Fred Frank, co-founder of the biotech industry, is dead at 89
His influence can be found on deals that built biopharma ecosystem
The influence of Fred Frank, one of the biotech sector’s first analysts and investment bankers, can be found on the deals that built the biopharma ecosystem.
Frederick Frank, one of the founding fathers of biotech investment banking who transformed the sector by constructing the first Genentech-Roche deal, passed away Saturday. He was 89.
Frank was one of the industry’s first dedicated drug analysts and investment bankers. After completing his MBA at Stanford University, Frank began his Wall Street career at Smith, Barney and Co. in 1958. Here, Frank would encourage his boss to split up coverage of chemicals and drugs and give him the drug beat.
A decade later, Frank joined Lehman Brothers as a partner — he would eventually become vice chair — putting him on a path that would see him lead more than 200 deals and earn a reputation as a creative dealmaker, mentor and one of the most gentlemanly bankers ever to grace Wall Street.
Most of all, he was known for his visionary dealmaking.
“Fred helped form the infrastructure that today holds together one of the greatest strategic assets of the industrial base of the United States,” Jeremy Levin, CEO of Ovid Therapeutics Inc. (NASDAQ:OVID), and Paul Sekhri, president and CEO of eGenesis Inc., wrote in a tribute published by BioCentury. “His fingerprints and influence are to be found on nearly every major transaction that has led to the ecosystem that today supports the companies that invest in and produce new technologies, medicines, and diagnostics to save lives.”
“Your view after many long successful years on Wall Street was that science was forever young, a fountain of youth for the world.”
In his more than 60 years on Wall Street, Frank led over 125 IPOs and completed more than 75 mergers and acquisitions. The most significant of these deals was the first deal between Genentech Inc. and Roche (SIX:ROG; OTCQX:RHHBY). The deal enabled Genentech to operate independent of Roche, which helped the young biotech build a pipeline that would eventually deliver 70% of Roche’s revenue, said Blackstone’s Nick Simon, who was Genentech’s global head of business and corporate development throughout the 1990s.
“The whole concept behind the initial Roche and Genentech deal, and ultimately the subsequent deals behind it, was to enable this very young, innovative company to go ahead and advance their technologies and deliver a whole series of products going forward,” Simon said.
Levin echoed Simon’s remarks in a video presentation honoring Frank at this year’s Bio Digital conference. “Fred’s role in industry was to catalyze the concept that you could have an innovative relationship between a large pharmaceutical company and a small innovator company.”
The deal would usher in “an intense period of collaboration” between pharmas and biotechs, Levin and Sekhri said in their tribute.
Thirty years on, the deal continues to be productive for both entities and a steady source of new therapies.
Among the many deals he guided to completion, Frank counted the merger that formed Bristol-Myers Squibb (NYSE:BMY) in 1989, the IPO of Applied Biosystems, the merger of Synthélabo and Sanofi (Euronext:SAN; NASDAQ:SNY), and the 2001 deal out-licensing ImClone Systems Inc.’s Erbitux cetuximab to BMS. The last of these had been scheduled to close on Sept. 11, 2001; it became the first biopharma deal to be announced when the markets re-opened that September.
“He was able to be this consigliere to the biotech and pharmaceutical industry because he was the diplomat in the middle. He never wanted all the limelight or credit,” said Kleiner Perkins’ Brook Byers. “You didn’t have to say Fred Frank, you just said, oh, Fred’s on the deal.”
Other clients included CV Therapeutics, which Frank advised in its $1.4 billion 2009 sale to Gilead Sciences Inc. (NASDAQ:GILD); Beijing-based BioDuro LLC, in its 2009 sale to PPD Inc. (NASDAQ:PPD) for an undisclosed amount; and OSI Pharmaceuticals Inc., in its $4 billion takeout by Astellas Pharma Inc. (Tokyo:4503) in 2010.
