GLP-1 medicines are obviously having a real moment – medically and culturally. 

These once-weekly injectables, which reduce appetite and result in significant, long-lasting (so long as you’re taking them…) weight loss, have been demonstrated to have a number of important health benefits beyond simply shedding pounds. 

In March, Novo Nordisk’s semaglutide (Wegovy) was approved by the FDA for its ability to reduce the risk of heart attack, stroke, and death from cardiovascular disease in patients who are obese or overweight.  

This new wave of effective weight loss drugs has elevated the pharma companies that make them, Novo Nordisk and Eli Lilly. Novo Nordisk reported $1.3 billion in Wegovy sales in the first quarter of 2024 – about double the amount from the same period a year earlier. Eli Lilly’s rival GLP-1 and GIP receptor agonist, tirzepatide (Zepbound), recorded an extraordinary $517 million in US sales in the first quarter of 2024, in the first full quarter after being approved by the FDA in November.

The progress and momentum has also generated significant interest from other pharmas suddenly seeking to enter a therapeutic area that they have long been avoiding.

The availability of an apparently safe category of medicines that address a key societal preoccupation – obesity – has reverberations that have been felt everywhere from the Oscars to the diet industry – and, potentially, many other sectors of the economy.

Many companies focused on weight management, for example, have decided that instead of competing directly with GLP-1 medicines, it makes more sense to incorporate these medicines into their offerings (eg Weight Watchers) or to position themselves as an off-ramp (Virta).   

On a personal level, I appreciate their motivation. After significant success on Virta (discussed here, here), I’ve found it increasingly difficult to sustain (a common experience, it seems). As my weight, sadly, starts to creep back up despite regular exercise, I find myself actively contemplating a switch to GLP-1s, especially as I encounter more and more physician colleagues experiencing success with these powerful medicines.

Keeping up with the GLP-1 story can be difficult; fortunately, several recently-released podcasts, each with a slightly different focus, can help get you up to speed quickly – ideally while you’re exercising.

Ground Truths: Eric Topol interviews Daniel Drucker

Let’s start with the science. Here, the one person you’d most want to speak with is endocrinologist and physician-scientist Daniel Drucker, who has spent his career focused on incretins – molecules such as GIP-1 (glucose-dependent insulinotropic polypeptide) and GLP-1 (glucagon-like peptide-1) that potentiate the secretion of insulin after meals.

His website, glucagon.com, has for years served as a central repository of information in this field, including the many foundational studies and integrative reviews authored by Drucker and his colleagues.

In the latest episode of famed cardiologist Eric Topol’s invariably interesting podcast Ground Truths, he asks Drucker key questions about the underlying science.  What I found particularly striking was how much is still unknown.  (This seems like another example of a phenomenon I’ve frequently encountered, where real experts are comfortable enough to recognize and acknowledge the vast extent of our collective ignorance; in contrast, many with a more tenuous grasp of the material tend to present it with more certitude and bluster.)

The entire, relatively short (36-minute) podcast is an obvious must for anyone interested in a data-driven, grounded, sophisticated perspective on GLP-1s, but several points of particular relevance for readers of TR and this column include:

• Subtle biology of GLP-1: Drucker say, “if we take GLP-1 away or we take the receptor away, you don’t really develop diabetes without GLP-1. You don’t really gain a lot of weight without GLP-1. So physiologically it’s not that important.”  In other words, for all our interest in leveraging genetics to find new drugs, GLP-1 is an example of how this approach can be limiting – the pharmacological effects of GLP-1 might not have been predicted by extrapolating from observed physiology and pathophysiology.  Moreover, Drucker notes, molecules that were associated with more informative genetics, like leptin, have not translated thus far into broadly effective medicines for the treatment of obesity.
• GLP-1 seems to “talk to the brain,” but indirectly; the mechanism seems unclear:  Drucker explains that GLP-1 “doesn’t directly get into the brain to a meaningful extent,” and how it communicates with the brain is “is not well understood … in the magic that we see.”  Given the impact of GLP-1 on appetite control, this seems like a glaring gap in understanding – or rather, an important opportunity for future study.
• Role of serendipity: GLP-1 medicines emerged from decades of meticulous research (including foundational and continuing work by Drucker).  In other words, the discovery of GLP-1 and the elucidation of their biological and pharmacological effects weren’t simply a happy accident.  But what was unbelievably lucky, it seems, is that the medicines work as well as they do with an apparent paucity of serious side effects.  Drucker notes that while there are some side effects when patients start taking GLP-1 medicines, these tend to dissipate, while the positive effects on appetite suppression persist. (The most common side effects are nausea, vomiting, and diarrhea).

Acquired: Novo Nordisk

The Acquired podcast – recently described by the Wall Street Journal as what “the smartest people in the room are all listening to” – is a monthly, in-depth discussion of a leading company, hosted by former-VCs Ben Gilbert and David Rosenthal. 

