Michael Hayden: In The Genes

When Michael Hayden was a doctor at Children’s Hospital Boston, a teaching arm of Harvard Medical School, he did the unthinkable: he left – for a position at UBC.

“When I told people in Boston and Harvard, they thought I was crazy. Some suggested I see a psychiatrist. They said I was committing academic suicide – I’d lost it.”

But going his own way has paid off. Not only has Hayden found a rewarding career at UBC, he has found an equally gratifying sideline as a life sciences entrepreneur, launching three biotech startups since his arrival. Last year the latest of his startups, Victoria-based Aspreva Pharmaceuticals Corp., hit a home run when it was sold to Swiss pharmaceutical giant Galencia Holding AG for nearly $1 billion US. In just six years, the biotech’s value had grown a thousandfold from an initial million-dollar seed investment. Not only that, but Aspreva fulfilled a lifelong personal ambition of Hayden’s to find treatments for patients with rare diseases who are often brushed aside by the pharmaceutical ­industry.

BCBusiness caught up with Hayden at the Centre for Molecular Medicine and Therapeutics, a Vancouver-based research institute that he co-founded and where he serves as director. Hayden, who multi-tasks as effortlessly as most people breathe, is also a genetics professor at UBC, a Canada Research Chair in Human Genetics and Molecular Medicine, a senior scientist at the Child & Family Research Institute, the chief scientific officer for Xenon Pharmaceuticals Inc. and chief medical advisor for Aspreva.

Our interview takes place in a windowless boardroom that gives away little about the organization or its director. A few formulas written on a whiteboard are the only clue that anything scientific transpires here. Hayden slips into a chair, quietly introducing himself. “Michael Hayden,” he says.

Dressed casually in black from head to toe, he seems more like an academic than a businessman. He’s slim, with cropped hair, and he looks at you intently while he speaks – often at breakneck speed – as though he has a lot to say and not much time to say it. Hayden’s South African accent is still apparent, and South Africa is the first thing we talk about.

Born in 1951, Hayden grew up poor in Cape Town. His parents divorced when he was eight, and he lived with his mother. By South African standards, this was unconventional. So was the fact that his mother had no servants and never drove a car, preferring instead to scoot around on her Vespa. She was a courageous woman who invited blacks into her home – an illegal act at the time that could have landed her in jail. “I learned very quickly to be my own focus, not to worry about being different,” Hayden explains.

Hayden originally planned on becoming a lawyer but thought better of it. “Very quickly I realized that as a lawyer my role was to uphold the law, not to change it, and that wasn’t something I was very excited about,” he explains. Opting instead for medical school at the University of Cape Town, he graduated in 1975. Then, inspired by Peter Beighton, a “crazy professor” of his, he stayed on to take a second degree: a PhD in genetics.

Hayden often accompanied Beighton on his frequent trips to the countryside. On some of these trips, he saw young children dying because increased bone density in their skulls was putting pressure on their brains. “You had to drill a hole into the skull of a young child to save a life,” Hayden recalls. “Often you didn’t get there in time.” The condition was rare, found in just 50 or 60 families in South Africa, but it gave Hayden an idea that could potentially help many more. He thought that if he knew what was going on with these children, he might be able to treat people with the opposite, more widespread disorder: low bone density, or osteoporosis. It was a powerful insight that Hayden would exploit many years later: in genetics, uncommon cases are often the key to understanding the common ones.[pagebreak]

While studying for his PhD, Hayden developed what turned out to be a long-term involvement with Huntington’s Chorea patients. The devastating genetic disease hits about one in 10,000 people, causing uncontrollable movements and progressing to dementia. Back then no one thought it ex­isted in Africa, so when Hayden saw a patient suffering from it, he reported the finding to his professor. Beighton replied with a seemingly offhand comment: “H is for Hayden; H is for Huntington’s. Why don’t you spend your time on Huntington’s?”

The suggestion would profoundly affect the direction of Hayden’s career.

Hayden visited families afflicted by Huntington’s and by his mid-twenties had seen hundreds of them. He was well on his way to becoming an expert on a disease that was not well understood. In 1978 he was invited to speak at a Huntington’s conference in San Diego, and that’s where he met Marjorie Guthrie, widow of the folksinger Woody Guthrie, who had died of the disease. With the help of Senator Ted Kennedy, she had just succeeded in getting the U.S. Congress to establish the Commission for the Control of Huntington’s Disease and its Consequences. She was keen to have Hayden come to the U.S. to find a cure. The idea appealed to him, especially since the police in apartheid South Africa were starting to give him trouble. “My phone was tapped and I had been taken in a few times,” Hayden says.

