happened was, although the vision was outstanding, what happened from a corporate communications standpoint, especially in Europe, was that people actually reacted negatively to it, got a little ahead of themselves. And the best thing to do for the next several years, of course, is to get people back on board, and it should continue to be an important way to feed the world for the future.
David: What's it like to be the CEO of a company whose stock goes up 750% over the course of two years? Does it end up controlling your thinking a little bit too much? And how frequently do you click in and see your company's stock price during a given day?
Levin: It's certainly been an exciting couple of years, that's for sure. The first couple of years that we were public, we didn't go up anywhere near that much. Over the last year or so, it doesn't really dominate what we do here. What makes it important to us is since the value of the company has gone up, it allows us to be much stronger and our pharmaceutical partners it allows us to acquire companies, acquire products, it allows us to raise money at much higher valuations. And that's really what's driven us with this higher valuation.
Tom: OK, Mark, closing question, payoff question, about education, investor education. It's a two-part question, seemingly unrelated, but I think related. One is very personal. You have an MS in chemical and biomedical engineering. If I were to walk into a classroom, and take a class right now in chemical and biomedical engineering, as a formerly "B" student in college, how do you think I'd do in that class? And then more importantly, how can an investor learn about biotechnology, inform themselves and be in a position to invest in an industry that holds so much promise with the knowledge to make smart decisions?
Levin: Well the first question is I took biomedical engineering 25 years ago, so I'm not sure I remember much of it. I think if you were going to go into a class today, what you would see and what you would learn would be -- certainly the engineering part of it has to do with the process side. I think where much of the work today is in genetics and molecular biology. And if you were to pursue an education looking forward to this genomics revolution, a big focus certainly would be chemical engineering from the process side, but molecular biology and genetics from the genomics side. What was the second part of the question?
Tom: Just investors getting some information that's really written for the layman to understand how the industry is developing.
Levin: Well, I think an important thing to do is to stay in touch with the major investment banks. They write a lot of very good analytical information on the industry, and by contacting them they can give you overviews of the major companies in the field. I think stay tuned to lots of the major scientific and business journals talking about the companies, and one of the things to do, if you're very excited about companies, you should call them and ask for information and go out and visit them. That's always the best thing. Go meet the management team.
Dave: And can anybody just come by Millennium Pharmaceuticals and hang out with you?
Levin: Well, sure, we could do it in groups. Obviously we couldn't have several million people in here all the time, but we have lots of investors here all the time and we are always anxious to get a chance to talk to the public about what we're doing.
Tom: That's Mark Levin, the CEO of Millennium Pharmaceuticals. Mark, thanks for joining us this weekend and talking about your business, and the marketplace you operate in.
Levin: Thanks for having me.