In January, Gilbert and Rosenthal took on their first life science company, Novo Nordisk, reviewing its fascinating history, and contextualizing its strategy in the context of other businesses.  Listening to two smart, enthusiastic business analysts, who aren’t pharma insiders, wrap their heads around the complexities of healthcare and drug development was engaging and illuminating. The episode, as usual for Acquired, is long (this one runs over three and half hours!) but captivating and worth your time.

Key points for TR readers:

• Importance of a champion: Drug development requires champions (see here, here, here).  In this case, the champion is Novo Nordisk’s Lotte Bjerre Knudsen, who led the effort to develop a long-acting GLP-1, and then to guide it towards obesity.  The magnitude of this achievement is especially remarkable since the CEO at the time, Lars Rebien Sorensen, was initially skeptical about developing GLP-1 for obesity.  “Obesity is primarily a social and cultural problem,” he once said. “It should be solved by means of a radical restructuring of society. There is no business for Novo Nordisk in that area.”
  

  Lotte Bjerre Knudsen

• Focus on obesity from the beginning (this is actually from ACQ2, a second podcast hosted by Gilbert and Rosenthal, in an episode focused on Knudsen): “The target market was also obesity from the beginning,” Knudsen says about GLP-1 molecules, pushing back on idea that they somehow stumbled into obesity.  “We did have a strategic intent to go after obesity early on.
• Recognition of the risk of drug development: Perhaps my favorite part of the episode was when Gilbert and Rosenthal discuss the remarkable challenges and exceptional risks of drug development, in the context of other businesses.  Their recognition and articulation of the difficulty and urgency of coming up with new medicines represents a level of insight that seems to have eluded many others.

As strong as this episode is, the hosts may overstate their case when they suggest Novo’s exceptional business performance may be attributable to their concentration in, and singular focus on diabetes and metabolism. While Novo’s deep experience in diabetes and metabolism unquestionably facilitated their development of GLP-1 medicines, they are also incredibly lucky that these medicines turned out to be such a breakout hit, and not (as discussed above) saddled with all sorts of side-effects or other challenges. 

Concentrating efforts in any one area is like putting all your chips on a particular Roulette number – if you’re lucky, you can win big, but if not (for example, if you went all-in on Alzheimer’s Disease, an incredibly urgent medical need that hasn’t yet seen great therapeutic success), you might fare poorly. 

If you are going to bet big, however, it makes sense to do it in an area where you are expert, and can both choose as wisely as possible, and also be prepared to take advantage of a win if you get one. Gilead’s acquisition of Pharmasset for $11.4B in 2011 – derided by many analysts at the time, just before they started applauding Gilead’s subsequent success in curing hepatitis C – seems like a similar example.

Honestly: Bari Weiss interviews Johann Hari

Bari Weiss and the Honestly podcast offer independent-minded takes on a range of issues, including topics related to health. Here, she interviews author Johann Hari about his latest book, Magic Pill (I discussed his previous effort, Stolen Focus, for TR readers here).

Hari’s new work features reporting on GLP-1 medicines including in particular their social context, a perspective he succinctly summarizes in a recent New York Times op-ed.

It was especially interesting to listen to Hari’s distillation after hearing Drucker’s, because Drucker’s presentation emphasized the limitations of science and the many areas of ambiguity and uncertainty, while Hari offered a tidy narrative that at times felt scientifically dubious.

Key highlights for TR readers:

• View that the American diet is responsible for altered satiety setpoint:  Hari tells us about a neuroscientist, Paul Kenny, who early in his career was struck by the differences between the United States and his native Ireland, and his sense that American food was affecting his mind as well as his body.  Kenney later discovered that rats who were raised on a normal diet and then offered American food “went crazy for the American diet…within a couple of days, they were different animals. And they very rapidly all became obese.”
• Examples of healthier food in other countries like Japan, where the obesity rate is 4%, compared to a rate of 42% in the United States:  Hari describes visiting a “typical” school in Japan, and discovering processed food is banned, kids are served “unbelievably healthy” freshly-prepared meals, and children express preferences for healthy vegetables like broccoli.  (Like Hari, I found this unimaginable, and wasn’t surprised to hear his first thought was that he was being trolled by the kids; he wasn’t.)
• Examples of approaches to obesity management in the work setting that seem unimaginably over the top.  Hari tells us about a law in Japan mandating that “every company in Japan has to weigh its entire staff on a particular day. And if your weight has gone up, you have to make a plan with your employer to bring it down. And if as a company overall your staff’s weight has gone up, you are fined by the government.”

