[The Baltimore Sun]
David and Isaac Blech like to start companies. In fact, in the past eight years, they have started companies nearly as often as many people have gone to the dentist: about once a year.
Still, though Wall Street certainly knows them, the Blechs are far from household names.
But if all goes as the brothers plan — and so far they say their plans have been outstripped by reality — the founders of Baltimore’s Nova Pharmaceutical Corp. will have the fully integrated pharmaceutical giant they want.
“The whole thing has exceeded our expectations,” Isaac Blech, a 38-year-old former advertising executive, said in an interview in their office on Wall Street.
“We’re the major company in Baltimore as far as emerging biotechnology,” said David Blech, 32, a former stockbroker. “We’re looking to be a major force in the pharmaceutical industry, to the point where we can be a model to companies growing up in that industry as well as the biotech industry in the area.”
The publicity-shy brothers, natives of Brooklyn, N.Y., have increasingly drawn the attention of the biotechnology world to Baltimore.
Local government officials and business executives frequently point to the company as one of the more promising players in the region’s drive to be a major center for the high-technology and biotech industries.
The company’s hopes are currently pinned on the development of a new family of drugs, called bradykinin antagonists, that would block the symptoms of the common cold and might relieve the pain associated with severe burns and an array of skin irritations. Nova has also developed an implantable drug-releasing tablet that is being tested for use in fighting brain tumors.
In addition to creating its own drugs, Nova has established alliances with some of the nation’s largest chemical concerns to screen their drug “libraries” for potentially useful compounds.
The company’s work has attracted such pharmaceutical and chemical heavyweights as Marion Laboratories, the Celanese Corp. and, recently, SmithKline Beckman Corp. The larger companies have provided funding either through the direct purchase of Nova shares or in conjunction with research and development alliances.
With 188 employees in its three Baltimore locations and nearly $100 million either promised or in the bank, the company is now poised to concentrate on a long-term period of development and growth, the Blechs said.
“These guys have enough money to survive until the early 1990s, when their ship comes in,” said David M. Bartash, an analyst with Dean Witter Reynolds in New York. “If their ship comes in. This is very much a development-stage company.
“But it really does look like a very, very first-rate organization,” Mr. Bartash said.
Photo caption: Nova Pharmaceutical Corp.’s high-powered board of directors includes (left to right) Edward Hennessy Jr., former President Gerald R. Ford, founders David and Isaac Blech and Dr. Solomon H. Snyder of the Johns Hopkins University.
The company’s plans to build a new “world-class” headquarters and consolidate its operations into one site also would help the company shake its appearance as being stuck in the formative stages.
The brothers, who are quietly discussing the possibility of a move to the Bayview Research Campus in East Baltimore with the Deme Corp., a for-profit business and real estate unit of the Johns Hopkins University.
The brothers, who persistently attempt to divert the public spotlight away from themselves and onto their companies, rarely credit themselves with knowing much about science.
Instead, they said, their talent is in hiring the right people and staying out of their way.
“The idea is to have the best scientists, the best businesspeople, and you create a war chest so that they’ll be around for many, many years,” said Isaac Blech.
“We don’t want to meddle too much, hopefully,” his brother interjected.
“They’re not working for us, we’re working for them,” Isaac said, adding his comment over David’s continuing answer.
“We don’t want companies to rely on us, because that means there’s not enough expertise in-house,” David finished.
Working from their sleek new office overlooking the New York harbor from the southern tip of Manhattan, the two men are more identifiable as brothers by the way their comments overlap and their logic intertwines than by their looks or manner.
Constantly finishing the others’ thoughts and good-naturedly playing off the other’s search for the right word, the brothers seem almost symbiotic in the way they complete each other.
Dr. Solomon H. Snyder, whose research as the director of the department of neuroscience at Johns Hopkins was the underpinning for the start of Nova, said the two men are equally soft-spoken but at the same time are insistent with each other in their personal dealings.
“They have a clear idea about how they function, so they don’t have any conflicts,” said Dr. Snyder, a close friend of the Blech family who dedicated his last book to the brothers, their two sisters and parents.
“I could easily conceive of them working together into their 80s.”
At least until now, their work together has paid off handsomely.
Since 1980, when the Blech brothers amassed in the stock market, the Blechs founded their first company, Genetic Systems Corp., in Seattle in November 1980 after convincing a noted Seattle microbiologist, Robert Nowinski, to lead the enterprise.
In a move to be repeated at all their companies, the brothers quickly went to the over-the-counter public market to raise needed money for financing. Within a year, Genetic Systems had raised more than $13 million.
The building of Genetic Systems “helped us understand the financial elements of what these kinds of companies can be worth as well as the experience of building a powerful research company,” David Blech said.
“That put the Blechs into other venture-capital types of opportunities to the public at the earliest possible stages,” he said.
Playing on the lessons learned and the financial clout provided them through their first biotechnology venture, the brothers have started six additional companies, including Nova.
Their holdings now include firms active in agricultural biotechnology, medical devices, lasers, movie production and chemicals.
The Blechs’ mother, Esther, is a major stockholder in many of their companies.
The Blechs received their first taste of what their companies’ worth could be when they sold Genetic Systems to Bristol-Myers Co. for $294 million in 1986.
The brothers received at least $10 million from the sale, based on the number of Genetic Systems shares they owned.
Nova’s beginning provide a glimpse into how the two brothers became what one analyst called the “wunderkinds of biotechnology.”
