The Man Who Made Millions by Marketing Monoclonal Antibodies

SAN DIEGO—When Ivor Royston founded his first biotech company in 1978, the 33-year-old assistant professor at the University of California, San Diego had no idea it would make him so rich and...infamous. Royston did know he was taking a risk. But his idea, to start the first company in the nation to sell monoclonal antibodies to other labs, was so compelling that he decided to gamble his career at UCSD. “I had only been there a year. I wasn’t even tenured,” recalls Royston, going on to say: "I thought it might jeopardize my career, but I also had a gut feeling that this was the right thing to do,” Financially, the grand gamble paid off. Today, at 43, Royston is immensely wealthy, the founder of two biotechnology companies and still a university professor. He works in his lab, conducts clinical trials at the UCSD medical center, and spends a couple of weeks a year as consultant and director for IDEC pharmaceutical Corp., his second biotech startup. It’s no that he has to work, though. Cancer specialist Royston has made millions (but won’t reveal exactly how much), the bulk of it from the $480 million sale of his first company, Hybritech, to Eli Lilly in 1986. “My success,” Royston ruminates, “is beyond my greatest dreams.” But so is the controversy he’s engendered. In the past decade, Royston has been investigated by the National Institutes of Health and has resigned from his post as a physician at the San Diego Veterans’ Administration Medical Center after he was charged with failing to spend enough time with patients. He’s also been the taget of an anonymous letter accusing him of founding his private companies on university time and of having a conffict-of-interest between his for-profit projects and his NIH-sponsored university research. And today, many of his peers still view him as controversial, even though Royston has been exonerated of wrongdoing in several formal investigations. Mines Before Money? Is this reputation fair? Royston’s story, more than most, provides a powerful object lesson in the hazards—as well as rewards—of the entrepreneurial road. That road is often littered with mines—ethical quandaries that can blow up in an ambitious scientist’s face. Royston’s critics— some of the most notable of whom are his scientific colleagues—say Royston had no business traveling down the road in the first place. University scientists who accept public research money, they say, have no right to profit from it in the private sector. Take Keith Yamamoto, vice chairman of the department of biochemistry at U.C.-San Francisco. Yamamoto says: “I believe there are fundamental and legitimate differences between the goals of academic science and the goals of business. By putting them together, one runs the risk of conflict of interest. They are best kept separate. I think scientists should make the choice.” But defenders say that Royston is a man ahead of his time, a preview of the future where more and more scientists will profit from their research. They say he is controversial merely because he was one of the first physicians to make it so big in the world of business. “When he founded Hybritech, he broke new ground,” says Mark Green, director of UCSD’s cancer center and Royston’s supervisor. “Subsequently, many people have traveled down the path he’s blazed. Now it’s a four-lane highway.” Who’s right? Consider Royston’s story for yourself: The prologue, as Royston himself sees it, took place in elementary school when he read medical books in the public library. “I was fascinated by the human ana tomy," he recalls. In college, he and a childhood friend, Neil Shulman snuck a fetal pig into the basement of Royston’s house so they could dissect it—something Royston’s mother would not have allowed in her kosher kitchen. All this presaged a brilliant scho- lastic start--Royston, the exceptional student in math and science winning regional mathematics contests--but the truly extraordinary thing about Royston's childhood was'nt his scientific talent; it was his choice of his life’s work at an unusually young age. His pal Shulman, who today is an associate professor of medicine at the Emory School of Medicine in Atlanta, recalls it clearly: “Ivor wanted to cure cancer when he was five years old.” But from early on, there was that other side of Royston too: He was a member of the Chessmen, a high school investment club of 16 precocious teenagers who invested their savings in real estate, including a high-rise office building. Before Royston ever got to college, the Chessmen had lost all their money. Royston’s personal resources got him through school—including medical school at Johns Hopkins University—by the age of 25. Then after a three-year stint at the National Institutes of Health in Bethesda, Md., he became a postdoctoral fellow at Stanford’s division of oncology in 1975. And that was where Royston became aware of Milstein and Kohler’s new cloning technology for making endless supplies of identical antibodies—monoclonal antibodies. Soon after, scientists realized that these submicroscopic molecules could be among the great hopes for cancer therapy because of their ability to zero in on specific cells—for example, cancer cells but leave the surrounding normal tissue unharmed. So Royston, like many clinical researchers of his generation, spent hours in the laboratory making the antibodies by fusing a white blood cell and a cancer cell into one, called a hybridoma. This hybrid cell is a virtual factory for producing the antibodies, which can then be linked to a radioactive isotope or a chemical toxin to deliver precise radiation or chemotherapy at the cellular level. When the cancer fellowship ended in 1977, Royston became an assistant professor of medicine at UCSD’s School of Medicine. Sometime during that first year in San Diego, Royston and his research assistant, Howard Bindorf, realized there was a market for the monoclonal antibodies they were making in their lab. “We had proved how easy it was to make monoclonal antibodies,” recalls Royston. “Now, we had to start treating patients. But there was no way the university could manufacture [enough of] them to do clinical trials. And there were several scientists around the country in the same