The Journal: Trillion Dollar Shot

One of my favorite podcasts is The Journal, co-produced by Gimlet and the Wall Street Journal.  Most days, they look in depth at a topic in the news, but occasionally they put together a series taking an even deeper look at an important topic, seeking and sharing multiple perspectives across several episodes. I recent highlighted another Journal series (With Great Power) that focused on the birth of Marvel studios.

The current series (as of this writing only the first episode has dropped) promises an examination of GLP-1 medicines – how they were developed, and the effects they are having on “bodies, fortunes, and industries.”

Key highlights for TR readers:

• A recurrent theme of innovation has been the need for persistence and conviction, along with the uncomfortable fact that, as Judah Folkman said, “If your idea succeeds, everybody says you’re persistent. If it doesn’t, you’re obstinate.”  The problem is you can’t figure out until later the category in which you belong. It’s clear from this podcast that Lotte Bjerre Knudsen, the champion we met earlier, was persistent. The former CEO of Novo, Lars Rebien Sorensen, describes Knudsen as “a person that’s very, very difficult to say ‘No’ to,” someone whose team succeeded “because of their stubbornness and their skills and their professionalism.”
• Industry view of obesity drugs: Sorensen also highlights the initial concerns of pursuing GLP-1 medicines for obesity, noting that “at the time, almost all without exception, weight-lowering drugs had failed, some even so badly that companies were sued. So I knew that if we started talking too much about the obesity effect of GLP-1, we might taint a very good diabetes drug.” (As noted earlier, Sorensen also viewed obesity as a social rather than a medical challenge.)
  

  Dr. Fatima Cody Stanford, obesity medicine expert, MGH

• Unexpected high discontinuation rate: Perhaps the most striking fact I learned from all of these podcasts was the exceptionally high discontinuation rate from GLP-1 medicines.  The Acquired podcast that noted “one out of six patients have side effects that are so severe that they discontinue the drug,” and “as many as 68% of people roll off it after a year.” This is especially surprising since most of the weight lost due to GLP-1 medicines returns if the drug is discontinued. The Journal podcast offered the most compelling insight into the potential reasons for the high rate of discontinuations; one of the journalists reporting the story actually stopped taking the medicine himself although it seemed to be working well for him.  The key reasons for discontinuation seem to be (a) cost (a huge factor and the reason the reporter stopped); (b) side effects; (c) the inconvenience of needing to hunt for supplies of a medicine where manufacturing can’t keep with the demand. Dr. Fatima Cody Stanford, of the MGH Weight Center, tells me that the most significant issue in her experience has been serious ongoing challenges with the supply.

Collectively, these podcasts offer different but overlapping perspectives on GLP-1 medicines, and provide insight into the history, science, and strategy around these medicines. They also remind us of the complex interplay between transformative medicines and broader society, and the need for life science companies to engage with it – ideally with authentic curiosity, humility, and empathy.

A main theme of this column – perhaps even the dominant theme – is how to operate in a power-law domain like drug development where there are few, outsized successes, where most efforts end in failure, and where it’s incredibly difficult to predict in advance how you are likely to fare.

Earlier this week, I discussed the parallels between film and drug development, highlighting how messy and unpredictable the road to success can be as highlighted by the Marvel Cinematic Universe (MCU) in cinema, and Keytruda and Velcade in pharma. 

My conclusion was that in both these domains, success is contingent, but not random; you need to be really lucky in order to succeed, but you can also make choices along the way both to increase your exposure to serendipity and to maximize the opportunity to benefit from it.

Despite, or more likely, because of the incredible uncertainty that inevitably underlies their decisions, many investors and founders tend to project a disproportionate degree of confidence regarding choices and paths that you know are extremely high risk.  It’s easy to confuse this projected conviction with actual knowledge, and to allow yourself to believe that these individuals must really know what they’re talking about. 

On the other hand, as we’ll see, the very uncertainty of success makes achieving it all the more special.

Several recent interviews help provide a sense of perspective here.

Scott Galloway: Luck, timing, and the cultivation of allies

NYU Professor Scott Galloway, co-host of the popular Pivot podcast with Kara Swisher, was recently asked about what distinguishes highly successful people from everyone else.  He replied that “something that plagues people, especially tech bros, is they conflate luck with talent,” adding “the most common attribute” of successful people is that “they were born at the right place and the right time… the majority of people’s success is not their fault.”

This, of course, aligns extremely well with a central theme of Malcolm Galdwell’s Outliers, discussed earlier this week, and reviewed here.  Gladwell emphasizes the importance of being born in the right time and place, pointing to examples like Microsoft co-founder Bill Gates, and Sun Microsystems’ co-founder Bill Joy, among others.

Timing is also an underappreciated factor in VC returns.  A recent piece from the StepStone Group described the “Vintage Year Power Law… the notion that a small number of vintage years within venture capital have historically produced most of the returns for the asset class.”  

