An interview with WBBA’s
chairman of the board of directors: Mike Martino

By Lorraine Ruff and David A. Gabrilska, industry analysts
Milestones - the critical thinking company

On March 4 and 5, 2002, the Washington Biotechnology & Biomedical Association (WBBA) hosted Invest Northwest. More than 500 companies, experienced entrepreneurs and scientists, increasingly savvy investors and industry watchers gathered to hear the stories of emerging growth, developmental-stage and commercial phase companies. The chairman of the WBBA, Michael Martino, president and CEO of Sonus Pharmaceuticals, brought unique insight to Invest Northwest having only recently joined the ranks of the entrepreneur in a rapidly expanding biomedical region. This is the first of a series of interviews with the region’s biomedical executives.

Up until three years ago the president and CEO of Sonus Pharmaceuticals, Mike Martino, managed a division for Mallinckrodt, then one of the world’s largest medical products manufacturers. Life was good, but it occurred to Mike that it might be time to rethink career directions.

"During my 18 year career with Mallinckrodt, I had the opportunity to interact with entrepreneurial companies. I was intrigued with the concept of being a part of a small company, the entrepreneurial spirit and the ability to make an impact quickly," he said.

What finally provoked action was a conversation with his then eight-year-old son during a day of skiing. Martino’s son "had been badgering" [Martino] about snowboarding. "I was the purist - skiing was it, with poles and independent leg action. Tying both feet to a board with no way to break a fall wasn’t my idea of fun. During a ride up a chair lift, father and son watched snowboarders fly across the snow. . They agreed that the snowboarders looked "very cool."

"My son, hoping I’d changed my position, said that he’d really like to try snowboarding, hopefully before he was my age. And at that moment it occurred to me that we had identified an important mutual goal. For me it was not wishing to wake up when I was 50 only to discover that I was too old to be an entrepreneur," Martino said.

Seven months later Martino joined Sonus. And initially while it wasn’t easy snowboarding, Martino knew after his first year at Sonus that he had not only found his career venue but also the unique place in the world where he wished to apply his entrepreneurial flair.

Late last year, Martino assumed the chair of the WBBA board of directors at a time when there has been a definitive improvement in access to savvy investors and capital in a region that is distinguished by its research excellence and keen entrepreneurial talent.

"The underlying science for a significant number of WBBA’s member companies has been transferred from the region’s major research institutions, including, University of Washington, Washington State University, the Fred Hutchinson Cancer Research Center, and Pacific Northwest National Laboratory," Martino said.

"We live in an active entrepreneurial environment with a high risk-reward profile." (See InfoResource Evolution Poster) With the burst of the dot com bubble, Martino says he sees increasing interest in biotechnology among people who have historically invested in software development and telecommunications. The Puget Sound area and Washington State in general are now on the RADAR screens of the facilitators of capital, people and organizations that buy and sell companies through private or public financings.

"There is benefit in this critical mass that’s come together in the past three years," he said. Even three years ago if I wanted to talk to a [sell-side] analyst or investment banker, I had to go to San Francisco, New York City or Boston. But now they’re coming to our home turf for business," he said, adding that the "facilitators" include investment banks such as W.R. Hambrecht. "If you include the intellectual property arena - another key ingredient - virtually all the IP [legal] firms have established satellite offices in and around Seattle and are intent to grow them," he said.

While a critical mass is forming, Martino observes that "quality of life" and the "cost of doing business" are not on par with America’s first-tier technology regions that have for more than 25 years taken aggressive steps to facilitate, attract and retain advanced medical technology companies. Their investment has resulted in the diversification of their regional economies, and they continue to aggressively invest in and promote quality of life related issues such as primary education and transportation infrastructure. [See the Biotechnology Industry Organization’s state-by-state list of initiatives that promote growth of the biotechnology industry.]

"Washington is not a business-friendly state. We pay significantly higher business taxes, and corresponding services, such as the permitting process, are not on par," he said. Further, Researchers and executive management of advanced technology companies focus intently on quality of life issues such as K-12 education for their children and the amount of time their families and they will spend in traffic when making decisions on where to live and work.

"If you compare the quality of our K-12 education to other western states, it’s not bad. But compared to the East Coast and Midwest, it just doesn’t track. As recently reported in USA Today, our traffic congestion is comparable with Los Angeles and San Francisco, ranking third nationally for ‘cities with the most saturated streets.’ These quality of life issues have the potential to negatively affect our ability to attract top-flight talent from three quarters of the country," Martino said.

Left unchecked, Martino believes that it will be difficult if not impossible for Washington’s entrepreneurs to capitalize on the risk-reward profile that is the foundation for creativity and innovation. Unless (and until) a consortium of business, government and education collaborates to resolve these issues, Washington will not make the move to tier-one status.

"Biotech needs to step up its engagement in the political process and build upon the solid foundation Ruth Scott [president of the WBBA], Paul Goll [immediate past board chairman] and others have built during past years.

"As CEO of Sonus [without the affiliation with the WBBA], I don’t think I’d have an audience with elected officials. But within the framework of WBBA, even small member companies have been successful in gaining audience and contributing to the public policy positions of elected officials that directly affect our industry," he explained. "I believe we need to do more."

Martino said that an important goal as board chairman will be to add additional core biomedical companies to the association. For member companies he believes that it’s critical for the industry to understand the realities of the political process and how it works and to facilitate understanding among elected officials at the state and national levels for the science and the business drivers that spell success.

"Our $12,000 PAC budget is focused in the state, not nationally. We could easily justify a $50,000 to $100,000 budget," he said.

The WBBA legislative agenda for 2002 is focused on:

1. Ensuring access to prescription drugs without harmful price controls
2. Supporting K-12 and higher education
3. Encouraging the state to act cautiously in regulating medical research and clinical trials

WBBA has taken a definitive position that direct or indirect government control in drug pricing sets an artificial mechanism in the market that will discourage the level of investment and risk taking that are required at early discovery and development stages where most of Washington State’s biomedical companies are focused.

"As we know, there are a significant number of people in this country who do not have formal access to health care and there are people who have access but who can’t afford prescription drugs," he said. "We have an obligation to contribute to a solution to these issues. Innovation and entrepreneurship - key to our industry - can also be leveraged to contribute to resolution.

"The biotechnology and medical device industry need to step forward and actively engage the political process," he said. "It will be especially important to do so as public policy leaders recognize the economic contribution the industry is making to the state’s economy. "It’s beginning to happen, here in the Pacific Northwest," he said.

Other reading:

Measuring needs: Biomedical manufacturing facilities in high demand - Analysts from Milestones examine the compelling opportunities created by the intersection of a rapidly growing biotechnology industry and limited facilities for lab space and bioprocessing manufacturing.

Regional biotechnology: the elements of critical mass

Venture Capital Investment in the Biotechnology Industry, March 2002, (PowerPoint file 603 kb)

To learn more, visit investnorthwest.org