Armed with letters from both Guthrie and Kennedy, Hayden secured the coveted Green Card, which allowed him to work in the U.S. He got a job at Children’s Hospital Boston and began post-doctoral studies at Harvard Medical School. Getting into Harvard wasn’t something Hayden had dreamed about; he felt he’d lucked into it and, for that reason, wasn’t all that committed.

So when UBC came calling, he accepted, shocking his Harvard colleagues, who thought he would be wasting his life in the boonies. In 1983 Hayden began teaching and practicing at UBC Hospital. “I saw there was space for me to do things,” he says. “There was an openness, a perspective about building. I just had this feeling you could do great things here. It was not fully formed. It was nascent. Boston was pretty fixed, where Vancouver was in flux.”

Hayden threw himself into research, publishing his results in prestigious journals such as Cell, Nature, the Lancet and the New England Journal of Medicine. But gradually he grew frustrated with the limitations of being a university scientist. “Many of the discoveries had significant potential for patients, but we were always coming to a place where we had to talk to others,” he says. “You never had a chance to be the advocate for your program, to determine the fate of what happened to it.”

Even if a drug company wanted to license a discovery, that didn’t mean the company would develop it commercially. “It might want the licence to kill it because it didn’t want competition in the field,” Hayden explains.

He decided that he had to move into the world of business himself. For some researchers that transition might be daunting, but Hayden already had an entrepreneur’s knack for getting other people to believe in him – and to back that belief with considerable amounts of money.

In 1992, while continuing to teach at UBC, Hayden was also starting the Centre for Molecular Medicine and Therapeutics, an interdisciplinary genetics research institute. He visited Merck Frosst Canada Ltd. in Montreal to see whether it might assist. Seven months later, he had a deal. Hayden says, “Merck gave the largest amount of money they had ever given to anybody in the history of their company – no strings attached. This was a handshake. It was the shortest grant I’ve ever written: three pages. The budget for five years was two words: ‘fifteen million.’”

[pagebreak]In 1995, together with colleagues Max Cynader and Frank Tufaro, Hayden founded NeuroVir, a company that exploited the ability of the herpes virus to treat patients with a rare form of brain cancer called glioblastoma. Five years later, the company was sold for $140 million to Medigene AG in Germany. In 1996 he started a second company, Xenon Genetics (now called Xenon Pharmaceuticals) with Simon Pimstone, another expat South African doctor. With Xenon Hayden returned to the problem of bone density, a subject close to his heart and to his South African roots.

Hayden and Pimstone had no money in the beginning. Pimstone, who today is president and CEO of Xenon, recalls during a recent phone interview that “we ran it out of a briefcase and my basement.” But they did have a potent idea. Hayden wanted to find out whether the notion he’d had so many years ago – that understanding excessive bone density might help with a treatment for low bone density – would pan out. He had connections at the university in Cape Town and could get in touch with the families afflicted with the high-bone-density disorder known as sclerosteosis.

The only problem was that Xenon didn’t have a lab and wouldn’t be able to identify the gene. So Hayden contacted Darwin Molecular Corp. in Seattle (which counts Bill Gates among its backers) to see whether it might be interested in exploring this idea. It was, so Xenon provided the DNA from the affected families in South Africa. Scientists at Darwin Molecular identified the gene that regulates bone density, paving the way to developing a treatment for osteoporosis. It had worked out just as Hayden had intuited as a young doctor, but the story doesn’t have an entirely happy ending. “The problem was, we gave up our rights. It was just silly,” Hayden explains. “It was the first thing we did before we had a lab or any money. In retro­spect the idea was smart but the execution was poor.”

Hayden and his partners learned from this experience. Subsequent projects operated on the same principle: that understanding the genetics of rare diseases can lead to insights about familiar ones. But by raising money from investors and getting its own lab, Xenon could take an idea all the way from concept to a drug. The company could collaborate with others to bring these products to market but retain the rights.

There are perhaps 60 families in the world whose members have Tangier disease, a condition that leaves them completely bereft of high-density lipoproteins (HDL, known as good cholesterol) and at great risk for heart problems. By studying them, Hayden found that the gene ABCA1 is responsible for producing HDL. Xenon researchers began to look for drugs that increase the activity of this gene as a treatment for cardiovascular disease. Then, by investigating unusual individuals who feel no pain at all, Xenon was led to discover XEN401, a new style of analgesiac that is currently being tested in a clinical trial.

In another avenue of research, by investigating mutant mice resistant to weight-gain, Xenon hit upon an enzyme, SCD1, that is responsible for obesity. The company is now developing a molecule to depress SCD1 levels that could help people shed unwanted pounds.