Galloway also emphasized the value of soft skills like ensuring you “collect allies,” which increases the chances that you are “are constantly put in rooms of opportunities.”

Michael Moritz: Even great success not obvious early on

Legendary Sequoia investor and former journalist Michael Moritz, in a wide-ranging interview, was asked about the ability to discern early on whether a founder and a company are likely to make it big.

His candid response (emphasis added):

“When you invest in a company … you hope it will work, that the product will be enthusiastically received by customers, but you don’t know that in real time. I have never been involved in an investment that became a very successful business, without fearing earlier that the business was going to fail, not even once.”

The interviewer followed-up, “Not even when you worked with the founders of Google in their early days?”

Moritz replied:

“Not even then. The initial business model was very different from the business model we know today, and during the first eight months of the investment the company lost a huge amount of money and I was afraid we would run out of cash.”

This echoes my favorite adage from famed Harvard surgeon-scientist Judah Folkman, discussed earlier this week, and also in this 2017 piece about success narratives:  

“If your idea succeeds, everybody says you’re persistent. If it doesn’t, you’re obstinate.” 

The key point is you need conviction to achieve success, you need to move in a particular direction (former Pixar CEO Ed Catmull makes a similar point in Creativity, Inc).  But – and this is what’s so hard – it’s often impossible to figure out along the way whether you are brilliant or deluded.  As Moritz points out, even Google – today a $2 trillion (with a “t”) company – wasn’t obviously a success early on.

Sam Blackman’s Story

Sam Blackman, a physician-scientist, is a pediatric oncologist by training (you can hear about his origin story on this 2018 episode of Tech Tonics) who pivoted to drug development.

He’s now the co-founder and head of R&D of Day One Biopharmaceuticals, a developer of cancer drugs for children. In late April, their lead drug candidate, tovorafenib (Ojemda), was granted accelerated approval by the FDA for use in a type of pediatric brain tumor.

This story is worthy of our attention for several reasons.

First, there’s the drug’s convoluted path to approval: as summarized independently by Bruce Booth, Jacob Plieth, and Ron Leuty, the “molecule was discovered in a collaboration between Sunesis & Biogen that started 20 years ago” as Booth notes, then reverted to Sunesis after Biogen deprioritized oncology.  Takeda licensed it in 2011, and spent seven years developing it for multiple myeloma, without success. 

Day One licensed it from Takeda in 2020, targeting a specific condition for which it seemed especially well-suited. (See Timmerman Report from May 2020 on the origin story of Day One Biopharma, and this deep-dive interview from Aug. 2021 with Blackman and co-founder Julie Grant on The Long Run podcast.)

Last month, their years of effort culminated in the FDA granting accelerated approval. This medicine is the first of its kind approved for children with pediatric low-grade glioma. It has shown it can shrink tumors in more than half of patients. This means that many children with this terrifying diagnosis may be able to avoid high-dose chemotherapy and all its toxic side effects, and instead take this medicine as a bridge to a healthy adulthood, when these types of tumors tend to subside.

It’s a life-changing medicine.

Those basic facts make for a compelling story. But what this account fails to capture, is the tortuous emotional journey of drug development from the perspective of those doing the developing.  Here we are unusually fortunate, because Blackman – an expert story-teller and Moth veteran – has given us a treat.

In a 12-minute video shared on LinkedIn, Blackman walks us through the experience of developing this medicine.  Blackman captures, in the most effective way I’ve ever seen, the interior monologue of drug development – the feeling of confronting tremendously long odds, the persistent hopes, the crushing disappointments, and all at a very personal and relatable level. 

It’s essential viewing for anyone curious why we in life science do what we do, and an expression of what, at our best and most fortunate, we can achieve.

While the video absolutely must be watched in its entirety – yes it’s worth your 12 minutes – I can’t resist summarizing just a few relevant highlights.

• A formative experience first learning about drug development during an in-house course at GSK, when the instructor told attendees to look at the person sitting to their left and to their right, and explained, “the odds are that none of you will ever work on a drug that gets approved. None of you.”
• His experiences in early cancer drug development, where he’d “work on programs where the science seemed totally understood, where the preclinical data was so compelling that it made me want to get that IND filed and get that drug into patients as quickly as possible — only to have something unexpected blow the program out of the water.”
• The feeling of constantly anticipating each new drug was going to be successful, and imaging what that would feel like, and then “a year would go by or two and it wouldn’t work. I’d see the data. They’d be meh.”

On his reflections after failures:

“I’d look back across failed programs, and sometimes I’d see the decisions that we made along the way about how to develop the molecule, and I’d see that those decisions were right, but the science was wrong. Or sometimes I look back and I see that the science was right, but we made the wrong decisions and choices. I’d look backwards and see all the could-have-beens and should-have-beens and the never-could-have-beens, and I realized, yeah, it’s possible that no matter how hard I work or how hard I tried, it may very well be that I could spend the remaining years of my career and have nothing to show for it, but having worked on a bunch of programs, never having made a new medicine.”

