SR One Posts Help Wanted Ad, Again

Wanted: Senior investor to oversee strategy for one of the largest -- and certainly the oldest -- biopharma corporate venture groups. Brand management and team building skills a must. May report directly to CEO--or not. (Details TBD.) Persons interested in a long term stint need not apply.

Admittedly, this isn't the kind of ad GlaxoSmithKline would actually publish as it searches -- yet again -- for a new head of its corporate venture group, SR One. But given the rapid turn-over in the top spot, senior investors might want to think twice before throwing their names into the ring for consideration.

It's hard to believe SR One isn't a mess. Just over a year after Russell Greig departed from the corporate venture group, comes the April 4th announcement that his successor, Christoph Westphal, is also jumping ship. Westphal is leaving to devote his energies to his other venture fund, Longwood Founders Fund, which announced an $86.9 million close in December 2010. In a statement, GSK's head of R&D Moncef Slaoui recognized Christoph's contributions, noting "he has brought an entrepreneur’s perspective to our thinking on venture capital investments and deals."

It's been a revolving door for SR One's leadership since 1999, when the group's original founder, Peter Sears departed. (If you are keeping tabs, in addition to Greig and Westphal, Brenda Gavin (now with Quaker Bioventures), Barbara Dalton (now with Pfizer Investment Group), Tamar Howson (currently at JSB-Partners), and Joyce Lonergan, have all held top honors at the firm over the years.)

Not that Westphal's departure is all that surprising. His tenure has been rife with controversy. First there was considerable debate about how the founder and former CEO of Sirtris could realistically wear two venture hats simultaneously, a potential conflict of interest that was explained away by the very different investment theses of the two groups. More problematic, however, have been Westphal's ties to the Healthy Lifespan Institute.

Founded in 2009, the non-profit group's mission is to educate the public about the aging process and research non-pharmaceutical approaches to living longer, healthier lives. But the Institute entered some very murky waters when it subsequently began selling a dietary supplement version of resveratrol, potentially undercutting GlaxoSmithKline, which thanks to its $720 million purchase of Sirtris in 2008 was developing a proprietary form of the compound, SRT501.

That compound has had it's own troubles, with the GSK division halting enrollment of new patients in a Phase II clinical trial testing the substance as potential multiple myeloma treatment (for more see here, here, and here).

The Healthy Lifespan debacle was a distraction SR One didn't need. Recall Wesphal's predecessor Greig was brought on in 2008 to remake SR One, ambitiously retooling the organization with a two-fold mission of making external investments while simultaneously spinning out start-ups founded around wholly owned GSK IP. It's a strategy SR One attempted--and failed to realize--in the past, but with Greig reporting directly to CEO Andrew Witty, industry wags thought a transformation was in the offing.

But with Westphal taking over last year, whatever retooling was underway seemed to come to a full stop. Back in October 2010 GSK announced the rare spin-out: After a portfolio cull, the big pharma jettisoned late stage pain and depression assets, working with VCs SV Life Sciences and New Leaf to form Convergence Pharmaceuticals. But SR One didn't play a role in the new co's creation; that honor goes to Simon Tate, previously a VP in GSK's Pain and Epilepsy Discovery Performance Unit (he's now CSO of Convergence), who took the idea for the spin-out, plus a letter of intent from outside VCs, directly to GSK's R&D Executive Committee.

Given spin-outs are notoriously hard to do, it's perhaps not surprising SR One hasn'tblazed a trail in this area. But it's not as if the VC has been on a dealmaking tear since Westphal became its leader. In 2010 SR One staked just three new companies, co-leading or leading the Series B financings of NeuroTherapeutics, Constellation Pharmaceuticals, and Semprus Bioscience Group. According to Elsevier's Strategic Transactions, the group has announced just one deal in 2011, participating in the $35 million Series B of vaccine developer Genocea Biosciences. (It was also a Series A backer.)

If Westphal's departure, which will come some time later this year, isn't surprising, it's probably also no accident. GSK, in the vanguard to improve big pharma R&D productivity via the creation of smaller, more biotech like units, is also remaking its business development team. Come April 18, Ian Tomlinson, currently head of Biopharmaceutical R&D, will take on the additional role as head of world-wide business development. (He'll be replacing long time SVP Ad Rawcliffe -- who also once helmed SR One -- who moves to a new role as head of finance for GSK's North American Pharmaceuticals business.)

It's a fair bet that Tomlinson, who also has entreprenuerial bona fides having co-founded the second-generation antibody play Domantis, may want to weigh in on who captains the SR One ship. With R&D and biz dev rapidly converging, it's natural to think SR One can operate in a strategic role bolstering the activities of the transactions team, making investments in early stage companies not yet ripe for traditional business development deals. Such investments give GSK an early look -- and potentially a deal-making IN (though that's controversial) -- into potentially important cutting edge technologies and/or drug targets.

At this juncture, more questions than answers swirl around the future of SR One. Will the group's modus operandi change yet again? (Maybe the stalwart will embrace the more new fangled option style financings best associated with Novartis' option fund, where in addition to equity there's also the potential for a licensing transaction.) Will it continue to report to Witty or, like most other corporate venture groups, report into either finance or the R&D organization? How should such a group support the external goals of GSK's changing business development team?

Clarity will hopefully come when a new leader is named later this year. Stay tuned.

Image courtesy of flickrer cote used with permission through a creative commons license.