Pharm Exec's 2013 Emerging Pharma Leaders - Pharmaceutical Executive


Pharm Exec's 2013 Emerging Pharma Leaders

Pharmaceutical Executive

Beating the Keeper — Michael Babich, InSys Therapeutics

Michael Babich, President and CEO, Insys Therapeutics
Michael Babich was four years into a career at a large bank when he began "running the money" for serial investor and entrepreneur Dr. John Kapoor in 2001. Kapoor's venture capital firm EJ Financial Enterprises was focusing investment in early-stage and start-up companies in healthcare; one was INSYS Pharma, a company developing and commercializing supportive care products. Babich found the work of INSYS inspiring; he took an MBA (majoring in Management and Entrepreneurship) at Northwestern University's Kellogg School and turned a professional corner. By 2007, he was INSYS's Chief Operating Officer.

A life change accompanied the career change. Sick of the Chicago winters, he and Kapoor (who remains INSYS's Executive Chairman) decided to up sticks and relocate the company to Arizona. Since then Babich has risen to CEO of what is now INSYS Therapeutics, proving himself something of a whiz as a leader in the specialty pharma space, which, he points out, "is a lot more fun than finance ever was."

But it's not been all fun and games. INSYS faced considerable hurdles in the early years. Around 2009, says Babich, with the recession at its height, the company was still in the middle of clinical trials and needed another $30 million. At that point he was asking himself, "Why did we come here?" But Babich also found the hardships invigorating, and wouldn't swap the days of small-company struggling for the slow grind of Big Pharma. "The most exciting part was your back was against the wall every single day," he says. "We couldn't afford to fly under the radar, to screw it up. We had one product, one shot on goal."

Luckily, they scored, not least through Babich's skill at responding innovatively to mounting pressure. When, for example, clinical trials recruitment was lagging, he hired sales reps to jump-start enrollment. And he has been able to contain costs while simultaneously growing the company to its present size of over 130 employees and bring fundamental operations in-house. Effectively, he's implemented the much sought after "low-cost/high-profit" model. As a result, INSYS is now in a position to take a few more shots on goal.

In the last two years Babich has led the products Subsys, a sublingual fentanyl spray for breakthrough cancer pain, and Dronabinol, a second-line treatment for chemotherapy-induced nausea and vomiting, through approval and commercialization. The company has taken 20 percent market share from its main competitor, Teva, in just over 12 months, this year doing "just shy of $10 million in sales in the first quarter."

He may leave finance largely to the CFO these days, but Babich believes strongly in a cost structure that fits the model. "You can't go out and pay Big Pharma salaries across the board, even at the executive level," he says. Instead, INSYS employees are incentivized by stock options and bonuses, something that really helped during the "tough times."

For Babich, those tough times were the making of INSYS, and he likes all employees to acknowledge "the blood, sweat and tears that went into creating and building the company" from scratch. Some of INSYS's most successful recruits are those who originally worked for small companies that were bought out by big companies. "The most difficult part of my job is hiring," says Babich. "Finding the right person who understands that we are going to do things very differently from Big Pharma."

That's not to say his ambitions stop at 130 employees. Babich thinks INSYS could become "the premier supportive care company in the specialty pharma space." The company has been making acquisitions, and there's a second NDA filing coming up. He's also promising further investment in R&D. "We brought Subsys to the market from idea all the way through R&D," he says. "We now have about 20 PhDs at our corporate office working on new formulations of differentiated products, so we anticipate continued growth. Within the next couple of years, I see us being a company with about 400-500 employees."

The one thing you may be left asking is—the 300-plus days of sunshine per annum notwithstanding—why Arizona? Babich says the Grand Canyon State is growing fast, and being based there has never hindered INSYS. Indeed, it's been an advantage: "We're still a novelty here—the only commercial-stage pharmaceutical company in the Phoenix area—but that's great for us."

While he gears up to lead what should be a viable mid-size in the next few years, Babich clearly already enjoys being a big fish in a small pond.

—Julian Upton


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