position.” So he and Birndorf decided to seize the opportunity. Neither knew anything about founding a company, so in early 1978 they bought a book called How to Start Your Own Business. They wrote a five-page business plan that Royston now says was “naive,” but it worked. Venture capitalists Kleiner, Perkins, Caufield & Byers were so taken with Royston’s idea that they agreed to invest $300,000— even though the plan had only requested $200,000. Hybritech was founded in October 1978, and by the following March—three months ahead of schedule—the scientists had made their first monoclonal antibodies. Shortly after, Hybuitech became the first company in the U.S. to sell monoclonal antibodies commercially. But even then, in the early days of Hybritech, Royston had a foreboding thathis business venture would hurt his academic standing. And the years have proven this fear warranted. Royston concedes he knew from the start that the ethic in medicine and the biological sciences has always deemed it taboo for scientists to try their ideas in the free market if they keep their jobs in the public sector. But not only has he founded one company that made him millions before he was 40, he also started a second in 1985—IDEC Phannaceutical, also a manufacturer of a special type of monoclonal antibody. But more serious than the charge of violating a traditional ethic have been allegations that Royston has engaged in a conflict of interest. An anonymous letter sent to the NIH in 1987 charged him with cheating the University of California by doing corporate work on school time. Moreover, the letter alleged that since some of Royston’s UC hours were supported by an NIH grant, he also might have had a conflict of interest. The Case Of The Stand-In But that wasn’t the end of it. Royston also caused a stir when he paid another physician to do his rounds for him at the San Diego Veterans’ Administration Medical Center. Royston said he did it just once—because he had to live a lec ture in India and the VA had reneged on an agreement to give him time off to attend. But VA administrators weren’t informed of the arrangement until after the fact, and they charge— even to this day—that Royston spent too little time treating patients. The argument was never resolved—not even when Royston resigned from the hospital in early 1986. “It’s fair to say that in Ivor’s rush to get things done, there are people who feel he didn’t stick with the culture of the village,” says Mark Green. “This is not a guy who goes slowly, andhe’s not shy.” Royston admits that his seemingly easy success and visibility have made him an easy target for criticism. “I know other people who have done what I have done but kept a low profile, and therefore, got in less trouble,” says Royston. “I was always proud of what I had done and I didn’t want to hide behind a rock. Therefore, I became an easy target.” But, many scientists critical of Royston and his breed stress that regardless of whether wrongdoing is found, an entrepreneur can make things uncomfortable around an academic lab. Yamamoto (who has not worked ‘with Royston) recalls the tension that he says was “frightening” in his department at UCSF in the 1970s when three researchers founded separate biotechnology companies, one of which was Genentech. “We saw a situation where even postdocs in the lab were becoming extremely proprietary of ideas,” he says. “We heard squabbling in the hallways about whether an idea is yours or if you overheard it. If that happens a couple of times, maybe next time in a group meeting you won’t share your ideas.” Others worry that the entrepreneur might steer his publicly funded research toward areas where his company would be most likely to profit—and away from areas that might benefit science and society most. Or the entrepreneur, because his business depends on it, might talk himself into judging some laboratory results as valid that are, in fact, tenuous. Meanwhile, the entrepreneur’s business benefits from the association with a prestigious university. “The most dangerous thing,” says Yamamoto, “is developing the attitude that your academic lab is merely an R&D arm of your company." To Royston, scientists like Yamamoto are “academic socialists.” He asks: “Why, because we’re academics, should we deprive ourselves of the financial rewards that come with our work? Just because you’re an academic you shouldn’t have to shut yourself off from one of the basic tenets this country was built on.” Indeed, Royston believes that his marriage of industry and academia has been a good one. He’s proud that his work has led to jobs for roughly 1,000 people at Hybritech, and he thinks companies like his have accelerated the pace at which new drugs and medical products reach patients—especially in an era when competition has intensified for public funds. With the NIH funding only about one out of every four new requests for research grants, there’s a clear-cut need for private investment in biomedical research, he says. Stanley E. Order maken an eloquent defense of Royston’s dual citizenship. Order was the first physician to use the Hybritech monoclonal antibodies in clinical trials at Johns Hopkins Oncology Center in Baltimore. So far, four of eight patients suffering from Hodgkin’s disease have had complete remissions after treatment with the antibodies— a therapy he says wouldn’t have been possible for years without the work of Royston and Hybritech. “It was terrific. for us. They accomplished the safe labeling of yttrium, and it’s fabulous for Hodgkin’s,” he says. “It sure happened a lot easier because there’s a Hybritech.” While Royston recognizes there’s a potential for danger on the path he has chosen, he says it can be avoided—as long as a scientist’s primary motive is to do good research. Results should be published openly and be screened by peers. Then, he feels, if it helps achieve those research goals, it’s appropriate to start a business. But he also knows that not everyone shares his view. “Criticism comes with the turf,” he says. “Most people don’t believe you can serve two masters. I know I’ve paid a price for it.” Ann Gibbons is science writer at the San Diego Tribune.

The Man Who Made Millions by Marketing Monoclonal Antibodies

Interested in reading more?

Become a Member of