“Very few of us get to become legends in our own lifetimes, but Fred Frank is a deserving member of that elite club,” said Karen Bernstein, chairman of BioCentury Inc. “Not only was he among the founders of the biopharmaceutical sector, he played a major role in many of the premier partnerships and mergers in the industry. He was also one of the geniuses behind the creation of many of the modern funding vehicles that made it possible to raise the amounts of money required for this capital-intensive, high-risk endeavor.”
Jane Henderson saw Frank’s creativity firsthand. She worked with Frank and his wife, Mary Tanner, at Lehman and is now CFO of Adagio Therapeutics Inc.
“Anybody can do a plain vanilla transaction. What Fred could do was figure out how to get a deal done when it wasn’t easy to do so. And he would come up with these creative structures, whether it was on the financing or M&A side, to provide the optimal solution for completing the deal and creating value,” Henderson said.
Frank famously walked to work at 4 in the morning from Manhattan’s Upper East Side to his office in Lower Manhattan to ensure that he could start his day on European time.
“He built a broad set of high level executive relationships with the European pharmaceutical companies,” Byers said. “That was powerful. And that’s why I wanted to meet him because all our small, new biotech companies wanted to develop partnerships with the European pharma companies. He was the first person to build those bridges.”
‘Chasing the new’
After focusing on a wide range of new business segments early in his career, Frank later gravitated to science, in particular biotech and chemistry.
“You spent your life chasing the new,” Tanner wrote in tribute to her husband. “Your view after many long successful years on Wall Street was that science was forever young, a fountain of youth for the world.”
In June, BIO and the Science History Institute awarded Frank the prestigious Biotechnology Heritage Award, an honor first awarded to George Rathmann in 1999.
“You didn’t have to say Fred Frank, you just said, oh, Fred’s on the deal.”
In the video honoring Frank for receiving the award, former BIO President and CEO Jim Greenwood highlighted Frank’s prescience.
“He saw biotechnology coming before almost anyone else,” Greenwood said. “He knew it was a risky place to invest money, but he chose to take that risk because he knew that it would save lives.”
Frank said in the video that he anticipated how the “life science industry was going to shift very dramatically from the chemical base to the biotechnology base. So, I saw this as an epic change in the life sciences industry.”
Henderson recalled working with Frank on a deal to sell an early antibody company.
“I had pharmaceutical companies say to me, why are you bothering? Antibodies are never going to be a commercial product,” she said. “Fred was always on the cutting edge of where he saw the innovation. He had that vision of where the next wave was going to be.”
Learning from Fred
Frank’s willingness to mentor CEOs and bankers alike has helped build the next generation of leaders in the sector.
“He always made time to help those coming behind him: kind, humble, ever ready to share his wisdom,” Bernstein said.
Henderson was among those counting Frank as a mentor.
“Fred was an amazing mentor. Several generations of investment bankers learned from Fred, the meaning of excellence in corporate finance, the pride of being a trusted and valued client adviser, the passion for scientific innovation and the art of creative dealmaking,” said Henderson.
“Not everyone believed it was an apprenticeship. That was the difference,” she said, speaking of Frank and Tanner. “Not every senior banker will take the time to teach the young bankers what it is they know. And you learn not just from observing and doing, but hearing about their experiences and the war stories. And they took the time and energy to do that and invested in their people.”
“Anybody can do a plain vanilla transaction. What Fred could do was figure out how to get a deal done when it wasn’t easy to do so.”
Said Tanner of her husband: “You never met an entrepreneur you didn’t like and admire, especially those who had failed but had the perseverance to pick themselves up and try again.”
One of those entrepreneurs was a CEO named Sam Waksal, who was encouraged by an investor in his biotech ImClone to reach out to Frank in the mid-1980s.
“What time would you like me there?,” Waksal said he asked Frank. “He said, ‘Come in the morning.’ I said, ‘Sure, what time? Eight o’clock?’ And he said, ‘Come over at 4:30. I'll have been there for a half an hour. I said, ‘Excuse me?’ He said, ‘Come over at 4:30 in the morning.’ I thought to myself, ‘I’m not going to act like that’s a crazy hour.’”