Xenon’s list of collaborators reads like a who’s who of big pharma. In 2000 Pfizer Inc. (a U.S. company) got on board with the HDL drug for $87 million; in 2004 Novartis AG (headquartered in Switzerland) signed on for $157 million to work on the anti-obesity product; and in 2006 Takeda Pharmaceutical Co. Ltd. (based in Japan) inked an $80-million contract to co-operate on the painkiller.

While serving as the chief scientific officer at Xenon, supervising its research program and fulfilling his professorial duties at UBC, Hayden was also conducting his own medical investigations. He was still haunted by Huntington’s. An accurate test for the disorder had been available since 1993, but there was no cure or even much of a way to alleviate the symptoms.

Then, in 1997, a glimmer of hope appeared. Hayden had conducted a small trial with an inexpensive drug that had already been approved in Canada for treating epilepsy. It turned out to work well with Huntington’s patients, reducing their erratic movements and lifting their depression.

[pagebreak]

“We thought, ‘This is amazing. This is great news. This will be great news for the drug company,’” Hayden recalls. To his dismay, the company making the epilepsy drug wasn’t happy at all. His contacts there said, “This is terrible news. The families are going to know about it. They are going to put pressure on us to develop the drug. There’s no economics in it for us to do so. We wouldn’t recoup our investment.”

Since the pharmaceutical was approved for epilepsy, the drug company (which Hayden declined to name) had already done much testing that did not have to be duplicated – such as the initial animal experiments and the safety trials in humans. The company also understood how to manufacture the drug. All that was needed now was a Phase-3 clinical trial to prove that the drug’s use could be expanded, that it was effective with Huntington’s as well as epilepsy. Such a trial would cost about $30 million – much less than the full development cost of a new medicine, which is often pegged at around $1 billion.

“They saw no benefit,” Hayden recalls. “I used all sorts of arguments. They said, ‘Forget it.’ And they told me they would prefer if I didn’t publish the results of the trial.” Knowing how much people suffered from Huntington’s, Hayden was furious that they would be denied a drug that could help. Needless to say, he didn’t respect the drug company’s wishes and published his results in 1999.

Shortly afterward Hayden went to a Human Genetics Disease Network meeting in Montreal. “I was still filled with anguish about this,” he says. “I started talking to two people who happened to be on the board of directors: Noel Hall and Richard Glickman. Noel asked the critical questions: ‘Why do you think they are not willing to develop this? Let’s think about the business reasons. How can we address them?’”

Hayden, Hall and Glickman decided that if the drug company would give them the medicine, they would develop it further at no cost to the company. In return the company would share some of the upside. They were convinced it was a deal no reasonable person would refuse. Wrong. The three were turned down again. Hayden explains: “Their belief was this: ‘You’re three guys on the West Coast with no money behind you. You’re crazy. Why are we going to give you a drug that has potential for us?’”

But the three innovators weren’t deterred. They liked the concept and in 2001 founded a new company called Aspreva. Hayden was in charge of the medical and scientific side (while retaining his position at Xenon). Very quickly researchers at Aspreva identified another drug, CellCept, that might have unrecognized potential – not for Huntington’s but for several rare diseases not currently served by the industry. The top-selling drug for F. Hoffmann La-Roche AG, a Swiss pharmaceutical giant, it was used to prevent rejection in organ transplants.

Hayden thought that because of the way the drug worked, it could also help people with Lupus and other auto-immune disorders in which the body attacks itself. “We used our frequent-flier points,” Hayden explains. “We borrowed jackets to look as respectable as we could and went to visit Roche.”

They found one champion at Roche who became their advocate, and in 2003 the Swiss corporation signed a deal. Aspreva went public in 2005, raising $100 million in the largest IPO ever for a Canadian biotech. Within a week, the buzz had boosted its market capitalization to $500 million. The 2007 Report on Business “Top 1000” listed Aspreva’s profits at $124 million, making it the second-most profitable biotech com-pany in Canada. In the same year, the Galenica Group, a Swiss pharmaceutical company, bought Aspreva for $915 million US (the sale closed on December 18, 2007).

“For me, this is like a dream,” says Hayden. But he’s not resting on his laurels – not yet. He’d like to hit a home run with Xenon too. “We’re interested in having a thriving company here in Vancouver that becomes a next-generation genetics pharmaceutical company. We have to see whether we can be successful and then resist any advances. My goal would be to maintain a Canadian-run company here.” He’s optimistic, but cautiously so.

“We need a bit of luck, because finally when you make a drug you never know about side effects – not that we have any reason to be worried. Still, you need some blessing, some luck, some feng shui.”