73.8 F
San Fernando
Saturday, Jan 28, 2023
-Advertisement-

A Mann’s Man

Swedish native Hakan Edstrom labored for years as chief operating officer at MannKind Corp., a Valencia company established in 1991 that sought for decades to develop a breakthrough method of insulin delivery for diabetics. The company, without any products on the market, survived on nearly $1 billion in investments from founder and chief executive Alfred Mann. Then, on Jan. 12, it announced that Edstrom would become chief executive, replacing the 89-year-old serial entrepreneur and billionaire who now holds the title of executive chairman. The move came just a month before MannKind finally launched sales of Afrezza, its brand of inhalable insulin, following a global marketing agreement with French drug company Sanofi. Edstrom met with the Business Journal in MannKind’s headquarters, where, in a pronounced accent, he discussed the ups and down of the drug-development process, the business impact of the September 11 terrorist attacks and how he came to believe in never betting against Mann, who personally recruited him from Bausch & Lomb. Question: How have your duties changed compared to when you were chief operating officer? Answer: The company duties have been much the same. The external contacts – board seat invitations and other community-related activities – have increased as I have become a more visible person. When did you start running MannKind? Title: Chief Executive Company: MannKind Corp., Valencia Born: Ostersund, Sweden, 1950 Education: MBA, Stockholm School of Economics Career Turning Point: Recruited by billionaire entrepreneur Al Mann to manage portfolio companies Most Influential People: Al Mann, grandfather Erik Edstrom, and Jon Eric Wallin, product manager at Best Foods Corp. Personal: Lives with wife in Newhall; two adult sons; no pets. Hobby: Fast cars and motorcycles. “I just love speed.” Owns a 2014 Ferrari 458 Italia, a 1989 Porsche 911 Speedster and BMW i8 hybrid, in addition to BMW and Honda motorcycles. His commuter car is a BMW 535. Officially, just a few weeks ago. How did you run a company for years with no product or revenue? It was certainly different. You need to look at opportunities and challenges in a different way. You are operating on shareholder money, but you still have to produce results that hopefully in the future will generate a return for those investors. How did you measure results? Scientific studies. You ask yourself, are we moving in the right direction and communicating that to the marketplace? Are we delivering at the speed we would like? The background is that you need to believe you are doing something that is right and good for your patient population. That’s where Al Mann is incredibly inspirational. Look at his personal dedication and his belief that MannKind’s Afrezza could be the biggest product he has ever made for patients with diabetes. Did you ever question the project’s viability? There have been moments of doubt. Not necessarily with respect to the product. That’s insulin, and you know it works for diabetes. It’s basically looking in yourself and asking if you believe in what you’re doing. Probably the biggest challenge was when Pfizer launched Exubera, which also was an (inhalable) insulin product, and then withdrew from the market. What happened? They launched Exubera on the idea that convenience was enough of a compelling reason for doctors to prescribe it. But when you put it together with not really offering any clinical benefit, an inhaler that was as big as a tennis ball can that needed replacement parts during its month of use, and a cost that was a premium over available therapies. It failed. They just couldn’t get the sales going. How did you react? At that point, we were sitting here in the development phase, saying, “If Pfizer, with billions of dollars behind them, has withdrawn from the market, how can little MannKind go on?” That was the question from the market. We said, “We have a different product. There is a clinical rationale for our product.” So what is the rationale? It’s faster. The technology is FDKP, a chemical. At a Ph below 6.5, it is a white powder, very fluffy with a big surface area. You can attach the insulin molecules to that surface. When it reaches a Ph above 6.5, it instantly turns into a watery substance. So you inhale it, it goes into the deep parts of your lung, becomes liquid and it’s one cell away from your bloodstream. Tell us about how the company has evolved now that Afrezza is hitting the market. We are pursuing two distinct paths. In Danbury, Conn., we have a very up-to-date manufacturing facility that is now 24-7 making product for Sanofi. They are introducing the product to doctors. The patients, once they meet with their doctors, get a 10-day test supply. Then they come back, have a discussion with the doctor. And from there, they can get a prescription. What is the second path? FDKP is a tremendous technology platform. We are looking to use it in a number of other areas: hypertension, pain management and cancer, where we apply this same technology to different drugs. So you think you could have a second product on the market in the next few years? Yes, that’s our plan. We are now a manufacturing and a development company. Could you have accomplished this without Al Mann’s name attached to it? Certainly, don’t bet against Al Mann. I’ve used that philosophy many a time. When I’ve disagreed with him, I told him, “Al, I know of your success, I’m not prepared to bet against you, however … ” And then we have our discussion. But I would say, we would still be successful, but under very different circumstances. How? Al has the resources and commitment to take almost any project from A to Z. Without the resources and personal investment of his time and money, we would have partnered on this project much earlier. The scientific rationale is strong enough that we would have found a partner. What is it like working with Al Mann? Inspiring. Once you have an agreement