Waksal arrived on time to find Frank on an exercise bike, having just finished his first phone call of the day with someone at Roche.
Frank would become a mentor and lifelong friend to Waksal, who said Frank almost immediately began teaching him about biotech, for instance, showing him how to execute equity financings that would save his company from massive dilutions.
Waksal, who was already working on a new company focused on ROCK inhibitors months before his brother Harlan Waksal agreed to sell a ROCK company Sam founded, Kadmon Holdings Inc. (NYSE:KDMN), to Sanofi (Euronext:SAN; NASDAQ:SNY), said Frank encouraged the serial entrepreneur to keep moving forward upon hearing of Waksal’s plans. “You’ve got to keep doing it forever and forever and forever,” Waksal recalls Frank telling him. “Just keep moving.”
“Fred was somebody unbelievably special. He cared about what he was doing. He cared about deals as if they were deals that changed the world,” said Waksal. “He knew how to get funding for these companies that he felt were going to change the world. And they did.”
Walking on water
Frank was as famed for his dealmaking as he was for his down-to-earth demeanor and sense of humor.
After celebrating Frank’s eighty-ninth birthday on Zoom in May, Daphne Zohar, CEO of PureTech Health plc (LSE:PRTC; NASDAQ:PRTC), said via Twitter that he “pointed out he did a reverse stock split on his age.”
Frank knew that “patience, persistence and passion,” as Levin and Sekhri put it, were needed for biotechs to succeed, and so he was fond of giving young biotechs a step-by-step guide.
“If you want to be a so-called FIPCO — a fully integrated pharmaceutical company — you have to learn the sequence,” Frank explained to Greenwood at the trade organization’s twenty-fifth anniversary. “You need to start off as a JITCO, a just-in-time provider of lead compounds to big pharma. That will bring in enough money, so you become a RITCO, a royalty income trust company. And then you can become a FIPCO. If you don’t follow the sequence from JITCO to RITCO to FIPCO, you become a SHITCO.”
“He saw biotechnology coming before almost anyone else.”
A favorite moment for many of Frank’s friends occurred in October 1990 at The Biotech Meeting at Laguna Niguel, which has taken place annually for the past 33 years.
Byers was handing out the meeting’s annual awards, such as company of the year and best new diagnostic, to various CEOs when he asked Frank to accept the M&A of the year award on behalf of Genentech’s CEO who was unable to attend.
Frank, sitting amid the palm trees across the Ritz Carlton’s pool from Byers, had stood up in his trademark tailored suit and tie when Byers said, “Fred, no need to go around the pool. You walk on water, just come across.” Frank walked right into the pool, making his way across the waist-deep water to stand next to Byers, dripping wet, and receive the award.
“Walking into the pool made people realize that there were these different dimensions all in one person,” said Byers, who recalled Frank’s trademark formal attire and his quiet, measured way of saying things. “There was a whole playful side to him.”
Leonard Schleifer, founder, president and CEO of Regeneron Pharmaceuticals Inc. (NASDAQ:REGN), was one of the executives in attendance.
“Most investment bankers think they walk on water: Fred Frank actually did, and I saw it with my own eyes,” Schleifer said. “A great hero of the biotech industry.”
Path to Wall Street
Frank was born in Salt Lake City, Utah, in 1932, to Simon and Suzanne Frank.
Salt Lake and Portland, Ore., where his mother’s family resided after emigrating to the U.S. from Germany, formed the “nexus” of his early life, Frank told Ira Pastor of ideaXme in an interview in 2020.
Frank told Pastor his father, who was in the men’s retail clothing business and the first in his Russian Jewish family born in the U.S., had a vast collection of Fortune magazines that he loved to read. In an issue from 1932 he stumbled on an article on East Coast prep schools, and though he’d never heard of one before, he asked his parents if he could attend.
