Transforming Forma - The Science of Giving a Damn

November 16, 2022

“Hey, clear a week on your calendar.”

It was April 2019 and Frank Lee had been CEO of Forma Therapeutics for less than a month. The then eleven-year-old, small molecule platform company with a who’s who of big biotech and pharmaceutical partners was in the midst of an abrupt transition. Forma’s founder/CEO had stepped aside for Lee. The company needed to finance. It was downsizing. Eliminating early-stage discovery research. Culling the pipeline. There was a tremendous amount to get done. People – the remaining people – were busy. But Lee was adamant. “When’s the last time you actually walked into a hospital and saw an AML or sickle-cell patient?” He called in some favors.

And so Forma’s leadership team spent the week at St. Jude’s Children’s Research Hospital in Memphis, Tennessee, and at the University of Miami. They met with patients – including cancer patients and sickle-cell disease patients, the two areas where Forma would focus going forward. They met with the caregivers who took care of those patients. They met with their doctors and staff.

Lee thinks back on the trip as an early confirmation that the company was really getting on the right track. A kind of inflection point in its purpose to match the valuation and clinical inflection points that would eventually follow. When he got to Forma, “I felt like there was so much focus on the science, so much focus on the platform,” he said. “There wasn’t much in the sense of, why do you show up for work every day?”

“Frank, you should come visit me.”

Lee is a chemical engineer by training who began his biopharma career designing and building pharmaceutical manufacturing plants for Eli Lilly. After about five years he was steered toward a Wharton MBA. Stints at J&J and Novartis followed, where Lee advanced through various roles in marketing and business development.

When his boss was recruited to Genentech in 2005 he quickly encouraged Lee to visit. “I remember him saying, ‘this is a special place.’ Though really I didn’t know much about Genentech at that time,” said Lee. “But on the flight back to New Jersey I was already thinking about how in the world I’m going to convince my wife and family to move out to the West Coast when we’d really only just relocated from the Midwest.”

He was persuasive. And in his 14 years at Genentech, Lee rose to SVP global product strategy and therapeutic area head for immunology, ophthalmology, and infectious disease, overseeing about a third of the company’s late-stage development portfolio and approximately $11 billion in global sales. Along the way he guided or touched almost every key franchise at the storied biopharma company and, in the process, spirited through some novel strategic and commercial initiatives that proved transformative not just for Genentech (and Roche), but eventually for the sector as a whole. “I got to see a company that said it cared about doing meaningful things for patients and then actually doing them,” he said.

Lee recounts running key areas like Genentech’s HER2 breast cancer drugs, its targeted oral cancer therapies like Zelboraf and Tarceva, a host of first-in-class medicines. But he lights up the brightest when talking about solving the problems that one way or another were keeping a person who would benefit from treatment from actually getting it.

Like the difficulty in getting patients access to Xolair, the first monoclonal antibody treatment for asthma – which was competing with generic steroids that cost pennies a day. “At the time patient assistance programs, coupon cards or co-pay foundations weren’t offered or set up well to help patients. We had to put a whole new patient friendly approach in place for the first time,” he said (in the process firing an early salvo in the access arms race that would emerge between payers and drugmakers).

Or how around the time of the integration of the Roche and Genentech portfolios following those companies’ 2009 merger, Lee picked up responsibility for Roche’s Tamiflu franchise. Back then, the drug was a bit of a commercial afterthought. But it was an important part of US biodefense against pandemic flu and so it was stockpiled through an agreement with BARDA. Lee saw more potential in directly educating and activating the patient. “I want to put it in places where patients can see and hear it… on TV, radio and print,” he told the company’s leadership.

Lee laughs now, but it was a gamble in those days, he said. Genentech was about the science, it didn’t communicate directly with patients. But Lee reasoned what good’s a drug if people don’t know they should take it? Even if physicians knew about Tamiflu, a patient still has to get into a doctor’s office and test positive for flu within 72 hours to benefit from the antiviral. Lee’s team started with a pilot in the southeastern states (“and patients really responded,” said Lee) and the following year took it nationwide. Until this new approach, Tamiflu was earning very little in so-called seasonal (non-stockpiling) sales; directly educating and activating the patient turned it into a blockbuster franchise.