with Al, he delegates responsibilities and stays out of the way. How do you stay in communication with him? We have a set schedule that we tend to follow. If there is a need to contact each other outside of this set schedule, time of day is not important. We will talk at our earliest convenience. Working with Al is like being part of a family. Where did you work before MannKind? I ran the surgical and ophthalmology business for Bausch & Lomb (in Santa Clarita). They made equipment, lenses, solutions and drugs for eye surgeries. How did Al Mann recruit you? I got a phone call on Monday morning. I was about to go out the door and fly to Rochester, N.Y., to Bausch & Lomb headquarters. I pick up the phone and he said, “Hello, this is Al Mann.” I thought – “Wow, the Al Mann?” He said, “I am looking for someone who can help me take a number of companies public. Your name came up, and I’m interested in meeting with you.” I was really surprised. I said, “When, Mr. Mann, would you like to meet?” He said, “What about lunch today?” He is a man of instantaneous action. I rearranged my trip and went to Marie Callender’s in Valencia and met with Al. What was the proposal? He told me about three development companies that he had. One was in cancer, one was in allergies and one was MannKind as we know it today. He asked me if I could help him take them public. He also had technology at Advanced Bionics that needed leadership, and he said that could be an opportunity. When did you decide? I took the rest of the week to think about it. I got back to Al on Friday, saying I was interested but wanted to meet with management teams and discuss what role I might play. I met with the teams over the next couple of weeks and made my decision – yes, I wanted to do this. When was that? April 2001. I started to work with banks to take this company public. We were planning to do that in early August, but it didn’t happen. And then we had 9-11. That stopped everything. How? The market collapsed. It killed the IPO market for a while. We took a deep breath. We had to look at how we could survive, if not flourish, in that time. What happened to those other businesses? In the allergy business, a couple of companies licensed the technology. It’s now a small operation, but we don’t see that as a viable opportunity. On the oncology side, we kept that business going until about two and half years ago. At that time, we signed agreements with companies that are pursuing those technologies. So tell us a bit about your background. Where did you grow up? In the northern part of Sweden near the Norwegian border. How did your parents make a living? My dad was an electrician. My grandfather Erik Edstrom was the field head of a forestry company. He was probably my biggest inspiration. He had one of the first cars in our little village. It was very fascinating, because I’ve always loved cars. How did you come to the United States? I started with Nestle in the food business. Then I was recruited by General Foods when they moved into Scandinavia with their coffee business. Then I was recruited into a Swedish pharmaceutical company called Pharmacia. If you wanted a career with Pharmacia, they said you need to spend a couple of years abroad. You had to prove you can operate in a multicultural environment. Where did they send you? Montreal, Canada for two years. After 18 months, the company sent me to New York for another year. How did you arrive in Santa Clarita? I did an analysis of the business that we needed to complement our products. We found a company, Interocular in Pasadena, and bought it in 1986. In the spring of 1987, I went to the president of Pharmacia and said it was time to move back to Sweden. He said, “Now you’ve bought a business in the U.S., you better stay and take care of it.” We moved to Santa Clarita in 1987. What happened to Pharmacia? Pharmacia and Upjohn merged. They never allowed me to go back to Sweden, and I’ve been here 30 years. My boys grew up here and got married here. How do you feel about never moving back to Sweden? We are set in the U.S. now with grandchildren and our boys’ families. Luckily we still have a summer residence in Sweden, so we can go back at our leisure. Do you go back for visits? For me, it’s about once or twice a year. My wife will go back several times a year. What are your hobbies? Fast cars and motorcycles. On weekends, I see which one I should take out for a little tour. I do more motorcycling than anything else. Why? The combination of power, speed, riding skills and total concentration. Man and machine in sync. When did you discover your “need for speed”? I remember sitting on the gas tank of my father’s motorcycle when I was 4 years old and wanting to twist the throttle to go faster. I was always fascinated by cars and motorcycles. What are your favorite vehicles to drive? The Ferrari 458 Italia and the Lotus Super 7. What is your favorite story about Al Mann? When he sold MiniMed in 2001, his friends and associates convinced him to buy a plane. It’s probably the biggest reward he ever offered himself. And to this day, it’s fun to see that because he’s a very down-to-earth, simple man. When he says, “Let’s go out to eat,” we could go to a fast-food place. He is not someone who needs a spectacular life. He’s remarkable from that point of view. But flying that plane brings him tremendous joy. This interview has been edited and condensed for clarity and space reasons.

Joel Russel
Joel Russel
Joel Russell joined the Los Angeles Business Journal in 2006 as a reporter. He transferred to sister publication San Fernando Valley Business Journal in 2012 as managing editor. Since he assumed the position of editor in 2015, the Business Journal has been recognized four times as the best small-circulation tabloid business publication in the country by the Alliance of Area Business Publishers. Previously, he worked as senior editor at Hispanic Business magazine and editor of Business Mexico.
-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-