Biotech Hall of Fame: Interview with Biotech’s First Investment Banker

Jim's Corner

Earlier this week, I had the opportunity to discuss biotech’s storied history with Fred Frank, one of the industry’s greatest luminaries, on what we can learn from the past to help shape the future.

Fred Frank, formerly Vice Chairman of both Lehman Brothers Inc. and Peter J. Solomon Company, recently became Vice Chairman of Burrill & Company and Chairman of Burrill Securities, the broker dealer arm of Burrill & Company. He was the first life sciences specialist in investment banking, and the most prolific. In a career spanning fifty-four years, Frank has served as the lead underwriter in more than 125 initial public offerings. He has negotiated more than 75 mergers and acquisitions, including some of the largest and most important transactions in the history of biotechnology. So central was his role in biotech finance that he became known among Wall Street banking peers as ‘the ubiquitous Fred.’ Learn more about Fred Frank here.

Biotechnology is a capital-intensive industrial sector. It usually takes a biotech company ten-to-twelve years to develop a new product. For young science-driven firms without substantial revenues, the search for funds is perpetual. Capital is life.

In the beginning, venture capitalists were the first to supply it, the first to bet on biotech. A few large pharmaceutical and chemical corporations also acquired stakes in biotech startups in order to keep tabs on the latest technological developments. Of late, ‘angels’ (high net worth individual investors) have made important contributions. However, in order to finance growth into maturity, most biotech firms have had to make the transition from private to public equity, where sizable capital can be accessed.

When the industry was still in its infancy, biotech CEOs began traveling to New York for lessons in high finance, and on Wall Street, a handful of investment bankers began learning the biotech business. The bankers soon started counseling clients, arranging transactions, and developing specialized financial instruments to meet the needs of biotech companies and intrepid investors. In doing so, they shaped the financial architecture of the industry.

Listen to the podcast:

LSF has published a highly-illustrated coffee table book – Honoring 25 Years of Biotech Leadership – honoring the outstanding individuals, companies and scientific achievements that have been inducted into the Biotech Hall of Fame at the annual Biotech Meeting held in Laguna Beach, CA. The meeting is co-sponsored by Kleiner Perkins Caufield & Byers and Burrill & Company. The book was commissioned to mark the 25th anniversary of the Biotech Meeting, an invitation-only retreat for biotech CEOs. Distribution has been limited to meeting participants and Biotech Hall of Fame award winners recognized in the book. LSF is currently working on a comprehensive scholarly history of the origins of commercial biotechnology, scheduled for publication in 2014.

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