Executive Column: An Interview with Noted YU Alumnus Tony Fiorino

Tony Fiorino, M.D., Ph.D. has been President and CEO of Triumvira Immunologics, a cancer immunotherapy company, since December 2015. Prior to this, he was CEO at BrainStorm Cell Therapeutics from 2014-2015. Dr. Fiorino was also Founder and CEO of EnzymeRx, where he led the acquisition of a late-stage pre-clinical biologic and the development of the compound through phase 1/2 clinical trials and its subsequent sale to 3SBio. Before founding EnzymeRx, Dr. Fiorino worked as a biotechnology and pharmaceuticals analyst and portfolio manager at firms including Greywall Asset Management, Pequot Capital, Citigroup and JP Morgan. Dr. Fiorino earned an M.D. and a Ph.D. from Yeshiva University’s Albert Einstein College of Medicine where he studied the differentiation of liver progenitor cells. He completed his undergraduate degree at Massachusetts Institute of Technology.

What was the hardest transition in your career?

The biggest transition for me, by far, was choosing to leave medicine and enter the world of finance. I don’t know if it was the hardest decision or not, because I was unhappy in medicine and I was much happier in finance, so from that perspective it wasn’t hard, but it was definitely a huge transition.

When I was in my residency in the late 1990s,  I was unhappy, and I looked around and saw that many of the attending physicians around me were unhappy. The departments were counting on the doctors to see ever-increasing numbers of patients to generate more revenue, and were not really providing the kind of support that would make seeing patients at night and on weekends a little more tolerable.

I always wanted to be in academic medicine, to do research, have a lab, and see patients, and I realized that the model was just broken—and if it wasn’t broken, it was just really painful. So, I had to really think about decide what I was going to do. I loved science and medicine, and there was really no way I was going to be a clinician, so I contemplated a few different options, including trying to get a job at a consulting firm, or on Wall Street, and opted to try and find something on Wall Street.

How did you make the decision?

I’m not the only physician who’s gone through this kind of “cheshbon hanefesh.” For me, I had to make the decision not to look at the nine years invested in becoming an academic physician as a reason to stay doing something that I was unhappy doing. That was hard. I know other people in that position weren’t able to make that kind of decision. But, you can’t always look at sunk costs in life. Sunk costs are what they are. The nine years were what they were. I figured that I shouldn’t be unhappy after spending nine years training to become a clinician just because when I got there I discovered that it wasn’t really for me. It was probably made easier because I didn’t have loans because I was in an MD/PhD program. I think it’s hard for people; they wanted to be a doctor for a long time, their parents wanted them to be a doctor, their grandparents wanted them to be a doctor, and they went to med school.—it’s an investment of time and money, and to say “I’m totally changing directions” —If you focus on the sunk costs, you’ll never make that decision.

Why did you choose to go into finance as opposed to something like consulting?

I felt like my training and skillset was very applicable to the world of finance—being a research analyst and performing due diligence on biotech companies, on products in development. I had both scientific training and medical training; I knew how drugs were used in the clinic, and it seemed like a fairly good fit. What I knew about consulting was that I wouldn’t necessarily be in a position to leverage that knowledge and experience. I knew putting in a couple of years doing that would certainly be a nice element for my resume or would help me move in whatever directions I wanted to move into after that. But, I loved medicine and science, so I figured why should I give up that piece of it if I don’t have to?

I didn’t really look at working in the pharma industry. I looked a little bit, but the kinds of positions I looked at, running clinical trials, didn’t seem so appealing to me. But I do that stuff now, so I’ve learned that it’s really interesting. But at the time I didn’t think that it was for me, but things shifted.

If you could freeze your career at one point in time, when would it be?

Probably the first biotech company that I joined. I was at a fund, Pequot Capital, and we financed a startup company. Basically, we bought a drug that was on the shelf at another biotech company, and put it in a new company. After we put together the financing for it, I left the fund to run the company. Over the course of a couple of years, we built up an amazing team. We had about 6-7 employees and a handful of other consultants….great people who really clicked. We worked very well together and it was fantastic.

We accomplished a tremendous amount over three years, and took the product to phase 2 trials, but then the asset got bought from the company. We wrapped things up and everyone went on in their own directions. I guess you can call that a happy ending.

Was it the process that made you enjoy it, or the success of that particular company?

It was totally the process. Working with a team that was both committed and hard-working, as well as just friendly, nice people to be around. I spend a lot of time at work, and if the people who are there with you are miserable or unhappy, it can create a climate that is toxic. And if you are running a team and there’s that kind of negativity on the team, it’s challenging to manage.

There was a feeling every day going to work, that we have this great asset that’s firing on all cylinders, there’s clinical trials going on, we’re filing patents, we’re doing everything we’re supposed to be doing, and it was enjoyable. What was really great was the day to day interaction of this team that I was working with.

Can you tell me a little bit about Triumvira’s structure?

Triumvira is not quite a startup. It’s a little bit more mature than a startup, though it’s closer to a startup than to anything else. It is very virtual. In biotech, virtual means not a lot of infrastructure, not a lot of employees. The work is either outsourced to other companies, other vendors, or, as in our case, we have a relationship with McMaster University in Hamilton, Ontario, so all of our research is done in a lab at McMaster. Until we really get financed- like complete our Series A financing, hopefully next year-this kind of structure will remain. Until we have some real funds in our pockets, we won’t build our own lab space.

What is a typical day like? What do you do on an average day?