On the challenges of making critical decisions with incomplete and imperfect information.

“All of the times that we had to be right, and all of the times we had to not be wrong.”

On the contingency of success:

“I can look back now and see how rare it is to be at this point for all of us at Day One, to have arrived in this place and at this very moment together, because so many things had to work out just right.”

These small excerpts don’t begin to do justice to the magnificence of Blackman’s talk (again: please watch!), but they highlight just how incredibly difficult and fraught it is to get a new drug to patients. 

But when it happens — when, as Blackman says, you touch your dream for the first time — “it feels absolutely magical.”

Film and pharma, like many creative endeavors, exist in a world of power law economics, where a handful of exceptionally successful products account for a massively disproportionate share of the total revenue. 

Consequently, in both domains, there’s a powerful incentive to “pick winners.” Every studio head and every R&D leader tries desperately to do this. 

But there’s a problem: as screenwriting legend William Goldman (The Princess Bride, All The President’s Men, Butch Cassidy and the Sundance Kid) famously observed.

“Nobody knows anything.”   

The full quote, from Goldman’s classic 1983 memoir, Adventures in the Screen Trade, continues, “Not one person in the entire motion picture field knows for a certainty what’s going to work. Every time out it’s a guess and, if you’re lucky, an educated one.”

Similarly, distinguished physician-scientist and former head of R&D at Merck, Dr. Roger Perlmutter, bluntly acknowledges, “we have no idea what we’re doing,” adding, “It’s a bloody miracle if you ever make a drug that works.”

Revenue predictions in pharma ahead of launch are also notoriously difficult to predict, as studies by both BCG and McKinsey have affirmed. Earlier stage (pre-Phase 2) forecasts – the sort of thing former NIBR head Mark Fishman wisely banned, but current management has reinstated – seem especially fraught (see here).

Yet beneath this truth lie two conflicting realities.

1. As appealing as the narrative of drug development moving gracefully between biology and clinic is, with “line of sight” thinking and guided by a target product profile, the actual process tends to be far messier, particularly in the case of novel mechanisms;
2. Even though a huge number of lucky breaks are required to achieve a blockbuster, this does not mean that such success is simply random, equally available to anyone who buys a lottery ticket.  Talent, taste, and teamwork are vital as well, not to mention judgement and determination. 

The real lesson is that in power law domains like film and pharma, success is incredibly difficult to achieve.  You need both a huge amount of good fortune and a team that actively seeks opportunities to benefit from serendipity.

A good team has the mindset, competence, and agility to leverage effectively whatever luck comes their way. 

Path To A Blockbuster Drug: Messier Than You’d Think

In a fascinating recent interview, R&D productivity scholar Jack Scannell (of Eroom’s Law fame) discusses what might be called the noble lie of drug development: the conceit that we have the ability to understand adequately and domesticate reliably biology. Nassim Taleb and I wrote about this in the Financial Times in 2008.

Scannell explained that to advance a candidate medicine in a drug development organization, you need a very clear and crisp story of why you think it’s going to work, in order to compete successfully for resources.  He also notes that every time a drug is successfully developed, there’s always a just-so story explaining why the process worked.

The problem, Scannell accurately points out, is that these narratives evolve over time – an approach that in retrospect seems logical and methodical (and hence, presumably, repeatable) yet was almost certainly far less structured and streamlined in practice. 

If there’s a canonical path for drug development, many first-in-class medicines never got the memo.  Scannell cites the example of anti-TNF drugs, which were initially developed for sepsis; they didn’t work.  Only later were anti-TNF candidates tried in inflammatory conditions like rheumatoid arthritis; products in this category today include Humira (cumulative global sales of around $200B) and Enbrel (cumulative sales of around $74M as of 2021, estimated to hit $100B by 2029). 

Similar examples abound.  Botox (as I’ve discussed, see here, here) was originally developed and FDA-approved as a medicine for strabismus; sildenafil (Viagra), famously, entered clinical trials as a potential treatment for angina.

Pembrolizumab (Keytruda), Merck’s blockbuster oncology drug, as I discussed in depth here, was initially developed by researchers at Organon Pharmaceuticals in Oss, the Netherlands, as part of a hunt for an inhibitor of the immune system to help patients with autoimmune disease. 

When a stimulator (technically, an inhibitor of an inhibitor) was discovered instead, researchers contemplated a range of uses including as an anti-viral medicine and as a vaccine enhancer, before setting on developing it as a potential cancer medicine.  Even so, it was effectively invisible to the R&D leadership of multiple companies for years, including Merck which was on the edge of out-licensing it, only pulling it back in at the last moment. 