Soon he was on a train by himself heading to the Hotchkiss School in Lakeville, Conn. After graduating from Hotchkiss in 1950, he headed to Yale University and then spent two years in the U.S. Army in Paris.
“Fortune magazine clearly changed my life,” Frank told Pastor. His graduate studies at Stanford’s business school would help cut the trail to Wall Street.
“The two of them together could get any deal done.”
It was on Wall Street that he made lifelong friends, such as fellow banker Sandy Robertson, with whom he was a training partner at Smith Barney.
“You knew Fred was special even as a trainee,” Robertson said. “One of the things I think is most incredible, it seemed to me like all the mergers in the pharmaceutical world in the eighties and nineties — and there were some fairly large ones — it seemed to me that Fred was on one side of it.”
It was on Wall Street in 1987 that he met fellow investment banker Tanner. Frank invited Tanner to join his team at Lehman, where she became senior managing director. They married the next year, and spent the following nine years at Lehman together.
“Everyone that knows him has experienced the warmth and the humor, but also knows that he’s a very tough negotiator. And Mary’s not that much different,” said Lisa Burns, president and CEO of Burns McClellan Inc. “The two of them together could get any deal done.”
The collapse of Lehman hit Frank very hard.
During a fireside chat at Laguna Niguel, Byers asked Frank about the final days of the investment bank, where Frank was one of the last to leave.
“He teared up and choked up. And he just said, ‘It was such a travesty.’ It was just so sad because he and others tried to not have Lehman have so much debt.”
In 2009, Frank and Tanner joined Peter J. Solomon to form a group focused on pharma and life sciences. They would go on to join Burrill & Co. in 2013, with Frank serving as vice chairman; the following year they founded Evolution Life Science Partners, of which he was chairman.
Frank “has been undoubtedly the mostly gentlemanly person one could encounter anywhere, not to mention Wall Street,” said BioCentury CEO David Flores.
Said Burns: “If one were to have an example of who is truly a white glove gentlemen, and able to mingle with the gas station attendant, as well as a brilliant scientist, Fred was really interested in people.”
A “brilliant strategic dealmaker” without the hype, Frank possessed a strength of character and a sense of fairness that made him stand out from most of his peers, Burns said. “You never had to worry if there was anything less than truth in what he was telling you, which is great for a banker.”
But Frank didn’t fit the stereotype of an investment banker, said Ron Cohen, president and CEO of Acorda Therapeutics Inc. (NASDAQ:ACOR). “He was learned across so many disciplines, and always seemed to be living, and communicating, within a larger context than the parochial matter at hand. I was not surprised to learn at one point that he had majored in philosophy in college.”
Frank collected art and eighteenth century antiques. Recalling a visit to their Upper East Side town home, Byers said, “Fred and Mary had it furnished in Louis XIV furniture like you were in Versailles,” he recalled. “It was so authentically done that it didn’t feel over the top. It just felt like you were transported to that world.”
Perhaps not surprisingly, even Frank’s investment banking peers became friends.
“Fred was a competitor and a colleague, but more than that he was my friend,” said Stelios Papadopoulos, chairman of Biogen Inc. (NASDAQ:BIIB) and former vice chairman of Cowen & Co. Speaking for all who knew Frank, Papadopoulos added: “I will miss him.”
The tribute video played at BIO Digital began with Tanner, friends and industry peers describing Frank in a word or two, among them: Forever young. Prescient. Steadfast. Loyal. Creative. Funny. Strategic. Generous. Insightful. Legend.
A newly released book by David Ewing Duncan, A Philosopher on Wall Street, tells the story of Frank’s role in the Genentech-Roche deal. Proceeds will go to four of Frank’s favorite charities: The Yale School of Management, Hotchkiss, the Salk Institute and Stanford Business School.
In addition to Tanner, Frank is survived by their son, Frederick Frank, Jr., and his daughters, Jenny Frank Goldsmith and Laura Frank, from an earlier marriage.
Frank’s family and close friends will pay their respects at services in New York City and New Haven. A memorial will be held in New York at a later time.