A Loud and Proud Outsider
Though Baldino is CEO and chairman—and pulled in $6.5 million in pay in 2005—he is kept on a short leash these days when meeting
the press. When I sit down with him in his executive office, two suits from Corporate Communications are at his elbow, ready
to spring. I put my tape recorder on the glass table; they produce their own digital model. Clearly, I will be served no vintage
Baldino—no I-can't-believe-he-said-that! comments—like when he admitted to having his own prescription for Provigil to a New York Times reporter in 2002, who was doing a story about the stimulant's increasingly controversial off-label popularity.
Blame it on his Neapolitan blood. A second-generation Italian-American, Baldino has always been a Philly boy. He went to Muhlenberg
College on scholarship, got his doctorate in pharmacology at Temple, and began screening neurobiology chemicals at Dupont—where
he watched in wonder as Genentech cloned its first gene and gave birth to an industry. "DuPont taught me a lot about how to
do things—and how not to do things," Baldino recalls. "As I was tracking Genentech, Amgen, and all the other examples, I finally
said, 'I think I can do that. And I think science needs a new direction, instead of the same old strategy.'"
In 1987, Baldino and two other DuPont scientists, jumped ship to start a CNS venture with $3 million from investors. But between
the challenge of raising money after the October stock-market crash and the lessons he had learned from industry watching,
Baldino knew enough not to drink the biotech boom-or-bust Kool-Aid. "What happened in biotech is that we became a little full
of ourselves with the 'If you can clone it, it should work' attitude," he says. "But the industry started doing things that
weren't proven to work, trying to interfere with the course of a disease in ways that had never been done. By 1987 a lot of
companies blew up. I said, 'We're not going to do that.' Even how we discovered drugs and screened compounds was one of mitigated
risk."
Cephalon began doing deals—another way of balancing risk—and has never looked back. After sinking $130 million into Myotrophin
(mecasermin), a recombinant insulin-like growth factor product to treat amyotrophic lateral sclerosis (ALS), the young company
was in a deep hole. So Baldino turned on the cash faucet by signing a co-development agreement for new Alzheimer's drugs with
Schering-Plough. In 1991, Cephalon went public, raising another $55 million. A series of tactically brilliant deals followed,
with Cephalon co-developing here and co-marketing there, licensing and acquiring, diversifying within and finally outside
its specialty. What began as a way to stay afloat while its R&D eggs hatched quickly doubled as the point of the exercise.
"Wall Street likes to put companies in categories: Big Pharma, specialty pharma, biotech," Baldino says. "Well, we're about
as biotech as it can be. But because we developed a strategy of mitigating risk and make a lot of money, we're more like specialty
pharma. But because we're global, we're more like Big Pharma. But what we're not is any one of those things. We're different." Cephalon's outsider status is clearly a point of well-earned pride.
"It's very difficult—and expensive—for a small company to pursue multiple products at the same time, especially in such a
high-risk field," says Harvard Business School professor Gary Pisano, the author of Science Business: The Promise, the Reality, and the Future of Biotech. "I give Cephalon a lot of credit for recognizing the need to do that, managing so many different partnerships, and executing
it all so successfully."
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