My daily activities generally fall into a small handful of buckets. One huge bucket is working on financing. We’re a young biotech company and we will need tens of millions of dollars to test our products in humans. Clinical trials are really expensive. So whether it’s talking with venture capitalists, talking with other pharmaceutical or other biotech companies who might be interested in a partnership, we’re constantly tweaking our presentations and budgets, and constantly adjusting our data room. Investing in biotech, especially private biotech, is a very research intensive process for the venture capital firms, so they come in, see our data room, and take a really good look under the hood. Doing calls with investors or potential partners, reviewing and sorting out the appropriate data for the data room and keeping it updated, takes up a chunk of my time.

Another bucket is project management: looking at our data and figuring out our next steps...what are the pieces that need to be ready on time to apply to the FDA. A third bucket is looking at  academic institutions or other companies who are developing drugs that we might be interested in combining with our treatment or with whom we might be interested in partnering. The last piece I spend a lot of time on is looking at the big picture and formulating a narrative and plan for the company.

Practically, that means that I’m on the phone a ton. I also have a ton of small, productive internal meetings and calls with investors. I try to not have more than half my day scheduled with conference calls. I do a lot of writing for regulatory purposes and for due diligence requested by venture capital funds or potential partners..

You have raised a lot of money. You raised $25MM at Brainstorm Cell Therapeutics.  What accounts for that success?

You need a story and you need to be able to show investors where the valuation inflection is going to come from.  So, if you are raising $10 MM, it should get you somewhere. When we go out to raise our series A, we won’t ask investors to give us enough money to get halfway to results. We want enough money to get to clinical data because that is a huge valuation inflection point- the point where the next piece of capital that needs to be raised is going to be at higher valuation or will possibly allow some sort of liquidity transaction, a partnership, a take-out, an IPO.

In the public sector, investors are not necessarily tied to a big event because they have more liquidity options. The downside of being a public company is that investors are much less patient. VC’s and private companies, on the other hand, know they aren’t investing in something they can sell out from in three months…they are in it for the long run.

Are you concerned about Congress cracking down on drug-pricing?

Price-controls have always been something that have scared investors in the pharma and biotech industry. I think the problem with them is that healthcare is such a dysfunctional economic system. The people who pay for drugs aren’t the people who use drugs. And the people who use drugs aren’t the people who control access to drugs.

In any case, given that Clinton did not win the presidency and considering the fact that we will have a Republican Senate and House, I don’t think drug pricing is going to be on anyone’s agenda. Since the election, the fact that pharma and biotech indices have been ripping suggests that investors are feeling the same way.

Top-down price controls imposed on the industry by the government might be harmful. At the end of the day, all these companies are driven by developing innovative products. They have to do R&D. A better way to influence pricing is for large payers to organize themselves—for example, the use of tiered drug plans where some drugs have a $5 copay but others have a $50 copay. That could be a good way to impact pricing and usage from the market perspective. I think top-down price controls are usually one size fits all and may lead to unforeseen negative consequences.

What do you look for in a new hire?

Technical skills are a necessity in the biotech industry. There is a certain skillset you need to be “in the parshah.” I am always looking for people who want to learn and who bring energy to the table. A sense of arrogance or overconfidence is a turn-off. It may be a great attribute in a sales job. But, research and drug development is a thoughtful process—you need to be able to take in information from different sources, evaluate and make thoughtful decisions.

I always talk to references but I think they are nearly worthless. I’ve had people with unbelievable references do a horrible job. I guess it's a high negative predictive value metric—if you find someone with terrible references, you can stop there. It’s just not necessarily indicative of actual job performance.

What was the last book you read?

The Upright Thinkers by Leonard Mlodinow

Why did you decide to transition away from finance?

I spent about ten years as a biotech investor. I saw a lot of companies make a lot of mistakes. From the outside looking in, I thought I could do better a lot of the time. A classic example: a company develops a drug and their study fails. But, they found that in a subset of patients- right-handed, blue-eyed patients- it looked like it worked. So, they are going to run another study with right-handed, blue-eyed patients. It’s a data mining exercise. It’s also bound to fail. I understand it’s not so easy for people to just close up shop after a failed study because there is a strong incentive to salvage an otherwise irredeemable drug development program, and so they end up finding spurious associations post hoc. You can always bet against that when you are a biotech short seller. So, when I had the opportunity to try my hand at drug development in 2008 when my fund financed a start-up company, I jumped at it.

You’ve spent a lot of time at different companies. Can you talk about that?

In finance, more so than biotech, there’s not a lot of firm loyalty. If you're a sell-side analyst and you want to be on the buy-side and there’s an opportunity to work at a mutual fund, then you go there. If a hedge fund opportunity arises, then you take it because it has more earning potential. Then you think, gee, I can run my own fund. It’s an industry where moving forward involves moving to other firms.

In biotech, it's not totally different. Small biotech companies have volatility associated with them but companies have only one chief medical officer. Outside of the company, there are five hundred or a thousand CMOs. Inside the company, your boss is going to have to move on somehow if you want to become the CMO. This might be less true in big biotech and big pharma. Though, you do see a lot of big pharma VPs and directors move to smaller biotech companies with an incremental title gain.

Big companies have bureaucracies that are painful to deal with. At smaller companies, you are able to wear more than one hat. At a big company, people’s tasks are very specialized. You may be responsible for one or two programs. You are the guy who does phase 1/2 studies for inflammation programs, for instance. You are not involved in any of the animal studies or manufacturing process. But in smaller companies, it's an all hands on deck effort. I love that, but some people don't.