Audacity
Comment 1

Genzyme’s IPO

I was determined to take this company public as its CFO. Of course the complexity of our accounting was well beyond me. It required an understanding of American Generally Accepted Accounting Principles (GAAP), American financial and tax accounting, as well as English financial and tax accounting, and emerging biotechnology financial and accounting standards. Fortunately, with the help of our auditors, I found Theresa, a Southeast Asian British CPA who had grown up in London, but now lived just outside Boston doing audits of US GAAP financial and tax accounting. I immediately hired her as our company controller. Theresa knew the applicable accounting standards.

To succeed in any field requires a combination of audacity, innovation, risk taking, humility, accountability, and following the rules. I had the audacity, innovation and risk taking in spades, but now I had to learn humility, admitting the limits of my own knowledge, to avoid bringing the company to crisis. I discovered that I could greatly magnify my productivity by gathering around me highly competent people who I could trust. Theresa was perhaps the most important hire I ever made. I could trust her to understand from a tax and accounting perspective what needed to be done, how to do it, and to always have my back. I focused on fundraising and financing. We grew to be good friends, frequently playing tennis together when the weather was suitable, watching our kids grow up, her daughters a little younger than our kids. The support of my parents, my siblings, and my friends has been key to my success in business and in life. Theresa describes those years as the best time of her professional life. I wanted that to be true for everyone whoever worked for and with me. This was a hero’s journey.

I couldn’t persuade Kidder Peabody’s leading biotech analyst that we would sell billions of dollars of expensive to produce genetically engineered enzymes for rare orphan genetic diseases. So we refocused our business plan to use IPO proceeds to further develop hyaluronic acid and our operating businesses. The IPO was an enormous success, trading up 25% its first day, and at closing the banker handed me a check for $27 million to deposit in Genzyme’s bank account, since the CEO and CFO were the sole signatories on the account. I felt enormous pride in being trusted with so much money. The character and integrity of individual entrepreneurs matters greatly. This is why it is so essential to build a company with great integrity, and to never violate ethical boundaries, people need to know they can trust you in times of stress.

We floated a $10 million R&D partnership which worked so well for all parties concerned that investors asked us to spin off additional R&D financing vehicles about every other year thereafter. It gave us complete control over our R&D spending, created large tax benefits for our investors, and our stock appreciated enough upon success so we could buy the resulting therapeutic back relatively cheaply. This was a legitimate and timely use of the tax code, but others copied us, often with less investor friendly approaches. In response to misuses of this financing vehicle by others the IRS kept changing what was allowed, so we continually restructured these vehicles to continue funding our leading edge research in a highly profitable manner by apportioning risk, cash flows and returns. We were creating new classes of financing vehicles that better met our evolving financing needs. This is was audacious innovation.

That year CFO Magazine named me the most innovative public company CFO in the biotechnology sector. When Henri hired me he had asked me to promise to stay five years, not under contract, just a moral obligation. Over those five years I raised over $80 million for Genzyme, helped to radically improve our operating performance, created standards and structure for our worldwide financial and administrative systems, introduced new and robust financing vehicles for new opportunities, oversaw the creation of our new corporate headquarters in Kendell Square Cambridge, and our billion dollar pharmaceutical protein plant located next to Harvard Business School. At age 32 CFO magazine recognized me on their cover as one of the leading public company CFO’s in America. A heady success for my first decade in business.

1 Comment

  1. Bill Seaver says

    her daughters a little younger than our kids. SHOULD READ her daughters ARE a little younger than our kids.

    Like

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