After talking with their scientific consultant, Dr. Lloyd H. Schloen, the two men approached Dr. Gavril W. Pasternak, an associate member of the Memorial Sloan-Kettering Cancer Center in New York. Dr. Pasternak, who had done graduate work, to talk with his former teacher and mentor, Dr. Snyder at Johns Hopkins.
“I directed them to Sol for a very simple reason,” said Dr. Pasternak, “He is one of the smartest, brightest, shrewdest people that I have ever met in my life.
“I said, ‘if you really want to make a go of it, the guy you should really talk to is Sol Snyder.'”
In a telephone call, the Blechs and Dr. Synder scheduled a lunchtime meeting at Danny’s Restaurant on Charles Street.
“Snyder had in mind his dream of a pharmaceutical company,” said Isaac Blech.
“But he was just too busy to get it going,” David Blech said. “We represented that vehicle for him.”
After the lunch with Dr. Snyder, the brothers went back to New York.
Isaac Blech, who still helps write the “important” press releases for the company and oversees the design of the annual report, chose the name Nova, or “new,” Pharmaceutical.
The Blechs chipped in $500,000 and set out to recruit Donald G. Stark, president of the pharmaceutical group of Sterling Drug Inc., as Nova’s first president.
Within the next few years, the company raised about $8 million in a public offering.
An early research-and-development contract with Marion Labs gave the company both extra cash and much-needed legitimacy.
A later $10 million investment from Celanese helped seal the early success of the company.
Now, the Blechs said, they have collected for their companies reads like a who’s who of American business, including the present or retired heads of Celanese, International Business Machines, Monsanto, Merck, Chase Manhattan Bank, Allied-Signal and PepsiCo.
The members of the companies’ scientific panels are equally impressive.
“It interested me because of the long, long interest I’d had in research both in government and outside,” former President Gerald R. Ford, a Nova director, said in a telephone interview.
“I was also attracted to the kind of people they had on the board. I’m very proud of my association with the company,” he said.
The board, which includes members and scientific advisers, is probably also pleased with certain stock benefits the Blechs provide. For example, Mr. Ford has options to buy 50,000 shares of Nova stock, with a current market price of $7.50, for 1 cent a share.
In addition to the people they hire, the Blechs credit their success to the simple manner with which they do business. They insist strongly that they do not try to run them.
With at least eight years of successes behind them, the Blechs seem somewhat surprised by what they’ve accomplished. And Nova, they said, could be their shining star.
“I think what’s interesting,” Isaac Blech said, “is the power of an idea that it can translate into a company with 50 high-powered Ph.D.’s and $100 million behind it.
“And that is just the beginning.”
* * *
The Blech companies
These are the eight companies founded by David and Isaac Blech during the 1980s. Except for Genetic Systems, they are all traded on the NASDAQ National Market System.
Genetic Systems Corp., Seattle. Founded in November 1980; went public in June 1981. Sold to Bristol-Myers Co. in Feb. 1986 for $294 million. The diagnostic research development, marketing and manufacturing concern is working on tests for AIDS and other blood viruses, among other things.
Cambridge BioScience Corp., Worcester, Mass. Founded in March 1981; went public in March 1983 at $5 a share; closed Friday at $13 1/2 a share. The medical device company is working on the development of a five-minute test for AIDS antibodies. The Blechs directly own less than 1 percent of the 5.9 million shares outstanding. The company is currently involved in an offering of 2.3 million shares at $11 a share.
DNA Plant Technology, Cinnaminson, N.J. Founded in 1981; went public in January 1984 at $5.75 a share; closed Friday at $4.25 a share. An agricultural biotechnology company that was spun off from Campbell Soup Co. Among its projects is development of a “super tomato.” The Blechs directly own less than 1 percent of the 11.7 million shares outstanding. The company is currently merging with Advanced Genetic Sciences Inc.; DNA Plant Technology will be the surviving company.
Nova Pharmaceutical Corp., Baltimore. Founded in July 1982; went public in July 1983 at less than $1 a share; closed Friday at $7.50 a share. This biotechnology and pharmaceutical company is working with drugs for treating certain central nervous system illnesses, an implant for treatment of brain tumors and receptor-based compounds to develop a powerful analgesic. The Blechs own 13.8 percent of the 23.4 million outstanding shares. A recent agreement with SmithKline Beckman Corp. will result in the issuance of an additional $49 million in stock over the next four years.
Lasersciences Inc., Albuquerque, N.M. Founded in December 1982; went public in 1983, closed Friday at a bid price of $1.75 and asked price of $1.81 a share. This high-technology firm uses lasers for a variety of uses, including laser writing systems and optical sensors. The Blechs own 23 percent of the 11.7 million outstanding shares.
Vista Organization Ltd., New York. Founded in June 1983; went public in June 1983 at less than $1 a share; closed Friday at $2.25 cents a share. Vista is a film and television movie development and production company and videocassette distributor. The Blechs own and percent of the 13.35 million shares outstanding.
Hygeia Sciences Inc. Founded in July 1986; went public in July 1987 at $11 a share, closed Friday at $10.25. This biotechnology firm uses natural biological reactions to produce industrial chemicals for companies in the health-care, agriculture, textiles, paper and specialty chemicals industries. The Blechs own 8.8 percent of 5.2 million outstanding shares. The company was created in partnership with the Celanese Corp.