Or consider my former employer, Takeda, which acquired Millennium Pharmaceuticals in 2008 for $8.8 billion in order “to bolster its cancer drug business,” according to Reuters. At the heart of this transaction was bortezomib (Velcade), a cancer drug Millennium acquired when it bought Leukosite in 1999 for its pipeline, most notably a share the drug Campath (later sold to ILEX which was then acquired by Genzyme).  At the time of the acquisition, Millennium “had no interest in bortezomib,” and was effectively unaware of its existence. 

Leukosite, for its part, had acquired bortezomib from a company called ProScript after it ran out of money; ProScript, meanwhile, began life as Myogenics, a company co-founded in 1993 by Harvard scientists Alfred Goldberg, Tom Maniatis, Kenneth Rock, and Michael Rosenblatt.  The company was focused on targeting the proteosome, which is involved in protein degradation.  The original goal was to help treat disorders of muscle wasting, hence the name.  But in 1994, after a compelling conversation with Israeli researcher and future Nobel laureate Avram Hershko, the startup’s head of research, Julian Adams, decided to pivot to cancer (and change the company’s name to ProScript). 

As Goldberg later reflected, “Most scientists do not realize how the progress of drug development depends so much on nonscientific issues and random events — and luck.” 

The broader point is that while both Velcade and Keytruda are important oncology medicines ultimately developed successfully by Millennium and Merck, respectively, the origin and early evolution of each was incredibly messy, and effectively the antithesis of the carefully scripted process we might have been tempted (or seduced) to imagine. 

Similarly, anti-TNF medicines weren’t initially developed to treat rheumatoid arthritis, Botox wasn’t developed to treat wrinkles, sildenafil wasn’t developed for erectile dysfunction. Moreover, as Morton Meyers documents in Happy Accidents (see my discussion here), many categories of medicines used in psychiatry were originally discovered through astute clinical observation rather than deliberate drug design focused on the particular indication.

Path To A Blockbuster Film Franchise: Messier Than You’d Think

The Marvel Cinematic Universe (MCU), featuring Spiderman, X-Men, Iron Man, The Hulk, Thor, Captain America, Black Widow, and many others is the single most successful franchise in movie history, netting nearly $30B in global box office so far, and much more in associated licensing.  These are impressive numbers even by pharma standards.

Much like the eventual success of Keytruda and Velcade, the triumph of the MCU was hardly inevitable, as a fascinating new book, MCU, and an engaging Wall Street Journal podcast series, “With Great Power,” both reveal.

Marvel Comics, founded in 1939 as Timely Comics, enjoyed its heyday in the 1960s, as writer Stan Lee led the development of such memorable characters as the Fantastic Four, X-Men, Spiderman, Ant Man, and Iron Man, among others.  After a series of financial transactions starting in 1968, Marvel wound up in the hands of corporate raider Ronald Perelman in 1989.  Perelman, in turn used the company as a vehicle to acquire other companies including a sports card company and a sticker company, loading up Marvel with extensive debt. 

In 1990, Marvel sold licensing rights to ToyBiz, a company owned by entrepreneur Ike Perlmutter, an emigree from Israel who had made his fortune in the U.S. as a liquidator, buying products from failing businesses and selling them to consumers at a small markup.  The profits from this enabled him to acquire and turn around distressed companies instead of products; for example, he acquired and later flipped Caleco to Hasbro, pocketing $40 million in the process. 

In 1990, Perlmutter acquired the struggling toy maker ToyBiz, and hired inventive toy creator Avi Arad (another Israeli emigree) to help the company come up with new products.  Having watched the sales of Batman toys go through the roof with the release of Tim Burton’s Batman in 1989 (ToyBiz had a non-exclusive license to DC characters), Perlmutter pursued and acquired the exclusive rights to Marvel characters from Perelman.  The sales of these were sufficiently encouraging to encourage Ike to strike a new deal with Perlman in 1993: Marvel would get 43% of ToyBiz and in exchange, ToyBiz would gain exclusive licensing rights for all Marvel characters into perpetuity.

To support Marvel’s struggling balance sheet in 1993-1994 – and to stimulate the sale of toys – Marvel, in a deal led by Arad, sold the movie rights to X-Men and the Fantastic Four to 20^th Century Fox. But Marvel couldn’t stave off the inevitable, and in 1996, the company declared bankruptcy, with the intention of restructuring their debts.   

Unexpectedly, a fight ensued between Perelman and another well-known corporate raider, Carl Icahn.  In 1997, ToyBiz abruptly parachuted into the middle of this dispute with an unsolicited offer of their own to acquire Marvel, showing up uninvited to a meeting of creditors to make their pitch.  After a lengthy legal fight, ToyBiz was awarded the business in 1998. 

The future of Marvel was now in the hands of a toy company.