*RA Capital has developed a variety of short, free, self-guided online learning modules called* ***RA University****. Our goal is to share practical and theoretical concepts fundamental to the biotech industry that aren't being presented anywhere else.*

“Now I know what I’m getting into.”

Even as Lee managed to help instill some Big Pharma commercial nous alongside Genentech’s culture of patient-centered science he began to explore leadership opportunities in smaller biotechs. But Forma’s chairman’s initial call about the CEO job at Forma was met with some skepticism from Lee.

Forma was promising, but complicated, to say the least. The biotech boasted an impressive list of current and former discovery/development partnerships in cutting edge oncology fields with companies including Cubist, Eisai, Novartis, Genentech, and Celgene. It had been founded with an early-investor-friendly corporate structure that saw its small molecule drug discovery platform housed in an umbrella LLC and individual assets and sheltered below as distinct enterprises. Forma’s partners held options to take over development of several key programs.

So when the call about the Forma job came in 2018, it still wasn’t clear where some of Forma’s most intriguing assets could wind up. But when Bristol-Myers Squibb acquired Celgene in late 2018 and terminated its Forma deal, Lee pounced on the opportunity. “Now I know what I’m getting into,” he said. “The science is transformative. The molecules are best-in-class. It just needs some focus.”

“Four months of cash.”

Step one was reprioritizing the portfolio. Forma had an IDH1 drug candidate that Lee believed was best-in-class, “but it wasn’t something we could build a business on,” he said, particularly because Forma wasn’t going to be first-in-class. The drug was better suited with a partner that could complement it with other heme-onc products, somewhere it’d be another asset in the portfolio where an existing player could leverage commercial infrastructure, he reasoned.

The compound, olutasidenib, was in pivotal studies – and was Forma’s most advanced asset. “We deprioritized it,” said Lee. “It had seven different cohort groups, we narrowed that down to only Relapsed Refractory AML. That caused a lot of heartburn in the organization because people in the company were invested in that program.”

Almost everything else was shuttered entirely. Forma even parted ways with its core discovery platform in a deal with Flagship Pioneering (that platform would eventually become the engine of Flagship’s Valo Health). Instead, Forma focused on the red blood cell pyruvate kinase-R (PKR) activator FT-4202 (later named etavopivat), which had just entered early-stage clinical trials in the rare inherited blood disorder sickle-cell disease.

Olutasidenib would eventually be out-licensed to Rigel Pharmaceuticals, but not until August 2022 and for $2 million up-front and $17.5 million in near-term milestones. That drug, now on the verge of FDA approval, may have foundered were it not for investors’ keen interest in funding Forma to pursue etavopivat for sickle-cell disease.

From 2019 to 2020, the company’s headcount fell from 160 to 60 (many of those employees transitioned to what would become Valo - a key aspect of Forma choosing that company as a partner).

Meanwhile, Lee brought on a new executive leadership team, dramatically simplified the company’s LLC structure, reduced its complexity, and sought to refill the company’s coffers. “At the time, we had four months of cash left.”

In December 2019 Forma raised $100 million in a Series D crossover financing led by RA Capital, which found the sickle program to be a compelling lead asset. The company had healthy volunteer data, once-a-day dosing, and a promising mechanism of action. But that round was only part of the financing strategy; an IPO would bring in most of the cash that the company needed to fund further development.

“The timing couldn’t have been better.”

With cash, sickle-data imminent, and a clear plan forward, the company was so different than only a year before that Lee toyed with changing its name. Forma was clearly gathering momentum.

But in March 2020 as it prepared to go public, Forma sent everyone home, just like every other company. Lee describes a board meeting – a virtual one, obviously – where they had to decide whether to go forward with the IPO, or whether to further tighten the belt and determine how to navigate those early days of the Covid-19 pandemic.

