News Article

Executive Q&A: Quintessence Biosciences CEO creates company visions
Date: Sep 22, 2012
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Featured firm in this article: Quintessence Biosciences Inc of Madison, WI

Ralph Kauten received an Ernst & Young Entrepreneur of the Year Award in 2001, and he’s been dubbed a “serial entrepreneur.” Kauten, chief executive officer of Quintessence Biosciences, doesn’t think of himself that way.

“I don’t even think of myself as an entrepreneur,” Kauten said. “I think of myself as someone who can be helpful in creating a company vision, then working with a team to advance an interesting technology to the point where a set of valuable products or services are developed.”

The companies he’s led are scientific companies. “As I am not a scientist, I am never the person who makes the discovery. And I am rarely the person who initially perceives the potential application for the discovery. However, I am a person who can help evaluate the commercial value of a discovery and then help an organization move forward to commercial success.”

Q: How did you start out?

A: I started out wanting to be a baseball player, but I was never that good. So I majored in college in accounting, although I liked history and economics better. Graduating from the University of Iowa as an accountant, I thought I would make a career as a CPA. But within one month of working at Grant Thornton, I changed my mind. Nevertheless, I paid my dues by staying on at Grant Thornton for three years. After practicing accounting ... and after teaching at UW-Whitewater, I first got involved in creating new businesses when I met Bill Linton, who had just started up the company that became Promega. He had the scientific vision. I contributed knowledge about economics, finance, business, teamwork and accounting. That was so much fun that I decided to continue with this endeavor. In that way, I continue to help in formulating a company vision, which gets played out in translating discovery to commercialization.

Q: What’s the appeal of creating a new business despite the risks?

A: I suppose to some extent it is the same appeal that an artist has before they create a new and beautiful piece of art. I am sure there are many people who feel the same as I do when I say it is very exciting to imagine the development of a new company when one sees and understands a new, useful and interesting technology that could be a game-changer in an industry. And it is a real treat to work with a group of talented people who share the same vision and see the appeal of creating products and services that benefit people.

Q: Is it easier to be an entrepreneur now than when you started?

A: There a few things that make it easier to start a business today as compared with the start of Promega, and some things that are harder.

When we started up Promega, there was little understanding of biotechnology. At that time, biotechnology was not a term that people had even heard. Likewise, there was great skepticism about a couple of guys out talking to people trying to get secure funding.

At that time, it was exceptionally rare for a private company to raise money from individuals. The concept of angel investor did not exist then. But the concept of a con artist swindling money from widows and orphans did exist.

Today, there is a much greater understanding of the value of small businesses. Being an entrepreneur and a small businessperson today is an honorable profession.

But, speaking just of the biotechnology industry, it is more difficult to start a new business. The competition today is intense, and the industry is filled with large, formidable competitors.

As my friend and colleague, Dr. Tom Burke, says, today anytime you try to do something new in biotechnology, you have to count on there being at least five other people somewhere in the world who are trying to do the same thing. You have to have a compelling reason as to why you will be successful.

Pockets of opportunity do still exist, but it isn’t likely we will see another broad-based biotechnology products company like Promega or Life Technologies created soon.

Q: What are the biggest obstacles to making a company like Quintessence succeed?

A: Quintessence Biosciences, or Quint Bio, is a very interesting company. And the business model of drug development is a very interesting model. The business model poses the ultimate in risk and reward — huge risks with success not likely and huge rewards if success is secured.

Any drug development endeavor has many obstacles.

First, you are developing a product that can easily take more than 10 years — years in which you generate no revenue — to get to market. Therefore, the company must rely on the kindness and patience of investors.

Second, as much as Quint Bio selects a drug candidate which has shown outstanding performance in the lab, in petri dishes and in animals, one cannot be certain that the drug will work in people. Hence, even though we have reduced our risk of product failure as significantly as we can by conducting experiments in petri dishes and in animals, we still cannot guarantee that our product will work in people as well as it works not in people. This work can only be done in human clinical trials under the oversight of the U.S. Food and Drug Administration.

Did I mention that these trials are very time consuming and very expensive?

Our drug candidate is being used today in a human clinical trial being conducted at the University of Wisconsin Comprehensive Cancer Center and at the MD Anderson Cancer Center in Houston, Texas. So far, we have treated over 50 patients.

Based on what we have seen so far, we are still very optimistic that our drug will work in people and we will get market approval from the Food and Drug Administration.

We have not seen in the patients we have treated the side effects normally associated with chemotherapies. We are not harming patients with our drug candidate. We have seen some signs of efficacy, but given the nature of our trial, we cannot be certain that our drug is working.

Q: How many companies have you started?

A: I have been engaged in the startup of four different companies, Promega Corp., PanVera Corp., Mirus Bio Corp. and Quintessence Biosciences. I have looked to start up other companies but have not pulled the trigger because the circumstances weren’t right. However, I am considering putting two honey bee colonies in place next spring.

Q: Have you had any flops?

A: We all have flops. Hopefully, my honey bees will work. I have heard they are good workers.

I can tell you that any successful company has, at particular points in time, seemed to be headed for failure. The key is to never give up.

Q: What do you do for fun in your spare time?

A: I spend a lot of time working. Recently, I have taken up making music and guitar playing as I admire music and musicians and the value they add to our lives. Comedy is also very important to me, so I try to expose myself to comedy when I have the opportunity.