Desperate for cash, Perlmutter soon cut a deal for Spiderman with Sony (who already owned a sliver of the rights, from an earlier tractions).  Marvel received $10 million plus 5% of the profits – in addition to whatever they made from any Spiderman-related toys.  The movie, which came out in 2002, did fairly well, achieving a box office of more than $100 million.  When Perlmutter saw this, he was furious, and decided he gave away too much to Sony in this transaction. 

In 2003, a savvy young business whiz named David Maisel met with Perlmutter and floated what was a radical idea at the time: perhaps Marvel could make its own movies, rather than just license the rights to others.  By controlling the production, Maisel said, they could better coordinate the timely development and sale of movie-related toys, which was always what Perlmutter saw as the key source of revenue. 

Maisel eventually persuaded Merrill Lynch to provide $525 million, enough to make two movies; as collateral for this, Marvel offered up movie rights to a broad portfolio of their characters.  After conducting focus groups with children, Marvel decided that the most popular toy would be one based on Iron Man, and so this was nominated to be the movie they filmed first.

Overseeing this project would be a Marvel fanatic named Kevin Feige, who was hired by Arad in 2000 after seeing Feige’s contribution to an X-Men movie that was made in the late ‘90s and released in 2000, produced by Lauren Shuler-Donner, for whom Feige was working as an assistant at the time. 

Feige and Maisel, in turn, both selected Jon Favreau to direct Iron Man. This was critical to the movie’s eventual success, not least because Favreau identified Robert Downey Jr as the ideal actor to portray Tony Stark, and then passionately advocated for him despite Perlmutter’s strenuous objections (Downey was considered a risky choice because of his well-known history of substance abuse). 

Favreau eventually won, Downey joined the cast, and other talented actors and crew members were soon drawn by Downey’s presence.  Downey turned out to be perfect for the role, the movie was an enormous success, and the franchise was launched, steered by Feige’s vision for an integrated series of films all taking place in a coherent universe – the MCU.

Interestingly, Favreau got the opportunity to direct Iron Man in part because of his success directing the 2003 Christmas classic Elf, starring Will Ferrell. Favreau had heard about Elf in 2001 when he was guest directing an episode of a TV show called Undeclared, created by Judd Apatow, who shared a manager with Ferrell.  The TV show opportunity, in turn, resulted from the success of his 1996 cult classic, Swingers – a film that he wrote in less than two weeks after his dad sent him screenwriter software and for amusement, he thought he’d try it out. 

Favreau barely managed to get Swingers financed (ultimately a friend of the director’s father ponied up $200,000). He struggled to film the picture on this tiny budget, relying on friends, spare supplies, and unpermitted locations often requiring guerilla filming tactics to complete a take rapidly before he was kicked out.

In short: the MCU was launched from the success of Iron Man, driven largely by the appeal of Robert Downey Jr, who was cast only because director Jon Favreau had insisted, and Favreau was in the director’s chair only because of a remarkable series of fortunate events. 

Contingent but not Random

While the successful development of blockbuster movies and medicines clearly requires a huge number of unplanned and perhaps unplannable things to go right, their successes, critically, are not random either. 

Luck may be necessary, but it’s hardly sufficient.

The launch of the MCU, for example, clearly involved an exceptional amount of luck but it also required extremely talented people, in this case a balance sheet-focused business executive, Ike Perlmutter, joined by the creative Avi Arad; a visionary finance strategist, David Maisel; an imaginative, ultra-high-EQ subject matter expert, Kevin Feige; and a director with great taste and an expansive network, Jon Favreau. 

It would be a mistake to attribute the coalescence of this team to dumb luck.  Feige, for example, had attended film school at USC after applying six times (he was rejected the first five), and then pursued an internship with the Hollywood power couple of Laura Schuler-Donner and Richard Donner (Richard had directed the 1978 film Superman, starring Christopher Reeve). 

Maisel, drawn to the entertainment business, had apprenticed with legendary superagent Michael Ovitz after first attending Harvard Business School and spending time at the Boston Consulting Group.  Favreau, meanwhile, had spent years hustling in Chicago and Los Angeles as an aspiring actor and director; bit parts include “D-Bob” in Rudy (1993), and “Eric the Clown” on an episode in the fifth season of Seinfeld (1994).

In Outliers (my WSJ review here), Malcolm Gladwell discusses underappreciated factors that can contribute to success, such as hours of practice and hard work.  As I noted, “For the Beatles, the hard work of marathon engagements in Hamburg’s red-light district early in their careers was crucial. ‘By the time they had their first burst of success in 1964,’Mr. Gladwell writes, ‘they had performed live an estimated twelve hundred times. Do you know how extraordinary that is? Most bands today don’t perform twelve hundred times in their entire careers.’”  Similarly, Bruce Springsteen, in his captivating autobiography, cites his years of experience in a bar band as critical for his later success. 