“We decided to keep our heads down and do the IPO,” he said. Following good feedback in its early meetings with investors, management led an IPO process where it controlled the highly concentrated investor allocations internally to make sure it had shareholders that really aligned with the company’s mission, with Lee personally meeting with each investor that would receive an allocation. In June, the company raised more than $319 million, selling more shares than originally planned, at $20 apiece – above the deal’s expected $16-18 range. “And – thankfully – the timing couldn’t have been better, and the stock climbed in a hurry.” Forma didn’t wait long after the IPO to raise more capital. In December, it tapped the markets again, bringing in another $275 million in a follow-on offering.

“There was some discussion among our leadership team and Board about why we’d raise again so quickly. Because we can’t see the future - who knows if the markets would remain favorable?” Lee said, in a response that would be both familiar to and endorsed by biotech CEOs that have seen previous “biotech winters” like the one the sector would go on to face in 2021-22. And with the stock in the $40s, the offering wouldn’t be so dilutive. “That gave us flexibility to pursue the strategy we had put in place,” said Lee.

“Not just something we put in a PowerPoint.”

In the midst of its financing push Lee continued to work on the Forma culture as well. “We talked at all levels of the company about the kind of company we wanted to build going forward. The fundamental thing is to be patient-centered, follow the science, treat people really, really well, and a lot of good things will happen,” he said.

The April 2019 leadership trip to Memphis and Miami had been invigorating. “We came back and every person on the leadership team agreed it was amazing. We had to do it for the whole company,” said Lee. In May 2019, the whole staff of Forma spent two days at a Hyatt out by Boston’s Logan Airport talking to patients, physicians, and caregivers who’d been flown in for the occasion, further aligning Forma’s employees with the company mission.

And so on the heels of the IPO, Forma’s portfolio, structure, and now balance sheet were completely transformed. The company’s employees were rallying around a set of core values. But Lee also wanted the board aligned with Forma’s patient-first culture. “If we say we’re going to be patient-centered, we’re going to be patient-centered, and we’re going to start in the boardroom,” he said.

In July 2020 the company added Howard University president Wayne Frederick, MD, to its board. Frederick is a practicing surgeon and himself living with sickle cell. In January 2021, the surgeon and health disparities expert Selwyn Vickers (now CEO and President of Memorial Sloan Kettering Cancer Center) joined the board. In November 2021, the sickle-cell disease physician Ifeyinwa Osunkwo joined Forma as its chief patient officer. “I spent a lot of my time making sure that patient-centricity was real in the organization, and it’s not just something we agreed on and put in a PowerPoint presentation. You either believe it or you don’t, and you invest accordingly,” said Lee. “Being patient-centered brought great insights into the organization and our development efforts, and attracted the best talent and kept them engaged (our voluntary turnover was half of the biotech average),” he said.

“Where is everybody?”

Forma’s sickle-cell program is currently only in Phase 2, but its investments in bringing in the right people have helped it become a better partner to the sickle-cell community. It’s a community that has been historically marginalized, with an African-American patient population that has been rightly wary of clinical trial participation in the past. It was an adjustment for Lee.

“I’m used to working in oncology,” he said, where funding and support are ample. “In oncology, you walk in, there’s a huge staff at the infusion center. But if you’ve ever visited a sickle-cell center, you’ll see – you see one doctor, maybe, one or two staff, and that’s it. Where is everybody?” (This dichotomy underscores the considerable irony of Forma’s own AML program completing development in large part because of investors’ willingness to fund etavopivat in sickle-cell.)

Working through the thick of Covid made trial enrollment and site coordination more challenging, particularly before people could be vaccinated. The team had to risk its own health sometimes to visit with investigators back when just getting on a plane felt incredibly dicey. Lee admits the company lost time, even as “we threw everything but the kitchen sink at it trying to help the centers.” One of those efforts turned into Formabridge, a program that assists people with sickle cell in the transition from pediatric care to adult care. “There’s a huge gap in sickle cell patient care during that transition and we partnered with the community to shine a light on it,” he said.

