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November 2004 Marty Gerstel, In at the Beginning
As the third employee of ALZA Corp., Martin Gerstel, MBA ’68, was in at the creation of today’s biotech industry. In fact, Gerstel told a Business School audience in April, he also witnessed the birth of venture capital. Barely out of the GSB, Gerstel was invited by legendary biochemist Alex Zaffaroni, who had just left Syntex, to join his new venture, ALZA, as CFO. As purveyor of the birth control pill, Syntex was then the hottest pharmaceutical firm on the market. But ALZA? “This company had nothing—no technology, no money, no nothing.” Gerstel said. ALZA was “pure hope and dreams.” The hope was not to invent new drugs but to find new ways to administer them, he said. “But how were you ever going to start a company where you knew your products would be 5 or 10 years away, and you would have to invest 100, 200, 300 million dollars before ever getting to the marketplace?” The Securities and Exchange Commission did not take kindly to the idea of an initial public offering of a company with nothing to offer. But ALZA already had some 20,000 shareholders. Zaffaroni, sensing a potential conflict of interest with Syntex, had given his old company a quarter interest in ALZA, which Syntex then distributed to its own shareholders. “The SEC couldn’t say it was an unfair offer, so they let us go public,” Gerstel said. “It was actually the first United States company to go public without any revenues.” Gerstel rose to CEO and co-chair before he moved to Israel in 1993. He is currently chair of the biotech firm Compugen. And the first and second ALZA employees? They were the cook and chauffeur Zaffaroni brought with him from Syntex. One can only presume they too fared well. |
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