Seth Stephens-Davidowitz, in Don’t Trust Your Gut (see my discussion here), also examines how artists can increase their exposure to serendipity by getting themselves out there rather than waiting to be discovered.  Maisel, Feige, and Favreau, in evolving their careers, all seem to have chosen, deliberately, to put themselves in the path of serendipity, maximizing their chance to get lucky.  Maisel worked with Ovitz, Feige went to USC film school and then worked with Schuler-Donner, and Favreau keeping himself in the mix as an actor (and later director), as frustrating as that must have felt for most of his early career.

The success of Keytruda and Velcade, also, required more than just good luck.  While Merck’s head of R&D Roger Perlmutter wasn’t responsible for the Keytruda’s discovery and early development, he soon recognized the promise of the drug, and ensured Merck was all-in on its development, independent of whatever his (and Merck’s) preexisting strategic plans might have been. Similarly, the championing of Velcade by Julian Adams was essential to its development — not least his role in persuading a skeptical Millennium to resource it after the acquisition of Leukosite.   

What Is To Be Done?

On an individual level, it seems like a good idea to stay in the mix as much as possible, not least because the people you work with on a failed program today might be some of the same people you might work with on a successful drug tomorrow, and the skills and instincts you develop along the way in the trenches enable you to become increasingly effective, assuming you are curious, industrious, and collegial.

On a company level, it’s more complicated. Most large pharmas are built around a degree of planning and projection that works beautifully in Excel and Powerpoint.  However, the approach generally doesn’t meaningfully acknowledge, much less come close to describing, the messy reality of novel product development. 

This discrepancy suggests there must be an incredible arbitrage opportunity here for more agile leaders and nimbler organizations, and presumably this is what venture-backed biotech start-ups are effectively doing. It’s not surprising to learn that only a quarter of new approvals in big pharma originated in-house, and unless big pharma can truly figure out how to industrialize and brute-force innovation, I’d be surprised to see big pharma’s in-house number go anywhere but down.

Stay Humble

It seems only appropriate to conclude a piece around uncertainty with several humbling reminders.

As Judah Folkman, a pioneering surgeon-scientist and a great champion of innovation at Harvard famously observed, “If your idea succeeds, everybody says you’re persistent. If it doesn’t, you’re obstinate.”  

In other words: to pursue any idea, at some point, you have to just put your head down and go after it; the problem is you have no way of knowing until afterwards whether you were right.

This lesson has particularly poignancy in the case of Folkman, who is perhaps best known for advancing the thesis that to grow beyond a certain size, cancers need to acquire their own blood supply, and if you can inhibit the grow of new blood vessels – for example, with drugs targeting VEGF — you might be able to starve and kill cancers.

It now seems, as Scannell points out in his interview, that these anti-VEGF cancer medicines, like Avastin, might work in other ways. As MGH cancer researcher Rakesh Jain wrote in 2014, these “agents could transiently ‘normalize’ the abnormal tumor vasculature, resulting in improved blood perfusion,” and helping other anti-cancer treatments (both drugs and radiation) work better. 

Thus, the medicines Folkman was championing might work, but perhaps not for the reasons he thought.

We might give the last word to former Pixar CEO Ed Catmull, who wrote an entire book, Creativity, Inc., about the challenges of serial creativity, and the need to successively reinvent yourself each time (see my discussion here). 

While readers “often thanked him for sharing his formula for surefire creative success,” the Wall Street Journal reported in 2023, the book conspicuously makes the opposite point: there isn’t “a template” for success – at best, he allows, there is perhaps “a way of thinking.”

Catmull’s insight bears repeating: inconveniently, there just isn’t a ready formula for creative success.  Catmull was talking about original movies in particular, but he could just as easily have been discussing original books, songs, drugs, or even venture investments, which all obey power law dynamics. 

Even if you are part of a team that has delivered an outsized success, or the CEO of the organization responsible, it doesn’t mean that you can now apply what you’ve learned and simply do it again, or that your organization can now apply these tidy “lessons learned.”  

I find it liberating to recognize that there isn’t a secret formula for innovative success in pharma (or any other creative domain ruled by the power law).  It means we don’t need to distract ourselves wondering whether we are doing it “right,” or worry if we’re not following the putative example of previous successes (which would be particularly misguided given the post-hoc narrative biases Scannell describes). 

Novel, impactful medicines – like novel, impactful films – are incredibly difficult to create, and require an exceptional amount of luck. 

What we can control, however, is how we approach this challenge:  with authentic intellectual curiosity, and colleagues who are talented, inquisitive, and nimble, approaching their work with conviction yet able to pivot in response to new information. 

True, we may not succeed.  Yet as screenwriter Charlie Kaufman observed, “If you don’t risk failure, you’re never going to do anything that’s different from what you’ve already done or what somebody else has done.”