Forma orchestrated the first ever national public service announcement for sickle cell disease to raise awareness of the disease and emerging treatments. Forma rallied a long list of contributors (directors, producers, agencies) who volunteered their time to develop and launch the PSA, which is scheduled to air in early December 2022. What’s more, Forma committed $1 million in Formabridge grant funding during 2022 alone, which is slated to be announced at the American Society of Hematology (ASH) meeting in November. “Most companies would say ‘let somebody else do that who already has a marketed product, and we’ll focus on getting from Phase 2 to Phase 3,’” said Lee. “But this is going to help us as we develop our drugs and it’s going to help us as we further partner with the community post-launch. We built these trusting relationships where we truly get important patient insights when we started Phase 1, and that’s been a tangible benefit and builds value in the company because we’ll get there faster, better with our molecule. And ultimately, that means better for patients.”

“The right company, the right fit.”

A lot can happen in a few short years. At the 2019 ASH meeting, Lee met Novo Nordisk’s newly minted head of rare diseases. Both executives were just getting their feet wet in their respective roles and they built on that initial meeting as Novo made partnership overtures in 2020 and 2021.

Those discussions intensified in early 2022. “We knew we’d eventually need a partner, especially outside the US,” said Lee. Given the economic uncertainty and the current fundraising environment – Forma’s own stock price had dwindled to $5/share, certainly validating the company’s decision to raise additional capital back in 2020 – partnership discussions turned toward acquisition. A tricky prospect given the bear biotech market, but Lee was confident a buyout price would anchor to the intrinsic value of Forma’s drug candidates - not an arbitrary premium. He also felt they’d found the best buyer, and knew that despite its past fundraising success, adding up the kind of capital they’d need to develop its drug across multiple indications and populations meant they’d have to raise again. “And it wouldn’t be a small raise, and I didn’t know where the markets would be,” he said.

Moreover, “Novo is serious about rare hematologic diseases, and they’re a company that really cares about doing good for patients and doing right by their people,” said Lee. In September, Novo announced it was buying Forma for $20/share, or $1.1 billion (that deal closed in mid-October). “From a cultural and values and ethos standpoint, it’s the right company and the right fit,” he said.

Approximately half of Forma’s employees have moved on to Novo, Lee said, including and importantly Forma’s chief patient officer Osunkwo. (Among those who have left, two weeks after the closing at least 40% have already landed new jobs, said Lee, well on the way to the company’s 100% goal.) Direct outreach to the sickle-cell community when the deal was announced helped reinforce Novo’s commitment, he said, and Formabridge will continue at Novo. “That’s step one,” said Lee. “Now Novo needs to deliver for patients. There may be some choppiness initially through the integration, but I’m very confident this is going to wind up better for patients.”

Frank Lee has not moved on to Novo. As of late October 2022 when the deal closed, he is probably on a golf course (or the driving range - it’s getting off the tee that’s been giving him trouble). “I honestly haven’t thought much about it yet,” he said about what’s next. But he’s likely to have his pick of board seats and relishes the idea of mentoring and giving back to CEOs in the way his many informal mentors guided him, he said.

Only once the deal cleared the necessary regulatory hurdles “did it become real to me,” said Lee. “It’s bittersweet, as we had a wonderful group of people, but it was the right move for patients.” But he seems intent on finding a new challenge. He’s held leadership roles at industry’s bellwethers, and he’s transformed a small biotech on the verge of launching its first drug. What could tempt him?

“As a CEO, the most important things you can focus on are purpose – what some people call mission – and your vision for the company. Over and over and over again. Because that’s how you get people to sign up for big challenges,” said Lee. “If they really believe in that purpose – your scientists, your clinicians, whoever – and they know that it’s real and not just some poster you put up inside the company, then you’re going to get the best people. They’re going to work hard, you’re going to retain them. And ultimately, you’ll deliver transformative medicines for patients. That’s the science of giving a damn.”

Please click here for important RA Capital disclosures.