Beating the Keeper — Michael Babich, 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.
Michael Babich, President and CEO, Insys
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.